Back to Basics or Business as Usual? 
Responsible Lending, Responsible Borrowing and 
the Christian Response to the Great Recession 
 
9.30 – 3.30, Saturday 12th December
St Paulʼs Onslow Square London SW7 3NX

A day conference organised by:

The Faith & Public Policy Forum (Kingʼs College London),
the Contextual Theology Centre & St Mellitus College

THE MORAL MARKET IS A FREER MARKET

Prof John Milbank, Nottingham University

Transcript of his talk recorded on the day

Introduction
I think my approach will differ considerably to that of the last speaker, Andrew Dilnot.
However, I completely agree with him that one shouldnʼt exaggerate the scale of the recent
crisis, itʼs certainly not the end of capitalism, and in the end weʼll probably see it as only a
relatively minor blip. However, that doesnʼt mean that as Christians we shouldnʼt be taking
this very seriously and it doesnʼt mean that it doesnʼt reveal to us certain very crucial things.
Unlike the last speaker I think it would be quite wrong to say that this is just a manifestation
of natural human behaviour and the natural cycle of ups and downs. I think it would also be
wrong to say that the current economic crises is somehow straightforwardly a manifestation
of human greed; because on the contrary, itʼs the consequence of people behaving precisely
in the way that theyʼre supposed to behave, according to our current economic system.
I donʼt think itʼs a manifestation of something merely natural, because these kinds of crises
are quite specific to a capitalist economy. Of course since the dawn of human history, there
have always been economic crises, but theyʼve had to do with natural disasters, failures of
harvests, failure of ethos, failure of people to work hard and be productive. Whatʼs
completely different and peculiar about the crises of capitalism is that they tend to be crises
of speculation, crises caused not by concrete physical factors, nor by solely human factors,
but precisely failures of the abstract mechanisms of the system itself. You donʼt have to be
anti-capitalist to recognise this phenomenon. Plenty of completely pro-capitalist economists
recognise it as well. So ever since the dawn of the capitalist era, weʼve had these kinds of
crises, think of the south sea bubble in the 18th Century. So these crises are recurrent. Itʼs

Faith & Public Policy Forum

1
also important to notice that capitalism is somehow inherently unstable, it tends to
reorganise peopleʼs lives for good and ill in very dramatic ways.
Itʼs completely true that the size of the cake, if youʼre talking about abstract wealth, has
increased, but this has also brought in its wake incredible amounts of social disruption and
sometimes it has also increased economic inequality. So just because we get another crisis
in our economic system and this is quite normal, doesnʼt mean that itʼs not time to pause and
think once again about our economic system as Christians in the light of such a crisis.
There is something qualitatively new about the kind of crisis weʼre now seeing and this is
because globalisation has accelerated the pace of the capitalist free markets, capitalism was
always globalising but you know how sometimes a process goes so far that it tips over into
something quantitatively different, and thatʼs I think what people mean by globalisation,
because what we now see is that international firms, international movements of finance as
so powerful that they often override the capacity of governments to react to these
phenomena, and this tends to put political life itself into crisis. In the case of the recent
financial crisis, this certainly had something to do with the speed of international capital flows
and the way excess capital from some parts of the world flows into our western system and
destabilises everything. Now what lessons then, what specific lessons can we learn, not
only about our capitalist economic system as such, from the recent crisis, but also about
globalisation. I think there are three things that have struck everybody about the recent
crisis in banking and itʼs those three things that I want to focus on. All of us have registered
these three things in a rather inchoate kind of way.
First of all we have the phenomenon of abstraction, none of us understand what bankers are
up to, they scarcely understand it themselves, theyʼre moving round abstract sums of money
that they donʼt know any longer what theyʼre relating to, theyʼre speculating about things that
they only half understand. This is a crisis of abstraction, thereʼs something very weird about
the fact that money is of course a complete fiction, debt is a complete fiction and yet for the
next 15 years supposedly weʼve got to be dominated by this complete fiction. Itʼs as if
human beings get caught up in their own abstract systems which supposedly most of the
time help them to run the world. William Blake talked about mind forged manacles, the
economy is the most striking example of a mind forged manacle, thereʼs nothing wrong with
our technology, thereʼs nothing wrong with our human capacity, thereʼs nothing wrong with
our natural resources at base, weʼve got this crisis because somehow the weird game of
Ludo that we play has entangled us in its own rules. So we have a crisis of abstraction.
Secondly, we have a crisis of the firm, the bankers are not isolated individuals, theyʼre
operating in banking cartels and we have the sense that these banks are operating in their
own interests and theyʼre rewarding absurd bonuses to their employees. So the question of
the firm, the question of the bank as an institution is the second thing after the question of
abstraction.
And then the third thing that I think that strikes us all is what kind of anthropology is involved
here, what account of the human being is at work? We keep using the word greed, self
seeking, we feel that these are more and more dominant in our society as a whole, but the
problem is not I think that business as usual has been interrupted by a spasm of greed, the
problem is much more that the whole system that we live in functions on the primacy of self
interest and the primacy of material self seeking. This is the way it operates and periodically
that is shown up for us in glorious technicolour and we feel horrified. So these three things -
the question of abstraction, the nature of the firm and the question of anthropology (the
question of a model of human nature) – are the focus of my talk here today.

Faith & Public Policy Forum

2
The abstract economy
So first of all this question of abstraction. As Christians we have to view the world as Godʼs
creation and therefore we have to view the world sacramentally, this means that everything
in the world is at once a thing and a sign. Our economic system exists by tearing apart thing
and sign, therefore our economic system is fundamentally at variance with the principles of
Christian sacramentality, the idea that the whole world shows the glory of God and
particularly that human beings are in the image of God. Our economic system above all de-
sacralises, it treats things as objects that can be manipulated, as things that can simply be
bought and sold, it treats human beings like that rather than as persons, it treats them as
simply sources of labour supply for the economy. It treats the land like this, this is why the
surface of our earth is being desecrated.
Instead of treating money as an instrument of exchange, supposed to measure one thing
against another and thereby achieve distributive justice, it treats money itself as something
that you can pursue, speculate on, use to exploit other people who are short of money. This
leads to the dominance of usury. Right up to the 1980s we retained a residual sense that
lending at interest usury should be at least restricted. The bible is adamant about its
condemnation of usury. In the Old Testament, Jews should not be lending money at interest
to Jews. In the New Testament, because now we are all Jews, nobody in the world should
be doing that to anybody else. The usurers in Danteʼs hell occupy one of the very lowest
circles. For us to have built an entire economy on the principle of usury is as John Ruskin
said, equivalent to the most severe kind of apostasy against the very heart of the Christian
gospel.
Now I think that by dividing sign from thing, what we get on the one hand is a crude
materialisation of resources, everything is treated as exploitable. The economy moves from
place to place, it gets what it can out of things, it squeezes land and people dry and then it
moves on. On the other hand, the economy is incredibly abstracting, it pursues merely
signs, it pursues abstract money. Weʼve heard a lot of evidence to the effect that we all now
have much more abstract money than we had back in the 1950s, but I agree with the
questioner who said itʼs not as simple as that. Nor do I think itʼs the case that merely
economically weʼre better off, but our quality of life may have gone down. No, there are other
measurements. For example my father was a schoolteacher, my mother didnʼt work, we
lived in a good quality house in the ʻ50s and ʻ60s, itʼs taken me my entire life as a professor
with my wife working as well to get to an equivalent kind of house, this is not a complaint, itʼs
just an illustration. Itʼs not about merely a shift so that quality of life may have declined, itʼs
also an economic measure because if you measure the economic merely in terms of these
abstract signs, you donʼt measure the way in which our material life, not just our quality life,
but actually our material life may also have declined. Itʼs also completely true that the middle
classes are having to work harder and harder and that in effect they have become
proletariatised. Nor do I believe this story about the working classes either, an awful lot of
people are having to do multiple jobs, the taxi driver who drove me to the station this
morning gets up at eight every morning and goes to bed at midnight late at night, okay his
job is not as grimy and dangerous as that of a miner but heʼs arguably working even longer
hours.
So I donʼt think the numbers are telling you everything and numbers can be used extremely
selectively. I think this abstraction bears strongly upon globalisation, because globalisation
allows financial capital to move faster and faster round the world, it allows everything to be
more and more disaggregated. And in that sense globalisation encourages this piling up of
sheerly abstract wealth and a situation where nobody in finance any longer knows quite what
theyʼre talking about, and at the end of the day if you canʼt relate abstract capital back to
something material that in the last analysis secures it, this is precisely part of what tends to
drive the system into prices.

Faith & Public Policy Forum

3
If globalisation increases abstraction, it also in the end increases the way in which
abstraction has in the end to relate back to the real material economy, because the point is
that if you live in one globe, there is in the end nowhere to hide, there is no secure tax haven
for the abstract. In the end as we see even Dubai comes tumbling down. The poverty of
people in one part of the world starts to affect us even in the west and above all of course,
the ecological depredation of the earth comes to hit us in the end precisely because of this
sundering between sign and thing, this duality between this sheerly material and the sheerly
nominal signifying, or abstract which ones against all religious principles of sacramentality,
this is why the capitalist economy as such is a de-sacralising move which Christians have to
be very suspicious about.

The necessity of the firm

Now the second thing I want to talk about is the question of the firm or the question of the
institution. In theory it would seem that bankers might operate as lone rangers. Precisely
why is it that bankers operate in groups, and thatʼs part of a larger question about the
capitalist firm as such. Why do we have not just markets, but also firms? Ever since the
1970s neoclassical economics has been in crisis, neoclassical economics was simply about
markets, it was about market equilibrium, it was about the idea that markets automatically
record exact information. But ever since the 1970s that model of modernist economics has
broken down in favour of post-modern models. Itʼs parallel to whatʼs happened in physics.
Once upon a time you had the stable Newtonian universe where everything was in a kind of
balanced harmony, then people introduced time and entropy and contradiction. Just the
same thing has happened in the discipline of economics, people have introduced the factor
of time, the fact that no system is in the long run stable, there are always factors leading to
degeneration and collapse in the end. Also, economists have realised that mere rational
individual acting can often produce irrational results, theyʼve also realised that sometimes itʼs
really more rational to collaborate but the individual canʼt always see that. Finally there has
been an unravelling of the Hayekian point that markets somehow give you perfect
information about whatʼs going on. Of course Hayek was completely right that you canʼt see
everything from the state, this is not an argument for central state planning which Iʼm totally
opposed to. He was absolutely right about that, that you canʼt have a map at the centre of
whatʼs going on at the margins.
But the problem about saying that the market knows is that in that case no individual at any
one time knows enough for any situation of security. Once again, this is the problem of time.
Although in the end the market will tell you where supply is meeting demand, that
information is going to arrive too late for the individual speculator. And this I think is where
most economics now think that the role of the firm comes into play. People have to get
together and cooperate precisely because by forming a firm you can create relatively stable
economic information, you can create for yourself a niche market that becomes relatively
predictable, this is the reason for the firm, this is the reason why now economics is mainly
institutional economics and not pure market economics. Why then do we hear so much,
ever since Margaret Thatcher, about free markets economics, about the return of the
neoclassical model?
This is a bit of a mystery. But I think the answer is rather like the answer of why do we have
Mr Dawkins when ever since the 1970s that kind of scientism has been made philosophically
impossible. Ever since the 1970s weʼve known that science is very restricted in its
conclusions, it can only tell us about certain sorts of things, even those things are really quite
uncertain and subject to all kinds of revolutionary revisions. Why then is Dawkins mode of
completely Victorian scientism make such an impact in a post-modern age? The answer is,
I think, that it is itself a post-modern phenomenon, itʼs a kind of post-modern kitsch, itʼs a

Faith & Public Policy Forum

4
kitsch recycling of modernism. And what I mean by this is that there are no longer any
philosophical foundations for Dawkins position, so it becomes like a sort of try-on, it
becomes precisely a kind of fashion. I think exactly the same thing is true about neo-
liberalism. No economists, not even the right wing, market economists really believe
precisely in neo-liberalism. But itʼs a kind of easy ideology to grasp and put over and it began
with Reagan and Thatcher, but it doesnʼt relate to what is really going on.
What is really going on is the question of the institution, the question of the capitalist firm.
Likewise the question of government institutions - itʼs the same problem. And this is the key
to the Blairite project, this is the key to new Labourism. Because you might say, okay, if we
see the importance of the firm, then we see the importance of human collaboration after all,
but not a bit of it, the trouble is that our entire inherited economic model is based upon
atomic individualism and utilitarianism, there is no question about this, the entire discipline of
economics, the way it shapes government policy, itʼs based on the idea that basically we are
all self seeking individuals mainly concerned about our material welfare and trying to
maximise our utility. So the switch of economics to looking at the firm has tried to read the
firm still in individualist, utilitarian kinds of terms. This means then that firms canʼt trust their
employees, they have to try to manipulate them because actually acting collectively will
benefit them individually, but theyʼre not necessarily going to see that, so we have this
culture of incentives, bonuses, checking up on people, endlessly employing people to check
out other employees, this goes on throughout the capitalist economy, it also goes on
throughout governmental institutions, itʼs absolutely key to the way that new Labour has
operated. It is assuming, using public choice theory, that basically individuals will always be
putting themselves first and be out to exploit the firm theyʼre in. Now my case is that this has
totally screwed up the working of civil society and itʼs rather screwed up the workings of the
economy and itʼs finally led to the total breaking down of any element of a trust culture within
the city of London.
The point about talking about a culture of trust is not some kind of moralistic wishful thinking,
the point about a culture of trust is actually an entrepreneurial culture needs trust. The point
is that even if you believe in the free market, it turns out that the model of individualist
utilitarianism that goes all the way back to Adam Smith, is actually the wrong model. Itʼs the
wrong model for the free market itself because if you have endless checking up on people, if
you donʼt have trust, that actually inhibits initiative, risk and creativity. This is why the Italian
economist, Stefanos Zamagni is saying very clearly we need to return to the principles of
Italian political economy, not Scottish political economy because the Italian political
economists from the 18th Century onwards saw sympathy as part of contract itself, not as
standing outside contract.
In the end Adam Smith subordinates sympathy to self-interest and he says that if your
butcherʼs selling you meat heʼs not doing it out of the goodness of his heart. But this is
untrue. In fact people do enter into economic relationships at the local level for social
reasons, for personal reasons, and Zamagni argues in a really powerful way that the more
we have relatively informal contracts between people, the more itʼs based on trust, the less
you need the intervention both of state law on the one hand, or of inner control by firms on
the other hand. So this is a different way of thinking about the free market. The market
would actually be freer if it was a moral market, is the kind of argument that is now being
made, and in a funny kind of way this is even more critical of capitalism than most socialisms
are, because both state socialism, even some forms of associationary socialism, have been
wedded to the self seeking utilitarian individual. In practice they havenʼt said enough about
fraternity. They havenʼt said enough about the primacy of reciprocity, about the primacy of
people seeking personal interaction as being the whole point of human existence, this is not
ethical fantasy, it is also economic realism, this is the whole point of going for the big society
and subordinating government and the market to the big society instead of the situation we

Faith & Public Policy Forum

5
have at the moment where government and market are both in collusion in pursuing both
governmental power and the utilitarian welfare of the individual.
One of our legacies in the West is the division between self-interest on the one hand and
altruism on the other. But altruism is not a Christian term. It was invented by the atheist
Auguste Comte. Charity is always reciprocal, charity is never a one-way gift, itʼs always a
matter of give and take. If it has sometimes to be a one-way gift thatʼs in exceptional
circumstance, because the point of charity if mutual bonding, read the new testament again,
especially the gospel of John and you will see that what Iʼm saying is right. Charity is
reciprocity, charity, you and me, me and you, us in Christ, Christ in the father bound together
by the Holy Spirit.

Anthropology, reciprocity and the moral economy

This leaves me finally to my point about anthropology. Economics itself, ever since the ʻ70s,
has been starting to break with Adam Smithʼs anthropology, with his idea that we are all
naturally a trucking individual looking out for ourselves. The whole witness of anthropology,
as Karl Polanyi pointed out, is that human beings arenʼt primarily materialistic creatures,
what human beings want most of all is social recognition. This is why most traditional
economies, and even the so called ʻfeudal economy,ʼ worked according to the primacy of gift
exchange, according to the interpersonal. They worked according to the idea that I give
something to you and I vaguely expect you to reciprocate. Itʼs not written down in writing.
Itʼs what Zamagni calls non-compulsory compulsion. Itʼs the paradox, the spiral paradox of
the gift. You do give something and you kind of expect something back but you canʼt
demand it. And thatʼs not just about present giving, thatʼs the whole way human society
works, even today. And the problem about political economy is itʼs an attempt to deny this
fundamental fact about human nature, about human society. Its founded in reciprocity which
extends also beyond the human: the sense that the gods, the divine, or God or whoever has
given us the world and we somehow owe something back in terms of worship. So you can
see how this idea of gift exchange is profoundly related to the idea of the sacramental which
it is so completely dangerous for us to abandon. The problem then, about the kind of
economy that we have now, is that it invents a natural animal humanity which has not
always existed. In a bizarre way it makes us far too primitive, it treats us and then it makes
us behave as if a kind of sheerly animal self seeking was the prior thing. Of course this is
massively forwarded by the influence of Darwinism in the 19th Century and this part of the
reason for the popular return of Darwinism today. So if you have this idea that reciprocity,
mutual recognition, interpersonal relations is not the primary thing, itʼs not the way the
economy should work, if you say the primary thing is utilitarian self seeking, then what
happens is that the social round itself is gradually eaten into, it is incrementally abolished.
And this is why everybody in Britain has this sense that ordinary human decency, basic
respect for other people is breaking down and we increasingly live in a cold world.
So thereʼs nothing natural about the kind of market economics that we have at the moment.
Even economists admit that the market is something artificial that has to be created by the
state, by laws. Even if they believe itʼs the right kind of market, they think that. I donʼt think it
is the right kind of market. I think itʼs based on what Marx called primary accumulation: an
initial seizure of resources and an initial monopolisation of resources as recorded by James
Stewart, who was far more honest about the process of Scottish political economy than was
Adam Smith. And when the Scots quite quickly put these new principles into action, one of
the first things they did was disappropriate all the owners of cotton in the American south,
tear up all their gentlemanly rules and make sure all the profits went back to Glasgow. To
Adam Smithʼs credit, Smith started to realise that a new sort of process of monopolisation
was growing up, and tried to find ways of resisting that. But the main thing is that the market

Faith & Public Policy Forum

6
is created by a series of laws that enshrine absolute property rights, that make contractual
exchange absolutely non overrideable by anything else whatsoever, that tend to inhibit the
formations of guilds and corporations, and that put restraints on trade. Itʼs government itself
and the self-seeking of the nation-state that has created for us a particular kind of market.
To end with the anthropological implications of what Iʼm saying for the nature of the firm,
what one can say is that the very existence of the firm suggests a certain kind of monopoly
as absolutely inherent to capitalism and the workings of the free market. The question is,
what kind of monopoly do you have? If you have what Smith described as a gang of people
conspiring against the public interest, then what follows is that bad practice always drives
out good. People seek monopolies in order to produce the shoddiest products, get the
materials for those products as cheaply as possible and sell them as dearly as possible and
finally that kind of bad practice drives out the people who are trying to do things better
because they canʼt make enough money. The United States is the country where bad
practice has almost uniformly driven out good practice. Kraft who are about to take over
Cadbury, destroyed American local cheese production, why is decent cheese so difficult to
find in America today, there is one answer, Kraft. Likewise, the phenomenon of Walmart.
Yet here we arrive at the heart of the theological question. Sometimes the opposite happens,
sometimes good practice drives out bad. Why should that be the case? Whatʼs an example
of that? John Lewis. John Lewis is an example of good practice driving out bad practice.
Why are both these things true? Theyʼre true, because as Christians we know that weʼre
created good but weʼre fallen. That doesnʼt mean as Calvin held that weʼre totally depraved;
it means that we are good up to a certain point. And of course through the grace of Christ
we are capable of being perfected. So itʼs not a matter of given nature, itʼs a matter of habit.
A bad habit can destroy a good habit but a good habit can destroy a bad habit. And my
case is that if you have relatively good monopolies, good firms, firms signing up to certain
standards of professional associations, quite freely, that gradually in the long term that kind
of practice, based on trust, based on reciprocity, based on the idea that we are essentially
destined to be charitable beings, that can triumph in the long term. Itʼs only true that the
devil can triumph for so long. Jesus tell us a house divided against itself based on conflict
canʼt in the long run survive, we know as Christians that in the end good practice will drive
out bad. That along with the notion of charitable reciprocity is the key to the establishment of
a Christian economy. Thank you.

Organisers
The event was jointly organised by the Faith & Public Policy Forum, Kingʼs College London;
St Mellitus College (the diocese of London and Chelmsfordʼs theological and ordination
training institute); and the Centre for Contextual Theology (CTC). Kingʼs, St Mellitus and
CTC have an established relationship and are already working together in a variety of ways
to resource and equip the church in London in its mission and ministry through theological
education. This event was designed to initiate a conversation about the way beyond the
economic crises, one framed by theological considerations rather than economic ones, and
build relationship between bankers, theological educators, church leaders and policy makers
within a church rather than a political setting.

Other participants in the day conference included:

• Dr Luke Bretherton, Kingʼs College London
• Paul Marshall, Marshall Wace hedge fund/Centre Forum
• Dr Maurice Glasman, London Citizens/Faith & Citizenship Programme
• Piers Le Marchant, General Counsel, Nomura International
• Andrew Dilnot, Principal, St Hughʼs College, Oxford
• Phillip Blond, ResPublica

Faith & Public Policy Forum

7