There is a Crucial Link Between Culture and Economics

R&L: Do you agree with Josef Schumpeter’s thesis that capitalism is ultimately destructive of both itself and the culture within which it operates?

Berger: I don’t think I can answer that with a simple yes or no. Schumpeter saw certain things very clearly, and certainly capitalism creates certain processes which have negative cultural effects. I would say that capitalism is very much part of modernity, not just the economic system. It is other institutional consequences of modernization, for example pluralism, that have various effects on culture, and that would take a long time to explain.

Whether capitalism destroys itself the way Schumpeter thought is another question. He thought that, among other things, advanced capitalism becomes very bureaucratized and therefore destroys the spirit of entrepreneurship. I think there is something to that. If for example you look at large corporations, some of them produce the so-called Edsel effect. On the other hand, something that impresses one about American capitalism is that entrepreneurship springs up in the most unusual places, unexpectedly and with great dynamism.

So I think Schumpeter was an astute observer and analyst, and he saw certain things very clearly, but I don’t think he was basically correct on this point.

R&L: Pope John Paul II often warns the West against the cultural phenomenon of consumerism. How do you define consumerism and do you view it as a danger?

Berger: I like to avoid the term, frankly. There is a long Christian tradition where there are certain spiritual dangers to being wealthy; this certainly goes all the way back to the New Testament and, to some extent, even earlier to the Hebrew Bible. But that is more a theological problem than one on which I would want to comment. The way in which consumerism is usually discussed among culture critics or analysts presupposes that it is worse in affluent societies. I’m not so sure that is entirely true. If one thinks of consumerism as being very greatly concerned with material goods, one can make a case that it is more common in poor societies than affluent ones.

R&L: It’s more a concern for them.

Berger: Yes, for understandable reasons, and in affluent societies such as the United States, where there is a great choice and wealth of consumer goods and services, people tend to be quite generous. It’s amazing how many spiritual and moral social concerns Americans have organized to express, so I’m not sure I would put things in quite that way.

R&L: Many have argued that capitalism operates according to the principle of self-interest–do you think this is necessarily so? Do you think self-interest rightly understood must equate to egoism?

Berger: Well, capitalism does operate by the principle of self-interest; that is how the machinery works. Adam Smith understood this, and I think he was right. Now whether one equates this with egoism obviously depends on how one interprets egoism. If one takes egoism as an immoral concern for oneself and nothing else in the world, then, no, I don’t think one has to equate this with self-interest.

One thing I think one must also understand in making moral judgments is that human beings operate in different spheres. Now the person who is in business, if his business is to survive, must operate by self-interest or he goes under. But very few people are only business people; the same individual is, let us assume, married, has children, is a citizen, belongs to a community, has friends and associates outside this business world, and so on, and an awful lot of altruism is possible in all of these relationships. So in response to your two questions, the first one I would answer yes, and the second one, no.

R&L: Latin America has recently seen an explosion of Evangelical Christianity. How will this affect the region’s social institutions and economic culture?

Berger: It’s already affecting them, at least in some of these countries. It’s an immense phenomenon. Our research center at Boston University has been engaged in studies on this, and our research has estimated that there may be between forty and fifty million Protestants south of the United States border. And something like eighty percent of them are first-generation Protestants, so we are dealing with a massive phenomenon–most of them, by the way, again somewhere around eighty percent, are Pentecostal, so it’s a very particular kind of Protestantism that is exploding.

I would say there are a number of consequences one can already see. If you talk about social institutions, we have here an incredible replication of some of the values and habits that Max Weber was describing in terms of seventeenth- and eighteenth-century Europe and North America, the Protestant ethic. And then we see here the beginnings of a new middle class, which apart from speaking Spanish or Portuguese sometimes looks as if it came out of the literature of early New England. Economically, again one can say the same thing, it’s creating a group of people with very strong entrepreneurial interest.

There is also, I think, a political effect. This kind of Protestantism, at least so far, except in a few places–Guatemala might be an exception where it’s strongest–is not political. In other words, these people don’t have a political agenda, unlike the Liberation Theologians. They are concerned with being saved, with prayer, healing, and being born again. I think there are indirect political consequences because they are antitraditional almost by definition, since their religion represents a break with tradition. They tend to favor democracy, because it’s very much a people’s movement. They organize themselves, they administer their own institutions, and from what I have seen of this it’s almost the Tocquevillian idea of these churches being schools for democracy.

So, yes, I think there is an extremely important phenomenon which already has great consequences and probably will have even more.

R&L: From your research in United States, Latin America, and Europe, what cultural factors are most important for the economic success of individuals and nations?

Berger: I don’t think we have absolutely certain knowledge of this. One thing I would say, which creates very interesting moral problems: one probably has to ask what stage of economic development one is thinking of here. But very briefly, probably quite different values and habits are conducive to success at earlier stages of modern economic development as compared with later stages.

Let me go back to what I said about the Protestant ethic. Looking at a phenomenon like Protestantism in Latin America, I think we are dealing here with mostly very poor people, and we are dealing with economies that are either just taking off in a modern way or are trying to. The Protestant ethic–hard work, saving, discipline, basically not enjoying life very much and saving for the next generation–these kinds of values and behavior patterns are very conducive to success. You can show this not just in Latin America but in other parts of the world where this kind of ethic may not be Protestant in the religious sense, but again has these values.

I am not at all sure that is true with the kind of economy we have in the United States and Europe today–the advanced capitalistic economies. Where there is much more productivity, mostly for technological reasons, and to put it very simply, people can afford to be much lazier. And the less disciplined or hedonistic culture can be quite compatible with economic success. Now this creates certain ethical problems, certainly most Christians more or less for very good reasons, prefer the older type of virtues to these newer ones. But economic success is not the end all be all of human existence. The person who is quite undisciplined, quite hedonistic, and in fact relatively lazy might succeed in our kind of economy if he finds the right niche, while his case would be hopeless in Guatemala. So it’s a complicated issue.

R&L: The Acton Institute often encounters Christian churches and communities who argue that socialism is the economic system to be preferred if you wish to achieve true personal liberation. How do you respond?

Berger: These people are dreadfully wrong. Socialism is no longer just an idea, it’s a form of economic and political organization that has been tried in many countries, not just in the Soviet Union. It has unfailingly produced economic disaster, and in most cases, pretty odious political tyrannies. So the idea that socialism is the way to personal liberation is, empirically speaking, a horrendous mistake and one that fortunately is becoming a little less fashionable than it was a few years ago.

R&L: At least the election in Russia went in a better direction.

Berger: Yes, but also if you take Latin America it’s not so long ago that virtually all intellectuals in America, including Catholic intellectuals, were in one way or another committed to the idea you have described–there’s been a real change in this. John Paul II has been influential in that change. So the view that socialism is the way to liberation has become a somewhat jaded point of view, fortunately.

R&L: In Centesimus Annus the Pope calls for a vibrant market economy circumscribed by strong moral and juridical frameworks. How do you interpret “strong moral and juridical frameworks”? Is there ever a reason for direct government intervention in the economy?

Berger: It’s not for me to interpret what Centesimus Annus means or what the Pope meant. It is very clear, though, what “juridical frameworks” means, and you can see this in Russia where there is an effort to create a market economy but the juridical framework isn’t there. You need the juridical framework for such things like property law, law of contracts, a reliable taxation system, reasonably non-corrupt government offices, so it is very clear and there is overwhelming evidence for that.

In terms of a moral framework, of course the market economy, like every other human institution, is based on certain moral assumptions. Take a very simple assumption: if people sign a contract, they will live up to it. So certainly you need a moral framework for any economy to work, including a market economy. But just what that moral framework has to be, I’m not completely sure. I’m speaking now not as an ethical theorist but as a social scientist. It is possible, even if it makes one a little uncomfortable, that different moral frameworks are functional at different stages of economic history.

R&L: There is often a debate between those who strive for what they might call a more humane economy and those who see economics as only a matter of productivity. Do you think there’s really a tension, or do you think virtue in the marketplace can help productivity?

Berger: I think cases exist where there are tensions that individuals who are in positions of responsibility have to work through. That is the subject matter of business ethics, which is a complicated and I think worthwhile undertaking. But there is a primitive business ideology that being good, being morally virtuous, will always lead to economic success. That is simply not true. The life of Jesus of Nazareth if nothing else would indicate that he did not start a successful corporation.

So I think the relationship is not that easy. It does not mean on the other hand, that in order to succeed in business one has to be a brutal, immortal person. No. But there is a tension there. I don’t think there are any easily formulated general rules on how to resolve that tension, but I know many religious people in the business world who will struggle with this and sometimes come up with creative solutions.