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Free Market Requires Legal, Moral, and Religious Foundations

R&L: You have spent a large portion of your professional life in the business world. How has your faith informed how you approach your vocation?

Byker: My faith, which had much of its formation while I was a student at Calvin College, has informed my professional life in two ways. One has been by formulating my worldview, a perspective that declares, first, that this is God’s world, that everything was created good by God, and that human beings, especially, were created in God’s image. Second, this worldview affirms that creation is fallen and deeply tarnished by sin. Finally, this worldview believes in the Good News of redemption and our role as agents of renewal. As a child, I learned this structure from the Heidelberg Catechism as sin, salvation, and service. This sort of worldview carries over into business when we see our role in God’s plan and God’s world, where there is good and bad in everything and where we are called to struggle against the bad and to build on the good.

The other way my faith has affected my professional life is through the idea of “calling.” Religious faith and tradition have always brought with them a strong sense of calling, implicit in what I have said about living out a Christian worldview. This is a view that all of life and work are deeply embedded in a spiritual, ethical framework. When you see your life as a calling, you understand that you do everything before the face of God, regardless of what you do.

R&L: How does this emphasis on calling play itself out?

Byker: When looking at your vocational choices, you ask, “In which of these lines of work are my skills most needed for transforming something that needs changing?” So, in my case, I appreciated the opportunity in investment banking to develop new approaches to Third-World debt restructuring, because I think there is a serious problem both in those countries and in those debt situations. I might have chosen to do mortgage-backed securities. There is nothing wrong with doing mortgage-backed securities, but I chose long-term commodity derivatives because I considered it to be an area where I was needed and where there was a need for change.

R&L: What is the single greatest challenge today for those in the marketplace who are striving to bring their faith to bear on their professional lives?

Byker: Balance is the word I would use to describe it. If you hear a call and see the need for service in God’s kingdom as important, then you are not only going to be concerned that you have prayer and devotions and that you are an honest person. You are also going to be concerned with questions like, “What kind of business am I in?” and “How am I conducting this business?” and “What impact does this business have?” and with balancing those factors against what the world says, which is, “Look, you should be out there maximizing your profits.” Then, you see the dangers. You see aspects of business that are not conducted properly, and you say, “I can’t do that.” Rather, your balance of goals and methods of operation come from your bedrock understanding that there are moral, ethical, and religious components in all aspects of life.

R&L: Similarly, how has your business experience affected your approach to your faith?

Byker: My experience in business–and I was in some high-stress, high-demand types of businesses–has impressed upon me the complexity of these challenges and the need for personal renewal to keep yourself on track and aware that you are always dealing with the kinds of trade-offs we have been talking about. There is power for good in the free market; there are dangers and evil consequences that can come from the free market. If you are not well-grounded and constantly renewed in your faith, you can lose track of the dangers. If you are not thinking about your faith on a daily basis, it will not affect your decisions the way it should.

R&L: You mention the complexity of business. Is it sometimes the case that those who criticize the world of business do not have the sort of practical business experience necessary to understand its complexity and, consequently, offer an overly simplistic account of it?

Byker: That is an interesting point. I happen to think that real-life experience is a very important factor in analyzing almost anything in social, political, and economic terms. For example, people will talk very passionately about the problems of Third-World debt. In response, I say, “Let’s talk about at least four different countries and four different types of debt. Let’s talk about Venezuela, Chile, Chad, and the Philippines and look at what goes on in each of those situations.” Third-World debt is not the same in each of these contexts, and unless you are willing to do the hard work of looking at the individual situations, you really are not in a position to make value judgments.

R&L: Many ministers like to make these kinds of pronouncements. Does this principle apply to them, too?

Byker: Absolutely. Now, the other side is true as well. Defenders of free-market systems who are unwilling to study the really egregious violations of ethical and legal standards by businesses in Third-World countries are equally blind. You have to be willing to take a hard look at the data and the history of the specific situation before you criticize or commend it.

R&L: As you mentioned earlier, much of your professional life has been as an investment banker, where you did work with Third-World development projects. What were some of the obstacles you faced in this line of work?

Byker: In dealing with Third-World transactions and debt situations, some of the most difficult problems had to do with corruption and with lack of consistent and fair application of laws. Such situations make one focus on the legitimate role of government in establishing the structural underpinnings of an economy. If those are missing–if people can freely bribe officials and cheat, if there are no laws for how property ought to be handled–then you really have a problem. If you do not have the legal, moral, and ethical foundation for a free-market economy, you are not likely to have a well-functioning capitalist system.

R&L: How does the presence or absence of the right kinds of private property laws affect how these Third-World markets are working?

Byker: Take the example of countries where a few dozen families own all the property and provide communal lands for tribal peoples. Since these are communal lands of which no one can have title, no one puts forth the effort to acquire and develop property for long-term return. So, there is a distorted motivational structure and, therefore, a distorted capitalist structure in such countries. In this country, by contrast, the vast majority of new businesses are based on the amount of money people borrow against property they own, whether it is their home or other real estate they are going to use in a business. They can borrow against it because they have clear title to it. If the only people in the country who have a clear title to property are these people from these few dozen families, then you can see how it would be difficult to develop that economy.

R&L: You mention corruption as an obstacle as well. How does that affect the development of an economy?

Byker: The bribery of government officials or of private business officials, if pandemic, is very detrimental to the development of an economy. Such an economy is unlikely to be efficient and to develop in ways that benefit the society as a whole. It will benefit the individuals who use the system, but that, almost by definition, means that other people do not have access to it nor the motivation to work, save, and invest.

R&L: In light of your experience, what role do you see for Christian faith in promoting an environment in which market institutions can flourish?

Byker: The Christian faith can provide the basis for a moral, civil, and ethical foundation on which an economic structure can function effectively. Fairness, equal opportunity, and equal access are things that laws have a role to play in, but if you do not have an underlying civil society based on a set of norms that come primarily from religious sources, you are not going to have a well-functioning economy. And insofar as we have lost some of those things in this country, I think we are seeing that carry over into the difficulties we have in our economic system.

R&L: Earlier you mentioned the problem of Third-World debt; there has been a lot of talk recently, from both evangelicals and Roman Catholics, about this problem.

Byker: Third-World debt is not in and of itself a problem; it only means that someone lent money to a country or its citizens. Third-World debt only becomes a problem when there is unwillingness or inability to repay. Governments cannot really go bankrupt, but they sometimes cannot pay their debts. Their cash flow is insufficient to meet their needs, so they become insolvent. The question for such countries then becomes, “What takes precedence? Paying our debt or trying to keep our economy going and keeping people employed and fed?” That is looking at the end of the process, so one has to go back and look at how the debt was accumulated. Some Third-World debt was accumulated legitimately; countries borrowed money for building roads and bridges, developing mines, and so on. Other debt was used to fund scam projects where the money ended up in some government official’s pockets. Consequently, one ends up with some complex cases.

R&L: How should such Third-World debt problems be addressed?

Byker: Again, one has to look closely at the details of each situation before trying to come up with a solution. What normally happens in Third-World debt restructuring is that all the debt a country has gets lumped into one pot. Even if one bank lent money to a successful mine and another lent to a scam project, both get thrown into the same pot, usually along with government debt; that is, money that a government borrowed from the World Bank or from other governments that lent money or provided capital.

The difficulty is that if a country becomes insolvent and defaults on its payments, forgiving that debt may take care of the past, but it puts the country in a weak position for the future. It will be unable to borrow money and unlikely to get people to invest equity capital for the same reason that people who declare bankruptcy have no credit. Again, it is a difficult decision, and one has to look at the specific situation–both in the past and in the future–to decide how to come up with a solution that does not cause terrible hardship in that country but supports the principle that loans ought to be repaid.

R&L: Do you have any thoughts on the efficacy of government-sponsored loans versus private loans?

Byker: I have some strong feelings on that subject. In general, governments lend money only to governments, and, typically, that means local governments, which are in trouble already due to mismanagement or corruption–Indonesia is such a case. Such a country is not likely to use the money in a way that, in the long run, adds to the viability of that country’s economy. In contrast, private loans are given to specific projects that have to demonstrate their economic viability. If that is done on a regular basis, then, generally, the most efficient businesses in those countries are going to get foreign capital and are going to provide jobs and economic growth.

R&L: So private loans create better incentives for growth than government loans?

Byker: They provide an incentive structure for growth, and they are used in ways that make economic as well as political sense, whereas loans to governments frequently are used simply for political purposes. A political official could build a bridge or road not because it is particularly needed but because the political group in that area has sufficient clout. I think World Bank projects often have ended up this way; the loans went to wrong-headed mega-projects.

R&L: You have been president of Calvin College since 1995. In your opinion, what is the role of a Christian liberal arts institution, such as Calvin College, in preserving a free society?

Byker: The ideal of the Christian liberal arts college is at the heart of these kinds of issues, not only by promoting scholarship about them but, more important, by training young people to be sensitive to and involved with them–to impress upon them the obligation to lead the kind of reflective life that translates into taking one’s social responsibility seriously. Virtues like a work ethic, self-discipline, compassion, honesty, and being sensitive to issues of justice and stewardship–these are key elements in the continuation of a free society. If we are at the cutting edge of training young people to do these things and embody these virtues, then we have a very important role to play in sustaining a free society.

R&L: The Acton Institute conducts programs to supplement seminarians’ education with regard to economic principles. In light of your experience in both the business and educational worlds, what do you see as the benefit of providing such an education for future ministers?

Byker: It is a very good idea, because it provides seminarians training they do not always get, and it highlights the complexity of real situations instead of looking at politicized, one-sided views or programs. I have the opportunity to serve on the board of Fuller Theological Seminary, and I think that having seminarians learn about the interrelationship of business, society, and government and getting them to look at the actual results rather than some political agenda is very important–to inquire into what the actual impact of specific organizations is, into the pros and cons of using a business solution versus a nonbusiness one, into how free enterprise has been more successful at generating jobs and prosperity than any other system, and then to look at the things about free enterprise that are not going well and setting ourselves to fixing them, rather than advocating the abolition of the system.

R&L: What particular economic or business principles is it important for ministers to know?

Byker: Ministers give guidance to people’s spiritual outlook and decisions, so ministers are going to influence people to do certain things, to take up certain kinds of jobs and not others. It is, therefore, important for them to have a balanced view of things in business and economics so they can give balanced and knowledgeable guidance. I have seen pastors who are more critical of business and the making of money than they are of other professions, but it seems to me that–as I said earlier–just as all professions are part of creation, they are all fallen. So, it is unlikely that business is any more fallen than the practice of law or politics or academics. These are all in need of careful thought and transformation.

R&L: So, one of the most important reasons for clergy to be informed about the business world is so they can give wise and godly counsel to businessmen in fulfilling their vocations?

Byker: That’s right. And to balance that counsel with the same kind of advice to all who face temptation in general.

R&L: Many have criticized the free market for promoting consumerism, that is, a way of life concerned solely with accumulating things rather than concerned with how we live. How do you approach the problem of consumerism?

Byker: Consumerism is a major problem in society today; furthermore, it has always been a major problem–just read the Old Testament prophets or Jesus’ parables. Having things define who one is and what is important in one’s life has always been a problem. The idea that the free-market system has made it more pervasive might be true, but modern media and advertising has certainly made it more obvious.

The spiritual and moral problems of humankind, however, have not changed since the Fall. Everybody needs to have certain things, but everybody also needs to focus on what kind of person he is and how he interacts with others. That balance comes from one’s religious commitments. And there is the need to constantly renew those commitments and remind ourselves that of those to whom much is given, much is required. This brings us right back to where we started–sin, salvation, and service.

Christians are called to be different. One resists temptation; one tries to transform culture and one’s self. Consumerism has always been with us, it is always going to be with us, and it is one of the things that one’s religious perspective is important in counteracting.