Banking on alternatives

By Simon Barrow
March 11, 2009

As free market fundamentalism falters, religious communities have an opportunity to invest in practical alternatives.

That is part of the thesis advanced by Adrian Pabst, Leverhulme Research Fellow in the Department of Theology and Religious Studies, Centre of Theology and Philosophy, University of Nottingham.

He is writing on Guardian Comment-is-Free here:

Encouraging the Church of England and others to look at how they use their assets and promoting alternative visions and practices of economy is something Ekklesia has been advocating for some time.

I'm not sure calling this "religious banking" helps (Oikocredit is part of a wider network) - and I don't think blaming 'secularism' for the failings of anonymised versions of unregulated capitalism is any more helpful than blaming 'religion' for war. I know many secular advocates of humanized and green economics, and many religious peacemakers.

But that is a small point. This article raises important issues.

Part of the wider context I would want to set it in is a conversation about the "global oikonomia of the churches" more generally - promoting through practice just production, distribution and exchange, as well as charity and community enterprise.

That would include a critique of Christendom economics, too, and the recovery of more subversive Christian understandings.

Anyway, here is part of what Adrian writes:

Christianity and other world religions have practical resources to provide alternative models that are directly relevant to the current crisis. Take banking. Christian lending and Islamic microcredit have already opened fresh economic avenues since the advent of the global credit crunch. Oikocredit, a Church-backed microfinance agency, increased its field investment by over 32% to almost £350m in 2008, reaching around 15m households in both rural and urban areas and focusing on regions where an underdeveloped commercial banking sector excludes the poor. Likewise, the Grameen Bank, set up by the Muslim economist Mohammed Yunus, has lifted millions of Bangladeshi peasants out of poverty through a micro-lending scheme that over the last thirty years has amounted to nearly $6bn in loans averaging just $130 each.

Of course, religions have no God-given monopoly on microcredit. Nor will small loans to households and businesses avert the global recession. However, religious microfinance makes at least three distinct contributions to the economy.

First, it mobilises capital from churches, mosques and religious organisations that might otherwise be reluctant to part with their savings. Unlike commercial banks, it channels money to those most in need – precisely what the asset-poor and the cash-strapped require. Second, it promotes investment and responsible behaviour by limiting loans to income-producing activities that meet strict ethical codes and by maintaining a close, personal relationship between lenders and borrowers. Third, it is cost-efficient and provides economic security for communities. Only a small percentage is spent on administration and the default risk is less than 2%. Crucially, profits are reinvested and distributed among stakeholders rather than siphoned off by shareholders and the top management.

Now the challenge is to extend the benefits of religious banking to a larger constituency. What is most urgently needed is more capital. Part of the Church of England's total assets (worth around £5bn) could be used to underwrite new microcredit schemes in England and Wales.

Adrian Pabst responds: "A wholesame systemic transformation towards a just economy is exactly the right agenda and must be at the centre of the political and cultural debate. Of course there are non-religious traditions and people who defend alternative economies, but I still think that the historical and conceptual origins of capitalism are secular - the sacred was 'enclosed' and relegated to the supernatural sphere."

To which I replied: "I agree about the enclosing and relegation of the sacred, but I don't blame that entirely on secularity - a form of which can be defended in thoroughly theological terms, and the origins of which owe a fair bit to deformations within Christian historical and conceptual apparatus too.

"I think the overgeneralisation of 'secular reason' and the creation of a Christian rhetoric of 'overcoming' it is as problematic theologically and practically as the secular overgeneralisation of 'religion' and a non-religious rhetoric of supercession. I want to see Christian witness based on the cultivation of virtue and the practice of repentance, not participation in a war between 'religion' and 'secularism'... which I think is simply misplaced and counter-productive."

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