Last month, the US Federal Reserve chairman Ben Bernanke held an unusual and urgent meeting with top economic policy-makers, to discuss the fallout from the recent volatility in the financial markets.
On the agenda was the regulation of those who, some say, have recklessly leant money to vulnerable homeowners.
The stock market turmoil began over fears surrounding sub-prime mortgages, made to those who find it hard to get credit. The loans are less than ‘prime’ because of the degree of risk. A potentially dangerous investment, they carry higher rates of interest to reward the lenders for their entrepreneurial daring.
Many would condemn as ‘loan sharks’, those who charge higher rates to the vulnerable. But the institutional usury of the sub-prime sector has become a virtue. Adam Smith’s invisible hand lifts the poor onto the first rung of the housing ladder. It then gives a large pat on the back, or a golden handshake, to those who have taken the investment risks. Everyone appears to win.
But when higher rates of interest mean the poorest default on their loans, it seems, from the recent stock market plunges at least, we all have the potential to lose.
Sociologist Max Weber was one of the first people to link industrious Protestantism with the profit motive. The capitalist spirit though is not the only driver which will help the financially disadvantaged to acquire a home.
Co-operative housing schemes operate with an alternative ethos. A mortgage can be carried by a community, rather than an individual. Risk can be spread, vulnerabilities limited, and interest rates set at more reasonable levels. More than 1.2 million families in the US live in property occupied through cooperative associations.
Whilst the sub-prime system operates in a paternalist way that seeks to exploit the situation of the vulnerable, the co-operative model aims to help the poor to help themselves.
1800 years before Max Weber, the first Christians explored such values of mutuality. Taking Jesus’ teachings seriously, they laid aside their individualist pursuit of wealth, sold some of their property, and shared what they had for the benefit of the most vulnerable. Throughout history others have done the same. As with capitalist endeavours, sometimes they have failed and caused great pain and heartache. Sometimes they have proved extremely successful.
No system is foolproof. But rather than accept that profit must always be the motivator, institutions can be built around alternative values.
Jesus had told his disciples that where their money was, there their heart would be also. Property is a good place to start. Home, after all, is where the heart can usually be found.
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Jonathan Bartley is co-director of Ekklesia. This article is adapted from one of his Radio 4 ‘Thought for the Day’ broadcasts, with acknowlegements to the BBC.