Debt, Credit and the Virtuous Life

By Fr. Gregory Jenson

Our economic life is concerned with more than just the objective exchange of goods and services.  Far from being morally neutral, it is an expression of how we understand our dependence on God and neighbor and is the means by which we fulfill, or not, our obligations toward them.  Both for reasons of morality as well as long term economic efficiency, we cannot overlook or minimize the centrality of personal virtue, and of a culture of virtue, to the success of the free market.  It is not enough for me to be good; we must be good together.  Or at minimum, and whatever our personal moral shortcomings, culturally we must value and reward moral excellence.

Jack Cashill understands this and in his new book, Popes and Bankers: A Cultural History of Credit and Debt, from Aristotle to AIG, he traces the changing moral attitudes towards lending and borrowing in Western culture.  From the beginning the author is clear that we cannot separate a conversation about debt and credit, and so the economics of the free market, from a conversation about our personal and cultural moral lives.

Quickly the author takes us through some 25 centuries of social history.  Along the way we hear from Dante and Shakespeare. To my delight, The Merchant of Venice has a recurring role in Cashill’s analysis and he uses effectively the changing portrayals of Shylock to illustrate shifting cultural attitudes toward debt.  

Aristotle and Aquinas also make an appearance and join a cast that includes Medieval popes, Renaissance Jewish lenders, Protestant Reformers, 19th Century American robber barons and financiers.  And of course our favorite villains, the bankers, lenders and borrowers who figure so prominently in the recent economic collapse make an appearance.  Though the tone is at time a bit too flippant for my tastes (especially when discussing the Medieval Catholic Church), the text offers a good historical overview of the cultural and moral debate about debt. Throughout the author highlights intimate connection between moral character and economic life.

Cashill locates our current distress in the gradual cultural changes in the “fifty or so years since interest rates” were last at 1 percent.  This cultural shift has “had less to do with the behavior” of lenders and more to do with our unwillingness to censure “the behavior of consumers, especially the prodigal” among us. While not minimizing the “downside” of “major investment houses” shifting “from partnerships to corporations” (which both “democratized Wall Street” even as “it diminished long-term loyalty and distanced executives from the consequences of failure”) he locates our moral failure in our growing evermore “dependent on credit.”

Through governmental and private institutions, Western culture is now eager “to oblige its prodigals” and extend to them the credit that allows them to live, for a short time at least, above their means.  In addition where once we thought of “prodigals as sinners” today we “think of them as they think of themselves—as victims.”  Cashill points out that “the real divide in America today is not between left and right but between those who would sympathize” with the prodigals among us “and those who would not.” While we condemn “predatory lenders” we never even discuss, much less censure, the”predatory borrower” who also played a central role in the collapse of the housing market.

Ideally our willingness to go into debt reflects our confidence in the future and rather than a desire to fulfill momentary desires.  For this reason, we should think of debt, as Cashill does (and as Western cultural has historically) as a profoundly moral and is not simply economic question.  Because we have lost sight of the necessary connection between virtue and an efficient free market, we now face a widespread lack of confidence in the economy.

Our lack of confidence reflects a more fundamental a lack of trust in the future.  To borrow from moral theology, the economic crisis is a crisis of despair; we have lost faith in the goodness of tomorrow.

So how do we reclaim hope in the economic sphere?  As Aristotle has it, we must be “liberal.”

Needless to say Aristotelian liberality is markedly different than our contemporary understanding.  For Aristotle to be liberal means that we not spend more than we have and then spend only “on the right objects.”

But true liberality can only exist within a living tradition of moral virtue.  In our current circumstances we are sorely tempted to settle for merely technical solutions.  Yes, these are important but what is needed most is repentance and the cultivation of the cardinal, and dare I say, theological, virtues.  Whether this will happen or not depends on how we exercise our personal freedom and the decisions we make as a culture.

In any case Cashill’s work offers us a sound foundation from which to argue in the public square that our economic pursuits must take place within a “culture of life” and this is necessary not only morally but also for the efficient working of the free market.

Read the article on the Acton Institute website (new window will open). Reprinted with permission.


  1. Brief summary: The closer the currency’s monetary unit (dinar, dollar, drachma, yen, euro) approximates ‘a quantum of actual trust among people’ — the better the society does.

  2. George Michalopulos :

    BTW, Cashill is a great investigative journalist. He wrote a wonderful book called Hoodwinked about 6 years ago. He examines many of the modern pieties that have animated the Progressive movement and blasts them apart. We’re talking things like the Sacco and Vanzetti exoneration movement, the fraudulent research that Alfred Kinsey permormed, the myth of heterosexual AIDS, etc. Well-written and entertaining.

  3. Good article. Debt/credit (i.e., using OPM – other people’s money) is always a moral issue. I would draw a minor distinction based on the nature of debt.

    Capital debt (Capex) is an investment in the future and so inherently reflects a measure of confidence.
    Consumer debt allows us to borrow from tomorrow to consume today. (Wimpy would be thrilled.) At the worst, it consumes tomorrow’s seed corn today.
    The first uses credit to expand capability and output – that is to increase efficient effort.
    The second allows us to indulge ourselves NOW and this makes all the difference. Ultimately, it may be driven by and reflect our appetites.
    We see this same posture on display when it comes time to pay the piper.
    The first rarely vilify lenders because they understand the nature of a contract and their own responsibility;
    the second often seem to vilify lenders, perhaps because they may have been serving their appetites to begin with.

    In the end though, the differences are but a matter of degree.
    For either way, according to Nassim Taleb, leverage (debt) is a measure of hubris.

    I think he is right.

  4. Excellent article, spot on. I’ll share an article that I wrote about a similar theme, entitled “The Costs Of False Compassion”, which references a book by an Acton alum, Jay Richards, entitled “Money, Greed and God”. That book also touches upon many of the issues here.

    Please keep writing on these topics — they are vital to the continued health of our country and our world, the world within which the message of the Christian church is forced to operate.

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