Any discussion of the influence of Calvinism on economics immediately faces the challenge of the thesis propounded by Max Weber in The Protestant Ethic and the Spirit of Capitalism.[i]  The thesis itself was not primarily concerned with theology, or even with economics.  It was a thesis in sociology.  It wasn’t arguing that Calvin’s guarded endorsement of usury produced a financial revolution.  Nor was it arguing that Calvinism was directly responsible for the emergence of capitalists and entrepreneurs.  What Weber was arguing was that Calvinism produced a ‘spirit’ which contributed to the social conditions which in turn produced a class of merchants and bankers who rationalised both the means of production and the flow of finance. 

 

Work for work’s sake

How did Calvinism come to have such an effect?  Weber’s answer was that the central doctrine of Calvinism was predestination; this produced a need to make one’s calling and election sure; and the way to do this was to be diligent in one’s calling.  According to Weber, this canonised the idea of ‘work for work’s sake’ (though it looks much more like work for religion’s sake).  Diligence was exalted above indolence, particularly the indolence that lived off unearned or inherited wealth; asceticism was transferred from the monastery to daily life; frugality triumphed over indulgence, and any surplus was invested for religious purposes and for the glory of God.  Eventually, those infected by the new spirit used money to grow money.

It is, surely, paradoxical that the individual model Weber invokes is not a Calvinist, but the deist, Benjamin Franklin.  It is Franklin (quoted by Weber, pp. 48 – 49) who lays down that time is money, that credit is money and that money can beget money: ‘He that kills a breeding sow, destroys all her offspring to the thousandth generation.  He that murders a crown,[ii] destroys all that it might have produced, even scores of pounds.’  It is Franklin, too, who advises a young tradesman, ‘The good paymaster is lord of another man’s purse … therefore never keep borrowed money an hour beyond the time you promised, lest a disappointment shut up your friend’s purse for ever.’  Weber is fully aware that Franklin was non-religious, but he cites these documents because they seem to him to contain the spirit of capitalism ‘in almost classical purity’.  Yet, a later German satirist, also quoted by Weber (p. 51), depicted Franklin’s sentiments as ‘the confession of faith of the Yankee,’ and Weber himself described them as setting forth a ‘philosophy of avarice’, holding forth as its ideal the honest man of recognised credit, and as its overriding principle the obligation of a man to increase his capital, as if this were an end in itself.  This, according to Weber, is not simply business astuteness, or a means of making one’s way in the world.  It is an ethos, and ‘this is the quality which interests us.’ Which, of course, is true.  What is not clear is whether it has any link to Calvinism. 

It is equally paradoxical that the most explicit example of Weber’s ‘ideal’ Calvinist is John Wesley, who vehemently repudiated the doctrine of predestination.  Wesley’s sentiments appear in his sermon, ‘On the Use of Money’.[iii]  The sermon contains three headings: ‘Gain all you can; Save all you can; Give all you can.’To Wesley, there is nothing sinful about the accumulation of wealth.  On the contrary, in the present state of mankind, money is an excellent gift of God, answering the noblest ends, and though Wesley is careful to warn of the danger of ‘buying gold too dear’ the truly Christian way of coming to terms with wealth is not by renouncing it but by using it for the glory of God; and under this rubric his stress on asceticism and frugality fully matches that of any tormented Calvinist seeking to make her calling and election sure: ‘No more waste!  Cut off every expense which fashion, caprice or flesh and blood demand!  No more covetousness!  But employ whatever God has entrusted you with, in doing all possible good, in every possible kind and degree, to the household of faith, to all men!’  (p. 588)

Apart from the dubious example of Franklin and Wesley, however, it is hard to verify Weber’s theory of ‘proof of election’ from Calvinist sources, and even more difficult to verify it from Calvin himself.  Weber’s starting-point is the belief that the hallmark of Calvinism is the doctrine of predestination: a dubious enough claim in itself.  But however firm Calvin’s belief in the idea of eternal election, he was certainly not obsessed with seeking proof of his own.  For him, assurance of his own salvation seems never to have been a problem.  On the contrary, assurance was of the very essence of faith: to have faith was to be assured.  For example, when offering a brief summary of Christian doctrine to the Protector Somerset, he bases assurance of forgiveness on the sacrifice of Christ and lays down that, ‘being members of his body, we may never doubt that God reckons us among the number of his children, and may confidently call upon him as our Father’.[iv]  This was equally true of such later Calvinists as Scotland’s Marrow-men.  When assurance did eventually become a serious spiritual problem, it focused not on the question, ‘Am I elect?’ but on the question, ‘Am I born again?’  and this undeniably bred a subjectivism and an obsession with the ‘marks of grace’ which was totally alien to Calvin.  But these marks seldom included ‘diligence in one’s calling’ in Weber’s sense.   In fact, Calvin was profoundly aware both that God often gave riches to the wicked, and that whatever wealth came the way of the righteous was not due to their own diligence but to the divine blessing: ‘we must take this for a general rule, that men attain not to riches by their own power, wisdom, or travail, but only by God’s blessing.’[v] When he came to comment on the words, ‘give the more diligence to make your calling and election sure’ (2 Peter 1:10), Calvin makes not the slightest allusion to what Cottret calls the ‘bourgeois accumulation of capital’,[vi] but insists instead that ‘purity of life is rightly regarded as the illustration and evidence of election’.[vii]

It was this same note which continued to be sounded in later Calvinism.  Diligence in one’s secular calling could never be a mark of anything more than Common or General Grace, and Thomas Chalmers could even deliver a sermon on ‘The Commercial Virtues that may exist quite apart from the influence of Christianity’.[viii]  These included, effectively, all the commercial virtues, and far from viewing diligence in the pursuit of money as a sign of grace, Chalmers believed that Christian piety would inhibit the commercial virtues.  Commerce was driven by the love of money and Chalmers declared bluntly, ‘if the love of money be in the heart, the love of God is not there.’  Let us not forget that it was in this very series that Chalmers preached his most famous sermon, ‘The Expulsive Power of a New Affection,’ and in the Preface to the published series he questioned ‘whether, on the supposition that a desire for the good things of this life were reduced down to the standard of the gospel, there would remain a sufficient impulse in the world for upholding its commerce.’

Calvin’s limited stress on diligence in one’s calling was intended to legitimate the secular sphere, not to canonise it as a domain within which success could be taken as a sign that one was among the elect.  He meant to insist that the Christian virtues were to flourish not in the monastery, but in the field and in the market-place.  When later Calvinism addressed the question of assurance of salvation, it focused not on commercial diligence, but ‘on the inward evidence of those graces to which the promises were addressed’ (Westminster Confession, 18:2).  These included love for the brethren and utter, complete satisfaction with Christ.  But none of the thousands of Calvinists hounded by Claverhouse’s dragoons or cleared off their land by Highland lairds would ever have thought successful investments were a mark of grace.  Indeed, in the last analysis capitalism served only to subvert Calvinism, its imperious demands on helpless labour spelling the end of such fundamental Calvinist institutions as Scotland’s Sabbaths and Communion Seasons.

           

Usury

To what extent did Calvin sanction usury and thereby give some sanction to an industrial and commercial system based on investment and credit?  He treats the question in a variety of contexts and these treatments show both remarkable consistency and remarkable caution.  While he takes with utter seriousness the biblical passages which condemn usury, he is careful to interpret them in context.  They do not, he argues, amount to a categorical ban on all usury.  At the most obvious level they forbid the Jews exacting interest from one another, but at the enduring ethical level what they absolutely forbid is the charging of interest to the poor.  Here Calvin links the ban on usury to the law of charity.  Not only does the biblical ethic forbid our taking advantage of misfortune by exacting extortionate rates of interest: it places us under obligation to lend liberally to the poor, and to do so not only without charging interest, but even at the risk of our very capital itself.  We must lend even when there is a real risk of receiving nothing back.  That is what the law of charity demands.  This, he writes, is the meaning of Jesus’ words in Luke 6.35,[ix] not a blanket ban on usury, but a summons to spontaneous liberality inspired by charity and having regard to nothing but a neighbour’s need.  We are to lend where there is destitution, not where there is the gleam of profit.[x]  The principle could be extended, of course, to include not only the way that individuals deal with individuals, but also the way that rich nations deal with poor nations.  Aid to developing countries should not only be interest-free, but un-secured.

But Calvin never allows himself to say that usury in and of itself is wrong.  That question, he insists, cannot be answered by a simple appeal to biblical texts.  For example, though an Old Testament Jew was forbidden to charge interest on a loan to a fellow Jew there was no ban on a Jew charging interest to a Gentile.  If there were, this would place Jews at a huge disadvantage when dealing with Gentiles, forbidding them to charge interest on any money they lent, yet leaving them with no option but to pay interest on any money they borrowed.  That, for Calvin, was totally inequitable.

Similarly, it was perfectly legitimate to expect interest when lending money to the rich.  Calvin makes this plain in his Commentary on Exodus 22.25.[xi]  On the face of things, this passage forbids usury: ‘If you lend money to any of my people who is poor, you shall not be like a money-lender to him, and you shall not exact interest from him.’ But Calvin is careful to set the prohibition in context.  ‘Reason,’ he writes, ‘does not suffer us to admit that all usury is to be condemned without exception.’ It was legitimate, he insisted, to charge interest to the rich, especially when the rich wanted the use of the money in order to make more money for themselves:  ‘If any rich and monied man, wishing to buy a piece of land, should borrow some part of the sum required of another, may not he who lends the money receive some part of the revenues of the farm until the principal sum be repaid?  Many such cases daily occur in which, as far as equity is concerned, usury is no worse than purchase.’

Calvin was clearly alert to the exigencies of the real world.  Usury was already a fact of life: without it, indeed, men could not transact their business.[xii]  It cannot be eliminated, then: it can only be regulated; and while in inter-personal relations it must be governed by the law of charity, in commercial relations it must be regulated by two fundamental principles: equity, and the common good.  This implied that financial markets could be neither self-regulating nor self-regarding.  Society must rule financiers, not financiers rule society: hence the statute which stipulated a maximum interest-rate of five per-cent for the city of Geneva.  Such a regulation was eminently practicable within the limited jurisdiction of Geneva: it is scarcely imaginable in a trans-national banking system devoid of any notion of the common good.

 

Detestation of usury

But underlying Calvin’s caution was a profound mistrust and even detestation of all usury.  Indeed, there is abundant justification for the comment of one forgotten 17^th century English divine, ‘Calvin deals with usury as the apothecarie doth with poison.’[xiii] 

He was fully aware of the classical loathing of usury: Cato had even declared that usury was almost as bad as murder.  Calvin knew, too, that neshech, the Hebrew word for usury, was linked to the verb nashach, to bite, and he made full use of the connection.  Usury was something bitten off, and the usurer was a biter: even, indeed, an eater, who consumes the miserable, spoils the wretched and sucks out their blood. 

Calvin was adamant, too, that it was unadulterated casuistry to limit ‘usury’ to simply charging interest when lending money.  Other forms of usury were equally execrable, and it was part of the deceit of the extortionist that he repelled criticism by pointing out that he wasn’t charging ‘interest’.  ‘This plague of usury extends itself,’ wrote Calvin, ‘to almost all sorts of traffic,’[xiv] and as such it took many forms: charging an exorbitant rent for a piece of land; exacting a fixed proportion of the harvest; demanding that a tradesman mortgage his tools, a merchant his merchandise or a miller his millstone; re-possessing mortgaged property; charging a fee for late payments.  The tricks of the money-lender were endless, and while Calvin with his legal training knew that they were usually perfectly legal, the problem lay in the nature of the contracts, many of which were simply unjust, securing the interests of the lender, but leaving the borrower totally vulnerable.  Even churches are not guiltless in this respect.

There are other practices on which it is difficult to find in Calvin a recorded opinion, but which, from his experience in Geneva, he would almost certainly have regarded as hallmarks of the ‘biter’: the speculator, for example, who asked his ships to remain at sea till the price of corn rose; the lender who demanded payment in a different currency because the exchange-rate had altered; the lender who charged a hefty fee for re-scheduling a loan and simultaneously demanded greater security because he knew the customer had no choice.

The upshot of Calvin’s reflections was a categorical denunciation of the trade of the usurer.  Quite simply, it was not a lawful calling.  A man might, once in a life-time, lend a sum of money and even agree a rate of interest on it, but the profession of a usurer (money-lender) was ‘unworthy of a pious and honourable man.’[xv]  In a well-regulated state, therefore, no usury would be tolerated.  Indeed, ‘it is to be wished that the very names of usury and interest were buried and blotted out from the memory of men.’[xvi]           This is far from a ringing endorsement of world banking; even further from the doctrine that a booming portfolio is a mark of divine election; and further still from any suggestion that Calvin’s endorsement of usury disposed later Calvinists to regard the making of money as an end in itself, and thus contributed to creating a social climate in which capitalism could take root and flourish.  Later Calvinists clearly had similar reservations to Calvin’s own.  The 17^th century English Puritan, Thomas Watson, for example, equated usury with extortion, and declared bluntly, ‘The usurer is a robber.’[xvii] 

The truth is that Calvin’s comments on economic and financial matters are but yet another example of his use of the principle of accommodation.  Commerce exists; it depends on usury; and since we cannot eliminate it, we must do all in our power to regulate it, having regard to the law of charity, the principle of equity and the common good.  We are, after all, dealing with poison; and greed and avarice cannot be allowed to rule un-checked, no matter how successful they are in making money grow.

Yet it may be that other factors stemming from Calvin and Calvinism contributed to creating a society predisposed to capitalism, and to the success of capitalism once it was established.  Self-denial, for example, was a key element in Calvin’s idea of Christian discipleship, and this may have bred an asceticism which discouraged wasting money on self-indulgence and luxury, thus leaving people with a surplus available for prudent investment.  Similarly, a rigorous emphasis on honesty bred the ‘good worker’, and perhaps even a ‘Calvinist work-ethic,’ and this in turn resulted in an upward mobility which pushed people up the commercial ladder.  At the same time, the Calvinist ethic produced the credit-worthy borrower. 

And besides these personal qualities, there were other more general features of Calvinism as a movement which contributed to its economic influence. Calvinism was an  international movement in a way that Lutheranism never was, and it was also an urban movement.  Geneva itself, unlike Wittenberg, was ‘a trading centre on the economic crossways between Italy, France and Germany’;[xviii] later Calvinism centred on such cities as London, Antwerp, Amsterdam and Rotterdam; and from the 18^th century onwards the loop included Glasgow, New York and Philadelphia.  These factors inevitably placed Calvinism at the heart of world commerce.  It may be that Calvin’s qualified tolerance of usury eased the consciences of both honest lender and honest merchant, but neither Calvin nor Calvinism ever argued that money should be grown for its own sake.  Even less did they give their blessing to the idea of the free, unregulated market.  Economics was subject to Christian ethics, and this ruled out any banking and commercial system driven by naked market forces.