Income inequality and religion

This is my third response to my own challenge to apply the ‘Honey and Thistles’ approach to finance and economics.

In 2013, celebrated French economist, Thomas Piketty, published his best-selling book, Capital in the Twenty-First Century. Pikketty argues that if the rate of return on capital is greater than the rate of economic growth over the long term,  wealth concentrates and this unequal distribution of wealth causes social and economic instability. He goes on to contend that the world is returning to a patrimonial capitalism, in which the world economy is dominated by the inherited wealth of a powerful economic class.

What is needed is a mechanism (other than war) to reset this wealth distribution periodically. Pikkety proposes a global system of progressive wealth taxes. The Bible proposes the Jubilee!

The Jubilee, and many other OT provisions, suggest that extremes of income inequality, and the uneven distribution of assets behind it, are a bad thing, and many Christians would concur with this view. But this view is not necessarily held by all Christians nor is it borne out in Christian practice.

Here is one example of an alternative view (there are plenty more). A report published by the Institute for Faith, Work & Economics concluded that “income inequality is a natural part of the human condition” and “there is no universal Biblical standard for income equality.” God created us all with a different set of gifts. “By focusing on our gifts we can unleash our comparative advantage and bring value to the marketplace by serving others.” But because all gifts are different and value in the market place is subjective, incomes will be different. “Disparity of wages is not a sign of injustice. If we care about a society that reduces poverty and assists the poor, we should be concerned not about income inequality but the relative prosperity of those at the bottom and their income mobility.” Now that does sound familiar! (Remember, the Good Samaritan wasn’t just good, he also had money). So, it seems, the Bible endorses laissez-faire economics! Get used to it.

What about the impact of Christianity on income inequality in practice?

To address this question, my first port of call is Pikkety’s tables. These show that for Britain, income and wealth inequality have crept up steadily since their lowest points around 1970-1980, but are still appreciably lower than their peaks around 1910. In 1910, the top 1% received 22% of total income, this dropped to 6% in 1978, but rose to 14.5% by 2010 (when 10% of people received 41% of total income). The pattern for wealth is similar as below. In the US, the income inequality trend is similar, but overall values are higher: in 2010, 20% of income went to 1%, 47% to 10%.

Wealth inequality in Britain, 1810 – 2010

Date                                                   1810                     1910                    1970                      2010

Wealth share (%), top 10%               82                         91                         64                          70

Wealth share (%), top 1%                 55                         69                         22                          29

Interesting statistics in themselves, but particularly interesting in terms of their relationship to Christianity or ‘Christendom’ vs secularisation or ‘desacralisation’! In the last two hundred years as wealth inequality has decreased (until relatively recently), Britain has become less’ Christian’ and more ‘secular’. Similarly, at present, incomes are much less equal in the US, which remains strongly ‘Christian’ than in Western Europe, which is much more evidently ‘post-Christian’ and secular. The same phenomenon is even observable between the states of the USA, eg Mississippi is very income unequal and very ‘Bible belt’ (55% Baptist); the much more secular Vermont is also relatively income equal.

Of course, correlation does not prove causality. But recent research at Southern Illinois University does appear to suggest a link. The research compared indicators of ‘religiosity’ (eg prayer, church attendance, belief in God, self-identification) with data on income inequality in 76 countries (using clever statistical jiggery-pokery to clean up the data and eliminate distortions). The researchers conclude: “inequality has a powerful positive effect on the religiosity of all members of society regardless of income”. In other words, in ‘Christian’ countries, income inequality and Christian affiliation go hand in hand, hence the differences between Britain in 1910 and 2010 and between the US and Western Europe now.

The Illinois researchers agree in general terms with the well-established ‘deprivation theory’ that “religion may serve as a comfort to the poor” (the ‘opium of the people’), but because their research revealed no income-related differences in religiosity, they conclude that religion is “also and more importantly a means of social control for the rich”, ie their research supports the ‘relative power theory’. “Religion works to discourage interest in mere material well-being in favour of eternal spiritual rewards, preserving the privileges of the rich and allowing unequal conditions to continue.” In the US, they suggest that one mechanism is that poor theologically conservative evangelical Christians will vote for politically conservative right-wing governments on issues like abortion even if such governments do little to redistribute wealth.

Comparing the US with western Europe, they conclude: “The results of our comparative analyses indicate that religiosity is much higher in the United States than in western Europe primarily because inequality is much greater there, making wealthy individuals more likely to adopt religion to justify their privilege and giving them more power to spread religious belief throughout their society. That the ebb and flow of religiosity in the United States appears to have been strongly influenced by falling and rising inequality over the past half-century further underscores this point.”

So, where does all that leave us? Partly, it just dredges up the age-old conservative vs liberal, capitalism vs socialism arguments that have been rehearsed in the church just as much as in the world. Partly, it leaves me uneasy: I can’t really accept the claimed divine endorsement above of the marketplace as God given, nor feel comfortable with Christianity’s apparent aiding and abetting of inequality. Plus, there is a bit of wild card in the apparent increase in inequality alongside rampant secularism. To me, this is just another indication that, as Christendom collapses, we are sailing into uncharted waters – all the more reason to go back to the Maker’s handbook and the Maker Himself for instructions on both ‘shipbuilding’ and ‘navigation’.

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