Economics 101 & Public Square & Theology 101

Hasn’t Christianity Always Opposed Free Enterprise?

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Hasn’t Christianity always opposed free enterprise? It’s easy to think so. In fact, my colleague, Anne Bradley, was asked this question by a student at a recent conference.

One of the reasons people think Christianity has historically opposed free enterprise is because of certain Bible verses about money and lending. Some Christians continue to treat banking, and any work with money, as it if it were the root of all evil. This view stems from myth #6 in our series on the eight most popular myths about wealth, poverty, and free enterprise:

Myth #6: The Usury Myth – believing that working with money is inherently immoral or that charging interest on money is always exploitative.

In several places, the Bible condemns charging interest on money. In Exodus 22:25, for instance, God tells the Hebrews:

If you lend money to my people, to the poor among you, you shall not deal with them as a creditor; you shall not exact interest from them. 

It’s the same story in Leviticus, when God is describing the rules that should apply when he brings the Hebrews into the Promised Land:

If any of your kind fall into difficulty and become dependent on you, you shall support them; they shall live with you as though resident aliens. Do not take interest in advance or otherwise make a profit from them…You shall not lend them your money at interest taken in advance, or provide them food at a profit. 

So for centuries, Christians, along with pretty much every traditional culture, forbade charging interest on money loans. Christian theologians and philosophers believed that charging interest on money was an egregious sin known as usury. Why?

Lending and the Old Testament Economy

When interpreting passages of scripture, the meaning of the words and sentences hinges on their historical and literary context. Every passage is part of a larger text, written at a specific time and place, and for a specific audience. It’s important to keep in mind:

  • When the passage was written.
  • Who the passage was written for.
  • What genre the passage was written in.

The passages of scripture quoted above were written in ancient times, when the economic model in existence was static, agrarian, and semi-nomadic. Societies were smaller, poorer, somewhat isolated, and based on family-ties. Very few people lived above subsistence standards. What money people had and used was merely a unit of exchange to overcome the coarseness of bartering. It was an unproductive tool.

The rules outlined in these verses refer to richer Israelites lending money to their poor family members and neighbors for basic necessities. Given this historical context, and the belief that money was sterile, the ban on usury made a lot of sense. Charging interest on money in this context was immoral because it was exploitative.

Eventually, ancient economies evolved and the modern system of banking as we know it began to develop. The West developed banking systems that allowed banks to lend money that had been deposited. Banks charged interest because:

  • Loans were risky.
  • Loans prevented the bank from using the money for other purposes.

The banks also paid interest to depositors for the risk they assumed. This system allowed wealth to be created much more quickly.

It slowly dawned on people, including Christians, that money lent for capital was different than money lent to a poor neighbor in need. They realized that,

  • Usury is not charging interest on a loan to offset the risk of the loan and the cost of forgoing other uses of the money.
  • Rather, it is unjustly charging someone for a loan by exploiting them when they are in dire straights.

The latter behavior is akin to contemporary loan sharks, not the modern practice of banking we experience every day.

Lending and the Parable of the Talents

For another view on interest and banking, let’s return to the Parable of the Talents in Matthew 25:14-30. This parable is about the Kingdom of God, but it contains a lot of economic wisdom:

  • Notice that the first two servants are rewarded for investing the money they are given – for putting it at risk, where it can be productive and bear fruit.
  • The master punishes the third servant for hoarding. He expected the servant to invest. At the least, the master tells him, the servant should have put the money in a bank where it could bear interest.

Again, Jesus is not giving an economics lesson, but why would he have told this parable if he thought it was always immoral to accept interest for lending money to someone? Instead, Jesus treats risk, investment, and interest in a positive light. He describes enterprise as productive, not exploitative, and money as fertile, not sterile.

So hasn’t Christianity always opposed free enterprise? If we are reading scripture carefully, we can conclude it has not always been so opposed.

What do you think? Has Christianity always opposed to free enterprise? Leave your comments here

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  • Jim Price

    Dr. Richards,This is rich commentary and important for the Christian community. I especially like the three ways to interpret scripture. The time, the audience and the tone.

  • seeker

    IMHO…it seems dangerous to examine scripture in a revisionist manner….which you have done.

    • RogerMcKinney

      I agree with Jay. He is merely applying sound hermeneutics. The church was wrong on interest and commerce for centuries because of its idolatry for Aristotle.

  • I don’t think I have examined Scripture in a revisionist manner. I’m simply trying to interpret it correctly using widely accepted interpretive tools used and refined over the years by faithful Christian scholars. The Word of God is the same yesterday, today, and forever, but our interpretation of it is fallible. If there’s an argument against my interpretation, I’m certainly open to considering it.

    The central point, I think, is this: Since God allowed Jews to charge for money loans to non-Jews, then lending with interest can’t be intrinsically evil (like murder or adultery). So the question is, why were Jews only forbidden from lending to other Jews? My conclusion is that it was prohibited because of the familial relationship that ancient Jews had with each other. To charge interest to them would have been to turn a familial relationship into an abstract economic one (like charging your young child rent).

    As a result, though many Christians in the past have thought charging interest on money loans is always wrong, there’s nothing in Scripture that teaches that. The sin of usury refers to some money lending, but not all of it.

  • RogerMcKinney

    BTW, the church hasn’t always opposed free enterprise. The scholars at Salamanca, Spain determined in the 16th century that only in free markets could just prices be even approximated. Also, private property exists only in a free market because property requires control by the owner and his freedom to do what he wants with it. The emphasis by those Church scholars on 1) the just price and 2) property was the true beginning of what we call capitalism.

  • anarchobuddy

    “Rather, it is unjustly charging someone for a loan by exploiting them when they are in dire straights.

    The latter behavior is akin to contemporary loan sharks, not the modern practice of banking we experience every day.”

    This makes me think of Walter Block’s “Defending the Undefendable”, where he defends the loan shark. If it’s the case that loan sharks are able to charge higher interest because of usury laws that prevent people from getting loans from “legitimate” channels, then aren’t loan sharks’ high rates simply due to offsetting the risks of the loan?

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