Financial markets have long been a source of either confusion or consternation on Main Street. The very term, “Wall Street,” originally a reference to an actual street at an actual place, is now confusing for most Americans. Many know it is the name of a famous movie from 1987, many know it as something to do with the stock market, and yet very few understand it as the broad, amorphous term for “financial markets.” What does that mean, and what are we, as Christians, supposed to think about it?

There is a tendency to demonize “Wall Street” in our culture, and one may say that propensity is enhanced, not lightened, in the Church. If we understand Wall Street to be a place of hedonism and materialism, as depicted in that 1987 movie, it is understandable that Christians would frown on it as a concept. And if we understand Wall Street to be a place where ‘financial recklessness takes place, with the public bearing the cost, a negative impression is also warranted. The post-financial crisis experience with bailouts and TARP certainly poisoned the well about Wall Street, but do these impressions warrant a negative view about the very existence of capital markets?

The proper Christian perspective, of course, requires a framework through which we can see all of these things. The worldview of Christianity views the human person as the subject of economics, a uniquely dignified part of creation made in the image and likeness of God. The ways in which humans act and the process of how humans allocate the scarce resources of creation is what we study in economics, but the aim of that action and endeavor is human flourishing. It is our worldview that sees a good life as desirable, and it is our worldview that defines for us what a good life is. Within a framework that sees mankind as uniquely dignified, rational, and capable, and also bound by ethically normative intentions, Christians start with an understanding of economic activity that is purposeful and moral, and “financial markets” become a means to the end, not the end in and of itself. It is this concept that truly requires better understanding.

When we speak of “Wall Street” we speak of “financial markets” that includes the ability of entrepreneurs to raise capital to drive risk-based projects. More sophisticated financial markets like we enjoy today involve all sorts of innovations in how debt and equity can be raised, traded, structured, and provided, to essentially offer capital to those looking to produce goods and services that meet the needs of humanity. We may think of Johnny as giving a loan to Tommy to start his home business (debt), and we may think of Johnny becoming a partner with Tommy in starting that home business (equity), but either way, on that basic mom-and-pop level there is some “capital structure” to how Tommy’s home business comes to be. There is risk. There is opportunity. But there is capital. And if things go well, there will be the production of goods and services that drive a higher quality of life for human beings—the aim of economics.

A world without robust financial markets is not less sinful than one with financial markets.

Of course, there are only so many “Johnny” characters out there who can support “Tommy,” and a lot of our economic production in a sophisticated and complicated society doesn’t come from a “Tommy.” Businesses of size and scale and mass production are large, and the capital needs of such businesses are large, too. The United States has seen postwar economic growth that has trumped the rest of the world many times over, because we coupled vigorously innovative capital markets to our industrial capacity, our work ethos, our rule of law, and our free society. Beyond the “Johnny” characters that can lend to or invest with Tommy, we have created a substantial financial marketplace where debt and equity can be raised at great size. We have enabled capital to get to businesses where there is capacity for people extending capital to absorb losses! If the only capital we have available is capital extended from those who cannot afford to lose it, we have a truncated opportunity for growth. This works against human flourishing!

But the last 50-75 years have seen the advent of the high yield debt industry, the venture capital space that drove Silicon Valley, hedge funds that can provide liquidity and allocate capital quickly and efficiently, robust public markets that provide monetization options to investors enhancing incentives to invest, and private equity and credit markets that have supercharged our capacity for growth.

None of this to say that financial markets cannot have bad actors. All of creation is tainted by sin (another worldview principle!) and therefore financial markets will be subject to the same inevitabilities that any other industry or domain will suffer on this side of glory.

But a world without robust financial markets is not less sinful than one with financial markets. Christians whose aim is human flourishing should celebrate innovation and progress in financial markets, and perhaps even consider exercising dominion in that very space.

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