What is Spiritual Capital? Economics, Religion, and Conference 2006

What is Spiritual Capital? Economics, Religion, and Conference 2006

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In a recent New York Times webcast, Thomas Friedman (The World Is Flat; 3-time Pullitzer prize winner), Joseph Stiglitz (Nobel Prize, Economics, 2001), and Ted Koppel discussed globalization and how it is changing the world. The excellent discussion ranged from international politics to economic development. Through a panorama of disciplines and perspectives, it was not until Koppel opened up the discussion to questions from the audience that a fundamental issue in globalization finally reared its head: religion. This question was directed to Friedman: “If we assume that the flattening process described by you is referring to a melting of classes across national lines, how might religion influence this as an outward expression of human identity and national identity?”

Friedman quipped, “You know, that’s a really, really good question. And I’d like another question, please.” Friedman then said this: “I believe that obviously … faith and a sense of rootedness are going to be very important. But I don’t have a particularly intelligent answer on that side of it.”

How might we explain his reticence? I think a fair shot at an explanation is this: the inherent complexities at the interface of religion and economics have been little studied nor understood, though the relationship may be profound. And that’s what makes the Metanexus Spiritual Capital Research Project, pulling together field experts at the intersection of religion and economics, not only unique, but potentially of major significance. Funded by the John Templeton Foundation, Spiritual Capital “is an interdisciplinary social scientific research initiative on the economic and social consequences of religion and spirituality.” But as Kimon Sargeant, Vice-President of the Human Sciences at the John Templeton Foundation and developer of the Spiritual Capital Research Program, pointed out in his introduction to the opening panel of the 2006 Metanexus conference, “Spiritual capital is something that we’re not exactly sure what it is.”

Host to four of the brightest minds in the interdisciplinary study of spiritual capital, the panel convened on the first night of the conference to convey some of the diversity and complexity of the subject to Metanexus’ international audience. Ending his introduction, Sargeant described the night’s fare as a “wonderful interdisciplinary feast of approaches,” noting that spiritual capital might be best broadly understood as “An informed guess that there is … payoff in understanding the connections between religious beliefs, networks in institutions, and things in the real world of economics, and politics and social changes.”

 
Physical, Human, and Social Capital

Perhaps the quickest entrée to this enigmatic term is an explanation found in the Metanexus online archives from Theodore Malloch, founder of the Spiritual Enterprise Institute:

“How exactly does religion affect economic behavior at both the macro and micro levels? Can we fully demonstrate the relevance, validity, and potential of the notion that spiritual mores and underpinnings demonstrably effect development? Here is the hypothesis: In the ultimate sense spiritual capital is the missing leg in the stool of economic development, which includes its better known relatives, social and human capital.” (Social, Human and Spiritual Capital in Economic Development, Metanexus, 2006.04.19). 

 As a backdrop to Malloch’s hypothesis, it might be helpful to say the “stool” also has a fourth leg, arguably its first: economic, or physical, capital. Robert Putnam, Peter and Isabel Malkin Professor of Public Policy atHarvardUniversity, gave the example of a “wrench” while presenting on the Metanexus panel: “You invest in a wrench and you can repair more bicycles more quickly with that tool than without it.” Traditionally conceived, “capital” in this regard simply means human-made goods or assets (such as tools and machines) used to assist in the production of other goods. As “capitalism” is an economic system in which private individuals and corporations produce and exchange goods and services, capital itself is at the core of this exchange.

“Thirty years ago”, Putnam elaborated, “economists began talking about Human capital to refer to training and education. You can invest in training and education, and you can be more productive, more efficient.” Human capital, for example, refers to the skills and abilities a worker brings to a task, such as an ability to program in HTML. It can also refer to a specialized knowledge, for example of philosophy, science, and religion, all in the context of the value that skill or knowledge brings to a particular employment (such as the skills and knowledge necessary for the Managing Editor job at Metanexus). That this “human capital” is as essential to the production of goods as physical materials (such as, in this example, computers or books) seems almost obvious in retrospect.

Social capital, on the other hand, refers less to a value within an individual as to a value between individuals. As Putnam noted, people studying social capital “talk about features of our communities that are like tools and training. In communities where people are connected to each other in productive ways you can get more done.”

Social capital is about the value held within a group or community of people, such as the sense of being a team and working well together that a close knit group of colleagues might share, and what that sense brings to an organization. A less financial sense of social capital might mean my trust that my friends will help me move from apartment to apartment, and their trust in me to help them do the same. The value of my group of friends in this sense is lost if my friendships are not maintained.

“The core idea of social capital”, according to Putnam, “is that social networks have value, both to people in the networks and outside.” The value of social capital, however, goes beyond the workplace, or even immediate social benefits. Our social capital—that is, our social networks, our connections and relationships—are “almost miraculous in their effects.” Social capital is related to crime rates (i.e. places that have low social capital are high in crime), voter turnout (low capital, low turnout), government corruption, happiness, and even life expectancy. “Your chances of dying in the next twelve months are cut in half by joining one group. Cut in three quarters by joining two groups.”

 
The Decline and Rise of American Social Capital

Putnam’s presentation segued from the theoretical to the historical in telling the audience, “For most of the twentieth century, Americans were not just a nation of joiners—as Tocqueville had said a hundred years earlier—we were more and more joiners.” Starting the beginning of the last century, social organizations boasted steady increases in membership from year to year. After a slight dip during the period of the Great Depression and the Second World War, membership in civil organizations rebounded and rose again, this time to unprecedented heights, “probably the most civic period in American history.”

And then with no explanation—“suddenly, silently, mysteriously”—memberships began to level off. Then they declined somewhat. And then they plunged. This precipitous decline has continued such that in the last few years membership in civil organizations have returned to depression levels.

Over the last 20 to 25 years, according to Putnam, membership has dropped about 40%. But it is not only membership in civic organizations, but a general downward decline in most social activities. The frequency of dinner parties, for example, as dropped 60%. “Having people come to the house” has declined, with people come 14 times a year in 1975 to 8 times a year now. Even picnicking has decreased, with the average American in 1974 going on five picnics a year, down to two times per year recently. Religious organization attendance and voter turnout, says Putnam, follow the same pattern. Each rose steadily for the early years of the century, peaked around 1964, and then just as steadily declined.

What happened? According to Putnam, “What’s happened in one sense is that a variety of technological and economic and social changes have rendered obsolete a stock of our social capital. That’s jargon for just saying that two career families, urban sprawl, television, and some other things mean we don’t feel comfortable going to the Elk’s club anymore or the PTA, or having picnics, or having friends come over to the house. Those all seem a little outdated and they don’t fit the way we’ve come to live.”

Just when everyone is ready to provide their favorite theory of the great American moral decline of the second half of the 20th century, Putnam puts on the breaks. “Go back a hundred years,” he tells us. Apparently, at the end of the 19th and beginning of the 20th century, the same drop in social capital occurred. “America a century ago suffered from many of the same symptoms of a social capital deficit.” Americans at that time also had just been through 30 – 40 years of economic, social, and technological change, in their case due to the Industrial Revolution, urbanization, and immigration. Movement from other countries intoAmerica, and from the town and country into the cities, disrupted more rural and traditional practices of social capital.

“And then they fixed the problem.” Astonishingly, Putnam’s research recovers “an amazing burst of creativity” in the period between 1890 and 1910. During this time, most of the contemporary civic institutions in American were invented: the Boy Scouts; the Red Cross; the League of Women Voters; the NAACP; the Rotary Club, most of the labor unions, and many others. “They invented new ways of connecting that fit the way they’d come to live.” After a steadily period of decline in social capital, Americans at the turn of the 20th century set out to create new kinds of social networking to fit the transformed social landscape.

Our choice now, for Robert Putnam, is clear: “We have to be about the business of inventing new ways of connecting that fit the way we’ve come to live.” And this inventing must take two forms that map to two different but equally necessary kinds of social capital, between social ties that link you to someone who is like you—“bonding social capital”—and on the other hand social times that link you to someone who is different than you—“bridging social capital.” The rub is that the kind of social capital a modern pluralist democracy like America, composed of so many diverse cultures and different peoples, needs most is bridging social capital—which is also the hardest to build.

What form this new social capital will take is anybody’s guess, but according to Putnam we can count on religion playing a large role. He noted, “As a rough rule of thumb, about half of all American social capital is religious: it’s half of all volunteering, half of all philanthropy. So religion—or what we’re now calling spiritual capital—has got to be part of the solution to this problem.”

 
Pervasive American Spiritual Capital

The very concept of spiritual capital is premised on the idea that religions and religious communities represent an additional factor in economic development. According to the Spiritual Capital Research Program, “The specific term ‘spiritual capital’ has been used variously over the past decade by scholars such as Robert Fogel, an economist from the University of Chicago and 1993 Nobel Laureate in Economics, and University of Pennsylvania political scientist John DiIulio. Broadly, spiritual capital may be construed to refer to that aspect of social capital linked with religion and/or spirituality. In one sense, then, spiritual capital might be a subset of social capital.” Whether spiritual capital is also separate class of capital (in the way human and social capital differ), or whether it is more adequately only understood as a special type of social capital, remains to be seen. As the working definition of term provided by the program shows, spiritual capital is best understood as a particular focus in economic development: “The effects of spiritual and religious practices, beliefs, networks and institutions that have a measurable impact on individuals, communities and societies.

The importance of spiritual capital in Americais not lost on Theodore Malloch (quoted above), who claimed at the panel: “One can’t understand America unless one has an understanding of her spiritual underpinnings.” Malloch delivered to the Metanexus audience previously unreleased research on a recent Gallop Poll in April. Entitled The Spiritual State of the Union: The Role of Spiritual Capital in the United States, the poll gave a “fresh look at how religion and spiritual beliefs relate to current problems to the economy, work, volunteerism and the giving of money, to meaning and purpose in life, to ones outlook on the future, as well as other areas of life.” The poll covered several areas of culture, including entertainment, the workplace, religious institutions, politics, and the media, among others.

There is inAmerica a “pervasive influence of spirituality.” According to the Gallop poll, a majority of adults believe spirituality is directly influence or determining of “the overall health of the nation, including economic health” and “success in life.” Majorities also say that religious or spiritual beliefs effect their financial investments and savings, the relationship with colleagues, career choice, volunteer activities, entertainment preferences, news source selection, and future outlook.

But what does the term “spirituality” mean? ” Malloch defines spirituality broadly as a “sensitivity or attachment to religious values and things of the spirit, rather than worldly or material interests.” More interesting, perhaps, were the answers of those asked in the poll to define the term. The most frequent responses incl ded: “belief in God; a higher power; something beyond oneself; a sense of awe and mystery in the universe; innerspace; state of mind; seeking to be a good person; seek the innerself; reaching human potential; what has been learned by upbringing, school, church, wisdom and the bible.” According to the poll, Americans think of spirituality by a ration of 7 to 2 in a personal, individual sense over that of organized religion and doctrine.

The poll generally conveyed an increase in popularity of the term “spiritual” over “religious”, showing an increase of ten points from a survey seven years ago of those who say they are “spiritual but not religious.” There is now only a slight margin between the 49% who say they are religious versus 40% who say they are spiritual (7% saying they are both, and 3% neither). But as Malloch notes, “Perhaps the most important thing to know about Americans today is that they believe. They believe in varying degress in a God who is active, is vital, is vitally interested in human, and who has plans for their lives.”

 The poll also shows the astonishing degree to which this belief plays key roles in American’s lives. 1 in 5 adults can be described as a “highly spiritually committed person. 6 in 10 believe that success in life is determined by “spiritual forces,” and that their faith is involved in every aspect of their lives. 7 in 10 say that because of their spirituality they find “meaning and purpose in life.” The role of spirituality in American is also evident in the workplace. 64% of employees say that in open expressions of religion are “encouraged or tolerated”, and two-thirds feel experience spiritual growth in their work. 19% report that they take part in groups at the workplace that meet regularly for “prayer of bible study.”

 Regardless of its form or style, spirituality is advanced by the poll as directly related to the well-being of the country and its inhabitants. As Malloch concluded his presentation:

“The results of this study clearly point to spirituality—religious and spiritual beliefs and practices—as being the fountainhead out of which flows social capital and human capital. And this social and human capital themselves are based to a large extent on the existence of good faith, trust, stewardship, sense of purpose, and other moral characteristics which can not persist in the absence of piety, solidarity and hope that come from religious and spiritual sentiments.”

 

The Sacred and the Secular, the Untouchable and the Unemployed

 Sriya Iyer, St. Catharine’s College atUniversityofCambridge, also conveyed a sense of the inherent complexities in the term “spiritual capital.” Presenting on “Religion, Caste, and Job Reservation inIndia”, Iyer began with the question: “Have economists neglected religion in the study of economic development?” Indicating a two-way interaction between religion and economic development, she gave a quick tour of some current foci in the study of this relationship. Iyer mentioned recent studies that show “how religion affects economic growth”, others that show the impact of religion on issues as diverse as “fertility, political outcomes, and mutual insurance”, and finally indicates studies that suggest the causality in the relationship might work the other way, “from economic development to religion, with emphasis on how robust the links really are.”

 Taking a broad perspective on these studies, however, Iyer noted a “dichotomy, between the sacred and the secular, which epitomizes the key puzzle of the relationship between religion and economic development.” Against the backdrop of this puzzle and the various challenges in economic theories used to explain it (“Rational Choice Theory” is mentioned as well as other structural theories), Iyer presented her research into affirmative action. As she explains, “Variations in employment are evident in most societies and often perpetuate great inequality. This issue is particularly relevant for whether or not affirmative action policies are necessary to ensure a more just and equal society.”

 Iyer’s work evaluates a 60-year old experiment with affirmative action in India, where since 1947 there have been policies instituted specifically for the “Scheduled Castes and Tribes of India,” formerly known as the so-called “untouchables.” (In the context of traditional Hindu society, the term “untouchables” refer to a caste of persons considered beneath or below other society groups. As in similar groups in other traditional societies, the “untouchables” are considered impure, unclean, or otherwise being a potential contaminate for the higher society.)

 In this context, Iyer’s work asks three main questions: How successful have affirmative action policies been; should these policies be continued; and should these policies be extended to other economically disadvantaged groups inIndia. Using a variety of economic and statistical techniques, this research examines data from the National Sample Survey of India to measure discrimination in salaried wage employment by religion and caste. The research suggested three conclusions: first, that policies aimed at the Scheduled Caste succeeded at raising the representation of such persons in employment; second, that if similar policies are to be extended to anyone beyond the Scheduled Castes, Muslims have a much more compelling caste than other groups; third, that these policies place very little emphasis on improving the job related attributes of the minority groups. As Iyer noted, “even modest improvements in the education levels…could deliver significant employment gains inIndia.”

Her presentation concluded with a concern for greater synergy of studies in religion and economics, noting that despite recent and rapid economic growth,Indiais still “a long way away from a deeper policy consideration of how issues concerning religion and caste might be endogenously integrated into discussions of economic development.” For Iyer, unless such synergy is pursued, “India’s experiments with affirmative action will simply be, just that. Affirming the existing situation with respect to intergroup equality, but doing little by way of real action.” As she concludes, “‘untouchability’ has died, but I fear only in name.”

Self-Augmenting and Self-Destroying Spiritual Capital

Presenting on “Economic Underdevelopment of theMiddle East: Exploring the Role of Islamic Law”, Timur Kuran displayed yet another way in which the relationship between economics and religion can play. As Kuran,University ofSouthern California, provocatively introduced his talk: “To anyone who knows theMiddle East, it is puzzle that it became underdeveloped and remains so.” After many centuries of economic prosperity during the Middle Ages, theMiddle East became subsequently underdeveloped. Kuran’s work examines what role Islam may have played in this prosperity and decline.

Kuran discounts immediately two popular but, in his view, misguided theories of the decline. The first, that Islamic usury laws hampered financial development, is problematized by the existence of usury laws in Christian Europe, where the modern economy subsequently developed. The second is the notion that a certain dogmatism or what is popularly called today a “fundamentalism,” stifled open ended and critical inquiry. He notes that during the Middle Ages the libraries of theMiddle Eastwere massive by the standards of the time, and Islam was remarkably open to outside influences. While these are not by far the only theories of Middle Eastern decline, if you take any of the existing hypotheses and “scratch it a little”, you will, Kuran claims, inevitably ask “the question of why a certain transformation occurred in some place, in one part of the globe, and not the other. Or you begin wondering why dynamism diminished, and rigidity set in.”

“If resolving the puzzle requires understanding social change, or a lack of social change, we have to use appropriate analytical concepts.” For Kuran, this means utilizing a definition of religion that makes sense of its complexities and ability to change from within. Kuran defines religion as an “institutional complex consisting of beliefs, conventions, and rules that motivate, constrain, and direct actions relevant to social performance.” Equally important, these institution elements interact, allowing change from within. Following this definition, Kuran tells how Islam, in the 8th and 9th centuries, encouraged the wealthy to found charitable organizations, and defined the founding of these organizations as an expression of religious piety. These charitable foundations produced many social benefits, and these benefits reinforced the founding of these charities as an act of piety. “So the institutional complex constituting a religion may be self-reproducing, even self-reinforcing.”

In the second millennium, Kuran argues, other institutional elements with in Islam helped to undermine this pattern of piety. The Islamic law required the charitable foundations to have fixed objectives, which encouraged the possibility of corruption once circumstances dictated that the objectives should change. This corruption, over many centuries, undermined the piety in the founding and the work of charitable organizations. By modern times, the fixity requirement had weakened the entire system. Thus, Kuran’s understanding of spiritual capital is that it can be: self-augmenting (as with the piety in founding the early charities); self-reproducing but stagnant; and self-destroying (as how the fixity rule undermined the pattern of piety in the charitable foundations).

 These charitable foundations are each called a “waqf”. A waqf is an “unincorporated trust established under Islamic law by an individual owner of immovable property to provide a service in perpetuity.” A waqf can be established for any possible service, from maintaining roads and drinking foundations to maintaining shrines and mosques. Waqfs allowed for a private provision of public goods, such as those that in many cases of now supplied for governments. Many waqfs are still in existence today, maintaining monuments, landmarks, mosques over centuries.

 Waqfs, according to Kuran, arose around the 8th and 9th centuries in response to the instability of private property in the Middle East. The insecurity of this property lead the property holders to seek a wealth shelter. Older civilizations—such as the Roman and Persian—had developed forms of trust. The ingenious innovation of Waqfs was the creation of their fundamental sacrality; waqfs were considered sacred, and as such protected by religious belief. Considering waqfs sacred, rulers were reluctant to confiscate its assets, less they be considered impious.  So property owners endowed waqfs to prevent loss of wealth through confiscation or taxation.

 Investment in waqfs, Kuran notes, came with immense personal incentives. Endowing a waqf meant not only protecting wealth, but also the satisfaction of endowing an institution that was considered sacred and that performed a public service. Moreover, the association with a sacred institution brought great social prestige. Perhaps most significantly, however, was that the founder of a waqf could appoint himself as the “mutawalli”, or manager. The mutawalli could set his salary, make appointments and designate a successor.

 According to Kuran, structures inherent in the waqf itself, such as its rigidity and requirement to exist in perpetuity, as well the incentives listed above, lead to the corruption and inevitable decline of the waqf system, and ultimately of the Middle East. Waqfs could not change with the times; their resources, due to Islamic law, could not be reallocated and nor could the waqfs themselves be reinvented or reconceived. The waqf served as the principle provider of social services that in the West were being supplied by corporations, and as the modern economy developed waqfs could not compete. Unlike the waqf, the corporation was designed with great flexibility, given an ability to reallocate resources and reinvent itself as circumstances dictated. By the 19th and 20th centuries, the waqf system was largely diminished, although today in some countries the waqf is re-emerging in a modernized, more flexible, corporation-like form.

 

Conclusion

 Whether in America, India, or the Middle East(and, many scholars would argue, elsewhere), and whether in earlier historical periods or our own, it appears the interconnection of religion and economics is real and profound. The concept of “spiritual capital,” although we are not sure exactly what it is or means, is at the intersection of what are arguably the two most powerful forces shaping the globe today. As much as we may, like Friedman, “want another question, please”, the very immensity of these forces requires that we figure this intersection into our worldview.

What seems equally real and profound is the potential of what we might call, following Robert Putnam, bonding and bridging spiritual capital. The potential, that is, of social and spiritual ties between those in similar and different spiritual and cultural worlds as our own. In addition of the need to create new social connections, the power and influence of religion and economy today impel us to create new spiritual connections, not just between differing religions, spiritualities, and cultures, but also between them and other disciplines, other areas of influence in the world, and other theories of social change.

We might, in shorthand, just name this a “dialogue,” but a real dialogue (a “speaking together”), a dialogue within and across national, economic, disciplinary, and spiritual boundaries, a dialogue that also listens. As William Iss cs writes,

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