The Charismatic Principle in

Social Life

From various perspectives this book develops the thesis that charismatic person-
alities and civil charisms have an important role to play in social and economic
life. Thereby it gives an original contribution to the ongoing discussion of the
relationship between ethics and economics. It makes quite clear that economic
research needs to consider the role of moral values and ethical principles.
Carl-Henric Grenholm, Professor in Ethics, Uppsala University, Sweden

Max Weber laid the foundations for the meaning of “charisma” in modern
secular usage. This new volume argues for the importance of the “charismatic
principle” in history, economics and society.
This volume brings together a number of contributors at the cross section
between economics, theology, sociology and politics in order to set a research
agenda for the following issues:
• What does it means to have a “charism”? How does it work in society? How
might one distinguish a “charism” from a talent? Are “charisms” given only
to “special” people, or are they also present in ordinary people? Is a
“charism” necessarily associated with religion, or, is it, as we submit, pos-
sible to imagine “charisms” at work within a secular perspective?
• Which are the principle perspectives of the role of “charisms” in social
history? How have the “charisms” of noted personalities (e.g., Benedict,
Francis, Gandhi) changed economic and social history?
• What insights might be drawn from “civil charisms” such as the cooperative
movement, non-profit organizations, social economy, and values-based
organizations?
This book seeks to answer these questions through the employment of an inter-
disciplinary perspective, which examines the theme of the charismatic principle
in social life in different fields of application.
Luigino Bruni is Associate Professor at the Department of Economics, Univer-
sity of Milan-Bicocca, Italy.
Barbara Sena is based in the Faculty of Social Science, University of St
Thomas, in Rome, Italy.
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Global Order
Edited by Marjorie Griffin Cohen 98 Culture and Economic
and Janine Brodie Explanation
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89 Hayek and Natural Law Donald W. Katzner
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99 Feminism, Economics and
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Opportunity in the Time travelling through
Twenty-First Century paradigms
Edited by Marlene Kim Karin Schönpflug
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155 The Political Economy of 163 Architectures of Economic

Putin’s Russia Subjectivity
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156 Facts, Values and Objectivity economic thought
in Economics Sonya Marie Scott
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High Wage Economy Patrick Spread
Choices, constraints and
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economy Equality
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158 Social Costs Today
Institutional analyses of the 166 The Charismatic Principle in
present crises Social Life
Edited by Wolfram Elsner, Edited by Luigino Bruni and
Pietro Frigato and Barbara Sena
Paolo Ramazzotti
167 Ownership Economics
159 Economics, Sustainability and On the foundations of interest,
Democracy money, markets, business cycles
Economics in the era of climate and economic development
change Gunnar Heinsohn and
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160 Organizations, Individualism additions by Frank Decker
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161 Economic Models for Policy

Making
Principles and designs revisited
S. I. Cohen
The Charismatic Principle in
Social Life

Edited by Luigino Bruni and

Barbara Sena
First published 2013
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
Simultaneously published in the USA and Canada
by Routledge
711 Third Avenue, New York, NY 10017
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2013 selection and editorial material, Luigino Bruni and Barbara Sena;
individual chapters, the contributors
The right of Luigino Bruni and Barbara Sena to be identified as the authors
of the editorial material, and of the authors for their individual chapters,
has been asserted in accordance with sections 77 and 78 of the Copyright,
Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or
utilized in any form or by any electronic, mechanical, or other means, now
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any information storage or retrieval system, without permission in writing
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Trademark notice: Product or corporate names may be trademarks or
registered trademarks, and are used only for identification and explanation
without intent to infringe.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging in Publication Data
The charismatic principle in social life / edited by Luigino Bruni and
Barbara Sena.
p. cm.
1. Charisma (Personality trait) 2. Economic history. 3. Social history.
I. Bruni, Luigino, 1966– II. Sena, Barbara.
BF698.35.C45C46 2012
302'.1–dc23 2012023111
ISBN: 978-0-415-63822-7 (hbk)
ISBN: 978-0-203-07764-1 (ebk)
Typeset in Times New Roman
by Wearset Ltd, Boldon, Tyne and Wear
Contents

List of tables and figures xvii

Notes on contributors xviii
Foreword: the role of charism in social life xxi
LUIGINO BRUNI AND BARBARA SENA

1 Economy of life: charismatic dynamics and the spirit of gift 1

ADRIAN PABST

2 The role of charisma, ethics and Machiavellianism in

economic and civil life 20
TAMÁS KOVÁCS

3 The charismatic principle in an American and democratic

context 37
DAVID J. O’BRIEN

4 Dr Martin Luther King and the American civil rights

movement: charismatic and institutional perspectives 47
IAN WEINSTEIN

5 Charism and institution: an organizational theory case

study of the Economy of Communion 64
JEANNE BUCKEYE AND JOHN GALLAGHER

6 Benedictine tradition and good governance 83

EMIL INAUEN, BRUNO S. FREY, KATJA ROST AND MARGIT
OSTERLOH

7 Opus Dei: prayer or labor? The spirituality of work in

Saints Benedict and Escrivá 94
JAMES B. MURPHY
xvi Contents
8 Values-based enterprises: the good practices of Italian
SMEs, passionately committed to people, environment and
community 112
MARA DEL BALDO

9 The role of the charismatic economist E. F. Schumacher in

economic and civil life: CSR and beyond 151
HENDRIK OPDEBEECK

Index 171
Tables and figures

Tables
2.1 Significant regression coefficients of sent amount 30
2.2 Significant determinants of trusting behavior 31
6.1 Determinants of good and poor abbots 84
8.1 Companies’ profile 126

Figures
2.1 Relations between personal characteristics, social capital
and emotional intelligence 23
2.2 Frequency distribution of sent amounts 29
2.3 Interdependencies between the elements of social capital
and personal characteristics 33
Contributors

Luigino Bruni was born in Ascoli Piceno in 1966. He is an Associate Professor

at the Economics Department of the University of Milan-Bicocca, and at the
Sophia University of Loppiano in Florence. Recent publications include Reci-
procity, Altruism and Civil Society (Routledge, London, 2008), Civil Eco-
nomy (with S. Zamagni, Peter Lang, Oxford, 2007) and The Genesis of the
Ethos of the Market (Palgrave Macmillan, 2012).
Jeanne Buckeye, PhD is an Associate Professor at the University of St Thomas
in St Paul, Minnesota, teaching MBA and undergraduate courses in Business
Ethics and Management. She also serves as a Research Fellow in the Univer-
sity’s John A. Ryan Institute for Catholic Social Thought, where she is cur-
rently researching and writing about the managerial practices of Economy of
Communion businesses.
Mara Del Baldo is Assistant Professor of Small Business Management at the
University of Urbino Carlo Bo (Italy), where she also teaches Financial
Accounting. Her main research interests are small business economics and
management, with particular focus on corporate social responsibility and
small entrepreneurs’/SMEs’ business ethics, and she is currently involved in
diverse researches and projects on those topics. She has been published in
Italian and foreign journals, as well as in national and international confer-
ence proceedings.
Bruno S. Frey is Distinguished Professor of Behavioural Science at the War-
wick Business School, University of Warwick, and Research Director of
CREMA – Centre for Research in Economics, Management and the Arts,
Switzerland. He is Managing Editor of Kyklos. Bruno Frey seeks to extend
standard neoclassical economics by introducing insights from other disci-
plines, including political science, psychology and sociology.
John Gallagher is a Professor of Management at Maryville College in Mary-
ville, Tennessee, teaching Strategic Management and International Business,
and also executive MBA courses at the University of Tennessee. Since 2007,
his research has examined the business practices of companies that participate
in the Economy of Communion, a worldwide movement with the goal of
 Contributors xix
using private enterprise to address social problems. Prior to his academic
career, he spent over twenty years as a corporate executive and consultant in
both manufacturing and service industries. He completed his undergraduate
education at Boston College, and earned his MBA and PhD degrees from the
University of Tennessee.
Emil Inauen is a PhD student at the Department of Business Administration and
the Department Economics at the University of Zurich. His primary research
interests are economics of religion and governance. Before starting his study
of economics he worked as a teacher of religion for several years and has ex-
perienced the monastic life.
Tamás Kovács is an Associate Professor of Econometrics in Budapest Business
School, Hungary. He holds two MSc. degrees, one in Financial Economics
and the other Law, from the University of Miskolc, Hungary. He received his
PhD degree from the University of Montpellier in 2007 for the experimental
investigation of trusting and reciprocal behavior. His research interest within
experimental economics is the investigation of factors making up social cap-
ital. He enjoys traveling to get acquainted with different cultures and lives in
Budapest, Hungary with his wife and two sons.
James B. Murphy is Professor of Government at Dartmouth College. His PhD
in Philosophy and Political Science is from Yale University (1990). His
research interests include: Aristotle, jurisprudence, semiotics, political eco-
nomy and the philosophy of education. He has received grants and fellow-
ships from the NEH, the ACLS, the Earhart Foundation, The Manhattan
Institute and the Pew Charitable Trusts. He has written two books, The Moral
Economy of Labor: Aristotelian Themes in Economic Theory and The Philo-
sophy of Positive Law, both published by Yale University Press. He has co-
edited, with Richard O. Brooks, Aristotle and Modern Law (Ashgate,
Aldershot, 2003) and Augustine and Modern Law (Ashgate, 2011); he has co-
edited with Amanda Perreau-Saussine The Nature of Customary Law (Cam-
bridge University Press, 2007). He has published scholarly articles in Political
Theory, The Review of Politics, The Review of Metaphysics, Semiotica, The
Thomist, The American Journal of Jurisprudence, The American Catholic
Philosophical Quarterly and Social Philosophy and Policy.
David J. O’Brien is Emeritus Professor of History at the College of the Holy
Cross and serves as University Professor of Faith and Culture at the Univer-
sity of Dayton.
Hendrik Opdebeeck is Professor of Philosophy and Economics at the Univer-
sity of Antwerp, where he is affiliated to the Center of Ethics. He studied
Philosophy and Economics at the Universities of Leuven and Gent, where he
obtained a PhD with a dissertation on E. F. Schumacher (1911–77) and the
polyparadigmatic discourse in economics. His research interest is focused
on the cultural-philosophical backgrounds and effects of globalization, with
xx Contributors
special attention to the role of spirituality and technology. In 2000, together
with Luc Bouckaert (KU Leuven), he founded the Spes Forum for Spirituality
in Economics and Society. His publications in English include The Founda-
tion and Application of Moral Philosophy (Peeters, Leuven, 2000) and Build-
ing Towers, Perspectives on Globalisation (Ethical Perspectives Monographs
Series, Peeters, Leuven, 2002).
Margit Osterloh is Professor emeritus of Organization at the University of
Zurich, Professor of Management Science at the Warwick Business School,
University of Warwick and Research Director of CREMA – Centre for
Research in Economics, Management and the Arts, Switzerland. Her primary
research interests include organizational theory, knowledge management,
corporate governance and motivation theory.
Adrian Pabst is a Lecturer in Politics at the University of Kent. He is the author
of Metaphysics: The Creation of Hierarchy (2012) and the editor of The
Crisis of Global Capitalism: Pope Benedict XVI’s Social Encyclical and the
Future of Political Economy (2011). He is currently writing The Politics of
Paradox, a book on alternatives to the logic of left/right and state/market that
has been dominant since the secular settlement of the French Revolution.
Katja Rost is Professor of Business Administration at the Friedrich-Schiller
University of Jena and leads the Chair of Strategic and International Manage-
ment. In 2010 she obtained her Habilitation in the area of corporate govern-
ance. Her primary research interests include corporate governance and social
embeddedness in markets.
Barbara Sena is Adjunct Professor of Sociology at the University of St Thomas
Aquinas in Rome. She deals with issues related to contemporary sociological
theory and economic sociology. Her principal publications are L’agire
responsabile (Città Nuova, Rome, 2009) and Etnometodologia e sociologia
in Garfinkel (Franco Angeli, Milan, 2011).
Ian Weinstein is Associate Dean for Clinical and Experiential Programs and
Professor of Law at Fordham University School of Law. He teaches and
supervises in the law school clinic and is the Executive Director of Lincoln
Square Legal Services, Inc., the non-profit law firm through which many of
the Fordham legal clinics operate. He also teaches Criminal Law, Fundamen-
tal Lawyering Skills and has taught Evidence, Trial Advocacy and Adminis-
trative Law. He litigates at the trial and appellate levels in both federal and
state courts and was a staff attorney with the Federal Defender for the South-
ern District of New York. He was the fourth clinician to join the Fordham
faculty and has participated in the growth of Fordham’s nationally recognized
Clinical Legal Education Program. He has written on federal criminal prac-
tice, federal sentencing law, criminal law, clinical teaching, legal education
and lawyering, and is a co-author of Lawyers as Counselors (2011, with D.
A. Binder, P. Bergman and P. R. Tremblay), which is in its third edition.
Foreword
The role of charism in social life*
Luigino Bruni and Barbara Sena

The role of charisms has never been a major subject for scientific and academic
discussion, mainly because “charisma” has been considered as an element of a
divine nature or as an inborn and inexplicable personal gift of interest only for
theologians, or at the most for historians or even psychologists interested in the
personal lives of people who have left their mark on the history of mankind. It is
not surprising that today the term “charisma” – which is different from what we
call in this book charism or charisms – has been reduced to the concepts of
“charm” and “seduction”, and is usually used to refer to individuals who have
such extraordinary communication skills, verbal or otherwise, that they are able
to exert power over a large number of followers or even entire communities and
set themselves up as leaders. Yet our understanding of charism cannot end here.
On the contrary, it is feasible for researchers to investigate the matter in a wider
and more scientific way in order to find out the links between its relational nature
and its social, cultural, institutional and economic contexts, and to examine its
capacity to bring about a process of change and development in social life.
This work is a collection of various studies, all of them contributing signifi-
cantly to the discussion of charism and its influence on social, economic and
political life, which was the subject of the International Conference on “The
Charismatic Principles in Economic and Civil Life” held at the University Insti-
tute of Sophia, in Loppiano (Florence, Italy) on May 28 and 29, 2010. The
Sophia International Conference originated from the conviction that the “charis-
matic principle” should be considered as an essential part of the dynamics of
history and, therefore, lies at the root of many economic phenomena and our ex-
periences of life in society, although its importance has never been fully acknow-
ledged or given its proper place in scientific studies.
If we consider carefully past historical events we can easily discover that it is
not only “institutions” that have changed and continue to change economic and
social life: highly gifted charismatic people had and still have also a fundamental
and lasting impact on the dynamics of all aspects of society. The history of
Western countries can surely be considered as the result of the activities of city-
states like Bruges and Venice, the exploits of men like Marco Polo and Christo-
pher Columbus and the power of nation states and central banks; but, at the same
time, it cannot be denied that it is also the result of the actions of people such as
xxii L. Bruni and B. Sena
Saint Benedict and Saint Francis of Assisi, Don Bosco and Gandhi, Dorothy Day
and Martin Luther King (who were the subject of several of the papers presented
at the above-mentioned International Conference in Loppiano). Nowadays, eco-
nomic life is undoubtedly affected by big businesses and the actions of govern-
ments, but it is also affected by the work of the founders of many cooperative
societies and NGOs, of voluntary organizations and Economy of Communion
(EoC) businesses, that can be rightly considered, in our definition, as expressions
of the charismatic principle in civil life.1
The term charism comes from the Greek χάρισμα (charisma), which in turn
comes from the noun χάρις (chàris or grace) that includes also the meaning of
“gift”. Rarely used in pagan Greek, the word seldom comes up in the New Tes-
tament. It was mainly used by Saint Paul who interprets this word-concept as
having the inner meaning of a benevolent gift of God (Letters to Corinthians, 12:
8–10). However, Christian theology gives much importance to the word and
defines charism as a gift from the Holy Spirit, a capacity given to a believer for
the good of the whole community.
In ancient times, charism (sometimes also called charisma) was often identi-
fied as that particular personal strength of character, originating in the transcen-
dental sphere, that kings, emperors, great orators and statesmen used to increase
their power through the performance of the ancient rituals of kingship or long,
grand and costly travels all round their kingdoms (Geertz, 2001).
No one can deny that the history of mankind, especially that of Christianity,
has been full of individuals blessed with charisms that allowed them to bring
about social, economic and institutional changes (Bruni and Smerilli, 2008), but
the meaning of the word charism goes beyond any religious definition or the
concept of supernaturally bestowed gifts that manifest themselves in individuals
or communities only in exceptional circumstances, and therefore do not repre-
sent a valid topic of investigation by the social sciences. In fact, there are some
types of charisma that spring from society itself, not from single individuals, just
as there are societies that, though highly religious, show hardly any or no cha-
risma at all, because they are not capable of nurturing charisma or bestowing it
on members of the community.
The writings of the theologian von Balthasar and the sociologist and philo-
sopher Max Weber contain many important influential references to the relation-
ship between charism and institutions, between the principle of charisms and the
principle of institutions. The most exhaustive and best known of all the defini-
tions given by the social sciences is certainly that given by Max Weber in Theory
of Social and Economic Organization (Weber, 1947). According to Weber, cha-
risma is a supernatural, often divine, quality that somehow touches a leader and
allows his power to be legitimized by his group of adepts. In the same way, if
the leader for some reason abandons the scene, that power of authority is lost
with him. In fact charismatic authority nearly always evolves within the context
of boundaries set by traditional or rational-legal authority (the other two cat-
egories of authority described by Weber), but then, by its very nature, tends to
come into conflict with these types of authority and therefore it is often seen as
 Foreword xxiii
revolutionary. However the constant challenge that charismatic authority
presents to a particular society tends eventually to disappear as the charismatic
leader gradually becomes incorporated into that society. Weber calls this process
routinization. Routinization is the process by which a charismatic authority is
substituted for a bureaucracy controlled by a rationally established authority or
by a combination of traditional and bureaucratic authorities.2
Moreover, in contrast to the meaning commonly given today to the words
“charismatic leader”, Weber saw charismatic authority less as traits of the lead-
er’s character than as a reflection of the relationship between the leader and his
adepts. The validity of charisma is founded on its “recognition” on the part of
his followers. From a psychological point of view, recognition entails complete
personal abandon, full of faith, born either from enthusiasm or necessity and
hope. For this reason, the leader’s charisma would disappear if it were no longer
recognized or legitimized by others (Weber, 1978). We can therefore say that,
for Weber, charisma does not exist independently but only if and as long as it is
socially recognized. In fact, though a charismatic leader can be described as
being endowed with supernatural qualities, we cannot fail to recognize that his
or her power depends on social relationships. If the followers should find some-
thing in the leader’s behavior that they do not agree with or that does not repre-
sent their interests in some way, then they would cease to follow the leader, and
consequently those charismatic qualities that had initially been attributed to the
leader would disappear.
In our opinion, the problem with this concept lies in the fact that Weber did
not clarify the nature of the charismatic qualities possessed by the leader, and he
remained neutral toward all manifestations of charisma, in whatever form: for
example, there would be no distinction between the charisma of Saint Francis
and that of the Al-Qaeda leader Bin Laden. However, though he does not do it
explicitly, Weber does underline a very important aspect of charisma and its role
in society, that is, its relational character. In fact, charisma is not charisma if it
does not manage to create a particular bond between leader and followers.
However, Weber’s analysis does not seem to go beyond this affirmation. Above
all, it is not clear how such bonds are set up and how they can lead to positive
social change (Meindl, 1990).
Sociologists, psychologists, historians and political scientists have basically all
accepted Weber’s theory of charismatic leadership, although they have elaborated
on the theory and, more importantly, tested it against the several contexts in
which it is possible, today as well as in the past, to find charismatic leaders.3
Another writer of interest to us is the economist J. A. Schumpeter. His well-
known theory of the relationship between innovation and imitation has largely
remained within the confines of economics, whereas we are convinced that its
implications could be much wider and could certainly be useful for an under-
standing of the dynamics of the relationship between charisms and institutions.
Schumpeter’s ideas are perhaps more appropriate even than the theories of
Weber and von Balthasar for a deeper understanding of the relationship between
charisma and civil institutions.
xxiv L. Bruni and B. Sena
In his book The Theory of Economic Development (1934), a twentieth-century
classic of economic theory, Schumpeter describes the dynamics of market
economy as a race between innovators and imitators. His model starts with a “sta-
tionary state”, in which business enterprises only carry out routine activities: that
is, where the economic system does nothing more than repeat itself, year after
year, and therefore the value added by the company is sufficient only to cover the
cost of production and amortization without creating any new wealth. So in
Schumpeter’s theory, economic development begins when an entrepreneur breaks
the stationary state by introducing an innovation that could entail a new technical
invention or a new organization plan, a new product or the opening up of new
markets, thus reducing average costs and allowing the company to create new
riches.4 The innovative entrepreneur is the leading protagonist of economic devel-
opment, as he creates real value added and makes the social system dynamic.
The innovator is then followed by a flock of imitators attracted by the profits
like bees to nectar. These businessmen enter those sectors where innovations
have taken place, and profits have been made, thus swiftly causing the market
price to fall until all the profit generated by the innovation is absorbed. In this
way, the economy and society itself revert to a stationary state and remain so
until a new innovation comes along and the cycle of economic development
starts up again.5 However, imitation does not have a negative value: it has an im-
portant role to play, because it is the reason why the advantages of innovation do
not stay concentrated in the hands of the company that introduced it, but are
extended to the whole of society (for example, through a reduction in market
prices, which benefits the whole community). But Schumpeter’s message goes
further than that: when the entrepreneur ceases to make innovations, his role as
an innovator dies and he blocks the race between innovation and imitation that is
the driving force pushing society forward. Moreover, innovation is a social
reality, not the entrepreneur or company’s private affair (it is not enough to have
an invention or a new idea for innovation to come about, since, if the social and
cultural conditions are not ripe for them, those inventions or ideas do not trans-
late into innovation and therefore do not lead to economic development.)
Like Weber’s charismatic leader, Schumpeter’s innovator must have leader-
ship qualities that are not spread equally around the members of any particular
social group but are instead concentrated in a few particular individuals. However,
Schumpeter gives a more precise definition of the qualities this leader must have,
not mentioning charisma as such, but listing its components through the con-
ditions and abilities that allow the leader to start up the innovation process.
Taking on the role of sociologist as well as that of the economist he was, Schum-
peter states that when one is starting an innovation, one must fight and overcome
not only resistance within oneself – that is, one’s own habitual mindset, which
can be an obstacle to new ways of looking at things – but also fight resistance
from the social environment. In fact, there may be legal or political obstacles that
hinder innovation, and people’s disapproval of practices that stray from the tradi-
tional channels can be quite a hurdle to overcome, especially in underdeveloped
societies. Yet also in societies that are more developed and more open, there may
 Foreword xxv
be resistance from various sources. There may be groups who feel threatened by
the innovation; it may be difficult to get cooperation when needed or to convince
people to accept and exploit the proposed innovation (Schumpeter, 1934). For
Schumpeter, the factors that count for the emergence of an innovator are, cer-
tainly, economic and psychological, but also social.
An innovation can also spring from factors beyond the economic ones, factors
like an increase in population or sudden social and political upheavals. However,
the source of an innovation can sometimes be traced to the presence of certain
individuals who manage to overcome habitual routines and experiences, and
therefore can recognize and exploit new possibilities within the relationships
offered by the economic and social life of their group and their institutions. For
Schumpeter, this means that no one can be an innovator forever, and that there is
no particular social class that the innovators will belong to.
What we want to underline is the fact that though Schumpeter’s theory
claimed to give an explanation for the charisma of the innovator in a specific
sector – that is, the economy – it has obvious connections with the institutions
and the social context as a whole. That is to say, the innovator undoubtedly pos-
sesses certain personality traits and certain inborn gifts, but never emerges in a
vacuum: it is necessary for there to be a favourable context, influenced by the
stratification of society and institutions that compose it, and these are realities
that change in space and time.
It is no surprise that in his theory of economic development Schumpeter
draws a clear distinction between innovation and invention. The entrepreneur
brings about innovation but he never invents anything, because inventions are
irrelevant unless they are exploited in practice. In other words, people with char-
ismatic qualities will not necessarily be able to put these qualities into practice in
some field of social life if they are not able to exploit them within the structural
and institutional system of their society. To give an example, Muhammad
Yunus, the creator of the microcredit stystem and winner of the Nobel Peace
Prize, would never have been able to transform his “invention” of the Grameen
Bank into an “innovation” if he had not been able to find the support of certain
banks and financial institutions and the help of political groups that were capable
of recognizing the value of credit to the poor and able to insert it into the eco-
nomic system in Bangladesh.
Another aspect of Schumpeter’s economic theory that is also relevant for our
discussion about charisma is what he calls “creative destruction”: the dynamics
of innovation and creativity and also the very nature of market competition push
the economy and society forward and in so doing bring about the “destruction”
of the stability of the status quo.
Schumpeter’s theory, as summarized above, therefore allows us to say some-
thing more general about the way history unfolds, even economic and social
history. The race between the innovator and imitator is not so different from the
dynamics of the struggle between charisma and the institutions, whether it be in
Max Weber’s original version or the ecclesiological one proposed by von
Balthasar. For him, the life of the Church is based on a dialectic debate or vital
xxvi L. Bruni and B. Sena
struggle between its various facets, in particular the charismatic forces and the
institutional structure. In fact the framework of Schumperer’s theory lends itself
to an understanding of the history of society as a sort of race between innova-
tors: charism, on the one hand and, on the other, the imitators, the institutions
and ordinary people who carry out the fundamental task of making sure that the
cultural and social innovation wrought through charisma works toward the
common good.
When charisms, of whatever degree of power, burst on to the historical scene,
a process of real innovation involving all human activities, including the eco-
nomic ones, is set in motion. Until the pre-modern age, when the economy was
not yet seen as a separate, distinct aspect of communal life, it was easy to see the
economic effects of charisms. For instance, anyone who lived at the time of
Saint Benedict and Saint Francis of Assisi would certainly have experienced the
extraordinary, revolutionary effects of charisms on economic and social life.
Indeed, in a society imbued with religious beliefs and where economic and insti-
tutional improvements were slow and hard to achieve, the effects of charisms
were mostly evident in the social life of the community. Thus, significant spirit-
ual innovations meant sudden social changes. It is useful to remind ourselves
that the great charismatic figures of history (even if we consider only those in the
Catholic Church) brought about – and they still do – processes of moral and civil
rights and freedom, mainly for the poorest and most deprived people. Past or
present events of this kind must be considered as something different from and
much more significant than merely “religious”, or “spiritual” as contemporary
culture tends to describe them.
As some of the contributors to this book maintain, in today’s society there are
many charismatic people who have founded social cooperatives, NGOs, schools,
hospitals, banks and trade union movements, or who struggle for the rights of
deprived people, the insane and prisoners, or for the protection of the environ-
ment and animals, just because they are able to see far beyond all the others
around them and perceive things in a different way, with different eyes.
Although our society is affected by extreme individualism and hedonism,
accompanied by immoral behavior and a lack of social responsibility, there is
clear evidence of the blossoming of new instances of charisms that manifest
themselves in countless struggles for freedom and civil rights. In such cases,
charismatic, innovative people are much more capable than everyone else of rec-
ognizing demands that are not being met, and they set out to find ways to satisfy
these needs, thus converting them into social good.
For this reason, if we look carefully at the history of mankind we realize that
human development, including its economic history, is also the result of the
innovations brought about by charism, that is, by charis. In fact, if political and
civil institutions run efficiently, after a time these innovations are “imitated” by
ordinary people and institutionalized to the advantage of all.
Let us take an example: in March 1930, Gandhi started his “Salt March”, and
seventeen years later India gained its independence from British rule, while the
Indian Constitution formally abolished discrimination based on the caste system.
 Foreword xxvii
Charismatic people who are able to see things differently often give their lives
for the rights of minorities, women and children, even in the face of opposition
from individuals or institutions that, later on, “imitate” and “institutionalize” the
charismatic innovation, allowing it to become a universal common good. For
instance, between the seventeenth and the twentieth centuries, without the cha-
risma of the founders of religious orders or social associations the history of the
European welfare state would have been very different. The improvement of
hospitals and the health system, schools and education, as well as the care of the
disadvantaged were all the results of charismatic innovations (with charismatic
people acting as pioneers, pushing at these frontiers of human development), fol-
lowed by universal implementation (through public or private institutions). In
the same way, if we had not had entrepreneurs who, of their own free will, set up
procedures of “good practice”, with socially sustainable activities and socially
responsible financial budgets, laws would not have been passed requiring all
companies to comply with equal ethical and social standards. We may say,
again, that charisma “innovates” while civil institutions, making innovations uni-
versal, extend their benefits to everyone.
Sometimes the charismatic innovator may have the impression that his or her
innovative experience will not retain its originality and prophetic power if it is
widely imitated. This is not true, because it is “imitation” that will bring about a
positive social change. When processes of development take place, history
becomes a sort of relay race between innovators and imitators, that is, between
charismatic people and institutions.
Let us consider the big question of human rights. In every generation new
human rights are established, thanks to the struggle of charismatic people or
movements, even if at first the institutions are under no absolute legal obligation
to enforce those rights but may have only ideal and ethical aspirations. Yet as
time passes these perceived obligations connected with new human rights (and
here we can think of the second generation of rights, such as economic and
social ones (Sen, 2009)) are perfected, thanks to the institutions that convert the
rights claimed into a legally acknowledged and guaranteed obligation. There-
fore, the dynamics of history result in an endless process, shifting from informal,
unwritten obligations to absolute obligations through the alternating intervention
of charisma and institutions.
We believe that one of the deepest patterns of history, including economic
and social history, is probably the process of alternation from innovators to imi-
tators, from “pioneers” to “generalizers”. This was the inspiring idea behind the
International Conference at Loppiano and the challenge it presented. The interest
shown by the participants as well as the quality and quantity of the research dis-
cussed lead us to believe that the time is ripe for charisma to be acknowledged
by the social sciences as a part of the history of mankind. Our purpose is to carry
on our work toward this goal, because we are convinced that a society can fully
develop when it is able to recognize charisma and allow it to be socially embed-
ded, thereby making its value universal. Of course we are aware that the work to
be done will be challenging, but it will also be exciting.
xxviii L. Bruni and B. Sena
The works collected in this book are representative but not exhaustive of the
various aspects of the role of charisms in economic and social life that were dis-
cussed by the authors who participated in the Loppiano Conference. The book is
divided into two approaches. The first four chapters cover theory and general
definitions. The subsequent chapters deal with significant case studies that high-
light the role of charisms in social life.
In Chapter 1, Adrian Pabst’s “Economy of life: charismatic dynamics and the
spirit of gift” relates von Balthasar’s Christological argument for “personal
charism” to Pope Benedict XVI’s Trinitarian explanation of the relationship and
capacity of relational goods to bridge the gap between the charisma rooted in the
Church and social life. The main idea developed in this chapter is that just as the
Church cannot be considered as a mere organized community made up of purely
official institutions governed by abstract rules, society as such cannot be pre-
vented from developing charismatic principles and practices similar to those
present in the Church’s tradition. In order to explain this, Pabst starts with Bene-
dict’s belief, related to Christian Neoplatonism, and links it both to the Thomis-
tic legacy and the civil economic theories worked out by Galiani and Genovesi.
The conceptual link maintained by Pabst is that of a horizontal and vertical rela-
tionship among human beings.
Tamás Kovács, in Chapter 2, “The role of charisma, ethics and Machiavelli-
anism in economic and civil life”, investigates the role of three important per-
sonal characteristics, that is, charisma, ethical behavior and Machiavellianism in
the economic context. On the one hand they are considered as key elements of
emotional intelligence, on which working efficiency and leadership capability
depend; on the other hand the author shows how Machiavellianism and charisma
can positively manipulate trust while ethical behavior and charisma can lead to
higher levels of reciprocity among individuals. Furthermore, the author exam-
ines the negative relation between the strength of social cooperation and the
Machiavellian or charismatic power, and how these elements can affect social
resources.
Chapter 3, “The charismatic principle in an American and Democratic
context” by David O’Brien, highlights the main characteristics of some charis-
matic American leaders, many of whom started movements for social reforms
such as the abolition of slavery and racial segregation, equal rights for men and
women and so on. It seems evident that many of these movements and the ideas
of their charismatic leaders have deeply influenced American culture and society.
O’Brien examines three charismatic leaders and the movements they founded,
that is, Eugene Debs and democratic socialism, Dorothy Day and Catholic per-
sonalism, and Martin Luther King and the nonviolence movement. Finally,
O’Brien points out that institutions can either accept or reject, entirely or par-
tially, charismatic innovations. Finally, some observations are made about the
implications of innovations in pastoral action and Catholic teaching in the USA.
Ian Weinstein, in his chapter “Dr Martin Luther King and the American civil
rights movement: charismatic and institutional perspectives”, applies Max
Weber’s theory on charismatic power to Martin Luther King’s role in the
 Foreword xxix
struggle for racial equality and social justice in the USA. He examines the per-
sonal history of King, whom he considers to be a paradigmatic example of the
charismatic leader, and highlights the central role of King’s charisma from the
mid-1950s to 1968 when he died. Most of King’s work is investigated according
to Weber’s theory, but Weinstein goes beyond it in analyzing the different
sources that contributed to the formation of the leader’s powerful charismatic
personality, and finally tends toward the concept of “gift”. Weinstein also exam-
ines the “routinization” of King’s legacy and to what extent social change can be
hindered by the bureaucracy of social institutions. To sum up, he maintains that
the change suggested by a charismatic leader may lead to significant social
change in the long run.
Jeanne Buckeye and John Gallagher’s “Charism and institution: an organiza-
tional theory case study of the Economy of Communion” is the content of
Chapter 5. The chapter examines the Economy of Communion (EOC) through
the lens of organizational theory, seeking a fuller understanding of a movement
that continues to resist facile definition. Noting the absence of a unified, compre-
hensive theory of organizations, two differing theoretical perspectives that share
a similar label are explored. “Institutional theory”, rooted in scientific rational-
ism and a teleology of efficiency, views organizations as “closed systems”,
largely shaped by their external environments. The second perspective, the
“institutional school”, suggests that organizations are “open systems”, both
shaping and being shaped by their environments but through two differing types
of organizational behaviors: “administration”, which is intentional and planned,
and “institutionalizing”, which is responsive and adaptive, and therefore consti-
tuted from shared values and beliefs. These two perspectives, even together, fail
to provide an answer to the problem of defining the EoC. The paper also consid-
ers EoC companies in light of charism, that is, as concrete enactments of spirit-
ual gift, a possibility that organizational theory does not acknowledge at all. We
argue that it should, and note that scholars of charismatic organizations certainly
observe similar tensions and institutionalizing tendencies, which suggest that
organizational theory might be useful. But we also argue that charism displaces
efficiency and legitimacy with a teleology of “community”, and note that future
examination of this possibility, particularly alongside the business practices
of EoC companies, would significantly enrich our understanding of all
organizations.
In Chapter 6, “Benedictine tradition and good governance” by Bruno S. Frey,
Emil Inauen, Katja Rost and Margit Osterloh address the issue of governance of
charismatic institutions. Governance is the set of processes, customs, policies,
laws and institutions affecting the way an organization is directed and control-
led. In the past few years, with the world economic crisis and the huge scandals
related to excessive manager compensation and fraudulent bookkeeping, the dis-
cussion over the need for good governance has become a hot topic. Many polit-
ical and economic leaders recommend an accentuation and extension of external
control mechanisms, such as a tightening of the law or new monitoring measures.
Alternative solutions can be found, according to the authors, in an unexpected
xxx L. Bruni and B. Sena
place, namely in the ancient governance structures of religious orders like the
Benedictines. With their governance, tested in practice over more than 1,000
years, the Benedictine monasteries are also a call to give weight to internal gov-
ernance. To reduce misbehavior, for example, monastic governance involves
broad participation rights of the members or an emphasis on implementing
values and norms.
Chapter 7, “Opus Dei: prayer or labor? The spirituality of work in Saints Ben-
edict and Escrivá” by James B. Murphy, deals with the classical Benedictine
motto “ora et labora”, or sometimes “orare et laborare”. According to Murphy,
what is most amusing and illuminating is the common practice of misquoting
this motto as “laborare est orare”. The idea captured in “laborare est orare” is the
basis for the spirituality of Opus Dei: “Let us work. Let us work a lot and work
well, without forgetting that prayer is our best weapon.” The paper argues that
Saints Benedict and Escrivá represent the fundamental alternative charisms of
work. For Benedict, work is the necessary precondition for the spiritual freedom
of prayer; while for Escrivá, work is itself offered up as a form of prayer. In the
first, we encounter God through the spiritual exercise of prayer; in the second,
through the exertion of our daily occupation.
In Chapter 8, “Values-based enterprises: the good practices of Italian SMEs,
passionately committed to people, environment and community”, Mara Del
Baldo tries to read Italian entrepreneurs of industrial districts as expressions of
the charismatic dimension of economic life. The ethos and values of this entre-
preneurship, such as a spirit of initiative, creativity, leadership, enthusiasm,
passion, commitment and responsibility, are interpreted by Del Baldo as charis-
matic features. In light of this premise, empirical research is used in a qualitative
approach centred on the analysis of three case studies, which are presented in the
work following an initial phase aiming at the description of the theoretical refer-
ence framework and relate to SMEs that stand out for their CSR (corporate
social responsibility) good practices. The study proposes a moment’s thought
concerning the centrality of values that focus on respecting and making the most
of the individual and of human rights, of relationships, of local and general
environment.
Finally, Chapter 9, “The role of the charismatic economist E. F. Schumacher
in economic and civil life. CSR and beyond”, by Hendrik Opdebeeck, explores,
on the eve of the centenary of his birthday, the charismatic personality of E. F.
Schumacher (1911–77). We want to discover how the impact of this author of
the well-known bestseller Small is Beautiful helped to change the economic and
social mainstream of the last quarter of the twentieth century. His contributions
include his influence on the cooperative movement, the social economy and
values-based organizations. With this perspective, Opdebeeck begins by describ-
ing some main biographical elements. In the second part of the chapter he dis-
cusses Schumacher as one of the first economists to integrate CSR principles
into his work and how in Schumacher’s last publication, Good Work, clarifies
the policies and practices of the good corporation, especially regarding participa-
tion of employees.
 Foreword xxxi
To conclude, we believe that the main value of this book should be to indicate
a new path of investigation for social sciences, which, with the great exception
of Weber, have disregarded the important role of charisms in social and eco-
nomic life and their capacity to renew and change the world. Of course this is
just a first step, but we hope a good step.

Notes
* We thank Professor Franca Migliore for the precious linguistic help in the revision of
this Foreword.
1 The Economy of Communion is a project launched in Brazil, in 1991, by Chiara
Lubich, the founder of the Catholic Focolari Movement. The EoC project has already
been shared by hundreds of businesses all over the world. To learn more about it please
visit www.edc-online.org, or read the essay by Buckeye and Gallagher in this volume.
2 The process of routinization is in many ways similar to that described by the theologist
Hans Urs von Bathasar (1972) when writing about the connection between the prin-
ciple of “institution” and the principle of “charisma” in the history of the Church. The
classic example is that of Jesus, who was seen by his disciples as a charismatic author-
ity and whose successors comprised the traditional and institutionalized authority of
the Church, a classic example of routinization. But it is possible to find similar exam-
ples in many religious and non-religious movements. For further elaboration, see Bruni
and Smerilli (2008).
3 For a critical presentation of the various sociological theories about charismatic leader-
ship, see Bass (1990) and Shamir et al. (1993).
4 For Schumpeter, therefore, profits, including bank interest, can be more than zero only
when there are new innovations and only in a dynamic context (and this idea also leads
to an interesting theory about why, in a static society, as pre-modern ones usually were,
the interest rate was usually zero, and therefore usury was to be condemned not only
from a moral point of view but also from an economic one.
5 For Schumpeter, profit is purely transitory as it lasts only as long as there is innovation,
in the period of time between innovation and imitation.

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Schumpeter, J. A. (1934 [1911]) The Theory of Economic Development, Cambridge, MA:
Harvard University Press.
Sen, A. (2009) The Idea of Justice, Cambridge, MA: Harvard University Press.
Swedberg, Richard (1998) Max Weber and the Idea of Economic Sociology, Princeton:
Princeton University Press.
Weber, M. (1947 [1922]) Theory of Social and Economic Organization, New York: The
Free Press.
Weber, M. (1978 [1922]) Economy and Society, ed. G. Roth and G. Wittick, Berkeley:
University of California Press.
1 Economy of life
Charismatic dynamics and the spirit
of gift
Adrian Pabst

Economic life undoubtedly requires contracts, in order to regulate relations of

exchange between goods of equivalent value. But it also needs just laws and
forms of redistribution governed by politics, and what is more, it needs works
redolent of the spirit of gift. The economy in the global era seems to privilege the
former logic, that of contractual exchange, but directly or indirectly it also dem-
onstrates its need for the other two: political logic, and the logic of the uncondi-
tional gift.
(Pope Benedict XVI, 2009: sec. 37 [original italics])

Introduction
The dominant mode of globalization has mostly reinforced the disembedding of
states and markets from the social practices and civic virtues of civil society writ
large. In this process, abstract economic values linked to instrumental reason and
procedural fairness have supplanted civic virtues of courage, reasonableness and
substantive justice. As such, the global “market-state” reflects the centralization
of power and the concentration of wealth that is undermining democratic politics
and genuinely competitive economies.
However, the growing economic interdependence around the world also offers
new opportunities for reciprocity, mutuality and fraternity among communities and
nations. To promote an ethos of responsible and virtuous action, requires the full
breadth of political and economic reason. Christian social teaching offers concep-
tual and practical resources that are indispensable to the search for broader notions
of rationality. Among these resources are non-instrumental conceptions of justice
and the common good in the social doctrine of the Catholic Church and cognate
traditions in Anglicanism and Eastern Orthodoxy.
Closely connected to this is the idea of “civil economy” (Bruni and Zamagni,
2007). As Pope Benedict XVI has suggested in his encyclical Caritas in veritate,
“civil economy” embeds state-guaranteed rights and market contracts in the
social bonds and civic virtues that bind together the intermediary institutions of
civil society (Benedict XVI, 2009). In this manner, it links the “logic of contract”
to the “logic of gratuitous gift exchange”. The spirit of gift exchange translates
into concrete practices of reciprocal trust and mutual assistance that underpin
2 A. Pabst
virtues such as reciprocal fraternity and the pursuit of the universal common
good in which all can share. As such, “civil economy” reconnects activities that
are primarily for state-administrative or economic-commercial purposes to prac-
tices that pursue social purposes.

Charisma, Calvinism and capitalism

Contemporary social sciences owe the dominant modern understanding of the
term “charisma” to the work of Max Weber. In his 1919 lecture on “Politics as a
Vocation” (Politik als Beruf ), he describes charismatic authority as “resting on
devotion to the exceptional sanctity, heroism or exemplary character of an indi-
vidual person, and of the normative patterns or order revealed or ordained by
him” (Weber, 1994: 309–369). Likewise, in his seminal book Economy and
Society (Wirtschaft und Gesellschaft), he defines the nature of charismatic
leadership as

a certain quality of an individual personality, by virtue of which one is “set

apart” from ordinary people and treated as endowed with supernatural,
superhuman, or at least specifically exceptional powers or qualities. These
as such are not accessible to the ordinary person, but are regarded as divine
in origin or as exemplary, and on the basis of them the individual concerned
is treated as a leader.
(Weber, 2006: chapter III, §10)

In Weber’s typology of different forms of domination or rule (Herrschaft), char-

ismatic authority exceeds and supplants both traditional authority (based upon
informal habits and customs) and rational-legal authority (grounded in formal
rules and state law). That is because charisma for Weber is truly extraordinary,
originating in the divine “gift of grace” bestowed on the elect few.
What is striking about Weber’s account of charisma in both texts is the same
emphasis on divine predestination as there is in Calvinism, which he rightly
associates with the birth of capitalism. However, by focusing on the Protestant
work ethic Weber’s thesis about the origins of the capitalist economy is at once
too broad and too narrow. It is too narrow because he neglects the Counter-
Reformation Baroque scholasticism of influential Catholic theologians like Fran-
cisco Suárez that sunders “pure nature” from the supernatural and thus divorces
man’s natural end from his supernatural finality (Boulnois, 1995: 205–222;
Pabst, 2012: 308–340). As a result, human activity in the economy is separated
from divine deification, and the market is seen as increasingly autonomous.
Weber’s thesis is also too broad because he fails to recognize the more specific,
historical origins of capitalism in Henry VIII’s dissolution of the monasteries
and the English “enclosure movement” that started the process of repeated
“primitive accumulation” and provided the surplus capital for financial invest-
ment in non-reciprocal, piratical trade (Tawney, 1998: 79–132; Polanyi, 2001;
Brenner, 1976: 37–74; Brenner, 2003).
 Economy of life 3
Thus, Weber is right to highlight the Calvinist gospel of prosperity that
conflates the elect with the wealthy and sanctifies the pursuit of power and
pleasure – a justification for free-market capitalism that cuts across the liberal–
conservative divide in the Anglo-Saxon West and remains influential to this
day.1 But linked to the divine predestination of the prosperous is the Calvinist
separation of human contract from the divine gift of grace and the Lutheran
divorce of faith and works (Hénaff, 2002: 351–380). The same dualism between
transcendence and immanence underpins the Baroque Catholic sundering of
“pure nature” from the supernatural and the concomitant claim that human
beings have a natural end that is unrelated to their supernatural finality. Taken
together, these dualistic theories view the market either as morally neutral or as
positively conducive to human freedom; or else as the “invisible hand” of divine
providential intervention converting rival self-interest into mutually beneficial
cooperation (Pabst, 2011a: 106–124).
In any case, Weber’s theory neglects not just this series of dualisms but also
the interaction of shifts in theology and philosophy with changes in political
economy. Just as certain theological and philosophical ideas shaped the concep-
tion and institution of new political-economic models, so too changes in political
and economic conditions led to changes in theological and philosophical thinking.
Indeed, modern dualism, which split asunder human natural goods and the divine
supernatural Good in God, brought about a market economy that is increasingly
disembedded from the social bonds and civic virtues of civil society (Polanyi,
2001: 35–58). So configured, the market was seen as a system that requires little
more than a state-policed legal framework. The underlying secular logic marks a
departure from orthodox, creedal Christianity, which considers all human arrange-
ments as mirroring – partially and imperfectly – a divine, cosmic order. Thus, the
secular turn of post-Reformation Christian theology, both Protestant and Catholic,
laid the conceptual foundations for the emergence of capitalism.
Nor was this a purely abstract theoretical change brought about by shifts
within theology. On the contrary, new religious ideas were embraced by the
English gentry, who massively increased their land holdings after the “enclo-
sure” of common land and the dissolution of the monasteries under Henry VIII
and his son Edward VI. Both these events transferred over one-quarter of
national wealth to the landed gentry, who seized the full economic benefits of
their new assets while ignoring the old social and political duties toward the
peasantry and the locality. Thus, private investment was sundered from public
charity, not in the sense of handing out alms to the poor but rather as a kind of
asymmetric mutual assistance in a spirit of free self-giving and in the hope of
receiving a counter-gift that is itself given, received and returned. Separating
investment from charity foreshadowed the growing abstraction of finance from
the real economy that has brought about virtually all financial crises in the last
few hundred years, including the Dutch Tulip Mania of 1637 and the English
South Sea Bubble of 1720 (Kindleberger, 2005; Reinhart and Rogoff, 2009).
Indeed, the newly enriched landed gentry mutated into Calvinist agricultural
capitalists investing their surplus in the activities of the guild-excluded
4 A. Pabst
merchants who practiced non-reciprocal trade and more piratical modes of enter-
prise (Brenner, 2003: 3–37; Milbank, 2011: 27–70). Coupled with new lending
practices and state intervention, this consolidated the nexus between finance and
government. In this process, material landed assets were stripped of their social,
cultural, symbolic and religious significance and increasingly commodified
through their link with maritime fortune – itself closely connected with specula-
tive wealth. From the outset then, capitalism is predicated upon the Calvinist
division between earthly matter and heavenly spirit. In turn, this division is
based on a literalist, non-allegorical reading of the Fall and our post-lapsarian
predicament.
By contrast, creedal Christianity and the episcopally based Churches of
Rome, Constantinople/Moscow and Canterbury all refuse such and similar divi-
sions, emphasizing instead that the Incarnation of Christ restored and renewed
God’s original creation and that divine love is open to all through the event of
the Holy Spirit. In the words of St Paul, this event is the advent of “charism”.
Just as our material world is always already infused by divine grace, so too
wealth is not the product of divine election but rather the fruit of faith and works.
Faith is a supernaturally infused virtue that habituates reason to recognize that
the origin and end of rationality is the divine logos. Likewise, our capacity to
work and excel in some labors and not in others is intimately intertwined with
our supernaturally infused natural vocation – exemplified by Jesus’ mission
embodied and carried forward in the Church. Here “charisma” is not some super-
human quality of the few or a simple character trait of the many but instead the
reception of God’s universal grace open to all and the unique vocation of each
and everyone.

The source of charisma: state, market and Church

As the previous section indicated, Weber’s influential theory of modern state-
hood is inextricably intertwined with his account of charismatic leadership. In
“The Profession and Vocation of Politics”, he defines the modern state as “a
human community that (successfully) claims the monopoly of the legitimate use
of physical force within a given territory” (Weber, 1994: 310). According to
Weber, political legitimacy can derive from three different sources: charisma,
tradition or law. In liberal-market democracies, traditional and legal sources of
legitimacy and authority are necessary but not sufficient conditions in order to
guarantee the stability of a system torn between the anarchy of the free market
on the one hand, and the centralized control of the bureaucratic state on the other
hand (Pabst, 2010b: 570–602).
Leaving aside the question whether absolute self-rule of the people is feasible
or desirable (it is neither), this constitutive tension between state and market
requires a further source of authority and legitimacy beyond tradition and law.
That is why in 1919 Weber called for a “leader-democracy” (Führerdemokratie)
that is based on strong, charismatic leadership. The potentially authoritarian
outlook of this conception gives credence to Jürgen Habermas’ well-known
 Economy of life 5
critique that the controversial jurist Carl Schmitt, who further developed the idea
of “leader-democracy” in the 1930s and early 1940s, was in fact “a pupil of
Weber’s” (Habermas, 1971: 66).
However, Habermas’ critique ignores Weber’s own emphasis on the impor-
tance of associational life and corporatism. For Weber, charismatic leadership is
not merely fueled by electoral competition for state power but tends to be nur-
tured and nourished by involvement in the public, localized life of associations.
Such participation is conducive to the formation of character and instils a sense
of professional and civic ethos on which a vibrant democracy and market
economy depend (Weber, 2002: 199–209). Similarly, in his book The Concept
of the Political, Schmitt endorses the importance of professional, religious and
cultural organizations and corporations to guard against a “total state” that sub-
ordinates all intermediary institutions to its administrative and symbolic order
and seeks to absorb the economy and society as a whole (Schmitt, 1996).2
Yet at the same time, both Weber and Schmitt ultimately privilege the primacy
of central state authority over the relative autonomy of intermediary institutions
and the freedom of individuals. Paradoxically, this is done in the name of coun-
terbalancing liberal individualism. The trouble is that both the state and the indi-
vidual are part of the same voluntarist and nominalist poles upon which the liberal
tradition is founded (Manent, 1987; de Muralt, 2002): first, the voluntarism of
collective state power and the voluntarism of self-governing, negatively choosing
individuals; second, the nominalism of “the sovereign one” linked with the polit-
ical “right” and “the sovereign many” connected with the political “left” since the
secular settlement of the French Revolution. These double poles reinforce each
other to the detriment of the autonomy of the “radical middle”, composed of
human relationships within groups, associations and communities. By entrench-
ing the voluntarism of central state power, Weber and Schmitt disregard not only
theories of state pluralism put forward by G. D. H. Cole and Harold Laski but
also the best elements of the shared Anglo-Saxon and Continental European tra-
dition of non-statist corporatism and guilds-based associationism – as detailed in
the work of Otto Gierke, Frederic William Maitland and John Neville Figgis.
Common to these thinkers is the argument that corporate bodies such as asso-
ciations, communities and fraternities form a “complex space” of overlapping
jurisdictions and multiple membership wherein sovereignty tends to be dispersed
and diffused horizontally and vertically (Milbank, 1997: 268–292). In con-
sequence, such and similar economic, political and religious “intermediary insti-
tutions” are not – and should not be – creatures of the modern central state or,
for that matter, the modern “free” market. Far from being opposed, state and
market (or, more precisely, the nexus between finance and the executive branch
of government) centralize power, concentrate wealth and usurp the sovereign
legitimacy of parliament and corporate bodies (Agamben, 2005: 1–40). The old
guilds-based system of intermediary institutions, which characterized politics in
Europe since the Middle Ages (Black, 2002), has been sidelined by the complicit
collusion of state and market. That is why much of contemporary “civil society”
represents little more than an extended arm of the new “market-state”.3
6 A. Pabst
Thus, the imperative now is to pluralize the “market-state” by remaking it in
the image of the corporations and associations that constitute society on which
state and market are – or should be – modeled. In turn, what underpins the
freedom of state, market and society is the freedom of the Church. For only the
Church can secure the “free space” between those who rule and those who are
ruled by mediating between the sovereign will of “the one” and the sovereign
will of the “the many” – a voluntarism and nominalism bequeathed to us by the
French Revolution and its late medieval origins.4
Not unlike the operation of the modern state (which is essentially a secular
simulacrum of the Church), the legitimate exercise of power by the Church can
also be distinguished according to charisma, tradition and law. However, the
source and meaning of ecclesial “charisma” is of course profoundly different
from Weber’s charismatic leadership at the head of modern states. The Swiss
theologian Hans Urs von Balthasar rightly locates the origin of “charisma”
firmly in the Church and stresses the dynamic, complementary interaction
between the Church’s “charismatic” and “institutional” principles. “Charisma”
for von Balthasar describes the personal participation in the universal mission of
Christ, of which the Church is the embodiment anticipating heaven on earth. As
such, “charisma” outflanks the secular, dualistic divide between the sacred space
of the Church and the non-sacred realm of society, including the market.
Joseph Ratzinger/Pope Benedict XVI modifies von Balthasar’s theological
conception of “charisma” and develops it in the double direction of a theological
anthropology and a civil economy – so far most clearly expressed in his encycli-
cal Caritas in veritate. Bound together by an “integral humanism” that accentu-
ates the relational nature of mankind, Ratzinger’s vision shifts the focus toward
notions of the natural desire for the supernatural Good in God and the centrality
of relational goods as a way of challenging the moral relativism and the liberal
separation of the private realm from the public sphere that underpins con-
temporary capitalism and democracy. Linked to this is a conception of the
Church that differs in some crucial respects from von Balthasar’s. By rethinking
the “role” of the Holy Spirit in the mission of the Church, Ratzinger sets out a
refreshingly orthodox ecclesiology, whereby the Church secures and governs the
“free space” between the state and the individual – a kind of “corporation of cor-
porations” that ensures the autonomy of civic society and all the intermediary
institutions therein.
This complements and transforms existing ideas on associative democracy
and civil economy in at least two ways: first, it accentuates ideas of reciprocity
and mutuality that overcome Adam Smith’s separation of moral sentiments from
the institutions and processes of the market; second, it fosters bonds of mutual
help and reciprocal giving and thereby it restores and extends the universal
anthropological reality of gift exchange – the bestowing of gifts on others in the
hope of a reciprocal gift return. Benedict XVI’s call for a gift economy is theo-
logically more orthodox than von Balthasar, economically more egalitarian than
Smith and politically much more radical than Weber, as the next section argues.
 Economy of life 7
“Charismatic personalism”: von Balthasar and Benedict
In an important article on the concept of person published in 1986, von Balthasar
refers to St Paul’s notion of “charisma” as participation in the mission of the
Church (von Balthasar, 1986: 18–26). Charisma is defined in this text as that
which is “given to each as his eternal idea with God and his social task” (ibid.:
25). For von Balthasar, “charisma” is the divine gift of vocation that transforms
our “bare individuality” into real personhood. Since we discover our own unique
vocation within the life of the Church, “charisma” combines a strong Christolog-
ical and Trinitarian focus on our relationship to God with a socio-economic and
political outlook that explicitly rejects secular ideas such as choice-based
negative individual freedom and collective dependence on statist control.
Indeed, von Balthasar goes on to say in the same article that

The world situation today [in 1986] shows clearly enough that whoever dis-
cards this Christian or at least biblical view (in theology or philosophy) must
in one way or another find his downfall in a personless collectivism or indi-
vidualism (which converge upon one another).
(von Balthasar, 1986: 25)

Von Balthasar’s prescient argument about the complicit collusion of centralized

bureaucratic statism (whether left or right wing) and “free-market” liberalism
(both economic and social) resonates with Benedict XVI’s critique in Caritas in
veritate that “the exclusively binary model of market-plus-state is corrosive of
society” (Pope Benedict XVI, 2009). Both agree that the only genuine altern-
ative to statist collectivism and “free-market” atomism is personalism, but they
develop a different conception of the person, which has implications for cha-
risma in civil and economic life.
Von Balthasar’s distinction between the Church’s “charismatic” and “institu-
tional” principles is inextricably intertwined with his account of personhood. To
become a person, rather than merely being an individual, is to receive and accept
a mission from God, which is properly pursued and accomplished by participat-
ing in Christ. Following the model of the saints, participating in Christ trans-
forms general, “bare individuality” into real, embodied personhood, which is
distinct and unique to each and everyone. Since to participate in Christ is to
partake of his universal mission, life in the Church involves an ongoing ontolog-
ical process of conversion whereby we are at once individuated and universal-
ized. One can describe this process like an ever-unfolding event that blends our
own self with our God-given mission. In this manner, one discovers in one’s
mission one’s own, true identity which is both personal and social (Ackermann,
2002). This is exemplified by the fusion of Eucharistic celebrations and social
practices in late medieval and early modern Mass, notably processions that com-
bined religious acts of thanksgiving with social rituals aimed at strengthening
the bonds of mutual trust and friendship, which sustain fraternities, guilds and
communities (Bossy, 1983).
8 A. Pabst
Like his erstwhile contemporaries Karol Wojtyla, Henri de Lubac and Joseph
Ratzinger, von Balthasar was strongly influenced by the early and mid-twentieth-
century work on Christian personalism. Together they challenged pre-Conciliar
scholasticism and post-Conciliar liberalism by recovering and extending the
legacy of the Church Fathers and Doctors. Coupled with important insights from
the Romantic tradition, their writings shaped the nouvelle théologie (or “res-
sourcement theology”) that informs the best reforms of the Second Vatican
Council.
But whereas von Balthasar and Wojtyla tend to draw a clearer line between
philosophy and theology, de Lubac and Ratzinger explore the mutually augment-
ing interaction of reason and faith. Building on de Lubac’s work, Ratzinger –
both in his pre-papal and papal writings – develops an integral humanism that
underpins his call for a civil economy in Caritas in veritate. At the heart of this
humanism lies a daring new theological anthropology that centers on the idea of
relationality – the idea that human beings stand in mutually irreducible relations
with each other and their transcendent source in God. By contrast with von
Balthasar’s focus on beauty, the current Pope shifts the emphasis toward good-
ness, both at the level of philosophical theology and political economy. This
shift brings to the fore notions such as: first of all, the natural desire for the
supernatural Good in God; second, the conflict between modern market capit-
alism and the natural law tradition; third, the new theological imperative to view
all production and exchange ultimately in terms of the idea of relational goods
that outwits in advance the false, modern liberal dichotomy between private,
individual goods on the one hand, and public, social goods on the other hand.
Before some of these points can be developed, it is necessary to revert to the
link between “charisma” and personhood. Theologically, Benedict connects the
sacramental nature of Church ministry with what he calls the “charism or event
of the Holy Spirit”, whose interruption in the world mediates between divine
creativity and human agency (Ratzinger, 1998). “Charisma” provides a universal
and interpersonal bond that cuts across the modern divide between the sacred
realm of the Church and the secular space of society. In this sense, the Church is
the true and ultimate locus of sociality in which we participate according to our
own specific, unique, God-given vocations. That is why for Benedict “truth in
charity” is “caritas in veritate in re sociali: the proclamation of the truth of
Christ’s love in society” (Pope Benedict XVI, 2009: sec. 5).
Anthropologically, Benedict argues in his first encyclical Deus caritas est that
the economy of life into which we are all born is governed by the universal voca-
tion to love. For Christians, the love that moves all men is a gift of God revealed
in Christ and infused by the Holy Spirit – hence the idea of “charismatic dynam-
ics”. But independently of one’s faith and belief, we can say that the love we
receive and give is itself perhaps evidence that society is ultimately held together
neither by a social contract nor by pre-rational moral sentiments but rather by an
“economy of gift-exchange” – a “spiral paradox of ‘non-compulsory compul-
sion’ in which the giving of gifts [. . .] half-expects but cannot compel a return
gift” (Milbank, 2011: 6). Since the call to love is the most universal reality of
 Economy of life 9
mankind, love is “the principle not only of micro-relationships (with friends,
with family members or within small groups) but also of macro-relationships
(social, economic and political ones)” (Pope Benedict XVI, 2009: sec. 1). What
binds together the theological and anthropological dimension of Benedict’s
account is that love is both one and triune (eros, agape and philia), thus mirror-
ing the Trinitarian origin and end of creation and underpinning the relational
outlook of human life (Bruni, 2009).
In line with Deus caritas est, Benedict argues in Caritas in veritate for a com-
prehensive new model of “integral human development” based on “charity in
truth” – the recognition that “[e]verything has its origin in God’s love, every-
thing is shaped by it, everything is directed toward it” (Pope Benedict XVI,
2009: sec. 1; Pope Benedict XVI, 2006). The call to love, for Benedict, is at the
heart of human nature – “the vocation planted by God in the heart and mind of
every human person” (Pope Benedict XVI, 2009: sec. 1). In other words, love is
a deep anthropological desire to enter an economy of gift exchange where gift
giving (and the giving of ourselves) occurs in the real hope of a reciprocal gift
return. So configured, love translates into solidarity practiced through the exer-
cise of charity.
Building on von Balthasar’s conception of love as the form of all virtues,
Benedict views love as that which infuses all other virtues – theological and
classical. Without love, moral and civil virtues are deficient and lack ordering to
their final end in God. Beyond the Old Testament, the New Testament fuses the
commandment to love God and to love our neighbor equally and without prior-
ity. What underpins this is the mystical union with God as revealed in the Eucha-
ristic mystery that is both sacramental and social, as John Milbank has argued
(Milbank, 2006). In this manner, Benedict retrieves and extends the patristic and
medieval vision of the Church as the corpus mysticum which he inherited from
the nouvelle théologie of Henri de Lubac (rather than the slightly watered-down
version of von Balthasar) (Milbank, 2005; Rowland, 2010).
Benedict eschews the Baroque scholasticism of Francisco Suárez and the
nominalist voluntarism of Calvinist-Lutheran theology in favor of the Romantic
orthodoxy that is common to Augustine, Dionysius, Chrysostome, Aquinas and
other Christian Neoplatonists in both the “Latin” West and the “Greek” East.5
The latter envision the ecclesial corpus mysticum as the highest community on
earth, a profound and permanent spiritual union within the Church in the recip-
rocal love of the Holy Spirit (in the words of Saint Paul). By contrast, Suárez
contends that the mystical body refers to the sacraments and that the primary
community is the nation or population – not the universal brotherhood of the
Church. Linked to this is the Baroque scholastic separation of “pure nature”
(pura natura) from the supernatural and the concomitant relegation of divine
grace to an extrinsic principle that is superadded to the natural realm, rather than
a supernaturally infused gift that deifies nature. Against Baroque scholasticism,
Benedict contends that love is received and returned trough our participation in
the universal Eucharistic community of the Church that enfolds the social-
political body of human society and directs it to the supernatural Good in God.
10 A. Pabst
The Church and civil economy
Why does all this matter for the charismatic principle in economic and civil life?
Baroque scholasticism, by divorcing “pure nature” from the supernatural, intro-
duces a series of dualisms into theory and practice, such as faith and reason,
grace and nature or transcendence and immanence. Such and similar dualisms
are incompatible with the (theo)-logic of the Incarnation and undermine the con-
tinuous link between Creator and creation. Specifically, the idea that “pure
nature” correlates with a purely secular (non-sacred) social space unaffected by
divine grace is linked to the “two ends” account of human nature. According to
this theory, human beings have a natural end separate from their supernatural
end. Instead of participating in the Trinitarian communion of love by which we
are perfected, human society and the economy operate independently and are
ordered toward a different finality.
Concretely, this means that the market is viewed as morally neutral and com-
mitted to the promotion of human freedom – exactly the Neo-Baroque position
of contemporary Catholic commentators, in particular the neoconservatism of
George Weigel and the “Whig Thomism” of Michael Novak. However, this is
merely the laissez-faire liberal side of the modern coin whose reverse face is the
socialist utopia of statism and collectivism. For both uproot the market and the
state from the communal and associationist networks of civil society, thereby
severing production as well as exchange from the civic virtues that are embodied
in intermediary institutions and from the moral sentiments that govern interper-
sonal relations.
For Benedict, it follows that neither society nor the economy are purely non-
sacred, self-standing, self-sufficient realities. Instead, they either reflect some
revealed cosmic order, for example Augustine’s Civitas Dei that is governed by
theological virtues embodied in real, primary relations among its members (self-
organized within communities, localities and associations). Or else society and
the economy represent a human artifice built over against the inalterability of
“given” nature, such as the modern tradition of the social contract, where ties
between the state and the individual and also among individuals are determined
by abstract standards like formal rights and proprietary relations (a vision which
finds its original expression in the works of Hobbes and Locke). The objective of
Christian social teaching is to transform the earthly city in accordance with the
heavenly city – a foretaste of the heavenly banquet in anticipation of the beatific
vision so vividly depicted by the Fathers and Doctors of the Church.
Crucially, in Caritas in veritate Benedict locates the logic of gratuitous gift
exchange and interpersonal trust at the heart of the economic system. Since the
work of Adam Smith, the economy represents an increasingly autonomous
space, consisting of market exchange based on formal contracts policed and
enforced by the state and operating according to Smith’s famous principle of
“cooperation without benevolence”. Benedict’s insistence that the logic of con-
tract cannot function properly without the logic of gratuitousness marks a radical
departure from the Smithian legacy and a return to the civil economy tradition of
 Economy of life 11
Genovesi (Bruni and Zamagni, 2007: 27–99, esp. 45–57; Pabst, 2011b:
173–206).
Far from simply restoring this tradition, the Pope blends the Neapolitan
Enlightenment with the Christian Neoplatonism of the Church Fathers and
Doctors and the Romantic orthodoxy of nineteenth-century theology (Rowland,
2010: 9–47). Central to Benedict’s vision is the “re-hellenization” of Christian-
ity, which he delineated in his groundbreaking Regensburg Address. By appeal-
ing to the Neapolitan tradition of Neoplatonist metaphysics and civil economy,
Benedict shifts the emphasis away from a more Aristotelian concern for indi-
vidual substance toward a more Christian Neoplatonist focus (in Augustine and
Aquinas) on the self-diffusive Good that endows all things with goodness and
makes them relational. In turn, this draws on Plato’s argument that we have a
natural desire for the transcendent Good that “lures” us erotically – the Meno
paradox of desiring to know that which we do not as yet understand. It is the
presence of the transcendent Good in immanent nature that directs human activ-
ity to the common good in which all can share.
The Christian Neoplatonist vision is not merely abstract and conceptual but
on the contrary translates into real, concrete practices, which we can also trace
back to the Dominicans rather than the Franciscans. For example, the common
good is neither purely publicly provided nor exclusively privately owned but
instead distributed communally across the whole of societies and embodied in
intermediary institutions and structures such as cooperatives, employee-owned
partnerships, community banks and civil welfare. For unlike the collectivist state
or the unbridled free market, such and similar structures work for the social
good, open to all, rather than exclusively nationalized ownership or purely
private profit, as Caritas in veritate reaffirms.
Likewise, the idea of a “just price” reflects the true value and not simply the
prevailing market equilibrium of demand and supply. This has a wide variety of
possible applications today, from the practice of paying workers a “living wage”
(as opposed to merely a minimum wage) to anti-usury legislation and limits on
interest rates and also the introduction of asset-based welfare and employee
ownership. Coupled with Benedict’s appeal to the ecclesial corpus mysticum as
the most universal human community and in some sense the condition for social-
ity, the emphasis in the Christian tradition of Neoplatonism on relationality ties
together the sacramentally ordered universal community of the Church with the
network of overlapping intermediary institutions, businesses and the so-called
“third sector” that operate on the basis of reciprocity and mutuality. Ultimately,
this shows just how artificial the old barriers between or across state, market and
civil society really are.
As such, the Neoplatonist metaphysics of relationality is closely correlated
with the civil economy tradition of Genovesi’s civic humanism. Taken
together, they have the potential to transform the state, the market and civil
society in such way that state regulation and governmental welfare no longer
play a merely compensatory role within the anarchism of “free-market” capit-
alism. Instead, state and market are re-embedded in a civil compact. The idea
12 A. Pabst
is to foster civic participation based on self-organization, social enterprise,
reciprocity and mutuality, which help produce a sense of shared ownership
around “relational” goods. This approach tries to balance liberty and respons-
ibility as well as rights and duties in a spirit of individual and communal
“charism” where the talents and particular vocations of each person are mutu-
ally augmenting and beneficial to society as a whole. That is what Caritas in
veritate seeks to articulate.
So in charting a path that seeks to re-embed markets and states into the
complex network of human relationships, the Pope deploys a pre-modern,
theological metaphysics and anthropology in order to develop a post-modern,
post-secular civil economy that transcends a variety of essentially modern,
secular dualisms (sacred-profane, nature-supernatural, charismatic-
institutional, individual-collective, etc.). Beyond von Balthasar, Benedict shifts
the emphasis away from a more Aristotelian concern for individual substance
toward a more Christian Neoplatonist focus (in Augustine and Aquinas) on the
self-diffusive Good that endows all things with goodness and makes them rela-
tional. For Benedict, we can have knowledge of the supernatural Good in God
because it makes itself known to us through the creative self-diffusion of
divine goodness and love. As the Pope puts it in section 5 of Caritas in ver-
itate, “Love is revealed and made present by Christ (see John 13:1) and
‘poured into our hearts through the Holy’ (Romans 5:5)”. The twin emphasis
on both the Son of God and the Holy Spirit underscore once more the link
between Trinitarian theology and anthropological humanism, as well as an
accentuation on the divine wisdom of the Spirit that Roman Catholicism shares
with Eastern Orthodoxy.
The “charism” or event of the Holy Spirit permeates the human and natural
world; it sustains the charismatic dynamics of economic and social life; and it
directs human activity to the common good in which all can share. In turn, the
common good is neither purely publicly provided nor exclusively privately owned
but instead distributed communally across the whole of societies and embodied in
intermediary institutions and structures such as cooperatives, employee-owned
partnerships, community banks and civil welfare.
By contrast with both these extremes, Benedict charts a Catholic Christian
“third way” that combines strict limits on state and market power with a civil
economy centered on mutualist businesses, cooperatives, credit unions and other
reciprocal arrangements. By advocating an economic system re-embedded in
civil society, Benedict proposes a political economy that transcends the old,
secular dichotomies of state versus market and left versus right.
The commonly held belief that the left protects the state against the market
while the right privileges the market over the state is economically false and ide-
ologically naïve. Just as the left now views the market as the most efficient
delivery mechanism for private wealth and public welfare, so too the right has
always relied on the state to secure the property rights of the affluent and to turn
small proprietors into cheap wage laborers by stripping them of their land and
traditional networks of support.
 Economy of life 13
This ideological ambivalence masks a more fundamental collusion of state
and market. The state enforces a single standardized legal framework that
enables the market to extend contractual and monetary relations into virtually all
areas of life. In so doing, both state and market reduce nature, human labor and
social ties to commodities whose value is priced exclusively by the iron law of
demand and supply.
However, the commodification of each person and all things violates a uni-
versal ethical principle that has governed most cultures in the past – nature and
human life have almost always been recognized as having a sacred dimension.
Like other world religions, Catholic Christianity defends the sanctity of life and
land against the subordination by the “market-state” of everything and everyone
to mere material meaning and quantifiable economic utility. This argument was
first advanced by the civil economists of the Neapolitan Enlightenment and
further developed by Christian “socialists” like Karl Polanyi and his Anglican
friend R. H. Tawney.
Against the free-market concentration of wealth and state-controlled redistri-
bution of income, this chapter proposes a more radical program in line with Ben-
edict’s social encyclical: labor receives assets (in the form of stakeholdings) and
hires capital (not vice versa), while capital itself comes in part from worker and
community-supported credit unions rather than exclusively from shareholder-
driven retail banks. Like the “market-state”, money and science must also be re-
embedded within social relations and support rather than destroy mankind’s
organic ties with nature, as the anthropological dimension of Caritas in veritate
suggests. As such, the world economy needs to switch from short-term financial
speculation to long-term investment in the real economy, social development
and environmental sustainability.
Taken together, these and other ideas developed in the encyclical go beyond
piecemeal reform and amount to a wholesale transformation of the secular logic
underpinning global capitalism. Alongside private contracts and public provi-
sions, Benedict seeks to introduce the logic of gift giving and gift exchange into
the economic process. Market exchange of goods and services cannot properly
work without the free, gratuitous gift of mutual trust and reciprocity so badly
undermined by the global credit crunch.

The spirit of gift exchange

Relational patterns and structures, which are part of the idea of gift exchange,
are moving to the fore in a growing number of disciplines in the humanities and
social sciences. For example, in anthropology it is argued that the idea of a
purely self-interested homo economicus in pursuit of material wealth (central to
Adam Smith’s Wealth of Nations) reduces the natural desire for goodness to a
series of vague, pre-rational moral feelings (as set out in his Theory of Moral
Sentiments). As such, the tradition of political economy since Smith marks a
radical departure from the older ideas of “political animals”, who seek mutual
social recognition through the exercise of virtues embodied in practices and the
14 A. Pabst
exchange of gifts, instead of a mechanical application of abstract values and the
trading of pure commodities. For these (and other) reasons, individuals cannot
be properly understood as separate from the relations that bring them into exist-
ence and sustain them in being. Instead, individuals are best conceived in terms
of personhood, defined as the plural and composite locus of relationships and the
confluence of different microcosms.
The most innovative research in contemporary economics repudiates the
modern, liberal separation of private and public goods in favor of relational goods
and a renewed emphasis on the reciprocal bonds of sympathy that always already
tie individuals together (Bruni and Zamagni, 2007; Halpern, 2010: 56–123).6
Closely tied to this is a critique of methodological individualism and of a total
mapping of individual preferences. Since neither is theoretically and empirically
warranted, the entire edifice of modern political economy (after Adam Smith) and
modern economic science (after Carl Menger) becomes unhinged. This casts doubt
over key premises and concepts, such as economics as a “value-free” and pure
science, instrumental rationality, perfect information and the “rational expecta-
tions” hypothesis, as well as the “efficient market” theory (Screpanti and Zamagni,
2005: 43–71, 145–211). All this calls into question the conceptual foundations and
empirical conclusions of both classical and neoclassical economics.
By contrast with the anthropological vision of homo economicus, implying “a
natural propensity of truck, barter and exchange” (Adam Smith) that is central to
modern economics, other traditions such as the Neapolitan and the Scottish
Enlightenment defend a rival anthropological vision that views humans as “gift-
exchanging beings”, who form mutual bonds and organize society around the
exchange and return of gifts. Properly configured, the idea of gift exchange
translates into practices of mutual help and reciprocal giving, thereby shifting
the emphasis from the false dualism between egoism and altruism to the “radical
middle” of trust, caring, and cooperation.
Crucially, we can locate the logic of gratuitous gift exchange and interper-
sonal trust at the heart of the economic system. Since Smith, the economy repre-
sents an increasingly autonomous and abstract space, consisting in market
exchange based on formal contracts policed and enforced by the state and func-
tioning according to the principle of “cooperation without benevolence”, as I
have already indicated. By contrast, to suggest that the logic of contract cannot
function properly without the logic of gratuitousness marks a radical departure
from the legacy of Smith and his followers and a renewed engagement with the
civil economy tradition of the Neapolitan Enlightenment.
By contrast with Smith’s more Calvinist separation of human contract from
divine gift, Genovesi and the other members of the Neapolitan School view the
institutions and practices of civic life as a supernatural dynamic that seeks to
perfect the natural, created order and calls for human cooperative participation.
Linked to this is the insistence upon public trust or faith (fede pubblica) as an
indispensable condition for socio-economic and political development within the
framework of civil life and cognate notions such as honor and “the mutual confi-
dence between persons, families, orders, founded on the opinion of the virtues
 Economy of life 15
and religion of the contracting parties” (Genovesi, 2005: part II, chapter 10, §5,
132). In this manner, Genovesi emphasizes the importance of social sympathy
and reciprocity in economic contract, such that mutuality binds together contrac-
tual, proprietary relations and gift exchange. From its inception, the tradition of
civil economy rejects any separation of the market mechanism from civic virtues
and moral sentiments. Thus, the civil market is diametrically opposed equally to
statist central planning and “free-market” capitalism because both subordinate
the social to the political and the economic and invest production and exchange
with quasi-sacred significance.
The genuine development of each person involves the fostering of human,
social, economic and political bonds, as exemplified by practices of gift
exchange, mutual help and reciprocal giving. As such, economics is entirely
reconfigured, away from the demand- and supply-driven market production of
individually consumed goods and services or the paternalistic state provision of
uniform benefits and entitlements toward the co-production and co-ownership of
relational goods and civil welfare.
For example, the work of Karl Polanyi or G. H. D. Cole can help us imagine
and institute alternative economies that are re-embedded in politics and social
relations offer a refreshing alternative to the residual market liberalism of both
left and right (Polanyi, 2001; Cole, 1920). In practice, an embedded model
means that elected governments restrict the free flow of capital and create the
civic space in which workers, businesses and communities can regulate eco-
nomic activity. Instead of free-market self-interest or central-state paternalism, it
is the individual and corporate members of civil society who collectively deter-
mine the norms and institutions governing production and exchange. Specific
measures include, for example, extending fair-trade prices and standards from
agriculture and the food industry to other parts of the economy, including finance
and manufacturing. This could be done by strengthening the associative frame-
work and giving different sectors more autonomy in determining how to imple-
ment a set of desirable goals debated and voted upon by national parliament,
regional assemblies or city halls.
Other practices of gift exchange relate to labor itself. For instance, it is right
to replace the minimum wage with a just “living wage” that reflects the true
value of labor. Here the example of London Citizens is very instructive – a
network of different local communities and faith groups that are joined together
in action by the principles and practices of Catholic social teaching and have
persuaded both City Hall and a growing number of corporate businesses to sign
up voluntarily and pay their staff the “living wage” (Ivereigh, 2010). By exten-
sion, groups of trading guilds with overlapping membership, in cooperation with
local councils or regional governments, must be empowered to negotiate just
wages for workers. Employee co-ownership, savings and pension schemes could
also be linked more closely to firms that self-organize as part of professional
guilds.
Further instructive examples include the Focolare movement’s “economy of
communion” that operates in Brazil, Portugal, Italy and elsewhere – bringing
16 A. Pabst
together businesses, social enterprise and educational institutions in deprived
areas so as to create a local economy that blends private profit with social
purpose (Bruni and Uelmen, 2006; Gold, 2010). Business profits are shared
between three distinct kinds of purposes that are considered to be of equal im-
portance. First, helping people in need by creating jobs in neglected areas that
have been abandoned by the central state and the free market. Second, institut-
ing, broadening and deepening a “culture of giving” grounded in human rela-
tionships of mutual support. Third, sustaining and expanding businesses in a way
that combines efficiency with solidarity. The objective is to blend investment
with charitable giving and to change the market from within by locating the logic
of gift exchange at the heart of ordinary economic processes. According to some
estimates, some 735 businesses have joined such “economies of communion”,
with a majority in Europe (notably Italy and Portugal) but also more than 245 in
the Americas. Common to both London Citizens and “Economy of Communion”
is a rejection of top-down, command-and-control state power, coupled with the
promotion of civic and ethical limits on free-market capitalism in order to foster
reciprocal trust and mutual giving.
At the level of the G20 and pan-national blocs like the EU, concrete options
include certain forms of global capital controls in the form of the Tobin tax and
bank levies (including voluntary caps on interest rates), coupled with new incen-
tives to reconnect finance to the real economy, by promoting investment in pro-
ductive, human and social investment. More specifically, the financial industry
must eschew the dichotomy of public, nationalized and private, corporate models
in favor of social sector solutions, such as social investment banks, social grants
or social impact bonds. The latter could encompass a wide range of areas such as
projects devoted to restorative justice, local socio-economic regeneration, the
environment, education or culture.
In order to diversify the nature and range of financial services, governments
and parliaments could put in place a series of positive incentives to promote
cooperation between non-profit organizations, social entrepreneurs and govern-
ment agencies. Beyond current attempts to channel financial into social capital,
the key is to link investment to charity (and thereby bind contract to gift), such
that charitable activities and social action are not just added on and play a com-
pensatory role for financial capitalism. Instead, each new financial investment
would always already involve new assets for social activities, and a share of the
profits would automatically be reinvested in social enterprise. Such an organic
connection between investment and charity would transform the very way global
finance operates. The trillions of pounds that the now retiring generation of
babyboomers have to invest can be tapped into as a source of capital. The over-
riding aim must be to preserve the sanctity of natural and human life and to
promote human relationships and associations that nurture the social bonds of
trust and reciprocal help on which both democracy and markets depend.
 Economy of life 17
Conclusion
As the French anthropologist Jacques Godbout puts it, society as the gift
exchanging relationship is best described as a “strange loop and a tangled hier-
archy” (Godbout, 1998: 202). It is a “strange loop” because the giving, receiving
and return of gifts involves an economy of spiraling linkage through time rather
than the perfect circularity of globally mobile capital or a mutual stand-off in
space between capital and labor. Likewise, it is a “tangled hierarchy” because it
involves continued guidance by “the wise” and the ordering of some by others,
but often in educative exchange and in such a way that some may lead for certain
purposes while others lead for different ones. Just as the “strange loop” links
people inter-generationally, so too hierarchy is dynamic and transformative
rather than static and defensive of the status quo. In this manner, gift exchange is
the ultimate glue that binds people together within the social bonds and civic ties
on which vibrant democracies and market economy depend.
The model that embodies the principle and practice of gift exchange is the
civil market economy. Benedict’s call for such a civil economy represents a
radical “middle” position between an exclusively religious and a strictly secular
perspective. Faith can lead to strong notions of the common good and a belief
that human behavior, when disciplined and directed, can start to act more chari-
tably. There can also be secular intimations of this: the more faith-inspired prac-
tices are successful even on secular terms (e.g., more economic security, more
equality, more sustainability, greater civic participation), the easier it will be for
secular institutions to adopt elements of such an overarching framework without,
however, embracing its religious basis. Thus, Benedict’s vision for an alternative
political economy speaks to people of all faiths and none.

Notes
1 See H. R. Niebuhr, 1957: 94–95. This passage suggests that there is a “harmony of the
Calvinist conception of individual rights and responsibilities with the interests of the
middle class” and “Laissez-faire and the spirit of political liberalism have flourished
most in countries where the influence of Calvinism was greatest”. Cf. Connolly, 2008:
17–68.
2 The second edition, published in 1932, contains important revisions in relation to asso-
ciational life and other key themes.
3 For a longer exposition of how the “market-state” emerged, see Pabst, 2010a.
4 I have argued elsewhere that the left–right rule of individual and collective wills and
other such dualisms can be traced to late medieval and early modern shifts within theo-
logy – from the realism and intellectualism of Christian Neoplatonist metaphysics to
the nominalist and voluntarist alternative of Avicennian-Aristotelian ontology. See
Pabst, 2012: 153–303.
5 For a detailed account of the argument in this paragraph, see Pabst, 2012: chapters 5
and 7.
6 The emphasis on relationality and sympathy develops ongoing research on the coopera-
tive instincts of humans and (other) animals in a stronger metaphysical and political
direction. It also qualifies cruder distinctions between “bonding” and “bridging” in the
work of Robert Putnam and others.
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