Can a Market Exchange Really Be Love?Article / Produced by TOW Project
The question of prices raised two questions about finance as a form of love. First, can love be expressed in a market value-exchange relationship? Put another way, if both borrower and lender expect to gain from the relationship, is either one really doing it out of love? Second, since most financial transactions are at arm’s length, can one love another human even if there is no personal relationship?
Can one person love another through selling something at a price? Recall that our idea of love is seeking to bring about the flourishing of another human as an end in itself, and with due respect for that person as a human. The answer is yes. People bring about others’ human flourishing all the time through providing goods and services at a price. When farmers provide wholesome food, they help consumers to flourish, even though consumers pay for the food. We don’t regard good teachers as mere mercenaries simply because they get paid. The majority of work in modern economies is paid, and the goods and services produced by work are sold at a price. If charging a price negates the possibility of love, then virtually no work could show love.
Why is it that market-rate finance somehow seems less capable of showing love? Perhaps it is because money—unlike teaching or farm produce—seems like an undifferentiated product. A farmer shows love by selling good produce. Can a lender show love by lending good money? The answer, surprisingly, is yes. The money itself is not better or worse than any other money, of course. But the circumstances, conditions, and terms of lending are all opportunities for borrowers and lenders to care for one another. The duration of the loan, its payback provisions, collateral requirements, default penalties, insurance, inflation protections, and countless other terms can make a loan better suited to enable the borrower and the lender to flourish. Income verification, property assessment, due diligence, understandability of loan documents, availability of unbiased information, and other factors related to initiating the loan can also show care and respect. The location and convenience of bank locations, loan officers, rate comparisons, community engagement, advertising, and other factors can help reach underserved communities. Credit counseling, respectful dialogue about the use of proceeds—whether for consumption or investment in productivity, product education, and other factors can show love by helping people avoid borrowing if it is likely to harm them. For equity transactions, the openness of markets, the accuracy of financial statements, the integrity of people with inside information also care for and respect investors. Even though the money itself is the same from one lender to another, the love—that is, the care and respect—can vary widely.
For example, a mortgage lender may help a low-income family buy a house instead of renting. If the house, the interest rate, the loan period, the income verification, and all the other factors are handled properly, this can be a tremendous benefit for the family as they begin to build equity. It also benefits all those who lend the money involved, typically bank depositors or pension funds. Similarly, an investment bank that helps an entrepreneur issue an initial public offering to raise capital to grow the business brings a kind of love to the entrepreneurs future customers, employees, suppliers, and community, in addition to the shareholders who purchase the stock. All of these are market-rate transactions that bring love to bear for both borrowers and lenders.
Finally, love can be shown by honoring and fulfilling the promises made in the transaction. Of course much of this is required by law, but here we are arguing that love is shown in market transactions by going above and beyond the law by acting in the other party’s best interest even if it is not required or deserved and even if there is no expectation of a future benefit of doing do so. This means seeking the flourishing of the other party as an end in itself. Again, markets for other goods and services routinely do this—think of health care, for example—and there is no reason finance cannot do the same. Most if not all market transactions could feature this kind of love, and many do.