Caricaturing Capitalism

Readers of this blog will have noticed that I support free-market economics. That’s to say, I’m a capitalist. One of the problems with making this public is that it can lead to all kinds of misunderstanding. So many confused perceptions of capitalism exist, that I’d like to use this platform as an opportunity to explain what I mean, and why I support free-market economics.

The common perception of the capitalist is one of a greed miser who hordes his money, looking for ways to keep the poor in their lowly state.  Personally, I normally take no offense at this portrayal. I oppose greedy power-hungry misers myself! But this image doesn’t really address capitalism as I understand it. It sounds more like the Hollywood portrayal of Gordon Gekko in the Oliver Stone movie Wall Street, a poster boy for greed and the lust for power. This is far from what I think of when I endorse capitalism.

I’m convinced that what people think of capitalism is a straw man, especially when they attack the US as an example of a free market or capitalistic society. I say this because the world has never known a 100% capitalist society. Capitalism represents barometer for determining economic health. The more capitalist a country becomes, the more it flourishes (China is a great example of this).

First, capitalism does not, in and of itself, encourage greed. Plain ol’ sin does that just fine. The stereotypical picture of the socialist dictator sitting his is mansion doesn’t do well to support this criticize either. The problem is the human heart. In fact, there’s a sense in which one could argue that capitalism neutralizes greed. Why? Because a true capitalist desires to increase her profits, and this means that she cannot jerk around her clients for too long. As long as the market is free there will always be competition, and if you want to do well for your business you need to work in favor of your customers and give them things that they want-or they’ll go elsewhere. So, subjectively the business owner may be a greedy miser, but a free market forces him to work in the best interest of his clientele.  Free markets can’t change the heart, but they can create an environment that redirects actions.

This leads me to the second point. Capitalism presupposes the rule of law and fair dealings in trade. So examples of greedy misers lying and cheating their customers do not fairly represent capitalism, but rather a corruption of it. Does this happen? Of course it does, but that’s a result of the heart and not the system, per se.

Third, capitalism encourages boldness and risk, rather than the greedy hording of wealth. Capitalism flourishes when an entrepreneur comes up with an idea and is willing to risk his own personal capital to see it through. Many, many people who do this fail and lose tons of money. A true capitalist invests for the purpose of development rather than horde for the purpose of mere personal gain.

Last, many anti-capitalist Christians have argued that Scripture supports socialism. After all, doesn’t Acts 2:44 and 4:32 say that the early Christians “had everything in common”? Here’s the sticking point: How are we defining socialism? If we define socialism to mean people of different backgrounds and socio-economic levels freely pooling their resources together for the common good, that’s great. But that’s not socialism, that’s sharing.  The peaceful means of exchange says “If you do this for me, and I’ll do that for you.” Socialism fosters the violent means of exchange which says “Do this for me, or else!” What I mean by this is that socialism doesn’t promote sharing (which is a biblical value, to be sure), but instead promotes government coercion. It doesn’t give incentive with a carrot, but threatens with a stick. It takes money from people whether they want to give it or not, whether they want to be philanthropic in other ways (to support other causes) or not.

As Max Weber noted in his famous book, capitalism is the “Protestant work ethic.” Biblical values such as hard work, honest labor, supporting oneself and their family, and working for the common good all underlie authentic capitalism.

American is far from that…

For an excellent defense of a proper understanding of capitalism, see Jay Richards’ work:

A Theology of Money

Kevin DeYoung has recently posted a brief blog on a theology of money. It’s short and insightful. Following the lead of Proverbs, he lists 10 things the book says about money and possessions. Here are his findings:

1. There are extremes of wealth and poverty that provide unique temptations to those who live in them (Prov. 30:7-9).
2. Don’t worry about keeping up with the Jones’ (Prov. 12:9; 13:7).
3. The rich and poor are more alike than they think (Prov. 22:2; 29:13).
4. You can’t out give God (Prov. 3:9-10; 11:24; 22:9).
5. Poverty is not pretty (Prov. 10:15; 14:20; 19:4).
6. Money cannot give you ultimate security (Prov. 11:7; 11:28; 13:8).
7. The Lord hates those who get rich by injustice (Prov. 21:6; 22:16, 22-23).
8. The Lord loves those who are generous to the poor (Prov. 14:21, 31; 19:7; 28:21)
9. Hard work and good decision-making usually lead to increased prosperity (Prov. 6:6-11;10:4; 13:11; 14:24;  21:17, 20; 22:4, 13; 27:23-27; 28:20
10. Money isn’t everything. It does not satisfy (Prov. 23:4-5). It is inferior to wisdom (Prov. 8:10-11, 18-19; 24:3-4). It is inferior to righteousness (10:2; 11:4; 13:25; 16:8; 19:22; 20:17; 28:6). It is inferior to the fear of the Lord (Prov. 15:16). It is inferior to humility (Prov. 16:19). It is inferior to good relationships (Prov. 15:17; 17:1).

His conclusions are balanced and biblical:

You can’t understand the biblical view of money unless you are prepared to accept a number of truths held in tension.

• You’ll probably acquire more money if you work hard and are full of wisdom. But if all you care about is getting more money, you are the biggest fool.
• Money is a blessing from God, but you’ll be more blessed if you give it away.
• God gives you money because he is generous, but he is generous with you so that you can be generous with others. And if you are generous with your money, God will likely be more generous with you.
• It is wise to save money, but don’t ever think money gives you real security.
• Wealth is more desirable than poverty, but wealth is not as good as righteousness, humility, wisdom, good relationships, and the fear of the Lord.

I’d encourage you to read the whole (brief) entry. It’s well worth the 3 minutes you put into it.