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:

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Posted on August 20, 2011, in Economics. Bookmark the permalink. 8 Comments.

  1. I agree with the critique of socialism, but take issue with the laud of capitalism. The human heart is corrupt, to be sure, and it’s corruption will “flourish” regardless of the system, but the system does create the context and plausible ways in which that corruption can manifest itself. And I would say that capitalism certainly fosters the already present impulse of greed in the human heart. Capitalism, particularly as it’s currently manifested in America, prompts advertisers to create and sell problems and desires to consumers, so that they may come in turn with their products to solve and fulfill those problems and desires.

    That’s why I think this statement is problematic: “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.” This assumes that the American, almost now synonymous with “consumer,” consciousness can’t be manipulated by advertisers, but we seem to live in a time when almost the entirety (hopefully that’s too strong) of the American consciousness is shaped by such.

  2. Justin, I nearly completely agree with your concerns and personally find this to be one of the more difficult problems within a capitalist culture to defend. Again the sinful heart will always find a way to get around the system, and here is no different. Capitalist economics (as expressed in line with its truest principles) denounces deceit. But beyond that things get sticky, at least legally. If I tell you that my product causes hair growth and it doesn’t I’m liable to a lawsuit. BUT, if I advertise in such a way to lead you to believe the same thing (without saying so explicitly), then legally that’s on YOU. This is why capitalism does best in increasingly Christianized countries. False needs are now themself a market with plenty of pedalers out there.

  3. I guess I don’t really see how this kind of manipulation “gets around” capitalism. It seems like one of the aspects of the system itself that the human heart is more than happy to take advantage of. I think that pure human hearts would make just about any system work well but, since we don’t have those, different systems will be susceptible in different areas as to the ways in which the human heart may work it to its own, sinful, advantage. The hypertrophy of consumerism and a consciousness formed by advertising strikes me as a (decadent) case in point of one of those areas capitalism is systemically ripe for exploitation.

    I guess I also tend to conceive of capitalism as in its nature more pragmatic than idealistic: more geared toward fostering wealth than goodness. Keep in mind, though, that I’m not necessarily advocating another system. As I say, in general I don’t think systems are the problem. But I think in making public policy we need to consider how systems will work when worked out by corrupt hearts, and how to limit possible areas of exploitation.

    I’m also a little nervous by how the term “free market” will apply in our present culture since “free,” as we conceive it, means “without limits; liquid,” etc.

  4. Patrick Williams

    I agree with Justin Ryals and thought he expressed the situation well. People like to say that Capitalism in it “pure” form is good but even in its theoretically “pure” form it is a system that encourages competition with people rather than cooperation (unless they form a merger to “beat” their competitor) and greed rather than goodness. It does not encourage meekness but just the opposite – in Capitalism, it is not the meek that will inherit the earth but the strong, the aggressive, the ruthless, the cut-throat. I could go on and I am sure their could be some sort of rebuttal to the points I could make so I will not belabor this with a long post. My main concern is that some Christians get overzealous in marrying Capitalism with Christianity and saying the two are interconnected and almost one and the same thing – but they ARE NOT. The two share a few similar values but many, many more opposite values.

  5. “Capitalism represents barometer for determining economic health. The more capitalist a country becomes, the more it flourishes (China is a great example of this).”

    Flourishes for who?
    In what way?
    Health is to be attributed to GDP?
    China is one of the most polluted countries, with some of the worst third world living conditions in a country using first world technology. Not to mention it’s flourishing capitalist market has been state backed by an authoritarian regime that shrouds itself in secrecy and oppression.

    You’re already showing how the capitalist economy does in fact seep into the values – or in your case ‘heart’ – of the individual and society. Only in the past century or two has a societies ‘health’ been connected to its GDP. Entirely ignoring mental health, or even physical.

    Some countries have heavier regulated capital markets, with higher increases in happiness, life-span, less infant mortality, less rates of cancer, etc. But their GDP is less. So the economic health is mitigated in favor of other forms of health. I’m not sure why anyone would oppose that, or oppose the expansion of the definition of health outside the stability of the market.

    One more note on market health. Several months after the 2008 economic collapse – which has sent out unemployment rates to a stagnant 9-10%, and is projected to remain at that level perhaps into 2015 – the stock market rebounded. The ‘recession’ was over. Folks on wall-street were making record profits and bonuses. Meanwhile the class that labors in a precarious/anarchic market structure was, and is, in decline or abject stagnation. So the market ‘healed’ (according to stock numbers and recession analysis) but the brunt of the population was worse off. So again, how is economic health something to gauge the well-being of a society by…

  6. Also, I’m curious of your answer to this question, and I must forewarn you that I simply don’t have the time to read that book you suggested if the answer is to be found in there. How does Capitalism, or a Capitalist, square with this:

    “Then Jesus said to his disciples, “Truly I tell you, it is hard for someone who is rich to enter the kingdom of heaven. 24 Again I tell you, it is easier for a camel to go through the eye of a needle than for someone who is rich to enter the kingdom of God.””

    Capitalist do do remarkable forms of charity and philanthropy, but often times in the process still remain rich at a level that exceeds all rational needs, and to a degree that the more they came close to their needs via liquidation, the more others could attain theirs.

  7. Justin, ‘Free-Market’ is an oxymoron to be sure. A capitalist market, as Joe pointed out, presupposes the existence of laws. Laws of course are either obeyed, or broken. They exist prior to the individual, and therefore the individual lacks the ability to rationally consent to them. Consent is coerced. You either accept the laws you find yourself born into, or you don’t. But even if you don’t morally or rationally accept them, you’re still coerced to obey them for fear of punitive measures. Or you’re simply coerced when you openly disobey. A capitalist market of course has its own set of laws that precedes the individuals birth, and thus engages in coercion and pre-determinism. To call that arrangement ‘free’ is to disparage the notion of freedom into absurdity.

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