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God and the Economy: Is Capitalism Moral?
Part 2
by Doug Bandow, June
2000
Economic Freedom is important because it helps disperse power, allowing the
development of private institutions — for instance, associations,
corporations, think tanks, labor unions, and universities — that can
counterbalance state power. Moreover, private property is necessary for the
exercise of many political rights. If you can’t buy a printing press or
TV station, hire a hall, or sell newspapers, you have no press freedom. The
Soviet Union’s great conundrum in the 1980s was the personal
computer, necessary for economic progress but a potentially devastating
weapon in the hands of dissidents.
Nevertheless, there is a spiritual
sterility to market capitalism that bothers many religious people. While a
number of former East Germans, for instance, deplore their old police state,
they still dislike the gaudy, individualistic materialism of the West. Andrew
Kirk contends that capitalism assumes “that the main purpose of
man’s life is the pursuit of happiness to be achieved by the constant
expansion of goods and services” and that this is thereby “the
basis of our daily political and economic life.”
However, all men are fallen and sinful;
greed and envy are common to man, not products of particular social
systems. Capitalism allows those who have dedicated themselves to the
pursuit of Mammon to live that way, but it also lets believers like Kirk decide
to fulfill their lives differently. Kirk, for one, became affiliated with a
religious institute, a choice he could not have made in socialist Eastern
Europe. Capitalist America has similarly proved receptive to communal
religious sects such as the Hutterites.
The hallmark of a relatively unregulated
market economy is freedom of choice, and some people will undoubtedly use
their liberty to go grievously wrong. But Marxism is profoundly materialistic,
and political life in such societies revolves around gaining access to a
relatively small pool of consumer goods — thus the avarice of the
nomenklatura, the ruling elite, and the ubiquitous long lines in the communist
world. The average citizen of a socialist state does not care any less about
possessing shoes, washing machines, VCRs, and cars than an American; he is
simply less able to satisfy his desires.
A related argument is that capitalism
relies on destructive competition rather than constructive cooperation.
Competition is obviously important to a market economy, but it has proved
to be an extraordinarily socially valuable tool. Cartels usually break down
quickly because of competition, unless they have government support.
Competition drives down the price of consumer goods, enabling even people
of modest incomes to acquire clothing, food, and shelter. And competition
has driven innovators to constantly seek to design better products for less.
Indeed, while competition is a hallmark of
capitalism, so too is cooperation. For only by cooperating — with
customers, suppliers, and workers — can a businessman succeed. In a
system of state control, firms can force their products on reluctant buyers,
extract supplies from reluctant producers, and mandate work from
reluctant employees. A private firm, however, can succeed only by inducing
the cooperation of all of these parties. While money may seem a crass
inducement, it is also effective; moreover, many firms, where people group
together voluntarily, in contrast to collectivist systems, generate an esprit
de corps that reflects a variety of nonmaterial values.
Government, economic freedom, and
poverty
Perhaps the most fundamental
criticism of capitalism is the prevalence of poverty amid plenty. The
desperation of the inner city remains obvious in America. Some supporters
of Cuba’s Castro have responded to criticism of his repressive
tactics by arguing that there are no homeless people in Havana. Indeed,
Andrew Kirk wrote, before the collapse of the East in 1989, “Marxism
has exalted collective freedom — the freedom of everyone to enjoy a
basically dignified life.” Yet it is now painfully obvious that poverty was
pervasive and income differentials were hideous in those nations. Acquisitive
ruling elites may have cloaked their greed in humanitarian socialist rhetoric,
but the reality of their systems was quite different.
Societies tending toward free markets,
in contrast to statist systems such as Brazil, have also performed well in
enhancing the economic status of all their citizens. Taiwan, for instance, has
enjoyed a dramatic increase in literacy, life expectancy, and equality of
income distribution as it has expanded economically. Even in the United
States those who are poor live far better than the bulk of the populations of
many Third World states. In short, without production there is nothing to
distribute. Only in a capitalist economy may one meaningfully advocate
extensive government transfer programs.
Yet today the state does far more to
harm than help the poor. Indeed, much of the poverty in the United States is
the result of government policy, often at the behest of powerful special-
interest groups. Labor unions back the minimum wage because it prices
disadvantaged workers out of the marketplace. Occupational licensing makes
it harder for poor people to enter a variety of trades, such as driving a cab.
Trade barriers to protect selected industries push up the cost of clothing,
food, shoes, and a host of other goods. Antiquated building codes that
guarantee construction jobs increase housing costs. Expansive government
transfer programs enrich influential voting blocs — farmers, retirees,
and the like — at the expense of the poor and middle class. And so on.
In a true market economy, those with
the least influence can still gain access to economic opportunity. The more
expansive the government controls, the more likely are concentrated
interest groups to twist policy to their own ends, to the detriment of the
most disadvantaged in society. This does not mean that capitalism is enough
for a just, and “Christian,” society. Private mediating
institutions, particularly associations, charities, and churches, are needed to
play a critical role in helping those who, like the proverbial widows and
orphans in the Old Testament, are unable to succeed in a market economy. In
contrast, government welfare programs have turned out to be
counterproductive, subsidizing illegitimacy, fostering family break-up, and
discouraging work.
Respect for the virtues of capitalism is
not limited to America’s religious Right. With the publication in 1991
of the papal encyclical Centesimus Annus, or The
Hundredth Year, Catholic social teaching has explicitly recognized the
benefits of a market system. The pope’s critique of Marxism was
devastating: “The historical experience of socialist countries has sadly
demonstrated that collectivism does not do away with alienation but rather
increases it, adding to it a lack of basic necessities and economic
inefficiency.”
In contrast, he praised capitalism,
including its reliance of entrepreneurship and profits. “When a firm
makes a profit,” he wrote, “this means that productive factors
have been properly employed and corresponding human needs have been duly
satisfied.” All told, he argued, “the free market is the most
efficient instrument for utilizing resources and effectively responding to
needs.”
The pope remained vitally concerned
about the poor, however, and believed that capitalism cannot be the sum of
society. He criticized “consumerism” and advocated
government intervention to ensure that “fundamental human
needs” are not left unsatisfied. Finally, he wrote that individual
freedom needs an “ethical and religious” core.
Indeed, that core is absolutely critical.
But it is most likely to be provided by private institutions — the family
and church, in particular, and community groups and associations. The one
organization guaranteed not to promote ethical and religious values is
government.
Is capitalism Christian? No. It neither
advances existing human virtues nor corrects ingrained personal vices; it
merely reflects them. But socialism is less consistent with several Biblical
tenets for it exacerbates the worst of men’s flaws. By divorcing
effort from reward, stirring up covetousness and envy, and destroying the
freedom that is a necessary precondition for virtue, it tears at the just
social fabric that Christians should seek to establish. A Christian must still
work hard to shed even a little of God’s light in a capitalist society.
But his task is likely to be much harder in a collectivist system.
Doug Bandow is senior fellow at the Cato Institute and the
author of Beyond Good Intentions: A Biblical View of Politics.
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