Saturday, May 8, 2010

In Defense of Capitalism

Jay W. Richards has written a readable and powerful book defending capitalism against its cultured despisers entitled Money, Greed and God: Why Capitalism is the Solution and Not the Problem (Harper One, 2009).

He takes on eight myths about capitalism and demolishes them with surprising ease. They are:

1. Can't We Build a Just Society - The Nirvana Myth (contrasting capitalism with an unrealizable ideal rather than with its live alternatives)

2. What Would Jesus Do? - The Piety Myth (focusing on our good intentions rather than on the unintended consequences of our actions)

3. Doesn't Capitalism Foster Unfair Competition? - The Zero-Sum Game Myth (believing that trade requires a winner and a loser)

4. If I Become Rich, Won't Someone Else Become Poor? - The Materialist Myth (believing that wealth isn't created, it's simply transferred)

5. Isn't Capitalism Based on Greed? - The Greed Myth (believing that the essence of capitalism is greed)

6. Hasn't Christianity Always Opposed Capitalism? - The Usury Myth (believing that working with money is inherently immoral or that charging interest on money is always exploitative)

7. Doesn't Capitalism Lead to an Ugly Consumerist Culture? - The Artsy Myth (confusing aesthetic judgments with economic arguments)

8. Are We Going to Use Up All the Resources? - The Freeze-Frame Myth (believing that things always stay the same - for example assuming that population trends will continue indefinitely or treating a current 'natural resource' as if it will always be needed)

The book is well-written and tightly argued so summarizing it is difficult. So let me just talk a about one of the myths: the materialist myth that if I become rich someone else will inevitably become poor. This myth is closely related to the value that equality is the essence of justice and the belief that equality must be imposed by government coercion because the market is inadequate.

In addressing the materialist myth, Richards starts by quoting a host of people who complain about the growing gap between rich and poor - everyone from Pope John Paul II to Ron Sider to Gustavo Gutierrez. He agrees that God is concerned for the poor, that we are concerned for the poor and the picture of an ever-increasing gap between rich and poor is disturbing. Most people believe that the total wealth of a society is like a cherry pie and there is only so much to go around. But this is not true; wealth is created in a market economy. Wealth is not a physical object like a cherry pie; rather, it is something that can grow over time.

Absolute poverty is different from relative poverty. Absolute poverty can be defined in terms of caloric intake, levels of disease, access to clean water, employment, life expectancy and so on. But relative poverty is a moving target. For example, "Eight hundred million people go to bed hungry every day" represents absolute poverty, while "the three richest people in the world control more wealth than all 600 million people living in the world's poorest countries" represents relative poverty.

To make a long story short, capitalism is good at eliminating absolute poverty but it never will address relative poverty. The question is whether or not that is a problem. Let's say we hear that the gap between wealthy and poor nations has grown. Isn't that bad? Well, not necessarily. It may well mean that the poorer nations have gotten wealthier and much absolute poverty has been eliminated while richer nations have gotten even richer. It is not as if the extra wealth in the rich nations has come from the pockets of the people in the poor nations. So it is only a bad thing if you assume that wealth is static and can never be increased. If that were the case, then taking from the rich and giving to the poor would be the only hope of eliminating poverty.

But in fact, wealth is not static or material. It can be created by human ingenuity because humans are created in the image of God and have the ability to make more and more wealth with less and less matter. Fiber optic cable made out of economically worthless sand, for example, can carry a thousand times more information than a cable made out of expensive copper. (p. 101) So the total amount of wealth is not fixed.

Fighting absolute poverty is a human imperative and a Christian duty and is best done by unleashing human creativity through a free market system. Fighting relative poverty is to fight the realities of human inequality and a socialist project that is usually done by stifling human creativity through centralized distribution of wealth. As Richards points out:
"When Jim Wallis announces that God hates inequality he's not quoting the Bible. The Bible doesn't say that anywhere. Jesus tells his inner circle of followers that they will sit on twelve thrones (Matt. 19:28). He speaks of the least now being greatest in the kingdom of God. He tells his disciples that those who are humble like children will be greatest in the kingdom of God (Matt. 18:4). If absolute equality doesn't apply to God's kingdom - the very standard of justice - why do we think it should apply to human society? If God can be just without sharing his blessings equally, might the same be true of a society? (p. 107)
These questions acquire extra urgency when we realize that all the socialist revolutions of the 20th century have led to poverty, misery, oppression, mass murder and totalitarianism. Perhaps it is time to recognize that equality is not the be all and end all.

What I found fascinating about Richards' argument is how he identifies the origin of the socialist idea of wealth as a zero-sum game in the philosophy of materialism that animates Marx's thought. It would seem that Marx's philosophical-religious assumptions govern his thought at this point and that his rejection of the Christian understanding of man and history is decisive. The really important implication here is not just that Marxism is incompatible with Christianity, which seems obvious enough, but that capitalism depends on a specifically Christian anthropology and a specifically Christian understanding of creation and history.


Canyon Walker said...

Read Acts 2:44-45. "All who believed were together and had all things in common; they would sell their possessions and goods and distribute the proceeds to all, as any had need."
Does that sound like capitalism? I agree with Karl Barth: Capitalism is an inherently atheistic philosophy.

And how can any reasonable person argue that Jesus accepted the inequality between the Romans and the wealthy priestly caste in Jerusalem, on one hand, and ordinary people, on the other? Jesus was crucified because he challenged the wealthy and powerful who were oppressing the poor? Read the Beatitudes and re-think your position! Jesus vision of the Kingdom of Heaven was centered, above all, on the idea of justice. He said, one cannot love both God and mammon. Capitalism is inherently a love of mammon. Furthermore, the one reason Christianity survived its early stages was its insistence that God loved everyone equally - rich or poor, able-bodied or handicapped, slave or free.

D. Chambers said...

I would like to inform Mr. Canyon Walker (assuming he ever reads this post again) that there was no such thing as capitilism prior to 1700's in the world. Capitilism is a Western phenomenon in and of itself. There was no such thing as wealth creation in the time of the 1st century so to argue an equivalence between economic equality of the 1st century and income inequality of capitalism is not the same thing. A good book to read on this concerning the economic world of the 1st century is Bruce J. Malina's The New Testament World. In it he explains what is called the limited good concept. How the New Testament church deals with wealth is quite unique for its time; but it is not addressing a capitilistic world.