Christianity and Capitalism
It’s been a rough couple of years for free-market capitalism.
In Business as a Calling: Work and the Examined Life, theologian Michael Novak wonders if capitalism is “spiritually empty and corrosive of virtue.” The evidence, perhaps now more than at any time in the past 70 years, may tilt the scales in that direction.
In response to the recent turmoil, French president Nicolas Sarkozy has said, “Laissez-faire is finished. The all-powerful market that always knows best is finished.” And the Washington Post has declared, “The worst financial crisis since the Great Depression is claiming another casualty: American-style capitalism.”
Such a negative view of capitalism might perplex those in the Reformed-Calvinist community. According to David Hall and Matthew Burton, authors of Calvin and Commerce: The Transforming Power of Calvinism in Market Economies, it was John Calvin himself who laid the foundation for today’s market-based economy.
As Calvin’s theological heirs we know that economic decisions, like those in every category, stem from a worldview. They reflect our values and fundamental view of man, and while the Bible doesn’t prescribe a particular economic system it does, Hall and Burton tell us, provide a moral framework within which to make our choices. As Christians, our challenge is to recognize and—to the extent we’re able—create the system that fits best with what the Bible teaches.
So, in a fallen world that’s populated by sinful people, what realities should an economic system address? What good should it aspire to? And what truths—about God, man, and money—should be brought to bear? The answers could (and do) fill books. For now we’ll glance at six features of a realistic, healthy economic system.
Encouraging, Not Discouraging, Creativity
Man, because he’s made in God’s image, creates. By nature he takes the raw materials God grants and shapes and molds them, creating products that make life more comfortable and more productive.
Consider your morning routine: God didn’t create your bed. He didn’t create indoor plumbing, electricity, toothbrushes, or soap. He didn’t manufacture cars, nor did he hand Adam a wad of cash and point him to the corner bank.
God didn’t have to create us with the need for food, shelter, clothing, and currency. Nor do we need an appreciation for hot showers or the taste of fresh-squeezed orange juice. The angels, author Wayne Grudem says, apparently don’t share those needs.
But think about how, in the process of creating, distributing, and selling all those products, we’re able to give God glory. In Business for the Glory of God, Grudem describes how, when we create shirts, shoes, or blankets, God sees a reflection of His own image: He sees wisdom, knowledge, skill, creativity, the appreciation of beauty. And when we produce those products for others we demonstrate love for our neighbors; we show that we understand and care about their needs. What’s more, Grudem points out, we exhibit mankind’s mutual cooperation, which reflects God’s own Trinitarian existence.
Our innate desire to create doesn’t always stem from greed. Sometimes (and one would hope more often), it represents our God-given desire to produce, to solve problems, and to exercise faithful dominion.
God has not prescribed an economic system. But we know, from what He has revealed, that we should stimulate, not dampen, our creativity.
Encouraging, Not Discouraging, the Creation of Wealth
The production of shoes, shirts, and blankets leads, one hopes, to the creation of profit and wealth. And these, when created “unto the Lord rather than men” are not the products of greed. Rather, say Hall and Burton, they become “instruments of mercy, reinvestment, and ministry.”
In their analysis of Calvin, the authors explain that profit and wealth, when deployed in a free-market system, have a multiplier effect. The compounding power of re-invested wealth, they say, becomes a tool of God’s grace, creating value, improving lives, and extending the goodness of God’s creation.
Which, in theory, sounds good. In practice, however, it often looks as though “the goodness” flows in just one direction—toward the rich. All this created value, the improved lives, the extension of goodness, seems, so many times, to bypass the poor, causing us to wonder, where’s the grace?
Economist Jay Richards, in Money, Greed, and God, asks readers to imagine the world’s wealth as a pie. You can slice it into as many pieces as you’d like, he says, but if you cut a few thick slices, the others have to be thin. This is how we tend to view the distribution of wealth: Rich people get thick slices; the poor are left with a sliver.
But the analogy, Richard explains, misrepresents a market economy. A pie, unlike such an economy, is a physical object, unable to shrink or expand. And in this analogy, we don’t even know where it came from.
But that’s not how wealth works in a market economy. Wealth, unlike a pie, can grow. If we care about issues of wealth and poverty, Richard says, we must discard the notion that wealth is a static, uncreated pie.
A Gap Too Big to be Moral
How then do we explain the flow of goodness to the rich, but not the poor? How, for example, could we make moral sense of the fact that the three wealthiest men in the world—Bill Gates, Warren Buffet, and Mexican telecommunications magnate Carlos Helu—“control” more wealth than the world’s 600 million poorest people combined. That, to use Richards’ phrase, “is the mother of all gaps.”
Because we’re rational people, the author encourages us to ask what that comparison actually means. Does it mean, for example, that if Bill Gates weren’t so rich, the 600 million poorest people wouldn’t be so poor? Does this enormous gap suggest that Gates, Buffet, and Helu (and, to a lesser extent, you and me) siphoned off the wealth that rightfully belonged to others?
As Christians, we’re concerned about the poor and about justice. Which is why, Richard says, we need to focus on poverty, not gaps. We need to understand that wealth isn’t a static, uncreated pie. Therefore, a market economy isn’t a zero-sum game.
The key issue isn’t that three men control so much wealth. The issue is that three men, for some variety of reasons, have been able to create more wealth than 600 million others. The problem that demands our attention is this: that 600 million people—all of whom bear the creative, productive image of God—created so little.
Encouraging Goodness and Discouraging Evil
We’re to do nothing out of selfish ambition. In humility we’re to consider others better than ourselves, looking out not only for our own interests, but also for theirs (Philippians 2:3,4). At first glance, business hardly seems the ideal venue to practice such virtues. But consider the story of John Mackey, the founder of Whole Foods.
Mackey, according to Steve Forbes’ new book How Capitalism Can Save Us, once believed that business and capitalism exploited consumers, society, and the environment. Profit, he thought, was a necessary evil “and certainly not a desirable goal for society.”
"Business increases prosperity, ends poverty, improves the quality of life, and promotes the health and longevity of the world’s population.”
But after he founded Whole Foods, after Mackey had spent time doing business, interacting with suppliers, employees, and customers, he changed his mind. “I realized that business is based on voluntary cooperation,” he said. “Investors, labor, management, suppliers—they all need to cooperate to create value for their customers. If they do, then any realized profit can be divided amongst the creators of the value through competitive market dynamics.
“Business, working through free markets,” Mackey said, “is possibly the greatest force for good on the planet today. … Business increases prosperity, ends poverty, improves the quality of life, and promotes the health and longevity of the world’s population.”
Through business Mackey gleaned the truth of Philippians 2: to look out for the interests of others.
Steve Forbes contends that with the rise of democratic capitalism humankind has become wealthier and healthier than in all the previous centuries combined. In a democratic capitalist economy, he says, people interact in networks of cooperation that “teach discipline and moral lessons—from the importance of showing up for work and handling money responsibly to the value of teamwork.”
Entrepreneurs, whether they’ve read Philippians 2 or not, must look out for others’ interests. They must, Jay Richards says, if they’re to stay successful, not look at their money but through it—to the good it can do not only for them, but for their neighbors.
Recognizing that Justice Doesn’t Demand Equality
Scripture repeatedly conveys God’s concern for the poor, and the passages aren’t ambivalent: It’s a concern we’re to share. It’s equally clear that God never intended for all of us to all have equal possessions. Not now, nor in the kingdom to come.
In Luke’s gospel, for example, we learn that when we stand before Jesus to give account for what we’ve done He’ll say to one person, “You shall have authority over 10 cities,” and to another, “You are to be over five cities” (Luke 19:17,19). That’s inequality. Paul informs us that “we must all appear before the judgment seat of Christ, so that each one may receive what is due [emphasis added] for what he has done in the body” (2 Corinthians 5:10), demonstrating again that there are degrees of reward in Christ’s kingdom. Jesus tells His inner circle that they (not you or me) will sit on the 12 thrones (Matthew 19:28). He talks about the how "the least" and humble will be greatest in the kingdom of God. He teaches the parables of the talents and of the workers in the vineyard, illustrating again that God, who is perfectly just, doesn’t share His blessings equally. The same, then, can be true of society.
The Bible doesn’t prescribe an economic system, but we do know from what God has revealed, that where there are varying gifts and responsibilities, there must be varying rewards.
Presuming Man’s Depravity
Hall and Burton state that capitalism is the one system that deals honestly with the Fall and its economic consequences.
They point to Adam, who once worked the Garden gladly. So much so, John Calvin believed, that he “might be said to play; for he was not formed for idleness but for action.” Since the Fall however, work is no game, and it’s often no fun. With the thorns and thistles come sweat and aggravation.
The Calvinist work ethic, Hall and Burton explain, synthesizes our pre- and post-Fall natures. It recognizes that we were originally “formed for action,” but that now, as a result of the Fall, we aren’t inclined to work hard for the sheer joy of the labor. Depravity affects motivation, they say, explaining why we have detailed job descriptions, incentives, rewards for work well done, and consequences for poor performance. In a fallen world, these bring accountability.
Socialist communities fail, the authors say, because non-productivity is tolerated. In socialist economies, high goals aren’t set, lousy work is condoned, there’s no motivation to improve one’s living standards, and assets are routinely redistributed. Therefore, there’s nothing to encourage the investment of one’s time, effort, or assets.
But a healthy economic system must not only motivate the lazy; it must restrain the greedy. Adam Smith, author of the Wealth of Nations, once observed: “In spite of their natural selfishness and rapacity, businesspeople are led by an invisible hand … and thus without intending it … [they] advance the interest of the society.”
To illustrate Smith’s point, imagine our common caricature of a “rapacious” used car salesman. He may lie and cheat and try to persuade us to buy a broken-down junker. But, according to Smith’s logic, “in spite of” his greed and dishonesty, he can’t force you to buy his lemon. In a free market economy he must—if he’s going to feed his kids and pay his mortgage—offer you a car that you’ll willingly, even happily, buy.
The Bible doesn’t dictate a particular economic system, but it does describe man’s depravity. Which means our system must encourage us—smarmy as we’re prone to be—to work hard and to look out for one another.
Reflecting God’s Heart for the Poor
Wayne Grudem believes that the only long-term solution to world poverty is for men and women to start businesses. His belief stems from Scripture’s admonition that “if anyone has the world’s goods and sees his brother in need, yet closes his heart against him, how does God’s love abide in him?” (1John 3:17). Grudem believes that business offers a solution because of Galatians 2:10, where Paul says, “they asked us to remember the poor, the very thing I was eager to do.”
Both verses beg the question: How? What does it mean to remember the poor? And how, exactly, should we open our hearts to them? A short-term solution, of course, is to give. The people of Haiti need money, food, water, medicine—and they need it now. But when the crisis passes, the money will be gone, the food and water will have been consumed, and the people of Haiti will still be poor.
The only lasting solution to poverty is wealth, and only business—not government, not non-profits, not even the church—creates wealth.
Then why, we naturally ask, hasn’t business solved the problem? Hall and Burton point to several barriers that “prevent the flood of business’s benevolent overflow.” Excessive governmental regulations inhibit entrepreneurs. Poor governments often confiscate private wealth. Weak governments are powerless to punish crime, and thereby suppress a healthy business climate. Repressive governments intentionally stifle businesses, thus thwarting a challenge to their power.
But another barrier is negative attitudes. People won’t go into business if they’re told it’s evil. They’ll never start a new enterprise, and they’ll never know the freedom John Mackey discovered—of satisfying consumers, creating prosperity, sharing profit with those who create value. Instead, Wayne Grudem says, they’ll sense “the faint cloud of false guilt.” Because who, Grudem rhetorically asks, can enjoy “being an evil materialist who works with evil money to earn evil profits by exploiting laborers and producing material goods that feed people’s evil greed and enhance their evil pride and sustain their evil inequality of possessions and feed their evil competitiveness?”
If the devil himself wanted to keep God’s image bearers in the wretched bondage of lifelong poverty, Grudem continues, he’d persuade them that business is evil, and convince them to oppose it at every turn.
The godly alternative, of course, is for believers to subdue the earth, to use time, talent, and the materials God’s given to earn profits, and to use them to produce jobs and to care for real needs.
"Mankind’s unfettered creativity reflects God’s image, and this is one of the least appreciated truths of economics."
The love of money is the root of all kinds of evil; its pull is powerful, causing some to even walk away from the faith (1 Timothy 6:10). And we in the U.S., who are wealthier than any people have ever been, need to be constantly warned. But that doesn’t mean there isn’t a moral quality to wealth. Nor does it mean that the essence of capitalism is greed. Market economies work, Jay Richards says, because they allow wealth to be created. And only wealth can reduce poverty.
Richards poses the question: How is wealth created? Economists, he explains, can’t easily answer the question, but Christians can. The key source of material wealth in a modern market economy, he says, is not material—it’s spiritual. According to Richards, “Wealth is created when our creative freedom is allowed to prosper, when it’s undergirded by the rule of law and suffused with a rich moral culture.” Mankind’s unfettered creativity reflects God’s image, and this, Richards points out, is one of the least appreciated truths of economics.
"Business has a special role to play in bringing hope—and not only hope, but actual economic progress—to indigent people," writes Michael Novak.. "And that is one of the noblest callings inherent in business: to raise up the poor.”
Richard Doster is the editor of byFaith. He’s also the author of two novels, Safe at Home (2008) and Crossing the Lines (2009), both published by David C. Cook Publishers.
Comments
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Christina
Mancini
Southington, Connecticut
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David
Wallover
Harvest PCA, Medina, OH
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Dan
Vogt
Jackson, MS
Calvin’s economic views are now irrelevant because the capitalism that he saw in Geneva and Strasbourg bears only an accidental relationship to current practices in New York and Hong Kong.
Mr. Mackey may have earned his income in a cooperative endeavor, but Bernie Madoff deliberately cheated his clients. While Andrew Carnegie was an innovative industrialist and a generous philanthropist after he retired, the workers in his steel mills labored seventy-two hours a week and were summarily fired if they protested or organized a union.
In what way does capitalism restrain greed? Adam Smith’s hope that the invisible hand of the market place would prevent injustice is unfulfilled.
Thank you for writing a thought provoking article and for editing a magazine which seeks to relate faith and society.
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Rob
French
Mountain Home, ID
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Lance
Lloyd
C/S CO
Dr. Robert Costanza made two staggering observations challenging these assumptions. First: the energy embedded in the end product of 92 industries studied was realistically of equal value to the final retail price. Second: the value of natural processes we "creators" take for granted, such as decomposition and pollination, are "worth" about $33 trillion annually; God’s abundance, not ours. His numbers suggest something other than the “creation” of wealth out of thin air (spiritual, as the article suggests, or otherwise), as do the Laws of Conservation.
The naïve suggestion that “buisness” holds mystical keys to wealth “creation” in the developing world, if only markets were more open, ignores the complicated tyranny of global capitalism and hypocrisy of wealthy nations that achieved market share and prosperity through protectionist trade policies. Even Greenspan repented of the “invisible hand” theory of moral self-correction.
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Gus
Espino
Bradenton FL
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Paul
Drake
Hamilton, MA
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David
Noble
Washington DC
I appreciate Mr. Doster raising the issue and his brief treatment of it, as well as the discussion it has raised.
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Ken
Jones
North Carolina
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Scott
Reiber
Mississippi
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Allen
Baldwin
Peachtree City
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Doug
Kennedy
Newville, PA
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Jason
Dausman
St. Louis
I agree that the greedy can succeed in a capitalist country, even cause harm to their employees. Madoff traded money and did so dishonestly in a complex financial world. However, his abuses to the detriment of thousands, do not detract from the thousands of small businessmen and woman who work hard and employ people justly in a free market which provides dignity for the employee and food for their families.
In addition the status of labor in the 19th century was the onset of the industrial revolution. Laws and regulations protecting workers and the condition in which they lived took time to develop and be implemented.
A system full of broken individuals will always be in need of reform.
What alternative system offers freedom from the greed of the Madoffs of the world? Only the kingdom ushered in by Christ's return.