171 Captialism & Christians

Returning recently from a conference featuring some influential contemporary thinkers, I noticed a book in my library with essays by a number of them–The Capitalist Spirit: Toward a Religious Ethic of Wealth Creation (San Francisco: Institute for Contemporary Studies, c. 1990), edited by Peter Berger. One of the 20th century’s most influential sociologists, Berger was driven by the data to shift from an anti-capitalist to a pro-capitalist stance, and in the book’s foreward he explains that the most important thing about wealth is that it must be created. This has proven to be a difficult concept for many religious thinkers to either understand or embrace, for most pre-modern religious thinkers, living in relatively static societies, could only envision justice through distributing existing wealth. Like the 18th century mercantilists, today’s “zero sum” economists envision a world with finite resources that need to be properly shared.

We all know that many pre-modern 16th century thinkers like Martin Luther resisted any re-casting of Medieval cosmology. But in time most everyone recognized that Copernicus and Kepler had rightly read the skies and set forth an accurate account of the ways the world functions. Equally important economic insights came to light in the 18th century as the Industrial Revolution opened up new avenues for productivity and the creation of wealth. But many ethicists, rooted in a pre-modern philosophy, failed to craft their moral convictions to fit the new economy. “It is no wonder, then,” says Berger, “that so many religious thinkers have been anticapitalist and prosocialist in their instinctive inclinations” (p. 2). Having shared such inclinations for years, Berger sympathizes with them. But he finally realized how they misled him. They simply are not true.

Nor have they ever been! Nostalgic visions of the Early Church as a precursor of socialism–sharing “all things in common”–are unfounded. Socialistic assertions regarding the Early Church resemble Rousseau’s portrayal of the “noble savage” in North America. The distinguished ancient historian Robert M. Grant, in “Early Christianity and Capital,” concludes that, contrary to the assertions of Christian socialists: “The church both ancient and medieval respected private property. The 38th Article of Religion of the Church of England . . . simply follows the central tradition when it insists that ‘the Riches and Goods of Christians are not common, as touching the right, title and possession of the same; as certain Anabaptists do falsely boast.’ In an equally traditional manner, the article balanced this statement with the exhortation that ‘nothwithstanding, every man ought, of such things as he possesseth, liberally to give alms to the poor, according to his ability” (p. 28).

Contrary to those who winnow the Old Testament for their socialistic economics–often taking things such as the Jubilee Year out of context, David Novak (an eminent Jewish scholar) insists that “equality” in the Old Testament has meaning only “in the sphere of rectification, that is, the restoration of private property misappropriated in one way or another” (p. 32). Even “charity” was not emphasized, for it too often renders recipients passive and dependent. In fact, economic justice, “in accordance with the principles of the Covenant, is thus best accomplished by loans” (p. 38). And commercial loans, Jewish teachers decided, must be understood differently from agricultural loans. Thus loaning money for investment justified collecting interest, whereas agricultural loans (generally of a brief duration) did not. “In other words, the loan is not given because the borrower has nothing but the shirt on his back, so to speak. Rather, the loan is now more probably for the sake of investment, a risk taken by both lender and borrower in the hope that the future will yield a better income than the present. In this case, the need for the sabbatical year release from indebtedness, which in the agricultural context would make a loan into a charitable gift, would no longer be required” (p. 47).

Michael Novak’s essay, “Wealth and Virtue: The Development of Christian Economic Teaching,” shows how a select circle of 18th century Scottish “moralists” (David Hume and Adam Smith) understood the essence and importance of free enterprise capitalism, defending the proper pursuit of wealth as admirable and socially beneficial. They “sought to construct a new ethos for Western civilization and, indeed, the world” (p. 70). Both sought to alleviate the plight of the poor, and envisioned “the surge of spiritual independence and the extension of humane sympathies that would flow from the sway of a more free and beneficent regime” (p.74). They particularly sought to replace the elitist, anti-capitalist position generally championed by intellectuals and artists with one favoring the bourgeoise, which empowered ordinary people. Indeed, though often portrayed as advocating a ruthless “dog eat dog” economy, Adam “Smith’s discussion reminds one of Saint Thomas’s definition of love: to will the good of another” (p. 68).

George Weigel, reknowned for his definitive biography of John Paul II, Witness to Hope, recounts the uneasy history of “American Catholicism and the Capitalist Ethic.” Whereas many Protestants have supported free enterprize capitalism, Catholics tended to critique it. Like Southern slave owners, enamored with the novels of Sir Walter Scott, they idealized the agrarian socioeconomic structures of the Middle Ages. Uneasy with the individualism evident in Protestant America, 19th century Catholics like Orestes Brtownson condemned capitalism and proposed an ideal “Christian society.” Eminent Catholic clerics early sided with the Knights of Labor in the 1880s, embracing its socialist prescriptions and strongly supported FDR’s New Deal 50 years later. Half-a-century later, in the 1980s, despite mounting evidence to the contrary, Catholic bishops and academics generally denounced “Reaganomics” and free enterprise capitalism. However, in the aftermath of Vatican II, and a fresh Catholic openness to the modern world, came the “creation-centered social thought of John Paul II” (p. 96). From the highest authority came the endorsement creative entrepreneurship. “Wealth creation,” to John Paul II, “is a specifically economic form of human participation in God’s abiding creativity, God’s sustaining care for his creation” (p. 96). It’s time, Weigel argues, for Catholics to embrace the free enterprise economy that has so uplifted the world and join John Paul II in making it Christian.

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In The Church and the Market: A Catholic Defense of the Free Economy (New York: Lexington Books, c, 2005), a Catholic historian, Thomas E. Woods, endeavors to counteract the anti-capitalist views of Christians who fail to see its worth. The Industrial Revolution, often deplored by socialists because of its reliance on child labor and exploitative practices, was in fact a great boon for the working classes. Bad as it was, it was an improvement on what went before! “To say that the free market led to the destruction of some previously existing, harmonious community life is simmply to defy historical testimony” (p. 165). Child labor, for example, was no new thing in 1800! Farm kids worked long and hard from time immemorial. To work hard in factories was not a major change. What changed, as economic conditions improved during the 19th century, was the ultimate abolition of “child labor” and the radical improvement of their living conditions–life expectancy, nutrition, education, etc.

Woods especially urges readers to seriously study economics and to discover truths discerned by 15th and 16th century Spanish Scholastics such as Juan de Mariana, as well as 20th century Austrians such as Ludwig von Mises. Whereas modern socialists, enthralled with Karl Marx, have embraced an illusion, the truth-seeking economicsts have carefully studied mans’s nature and prescribed the best ways for his flourishing. The Scholastics and Austrians, Woods says, both “sought to ground economic principles on the basis of absolute truth, apprehensible by means of reflection on the nature of reality” (p. 216). Prices, for example, rightly reflect market demand. Consumers–not the labor expended producing–should determine the value of various goods. Whenever the state intervenes, artificially setting “just prices,” dire if unintended consequences follow. Just wages are also best set by the marketplace. To Domingo de Soto, writing in the 16th century, workers who agree to a given salary are fairly paid when their employer pays as promised. Wages rise when wealth is created, and the prerennial socialist impulse to dictate “fair wages” generally militates against the very creative process that justifies higher salaries.

Money and banking, of course, are major economic concerns. We Americans live under the rule of the Federal Reserve, which, by issuing “fiat currency” basically “creates money out of thin air” (p. 93). Since it was founded in 1913, “the dollar has lost about 95 percent of its value” (p. 93). While claiming to control inflation, the “Fed” has, in fact, caused it! There are major moral problems with fiat currency, Woods argues, for it is, in fundamental ways, “not conceptually distinct from simple counterfeiting” (p. 97). The Spanish Scholastics knew this centuries ago. They also knew that some of the traditional teaching regarding usury could not address the dynamic, commercial economy of the world emergent in the 16th century. Indeed, “Catholic theologians had overturned virtually all of the older arguments against usury–at the very time that Martin Luther was busily attempting to rehabilitate them” (p. 114).

Regarding the welfare state, Woods invokes a recent warning by Pope John Paul II: “By intervening directly and depriving society of its responsibility, the Social Assistance State leads to a loss of human energies and an inordinate increase of public agencies, which are dominated more by bureaucratic ways of thinking than by concern for serving their clients, and which are accompanied by an enormous incrfease in spending. In fact, it would appear that needs are best understood and satisfied by people who are closest to them and who act as neighbors to those in need” (p. 147). But the welfare state directly harms neighborhoods and families. And it undermines private property rights–rights that Pope Leo XIII branded “sacred and inviolable” (p. 195).

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Woods anchors his position regarding “the church and the market” in the scholarly work of Alejandro A. Chafuen, Faith and Liberty: The Economic Thought of the Late Scholastics (New York: Lexington Books, c. 2003). The popularity of Max Weber’s thesis, yoking capitalism and Calvinism, has obscured the numbers of Catholic philosophers who carefully situated free enterprise capitalism within the natural law teachings of the Church. “Our analysis of the Schoolmen’s writings,” says Chafuen in his conclusion, indicates “that modern free-market author owe the Scholazstics more than they realize. The same can be said for Western civilization” (p. 159).

This meant they stressed the sanctity of private property. Noting that many of Jesus’s associates “were quite wealthy for their times” (p. 32), they “declared it was heresy to say that those who have property cannot enter the kingdom of heaven” (p. 33). “According to [Juan de] Molina, private property may have existed even before original sin, since in that state, men could agree by common consent to divide the goods of the earth. The commandment ‘Thou shalt not steal’ implies that the division of goods does not pervert natural law” (p. 36). One scholar says that for these Scholastics “‘the right to property was an absolute right that no circumstances could ever invalidate'” (p. 42). This, Chafuen says is because: “Private property is rooted in human freedom, which is founded in human nature, which, like any other nature, is created by God. Private property is the essential prerequisite for economic freedom” (p. 160).

When they considered “public finance,” the Scholastics cautioned against government involvement in economics. “To believe in private property means to believe in limited government” (p. 132). Taxes should be minimal. The budget should be balanced. The currency should never be debased as a means of redistributing wealth. Administrative officials should not be allowed to grow rich at public expense. More than anything else, high taxes produce poverty. “‘Taxes are commonly a calamity for the people and a nightmare for the government'” said Juan de Mariana. “‘For the former, they are always excessive; for the latter, they are never enough, never too much'” (p. 57).

Contrary to socialists, for whom the “labor theory of value” of commodities is an article of faith, Scholastics trusted the marketplace to establish fair prices. Commerce and trade are necessary for a healthy society. Surviving through subsistence farming and barter economics condemns folks to perpetual indigence. To Molina, one should not scoff at different prices for the same goods in different areas, for “‘the just price of goods depends principally on the common estimation of the men of each region. When a good is sold in a certain region or place at a certain price (without fraud or monopoly or any foul play), that price should be held as a rule and measure to judge the just price of said good'” (p. 75). We value goods insofar as they are useful to us. It’s their usefulness–not the effort invested into making them–that determines what we’re willing to pay. Efforts to fix prices, through monopolistic controls established by either entrepreneurs or workers, are harmful and wrong. Wages, the Late Scholastics taught, should be set by the marketplace, where a “just” wage is whatever a worker freely accepts. A doctor’s wages, it follows, will be higher than a garbage collector’s, for we are willing to pay more for medical care than manual labor.

In all their works, the Scholastics sought to clarify the nature of justice for all–and especially for ordinary folks. “The protection of private property, the promotion of trade, the encouragement of commerce, the reduction of superfluous government spending and taxes, and a policy of sound money were all detined to improve the condition of the workers. They recommended private charity as a way to alleviate the sufferings of those who could not work. According to the Late Scholastics, and in agreement with the Holy Scriptures, the rich are under obligation to help the poor. Money could be better used if the rich would reduce their superfluous spending and increase their alms” (p. 110).

Still worth reading, to understand the Evangelical economic thought, is Craig M. Gay’s With Liberty and Justice for Whom? The Recent Evangelical Debate over Capitalism (Grand Rapids: William B. Eerdmans Publishing Company, c. 1991), originally written as a Ph.D. dissertation under Peter Berger’s guidance. As one would expect, this work is detailed, carefully documented, and quite helpful for anyone wanting to hear different voices from within Evangelicalism. Gay first noted the growing influence of the “New Class” intellectuals within Evangelicalism who profit from and thus endorse the leftist planks of the welfare state. This “New Class,” says Peter Berger, “‘rhetorically identifies its own class interests with the general welfare of society and especially with the downtrodden. . . . This is especially so because the knowledge class has such an interest in the welfare state, which is ostensibly set up on behalf of the poor and of other disadvantaged groups'” (p. 189). Led by “radicals” such as John Howard Yoder, Jim Wallis and Ron Sider, leftist Evangelicals denounce capitalism and America’s “oppressive” society. “Jim Wallis has stated, for example, that ‘overconsumption is theft,’ and Ronald Sider has insisted that ‘an affluent minority devours most of the earth’s non-renewable resources'” (p. 31). Anabaptist thought undergirds much of their protest, and they clearly long to establish their vision of the “kingdom of God” in this land. This should come through redistribution–taxes on the rich funding programs for the poor, legislation securing entitlements establishing various kinds of economic, racial, and sexual “equality” everywhere.

Clark Pinnock, closely associated with Wallis in the ’70s, later renounced his radical views, stating: “I remember being asked if I realized the Marxist content of what we were saying . . . and being puzzeled by the question. . . . It seemed reasonable to think of the rich as oppressors, and the poor as their victims. The Bible often seemed to do the same thing. It was obvious to me that the welfare state needed to be extended, that wealth ought to be forcibly redistributed through taxation, and that the third world deserved reparations from us, that our defense spending was in order to protect our privilege, and the like'” (p. 36). What’s now clear to Pinnock and other scholars is the Marxist influence on the Evangelical Left.

Rejecting Marxism and defending capitalism is the Evangelical Right, represented by Harold Lindsell, for years the editor of Christianity Today, and Ronald Nash, an influential Reformed philosopher, who taught at Westminister Theological Seminary. “In a sense,” Gay says, “those on the right have become traitors to the New Class” (p. 193). Thus they rarely if ever get invited (as does Jim Wallis) to high profile meetings of the inner circle of opinion shapers in New York and Washington, D.C. They may be intelligent, but they’re not accredited member of the reigning intelligentsia that controls the media and universities.

Those on the Right are, Stephen Brint says, “‘blue-collar workers, small-business people, and farmers'” (p. 191). They tend to be older, less educated, and live in what’s now called “red” states. Free market capitalism, they insisted, provides the best system yet developed to produce and distribute goods. The world is far better off as a result of modern capitalism. Wealth is created and spread abroad through free trade, and “in such an economy, no man becomes rich by oppressing another but rather by helping others” (p. 70). Thinkers on the Right anchor their defense of capitalism in the natural law. Given our nature, it’s the best economic system. To Lindsell, the free enterprise approach is approved by God’s Word and “is binding on all men everywhere.” Divinely ordained, “it is normative, it will work, and it will prove itself to be superior to socialism, which can only be validated by denying what God has revealed and can only function by destroying the foundations on which Western culture has beeen built'” (p. 100).

Neither Left nor Right is the “Evanglical Center” that finds “capitalism as a cause for concern.” Folks like Carl F.H. Henry (in The Uneasy Conscience of Modern Fundamentalism) and Bob Goudzwaard (in Capitalism and Progress) represent, for Gay, the evangelical mainstream. Henry clearly rejected Marxism, but his concern for social justice led him to criticize aspects of modern American capitalism, and “Goudzwaard has argued that the crisis of Western civilization . . . has been precipitated by the idolization of progress in the modern period, a problem linked to the institutionalization of modern capitalism” (p. 136). Such “mainstream” thinkers want to preserve valuable aspects of free enterprise capitalism while encouraging governmental intervention to mitigate its excesses and provide basic welfare needs for all peoples.

Gay concludes his book with two chapters evaluating what he has described, providing the reader a helpful perspective. “This is the best survey of evangelical thought about capitalism that I know of,” says Goudzwaard, and I concur. It still merits attention, nearly 20 years after it was written.