The Demise of Capitalism and the Christian’s Response

Capitalism is an unfortunate term; it was coined, after all, by someone hostile to that economic system, and the term has never lost its pejorative connotation. So strike that term and consider a synonym, one that is not only neutral but also more descriptive. I shall discuss the market system, and in particular, the demise of this economic system, and the Christian’s response to its death.

But first, there is a preliminary bout: defining the market system. It is necessary to realize that the market system is not everywhere the same as the economy of the United States.

All systems of organizing an economy have certain similarities; for example, all economies must determine what goods will be produced and who will enjoy the fruits of this production. All economic systems in some way coordinate people and materials in making these determinations.

The market system makes these determinations and accomplishes this coordination through an institution of private property rights and voluntary exchange. In a market economy, people generally make their living by selling things they own, such as their labor services, to businesses. And they then use the money they receive to buy goods and services from the business sector. These exchanges are voluntary: no worker is forced to sell labor to a particular firm, and no customer is forced to buy the products of a particular firm. This voluntarism applies to the business sector as well: no firm is required to produce only certain goods or sell only to certain customers.

The market system operates impersonally. This is not to say that buyers and sellers never meet face to face. They frequently do, and there is often room for considerable contact, negotiation, even camaraderie. What the impersonality of the market system means is that no one person can be held responsible for the eventual outcome of the market’s operation.

For example, the market system determines how many pairs of pants will be produced, and in what styles. There is no person, located in Washington, D. C., or in the garment district of New York, who decides how many flare jeans are to be produced in 1972, no person who directs the consumption patterns of buyers or the production plans of producers. This “decision” is the result of decisions made by thousands and thousands of persons—customers and businessmen—operating rather independently of one another. If consumers decide they want more flare jeans and fewer pleated gabardines, their dollar votes cast in the marketplace will mean that efficient producers of the jeans will prosper and expand, while producers of pleated gabardines have three options: to contract their operations, shift to the production of flairs, or go broke. In a sense, then, producers of pleated gabardines (and other products) are compelled to do what consumers want. This is why the market system is called one of consumer sovereignty.

The motivating impetus of the market system is self-interest, sometimes called the “profit motive.” Consumers and businessmen both deal in ways each finds advantageous. The shoe-repair man does not repair shoes out of a desire that his customers be nicely shod; nor do they give him business out of a desire to see his family become wealthy. They consider their self-interest; he considers his. They decide a pair of new heels is worth more to them than $4—or they would not pay $4 for them. He considers the $4 worth more to him than the heels and his labor—or he would not agree to do the job. In a very real sense, each considers himself better off making the deal (and note that the customers were as much motivated by the “profit motive” as the businessman).

Because the market system can organize economic activity impersonally, the state, i.e., the government, can remain rather small. Its activity can be limited to dispensing justice and enforcing laws, providing for national defense, coining money, and umpiring the ground rules of fairness and openness necessary for the operation of the market system.

I

That ends the preliminary bout; so much for what the market system is. On paper it can seem quite delectable. In fact, for an economist to portray the market system analytically without seeming to justify the system is not easy. After all, it appears to be a beneficent system that provides consumers with what they want and compels business firms to be efficient in meeting these wants.

Yet we are witnessing the death of the market system. A year ago, this would have seemed a bolder statement, but the remarkable events of last August might convince even the most skeptical that the market system is near death. Now August was not the time of death, nor will wage and price controls be the only item on the death certificate. The final autopsy will show death by multiple wounds, inflicted by at least four groups. I would like, very briefly, to identify the groups responsible. Note that an individual can be in more than one group; indeed a ubiquitous person could make all four.

The first group responsible for the demise of the market dislikes consumer sovereignty; its members oppose the option given to the customer in a market system to choose freely. This group includes moralists, some of whom are Christians. For example, Carrie Nation could not tolerate the voluntary exchange of money for liquor; D. L. Moody was known to break up checkers games. If this famous pair had their druthers, the sale of liquor, checkers, and certain other products would not be tolerated.

A more contemporary version of the moralist is the elitist who opposes consumer sovereignty, not on religious grounds, but rather because the unfettered consumer has such bad taste, preferring the Patriots to the Pops, preferring Harold Robbins to John Keats, and in general devoting gigantic amounts of resources to cheap cosmetics, sports, faddish clothes, and ridiculous automobiles. Professor Galbraith once remarked that he thought Stuckeys roadside restaurants were particularly iniquitous, presumably himself preferring Locke-Ober; his book The Affluent Society is the best articulation of the point I am making.

The moralists and elitists have been joined recently by the consumer protectionists. These persons argue that in an age of the complicated products and manipulative advertising, the consumer can no longer afford to be sovereign, but rather needs to be protected from ignorance and folly in the purchase of an array of goods, ranging from drugs and food to, more recently, toys, automobiles, even pajamas.

The moralists and elitists and consumer protectionists, the members of this first group, will not alone destroy the free market. Through the actions of a Moody or the proposals of a Nader, they only prevent the market system from allocating particular goods, such as checkers, or maybe Jaguars, or flammable nightgowns. Still, there is a point when this list becomes so long that it becomes a charade to talk of consumer sovereignty.

Perhaps the severest wounds to the market system have been administered by the second group: businessmen who dislike the rigors of competition inherent in a market system. One of the more difficult chores in teaching economics is to explain the extent to which, Chamber of Commerce literature notwithstanding, businessmen dislike the market mechanism but have warm affection for the government regulation that protects them from the chilling winds of competition.

It is a commonplace, in one branch of economics, to show that the federal regulatory agencies, such as the ICC and the CAB and the FCC, have done more to protect the industries they supposedly regulate than to protect the customers those industries serve. We seldom see the extent to which government regulation keeps prices up until the regulation breaks down, as it has in air transportation. Note that it was not airline passengers who recently persuaded the CAB to put an end to price-cutting on the run between California and Hawaii—it was United Air Lines. Without the CAB, the rates would remain at $73, instead of $98. To my knowledge, no textile customer requested the recent government textile quotas that protect textile mills from foreign competition, nor did the New England home-owner seek the present petroleum quotas. It was American businessmen who sought and secured the demise of the unfettered market in steel, textiles, petroleum, airlines, as well as railroads, trucking, and ethical drugs. The present wage and price controls are not without their vigorous supporters in the ranks of big business; it is, after all, George Meany, not Henry Ford II, who argues that the federal government has no right to interfere with contracts entered into voluntarily.

The third group promoting the demise of the market system consists of intellectuals. George Stigler once defined intellectuals as people who spend more money on books than on golf clubs or those who would rather be “a Nobel Laureate than the head of the Great Atlantic and Pacific Tea Company.” Most professors are intellectuals, as are many members of the clergy and media.

Note that the market system has been kind to intellectuals. Because it has created so much affluence, this system has been able to support many of them. But the intellectual has never been able to forgive the market system for two sins: one, it gets along so well without intellectuals; two, its motivational impetus seems so crass, so infra dig, compared to the ideals of the intellectuals’ realm.

Make no doubt about the first point: the market system has been able to generate goods and services at a rate no other economic system has been able to match, all without any substantive assistance from the intellectual community. Our own economic abundance is due more to J. C. Penney and E. I. duPont than to our great economists such as Paul Samuelson and James Tobin; our GNP stems more from the business talents of James Duke and Cornelius Vanderbilt than from the scholars at universities that bear their names. And for intellectuals, subject to at least a touch of vanity, this truth is a difficult one to behold.

Second, to be sympathetic to a system based on self-interest is difficult for people who work with ideas and ideals—at least those untrained in economics. For an intellectual, to openly operate in one’s self-interest seems so base that the market system appears inherently nefarious.

The fourth and final accomplice in the death of the market is not really a group; it is an institution—the institution of government. Some scholars have argued that the government is the natural foe of the market, because an unfettered market, by definition, leaves only a small role for the state.

Whether or not the market and the state are natural adversaries, it is true that, because the government has a monopoly on law-making and law-enforcement, and because certain laws can be very profitable, there is pressure on the government to pass laws that restrict the operations of the market, for the benefit of those securing the legislation. And because these beneficiaries of the legislation are then beholden to the state, the state can increase its power, and the trappings of this power, through measures that weaken the market. These measures are not so much the blatantly repugnant bribing of congressmen and judges to secure business favors as the more subtle courting of public servants through dinners, meetings, and conventions, campaign contributions, and the many various ways business can promote the careers of sympathetic government employees.

II

My argument is simple to state: the market system is meeting its demise, and four groups are largely responsible. Price and wage controls, tariffs and quotas, restrictions on the sale of gold and silver, legislation to bail out financially embarrassed companies, buy-American provisions, protection of the union shop, resale price maintenance laws, and agricultural production allotments are all simply manifestations of its passing away. And what, then, should be the Christian’s response? Should he regret or welcome the death of the market system?

Let me acknowledge at the outset the controversiality of almost any answer to this question. Some Christians argue that the market system is the only economic system consistent with the Christian faith; there is a periodical, Christian Economics, that promulgates this view. And to be sure, Max Weber contended that Christianity made the market system possible in the first place. On the other hand, Christianity has long had socialists among its ranks; former British prime minister Clement Attlee once wrote that “the first place in the influences that built up the Socialist movement must be given to religion. England in the nineteenth century was still a nation of Bible readers.” And to add to the confusion, there are other sincere Christians, heavily influenced by the writings of Kuyper and Dooyeweerd, who argue that both the decentralized market system and centralized planning are unholy—that the economy should come under a “sphere sovereignty” in which all institutions, even corporations and labor unions, will be subject to the will of God.

To claim a resolution of these divergent views would be pretentious. But let us look at some of the key elements of the market system, beginning with consumer sovereignty.

Have no doubts about it: consumer sovereignty means goods and services will be promoted and sold that will provide great temptations for Christians. The Christian will often abhor what is going on around him, or at least he should. But inherent in the market system is also the freedom to procure goods and services that can facilitate the Christian life. Probably only those who have lived in an economic system without consumer sovereignty, where the state has decided that paper shall be used to produce political tracts but never devotional tracts, can fully appreciate the benefits of consumer sovereignty. I suspect persecuted Christian minorities would gladly exchange the temptations of consumer sovereignty in a pagan society if, in the bargain, society would extend to them the right to buy Bibles, church buildings, and the like.

And what about an economic system based on private property? There is an old debate in Christian circles: Christians who support socialism used to point to the Book of Acts, where those in the church shared all their possessions; Christian advocates of the market system countered that since this sharing did not seem to continue, it was clear that holding property in common was unworkable and unbiblical. It is not a very good debate, really.

The Bible does teach that we are to have respect for the property of others, neither stealing it nor coveting it. It does not per se prohibit our making voluntary exchanges for the property of others. What is clear is the responsibility Christians have in the use of their property, and here the market system permits great freedom—freedom in a Christian sense. In common parlance, freedom means self-determination. What I mean is freedom from the power of sin, being freed to do God’s will, to do one’s God-given calling. The market does not dictate how one is to use private property; consequently the Christian is free to use and consume his or her property, exchange it, share it, or bequeath it, however God directs.

And now what of the admittedly crass motivating impetus of the market system: self-interest? It is one of the first lessons of economics that a system based on self-interest need not produce economic results that deviate significantly from the interests of consumers. And it is one of the first axioms of the Christian world-view that man is not a noble creature, only temporarily corrupted by the evils of the society around him, but rather is quite imperfect. One imperfection is a general propensity to consider his own interests first, and the market system capitalizes on this propensity. A great virtue of the market is that it takes this primal force of self-interest and imperfectly, but tolerably, converts it to the general social interest. For example, a clerk may hate your looks, despise your religious beliefs, have distaste for your skin color or disdain for the length of your hair. But it is in that clerk’s narrow, crass, self-interest to treat you with at least a modicum of decency when you shop.

It is naïve to believe that prior to the market system, people did not operate out of their own self-interest, or that they will refrain from doing so after the market’s demise. The peasant serf, after all, was not notably angelic, and no one has convincingly argued that since the socialization of the means of production, altruism and a deemphasis on materialism have reached dizzying heights in Russia and Hungary. The market system did not cause the “profit motive”; what it did accomplish was to extend the profit motive beyond a privileged class by opening profit opportunities to individuals and groups historically lacking these opportunities.

And what, finally, of the common charge that racism is a component of, or result of, the market system? Maintaining that a market system promotes anti-Christian racial discrimination is an error. Probably the most egregious discrimination in this country has been against blacks and Indians. In the case of blacks, the discrimination dates from slavery, i.e., government restrictions that prevented most blacks from entering the labor market and themselves offering their services to the highest bidder; slavery, of course, is inconsistent with the market system for that reason. With the labor market closed off to slaves, these unfortunate people had little incentive to develop highly marketable labor skills.

And then after the de jure abolishment of slavery, once again it was largely the failure of the state that hampered the economic advance of many blacks. In a market system, as I mentioned earlier, a fundamental role of the state is protection of property. But time and again, the state, especially police and courts, did not give the same protection to the property and economic activity of blacks as it gave to whites; many blacks were unable to secure legal protection in offering their labor services and property and business talents for sale in the higher paying areas normally held by whites. For that matter, legal protection was and is often withheld, and outright persecution imposed upon, whites who have regular business dealings with blacks, or have served them, or have sought to sell them their homes, businesses, or farms; this also has hindered the economic progress of blacks. It is a sham to translate the negligence shown by the police, the courts, and local, state, and federal government in not giving blacks equal protection and opportunity under the law into a criticism of the market system. Yet it is often done.

What I am arguing is this: the market system seems to be dying, and the Christian should pay his respects. The market system has given Christians enormous freedom of worship, enabling them to direct property into the production of churches, hospitals, and schools. And in no other economic system is religious freedom so inherent in the nature of things. This is vividly evident when one examines other societies where central planners failed to provide for the production of items important for the worship or understanding of God. Brother Andrew’s book, God’s Smuggler, portrays a society where the production of Bibles did not fit into the government’s five-year plans; newspapers recently disclosed the plight of Jews in countries where the state decided there would be no unleavened bread to make matzoth for Passover. In a market system, these earnest preferences would not be ignored; there would be both Bibles and matzoth.

In point of fact, the protection that the market gives goes much deeper: where Christians, or any religious minority, find themselves persecuted, the existence of even a small market sector can facilitate their secular survival. The reason the market provides protection and economic sustenance to otherwise persecuted minorities is that customers generally pay little attention to the religious views of those who make their water beds, fill their gas tanks, or bind their books.

III

Where protected and allowed to function, the market system has compiled a pretty decent track record. For this, it deserves a decent burial. But the concluding point I want to make is that, as Christians, we should not tarry too long at the funeral—Or strive too hard to prevent its occurrence. In all candor, I would be surprised—pleasantly so, to be sure, but still surprised—if the demise were prevented.

But there is more to my advice not to tarry than mere pragmatism or strategy. It is an unfortunate sight to observe a Christian vehemently defending any economic system, for two reasons: first, any system, viewed abstractly and seasoned with the appropriate sophistry, can appear utopian. Through a felt need to defend the market system against all criticism, some otherwise sensitive people have come to overlook the injustices actually perpetrated through an impersonal allocation of resources. Second and even more seriously, promoting and hawking an economic system subtly, even invidiously, feeds the notion that man maybe does or can live by bread alone. But a system that abundantly meets material needs, whether through the market or through beneficent central planning, cannot be thoroughly admired if its people have not learned, or have been distracted from knowing, the True Reason for living and have no spiritual focus for their lives.

Ultimately it is a matter of how we are to spend our time. To be caught up and totally absorbed in the defense and promotion of any economic system is probably a misuse of time. There is an economic battle going on, and in this battle the market system is meeting its demise. When the battle is over, I for one, will miss the market’s benefits and accouterments; and I predict that many others will too, surprised though they might be.

But we must not tarry too long at the grave because our Lord tells us of another battle. Unlike battles about economic issues, this one has truly enormous stakes; unlike battles about economics, this one can unite Christians; unlike battles about economics, this battlefield extends beyond the halls of debate and the ballot box to include the hospitals and war zones, the ghettos and country clubs, the universities and factories, the homes and the streets. Our Lord specifically orders us into this one. This paramount battle is, of course, the battle for men’s souls.

Kenneth G. Elzinga is associate professor of economics and assistant dean of the College of Arts and Sciences at the University of Virginia, Charlottesville. He has the M.A. and Ph.D. from Michigan State University.

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