Is Capitalism Biblical? (Part 3 of 5)

We’re honored to present this series of five posts exploring the question, “Is Capitalism Biblical?” Originally a lecture given at Biola University in May 2012, Philip Massey has graciously granted us permission to republish it here for the benefit of our readers. While some business references are dated to 2012, the principles remain timeless. In this Part 3 we consider the Biblical value of free will by which to gauge an economic system.

Philip Massey earned his MBA in finance from the University of Chicago Booth School of Business, is a CPA with over 20 years’ experience as a corporate auditor, is on faculty at the Crowell School of Business at Biola University, and is currently earning his Master’s in New Testament from the Talbot School of Theology. Prof. Massey is an ideal Better Capitalism collaborator – one foot solidly in business and the other solidly in theology – to offer his studied views on this important question.

Which system does the best job of respecting free will?

Free will is an important aspect of the way God created us as human beings. In the words of pastor and theologian John Piper,

God must give man a “free will” and allow man to reject God's plan to save him. The reason is that “only a free being with an independent will can love. If love was to be a meaningful thing, Adam had to be allowed some free choice. God does not want mule-like servants who have to be forced to obey him all the time. He wants those who will freely accept his instruction and counsel. He wants relationships of mutual affection and love, not those based on some kind of force. God could bridle unbelievers, tinker with their wills and hearts, and turn them into automata (or mules), so that they have to do what he says. But if he did this it would still not achieve his purpose of developing free relationships . . . .

[John Piper, A Critical Review of “God’s Strategy in Human History,” Desiring God Ministries, May 1, 1976, accessed on April 28, 2012.]

When we compare capitalism and socialism, we see very clearly that capitalism depends on the ability of market participants to make free choices, whereas socialism depends heavily on a strong element of coercion.

Image Credit: Biblical Christian Worldview

One of the criticisms of capitalism is that it promotes greed. In the movie Wall Street, the character Gordon Gecko famously says, “Greed is good.” Critics of capitalism point to such sentiments as one of capitalism’s major flaws, but they are mistaken. Capitalism does not make people greedy. Rather, greed is a condition of the human heart. In other words, we are fallen, sinful beings, and one of our sins is a propensity toward greed. Greed exists even in socialist societies; in fact, in some ways, it is even worse. The reason is that, as Jay Richards says, high rates of taxation in socialist societies leave people feeling resentful that they have already “given at the office” and therefore cause them to want to hold on to what they have left. [Richards, p. 124]

Capitalism is the best economic system for dealing with fallen humans because it can actually channel greed into socially constructive behavior. Turning yet again to Jay Richards’ book, he draws a lesson from 18^th century economist Adam Smith’s concept of the “invisible hand” of the market by citing the example of a greedy, corrupt meat butcher:

Even if the butcher is selfish, even if the butcher would love nothing more than to sell you a spoiled chunk of grisly beef in exchange for your worldly goods and leave you homeless, the butcher can’t make you buy his meat in a free economy. He has to offer you meat you’ll freely buy. The cruel, greedy butcher, in other words, has to look for ways to set up win-win scenarios. Even to satisfy his greed, he has to meet your desires. The market makes this happen. [Richards, p. 123]

Richards then goes on to explain that entrepreneurship in a capitalist economy actually fosters virtuous behavior:

Right off the bat, if I’m an entrepreneur, I have to think about the wants and needs of others. I must make or acquire something desirable. Great entrepreneurs succeed by anticipating and meeting the desires of others. …Competition between entrepreneurs in a free economy thus becomes an altruistic competition, not because the entrepreneurs have warm fuzzies in their hearts or are unconcerned with personal wealth, but because they seek to meet the desires of others better than their competitors do. …At the base of the capitalist system is not greed or consumption, but intuition, imagination, and creation. As Thomas Edison said, “I find out what the world needs … then I proceed to invent it.” [Richards, pp. 127, 130]

In this regard, the entrepreneur in a capitalist society acts consistently with the command of Philippians 2:4 to “look not only to his own interests, but also to the interests of others.” Although the point of that passage is for Christians to imitate the humble love of Christ, it still teaches a useful principle that is relevant to capitalism. In a capitalist society, the only way an entrepreneur can succeed is by taking time to find out what the interests of others are and then creating goods or services that others will freely buy.

Notice the important wording of the verse in Philippians. It says to “look not only to his own interests.” It does not say not to look to his own interests, which would entail acting out of complete altruism. As the ESV Study Bible notes, “Paul realizes that everyone naturally looks out for his or her own interests. The key is to take that same level of concern and apply it also to the interests of others.” This describes an entrepreneur quite well. An entrepreneur is naturally looking out for his or her own interests, but is doing so by seeking out the interests of others in order to meet them.

By contrast, socialism violates the principle of free will and instead relies on coercion. A prominent example of this is China’s one-child policy. For many decades, China strictly enforced this policy on a vast segment of its population. At times, women were subjected to forced abortions if they were found to be pregnant after already having had one child. Thus, instead of respecting its citizens’ freedom to make their own choices regarding family size, China used coercive means to force citizens into compliance.

In an essay for Summit Ministries, author Ronald Nash quotes economist Walter Williams as stating:

There are two and only two ways in which something may be exchanged: …the peaceful means of exchange and the violent means of exchange. The peaceful means of exchange may be summed up in the phrase, “If you do something good for me, then I’ll do something good for you.” When capitalism is understood correctly, it epitomizes the peaceful means of exchange. …But exchange can also take place by means of force and violence. In this violent means of exchange, the basic rule of thumb is: “Unless you do something good for me, I’ll do something bad to you.” This turns out to be the controlling principle of socialism. [Ronald Nash, “Socialism, Capitalism, and the Bible,” accessed on April 17, 2012.]

Therefore, which economic system does the best job of respecting free will? From the examples we have studied, the evidence indicates that capitalism respects free will the most.

###

Join us next week with Part 4, where Prof. Massey explores the question, "Which system best promotes responsible stewardship of wealth?"

Fix Capitalism. Fix the American Dream.

Our vision is to benefit society by transforming capitalism's current core ethic of 'maximize shareholder value' to the better core ethic of 'optimize mutual value.' We achieve our vision by impacting learning, opinion, beliefs, and policy. Institute for Better Capitalism, Inc.

Invite Us to Speak

⭐⭐⭐⭐⭐ Our Amazon number 1 new release: Unleash more with Better Capitalism: Jesus, Adam Smith, Ayn Rand, & MLK Jr. on Moving from Plantation to Partnership Economics.

"This book merits close, sustained attention as a compelling move beyond both careless thinking and easy ideology."—Walter Brueggemann, Columbia Theological Seminary

"Better Capitalism is a sincere search for a better world."—Cato Institute

The Institute for Better Capitalism, Inc., is a 501(c)(3). We invite and are grateful for financial partners in this work. We invite you to donate here or contact us for more information. Thanks!

Donate Now >>