Is Capitalism Biblical? (Part 4 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. In Part 4, we consider the Biblical value of responsible stewardship by which to gauge an economic system. You can start the series here.

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 best promotes responsible stewardship of wealth?

We should first define what “responsible stewardship of wealth” means. In broadest terms, it means that those who possess wealth use it in ways that are productive rather than destructive. One of the sins the Bible clearly condemns is the sin of hoarding wealth:

• In the Parable of the Rich Fool in Luke 12, Jesus condemns the fool for hoarding his wealth by wanting to build bigger barns to store his harvest.

• In Haggai 1, the Lord condemns the Israelites for hoarding their wealth to build fancy houses while neglecting to give to rebuild the house of the Lord.

• In Joshua 7, the Lord punishes Israel because of Achan’s sin of taking the forbidden plunder of Jericho to hoard it for himself.

The unmistakable lesson from these passages is that God expects those whom He has blessed with wealth to use their wealth productively. Therefore, we should ask, “Does capitalism promote a productive or destructive use of wealth?” Returning to Jay Richards’ book, he writes:

“The grasping or hoarding rich man is the antithesis of capitalism, not its epitome,” writes George Gilder, “more a feudal figure than a bourgeois one.” The miser prefers the certainty and security of his booty. It’s right there in his cold hands. Entrepreneurs, in contrast, assume risk. They cast their bread upon the waters of uncertainty, hoping that the bread will return with fish. They delay whatever gratification their wealth might provide now for the hope of future gain. The miser treats his bullion as an end in itself. The entrepreneur, whatever his motives—including the desire for more money—uses money as a tool. The carpenter uses hammer and saw; the doctor, scalpel and stethoscope; the entrepreneur, cash and credit. [Richards, pp. 125-126]

Richards then goes on to show that the entrepreneur practices a whole host of virtues, including:

• Delaying gratification by investing rather than consuming wealth

• Providing stability for those employed by their neighbors

• Having faith in their society and employees

• Anticipating the needs of others

• Making disciplined choices

Image Credit: Biblical Christian Worldview

By contrast, socialism almost by its very nature involves the hoarding or concentration of wealth in the hands of a very few people. When the government controls and plans an economy, as is the case in communism, the government accumulates vast amounts of the wealth in that economy. In such economies, bribery and corruption of government officials runs rampant.

Even in cases where the government only heavily regulates industry, we see a more subtle form of corruption known as crony capitalism, where the government gives special exemptions to politically favored constituencies. Businesses then spend valuable resources seeking to influence the government to enact policies favorable to themselves and unfavorable to their competitors. University of Chicago economist Luigi Zingales notes that when governments start providing loopholes and subsidies in industrial policies, companies employ lobbyists to pressure lawmakers for their slice of the subsidies. [Luigi Zingales, A Capitalism for the People: Recapturing the Lost Genius of American Prosperity (New York: Basic Books, 2012) p. 208.] These are destructive, rather than productive, uses of wealth, because they do nothing to create anything of value. Their sole purpose is to purchase influence.

The United States is not without blemish when it comes to crony capitalism under both political parties. As the federal government has grown increasingly large and powerful, we have seen the government give special dispensations to politically favored constituencies, such as the General Motors bailout in the closing days of the George W. Bush administration or loans to Solyndra and other green energy companies under the Obama administration.

These examples of crony capitalism have led to protest on the part of ordinary Americans who feel the government should stop bailing out powerful companies and return to a more traditional form of a capitalist economy with smaller, limited government. In a limited government capitalist system, crony capitalism and/or bribery of government officials become far less likely if those in government do not have economic power to dispense special favors in the first place.

Therefore, which system best promotes responsible stewardship of wealth? I believe capitalism does this the best.

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Join us next week for Part 5, where Prof. Massey explores the question, "Which system does the best job of promoting a proper sense of social responsibility to the poor?" as we conclude this series.

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