In Praise of the Market "Christian" Socialism Versus Christian Capitalism
Christians have not always spoken with a unanimous voice on the issue of what we today term economics. The Bible expressly defends the notion of private property and requires the civil magistrate to protect it (Ex. 20:15; 22:1). The Bible also warns the rich of many dangers into which they can fall (Pr. 22:16; 1 Tim. 6:17-18); and it repeatedly commands God's people to care for the poor, oppressed and needy (e.g., Ex. 23:11; Lev. 25:25; Dt. 15:7-8; Rom. 15:26; Gal. 2:10). This second classification of Biblical texts led many in church history to espouse and practice a simple socialism, or at least employ arguments that sounded quite socialistic.1 The medieval church uniformly condemned usury2 (a cornerstone of an advanced free-enterprise economy) and even many of the Puritans supported price controls.3 While the Reformation did not advocate a consistent free-enterprise economy, it certainly laid the foundation for it. The Reformation broke down the medieval sacred-secular distinction, showed men that they were responsible first to God and only secondarily to the church, and alerted them to the necessity of hard work and provident use of resources, all of which comports well with a market economy.4
To a large extent the "contemplative" (other-worldly) model which predominated in the medieval world had come to be identified with Christianity. The notion that the most contemplative were the most spiritual was considered a Christian tenet. The Reformation broke the monopoly of that idea. This helped lay the groundwork for an atmosphere in which the free market could prevail. Remember, too, that the Reformation was immensely popular among the rising middles classes, what we would call today the commercial classes, artisans, peddlers and "small businessmen." In short, while the Reformation did not espouse an explicit free market system, it is hard to imagine the emergence of "classical" economics without a Reformational base; a patristic and medieval "Christian socialism" springs from presuppositions alien to Reformation thought.
The idea of "Christian" socialism, in any case, is wrong on two counts. First, it violates the Eighth Commandment. Second, it vests the state with authority that the Bible never gives it (Rom. 13). Free market economics, or what in some quarters is known as classical liberalism, is actually a recovery of the Biblical view of property and wealth. Not that most of the early classical liberals were explicitly Christian or understood that they were articulating what was in essence a Scriptural view of the issue. But the fact is that any view of Biblical authority which takes Biblical law seriously must arrive at an endorsement of what we call free market economics.5
Free Market Wealth Generation
We in the United States live in the wealthiest society ever known in the history of man. Most middle class people in our country live better than most kings did until 1900. The ultimate reason for this is God's blessing. The British colonists who brought Christianity to this shore were, by and large, God-fearing Calvinists who held the gospel and law of God in high esteem and implemented God's word in their society. Today we are living on the borrowed ethical (and financial) capital of those forefathers, because God blesses covenant keeping intergenerationally (Dt. 5:9-10; 6:1-3).
The one aspect of covenant keeping that makes itself evident in a society is respect for property, adherence to the Eighth Commandment, "Thou shalt not steal." A free market economy is the most consistent social expression of Eighth Commandment law keeping, even when practiced by God-hating covenant breakers. True, covenant breakers will tend to misuse the wealth which is the reward of their willingness to obey the Eighth Commandment and thus incur God's judgment for their disobedience (Dt. 6:10-12). But we simply cannot deny God's blessings on a free market economy, that is, an economy that honors the Eighth Commandment. The free market always generates wealth. It seems magical.
The "Magic" of the Market
What is this "magic" of a free market economy? What is the chief functional reason free market economies always, without exception, develop into robust economies over time? The answer to that question is really quite simple. When individuals have their own economic interest at stake in a society in which they are free to sell and buy without coercion or fraud, they will tend to make economic decisions that benefit society. This may seem strange. Notice I did not say they will tend to make decisions that benefit themselves, although this also is true. Economists call it "the law of unintended consequences."6 At Christmas when I purchase a dress for my daughter, I am not especially interested in the son of the salesman from whom I buy the dress, but the purchase of my daughter's dress from this salesman helps this salesman purchase a toy gun for his five-year-old son. I care much less for his five-year-old son's enjoyment than my teenage daughter's enjoyment, but my decision to secure a measure of happiness for my daughter may equally be a decision to secure happiness for the salesman's son, though wholly unintended. This is one reason why, contrary to socialists' canard, market economies are more compassionate and humane in action than interventionist economies.
The free market is not basically about money. It is about human decisions concerning the use of property. The Biblical teaching is that I can do with my own as I wish (Mt. 20:15). Of course, as a Christian, I wish to do what God wishes me to do (Mt. 6:33). But God gives men the ability, though never the permission, to sin. He gives them the ability to use their property unwisely or even sinfully. But it is still their choice to make. They will enjoy the reward of right choices or suffer the consequences of wrong choices. In the United States every day the total number of decisions relating to the use of property numbers into the billions. This is what Ludwig von Mises calls human action.7 It is the voluntary exchange of property and factors related to property, like services. The free market economy generates wealth because it allows "self-interested" people to make decisions all of which when combined lead to the wise, productive use of assets. The free market rests on the action of the simple statement, "If you do good to me, I'll do good to you." This happens billions of times a day in economic exchanges in the United States alone: people with a vested interest in their own welfare make decisions based on that interest, and this economic "self-interest" secures a voluntary cooperation that benefits all of society.
Christian Economic Ignorance
Most Christians, I have observed, haven't the foggiest notion of these things, although they are really not hard to understand. For one thing, they tend to think that wealth (which they erroneously equate with money, or its substitutes, like paper currency) is simply a given, or "there." Like socialists, they seem always to know (or think they know) what to do with wealth, but they do not seem to understand how wealth gets there in the first place. They do not understand that wealth is generated when people offer a product or service other people are willing to pay something for. That payment may be in the form of dollar bills, gold, peanut shells, glass bottles, or Pop Tarts, but it is payment nonetheless. Automobile corporations do not make cars because they like people in general, or even people who buy their automobiles, but because they like what they can do with the payment they can get for selling automobiles. This by no means implies they are necessarily selfish. Sometimes, it means just the opposite of selfishness, or even of "self-interest" (though there is nothing wrong with self-interest, which is not the same as selfishness [Eph. 5:29]). Maybe they want a lot of money so they can give it to charity or to family and friends. The specifics of the motivation are not the issue. The wealth generated by voluntary exchange is the issue. But how specifically do these exchanges generate wealth?
Well, if an automobile manufacturer knows he can make, let us say, five thousand dollars on the sale of a twenty thousand dollar car, he may get the bright idea that if he could make a thousand, or ten thousand, or a hundred thousand cars a month, he could make a lot more money, provided people were willing to buy his automobiles. But of course, he alone cannot generate this number of cars. He needs many more people—or at least the technology that many more people produce—to make these automobiles; in other words, he needs other people to help him, even if only to purchase the product from him. Those who help him by working for him need some incentive to work for him. In a free market economy, they are not forced to work for him; therefore, he has to make it worth their while, that is, he has to offer some form of payment. In a free market economy, he cannot coerce them. But he needs to sell automobiles in order to get enough money to pay people to help him make more automobiles. For this reason he needs capital investment or start-up capital. If he is wise, he will not waste his resources—including his workers—in making automobiles. So he has to be careful of how he treats them, because if he treats them poorly (including paying them poorly), he may not have any more people to help him make automobiles, and his wealth will be diminished or lost. In other words, generating wealth in a free economy is based on making wise choices. This often involves risk. An entrepreneur does not know for sure beforehand just what people will buy. He may look at the market and see how other people are spending money for a product and service, and decide he could offer a similar product people would pay for. He may be wrong. But he will never know until he tries. Risk is a vital aspect of a Biblical, i. e., free market economy. A free market economy assumes and requires individual responsibility. Any attempt to forcibly shift loss for poor economic choices is a step toward socialism, no less than is the attempt to shift the benefits of sound economic choices (statist redistributionism). The point is that, from a procedural standpoint, a free market generates wealth because it allows people to make their own decisions about how to use their time, minds, effort, and property; and when they use these personal factors to benefit themselves, they benefit the entire society in which they trade.
I have not included all of the factors. A trained economist could include many more, 8 but you should get the point by now. A free market economy helps everybody all the way around. Some people foolishly say capitalism means that the rich get richer and the poor get poorer. This is demonstrably false. In a true free market economy, that the rich get richer and the poor get richer. The poor in America today would be considered middle class in most countries around the world. Poverty is a relative term. Many "poor" people in this country own an automobile, a radio, a television set, and have an indoor bathroom. This did not happen by chance. It happened because a free market economy always tends, if left unmolested, to up the economic ante. It tends to produce better goods and services at a more affordable cost. This means that people can buy more products or services for less money, and have more money left over. They spend this money (recall that even saving is spending, since banks use money from savings accounts to invest) and thereby generate more jobs, products, and services. Marx taught that capitalism alienates men (at least most men) from themselves since it ties them to the whims of the private owners of production.9 This is nonsense. Man is alienated from himself, God, and his fellow man by sin, not by capital (Gen. 3). The free market economy allows men to contract with employers, just as they contract with one another in any economic transaction. And in allowing this contract (and every purchase and sale is an implied contract), a society assures the generation of wealth—or at least the benefits of wealth—to everybody. The next time you hear some "deep thinker" attack the free market, gently remind him that his fancy clothes, shiny car, and roomy home didn't spring from utopian socialistic schemes. He got them because somebody wanted to help himself or family or friends, and in so doing helped the "deep thinker."
God has established private property and free exchange as mechanisms for attaining, generating, accumulating, and bequeathing wealth. This is why every assault on the market (no matter how pious) is an assault on God's law for wealth creation in his world. Coercive socialism is thus at war with God.
1. John C. Cort, Christian Socialism (New York, 1988), 42-52; see also Justo L. Gonzalez, Faith and Wealth (San Francisco, 1990).
2. Patrick Cleary, The Church and Usury (Hawthorne, CA, 1972). But see Murray N. Rothbard, "Late Medieval Origins of Free Market Economic Thought," Journal of Christian Reconstruction Vol. II, No. 1 [summer, 1975], 62-75.
3. Gary North, Puritan Economic Experiments (Tyler, TX, 1988), 22-40.
4. Allister McGrath, Reformation Thought (Oxford and Cambridge, 1993 edition), 225-227.
5. Ronald Nash, Poverty and Wealth (Westchester, IL, 1986); Gary North, The Dominion Covenant (Tyler, TX, 1982); Tom Rose, Economics: Principles and Policy from a Christian Perspective, second edition (Mercer, PA, 1996);
6. Michael Novak, "The Ideal of Democratic Capitalism," in ed., Franky Schaeffer, Is Capitalism Christian? (Westchester, IL, 1985), 58-61.
7. Ludwig Von Mises, Human Action (New York, 1963 edition).
8. A fine gem of an introduction is Henry Hazlitt's Economics In One Lesson (New York , 1962).
9. Isaiah Berlin, Karl Marx: His Life and Environment (New York, 1963), 106-115.