Is “free enterprise capitalism” the only way?

That’s the question roughly posed at The Banner.

Is it true that the Bible endorses free enterprise capitalism? I read that this is because it assumes private property and rewards a good work ethic.

Editor Shiao Chong defers in his answer, pointing to a “perfect economic system” as a sort of goal. All rather Platonic, when you think about it.

The correct answer is that God does not “endorse” any human social arrangement, let alone envision some “perfect economic system.” Instead, what God asks for is that these arrangements in their particularlity be just. In large measure we do not get to choose the sort of system we live under, be it a parliamentary democracy, a republic or for that matter a kingdom. God can and has worked through all of these. In the same manner, the economic arrangement in society can have a wide variation.

On the specific question, “free enterprise capitalism” is a rather flexible term, meaning different things in say the sociology, the political science, and economics department. What we do know is that however defined, the result of the system must still safeguard the poor and the weak from the all too easy actions of the wealthy and powerful. This caution is spelled out over and over again in the Psalms and Prophets.

We do not pursue a perfect system, or even a perfected system, but rather a perfect, a complete obedience on our side. That at least seems more doable.

 

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Insourcing and the Spirit

David Gruesel brings an interesting comparison between the return of insourcing and our spiritual life.

What Foster and Willard (and others) have helped us to realize is that our bodies can cooperate in our spiritual development, or be a hindrance to it. Renewed interest in spiritual disciplines like fasting, daily prayer and service has helped reconnect our bodies to our beliefs in the same way that insourcing has helped GE reconnect manufacturing know how with its design and marketing expertise.

While I have little to say about embodiment, particularly in the time of Advent, nonetheless, I think we may be missing  the point of the return of manufacturing. What is returning is the knowledge gained by practice. It’s not only that one can make the product faster but that the firm also adds an internal capacity of understanding the nature of the problems. I would suggest that the Christian analog to this is the work of mission.

The congregation (and individuals) often out-source their mission and discipleship. some one else does, not me, as it were. The way to grow in Christian life is to engage in the work of discipleship and mission. And that means more than my devotion to spiritual disciplines and my private growth. I learn by doing, by engaging this world, by the practice of listening and doing.

It’s not a program, it’s a process. It’s social; it’s congregational. Like a Body.

On Minimum Wage

Noah Millman points to some basics about the role of the minimum wage as part of a conservative approach to a more just society.

In principle, any kind of “one-nation” conservatism has to care about inequality as such, and particularly about the weakness of labor’s bargaining power in most of contemporary America. Right-wing individualism is often conflated with a conservative approach to governance in contemporary American politics, but that conflation is a profound error. As a practical matter, I’m convinced that wage stagnation is the deep reason for the financial crisis. The Bush-era answer to stagnating wages was cheaper credit. That papered over the problem for a while, but it teed America up for a terrible crash. … Avoiding a repeat requires fixing the structural drivers of widening inequality, and particularly means raising wages at the low end of the scale. In that context, a legislated rise in the minimum wage should absolutely be on the table for discussion.

He concludes,

Wage stagnation is a serious economic and social problem with far-reaching consequences. You don’t get to say “I don’t care about that problem” because your ideology doesn’t have a ready-made answer. That applies to free-market-oriented conservatives and client-service-oriented neo-liberals alike, because solving the problem is going to require solutions from the “left” and “right” side of the policy box, and these solutions may be more complementary than contradictory.

In short, there’s something for everyone to contribute.

Greed and Capitalism, Part 2

[This is the second of two essay-notes on Greg Foster’s article  at The Gospel Coalition}

Paul VanderKlay highlights the same paragraph noted in the previous post:

Capitalism has not flourished most where there was a spirit of greed. It has flourished most where there was a spirit of stewardship—a sense that we are responsible to make the world a better place. That—not greed—is what produces a capitalism that thrives.

As far as I can tell, Foster  is actually arguing for something close to an “Optimal Capitalism”, a capitalism that works best. From his viewpoint, when capitalism has worked best it has done so by being grounded in a moral viewpoint. The utilitarianism that governs the transactional side (that is, the self-interest of the actors) rests on pre-existing moral assumptions. This is obviously not a stable relationship. Indeed, the historical difficulty is that the very nature of utilitarianism tends to erode this set of moral assumptions (religious or otherwise), as one can read in the hesitation of Christians throughout the 19th Century on the role of money and enterprise, Christians both leading enterprises and those in the Church.

But if the author is arguing for an Optimal Capitalism then he is likewise advancing a moral critique of current practices, assuming that present work is not especially optimal. Now an interesting question underway would be what determines this optimal outcome. What well-being are we striving for? Again, the business of utilitarianism and the “doctrinal” neutrality of business practices seems to recreate the conflict. Can moral precepts function as a boundary to capitalist endeavors? Is there some set of moral bright lines that ought not be crossed?

That is, if we assume the following, what then is our critique? How do we put boundaries on this behavior? What cultural or moral truths are evading?

Our political system has adopted many policies and practices that incentivize materialism, exploitation, and crony capitalism.

Lastly, I found that there was a certain drift to optimism that would be experientially unwarranted. The underlying notion of most market economies is that they are self regulating through competition. Yet at the same time we also find two sets of easily observed phenomena: the regular collusion among the actors led by their own self interest; and secondly the distribution of success along Pareto’s lines (the so-called 80-20 rule, where 20 percent do 80 percent of the business). Both limit the effective role of competition as self-regulation. Cooperation and co-option seem more the order of the day.

Greed and Capitalism, Part 1

[This is the first of two articles considering Greed Is Not Good for Capitalism]

 

Over at The Gospel Coalition, Greg Foster takes on Max Weber, and importantly sees capitalism does not so much thrive on greed as on stewardship,

Capitalism has not flourished most where there was a spirit of greed. It has flourished most where there was a spirit of stewardship—a sense that we are responsible to make the world a better place. That—not greed—is what produces a capitalism that thrives.

Of course there are problems:

Capitalism creates wealth, and there’s no denying wealth creates special temptations. You don’t have to accept Weber’s economic charlatanry to see that!
There are other factors. In a society with religious freedom, it is especially challenging to maintain a robust public moral culture. The academic discipline of economics has adopted a materialistic anthropology and utilitarian ethical assumptions. Our political system has adopted many policies and practices that incentivize materialism, exploitation, and crony capitalism.

But are these flaws, or inherent to the practice of capitalism itself? Some thoughts.s

The notion that capitalism thrives in moral or Christian framework implicitly creates the tension that Weber observed. That idea means at the very least that there are certain values that precede and govern the economic enterprise. The very role of self-interest in transactions pushes players to test these moral boundaries. Indeed, the historical experience has been to validate game theory: violation reaps the rewards, thus the bitter outcomes of so many extractive industries. The corollary to this would be a degradation of standards, unsurprising since the observance of moral precepts, that is of self-limitation, is itself a cost. So utilitarianism, the role of self-interest (aka “greed” or in polite circles perhaps “fiduciary duty”) gets validated, and indeed becomes normative.

This conflict between the moral sentiment and religious grounding and the imperatives of the emerging market or capitalist economies is well attested to in the literature and journals of the 19th Century, or for that matter in the family practices of the great capitalists themselves (thinking here of Ron Chernow’s portrait of John Rockefeller in Titan). In short, it’s real.

Second, the article assumes in good business school optimism, that companies in fact act for the best interest (“humanizes work, builds trust with customers, and orients workers toward creating value and serving the customer with excellence”). Greater honesty would admit that realizing this view is more a matter of privilege, that many work only to survive, seeking a satisfice role rather than one of pursuing excellence. Where one does not have a market dominant position the force of competition at the least creates the sense that one cannot afford such a move to excellence, no matter how personally desirable.

And that brings the other issue left out here, the nature of internal policies. The question of greed is often as much expressed in how one understands the varying claims on revenue: what portion properly belongs to the investor, what to the worker, what to benefits, what to reinvestment, what to improved processes and the like. Again, there is a societal or group dynamic at work here that limits the view of the participants themselves as to what they may consider to be even feasible. (Case: in the 70s the Fortune 500 firm, Herman Miller, limited CEO pay to a multiple of 35x the wage on the floor; current practices would find that decision to be fiscally irresponsible. Or read Dickens to see what could be tolerated).

To sum, while the idea that capitalism rests properly on moral precepts and Christian teaching may offer an explanation of where and how capitalism works best, it is a notion that is limited. And indeed, were we to admit it, by putting (biblical) ethics before business, it functions as an implicit critique of current practice. And ironically, that is not so far from where social justice begins.

A Cast of Thousands

Bill Vis posted a link to an ad, wondering if it is”the best ad in 30 years?” As Bill would say, you decide. The ad is  part of the conservative push back against President Obama’s words the other day, that no one builds a business by themselves. A truism, one would think. It certainly brought to mind this quote from Adam Smith:

Were we to examine, in the same manner, all the different parts of his dress and household furniture, the coarse linen shirt which he wears next his skin, the shoes which cover his feet, the bed which he lies on, and all the different parts which compose it, the kitchen-grate at which he prepares his victuals, the coals which he makes use of for that purpose, dug from the bowels of the earth, and brought to him perhaps by a long sea and a long land carriage, all the other utensils of his kitchen, all the furniture of his table, the knives and forks, the earthen or pewter plates upon which he serves up and divides his victuals, the different hands employed in preparing his bread and his beer, the glass window which lets in the heat and the light, and keeps out the wind and the rain, with all the knowledge and art requisite for preparing that beautiful and happy invention, without which these northern parts of the world could scarce have afforded a very comfortable habitation, together with the tools of all the different workmen employed in producing those different conveniencies; if we examine, I say, all these things, and consider what a variety of labour is employed about each of them, we shall be sensible that without the assistance and co-operation of many thousands, the very meanest person in a civilized country could not be provided, even according to what we very falsely imagine, the easy and simple manner in which he is commonly accommodated.

Wealth of Nations, Book I, Chapter 1, “Division of Labour”

Babel, Economics and the Duty to the Neighbor

The Economics of Honor: Biblical Reflections on Money and PropertyThe Economics of Honor: Biblical Reflections on Money and Property

by Roelf Haan

Geneva: World Council of Churches. 1988

 

 

Book note: Read the earlier version of this book, published 1988 by the World Council of Churches. This version has a different translator, plus new information.

Roelf Haan addresses the question of economics in the specific context of the authoritarian states of South America of that era, in particular that of Argentina. His meditations turn further to the consideration of the marginalized agrarian poor — those still working in subsistence or commodity-based economies. As noted below this later turn is something of a weakness for his approach.

Although published by the WCC, the rhetoric is solidly in the Dutch Calvinist tradition. Haan shows an evident debt to the earlier work of Jacques Ellul and the general exegetical approach that sees in the biblical text a lens through which one can see this world and its arrangements more clearly (a good example of this sort of theological reading would be NHK Ridderbos’ discussion of Genesis 1 in the old New Bible Commentary, IVP). It is a very different approach than the more biblicist model of present Evangelicals, or of the more social science determined pattern of many social justice folks.

For him, economics is seen principally through the lens of the “city” as an alternate place from that which God has provided. So Cain and Enoch both go off to found cities. In this, it is not the City as the New Jerusalem of Revelations, so much as the Augustinian City of Man. Economics with its focus on gain and power is constituent of this City.

The fulcrum of the book is his eighth meditation on the meaning of the Fifth Commandment (Honor your parents…), appropriately titles The Economics of Honour. Haan points to how this commandment links the two tablets of the law, the first being our duties towards God and the second, those towards our neighbor. Parents are both the ones who name us like God, and who also become the face of God that we encounter in our neighbor; thus the turn to honour is the turn to God and to our neighbor. As the Apostle John tells us, we cannot see God if we do not first see our neighbor — we must see both, and we see both in our parents.

Moreover, for our ethic, the giveness of our parents becomes a type for the giveness of our neighbor. These are the people in front of us, in our lives, to whom we must respond.

By way of commentary, this is some remarkable exegetical/spiritual sleight of hand. The result are a series of provocative ways of considering our own social duties, our “economics.”

Trouble arises in the last third of the book, as Haan considers the specifics of my neighbor in the guise of the poor. Until this point, the meditations have been on our responsibilities towards God, how we must have a new way of thinking, of seeing. Now he turns our gaze toward the poor, where he considers the politics of money and food, of an agrarian commodity economy. This is less satisfying for two reasons.

First, while Haan writes of the world he knows it becomes an elevation of the particular circumstance to the universal. So the agrarian problem and the distrust of market solutions are seen as the normative framework. But in the 25 years since the questions of urbanization have substantively altered how we are to think of the poor. In this time, the number of those living in such subsistence economies has drastically shrunk; the realities of urban live pose new challenges. For this social landscape, market approaches, both of land ownership (so Hector DeSoto) and of entrepreneurialism play an important role in alleviating the burdens of poverty.

Second, the focus on the poor as an object of our action, or our ethical duty, our “social justice” imports our own class frame. We’re still in the land of Nimrod, still relying on our own power, still caught in the web of our own social-technological technique. We think we can fix it. Here, Haan’s thinking could be reasonably expanded by Jacques Ellul’s own meditation on the inutility of human action (Politics of God and the Politics of Man). The Christian approach is kenotic (see Philippians 2), open — the opposite of that of the City of Man and Babel.

As Haan demonstrates, our practice of economics and our seeking the betterment of our neighbor are alike spiritual tasks.

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