Reflections on Republocrat: The Trouble with Capitalism

republocratThe series so far.

Capitalism—should Christians endorse it with enthusiasm? Accept it with reservations? Utterly reject it? Just ignore it? Questions like these are at the heart of the fourth chapter of Carl Trueman’s book Repuplocrat: Confessions of a Liberal Conservative.

Overview

This chapter (“Living Life to the Max”) is book’s weakest so far. Key terms shift in meaning, the problems under attack lack the kind of concrete examples found in other chapters, claims seem contradictory at times, and the thesis is less clear.

The thrust of the chapter seems to be that although capitalism is the best economic system the world has yet seen, and we have no idea what would be better, it’s attendant ills are such that we need to make sure we’re sufficiently critical of it.

Some points of agreement

  • “Capitalism of some form is the best means of wealth creation. There is, quite simply no alternative out there” (p. 70).
  • “[T]here is no necessary connection between biblical faithfulness and God’s blessing on the one hand, and material prosperity and economic boom times on the other” (p. 72).
  • “[C]apitalism does not necessarily foster the kind of behavior, outlook, and ethics that Christians themselves prize” (p. 72).
  • “[N]ot all the effects of capitalism are unconditional goods, consistent with the gospel and with the Christian mind-set” (p. 73).
  • Using economic arguments to defend traditional moral positions is foolish. (p. 76)
  • “[A]bility to contribute directly to the wealth-creation process” is not “ultimately the measure of somebody’s social standing and value” (p. 77).

With the above as points of agreement, what objections remain?

1. The irrelevant Max Weber

Trueman devotes several pages (61-64) to arguing against “the Weber thesis,” the idea that capitalism is a product of the Reformation (and therefore really awesome). Since I support capitalism for completely different—and far older—reasons, it’s hard to see the relevance of Weber’s idea. Capitalism does not need a Reformation link to justify it.

2. Hegel and progress

Trueman’s reasoning vis–à–vis capitalism and progress (p. 65-69) is hard to follow because he tries to link the idea of never-ending human progress to the idea that the present order is the best that ever will be (“absolutizing the moment”). But these are two different and incompatible ideas. Speaking of Darwin, Hegel and others, Trueman observes,

What all these models had in common was a belief in progress, and that things were moving ever closer to what one might regard as the ideal state of affairs, even if that state would never be perfectly achieved. (p. 66)

Though Trueman attempts to link this thinking to supporters of capitalism, this view of progress is actually a central tenet of the Left and one of its favorite reasons for rejecting the free market. The conservative thinkers who have championed free markets (e.g., Smith, Burke, Friedman, Hayek) have argued that progress in human societies is actually extremely limited and that relatively honest, secure and non-engineered (a.k.a., “free”) markets offer the best set of trade offs for making life work among human beings.1

3. Defining capitalism

The definition of “capitalism” is murky throughout the chapter. At times, Trueman seems to identify it exclusively with industrialism and the modern-banking, share-holder-investment phenomenon. At other times, he seems to identify it with the free market idea in general. He refers to it once as “capitalism, aka consumerism” (p. 73).

The chapter sometimes uses the flaws of capitalism-as-industrialism to argue against capitalism-as-free-market or the flaws of capitalism-as-consumerism to argue against capitalism-as-free-market. The difference matters because, though the modern corporation is a new development, free markets (in varying degrees) have been around for millennia.

4. Free market confusion

Several statements suggest that the lack of consistent definition may be partly due to confusion about what the free market idea actually is.

For a free marketer, the system is designed to promote maximum efficiency: wages find their appropriate level, supply meets demand, hard work is rewarded, individual power is enhanced, government is limited. Thus runs the theory. Of course, we are self-interested, but the idea is that your self-interest and mine will, if not cancel each other out, at least affect each other and limit the damage that can be done. Inequality will persist, but as long as there is the possibility of social mobility and thus motivation for hard work, this is not a particular problem. Whether this is the case, however, and the market operates this smoothly is now open to question on a variety of fronts, particularly in light of the financial collapse of late 2008. (p. 69-70)

Trueman also refers to “ ‘the morality of the markets,’ so popular with free-market philosophers” (p. 68) though he includes no examples of this thinking.

These characterizations are flawed. First, the great 18th century free-market thinkers (Adam Smith, Edmond Burke, et. al.)2 saw the market (in contrast to individual choices) as a natural order not “designed” by humans and, as such, neither moral nor immoral.

Second, free market thinkers have not generally depicted the market as working at the level of perfection or even near-perfection. It’s simply the best we can do. It works less badly than the alternatives. Sadly, lots of popular free market advocates, unaware of this tradition, badly overstate the qualities of the market.

Third, regarding the collapse of ‘08, the idea that that good regulation is antithetical to the free market is a popular straw man. Though free market thinkers have passionately opposed excessive and misguided regulation, few have opposed the principle of regulation itself. A market is not free if participants are being cheated by conscious misrepresentations of value.

Finally, the idea that free-marketers believe the market alone is sufficient to restrain evil self-interest and greed (as opposed to ordinary self-interest) is a popular myth.

5. Compared to what?

The chapter not only concedes that capitalism is the best system available (p. 70), it offers no reason to believe any economic system among sinners could ever be better.

Further, the chapter repeatedly faults capitalism for features that are not unique to it. The following is a good example:

It is hard to imagine a premodern society where child-bearing was seen as a burden or, given that age was valued for its wisdom and for its lifetime of contribution, where people would have had serious discussions about whether it was worth looking after the aged. But in an advanced capitalist society, unwanted babies look dangerously like unproductive appetites and old age speaks of of lack of energy an innovation, and frankly, lack of ability to produce wealth. Of what use are such people? This is not to say that capitalism leads to euthanasia, but it creates one of the kinds of societies where such discussion might well take place. (p. 76)

These observations have no relevance in a chapter on why we ought to be less fond of capitalism because the problems in view are characteristic of nearly all economic systems. The briefest glance at world history provides abundant examples of pre-capitalist and non-capitalist societies devaluing those who don’t seem to contribute (and the modern world, where do we actually find forced abortion and sanctioned euthanasia?).

6. Causation fallacy

Much of this chapter rests on the assumption that problems that have developed along with capitalism have been caused by capitalism. (See cum hoc ergo propter hoc.)

It is clear that as the world moved from feudalism to economies based on trade and production, values changed, and even the family was restructured as people moved from rural areas to cities and family units became smaller… . Many Christian families want to instill a love of great literature in their children; but think of how modern capitalism connects to the entertainment industry, of how even the imagination has been turned into a marketable commodity. (p. 77)

The assumed causal relationship is questionable. First, while all of these changes were taking place in society, profound changes were also taking place in belief-systems.

Second, consumerism, individualism, poor aesthetic choices and the idolatry of material things are nothing new. As murky as Trueman’s definition of capitalism is, it’s doubtful he’d say the individualistic consumerism of Luke 12:15-20 (the Rich Fool) or Amos 6:1-10 (“at ease in Zion”) took place in a capitalist society. Clearly there are other causes at work.

Third, it’s hard to sustain the idea that freedom is the cause of the choices free people make. The absence of restraint does not create anything; it simply allows pre-existing causes to have their effects. Though these effects are often ugly and evil, it’s far from obvious that loss of freedom is preferable.

Conclusion

There truly is a great divide in market philosophies. Trueman is fond of faulting American political thought for its “maniceanism,” but though reality is multichromatic, the colors black and white still exist. The two great branches of economic thought divide on the question of whether human beings are smart and good enough to devise effective economic order from the top down—the centralized approach—or whether our limits leave us unable manage an economy better than a naturally occurring systemic order can do it.

If all of today’s economic views really do derive from one of these two perspectives, and if one of them is more biblical than the other, Christians should not to try to cling some kind of neutrality. All economic systems fail to remedy greed, inequality, injustice and poverty. All of them have unintended negative consequences for the human heart. But some systems are clearly more supportive of biblical values than others.

Related:

Right is Right

Objections to Christian Political Engagement, Part 1

Objections to Christian Political Engagement, Part 2

Notes

1 Friedrich August Hayek (The Road to Serfdom) wrote in somewhat social-evolutionary terms. Nonetheless, he held that the highest point of societal progress was not especially high.

2 This tradition has continued in the work of F. A. Hayek and Milton Friedman among others.

[node:bio/aaron-blumer body]

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Andrew Comings's picture

...and paraphrased by me:*

 

"Capitalism is the worst possible economic system, except for all the others..."

 

*Churchill's original quote, attributed by him to some unknown originator, was about democracy, not capitalism.  Still, it fits.

Missionary in Brazil, author of "The Astonishing Adventures of Missionary Max" Online at: http://www.comingstobrazil.com http://cadernoteologico.wordpress.com

npaul's picture

Aaron, you state:  Since I support capitalism for completely different—and far older—reasons....

I'm not trying to be argumentative, but what are your different and older reasons for supporting capitalism?  Thanks.

 

Aaron Blumer's picture

EditorAdmin

npaul,

Appreciate the question. A lot of that is in the Right is Right link from a slightly different angle.

First a bit of definition: I usually use "capitalism" as a synonym for "free market economy" or "non-centralized economy." I'm not necessarily convinced that the whole corporation-based share-holder-investment thing is necessarily a great idea... though I don't have any specific bone to pick with it either. I don't share the popular antipathy toward "big" as something inherently ickier than small, when it comes to business.

I favor capitalism-as-free-market for several reasons (several far older than Weber's thesis... some newer):

  1. Human nature as a whole is not going to improve until it's transformed from outside it.
  2. The basic market mechanism of "I have to figure out what my fellow men want in order to get from them what I want in trade" really does do a good job of extracting mutual benefit out of self-interested sinners.
  3. Neither an elite few nor humanity has a whole are smart enough or virtuous enough to engineer an economy more effectively from some central authority than the market does all by itself.
  4. People care most about what is near them, then less and less as they hear of needs further and further away. So markets driven by local interests are more effective than those driven by interests far away (though the meaning of "local" is changing a bit now, with Internet).
  5. The labor-reward relationship is important in Scripture. Since centralized economies are almost always driven by equality-of-results ideals, redistribution is a favored activity... and coerced redistribution (in contrast to charity) destroys the labor-reward relationship.
  6. Value derives from human affections not labor+materials calculations. Free markets reflect the value people attach to things rather than value imposed as an application of abstract ideas and tables full of numbers.
  7. Human society is not locked into a path of never ending progress: so there is no reason to assume that a newer and better way to manage economies exists.

None of these have anything to do w/the Reformation.... though I do think the idea of a "Protestant work ethic" is not a fantasy and we have benefited greatly from it as a country.

 

Edit: I can see that my use of the term "capitalism" here isn't consistent w/ how I was using it a couple of years ago (e.g., here)... Might be safe to generalize that I'll try to use "captialism-as-free-market" or "captialism-as-coproration-system" or the like when a distinction is important, and just "capitalism" or "free market" when a distinction doesn't seem necessary.

James Bliss's picture

I would agree that I am in favor of capitalism being defined as a 'free market' and that Christians should support that.  The difficulty is there are no truly free markets in the world today.  Perhaps the US would be defined as the most free (or least restrictive) but even that will result in heated discussions among various economists.

There are two trouble area with the US, and most other nations in the world, which result in there being no truly free markets. 

1)  Using an example, the most recent, and largest, intrusion of government (or government supported entities) in the US is the Quantitative easing and the various stimulus packages.  I do understand the concept of 'Keynesian' economics, but that concept is being applied to an economic structure which has emphasized the government attempting to stimulate the economy only.  The government(s) never pay off the debt and so the concept of 'Keynesian' economics is no longer valid and is, in practice, never fully implemented resulting in our current massive debt dilemma (both within the US and throughout the world).

2)  All markets have some degree of government interference.  Whatever set of rules and regulations which are imposed, all governments have imposed some which removes the true concept of free markets.

This is an interesting discussion but not one which is anything more than theoretical in my mind and definitely not applicable to any country in the world today due to there being no truly free markets, just markets with varying degrees of government regulations.

In addition, assuming that the US had a truly free market, it would not survive for long due to the influences of all of the other markets worldwide.  Aaron mentioned that free markets being best defined with local interests are more effective...  This gets into some serious discussions regarding macro vs micro economics and ignores the fact that our world is probably the smallest economy which can currently be defined unless we are going to restrict discussions to local regions which are fully self sustaining such as, perhaps, the Amish communities.  As soon as fuel, power, wider varieties of food and many other items come into play then we immediately end up with a world economy and international influences with restrictive countries influencing the 'free' markets which may exist.

I find these discussion to be curious with the fact that there are no truly capitalistic nor free markets which exist in the world today, generally.

Sorry, it has been a long time since I posted something but this has been a topic of interest to me for a while.  It appears that the largest issue is defining what the Christian is to be supporting since we have no valid example of pure capitalism and/or free markets, and really have not had one in quite some time.

Jim

Charlie's picture

The two great branches of economic thought divide on the question of whether human beings are smart and good enough to devise effective economic order from the top down—the centralized approach—or whether our limits leave us unable manage an economy better than a naturally occurring systemic order can do it.

This whole line of argumentation strikes me as bizarre. Granted, economics is not one of my strengths. But I'm at least passingly acquainted with medieval political and economic theory. For medieval Christians, the badness of people is a given. But badness is always a justification for regulation, not for freedom-from-regulation. The standard line is that the worse people are, the more centralized the regulation needs to be. And people are very bad, so they need lots of regulation. A free market is the exact opposite of what medieval intellectuals would think bad people need.

So, I just find it interesting that the pro-free-market group is accusing advocates of more regulated, centralized economies of being unduly optimistic. Perhaps the explanation is that the early modern period invented the idea of "the market," an economic order that, like the natural order, has laws and is self-sustaining. It's just there, but sort of under the direction of God, like the natural order is just there, but sort of under the direction of God. And if that is the case, then the answer is not to mess with the economic order; that would be like trying to mess with gravity or inertia. You might be able to use the rules to your advantage, but you can't change the rules.

I'm not convinced that there actually is an economic order that spontaneously arises yet has inviolable rules. But maybe there is. Like I said, economics is not my specialty. Given what I know of intellectual history, though, I doubt that these issues can really come down to optimistic vs. pessimistic anthropologies. 

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Aaron Blumer's picture

EditorAdmin

To James - Part of the difficulty of talking about "free" markets is the term "free." Many take it to mean "free of government involvement." The trouble with that is that participants in any market need government involvement to keep crooks and cheats at bay as well as to protect folks' ability to keep what they've traded for (aka bought). Without these protections a market is not free because whoever has the most power to cheat and steal is oppressing those who are not able to resist. So the freedom vs. lack of freedom isn't measured exclusively on a more vs. less government scale.

On the other hand, when governments are controlling prices, intentionally trying to influence prices, taxing at confiscatory rates, etc., freedom wanes as well.

Fortunately, markets can still work pretty well even when they're not as free as we might like.

 

To Charlie - I really do think that the schools of economic thought since the 18th century do all derive from, as you put it, either optimistic or pessimistic anthropologies. Not to say that people are completely consistent about that. As for spontaneously arises, I'm not sure "spontaneously" is quite the right word. But when you take two beings as complex and designed as humans are, and put them together and they begin to trade, what they do is create surplus value as each trades what he wants/needs less for what the other wants/needs less. Each walks away having traded something he valued less for something he valued more. It grows exponentially as you involve more people.

(Interestingly, Marx thought "surplus value" was inherently evil, but it is, in fact, the only way to reduce absolute poverty in the long run.)

It isn't random. Some of the more deistic thinkers have seen it all in more naturalistic terms. Others have emphasized gracious providence in how the market works. (Adam Smith is controversial on that question alone because some see him as purely deistic and naturalistic while others believe he is literal when he talks about "nature's God" and so forth.)

Thomas Sowell has done more than anyone recently to increase my confidence in the "two branches" idea. (In his analysis, modern centralized economies grew out of the belief that as humans get smarter, a select few will be better able to produce just outcomes for the masses. While conservatives held that even the best and brightest are not much better and--in the case of government--are disadvantaged by distance from the where trade is actually happening.) And while reading Jay W. Richard's Money Greed and God, many "hunches" became convictions in my mind.

But even reading, say, C. S. Lewis' Abolition of Man, you get a pretty dualistic view of how people think about society (those who follow "the Tao" and those who don't)... I wonder if Trueman would say Lewis is Manichaean.

Jim's picture

Consider the Trabant

With its mediocre performance, outdated and inefficient two-stroke engine (which returned poor fuel economy for the car's size and produced heavy exhaust), and production shortages, the Trabant is often cited as an example of the disadvantages of centralized planning; on the other hand, it is regarded with derisive affection as a symbol of the failed former East Germany and of the fall of communism (in former West Germany, as many East Germans streamed into West Berlin and West Germany in their Trabants after the opening of the Berlin Wall in 1989). It was in production without any significant changes for nearly 30 years with 3,096,099 Trabants produced in total. In 2008, Time magazine rated the Trabant as one of the 50 worst cars ever made.

# 9 on "The Street's" 10 Worst Cars of All Time

 

Below is a 1 HP conversion model 

 

 

Aaron Blumer's picture

EditorAdmin

Sometimes philosophical talk about prosperity does get a little too separated from 'conditions on the ground.' I often think some of the "it's virtuous to move toward poverty" folks would benefit from a bit of time experiencing it. Maybe trade their cars in for one of the above. 

About the manichean/binary/two-branches thing again.... I don't know why this is hard to believe. Though there are many variations, they easily cluster under two headings: views that favor more government as a positive thing and views that favor less government as a positive thing--both in reference to the current situation, not as an abstract principle. (When it comes to the principle, it has not always been a "conservative idea" to have "less government." It's a conservative idea now only because government has become so massive, inefficient and sometimes truly oppressive.)

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