Should Christians support capitalism? Surely yes, if only because capitalism deserves most of the credit for the decline of extreme poverty in the world, from about one-third of the world’s population a generation ago, to about one-tenth today, using World Bank definitions of poverty. But capitalism has its moral dangers, one of which is that by giving people so much freedom in the economic sphere, it can make people feel entitled to do whatever they want in every sphere. Christians need a way to avoid basing the case for capitalism on a libertarian philosophy that would identify value with choice, and in particular, authorize all the excesses of the Sexual Revolution.
The first step is to accept the premise that it is good, in general, to expand people’s opportunity sets, as free-market capitalism tends to do. But often, changes in policy or social norms that seem, prima facie, to expand opportunity sets, are really ambiguous, creating some opportunities and destroying others. In such cases, we must try to discern what is really good and wholesome, and seek to adopt policies and promote social norms that expand opportunity sets in that direction. Since the Sexual Revolution has generally given people unwholesome new opportunities, while taking away more wholesome ones, it is wholly reasonable to regret it and seek ways to reverse it, while affirming and applauding free-market capitalism in general.
Capitalism may be defined as an economic system in which:
- Goods and services are produced mostly by large private enterprises voluntarily backed by many private savers through sophisticated financial intermediation; and
- Public policy is shaped by mainstream economic theory, with a presumption in favor of the free market.
Capitalism in this sense dates back to the Industrial Revolution of the eighteenth century and to Adam Smith’s 1776 masterpiece, The Wealth of Nations.
There were, of course, banks and joint stock companies before that. They go back at least to the later Middle Ages. But they didn’t run the economy then. Also, they didn’t inhabit the “private sector” in the modern sense. They tended to be entangled with the state. Banks made or lost money lending to kings to finance wars. The Dutch and English East India Companies were chartered by their respective governments for geopolitical as much as for commercial ends.
During the Industrial Revolution, with the appearance of factories and railroads, production of goods and services began to occur on a much larger scale, and demanded more financing. When, in the course of the nineteenth century, corporations took over the commanding heights of the industrial economy, capitalism had arrived. Today in rich countries, unlike in ancient and medieval times, people meet most of their material needs by transacting with banks, companies, and corporations. That’s capitalism.
Capitalism democratizes the financing of large projects. Long before there were factories and railroads, society needed granaries, ships, and aqueducts. Society also wants great works of art and science. Who will finance it all? Not ordinary people, for their resources are too small. So, to simplify somewhat, in pre-Christian societies, large projects had to be financed by either (a) the state, or (b) rich people. Medieval Christendom added (c) the Church. That was good in one way since it gave a Christian coloring to art, architecture, literature, and learning. The downside was that the Church ended up handling lots of money, got entangled in worldly corruption, and became the subject of bitter envy.
Capitalism adds (d) corporations. Or more generally, the financial sector, including banks that take deposits and lend to companies, and the stock and bond markets. In various ways, these institutions amass the savings of many individual investors, and channel them into large projects that promise a financial return. Capitalism makes it possible for society to do without strong states, wealthy aristocracies, or a wealthy and worldly Church. Instead of requiring the patronage of governments and aristocratic or ecclesiastical patrons, large projects can be funded by ordinary savers, with the help of financial intermediaries.
An incident reported by the Roman historian Livy may help make the point vivid. Livy tells how a revolt of commoners in the sixth century B.C. was quelled when a Roman aristocrat told the rebellious populace the parable of the body and the members. In this parable, the members of the body, which do all the work, revolt against the belly, which gets all the food. The members are a metaphor for the commoners and the belly for the aristocracy. But when the members reject the stomach, the whole body dies. Likewise, suggested the aristocrat, Rome could not survive without its aristocracy. Why was this parable persuasive? Perhaps because, in the ancient Mediterranean, ordinary people often had to store their food in granaries that only the rich could afford to build.
Elsewhere, as in “hydraulic empires” from ancient Egypt to Peru, food security depended on a strong state running an expensive irrigation system, and thereby gaining despotic power. By contrast, modern supermarkets are usually owned neither by local patricians, nor by the state, but by thousands of individual investors, of whom most are what we call “middle class,” but what Karl Marx would have called “working class” since these people need to work in order to live. Capitalist societies can let entrepreneurship and compound interest create a lot of inequality, as in the United States, or they can, through Scandinavian-style redistribution, achieve some of the most egalitarian income distributions in history. But they do not need the rich or a strong state, as pre-capitalist societies did. The middle-class, private-sector economy can run itself.
Yet it would probably never have gotten the chance, without a breakthrough in the realm of ideas. Economics, the science born with Adam Smith’s Wealth of Nations, paved the way for capitalism by showing how national prosperity was consistent with natural liberty. Adam Smith’s masterpiece attacked the mercantilists of the seventeenth and eighteenth centuries, who meddled and regulated and restricted, in order, as they thought, to strengthen the economy. He showed, with later help from generations of economists who refined his arguments, how the invisible hand of competition tends to lead to an efficient market equilibrium. He was persuasive enough to set in motion decades of deregulation and liberalization, ending in the largely laissez-faire world of the late nineteenth century, when the state was little more than a “night watchman,” as the saying went. Since then, global capitalism has suffered a catastrophic fall, followed by a dramatic if still incomplete comeback. But most of the world today is at least somewhat capitalist.
Value, for economists, is subjective. Each individual discerns what is good for himself or herself. Economists rely on “revealed preference” to settle questions of value. Consequently, they like, above all, to expand people’s “opportunity sets.” If an economist can give you opportunity set A or opportunity set B, and A contains all the elements in B and more besides, he will give you A. But if A and B each contain elements that the other does not, he is at a loss. He makes no claim to insight about what is good for you, except what he can discover by observing your choices. Nor can he answer any questions about how resources ought to be distributed among different people since revealed preference cannot be a basis for interpersonal comparisons. Economists give confident advice when they think they can expand everyone’s opportunity sets. Otherwise, they tend to be agnostic, saying, as President Truman complained, “on the one hand… on the other hand…”
Now, in his recent critique of capitalism, “Mammon Ascendant,” David Bentley Hart levels many conventional charges, but his subtlest, most distinctive, and most central critique of capitalism is as follows:
[Our] society’s… highest values—in every sphere: moral, religious, economic, domestic, cultural, and so on—can loosely be described as ‘libertarian.’ We understand freedom principally as an individual’s sovereign liberty of deliberative and acquisitive choice… Our natural economic philosophy, then, is of course ‘neoliberal’… while our natural moral philosophy is voluntarist, individualist, and hedonist… Capitalism has no moral nature at all… Fully developed capitalism [must] carry moral costs that would render it ultimately antagonistic to any but an essentially secularized culture… It could not coexist indefinitely with a culture informed by genuine Christian conviction.
This is a shrewd critique, seemingly aimed at the doctrine of revealed preference as a theory of value, which is central to free-market economics, which in turn is the ideological heart of capitalism. Economists do tend to make the “sovereign liberty of deliberative and acquisitive choice” the supreme criterion of value. Such a moral worldview is inimical to Christianity, which regards the good as real and eternal, not a function of arbitrary choice, and which regards people as fallen and fallible, prone to error and sin.
Yet it is possible, and I believe it is the proper approach for a Christian economist to take, to use the doctrine of revealed preference as an analytical framework, without regarding it as an ultimate theory of value, a source of claims about what is really good. It can be regarded, instead, as a delegation policy, a means of leaving many or most decisions about what is good to the individuals most directly concerned, to make well or ill. A Christian economist might seek to expand people’s opportunity sets, not because he always trusts individuals to make the right choices, but because he usually mistrusts rulers to make people’s choices for them, and because he believes in freedom.
The psalmist warns us, “trust ye not in princes, in the sons of men” (Psalms 146:3). Free-market capitalism follows this advice by taking power out of the hands of kings, aristocrats, bureaucrats, etc., and distributing it among ordinary people. They, too, are fallible and prone to sin, yet they may be more trustworthy than those who would rule them. And freedom is good in itself, an indispensable element in the enjoyment of life, as well as a school of virtue. That is why it is often good to let someone err, even if we are absolutely certain they are doing wrong, rather than force them to do right. That God Himself accepts this argument may be seen in the way He designed the world and is among the highest truths of Christian theology. God is, in a sense, is the ultimate libertarian. He made our freedom, and gives to evil a tremendous liberty, forbidding it, yet often declining to prevent it.
These arguments need not, and probably could not, be applied with perfect consistency, and do not require us to chase the chimera of a pure libertarian capitalism. We may reasonably hold, that it is better, in general, to give people more opportunities, yet that some choices, such as cocaine or prostitution, are so definitely and dangerously evil that we should subtract them from people’s opportunity sets through legal prohibition. In any case, it is not always possible to derive policy recommendations merely from the desideratum of expanding opportunity sets.
First, there are well-known “market failures,” including (forgive the jargon) natural monopoly, externalities, moral hazard, adverse selection, and public goods. Never mind what these terms mean. Suffice it to say that they all describe common scenarios in which we know on theoretical grounds that the spontaneous market outcome would be inferior, by everyone’s agreement, to some other outcome that is feasible, though it may be difficult to identify or implement. Markets are inefficient. The delegation policy fails.
Second, proposed alternative policies usually do not simply expand people’s opportunity sets. Instead, they create some opportunities and destroy others. They may definitely enrich some, while definitely harming others, so that they cannot be judged, without some means of making interpersonal comparisons. In other cases, changes in policy or social norms may alter people’s lives in ways that they cannot fully understand or assent to, but which are plausibly for their good. Various policies may all satisfy the criterion of market efficiency, but we must choose among them.
The wise course, in all such cases, is to seek to derive an understanding of what the good life for man really consists in, from the evidence of conscience, imaginative sympathy, our aesthetic faculty of recognizing what is good and beautiful, human tradition, and divine revelation. Having discerned what is good, we may then, when setting policy goals or advocating social norms, use our conception of the good life, sometimes to correct, but more often to supplement, the doctrine of revealed preference and the desideratum of expanding opportunity sets. We should discern what human flourishing really is, and try to expand people’s opportunity sets in that direction.
Unfortunately, it has become a tenet of modern liberalism that law and policy must be agnostic or neutral with respect to ultimate conceptions of the good. And here, economics is probably indirectly, and in part, to blame, for its nonjudgmental attitude towards consumers’ choices has been taken as a mandate to abdicate all value judgments about human conduct. J.S. Mill the economist inspired J.S. Mill the political philosopher. Because markets can be neutral among commercial goods, law and policy should be neutral among conceptions of the moral good. The subjective theory of value in economics has helped to inspire a widespread subjectivism about values. This moral attitude helped fuel the Sexual Revolution.
As free-wheeling premarital sex, no-fault divorce, abortion, gay “marriage,” gay adoption, boys in girls’ bathrooms, and perhaps in future polygamy and public nudity, get successively declared acceptable by law and/or culture, each advance down the slippery slope is presented as a liberation, an expansion of people’s opportunity sets. All objections look unreasonable, as if born of illiberal paternalism or simply of malice. A right may be grudgingly conceded to retain private conceptions of the good life that forbid divorce, or homosexuality. But one is forbidden to bring one’s private conceptions of the good into public debate. To do so is felt to be as unreasonable as mandating that your neighbor stop buying Brussels sprouts because you prefer broccoli.
In truth, none of the Sexual Revolution’s reforms have merely expanded people’s opportunity sets. Each one has created some opportunities and destroyed others. Thus, if you let single women sleep around without shame, you reduce single women’s opportunities to date chastely and men’s opportunities to marry virgins. If you allow divorce, you take away people’s opportunities to form marriages whose permanence is backed by the force of law. Abortion is one more option for pregnant women, and the end of all options for an aborted fetus. Gay “marriage” either closes the door to some sexual opportunities for gays who undertake it, or if not—if, as seems likely, gays don’t see marriage as requiring sexual fidelity—it must attenuate the link between civil marriage and sexual exclusiveness, making it harder for straight couples to communicate an intention of sexual fidelity through the promises of civil marriage. Transgender bathrooms rob people of the opportunity to uncover their private parts in public restrooms without fear of being seen by people of the opposite sex. To liberate the nudists, we would expose users of public parks and streets to obscenity. Legalizing polygamy would deprive some men of the chance to marry and some women of the chance to monopolize a husband. And so forth.
To point all this out is easy enough, but where does it leave us? If we can’t just expand opportunity sets, how do we decide? The wise course, again, is to seek to discern which outcome—chastity or promiscuity, abortion or childbirth, permanent or transient marriage, gendered or genderless marriage, modesty or nudity, monogamy or polygamy, etc.—is better and wholesome, and then to seek to expand people’s opportunity sets in that direction, and not the other. We sometimes help people flourish by giving them choices, but which choices we should give them, ought to reflect a wise vision of what human flourishing consists in.
Liberals and libertarians are uneasy with any suggestion that the good is an objective reality apart from people’s preferences. They tend to feel that it’s the essence of a free society for the government not to try to define or discern the good. And they have burnt their bridges to indispensable sources of insight about the good. They are forearmed against tradition, regarding the past as benighted, and they suspect conscience and the aesthetic faculty of being ways to let tradition in by the back door. And so if they are convinced that a question cannot be delegated to the free market, they are likely to delegate it to the latest public opinion polls, or the Supreme Court. Might makes right.
All this is very ominous, but capitalism is not the problem. We are not doomed to descend into moral relativism, just because we meet our material needs by transacting with corporations, and leave the allocation of most goods and services largely to the determination of the market. Real, practical capitalism, as distinct from the imaginary pure capitalism of libertarian ideology, usually comes enmeshed with wholesome traditions, and it always left plenty of room for families and religious communities until liberal judges and anti-discrimination laws began to interfere.
Indeed, as the Sexual Revolution becomes more illiberal, a flourishing capitalist economy is more important than ever as a refuge for the faithful. Voucher schools are children’s best chance to escape liberal brainwashing. Entrepreneurship can provide livings to people for whom liberal academia and government are inhospitable. So even as it helps to spread prosperity to the poor of the earth, free-market capitalism helps right-minded people to survive and maintain their integrity in the face of a regime determined to impose sexual immorality on society. The Christian case for global capitalism is stronger than ever.
Books on the topic of this essay may be found in The Imaginative Conservative Bookstore.