I have been surprised in the last year to see how aggressively (and defensively) some Christians defend the sanctity of the free market, and how much faith Christians place in the "invisible hand" of the market to do the work of God in the world. To be sure, there is a religious component to free market ideology. We talk of the "benevolence of self-interest" (to paraphrase Adam Smith), the power of "market forces," (very spooky, when you think about it) and the capacity of capitalism to "create wealth out of nothing" (mirroring the doctrine of
creatio ex nihilo.)
At the same time, however, I've figured out that much of the defensiveness comes from a misunderstanding of those who critique the ideology of free markets. Defenders seem to reflexively assume that anyone who criticizes free markets, capitalism, consumerism, globalization or the financialization of the American economy (making money off money) have one thing in mind: state intervention. But it is a false dichotomy to assume that a unrestricted global market and a state-run economy are the only options available.
When I criticize the free market, I do so from the perspective not of Keynesian economic policies (which are themselves far from socialist in nature), but from the perspective of the Christian doctrines of creation, stewardship and the telos of human life. One of the major problems Christians must have with free-market ideology is that it doesn't provide any means of internal critique. The only definition of freedom provided is a negative one: 'free from state control.' Christian understanding of freedom goes far deeper and is comprised of a positive element: 'free to serve God.'
So let's consider two free-market scenarios, from William T. Cavanaugh's short book
Being Consumed: Christians and Economic Desire.
Reporter Bob Herbert visited a factory in El Salvador that makes jackets for Liz Claiborne line of clothing. The jackets sell for $178 each in the U.S.; the workers who make them earn 77 cents per jacket (56 cents an hour). The factory is surrounded by barbed wire and armed guards. A worker interviewed after her 12-hour shift told of being unable to feed herself and her three-year-old daughter adequately. Her daughter drinks coffee because they cannot afford milk; both mother and daughter suffer fainting spells. David Wang, president of Mandarin Company, which runs one of the plans in El Salvador, admitted to Herbert that the wages are inadequate: "If you really ask me, this is not fair." But then he went on to offer a lesson in "free" trade. "In the United States, if you want to buy a Honda Civic, you can shop around and always you will find cheaper ones." This is what the clothing companies were doing, according to Wang. "They are shopping around the whole world for the cheapest labor price."
Cavanaugh describes a second company, the Mondragon Cooperative Corporation, which was founded by a Basque priest in 1956. It is also being run under no state intervention, and therefore a product of a free market. Mondragon also manufactures goods, employing over 60,000 workers with annual sales over $3 billion USD.
What makes Mondragon extraordinary is that it is based on the principles of distributism: this idea - based on papal social teaching and promoted by Hilaire Belloc, G. K. Chesterton, and others - is that a just social order can only be achieved through just distribution of property and a recognition of the dignity of labor. Mondragon is entirely worker-owned and worker-governed, and it is based on a system of one vote per worker. At Mondragon they believe that labor hires capital, instead of capital hiring labor. Their capital comes largely from a credit union that is supported by workers and the community. The highest-paid employee can make no more than six times what the lowest-paid makes; 10 percent of surpluses are given directly to community development projects. Not only is the company successful and laborers highly satisfied with their work, but the communities in which Mondragon plays a significant part enjoy lower crime rates, lower rates of domestic violence, higher rates of education, and better physical and emotional health than neighboring communities.
From the perspective of free-market ideology, there is no difference between the two organizations, since both are free from state intervention and both consist of entities (customers, owners, workers, etc.) entering into contracts uncoerced. So the market itself lacks any mechanism or even perspective by which to say which of these situations is "better." For another example of a morally problematic situation created by free-market ideology, see Rhiannonator's
recent post.
Christians, of course, can only approve of or condemn any situation in the world by drawing on their own traditions, contrary to the intentions of globalizing economies to displace all such local traditions. Free-market ideology tempts us to use 'freedom' as a code word to mask what are in fact bare predations of power, as in the case of the Salvadorian textile worker above. Mondragon, in contrast is founded "on the recognition that true freedom requires a careful consideration of the ends of being human." The free market cannot provide the resources for such consideration; Christians must go back to the gospel of Christ.
What resources do Christians have in a global economy where freedom is equated with unrestrained power?
- First and most importantly, we have our traditions and doctrines. The doctrine of creation keeps us necessarily grounded in the reality that wealth doesn't spring from nothing, and that growth must come from work of real value: no Christian should have ever been fooled by credit-default swaps. Meanwhile the doctrine of the abundance of the Kingdom of God frees us from the need to hoard our goods and cling possessively to objects as though they were ours. As Thomas Aquinas put it, "Man ought to possess external things, not as his own, but as common, so that, to wit, he is ready to communicate them to others in their need."
- With this tradition from which to draw, we are enabled to enter the market place seeking freedom in its positive sense. Christians can organize corporations whose tasks are more than simply "returning a profit to the shareholder." Christians can create goods of actual utility and quality for the world to use. Christians can enter into partnerships with small business owners in impoverished nations to interrupt cycles of poverty. Christians can refuse to shop around for the lowest prices at the expense of human dignity. Christians can enter into real relationships with the producers of their goods through farmers markets, co-ops, choosing credit unions over national and transnational banks, local jewelers, etc., as well as by purchasing Fair Trade whenever possible.
- If Christians can effectively model healthy, attractive and successful methods of working within the free market, governments and secular institutions can be "brought along." Hospitals, public education and the peace corps were all originally matters of Christian conviction before governments began to notice that they worked, and gradually took over those roles in society. Christians can give shape to society specifically by serving it.
Further resources
The Free Market: the enemy of freedom?Mondragon, the remarkable achievement by Robert Gilman
50 Factors Within Nations that Determine their Wealth or Poverty by Wayne Grudem
How Did Goldman Sachs Contribute to the Financial Crisis? on Dollarish
What other resources do Christians have for interacting with a free market? What are the strengths and failings of the free market itself? Why are there not more organizations like Mondragon?
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Comments (22)
I would just like to tack onto this a criticism leveled at the free market from Pope Paul VI in the encyclical Populorum Progressio (1967): "Trade relations can no longer be based solely on the principle of free, unchecked competition, for it very often creates an economic dictatorship. Free trade can be called just only when it conforms to the demands of social justice... In order that international trade be human and moral, social justice requires that it restore to the participants a certain equality of opportunity. To be sure, this equality will not be attained at once, but we must begin to work toward it now by injecting a certain amount of equality into discussions and price talks."
Pope Paul VI advised a form of international state intervention that "could establish general norms for regulating prices, promoting production facilities, and favoring certain infant industries." He asked, "Isn't it plain to everyone that such attempts to establish greater justice in international trade would be of great benefit to the developing nations, and that they would produce lasting results?"
I'm not certain that we should trust national or international governments to balance these things, though I'm not opposed to governments taking over certain regulatory functions. What is more important, however, is for the church to work intentionally outside of state intervention, in ways I suggested in the post.
Also, I'd just like to predict that very few people are going to read this long, boring post about Christian economics.
The strengths of a free market is that money goes to the rich. The rich can be both the strength or the weakness of the market. The rich can use that money to enlarge the company, and employ people,
Or,
They can save that money for themselves.
In the first case the government makes it easy for businesses to hire people, and a wealthy economy is created.
In the second case the government makes it easy for businesses to hire people, but instead the wealthy became greedy, for their own lives, and made lots of money, and the economy went down.
Businesses went down, until it didn't matter anymore how much money you had, or how big your company was, very few people wanted to pay for your goods, because there just simply was no money for it!
I think this second system has been active for quite a while now!
In the third case, the government (Aka Barak Obama) intervenes and says: "We'll take the money from the rich, and give it to the poor".
The poor get the money, without working, or doing much effort for. This is in tax benefits, or unemployment checks. In it's turn the people stop to care about working, because the government provides.
The economy grows slowly, but the big businesses now get taxed more. They have no money to hire people. So we're getting into a situation where the people are stuck. They get employment checks, being taken care for, but find no place to start working again.
so they save money, figuring the government is going to stop giving sooner or later.
They cut their expenses. Companies get less money in, and have to layoff more people.
The government needs to pay more unemployed people. People lose their homes, because they can no longer afford to pay it with the government's income.
Homes are for sale, people ending with serious debts, not being able to pay them without jobs, cut money even further.
Companies can no longer afford employees, and are starting overseas where the workmanship is cheaper. With companies downsizing and stopping, people come into this vortex and downward spiral which will continue until .. who knows? .. Until rockbottom.
The poorest people will start stealing, fighting, robbing. Police will have more work to do. jail will be overfull. People will be taxed more due to the crime.
People who do have money will get taxed more, until they no longer are able to pay their bills.
One of the first things to go is insurance, luxuries. People will start living in smaller homes, selling some of their posessions, often keeping only one or two of their cars; start buying cheaper stuff. More expensive products will be forced to sell cheaper, which results in more layoffs; cheaper companies will see more people working there,or the same amount of people will need to work harder.
This third case scenario is where we find ourselves in now, thanks to our dedicated voters who voted for our president. One argument could be: "If Mc Cain would have been chosen, the economy would have been as bad".
Yes it would, but he would have sought to subsidize the businesses to hire people, instead of subsidize the people with unemployment checks.
He probably also would cut taxes on businesses, and perhaps raise taxes on business people with an income higher than... $xxx per year.
Mc Cain would definitely never have lend 3trillion dollars in the first 3months of his candidacy.
And definitely not 4trillion in his first 6 months of candidacy.
The money that has been pumped in the market by Obama has all been lost. The government had invested too much in a company that in the end ended up dead anyways, due to a wrong policy on GM. They should have seen that in an economical hard time, and with gas on $4, people don't want big trucks, they want fuel efficient cars!
So a bad investment! Mc Caine would have much sooner spoken of extended and modified loans.
Barak didn't have the knowledge, because he's a people's person, not a business person.
@SirNickDon@xanga - Also, I'd just like to predict that very few people are going to read this long, boring post about Christian economics.
I'd predict that very few people are going to read this long boring post because it's a bunch of BS.
"Christian economics" being a fecal example.
There's only one Christian on Revelife who posts instruction on the wonderous characteristics of capitalism (that spoiled snit slip of a grrrlll, fallingraindrop).
Socialist non-Christians-who-love-Jesus like Sir Nick babbler at length about how capitalism must be regulated. This time, however, the tactic is not to use government as the regulator, but to use JEEEEsuSSSS Christ, that supreme regulator in the sky and his minions those eeevil Catholic popes.
You continue to suck major wazzoo, Sir Nick.
In order for capitalism to work well for the majority of people and not just those at the top, a level playing ground needs to be set for all companies to compete by.
With no rules, or lack of enforcement of existing rules, companies that lack morality will ALWAYS have an edge over those that don't. Mondragon may work, but if forced to go head to head with a company that employs people like the factory in El Salvador, they will lose since if the products are comparable in quality, Mondragon will not be able to compete on price.
The hypocrisy lies in the fact that all the large corporations that cry out for free market conditions when times are good come running to the Govt for aid when things go bust. by all rights, NONE of the investment banks should have been rescued. If the Govt needed to step in, it should have assisted the smaller, solvent banks who avoided the Sub prime/CDO swap derivatives debacle in taking over the assets and holdings of the failed banks, which would be the capitalistic approach. Rescuing banks that deserved to die can hardly be called capitalism, and the banks continue to spit in the taxpayers faces with shelling out millions in bonuses this year.
@ProDigit - Much of your "economic theory" is off the mark. I highly doubt many folks are "being taken care of" via unemployment compensation. You do realize that unemployment benefits are just a fraction of most middle class salaries and higher right? You show me a person who makes enough on UI that they can save money off it and I'll show you a miracle case. I know plenty of folks who are newly unemployed, and UI doesn't cover everything, they have to go into their savings too. There is NO incentive to stay on UI and have savings dwindle to zero.
Next, companies were outsourcing jobs overseas long before the recession and spending slowdown hit the scene. The reason the recession is as bad as it is is due to the lack of jobs available in the first place. Outsourcing jobs started with the textile industry, and has now moved into many broad areas including high tech. The jobs that can't be "outsourced" are now being "insourced" by hiring foreign labor to come here via H1-B Visa's.
Blame Obama if you like, but you need to look at all the deregulation and lack of enforcement of current regulations that led to this fiasco - which includes BOTH republican and democrat members of the House, Senate, and White House.
John "The fundamentals of the economy are sound" McCain and Sarah "I fall apart during debates and interviews, and I'm a quitter" Palin would have been a disaster.
the free market can only work if the people at the top are decent human beings who care about the people at the bottom. unfortunately, wealth tends to corrupt. when 1% of the population owns 99% of the wealth, we have a problem. just as i believe that no business is too big to fail... no economic system is too perfect to fail.
@SoullFire@xanga - Well,perhaps less a disaster than Barak"I'm gonna change the world for worse, get the troops out of Iraq,Bail GM out, spend more money than we can ever pay back, give cars to only 600.000 Americans that can afford it"Obama. See any resemblances with Hitler?
But I do agree with your other post though! The real indicator of an economy is it's people. If the backbone is strong (which it isn't),people's moral is high (which isn't), people are hard workers (which isn't when you compare USA to other parts of the world;there's a reason Asia earns more money than USA right now), then the economy will recover.
However a good king knows how to motivate his people!
And unfortunately that is not really happening for some reason.
Last time I checked the statistics for unemployment compensation in FL where 10% out of 13% unemployment. That's a hell of a lot!
@ProDigit - Isn't it crazy that the U.S. works more than almost (if not every) country on the planet yet they aren't the hardest workers!? Crazy.
The market responds immediately (and ultimately ONLY) to the consumer. If you don't like what Liz Claiborne does in its factories, don't buy their stuff. They will not make what people do not buy.
You make very good points. As an aside it is disgusting, after all the indiscretions of companies like Lehman Brothers, Bear Stearns, and Goldman Sachs, the CEO of Goldman Sachs recently dismissed critics of their huge bonuses this year by saying he is doing God's work. One could go as far as to argue that organized crime would represent a free market if not for the pestilence of government intervention via law enforcement and prison systems. It's interesting to note in this regard that neighbors of John Gotti regarded his as they would a saint because their neighborhood was devoid of crime and they had the best 4th of July block parties in the city. It's the old "Screw you Jack. I've got mine" syndrome.
Excellent and well-written post. We have a variety of examples in the Bible of other than simple free-market economic systems.
The laws of Moses, for example, include numerous practices to provide for and protect the poor, including gifts (some tithes, sharing during the Feasts) and opportunities for labor (leaving field corners unharvested, not picking up dropped sheaves). If a family fell on hard times and had to sell land, the land was to revert back after a number of years, so that property distribution remained equitable and generational poverty was minimized. An Israelite who was economically desperate could become a bond-slave, but was to be released after seven years. Loans to fellow Israelites were to be interest-free. If you took property as collateral, it couldn't be their only clothing or their means of livelihood. Crime, on the other hand, definitely did not pay: fines were several times the value of the stolen goods.
I don't know if it is appropriate to expect our government to implement laws based on these, but it would be awesome if private companies would see what wisdom they can glean in order to make their practices equitable (as in the second Salvadoran example in the post).
During the time of Joseph, God directed him to organize a massive government taxation of a seven-year bumper crop of grain (20% tax rate, as I recall), the proceeds of which he used to a) save Egypt and surrounding countries from starvation, and b) buy up most the agricultural land of Egypt for the government during the subsequent seven-year famine, leaving farmers as sharecroppers. I don't know what application I would draw for modern economics, but in Joseph's case, a government bailout was clearly God-inspired.
Jesus frequently hit people between the eyes with the principles behind the laws of Moses, because the people of his time had done like we do and looked for every loophole and every possible self-serving misinterpretation of the Law. He didn't have a problem with wealth itself (see the Parables of the Talents), but he had a huge problem with selfishness and the illusion of self-sufficiency (see the Rich Fool).
It's an irony that I'm seeing this today. My rant for this week is about economics. It's not really up to the par I would like it to be, but it's got some good ideas on it: http://nidan.xanga.com/716256931/wprr-resources/
I like this post, thank you for writing it. It seems like so many Christians in America these days get caught up in the free market and why not? Supporting "Republican Party" ideals absolves them of their obligations to help the poor and downtrodden. Why give to someone else when you believe that "belief" is enough and your life should then be spent going to Church and trying to amass as much stuff as you can, like a good little American. This is all baloney! Organizations like Mondragon should be held up as paragons, should set the standards for capitalism in our society. We all benefit that way. This worship of the rich is nothing but the residual influences of Puritanism. "Work hard or you don't eat" is not an appropriate Christian value, it's from our colonial past, from Jamestown I do believe (well I know it was a rule there starting out). Christians shouldn't be supporting one economic system over the other. They should support those who work for equality and fair distribution of wealth and means of control over capital. We can't all be millionaires, it's time to stop stealing from the poor to grow the coffers of the rich.
One of the major problems Christians must have with free-market ideology is that it doesn't provide any means of internal critique.
That statement is incorrect and mis-leading. Here, "internal critique" is merely code for "command and control". The mass starvation and poverty caused by that type of "internal critique" is a matter of history and a matter of fact.
Pointing to socialist Western Europe is another much used but erroneous technique to foster believe in command and control societies. (Yes, if the govenment is able to command and control the economy it will command and control the individual and the society.)
Unlike gulags like the Old Soviet Union, the Old Eastern Bloc, Cuba, North Korea, Vietnam, etc., Western Europe has access to the oceans of capital created by capitalist United States. Without that access, Western Europe would be completely impoverished.
some Christians defend the sanctity of the free market, and how much faith Christians place in the "invisible hand" of the market to do the work of God in the world.
This is also misleading and incorrect statement. The so called "invisible hand" of capitalism is obvious to anyone who goes to an American supermarket. It is the invisible hand that provides such incredible abundance and variety.
So it is not irrational faith but belief in one's own eyes that provides rational faith in the power of the invisible hand. One may have faith that the sun will rise the next morning because one sees it happen every day.
The only definition of freedom provided is a negative one: 'free from state control.'
Another false statement once again.
The expression of everything humanity has to offer is expressed in liberty. Capitalism allows the awesome expression of human generousity, creativity and human development in a way that allows universal sharing of these things throughout the entire human race.
That is positive not negative. Seeing such positivity is only a matter of looking around and seeing the obvious.
As Thomas Aquinas put it, "Man ought to possess external things, not as his own, but as common, so that, to wit, he is ready to communicate them to others in their need."
This is yet another example of misleading propaganda that comprises the majority of this post. The attitude of charity expressed by Thomas Aquinas is not justification for the redistribution of wealth or the abolition of private property.
Nor does it have anything whatsoever to do with economics.
Ok for all you supporters of Capitalism out there what are your opinions on laissez faire? I feel that capitalism is a useful tool and a good economic engine, but it's not the gurantor of our rights and freedoms, as so many seem to think. God and our laws do that. No human economic system can give us freedom and secure our rights. I personally don't think the market should be allowed to run willy nilly, for the invisible hand is not God at work. It's a "corrective agent" that functions best in a truly just society. Justice and equanimity are the key to the invisible hand. I do believe in the power of capitalism but it needs to be regulated to protect us from greed and to keep the engine running smoothly so everyone can participate and gain.
Oh and another question: Why is it assumed that the parable of the talents is about money growth? I was always taught it was about making use of what God gives you, using your own abilities and ideas to grow the kernel supplied. I never saw it as some kind of endorsement of capitalism or investing money, just a don't waste what you've been given tale.
@TheSutraDude@xanga - Like you have brought up elsewhere we can't overlook the influence of the C Street gang. Of course Wall Street execs would think they're doing God's work when they've bought into the ideolgy of C Street. It absolves them of any responsibility to the "lower classes" and the impoverished, of any responsibility outside of their stockholders. Such pernicious thought needs to be dealt with!
@too_pretty_to_die@xanga - Thank you! You hit the nail on the head! It only works with decent, moral people at the top, which in our culture never happens because to get there you have to back stab, like, fight, and claw your way to the top! How can people like that ever be expected to be true leaders?
@SoullFire@xanga - Amen!!
@anewbys@xanga - They don't even care about their stockholders. Lehman Brothers is under investigation. While the firm was telling its shareholders that the firm was doing great (it would be interesting to reread articles about Lehman Brothers in publications like Forbes and the Economist written in 2006, 2007, and 2008 and also to see the "excellence" ratings and awards given to the firm in that time period) at the time of it's bankruptcy its debt to asset ratio was 40:1. Imagine anyone being $40 in debt for every $1 in salary. However, the investigation is revolving around the practice called "blind short selling" which is basically selling shares not in your possession. It's an illegal practice which involves selling shares that you don't possess and that you know are going to lose value. You then buy them back for less than you sold them and sell them again if your research department determines they are going to lose value again. What is holding up indictments is that it is difficult to determine the actual persons responsible for the fraud. Smoke and mirrors at work. Lehman isn't the only firm that used this practice. The other firms were bailed out. One of the Bush economic advisors had a long standing feud with Dick Fuld, CEO of Lehman Brothers and had been a top exec at Goldman Sachs. He was influential in the decision to bailout GS and throw LB under the bus.
Wall street is no different from Vegas in that most people lose money on stocks. Of course in 2008 even 401Ks were wiped out. We saw people who expected to retire with as much as or more than a million dollars in assets from their wall street investments suddenly having to take jobs packing bags at supermarkets and the like in order to survive. I could go on. That people "rise to the top" by being animals and pushing others out is human nature of the worst kind. That anyone trusts these people because they are on the top is gross ignorance. That any of these execs claim to be doing God's work could be grossly delusional but more likely is an intentional propaganda, knowing that the mention of God will cause a segment of society to snap into formation.
A friend of mine who was in covert operations and had connections to the big brass in the Pentagon was in a disagreement with a General one day. The General reminded my friend that cream rises to the top to which my friend answered, "Just remember. Cream isn't the only thing that floats". One of the best comebacks I've heard.
You've probably heard the Senator under investigation, John Ensign, has left C Street because he doesn't want to tarnish the organization. Closing the barn door after the horses have gotten out. That organization is trying to subvert the U.S. of A. and the world. It needs to go down and people need to know about its existence and false motives.