3/13/2009

The Economics of the Kingdom

Here’s a good definition of Capitalism (courtesy Wikipedia): “An economic system in which wealth, and the means of producing wealth, are privately owned and controlled rather than commonly, publicly, or state-owned and controlled.”

Here are a couple issues that arise from believing in strict “free-market,” “laissez-faire” or "pure” capitalism.

The first comes from thinking that everything needs to be “privately owned and controlled.” There is no room for common resources, common capital, and common services. Everything, including our natural resources like water and air, as well as our common services such as fire fighting and the military (think of Private Military Companies like Blackwater in Iraq) must be privatized. Is there a danger with this?

Another issue that arises from believing in purely private ownership is that we begin to believe that the goal in life is to own stuff. That what I have is mine, and not somebody else’s. The top priority in a capitalistic worldview becomes our personal material well-being (for each individual, as well as for our nation).

However, this runs contrary to the biblical teaching of Stewardship. Certainly, we “own things,” but what this actually means is that God has entrusted to us these possessions – that they are actually his. Everything we have is actually entrusted to our care, including nature, our fellow human beings, our health and our time.

One of the great Christian economists of our generation, Bob Goudzwaard, wrote these helpful words. As I read them again this week, I was struck about how incredibly insightful they are in light of the current economic crisis.
Is our society characterized by this kind of stewardship? This has become a rhetorical question. Christians no less than nonchristians have frequently acted as if economic means and technology are ends in themselves. We take a steady annual growth in material welfare for granted as if it were a right we are entitled to. We also convince ourselves that our own ever increasing wealth will enable us to preserve nature more carefully as well as provide some aid to the poor nations. But our thinking presupposes that our own material well-being, personally as well as nationally, must receive priority.

I am inclined to state that in this framework of thought things have been turned upside down. Mind you, the question is not whether economic growth in itself is good or bad. Our concern here is with the sequence of things. Stewardship means: first take care of the earth for which God has made you responsible, first see to it that others have enough, and then you will discover that there is plenty left for you and your own society. This is what I would call the economics of God's Kingdom. First seek that Kingdom and all things will come to you as a matter of course.

How can capitalism help or hinder our calling to seek first the Kingdom?

10 comments:

Byron Harvey said...

I'm wondering if there are many capitalists who would take as far as you do the idea that everything needs to be privately owned and controlled. I've never been against the U.S. military as an entity; the most appropriate roles of government are the protection of our citizenry and the execution of a fair and impartial system of justice--though I suppose those could be farmed out to private enterprise, perhaps. That said, your Blackwater mention raises only one side of the equation; do you think that a privately-owned military would pay $436 for a hammer like the Pentagon did at one time? Nonetheless, if we were discussing things like firefighting and military only, I'd be a happy camper; instead, we're discussing the U.S. government taking over, or at least holding massive interests in, large swatches of private banking and industry. That portends some terrible things economically.

Further, you're quite right to point out the danger of believing that our goal in life is to own stuff; perhaps the case can even be made that capitalism makes that temptation stronger than other systems. That said, though, we can certainly think of temptations that attend other systems as well. Sloth jumps immediately to mind when it comes, for instance, to socialism; if I'm going to get what I need anyway, why work for it?

This is good stuff to process, though; I'll look forward to reading Bob's stuff.

Byron Harvey said...

Your link didn't work to Bob's stuff, by the way.

Michael Kruse said...

The jubilee code required that agricultural land revert back to the original owners every fifty years. Good wanted to be sure that each family had capital (land and labor) that would allow them to participate in stewardship of God's resources. It was not communal ownership but everyone recognized that what they had was held in stewardship for God. Through productive private stewardship they participated in their own provision as well producing goods that could exchange with others to enhance others lives, and they had resources they could share with poor.

There is the issue of the "tragedy of the commons." As Wikipedia explains:

"… a dilemma in which multiple individuals acting independently in their own self-interest can ultimately destroy a shared limited resource even where it is clear that it is not in anyone's long term interest for this to happen."

The example Garrett Hardin (who coined the phrase) uses is this:

"Central to Hardin's article is a metaphor of herders sharing a common parcel of land (the commons), on which they are all entitled to let their cows graze. In Hardin's view, it is in each herder's interest to put as many cows as possible onto the land, even if the commons is damaged as a result. The herder receives all of the benefits from the additional cows, while the damage to the commons is shared by the entire group. If all herders make this individually rational decision, however, the commons is destroyed and all herders suffer."

As long as what is held in common far exceeds the consumption of users, holding something in common is not a problem. But if you keep adding consumers you are eventually going to create this dilemma.

For holding things in common to work, there must be a high degree of solidarity and frequent social interaction among the commons users. As our social networks can contain up to 150 people at the extreme, property held in common will only work with a small community.

Imagine monitoring the tomato crop. If all tomato plants are held in common by a community, then people's behavior regarding the tomatoes must be observed at all times for everyone. This requires a high degree social interaction and acquaintance, and as I noted, that can only be done in small communities.

If we each own our own tomato patches, then all each of us must do is monitor trespasses regarding our plants.

Recognizing the need to see our property as held in trust for God and that we have a communal responsibility does not equate to some need for communal ownership.

Private property, markets and a strong juridical framework are what enables strangers to exchange and enhance the lives of other strangers. It improves the common good.

The challenge comes with things like air pollution where the perpetrator is inflicting costs on others in the air commons. The challenge there is to shift the costs back on the polluter through things like taxes and regulation.

Bob Robinson said...

Byron,
I've updated the link - it's a pdf file. This file is found at the Goudzwaard pages at
All of Life Redeemed - click on the "Articles" tab and find article #53 - ""Economic Life: A Confession."

Blessed Economist said...

Bob
The main difference between privately and publicly owned capital is that private owners have a strong incentive to look after it and make sure it does not deteriorate or become obsolete. If private owners do not shepherd their capital they suffer. With public ownership of capital no one has an incentive to care for it. Look at the way the military wastes and damages valuable capital equipment for evidence. Likewise in the soviet union capital was often wasted.

Your statement that “the top priority in a capitalistic worldview becomes our personal material well-being” is misleading. You could just easily say that megachurches encourage pride, because the objective of the pastor is to have a bigger congregation than anyone else. The reality is that greed, avarice and pride come out of the human heart, so they can manifest in any area of life.

The great irony is people that in the free enterprise system capitalists are forced to care and serve. To become wealthy, they have to provide a service or product that people want.
If you start a business in and free enterprise economy with the goal of becoming rich you will almost certainly fail. Capitalism actually forces people to serve other people. If you talk to any person running a modern business, you will find they are flat out trying to provide the service that their customers need. They know that if they do not care about their customers enough to find out what the need, they will lose them. The business that does not serve its customers will eventually fail.

On the other hand a public bureaucracy does not have the same incentive. You progress in a bureaucracy by working the system, not by caring for customers or serving their needs. The party hacks in the Soviet Union got their dacha’s by being ruthless and greedy, not by serving.

Bob Gouzwards statement
that “Stewardship means: first take care of the earth for which God has made you responsible, first see to it that others have enough, and then you will discover that there is plenty left for you and your own society. This is what I would call the economics of God's Kingdom. First seek that Kingdom and all things will come to you as a matter of course” is true, but it really lacks content.

What does it mean for a self-employed carpenter. Does he stop working when he has earned enough to get by? If being a carpenter is his kingdom calling then he should probably keep working. How does he care for the earth. Rather than sitting on the sidelines and passing judgment, Pastors should spell these things out in more detail, if they are to avoid putting guilt trips on people.
Ron

Bob Robinson said...

Byron,
As I read the Imprimis article that you recommended on your blog, it struck me that the logical route for free-market guys like Ronald Nash is for everything, yes everything, to be privately owned and controlled. And this is the kind of thing we see pushed for by free-market capitalists all the time - they keep pushing for privatization. It's no wonder, then, that the U.S. has paid for the services of Blackwater.

There is a balance needed that the black-and-white pundits refuse to recognize. Some things need to be privately owned and operated, other things need to be communally owned and operated. Instead of the capitalists labeling all socially-owned capital and services as non-Christian since they are "communist" or "socialist," or, on the other had, communally-minded folks labeling all efforts at free-market capitalism as non-Christian because they are based on "greed" and "individualism," we all need to keep from swinging the pendulum too far.

Bob Robinson said...

Michael,
That is such a helpful way of seeing the need for private ownership with the need for taxing and regulation. The free marketers are always pushing for deregulation and lowering (or elimination) of taxes. The thinking is that the market will make the adjustments needed for the common good (the "invisible hand"), but that is not logically possible.

Bob Robinson said...

Ron (Blessed Economist),
Am I understanding you correctly in that you deny that the force that drives the capitalist machine is personal material well-being? This seems contrary to what Adam Smith and Ayn Rand said. The invisible hand that makes it work is for each person to seek his or her best interests - this includes, of course, providing goods and services others want and need, because they too are seeking their own personal material well-being.

Byron Harvey said...

Of course free-market folks keep pushing for privatization, Bob; way too many things are state-owned/state-run/state-meddled-with. I don't know, but my guess is that if we could get all the things that clearly need to be back in private control that ought to be, we could then have a civilized discussion about the limits, about what rightly ought to be the roles of government. But we're so far from that, that of course we have to keep pushing for privatization.

Now, we've got Obama and his buds trying to shame AIG into breaking legally-binding contracts that the government doesn't happen to like--and my guess is that if shaming them doesn't work, the Chris Dodds of this world will impose heavy taxes on those bonuses. No, it's not the role of government to give AIG money in the first place (particularly without strings attached), and then come back after the fact and complain about what AIG does with the money. When government gets into these matters, it invariably screws things up. Invariably. Without fail.

So back to your response: what "ought" to be "communally owned and operated", and what ought not? And why? Because while there have to be standards--a minimal amount of regulation that only goes so far as to safeguard the constitutional rights of all involved--it seems to me that the consistent track record of government is that it messes things up in ways that some of your commenters more deeply-versed in these matters than I have already pointed out.

Sam Van Eman said...

Bob,
I featured this post over at High Calling Blogs. You should see it in the next week.

Keep up the good work!
Sam