Wednesday, April 7, 2010

Does the Free Market Corrode Moral Character?

Each year in April, The King's College takes a break from regular classes and focuses as an academic community on some fertile topic for exploration and reflection through a common reading, student debates, dramatized great speeches, an art exhibit, student lectures, and a formal address by a prominent academic. This year the theme (in keeping with the times) is "avarice." We had two readings: Marlowe's Doctor Faustus and Shakespeare's Macbeth. Our honored speaker will be Stanley Hauerwas from Duke Divinity School tomorrow night.

I most appreciate the student lectures, however. (Forgive me my weaknesses.) One student from each of the nine "houses" by which we organize the student community at King's delivers a ten minute lecture on a commonly assigned question. Following the avarice theme, and wishing to challenge our liberty oriented Christian community, the student lead Interregnum Committee posed the question, "Does the Free Market Corrode Moral Character." I was only able to hear six of the addresses, and, while they were all impressive, sophomore Tim Wainwright's stood out, in my opinion. He graciously consented to allow me to reproduce it here at Principalities and Powers.

"Does the Free Market Corrode Moral Character?"
Tim Wainwright
House of C.S. Lewis, The King's College, class of 2013

The question I address today, “Does the free market corrode moral character?”, is not a new one, but it is a complex one, and because of this I feel I should start by defining my terms and my interpretation of the questions. First of all, I define “free market” not as a lawless Wild-West kind of gold nugget anarchy, but as an economic system of capitalism with minimal interference, with rule of law and clear rights of private property, and a system where people can freely exchange goods and services. Secondly, the way I interpret this question posed is “how does the free market impact people’s morality?”, as in, does the free market on average cause individual people to behave in an immoral way? Therefore, I will not be trying to persuade you of the various material benefits of free market policy and economics. Also, minimum wage laws, regulation, dead weight loss and the harm caused by nationalization of industry and other nuances will be left for another discussion. I will be trying to leave out these topics unless they pertain directly to people’s moral character.

I lay this out to you because it’s important. It means that this lecture will be more of a subjective approach than an objective one. And because I have to focus on morality rather than math, and because this is such a deep question and I only have ten minutes with which to talk about it, I will not be able to go into as much detail as I would like. Keeping those challenges in mind, I’ll now talk about some way how best to serve others by providing a superior product or making a process more efficient and seeking to market that. This creativity cannot be mandated by central economic planning. Also, do not let it seem like free-markets use a reductive definition of creativity, as simply a means to turn something of worth into cash. From a Judeo-Christian vantage point, the capacity to create is something, in the words of Austin Hill, “distinctly human, something God-given, and something indicative of the unique nature of the human person, having been “made in the image of God”. Creativity is a gift that separates man from the beasts. Birds and other animals create, but with repetition, not ingenuity. Capitalism is the economic system which allows creativity to thrive most because it provides incentives, more so than any earthly alternative.

Speaking of incentives, that brings me into my third ethical point in favor of free-market capitalism. It is the only economic system that relies upon persuasion rather than coercion. Communism, fascism, and socialism rely upon coercion: trying to get people to do what you want by threatening to reduce their options. And by “reducing options”, I mean state-sponsored murders. 65 million in China, 20 million in the USSR, the list goes on. Free-market capitalism, presupposing the freedom of exchange, that the rule of law prevents anyone from being physically forced to make a purchase, means that no trade will occur without the blessing of all parties involved, which means that by definition it is a win-win situation. That means that in order to get others to do what you want, you have to use persuasion rather than coercion. It is an environment where people have an incentive to serve others in order to serve themselves, thus actually tempering the human desire to conquer and domineer. It takes those in the economy whose motives are pure greed (and they do exist) and forces them to channel that greed into doing something useful for their fellow men, for that is the only way they can sate it. So not only does free-market capitalism sponsor certain virtues, it also channels certain vices and, while not eliminating that vice, at least preventing it, when the rule of law is upheld, from becoming something that harms the rest of society as it would under another system.

I could go on. I could say how capitalism creates responsibility, civility, cooperation, and responsibility. That it furthers knowledge, and that it helped give us modern theology in that it allowed people to take a break from farming and spend some time thinking about God. Unfortunately, I don’t have time to really unpack those topics. Instead, I will use the time I have left to answer common arguments from those who disagree with my view of the market.

I’ll begin with the most common complaint against free-market capitalism: that it is a system that rewards and fundamentally relies upon greed and selfishness. Critics who make this point are foolishly confusing selfish behavior with self interested behavior. A market system does run on self-interested behavior, but that is not necessarily greedy. What I'm doing right now, giving this lecture, is engaging in self-interested behavior. I accepted the chance to speak in front of you because I am interested in the subject matter and how it gets communicated. But it's not selfish. Selfishness can be defined as “exclusively concentrating on one’s own advantage, pleasure, or well-being without regard for others”. I’m certainly not exclusively focused on my own pleasure being here. If I were, I wouldn’t be here; I would be asleep!

And that is why it is important for us to distinguish between selfishness and self-interest. Self-interest, as defined by Paul Heyne, is “individuals in control of property using that property to pursue projects that interest them”. There is nothing inherently wrong with self-interest. Not all desire to better oneself is greed. Indeed, the Book of Proverbs says, “Lazy hands make a man poor, but diligent hands bring wealth”. There is clear biblical support for a pursuit of self-interest through hard work, and it is on this that the free market runs, not greed.

And this is where critics of capitalism get it all wrong! They make glaring assumptions about the true motives of people in the business world. What is it that business execs are thinking about in their work? When they devise a campaign or have meetings, are they only thinking about getting more money? Sometimes, but a whole lot less than we are given to think. And I would stress that the greed that does exist is a matter resulting from the human heart, not from the way the economic system is set up.

This point about the human heart is closely related to the second common argument I will refute, so I will expand it in relation to this: that the free market creates a materialistic and spiritually bankrupt consumer culture. You all know the common caricatures: of obese Americans who love nothing more than a McDonald’s and a Starbucks on every corner, who only care about getting the latest Steve Jobs toy. Or, as a Preacher named Jim Wallis put it, “The tree of the American economy is rooted in the toxic soil of unbridled materialism”. Unfortunately, this dramatic stance distorts consumption into gluttony. Gluttony involves our hearts, it is something created by human nature and not from circumstances created by private property.

St. Augustine talks about this problem of material goods, the “beautiful form of material things”. He says that “Sin can gain entrance through these and similar good things when we turn to them with immoderate desire, since they are the lowest kind of goods and we thereby turn away from the better and higher: from you yourself, O Lord our God, and your truth and your law. These lowest goods hold delights for us indeed, but no such delights as does my God, who made all things; for in him the just man finds delight, and for upright souls he himself is joy”. Isn’t that beautiful? If we unpack what Augustine says here, we learn that materialism comes from putting earthly desires before God. Sound familiar? Oh yeah, its that thing humanity has been struggling with for the last few thousand years, way before The Wealth of Nations was written. Materialism can be found in any culture, and it is something that stems from the imperfection of human hearts, not from any imperfection of the free-market. I'll summarize this point by using the words of economist and author Jay Richards, “don’t confuse the free market with the bad choices free people make”.

To sum up, far from being a system that actively corrodes people's moral character, the free-market enterprise system actually encourages virtues. Remember charity and creativity and all the rest? It also uses persuasion over coercion. And as I have shown, most of the moral arguments against capitalism come from misguided people. And this is where we get to the root of the matter, what I think is the one single most harmful false presupposition in this debate. Underpinning anti-capitalist views are, I believe, a Utopian view that society can somehow be perfected. People who criticize capitalism compare it with a perfect universe, a Nirvana. Against a perfect world, against the Kingdom of God, of course free market capitalism looks bad. So does anything else you care to name. But when you hold capitalism up against any other earthly alternative, then it stops looking so bad. As Martin Wolf said, “Those who condemn the immorality of liberal capitalism do so in comparison with a society of saints that has never existed--and never will”. Remember that the free market is only one of several imperfect, earthly ways to run an economy….but hold no doubts that it is by far the most moral, the most humane, and the most efficient of all the imperfect options available to us.


Scott Rae and Austin Hill, The Virtues of Capitalism: The Moral Case for Free Markets (Northfield Publishing, 2010).

Paul Heyne, "Are Economists Basically Immoral?" and Other Essays on Economics, Ethics, and Religion (Liberty Fund, 2008).

Paul Heyne, The Student's Guide to Economics (ISI, 2000).

Jim Wallis, Rediscovering Values: On Wall Street, Main Street, and Your Street (Howard Books, 2010).

Susan B. Varenne, ed. Late Have I Loved Thee: Selected Writings of St. Augustine on Love (Knopf Doubleday, 2006).

Jay Richards, Money, Greed, and God: Why Capitalism Is the Solution and Not the Problem (HarperOne, 2009).

1 comment:

Anonymous said...

I don't know how ten minutes could be better used on this subject. If there were an eleventh minute, it might say a bit more about work, which is also part of God's will for us. The free market encourages us to work, and (to the extent that it can in a fallen world) ensures that we are appropriately rewarded for it.

I especially appreciated the writer's reminder that a free market is subject to the laws of nations as well as the laws of economics.