Christianity & Capitalism, Part 3: "a Brief Look At Centralized Economies"

Christianity & Capitalism

July 12, 2008

Christianity & Capitalism

A Quick Review

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Christianity & Capitalism

A Model for Examining Capitalism • No economic system is prescribed by the Bible. • A multi-disciplinary examination through the lenses of Scripture, history, and economics. • Capitalism as an institution. • Does capitalism promote Shalom? 3

Christianity & Capitalism

What is Capitalism? • Definition: An economic system where 1) people own their labor; 2) property rights are protected by rule of law; 3) investments are determined privately; 4) and the market sets prices, wages, production, and distribution. • Key Components: “The Invisible Hand” and “Creative Destruction.” • Free to Choose: Free, mutually beneficial

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Christianity & Capitalism

The History of Capitalism • Replaced feudalism and mercantilism, triggered the Industrial Revolution in Europe. • Christian concepts led to the rise of Capitalism: – Humanity’s role in creation – Private property – Reason – The Reformation – “The faith of Abraham” – Optimism for the future tempered by original (Sources: Joel Mokyr, The Lever of Riches, pp. 201-205. Jay Richards, Money, Greed, and God, 5 pp. sin 145-151. Walter Russell Mead, God and Gold, pp. 191-247.)

Christianity & Capitalism

Centralized Economies

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Christianity & Capitalism

The Visible Hand • Feudalism and mercantilism were eclipsed by capitalism. • The debate of the past two centuries has centered around economic decentralization (capitalism) vs. centralization (communism and socialism). 7

Christianity & Capitalism

Communism • State ownership of all means of production and central planning to allocate resources and set wages/prices. • By mid-20th century, it looked to be ascendant. • Communism must always entrust massive political power into the hands of a few sinful men.

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Christianity & Capitalism

Deaths by Communist Regimes

China Soviet Union North Korea Cambodia Africa Afghanistan Vietnam Eastern Europe Latin America

65 million 20 million 2 million 2 million 1.7 million 1.5 million 1 million 1 million 150,000

(Source: The Black Book of Communism, Harvard Univ. Press, 1999.)

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Christianity & Capitalism

Socialism • The state ensures greater economic equality through some mix of gov’t regulation and ownership of industry, income redistribution. • “Market socialism” accepts the price system, but like communism it entrusts significant power in the hands of political leaders. 10

Christianity & Capitalism

A Viable Alternative? • Socialism is growing in popularity during the current financial crisis. – Only 53% of U.S. adults believe capitalism is best; 20% say socialism, and 27% unsure. – Adults under-30: 37% capitalism, 33% socialism, 30% undecided.

(Source: Poll by Rasmussen Reports, April 9, 2009; available at http://www.rasmussenreports.com/public_content/ politics/general_politics/just_53_say_capitalism_better_than_socialism.)

• America’s early experiment with

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