Christianity & Capitalism

Christianity & Capitalism

June 21, 2008

Christianity & Capitalism

Introduction

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Christianity & Capitalism • Goals: Multi-disciplinary look at capitalism using Scripture, history, and economics to see if it’s producing shalom. • Approach: Capitalism as an institution. – God-created institutions (marriage, the church) vs. human-created ones (gov’t, courts, universities). – Institutions don’t make people perfect, but hopefully they mitigate the effects of sin. 3

Christianity & Capitalism

The Biblical Narrative

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Christianity & Capitalism • Is free market capitalism Christian? The Bible doesn’t specify a national economic system. • Capitalism emerged from a distinctively Christian ethos. • Capitalism moves us in the direction of God’s intended Shalom.

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Christianity & Capitalism • The Biblical Narrative and Work – The Beginning of Things – Israel and the Law – Christ and His Church

• Where do we stand today in the Biblical Narrative and how can we participate in what God is accomplishing in the World? 6

Christianity & Capitalism

What is Capitalism?

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Christianity & Capitalism • Capitalism is an economic system where: 1. Each person owns his/her own labor and may sell it. 2. Property rights are protected by the rule of law. 3. Investments are determined by private decisions. 4. Prices, wages, production, and distribution of goods are set by 8 competition in the marketplace.

Christianity & Capitalism

Free to Choose • The building block of capitalism = voluntary transactions by buyers and sellers – When two parties voluntarily transact with each other, both are better off.

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Christianity & Capitalism Key Components of Capitalism 1. “The Invisible Hand” – Capitalism is decentralized, but orderly. – The most famous description: • “It is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard to their own self interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.” – Adam Smith, The Wealth of Nations (1776) 10

Christianity & Capitalism • No one is “in charge,” yet goods and services are still available in the marketplace. When Gorbachev visited the UK in the 1980s, he was perplexed over how food was distributed. He asked Thatcher who saw to it that the British people got fed. She replied, “No one, the price system does that.”

• Prices = Information about scarcity and value • “I, Pencil” by Leonard Read

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Christianity & Capitalism Key Components of Capitalism 1. “Creative Destruction” – Innovation is rewarded. So innovation continues to upset the status quo. – Competition gives suppliers in the economy (e.g. companies, workers, institutions) the incentive to improve and innovate. – Result is in an explosion of knowledge. 12

Christianity & Capitalism

(Source: U.S. Patent Office, http://www.uspto.gov/web/offices/ac/ido/oeip/taf/h_counts.htm)

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Christianity & Capitalism Where’s the Beef? • Has Capitalism Delivered? • In evaluating an economic system, it’s important to measure it in terms of history. – Economic growth is NOT the norm of human history. • e.g. The economy in the time of Jesus.

– However, since the rise of capitalism, this has changed…

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Christianity & Capitalism

A.D. 1

A.D. 1000

(Source: Angus Maddison, "World Population, GDP and Per Capita GDP, 12003 AD," at the Groningen Growth and Development Centre. http://www.ggdc.net/)

A.D. 2000

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Christianity & Capitalism Our Next Meeting (July 5) • What are the origins of capitalism? • What other economic systems are there? • Is capitalism producing Shalom? Optional Reading: “God and the Economy: Is Capitalism Moral?” by Doug Bandow. Available at tinyurl.com/GodAndEconomy 16