Defining… stuff

1. Defining… stuff

2. Capitalism is a loaded term… • Might imply corporate control of consumer choices • Might imply loving money, wealth, and the easy life at the expense of others • It’s an “ism” that sounds like it has its own ideologies, it’s own cultish following. And sometimes, it has… • Might imply that any form of government intervention is an act of socialism • “Ksm” is sometimes “used in an abstract sense to refer to an ideal market economy in which people exchange goods and services in an environment free from coercion, fraud, monopoly, and statist interference with the exchange process.” • Also describes ‘several systems of exchange in the real world that approximate more or less the freedom of the ideal of the ideal market. The ideal is the standard by which we judge the health of economic practices in the real world.

3. Regarding capitalism, these are things we don’t want to say… Why? • Ksm is flawless • Ksm is what Jesus would have endorsed • Ksm should be completely free • Ksm does not need restraint • Ksm by itself fixes all of the world’s problems • Ksm is wonderful and great • It IS flawed – very much so. • Jesus gave us principles, but didn’t give a specific economic system • No system should be “completely free” in a fallen world • It isn’t wonderful in itself, but is a tool • It’s not that great! It’s just a little better than the other systems

4. So what is a free market? • Need to emphasize terms such as “market relations,” “market solutions” • Market – set of procedures or arrangements that prevail throughout a society that allows voluntary exchanges. The institutional framework within which individual voluntary economic exchanges can take place. - Nash • At the most basic level, a market system is a form of economic organization where people help others in exchange for income. Pursuit of income induces individuals to produce goods and provide services desired by others. Both buyers and sellers gain from the voluntary exchange; otherwise the trading partners would not agree to the transaction. – James Gwartney • Like traffic patterns with certain tried-and-true methods (one-way streets, traffic lights, speed limits, stop signs), it provides loose guidelines but does not dictate where people should go.

5. More… • A market economy is an economic arrangement in which the bulk of the wealth and means of production are privately owned and most wages and prices are set buy supply and demand.

6. Why do we have a free market economy? • Adam Smith etc. • In more primitive times, people were often forced to provide for all or almost all of their wants through their own effort. … a market economy permits people to specialize in those things they do best… This specialization enables most of us to do a better job with our time and effort. But this specialization also increases our dependence on others. • societies that adopt a centralized economy inevitably fall far short of the efficiency of those that follow a decentralized market approach…. When governments exceed their legitimate role as the maker and enforcer of rules, they can do enormous harm to the economy and can be the source of much injustice.

7. It’s a flawed system, but… • It has proven to be the most effective given the options • We live in a fallen world. People are sinful, and resources are scarce. (poor people are sinful too!) • like democracy: democracy is a system that is not perfect, but it is better than the other options because it keeps small factions from gaining too much power, or government from getting too out of control, because the people hold it accountable. (Side note: the argument for democracy is not that the “people” govern, but that the government is held accountable). • “Democracy is the worst system except for all the others.” – Winston Churchill

8. “No” to centralized power • Freedom is good, the government doesn’t control everything. People can make their own business choices, construct their careers, create wealth. • Centralized power brings out human flaws. • Lord Acton: “Power tends to corrupt, absolute power corrupts absolutely.”

9. Free market = right to property • 10 commandments – no stealing! • Loans require private property (Matt 6:2) • Jesus visited people who owned houses (Mk 1:29 • “The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.” Smith IV .ii .10 • Freedom to own property is connected to religious freedom • Encourages spirit of entrepreneurship, which generates wealth • I can read my paper if you want…

10. The poor • God wants every person or family to have equality of economic opportunity, at least to the point of having access to the necessary resources (land, money, education) to be able to earn a decent living and participate as dignified members of their community • Basic needs – life sustenance, self-esteem, freedom to choose one’s own course of action – Goulet • Not just material goods but also self-determination, self-reliance, political freedom and security, participation in making decisions that affect workers and citizens, national and cultural identity, and a sense of purpose in life and work • The poor are people who don’t have fair access to these things that uphold human dignity.

11. Moral objections to capitalism • Exploitation of the poor • Poverty also occurs from misfortunes that have nothing to do with exploitation – misfortunes, personal choices • Free exchange is a zero-sum game – all exchanges are win-lose • Market exchanges illustrate a positive-sum game – voluntary exchanges are win-win. If they did not perceive the exchange as beneficial, they would not continue to take part in it. • Selfishness • Self-interest is OK in golden rule: When a person is motivated by self-interest, he can pursue his welfare in ways that do not harm others. • Capitalist free markets don’t necessarily depend upon self-seeking behavior but allow the individual to choose some particular line of action, whether it be self-interest or altruism. • Greed • As long as our rights against force, fraud, and theft are protected, people must be concerned for the other person who will voluntarily exchange. – 73

12. More… • Competiveness, as opposed to “collectivist cooperation” • Competition is the result of scarcity, not free market • Dishonesty, a result of sin, does not mean there is anything wrong with competition itself • Competition stirs people to higher levels of excellence • “The competition of the marketplace is not an end in itself; it is a means to the end of providing goods and services at the lowest possible price. • “collectivist cooperation” in a fallen world would spiral into violence and theft

13. more • Objections: A just society with centralized power that fixes income and enforces progressive tax and income redistribution • Restrains personal liberty, enhances power of state (corruption). Destroys incentive to work/create wealth. • Capitalism presupposes a utopian view of human nature and consequently conflicts with the Biblical view of sin. • Biblical doctrine of sin calls for decentralizing of power. • Free market recognizes the weaknesses of human nature and limitations of human knowledge. Socialism requires a class of omniscient planners to forecast the future. • Capitalism produces monopolies • It is not the free market that produces monopolies; rather it is governmental intervention with the market that creates the conditions that encourage monopoly. The big monopolies in history (America’s famous “robber barons”) were aided by special privileges granted by the government.