Is Capitalism Based on Greed? — Canon Fodder

Ever since Gordon Gekko’s character in the movie Wall Street uttered the phrase, “Greed is good,” there has been a wide-spread and oft-repeated myth that capitalism is based on greed. And, so the argument goes, if capitalism is driven by a sinful desire (greed), then it must be rejected as an immoral system.

Such issues have come up again in recent months as a number of new members of congress (and old members) are pushing the country away from capitalism and towards socialism, mostly on moral grounds. Even some well-meaning evangelicals, who have a genuine care for the poor, find themselves drawn to this new movement and its disdain for capitalism.

In light of this current climate, I appreciate Jay W. Richards’ book, Money, Greed, and God:Why Capitalism is the Solution and Not the Problem (HarperOne, 2009).  Richards sets out to dispel many myths about capitalism, and is particularly intent on showing that it is not at all contrary to the teachings of Jesus and Christianity, as so many suppose.

Chapter five is devoted to the myth that capitalism is driven by greed, and Richards makes a number of useful points:

1. The fact that individuals in a capitalistic society happen to be greedy, does not mean capitalism is actually based on greed.  Richards is quick to distinguish the greedy intentions of individuals (which, unfortunately, are prevalent), with the capitalistic system itself.

2. There is a difference between selfishness and self-interest.  Capitalism is based on people operating out of their own self-interest, says Richards, not operating out of selfishness.  Self-interest is not in itself immoral.  Indeed, many of our daily actions are based on self-interest, such as brushing our teeth, looking both ways before crossing the street, and eating healthy foods.  One might even say, our self-interest is an act of stewardship of the things God has given us.

3. Thus economic exchanges in a capitalistic system are mutually beneficial. Because capitalism is built on self-interest, then it means that people only engage in economic activity when it is mutually beneficial. When Joe buys meat from the butcher he does so out of the belief that the meat is more valuable to him than the money it costs.  Thus, he exchanges the money for the meat willingly.  He is not forced to beg for the meat, nor is he forced to buy the meat. He buys it because it gives him a benefit.

Likewise, the butcher also sells the meat willingly.  He sells the meat because he believes the money is more valuable than the meat he is selling.

Thus, argues Richards, in a capitalistic system both parties benefit.

4. Capitalism does the best job of channeling selfishness for good ends.  Although capitalism isn’t based on selfishness, it does do a very good job at channeling it towards a good outcome. Imagine an economic system that required everyone to act selflessly–it would be doomed to fail.  Instead, capitalism, argues Richards, accounts for the fact that some (most?) people will act selfishly and guides their actions into a good outcomes.  If the butcher is selfish and tries to sell a piece of spoiled meat, he cannot force people to buy it in a free economy.  Thus, it is in his best interest to offer meat that the consumer actually wants.  Richards comments, “The cruel, greedy butcher…has to look for ways to set up win-win scenarios.  Even to satisfy his greed he has to meet your desires” (123).

5. Capitalism actually encourages generosity.  Richards points out, contrary to popular opinion, that there is no evidence that America is more greedy just because its capitalistic.  In fact, America is the most generous country in the world when it comes to charitable giving–by a landslide.  Richards also observes that there is an inverse relationship between taxation and giving. “The more the government confiscates the less people give. Conversely, the freer the economy, the more people give” (124).

In sum, Richards’ book (particularly chapter five) reminds us that capitalism is not opposed to Christian thinking, but actually is consistent with the Christian understanding of human nature. It recognizes the proper role of self-interest. It encourages freedom, not coercion.  It recognizes people are fallen and sinful and channels bad behavior towards good ends. And it ends up providing more prosperity out of which people can give generously.

via Is Capitalism Based on Greed? — Canon Fodder

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