One area I don’t fully understand is the medical-industrial complex. I don’t get to visit hospitals very often, but when I do, I get the same sense of awe and wonder and I just can’t help but marvel at the wonders of the marketplace. Yes, I realize that the medical industry isn’t exactly as “free market” as, say, the technology industry. But that doesn’t preclude a strong market component in the production of devices and substances in the industry. Somebody long before our visit to the hospital saw a problem that needed to be solved. They took huge risks of capital in order to help save lives or to make our lives generally less problematic.

This is no small matter. I have a pitiful amount of knowledge about the production of the equipment that fills the rooms and corridors of our hospitals and operating rooms. What I do know, however, is that incredible risk was taken for something for which there was no guarantee: success. With only profit and loss as the barometer in the marketplace, some forged ahead. There were undoubtedly many failures along the way, yet some of the best equipment and substances emerged for our well-being. Their purveyors weren’t necessarily even interested in medical devices in the first place. All it took was the skills to make really awesome  microchips or perhaps the talent to manage a company of high-functioning people to create software that made procedures more efficient.

Leonard Read’s classic story, I, Pencil comes to mind. Millions of people, in small but important ways, contributed willingly to a process that saves lives (or produces pencils). Of course, some of them were intelligent people who were able to connect the dots and work purposefully toward solving a medical problem or need. But they represent the small percentage of those producers. By and large those who cooperated in the process weren’t boasting to their families at dinner about how they contributed to society’s health needs.

Despite the marvels of the marketplace advancement in health industry, there are two morally attractive but wholly dubious arguments regarding health care that we ought to guard against. The first is that health care is too important to be left up to the free market. Seriously? Take a stroll down the hallways of a local hospital and try to convince yourself that all this stuff can be produced through central planning, even if only for a single industry. If universal health care were indeed possible, its advocates take for granted that the marketplace itself provided the myriad luxuries provided in the medical industry. Universal health care is a direct result of the wealth created by the entrepreneurial spirit in the medical industry. Nobody was crying for “universal health care” 500 years ago.

A second but related complaint is that some people shouldn’t get rich off of other people’s ailments. Never mind the obviousness that whatever wealth is acquired it is in the solving of those ailments! What troubles the anti-market health care enthusiast can be sufficiently blamed on the word “care” in “health care.” The additional word introduces concepts such as intentionality or purposefulness or planning. The patient (who is a type of consumer, by definition, regardless of our sentimental objections to the term) must be cared for by her doctors and nurses. Yet if we consider the economics of the doctor-patient relationship, we realize that the success of the doctor depends on the quality of care they provide, both medically and emotionally. It’s an enormous asset to have a genuinely caring physician. What’s more important is competence and honesty, something a market is equipped to facilitate.

But should we even care whether the producers in the medical industry (or any other industry for that matter) are driven by rampant greed or Christian-like charity and good intentions for humanity? While it’s nice to think that laborers in factories, the CEOs of companies, and all who cooperated to bring those final goods into service are caring individuals, I’m personally more interested in the outcome: quality equipment and substances that do not fail. If the CEO of a company who can save lives is a greedy corporatist is inconsequential to whether my life is saved. The equipment must work.

To be sure, if somebody is getting wealthy because other people are being duped, defrauded, or misled, of course we take great issue with that (in any industry). But if you ask any woman about to deliver a baby if she cares that the inventors or producers of an epidural are wealthy, I doubt you’ll hear her disdain for such people.

It can’t be mistaken that there are truly caring entrepreneurs who want to discover and create solutions that save people’s lives. For that we must be grateful, and they can never receive enough praise. They saw a need and—regardless of motive—are working toward a solution. But we should neither forget nor discount the progress that occurs in the marketplace because any incentive whatsoever has helped produce a quality and desirable outcome.

Post from: LibertarianChristians.com

The Progress of Greed

Capitalism, by conquering poverty, creates the “problem” of poverty.

If we look back over the history of the past two or three thousand years we realize that most people who have ever lived on this planet were desperately poor, not merely poor by our standards – poor by any standards; miserably housed, shabbily clothed, and continually on the verge of starvation, only to go over the edge by the hundreds of thousands during the regularly recurring famines.

Medieval Europe is regarded by many scholars as one of the high points in world civilization. It gave us the great cathedrals, scholastic philosophy, magnificent works of art, literature like Dante’s Divine Comedy, specimens of craftsmanship that grace our museums, and chivalry. But the Middle Ages in Europe suffered from a number of famines. Between 1201 and 1600 there were seven famines, averaging ten years of famine per century. Coming down to 1709, there was a famine in France that wiped out one million people, five percent of the population. The last great natural famine in Europe was the Potato Famine in Ireland in the late 1840s, which claimed about one and a half million lives.

But Europe has always been a favored region, more prosperous than the rest of the world, less subject to natural disasters than Asia. There have been starving times in Western civilization, but never were they of the same order of magnitude as the disasters in the Orient. India and China have been especially vulnerable to famines. A famine in China between the years 1876 and 1879 resulted in an estimated 15 million deaths. And within living memory, a famine in China’s Hunan Province in 1929 resulted in two million dead. Ten major famines in India between 1860 and 1900 caused the death of close to 15 million people. During the Bengal famine of 1943-44—in and around Calcutta-one and a half million people died of starvation and the epidemics that followed.

I have recited these rather unpleasant facts, not for their own sake, but to emphasize a neglected or overlooked truism: Poverty is the natural state of mankind. Poverty is the rule; prosperity is the exception. In most parts of the globe, in most periods of history—including the present—most people most of the time have been or are desperately poor. Prosperity is what the ruling class enjoys. The rich are the superior warriors, the superior hunters, the favorites of the gods, and these wealthy few—it was believed—deserve what they have.

Water runs downhill, fire burns, grass is green, the masses of people are poor. This was the perceived natural order of things, accepted and rarely questioned. Such was the mentality that prevailed throughout most of the world most of the time—until a few centuries ago. Poverty for the multitudes was simply a fact of life. It was a hardship, but being poor was not perceived as deprivation.

The rich were envied, but the envy rarely translated into thoughts of redistributing their wealth. Occasionally something triggered a peasants’ revolt or a slave rebellion, but when each of these fizzled out, all ranks went back to “The good old rule/ The simple plan/ That they should take who have the power/ And they should keep who can.” Universal poverty was a fact. But poverty was not a problem! The distinction is simple: a fact or situation just is; a fact or situation for which there is perceived to be a solution becomes thereby a problem, and a new mentality is generated.

The Capitalist Alternative

Masses of people, the world over, have now been persuaded that someone or something keeps them poor, and their resentment follows. This fact helps to explain the modern world’s hostility toward capitalism. Capitalism is not at all the cause of the poverty of the noncapitalistic nations, but it is the source of their dissatisfaction with their poverty. Capitalism in fact overcomes poverty; but in overcoming poverty capitalism creates the problem of poverty.

There was a breakthrough a few centuries ago, one of those great tidal movements in human affairs resulting in a new mentality and a different way of viewing the human condition. It was the discovery by the people of a few western nations of the complex set of institutions which later came be to be called capitalism. The breakthrough might be symbolized by two documents, one penned by Thomas Jefferson setting forth the vision of a nation founded upon a new philosophy, that “all men are created equal,” that they are “endowed by their Creator with certain unalienable rights,” and that everyone is entitled to equal justice under the law. These axioms form the cornerstone of the free society.

At the same time, on another continent, a man named Smith wrote a great book which explained why the economy need not be centrally planned, directed, and controlled by the government—as it was under the mercantilism of his day. Let the law be vigilant to protect the life, liberty, and property of all — as the Whigs advocated — and the buying habits of freely choosing men and women in the marketplace will provide all the directives needed for the producers to grow and manufacture the things consumers want most. This is the market economy, the backbone of a free society. Under these conditions a free people will multiply their productivity and thus generate their own prosperity.

Capitalism is the name given to the set of institutions which enable free people to produce wealth up to the limit of their time, talents, capacity, and desire; and then to voluntarily exchange the fruits of their labors with others. Capitalism becomes fully operative only when there are institutional guarantees of individual liberty, with laws designed to secure the G0d-given rights of every person to life, liberty, and property.

The intelligent and ethical way of arranging human action in society, the free society-market economy way of life which we are labeling capitalism, was like a bootstrap by which whole nations of people could and did elevate themselves out of misery, grinding poverty, and periodic starvation. Capitalism tackled poverty using the only means by which poverty can be alleviated, namely, by increased productivity.

Remove every obstacle that hinders the productive and creative energies of men and women and you create an abundance of goods and services, shared by everyone involved according to his contribution to the productive process, as that contribution is judged by the man’s peers. This ever-increasing supply of goods and services will move the entire society up the rungs of the ladder of wealth. Some will climb to the top rungs, but even the least well-off on the bottom rungs will experience a level of well-being that would be regarded as affluence in noncapitalistic societies past or present.

Liberty and the Economic Miracle

The results of this new social order were almost miraculous, but there was nothing magical about the way the results were achieved. The results were achieved by people who had the intelligence to understand the requirements of a free and prosperous commonwealth, and who possessed the integrity and character to live by those requirements. We had a significant number of people a couple of centuries ago, who “pledged their lives, their fortunes, and their sacred honor” to establish not simply a new nation, but a nation founded upon new principles.

Capitalism generated a new mentality, a new perception of the human condition. After the experience of capitalism anywhere, people everywhere came to regard prosperity as the rule; poverty as the exception. The fact that we launched a “war on poverty” demonstrates this. No one would contemplate a war on poverty in India or Africa, where need is much more desperate than here. Only in a prosperous nation like our own, where the great war against poverty had already been won — by means of the market economy — would the elimination of the last, lingering remnants of poverty emerge as a political issue. The trouble is that if we employ the wrong remedy to eradicate the remaining pockets of poverty — as we are doing — we may find that we have destroyed prosperity instead, as in the familiar story about killing the goose that laid the golden eggs. Charles Murray’s recent book, Losing Ground, demonstrates that we have been losing the political war against poverty despite spending hundreds of billions of dollars yearly.

The 18th-century breakthrough I’ve referred to brought with it a new understanding of how economic goods come into being, the nature of material wealth, and how this new wealth is allocated in differing amounts among all the participants in the productive process. The economic breakthrough was not miraculous; it was preceded by a new vision of how the ancient ideas of liberty, justice, and law should be applied. No longer Were these venerable ideas to be the prerogative of the few; equal justice under the law was for everyone; liberty was to be enjoyed by all, and every person had a natural right to the property created by his labor.

For thousands of years the planet was regarded as a static warehouse, containing a fixed amount of wealth, impossible to increase, never enough for everyone. The serf tilling his field grumbled that he had to pay various feudal dues to the lord of the manor, but he was realistic enough to know that even if he kept everything he produced, he’d still go hungry much of the time. He was cursed by low productivity, caused by a faulty understanding of the nature of wealth.

When it is believed that the earth contains only a fixed amount of wealth, the preoccupation is with the allocation of what’s already here, which means, invariably, that one man’s gain is another’s loss.

The new perception that dawned during the 18th century was that new wealth is in a process of continuous creation, in ever-increasing amounts, with more for everyone resulting from each new cycle of production. This new abundance would be distributed—not equally, but equitably—by voluntary exchanges in the marketplace, with each person receiving from his fellows what they think his contribution is worth to them. Each of us benefits in such a voluntary exchange.

This is a paradigm of capitalistic society; peaceful exchanges within the rules, with the rules designed to protect person and property. Each participant in a voluntary exchange is a net gainer, having given up what he wants less to get what he wants more. And as these exchanges multiply every person has a strong inducement to work harder, producing more of the things other people will want from him in exchange. And as each person betters his own circumstances he improves the lives of other people. Production, in a free society, begets production, with more for everyone.

In the pre-capitalistic ages the kings and nobles used their political power to enrich themselves at the expense of the peasants. The serfs who did most of the work were entitled to enjoy only a portion of the goods they produced. Post-capitalistic societies operate in similar fashion. Those who possess political power in welfarist America or socialist Britain or Soviet Russia, exercise the taxing power to deprive productive people of a huge chunk of their earnings. These tax dollars — minus the political costs of effecting these transfers — are then doled out to various “deserving” pressure groups in the private sector.

We witness what Frederic Bastiat might have called a Plunder-bund — the law designed to protect life, liberty, and property perverted into an instrument to enrich some by impoverishing others. Albert Jay Nock referred to the law thus perverted as The State — holders of public office in cahoots with factions in the private sector to operate a scare against productive people.

Our basic political structures were largely built around the conviction that, “to the producer belongs the fruits of his toil.” We were to have a private property order. The Declaration does not mention a right to property, substituting a right to “the pursuit of happiness.” We cannot read Jefferson’s mind as he wrote the document, but we do know what was in almost everyone else’s mind at the time; it was Life, Liberty, and Property.

The colonists had migrated out of situations in Europe where they lived on the estate of a master, working mostly for his benefit and only partly for their own. Here in the colonies the idea of freehold property was established. You owned your farm in fee simple, which means that your estate was your very own. You could will it to your descendants, sell it, dispose of it as you wished.

What you produced on your property was yours to keep, or sell, or give away. Now, you owned what your labor created, and you had an enormous incentive to devise labor-saving devices and work harder, longer, and more skillfully because everything you produced was yours. You got the added benefit; not some absentee landlord. Wealth creation increased by geometrical progression under these circumstances, with free men and women living under a just system of laws, holding a strict property right in the fruits of their labor.

The American colonists of the 17th and 18th centuries lived in a society whose primary institution was not government, or the press, or business, or the academy; it was the Church. As Alexis de Tocqueville observed of us in the 1830s: “Religion… is the first of their political institutions.” And it was the colonial churches which labored for the creation of the kind of personal character in men and women which a free society, with its market economy, demands as its basic ingredient.

We are reminded of this need for exemplary character by the late, great economist Wilhelm Roepke who said that the market economy cannot “… go on in a moral vacuum… Self-discipline, a sense of justice, honesty, fairness, chivalry, moderation, public spirit, respect for human dignity, firm ethical norms—all of these are things which people must possess before they go to market and compete with each other.” And as these early Americans entered the marketplace they practiced the Puritan ethic of work and thrift, believing that thus they served God as co-creators of a new nation, and proved that poverty is not mankind’s fate.

The Wealth of the West

The Western World is relatively wealthy because it is relatively capitalistic. The Third World is poor because it shuns capitalism. This is the truth of the matter, obvious to any person who examines the issues impartially. But this truth is overcome by a worldwide ideology which declares that the wealth of the West is the cause of Third World poverty!

President Julius Nyerere of Tanzania voiced this Third World ideology when he wrote: “In one world, as in one state, when I am rich because you are poor, or I am poor because you are rich, the transfer of wealth from the rich to the poor is a matter of right; it is not an appropriate matter for charity.” Along the same line, Third World voices tell us that the United States is to blame for the famine in Ethiopia — a country which exported its surplus grain and other foodstuffs until the Communists took over.

Third World politicians have a method in their madness: they want things from the West — American dollars, foodstuffs, machinery, and other goods — so they try to convince us that we owe it to them because we are to blame for their plight. This is the Marxist notion that the rich, under capitalism, get richer by making the poor poorer. This ploy would not work except that millions of Americans have also swallowed the Marxist exploitation theory; that those who are better off got that way by making others worse off; that the wealth created by capitalism is the cause of poverty.

Here, for example, are the words from a keynote address given at the World Council of Churches Assembly held in Vancouver two years ago: “We inhabitants of the industrial nations… exploit the majority of the world’s population… The demon of profit for the few at the expense of the many, i.e., their impoverishment, has the whole world economic system firmly in its grip.” These false and defamatory sentiments are echoed by many academic and ecclesiastical voices, here and abroad.

Americans do consume more than most people elsewhere and it might be interesting to find out why. The answer is simple, to the point of being self-evident: Americans consume more because Americans produce more. Americans produce more, not because we are superior beings, but because our relatively free institutions impose fewer restraints on our productive energies than is the case in other nations, and our private property system guarantees to the producer that he will own the fruits of his toil. Any nation that adopts the free market will be more productive, and thus more prosperous, and in the long run this is the only way to feed the world’s hungry.

A False Axiom

The redistributionist policies of our own welfare state, as well as similar international policies which tax Americans in order to subsidize other nations, is based on the false axiom that the wealth of some is the cause of the poverty of others. Something like this was true during the pre-capitalistic ages, but capitalism introduced an entirely new ball game in which each one of us prospers to the degree that he contributes to the well-being of other people, as they see it. Walter Lippmann puts it this way: “For the first time in human history men had come upon a way of producing wealth in which the good fortune of others multiplied their own.” Freedom in production and exchange does not promise perfection. When people are free, many of their choices may offend us, which means that the free society demands infinite tolerance for each other’s foibles. But that’s a small price to pay for all the benefits received.

To believe that wealth is the cause of poverty makes as much sense as to assume that health is the cause of disease. And to contend that the remedy for poverty is to soak the rich and give to the poor is as idiotic as believing that the only way to heal the sick is to make the healthy ill. The sick can be made well only as they adopt the sensible regimen of the healthy, and the poor can move out of poverty only as they become more productive. The world’s economic problems and other ills will only worsen unless there is a revival of that sound philosophy, which, two centuries ago, gave us the free society and the market economy which I’ve been labeling capitalism. Education along these lines — replacing bad ideas with better ones — is slow, frustrating, uphill work. But there is no other way.

Meanwhile, we try to live with — while working to correct — the false assumption of people everywhere, that wealth is the cause of poverty. The truth of the matter is that poverty in a nation is caused by the low productivity in that nation. And it is our good fortune that there is a simple recipe for overcoming low productivity while moving in the direction of prosperity. The recipe is: follow the prescriptions of people like Jefferson and Madison; Adam Smith, and Bastiat; Mises, Hayek, Roepke, Friedman, and others. The remedy is simple, but simple is not necessarily easy!

Read more from the Edmund Opitz Archive.

Post from: LibertarianChristians.com

The War on Poverty Revisited

At its core, Jacob’s book addresses in brief the history of classical liberalism and the libertarian movement, explains the basics of the philosophy of liberty, and tells the stories of a number of modern libertarian organizations at work right now. It’s wonderfully entertaining, easy to read, and splendidly pithy.

Among Huebert’s most salient points is his excoriation of “conservatism” and its relationship to libertarianism. He completely demolishes the myth that Ronald Reagan was even close to a libertarian, and hopefully such words will shock conservatives into realizing that most, if not all, of “traditional conservatism” as enshrined in Reagan is nothing short of a lie.

I’m a particular fan of the chapter on war (read an excerpt here); it’s so great that I have to quote the first paragraph in full:

Libertarianism and war are not compatible. One reason why should be obvious: In war, governments commit legalized mass-murder. In modern warfare especially, war is not just waged among voluntary combatants, but kills, maims, and otherwise harms innocent people. Then, of course, wars must be funded through taxes, which are extracted from U.S. citizens by force — a form of legalized theft, as far as libertarians are concerned. And, historically, the U.S. has used conscription — legalized slavery — to force people to fight and die. In addition, an interventionist foreign policy makes civilians targets for retaliation, so governments indirectly cause more violence against their own people when they become involved in other countries’ affairs. Plus, war is always accompanied by many other new restrictions on liberty, many of which are sold as supposedly temporary wartime measures but then never go away.

And now I… have nothing else to say. This is it. This is what we need to communicate to everybody. War kills. War is immoral. To the Christian, aggressive war is among the greatest of all evils humans can commit. Peace is our code. Period.

Another great part of Jacob’s book is his chapter on education. Public, compulsory schooling is not libertarian. And guess what, vouchers are not a viable alternative. This principle is somewhat difficult to explain to many people, but I have contended for years that vouchers are just another back door for government control of education. Huebert does a much better job of explaining it than I ever have.

I could go on and on just describing the chapters themselves, but I want to give you a concise flavor for the book so I will stop with the praise here. However, there are a few weaknesses to the book that I would be remiss not to point out. First, I think that Jacob was a bit too critical of the Libertarian Party, and a bit too kind to the Campaign for Liberty. It’s true that the LP has not lived up to the radical vision of its founders at times, and there are questions that I still have about its future. Nevertheless, it continues to be the home of a huge number of amazing activists and thinkers, and we dismiss the effect that it can have. The LP will only fail to live up to its original purpose if we let it – Murray Rothbard said as much many years ago and prominent LP members such as Mary Ruwart and Lee Wrights say the same today.

In contrast, despite the influence of Ron Paul and the large amount of money initially invested, I am a bit underwhelmed by what the Campaign for Liberty has been able to do at the national level. In truth, the awareness that America now has of the Federal Reserve and its criminal nature is incredible, but is this the result of C4L or is it just the momentum from 2008? I personally wish C4L would be more a hub of local activism rather than another organization trying to take on the House of Representatives. Don’t get me wrong, I want to see C4L succeed, but I also want to make sure that local efforts are well-funded and well-staffed.

This leads me to another minor oversight in the book: the lack of discussion of local activism. Don’t get me wrong, I despise politics and the electoral process is completely inane. Moreover, I readily admit national politics stinks and is frequently a waste of money except in very specific situations (the Ron Paul Presidential Campaign being the most spectacular example). But on a local level (i.e. states, counties, cities) individuals can have very real impacts that truly promote liberty and help people live more freely. I wish Jacob had explored this more thoroughly, because I imagine that concrete examples of success would inspire people to get out there and make a difference.

Finally, the price tag is a bit stiff, but I still contend that you need this book on your bookshelf to have, read, and lend out. While Amazon.com generally sells the book for $35, you can get a paperback copy for $25 at the Mises Institute Store. No matter what you choose, the knowledge you will gain from reading this is totally worth it.

Please consider buying Libertarianism Today at Amazon.com and LCC will then get a small kick-back from the sale. Remember, LCC receives a small percentage of any shopping you do at Amazon when you go through an LCC link. Help keep LCC growing and growing; your support is much appreciated!

Post from: LibertarianChristians.com

What is the best book on the essentials of libertarianism?

The First Amendment to the Constitution forbids Congress to set up an official church; there was to be no “Church of the United States” as a branch of this country’s government. Such an alliance between Church and State is what “establishment” means. An established church is a politico-ecclesiastical structure that receives support from tax monies, advances its program by political means, and penalizes dissent. Our Constitution renounces such arrangements in toro; the Founders wrote the First Amendment into the Constitution to prevent them.

The famed American jurist Joseph Story, who served on the Supreme Court from 1811 till 1845, and is noted for his great Commentaries on the Constitution of the United States, had this to say about the First Amendment: “The real object of the Amendment was, not to countenance, much less advance Mahometanism, or Judaism, or infidelity, by prostrating Christianity; but to exclude all rivalry among Christian sects, and to prevent any national ecclesiastical establishment, which should give to an hierarchy the exclusive patronage of the national government.”

The various theologies, doctrines, and creeds found in this country can thus be advanced by religious means only—by reason, persuasion, and example. Separation of Church and State means that government maintains a neutral stance toward our three biblically based religions—Catholicism, Judaism, and Protestantism, as well as toward the various denominations and splinter groups. These several religious bodies, then, have no alternative but to compete for converts in the marketplace of ideas. This is a good arrangement, good for both Church and State; it avoids the twin evils of a politicized religion and a divinized politics.

A Christian Nation

It has often been observed that America is a Christian nation — around which observation several misunderstandings cluster. We are a Christian nation in the sense that our understanding of human nature and destiny, the purpose of individual life, our convictions about right and wrong, our norms, emerged out of the religion of Christendom — not out of Buddhism, Confucianism, or primitive animism. And it is a fact of history that our forebears whose religious convictions brought them to these shores in the 17th and 18th centuries sought to create in this new world a biblically based Christian commonwealth. But it was not to be a theocracy — of which the world had seen too many! It was to be a religious society, but one which incorporated a secular political order!

The reasoning ran something like this. The human person is forever; each man and woman lives in the here and now, and also in the hereafter. Here, we are pilgrims for three score years and ten, more or less. Life here is vitally important for it’s a test run for life hereafter. Earth is the training ground for life eternal. Such training is the essence of religion, and it’s much too important to be entrusted to any secular agency. But there is a role for government; government should maintain the peace of society and protect equal rights to life, liberty, and property. This maximizes liberty, and in a free social order men and women have maximum opportunity to order their souls aright.

Separating the sacred and the secular in this fashion is a new idea in world history. Secularize government and you deprive it of the perennial temptation of governments to offer salvation by political contrivances. By the same token, things sacred are privatized as free churches, where the spiritual concerns of men and women are advanced by spiritual means only.

So, when it is said that America is a Christian nation, the implication intended is poles apart from what is meant when it is observed, for example, that Iran is a Shiite nation. The Shiite sect of Islam is a branch of the government of Iran. Other religions are not tolerated. Deviations from doctrinal orthodoxy are forbidden. The government punishes infidels because Shiism is Iran’s official, authorized church. From time to time government uses the sword to gain converts. The government of Iran is not neutral with respect to religion.

In the United States, it is mandated that the government maintain a level playing field, so to speak, “a free field and no favor,” where freely choosing individuals find their different pathways to God while government merely keeps the peace. This is what is really meant by the phrase, “Separation of Church and State.” This oft-quoted phrase is frequently misunderstood as suggesting that religion and politics are incompatible, and that we should keep religion out of politics.

If we think of “politics” as several candidates wheeling, dealing, and slugging it out in an election campaign, it’s clear that religion doesn’t have a significant role in such a situation. And if we think of “religion” in terms of a contemplative meditating and praying in his cell, it’s obvious that politics is absent. But there is no coherent political philosophy apart from a foundation of religious axioms and premises.

Religion and the Social Order

Religion, at its fundamental level, offers a set of postulates about the universe and man’s place therein, including a theory of human nature, its origin, its potentials, and its destination. Religion deals with the meaning and purpose of life, with man’s chief good, and the meaning of right and wrong. Thus, religious axioms and premises provide the basic materials political philosophy works with. The political theorist must assume that men and women are thus and so, before he can figure out what sort of social and legal arrangements provide the fittest habitat for such creatures as we humans are. So, some religion lies at the base of every social order.

It is the religion of dialectical materialism that is the take-off point for the Marxian theory and practice of the total state. Hinduism is basic to the structures of Indian society. Western society, Christendom, was shaped and molded by Christianity. Incorporated into Western civilization were elements from the Bible, as well as ingredients from Greece and Rome. This composite was lived, worked over, and thought out for nearly 1800 years by the peoples of Europe. And then something new emerged and began to take root in the New World; it was the recovery of that part of the Christian story needed to ransom society from despotism and erect the structures of a free society wherein men and women might enjoy their birthright of economic and political liberty.

A vision emerged of a society where men and women would be free to pursue their personal goals, unimpeded by the fetters of rank, privilege, caste, or estate that had hitherto consigned people to roles determined by custom and command, not by their own choice.

The people who settled these shores during the 17th and 18th centuries were children of the Reformation driven by their need to worship God as it pleased them, according to their own wisdom and conscience. Believing that God had entered into a covenant with His people, they freely covenanted together to form churches. This was later called “the gathered church idea,” seemingly endorsed by Jesus himself in Matthew 18:20: “Where two or three are gathered together in my name, there am I in the midst of them.”

The local New England church in the Puritan period had full ecclesiastical authority to ordain its minister and appoint deacons and elders. Its minister could celebrate communion, perform christenings, baptisms, and marriages, and conduct funerals — all on the authority of the local church. Each church was in voluntary fellowship with other churches, but in authority over none. The covenant pattern of the early New England churches was the paradigm for the federalist political structure erected two centuries ago. The West was moving from status to contract, as Sir Henry Maine would observe in 1861.

This concern for individual liberty in society was not limited to theologians. Tom Paine generally took a critical stance when dealing with religion and the church, but in 1775 in an essay entitled “Thoughts on Defensive War” he wrote as follows: “In the barbarous ages of the world, men in general had no liberty. The strong governed the weak at will; ‘till the coming of Christ there was no such thing as political freedom in any part of the world… The Romans held the world in slavery and were themselves slaves of their emperors… Wherefore political as well as spiritual freedom is the gift of God through Christ.” And Edward Gibbon, so critical of the Church in his history of Rome, nevertheless pays tribute to “… those benevolent principles of Christianity, which inculcate the natural freedom of mankind.”

Our forebears of a couple of centuries ago regarded human freedom as a religious imperative. They loved to quote such biblical texts as: “Where the Spirit of the Lord is, there is liberty,” (2 Cor. 3:17) and “Proclaim liberty throughout all the land to all the inhabitants thereof.” (Lev. 25:10) They struggled for freedom of worship; they fought for the right to speak their minds, and for a free press to put their convictions into written form. They also had firm convictions about private property. The popular slogan of the time was “Life, Liberty, and Property!” Property meant the right of private ownership. Adam Smith and his Wealth of Nations came along at just the right time—with what Smith called his “liberal plan of liberty, equality and justice”—to become the economic counterpart of the political ideas of the Declaration of Independence.

The Importance of the Individual

The central doctrine of the American political system is our belief in the inviolability of the individual man or woman. This is one of the self-evident truths enunciated in the Declaration of Independence: “We hold these Truths to be self-evident, that all Men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness.” The “equality” which is the key idea of the Declaration means “equal justice,” the Rule of Law, the same rules for everybody because we are one in our essential humanity.

The reflections of H.L. Mencken on this point are intriguing as coming from a man usually critical of religion. In 1926 Mencken wrote an essay entitled “Equality Before the Law.” “Of all the ideas associated with the general concept of democratic government,” he wrote, “the oldest and perhaps the soundest is that of equality before the law. Its relation to the scheme of Christian ethics is too obvious to need statement. It goes back, through the political and theological theorizing of the middle ages, to the early Christian notion of equality before God… The debt of democracy to Christianity has always been underestimated… Long before Rousseau was ever heard of, or Locke or Hobbes, the fundamental principles of democracy were plainly stated in the New Testament, and elaborately expounder by the early fathers, including St. Augustine.

“Today, in all Christian countries, equality before the law is almost as axiomatic as equality before God. A statute providing one punishment for A and another for B, both being guilty of the same act, would be held unconstitutional everywhere, and not only unconstitutional, but also in plain contempt of common decency and the inalienable rights of man. The chief aim of most of our elaborate legal machinery is to give effect to that idea. It seeks to diminish and conceal the inequities that divide men in the general struggle for existence, and to bring them before the bar of justice as exact equals.”

The freedom quest of Western man, as it has exhibited itself periodically over the past 20 centuries, is not a characteristic of man as such. It is a cultural trait, philosophically and religiously inspired. The basic religious vision of the West regards the planet earth as the creation of a good God who gives a man a soul and makes him responsible for its proper ordering; puts him on earth as a sort of junior partner with dominion over the earth; admonishes him to be fruitful and multiply; commands him to work; makes him a steward of the earth’s scarce resources; holds him accountable for their economic use; and makes theft wrong because property is right. When this outlook comes to prevail, the groundwork is laid for a free and prosperous commonwealth such as we aspired to on this continent.

A Created Being in a Created World

We gaze out upon the world around us and are struck by the preponderance of order, harmony, beauty, balance, intelligence, and economy in the way it works. The thought strikes us that the explanation of the world is not contained within the world itself, but is to be sought in a Source outside the world. The Bible simply declares that God created the world, and when He had finished He looked out upon the world He had created and called it good. The biblical world is not Maya — as Hinduism calls its world; it is not a mirage or an illusion. Nor is the world of nature holy; only God is holy. The created world, including the realm of nature, is “the school of hard knocks.” The earth challenges us to understand its workings so that we might learn to use it responsibly to serve our purposes. Economics and the free enterprise system teach us how to use the planet’s scarce resources providently, efficiently, and non-wastefully—in order to produce more of the things we need.

Man comes onto the world scene as a created being. As a created being, man is a work of divine art and not a mere happening; he possesses free will and the ability to order his own actions. As such, he is a responsible being. He’s no mere chance excrescence tossed up haphazardly by physical and chemical forces, shaped by accidental variations in his environment. To the contrary, man is endowed with a portion of the divine creativity, giving him the power to dynamically transform himself, and his environment as well, according to his needs and his vision of what ought to be.

The other orders of creation — animals, birds, bees, fish, and so on — live by the dictates of their instincts. But our species has no such infallible inner guidelines as our fellow creatures possess; our guidelines are formulated in the moral code, as summed up in the Ten Commandments.

Ethical relativism is a popular attitude today; it is a wrong answer to questions such as: Is there a moral code? Are there moral laws? Let me summarize briefly the argument that our universe has a built-in moral order by showing that there is a striking parallel between the laws of physical nature and moral laws.

The laws of science transcribe into words the observed causal regularities in the world of physical nature, i.e. the realm of things which can be measured, weighed, and counted. This is one sector of reality. Reality also exhibits a moral dimension, where things are valued or disdained on a scale of ethics ranging from good to evil. Biological survival depends on conforming our actions to the laws of nature; ignorance is no excuse. Social survival, the enhancement of individual life in society, depends on willing obedience to the moral code that condemns murder, theft, false witness, and the rest. Transgressors lead us toward social decay and cultural disorder.

Your individual physical survival depends on several factors. If you want to go on living you need so many cubic feet of air per hour, or you suffocate. You need a minimum number of calories per day, or you starve. If you lack certain vitamins and minerals specific diseases will appear. There is a temperature range within which human life is possible: too low and you freeze, too high and you roast. These are some of the requirements you must meet for individual bodily survival. They are not statutory requirements, nor are they mere custom. They are laws of this physical universe, which one can deny only at his peril.

Establishing a Moral Order

It is just as obvious that our survival as a community of men, women, and children depends on meeting certain moral requirements: a set of rules built into the nature of things which must be obeyed if we are to survive as a society — especially as a social order characterized by personal freedom, private property, and social cooperation under the division of labor.

Moses did not invent the Ten Commandments. Moses intuited certain features of this created world that tell us what we must do to survive as a human community, and he wrote out the code: Don’t murder, don’t steal, don’t assault, don’t bear false witness, don’t covet. Similar codes may be found in every high culture.

It would be impossible to have any kind of a society where most people are constantly on the prowl for opportunities to murder, assault, lie, and steal. A good society is possible only if most people most of the time do not engage in criminal actions. A good society is one where most people most of the time tell the truth, keep their word, fulfill their contracts, don’t covet their neighbor’s goods, and occasionally lend a helping hand. No society will ever eliminate crime, but any society where more than a tiny fraction of the people exercises criminal tendencies is on the skids. To affirm a moral order is to say, in effect, that this universe has a deep prejudice against murder, a strong bias in favor of private property, and hates a lie.

The history of humankind in Western civilization was shaped and tempered by biblical ideas and values, and the attitudes inspired by these teachings. There was much backsliding, of course; but in the fullness of time scriptural ideas about freedom, private property, and the work ethic found expression in Western custom, law, government, and the economy — especially in our own nation. We prospered to the degree that we practiced the freedom we professed; we became ever more productive of goods and services. The general level of economic well-being rose to the point where many became rich enough so that biblical statements about the wealthy began to haunt the collective conscience.

The Bible does warn against the false gods of wealth and power, but it legitimizes the normal human desire for a modicum of economic well-being — which is not at all the same as idolizing wealth and/or power. As a matter of fact, the Bible gives anyone who seeks it out a general recipe for a free and prosperous commonwealth. It tells us that we are created with the capacity to choose; we are put on an earth which is the Lord’s and given stewardship responsibilities over its resources. We are ordered to work, charged with rendering equal justice to all, and to love mercy. A people which puts these ideas into practice is bound to become better off than a people which ignores them. These commands laid the foundation for the economic well-being of Western society.

Western civilization, which used to be called “Christendom,” did not prosper at the expense of the relatively poor Third World. This unhappy sector of the globe is poor because it is unproductive; and it is unproductive because its nations lack the institutions of freedom that enabled us to achieve prosperity.

During recent years a small library of books and study guides has poured off the presses of American church organizations (and from secular publishers as well) with titles something like “Rich Christians (or Americans) in a Hungry World.” The allegation is that our prosperity is the cause of their poverty; in other words, the Third World has been made poor by the very same economic procedures — “capitalism” — that have made Western nations prosperous! Therefore — the argument runs — our earnings should be taxed away from us and our goods should be handed over to Third World countries—as a matter of social justice! The false premise is that the wealth we have labored to produce has been gained at their expense. Sending them our goods, then, is but to restore to the Third World what rightfully belongs to it! What perverse ignorance of the way the world works!

Nations of the West were founded on biblical principles of justice, freedom, and a work ethic, which led naturally to a rise in the general level of prosperity. Our wealth could not have come from the impoverished Third World where there was a scarcity of goods. We prospered because of our productivity; we became productive because we were freer than any other nation, Freedom in a society enables people to produce more, consume more, enjoy more; and also to give away more—as we have done—to the needy in this land and in lands all over the world. The world has never before witnessed international philanthropy on such a scale.

No one has denied Third World nations access to the philosophical and religious credo which has inspired the American practices that make for economic and Social wen-being. Few nations have done more to make the literature of liberty available to all who wish it than American missionaries, educators, philanthropists, and technicians. But there is something in the creeds of Third World countries that hinders acceptance. However, when non-Christian parts of the world decide to emulate Western ideas of economic freedom they prosper. Look what happened to the economies of Taiwan, South Korea, Hong Kong, and Singapore when they turned the market economy loose!

Regarding the Poor

Ecclesiastical pronouncements on the economy are fond of the phrase “a preferential option for the poor.” It is invoked as the rationale for governmental redistribution of wealth, that is, for a program of taxing earnings away from those who produce in order to subsidize selected groups and individuals. But it is a fact that reshuffling wealth by programs of tax and subsidy merely enriches some at the expense of others; the nation as a whole becomes poorer. Private enterprise capitalism is, in fact, the answer for anyone who really does have a preferential option for the poor. The free market economy, wherever it has been allowed to function, has elevated more poor people further out of poverty faster than any other system.

Another phrase, repeated like a mantra, is “the poor and oppressed.” There is, of course, a connection between these two words; a person who is oppressed is poorer than he would be otherwise. Oppression is always political; oppression is the result of unjust laws. Correct the injustice by repealing unjust laws; establish political liberty and economic freedom. But even in the resulting free society, where people are not oppressed, there will still be some people who are relatively poor because of the limited demand for their services. Teachers and preachers are poor compared to rock musicians because the masses spend millions to have their ears assaulted by amplified sound, in preference to the good advice often available for free!

Ecclesiastical documents announce their concern for “the poor and oppressed,” but the authors of these documents are completely blind to the forms oppression may take in our day. If there are unjust political interventions that deny people employment, this would seem to be a flagrant case of oppression. There are many such interventions. Minimum wage laws, for instance, deny certain people access to employment, and these people are poorer than they would be otherwise; the entire nation is less well off because some people are not permitted to take a job. The same might be said of the laws that grant monopoly status to certain groups of people gathered as “unions” – U.A.W., Teamsters, and the like. The above-market wage rate they gain for union members results in unemployment for others both union and nonunion. It is not difficult to figure out why this is so. The general principle is that when things begin to cost more we tend to use less of them. So, when labor begins to cost more, fewer workers will be hired.

It would take several pages to list all of the alphabet agencies that regulate, control, and hinder productivity, making the entire nation less prosperous than it need be. Our country suffers under these oppressions, economically and otherwise, but not so severely as the oppressed people of other nations, especially Communist and Third World nations. Churchmen recommend, as a cure for Third World poverty, that we deprive the already over-taxed and hampered productive segment of our people of an even larger portion of their earnings, so as to turn more of our money over to Third World governments. This will further empower the very Third World politicians who are even now oppressing their people, enabling those autocrats to oppress them more efficiently!

The New Testament and the Rich

It is not difficult to rebut the manifestoes issued by various religious organizations. But then we turn to certain New Testament writings and are confronted by what seem to be condemnations of the rich. How, for example, shall we understand Jesus’ remark, found in Luke 18:25 and Matthew 19:24: “It is easier for a camel to go through a needle’s eye, than for a rich man to enter into the kingdom of God”?

Jesus’ listeners were astonished when they heard these words. Worldly prosperity, many of them assumed, was a mark of God’s favor. It seemed to follow that the man whom God favored with riches in this life was thereby guaranteed a spot in heaven in the next.

There is a grain of truth in this distorted popular mentality. Biblical religion holds that man is a created being, with the signature of his Creator written on each person’s soul. This inner sacredness implies the ideal of liberty and justice in the relations between person and person. These free people are given dominion over the earth in order to subdue it, working “for the glory of the Creator and the relief of man’s estate,” as Francis Bacon put it. This is but another way of saying that those who follow the natural order of things—God’s order—in ethics and economics will do better for themselves than those who violate this order. The faithful, we read in Job 36:11, “… if they obey and serve Him… shall spend their days in prosperity and their years in pleasures.”

Perhaps Jesus had something else in mind as well. Palestine had been conquered by Rome. Roman overlords, wielding power and enriching themselves at the expense of the local population, would certainly supply many examples of “a rich man.” Furthermore, there were those among the subject people who hired themselves out as publicans to serve the Romans by extorting taxes from their fellow Jews. “Publicans and sinners” is virtually one word in the Gospels!

In nearly every nation known to history, rulers have used their political power to seize the wealth produced by others for the gratification of themselves and their friends. Kings and courtiers in the days of slavery and serfdom consumed much of the wealth produced by farmers, artisans, and craftsmen. Today, politicians in Communist, socialist, and welfarist nations, democratically elected by “the people,” share their power with a congeries of special interests, factions, and pressure groups who systematically prey on the economy, depriving people who do the world’s work of over 40 percent of everything they earn.

Many a “rich man” lives on legal plunder, today as well as in times past. Frederic Bastiat’s little book, The Law, familiarizes us with the procedure. The law is an instrument of justice, intended to secure each individual in his right to his life, his liberty, and his rightful property. Ownership is rightfully claimed as the fruit of honest toil and/or as the result of voluntary exchanges of goods and services. But the law, as Bastiat points out, is perverted from an instrument of justice into a device of plunder when it takes goods from lawful owners by legislative fiat and transfers them to groups of the politically powerful. “Robbery is the first labor saving device,” wrote Lewis Mumford, and political plunder is a species of theft. The fact that it is legally sanctioned does not make it morally right; it is a violation of the commandment against theft.

The Israelites had fond memories of King Solomon. “All through his reign,” we read in 1 Kings 4:25, “Judah and Israel continued at peace, every man under his own vine and fig tree, from Dan to Beersheba.” A nice tribute to individual ownership and economic well-being! The Bible has high praise for honestly earned wealth, and it is exceedingly unlikely that Jesus, in the passage we have been considering, intended anything like a general condemnation of wealth, as such.

At this point someone might raise a legitimate question: “Did not Jesus say, in the Sermon on the Mount, ‘Blessed are the poor’?” Well, yes and no. The Sermon on the Mount appears in two of the four Gospels, in Matthew and in Luke. In Luke 6:20 the Beatitude reads: “Blessed are the poor”; but in Matthew 5:3 it is: “Blessed are the poor in spirit.” There’s a discrepancy here; how shall we interpret it?

The Beatitudes were spoken somewhere between 25 and 30 A.D. The Gospels of Matthew and Luke appeared some 50 or 60 years later. Both authors had access to the Gospel of Mark, to fragments of other writings now lost, and to an oral tradition extending over the generations. We do not have the original manuscripts of the Gospels; what we have are copies of copies, and eventually translations of copies into various languages.

Scholars tell us that the Aramaic original of those two words, “the poor,” is am ha-aretz — “people of the land.” The am ha-aretz — at this stage in Israel’s history — were outside the tribal system of Jewish society; they did not have the time or inclination to observe the niceties of priestly law, let alone its scribal elaborations. The work of the am ha-aretz brought them into contact with Gentiles and Gentile ways of life, which in the eyes of the orthodox was defiling. Their status is like that of the people on the bottom rung of the Hindu caste system — the Sudras. Jesus is reminding His hearers that these outcasts are equal in God’s sight to anyone else in Israel, and because of their lowly station in the eyes of society, they may be more open to man’s need of God than the proud people in the ranks above them. The New English Bible provides an interesting slant on this text; it translates “poor in spirit” as “those who know their need of God.”

In short, Jesus is saying that all are equally precious in God’s sight, including the lowly am ha-aretz; He is not praising indigence, as such.

Biblical Interpretation

The Bible is full of metaphor and symbolism and allegory. Literal interpretation usually falls short; proper interpretation demands a bit of finesse… as in the case of St. Paul’s remark about money.

St. Paul declared that “The love of money is the root of all [kinds of] evil.” (1 Tim. 6:10) The word “money” in this context—scholars tell us—does not mean coins, or bonds, or a bank account. Paul uses the word “money” to symbolize the secular world’s pursuit of wealth and power. We tend to become infatuated with “the world.” It’s the infatuation which is evil, for God’s kingdom is not wholly of this world. We are the kind of creatures whose ultimate destiny is achieved only in another order of reality: “Here we have no continuing city.” (Heb. 13:14) Accept this world with all its joys and delights; live it to the full; but remember—we are pilgrims, not settlers. In today’s vernacular, Paul might be telling us: “Have a love affair with this world, but don’t marry it!”

We know that there are numerous unlawful ways to get rich, and these deserve condemnation. But prosperity also comes to a man or woman as the fairly earned reward of honest effort and service. The Bible has nothing but praise for wealth thus gained. “Seest thou a man diligent in his business?” said the author of Proverbs (Pr. 22:29). “He shall stand before kings.” Economic well-being is everyone’s birthright, provided it is the result of honest effort. But we are warned against a false philosophy of material possessions.

This, I think, is the point of Jesus’ parable of the rich man whose crops were so good that he had to build bigger barns. (Luke 12:17) This good fortune was the man’s excuse for saying, “Soul, thou hast much goods laid up for many years; take thine ease, eat, drink, be merry.”

There is a twofold point to this parable. The first is that nothing in life justifies us in resigning from life; we must never stop growing. It has been well said that we don’t grow old, we become old by not growing. The second point is that a material windfall—like falling heir to a million dollars—may tempt a man into the error of quitting the struggle for the real goals in life. Jesus condemned the man who put his trust in riches, who “layeth up treasure for himself and is not rich toward God.” He did not condemn material possessions as such; He taught stewardship, which is the responsible ownership and use of rightfully acquired material goods.

Life here is probative; our three score years and ten are a sort of test run. As St. Augustine put it, “We are here schooled for life eternal.” And one of the important examination questions concerns our economic use of the planet’s scarce resources and the proper management of our material possessions. These are the twin facets of Christian stewardship, and poor performance here will result in dire consequences. Jesus put it very strongly: “If, therefore, you have not been faithful in the use of worldly wealth, who will entrust to you the true riches?” (Luke 16:12)

What does it mean to be “faithful in the use of worldly wealth?” What else can it mean except the intelligent and responsible use of the planet’s scarce resources to transform them by human effort and ingenuity into the consumable goods we humans require not only for survival, but also as a means for the finer things in life? In practice, this means free market capitalism — the free enterprise system — in the production, exchange, and utilization of our material wealth in the service of our chosen goals.

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Biblical Roots of American Liberty

Capitalism is the only moral social system. Only a capitalist system allows you to act in your own interest, to keep what you have worked for and trade it with other willing individuals. For much of human history, wealth has been produced primarily by looting or enslaving others. Under capitalism wealth is created by serving others, by creating values for them. Individuals who produce the best goods and services are rewarded by making the most profit. Those who produce shoddy goods, mediocre services or try to defraud others are weeded out when exposed.

Capitalism is win-win. Producers only make profits on goods and services that consumers choose to buy. Competition among producers ensures that consumers have a variety of goods and services at different price ranges to choose from. Workers and employers come together based on mutual consent. Employers can choose to fire incompetent workers, and workers can choose to leave an employer for a better job. Competition among employers for qualified workers drives wages and benefits up. Whereas politics is a zero-sum game in which power and tax dollars are redistributed from one group to another, capitalism continuously creates more wealth, thereby growing the pie and increasing prosperity for all.

Capitalism is fair. Capitalism is predicated upon and respects individuals’ free choices. No one has to pay for what he does not want and derives no benefit from. Under capitalism, individuals and businesses cannot seek politically enforced advantages or handouts. For instance, in a capitalist system steel producers would not be able to obtain tariffs and subsidies in order to avoid being undersold or driven out of business by foreign competitors, and a workers’ union could not get government to force employers to provide higher wages, more benefits and greater job security. Unable to run to the government for help, these groups must prove themselves entirely based on the worth of the goods and services they produce. That is fair to consumers and competitors.

Capitalism empowers the consumer. The consumer votes for or against goods and services with his money. If companies do not offer the kinds of goods and services consumers want to buy, they fail — but their demise inspires the emergence of new markets, new products, new services, and new methods of production. In this way, capitalism promotes innovation and efficiency through a process of creative destruction. Capitalism also fosters the creation of mass communication tools such as the internet. Thus, consumers can make informed decisions about what to purchase and can let others know about the quality of that purchase. Many consumers united together can persuade a producer to lower prices or change his product or service for the better.

Capitalism reflects human nature. People have limited knowledge. State-planned economies fail because no bureaucrat or committee, no matter how well educated in economics, has the knowledge to coordinate the actions of millions of individuals. People are also motivated by different values. Under capitalism people can pursue their chosen values, provided of course that they do not violate the rights of others. Pursuing values and being allowed to keep, dispose of and profit from the results of that pursuit motivates people to take care of things, to produce, and to innovate. Further, by tapping into human beings’ competitive nature, capitalism makes everything better. Just compare the best car created under a capitalist system to the best car created under a socialist system, where competition is suppressed.

Capitalism fosters benevolence. When individuals are well-off, as would be the case for the bulk of individuals under capitalism (perhaps only those currently receiving special treatment from some government body would be the exception), they have time and money to take care of others. Further, if they have the right to keep what they have worked for and dispose of it in the way they choose, they are more likely to embrace helping people in need and give more than if their money is forcibly taken from them by the government via taxation. For instance, you might already donate money to your local homeless shelter, food pantry or to an organization working for a cause that is very important to you. But if you were not taxed as heavily as you are, you might be willing and able to donate more.

Capitalism makes everyone richer. Even the least well-off person in a developed country today lives a life of luxury beyond the wildest dreams of the richest kings centuries ago: consider televisions, computers, iPods, cell phones, microwaves, cars, washing machines, or air conditioning. Compare how poor people live in the United States today to how they lived in the US a hundred years ago, or to how they live in Third World countries today. In fact, capitalism is our best hope for alleviating and eventually eradicating poverty worldwide because it creates more wealth — for everyone — than any other social system.

Capitalism promotes peace. Capitalist countries are less likely than non-capitalist countries to initiate violence against their citizens or against other countries. Where people come together for mutually beneficial interaction such as trade, issues of race, religion, ethnicity, gender, or sexual orientation are less important. What matters is whether you can offer me the kinds of goods and services I want for the price I am willing to pay.

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Enjoy Capitalism!

Communism is the vision of an egalitarian society with common ownership of property. Karl Marx, the father of communism, stated that the prevailing capitalist environment is responsible for class struggle and inequality among people. He believed that people’s lives are determined by their economic environment and in order to achieve the communist utopia, that environment has to be changed. For this change to occur, the working class (proletariat) must overthrow the existing regime, dismantle all capitalist institutions, and eliminate the possibility of a counterrevolution by the merchant class (bourgeoisie). Then, as a necessary pre-stage to communism, a socialist authoritarian government must be established to take complete control over the means of production—natural resources, infrastructure, tools, financial capital, and labor. Once people are thoroughly conditioned by this new structure they will morph into a “higher” man. Soon, government will wither away and in its place will emerge the stateless, egalitarian society that communists envisage. This may sound good in theory to some, but the communist experiments of the 20th century resulted in economic deprivation and murder on a massive scale.

Communism kills. Marx knew that winning the revolution would not be enough. He penned that “so long as other classes continue to exist, the capitalist class in particular, the proletariat fights it…it must still use a measure of force, hence governmental measures.” Lenin purged his ideological rivals, the Mensheviks and the Social Revolutionaries. Stalin, Pol Pot, Che Guevara, Castro, and Mao all eliminated whoever they suspected of opposing their regimes, whether by deporting dissidents to slave labor camps, subjecting them to sham trials in which the forgone conclusion was a “guilty” verdict and execution, or simply murdering them outright. In all, even according to conservative estimates, communist regimes have killed at least 150 million people. Not too peaceful…

Communism prohibits private property. As Marx saw it, private property is the primary cause of man’s alienation from his social nature and a limitation on his freedom: “The right of property is therefore, the right to enjoy one’s fortunes and dispose of it as he will; without regard for other men and independently of society…It leads every man to see in other men, not the realization, but rather the limitation of his own liberty.” Marx agreed that private property is the basis of the capitalist system, creating enormous wealth and economic progress; but he claimed that such wealth and progress is limited to a small class of rich merchants at the expense of a large class of poor workers. But, as classical liberals such as Adam Smith and John Locke argued, private property is essential to securing man’s natural rights to life and liberty. Think about it: the right to life is the right to live, and to live in the way you choose; the right to liberty is the right to pursue what you need to survive and live a good life, so long as it does not entail violating the rights of someone else to do the same.

However, if the needs of others are the determinant of how much food, shelter, or clothing you are allowed to have or of the profession you may pursue—then, ultimately, your life depends on whoever can claim to have a greater need than you. That’s not freedom; that’s slavery.

Communism is full of contradictions:

• Communists claimed that their philosophy would outdo capitalism economically because it promotes the good of all rather than the narrow self-interest of a few greedy capitalists. Yet, if being self-interested means that one acts according to a set of values that one holds and wants to realize, then communism itself could not be implemented without self-interest. Capitalist economies far surpassed communist ones in wealth, evident by the fact that the least-well-off in the former have a greater standard of living than all but the top echelon of government officials in the latter. To achieve the economic growth necessary to alleviate poverty, productivity and innovation are key, both of which depend on the proper incentives. Under capitalism people get to keep and dispose of what they have produced, which gives them an incentive to produce and innovate more. This is absent under communism.
• Communist leaders hailed their societies as beacons for a more just, abundant society. Yet, one only needs to look at how people voted with their feet to know that was not true; many willingly risked death to escape the devastatingly brutal conditions of communist countries to obtain a better life in capitalist countries. Moreover, in areas once seen as “breadbaskets” of the world, communism (and the disallowance of private property) brought mass famine, as was seen in Russia in the early 1920s and in China in the late 1950s.
• Communists stated that their philosophy is ethically superior to classical liberalism and capitalism because it seeks to abolish inequality. Under communism, they claim, everybody is equally provided for but in reality only those in power (bureaucrats and party honchos) win while everybody else loses. The only level of equality reached by the common man is in the shared level of misery.

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Communism Kills

Adam Smith’s monumental achievement was to enlarge the individual person’s freedom of action in economic affairs, and thus in other sectors of his life as well. Smith’s argument had several minor loopholes, but these were plugged by the Austrian School—Carl Menger, Eugen von Böhm-Bawerk about a century after The Wealth of Nations. Today, it is fair to say that Ludwig von Mises and his students have created a genuine science of economics—a systematic exposition of the free market economy-which, as an intellectual structure, is virtually impregnable. Misesian economic science is, so to speak, The Answer. It’s the recipe for anyone who wants to know how a society must organize its workplace activities so as to maximize economic well-being for all.

The Question is: How may we achieve the free and prosperous commonwealth? To which The Answer is: Install the free market economy, as taught by Austrian—and some other—economists.

Trouble is, almost no one is asking The Question!

Economic science does not tell John Doe how to make a million dollars on Wall Street, or a killing in real estate, or how to protect his assets. Entrepreneurship is an art, not a science; profitable investing likewise. Economic science, like every other science, deals with abstract principles and general rules. Economic science sets forth the general rules which members of a particular society must apply in practice if the society is to enjoy maximum productivity and raise the general level of economic well-being. Economic science is a scholarly endeavor which shows what must be done to maximize the wealth of nations.

Economic science has The Answer for anyone who asks how a society may advance from poverty toward affluence. But economic science has no answer for those who ask: How can I make a fast and easy buck?

This is the wrong question, so far as economic science is concerned. How can people be persuaded to ask the right question? The question people should ask might be phrased as follows: How can we create the social institutions which provide maximum opportunity for all of us to be more prosperous? Only a sense of moral obligation will generate such a question.

The ordinary, decent, law-abiding citizen in his private dealings with his fellows would not use force or fraud to gain advantage over another. But when force and/or fraud are legalized millions do seek some advantage for themselves at the expense of their fellows. When the State allocates resources and redistributes the wealth, it is using its power to deprive producers of what belongs to them, in order to dispense it to those who have not earned it. Everyone is forced to pay tribute for the benefit of the wield-crs of power and their friends. Concerned with their own immediate well-being and looking to the State for handouts, tens of millions of Americans have no interest in working toward an economic order which would assure a rising level of prosperity for everyone—the free market economy.

Austrian economics is The Answer, all right, but it is the answer to a question which only a few are asking. The reason: only a few have an ethical incentive to ask it. Millions are searching for ways to increase their salaries, double their incomes, and enjoy the good life. Only a handful, by comparison, are working with any intensity to advance the free society-market economy way of life.

Economic Fallacies

We have it on the authority of Henry Hazlitt that “Economics is haunted by more fallacies than any other study known to man.” Who can deny it? Any reasonably bright high school student can read Economics in One Lesson. Haw ing read the book, he can spot the fallacies in many textbooks of economics, in the speeches of public figures, in the commentaries of television and radio pundits, in sermons and academic lectures, in almost any place he cares to look.

The discipline of economics is not mired in simple ignorance; it is stalled by willful ignorance. Economic fallacies abound because every economic fallacy in practice gives someone an economic or other advantage over someone else. Pocketbook motivations keep economic fallacies alive; slay them in one generation and they return from the dead in the next.

Virtually every economic fallacy that plagues us today has been demolished time and again over the past couple of centuries; but has this work of demolition diminished the number and power of economic fallacies? Hardly; they appear about as numerous and virulent as ever. There are few new economic truths, but new errors proliferate wildly. Demolishing fallacies and exposing errors may be exhilarating for a time, but it is negative work; it is to toil on a treadmill. The positive maths of a market economy—together with its supporting institutions and ideas—are reached only by taking a different route.

The celebrated classicist, Gilbert Murray, offers some wise words on truth and error: “The great thing to remember is that the mind of man cannot be enlightened permanently by merely teaching him to reject some particular set of superstitions. There is an infinite supply of other superstitions always at hand; and the mind that desires such things—that is, the mind that has not trained itself to the hard discipline of reasonableness and honesty, will, as soon as its devils are cast out, proceed to fill itself with their relations.”

There will always be a need to expose economic error and demolish fallacies, but something more is needed if we wish to advance in the direction of a truly free society; and that something more is the sense of moral obligation which motivates persons to pursue the goals they perceive to be ethically right and good. Economics needs ethics.

Mises points out that economics “is a science of means, not of ends,” and that science, furthermore, is value- free. A science describes; but does not prescribe. “Science,” Mises goes on to say, “never tells a man how he should act; it merely shows how a man must act if he wants to attain definite ends . . . . Praxeology and economics do not say that men should peacefully cooperate within the frame of societal bonds; they merely say that men must act this way if they want to make their actions more successful than otherwise.” Moral obligation, a sense of “oughtness,” is not within the purview of science; the sciences, basically, operate in a sector of the universe that is ethically neutral. By the same token, there are no grounds in economic science per se for telling anyone that he ought to do this when he prefers to do that.

Although every science is value-free, the universe is not value-free! We live in a rationally and ethically structured universe where some things are morally right and other things are morally wrong; there is genuine good, as well as real evil. Moral obligation, besides being a reality that presses on the sensitive conscience, is a potent incentive to strive to translate the reasoned maths of economic science into a go_ ing concern economy.

Economics is the science of human action, and the actions of human beings are intimately implicated with ethical standards and moral obligation. In other words, economic science does not stand alone; it is a “means,” and as a means economics needs to be hooked up with disciplines that deal with ends.

What we have here is an IF—THEN situation. The economist cannot tell us that we ought to prefer a free and prosperous commonwealth; but IF that is what we want, THEN economic science can demonstrate that the market economy is the only means to achieve that end. Economic science can only explain; the economic argument must therefore be joined to an ethical imperative which commands.

Strengthening the Case

Economic reasoning can demonstrate that the free market system is the most efficient way to produce goods and services, rewarding every participant according to his contribution to the productive process—as that contribution is judged by his peers. But the economic case for freedom is strengthened immeasurably when it is bolstered by moral reasoning which demonstrates that the market economy is the only economic order which embodies the ideas of liberty and justice for all. Capitalism is the only economic system that does not reward some at the expense of others.

The interventionist state provides cushy jobs for many a predator and parasite, people whose services would not be needed in a truly free economy. Many of these people, once they become dependent on consumer choice, might, to begin with, be worse off economically than before. The pocketbook argument will not persuade them, but the moral argument might.

Originally published in The Freeman, April 1989.

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Economics Has the Answer: What’s the Question?

The church plays an important role in human life.

It was once the unwritten rule in polite society that two topics have no place in civilized conversation; religion and politics. It was ill-bred to discuss religion; it was gauche to talk politics. But times have changed. We live in a different and more open age. Now we discuss religion for political reasons, and we talk politics for religious reasons! The Bishops issue a Letter; the highest dignitaries of the various denominations pronounce on matters of government and business. The people behind these proclamations represent only a tiny minority of the total church membership, but they presume to speak for everyone. What they say is, in effect, the Socialist Party platform in ecclesiastical drag.

These ecclesiastical documents focus on an economic malaise, poverty; the poverty of the masses, especially the masses of the Third World. Churchmen profess to know the cause of this poverty. Third World poverty is caused by the wealth of the capitalistic nations; they are poor because we, in becoming wealthy, have pauperized them. Likewise, within our own nation the wealth of those who are better off is gained at the expense of those who are made worse off in the process. These are the typical allegations: the rich get richer by making the poor poorer.

Ecclesiastical myopia views the market economy—or capitalism—as an evil system which, by its very nature impoverishes the many as the means by which the few are enriched. The suggested cure for these differentials in wealth is to use government’s power to tax to exact tribute from the rich, and then distribute the proceeds to the poor—minus the cost to the nation of these wealth transfers. Robin Hood robs the rich to pay the poor, but Robin takes his cut!

It is as if these churchmen had swallowed the current secular agenda to which they have merely added oil and unction; as if social reform were the end, religion the mere means; as if religion has little more to offer modern men and women beyond what they can get from contemporary liberalism or socialism. The church has a more important role to play in human life, as I shall suggest in the course of this article.

One of my favorite modern theologians is the late William Ralph Inge. Inge was the Dean of St. Paul’s Cathedral in London, the scholar’s pulpit of the Church of England. Dean Inge wrote some notable books in theology, philosophy, and social theory, but he was also a newspaper columnist during the 1920s where his hard-nosed comments on the passing scene earned him the nickname, “the gloomy Dean.”

Christian Socialism was strong within the church of England, with some churchmen going so far as to declare that for a Christian not to be a socialist was to be guilty of heresy. A popular slogan was “Christianity is the religion of which Socialism is the practice.” Dean Inge would have none of this, so he waged a perpetual war of words against the socialists, especially against socialists of the Christian variety. “I do not like to see the clergy,” he wrote, “who were monarchists under a strong monarchy, and oligarchs under the oligarchy, tumbling over each other in their eagerness to become court chaplains to King Demos. The black coated advocates of spoliation are not a nice lot!”

It was not that Dean Inge was a defender of the status quo; far from it. Inge was a severe critic of many features of the modern western world. He argued that socialism is little more than a logical extension of many of the worst features of the modern temper, derived from the French Revolution, with its inveterate faith that man is a good animal by nature, but corrupted by his institutions; “Man is born free, but is everywhere in chains,” as Rousseau put it. This being the case, said the socialists, all we have to do is change our institutions in order to produce an improved society out of unimproved men and women.

Dean Inge foresaw a tendency within this mind-set toward “a reversion to a political and external religion, the very thing against which the Gospel waged relentless war.” It is not that Christianity regards social progress as unimportant, Inge goes on to say; it is a question of how genuine improvement may occur. “The true answer,” he wrote, “though it is not a very popular one, is that the advance of civilization is in truth a sort of by-product of Christianity, not its chief aim; but we can appeal to history to support us that [the advance of civilization] is most stable and genuine when it is the by-product of a lofty and unworldly idealism.”

The Pull of Public Opinion

Churchmen in every age are tempted to adopt the protective coloration of their time; like all intellectuals, churchmen are verbalists and wordsmiths; they are powerfully swayed by the printed page, by catch words, slick phrases, slogans, and bumper stickers. In consequence, they are pulled first this way then that by whatever currents of public opinion happen at the moment to exert the greatest power over their emotions and imagination. Today, it is the powerful gravitational pull of “environmentalism.”

I’m using the word environmentalism as a label for the belief that the human species is nothing but what external conditions have made us, that we are the victims of circumstances, that our lives are determined by forces we can barely understand, let alone control. Random chemical and physical interactions produced mankind in the first place. Then this raw material—mankind as it comes from nature—is shaped into various forms by the particular society in which we find ourselves. The social class to which we belong determines, finally, what we are and how we view the world and ourselves. Environmentalism exerts a powerful attraction today over intellectuals of all creeds. It is the ideology of Marxists and non-Marxists alike that men and women are the mere end products of nature and society—responsible men and women no longer—and that social engineering can construct a perfect society out of defective human units. Environmentalism has the cart before the horse; it is dehumanizing.

If there is disorder in our society it follows that there is disorder within our very selves, in our faulty thinking and erroneous beliefs, in our misplaced loyalties and misguided affections. Disharmony in our personal lives will result in conflict and frictions in society. This is why serious religion has traditionally focused on the inward and the spiritual, on the mind and conscience of individual persons, to make them responsible individuals. The premise is that only right beliefs rightly held can produce right action. The good society emerges only if there is a significant number of people of intellect and character; and the elevation of character is the perennial concern of genuine religion, in league with education and art.

But the modern world views the matter differently. The modern world assumes that the human species is the mere end product of external forces; a product, first of all, of physics and chemistry—our natural environment; and a product, secondly, of the particular society in which an individual happens to live. The basic assumption is that man’s character is made for him, by others; no individual is really responsible for himself. It is only necessary, then, for “the others” to acquire political power and use it to create social structures designed to produce a new humanity. Transform external arrangements and—according to this ideology—it matters little if men and women remain unregenerate; they will behave correctly because their institutions have programmed them to act according to the blueprint. This is the modern heresy.

Christianity, rightly understood, stands for a society with such basic features as personal responsibility, equal justice under the law, and maximum freedom for every person—the kind of society envisioned by the 18th- century Whigs like Burke, Madison, and Jefferson. Such a social and political order as the Whigs had in mind lays down the conditions in a nation which permit the operation of one kind of an economic order only, the free market economy—later nicknamed capitalism—the thing described by Adam Smith.

The economic order which Adam Smith challenged was called Mercantilism. Mercantilism was the communism or socialism or planned economy of the 17th and 18th centuries. The nation was covered with a network of minute regulations controlling every stage of manufacture and exchange, and the controls were brutally enforced, as they must be in every planned economy; in a 73-year period in France, 1686 to 1759, approximately 16,000 people were put to death for some infraction of the government regulations over the economy.

Adam Smith set out to free the economy with what he referred to as his “liberal plan of liberty, equality, and justice.” (p. 628)It is more than a coincidence that The Wealth of Nations and the Declaration of Independence appeared within a few months of each other, in the year 1776. The Declaration endorses the Whig political vision whose main features were voiced by Jefferson in his First Inaugural: “Equal and exact justice to all men, of whatever state or persuasion, religious or political; peace, commerce, and honest friendship with all nations—entangling alliances with none . . . freedom of religion, freedom of the press, freedom of the person under the protection of the habeas corpus,” and so on. This was the political and legal framework laid down by the Whig theorists, within which Adam Smith’s free market economy, or capitalism, had the freedom necessary if it was to function-his “liberal plan of liberty, equality and justice.”

Millions of people during the 20th century have turned away from the traditional religious faiths of the West—Christianity and Judaism-to embrace some form of secular religion, such as communism or socialism. The prevailing world view in our time is not Theism—the belief that mind and spirit are rock-bottom realities in the universe; it is Materialism—the belief that basic reality is composed of nothing else but particles of matter.

Materialism is explicit wherever Marxism is the official creed, but it is implicit almost everywhere else. Begin with the Marxist premise of Dialectical Materialism—or any other variety of Materialism—and some form of totalitarianism logically follows. Such a society reduces human persons to minions of the state, to be used and used up in the utopian endeavor to bring about the classless society of the communist pipe dream. Christian doctrine, by contrast, makes the individual person central. His role in life is to serve the highest value he can conceive—God; the modest role of the political order is to provide maximum freedom for all persons in order that we, as created beings, may achieve our proper destiny.

The Theocratic Temptation

In the free society, church and state are independent of one another, as set forth in the First Amendment. But there is, historically, a perennial temptation for church and state to join forces and form a theocracy—an alliance which tends to divinize politics and depreciate genuine religion. We are moving in that direction.

The church has been allied with the state ever since the fourth century, and this church-state combination has often been less than Christian in its treatment of Christians, and others. Edward Gibbon, the 18th-century historian, is only one of the many scholars who have chastised the official church for its misdeeds. But listen to Gibbon when he refers to original Gospel Christianity; he speaks of “. . . those benevolent principles of Christianity, which inculcate the natural freedom of mankind.” (Vol. I, p. 661)

The idea of Christian freedom came into sharp focus in the preaching of 18th-century clergymen in New England. F. P. Cole, an historian of the period, writes: “There is probably no group of men in history, living in a particular area at a given time, who can speak as forcibly on the subject of liberty as the Congregational ministers of New England between 1750 and 1785.”

It was the custom of the New England clergy to preach twice a year on some theme having to do with the secular order, the Artillery Day Sermon and the Election Day Sermon. These scholarly sermons were published by the Massachusetts General Court, as the legislature was then called, and they have provided the raw material for many a doctoral dissertation. Let me offer a typical statement by one of the ablest of these preachers, Jonathan Mayhew of Boston, in 1752. “Having been initiated in youth in the doctrines of civil liberty, as they were taught by such men as Plato, Demosthenes, Cicero, and other renowned persons among the ancients; and such as Sydney and Milton, Locke and Hoadley among the moderns, i liked them; they seemed rational. And having learnt from the Holy Scriptures that wise, brave, and virtuous men were always friends of liberty,—that God gave the Israelites a king in His anger, because they had not the sense and virtue enough to be a free commonwealth,—and that ‘where the spirit of the Lord is, there is liberty’—this made me conclude that freedom was a great blessing.”

Religion and the Founders

Most of the men we refer to as our Founding Fathers were not active churchmen, for one reason or another, but they were men of strong religious convictions. Norman Cousins has compiled a 450-page anthology of the religious beliefs and ideas of eight of these men in their own words. (In God We Trust, 1958) Those quoted are Franklin, Washington, Jefferson, Madison, the two Adamses, Hamilton, and Jay. There’s also a section devoted to Tom Paine. A familiar statement of Jefferson pretty well summarizes the outlook of this remarkable group of men. “The God who gave us life, gave us liberty at the same time.”

Tom Paine authored some influential political pamphlets, and he also wrote a great deal on the subject of religion, much of it critical—which is all right, because there is much about the ecclesiastical life of any period which deserves criticism. But when it was a matter of Christian liberty, Paine was on target. Cousins, for some reason, does not quote a surprising statement by Paine: “Wherefore, political as well as spiritual liberty, is the gift of God, through Christ.” (From his essay “Thoughts on Defensive War”)

What was the situation in the 19th century? Let me offer a few remarks by one of the keenest foreign observers ever to visit this nation, Alexis de Tocqueville. Tocqueville landed in New York in May, 1831. Nine months and seven thousand miles later he returned to France and wrote his great book, Democracy in America, with special attention being given to religion and the churches. “The Americans combine the notions of Christianity and of liberty so intimately in their minds,” he wrote, “that it is impossible to make them conceive the one without the other . . . Religion in America takes no direct part in the government of society, but it must be regarded as the first of their political institutions . . . They hold it to be indispensable to the maintenance of republican institutions.”

“Despotism may govern without faith,” he continues, “but liberty cannot . . . [for] how is it possible that society should escape destruction if the moral tie is not strengthened in proportion as the political tie is relaxed?”

Tocqueville observed that the clergy stayed away from politics. The clergy, he observed, “keep aloof from parties and public affairs . . . In the United States religion exercises but little direct influence upon the laws and upon the details of public opinion; but [religion] directs the customs of the community, and, by regulating everyday life it regulates the state.”

A Spotty Record

The history of the church during the past two thousand years is a spotty record, with many ups and some downs. There have been glorious epochs, and there have been periods which make for melancholy reading. Occasionally, the church has sanctioned tyrannous political rule; from time to time it has lent its support to persecutions, inquisitions, and crusades. As an arm of the state, or as a tool of the state, it has betrayed its sacred task while it pursued secular goals like wealth and power.

In the 20th century segments of ecclesiastical officialdom and councils of churches demand legislation to transfer wealth from one group of citizens to another. They work for a collectivist economic order planned, controlled, and regulated by government. The intended aim is to overcome poverty and feed the hungry; the means is the planned economy, otherwise labeled socialism, collectivism, the new deal, or whatever. Whatever the label, the planned economy puts the nation in a strait jacket; the planned economy, however noble the intentions of the planners, is the road to serfdom, as F. A. Hayek demonstrated in a landmark book written some forty years ago.

A planned economy forcibly directs the lives of individual men and women, and to do so the state must deprive people of their earnings which they would otherwise use to direct their own lives. Nation after nation during the 20th century has gone in for political planning of the economy and the results have been disastrous; where the planning has been strictly enforced, as in communist nations, the result has been a nation ill housed, iii fed, and ill clothed, it is a sad paradox indeed that the secular program, promoted by church hierarchies to alleviate poverty, has caused poverty in every society which has tried it. The only way to alleviate poverty in a nation is to increase productivity; and increased productivity is generated only by an economy of free men and women. Freedom is an essential part of the church’s business. Freedom is a blessing in itself, and it’s a double blessing, for prosperity follows freedom.

The socialists, until recently, have claimed the high moral ground. Their boast is that only socialists—or liberals—really care about people. What nonsense! Every person of good will wants to see other people better off; better housed, better fed, better clothed, healthier, better educated, with finer medical care, and all the rest. The dispute between socialists and believers in the free economy is not so much over the goals as over the means by which these goals may be met. The socialist’s means—his command economy—will not achieve the goals he says he wants to reach; socialism makes the nation worse off; poorer in material wealth, and poorer in every other respect as well.

There is another route for churchmen to take, a way that leads to more freedom for people in society, rather than less freedom. Freedom is at the heart of the gospel message, and the true genius of our religion was proudly proclaimed by our forebears, some of whose words I have quoted.

Man’s will is uniquely free; that’s the way God made us. We are free beings precisely in order that each person shall be responsible for his own life and therefore accountable for his actions. It is by acts of will, acts of choice, exercised daily over the course of a lifetime that each of us becomes the person we have the potential to be. Each person is by nature self-controlling; each person is in charge of his own life.

The free society, then, is our natural habitat; freedom in the relations of persons to each other accords with human nature. The tactic of freedom in the business and industrial sectors is the free market economy; the free choice economic system corresponds to the freely choosing creature that each of us is.

Animals, unlike us humans, have a finely tuned set of instincts which infallibly guides each creature according to its species. We humans do not have such elaborate instinctual equipment; instead of instincts we are given a moral code, which we are free to obey or not. Anyone can figure out for himself that no kind of society is possible unless most people most of the time do not murder, steal, assault, or lie. Thus we have commandments that say Thou shalt not murder, Thou shalt not steal, Thou shalt not bear false witness, and so on. These and other commands compose the basic moral code which is the foundation of our law.

Because we are flawed creatures as well as free, we occasionally break the law, and so we need an umpire to interpret and, if necessary, enforce the rules. We refer to this umpire function as the political order—government, the police power, the law. And we have the courts, where honest differences of opinion may be examined and resolved.

The Productivity of Capitalism

The free market economy, or private property order, or capitalism—if you like—is, by common agreement, the most productive economic order. In fact, it’s the only productive economic order. Socialism in a given country lives by exploiting the previous productive economy of that country, and when that gives out, socialist nations live on largess from capitalist nations.

The incredible productivity of capitalism is generally admitted, even by its critics; it’s the way the wealth gets distributed that they complain about. What’s wrong about capitalism, the critics charge, is that some people in our society have enormous incomes while other people have to get by on a mere pittance. Disparities in income show up most vividly in the sports and entertainment industries. Take basketball players, for instance. Basketball is a fun game which thousands play for pleasure and recreation. But many professional players make more money in a year than any six of us will make in a lifetime of hard work. Baseball is almost as grotesque, and then the players threaten to strike for more pay! A rock singer gives what is laughably called a concert and more money changes hands in one evening than the Seattle Symphony sees in a year. Supply your own examples. The question is: How can any person with even a modicum of intelligence and refinement condone such grotesqueries? How do we respond to such a critic?

Part of the answer is that in a free society—a social order characterized by equal freedom under the law—the market place becomes a showcase for popular folly, ignorance, superstition, bad taste, and stupidity. The market, in other words, is individual free choice in action, and no one is pleased with everyone else’s choices. But our displeasure is a price we must learn to pay if we are to enjoy the blessings of liberty. We must stand firmly behind the processes of freedom, even though we can barely stand some of the products of freedom. So let’s stop wringing our hands; let’s try to be tolerant, and let’s get on with our lifelong task of setting a better example of what freedom means.

Remember that no one is forced to pay over good money to watch a sporting event; no one has to listen to some hyperkinetic young man howl and gyrate in public places to the accompaniment of amplified sound. You and I might not pay money for such a performance, and if everyone were just like us, those who now make millions playing games would have to go back to sport for its own sake, just like the rest of us. And if a miraculous change in musical taste should occur, there’d be crowds attending Bach recitals every Sunday afternoon on your local church organ.

Turn from the sports and entertainment field to the business and industry sector. Here, too, there are wide variations in wages, income and wealth. How does this come about?

Here’s a person with a knack for manufacturing a better mousetrap, which turns out to be just what millions of consumers have been waiting for. They are willing to pay handsomely for this better mousetrap, and so the manufacturer becomes wealthy. His employees also benefit. Our entrepreneur’s wealth is voluntarily conferred upon him by consumers who aren’t forced to buy the product, but who find that these new mousetraps make their lives safer, better, and more enjoyable. Every step in this procedure—manufacturing, marketing, exchanging—is free and fair, and when this is the case the resulting distribution of rewards is also fair. It is only when someone profits and becomes rich because government gives him a subsidy or provides him with some advantage over his rivals and his customers that there is mal-distribution and unfairness in the final result.

Setting a Good Example

Let me emphasize the fact that the free market economy rewards each participant according to the value willing consumers attach to his offering of goods and services. Why does a rock singer make millions while your fine church organist makes hundreds? The answer is obvious; crowds of people would rather pay a lot of money to hear rock than to listen to Bach for free. We may find this intellectual and esthetic wasteland repugnant to our refined sensibilities. But what an opportunity this situation presents to every teacher. I refer not only to full time professors, preachers, and writers. Most anyone can be a teacher. Nearly everyone, in other words, has the capacity to convey a new idea to some other person, to instill a nobler sentiment, a superior value, a higher moral tone. More persuasive than any of these, we can set a good example.

It is a solid truth, I believe, that you cannot build a free society out of just any old kind of people. A free society is built around a nucleus of people of superior intellect and integrity who are, at the same time, cognizant of economic and political reality. You need people who love God and their neighbor; people of understanding and compassion; people with enduring family ties. Our schools and our churches should be producing people of this caliber, for it is the function of education and religion—in the broad sense of both terms—to make us better and wiser men and women. When we have a significant number of wise and good people living lives of a quality high enough to deserve a free society we’ll have a free society. All the rest of us, riding on their coattails, will reap the rich blessings of liberty.

Originally published in The Freeman, August 1986.

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Churches and the Social Order

Ethics and Business (March 1993)

A few years ago there was an immensely popular television series, named after Dallas. The central character of this show was a powerful and unscrupulous businessman who got that way by climbing over the backs of rivals, manipulating politicians, and wheeling and dealing with shadowy figures on the fringes of the underworld. J. R. Ewing finally got in the way of a bullet, and for months this nation was racked by the question: “Who shot J.R.?” But the civilized man could only wonder why the trigger man waited so long!

Business and the businessman have had a bad press, almost uniformly. Do you remember the television show whose hero was a businessman? The show that portrayed this businessman as a person of integrity and vision, who labored long hours to produce a product that supplied a genuine need, which he marketed at prices people could afford? Who treated his employees with generosity and consideration, and his customers with unfailing courtesy? Who was a devoted family man, active in civic affairs, and a churchman? Who could recite Shakespeare by the yard, relaxed by listening to his fine collection of recorded symphony music, and could tell a Corot from a Monet? Do you remember that show? Perhaps it was a movie? Actually it was neither. Such a show was never produced; the subject is taboo, by today’s mores.

The businessman has rarely if ever been treated fairly and accurately in drama or fiction. Is this because there are no men and women of superior intellect and high character in the world of business, industry, and trade? Not at all. Has the world of business no dramatic possibilities? Of course it has. But the fictional businessman invariably turns out to be the villain. There is a reason why this is so; the businessman is portrayed as a scoundrel because there is an almost universal bias against business on the part of novelists and dramatists. Businessmen do not get a fair shake because novelists and dramatists—with rare exceptions—have an ideological axe to grind.

This is the impression that emerges from our casual contact with the world of popular entertainment, the world of television, films, and fiction. This impression is confirmed in an unpretentious little volume by Ben Stein entitled The View from Sunset Boulevard. Stein interviewed a number of Hollywood writers and producers of television shows in order to find out how they viewed the various aspects of American life. If a visitor from England were to spend a little time watching television, what image of America would he come away with? Stein deals with television’s treatment of crime, the police, government, the army, the family, and other aspects of American life, including business. How do the people in Hollywood regard business? “One of the clearest messages of television,” Stein writes, “is that businessmen are bad, evil people, and that big businessmen are the worst of all . . . the murderous, duplicitous, cynical businessman is about the only kind of businessman there is on TV adventure shows, just as the cunning, trickster businessman shares the stage with the pompous buffoon businessman in situation come-dies.” A well known producer, Stanley Kramer, sees business as “part of a very great power structure which wields enormous power over the people.” And beyond that, Kramer implies, there is an “arrangement” between business and organized crime: “the Mafia is part of the entire corporate entity now.”

The warped feelings of wealthy and talented Hollywood writers and producers did not spring into existence unaided; it is one of the calculated end results of an intense propaganda effort that has been hacking away at the roots of Western society since the middle of the last century—attacking its religious origin, its values, and what is perceived as the last bastion of the bourgeoisie, business. A scholarly work which meticulously researched this vast literature appeared in 1954, by Professor James Desmond Glover of the Harvard Business School, entitled The Attack on Big Business. Professor Glover writes: “In volumes upon volumes of testimony before Congressional committees, in popular novels, in learned treatises and textbooks, in poetry, in sermons, in opinions of Supreme Court justices, ‘big business’ and its works are seen as evil and attacked. The literature of criticism of ‘big business,’ and of the civilization it has done so much to bring into being, represents by now a perfectly staggering mass of material.”

The Anti-Capitalistic Mentality

What is the rationale for this widespread antagonism toward the business system, otherwise known as capitalism? I don’t profess to understand all the reasons for the anti-capitalistic mentality, but the root cause of the antipathy is surely the perception, the mistaken perception, that the relation between employer and employee is that of exploiter to victim. The employer may intend no harm, he may intend only good to those who work for him, but in the capitalistic mode of production Karl Marx contended the worker is denied the full fruits of his labor; a portion of every wage earner’s product is garnished by his boss. To simplify Marxist theory, we might say that John Smith who runs a machine in a shoe factory—punches the clock at eight o’clock in the morning and works till noon. During these four hours he produces six palm of shoes, which represent his wage for the day. John Smith returns to his bench and works four more hours in the afternoon, but the shoes he produces during these four hours are expropriated by his employer.

This is a summary statement of the surplus value theory, otherwise known as Marx’s exploitation theory. It is a central contention of Marxism that labor alone creates value, the value of a commodity being measured by the quantity of labor normally necessary to produce it. But if it is labor alone that creates value, the value created should belong exclusively to labor. It does not, however; the lion’s share is grabbed by the employer while the real producer is paid only a subsistence wage.

This theory overlooks the role of tools and machinery in production. The tool user in this generation is many times more productive than his counterpart of a few generations ago. Why is this? His naked labor power is no greater than that of people over the ages. The enhanced productivity of labor today is due to the tools and machinery at the disposal of every one of us—and those tools are the fruits of the labor of earlier generations. If today’s “worker” retained the full product of his individual effort, and only that, the poor fellow would starve.

A contemporary of Marx, the celebrated Austrian economist Eugen von Bohm-Bawerk, demolished the surplus value theory in a book entitled Capital and Interest, published in 1884, the year after Marx died. The demolition job has been repeated many times since the appearance of Bohm-Bawerk’s great book, and the consensus of opinion among independent economists is that the surplus value theory does not hold water. The exploitation theory has great propaganda value, however, and it is used unthinkingly by those who are acting out a grudge against business, which, in their distorted vision, keeps the poor locked in their poverty in order that others might be rich.

Ben Stein, in the book mentioned earlier, records a portion of his conversation with television writer Bob Weiskopf:

“Q. Why are people poor in America?

“A. Because I don’t think the system could function if everyone was well off.

“Q. What do you mean?

“A. I think you have to have poor people in a capitalist society.

“Q. Why?

“A. To exploit. The rich people can’t exploit each other. Consequently they always exploit the poor.”

It is not only Hollywood script writers who profess to believe that the rich get richer only by making the poor poorer. The coordinator of the National Council of Churches’ Anti-Poverty Task Force asserts that, “Poverty would not continue to exist if those in power did not feel it was good for them.” A moment’s reflection will reveal this insulting accusation for the silly sentiment it is. We live in a commercial and manufacturing society. Our economy is featured by mass production, not only in factories but also in agriculture. The products of mass production flood our stores and supermarkets and showrooms, to be bought by the mass of consumers. Mass production cannot continue unless there is mass consumption; and the masses of people cannot consume the output of our mass production factories and fields unless they possess pur chasing power—the money to buy the goods of their choice. To suggest that those who have goods and services to sell have some sinister interest in keeping their potential customers too poor to buy is sheer nonsense! If the president of General Motors wants to sell you a Cadillac or a Buick or a Chevrolet—which he does—then he wants you to be rich enough to buy. in the free economy, everyone has a stake in the economic well-being of every other person.

It is in the immediate interest of business and businessmen that the masses of people be well off; people who are poor are poor customers, and business cannot survive without customers. Business has no stake in poverty; but there is a class of people who do need the poor, who do have an interest in keeping them poor. Permit me, in a slight digression, to offer you a few words on this point by the celebrated economist Thomas Sowell: “To be blunt, the poor are a gold mine. By the time they are studied, advised, experimented with and administered, the poor have helped many a middle class liberal to achieve affluence with government money. The total amount of money the government spends on its ‘anti-poverty’ efforts is three times what would be required to lift every man, woman, and child in America above the poverty line by simply sending money to the poor.”

Back now to the widespread animus against business, stemming from the false idea that labor is the sole source of value but is not allowed to keep what it produces. In the distorted vision of Karl Marx, business, industry, and trade—as these economic activities are organized in the free world—re intrinsically evil, and the businessman is a parasite and predator. Similar notions are entertained by many a man in the street who has never read a line of Marx, as well as by intellectuals who regard themselves as anti-Communists. Given this climate of opinion, the term “ethical businessman” is a contradiction in terms; it is the figure of speech known to English teachers as an oxymoron—a figure which juxtaposes incongruous terms like “virtuous thief” or “honest liar.”

Now, if businessmen are involved in activities which are intrinsically crooked, evil by their very nature, then it is pointless to discuss the ethical situations of business or the moral dilemmas businessmen sometimes face. It would be like instructing a thief on how to rob banks honestly! So I propose to spend a few minutes trying to understand the nature of the economic activities that engage businessmen, while touching upon some of the values that are implicated in the production of goods and services.

All Are Sinners

You have a right to know the direction from which I am coming at you, to know my bias. I have examined the catalogue of sins of which businessmen are allegedly guilty, and Lo! they are the very same sins exhibited by people in every other walk of life. We all break the Commandments now and then, every one of us. Businessmen have no monopoly on sin. My mind goes back to a conversation I had several years ago with a professor of economics with years of teaching behind him, who had also served for many years as the academic dean of a prestigious Midwestern college. He said to me, “You know, Ed, a thoroughly dishonest man can last a lot longer in teaching or preaching than as a used car salesman.” There may be some hyperbole here, but my friend has a point. There are good and bad in all walks of life, and there are very few saints anywhere; but in the eyes of the law all are equal. The law should mete out justice upon the guilty party with impartiality. It should punish those who harass, steal, defraud, breach a contract, assault, or murder. This is the rule of law in action.

There is no justification for the assumption that all businessmen are evil people who must therefore be regulated, i.e., adjudged guilty until proven innocent. There is no more reason for regulating businessmen than for regulating clergymen or teachers!

Who Decides?

The free market economic system produces goods and services in abundance, and it rewards every participant according to his individual contribution—as his peers judge that contribution. “To the producer belongs the fruits of his toil,” is an ancient bit of wisdom, as true now as when first uttered. The relation between an individual’s effort and the eventual reward of his exertions is fairly clear in a simple situation like subsistence farming. You work by yourself, preparing the ground in the spring, seeding and tilling it, watering the furrows with your sweat during the heat of summer, reaping in the fall. The abundance of your harvest is directly traceable to your skills and the amount of work you put forth. The greater your effort the more ample your harvest—other things being equal. The harvest is your wage, and your wage in this instance is pretty much determined by your own skill and your own exertions; the more you put in the more you will take out. What you take out is your wage, the economic equivalent of your contribution.

How is your wage determined in a complex division of labor society such as ours? Justice still demands that every participant in the economy be rewarded according to his contribution to the productive process. But how shall we identify each individual’s contribution in order to reward him commensurately? Economists from Adam Smith to Ludwig von Mises to F.A. Hayek and Milton Friedman have worked this question over and come up with an answer that is completely democratic and economically efficient, while encouraging every person in the full exercise of his lawful liberties. The answer provided by the economist is: Let the market decide what each person’s contribution is worth and reward him accordingly. “The market” describes the process of social cooperation under the division of labor where free people specialize in a complex variety of tasks in anticipation of a consumer demand for the goods and services they produce—followed by multiple voluntary exchanges of these products in which persons give over something they value for whatever they value more. This market process will reward people unequally, but it will reward them equitably, compensating each person in a measure equal to his peers’ evaluation of his services.

The eminent economist Frank H. Knight, founder of the Chicago School, put the matter in these words: “It is a proposition of elementary economics that ideal market competition will force entrepreneurs to pay every productive agent employed what his cooperation adds to the total, the difference between what it can be with him and what it would be without him. This is his own product in the only meaning the word can have where persons or their resources act jointly.” In short, each person will get his fair share, defined as what others will voluntarily offer for his goods and services—provided there is general freedom.

Each one of us is judged by his peers; our offerings of goods and services are evaluated by consumers who give us what they think our offerings are worth to them, and not a penny more. This is a democratic judgment on the value of the products of our labor—one dollar, one vote—and it is made by consumers who are, as everyone knows, ignorant, venal, superstitious, neurotic, biased, and stupid. In other words, people just like us—because every one of us is a consumer! When it is a question of the wage we earn we are dependent on consumers, who couldn’t care less that we are upright men of sterling character; their sole concern is: Do we have a product or service they want? If we do, they reward us handsomely. If we don’t, it matters not that we have labored long and painfully over our brainchild; if the customers don’t want it, we’re stuck with it. This is consumer sovereignty.

Consumers run the free economy; producers cater to their demands. It’s their show. What kind of a show do they put on? Not always a good one, I’m sorry to say. But I’ll say one thing for consumer sovereignty: it sure beats the alternative.

Freedom to Excel and Fail

Freedom is a costly thing, and we cannot keep it unless we are willing to pay the price. It is required of each one of us that we firmly adhere to the processes of freedom, even when we can barely stand some of the products of freedom—the products being what people do when given their “druthers.” The freer the society the more things people will do that we might find distasteful; this is one of the consequences of freedom, and we have to school ourselves to accept it. This we have learned to do in two important areas—freedom of the press and freedom of worship. We must learn to be equally tolerant in the areas of business, industry, and trade.

How fares the written word when the masses are relatively literate and free to pick their own reading material, where they themselves select the men and women who will do their writing for them? The highest paid writers may be those whose subliterary efforts jam the boob tube, some of whose opinions I quoted earlier. The magazines and newspapers of largest circulation may be those which cater to our prurient interests. Best-selling novels are forgotten by next year. But as much as anyone might deplore the decline of reading and the low estate of publishing—now that the press is free—no one with any sense would wish to add a Department of Censorship to the already overgrown government bureaucracy. To put the press under a Ministry of Information and Propaganda would be disastrous. Freedom of the press may give every idiocy a voice; authors may not reap a monetary reward commensurate with their literary talents; so be it, we say; it’s the price we pay willingly for freedom of the press. Freedom merely allows the budding genius the elbow room he needs to live, and breathe, and write. And books of solid scholarly competence still appear regularly for the small audience which needs the nourishment only the word can provide. My mind goes back to an observation of Ralph Waldo Emerson: “There are not in the world at any one time more than a dozen persons who read and understand Plato:—never enough to pay for an edition of his works; yet to every generation these [works] come duly down, for the sake of those few persons . . . .”

Take the matter of religious liberty, the separation of church and state. In a free society people are not punished for belonging to the “wrong” church. They belong to the church of their own choice, or they belong to no church, as the case might be. In any event, the law pays no attention, so long as no injury is done to person or property. What happens when people are free in the area of religion? First of all, they mangle the phrase “separation of church and state” into my least favorite American shibboleth! Even people who should know better distort and misuse the phrase.

Then there are the so-called “electronic churches,” the spellbinders who appear in television; there are the “hot gospellers” who dominate radio every Sunday morning; there are the cults in which people give over their souls to some figure of dubious charismatic allure; there is the new appeal of mystical imports from the exotic Orient; the occult flourishes, along with magic and superstition. And the mainline churches, in many instances, have subordinated theology to dubious economic and political theory. Church bodies support and help finance revolutionary and guerrilla activities. But is anyone campaigning to establish a government Department of Religion? Not to my knowledge. However much we may dislike certain manifestations of religion when belief is free, we shrug our shoulders and tolerate what we dislike as the price of religious liberty.

Some of these same considerations apply to the realm of business, industry, and trade, where, as H.L. Mencken once wryly observed: “Nobody ever went broke by underestimating the taste of the American public.” This is all too obvious in what is called the entertainment industry. Here is a hyperkinetic young man, lacking in musical sense, who makes eight million dollars a year by howling and gyrating in public places. Here’s another young man, gifted with a high musical I.Q. and years of study behind him. A handful of people appreciate his organ virtuosity and his sensitive interpretation of Bach. He earns a living as a bank teller, directs a choir, and gives an occasional free organ recital. Young people pay millions of dollars to hear the Rolling Stones, while the Boston Symphony has to pass the hat in order to survive. Is this fair? No. Is it a matter for political solution? That would be an even greater travesty of justice.

The Market Economy

Human beings everywhere have engaged in trade and barter. There is some specialization and a division of labor even among primitive people, with a consequent exchange of the fruits of specialization. The voluntary exchange of goods and services is the market in operation, and the market is everywhere. But the market does not spontaneously or automatically transform itself into the market economy; the market economy emerges only when the moral, political, and legal conditions are right. This occurred under the Whig philosophy of men like Edmund Burke and Adam Smith, Thomas Jefferson and James Madison. These men drew up a frame of government whose main purpose was to secure each person in his life, liberty, and property. This political idea of limited, constitutional government is grounded on the religious conviction that we are God’s creatures, possessing immortal souls. The conviction that persons are sacred is politically translated into our Creator- endowed rights to “life, liberty, and the pursuit of happiness.” Adam Smith referred to his “liberal plan of liberty, equality and justice,” with the free market as the economic counterpart to political liberty. The rule of law replaces the arbitrary will of rulers and personal freedom expands. It is significant that The Wealth of Nations appeared in the same year as the Declaration of Independence.

The discipline of economics as a separate subject matter was almost non-existent prior to Adam Smith. Virtually starting from scratch, Smith created nearly the whole edifice of economics. Adam Smith presupposed the legal framework of the Whig jurists, where the law would eliminate force from the marketplace, punish fraud, and enforce contracts. He also presupposed a high level of probity in the general population. Given these conditions, the market is self-starting and self-regulating; the buying habits of consumers guide producers, determining how the entrepreneur will decide to combine scarce resources for the maximum satisfaction of consumer needs. There will be a harmony in these diverse activities of millions of participants as if everything were directed by “an invisible hand.” The market economy—dubbed “capitalism” by its enemies about a century after Smith—contained the promise of prosperity for the multitudes. These same masses composed a self-governing people. Political liberty expanded and people had lots of elbow room to pick and choose and plan their own lives.

The Declaration and the Constitution created the political frame for a people who aspired to the ideal of”liberty and justice for all.” Political liberty assured freedom in economic transactions between employer and employee, seller and buyer. The work ethic was enshrined in America and wages doubled, redoubled, and doubled again during the nineteenth century—an eightfold increase in real wages. For the first time in history the masses glimpsed the possibility of pulling themselves out of poverty and creating new opportunities for their children. America’s schools and churches sought to shore up the traditional value structure of our culture and to orient the newly enlarged popular freedom toward virtue. Their success, needless to say, was only partial.

Was there ugliness in American life? Of course there was. Freedom was misused; the scramble for wealth was sometimes pretty crass. The newly rich were vulgar; plunderers bought and sold politicians, and fortunes were scooped out of the public treasury—all in violation of Whig theory and free market economics. But you cannot blame capitalism for the miscreants who refuse to abide by its rules.

Despite the gray and black areas in our history, there was still open opportunity on these shores, in comparison to what was available in other parts of the globe. Thirty-three million people told us so by coming here as immigrants during the half century before World War I. They came because life here—although far from perfect—was far better for them than life elsewhere.

The business of America is not business. It never was. The business of America is individual liberty, with the law enforcing an even-handed justice among equal persons. When the law provides a free field and no favor—which was the original implication of laissez faire—the economic order is the free market.

The market economy does not carry any implication that business may act irresponsibly with impunity. If, for example, industrial wastes are disposed of in such a way that persons are injured or property damaged, the law should punish those responsible and offer redress to the injured party. If a seller misrepresents a product he is guilty of fraud and the buyer’s injury should be redressed. If a businessman solicits and obtains a subsidy from government, or if government gives him monopolistic advantages over his competition enabling him to exact a higher price from his customers, he has forfeited his status as a businessman. A businessman as such has no power over anyone, his only leverage being the quality of his goods and the persuasiveness of his advertising. The businessman has the same rights and the same responsibilities as every other member of society, no more and no less.

Lord Acton’s aphorism about power has been over-quoted, but it is still terribly true. Power must be curbed if we will that people shall be free, and an independent economic order does put fetters on governmental power. People who control their own livelihood have little to fear from rulers; but political control of the economic life of a nation is totalitarian rule. The market economy curbs power in another way as well; it channels the activities of energetic, ambitious, and competitive personalities into the production of goods and services and away from politics. The rich in a free economy get that way because consumers appreciate the goods and services they offer; and if these few wish their descendants to enjoy this wealth the bulk of it must be invested in industries producing goods for the masses.

The End of Liberty

Let us give credit where credit is due; business, industry, and trade have made us into a prosperous nation. But our wealth has not made us a happy nation, or a contented one. We have proved once again—as if any further proof were needed—that prosperity and worldly success are, at best, a means to ends beyond themselves. Refine and improve a means as you will, it still remains only a means, needing a worthy end if it is to be meaningful. There is a discipline that deals with ends and goals, with the purposes that make life significant; it is called religion- though not everything bearing that label qualifies. But genuine Christianity is at a low ebb in the modern world; we have lost that vital contact with God and the moral law which energized our ancestors and made life for them an adventure in destiny. The decadence of Christianity is the root cause of the modern malaise; Plato argued two millennia ago that disorder in society is a reflection of disorder in the soul, that is, in our defective thinking and misguided loyalties. The work of renewal must begin here, with individual persons, and then go on to a restoration of the theological foundation necessary to a free society.

This is not the task of business, industry, and trade; the economic order has a more humble role to play. Business and the free economy beget a prosperous society which provides people the leisure they need to cultivate those goods which mark a high civilization: religion and worship, education and science, arts and crafts, conversation and play. These are the areas where people exercise their freedom most creatively, where they discover the goals proper to human life. Responsible freedom in the economic realm has the important role of supplying the indispensable means for these ends.

Read more from the Edmund Opitz Archive.

Business and Ethics (December 1983)

Mr. X manufactures gizmos in a plant which uses the varied skills of a thousand employees. These people might cheerfully acknowledge that they’d rather be sailing, or fishing, or whatever; but when it comes to supporting themselves they have chosen to work with Mr. X in preference to any known alternative. They are free to leave whenever a better opportunity offers, and many have indeed “graduated” into other forms of employment, to be replaced by people who have chosen to work with Mr. X as the best opportunity available to them. A lot of people find gizmos useful, and they are offered for sale at a price consumers can afford. So people buy, and Mr. X prospers. The relations between Mr. X and his employees are amicable; they are completely non-coercive and all arrangements are voluntary. Likewise all arrangements with customers. Mr. X is wholly dependent on willing customers, over whom he has no leverage except the appeal of his product, plus the persuasiveness of his advertising. Mr. X has a profitable business, and his customers profit too; owning a gizmo makes life more pleasant. There is an overall upgrading of the level of human satisfactions on the part of everyone involved: Mr. X, his employees, and the users of his product. By any definition of the term, Mr. X is performing a public service; everybody profits, nobody is coerced.

Mr. Y manufactures thingamajigs. There was once a brisk market for this gadget, but times have changed and the item is no longer fashionable. Sales decline steeply and the firm slumps into the red. Mr. Y’s firm is on the verge of failure. Now, no one likes to go down the drain, although in the profit and loss system of the free economy—usually called “capitalism”—some firms are bound to fail; customers simply stop buying, an act of free choice on their part, consumer sovereignty in action.

Mr. Y, although he has lost most of his former customers, has friends in Washington; so he lobbies for a handout. The politicians and bureaucrats respond by bailing him out with taxpayers’ money. What does this mean to the average citizen? People who had refused to voluntarily pay their hard-earned dollars for one of Mr. Y’s thingamajigs now have a portion of their earnings confiscated by the taxing authority in order to keep Mr. Y and his company afloat. Doesn’t seem right, does it?

As long as Messrs. X and Y operated in the private, voluntary sector of society they had no power to coerce anyone. Neither man could force anyone to work for him or buy his products. The rules of the marketplace forbid this. Under these rules Mr. Y faced failure, so he entered into an arrangement with government, and now the law forces every taxpayer to spend a fraction of his time working for Y, and another fraction to subsidize the sale of Y’s product.

There are many real-life situations that parallel the case of Mr. Y. Most recently in the news, and therefore fresh in our memories, is the Chrysler caper. The firm is a large one, and its products have merit. But for a complex set of reasons the American public turned to other makes of automobiles. The free market—which is the playing field where the rules of business hold sway—began telling Chrysler to go into some other line of business, or fail.

This adverse business judgment on its products turned Chrysler toward politics. The several hundred thousands of people who make up Chrysler—management, labor, and stockholders—refused to accept the verdict of consumers, who chose to buy other makes of cars. Instead, they turned to Washington and got help. They got a political remedy for economic failure, as have countless others.

Unbusinesslike Conduct

A business or industry endures only so long as it pleases customers. When a business ceases to please customers it ceases to exist as a business. At this stage of the game it may succeed in pleasing politicians, who have the power to force taxpayers to support the new operation. This is a different ball game. A failed business propped up by a government handout is no longer a business; it’s a hybrid which deserves criticism as an unethical raid on the public treasury. It doesn’t matter much what you label this politicized industry, so long as you realize that it operates in defiance of the rules which define a business or industry in a free society.

A businessman per se operates within the framework of rules laid down by “the market”; when he operates outside this framework, and by a different set of rules, he is something other than a businessman. “The market” describes the process of social cooperation under the division of labor, where free and virtuous people specialize in a complex variety of tasks in anticipation of a consumer demand for the goods and services they produce. This is stage one of the market, and it is followed by stage two—multiple voluntary exchanges of these goods and services where people give over something they value for whatever it is they value more. The end they have in view is maximum satisfaction of creaturely needs for food, clothing, shelter, recreation, or whatever.

Most of those involved in business, industry, and trade operate within the framework laid down by “the market.” They have a genuine desire to serve consumers; they take a craftsman’s pride in the honest workmanship embodied in quality products which make the life of all of us safer, healthier, or more pleasant. And they feel a moral obligation to give value for value received; they have adopted and try to live up to a code of “business ethics,” a praiseworthy effort, at which most businessmen succeed far better than many in other walks of life.

I was discussing this ethical point with a friend who had taught economics to a generation of students at a fine Midwestern college, where he also served for some years as Dean. We were talking about our two professions—teaching and preaching—some of whose seamier sides we had experienced from the inside. “You know, Ed,” he said to me, “a thoroughly dishonest man can last longer as a professor or a preacher than as a used car salesman!” I had to admit that there was more than a grain of truth in Ben’s cynical observation; and further, that these same intellectuals have a tendency to look down their noses at business, industry, and trade, as if the people involved in commercial activity are a lesser breed—a mean and mistaken opinion which I reject completely.

The Customer Is Boss

In a genuinely free society, a laissez faire society in the early sense of this much-abused phrase, the businessman is a mandatory of consumers; the customer is boss. Consumer sovereignty! Is this the way the businessman likes it? Of course not. Our businessman would like to think of himself as the man in charge, hands on the reins, running a tight ship. But who is he kidding? He doesn’t have even the power to set wages in his own factory, or fix the prices he’ll charge for his products! His competition, his employees, and his customers make those decisions for him. If he tries to lower wages he will lose his best workers to his competition who pay the going rate or more. If he tries to raise prices people buy elsewhere. He’s stymied, and that’s why he’s tempted on occasion to persuade some politician to bend the rules in his favor, just enough to give him a little “fair advantage.” But when a businessman yields to this temptation he forfeits his standing as a businessman and becomes something else—a branch of the government bureaucracy with a status similar to the postal service. Wealth has a universal appeal, but wealth production is a dull affair. There’s nothing about work to make the adrenalin flow or the heart to leap; there’s no poetry, dash, or glamour about commercial transactions—which is why the literary tribe turns its back on the realm of trade.

John Ruskin, for example, admired the buccaneer and freebooter type, calling him the Baron of the Crags—the knight with his castle atop a hill. The modern man of wealth Ruskin referred to contemptuously as the Baron of the Bags—moneybags, that is. The businessman tends to accept this caricature of himself and his function, vainly trying to conceal it under a false and somewhat ridiculous image. If only business radiated some of the magic that invests royalty, or reflected some of the panache of the military! So dreams the man of business, who then finds wish fulfillment, of sorts, in assuming titles such as The Spaghetti King, The Chewing Gum Czar, The Fast Food Tycoon, and so on. Captains of Industry meet with their Lieutenants at the Admirals’ Club to work out the strategy and tactics of the next “trade war.” Inside the plant or in the boardroom our tiger is referred to with affectionate dread as The Boss, or The Old Man.

The Function of the Businessman Is to Serve the Customer

There is an inversion of values here, as well as a gross misunderstanding of the role of the businessman in society, a misunderstanding on the part of the businessman himself, which is shared by friends and enemies alike. Kings and dukes in the precapitalistic ages did not produce or earn the wealth they enjoyed; they seized the wealth produced by others. They lived by “The good old rule, The simple plan, That they should take who have the power, And they should keep who can.”

Royalty and the nobility exercised vital functions at the time, but work was not one of them; and the same might be said of the military. As necessary as a military establishment is for the defense of the nation, is it not obvious that military action results in the consumption and destruction of wealth? The businessman appeared on the scene as a different breed altogether; the businessman earns whatever wealth he obtains, and the method he employs increases the well-being of others. He is on an ethical par, to say the very least, with those who rule and those who fight!

“I take what I want,” said Frederick the Great. “I can always get some pedant to justify my actions.” The thief also takes what he wants, and so does the pirate and the racketeer. The king, the crook, the buccaneer and the gangster pursue their naked self-interest directly, operating in terms of a ruthless egoistic hedonism. Bemused by these glamorous figures, apologists for capitalism have explained the motivation of the businessman in terms of the same egoistic hedonism. With friends like this the businessman doesn’t need enemies! It is a truism to say that everyone tries to improve his circumstances, to upgrade his level of well-being. The question is How? Pursuing one’s self-interest directly, at the expense of other people, is the way of the powerful and the crooked. Serving one’s self indirectly by advancing the well-being of other people is the operational principle of the free-market economy.

To illustrate: the successful buggy manufacturer with a deep personal commitment to this means of transport and pride in his product finds business falling off. Consumer taste is gravitating toward the new-fangled horseless carriage. Our entrepreneur, if he wants to stay in business, must swallow his pride and put his time, talents, and capital at the service of those who want automobiles. The ruler of this tiny industrial empire, as he fancies himself, surrenders, and agrees to put himself at the disposal of consumers. Everyone’s welfare is upgraded in the only way possible for this to occur.

The Good Society

The latter part of the 18th century marks a watershed in human history. Walter Lippmann, writing about the capitalistic era which opened two hundred years ago, utters an incandescent truth about this startlingly novel way of conducting our economic affairs: “For the first time in human history men had come upon a way of producing wealth in which the good fortune of others multiplied their own.” Read that one again, for it is the basic axiom of the free market economy, so fundamental that it is overlooked by friend and foe alike. Lippmann continues: “For the first time men could conceive a social order in which the ancient moral aspiration for liberty, equality, and fraternity was consistent with the abolition of poverty and the increase of wealth” (The Good Society, pp. 193–94).

This was the social order originally known as Classical Liberalism, built around the conviction that there is an inviolable essence in each person, which it is the function of the Law to protect. When the Law is limited to the administration of justice by securing the life, liberty and property of all persons alike, then people are free to peacefully pursue their personal goals, each respecting the right of every other to do the same. This is the good society operating under the moral law, the only kind of society in which a complex division-of-labor economy can flourish.

There is a moral law whose mandates are binding on every one of us. The moral law within each person—his individual conscience—instructs us to “injure no man.” It obligates us to work for justice and fair play in human affairs; to speak the truth in charity, keep our word and fulfill our contracts. This ancient code forbids murder, assault, theft, and covetousness. These are the most important items in any ethical code, so universal as to seem part of human nature itself, and so compelling that most of us acknowledge them as binding even while we fail to obey them.

There is not a separate ethic or set of moral principles trimmed or adapted to this group or that in society, even though our common speech seems to suggest this. It is improper, strictly speaking, to talk about “legal ethics,” “medical ethics,” “business ethics,” or the like. Lawyers, doctors, businessmen are judged by the same moral law that applies to all the rest of us. Free-market rules of business fall well within the moral law; and individual businessmen, large as well as small—so long as they stick to their last—measure up at least as well as members of other trades and professions. Only when a government grant of privilege is obtained is a moral principle violated. But when this happens the violator is no longer a businessman.

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Ethics and Business

The two major terms in my title are subject to extravagant misunderstanding and occasional abuse. Some of this is natural, due to limited knowledge; much of it is willful and ideological. It is appropriate, therefore, that I try to elucidate at the very beginning how the term “religion” is to be used in this paper. The meanings I attach to “capitalism” will be clarified as we proceed.

It is my understanding that religion, at bottom, is not one sector of human experience separate from other portions of human experience; it is more like a common core. A college or university, for academic purposes, may have a department of religion alongside departments of chemistry, history, mathematics, or whatever, and this fact may mislead. In actual living, and in its deepest sense, your religion is not one subject among other subjects; your religion is the fundamental way you approach, understand, and evaluate all subjects. It consists of your first principles, the truths you regard as self-evident, the basic axioms you take for granted, and through which you view everything else. Your religion colors your outlook upon the universe, affecting the way you look upon life, your relation to other people, your treatment of things.

Religion is many faceted; it has its history, its doctrines, its exercises, its rituals, its ecclesiastical structures, and so on. But the central core of every religion is its vision of the cosmos, its understanding of the nature of ultimate reality. For the purpose of this paper I shall put aside several important elements of religion and use the term as equivalent to world-view, or Weltanschauung. Everyone entertains some image of the entire scheme of things, a mental picture of what the totality—in the final analysis—is like. Some have pictured the universe as an immense and intricate piece of clockwork, a mechanism; others regard it as a gigantic organism, or as the great ocean of being, or as a feature less Absolute. Everyone operates in terms of some image of the nature-of-things, for to be human is to be a metaphysician. My own world-view is that of Christian theism.

A Creative Intelligence

Those who entertain the religious—or theistic—world-view conduct their lives on the premise that a Creative Intelligence is working out its mighty purposes through nature, in history, and above all, by means of persons. The Divine Intelligence is creative, as witness the continuing emergence of novelty on the world scene; the Divine Creativity is intelligent, because wherever we look we find a deft and ingenious adaptation of means to ends. There is order, beauty, elegance, economy and balance from one end of this universe to the other. Human beings may come to a sense of kinship with this Creative Intelligence by aligning themselves with the movement and configuration of its thrust.

At the same time we may become keenly aware that vast stretches of this universe appear to be indifferent to us. I refer to the natural order, the realm of nature subject to the laws of physics, chemistry, and the other sciences. Cause and effect operate inexorably in nature, independent of our fears and wishes. A stone falls to earth in response to the tug of gravity, and we have no choice but to adjust our actions to this and other physical laws. Natural forces affect our actions, and natural disasters cause human injury and sometimes death. The natural world piques our curiosity, and we seek to understand it so as to cope with it more successfully. Nature will never surrender unconditionally to man, but nature’s stubborn otherness provides a necessary condition for the exercise of human freedom.

The nature we confront is a nonhuman Other, and this Other is neutral, so far as we as individuals are concerned; the rain falls on the just and the unjust alike. But if this were not so—if the Other were responsive to the conflicting and the constantly changing whims of billions of human beings, submissive to our rituals and incantations—if the Other were not largely neutral and/or indifferent it would be chaotic.

Actually, the Other is an order, a vast and comprehensible order consisting in discoverable patterns and recurrences. The neutral orderliness of nature provides a basis for understanding and explanation; it affords a significant measure of predictability, allowing us to plan our lives and achieve our goals. A neutral order provides the necessary condition for exercise of the freedoms and powers proper to human nature. And as we come into a working relationship with the Other a sense of kinship begins to develop.

Let me illustrate: A man confronts a portion of the Other in the form of a body of water; a pond or a stream. He complains because the water is cold, wet, and indifferent to him; furthermore, the water is an obstruction, impeding him as he wades through it. But this same water, to an expert swimmer, is the necessary vehicle for his freedom as a swimmer. The swimmer does not complain about the water’s friction, even though it does impede his progress through it and slows his speed. For him, the friction of the water is the same thing as its buoyancy, and without the buoyancy swimming would be impossible. The exhilaration our athlete derives from a vigorous swim begets his belief in the friendliness of at least this little segment of the cosmos—which now appears to have been constructed just for his delight. The relation is symbiotic. There is resonance between ourselves and the Other.

The realm of nature out there may sometimes appear arbitrary, indifferent to human values, or even antagonistic. But shirt perspective even slightly and we realize that if nature were not neutral—that is, if nature could be bent to the human will we would not be free beings. If nature were not largely recalcitrant and unyielding, we free beings would have no incentive to cooperate intelligently with it, making use of its forces to advance our purposes—simultaneously strengthening our own powers and refining our skills as we do so.

Human Capacity for Choice

It is obvious that we human beings do not merely react mechanically to external stimuli—we are capable of a creative response to our environment. B. F. Skinner and his behaviorists declare that human beings are capable of little more than a Pavlovian reaction to a stimulus; they speak for themselves. They don’t speak for us, for at the very core of our being we bear the imprint of the Creative Intelligence which is back of all things. We are gifted with free will, and it is this capacity for choice which makes us partakers of the primordial creativity.

Let me offer you some words of the great Russian religious philosopher, Nicholas Berdyaev: “God created man in his own image and likeness, i.e., made him a creator too, calling him to free spontaneous activity and not to formal obedience to His power. Free creativeness is the creature’s answer to the great call of its creator. Man’s creative work is the fulfillment of the Creator’s secret will.”

Human nature is threefold; we are implicated in nature, we are part of some society, and we are touched by the sacred. We human beings, with a portion of our being, are directly geared into nature. Drop us from a height and gravity operates on us just as it does on a sack of grain. The chemical processes going on inside our bodies differ little from the way those chemicals interact outside our bodies. We are largely within the same network of causal sequences which characterize nature.

We are natural beings, but that’s not all we are. We are also social beings, involved in history. Occurrences in nature are explained in terms of causes; actions in history and society are explained in terms of choices. Society is our natural habitat. Society is a spontaneous order—as F. A. Hayek has taught us—emerging out of human choices but not resulting from conscious human design.

Social order—comprising both the written and the unwritten law, together with custom, convention, habit and taste—social order may occasionally appear to stand athwart the individual to frustrate his immediate intentions. But everyone knows, on sober second thought, that our very survival as individuals depends on social cooperation under the division of labor; human beings are interdependent. Everyone, therefore, has a personal stake in the fashioning, the strengthening and the refining of the structures of a free society. The free society provides the optimum environment for every productive, peaceful person.

Participants in a Divine Order

There are natural elements in our make-up, and everyone carries a portion of some society in his very being. And there is a third thing. Analyze human nature and you discover elements in it which are not reducible to either nature or society, important as those facets of human nature are. We participate in an order of reality which is beyond nature and beyond society. Call this the sacred order or the divine order, if you wish; or call it God—the unconditioned Creative Intelligence in which all contingent existence, including our own, is grounded.

The word “supernatural” has been battered beyond use, and in any event, it is completely “natural” for the person to bear the marks of sacredness in his own being. This fact has important political implications. In the 18th century, this central sacredness in the person—as he is conceived within the theistic world-view—was politically translated. The sacred in persons found secular expression as the idea of inherent individual rights “endowed by the Creator,” the rights referred to in our Declaration of Independence.

Given the idea of individual rights, in virtue of what a person genuinely is in his true being, it is the task of political philosophy to fashion a legal structure designed to protect every person’s private domain, secure the rights of all persons equally, and maximize everyone’s opportunity to choose and pursue his personal goals. A uniquely religious political philosophy oriented toward these ends was called Whiggism in the 18th century, and Liberalism during much of the 19th. Whiggism and Liberalism endeavored to protect each person in his life, his liberty and his property. The free economy, or capitalism, is the natural counterpart to Whiggism; you get capitalism in the second place when you have Whiggism in the first place. Whiggism lays the necessary political ground work for the set of economic arrangements called capitalism.

The Capitalistic Order

As 19th-century Classical Liberalism turned into the diametrically opposed thing called liberalism today, the economic order became less and less free market as governmental regulations and controls progressively expanded over the economy. Capitalism—ideally—means simply private property, individual liberty, and the voluntary exchange of goods and services between freely contracting parties.

Capitalism is what happens in the realm of industry and trade when force and fraud are eliminated from that realm. It involves peaceful competition for the privilege of serving consumers better, with a reward in the form of profit going to anyone the consumers believe has served them well. Capitalism is the only productive economic order, and the only equitable one; it submits everyone’s offering of goods and services to the collective judgment of his peers and rewards him according to his contribution—as his peers assess it.

I firmly believe that a society of free people is impossible if economic actions are fettered and controlled by the government bureaucracy. The free market economy, or capitalism, is the only way free people can organize their bread and butter activities—business, industry and trade. This mode of economic activity—capitalism—enjoys a symbiotic relationship with the legal system and political structures called Whiggism in the 18th century. Whiggism and capitalism are the two sides of the same coin; you can’t have one without the other.

Whiggery goes back to the 17th century—although Lord Acton made a good point when he referred to St. Thomas Aquinas as the first Whig. The Puritan religious movement in

17th-century England spawned a political arm of Dissenters and Nonconformists in opposition to the court party, whose members were contemptuously called Whiggamores—a Scottish term for horse thieves. Whiggery bore its best fruit on these shores, in the Declaration of Independence, the Constitution, and The Federalist Papers.

Whiggery in America

Whiggery gave rise to political structures designed around the sovereign individual person, to secure his rights, protect his private domain and afford him maximum scope to pursue his personal goals. These legal and political structures—which are the earmark of a free society—represent the secular projection of a religious vision of man and the universe unique to western civilization.

The introduction of Christianity into the Classical World of two thousand years ago had important political consequences, for this religion taught that only a part of man is social, a portion of his being is God’s. That which is God’s is sharply marked off from that which is Cae sar’s. The realm which is Caesar’s becomes a mere province in the all-encompassing Kingdom which is God’s.

There are half-gods, false gods, and tribal deities—idols all. We worship the gods of power, wealth, fame or pleasure—or whatever else evokes our highest priorities. Some god you must have. Whatever thing you value so much that you would sacrifice all other values to it; whatever elicits your ultimate devotion; that which you invest your most at-dent emotions in—this is your god. The nation state in our time usurps a god-like role as the arbiter of men’s destiny. It is a chief characteristic of the 20th century that multitudes of men and women in the world-wide mass movements of our time—secular faiths like Communism, Fascism and Naziism—have consecrated first-rate loyalty and devotion to fifth-rate dictators.

Every human being is capable of first-rate loyalty and dedication, and logically we need to match this up with a first-rate object, the Object of ultimate concern—the one true God. Only the Supreme Being, God, merits the utmost devotion and consecration of which human beings are capable.

Religious Premises

If there is to be a society—in the sense of a culture—there must be a measure of agreement as to the relation between God and man, and as to the nature of man and his proper end. There must be some agreement as to what constitutes justice, honor and virtue. The source from which a society derives its understanding of these matters is its religion. In this sense, every society is cradled in some religion, Christian or otherwise. The culture of China is unthinkable without Confucianism; Indian society is the expression of Hinduism; and Islam is composed of followers of Mohammed. In like fashion, our western culture stems from the Judeo-Christian tradition; we are a branch of Christendom.

Our own institutions and way of life are intimately related to the basic dogmas of the Christian religion. From this faith we derive our notions of the meaning of life, the moral order, the dignity of persons, and the rights and responsibilities of individuals. Ours is a religious society, but it has its counterpart in a secular state. The Constitution forbids an official church, an act which permits religion to exercise its unique authority directly, unhampered by ecclesiasticism.

Capitalism Under Fire

The word “capitalism” itself has always been controversial, having been brought into use by Marxist writers for polemical purposes. Werner Sombart, a Marxist, claims to have been the first to use the term “capitalism” systematically in his analyses published around the turn of the century. The term still has pejorative connotations, as many people use it, including those who prepare ecclesiastical pronouncements.

The World Council of Churches was launched at a meeting of churchmen in Amsterdam in 1948. This ecumenical group appointed a commission on The Church and the Disorder of Society, chaired by one of my former teachers, John C. Bennett. The report of this commission kicked up a considerable stir because it recommended that “The Christian Churches should reject the ideologies of both laissez faire capitalism and communism . . .” When the press asked Dr. Bennett what he had in mind as the middle ground between communism and capitalism, he said it was British Trades Union socialism.

Precisely what did Dr. Bennett and his commission think they were rejecting when they turned their backs on capitalism? Well, they told us, by listing the four earmarks of the thing they dismissed. I quote from their report. (1) “Capitalism tends to subordinate what should be the primary task of any economy—the meeting of human needs—to the economic advantages of those who have most power over its institutions; (2) it tends to produce serious inequalities; (3) it has developed a practical form of materialism among Western nations in spite of their Christian backgrounds, for it has placed the greatest emphasis upon success in making money; (4) it has also kept the people of capitalist countries subject to a kind of fate which has taken the form of such social catastrophes as mass unemployment.”

Everyone who has had even a limited exposure to the economic thought of men like Mises, Hayek, Friedman or Hazlitt recognizes the flavor of schoolboy Marxism in these allegations. If there is a form of social organization which gives economic advantages to the powerful at the expense of the rest of us, makes money grubbing the highest good, and periodically throws masses of people out of work—then every person of good sense and good will would oppose that system.

But if you really want to dismantle the thing Dr. Bennett and his cohorts ignorantly label “capitalism,” there’s only one way to do it, and that is to labor on behalf of the free society on all three of its levels; the free market economy, the Whig political structures which sustain it, and the theistic Weltanschauung on which all the rest depends.

The Rule of Law

Whiggery insists on the Rule of Law—one law for all persons alike, because all are one in their essential humanness. Equality before the bar of justice means maximum liberty for all persons. In The Wealth of Nations, Adam Smith speaks of his “liberal system of liberty, equality and justice.” People are free to the extent that such ideals come to prevail in practice, and the only economic arrangement compatible with a free people is the market economy, or capitalism properly understood.

I should like to speak for a moment about the important distinction between principle and practice, or theory and history. Many good illustrations of this point are to be found in the history of the Church over the past nineteen centuries, where we find several instances of a wide discrepancy between Gospel Christianity and the practices of the Church in certain eras. The Church has occasionally sanctioned tyrannous political rule, it has lent its support to persecutions, inquisitions and crusades. It has forgotten its primary mission while pursuing secular ends like wealth and power.

In the economic realm, too, principle is sometimes obscured by malpractice. The late Wilhelm Roepke put it this way: “We must make a sharp distinction between the principle of a market economy as such . . . and the actual development which during the nineteenth and twentieth centuries has led to the historical form of market economy. One is a philosophical category, the other an historical individuality . . . a non-recurrent compound of economic, social, legal, political, moral and cultural elements . . .”

The theory of free market economics is one thing; the way some people used or misused such economic freedom as was available to them in 1870 or 1910 or 1960 is something else again. A listing of the misuse or abuse of any specific freedom cannot be made part of a case against that freedom, for a mere multiplication of instances does not constitute proof one way or another. The case for freedom of the press does not stand or fall, depending on any evidence you might muster that editors are idiots and reporters knaves.

It is absolutely certain that freedom will be misused, simply because we are human beings. The fact that people sometimes misuse their freedom is indeed bad, but to try to correct the misuse of freedom by the denial of freedom would be infinitely worse. If there were a Richter Scale to measure social dislocation, the misuse of freedom would be one or two; the denial of freedom would be seven or eight—disaster.

Take this matter of academic freedom—a principle nobly exemplified by many educational institutions. Academic freedom does not justify the expectation that you will have Einsteins in the physics department, Nobel prize winners in chemistry, or a Whitehead in philosophy. Academic freedom could be justified on its own terms even if it could be demonstrated that the majority of professors had mail order degrees, turned up tipsy in class, and never cracked a book. Given these conditions on a campus there would be good grounds for a faculty house-cleaning; but a catalogue of these bad conditions does not add up to the first step in the argument against the principle of academic freedom.

Academic freedom is a sound principle even if many teachers are incompetent and others betray their profession. We defend freedom of speech and freedom of the press even though we are dismayed by the inferior quality of much of the spoken and written word. Freedom of wor ship is a good thing and we stand for separation of church and state even though some of the results are not to our liking. And by the same token we believe in freedom of economic enterprise—even though consumer demands and producer responses to them fall short of the Good, the True, and the Beautiful. As do the efforts of some contemporary philosophers, I dare say.

Economic Freedom

Economic freedom is to be cherished for itself, just as we cherish every one of our liberties. But economic freedom is doubly important because it sustains all the rest; economic freedom is the means to every one of our other ends. Economic freedom represents our livelihood, and whoever controls our livelihood has acquired critical leverage over every other aspect of our lives as well.

We stress private property as an absolutely essential ingredient of a society of free people, an ancient bit of wisdom which Alexander Hamilton referred to twice in The Federalist. In the 79th Paper Hamilton wrote: “In the general course of human nature, a power over a man’s subsistence amounts to a power over his will.” Control the economy and you control people. So it is not simply for the sake of economic freedom and the prosperity it creates that we argue that business, industry and trade should come within the Rule of Law and be freed from governmental dictates, and bureaucratic regulations.

Incidentally, the free economy does not go unregulated—operating within the Rule of Law, the economy is regulated by the buying habits of consumers. We defend economic freedom—voluntary exchanges of goods and services between freely contracting parties—because every one of our more important freedoms depends critically on private property and free exchange.

It is my contention that a society of free people has a free economic order as an essential element of it. John Maynard Keynes, in backhanded fashion, lends support to my contention by declaring that his theory of economic planning adapts nicely to a totalitarian political order. In a Foreword to the 1936 German translation of his General Theory, Keynes had this to say: “The theory of aggregate production, which is the point of the following book, nevertheless can be much easier adapted to the conditions of a totalitarian state than . . . under conditions of free production and a large degree of laissez-faire.”

Axioms of a Free Society

Capitalism—the free economy—appeared on the political foundation laid down during the eighteenth century by Whiggism in a period when the cultural climate of the West was at least vestigially Christian. The intellectual soil of Europe still bore the marks of centuries of tilling by the teachings of the Church. Theism had yielded to Deism in the eighteenth century but Deism was not secularism, and Deism did lay great stress on the three basic axioms of a free society: (1) each person is endowed with certain rights; (2) each person is gifted with free will; and (3) there is a moral law binding on all persons alike.

The eighteenth century’s faith in reason really constitutes a fourth axiom; this was the belief that the universe is rationally structured, and so, by taking thought, unaided by revelation, we could convincingly prove that human beings possess inherent rights, free will, and a conscience which attaches them to the moral law. These four items constitute the heart of the religious Weltanschauung. If your image of the cosmos has three ingredients—reason, rights, free will and the moral law—you have the proper religious foundation for the free society, of which the economic expression is capitalism.

The nineteenth century brought about a complete change in world-view, from Deism to Materialism. The latter finds its explicit and most familiar exposition in the Dialectical Materialism of Marx. The world-view of Marxism has no genuine place for reason, free will, the moral law, or the sacredness of persons. The same is true of every other variety of Materialism. Materialism sometimes goes by other labels, such as Naturalism, or Secularism, or Positivism, or Humanism.

Whatever the name, the thing here discussed is the theory which maintains that reality is reducible, ultimately, to mechanical arrangements of material particles. This is the non-theistic Weltanschauung, logically denying everything the theistic Weltanschauung affirms: inherent rights, reason, free will, and the moral law. Some Materialists may assert one or more of these religious axioms, but none of these axioms can logically be grounded in a universe consisting ultimately of nothing more than material particles, electrical charges, or whatever.

We hear much talk these days about “rights,” but to call something a “right” does not make it a right. Privileges, granted or withheld at the discretion of the state, may be called “rights,” but this notion is worlds apart from the idea of individual sovereignty in virtue of a sacredness in the very being of each person.

Free Will and Morality

Free will is incompatible with philosophical Materialism. If man is wholly natural, and if Nature is all-there-is, and if Nature is the realm where cause and effect operate inexorably, then men and women are as much caught up in causal sequences as water, stones, gases, and everything else. It follows that free will is a delusion, determinism a fact. “Man is unconditionally subject to the natural conditions of his environment,” a leading thinker tells us. Man does not act; like everything else in nature he is acted upon; he merely reacts.

A mechanistic universe has no moral dimension; there is no right and wrong per se. But people can’t avoid making moral decisions; human beings are habituated to thinking in moral terms, or perhaps the human mind is so constructed that it cannot function outside the moral categories. Those who assert that the universe lacks a moral dimension, frequently argue that the social system determines what is right and what is wrong—which is to subordinate ethics to politics.

Again, one hears it said that each person decides for himself what is right and wrong for him. The inference is that the private will of each person is his only “authority”—there being no external norms or standards universally binding, to which the will and actions of every person should conform. Every man rolls his own and does his own thing. Whim, impulse, instinct, inclination, are the spurs of action. “If it feels good, do it,” is the contemporary folk wisdom conveyed by bumper stickers.

If the cosmos provides no clues for human conduct; if justice is of merely human contrivance, representing the interest of the powerful, then no one has any moral obligation to do anything when he happens to feel like doing something else. By the same token, no one has any warrant for telling anyone else what he ought to do, or not do. This is what each person decides for himself, each getting his kicks in his own way, each doing whatever turns him on. The old covenant has been shattered, the rule book discarded.

Having reached this point, the argument is hoist with its own petard. The weak doing their thing are at the mercy of the strong doing theirs. The unscrupulous doing their thing is why good guys finish last. Some people get their kicks by preventing other people from getting theirs, and there is no rule to say them nay. Those who want to live and let live are put under the thumb of those who strive for ascendancy over others because for these latter the exercise of power “feels good.” You cannot tell those who hanker after power that tyranny is “wrong,” because they will tell you that wielding power is “their thing,” which you have been at such pains to tell them to pursue!

The non-theistic world view has no real niche for the concepts of inherent rights and free will; it has discarded the norms without which no genuine ethical decision is possible; it makes reason the tool of class interest. Materialism is the appropriate ideology for a totalitarian society, but the Materialist who seeks to provide a rationale for the free society has saddled himself with an impossible task.

The Moral Foundations

Economic arguments for capitalism fall on deaf ears unless people, on other grounds, have first era-braced a philosophy of man and society which incites them to seek their own good while working for the well-being of the whole community, that is to say, when they have given proper weight to the argument for the free society based on ethics, inherent rights, and free will.

The ethical argument for the free society limits governmental power by surrounding it with moral restraints. There is not one law for magistrates and another for citizens; rulers and ruled are alike under the moral law. Statutes must conform to a higher law, or divine law, superior to the enactments of legislators, discovered by reason and intuition.

The argument from inherent rights views society’s political agency as having the negative function of securing each person’s private domain, protecting his life, liberty, and property, in order that he might have maximum freedom to pursue his personal goals.

The argument from free will is that the free society-free economy—Whiggism-Capitalism—provides the only social arrangements consonant with the nature of a creature gifted with the capacity to choose. The fact that each person is in charge of his own life, responsible for making the countless decisions required to bring his life toward completion, requires social conditions of maximum opportunity for choice. Human nature and the free society are complementary, two sides of the same coin. A society humane and just needs economic arrangements to match, and this means capitalism.

The free economy does not beget itself; the free economy appears only after we have the free society. And the free society emerges only after generations of exposure to the idea that there is a sacredness in persons which, in the political and economic spheres, demands liberty and justice for all. It is a mandate of our better nature as well as a requirement of our religion, that we work toward a society where every person has the widest possible scope to exercise his capacity as a freely choosing person, guiding his life by reason, within the moral law.

Is it not true—as Thomas Jefferson reminded us—that “The God who gave us life, gave us liberty at the same time.”

Originally published in The Freeman, December 1981.

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Perspectives on Religion and Capitalism