Thursday, November 6, 2014

A Refutation of Olson's "Capitalism: An Economic System that Requires Us to Think and Act As If God Does Not Exist"

I was going to post on another subject, but I found a blog by a theologian who said that capitalism "requires us to act as if God did not exist". It is a little hard to reply to such a statement because it is so absurd, particularly the word, "requires". How on earth does the free exchange between individuals and other economic entities or the private ownership of capital "require" anyone to act as if God did not exist? An individual can certainly act as if God does not exist whether he acts as an economic agent (e.g., a consumer) or in politics or in science or in anything else. Does our political system "require" that a political actor do things without reference to God?

I will trust that my readers will quickly realize that the "capitalism "requires us to act as if God did not exist" statement as ridiculous, but I will respond to some of the claims that were made about capitalism.

First, Roger Olson, the author of the blog post, said that Hugo Grotius asked that we set aside our religious beliefs in the public arena. I am not an expert on Grotius but I am aware of what he said about free trade between nations. He said it was the will of God that trade be free. That does not seem like setting aside one's religious belief other than implying that Christian nations should freely trade with Muslim or Buddhist or pagan nations. I happen to agree that we should. Free trade opens doors and makes nations interdependent and, therefore, less likely to go to war. Also, in his day, missionaries relied on merchant trading ships to go to new places to preach the gospel.

And those facts refute Olson's claim that there is no "invisible hand" that causes even transactions motivated by *greed to benefit society. The Dutch East India Company certainly had a profit motive when it opened up much of the Far East and India to trade. But they also willingly took missionaries with them who introduced the gospel. Today, trade keeps the peace between many nations who rely on the goods and resources of the other to survive.

Another error made by Olson was calling free market capitalism a form of "economic anarchy" and "Social Darwinism". Of course, we have clearly shown why this is not the case in my previous two posts, Is Capitalism Biblical?, parts 1 & 2. Property rights, rule of law and the right of free (uncoerced) exchange make these kinds of claims null. No, what economic anarchy and social darwinism would mean from an economic system would be the strongest just take what they want from the weak by force. Any taking by force is contrary to free-market capitalism though it can coexist with crony capitalism, monopoly capitalism, or interventionist capitalism.

Here is a claim that some would agree with: "Capitalism is a system that naturally encourages the strong to oppress the weak." The first question about this is whether the strong ever oppress the weak? The answer is yes. In what society is it that makes this impossible, or even harder. I would argue from both a theoretical (economics) and a historical perspective, that free-market capitalism is the one that has the least amount of oppression and makes it harder to oppress. Free markets means that people can enter freely into transactions or not. When choice is limited, then oppression can occur. Think of our non-free public school system. Do not be fooled into thinking that because you do not pay directly to have your children attend public school that it is free in the sense we are speaking of here. You are not free as to where you get to send your kid. The state determines that. If your school is not what is best for your child and you cannot afford private school, then you are coerced into sending your child to a bad school. You have no choice. Lack of choice is oppression. School choice would be freedom from oppression. Also, public schools would have to compete for students, making them responsive to their 'customers', that is, parents.

I will hit on one more thing in this article. Olson decries what he calls "unfettered consumerism". Let's do a little word study. The word 'consumerism' has been bandied about, but what does it mean? According to Wikipedia, "consumerism refers to economic policies placing emphasis on consumption. In an abstract sense, it is the consideration that the free choice of consumers should strongly orient the choice of what is produced and how, and therefore orient the economic organization of a society." On other words, we have an economic system that responds to the desires of those who want to buy stuff. That does not seem so horrible to me. The market responds to those who participate in it.

I think what Olson is concerned (and rightly concerned) about is materialism, making things our god instead of the true and living God. Once again, though, is this unique to our society or is it just human nature. The latter, I believe. If you read sermons that go back many centuries, you will find that one major theme that is consistent is the problem of materialism. Apparently, every generation and in every economic and social system, there is a persistent problem of materialism, seeking security and comfort in material things. Sounds more like a 'fallen human nature' kind of thing rather than a problem with the free-market.

The other word here is "unfettered". Now I have noticed that the word "unfettered" as in "unfettered capitalism" is becoming quite common in the media. What does the word "unfettered" mean? Well, fetters are chains. They are used on slaves and dangerous people who cannot be trusted. I am thinking that, in general, fetters should be used sparingly. I much prefer freedom to fetters. I want to be "unfettered" as does everyone else. I think that I have shown that markets and consumers should remain unfettered except in those things that harm society - drugs, prostitution, extortion, bribery, etc. I want us all to be as unfettered as possible. "unfettered" is just another word for freedom.

*[Note: When I use the word 'greed', I am using it in the sense of economic self-interest which is generally a good thing. As far as covetousness is concerned, any economic transaction may be tainted with it, but that is in the individual's heart. The outcome of identical transactions, one which may be infected with greed and another which may be done by the pure of heart, is identical. We are concerned with outward effects in economics, not with what is in the heart. That is the province of God and conscience. What we want to limit are transactions that have negative social consequences like illicit drugs, prostitution or slavery of any kind. We need not make such transactions legal to have a free market.]

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