Capitalism, Socialism and Christianity

It’s been interesting to hear people talk about politics and economics, and then comment on how Christianity should inform a political or economic perspective.  I definitely believe that one’s Christian faith should inform and direct economic and political decisions.  Jesus always gets pulled to one side or the other though.  Those who are liberal want to show how Jesus is a liberal, while conservatives work to show that Jesus would be a conservative.  This gets mirrored in discussions with economics.  So, when discussions of economics get brought up, all of a sudden Jesus is brought up as being a capitalist or a socialist.  I’m not trying to define conservatives as capitalists or liberals as socialist, but it seems clear that conservatives are more concerned with providing a “free market” while liberals have socialistic (or at least collective) tendencies.  I want to go through a short discussion of socialism and capitalism and provide some comments on how I believe Christianity/Jesus interact with these economic theories.  I want to be forth coming in my bias that I tend to favor capitalism and am fairly suspicious of socialism.

Let’s start with socialism.  Socialism means that the government owns the means to production, distribution and exchange of goods.  Socialism is an intermediary state before becoming full blown communism.  There are a few important differences between communism and socialism.  In communism, all property is publicly owned (by the collective of the people but essentially by the government) and classes are extinguished.  In communism, you are provided for based on needs.  This would mean that you don’t need to work to get money to buy anything, money actually gets eliminated in a pure communist state.  Whatever you need just gets provided for you and given to you.  With no money, there can’t be different levels of wealth, thus eliminating classes.  Communism also ends up suppressing religion and breaking down concepts of the family.  These institutions can be used for means of domination and are in conflict with a radical communitarian philosophy like communism.

In contrast, socialism doesn’t seek to entirely eradicate private property, eliminate the possibility for different economic classes, or war against the concepts of religion or the family.  Socialism does advocate essentially for the government owning and regulating the entire economy.  You can have private property, but all businesses are centralized under the government.  Socialism allows for people to earn different wages based on abilities, but it does promote heavy progressive taxes so the government may operate public programs.  Socialism isn’t in principle against religion like communism, but tends to lean towards promoting secularism in the society.

With this foundation, albeit a quite simplistic and thus slightly unfair and probably somewhat erroneous one, I want to go over some common misconceptions and my grievances with socialism.  The first misconception is the rhetoric that socialism makes things free.  Free education, free healthcare, free resources for low income persons.  This is true in some sense, but then misleading in another.  The reality is that nothing is free.  All these government operated, and own institutions and programs are paid for by taxes.  This means that socialist countries have vastly higher taxes to pay for all the government’s expanded operations.  The next misconception is that Scandinavian countries are examples of socialism.  The reality is they are thoroughly capitalistic market economies.  They don’t have the sort of centralized ownership of the means of production needed for a socialist economy.  They are essentially all private owned companies based in a capitalistic market, but just have immensely higher taxes which allows for the government to run more programs for the country.  The high taxes let them provide “free” healthcare and education.  The last misconception is the claim that all failures of socialism are because the wrong people were in power.  If only we had smarter or better or kinder people in power in the socialist/communist countries we’ve seen, then it would have all worked better.  The paternalism, arrogance, and ignorance in thoughts like this is quite astonishing.  I’m pretty convinced that the failures are just the natural outworking of socialism in general.  This last misconception will lead us into my misgivings of socialism.

My distrust of socialism is around the way it squelches competition, destroys incentives to innovate, and it gives government too much power.  Now, all three of these things are interrelated, but we can look at them individually here.  First, when the government essentially owns the economy and the businesses in it, there isn’t any competition.  Without competition, there isn’t any pressure for the government to improve the way it’s doing things.  This doesn’t mean that the government won’t make improvements, but there’s a different urgency when your job or business is on the line if you don’t continue to improve.  The presence of competition gets the best out of people.  As such, it requires people to be innovative and create to improve upon the current state.  Lack of competition isn’t the only thing that deflates innovation, a high tax rate also plays a role.  I do think that the ability to benefit personally from your work motivates people to work harder.  In socialism, the soaring taxing doesn’t really motivate people to work harder because for the amount of extra hard work they put into something, they don’t receive a return in proportion to the work they put in.

Socialist countries to date have been an economic nightmare.  Their economies have stifled and been woefully underproductive.  Ironically, this has led to large class distinctions, something it’s actually supposed to mitigate against.  In more severe cases, like Russia and now Venezuela, it has led to starvation and crushing inflation essentially causing abject poverty.  We have even seen in some of the Scandinavian countries a stagnation of jobs, where it’s been reported that throughout the second half of the 20th century, at least one Scandinavian country didn’t create a net new job for around 50 years.  These economic deficiencies are just the product of a socialistic economy.  Without the pressures of competition, economic growth is almost absent.  Unfortunately, what tends to happen is that the governmental employees begin to hoard all the wealth.  This last point is tied up in my distrust of increasing governmental power.

Part of the issue for me with socialism is the greater amount of power given to the government.  Not considering all the economic failures that result from socialism, I think we should be weary of a system that gives so much power to the government, which is made up of people.  Essentially this system makes the government a monopoly over all industries in a country.  We commonly are very weary of monopolies because without competition, they have the ability to raise prices to whatever level they want.  Thus, if they are in an industry of necessity, like providing water, then the consumer is beholden to this one company and must pay their price.

The issue thinking that a government monopoly will be better.  That the government won’t be driven by a greed of wealth like a monopolistic company in a capitalistic market would be.  I think this is where we forget that the government is ultimately ran by people.  History has shown, the governmental officials of socialistic countries tend to accumulate mass amounts of wealth.  This is because of the way all the money flows to the government since they own the economy.  They then may choose to spend some on social programs and things like that, but also end up spending a large amount on their own salaries.  When the government owns everything and there’s no competition, there’s nothing to put them in check.  They may put in place rules and regulations, but if they break them, no competitors can’t call them out on it.  Also, if they break these rules or provide poor service, you as a consumer don’t have the option to go to a different producer who has more integrity or better service.

Along with my distrust of the inevitable humanness of a socialistic government that ends up having a few people own and distribute the goods of a country for the majority of the people, I also think socialism has negative incentives that work against important social fabrics.  By this I mean, in general, it incentivizes entitlement and takes away the human component in helping others.  I don’t want to blow this out of proportion but mainly just want to point to the reality that if people get things given to them without working for it, it engenders a sense of entitlement where they believe they are owed things just for existing.  I do believe there are some things people deserve just for being human, but there are things we must work for.  I would say, in general, socialism would degrade a perspective of working for things, and would encourage a sense of entitlement.  I won’t venture to guess to what extent this would happen, beyond just the reality that this would happen to some extent.

I am also concerned with the way that the government will become the primary means for combating social/economic ills.  Not that the government shouldn’t play a role, but that I’m resistant to the idea of them being the first option.  I think this dependence on the government will have a negative impact on human relationships where people are showing others how much they mean by sacrificing to improve another’s situation.  The government may be a more efficient way of solving social/economic (I honestly am not convinced of this but am open to being wrong), but I don’t think the efficiency is worth the cost of weakening social ties by taking away people’s dependence on each other.

There could be much more said on everything I have stated about socialism, but those brief remarks basically sum up my position and attitude towards socialism.  I know I have pretty much stated all the negatives of socialism without defending it much, but as I said, that’s primarily because I’m skeptical of it.  There most definitely are good things about socialism and I believe the aims and goals of socialism are good, I just tend to think there are better ways of getting at those goals than the socialistic route.  I don’t necessarily think capitalism is the best thing ever, but I am in favor of it over socialism because of the way it avoids many of the issues I have with socialism.  It also is predicated on a sense of freedom that socialism doesn’t afford, and avoids levels of coercion found in socialism.

Now, moving on to capitalism.  When it comes to capitalism, the main critiques are centered around greed, power, and exploitation.  These are all powerful critiques and are concerns I also share about capitalism.  I don’t think those things are inherently a part of the structure of capitalism, but I think practically speaking, they always will be.  In college in my finance courses, I was taught that the goal of a company is to create the most value they can for shareholders.  This is directly tied to generating more profits for more returns to shareholders, along with increasing a company’s stock price.  When this is to be a company’s number one goal, it’s no wonder that capitalism is plagued by greed.  Now companies are willing to do whatever it takes to earn as much money as possible since that is their chief goal.  All considerations come second and are seen through the lens of making money.  Hence, we see companies do things that are technically legal, but are highly disputed as being unethical.

Capitalism is the idea that businesses should operate with the least amount of government interference as possible.  By government interference I mean regulations, a.k.a. laws.  The idea is that there should be as little laws and regulations as possible so competition will be as strong as possible.  At this point, it is down to the consumers to decide which companies get their dollars.  Those companies that consumers give money to are the ones that succeed.  It is then the responsibilities of the companies to find out what they need to do to get consumer’s money.  This could mean anything from providing better services and products, to displaying better corporate ethics and social activism, to having more affordable products.  In essence, the power of a company’s success is supposed to be in the hands of the consumers.

The problem is that this isn’t really the way it works, or at least it doesn’t feel like it works this way.  The main reason is because it feels like companies are the ones with the power, at least the large ones.  Once companies get big enough, they can either stomp out, or buy up all the competition.  We then are left with only one or a few companies that are selling a particular product or service, and then we are beholden to them.  Now, they get to decide the prices and the quality and we have to live with it because there aren’t any other companies for us to go to if we are dissatisfied with the large companies.  When this happens in an industry, this is considered a monopoly or an oligarchy.  Here, we can see how capitalism has a built-in power structure the allows for top rising companies to become tyrannical.  Once they amass money, they can wield unlimited power in a given industry.  To combat this, the government has rules and regulations against monopolies.  Even with these regulations, companies have ways of collecting power and using it to exploit and take advantage of workers and consumers.

Exploitation is a strong argument against the coveted competition capitalist desire in a market.  The problem is that many times competition is driven by cost effectiveness, i.e. cutting expenses.  Many times, products and services are fairly comparable and so companies need to gain an edge over their competitors in the price category.  The easiest way to lower prices is to lower expenses.  Attempting to lower expenses isn’t necessarily bad, it just frequently seems to be done in a way that harms people.  It either results in taking away jobs, or adding larger workloads without appropriate pay increases, or doing pay cuts, or some combination of some or all of these things.  The exploitation part comes in because companies know people need jobs, and know jobs are hard to get.  So, once someone gets a job, they may be willing to do a job in unfair conditions to keep it.  If they are in desperate need of a job, they may accept unfair terms just to have an income.  This is typically exampled by sweatshops and manufacturing plants where people are working in conditions and doing a certain kind of work where they aren’t being adequately compensated for it.

Tied up in all of this is the unfairness of privilege.  For one reason or another, some people have advantages over other people.  Common sources of privilege cited are age, sex, ethnicity, family, education, money, social class. In a thorough going utterly free market, the issue is that not everyone is playing on the same level because of these privileges.  This makes tenets like hard work a sham because one’s success can be determined more by the opportunities and privileges one is provided than how hard one works.  Socialism is seen as a way to even the playing field in some ways, particularly economically.  This argument is quite compelling, especially since I’m sure we have all associated a celebrity’s success to something other than their talent and attributed our failures to some sort of “bad luck” outside the possibility that we just didn’t work hard enough.

I have a mixed set of emotions and opinions when thinking about these critiques of capitalism.  As a supporter, I want to defend capitalism.  I want to point to all the good capitalism does and has done.  The way it has helped decrease poverty globally by drastic amounts.  The way it provides opportunities for upward mobility for those who work hard and improve their skills and talents.  I also want to defend capitalism by rebuking those crony-capitalist.  Those who pursue profit at the expense of morals and ethics.  Those who think capitalism wasn’t meant to be predicated on a moral and ethical system that valued humans and didn’t treat them as a means instead of an end.  Here though, I must be honest.  I’m defending capitalism in the way I critique others for defending socialism.  I’m claiming that the atrocities of capitalism aren’t because of capitalism per se, but because of the players acting within capitalism.  If we just had better people being the leaders, then capitalism wouldn’t cause so much destruction.  This sort of thinking is exactly what I called arrogant and ignorant when considering socialism.

I must recognize that the structure of capitalism allows for the abuses cited.  They don’t necessarily have to happen, but practically speaking I think they will be something that always is a part of capitalism.  That being said, I still prefer this economic system to socialism.  For all the opportunities of abuse, I think the freedom capitalism offers to the consumer, can and does act as a check of some sort on these abuses.  Capitalism allows people more opportunity to control their destiny and improve the destiny of others, where socialism takes a lot of that control opportunity and makes us beholden to the state.

How does the Christian respond to some of these basic yet core insights and thoughts?  As a Christian who supports capitalism, I do tend to think the Christian response should lean more towards capitalism.  That being said, there are legitimate reasons why some Christians would be more inclined toward socialism.  It must be stated though that Jesus wasn’t an economist, he wasn’t a socialist or a capitalist.  The Christian faith definitely has implications on how we should do and approach economics, but it isn’t an economic theory itself.  Honestly, it has some conflicting tendencies that support these two opposing economic systems.  Jesus seems to be for freedom and allowing people to make their own decisions, but also seems to suggest that we should make our decisions in light of other’s circumstances and how we can serve them.  Capitalism is highly individualistic and socialism is collectivist, and Jesus did seem more collectivist.  Jesus was also very much for the poor.  Socialism allows the government to make very direct attempts to the serve the poor.  Capitalism on the other hand doesn’t allow this sort of control and directed effort and makes us have to depend on individual people and organizations.

Along with this agreement on collectivism between Jesus and socialism, many point to the early church as evidence that Christianity support socialism.  The early church did live together and essentially shared all their belongings.  This does have strong socialistic leanings, at least ostensibly.  However, we must ask, does this mean they abolished any sense of private property?  If we pay attention to the writings, it talks about people sharing everything they own so everything they had they shared in common.  Before it was shared though, it was talked about in terms of being owned by individual people in the church.  It was clear that people were sharing things they rightfully had a claim to and had ownership over.  Personal property isn’t abolished but is suggested to submit to other concepts of ownership.  Also, if we are to imitate this behavior, why are we looking to establish it governmentally?  The early church didn’t look to establish the community governmentally or by any sense of coercion.  The church participants were freely engaging in this giving up of their property.  They weren’t coerced or forced into sharing their belongings.  This is something that would be contrary to a socialistic economic system.

I think the key thing to remember when reviewing socialism and capitalism in relation to Christianity is that Christianity is never motivated by a sense of coercion.  It recognizes that anything genuine needs to be done from a willing heart.  I think the question of coercion lies at the heart of the difference between socialism and capitalism.  I think the western world is much too individualistic, which can translate into selfish and brutal capitalism.  However, I don’t think the type of communitarian and collectivistic thinking Jesus had is aligned with the level of coercion found in socialism.  Government is a tool to be used by Christians to bring God’s kingdom to earth.  We need to be careful though with trying to have government replace our personal responsibility to each other with programs.  Improving one’s holiness will lead into improvement of the social environment around us.  I think trying to impose this from the top down to improve the social environment and then improve one’s inner holiness is the wrong way to go about it.  I think Jesus would be for the former, and that this perspective is most aligned with capitalism.

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