Is Capitalism the Problem…or the Solution?

Is capitalism based on selfishness? Does it produce more greed than the alternatives? Should Christians support fair trade products like coffee? Are we going to use up all the world’s resources? When someone becomes rich, isn’t someone else becoming poor? Are locally produced goods always better? Does trade always create a winner and a loser? What helps poor populations escape poverty?

The answers to these questions are accompanied by extremely important consequences. That’s why, according to Jay Richards, they require Christians looking to live out their faith in economic matters to think very carefully.

To that end, Richards has written the provocatively titled Money, Greed, and God: Why Capitalism is the Solution and not the Problem. As he notes in the introduction:

If we want to know the truth…if we want to order our economic and social lives justly, if we want to help people rather than merely feel like we’re helping people, we have to learn the economic terrain. …

The first order of business is to clear out the fuzz and fog in our thinking. This is a hurdle, since it means we have to do more than worry or care deeply. We have to think.

To guide this thinking, Richards organizes the book around eight myths he believes are related to nearly every mistake Christians make in the realm of economics:

  1. The Nirvana Myth—contrasting capitalism with an unrealizable ideal rather than its live alternatives.
  2. The Piety Myth—focusing on our good intentions rather than on the unintended consequences of our actions.
  3. The Zero-Sum Game Myth—believing that trade requires a winner and a loser.
  4. The Materialist Myth—believing that wealth isn’t created, it’s simply transferred.
  5. The Greed Myth—believing that the essence of capitalism is greed.
  6. The Usury Myth—believing that working with money is inherently immoral or that charging interest on money is always exploitive.
  7. The Artsy Myth—confusing aesthetic judgments with economic arguments.
  8. The Freeze Frame Myth—believing that things always stay the same—for example, assuming that population trends will continue indefinitely, or treating a current “natural resource” as if it will always be needed.

While I don’t want to suggest that Money, Greed, and God is the very last word on its subject matter, I found it easily to be one of the most thought provoking books I’ve read in some time—one that challenged a handful of ideas that I had consciously or unconsciously accepted.

One of the reasons I appreciated the book so much was Richards’ use of illustrations and real-life examples to explain basic economic principles. Not having a background in economics myself, this was helpful to make abstract economic concepts more concrete. For example, consider the following experience from Richards’ own elementary school days: his teacher once randomly handed out little gifts to her students: a pack of gum, Silly Putty, a paddle board and ball, Barbie trading cards, etc. Then, dividing the students into five groups of five, she asked them to rate how much they liked their gift on a scale of one to ten and compiled the total.

Next, she told the students they could trade with another person within their group if they so desired. Some made trades, some didn’t. A few were still stuck with their original gift. Again she asked them to rate how much they liked their gift and tallied the scores. The overall number went up.

Finally, she told the class they were free if to trade again, this time with anyone in the room. The students then rated their toys once more and the teacher added the scores. What happened?

The total number had gone way up. Almost everyone ended up with a toy he liked more than the one he started with. No one had a score that went down. The only kids whose scores didn’t go up were the ones who happened to get gifts they really liked at the beginning. I got the paddle board on the first trade and kept it.

Richards goes on to note that the game “teaches some of the most important lessons of economics,” including the fact that freely trading (where participants are not allowed to steal or coerce) is not a zero sum game, i.e., a situation where there’s a winner, so there must necessarily be a loser. Instead it’s a win-win proposition. Additionally, it actually creates value that didn’t exist before. This points to the fact that the amount of wealth in the world is not a static thing. We continually create more value. Concerning this rather remarkable fact, Richards comments:

How is wealth created? The economist can’t easily answer this question. But the Christian can. Wealth is created when our creative freedom is allowed to prosper in a free-market environment undergirded by the rule of law and suffused with a rich moral culture. The creative freedom should come as no surprise to Christians. We believe that human beings are made in God’s image—the imago dei. Our creative freedom reflects that divine image. This is one of the least appreciated truths of economics.

That’s just one example, but I hope it points to the fact that, whatever your beliefs going in, Money, Greed, and God will provide a lot to chew on. I recommend it highly.

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