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Capitalism and Christians

The book jacket on Capitalism and Christians, the newest dispatch by Arthur Jones, assures us that this editor-at-large of the National Catholic Reporter is “an economist by training.” That fact makes the pervasive and remarkable confusions in this book all the more depressing.

Jones seeks to define the relationship between capitalism and Christianity but begins with an unfair description of capitalism. It is a system, he says, in which finding “new ways of making a buck” quickly “conditions the world around it so it can extract for itself the maximum for the minimum.” Seems there’s no room for the Gospel here.

If there’s a problem in modern American life, Jones blames it on capitalism. This includes “adulterated baby foods,” “any toxic-waste site,” “Marlboro men with emphysema,” “coupons inside the packet” that “distract from the price on the packet,” and, inexplicably, “Rawlings baseballs in Haiti.” All represent “the drive for profits for their own sake” that is alleged to lie at the heart of capitalism. Yet some of his examples constitute the very fraud that capitalist contract law discourages. Others require additional elaboration (toxic-waste sites usually appear on public property, for example). Still others are simply silly and self-refuting (all shoppers know coupons can be tricky).

At least one of his critiques of capitalism, in addition, suggests wholesale ignorance of economics: Prices are “based not on value but on what the market will bear.” What could this possibly mean? If water sells at a higher price than diamonds in a desert, that says something of the relative value of each, given existing conditions. The economic value of anything is best expressed in the price a good or service bears on the market. The chief virtue of capitalism, economists have rightly argued, is that it recasts individual preferences and values into market prices so they can be exchanged in agreed-upon terms. It’s true that exchange is not central to a social order (consider family, church, and charity). But economic life without prices and exchanges would simply be chaos.

We are not dealing here with a search for a perfect system but rather with comparative institutions. In absence of the market–that is, apart from real people’s producing, buying, and selling–there is no way to sort what is economically valuable from what is useless. The price system objectifies the subjective. Eliminate it, and all that is left is arbitrary edict enforced by the regulatory and tax police.

Other things Jones does not like about capitalism include rich people like Michael Milken and Ivan Boesky. I’m not here to defend corporate buyouts and junk bonds. These are complex topics, and his objections to markets run much deeper: to wealth itself, because it seems to be taken from the poor. In a non-market economy, this is likely to be true. But the genius of markets is that wealth honestly earned doesn’t come out of anyone else’s hide; it is earned by producers who serve others.

Socialist theorists can despise corporate fat cats, but in a market economy, cats only get fat by providing goods and services that are valued by others. The result of the complex economic relations created through the private-property, free-enterprise order is unequal holdings of wealth. But the voluntary component of markets assures that society is always on the increase.

Unfortunately, Jones is more interested in anti-market poetics than the nitty-gritty of economic analysis, thus he equates the American system with capitalism (actually our system is more mixed). For example, Jones points to S & L Bandits in the eighties as an example of capitalism’s evils, when in fact he is identifying a problem inherent in the socialist enterprise of loose credit. Similarly, he complains that credit cards charge higher interest rates than commercial loans. But the reason Visa charges higher than prime is related to lender risk and customer convenience. As an opponent of consumerism, one would think he’d praise this. From a moral perspective, moreover, a long-term commercial loan seems intuitively more legitimate than a short-term consumer loan: Isn’t it interesting, then, that on the margin, capitalism discourages consumer credit by making it more costly to use?

Jones enjoys turning biblical warnings against specific sins into attacks on generalized capitalism, but in systems rooted in time and place, sin is always with us. And doesn’t this strategy let individual sinners off the hook? If someone is neglecting his spiritual life or his family, he should not be allowed to blame any system of economics, whether capitalism, socialism, or the mixed economy.

Yet Jones further argues that capitalism has a tendency toward sin. He forgets than sin has always had its own kind of rewards, which is precisely why it is a temptation. It is true that some systems tend to de-institutionalize sin’s corrective devices. Socialism, for example, rewards the worst instincts in man, especially his tendency to enjoy exercising power over others and to take property without consent. That’s how a criminal class could run the Soviet Empire for decades without penalty. Capitalism displaces comfortable elites, as IBM’s CEOs are discovering.

Capitalism has never purported to be anything but an institution of free exchange. Limit capitalism and you limit freedom and expand the state. This is why Pope John Paul II’s encyclical Centesimus Annus identifies with the business economy and warns that an attempt to curb it unnecessarily expands the state. Jones never confronts this truth.

With what would Jones replace capitalism? He doesn’t say, apart from a vague call for “economic democracy.” Whatever system we get in this world, he assures us, “We have to become ascetics. We have to learn to deliberately do without.” That’s a condition likely to be imposed by the state if Jones’ message prevails.