In recent years there’s been an increasing trend in popular culture of criticising capitalism as a cause of income inequality and therefore, a force for social injustice. But this criticism misunderstands what capitalism really is. When it comes to injustice, a proper understanding of the nature of capitalism shows us capitalism isn’t the problem! Something else is.
One major moral and ethical question raised by critics of capitalism is income inequality—how evenly income is distributed throughout a population. However, is income inequality really a bad thing if it raises the overall living standards for everyone—even the poor? When looking globally one study shows that countries with less free markets have higher levels of poverty.[1] Two-thirds of the global poor live in five countries: India, China, Nigeria, Bangladesh, and Congo, all of which are ranked 120th or below in terms of how free their markets are. In the US, however, even the poor have high living standards compared with globally. If we look at some of the many benefits free markets have given the modern world (e.g., innovations, surplus food, rising median income, lower prices, greater choice), it becomes very hard to label it as an immoral system.
But here is the problem when questioning the morality of capitalism. By nature, capitalism is neither a moral nor immoral system. Capitalism is a vehicle for efficiently transferring goods and services. Journalist and political commentator, Ben Shapiro, uses the example that if you purchase bread in a supermarket, then you’ve given the shop your money and they’ve made a profit.[2] But does that mean they’ve impoverished you? Or are you better off than you would have been if you had been forced to grow the grain, mill the flour, and bake the bread yourself? So where does morality come into economics?
To answer this question, we have to turn to the philosopher and ‘grandfather or economics’ Adam Smith. As the founder of capitalism, Smith developed ideas about how to make the economy more humane. He claimed that human beings have an “inner man” that functions as our moral conscience. He described human morality as being driven by passions but regulated by reason and sympathy.
But people also have an inner drive for improving their situation. Smith noted that it’s this human drive that gives rise to the competition that drives the free markets[3] it’s these human drives that make up the economy. And so, when we observe flaws in the economic system, it’s because there are flaws in human beings, but that doesn’t make the system itself immoral. Trade in and of itself can never be immoral, however, what can be immoral is the way trade is carried out.
The question of whether capitalism is good or bad is irrelevant because the question runs much deeper. With capitalism comes freedom of choice and with freedom of choice also comes free moral agency. Certainly, there is injustice in the world caused by corporations that place themselves above the moral law and abuse their power. But the source of this injustice lays deeply ingrained within the very nature of Man. Jesus hinted at this when He said, “For where your treasure is, there your heart will be also” (Matthew 6:21, NIVUK). The tension between free trade and injustice is actually a matter that involves the human heart.
The tension between free trade and injustice is actually a matter that involves the human heart.
Adam and Eve in the Garden of Eden decided to make autonomous moral choices without God, and humanity has done the same ever since. This has resulted in our potential for selfish ambition, desire for power, and oppression—to follow the immoral passions of our nature. However, in our lives, we always face a choice of good and evil. In every job we take, and, in every purchase we make, we have a personal responsibility to make a moral choice. The goods we purchase and the jobs we work in affect our communities and even the wider world. God gives us the guidelines for making moral choices, but He places the responsibility on us. Capitalism is a human system and just like humans, we have the potential for making good and bad choices.
The answers to the problem of injustice are to be found in the valuable principles and teachings of the Bible. God isn’t opposed to trade, but God is however deeply opposed to injustice. He gives us his guidelines in the biblical narrative through instruction, poetry, and examples of how we should conduct trade in an honest and fair manner. In the ancient Near East, it was common among dishonest merchants to create false measures and weights to swindle people to their advantage. However, the Bible teaches us: “Do not use dishonest standards when measuring length, weight or quantity” (Leviticus 19:35, NIVUK). This practice was widely rebuked by the prophets, and God is clear about how he views it: “The Lord detests dishonest scales, but accurate weights find favour with him” (Proverbs 11:1 NIVUK). Although the practices of not cheating seem obvious to us today, this is primarily because we developed a system of trade based on trust which originated from the Judeo-Christian value system (for instance, the London Stock Exchange’s moto, “My word is my bond”, is an extension of a biblical principle).
Simply, trade is a natural practice and necessary to advance quality of life for the individual and society. The practice of trade is good as long as it is done honestly and fairly. In the modern free world almost a billion people have benefited greatly from a system of free trade governed by rule of law and trust. In a time when the Judeo-Christian value system is under scrutiny by many socialist ideologies, it’s important to remember what the foundation of our society is built on.
The bottom line is that although we don’t live in a perfect world, and the system of the free world does have its flaws, it’s only as flawed as the individuals that make up the system. Therefore, we as individuals should strive towards an ideal state of being. In order to reach this ideal future, a transformation must begin on an individual level. We must learn to love our neighbor as ourselves just as Jesus teaches us. By doing so we have taken the first step in advancing God’s plan for world peace.
[1] https://www.dailywire.com/news/leftist-myths-about-economics
[2] Ibid.
[3] Adam Smith | Biography, Books, & Facts | Britannica