Rethinking Capitalism

One problem besetting discussions of capitalism is that we first must work through some confusion about what the word means. Most conservative Christians use the term merely as an antonym of socialism. Under capitalism, individuals own property, whereas under socialism, the government owns everything. Yet such a broad conception is grossly misleading, especially as it would shoehorn all societies into one of only two categories. Were the ancient Israelites capitalist or socialist? What about the Shawnee? Or the ancient Athenians? These are nonsensical questions, for both capitalism and socialism are distinctively modern ideologies.

We might address the question better by recalling that the stem capital refers to the means of economic production — be it a sawmill or an automated factory — and so, according to the Encyclopedia Britannica, capitalism means a system whereby “the excess of production over consumption” is used “to enlarge productive capacity rather than to invest in economically unproductive enterprises, such as pyramids and cathedrals.” By this definition, the primary function of capital is not to support and sustain a particular culture but to generate more and more capital. Insofar as they are dutiful capitalists, the rich must be preoccupied with getting richer so as to maintain a regime of limitless economic growth.

Of course, Catholic defenders of capitalism might argue that this is an oversimplification, that capitalism as a system must be subjected to and bound by some higher authority rooted in religion, culture, or the natural law. They might also contend that there are alternative capitalisms, such as the human-scale economic theory of Wilhelm Röepke. (One exchange between Röepke and libertarian icon Ludwig von Mises elucidates Röepke’s view. When Mises dismissed gardening as an inefficient way of producing vegetables, Röepke retorted that it can be an efficient way of producing human happiness.) Even after acknowledging such points, however, no serious Catholic will deny that 21st-century capitalism exhibits grave problems. “Woke capitalism” has become so common as to appear a redundancy, and we are no longer surprised when Amazon or Starbucks promotes gender ideology or “anti-racist” racism. It is, of course, good that Chick-fil-A gives its workers Sundays off and has proven reluctant to celebrate homosexuality; that such sensible stances make the fast-food franchise appear to be a radically conservative Christian business only demonstrates how low the bar has fallen. In what may be its ultimate manifestation, capitalism seems to be one of the driving impulses behind the transhumanist movement.

If capitalism does warrant criticism, who better to level it than Adam Smith? So reasons John C. Médaille in “The ‘Anonymous Society’ vs. ‘The Great Workbench,’” his contribution to Money, Markets and Morals. As it turns out, the godfather of capitalism himself inserted some caveats in a later edition of The Wealth of Nations. Although the division of labor greatly increases production, Smith noted, this increase comes at a price. Under such a system of mass production, the laborer “has no occasion to exert his understanding” and “generally becomes as stupid and ignorant as it is possible for a human creature to become.”

Yet the stultification of overspecialization could be mitigated by a variety of measures, and so Médaille dwells on and explores Smith’s even more profound reservations about the joint-stock company, which would evolve into the modern corporation. As Médaille observes, the very concept of property changes when stockholding replaces the ordinary personal ownership of a plant, shop, or business. “What is crystal clear is that shareholding is not ownership in any simple sense,” he writes. “Owning something gives me use and control of that thing and makes me responsible for that thing. If I own, for example, a share of IBM stock, I cannot enter any IBM facility, examine their research, or even look at their books. Nor am I responsible for any actions of the company.” Even if we believe shareholding has, on the whole, benefited mankind, it is important to acknowledge that it represents a radically different kind of possession. For his part, Médaille questions whether abstract finance has not subverted the very values it purports to advance: How “free,” really, is a free market dominated by billionaires and their cronies in the government?

Just as Médaille’s remarks are motivated in part by a concern for liberty not usually exhibited by opponents of capitalism, so David Cooney concedes in “The Market Wage vs. the Just Wage” that “there are certainly legitimate criticisms of unions.” He notes the inherent problem of establishing a national minimum wage. “The same wage that would leave a single person starving and destitute in a large metropolis could provide a life of luxury in a rural community in another area…,” he writes. “What constitutes a just wage in one area can be different in another.” At the same time, Cooney insists that we also remember how and why labor unions formed in the early 20th century. “Not only were working conditions very bad,” he writes, “but businesses also formed agreements which worked against the employees so that, when dissatisfied with one employer, the employee had no hope of a better condition elsewhere.”

At one point in U.S. history, it was not uncommon for the worker to be treated as an expendable cog in a machine. Insofar as conditions have improved, the existence of unions has had something to do with it. In any case, Cooney reasons, if we insist that investors must have the liberty to pool their money as they see fit, what on earth could justify denying the same liberty to workers, with respect to their skills and labor? All I would add is that, ideally, wages would not be the only thing at stake in discussions of labor; in a healthy society, a man’s profession is not just about making sufficient money but is a source of identity and self-respect, a role he plays in his community.

Perhaps the most compelling passage in the entire collection comes from editor Thomas Storck. As he observes, capitalism is frequently hailed as the ideology of innovation — or even “creative destruction.” This Faustian quality has implications for our understanding of capitalist freedom, implications that too often are overlooked. “When some new technology becomes an established part of our lives, then our society and its institutions, indeed, our material culture itself, are shaped by this technology and become dependent on it,” Storck writes. “The automobile is a perfect example of this.” Cars have “thoroughly shaped or reshaped our lives, our families, our jobs, our cities”; they have fostered “the separation of work from the family” and “the growth of gigantic cities with the consequent loss of farmland and forest,” including much land “given over to parking lots, gas stations and superhighways”; and they have “exacerbated the already existing tendency, especially in this country, toward rootlessness.” Whether our embrace of the automobile “was wise or not is not the point,” Storck continues. “The point is that what might have seemed merely a simple decision to make use of a new technology for moving about from place to place has radically reshaped how we live.”

For better or worse, a child who grows up in a culture defined by the automobile will experience life and community very differently from a child who grows up in a culture dominated by buses and trains, to say nothing of horses — and, more to the point, the child himself has zero say in the matter. Whatever his legal freedoms and rights, his character will be shaped by decisions made by others long before he was born. That our decisions about what technologies to embrace irrecoverably limit and circumscribe the liberties of succeeding generations is a simple, inescapable fact of the human condition, one which paeans to capitalism always ignore.

Lest this reviewer seem a mere cheerleader for Money, Markets and Morals, I’ll raise a few objections. Toward the end of Donald Boland’s generally edifying contribution to “A Colloquy on Usury,” for instance, he dismisses the question of whether “there is anything that Christians should do or avoid in their financial or economic behavior as a result of the sinfulness of usury.” For Prof. Boland, “this question does not need to be asked. The intrinsic evil of anything has the obvious effect on the conduct not only of a Christian but any human being of obliging them not to do what is intrinsically evil regardless of circumstances.” To make an analogy: The only conclusion to draw from acknowledging the sanctity of human life is that you should not procure an abortion; aside from that, don’t worry about it! The truth is, we all participate indirectly in an economy riddled with injustice and exploitation, one which is unlikely to reform itself soon, and we should be at least a little troubled by this regardless of whether we are in a position to correct the matter. With all due respect to Boland, real human beings really do face dilemmas, hard choices, and gray areas.

I must also take issue with Count Giuseppe Dalla Torre when he asserts that “communism as an economic system, aside from all of its philosophy, is not the antithesis or the opposite of, or against the nature of Christianity as much as capitalism is.” This reviewer finds such a claim difficult to reconcile with Pope Leo XIII’s stern critique of capitalism but flat condemnation of socialism in his encyclical Rerum Novarum (1891). According to Leo, the remedy socialists propose for the woe brought by capitalism “is manifestly against justice,” since “every man has by nature the right to possess property as his own,” and “private ownership is in accordance with the law of nature.” Ergo, communism is not merely wrongheaded but tramples on what the Pope saw as a natural right.

To dwell too long on such points is nitpicking, however, and distracts from the timelier points of Money, Markets and Morals. Today, the greatest threat to genuine private property — and liberty — comes not from Big Government but from a globalization process driven by international corporations. It is crucial for us to step back and rethink capitalism, especially now that social-media moguls enjoy the power to shape public opinion, and as virtual reality, synthetic biology, and artificial intelligence seem to offer Silicon Valley the ability to remake humanity at a fundamental level. No matter how sympathetic figures like Elon Musk and Peter Thiel might be in some respects, it would be foolish for Christians to trust them, much less elevate them as role models. Come to think of it, the stultification Adam Smith warned us about might be an even bigger factor in an overspecialized world of functionaries and technocrats than it was in the early days of the assembly line. Are we really so sure that utilitarian imaginations warped by the assumptions, processes, and procedures of “the global economy” are freer and broader than those of the men who put together Model T’s?

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