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Jun 08, 2006

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Dave

Now that you've gotten your mind off futbol, I really like your thoughts about capitalism. We make choices, hoping we are in some sense thinking God's thoughts after him. I've made my share of bad choices, but at least I know the name of the game, which, of course, is baseball. (Not all of us live in KC, you know!)

Michael Kruse

Don't get me wrong. I like baseball too. In fact, I look forward to Kansas City having a baseball team some day.

Daniel

Hey, you're a Royals fan too? Nice to see I'm not the only one!

However, on topic, I have found myself disillusioned with Capitalism more and more as I have grown older.

To me, the Gift Economy is the best system that man can hope to attain. The free and open sharing of all goods and services without the need for quid pro quo exchange maximizes our production potential while minimizing the shortcomings of our current economic system. Even the early church in Acts is described as using such a system.

Granted, if/when the day ever comes when money becomes unnecessary, we will have Capitalism to thank. The latter can only truly come from the former.

Michael W. Kruse

Hi Daniel. Not so good be a Royals fan these days. :( Maybe next year!

I'm not sure what you would mean by capitalism. I find people attaching all sorts of concepts and values to it that I don’t believe are there. Here are some thoughts;

First, the Gift Economy, sharing everything in common, has been tried over and over again with each generation. It always collapses within a generation or two. The reason is what economists call “The Tragedy of the Commons”. This concept goes all the way back to the Greeks but we keep revisiting it.

If you and I are in a community of animal herders with a common pasture, a problem is going to develop. Each additional animal I add to my herd is going to bring me great benefit but cost me little. Grazing land is free. But if everyone acts as I did and adds livestock, excessive demand will eventually be placed on our finite amount of grazing land. As it becomes scarcer the incentive is to use it more quickly because using it preserves my herd and not using it places great cost on me. Plus others benefit from lack of use. When pasture land is divided up and owned privately, then I bear the cost of adding too much livestock and of not preserving my pasture. I have an incentive to manage my livestock and pasture in a sustained manageable way that I do not if it is held in common. When everyone has private ownership, resources are used on a sustainable basis and the tragedy of the commons is avoided. Very few “property held in common” circumstances avoid this problem.

Second, quid pro quo exchange is antithetical to capitalism. Capitalism is about win-win exchanges. I produce a gallon of milk. You have $3.00. We exchange. Why? Because I value the $3.00 you have more than I value the gallon of milk I have. You value the milk more than your $3.00. We both win. That is the whole point of free exchange. It is to create endless win-win exchanges.

Third, with gifting there are no prices. With no prices there are no signals to suppliers about how much product they should make (more if prices rise and less if they decline). With no prices there are no signals to buyers that they should cut back (product is getting expensive) or buy more (price is cheaper). Prices are an information system that keeps supply and demand efficiently coordinated on a sustainable basis. A small community may be able to hold things in common for a while but it is impossible for an economy. The Gift Economy would not maximize production. It would make it incoherent.

Finally, it is not quite true that the early church lived without property in a Gift Economy. Acts 5:3-4: Then Peter said, "Ananias, how is it that Satan has so filled your heart that you have lied to the Holy Spirit and have kept for yourself some of the money you received for the land? Didn't it belong to you before it was sold? And after it was sold, wasn't the money at your disposal? …” NIV Acts 2:44-45 says “All the believers were together and had everything in common. Selling their possessions and goods, they gave to anyone as he had need.” It appears the private ownership continued. Each believer had an allegiance to the community that obligated him or her to contribute to the need of community as needed. They didn’t cease private property as evidenced by Ananias. Furthermore, we so zero evidence of private property abolishment or Gift Economy taught anywhere else in the Bible.

Therefore, I don’t think there is a Gift Economy taught on the Bible nor do I believe it is even possible.

Mark Bradshaw

My own take on it at http://vicariouschristian.blogspot.com/2008/01/capitalism-vs-christianity.html

Bob Robinson

[[Is Capitalism God’s Ordained Economic System?]]
Michael Kruse is helpful here when he writes,
If the question is whether or not free market capitalism is the biblically prescribed model for the economic life, then the answer is an emphatic “No.” There is no culturally transcendent economic model given in the bible...

Rick McGinniss

I know this is an old post, but I've been going back through all of your oikonomic writings (trying to wrap my head around a way to present some of these concepts to our congregation in a sermon series)and this particular post brings up a question that's been rolling around in my head: you maintain that it is inappropriate to claim that capitalism is "THE" biblically mandated system (and I agree), yet you do allow that it "emerged from a society with a distinctively Christian ethos"; would you be just as comfortable saying that socialism (or even "participatory facism") can NOT emerge from a Christian ethos?

My own hunch at this point is that socialism is not only counterproductive empirically, but also does not follow from the biblical worldview. However, since I have a lot more to learn about oikonomics I feel like I'm skating on thin ice. I just want to be sure I'm not reading in my own biases or overreacting to things like this:

http://www.rightpundits.com/?p=3699

(check out the YouTube of a dated Phil Donahue interview with Milt Friedman at the bottom of the page!)

Michael W. Kruse

Rick, I would nuance things this way.

Throughout the first 1,000 years after the fall of Rome feudalism was the dominant social/economic structure. But as early as the 900s we can detect the seeds of capitalist societies emerging. Proto-capitalism was certainly in existence in the early northern Italian states by the 13th and 14th centuries when it began to wane there and moved to northern Europe. That is to say, capitalism predated the Enlightenment.

The Enlightenment was rooted in reason, linear time, and the idea of progress within history. This mindset was deeply connected with Christian influences. Christian thought also contributed the notion that the world operates according to orderly patterns. Inanimate objects don’t have desires or wills, nor is their movement directly the result of gods or other entities directing them. Thus, potential events can be assessed and risk calculated for any given action. This became essential for the development investment and insurance. These ideas really began to take over during the Enlightenment.

The Enlightenment, with its obsession on human autonomy, impacted everything in human society. I’d say it created two equally false models. First, the idea of survival of the fittest economics with minimalist government. It hinders one’s autonomy to be responsible for others either through charity or government. Second, the idea of achieving autonomy through government. Government takes care of my every need and that frees me to be and do whatever I want.

Capitalism and the Enlightenment could not have emerged without Christian thought. Marxism, one extension of Enlightenment thought, is really a Christian heresy. It has the idea of foreordained progress leading toward a utopia that will one day emerge and we will all live in abundance and in harmony. Except here, collective humanity is god, not God. Marxism was also a revision of capitalism because it believed fully in the need for the accumulation of capital and employing it in production. It just made the state of the owner of capital instead of private citizens. Fascism is also a perversion of capitalist ideas.

So in short, you likely couldn’t have had Marxism or fascism without having had something resembling capitalism. And you likely couldn’t have had capitalism without first having Christian categories and outlooks. In that sense they all emerged or diverged from Christian thought.

We live in a messy world of human imperfection and just because capitalism may have been catalyzed by Christian thought, no doubt other influences are also present in our economic structures. Capitalism is unprecedented in the good it has brought and that would seem to be one indicator for its nomination as a more “godly” system. But it does not create utopia. What way of relating has yet to emerge that will make capitalism seem to our descendants as feudalism is to us? Maybe there isn’t one. Maybe there is.

Rick McGinniss

Thanks for the thoughtful reply. That really was helpful.

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