Ethics and the Economy

Continuing the debate on capitalism (and as a prelude of answering the question about what can exactly be defined as”progress” and whether we are solving the major problems in the economy in the correct fashion), first we must delve into the ethical arguments underlying all economic considerations.

This post will discuss the ethical concerns of capitalism and socialism, while also touching upon the effects of Christianity on ethics and how that relates to economics. Now, before you go all establishment clause on me, understand that I study at a Catholic university and thus, Christianity relates to a majority of readers. Additionally, Western ethical and moral values rely heavily on Christianity in their historical development. So even if you are atheist or agnostic, or even Jewish, many of your morals have a strong Judeo-Christian heritage.

Let’s start with the Christian concepts of market economy. According to Carl-Henric Grenholm, an ethics professor at Sweden’s Uppsala University and publisher of the academic article, “Justice, Ethics, and Economics,” there are four different Christian evaluations of the market economy– the first being Christian social conservatism. Christian social conservatives “accept a capitalist system with a market economy and private ownership of the means of production.” However, they also acknowledge “the market should not be completely free and unregulated.” Essentially what Professor Grenholm explains is that people all have an equal value, but are inherently different in productivity and function and thus the distribution of goods should also be different. These economic beliefs are “based on the Christian doctrine of creation.” Christian social conservatives hold that God’s will is expressed in his creation. And it is accepted as well that God’s creation is naturally a hierarchy. Man is greater than beast which is greater than plant which is greater than dirt. Therefore, the economic sphere must follow this pattern. Under this branch of Christian economic theory, economic distribution is also a hierarchal system.

Following these Christian concepts, Christian neoliberalism is a “defense of a capitalist society with a pure market economy and a private ownership of the means of production.” This Christian view of neoliberalism parallels the view of pure capitalists, even up to the ethical justification. “Christian neoliberalism is combined with the idea that justice is an equal distribution of individual liberty and autonomy.” Christians who fall under this category believe that human beings, regardless of religious belief, have dignity, which is exercised in their liberties and freedom. They assert that state intervention in private entrepreneurship abridges the liberties and freedom of the people and therefore disrespects human dignity.

On the left side of the political spectrum, we have Christian socialism. Christian socialists “argue in favor of a democratic socialism and they critique a capitalist society.” As previously stated, this ideology tends to be more liberal than social conservatives and neoliberals, specifically because they Christian socialists define justice “as a radical change of social institution which makes possible an equal distribution of welfare and power.” Thus, Christian socialists believe that the love revealed through Christ corresponds with an equal value to humanity. Where they differ from the more conservative social ideologies lies in the economic actualization of that belief. Whereas Christian conservatives and neoliberals believe equal opportunity, Christian socialists believe in equal outcome.

Going to a more moderate viewpoint, Christian social liberals “strive neither for laissez-faire, nor a socialist society.” These Christians find a balance between the two ends of the spectrum. They believe that the “state has an economic responsibility to promote social welfare and justice… (but) a market economy is necessary to generate economic growth and to allocate scarce resources.” Most Christian social liberals accept a market economy, but call for government regulations as needed. The ethical argument is that Christian love does not directly apply to the economy, but can be modified to call for some regulation as well as a free market. This viewpoint is the most moderate (most would consider it just slightly left-wing) of each argument on the political spectrum, with Christian neoliberalism furthest right and Christian socialism furthest left.

Now comes the real question, who is MORE moral, the socialist or the capitalist? I’m guessing the answer to this question varies widely, and I know that I am personally pro-capitalist because I believe that equality of opportunity is more moral than equality of outcome. However, instead of elaborating further on the post, I want to open up the question to the readers. So, readers, who is the angel and who is the demon? Choose wisely. But first, here is a nice little visual to ponder (yes, it is pro-socialist, I know, that’s the point).

Captain Capitalist signing out.

Captain Capitalism

The goal of this post is to a) counter Alex’s brief definition and summarization of socialism and b) allow for readers to have a more in depth understanding of capitalism in order to facilitate mor eeducated discussions.

Capitalism, as defined by Google, is “an economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state.” Many people prefer to call capitalism “economic individualism.” The basic premise of capitalism is that the pursuit of self-interest is not only legal, but encouraged. There is little to no limit regarding the margin of profit, the number of workers, or the scope of a company’s operations. When put into practice, a capitalistic society essentially renders the government incapable of directly impacting the economy. Now, don’t get me wrong, a government is necessary to create a (relatively) peaceful and functional society, and complete removal of governmental influence in the economy is risky; the goal of modern and more moderate capitalists is to limit what powers the government has over the economy.

Capitalism first became prominent during the Industrial Revolution. In 17th century England, large factories became the beneficiaries of the capitalistic society. These factories, which hired many women and children, often faced harsh criticism because of their poor work environment, long hours, and low wages. However, many of these factories also provided a place for the workers to live. Also, the life of a factory worker was far better than the alternative. Previous to factories, a majority of children were needed on the farm, sent to parish poorhouses, or became beggars to provide some sort of income for their families. The notion that capitalism created a large population of poor individuals ignores the fact that the rise of capitalism correlates with the rise of population density. Perhaps the poor were not more numerous, but simply more visible.

In short, capitalism trusts the regulation of the economy to the individual. A key aspect of a free market is the understanding of the relationship between company and customer. In order to maintain a steady flow of customers, a company must aim to please. There are numerous ways a company can please customers. But the idea is that a company exists to make money. And in order to make money, customers must be satisfied with the company, its services, its employees, and its reputation. Therefore, a company cannot afford to take advantage of customers, because they will quickly go out of business.

I hope this improves your knowledge of capitalism and/or answers the question, “Why capitalism?” This is a barebones post, but it introduces the ideaology of a capitalist and that is what I wanted to do.

And thus I leave you, but first, in light of Halloween being just around the corner, here is a video that does not necessarily have to do with capitalism, rather it addresses taxation, which certainly has some effect on the economy. Enjoy!