Money, Greed, and God: Why Capitalism is the Solution and not the Problem

By Jay Richards

The few remaining communists are cloistered mostly in places like Harvard and Havana (pg.2) (Money, Greed, and God by Jay Richards)

At bottom, economics is about us – what we choose, what we value, what we represent in language and symbols, how we interact with each other in a market, and especially how we produce, exchange, and distribute goods, services, risk, and wealth (5). (Money, Greed, and God by Jay Richards)

We believe that human beings are made in God’s image – the imago dei. Our creative freedom reflects that divine image. This is one of the least appreciated truths of economics (8). (Money, Greed, and God by Jay Richards)

Sharing freely [1. Voluntary]. State is nowhere in sight [2. Church] (22). (Money, Greed, and God by Jay Richards)

Third…. Lying [3. Private ownership]. Fourth, the communal life of the early church in Jerusalem is never made the norm for all Christians everywhere [4. Short term]. So it’s no surprise that the early communal life in Jerusalem was never held up as a model for how the entire church should order its life, let alone used to justify the state confiscating private property (23). (Money, Greed, and God by Jay Richards)

“Socialism only works in heaven, where they don’t need it, and in hell where they already have it” (27). (Money, Greed, and God by Jay Richards)

That’s one of the grave dangers of utopian thinking: it blinds us to the important differences among the various ways of ordering society (31). (Money, Greed, and God by Jay Richards)

Can’t we build a just society? The answer: we should do everything we can to build a more just society and a more just world. And the worst way to do that is to try to create an egalitarian utopia (32). (Money, Greed, and God by Jay Richards)

I hope you already have a heart for the poor. Lots of Christians do. But do you have a mind for the poor? Unfortunately, that’s in rather short supply (35). (Money, Greed, and God by Jay Richards)

Prudence…. It’s one of the four cardinal virtues, along with justice, fortitude, and temperance. Cardinal is based on the Latin word cardo, which means “hinge.” These four virtues are cardinal because all the other virtues hinge on them (36). (Money, Greed, and God by Jay Richards)

Minimum wage laws…. Such laws replace cooperation with coercion, since they make it a crime for individual employers and employees to enter freely into agreements for work and wages (37).  (Money, Greed, and God by Jay Richards)

Union employees, for instance, who rarely make minimum wage, like these laws since they make it more costly for employers to hire less-skilled workers who have to be trained (39).  (Money, Greed, and God by Jay Richards)

[Fair Trade: Extra paid can’t go elsewhere – so it slows down the economy.] Paying artificially high prices for some coffee encourages poor farmers to enter or stay in the coffee market when it’s against their long-term interest to do so (41). (Money, Greed, and God by Jay Richards)

[Fair Trade Grades?] Farmers in fair-trade schemes are deprived of this information. It’s in the long-term interest of some of these farmers to start growing more-competitive products or even to more out of agriculture altogether. Moreover, the small percentage of farmers in fair-trade schemes are being favored arbitrarily over farmers in most places, who don’t have access to such a scheme (42). (Money, Greed, and God by Jay Richards)

While some aid has helped a few things around the edges, it has utterly failed as a solution to third-world poverty (45). (Money, Greed, and God by Jay Richards)

What does tax money sent from one government to another have to do with speeding up the creation of wealth? Nothing. No developing country ever got rich that way (46). (Money, Greed, and God by Jay Richards)

In the United States, it started with FDR’s 1930s programs. They were meant to end the Great Depression but deepened and lengthened it instead…. “War on Poverty,” a part of his grandiose Great Society agenda implemented in the mid-1960s. Judged by its results, however, the War on Poverty was more a War on the Poor. Statistically, the poverty rate was already on a steady decline before Johnson put his hand to the domestic plow. It had dropped from about 22 percent to 15 percent between 1959 and 1965. After 1965, just after the War on Poverty began, the poverty rate settled in, and it has continued to fluctuate between 12 and 15 percent up to the present day, even though American society is now much more prosperous overall (47). (Money, Greed, and God by Jay Richards)

The best predictor of childhood poverty is being in a single-parent household headed by a mother (48). (Money, Greed, and God by Jay Richards)

Besides being morally dubious, government transfers of wealth are degrading to recipients. As George Gilder put it in Wealth and Poverty, “It is extremely difficult to transfer value to people in a way that actually helps them. Excessive welfare hurts its recipients, demoralizing them or reducing them to an addictive dependency that can ruin their lives.” When government takes the property of one person and gives it to another, it sets up a lose-lose game disguised as a win-lose game. One group is coerced; the other is degraded (54). (Money, Greed, and God by Jay Richards)

The money government spends comes from somewhere (55). (Money, Greed, and God by Jay Richards)

If the government weren’t occupying most of the charitable ecosystem, charities would be profoundly different. The ecosystem would be filled with thousands of well-funded responsive charities accountable to their donors and communities. As it is, government has invaded the ecosystem, and mostly made a mess of it…. The only known cure for widespread, generational poverty is capitalism (56). (Money, Greed, and God by Jay Richards)

For a market to work right, people need private property (71). (Money, Greed, and God by Jay Richards)

In the Bible, the right to have private property is nowhere stated but everywhere assumed (72). (Money, Greed, and God by Jay Richards)

Smith [a deist] believed in God, so he saw this invisible hand as God’s providence over human affairs, since it creates a more harmonious order than any human being could contrive…. Hayek did not see God’s providence in the market, he, too, marveled at what he called its “spontaneous order” (75). (Money, Greed, and God by Jay Richards)

So a market doesn’t just distribute goods and services. It’s a highly sensitive network for gathering and disseminating information that would otherwise elude us. It leads to specific prices for the goods and services of interest (77). (Money, Greed, and God by Jay Richards)

We hear a lot about the brutish, competitive nature of capitalism, about winners and losers, survival of the fittest, and all that. Some of us may even have downloaded a podcast on the subject right onto our iPods. We hear far too (80) little about the miracles of free cooperation and interdependence that free markets have made possible, that have helped make things like the iPod possible. Whatever the other vices in the market, we should take no critic seriously who does not first recognize this virtue (81). (Money, Greed, and God by Jay Richards)

In fact, most such gaps are distractions. Complaints about gaps almost always reflect a basic confusion about the nature of wealth…. But that follows only if the total amount of wealth is static (89). (Money, Greed, and God by Jay Richards)

Wealth isn’t the problem. Poverty is (90). www.gapminder.org (91). (Money, Greed, and God by Jay Richards)

As creator, God has made us with the awesome power and responsibility to create…. Work itself is part of God’s original blessing, not his curse after the fall. The way in which we work, then, should reflect the fact that we are a unity of matter and spirit, of heaven and earth, neither pack animals nor angels (98). (Money, Greed, and God by Jay Richards)

When Jim Wallis announces that God hates inequality, he’s not quoting the Bible. The Bible doesn’t say that anywhere (107). (Money, Greed, and God by Jay Richards)

So if we’re concerned about power, why on earth would we want to hand more power over to the most powerful entity in human history, the U.S. government? That doesn’t make any sense. The cure is worse than the disease…. Alexander Fraser Tyler…. “It can only exist until the voters discover that they can vote themselves largess from the public treasury. From that time (108) on the majority always votes for the candidates promising the most benefits from the public treasury, with the results that a democracy always collapses over loose fiscal policy, always followed by a dictatorship (109). (Money, Greed, and God by Jay Richards)

The central point is not our greed, but the limits to our knowledge. The market is a higher-level order that vastly outstrips the knowledge of any and all of us…. So capitalism doesn’t need greed. At the same time, it can channel greed, which is all to the good. We should want a social order that channels proper self-interest as well as selfishness into socially desirable outcomes….

That’s the problem with socialism: it doesn’t fit the human condition. It alienates people from (122) their rightful self-interest and channels selfishness into socially destructive behavior like stealing, hoarding, and getting the government to steal for you (123). That’s because capitalism discourages miserliness and encourages its near opposite: enterprise (125). (Money, Greed, and God by Jay Richards)

Too often, even fans of capitalism neglect the entrepreneur, focusing on free markets rather than free men and women (130). (Money, Greed, and God by Jay Richards)

Without freedom, there can be no free creativity (131). (Money, Greed, and God by Jay Richards)

(In Jesus’ time)…By modern standards, almost everyone was dirt-poor. Only the rich, a tiny minority, had any money to lend. Any money lending, then, would involve rich people lending to their poor neighbors, probably their kin, for a basic need like food (140). (Money, Greed, and God by Jay Richards)

Banks were using accumulated wealth to create more wealth by functioning as brokers between depositors and investors…. Between banking and insurance, the buying and selling of risk allowed many new ventures and enterprises to be created (143). (Money, Greed, and God by Jay Richards)

It slowly dawned on people that money lent for capital was different from money lent to a poor neighbor out of need…. By lending the money, for instance, the bank is forgoing other opportunities to use the money, and it’s taking a risk in lending the money in the first place (144). (Money, Greed, and God by Jay Richards)

Rodney Stark…. The Victory of Reason (148).

Education and capitalism emerged not with the Reformation or the Enlightenment, but in medieval (149) monasteries. And, as we’ve already seen, finance and banking emerged in northern Italy’s city-states centuries before Luther nailed his ninety-five theses to the Wittenberg door…. “The British colonies were founded on production,” Stark writes, “the Spanish colonies on extraction” (150). Stark… Christianity provided the prerequisites for a vibrant capitalism (151). (Money, Greed, and God by Jay Richards)

Jesus says that even sinners lend money, expecting to receive back the same amount. He says nothing about charging interest. Instead, he says we should lend expecting nothing in return. So he’s admonishing gratuitous generosity, not denouncing banks for charging interest on business loans (155). (Money, Greed, and God by Jay Richards)

(The parable of the Talents….) He should have put it in a bank where it could bear interest. If you’re looking for Jesus’s views on interest, this is the best clue there is. Jesus isn’t giving an economics lesson – the parable is about the kingdom of God.  But he would never have told this parable if he thought it was always immoral to accept interest for lending money to someone. On the contrary, he treats risk, investment, and interest in a positive light, and trusts his listeners to do the same (156). (Money, Greed, and God by Jay Richards)

The Bible has a lot to say about the dangers of wealth and overindulgence, but it also frequently treats bounty as a sign of God’s blessing (161). (Money, Greed, and God by Jay Richards)

Capitalism refers to an economic system with rule of law and private property, in which people can freely exchange goods and services (163). (Money, Greed, and God by Jay Richards)

That’s the whole point of freedom: it always involves costs – that is, trade-offs. To choose one path is to foreclose the opposite path. Even God accepted trade-offs. He chose to create a world with free beings, one that allowed those beings to turn against him. And they did. But their freedom didn’t cause them to choose the bad. It just allowed them to. So, too, with a free economy. Critics notice all the vice present in free societies. But it is only in free societies that we can fully exercise our virtue. Charity is charity, for instance, only if it’s not coerced (164). (Money, Greed, and God by Jay Richards)

In previous centuries, only aristocrats enjoyed such pleasures. Capitalist wealth has made them available to vastly more people (181). (Money, Greed, and God by Jay Richards)

Work and change did not arise from our fall into sin. The fall simply turned work into toil, since the ground would resist our efforts to cultivate it (186). (Money, Greed, and God by Jay Richards)

“How much of any given natural resource is known to exist depends on how much it costs to know,” says economist Thomas Sowell (187). (Money, Greed, and God by Jay Richards)

Economist Julian Simon… publicly bet one thousand dollars that over the next ten years, the real prices of any five commodities would go down, not up. Ehrlich and his team took up the challenge and picked five commodities: nickel, tin, tungsten, chromium, and copper. Ehrlich’s team lost the bet…. over time, virtually any natural resource you can think of – oil, copper, mercury, coal, whatever, has gotten less scarce, more plentiful, and thus, less expensive (188). (Money, Greed, and God by Jay Richards)

Instead, we need to think not in two or even three dimensions but in five dimensions, taking into account not only the three space dimensions, but also the dimensions of time and human creativity (193). (Money, Greed, and God by Jay Richards)

Regrettably, the environmental movement, which started with many noble goals, has now become the last line of defense in the left’s attempt to stem the tide of global capitalism (195). (Money, Greed, and God by Jay Richards)

Unfortunately, the global-warming scare is now the left’s best chance to establish more national (or international) control of the economy, not in the name of efficiency or economic justice, but in the name of the earth and future generations…. just listen to the rhetoric and the proposed solutions. They almost always involve more government (or U.N.) control and less economic freedom, and treat economic progress as the problem, not the solution (196). (Money, Greed, and God by Jay Richards)

Remember the economic trade-off. According to an article in National Review, “Earth got about 0.7 degrees Celsius warmer in the twentieth century while it increased its GDP by 1,800 percent, by one estimate.” Even if we caused all the warming, that’s a great bargain (199). (Money, Greed, and God by Jay Richards)

On almost every measure, we are healthier than we have ever been, and our environment is cleaner than it has been even in the recent past. Over time, we use more-efficient and less environmentally destructive forms of energy… United Nations… unreported 2007 document titled “State of the Future” began: “People around the world are becoming healthier, wealthier, better educated, more (200) peaceful, more connected, and they are living longer.” The document even goes so far as to admit that these improvements are the fruit of free trade and technology…. Most resources aren’t merely matter. They emerge where man and matter meet. And just as human ingenuity leads to new resource in a market economy, so, too, it can forge solutions to real environmental problems (201). (Money, Greed, and God by Jay Richards)

Every predicted global environmental catastrophe based on current trends has proved false. If we look at long-term historical trends, in contrast, the evidence of declining energy costs, increasing energy abundance, and growing prosperity provides no basis for such pessimism (202). (Money, Greed, and God by Jay Richards)

Most people in free societies grow up to produce more resources than they consume. This is the Achilles’ heel of the misanthropic strain of modern environmentalism: free societies allow human beings to be fruitful and multiply rather than merely consume. If they didn’t, market economies would shrink. Instead, over the long run, they grow…. Man, not matter, is the ultimate resource. “If you want 1 year of prosperity, grow grain. If you want 10 years of prosperity, grow trees. If you want 100 years of prosperity, grow people.” – Chinese proverb (206). (Money, Greed, and God by Jay Richards)

The Top Ten Ways to Alleviate Poverty; or, Creating Wealth in Ten Tough Steps

1. Establish and maintain the rule of law.
2. Focus the jurisdiction of government on maintaining the rule of law, and limit its jurisdiction over the economy and the institutions of civil society (209).
3. Implement a formal property system with consistent and accessible means for securing a clear title to property one owns.
4. Encourage economic freedom: Allow people to trade goods and services unencumbered by tariffs, subsidies, price controls, undue regulation, and restrictive immigration policies.
5. Encourage stable families and other important private institutions that mediate between the individual and the state.
6. Encourage belief in the truth that the universe is purposeful and makes sense.
7. Encourage the right cultural mores – orientation to the future and the belief that progress but not utopia is possible in this life; willingness to save and delay gratification; willingness to risk, to respect the rights and property of others, to be diligent, to be thrifty.
8. Instill a proper understanding of the nature of wealth and poverty – that wealth is created, that free trade is win-win, that risk is essential to enterprise, that trade-offs are unavoidable, that the success of others need not come at your expense, and that you can pursue legitimate self-interest and the common good at the same time.
9. Focus on your competitive advantage rather than protecting what used to be your competitive advantage.
10. Work hard.

These ingredients, or some subset of them, constitute the only known pathway to the large-scale creation of wealth. If we really want to alleviate poverty, we should focus on these ingredients, and not well-meaning plans that fail or do more harm than good (210). (Money, Greed, and God by Jay Richards)

The more advanced an economy, the more important the intangible becomes (211).

The market is, as Hayek said, “probably the most complex structure in the universe.” It deserves our admiration. And yet very few Christian critics… have fully understood it. Fewer still have thought of it as (214) a stunning example of God’s providence over a fallen world…. It is just what we might expect of a God who, even in a fallen world, can still work all things together for good (215). (Money, Greed, and God by Jay Richards)

The great eighteenth-century thinker Adam Smith considered this “invisible hand” of the market, which transcended human limitations, as an expression of God’s benevolent and providential governance of human society, since it created a more harmonious order than we would otherwise expect (217). (Money, Greed, and God by Jay Richards)