We hear much discussion these days on the subject of the economy. Why is our economy in the doldrums and what needs to be done to restore our once prosperous business and job climate? Are the problems merely cyclical or are they systemic?
As a Christian I believe the Bible reveals truths about the nature of man which speak to these basic economic issues.
The Bible declares quite adamantly, "The heart of man is more deceitful than anything else and desperately sick – who can understand it?" (Jeremiah 17:9, HCSB ). The New Testament reiterates this essential, though humbling truth about human nature: "for all have sinned and fall short of the glory of God," (Romans 3:23, HCSB). If it is true that human nature is fallen and selfish (i.e. "desperately sick") then some forms of economic theory or economic models will never work.
When I lived in England as a Ph.D. student, I was visited during my first fortnight in the country by a fellow student seeking to sign me up for the Socialist Club. In some wonderment I asked him, "Why would you think I would want to join the Socialist Club?" He responded, "Well, I've been told you are a Christian minister, and if you are you would have to be a Socialist."
I responded that if I am a Christian who believes the Bible is the truth I couldn't be a Socialist and be intellectually consistent.
Why? The Bible tells us men are fallen, sinful, and selfish and Socialism is based on the premise that individuals in particular and as a whole are at best good, and at worst neutral. Thus, they believe men will work according to their ability and receive according to their need. The overwhelming majority of human beings only do that grudgingly and then only when forced by government coercion. Such coercion never produces the productivity and innovation produced by a capitalist, free market system.
Let's be clear. Socialism doesn't work because it is incompatible with the true nature of humanity as it is, not as we might wish it to be. Unlike Ayn Rand, who contends selfishness is a virtue, Christians condemn such selfishness, but acknowledge it as a reality which must controlled, and channeled not desired.
Marxism and Socialism will never produce as much wealth as capitalism because most men will not work with great productivity and sacrifice when they do not get to keep a substantial portion of the rewards of their labor for themselves and their loved ones.
Free-market capitalism "capitalizes" on this essential truth and produces substantially more wealth for all while socialism just ends up trying to ever more equitably divide a never growing pie. Capitalism bakes a lot more pies to be sold, transported, distributed, and eaten.
Modern day China and India are graphic examples of this truth. In the last 50 years China and India have alleviated more poverty in their population by adapting modified forms of capitalism than they did (or ever would have) under their previous Communist (China) or Socialist (India) systems.
Also, the United Kingdom adapted Socialism in 1945 and sank into a post-war economic slough of despond which made it the "sick man" of Europe when Margaret Thatcher was elected on a pro-capitalist platform in 1979, cut the top tax rate from 91% to 28% and liberated her country from its socialist malaise and made it the most vibrant economy in Europe.
It is also true that Laissez-Faire capitalism has been impacted by human selfishness. As Lord Acton (1887) once observed, "all power tends to corrupt and absolute power corrupts absolutely." Since capitalists are fallen human beings they too will be selfish and will corrupt government and exploit workers if no restraints or controls are placed upon them.
With few or no external controls, unfettered capitalism will exploit workers and seek to monopolize markets to the detriment and harm of both workers and consumers. The "Robber Baron" era of late 19th century America serves as a good example of what happens when this occurs. The abuse of that era led to the Sherman Anti-Trust Act and other government legislation and the formation and growth of the American labor movement.
Unfortunately, labor leaders and their union members, as well as government bureaucrats, are human beings and thus prone to selfishness and corruption themselves. Consequently, just as big business had too much power and disadvantaged the comparatively less powerful in the Robber Baron era, you had Big Labor and big federal government possessing too much power in the middle decades of the 20th century, leading to suppression of productivity and wealth production.
When government over regulates or labor over demands through having too much power it is just as corrosive to the overall wellbeing of the community as exploitation by unrestrained big business interests.
The power of unions needs to balanced by right to work laws, which protect individual workers from being coerced by overzealous, power-hungry union leaders.
The economic shambles that was once the proud city of Detroit, stands as graphic testimony of the ability of unrestrained union power to kill the goose that laid the golden egg. America does have a thriving automobile industry, it's just far from Detroit. Instead it is in Tennessee (Nissan and Volkswagon), South Carolina (BMW), and Alabama (Mercedes Benz) which are all right to work states.
Similarly, government officials are tempted by too much power and their oppressive regulations and high tax rates were stifling innovation and productivity in the last half of the 20th century until the Reagan revolution pulled the balance back into a healthier direction. Remember the air traffic controllers who thought that their union could defy the government?
America's federal government system of checks and balances is an instructive example of how to resolve the inherent conflicts cause by human selfishness. Each branch of government checks and balances the other, diffusing the power among the several branches. In a similar fashion, Americas modified capitalist system has management (capital), the workers (unions), and government (laws and regulations), diffusing the power through checks and balances. Our economy gets into trouble when one or more of these three entities get too much power in relation to the others.
Our healthiest and most widespread prosperity occur when these three groups are working harmoniously together, each clearly checking and balancing the power and innate selfishness of the other two.
1 Holman Christian Standard Bible