Is There a Moral Basis for Capitalism?

From FEE.org (August 1983):

The contemporary indictment of capitalism usually takes two basic forms. First, there is the economic indictment. Those who make the attack from this perspective argue that capitalism is not viable because it is afflicted with insurmountable contradictions which result in a permanent state of crisis, or problems which can only be temporarily resolved by palliatives. Second, there is the moral indictment. Capitalism, according to this view, is the exploitation of man by man, the profit motive and the rule of money supreme, with an inevitable cruel injustice everywhere manifest.

The claim that capitalism provides the best economic structure for man’s moral development, long a virtual article of faith in American life, is met with derision these days by politicians, journalists, university professors, and theologians. Clergymen daily rage with indignation against the “evils” and “injustice” of the competitive market. Capitalism is, so we are told, “intrinsically immoral.” “Soul dead, stomach well alive,” was Thomas Carlyle’s estimate of the market system, and all the cultured despisers of commercial civilization are in hearty agreement.

The critics are right when they demand that our economic system rest on a firm moral basis. If it can be shown that it does not, then we should abandon it immediately and seek to establish a more just order. At the outset, however, important distinctions and clarifications must be made. Arthur Shenfield calls attention to one of the most vital, viz., “the economic system called capitalism is a system of relationships. It is a composition of markets, and markets are by definition systems of relationships, not purposive bodies. It follows that we can apply the tests of morality to capitalism only by considering the behavior of individuals who operate within it, not as a system capable in itself of being moral or immoral.”

It is Shenfield’s contention that since capitalism is “a system of relationships it cannot be moral or immoral in the sense that a purposive group can be . . . .” He denies, however, that such a system is morally neutral. “If its essential characteristics on balance positively nurture or reinforce moral or immoral individual behavior, it is a moral or immoral system in its effects.”

Economic freedom is born and thrives only in nations or communities where reverence for all human life is widely held to be a supreme value, where the personal safety of the neighbor and his family is generally regarded as inviolably sacred, and where compassionate individuals, acting either alone or through voluntary associations, are encouraged to offer substantial assistance to the poor and needy. This differs radically from the command society of socialism, whose adherents are frequently found not only approving but actively promoting violence, terrorism, and the destruction of the middle class. In such societies (and this would include the Welfare State) “compassion” is institutionalized, and becomes a monopoly of the state.

The seventh commandment, “Thou shalt not commit adultery,” teaches us, as does the ninth commandment, that contracts must be honored and double-dealing scorned. “The historic link between the biblical idea of binding covenants and the Western idea of binding contracts,” writes Gary North, “is obvious enough.” The very idea of contracting for joint benefit presupposes a high level of moral integrity and faithfulness on the part of all the parties engaged in the transaction.

In socialism the paternal state seeks to vitiate the necessity for the sanctity of contracts by substituting its omnipotent controls and decrees. Opportunity for moral development and the growth of trust between free men is thereby suppressed.

The right of private ownership is based on the eighth commandment, “Thou shalt not steal.” According to the Westminster Shorter Catechism, this commandment requires “the lawful procuring and furthering the wealth and outward estate of ourselves and others.” The commandment forbids “whatsoever doth or may unjustly hinder our own or our neighbor’s wealth or outward estate.” The eighth commandment “means that the Bible countenances private property—for if a thing is not owned in the first place it can hardly be stolen.” [read more]

Just as I thought. God’s a capitalist. (Just joking! Then again…)