Too often, the word “capitalism” is the red flag that enrages the bull of social justice. But I would argue that what we call capitalism today is a caricature of the real thing. It shares some of the characteristics of true capitalism but without its inherent sense of social responsibility.
For generations, capitalism referred to an economic system flowing from what Max Weber identified as the Protestant (Work) Ethic. This ethic was preached from the Reformation pulpits of Europe. It featured three key principles: the dignity of work, the virtue of thrift (delayed gratification), and charity (personal-responsible care for members of the community). Hard work, coupled with a commitment to the pursuit of excellence and thrift, leads to the formation of capital. When the virtue of generosity (social responsibility) is added you have true capitalism.
Wealth does not come from the ground as materialists like to claim. Wealth is a product of human innovation and creativity. The creation of wealth comes from the mind. For this reason, economist Michael Novak argues that the word capital is derived from the Latin word caput – head. The human mind is the source or fount of wealth.
What the world knows today as capitalism could better be called Hedonistic Consumerism. Many Western economies are based on hedonism. They are characterized by unbridled consumption and instant consumer gratification. Another modern corruption of true capitalism is Crony Capitalism, profits derived from close relationships between powerful political interests and the business community. A third perversion is Predatory Capitalism, maximum profits as fast as possible without regard for ethical or moral constraints, without consideration of consequences in the community.
These distortions are not new. The ancients called it chrematistics – the art of getting rich. Chrematistics was an economic order marked by manipulation of property and wealth so as to maximize short-term exchange values. The focus is on individual consumption. Wealth is created and spent without thought of being socially responsible.
Chrematistics stands in contrast to what the ancients called oikonomia. This Greek word literally means “the stewardship of the house.” From this word we derive our English word “economics.” Oikonomia focused on the management of a household so as to increase its value to all its members over time. The focus is on benefiting the community. Wealth is created with an eye to social responsibility.
The table below captures some of the contrast between chrematistics and oikonomia.
|Definition||Stewardship of the house||The art of getting rich|
|Activity||Management of a household||Manipulation of property and wealth|
|Time frame||Increase value over the long-term||Maximize short-term profits|
|Outcome||Benefitting the individual and the community||Individual consumption|
|Moral concerns||Socially responsible||Socially irresponsible|
|Modern parlance||Stock investment||Stock trading|
|Old-world parlance||Plant an olive grove||Rent an olive grove|
Capitalism and Social Responsibility
What we call the Protestant Ethic is a legacy of the Reformation. This application of biblical principles transformed the economic and social life of entire nations. These principles came from the founding generation of Reformers: Martin Luther (Germany, 1483 – 1586), John Calvin (Geneva, 1509 -1564), and John Knox (Scotland, 1514 – 1572). Their spiritual and metaphysical “children” were the English Puritans of the sixteenth and seventeenth centuries. This included those reforming the Church of England and the “New England” Puritans (1620-1680). The “grandchildren” of the reformers, men like Jonathan Edwards in the United States and John Wesley in England sparked the First Great Awakening (1734-1740). This movement once again transformed England and what would become the United States. The Reformers and their offspring taught and practiced the Protestant Ethic. One of their beliefs was that economic development must be socially responsible.
The Protestant Reformers studied the scriptures to see how they applied to every area of life, including the social, economic, and political spheres. These principles, applied, made Geneva a laboratory of reform; it became known as “the city on a hill.” This phrase came to America with one of the children of the Reformation, John Winthrop (1587 – 1649). Winthrop was a Puritan lawyer and founding governor of Massachusetts in 1630. While on board the ship Arbella, Winthrop preached a sermon, “A Model of Christian Charity.” For his fellow settlers, he cast a vision for the task ahead, a picture of mutual love and Christian community.
Winthrop called the Puritans to love one another, to be a community marked by social responsibility.
|Now the only way to avoid this shipwreck, and to provide for our posterity, is to follow the counsel of Micah [Mandate], to do justly, to love mercy, to walk humbly with our God. For this end, we must be knit together, in this work, as one man. We must entertain each other in brotherly affection. We must be willing to abridge ourselves of our superfluities, for the supply of others’ necessities. We must uphold a familiar commerce together in all meekness, gentleness, patience and liberality. We must delight in each other; make others’ conditions our own; rejoice together, mourn together, labor and suffer together, always having before our eyes our commission and community in the work, as members of the same body. So shall we keep the unity of the spirit in the bond of peace.|
He speaks eloquently of the settlers as a community, not only knit together, but also characterized by a responsibility to look out for others. They would suffer together and rejoice together. For the colony to be successful, its people would need to be socially responsible in their enterprise.
|For we must consider that we shall be as a city upon a hill. The eyes of all people are upon us. So that if we shall deal falsely with our God in this work we have undertaken, and so cause Him to withdraw His present help from us, we shall be made a story and a by-word through the world. We shall open the mouths of enemies to speak evil of the ways of God, and all professors for God’s sake. We shall shame the faces of many of God’s worthy servants, and cause their prayers to be turned into curses upon us till we be consumed out of the good land whither we are going.|
Winthrop continues by saying that the Massachusetts Colony would be for the new world what Geneva had been for the old, a city on a hill. The whole world would be watching to see if this grand experiment would succeed or fail. If they worked together and cared for one another, then they would be honored and they would succeed. If they neglected social responsibility, each one looking out merely for his own self interest, they would fail and bring dishonor on themselves and their God. The sermon captured the imagination of the new community (which actually located on the three hills of Boston). The New England colonists grasped Winthrop’s vision, which ultimately shaped the conscience of the United States of America.
Ken and Will Hopper’s book, The Puritan Gift: Reclaiming the American Dream Amidst Global Financial Chaos, chronicles the impact of Puritan culture on shaping American management. From a few small colonies of humble settlers came the world’s leading economic power. The authors attribute this transformation to the Protestant ethic carried to the new world. Hard work, thrift, innovation, and a balance between individual initiative and corporate responsibility created a culture that led to America’s corporate and managerial success.
Furthermore, the Hoppers argue that as this ethic is abandoned by the nation, its economic prosperity will be endangered.
To reiterate, when we speak of “capitalism” we are not referring to those broken systems that have no sense of social responsibility, namely Hedonistic Consumerism, Crony Capitalism and Predatory Capitalism. We are referring to the socially responsible economic philosophy derived from the biblical principle of work, thrift and charity so well-articulated and applied by the Reformers and their children.
In the next installment of this theme, we will further examine the First Great Awakening. Specifically, we will consider the impact of John Wesley on Arthur Guinness, the founder of perhaps the greatest beer company of all time, Guinness Brewery.
– Darrow Miller