Friday, July 15, 2005

Capitalism: Free Will

With the possible exception of the entire Cuban government, most entertainers, many college professors, and some Europeans, everyone by now should know that capitalism is superior to all other economic systems. Capitalism is both morally superior and functionally superior to every other economic system that has been attempted. There is no reason to believe any other system will ever outperform capitalism either. I’ve heard Christians claim that economics are not important to God. However, the very reason capitalism works so well is because capitalism is consistent with the laws of God.

The first key to the moral and functional success of capitalism is the fact that God created humans with the free will to make choices, and just as importantly, God punishes and rewards individuals based on the choices each individual makes. I know it’s not always clear why we are being rewarded or punished, and sometimes it feels like we are being rewarded or punished when we are not, but still, a basic of Christian belief, and a fact of life, is that there are consequences to our actions.

The more a society is controlled by legislators, bureaucrats, courts, and administrators, the less individual freedom the members of the society have. Conversely, the less a society is controlled, the more individual freedom is available to the members. Absolute freedom would create anarchy. The extremes do need some control. A society cannot let murderers run free or powerful corporations manipulate markets, but within the extremes, individual choices lead to the best outcomes.

When individuals are allowed to choose what to produce and what to buy, the most innovative producers and the most diligent shoppers are rewarded accordingly. Producers who recognize a need in society that is not being currently met can start supplying a product or service at a price buyers are willing to pay. If the price is too high, some potential buyers will choose not to buy. Likewise, if the price is too low, there will be more people who want to buy, than there is product available. Eventually, the interactions between the buyer and the seller will create an equilibrium where the supply and demand are the same. These free will interactions determine how much product is produced, how much product is bought, and what the right price should be. Some products are introduced with very high profit margins and some products are introduced at a price that doesn’t even cover the cost. Some producers are willing to lose money initially if they believe the long term prospects of their product will create opportunities for a profit.

When individuals are told what to produce, producers are not rewarded for innovation, and buyers are not rewarded for diligence or even allowed to choose what to buy. Socialized medicine and other government solutions to economic needs don’t work because of the lack of free will interactions between the buyer and seller to set a price that rewards innovative producers and diligent buyers. The supply and demand never meet because consumers want more than the producers are willing to produce. Theoretically, socialism could also produce more of a product than consumers are willing to buy, but in practice, socialism never is able to produce enough of anything because socialism doesn’t reward innovative producers.

My next post on capitalism will be about the second key to the moral and functional success of capitalism.


Anonymous said...

The irony is that modern capitalist doctrines was created by hardcore anti-Christian atheists. Ayn Rand was a rabid atheist, Reagan's economic adviser, Milton Friedman, was an anti-religious Objectivist Rand devotee, and John Keynes, godfather of most current economic policies, hated Christianity and called it "irrational hocus pocus" (he also was also anti-Semitic and the head of a eugenics foundation). Similar story with Alan Greenspan and every Federal Reserve big shot. Bizarre still is that many Christians who support the plutocratic policies associated with social Darwinism strenuously denounce Darwin's evolutionary science because it supposedly leads to, well, social Darwinism.

The truth is, capitalism is inherently unethical and anti-Christian. If people would bother to read post neoclassical economics (heck, even Einstein and Thomas Edison, fathers of electricity and relativity widely denounced capitalism), they'd understand that capitalism, on the level of simple physics, is unethical. Google Positive Money, for example, to learn money created as debt and the sheer act of profit must breed poverty. A dollar of profit = a dollar of debt. This is why 80 percent of the world lives on less than ten dollars a day and why there are more slaves (but of course CHristians dont care!) today than in the 1800s. Capitalism creates debt, poverty, bondage correspoding to the wealth it creates. Second law of thermodynamics applies to everything.

David M. Smith said...

Hi Anonymous, the person holding a view does not validate or invalidate a view. A view is independent of the holder of the view. Free Will economics was created by God. Free will is not social Darwinism; free will brings a willing seller into agreement with a willing buyer. Socialism is Darwinism where the most powerful force others to pay for their desires.

The capitalism I describe is not the capitalism of the present American government dominated by the Federal Reserve, Big Business, and Big Politician. Ayn Rand was accurate in her descriptions of what happens when Free Will is replaced by all of the Bigs. Ayn Rand was right about objective truths and she was mostly right about religion. She lacked wisdom because she lacked Christ which left a hole in her philosophy of objectivism.

God created us to be free. He also created us to acquire and grow our possessions and then to freely share our possessions, not be forced to surrender our possessions by a misguided and coercive government.

Most Christians do care, but many are misguided by wolves in sheep clothing, and many let their feelings override objective truths.