Vinoth Ramachandra

Archive for April 10th, 2009

Kevin Hargaden’s comment on my post of 27 March (‘Money and Morality’) raises an important issue that goes a little beyond his actual question. I would like to address that. It concerns how not to think in ‘black or white’ or, in this case, ‘left’ or ‘right’ categories.

As Kevin points out, there are many Christians in North America who have uncritically endorsed capitalism as ‘Christian’. There have been an equal, or perhaps greater, number in South America who have denounced it unreservedly as a ‘demonic’ system. More balanced critiques, such as that of the economic historian R.H. Tawney -himself a committed Christian- in the middle years of the last century have been relatively scarce. Clearly capitalism, like Christianity itself, means different things to different people in different contexts. We also have to move beyond textbook definitions and mere theory. Understanding the contexts within which we live and speak seems to be inseparable from understanding how businesses and economic policies function.

Insofar as capitalism encourages such values as creativity, innovation, personal responsibility and freedom from the overbearing weight of governmental control, it is surely to be welcomed by Christians. Competition and self-interest can have beneficial, though unintended, market outcomes. But, as I pointed out in the last post, this presupposes an overarching moral framework in place that is not itself determined by markets. Apart from the moral framework (and the accompanying rule of law), economists have long pointed out that market efficiency depends on certain conditions, such as ‘reciprocal information’ and ‘perfect competition’, and where these are lacking, markets fail.

In the real world, in contrast to the hypothetical world of the textbooks, these conditions rarely apply. Advertising manipulates human desires so that customers are never sovereign; supply does not usually reflect demand but, rather,  vested interests; and, in international trade, rich nations use their political muscle to distort markets and secure special favours for their industries. Business leaders who are most vociferous about ‘minimum government’ when their profits are soaring are the first to run to governments for ‘bail-outs’ when competition hits them hard. The playing field is never level. Those who enter the market with more power leave it with even more.

Moreover, where capitalism encourages a view of absolute property rights, or an instrumental approach to nature, and indeed to human beings (cf. the reduction of the natural world to ‘natural resources’ and of human beings too to ‘human resources’), it is surely to be resisted by Christians.  So, too, when market thinking encroaches on areas which nurture the sources of a culture’s countervailing moral values, such as families, religious communities and schools. This is what has been happening in recent decades, and hence the growing ‘anti-globalisation’ sentiments around the world. Capitalism has spawned a global culture of consumerism with which it is now identified.

Since the Second World War, many so-called capitalist countries have actually been ‘mixed’ economies. The post-war welfare state in Europe was Christian-inspired (it was Archbishop William Temple who first coined the term ‘welfare state’, as far back as 1927). The humanitarian reforms of the late nineteenth century and the post-war welfare state in Europe, the growth of labour unions, the widening of voting right and democratic accountability- all these led to a ‘social compact’ between government and business in countries as diverse as Germany and Japan. Varieties of capitalism have flourished in East Asia. South Korea, Singapore and Taiwan have seen strong government-led economic development, including government investment in education, housing and healthcare. China’s state-capitalism is controlled by an autocratic regime, and its path was paved by heavy-handed policies that spread misery across that land for generations.

Since the Reagan-Thatcher era, the conditions of economic globalisation have encouraged the worst forms of capitalism to flourish worldwide. Namely, speculative financial flows unrelated to either production or trade; sweat-shop factories and companies that ‘externalize’ the damage they inflict on the environment; mergers and acquisitions that lead to oligopolies that push small businesses out of the market; mega-malls that bankrupt neighbourhood shops; small farmers forced off the land by giant agribusinesses; American-type massive pay differentials in companies, and business practices that sacrifice workers for bigger profits.

Who, then, speaks for ‘capitalism’ today? And which capitalism do they mean?

R. H. Tawney’s classic polemic, Equality, published back in 1931, is still hugely relevant today. Two contemporary Christian economists well worth reading are Bob Goudswaard (Capitalism and Progress, 1979) and Herman Daly ( They both question basic economic assumptions. Daly’s paper ‘Uneconomic Growth and Globalization in a Full World’ (to be found on the above site, under his publications) argues that we should think of the economic system as a sub-set of God’s economy (that is, the economy of the earth). More on that some other time.



April 2009