Utah Free Press

Is Christianity Compatible with Capitalism & Democracy?

By Richard Okelberry, March 21st, 2010 - This essay is written in response to a statement by Richard Warnick, a writer for the political discussion site OneUtah.org.  While the conversation surround a posting by Dwight Sheldon titled, “JAT #3: Capitalists Don’t Understand Labeling Theory (Or Just Abuse It, Like Everything Else)” is certainly interesting to read, at one point Mr. Warnick made several comments out of thin air about the compatibility of Christianity and Capitalism/Democracy.

Michael Moore’s movie about capitalism is out on DVD now. Well worth seeing. He points out the truth, which is that capitalism is utterly antithetical to both democracy and Christianity.”

 “Capitalism vs. Christianity (short version) For most of its 2,000 year history, Christianity not only frowned on capitalism, but banned it outright.” – Richard Warnick

First, it is wrong to assume that all Christians interpret Biblical teachings in the same manner.  While there certainly are denominations like this small sect which only boasts a traditional membership of 2013 full time members, it is simply inaccurate to hold up their stance on Christianity and Capitalism as a theological standard.  Considering that this Church is also based in Florida, it is also unlikely that Mr. Warnick is a member of this Church and likely does not even share their interpretation of scripture.  As such, it is completely conceivable that Mr. Warnick simply did a quick Google search on the subject looking for someone to support his position, rather than giving serious consideration to the validity of this particular denominations interpretation of scripture.

Perhaps if he would have used a slightly larger sampling of Christian doctrine he would have found that his position is certainly in the minority and we would not even have to be having this conversation.

While Mr. Warnick’s link above does trace back to an unconfirmed position by The United Catholic Church, (an apparent, independent inter-denominational sect based on Catholicism that is not directly affiliated with the Roman Catholic Church) it certainly is not indicative of the way that a large portion of Christianity view Capitalism.  In fact, to make their argument, the United Catholic Church apparently crafted their own definition of Capitalism.  (I should also note that Mr. Warnick’s reference is being published on a political election site for someone named Rob Bowman.)

Capitalism is making money with money. Interest, capital gains, investment income — everything we call “unearned income” — these are the lifeblood of capitalism.” – http://www.rmbowman.com/catholic/econom2.htm

Of course anyone who has taken a basic economics class knows that the true definition of Capitalism has to do with the private vs. public ownership of the means of production and the distribution of wealth from that production.    

Capitalism is an economic and social system in which capital and land, the non-labor factors of production (also known as the means of production), are privately owned; labor, goods and resources are traded in markets; and profit, after taxes, is distributed to the owners or invested in technologies and, industries.” – http://en.wikipedia.org/wiki/Capitalism

In making their case which Mr. Warnick used to support his assertion, this church focuses almost exclusively on quotes from the Bible regarding the practice of charging interest when lending money.  Of course, Capitalism can exist without such lending practices. Even then, the quotes used from the Bible do not deal with capital lending (lending to those that are NOT in dire need) but the immorality of predatory lending practices where money is lent to those in dire need or desperation.  This type of lending is considered a form of theft.  In these cases the Bible tells us that if money is lent to these desperate individuals, (though pure charity is preferred if possible) the money should be repaid without interest and forgiven completely every seven years. 

Ultimately, the act of lending money should not lead to destitution for the individual.  This type of lending is most often conducted through black market trading and is more often known as loan-sharking.  Modern Capitalistic systems have long built in systems to help curb such lending practices.  Also, it is clear that Christians can participate in Capitalism while never having to engage in such practices.

Another Biblical argument made by denominations like this against Capitalism argue that because Capitalism produces wealth and wealthy people are prevented from entering heaven, Capitalism it’s self is also wrong.  To support this theological position, such denominations (as this one did) will almost always quote the famous Biblical passage, Matthew 19:23-24 taken from the story about the “Rich Young Man.”

“Then Jesus said to his disciples, “I tell you the truth, it is hard for a rich man to enter the kingdom of heaven. ²⁴Again I tell you, it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God.”

To most this sounds very cut and dry.  If you are rich you will not go to heaven, right?  Of course being rich is certainly a relative thing.  When we Americans think of being rich or wealthy we think of the guy living in the mansion on the hill.  Of course to someone living in a cardboard box in South America or a hut in Africa, some of the poorest in the United States are still rich simply because they are able to enjoy indoor plumbing and rarely if ever go hungry.  Of course Jesus was not speaking here about the evil nature of wealth it’s self but the inability of man to achieve salvation of his own works or deeds.  It is VERY important here to read the entire passage to understand what Jesus was teaching.

“¹⁶Now a man came up to Jesus and asked, “Teacher, what good thing must I do to get eternal life?”

 ¹⁷“Why do you ask me about what is good?” Jesus replied. “There is only One who is good. If you want to enter life, obey the commandments.”

 ¹⁸“Which ones?” the man inquired. Jesus replied, ” ‘Do not murder, do not commit adultery, do not steal, do not give false testimony, ¹⁹honor your father and mother, and ‘love your neighbor as yourself.”

 ²⁰“All these I have kept,” the young man said. “What do I still lack?”

 ²¹Jesus answered, “If you want to be perfect, go, sell your possessions and give to the poor, and you will have treasure in heaven. Then come, follow me.”

 ²²When the young man heard this, he went away sad, because he had great wealth.

 ²³Then Jesus said to his disciples, “I tell you the truth, it is hard for a rich man to enter the kingdom of heaven. ²⁴Again I tell you, it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God.”

 ²⁵When the disciples heard this, they were greatly astonished and asked, “Who then can be saved?”

 ²⁶Jesus looked at them and said, “With man this is impossible, but with God all things are possible.”

 ²⁷Peter answered him, “We have left everything to follow you! What then will there be for us?”

 ²⁸Jesus said to them, “I tell you the truth, at the renewal of all things, when the Son of Man sits on his glorious throne, you who have followed me will also sit on twelve thrones, judging the twelve tribes of Israel.

²⁹And everyone who has left houses or brothers or sisters or father or mother or children or fields for my sake will receive a hundred times as much and will inherit eternal life.

³⁰But many who are first will be last, and many who are last will be first.” – Matthew 19:16-30

First, we must recognize that the wealthy young man that Jesus was addressing here was in denial about his sin.  He believed that he already had lived a life in accordance with the law, so Jesus was illustrating to him that he was mistaken by showing his own attachment to wealth.  Also, notice here that immediately after Jesus said, “Again I tell you, it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God,” his disciples then asked, “who then can be saved?”  The disciples immediately understood that what Jesus was saying could be applied to almost anyone.  So Jesus clarified his point saying, “With man this is impossible, but with God all things are possible.” 

You see, Jesus was not saying that wealth in it’s self is evil but our attachment to worldly things and our sinful tendency to put them before God is.  This lesson is a lesson about both worshiping worldly things before God, which is a violation of the 1^st Commandment, and the inability of man to achieve salvation on his own.  It is not a lesson about the “evil nature” of Capitalism as some might suggest.

Of course the few Christians and Christian detractors that like to use this passage to show a division between Christianity and Capitalism always seem to forget to address the one parable, the “Parable of the Talents” given by Jesus that most directly addresses the issue of whether Christianity and Capitalism are compatible.  This parable appears only 6 chapters after the above passage in Matthew 25.

“The Parable of the Talents

 ¹⁴“Again, it will be like a man going on a journey, who called his servants and entrusted his property to them. ¹⁵To one he gave five talents of money, to another two talents, and to another one talent, each according to his ability. Then he went on his journey. ¹⁶The man who had received the five talents went at once and put his money to work and gained five more. ¹⁷So also, the one with the two talents gained two more. ¹⁸But the man who had received the one talent went off, dug a hole in the ground and hid his master’s money.

 ¹⁹“After a long time the master of those servants returned and settled accounts with them. ²⁰The man who had received the five talents brought the other five. ‘Master,’ he said, ‘you entrusted me with five talents. See, I have gained five more.’

 ²¹“His master replied, ‘Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things. Come and share your master’s happiness!’

 ²²“The man with the two talents also came. ‘Master,’ he said, ‘you entrusted me with two talents; see, I have gained two more.’

 ²³“His master replied, ‘Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things. Come and share your master’s happiness!’

 ²⁴“Then the man who had received the one talent came. ‘Master,’ he said, ‘I knew that you are a hard man, harvesting where you have not sown and gathering where you have not scattered seed. ²⁵So I was afraid and went out and hid your talent in the ground. See, here is what belongs to you.’

 ²⁶“His master replied, ‘You wicked, lazy servant! So you knew that I harvest where I have not sown and gather where I have not scattered seed? ²⁷Well then, you should have put my money on deposit with the bankers, so that when I returned I would have received it back with interest.

 ²⁸” ‘Take the talent from him and give it to the one who has the ten talents. ²⁹For everyone who has will be given more, and he will have an abundance. Whoever does not have, even what he has will be taken from him. ³⁰And throw that worthless servant outside, into the darkness, where there will be weeping and gnashing of teeth.” – Matthew 25:14-30 NIV

This passage not only discredit the theory that Christianity and Capitalism are incompatible but it even reinforces the fact that it is perfectly ok for Christians to earn interest on an investment (a primary definition of Capitalism used by Mr. Warnick’s reference above), “you should have put my money on deposit with the bankers, so that when I returned I would have received it back with interest.” 

If Capitalism is so “Evil,” no doubt Jesus would have chosen a completely different metaphor.  For years Leftists have been arguing that Jesus promoted Communism through his teachings.  This simply is NOT TRUE.  The reality is that Socialism and Communism both eventually destroy religion because Socialism and Communism both seek to consolidate power from the many onto the few.  When this happens, anything that might have sway or control over a people, including religion, must be eradicated if power and control is to be maintained. 

This is the reason why there has not been a single major nation that has adopted full blown Socialism/Communism that has also allowed the free expression of religion.  Also, considered that the free expression of religion goes hand and hand with the concept of free speech; another right that is largely “discouraged” by the types of regimes that find Socialism/Communism as an economic model preferable.

While the Bible does regularly discourage excess and encourages voluntary (not institutionalized) care for the poor, it tempers such discouragement with the warning that such devotion to wealth can lead one astray and blind individuals to their ultimate purpose as devoted followers of Christ.  Ultimately a person of great wealth can do great things for those in need, if they are able to resist the hold that such wealth can have on the individual.  This is not a condemnation of Capitalism but a clear recommendation that we be moderate and charitable in our lives.

As is common, this conversation has come about by a misconception that is created by the failure to take Biblical Scripture as a whole.  While the tendency to pick and pull individual quotes from the Bible may serve the political agendas of individuals, it does not create a clear and accurate understanding of what the Bible is trying to teach us about our relationship to God and each other.

The Influence of Christianity on Modern Democracy.

Now, for those that believe the other half of Mr. Warnick’s argument that Christianity and Democracy are incompatible consider this:

Our very Democratic Republic here in the United States was directly the result of the Protestant Reformation.  (In fact many economists and sociologists believe that the Protestant Reformation was also responsible for our current Capitalist system also.  See: The Protestant Ethic and the Spirit of Capitalism by Max Weber, 1905.) 

As “Reformers” like Dr. Martin Luther broke away from the Roman Catholic Church they were left looking for a new way to govern their new church.  After all, for generations the Roman Catholic Church had a Pope that acted as the final authority in all matters of theology and many matters in politics; as most of the governing aristocracies of the day were heavily influenced by the Papacy who could call for even Kings and Queens to be removed from power if they were seen by the Papacy to be acting against the Church. 

These new churches decided on a democratic form of leadership.  These early Protestants were all too aware of how consolidated power could corrupt even the most holy of men, even the Pope.  They felt that corrupting a large body of individuals would be far more difficult and chose Democracy as the preferred way of managing the new Church.  Now when you consider that the vast majority of our founding fathers were some variant of Protestant, it isn’t a huge leap to understand how when they went looking for a new form of governance in America that they would turn to a system that had worked very well for many of the fledgling Protestant Churches that populated the new world.

Ultimately, it is completely ridiculous to suggest that Christianity and Democracy are incompatible when the very form of Democracy we enjoy here in the U.S. today was first adopted by early Protestant Churches seeking to limit the authority of the Church. 

Many Protestant Churches today (not all) still use this system of governance which looks something like this:

Voter’s Assembly (the Electorate)

Elected Council (the Congress)

Elected President and Vice President (Administration)  

Elders (the Judiciary).

Medicare is NOT Socialism!

by Richard Okelberry, March 12th, 2010 - Throughout our current debate over current efforts to “reform” our healthcare system one of the core points of contention has been over the definition of Socialism.  Opponents to the current reform efforts of President Obama and Democratic Congressional leaders have properly pointed out that the current proposed reforms would ultimately result in the advancement of Socialism here in the U.S.  In response, those that support the current reform effort often point to the fact that few who oppose the current reforms have made any efforts in opposing or eliminating our Medicare system.  These proponents see little difference between what is currently being offered and our current Medicare system.  They argue that if you are not raising objections about Socialism regarding Medicare then you have no business doing so with the current reforms.  Of course this “hypocrisy argument” might be sound if only it were true that there were no difference between the current proposals to essentially nationalize our healthcare system and Medicare.  The reality is that there is a major deference between Medicare and the current reform proposals.

 What is Socialism?

First, it must be understood that every government program is NOT an example of Socialism.  For the term Socialism to be applied to a government program we must ask ourselves whether that program is providing a service that could otherwise be provided by the private sector and our free-market system.  Examples of these services that generally cannot or would not be effectively provided by the private sector are: core infrastructure needs, parks, police/fire services, roads, utility delivery (easements), the space program, military and defense, etc…

To test weather a particular government program is an example of Socialism or not we must ask several basic questions; does the particular product or service form a Natural Monopoly  and does the needed product or service have the potential for generating a profit?  Essentially, if there is no profit in it, the free market will not provide it regardless of how needed it is. 

 Medicare not an example of Socialism!

If we apply these tests to Medicare it becomes readily apparent that Medicare is not an example of Socialism because it is a needed product or service that would not generally be profitable to private industry.  While some would may argue that providing end of life medical coverage to the elderly is not a “needed” program, I will take the stance that it is needed because one of the measures by which any modern civilization is it’s willingness to care for those that have contributed so much to our society throughout their lifetime.  In my mind, caring for the elderly is little different than caring for our veterans whose service has helped to guarantee our democratic freedoms.  It is an obligation that we take on as a society to the benefit of society.

Medicare was initially design to be a form of medical insurance for the elderly.  Ultimately, as we age we ALL inevitably incur an ever increasing number of medical problems and expenses as a simple result of aging.  In addition, this happens at a time in our lives when we are no longer earning an income and the ability to pay for medical insurance is greatly reduced. 

Private insurance is based on the idea that a group collectively pays into a policy so that there is a pool of funds to pay for the medical expenses incurred by the few.  In the case of geriatric medical insurance, the number of people needing to draw from that cash pool to pay expenses quickly outpaces the ability for the cash pool to be replenished.  In essence, those in need of geriatric medical insurance would in the long run be better off paying for their own medical expenses out of pocket as the premiums for such insurance would become too great.  There simply is no profit to be found in providing private geriatric medical insurance.  As such, Medicare as it was originally conceived simply cannot be considered a classical form of Socialism because it provides a service that would not be provided by the free market.    

Private industry or business would simply not provide geriatric insurance.  Even if they did, the premiums would be well beyond the ability of those individuals covered by those policies to pay and the extra load of covering those individuals would have to be placed on the younger generation.  This would ultimately make medical insurance simply to costly for many employers to provide for their employees.  Because the care of our elderly through private insurance is simply not economically viable Medicare was invented as a program where individuals would essentially pay their Medicare premiums throughout their life, rather than waiting until they were no longer working and unable to afford it.

Medicare does not work without free-markets.

Of course any discussion about the viability of Medicare must include the inevitable fact that Medicare relies heavily on the private medical system.  As such it is arguable that the current proposed National Healthcare System would remove the few remaining free-market incentives in health care that help keep costs relatively low.  As our private health care system becomes less profitable under government intrusion into the free-market it is foreseeable that Medicare would suffer greatly as the cost to the government to provide geriatric medical coverage would rapidly increase.  Ultimately, the very proposed healthcare reform that is supposed to help reduce health costs will likely cause more bureaucratic inefficiencies. 

Such government pressure on any free market system usually leads to the formation of monopolies as free market competition is often replaced with governmental regulation.  Over the years we have seen a similar consolidation in companies that provide military hardware to the U.S. government.  Where once there were many, now there are only a few huge providers with ever expanding costs.  In many cases the economic success of these government contractors is tied more to their political connections and political influence than governed by their economic efficiency and ability to produce the best product at the lowest price.  Ultimately, the move by the U.S. government towards a single payer heath care system, which is the stated goal of both President Obama and many Democratic leaders, could ultimately cause the cost of Medicare to consume an even greater portion of our national budget as fewer private health care providers are able to compete and free-market competition is replaced with a “political-market” system.

Addendum:

As one final note, I want to point out that if this discussion about Medicare and Socialism teaches us anything, it is that contrary to what many Conservatives and even some Liberals think; not all “social” programs are examples of Socialism.  Many “social” programs would be better classified at Social Engineering Projects.  Even our public welfare system is not a service that would otherwise be provided by the free-market.  While many would argue that it is an unnecessary entitlement, I would argue that welfare in its various forms, while currently inefficient and mired in bureaucracy, provides a vital service to society.  Like Social Security, beyond making us simply feel good about caring for the elderly, poor or destitute in society, welfare is ultimately the nation’s insurance policy against revolt and revolution.  While this may sound cynical, historically people are far less willing to take up arms against their own nation when their children are fed.  Also, there is a clear economic advantage to having an economic safety net that keeps people from falling into destitution and keeps them acting as viable players in the free-market system. 

While it is true that Socialism often does lead to in increase in the number of Social Engineering reforms which ultimately erode personal liberty, we all should remain aware that the term Socialism describes a shift from private control of industry to government control of industry.  In this respect, the purchase of a controlling share in General Motors is a prime example of Socialism while having the government provide a valuable service like Medicare that either would or could not be provided by private industry is not.

Even Adam Smith, the recognized father of modern Capitalism would seem to agree that there is a legitimate roll for government in Capitalism.

“Smith specifically stresses three things that government should do in a society of natural liberty. First, it should protect that society against “the violence and invasion of other societies. Second, it should provide an “exact administration of justice” for all citizens. And third, government has the duty of “erecting and maintaining those public institutions and those public works which may be in the highest degree advantageous to a great society,” but which “are of such a nature that the profit could never repay the expense to any individual or small number of individuals.” 

Put into today’s language, Smith explicitly recognizes the usefulness of public investment for projects that cannot be undertaken by the private sector — he mentions roads and education as two examples.” Adam Smith and the Origin of Capitalism – PBS

Playing Kick the Can with Keynesian Economics

By Richard Okelberry, March 2nd 2010 - If we are learning nothing else from this recession, we are all at least becoming much more acquainted with Keynesian economics.  While debate continues to rage between the left and the right about the ability of this economic theory to help bring the country out of recession, there has always been one major, undisputable flaw to the system.  Keynesian economics, regardless of it’s effectiveness in managing the economy, always has and always will dramatically grow the size of the government.

This fatal flaw is never more evident than in a statement made by Utah State Senator, Fred Hunsaker (District 11, Logan) at a recent “listening session” with state lawmakers.

“All the stimulus that came last year…it’s not here now. It’s gone. So now what do we replace it with?  Well, we replace it with rainy day money. But all that does, is that’s one-time money again. So we kick the can further down the street. We’ll have to pay the piper sometime.” – Sen. Fred Hunsaker

When the recession hit, every state in the country found its self facing a serious revenue shortfall.  As people lost there jobs and profits for industry began drying up, there simply wasn’t enough cash coming in to pay for all the obligations that the various states had made.  While Utah was in better financial shape than most, when the federal government came along with some Stimulus money to spread around and help pay the bills, the temptation was simply too great.  It was far too easy, even in a conservative state like Utah, to take the cash, balance the budget and make a few capitol improvements.

Of course now that the stimulus money has dried up, the state is left wondering how in the world they are not only going to balance the budget but also fund the new obligations/programs that the stimulus made possible.  This same cycle has been occurring since Keynesian economics was first introduced.  During hard times the government hands out a bit of cash, new government programs are created which require more government employees which eventually require higher taxes to pay for those new positions when the economy improves.  When the next recession hits, the entire cycle starts over again and the government grows even bigger.

If Karl Marx had known of the Keynesian economic theory, he would have no doubt been a huge fan.  Karl Marx predicted that eventually capitalism would be converted through socialism into communism.  If he had known that Keynesian economics was such a powerful tool for growing the government he might have given it preference to his “Social Revolution” that relies so heavily on the dirty business of often violent class warfare.

Keynesian economic theory is also known as Keynesianism because while its effectiveness is widely disputed and scientifically unproven, some economists and many on the left preach and advocate its use with almost religious zeal.  While President Obama seems convinced that this theory is sound and believes it to be widely regarded by economists as the best way of dealing with the recession, there are those that certainly disagree with him.

“Massive government spending likely lengthened the economic struggles each time. Economists in the field are deeply divided on the issue of federal stimulus … I don’t know why Obama said all economists agree on this. They don’t. If you go down to the third-tier schools, yes, but they’re not the people advancing the science.”

– Edward Prescott, Nobel Prize winner for economics in 2004 for his study on business cycles. (Arizona State University – http://wpcarey.asu.edu/ecn/prescott_nobel.cfm)

This theory that President Obama seems to hold so much faith in was born out of desperation during the Great Depression by the economist John Maynard Keynes.  In its most basic form, it calls for direct intervention by the government in the free-market economy to reach “Full Employment” and “Price Stabilization.”  John Maynard Keynes basically gave politicians a pro-active way of dealing with the Great Depression.  No doubt that when given the choice of doing nothing and allowing the economy to self correct or appearing to their constituents to be actively working on “fixing” the economy, the Keynesian way was as it is today, just too attractive. 

Keynes followers during the Great Depression were essentially telling politicians of the time that they could stabilize the economy through the use of stimulus spending and maintain the economy through the manipulation of currency, tax rates and interest rates.  While we have been using Keynesian economics in one way or another since the 1930s, to date the U.S has never reached the Full Employment or Stabile Prices that were promised by what appeared to some at the time to be a utopian system.  We have however been growing the size, scope and influence of the Federal Government at an astonishing rate; along with the tax rates needed to support that growth.

In the 20 years before the implication of Keynesian economics the bottom bracket tax rate went from 1% in 1915 to 6% in 1918 then back down to 1% just before the Great Depression.  This was the last time our nation saw single digit tax rates as rates steadily rose to accommodate the growth of the government under Keynesian economics manipulations.

Ultimately, if Keynesian economics grows the government then logic dictates that through its use, the government will continue to grow until nothing but government is left.  Eventually, the growth of the government and the need for society to support its growth will become too much of a burden on free-market capitalism.  As capitalism begins to fail at the hands of government the entire economic system will begin to collapse.  This will eventually lead to even more governmental involvement and assistance until every industry in one way or another is nothing more than a branch of the government.  The fact that the government had to step in and purchase controlling share of General Motors (one of the worlds largest manufacturers) in 2009 is a perfect example of this.

If we cannot find some way to stop the terrible temptation that Keynesian economics creates in the hearts of politicians, John Maynard Keynes will ultimately have his way with us.

 “The best way to destroy the capitalist system is to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.” – John M. Keynes