"For the love of money is a root of all kinds of evil. . ."
I Tim. 6:10; NKJV
|Quentin Metsy, Money Changer and His Wife
Adam Smith famously argued that an entrepreneur, pursuing his own interest, is "let by an invisible hand to promote an end which was no part his is intention," viz., the interests of society as a whole (The Wealth of Nations, Book IV, Chapter II). But is this really true?
Most of the writers whose essays appear in The Morality of Capitalism: What Your Professors Won't Tell You paint an attractive picture of capitalism. The imagine a marketplace in which entrepreneurs make rational decisions to create wealth and freely exchange value for value. They acknowledge that the process results in unequal outcomes, but argue that the process itself is fair and ultimately improves the standard of living of everyone. It sounds fine in theory, but in actual practice things don't always work out that way.
First of all, the players in this game are hardly equal. On the one hand there are individual workers who have nothing to trade but their own labor. On the other hand there are large international corporations with huge amounts of capital at their disposal. The corporation obviously has far more leverage than either the lowly worker or the local mom-and-pop business. If the corporation pursues its own interest (actually, the interests of its shareholders) it is likely to take advantage of the little fry.
Then there is the fact that the players do not always produce real value. This is especially true on Wall Street where investors attempt to make private fortunes purely through speculation, and where banks make money simply by letting others use their money. The bankers might make it possible for others to create wealth, but they themselves and the investors often are not producing anything of value. They are living off the wealth created by others.
Then there is the ironic fact that the players do not always make rational decisions. To their own way of thinking, of course, they are being rational, even when economists think that they are not. An economist will tell you that in order to compete successfully in the marketplace a company must produce something of value and satisfy its customers. But the seemingly impeccable logic of this simple proposition seems to be lost on the MBA's graduating from our business schools. Fixated on the bottom line, but knowing little about the day-to-day operations of the company, they focus on driving down costs and boosting productivity. But the result is that the operation becomes a numbers game with everyone focused on producing a statistical result on paper instead of satisfying the customer. Who is going to pay attention to the customer if it's going to cost you your job for failure to meet a quota?
And, of course, there is always the age-old temptation to dishonesty. For some managers and business owners, lying, cheating and stealing is the rational course of action, if one thinks that he can get away with it.
Large corporations in particular are susceptible to this sort of predatory and even irrational behavior. They exist for the sole purpose of generating profits for the shareholders. They rarely take responsibility for the social consequences of their actions. They will make money any way they can, even if it brings others to ruin. The CEO is accountable to the shareholders, not the employees or general public, and the shareholders are generally interested in quarterly profits.
And make no mistake about it, the losers in this game suffer real hardship. Low wages, long hours, and even worse, outright unemployment, can leave a working class family without adequate food, clothing, shelter, or health care. If the rich man loses half of his fortune, he is still rich. If the poor man loses his job, he cannot pay his bills. Such are the tender mercies of unrestrained capitalism.
Strictly speaking, the problem is not with any particular social or economic system, but with human nature. A free market, per se, does not force anyone to become calloused, greedy or dishonest. Wealth can be gained honestly and used benevolently. But in a fallen world there are plenty of wolves ready to eat the sheep. Inhumanity is still inhumanity, no matter how we dress it up in the language of accountants and economists.
In a civilized society, then, the market must be regulated and the thieves brought to justice. The government can take judicious steps to alleviate hardship. And it certainly makes perfectly good sense for society collectively to provide for the elderly and infirm. We are merely providing for our own future needs.
"But whoever has this world's good, and sees his brother in need, and shuts up his heart from him, how does the love of God abide in him?" (I John 3:17).
You may also enjoy:
Boom and Bust