The Humane Economy of Wilhelm Ropke

To some people, free market economics is the worst social evil of our age that is responsible for every other social evil. What causes Racism? Capitalism. Child abuse? Free market. Objectification of women? The market economy. War? Economic liberty. Poverty? The same. Bad hair days? Definitely capitalism, too. You get the idea.

On the other hand, there are others for whom free market economics are akin to the good news of Jesus Christ. Andrew Carnegie did, after all, write a book called, The Gospel of Wealth, which largely extols the market economy. There are others to this day who see capitalism as not merely permissible by God, but actually required by a correct reading of Scripture.

In reality, liberty, including economic freedom, is a necessary condition for human flourishing, but it isn’t a sufficient condition. The free market economy the cleanest dirty shirt we’ve got. Like any human system, it has sinful people involved, so it is subject to abuse and distortion. Unlike other human economies that have been envisioned, it has the best means to keep people’s natural tendencies toward evil and oppression in check.

One of the most careful proponents of a free market that I’ve read in Wilhelm Röpke. He was a German who emigrated to Turkey in 1933 because of his resistance to the National Socialist regime. Early in his life he was inspired by socialism, later by the Austrian school of economics, and finally landed on a position that encourages a free market with targeted and limited government interventions. Röpke argued for what might be described as a humane capitalism. Röpke was one of the main thinkers that inspired the creation of the West German economic system after World War II, which helped to shape its balance between social welfare and free market, a system that resulted in West Germany rapidly recovering and developing into an economic power, with East Germany lagging behind, mired in socialism.

Röpke’s classic book, A Humane Economy, is an important book for socialists and libertarians to read so they understand both the needs for and perils of a free market.

One of Röpke’s concerns is over “mass society.” It was the enmassment of human activity that Röpke had witnessed in the rise of fascism in Europe before the war. Like other forms of socialism, the National Socialists ceased to recognize people as individuals or small units, and pursued global solutions with a faceless homo economicus as the actor. This faceless stand in for humans sometimes makes a good generalization, but it fails to take into account the goodness of owning a business, of small firms being able to compete in a grand economy, and of individual craftsmanship. At the extremes, unfettered capitalism and socialism lend themselves to aggregating humans into the faceless mass. Röpke was just as opposed to corporate monopolies as he was to state monopolies. Unlike some contemporary neoliberals, Röpke recognized that the power of the state was essential in preventing any sort of monopoly from forming.

What makes Röpke particularly significant is that he honestly represents the damage that redistributive programs like welfare can have as they encourage inflationary economics and can reduce the incentives to engage in meaningful economic activity. At the same time, he demonstrates that well-designed welfare systems can be essential to provide a safety net and can actually prevent the worst cases of abuse by the state and by corporate entities. Röpke is exactly the sort of thinker that will make people on both poles of contemporary social and economic debate uncomfortable, which is one of the best reasons to listen to him.

Another important aspect of Röpke’s perspective is that he emphasizes the necessary balance between collectivism and individualism. Both ideas in the extreme are debilitating to society. Röpke writes, “Man can fulfill his nature only by freely becoming part of a community and having a sense of solidarity with it. Otherwise he leads a miserable existence and he knows it.” A more apt criticism of most forms of socialism and the contemporary economy in the United States could not be written. In socialism, one is forced to assimilate with the mass, to contribute as the authorities deem necessary and to receive in exchange only that which the collective deems warranted. In late post-industrial capitalism, one tends to be isolated from the collective, set to gain what one can earn on her own, and catechized to believe that individual freedom is something of a summum bonum. To some degree, at least, Röpke seems to offer a golden mean.

In A Humane Economy there is resistance both to state totalitarianism and the totalitarian utilitarianism of some economics. But he is unquestionably opposed to the ravages of Communism. Röpke argues:

“Totalitarianism gains ground exactly to the extent that the human victims of this process of [social] disintegration suffer from frustration and non-fulfillment of their life as a whole because they have lost the true, pre-eminently non-material conditions of human happiness.”

He continues,

“What the free world has to set against Communism is not the cult of the standard of living and productivity or some contrary hysteria, ideology, or myth. This would merely be borrowing Communism’s own weapons. What we need is to bethink ourselves quietly and soberly of truth, freedom, justice, human dignity, and respect of human life and the ultimate values. For these we must set our course unerringly; we must cherish and strengthen the spiritual and moral foundations of these values and vital goods and try to create and preserve for mankind such forms of life as are appropriate to human nature and support and protect its conditions.”

This sort of attitude is what makes Röpke so helpful. He recognizes the horrors of socialistic economics, but also sees the abyss that is a purely materialistic utilitarian capitalism. Röpke reminds us that at the heart of the economy is the human. We are not graphs and statistics alone. Those things can be helpful, but they are not enough. We need to be more humane by treating people around us like humans. Economics can only function when it is constrained by virtue.

A Humane Economy: The Social Framework of the Free Market

By Röpke, Wilhelm

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Animal Farm, Economic Freedom, and Human Flourishing

George Orwell’s Animal Farm is an important piece of literature for our age.

Though the main target of the satire no longer exists, this is a book that should find its way back into the curricula of upper elementary, middle, and high schools. There are a whole lot of young adults that are living in a fairy tale, hoping for communism, that would benefit from reading it seriously, too.

Based on history, however, I think that the importance of Animal Farm is greater than when Orwell wrote it and that it is useful in understanding human nature and why we should be very careful how we view each other and the role of the government.

There are several reasons why Animal Farm deserves a more prominent place in American curricula.

Why is it Important?

First, it is simply a good story, written well, and entertaining. The book is satire, but the characters are sufficiently plausible that most readers will acknowledge they’ve met that person before. It helps that the story is about animals. One of the reasons Animal Farm should be more broadly read is because it is a masterpiece.

Second, it is a brilliant example of how imaginative fiction is much more effective at carrying ideas than essays. Those meager writers who mainly write in the world of non-fiction should be blown away at how powerful Orwell’s depiction of communism captures the absurdities of that political and economic system. I have read some of Orwell’s non-fiction essays (he is an excellent essayist, too), but his 1984 and Animal Farm are much more compelling.

Third, Animal Farm provides a gateway for children to understand totalitarianism. As a child toward the end of the Cold War, I sometimes wondered how it was that the Communists could get and maintain control, if they made people so miserable. Orwell shows the way in a manner that even a child can understand.

It is interesting, however, that Orwell’s satire seems to have implications beyond his original intention.

Broadening Applicability

One of the more interesting facts about Orwell is that he was a socialist. The man lived in voluntary poverty in France for a time, had a deep sympathy for working class people in the U.K. (who were largely getting a raw economic deal), and as a result viewed socialism as the economic program most likely to help people out.

The intentions were good, but Orwell failed to account for the fact that whether socialism comes in through revolution (as with Animal Farm) or by popular vote, as he preferred, it tends to end in the same place: human misery.

One of the central tenets of socialism, perhaps the very core of it, is that the collective controls the means of production. There are, as proponents of socialism argue, multiple ways that this could happen. In the Soviet bloc, ownership was by the government. As the U.K. flirted with socialism, it was public ownership of certain industries while private ownership remained for others, under government scrutiny.

Although there are some Jacobin types on the far left who lobby for full on communism, most of the advocates for contemporary socialism view themselves as arguing for some sort of economic control by the people, funneled through a centralized planning system, but always being governed democratically.

Again, the intentions are (nearly) always to make life better. People that want socialism don’t want Venezuela, and they typically don’t believe they will get it.

Animal Farm, I think, helps show what the process of centralized control will always tend toward the abuses of the animals on Animal Farm and by the government in Venezuela.

Orwell wrote Animal Farm to mock the Soviet Union and, perhaps, to show that real socialism wouldn’t end up there, but there is little empirical evidence of a nation implementing broad economic socialism while maintaining both economic viability and a reasonable amount of personal freedom.

Those arguing that “real socialism” won’t end up like Animal Farm, are really just unthinkingly chanting, “Four legs good, two legs bad.”

Just like the sheep chanting against two legged humans, most of the advocates for socialism (or raw capitalism, for that matter) haven’t given enough thought to the system to deserve to comment. Additionally, they mistakenly believe that it is the number of legs that determines the goodness, rather than the way that power is structured. Their end goal is wrong.

Economic Freedom as a Goal

Economic freedom is important, but it should never be an end to itself. This is why so many of the arguments between contemporary socialists and capitalists is unhelpful. Economic freedom is always relative, always situated within a particular context and community, and should always remain a means to an end.

The end of economic freedom should be to enhance human flourishing.

As I understand it, human flourishing is the ability for individuals to flourish within the web of families and communities as we live out our calling to be the image of God. Others may want a more naturalistic description of that, but I’ll stick with my own worldview.

True human flourishing isn’t found in a universally level distribution of GDP across the community or in absolute personal autonomy. It must have the individual and community as complementary elements, with both playing a function.

Oddly, many of the contemporary conceptions of socialism in the United States believe they can get both absolute personal autonomy and total collective cooperation at the same time. One of the privileges of being a fringe idealist group with (so far) very little control of policy is that you can propose preposterous solutions without having to ask whether it is even possible for them to achieve the stated ends.

The trouble with popular forms of capitalism that put personal autonomy as the golden calf at the center of the platform is that capitalism requires a cooperative community to function, so the very end they pursue promises to undermine the ends they want to achieve. The trouble with socialistic proposals that see the collective as the solution is that the collective always concentrates power to a few who will use it undemocratically “for the common good” and that abuse of power inevitably demotivates the hard workers who are being deprived from the fruit of their labor for someone else’s vision of good. This is the inevitable end of socialism.

Animal Farm may have started with a revolution, but it shows the likely end of all collectivist economic systems. By using anthropomorphic animals, Orwell enables the reader to look beyond the caricatures and have sympathy or antipathy toward parties that would be impossible were they humans. The book enables important conversations as we consider the likely end of socialism, which makes it an important resource for having real discussions with a generation that seems to be lurching toward a false belief in the innocence of the collectivization of power.

Animal Farm

By George Orwell

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Counting the Cost - A Review

Capitalism is often used as a curse word in contemporary political discourse. For others, it is used as a description of ultimate, unadulterated good. The term, coined by opponents of a free market, has so many definitions that it’s sometimes hard to figure out exactly what those that use the term mean by it. For some that dislike free market economics, capitalism is responsible for everything that is wrong with the world. For some that prefer a free market, capitalism is the sum of all the world’s goodness.

In reality, of course, the answer is somewhere in the middle. However, it is often hard to get people on either side to listen to legitimate critiques of capitalism and responses to those critiques. A recent volume published by The Institute for Faith, Work and Economics provides a reasoned and reasonable critique of capitalism, that in the end commends continued support for free market economics. This is an important book precisely because it takes the critiques of opponents to free market economics seriously and addresses them from a distinctly Christian perspective.

Summary and Analysis

Counting the Cost: Christian Perspectives on Capitalism consists of twelve chapter-length essays that rebut common objections to capitalism. The book opens with one of the final essays penned by Michael Novak, which considers the impact and validity of his book The Spirit of Democratic Capitalism in the three decades after it was published. Novak’s epilogue from perhaps his most significant work calls for a continual reforming and humanization of our economic system, with a significant emphasis on pursuing the common good in a free society in the economic, political, and social orders. He notes that the apparent moral slide (especially in a lack of compassion for one another) must be corrected or our free system will not survive.

In Chapter Two, Jonathan Pennington outlines a vision for human flourishing built on Scripture. This is a necessary beginning point for Christians, since such a vision should shape the goals and means of any ethical economic systems. Critically, Pennington highlights the reality that flourishing is distinct from being wealthy. The goal of Christians as they engage in capitalist society is not merely to build wealth, but to encourage holistic well-being.

Chapter Three takes on the fairly common argument that capitalism, ipso facto, is contrary to Christianity. Here Art Lindsley explains why Scripture does not, as some claim, actually extol the necessity or benefits of socialism. However, the reader will aptly note, capitalism has enabled some significant abuses, which some argue makes the system itself immoral. The fourth chapter, therefore, takes up the question of whether capitalism is antithetical to Christian morality because it is based on greed. New Testament scholar David Kotter argues that greed is a real danger in capitalistic systems, but that the system is not dependent upon greed, as some critics argue. While there is a need for moral reform by market actors, the system should not be discarded simply because it has been misrepresented or, as every system is due to human sin, abused.

Chapter Five asks whether capitalism as a system is fundamentally exploitative. This is based on the sometimes states assumption by some critics of free markets that profit is inherently sinful and that anything less than ideal conditions is unquestionably abusive. Joseph Connors argues that while exploitation is certainly possible and does occur, that such abuses are not a function of the system itself. Building on that theme, Anne Bradley asks whether income inequality is evidence of exploitation in her essay in Chapter Six. Bradley argues, in short, that income inequality is not necessarily a result of abuse, though it can be and often is when the concentrated power of capital is used to game the political system. She is critical of legitimate abuses due to misuses of power, but carefully explains why absolute income and wealth equality is neither a viable nor desirable goal as some claim.

Joy Buchanan and Vernon Smith take up the question of who benefits in capitalist systems in Chapter Seven. Critics of free market economics argue that the rich are the ones who benefit from capitalism, since economics is a zero-sum game. The authors carefully show, however, that free trade is not a zero-sum encounter and that both trade partners actually benefit. Their central argument on this point is good, though there are points within the chapter they deviate from their point and offer insufficiently supported arguments that will tend to raise questions for critics that read this volume. Chapter Eight addresses the same question from another angle. Doug Bandow provides evidence that the poor are actually the greatest benefits of free markets. At the same time, he notes that free markets are not sufficient for human flourishing and honestly contends with some of the abuses that have arisen within modern, Western versions of capitalism.

In Chapter Nine, Edd Noell considers the common criticism that capitalism relies upon and inevitably fosters consumerism. This chapter concludes that consumerism is bad and that it is prevalent in society, but though its public display is a result of economic prosperity due to capitalism, it has its roots in human sin that precedes the invention of modern capitalism. Consumerism is a problem to be addressed, but not one that is truly the fault of a free market. The tenth chapter, by Wayne Grudem and Barry Asmus, considers whether global corporations export poor countries. Their answer is that they certainly do at times, but these are cases where unjust negotiations and unfair trade barriers hamper legitimate free trade. The conclusion again is that there are abuses within capitalism, which are the result of human sin, but they are not caused by the fact of free trade itself.

The eleventh chapter evaluates whether capitalism and environmental stewardship are incompatible. Cal Beisner begins by explaining that socialism has an even more devastating record on environmental stewardship than capitalism. This runs the risk of committing a tu quoque, but that is not Beisner’s intention. However, Beisner’s point is simply to note that, once again, the problem is not the economic system, but the actions of the sinful humans within it. Helpfully, Beisner recognizes the need to internalize externalities—that is, to hold companies accountable for pollution and other general costs. The core defense in this essay is helpful—human sin will lead to abuse of creation in any system. In his argument for dealing with externalities, however, Beisner offers a replacement of the regulatory role of the state with a mainly judicial one; that is, that offended parties would be able to sue as a result of environmental damages. This part of his argument is less convincing than others, as it does not seem to take into account the significant power disparity between many corporations and the people who are most effected by pollution. That is to say, his idea may be good in theory, but the practice at this time might not be possible. The overall thrust of the essay, however, is well argued and on point.

The final chapter of the volume serves as a defense against claims that capitalism has created a cultural wasteland. In this essay, Jonathan Witt acknowledges some of the social problems that have arisen along side capitalism. As with other cases, Witt concludes that they are not rooted in capitalism, but are sometimes exacerbated or made more visible because of the wealth that comes from the general prosperity of capitalist societies. This essay is a strong one, though it covers a great deal of ground. Witt helpfully wrestles with the question of distributism and so-called crunchy conservativism. He does this with integrity that illuminates the alternatives honestly.

Conclusion

None of these essays entirely refute arguments against free market economics, but they do point the way toward reasonable defenses of capitalism that are grounded in Christian thinking. Determined opponents to economic freedom will continue to raise objections and demand additional proofs beyond what these authors provide. However, the essays in Counting the Cost do provide a realistic, critical defense of capitalism as it should be, recognizing that the system is in need of reform and work to ensure that some of the egregious abuses of power (such as those stemming from cronyism) are corrected. This set of essays is an excellent place to direct people that have concerns about capitalism, but also recognize the looming problems with competing economic visions.

This volume helps fill a hole in discussions of theological economics by actually addressing criticisms rather than ignoring them or ridiculing those that raise them. This is the sort of volume that would be helpful for many proponents of free markets to better consider honest objections. It would also be useful in the classroom to introduce college students to a balanced representation of a theologically informed discussion of capitalism.

Counting the Cost: Christian Perspectives on Capitalism

$26.31

By Art Lindsley PhD, Anne R. Bradley PhD

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Note: I received a gratis copy of this volume from IFWE as a conference participant. I am also a Senior Research Fellow for IFWE, but I am posting what I believe to be an honest and fair review of the volume. I have only passing acquaintance with any of the authors.

Just Capitalism - A Review

A lot of public debate about economics deals in caricature, particularly of capitalism. Critics of markets tend to argue that it is fundamentally unjust and based primarily on greed.

Some beneficiaries of capitalism tend to sheepishly agree with the injustice of the system but either shrug their shoulders because they feel they can’t change it or support it anyway because they like the prosperity that comes through the market system.

Brent Waters takes a significantly different approach. He writes,

“My principal contention is that globalization is the only credible means at present for alleviating poverty on a global scale. Consequently, a well-ordered global capitalism is compatible with such core convictions as the preferential option for the poor and promoting human flourishing. To be naively anticapitalism is thereby to effective opt against the poor and diminish human flourishing. Therefore, an ethic of globalization necessarily entails a defense of capitalism.”

This is, in fact, why I am pro-markets and anti-socialism. No economic system is perfect because they all involve imperfect, sinful humans. The free market economic system will not prevent all human suffering; however, it has proven to be a better tool to alleviating human suffering than various attempts at socialism.

Summary

Waters argues his thesis in two parts. The first five chapters of the volume outline the necessity of exchange and the place of Christians to argue for market systems. His first chapter summaries some of the historical arguments about wealth and poverty. Chapter Two defines what Waters means by markets and argues for the good in competition and cooperation that are necessary for a market economic system. In the third chapter, the author addresses the topic of creative destruction, the relationship of markets to governance, and an argument that markets represent the best means for improving human flourishing on a broad scale. Chapter Four makes a case for the good of affluence as a pathway to flourishing. The fifth chapter, which closes out the first part of the book, makes the case that affluence is the best means of eradicating poverty on a wide scale.

Part Two of Just Capitalism builds on the general affirmation of free markets, as offered in the first part, but critiques the failures in most current forms of capitalism.  The upshot of the last five chapters is that free markets without virtuous people engaged in exchange are no less evil than socialism. In Chapter Six, Waters argues that exchange is necessary for human flourishing, but it must be oriented toward that end rather than simply focusing on increasing one’s economic status. The seventh chapter shows that for markets to achieve their purpose, they must function within the context of a civil society with the purpose of sharing the goods of creation. Chapter Eight offers some provisional thoughts on possible relationships between a free, civil society that enables exchange with political orderings that prevent abuse. The ninth chapter fleshes out the concepts of freedom and justice, making an implicit case about the differences between positive and negative rights and their relationship with justice. Chapter Ten functions as a conclusion, where Waters draws together the threads of his earlier arguments to further emphasize the good that global capitalism can do to alleviate poverty.

Analysis and Conclusion

Waters is clearly not arguing that every instance of capitalism is good. Neither is he arguing that the present instantiation of global capitalism has no flaws. Many contemporary critics of global capitalism assume that the abuses that arise within existing markets are necessarily a feature and not a bug of the system. On the other hand, some proponents for markets insufficiently critique the sin that is evidenced in current markets and often make a similar assumption that some of the worst aspects of global capitalism are a necessary evil.

This book challenges assumptions on both sides. Economic systems are not inherently unjust or just. However, Waters carefully argues that free markets have a higher probability in resulting in just outcomes due to the self-corrective nature of the market system. At the same time, simply accepting capitalism without working to morally form the members of the market will lead to exclusion of potential market contributors due to social injustices. Waters’ book explains that markets can be good, but we have to work at keeping them moral.

This is the best moral case for the free market economic system that I have seen. There are points where one can disagree with Waters, but he realistically examines the benefits and risks of capitalism, showing that in the balance global capitalism is the best means of alleviating poverty.

Just Capitalism

$31.70

By Brent Waters

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Note: I received a gratis copy of this volume from the publisher with no expectation of a positive review. The above link is an affiliate link.