Capitalism, Poverty and Christian Charity

By no later than the thirteenth century, the leading Christian theologians had fully debated the primary aspects of emerging capitalism—profits, property rights, credit, lending, and the like … Capitalism was fully and finally freed of all fetters of faith.
                                                    —Rodney Stark, The Triumph of Christianity

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Rodney Stark is a fan of both Roman Catholicism and capitalism. He sees the former as being instrumental in the rise of the latter and much more profoundly so than Weber’s Protestant work ethic. Whether Catholicism or Protestantism was most responsible for spurring economic progress in the seventeenth and eighteenth centuries and beyond can be debated. What I believe to be true is that across all of its denominational variants, Christianity is bound together in a holy and secular alliance with capitalism. This is not universally appreciated. It should be, as I hope to explain.

Christianity views this life as the “testing ground” for the afterlife. Ergo, this free-willed life is definingly consequential. And part of our earthly job, as the parable of the talents makes clear, is to make the best use of the resources at our disposal. On a wholesale material level this leaves us, I would argue, with one option, which is capitalism. The alternative produces demonstrably awful material results and, as Hayek peerlessly set out, the loss of individual freedom.

This essay was first published in April 2018.
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You might think that the original acceptance of its essential elements, as described by Stark in the opening quote, would have led Christian churches to embrace capitalism. As we know, this has not been the case. It has been, and is, a fractious relationship. The perceived outcomes of capitalism do not always sit well with Christian charity and, accordingly, with Christian leaders; most of whom, it is fair to say, have not studied economics at Chicago. Putting capitalism, poverty and charity into proper perspective is my theme.

Unlike Stark, Pope Francis is no fan of capitalism. He laid out his disdain in his encyclical Laudato Si’ (On care for our common home) in May 2015. And he backed this up with blunt language in a speech in Bolivia in July of the same year:

The earth, entire peoples and individual persons are being brutally punished. And behind all this pain, death and destruction there is the stench of what Basil of Caesarea called “the dung of the devil”. An unfettered pursuit of money rules. The service of the common good is left behind. Once capital becomes an idol and guides people’s decisions, once greed for money presides over the entire socioeconomic system, it ruins society, it condemns and enslaves men and women, it destroys human fraternity, it sets people against one another and, as we clearly see, it even puts at risk our common home.

No one favours an unfettered and greedy pursuit of money, even though they might not describe it in such colourful terms as “the dung of the devil”. But greed must be distinguished from obtaining the best reward for one’s goods or services. Searching for the best price is part and parcel of how capitalism works. Morality is not at stake, per se, in that process.

Let me quote St Thomas Aquinas, quoting St Augustine, in Summa Theologica: “The greedy tradesman blasphemes over his losses; he lies and perjures himself over the price of his wares. But these are vices of the man, not of the craft, which can be exercised without these vices” (my emphasis). Of course, Aquinas says a lot about “the just price” which might not always sit well with market outcomes. But that simply means that it is important to have rules and oversight which combat anti-competitive and corrupt practices.

Level-headiness is needed and the Pope himself, perhaps unwittingly, provides it in paragraph 109 of his encyclical. “By itself the market cannot guarantee integral human development and social inclusion.” That is exactly right. It is, as logicians might say, a category error to assume otherwise. Capitalism’s claim is modest when set against the full gamut of human needs. It simply produces more goods, more services, more jobs and more wealth, than can any other economic system. And, more­over, it does this in ways which ensure that resources are ever plentiful.

Capitalism is not the answer to the suffering of man on this earth. And no pretence should be held out that it is or that it claims to be. Or, importantly, that it can be made to be; which prompts a brief segue into hot air. In particular, in this case, into a conference called “Making Capitalism More Inclusive”, held in London in May 2014. Inclusive Capitalism was a concept developed in 2012 by the Henry Jackson Society, a British “neo-conservative” think-tank, or so it is described by Wikipedia. Unfortunately, it is a deeply flawed concept, driven by the latter-day hysteria over inequality. It is ideally made for a takeover by those with leftist tendencies.

Accordingly, the conference was opened by Prince Charles and featured Bill Clinton, Christine Lagarde, Mark Carney and Lawrence Summers. There was hardly a “neo-conservative” in sight. It is no surprise either that Justin Welby is a fellow traveller. So far two conferences have followed: in London in June 2015 and in New York in October 2016. Presumably another is pending, though the website for the “Coalition for Inclusive Capitalism” does not say when or where this will occur.

Welby participated in the 2015 conference. Here he is at that conference describing what is required of capitalism: “A generosity of spirit that doesn’t always seek the greatest return … that meets the needs of the poor and the excluded and the suffering.” And, among a number of follow-up statements, he reportedly said this last year: “Capitalism in Britain is broken and needs urgent reform because it is leaving young people worse off than their parents.” The Archbishop might consider massive low-skilled immigration as a factor depressing wages and creating unemployment and poverty among many of his fellow citizens. Though that might be too factually confronting, as consequences often are.

As extraordinary as it seems, this is Mark Carney, Governor of the Bank of England, at the 2014 conference: “Inclusive capitalism is fundamentally about delivering a basic social contract comprised of relative equality of outcomes, equality of opportunity, and fairness across generations.” Relative equality of outcomes? How in the world does this pass muster outside of a communist agitprop conference?

Capitalism is adversarial. We depend upon entrepreneurs and businesses vigorously competing with each other and seeking out the very best deal for themselves and their companies. We need more, not less, of this honest expression of commercial self-interest. In the end result, it brings the greatest benefit for the greatest number. Capitalism cannot be moulded into a generous outreach to the poor and disadvantaged. At the same time, as Michael Novak puts it in an afterword to the 1991 edition of his book The Spirit of Democratic Capitalism, “it is the most practical hope of the world’s poor: no magic wand, but the best hope”.

Capitalism’s principal competitor in producing wealth is not some illusory halfway house between capitalism and socialism emerging formlessly out of elitist talkfests. It is socialism itself. And socialism has an unremitting history of abject failure. Unfortunately, not everyone has taken the trouble to look objectively at the historical record. Cock-eyed hope springs eternal when it comes to Marx’s legacy. It is a resilient mirage on the hill forever promising plenty for all.

New generations of idealistic youth latch onto it led by ageing patriarchs like Jeremy Corbyn and Bernie Sanders, and even by the odd ageing matriarch, such as Elizabeth Warren of Pocahontas fame. Of course, it is not only the young and the old who suffer from utopianism. There’s a fair swag of those in-between who can’t blame either their youth or advanced age for their historical dyslexia. Take the ex-president of the International Union of Socialist Youth, New Zealand Prime Minister Jacinda Ardern, now aged thirty-seven.

Ms Ardern recently put poverty and homelessness in New Zealand down to “a blatant failure of capitalism”. Nothing is more certain than that doses of socialism will make matters worse. Along with the current Pope and many other Christian church leaders, politicians like Ardern, and throw in the middle-aged Bill Shorten, don’t understand capitalism. In fact, most people don’t understand it. This allows those with socialist leanings in powerful positions to rail against cruel fortune, blame capitalism, and generate unfulfillable expectations.

Let me put capitalism in a nutshell. If you only have a dollar on a bitterly cold night and a cup of coffee costs two dollars, tough, you don’t get the coffee—short of a good Samaritan opportunely strolling by. Capitalism rewards those with the ability to pay. You don’t get things because you deserve them or desperately need them. You only get them if you can pay the going price. How cruel is that? Not as cruel as any alternatives man can devise. It is the least worst way of deciding who gets the goods, at least on the first pass. Any other way degenerates into nepotism, cronyism, corruption and ultimately misery.

Not all is rosy. Market forces, left unconstrained in pursuit of profit, can lead to unconscionable practices and outcomes—dirty air and rivers, child labour, and other unthinkable abominations, like human trafficking and the sale by Planned Parenthood in the US of aborted-baby body parts. But, shorn of its unethical excesses, capitalism is enormously beneficial. Market prices guide resources to where they can be used most productively and they trigger discoveries, inventions, innovations and investments. Out pours an ever-growing flow of goods and services and the opportunity for many to lift themselves out of poverty and off welfare dependency. However, it’s worth re-emphasising, it doesn’t achieve the unachievable. It doesn’t rid the world of poverty. That’s not within its remit.

Poverty is pervasive. The World Bank reported in 2016 that those living on less than its revised benchmark of $1.90 per day (in 2011 US purchasing-power dollars) dropped from 35 per cent of the world’s population to 11 per cent between 1990 and 2013. That’s obviously a good thing, but imagine the difficulty of living on ten times this amount in most places. And, taking official data at face value, the picture is mixed. The Food and Agriculture Organisation of the UN reported last year that “the estimated number of undernourished people increased from 777 million in 2015 to 815 million in 2016”. Grinding poverty is not confined to poor countries.

In Australia, with a population of just 24 million or so, ACOSS reported in 2016 that over 700,000 children were living in poverty. Now this figure is based on arbitrary and contestable OECD criteria and undoubtedly exaggerates the problem. Nevertheless, it still gives a stark-enough picture to put Bob Hawke’s goal of ridding Australia of child poverty by 1990 into the crowded assemblage of failed utopian-socialist promises. Leave aside statistics. They can desensitise the mind.

Frank Field, member of parliament for Birkenhead in England, across the Mersey from Liverpool, where I was born and lived my formative years, began an organisation at the end of 2014 to tackle the effects of poverty. “Feeding Birkenhead” is a coalition of churches, community groups and other organisations working together to eliminate hunger in Birkenhead. This is Field writing in the Spectator in October last year:

In the early days of Feeding Birkenhead, we found families needed to take home candles to light their homes … Lack of food and fuel, often against a backdrop of debt, is so endemic amongst families that FB is in the process of establishing a Citizen’s Supermarket, which will give families access to good food that would otherwise be wasted, but at a fraction of the normal price.

This story of poverty amidst plenty exists most everywhere. It is a never-ending story from Australia to Birkenhead and, for another example, skip across the Atlantic from Birkenhead to the US capital.

Beverley Wheeler is director of “DC Hunger Solutions”, which brings together government agencies and community and faith-based organisations to combat hunger in Washington. Wheeler was reported in the Washington Post on September 19 last year as asking, “How can there be any hunger in the capital of the wealthiest, most powerful country in the world?” Apparently, DC Hunger Solutions found that 27 per cent of households had experienced periods over 2014 and 2015 when they were unable to afford food. Here is an interesting comment from the author of the Washington Post article, Courtland Milloy: “Some would say that is how capitalism works: The haves have, the have-nots don’t. Besides, there are federal food subsidies and charitable organisations to help the poor.”

Mr Milloy was commenting sardonically to make a point. But he is essentially right. That is precisely the way capitalism works. But don’t blame capitalism for simply being capitalism. Reach a balanced conclusion. That conclusion is that we need governments to encourage and nurture (ethical) capitalism in order to make the best use of resources, grow economies and provide employment opportunities. At the same time, governments must provide measured assistance to those who fall by the wayside and also provide a supportive environment for charities to flourish at both national and community levels. These are all complementary, not clashing, facets of government policies.

Christian leaders rightly throw light on the plight of the poor. At the same time, they are mistaken in blaming capitalism. They see poverty and they see capitalism and wrongly put the two together. Perhaps it is unfair to conjoin all Christian leaders in this error. It is noteworthy, for example, that Michael Novak, in a CIS dialogue, reported Pope John Paul II as attributing the “many faults which socialist thinkers attribute to capitalism … to a moral-cultural system that is analytically distinct from capitalism.” Spot on. But, it is fair to say, I think, that John Paul is not representative of recent popes and other Christian church leaders.

Poverty in much of the world stems from corrupt and dysfunctional cultures, as John Paul intimated. But put cultural issues aside. Individual disabilities, frailties and sheer misfortune are by-products of human existence and will always result in poverty. Often, too, misguided government intervention makes matters worse rather than better. A free-of-poverty nirvana is not achievable.

It must be kept uppermost in mind that capitalism bakes the pie. Those wanting to cut and distribute the resulting pie to achieve so-called “social justice” need to tread carefully. The creation and distribution of wealth are part of one market process. They are not separate and can’t be ripped apart. Human resources move to where they are paid most. Accordingly, some people get rich. However, on balance, the movement of resources to where the rewards are greatest also means that most value is added. Reward and the generation of economic value are inextricably linked.

While capitalism doesn’t cure poverty, it does create wealth and jobs. And, beyond that, it provides the wherewithal for both governments and charities to lessen the extent and severity of poverty. Capitalism isn’t perfect. Nothing is or will be. But the alternative, whenever tried—in the old Eastern Europe, in Cuba, in Venezuela—always produces abject misery.

Socialism has been a curse on the poor. Surely this is no secret. So why is capitalism so often in the firing line of Christian churches? Perhaps they believe that the emphasis in the Bible on sharing with the poor does not sit easily with the acquisitiveness that drives capitalism. They need to think it through.

There are many passages in the Bible that advocate giving to the poor. One well known one recorded in Matthew (19:21), in Mark (10:21) and in Luke (18:22) has Jesus advising a “rich young ruler” to give away all of his possessions to the poor and follow Him. This proved too demanding, as it would, no doubt, for all but a rare few of us. Personal redemption for the young man in question lies at the heart of this passage and it is difficult to generalise its import. However, there is another passage in Acts (4:32–37) which presents a more generalised picture of charitable giving and which, superficially at least, in the wrong hands, creates a tension between Christianity and capitalism.

In the passage, a multitude of believers, all possessors of land and goods, sell them and pass the proceeds to those in need. Now, when I first heard this story, as a Christian and a supporter of capitalism, I inwardly asked whether anything was known of those who, in particular, had bought the land. If the land had been bought by those who could exploit it more productively then the set of commercial transactions and charitable giving might possibly be of net social benefit, even accounting for the dissipation of investable capital it entails. On the other hand, if the land was used less productively then society as a whole would certainly suffer. You see, you have to take a long and consequential view. The generous gesture on the part of landowners might, depending on the circumstances, go on to engender more rather than less poverty. “The common good”, as Catholic teaching puts it, might not end up being best served.

The key to having anything to distribute is production. For that we need landowners to work their land, not to give it away. Giving it away, in itself, creates nothing. When billionaires give money to charities that is fine and generous but it is reasonable to ask whether they could do more good by investing the money in productive enterprises. You can’t draw hard and fast lines. Charity has its place alongside business investment. But, to state the obvious, wealth has to be first made before it can be given away. Mind you, the obvious appears not to be universally appreciated.

As societies have become wealthier, and wealthier still, a disconnect has arisen in the minds of many between the vast array of commodities on show and available every day and the processes of making and delivering them. A cargo cult, almost, has taken hold. This is most acutely seen, in my view, among the Greens. However, to varying extents, this mentality is widespread. It is prevalent among charity and church leaders who otherwise display no tendency to believe in magic.

Quite apart from the drift of industry to Asia, manufacturing and transport industries have become so labour-saving that they are remote from the lives of most people living in the Western world. Far fewer people are now down mines, or on factory floors, or on the wharves, or on commercial ships. Accordingly, most people don’t see these processes at work. I sailed on a container ship from Hong Kong to Southampton in 2013. With a carrying capacity of 10,000 standard containers, it had just twenty-eight officers and crew—and they were predominantly from Croatia and the Philippines.

The growing lack of awareness of what it takes to make and transport commodities has proved fertile ground for breeding an infantile mindset, which is as divorced from economic reality as is the mindset of primitive cargo cultists. Greens are probably beyond the incursion of reality. I like to think church leaders are not. Let me humbly suggest a rider to the import of 2 Corinthians 9:7, which reads: “Each of you must give as you have made up your mind, not reluctantly or under compulsion, for God loves a cheerful giver.” The rider is that in the general course “a cheerful giver” must first invest his capital, time and effort in making stuff before having anything to give away.

Entropy, poverty and misery are always waiting in the wings unless free markets guide the process of creating and distributing wealth. Rodney Stark is right, I believe. Capitalism’s development and growth would not have occurred but for Christian values. In turn, capitalism has provided material riches and remains the key to alleviating poverty.

Christianity, charity and capitalism go hand in hand. It is beyond time for a renewal of the rapprochement of the thirteenth century, as described by Stark, between the pillars of capitalism and Christianity. Christians who complain about capitalism need to go back to basics. Poverty will always be with us. “For you have the poor with you always” (Matthew 26:11). Charity will always be required. Meanwhile capitalism is peerless at providing the wherewithal to support charity while progressively reducing, though never ending, the need for it. It is a match made in heaven and earth.