ECON-What Else Does the Bible Teach About Capitalism?

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February 2, 2012

What Else Does the Bible Teach About Capitalism?


By CATHERINE RAMPELL


Dollars to doughnuts.

Earlier this week, The Wall Street Journal published an opinion article by Rabbi Aryeh Spero titled “What the Bible Teaches About Capitalism,” which argued that Americans should laud Mitt Romney’s private equity career.

An outline of his reasoning: The United States was founded upon “the Judeo-Christian ethos,” and within that ethos “resides a ringing endorsement of capitalism as a moral endeavor.”

The Bible and related Judaic-Christian teaching are pro-capitalist, he argues, because God’s people are told to work and encouraged to be creative (which could be read as entrepreneurial), and because the Tenth Commandment forbids envy (including envy of the 1 percent). Additionally, Rabbi Spero notes, “King Solomon’s thriving kingdom crashed once his son decided to impose onerous taxes.”

Whatever capitalism’s merits, I’m not sure hanging its moral legitimacy on Jewish Scripture is such a solid plan. The Holy Book also conveys plenty of ideas that are anti-capitalist and anti-free-market.

Deuteronomy 23:19, for example, orders: “Do not charge your brother interest, whether on money or food or anything else that may earn interest.” “Foreigners” can be charged interest, however. Exactly who counts as a foreigner has fueled centuries of debate, and at least one Shakespearean play. (That play, “The Merchant of Venice” was home to the line “The devil can cite Scripture for his purpose,” by the way.)

Additionally, a biblical prohibition against “taking advantage” of the person on the other side of a sale was interpreted by ancient rabbis to mean that sellers were permitted a profit margin that was no greater than one-sixth of a good’s selling price. Any markup beyond that had to be returned to the buyer.

That restriction might not go over very well in private equity circles.


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December 26, 2011

Utopian Capitalism


By NANCY FOLBRE



Nancy Folbre is an economics professor at the University of Massachusetts, Amherst.

The blond prince hasn’t renounced his throne, but now criticizes the system that put him there. The superstar capitalist Richard Branson, founder of the global Virgin corporate empire, announced in November that the “short-term focus on profit has driven most businesses to forget about the long-term role in taking care of people.”

His new book urges businesses to embrace morality through “philanthrocapitalism.”

He does have a point. If all owners, bankers and corporate executives were virtuous souls, capitalism might function flawlessly. Adam Smith outlined a similar argument in the mid-18th century, in “The Theory of Moral Sentiments.” The pursuit of economic self-interest, he explained, would generally be tempered by natural morality. The economist Russell Roberts offers a modern version of this argument in his novella “The Invisible Heart.”

Socialists are usually the ones accused of having an overly optimistic view of human nature. Today, some capitalists have started to sound utopian.

Most economists, whatever their political stripes, generally put more emphasis on incentives than on virtue. And most ordinary people understand that the incentives built into the global capitalist system tend to reward some very bad behaviors.

Large corporations can often squelch their competition. They can minimize their costs by dumping waste products into the environment, contributing to pollution and global warming. They can use their profits to buy political influence. If they don’t like the regulatory policies of one nation-state, they can simply shift their operations to another.

Not all capitalists engage in bad behavior. But those who do often outcompete those who don’t. The structure of corporate ownership and governance allows short-term profits to trump long-run efficiency.

Recognition of these problems helps explain why the term “capitalism” doesn’t poll nearly as well as other terms describing our economic system. A Gallup poll conducted last January found that 33 percent of Americans had a negative image of capitalism, but only 10 percent had a negative image of free enterprise or entrepreneurship and only 4 percent a negative view of small business.

Big business and big government were essentially tied for disapproval (49 percent and 51 percent, respectively) – not surprising, since they currently enjoy a symbiotic relationship.

Republicans and Democrats differ far more on their images of capitalism (and socialism) than on free enterprise, entrepreneurship or small business.

More than a third of Americans but more than half of Democrats and Democratic-leaning respondents have a positive image of socialism.

The poll results suggest the political potential to develop a better hybrid system. Can we do something to minimize the perverse incentives that our current form of capitalism creates and move closer to our free enterprise ideals?

In his new book, “America Beyond Capitalism,” and in a recent opinion article in The New York Times, Gar Alperovitz makes a strong case for promoting cooperatives and worker-owned businesses.

A group of essays published during the summer in The Nation provides a longer list of strategies, asking, “If you had the ability to reinvent American capitalism, where would you start?”

Answers ranged from putting public directors on corporate boards to taxing financial transactions to promoting full employment. Overlapping Mr. Branson’s priorities, Jamie Raskin calls for changes to articles of incorporation that would allow companies to pursue social missions without fear of shareholder litigation.

Readers also weigh in with a remarkable variety of suggestions.

Maybe we should get some reinvention under way, just in case Mr. Branson fails to convert all his fellow capitalists to his cause.


Source: www.nytimes.com