This week we celebrate Independence Day in America. And we begin the amazingly long and expensive run-up to the 2020 US election, which focuses on numerous topics that often touch on political and personal freedom. We are hearing more and more themes related to economics these days.
As a student of economics in the 1960s, I was baptized first into the invisible hand of Adam Smith’s “Wealth of Nations” and later into Keynesian economics.
Adam Smith and his followers regarded economics as a science of wealth, which studies the process of production, consumption, and accumulation of wealth. Smith highly regarded the private sector and free market economics, and the resultant capitalist theory meant “To each their own. Markets should be free of government intervention and the principles of supply and demand will produce the best economic outcome for society as a whole. Government should not be involved, as the market will provide the most efficient responses needed”. (Businessdictionary.com).
Socialism generally and most simply is defined as “any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods.” (Miriam Webster)
So, how did we get to this point in our thinking about diverse economic theories?
During the depression and wars of the 20th century, Keynesian economists began to advocate a managed market economy – predominantly private sector, but with an active role for government intervention during recessions and times of crisis. Such a move toward government control has been consistently applied relative to developing countries.
As business people doing business for the glory of God, we must think clearly about wealth creation, poverty, production, distribution and similar themes. It is particularly true as we think about freedom this month, as we think of the implications of the coming election, and as we seek to base our Business as Mission endeavors on a solid foundation.
So, what about the talk about democratic socialism, especially in relation to economics – production of goods and services, consumption, accumulation, and distribution of wealth? A good starting point for Christians and BAM practitioners was developed in 2017, and can be found here.
- Wealth creation is rooted in God the Creator, who created a world that flourishes with abundance and diversity.
- We are created in God’s image, to co-create with Him and for Him, to create products and services for the common good.
- Wealth creation is a holy calling, and a God-given gift, which is commended in the Bible.
- Wealth creators should be affirmed by the Church, and equipped and deployed to serve in the marketplace among all peoples and nations.
- Wealth hoarding is wrong, and wealth sharing should be encouraged, but there is no wealth to be shared unless it has been created.
- There is a universal call to generosity, and contentment is a virtue, but material simplicity is a personal choice, and involuntary poverty should be alleviated.
- The purpose of wealth creation through business goes beyond giving generously, although that is to be commended; good business has intrinsic value as a means of material provision, and can be an agent of positive transformation in society.
- Business has a special capacity to create financial wealth, but also has the potential to create different kinds of wealth for many stakeholders, including social, intellectual, physical, and spiritual wealth.
- Wealth creation through business has proven power to lift people and nations out of poverty.
- Wealth creation must always be pursued with justice and a concern for the poor, and should be sensitive to each unique cultural context.
- Creation care is not optional. Stewardship of creation and business solutions to environmental challenges should be an integral part of wealth creation through business.
Having grown up in Canada, now living in the USA, I often hear Canada and the Scandinavian countries cited for their socialistic tendencies. So, I recently looked up some current statistics and quotes.
- The Index of Economic Freedom lists Canada as #9 on its list of countries with degrees of economic freedom. Others in the “mostly free” category include Denmark (#12); Sweden (#15); Netherlands (#17) United States (#18) and Norway (#23). Countries at the bottom are the socialism ones – North Korea, Venezuela, Cuba, Congo, etc.
- Claims of “Nordic socialism” are largely exaggerated. “I would stress that the Norwegian economic system is capitalistic, heavily influenced by the U.S. and U.K.” – Jostein Skaar
- Ratings of countries’ percentage of workers in the public sector (as of 2013), include Sweden with 30%, Canada, 22%, USA with 18%.
- With typical wit, Winston Churchill once quipped, “The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.”
- “I think we’ve been through a period where too many people have been given to understand that if they have a problem, it’s the government’s job to cope with it. ‘I have a problem, I’ll get a grant.’ ‘I’m homeless, the government must house me.’ They’re casting their problem on society. And, you know, there is no such thing as society. There are individual men and women, and there are families. And no government can do anything except through people, and people must look to themselves first. It’s our duty to look after ourselves and then, also to look after our neighbour. People have got the entitlements too much in mind, without the obligations. There’s no such thing as entitlement, unless someone has first met an obligation.” – Margaret Thatcher.
- “Economic freedom is … an indispensable means toward the achievement of political freedom.” – Milton Friedman.
- The history of the 20th century is full of examples of countries that set out to redistribute wealth and ended up redistributing poverty. You can only confiscate the wealth [and income] that exists at a given moment. You cannot confiscate future wealth [or income] — and that future wealth [and income] is less likely to be produced [or earned] when people see that it is going to be confiscated. Farmers in the Soviet Union cut back on how much time and effort they invested in growing their crops, when they realized that the government was going to take a big part of the harvest. They slaughtered and ate young farm animals that they would normally keep tending and feeding while raising them to maturity. – Thomas Sowell.
- Socialism appeals to many millennials under 30 because of Socialism’s two built-in fallacies: ignorance of human nature and ignorance of economics. Socialism, in its various forms, is based on twin false premises: humans can be programmed like Pavlov’s dogs, and people can have life’s needs without effort, property, or liberty. – John MacGregor
We can be sure that no economic theory is perfect and both capitalism and socialism and all the variances of each are often corrupted by unrestrained sin. So, to summarize on this Independence week emphasis, let us study the scriptures a little more, read a little more history, and remember a little more economics – especially as we go about business startups in our locations – the most unreached with Jesus’ Gospel, and the most impoverished economically. We have got to get it right – a hurting world depends on it.
Larry Sharp, Director of Training, IBEC Ventures