Lesson 04- Capitalism And Our Real Self Interest
In my last program I tried to give my listeners a sense of what the world was like before the advent of our Capitalistic economic system. Today, I will try to explore how Capitalism came about and how it impacted the way that people lived. However, once again, I would like to review the major points of my last program so that, those who are just tuning in, have some sense of what I am talking about, and those who have been listening can see the continuity in what I am doing. So let me now review and expand on the major points in my last program:
First: The logical invention of money, by the Logos within us, solved the problems contained in the Barter
System in which goods and services were directly traded in return for other goods and services. For
example, a farmers chicken for a doctor’s services. What was needed was a medium of exchange, or
way of exchanged things, that:
- allowed people to place a monetary value on their goods or services so that things of unequal value
could be measured. For example, the cost of a chicken in relationships to a doctor’s skills.
- allowed the person providing the good or service, the doctor, to buy what he really wanted rather than taking a chicken that he didn’t want
- allowed people to store up the money they received from the sale of things of little value, until they had enough to purchase something of greater value. For example, saving the money from selling chickens until one had enough money to buy a horse.
Next: Although many things, such as stones, shells, and salt, were tried as money, gold and silver
eventually became almost universally accepted and later developed into the use of paper claim checks
that were accepted in a transactions so long as people believed they could be cashed in for the gold and
silver they represented.
Next: As happens with many logical inventions designed to solve a social problem, what began as logical and conscious eventually became traditional and subconscious. For example, marriage was created for the reproduction, care, and rearing of children and often had little or nothing to do with the love or personal satisfaction of the two involved. It performed a necessary social function. Now homosexual unions are being proposed based on the love that the two have for each other and those who forgot its original function are capitulating because they are not consciously aware of why it was created. The same thing happened with money. It was an invention to solve a social need for some method of exchanging goods and service but it eventually took on a “life of its own” when people forgot this and began to believe that it was valuable in itself. The only reason. at that time, that gold and silver had any value , aside from their ornamental uses, was because, first they were scarce, and second, everyone agreed to treat them as valuable. The Aztec, who used both ornamentally, couldn’t understand why the Spanish Conquistadors were so obsessed with these two ores.
Next: The economic theory of Mercantilism, that preceded Capitalism believed that the wealth of a nation was based on its supply of “gold and silver”. This led to economic practices that limited and interfered with the “exchange of goods and services” as governments tried to sell as much as they could to other countries to obtain their gold and silver, and buy back as little as possible, so as to not diminish their own supply. To accomplish this, Mercantilism became a tightly controlled economy with laws limiting what one could produce, buy, or sell.
Next: During the Age of Exploration, which began around the time that Columbus discovered America in 1492, European nations began to colonize foreign lands. These colonies provided raw materials that the Mother Country needed and also markets for what they produced. The aim was to make the Mother Country self-sufficient so that it didn’t have to buy from other nations and “keep the gold and silver in the family” by dictating what the colonists could produce, buy, or sell. In the English colonies, these restrictive laws on the economic lives of the colonists, eventually laid the foundation for Thomas Jefferson’s Declaration of Independence and the American Revolution in 1776.
Next: In 1776 Adam Smith, a Scottish professor, wrote a book entitled “Wealth of Nations” challenging the concept that the “wealth of a nation” was its supply of “gold and silver.” Of what value were gold and silver if there were not enough goods and services to satisfy the needs and wants of the population. The real “wealth of nations”, he said, were the goods and services that it produced and it was the government’s attempt to regulate what was better left to natural forces that was preventing this from happening. In essence, who was proposing a Principle of Subsidiarity in which shoemakers, bakers, carpenters etc… were left to determine what they would make, how much they would make, and what they would charge. Thus, Adam Smith was to the economic system what Thomas Jefferson was to the political system. They both demanded that people should be left free.
Next: Smith proposed a “free market” economy guided by the “invisible hand of self-interest and competition”, which, he claimed, would provide all the goods and services that a society needed and wanted at a price that it could afford.
Next: In a “free market” economy, unlike Mercantilism where jobs, prices, and economic practices were controlled by higher authorities, moral principles, or traditions, everyone would be free to work where he chose, charge any price he wanted, and do anything that was profitable for his own self interest. No longer did the butcher’s son have to become a butcher. No longer did one have to charge a price slightly over his own cost of production. He could charge any price he cared to. No longer was he hemmed in by moral laws that required him to put other people’s interest above his own self-interest.
Next: The morally based Mercantilistic system was being replaced by an amoral Capitalistic one in which the major motivating force was profit. Notice that I said that Capitalism was amoral, not immoral. Amoral means without any moral consideration, while immoral means that one makes a moral consideration and then chooses to do what is wrong. Capitalism does not ask the question of whether the goods and services that it produces are good or bad for the consumer or the society. Rather, the only question it asks is whether it is profitable or unprofitable to produce them. Thus, like animals who are also amoral because they operate according to the principles of hedonism, which says whatever gives me pleasure is good and whatever gives me pain is bad, Capitalism focuses on profit and unprofitability. If pornography is profitable and wholesome reading is not, it will produce pornography. If wholesome reading is profitable and pornography is not, it will produce wholesome reading. It all depends on what the people want and are willing to pay for.
Next: The only controls in the Capitalistic “free market” system are “the laws of the market” consisting of “self-interest and competition” and the moral qualities of the producers and the consumers. According to the theory, there is no reason for the government or church or any authority to mandate a “fair-price” that is slightly above the “cost of production” because self-interested businessmen, through competition, will drive the price down to that level in their pursuit of a larger share of the market. Nor is there any reason for any central authority to tell producers what and how much to make since the demand of the consumers will do that. Businesses will come into existence and go out of it according to how many people want the product. Nor does any central authority have to tell anybody what to do or where to work. Expanding businesses, who are producing what the people want, will attract workers by offering higher wages, while collapsing businesses, whose products are no longer in great demand, will lose workers. Like nature, Capitalism, is a self-regulating system that creates a natural balance based on Natural Selection and Survival of the Fittest. The Natural Selector is the consumer who through his purchases drives the direction of the economy, and the Survival of the Fittest are those businesses that correctly respond to the ebb and flow of consumer demands. It is a consumer driven economy and accurately reflects their needs, wants, interests, and values and no business can afford to long ignore what they demand.
Next: Capitalism, because it is responsive to consumer demand, it the largest direct democracy in the history of the world. In the past, direct democracies, such as in Athens, where the people made, judged, and enforce laws that were necessary for social order and justice, were limited by the size of the group. A small community could meet daily in the market place to discuss and vote on mutual concerns. But, as population grew and society became more complex it became more difficult and eventually impossible to meet and decide the major issues. One solution was to create a republican form of government in which representatives of the people made, judged, and enforced the laws necessary for social order and justice. However, Capitalism has managed to overcome this problem by allowing millions of people, of every age, sex, race and origin, to have a direct input into its system through the money they spend. Every dollar is a vote that shifts the “means of production” which economist tell us are land (the raw materials), labor (the workers), capital (the tools and investments), and management (those who direct the other three) to what the people are demanding. By our purchasing power we create and destroy businesses, jobs, and whole industries. In a government controlled economy, such as in Communism, these “means of production” are directed by the leaders and reflects their values. But, in a free economy, such as Capitalism, what is produced is a reflection of the values of the consumer. So if we would like to see a reflection of the souls of the American people or any people in a free economy, look at what they buy or don’t buy.
Finally: Our business leaders are more responsive to our demands than our political leaders because they cannot afford to ignore us. When our political leaders fail to respond to our demands, we have to wait years until the next election to register our discontent through removing them and, often, by that time, we have either forgotten or the issue has been replaced by other concerns. Also, our political leaders are dependent upon polls, letters, emails etc... to know our concerns and often are responding to a small minority who take the time and make the effort to contact them. Our economic leaders know immediately when we are dissatisfied when their sales start to plunge and to what extent it represents a minority or majority voice of their consumers. They can’t wait, like the politicians, for a few years hoping that we will forget. They must respond immediately or lose their share of the market.
What Adam Smith was proposing was counter-intuitive to most of us because it seemed to contradict common sense. Things have to be planned and controlled and he was saying they had to be free and uncontrolled. It can’t work. It will end in chaos. Yet, time has shown that Capitalism is the most creative and productive economic system in human history.
But what about the fact that it is an amoral system that doesn’t make moral judgments about what it makes or what it charges. People need rules and laws to guide them and make them behave properly. If producers are allowed to charge any price they want, they’ll rip everybody off. If quality standards are not set by the government or trade guild, manufacturers will produce junk that they will sell at an exorbitant price. And if the government doesn’t legislate what workers should be paid, the employers will pay them starvation wages. If someone doesn’t tell the shoemaker, butcher, and baker how much to produce they will either produce too much or too little. Some one has to figure out the relationships between supply and demand. How is it possible for an amoral system motivated by self-interest to benefit humanity by producing the goods and services that it needs and wants at a price it could afford to pay? Could it be that “greed is good!” and that misdirected altruism is bad? It would seem so since the average person living under capitalistic economies have more goods, services, and luxuries than the nobles and kings of years ago.
But is it “greed.” The term that Adam Smith used was self interest and unlike morality, which is often in short supply and has to be taught and enforced through laws, self interest is in great supply and is built into the systems of every living creature. And it must have been God who put it there. Even the Bible, uses our own self interest as the barometer of how we should treat others when it says that we should love our neighbor as ourselves. So the “love of self”, which is the basis for self interest, must be good and necessary for our survival. Without it, we would neglect ourselves and threaten our survival.
The problem is that we have to distinguish between self interest, which is a product of self-love, and selfishness. Self-love is good and healthy and no one loves Himself more than God does and, according to the Church, it is the love between the Father and the Son, who are two of the persons in the Godhead, that results in the third person, a exuberant and expansive Holy Spirit whose very nature is to share with others. We could rightly say that He is the Spirit of Enthusiasm, a Greek word based on “en theos” which means “God within you.” His recommendation to us is the counter-intuitive message that “it is in giving that you receive.”
The Lord gave me insight into this years ago when Vatican II was just beginning to have its impact on the local churches. I saw a banner on the pulpit which said, “God is gift!” My immediate reaction was that this was a mistake. I had grown up believe that God wanted gifts. We were always being told to “Offer it up to God” and, of course throughout human history, human have been offering all types of sacrifices to God in the belief that He had to constantly be appeased through the offering of gifts. Like so many intuitive truths, it was only partially right. God did want a sacrifice but it wasn’t goats, sheep, doves, or other human beings. The type of sacrifice that He wanted was the type that Jesus showed us: the sacrifice of ourselves out of love for others.
Anyway, I began to meditate on what was meant by the statement that “God is gift” and, as so often happens, God put things in front of me to help me to understand. First, since God is a person who has everything then there is nothing that any one could give Him because He has no needs. Therefore, the only possible attitude that He could assume towards anyone else is that of a giver. Second, he used my son, Joey, to show me what it meant to be a giver.
Joey was only about seven years old and it was a few weeks before Christmas. I was sitting in the living room and he came in and, with a beaming smile said, “Hey Dad, wait until you see what I’m going to get you for Christmas. You’re really gonna like it.” I said, “Gee, Joe. That’s sound great. What is it?” “I can’t tell you, Dad. You’re gonna have to wait until Christmas. But I know you’re really gonna like it. In fact, it is so great that I think that I’ll get one for myself. I’m going up now to the corner drug store to buy it.” He left and ten minutes later return with a brown bag in his hand. Holding the bag up in front of my face, he said, “Here it is Dad. In this bag. But I can’t show it to you until Christmas.” I acted disappointed but assured him that I would wait till Christmas. A few minutes later I had to leave to visit my friend around the corner. Twenty minutes later I returned and my wife informed me that Joey was having conniptions. He was so anxious to show me his gift that he couldn’t wait until Christmas. My wife reminded him that my birthday was only a week away and that he could give it to me for my birthday. His lighted up but then he said that even a week was a long time. Then he decided that he would write out the days of the week on scraps of paper, fold them up, and place them in a can. Then, after shaking them up, he would pick out one and whatever day he picked would be the day that he would give me his gift. It was Monday and he picked Saturday. His face dropped. Then he said that he hadn’t folded that paper correctly and he had to pick again. This time he picked Wednesday and that was the day that he presented me with a bottle of shaving lotion. It was the most precious gift that I ever have received because what it showed me is that when someone has something good to give, he can’t wait to give it. And that, I believe, is the nature of God. He is overflowing with goodness and, like Joey, He can’t wait to share it. God is gift and all He is looking for is someone who is open to receive His gift which is the “fullness of life.” A musical group composed of four priest named the Dameans wrote a song called “The Song of Thanksgiving” which I believe expresses the very point that I am making. Here’s the song:
Love that freely given, wants to freely be received.
All the love your poured on us can hardly be believed,.
And all that we can offer you is thanks. All that we can offer you is thanks.
Creation tells a story that began so long ago
Of a Love that long to share its life in hope that love would grow.
The sun repeats each morning; the story is retold.
And just in loves retelling, new chapters yet unfold.
Love that freely given, wants to freely be received.
All the love your poured on us can hardly be believed,.
And all that we can offer you is thanks. All that we can offer you is thanks.
Obviously the point of the song is that “giving” is the natural mode for a Being that is just overflowing with Love and to the extent that we buy into this energy, it bestow upon us a “servant’s heart” who major joy is to give of one’s self. St. Francis, one of the greatest saints in the history of the Church, put it this way:
Make me a channel of you peace.
Where there is hatred let me bring Your love
Where there is injury, Your pardon, Lord.
And where there's doubt, true faith in You.
Make me a channel of Your peace
Where there's despair in life,
Let me bring hope.
Where there is darkness, only light.
And where there's sadness, ever joy.
Oh, Master, grant that I may never seek
So much to be consoled as to console.
To be understood as to understand.
To be loved as to love with all my soul.
Make me a channel of Your peace
It is in pardoning that we are pardoned.
In giving to all men that we receive.
And in dying that we're born to eternal life. (Refrain)
Selfishness, on the other hand, results from a narrowness of spirit whose energies and focus are always directed inward. It operates on the erroneous premise that “it is in taking or getting that we receive.” However, the more we take or get, the emptier we becomes as people. And the emptier we become, the more we try to fill the void by taking or getting more. It’s and endless cycle of trying to fill a bottomless pit that produces nothing but frustration. Maybe the next car, or boat, or condo, or wife will fill that emptiness inside. But it never does because as St. Augustine observed, “Our hearts are made for Thee, O God, and will not rest until they rest in You.” Or, as someone else put, there is a God-shaped hole in our hearts that only God can fill.
The problem seems to be that we often don’t know what is in our true self-interest because some things that seem to satisfy and benefit us in the short-term, simply lead to frustration and harm us in the long term. Morality, which is wise behavior, has to, on the societal level and in the long term, be to our self-interest, while immorality, which is unwise behavior, although it might seem beneficial on the personal level and in the short term, has to harm us in the long term. For example, it is not to our long term self interest to be spending billions of dollars on cosmetic, cigarettes, and alcohol while failing to maintain and repair the infrastructure of our country.
So, if we were wise enough to know what our true self interest was then any system that is designed to serve that end would have to be good. And Capitalism, which is consumer oriented and driven, it designed to service what the consumer expresses as his/her desire. It is the most responsive economic system ever created. It is a veritable “wish tank” in which the producers of the goods and services are constantly competing with each other trying to detect what the consumer wants. If this is true, then the ultimate morality in this amoral system is that of the consumer since it is their desires that drive the system. If the consumer is immoral or amoral, then the capitalistic system will produce results that are the same. If, however, the consumer is moral and realizes the power that he holds over the goods and services that are produced through the way that he votes with his money, then capitalism will reflect that. And that is why capitalism, for two reasons, should be the economic system of choice for Christians. First, because it gives the power and responsibility to the consumer to direct what goods and services will be produced. Second, because it rewards any producer who is able to make a better product at a lower cost and thus should reward honest, efficient, reliable, and moral producers over dishonest, inefficient, unreliable, and immoral ones.
Throughout the Bible the theme has been one of moving us from law or “other control” to freedom or “self control.” Or to put it another way, to move us from the immaturity of spiritual childhood to the maturity of spiritual adulthood. God intended us to be free and responsible adults and thus He said that the time would come when we would no longer have to be taught His laws because He would write them upon our hearts. The problem with law has always been that it can change behavior through threat of punishment but it can’t change our attitudes or heart. Consequently, whenever the threat of punishment is removed or detection is not possible, the evil heart will revert to its evil inclinations. That is why Jesus said that even if a man looked at a woman with lust in his eyes, he was already guilty of adultery because it was the attitude that was wrong, not just the behavior. So law was a temporary fix that sought to control behavior, but God always intended to replace it through a change in attitude.
Thus, St. John says in John1:17
“For the law was given through Moses (which was the Old Testament); but grace and truth came through Jesus Christ (which is the New Testament).”
The problem is that we, the consumers, often lack the wisdom to know what is truly in our own self interest and are frequently manipulated like sheep to follow false shepherds whose only interest is in shearing us. It’s not the system; it’s us because the system only is reflecting our distorted values. But maybe it is not hopeless. Maybe we, as a people, will grow up and start to demand what is truly in our collective self interest.
It appears that even in secular circles, the truth is beginning to dawn on those who have “the eyes to see and the ears to hear.” John Garner, former head of the Department of Health, Education, and Welfare wrote:
"Despite almost universal belief to the contrary, self gratification, ease, comfort, diversion and a state of having achieved all one's goals do not constitute happiness for man. We are coming to a conception of happiness that differs fundamentally from the storybook version... The storybook conception tells of desires fulfilled; the truer version involves striving towards meaningful goals... goals that relate the individual to a larger context of purposes. Storybook happiness involves a bland idleness; the truer conception involves seeking and purposeful effort. Storybook happiness involves every form of pleasant thumb-twiddling; true happiness involves the use of one's powers and talents. Both conceptions of happiness involve love, but the storybook version puts greater emphasis on being loved, the truer version more emphasis on the capacity to give love."
Thus, in my next program I will explore how Capitalism, which was at first totally incompatible with the teachings of the Catholic Church eventually came to be accepted.