Capitalism is not Consumerism

As I read Money, Greed, and God by Jay W. Richards, I find myself wanting to share pages and pages but realize I should probably restrain myself (and recommend that any of you reading this get your own copy of the book and dive in yourselves). I’m going ahead with the following passage because it makes important distinctions between capitalism and consumerism and points out what so many people to seem to miss: that capitalism is amoral.

Capitalism refers to an economic system with rule of law and private property, in which people can freely exchange goods and services. Free exchanges, by their very nature, will be viewed as winning exchanges by all parties involved. Otherwise the free parties wouldn’t be involved in the exchange. So capitalism enhances freedom and channels even our baser instincts (like greed) into the task of creating win-win scenarios with the people around us. A free market is best for distributing goods, services, and information, whether they are trucks, trumpets, or trashy novels. But the system doesn’t determine what choices people will make.

Too many critics confuse the free market with the bad choices free people make. Rod Dreher, for instance, chastises fellow conservatives, saying, “We look down on the liberal libertine who asserts the moral primacy of sexual free choice, but somehow miss that the free market we uncritically accept exalts personal fulfillment through individual choice as the summit of human existence.” Perhaps they miss that fact because it’s not a fact. The free market doesn’t exalt anything. Human beings exalt and denounce things like sexual free choice. Human beings might exalt “individual choice as the summit of human existence,” but a system of free exchange doesn’t do that.

In a free economy, sinful entrepreneurs may entice customers with pornography, and sinful customers may buy it. But having free choices in the market doesn’t dictate what people will choose. That’s the whole point of freedom: it always involves costs—that is, trade-offs. To choose one path is to foreclose the opposite path. Even God accepted trade-offs. He chose to create a world with free beings, one that allowed those beings to turn against him. And they did. But their freedom didn’t cause them to choose the bad. It just allowed them to. So, too, with a free economy. Critics notice all the vice present in free societies. But it is only in free societies that we can fully exercise our virtue. Charity is charity, for instance, only if it’s not coerced.

Besides, there’s no evidence that state control of the economy makes a citizenry more virtuous. Every social ill in modern-day America, from widespread abortion and alcoholism to family breakdown, was much worse in statist and communist countries.

That suggests that something other than mere economics is at work. We shouldn’t expect the economy, free or otherwise, to instill virtue in people. While free economy requires and may even encourage certain virtues, like trust and basic honesty, and while it may channel sins like greed into productive behavior, by itself it can’t teach us God’ complete will for our lives. It can’t raise up sons and daughters in the way they should go. It can’t take the place of the family, church, synagogue, and Boy Scouts. A free economy requires not only political freedom, but also free institutions of civil society, to produce a virtuous people.

Contrary to the stereotype, capitalism is not compatible with a vicious populace. Consumerism in particular is actually hostile to capitalism, at least in the long term. …

Remember, advanced capitalism needs financial habits and institutions that allow wealth to be reinvested so that wealth itself becomes wealth producing. That requires not only that wealth be created, but that some of that wealth be saved rather than consumed. Delaying gratification is restraint; it’s the opposite of gluttony. So consumerism is hostile to capitalist habits and institutions. This is why statistics about consumer spending are not reliable indicators of the long-term health of an economy. Every economy will have consumption. But a sustainable economy needs large portions of wealth creating, saving, and investing as well.

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