Christianity and Freedom
What does Christianity have to do with Economics?
Among the many radical concepts first to find expression in Christianity is that the God of the universe does not impose his will on his creation. Only in Christianity does God submit his own will in such a way. If, therefore, the God of the universe will not deprive me of my own free will, then doesn’t it follow that we ought not deprive another of the freedom to pursue his own economic interests?
The highest economically available good is attainable only through free markets, which are good to the extent that they are representative of human wants and needs. Profits earned of free customers in an environment where suppliers must compete with other suppliers render those profits morally good. The ancient economic vices of greed and envy are less rewarded in free markets, but such vices are exacerbated in planned economies and by confiscatory government intervention. Poverty may be mitigated by stabilized currencies, enforcement of individual property rights, and removal of artificial political barriers to entry of investment and production.
The Morality of Profit
When is Profit Ever Really Good?
“I’ve been rich, and I’ve been poor.
Rich is better.”
Mae West
Rich is better. It’s better in the same way that it’s better to be healthy than sick, or to be wise rather than foolish. Freedom is morally superior to slavery, and real freedom requires economic freedom–that is, that there be free markets to satisfy human wants and needs. In the context of free markets, profits are the means of directing investment as a response to consumer demand for goods and services. Profits represent an increase in wealth, a word derived from the archaic weal (from which welfare), meaning good. At their foundation, all judgments of value are moral judgments. The setting of economic policy is a moral exercise in judging one policy to be better–that is, more good–than another. In free markets, profits contribute to the prosperity of everyone, even those accidentally connected to the enterprise generating the profits. To the extent that it is avoidable, persistent poverty is a moral failure by governments in their setting of economic policy.
Economics is diffused with moral language. After all, economic policies are simply applications of ethical principles, which are themselves derived from moral principles. Human beings possess individually free moral will, so markets are good in the sense that they are representative of that will. Markets will always be with us, so to attempt to suppress or restrict these markets by artificial political means is merely to redirect them, but not to eliminate them. For markets to be moral requires freedom–freedom for consumers to choose from among viable alternatives of goods and services, and freedom for suppliers to choose to compete for profits by challenging the efficiency of the producers of existing products and services, or to choose to risk bringing a new product to the market.
Free markets are also morally good in other ways. In free markets, price is a representation of a countless number of judgments of value of a good or service at a particular time and place, and judgments of value are moral judgments at some level. In planned economies, however, price is set relative to suppliers’ costs, without regard for consumers’ judgment of value. The consumer exists rather to satisfy the needs of the supplier, and the profits “earned” are less instructive of the wants and needs of the consumer than of the supplier’s, and those profits are unrelated to the economic viability of the enterprise. Free markets, though, are directed by the consumer in an economic application of the “love your neighbor” ethic, by rewarding suppliers for satisfying the wants of the consumer at a price he freely chooses to pay. In free markets, therefore, profits are good in that they are representative and instructive of the adequacy of suppliers’ planning and investment, and they are representative of consumers’ affirmation of value.
To say something is immoral, to paraphrase Ayn Rand, means that a lesser good has been chosen in the place of a higher good. In most cases in human experience the greatest possible good –that is, the ideal –is not attainable, so are left to choose among the possible alternatives. With very little intellectual strain it is understood that resources are better put to a more profitable use than to one less profitable, but this implies the utilization of limited resources in a market free of artificial political barriers. For profits to be good, therefore, they must be earned of free consumers who have viable alternatives to goods or services produced by free suppliers. By contrast, if the consumer has no viable alternative, as in the case of goods or services offered exclusively by a state-sponsored monopoly, then the profits from that enterprise may not be considered moral, because the consumer is not free to choose among viable alternatives, constituting what is often referred to disparagingly as a “captive market”, a morally loaded term implying inherent injustice because of an absence of choice.
Prosperity is morally superior to poverty. If it were not so, or if the two were moral equivalents, then any economic policy should lead no more likely to one end than to the other. We should, if such were the case, celebrate simultaneously the captain of industry alongside the man who squanders his paycheck on booze and blackjack—but we do not, because prosperity is morally superior to poverty, and because prosperity and profit are more frequently the result of the virtuous applications of discipline, frugality, forethought, and risk. During a recent televised round table discussion on economic policy, a panelist was preparing to offer her perspective on some economic inequity, when the host interjected that he hoped the panelist was going to say something more interesting than that the rich have opportunities that the poor do not have.
This is certainly not to suggest that the rich are morally superior to the poor, which is contradicted by the affirmation that all men should have the economic opportunity to improve their own fortunes on the basis of their own investment of self-discipline. By simple arithmetic, equal outcomes are not attainable on a unit-for-unit basis, but they are attainable on a proportionate basis. The self-evident fact is, the rich have the advantage of being rich, which makes it easier to get richer regardless of the economic system, and provides them with greater freedom. Freedom is good. In free markets, the profits of the rich benefit the poor to a greater extent than in a planned economy, and it is therefore extremely counter-productive to incite class envy in free markets by disproportionately depriving the rich of their profits.
If envy may be described as one’s wishing that his neighbor not have some possession, then greed may be one’s endeavoring to take that possession from him. Neither greed nor envy are limited to a single socioeconomic class, and neither one is restricted to a particular economic system, but necessarily implied by these ancient vices is the existence of property rights—that something may rightly belong to someone—otherwise, greed and envy would be meaningless terms. By extension, profits are property.
In free markets these vices go unrewarded, in that greed finds expression in theft or fraud, which are surely punishable by law, but also by the free market. In free markets, the greedy man must compete with another for consumers’ purchases, and the greedy man who restrains himself best is more likely to be rewarded. The greedier man is unrewarded by the free market. In times past, economic discussions made use of a free market term – the ruinous profit– which illustrates the scenario where an excessive pricing of a good or service unwittingly invites new competition. Confiscatory government is the greediest of all, and the most dangerous, in that the government must answer to no market. Likewise, in planned economies, the greedy are rewarded with state-sponsored monopolies or preferential legislative protections, by which the greedy may effectively take what rightfully belongs to someone else through exorbitant pricing or by artificially limiting supply. The consumer has no viable alternative, or, the alternatives are artificially limited.
The motive for profit, therefore, is most certainly distinguishable from greed. Profit is a requirement for the economic viability of any enterprise, without at least the prospect for which the enterprise will not be undertaken, unless for altruistic or other reasons, in which case the enterprise must depend on profits generated from some other activity. And there will be no profit unless the supplier produces something that the market wants at a price that consumers will pay.
In free markets, prices decrease as quality increases. Put another way, as prices come down, the consumer profits by paying less for the same good or service. Countless examples may be cited, from VCR’s to cell phones to computers to flat-screen TV’s, all of which were purely free-market phenomena, entirely unanticipated by any governmental agencies, and whose current costs are extremely low when compared to their first entry into the market. Only the axe-grinding perverse would argue that lower consumer prices is not a moral good, and rarely is a consumer accused of greed for seeking the lowest price among available options. After all, consumers and suppliers alike are rightly criticized for overspending as opposed to saving. But when profits are generated by an impersonal free market enterprise, there is suddenly concern over the motive which directed the enterprise to seek those profits.
To deprive someone of the consequences of his own actions is immoral. Foolish behavior is usually rewarded by unpleasant consequences, and the same principle holds for economic behavior also. Individuals should be free to reap the financial consequences of their own behavior, whether profitable or unprofitable. Suppliers should be free to take risks in investing in the production of something that the market may not yet want, whether it turns out to be an Edsel or an iPhone. Profits from that enterprise will instruct them as to the judgment of consumers regarding the viability of the good produced and whether the enterprise was undertaken with sufficient planning and frugality, which will be further instructive for the adjustment of the enterprise.
Free market principles are also properly extended to areas not readily recognized as markets as such, but in which nature nevertheless seeks equilibrium between supply and demand. The spectrum of human wants and needs is undefinable, that is, it is infinite. In a democratic society, for example, there is a free market for ideas and candidates. A candidate must impress donors with his political viability, just as if he were recruiting investment for an economic enterprise. And then, the candidate must invest the time to persuade voters–his customers — of the relevance and effectiveness of his ideas. Market principles may be discerned in academics, athletics, entertainment, education, leisure, companionship, information, culture, and science—in fact, across the entire spectrum of human experience, there is a market for every potential human want or need. Suppressing these markets through artificial political means is ultimately futile and immanently counter-productive.
There is a natural aristocracy among men, based on virtue and talent. Jefferson’s famous articulation is famously ignored by policymakers who would slip wealth and prosperity of their moorings of morality and virtue. Social commentators agitate over “why should one man prosper, and another not?”, as though it were always a random chance lottery that profits are earned by some and not by others. Free markets permit one man to invest his time in skill development, and another to spend his time in leisure. Both men have made moral judgments of the value of their time. No specific outcome is guaranteed to either man, but each is free to risk his time as he judges fit. In a free market, discipline and investment are more likely to be rewarded by profit, economic or otherwise, than in a planned economy. Although there may not be an immediate connection between individually virtuous behavior and individual economic prosperity, it would be more reasonable to ask “Why shouldn’t one man prosper, and another not?” Most surprisingly, in free markets, even the undeserving derive economic benefit from the goodness of prosperity and profits. In free markets, there is no place for class envy. Economic policies which stoke envy of the rich lead to poverty for all.
As it was once said of the poor, the rich we will, also, always have with us. Human nature indicates that men will seek profits under any economic system, but free markets are the most efficient and the morally superior means by which human wants and needs may be satisfied. In any economic system profits will eventually be required, but in free markets, the motive for profits sooner rather than later renders the enterprise economically viable. As free market enterprises respond to demand for goods and services, profits are effectively redistributed by voluntary participation among free individuals. In free markets therefore, profits are good.
Free markets will not make all of man’s activities good, but they will make virtuous behavior more likely to be rewarded, and vice less likely to be rewarded. Policymakers should, therefore, cease in their efforts to define markets through central planning and instead tear down the artificial political walls that bar the entry of initiative, ingenuity, and innovation, which always accompany free markets in satisfying human wants and needs. They should instead focus their attention on securing and upholding individual right to property as an extension of human liberty. Currencies must be stabilized and contracts must be held enforceable. Governments must relinquish their proprietary claims to regional natural resources and open them to development by free market industries which will capitalize local economies through primary and corollary enterprises. Individuals must remain free to pursue their own happiness through economic prosperity. Free markets mean far more than merely freedom to invest and profit from the sale of goods and services. Instead, free markets are an extension of basic human liberty, and profits earned from free market enterprises are morally good.
Let freedom ring.