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& Capitalism
July 5, 2008
Christianity & Capitalism
A Quick Review
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Christianity & Capitalism
A Model for Examining
Capitalism
• No economic system is prescribed by
the Bible.
• We’re using a multi-disciplinary
examination of capitalism through the
lenses of Scripture, history, and
economics.
• Capitalism as an institution.
• Does capitalism promote Shalom? 3
Christianity & Capitalism
Free to Choose
• The building block of capitalism =
voluntary transactions by buyers and
sellers
– When two parties voluntarily transact
with each other, both are better off.
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Christianity & Capitalism
The Origins of
Capitalism
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Christianity & Capitalism
Earlier Economic
Systems
• Feudalism (Medieval Europe)
– Self-sufficient manors where serfs (who
were tied to the land) had to pay a
tribute.
– Guilds suppressed skilled craftsmen.
– No incentive to innovate. Limited
marketplace.
Industrial Revolution
• Capitalism was gradually
institutionalized in England in the
17th-19th centuries.
– Religious tolerance, large common
market, Parliament’s support (e.g.
patent law, lowered tariffs, 1811
Luddite rebellion)
• Sustained innovation of the Industrial Revolution
was only possible because of the advent of the
capitalist system.
– 14th century China
• Political fragmentation in Europe (weak states)
allowed capitalism to spread there next, and then
exported to rest of the world in 19th-20th
centuries. (Source: Joel Mokyr, The Lever of Riches, pp. 172-208, 239-269.)
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Christianity & Capitalism
Did Christianity Create
Capitalism?
“Western Christianity contained the
seeds of future technological process.” –
economist Joel Mokyr
• Specific examples of Christianity laying the
groundwork for capitalism:
– Centuries-long debate over usury gave insight
into nature of money and helped create
banking.
– “The [Benedictine] monk was the first
intellectual to get dirt under his fingernails.”
– Calvinism encouraged hard work and frugality,
which created a pool of investment capital. 9
Christianity & Capitalism
Intellectual Challenges
• Thomas Malthus (Malthusianism) –
“The power of population is
indefinitely greater than the power in
the earth to produce subsistence for
man.” So we’ll all starve to death.
• Karl Marx (communism) –
Communal property &
centralized decision making
will replace private property
& decentralization following
a working class uprising. 11
Christianity & Capitalism
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Christianity & Capitalism
The World Economy is No
Longer Stagnant
(Source: Angus Maddison, "World Population, GDP and Per Capita GDP, 1-2003 AD," at the
Groningen Growth and Development Centre. http://www.ggdc.net/) 13
Christianity & Capitalism
The U.S. Economy is the
World’s Largest
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Christianity & Capitalism
(Source:http://www.heritage.org/Resea
rch/Welfare/bg2064.cfm)
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Christianity & Capitalism
(Sources: Economic freedom scores, The Heritage Foundation, http://www.heritage.org/Index/Ranking.aspx. Food expenditure 23
data, U.S. Dept. of Agriculture, http://www.ers.usda.gov/briefing/cpifoodandexpenditures/data/2004table97.htm.)
Christianity & Capitalism
Economic Growth = Longer
Lifespans
(Source:
www.gapminder.org.)
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Christianity & Capitalism
Economic Growth = Longer
Lifespans
(Source:
www.gapminder.org.)
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Christianity & Capitalism
Economic Growth = Longer
Lifespans
(Source:
www.gapminder.org.)
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Christianity & Capitalism
Economic Growth = Longer
Lifespans
(Source:
www.gapminder.org.)
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Christianity & Capitalism
Economic Growth = Longer
Lifespans
(Source:
www.gapminder.org.)
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Christianity & Capitalism
The Environment
• No economic system is pollution-free.
• “Natural resources” change over time.
• Some analyses suggest global
environmental conditions are improving
—e.g. Index of Leading Environmental
Indicators.
• Bottom Line: What is the cost-benefit?
“Earth got about 0.7 degrees Celsius warmer in the 20th century while it increased its GDP by 1,800%…let’s
stipulate that all of the warming was the result of our prosperity and that this warming is in fact indisputably bad
(which is hardly obvious). That’s still an amazing bargain. Life expectancies in the United States increased from
about 47 years to about 77 years. Literacy, medicine, leisure and even, in many respects, the environment have
improved mightily over the course of the 20th century…” – columnist Jonah Goldberg
Key Takeaways
• Capitalism isn’t a perfect institution, but
it has a formidable track record across
the centuries:
– Economic growth
– Explosion of knowledge
– Income inequality but rising living
standards for the poor
– Greater availability of food
– Longer life spans
– Potential for the third world
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Christianity & Capitalism