Money, Greed, and God - Chapter 5
"Isn't Capitalism Based on Greed?"
This was a great chapter. Richards spent this chapter uncovering the nature of the entrepreneur or capitalist. (My one complaint: he conflates these two terms. I'd suggest that the capitalist is the person who funds the business while the entrepreneur is the person who comes up with the ideas. Often these are the same person - but not always.)
As Christians, we should be - and typically are - disturbed by the claims of many people that claim that greed is the essence of capitalism. Most of the people that suggest this are critics of capitalism - but some proponents of capitalism (most notably Ayn Rand) support this same notion.
The problem: it's simply not true. Here, it may be useful to distinguish between "self-interest" and "selfishness". Richards does a poor job defining these two, but I'll take a stab at it. Acting in one's "self-interest" simply means doing what you consider to be best for yourself. There's nothing inherently wrong about this. In fact, Scripture implicitly assumes that we do this, and does so without condemnation. (For example, Paul says that each of us should look out not only for our own interest, but also for the interest of others.) And, it simply makes sense that each of us should look out for own interests. After all, I have the best information about my needs. However, this doesn't not imply that I don't look out for others' interest at all. There is no contradiction in saying that I need to take care of myself AND take care of my wife (add to this whoever you like - friends, family, community members, etc.). Self-interest and generous altruism are, in the view of Adam Smith, two passions that humans may follow - both are part of who we are, and both should influence our actions.
"Selfishness" on the other hand is best seen in the image of the miser or glutton - like pre-reformed Ebenezer Scrooge. Someone who places their trust and pleasure in their material possessions. This is flatly condemned by Scripture. As Richards points out, though, misers are not a true image of capitalists. Capitalists (at least successful ones) don't hoard their wealth - they invest it.
And it's the investment process that makes capitalism work. Adam Smith famously said that it's not by appealing to the baker's and butcher's charitableness that we expect our meal, but by our appeal to his self-interest. Now, this isn't saying that the baker and butcher are never charitable - they certainly are, on occasion. Nor is it saying that the baker and butcher shouldn't be charitable - they certainly should be. Rather, Adam Smith is just making a statement about reality: a win-win trade satisfies the butcher's self-interest and my need for meat, and is a more reliable way of getting meat than begging.
The brilliance of capitalism is that the capitalists can only succeed in their pursuit of self-interest if they serve others' interests as well. If the butcher only offers spoiled, grisly meat at a high price, they will lose their customer base as people go to the butcher next door. In capitalism, it is true that "it is in giving that we receive". Only by serving the needs of others can we succeed. This is what entrepreneurs do - they find needs that people have, and find ways to fill that need.
The real strength of this chapter, I think, are some of the stories that Richards tells about how entrepreneurs often get their start. For example, the man who invented kitty litter had to give away the first dozen bags to a local pet store. At the time, cats were basically universally outside pets. So, the pet store refused to buy any kitty litter from the entrepreneur (after all, who would buy "bagged dirt") - so the entrepreneur left about a dozen bags there with instructions that the pet store should give them away. It did - and then made a significant order.
There is a world of difference between the miser and the entrepreneur. The miser rests in the security of his riches. The entrepreneur risks his riches in looking for ways to satisfy people's desires - and is only successful in as far as he succeeds.
This chapter made me a bit sad about Ayn Rand, honestly. On the one hand, Richards (I think rightly) criticizes Ayn Rand for her praise of selfishness and - let's call it what it is - hatred of Christian altruism. Though, to be honest, I think that Rand defines these terms differently than most people would. If I give a gift to a charity and feel good about it, Rand would declare the act to be selfish. I'm pretty sure most people would consider it altruistic. On the other hand, one thing that Ayn Rand gets spot-on is the nature of the entrepreneur. In her novels, entrepreneurs are risk-takers who produce products that are lower cost and higher quality than what their competitors offer. It's hard to paint a more accurate picture than that...
This was probably my favorite chapter so far, to be honest. I think it really made the strongest moral case for capitalism in the book yet.
This was a great chapter. Richards spent this chapter uncovering the nature of the entrepreneur or capitalist. (My one complaint: he conflates these two terms. I'd suggest that the capitalist is the person who funds the business while the entrepreneur is the person who comes up with the ideas. Often these are the same person - but not always.)
As Christians, we should be - and typically are - disturbed by the claims of many people that claim that greed is the essence of capitalism. Most of the people that suggest this are critics of capitalism - but some proponents of capitalism (most notably Ayn Rand) support this same notion.
The problem: it's simply not true. Here, it may be useful to distinguish between "self-interest" and "selfishness". Richards does a poor job defining these two, but I'll take a stab at it. Acting in one's "self-interest" simply means doing what you consider to be best for yourself. There's nothing inherently wrong about this. In fact, Scripture implicitly assumes that we do this, and does so without condemnation. (For example, Paul says that each of us should look out not only for our own interest, but also for the interest of others.) And, it simply makes sense that each of us should look out for own interests. After all, I have the best information about my needs. However, this doesn't not imply that I don't look out for others' interest at all. There is no contradiction in saying that I need to take care of myself AND take care of my wife (add to this whoever you like - friends, family, community members, etc.). Self-interest and generous altruism are, in the view of Adam Smith, two passions that humans may follow - both are part of who we are, and both should influence our actions.
"Selfishness" on the other hand is best seen in the image of the miser or glutton - like pre-reformed Ebenezer Scrooge. Someone who places their trust and pleasure in their material possessions. This is flatly condemned by Scripture. As Richards points out, though, misers are not a true image of capitalists. Capitalists (at least successful ones) don't hoard their wealth - they invest it.
And it's the investment process that makes capitalism work. Adam Smith famously said that it's not by appealing to the baker's and butcher's charitableness that we expect our meal, but by our appeal to his self-interest. Now, this isn't saying that the baker and butcher are never charitable - they certainly are, on occasion. Nor is it saying that the baker and butcher shouldn't be charitable - they certainly should be. Rather, Adam Smith is just making a statement about reality: a win-win trade satisfies the butcher's self-interest and my need for meat, and is a more reliable way of getting meat than begging.
The brilliance of capitalism is that the capitalists can only succeed in their pursuit of self-interest if they serve others' interests as well. If the butcher only offers spoiled, grisly meat at a high price, they will lose their customer base as people go to the butcher next door. In capitalism, it is true that "it is in giving that we receive". Only by serving the needs of others can we succeed. This is what entrepreneurs do - they find needs that people have, and find ways to fill that need.
The real strength of this chapter, I think, are some of the stories that Richards tells about how entrepreneurs often get their start. For example, the man who invented kitty litter had to give away the first dozen bags to a local pet store. At the time, cats were basically universally outside pets. So, the pet store refused to buy any kitty litter from the entrepreneur (after all, who would buy "bagged dirt") - so the entrepreneur left about a dozen bags there with instructions that the pet store should give them away. It did - and then made a significant order.
There is a world of difference between the miser and the entrepreneur. The miser rests in the security of his riches. The entrepreneur risks his riches in looking for ways to satisfy people's desires - and is only successful in as far as he succeeds.
This chapter made me a bit sad about Ayn Rand, honestly. On the one hand, Richards (I think rightly) criticizes Ayn Rand for her praise of selfishness and - let's call it what it is - hatred of Christian altruism. Though, to be honest, I think that Rand defines these terms differently than most people would. If I give a gift to a charity and feel good about it, Rand would declare the act to be selfish. I'm pretty sure most people would consider it altruistic. On the other hand, one thing that Ayn Rand gets spot-on is the nature of the entrepreneur. In her novels, entrepreneurs are risk-takers who produce products that are lower cost and higher quality than what their competitors offer. It's hard to paint a more accurate picture than that...
This was probably my favorite chapter so far, to be honest. I think it really made the strongest moral case for capitalism in the book yet.