Capital gains: how economic growth benefits the world

Christian Century, May 4, 2004 by Deirdre McCloskey

ANY SOCIETY, Christian or not, has both a sacred sphere and a profane sphere, a sphere in which love and obligation determine who gets what as against the sphere in which prudence and courage do so. And the two cannot be disentangled. We all live in families, and a church can be viewed from this social-scientific perspective as a sort of family. Businesspeople cannot be routinely avaricious and remain in business any more than a caretaker for a child can, or a dutiful daughter.

Many noneconomists imagine that, on the contrary, avarice is necessary to keep the wheels of commerce turning, "creating jobs" or "keeping the money circulating"--that people must buy, buy, buy or else capitalism will collapse and all of us will be impoverished. It's a bubble theory of capitalism, that people must keep puffing--one version of the old claim that expenditure on luxuries at least employs workers.

I say as an economist that the theory is mistaken. Nothing would befall the market economy in the long run if we tempered our desires down to one car and a small house and healthy foods from the co-op. (And as the economist Robert Frank argues, taxing consumption to bring down rivalrous buying of Ferraris and other symbols of superiority would make us better off even without moderating our desires, though I doubt that rivalrous consumption is a very long-lasting or very important feature of high capitalist economies; notice, for example, that it's always those other, silly people, not we, who are trying to keep up with the Joneses.) Workers in a temperate economy would not become permanently unemployed.

The mistake is to think that the relevant mental experiment is imagining that tomorrow, suddenly, without warning, we "all begin to follow Jesus in what we buy. No doubt such a conversion would be a shock to General Motors. But, an economist would observe, people in the Christian economy would find other employment, and would choose more nonwork activity. It would still be a fine thing to have light bulbs aim paved roads and other fruits of enterprise (the commercial version of courage). "In equilibrium," as economists say when making this sort of point, the economy would encourage specialization to satisfy human desires in much the same way it does now. People would buy Bibles and spirit-enhancing trips to Yosemite instead of Monica's Story and trips to Disney World, but we would still value high-speed presses for the books and airplanes for the trips. The desires would be different, but that doesn't change how the system works best: private property (such as your labor, your ideas) seeking its best employment; consumers (such as you) seeking the best deal.

I agree with Benjamin Hunnicutt in his remarkable books on the leisure history of Americans that long hours are connected to our great Need-Love for commodities. People following Jesus would by contrast make the plain pottery that an economy of moderation would demand and spend more time with their children. But the point is that the pottery would still be produced most efficiently in a marketing, free-trade, private property, enterprising and energetic economy. We would be richer, not poorer, in the things and deeds we value.

This should be good news for Christians. We do not need to trim our demands for ethical consumption for fear that such a policy would hurt the poor. We do not need to accept avaricious behavior because of some wider social prudence it is supposed to serve, allegedly keeping us employed.

TO REPEAT, it is not the ease that market capitalism requires avaricious people. More like the contrary. Markets, I now am claiming, exhibit behavior that Jesus would have approved of--in fact, behavior that he did, textually, once in a while, approve of. In any event, I want to claim that the imperfect economy we now inhabit contains in its very functioning a large amount of God-regarding virtue.

Consider your own workplace. How does your office or factory actually operate? Really, now. With monsters of prudence running around taking care of Numero Uno? No, not really. We find the cartoon strip Dilbert funny because the avaricious behavior of some of its characters is over the top, crazy funny, unacceptably prudent. Workplaces are in fact more like homeplaces. We are morally offended when our workmate complains about our dog in our office: what a nasty thing to do, we think; doesn't he realize that Janie is important to me; doesn't tie care about me? A wholly prudential worker would not be capable of such sorrow and indignation.

The ethical wholeness of actors in a capitalist marketplace is not a minor, supplementary matter. The writer Don Snyder tried construction work to survive one winter in Maine:

      There were six of us working
   on the crew, but the house was
   so large that we seldom saw one
   another.... Once I walked right
   by a man in my haste to get back
   to a second story deck where I
   had been tearing down staging.
   [The contractor] saw this, and
   he climbed down from the third
   story to set me straight: "You
   can't just walk by people," he
   said. "It's going to be a long winter."