Many people, especially young people, who critique capitalism have no idea what capitalism is. Capitalism is just freedom in the economic sphere. It’s just freely buying and selling. The only way to set a just price is to find one the buyer and seller agree upon. If someone with power – the state – tells the seller how he must price his goods, economic freedom is destroyed. Prices should be set by supply and demand, not government fiat.
Of course, for the Christian, freedom is always regulated freedom. It’s ordered freedom. So even free markets are regulated. While the 8th commandment basically establishes the free market, along with the fact that the Bible no where authorizes the state to plan or control the economy, this does not mean people should be free to buy and sell anything they want. Parents should not be allowed to sell children. Women should not be allowed to sell their bodies as prostitutes. Pornography should be outlawed under obscenity and decency laws. Certain types of drugs (a form of witchcraft) should not be available on the market. And so on. While God’s law establishes a free market, the actual formation of a market is a human construct. People have to create products. They have to have a way to make those products known and offer them for sale. An agreed upon currency has to be used. And the state has a role in enforcing just weights and measures. A proper free market is a moral market, a market regulated by ethical standards. A biblical free market means buyers and sellers exchanging lawful goods and services according to their own interests. The genius of the market is that every economic exchange should be a win-win transaction, in that both parties get what they want. Capitalism has created more wealth for more people than any other system. Whereas socialist and communist systems drag everyone down to poverty, the free market gives a way of creating jobs and generating wealth. It encourages entrepreneurship, efficiency, and innovation.
When most people today rail against capitalism, what they are actually railing against is globalism. “It’s capitalism that offshored our jobs. It’s capitalism that hollowed out the Rust Belt.” And so on. But free markets do not require globalism. In fact, capitalism can be fully consistent with at least some forms of economic nationalism. Within a nation, a free market can and should exist – there should be minimal state regulation. The state should not pick winners and losers. But when it comes to trading between nations, a global “supply chain,” and so forth, there are other considerations. Adam Smith believed individuals within nations should be free to import and export goods. In principle, that’s true. If one nation cannot produce what another nation can, and vice versa, it makes sense that they would engage in trade with one another, and both could benefit. But the actual situation is more complex. What if nation A subsidizes its workers in industry X, giving its own workers a great advantage over workers in industry X in nation B? Workers in industry X In nation B will eventually find themselves out of work – and not because they aren’t good workers but because they are competing against subsidized workers. The market is not free in that there really isn’t a level playing field. There is no biblical requirement for a nation to open its market up to other nations carte blanche. Israel was actually warned about entering into various kinds of alliances with nations that served other gods. Does anyone think the Israelites were supposed to enter into free trade with the Amalekites? Or the Canaanites? Obviously not – and to do so would have been considered traitorous. But in David’s and Solomon’s day, Israel did engage with trade with Tyre because they were sufficiently like-minded (cf. 2 Samuel 5:11, 1 Kings 9:13; see also Amos 1:9 which later accuses Tyre of breaking its “covenant of brotherhood” with Israel). David bought cedar from Lebanon. Solomon imported skilled workers from Tyre to assist in building the temple because those workers had skills Israelites did not. But in these cases, again, there are reasons to think Hiram and his people were either Gentile God-fearers, or at least culturally similar enough to Israel to engage in trade. There were other nations Israel refused to do to business with, economically and politically, because they were considered enemies.
So to apply this to our contemporary situation, a nation can be fully committed to free markets, and still resist globalism. A nation should be wary of engaging in trade with other nations that cannot be trusted to play fair. It should not enrich its enemies. It should not engage in alliances with nations that have antithetical worldviews. Those who critique the kind of free market globalism that went into high gear in the 1990s have a point. To get more specific, why does America engage in trade with Islamic nations in the Middle East by buying their oil? Why do we engage in trade with Marxist China? Sure, we get cheap goods, but at what cost to our own society’s well-being? Why have we allowed massive immigration of workers to do jobs our own people could do? The free market – capitalism – does not require any of this. And it’s time to rethink it. Yes, that means we may need to break up global supply chains. It may mean some goods will cost us more. It may mean less cheap junk for sale. But American workers, especially American men, have suffered greatly, and not because of the free market or capitalism, but because we decided engage in trade partnerships with modern day Amalekites. America needs a free market that serves the American people, not one that disproportionately serves the interests of other nations.
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ADDENDUM: I like a lot of what Vox Day says on various topics, and while I have not read everything he has had to say on free markets, I think he represents exactly the kind of confusion my post is addressing.
We had free markets long before we had any national debt. Free markets have absolutely nothing to do with the debt crisis. That’s a separate issue.
What Vox day calls free trade is really just the globalism I described and critiqued in my post – and despite the rhetoric of the politicians, that kind of “free trade” is anything but a free market – it’s the opposite. It’s not a level playing field. We ramped up global trade between nations especially in the 1990s, but “free trade” as it has existed in the modern era is not a free market. Not at all.
I’m actually sympathetic way some of VD’s critiques of free trade globalism, but we have to distinguish that from a free market in which all buyers and sellers abide by the same rules.
Commerce between nations only works to everyone’s benefit if everyone plays fair. That has not been the case with modern globalism.
Trump’s tariffs are an attempt to level the playing field. I don’t think they are the best solution, but they are a recognition of the problem. There is no global free market for the reasons I give in my post. Maybe there could be someday, but there isn’t right now.
Bottom line: what politicians in recent decades have called “free trade” is not actually a “free market. And, thus, it’s not really capitalism any more than “crony capitalism” is capitalism.
When we began offshoring manufacturing in the search for cheaper labor, many people knew and predicted what would happen. Yes, we’d get cheaper goods, which is nice. But many people knew it would crash the job market in certain parts of the country, it would hollow many industries we actually need for national security, etc.
Any time government tinkers with the economy, there will be winners and losers – and that’s what we’ve seen. Those working for multinational corporations have generally done very well. Those with factory jobs have not.
My post strongly questions the morality and wisdom of trade alliances with nations that are ideological enemies. Modern liberals thought they could liberalize these nations by bringing them into a global economy. But liberal ideals don’t work that way. American culture, our political system, our way of life, cannot be replicated anywhere with any group of people. It is specific to us. So the whole project was misguided. We’ve enriched our enemies, allowed them to steal technology we developed, and they have flooded our nation with poisonous drugs. Where VD and I probably overlap (terminological confusion aside) is that globalism has been a bad deal for us, all things considered. I’d be willing to pay a whole lot more for my iPhone or sneakers in order to avoid having anything to do with Chinese slave labor. But that’s not a choice we get to make now. It’s already been made for us.
ADDENDUM: “How a person who has been benefited out of Globalism view this ? I am from a third world country and i saw outsourced jobs bring at least a million out of poverty.”
You should be thankful it happened. And I agree there were many who really be benefitted – I’m not denying that at all. I’m looking at it from an American perspective – those were most likely jobs American workers lost.
ADDENDUM: “Defenders of capitalism, whe confronted with its failures, just say ‘true capitalism has never been tried.’”
That’s just not true. Not at all. Socialists say that but not capitalists because socialism always fails (therefore it wasn’t “real” socialism, they claim), but capitalism consistently succeeds. The two systems have completely different track records.
Free market advocates always point to its long track record of success in generating wealth. The free market has been tried, and when it’s been tried it has worked. When nations go away from it, into a centrally planned economy, they always suffer. Venezuela could be Exhibit A, but there are many others.
ADDENDUM: “How can markets be ‘free’ if they are regulated? Won’t free markets unbounded by higher societal goods spiral into materialistic tyranny?”
That’s like saying we shouldn’t have free speech because free speech spirals into vile, wicked speech, and free speech advocates underestimate the amount of intervention (censorship) needed to keep speech virtuous.
As my post clearly stated, a free market is required by the law of God. God never authorizes the state to plan the economy, set prices, etc. A just price is one agreed upon by the buyer and seller. Economic freedom is a good in and of itself – not the highest good, but an important good. It is one of the blessings of a Christian civilization that adheres to God’s law. Several of Jesus’ parables only make sense against the backdrop of a free market.
But, again, as I said in the post, markets themselves are human constructs. And God does authorize the state to put up parameters – to enforce just weights and measures, to prohibit the trading of unlawful goods and services (eg, forbidding an abortionist from selling his baby-killing services does not mean there is no free market), etc. The state has a role in a free market economy – but it’s very different from the roles of the state in a centralized, planned, socialist economy.
Liberty is always ordered and structured. Freedom and law are not opposites; they presuppose one another. When Patrick Henry said “Give me liberty or give me death,” he was not talking about autonomous liberty but ordered liberty – liberty within bounds, and law within bounds. Free speech never meant freedom to spread porn or to blaspheme the true God or to yell “fire!” in a crowded theater. Freedom of religion, properly understood, never meant Mormons were free to practice polygamy, or Muslims were free to wage jihad, or Satanists were free to use psychedelic drugs and sacrifice cats. Freedom of religion has never meant freedom to do whatever you want so long as you do it in the name of your god.
It’s true that a free market, in isolation, cannot make men virtuous (though it has the advantage of requiring people to serve their neighbors, whatever their intentions, by providing goods and services people want at prices they will pay). But it’s not the job of the market, as such, to make people virtuous. Training in virtue comes from the family, church, etc. A properly ordered market will not allow certain vices to be bought and sold, but the market by itself cannot make men virtuous because that isn’t its purpose. (I’ll hasten to add, a planned economy does not make men virtuous either – and in fact, makes men worse because it rewards corruption rather than service. So-called “crony capitalism” is a good indicator – in crony capitalism, businesses and corporations with sufficient clout use the power of the government to stack the deck in their favor, protect them from rivals, force people to buy their products, etc. Crony capitalism rewards doing whatever it takes to gain influence with the government rather than rewarding service. It’s socialism in disguise – socialist favors for the corporation competitive capitalism for everyone else.)
A free society, properly understood, is not a society with no rules. Liberty always requires a framework. When Paul says “for freedom Christ has set us free,” this is the kind of freedom he has in view.
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