July 30, 2014 by Brian Griffiths
Through much of the post-war period in the West, the formation of economic policy was dominated by Keynesian activism on the part of governments seeking an increasing role in providing public services, reducing material poverty, and reshaping income redistribution.
In the United States, President John F. Kennedy launched the New Frontier program and his successor, President Lyndon Johnson, soon after embarked on what came to be called the Great Society. In both cases, emphasis was placed on increasing the role of the state in order to solve problems of poverty and destitution. In intellectual terms, the economist John Kenneth Galbraith made the case for trade unions and government becoming “countervailing powers” in capitalist economies in order to check the power of large corporations. In Britain, Harold Wilson nationalized various industries, developed a national plan, a comprehensive prices and incomes policy, and extended the scope of the welfare state. Across the Channel and Rhine, the Social Democrat Willy Brandt was a major influence in extending the role of government in social policy throughout West Germany.
Throughout the years, the dominant social concern of Christian churches in the West was focused on the redistribution of income rather than the creation of wealth. Some form of socialism or social democracy was perceived as the inevitable outcome of taking seriously the teaching of Jesus in the Gospels concerning love of the poor. Thus, the Protestant theologian Paul Tillich declared that “every serious Christian must be a socialist.” Likewise, many on the British left believed that “Christianity is the religion of which socialism is the practice.” In policy terms, this translated into high taxation, an increasing government share of GDP, and the steady growth of the welfare state.
Theologian and philosopher Michael Novak’s great contribution – and he was really the first to do so – was to challenge this view, root and branch. Through articulating the idea of “democratic capitalism,” he sought the moral high ground. At a time when there was an obsession with the distribution of income, he was concerned with the moral, political, economic, and cultural preconditions for wealth creation in a market system that he believed would unleash the creative potential of the human person.
Novak set out his approach by constructing a number of building blocs. One was the uniquely Judeo-Christian view of the origins and purpose of the physical world; namely, that the physical world owes its existence to the Creator and is God’s provision and gift to mankind. The physical world has an abundance of resources, the potential of which is being extended on a daily basis through human innovation, entrepreneurship, and the technical sciences. The limits of the earth are not yet known. At the time of the Reverend Thomas Malthus (1766–1824), the earth supported 725 million persons. Today through the inventiveness of capitalism in agriculture and medicine, it supports 6.5 billion people. This view of God’s provision for humanity challenged the Club of Rome with its insistence on the finiteness of the created world and its very negative view of population growth. Today, it constitutes a strong challenge to the doomsters of global warming.
Novak was always clear, however, that the key to wealth creation is not the abundance of natural resources in itself. Many countries have enormous natural resources but remain poor. Rather, the key to wealth creation is the creativity of the human person, created as Imago Dei. Human creativity, for Novak, is the primary resource of man. The creation of wealth lies more in the human spirit and mind than it does in matter. Novak begins and ends his classic The Catholic Ethic and the Spirit of Capitalism with a quote from Pope John Paul II’s 1991 social encyclical Centesimus Annus.
… besides the earth, man’s principal resource is man himself. His intelligence enables him to discover the earth’s productive potential and the many different ways in which human needs can be satisfied. It is his disciplined work in close collaboration with others that makes possible the creation of ever more extensive working communities which can be relied upon to transform man’s natural and human environments. Important virtues are involved in this process such as diligence, industriousness, prudence in undertaking reasonable risks, reliability and fidelity in interpersonal relationships as well as courage in carrying out decisions which are difficult and painful, but necessary both for the overall working of a business and in meeting possible setbacks. (CA, no. 32)
The most distinctive feature of capitalism – and certainly the one that uniquely sets it apart from the worldview of socialism – is continuous innovation. The creativity, inventiveness, imagination, resourcefulness, and originality that lie behind this are the product of human intelligence. Through the growth of science, technology, and engineering, these become translated through entrepreneurs into new products and services for the home, the school, the workplace, and the wider community in areas such as health, food, education, transport, and leisure. Here Centesimus Annus – and Novak’s writings before and after this encyclical – also stress the importance of discipline in work, the social nature of wealth creation, as well as virtues such as prudence, trust, honesty, and reliability as indispensable ingredients in the process of wealth creation. In other words, wealth creation is built on moral foundations.
A further building block for wealth creation in Novak’s thesis is Bernard Lonergan’s concept of “emergent probability.” This is derived not only from an explicitly Christian perspective but also from a scientific practical one. Novak’s argument goes something like this. The world in which we live is not “logical, geometric, and perfectly predictable,” nor is it “totally mad, irrational and impervious to intelligence.” All sorts of things happen in the world. Some kinds of events reoccur. Other events are wild and highly improbable. In more recent years, the 2008 financial crisis has shown us at considerable economic cost that we do live in a world of black swans and fat tails. It follows that, on the basis of experience, people form a view of what might happen, assign probabilities to the different risks they might face and then make appropriate decisions. This belief about the way the world works is best captured by the term enterprise. Entrepreneurs know that the world is not totally random, but they also know that success is never guaranteed.
Although not expressed in this way, Adam Smith also saw that economic life was neither totally random nor blind necessity. His great insight was that because of the existence of self-love and sympathy as motives for human conduct coupled with “the way things work” in economic life, the system or the order in which economic life takes place is one of emergent probability. The key to the wealth of nations was not natural resources, political status, state planning, military power, or even the Divine Right of Kings but human creativity and intelligence that flourished under a particular system that he referred to as a “natural system of liberty.” This system was a bottom-up approach, which was based on the rationality of individuals free to choose in markets relatively uncontrolled by government. The genius of this system is that it was built up from the actions of myriads of individuals endowed with the freedom of choice to pursue their own interests in relatively free markets and that would, without being designed to do so, help promote the common good.
This article is excerpted and adapted from “Creation Theology” by Brian Griffiths in Theologian & Philosopher of Liberty – Essays of Evaluation & Criticism in Honor of Michael Novak, edited by Samuel Gregg (Acton Institute, 2014).
original article: Christianity, Socialism, and Wealth Creation
capitalism, culture, economics, ethics, freedom, ideology, innovation, religion, research, socialism, study