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Free market economics through the lens of sin, power, and human flourishing (Acton 4)

[Oops. I wrote this while I was at Acton, but neglected to publish it. So, before anyone comments, yes I know that 4 comes before 7.]

One of the consistent themes here at Acton has been the idea that economics is not a zero-sum game. Rather than trying to determine how to divide up a finite pie of economic resources (wealth re-distribution), we should be focusing on how the proper use of capital resources creates more capital and greater global wealth. And, the best way to allocate those capital resources properly is to allow local economies to flourish. Some centralization of governmental authority is necessary to ensure that market forces don’t get out of hand, but in general we should facilitate the development of free markets that can respond swiftly to market demands and tap the resources of creative individuals/communities.

An issue that often arises in these discussions is that of global poverty, particularly poverty in majority world countries. Applying these free market principles means that the best way to address poverty is through the development of free market economies that will facilitate the production of greater wealth. Although “aid” should be an important part of our response to crisis situations, continual aid leads to an unhealthy dependence that destroys local economies. So, instead of “aid”, we should be focused on supporting local, free market economies. This is the best way to address global poverty. And, the growing economies of China and India are often cited as case studies in the application of these principles.

Although I can appreciate a lot about this arrangement, I am still left with at least four questions. One of them, the impact of this free market approach on the environment, I’ll save for my next post. In this one I’d like to focus on the issues of sin, power, and human flourishing.

1. Sin. As I mentioned in the previous post, it’s easy to talk about a “market” as an abstract force in society, and then discuss its potential for good in the world. That’s nice. But, when we realize that markets comprise the actions of individuals and communities which are themselves sinful and driven by sinful desires, the level of optimism should decrease significantly. And, Acton is fully aware of this problem. That’s why none of the lectures rejected a role for government in monitoring markets entirely (even though some of the rhetoric still pressed in this direction). But, their preferred answer to the problem of sin is the development of “virtuous” people and societies, who will then develop more “virtuous” markets. Unfortunately, “virtue” is one of those terms that never received adequate definition. Presumably they meant the Christian virtues (love, joy, peace, etc.). But, since they’re not talking about evangelism per se, they must be talking about developing “Christian” virtues in non-Christian contexts. (In other words, for market purposes it doesn’t really matter if you’re a Christian or a Buddhist, as long as you’re trustworthy.) But, I’m still waiting for some discussion of what it means to develop Christian virtues apart from Christ, who gets to determine which virtues are necessary, and how they do that. So, in general, I’d still like to see more reflection on the nature of sin and how it impacts this appeal to free markets.

2. Power. This one is similar to the last, but nuanced in a particular way. In one discussion this week, someone pointed to the problem of malaria in the majority world as an example of a situation that free markets seem poorly positioned to address. According to him, Malaria has the greatest impact on poor children in the majority world. Since such children have no capital resources, large pharmaceutical companies have little incentive to invest in affordable malaria medications. An example like this powerfully demonstrates the problem of unequal power distribution in the world and its impact on free markets. It would seem that as long as such inequities exist, there will be a tendency for free markets to cater to the needs and desires of those already powerful and wealthy. Granted, as someone points out, it’s actually in the best interests of the market to bring people out of poverty because it creates a larger and wealthier market. But, to hope that the market (i.e. the sinful people making economic decisions) will take such a long-range view, often against its own short-term interests, is a little more than I can manage.

3. Human Flourishing. And, we’re back to this one again because I think it’s at the center of so many of these issues. At the very end of one session someone asked why it is that so many people look at the growing economy of China and worry about what that economic growth is doing to the overall well-being of the people. Unfortunately, we didn’t have time to discuss this one because I thought it raised a great question. If we’re not careful, this approach would seem to run the risk of equating human flourishing with economic well being, albeit virtuously economic well-being. So, we end up with a more Christian version of the homo economicus. I think the concerns people raise about rapid economic development are based on an almost unconscious realization that human flourishing involves so much more. So, a discussion of economics has to be grounded in an understanding of (at least) what makes for human flourishing in the world so that we can determine when economic growth does or does not serve that greater end.

One of the consistent themes here at Acton has the idea that economics is not a zero-sum game. Rather than trying to determine how to divide up a finite pie of economic resources (wealth re-distribution), we should be focusing on how the proper use of capital resources creates more capital and greater global wealth. And, the best way to allocate those capital resources properly is to allow local economies to flourish. Some centralization of governmental authority is necessary to ensure that market forces don’t get out of hand, but in general we should facilitate the development of free markets that can respond swiftly to market demands and tap the resources of creative individuals/communities.

An issue that often arises in these discussions is that of global poverty, particularly poverty in majority world countries. Applying these free market principles means that the best way to address poverty is through the development of free market economies that will facilitate the production of greater wealth. Although “aid” should be an important part of our response to crisis situations, continual aid leads to an unhealthy dependence that destroys local economies. So, instead of “aid”, we should be focused on supporting local, free market economies. This is the best way to address global poverty. And, the growing economies of China and India are often cited as case studies in the application of these principles.

Although I can appreciate a lot about this arrangement, I am still left with at least four questions. One of them, the impact of this free market approach on the environment, I’ll save for my next post. In this one I’d like to focus on the issues of sin, power, and human flourishing.

1. Sin. As I mentioned in the previous post, it’s easy to talk about a “market” as an abstract force in society, and then discuss its potential for good in the world. That’s nice. But, when we realize that markets comprise the actions of individuals and communities which are themselves sinful and driven by sinful desires, the level of optimism should decrease significantly. And, Acton is fully aware of this problem. That’s why none of the lectures rejected a role for government in monitoring markets entirely (even though some of the rhetoric still pressed in this direction). But, their preferred answer to the problem of sin is the development of “virtuous” people and societies, who will then develop more “virtuous” markets. Unfortunately, “virtue” is one of those terms that never received adequate definition. Presumably they meant the Christian virtues (love, joy, peace, etc.). But, since they’re not talking about evangelism per se, they must be talking about developing “Christian” virtues in non-Christian contexts. (In other words, for market purposes it doesn’t really matter if you’re a Christian or a Buddhist, as long as you’re trustworthy.) But, I’m still waiting for some discussion of what it means to develop Christian virtues apart from Christ, who gets to determine which virtues are necessary, and how they do that. So, in general, I’d still like to see more reflection on the nature of sin and how it impacts this appeal to free markets.

2. Power. This one is similar to the last, but nuanced in a particular way. In one discussion this week, someone pointed to the problem of malaria in the majority world as an example of a situation that free markets seem poorly positioned to address. According to him, Malaria has the greatest impact on poor children in the majority world. Since such children have no capital resources, large pharmaceutical companies have little incentive to invest in affordable malaria medications. An example like this powerfully demonstrates the problem of unequal power distribution in the world and its impact on free markets. It would seem that as long as such inequities exist, there will be a tendency for free markets to cater to the needs and desires of those already powerful and wealthy. Granted, as someone points out, it’s actually in the best interests of the market to bring people out of poverty because it creates a larger and wealthier market. But, to hope that the market (i.e. the sinful people making economic decisions) will take such a long-range view, often against its own short-term interests, is a little more than I can manage.

Human Flourishing. And, we’re back to this one again because I think it’s at the center of so many of these issues. At the very end of one session someone asked why it is that so many people look at the growing economy of China and worry about what that economic growth is doing to the overall well-being of the people. Unfortunately, we didn’t have time to discuss this one because I thought it raised a great question. If we’re not careful, this approach would seem to run the risk of equating human flourishing with economic well being, albeit virtuously economic well-being. So, we end up with a more Christian version of the homo economicus. I think the concerns people raise about rapid economic development are based on an almost unconscious realization that human flourishing involves so much more. So, a discussion of economics has to be grounded in an understanding of (at least) what makes for human flourishing in the world so that we can determine when economic growth does or does not serve that greater end.