We Don’t Need to Replace Capitalism. We Need to Redeem It.

Will capitalism be on the ballot in November?

With job growth at record levels and confidence rising on both Wall Street and Main Street, it may seem an odd question to ask. But millions of Americans are still very skeptical about our nation’s economic future, and their concerns are beginning to dominate the political landscape. In many ways, both capitalism and socialism will be on the ballot in November – a fool’s choice if ever there was one.

According to a recent study by the Harvard Institute of Politics, only 19% of Millennials self-identify as “capitalists” and, in a similar YouGov poll, nearly half expressed a preference for socialism over capitalism — something that would have been unthinkable only a generation ago. But while this may come as a complete shock to many readers, it doesn’t surprise me at all – at least not anymore – not since I started working on my new book, Redeeming Capitalism (Eerdmans 2018), a sober and critical assessment of the “the good, the bad and the ugly” of global capitalism.

Before becoming an academic, I spent most of my life in the rough and tumble world of international business, working on six continents for large, multi-national companies. I witnessed first-hand the unrivalled power of capitalism to create wealth, improve living standards and transform entire communities. But in the boardroom, I also experienced capitalism’s dark side, and in the wake of the Global Financial Crisis, I began my search for capitalism’s “soul.” Unfortunately, I didn’t find one.

I began my search for capitalism’s “soul.” Unfortunately, I didn’t find one.

Contrary to popular belief, capitalism is a “subject,” not an “object.” It’s not an artificial construct, coordinated by a central authority and isn’t an “entity” at all. Capitalism is nothing more than the term we use to describe the cumulative effects of countless individual and corporate decisions, in a highly monetized, lightly regulated environment. It works beautifully as a mechanism for wealth creation, but because it lacks an endemic moral code, it invariably reflects society’s values, or lack thereof.

Consequently, what I found wasn’t the capitalism of Adam Smith, rooted as it was in an Enlightenment-era interpretation of Judeo-Christian morality. Nor did I find the capitalism of Max Weber, famously driven by an all-encompassing “Protestant ethic.” Instead I found myself confronted by a mutant “postmodern capitalism,” which I reluctantly define as an economic system “devoid of a moral compass and resistant, if not impervious to ethical constraint”; a system with a moral vacuum at its core, which if not addressed, could lead to capitalism’s self-destruction and replacement by an altogether unworkable alternative. Allow me to explain.

The field of economics wasn’t always a mathematical science, dependent upon the veracity of financial models. Traditionally, “political economy” (as it used to be known), wasn’t merely a social science. It was a “moral science.” It dealt with issues ranging from wealth creation and monetary policy to taxation and public policy. Adam Smith’s famous tome was entitled: “An Inquiry Into the Nature and Causes of the Wealth of Nations” (emphasis mine), not the wealth of individuals, or corporations or governments. The purpose of a strong economy was the preservation of the state and the flourishing of its inhabitants, with the “common good” trumping all other considerations. Not so anymore.

In the wake of the Cold War and the failed attempts of totalitarian governments to micro-manage their economies along the lines of Marx and Engels (whose philosophies I devote an entire chapter to in the book), liberal democracies around the world have embraced free-market capitalism to a fault and failed to recognize the dangers inherent in the uncritical support of any economic system, including capitalism. Its great successes not withstanding, our current economic system is not working as it could, or as it should, for the vast majority of Americans and that is at the core of the aforementioned discontent. Wealth disparity and wealth concentration are at an all time high, while the average worker has seen little or no increase in net wage growth. The cost of home ownership, education and healthcare are becoming prohibitive for huge swaths of the population, and the burden of debt, both public and private, are at levels that are nearly incomprehensible. The environmental degradation caused by economic activity is also of serious concern and there is a foreboding sense that the next great economic crisis is just around the corner.

Insist on a virtuous, pragmatic approach to the future health of our “political economy.”

So what are concerned, frustrated, well-meaning people to do? As mentioned previously, many are exploring traditionally socialist solutions, such as those espoused by Bernie Sanders, Thomas Piketty and the Occupy Wall Street movement. As I conclude in the book however, utopian alternatives are doomed to failure for a variety of reasons, not least of which are the sheer size and complexity of the global economy. But that doesn’t mean an alternative to the status quo is unattainable. It is.

The alternative is not the “replacement” of capitalism; it is the “redemption” of capitalism. Despite the lack of religious hegemony, it is quite possible for concerned, frustrated, well-meaning people to reclaim the universal truths at the heart of every religious tradition, for the purposes of creating a fairer, more sustainable form of capitalism. At least that’s the argument I make in the book, and I invite readers to test my thesis for themselves. In the meantime, as they prepare to go to the polls in November I would encourage them to reject the false narrative of “competing” economic systems and insist instead on a virtuous, pragmatic approach to the future health of our “political economy.” Our “common good” depends on it.