You may not remember the Phil Donahue Show. I myself didn’t really pay attention to it. Besides having other things to do, I found Donahue’s political correctness too irritating when I did stumble across it. Last year, I saw an intriguing video clip of the show. Donahue was hosting the Nobel Prize-winning economist Milton Friedman, who advocated the benefits of free markets; Donahue took a more socialist, redistributionist, centralized-government approach to economics. (You can see a short exchange here: http://www.youtube.com/watch?v=RWsx1X8PV_A).
Friedman said that the historical evidence is in, and it is quite clear: over the last 200 years, free markets, not government programs, have created wealth that has brought general worldwide benefit to the poor, lifting multitudes out of grinding poverty. He says that there is no system that holds a candle to the free market in terms of helping the poor around the world.
Just look at the Gapminder website (www.gapminder.org). Without exception (unless, say, interrupted by civil war or dictatorship), countries where (a) free markets exist and (b) governments reinforce the rule of law (e.g., to protect private property, honor contracts), personal income increases. At Gapminder, just click on any country and see how personal income has increased where these two conditions prevail. The increase of wealth is not a zero-sum game—that if people get richer, others will necessarily become poorer.
Shortly after seeing the Friedman video clip, I came across a book by the Acton Institute’s Jay Wesley Richards—Money, Greed, and God: Why Capitalism Is the Solution and Not the Problem (HarperOne). The book offers an excellent, engaging, and accessible philosophy of economics. It also debunks many popular myths about free market economics: that Jesus would support government redistribution of wealth, that capitalism encourages unfair competition, that capitalism is based on greed, that capitalism means the rich get rich at the expense of the poor, that good intentions are all that matter when it comes to helping the poor, and so on. Richards defends free market economics as a chief—and empirically-proven—means of helping the poor break out of grinding poverty worldwide. All benefit from free markets. So even if Bill Gates has far more material assets than I do, this doesn’t mean that I am therefore poorly off or should feel justifiably entitled to some of his wealth. Everyone is better off materially in a free market system, not simply the wealthy. This is not to say that government has no role to provide safety nets (not hammocks!) for the truly needy. Yet the government does not create wealth, but its policies can create equal opportunities for wealth creation.
If we consider whether governments or free markets best help the poor out of poverty, the economist Thomas Sowell tells us straight:
The lot of the poor improves through the ability to create wealth. If we compare the track record of socialism and capitalism, the latter wins hands-down in terms of improving the lot of the poor. Redistribution of trillions of dollars through welfare programs in the US and moneys sent abroad to non-Western nations has only bred dependence, corruption, and irresponsibility without ameliorating the problem of poverty.
Some might ask: isn’t the free market driven by greed? Well, there are certainly free market capitalists who are greedy—just as many people who eat food who are gluttons! Greed is not the core of capitalism, and we could add that there are plenty of socialist-minded people who are greedy for political power. And many who are poor themselves may be greedy in their spirit. In Richards’ book, he distinguishes between selfishness (which is bad) and self-interest (which can be quite appropriate). A “greed-is-good” capitalism (selfishness) is clearly opposed to a biblical ethic, but a principled self-interest is not. Caring for oneself and for one’s family is an expression of proper self-interest (Eph. 5:29; 1 Tim. 5:8). A baker sells bread so that he can support his family from the profits, yet he provides goods so that his customers can feed themselves and their families. Both parties are appropriately self-interested, and this exchange of goods creates a win-win situation—not a win-lose or lose-lose situation. Free enterprise and profit through wealth creation are not themselves the problem. The false dichotomy between “concerned socialism” and “greedy capitalism” typically fails to recognize the proper place of principled self-interest.
Again, greed is not good, and the selfish orientation towards accumulation—tearing down old barns to build new ones for the sake of self-indulgence (Lk. 12:16-21)—is idolatrous, alienating, and soul-destroying. For the free market to work properly, it must be undergirded by crucial moral commitments: hard work, trust, industry, honesty, equality before the law, equal opportunity to improve one’s lot.
Even if the poor can be helped in a free market system, this is not the end of the matter. The gospel calls us to trust in our heavenly Father rather than finding security in earthly treasures; to invest in kingdom priorities that will not pass away; to care for needy especially within the Christian community, but also for those outside; to reject greed, opulence, indulgence; to care for natural resources; to recognize the power of the gospel to bring redemptive uplift to society. Capitalism must not be amoralized or secularized lest it become a crass economic system detached from human well-being.
The problem is not money or free markets. The problem is the love of money, which is a root of all kinds of evil (1 Tim. 6:10). There are many dangers associated with wealth—indeed, more dangers with wealth than with poverty. Indeed, abject poverty is a condition in which people will more likely see their need for God. But we are called to help the poor in a responsible way. If a person doesn’t work, Paul said, he shouldn’t eat. Also, in 1 Timothy 6, Paul’s admonition to the wealthy believers is not that they become poor—which is the worst way to help the poor, as Dallas Willard observes. The poor are not to be imitated but helped. Rather, he tells them not set their hope on unstable wealth, but on God; further, they are to be generous with their resources to those in need. This is not forced government redistribution—just as it was not in the Jerusalem church. Giving as everyone had need was a voluntary act (Ac. 2:44). Peter reminded Ananias about his property: “While it remained unsold, did it not remain your own? And after it was sold, was it not under your control?” (Acts 5:4).
Over 20 years ago, my wife Jacqueline and a friend of hers who had two doctorates from MIT began a ministry in microenterprise development to help the poor in non-Western nations. (It is now called PEER Servants: www.peerservants.org). It is modeled on the Grameen Bank of Bangladesh and its concept of loans for the poor to begin their own small businesses. One can purchase goats or a sewing machine, pay back the loan that would go to the next loan recipient, and the original recipient typically moves toward economic self-sufficiency. The Grameen’s founder, Muhammad Yunus, was awarded the Nobel Peace Prize for his groundbreaking work. Recognizing that Western-funded foreign aid (aside from disaster relief) has itself been a disaster, PEER Servants has influenced many thousands of people through its business loan program. In the case of the Grameen Bank and PEER Servants, wealth creation came not through government programs but through non-government organizations seeking to assist the poor by supplying loans, working with local communities and private organizations to provide accountability and oversight for the distribution and repayment of loans. PEER Servants itself has worked with national churches or missions organizations and, along with helping people economically, many lives have also been transformed by the gospel.
The free market is not the problem. It is the abuse of the free market—the love of money—that is the problem. But the track record speaks for itself. The poor have been greatly helped by the free market. If we are concerned about the poor, we should consider how the poor have benefited from principled free enterprise over the past two hundred years—and how overreaching government actually harms the poor.
 Thomas Sowell, The Economics and Politics of Race: An International Perspective (New York: William Morrow, 1983).
 Craig M. Gay, Cash Values: Money and the Erosion of Meaning in Today’s Society (Grand Rapids: Eerdmans, 2004); see also Gay’s With Liberty and Justice for Whom? The Recent Evangelical Debate Over Captitalism (Grand Rapids: Eerdmans, 1991).
 See Dallas Willard, “Is Poverty Spiritual?” in The Spirit of the Disciplines: Understanding How God Changes Lifes (New York: HarperOne, 1990)
39 replies to "The Poor and Free Markets"