Acton Institute Powerblog

Is This Capitalism?

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Is this supposed to be capitalism?

Geoff Colvin writes that a motivating factor in the recent crash in corporate profits, as well as the sharp decline in home values, was the phenomenon that “people began to believe that the more they borrowed, the better off they would be. Their thinking went like this: With the cost of capital so low and asset prices rising steadily, risk was evaporating.”

The precipitating cause of the downturn was that consumers “began to live within their means, shutting down the profit-growth machine.”

Any business or industry profit model that depends on consumers driving themselves deeper and deeper in debt is morally flawed and economically unsustainable. That’s not capitalism, that’s consumerism.

Compare the latter with the former, represented by this statement of a first principle of capitalism, “Thrift the First Duty”:

…thrift is mainly at the bottom of all improvement. Without it no railroads, no canals, no ships, no telegraphs, no churches, no universities, no schools, no newspapers, nothing great or costly could we have. Man must exercise thrift and save before he can produce anything material of great value. There was nothing built, no great progress made, as long as man remained a thriftless savage. The civilized man has no clearer duty than from early life to keep steadily in view the necessity of providing for the future of himself and those dependent on upon him. There are few rules more salutary than that which has been followed by most wise and good men, namely, “that expenses should be less than income.” In other words, one should be a civilized man, saving something, and not a savage, consuming every day all that which he has earned.

You don’t need to agree with Andrew Carnegie about everything to recognize the truth of these statements. Thrift is one of the things that separates civilized capitalism from savage consumerism.

Jordan J. Ballor Jordan J. Ballor (Dr. theol., University of Zurich; Ph.D., Calvin Theological Seminary) is a senior research fellow and director of publishing at the Acton Institute for the Study of Religion & Liberty. He is also a postdoctoral researcher in theology and economics at the VU University Amsterdam as part of the "What Good Markets Are Good For" project. He is author of Get Your Hands Dirty: Essays on Christian Social Thought (and Action) (Wipf & Stock, 2013), Covenant, Causality, and Law: A Study in the Theology of Wolfgang Musculus (Vandenhoeck & Ruprecht, 2012) and Ecumenical Babel: Confusing Economic Ideology and the Church's Social Witness (Christian's Library Press, 2010), as well as editor of numerous works, including Abraham Kuyper Collected Works in Public Theology. Jordan is also associate director of the Junius Institute for Digital Reformation Research at Calvin Theological Seminary.


  • Daniel

    Pointing this out is only half of the work that should be done by Christian commentators. *That* thrift has disappeared from American values is clear and rather uncontroversial. *Why* “savage consumerism” has been as savage requires some insight into economics.

    Indeed, what else could we have expected from a Fed-induced bubble in credit markets: rampant saving?

    And what incentive is there to save when (thanks to inflation) it takes more than a 5% return on investment, merely to *break even*? A penny saved is a penny depreciated.

    It would be encouraging to see some deeper analysis by Acton on these issues. Are we really going to simply blame consumers, and not ask who it was that was financing such an insane financial fad?

  • Daniel, I’m glad you raise the points you do more explicitly than they appear in my post. Colvin’s piece does a good job explaining what some of the policies are that contributed to the flawed thinking on the part of consumers…which, as I think we both agree, make a certain amount of sense given a particular regulatory and fiscal context.

    Maybe my comments about industries and business models aren’t sufficiently critical, but I didn’t mean this post to be the last word on the subject. As I said, I think you raise some important points more explicitly than I did, and deservedly so. My emphasis on personal responsibility shouldn’t be construed as approval of structural corruption.

    But maybe we could work our policy analysis in reverse. If we agree that thrift is a good and necessary condition for a healthy economy, then we should question the moral hazard raised by policies that deter rather than promote thriftiness.

  • But doesn’t the market, the only way to respect natural rights, already reward thrift and punish savage consumerism? Purchasing goods and services which one can afford, even if they be great and abundant amounts, means one will have to live with the consequences of not allocating such resources elsewhere.

    Capitalism is simply the affirmation of private property rights coupled with the economic freedom of buying and selling goods in a decentralized market. Whether people allocate goods properly in such a market is to their success or peril, but the system cannot be blamed for that, because capitalism means nothing more than the opposition of stealing and the affirmation of the possibility of buying and selling one’s property.

    Although true pure capitalism would be anarchy, most of the time today when we refer to capitalism or a market economy we are referring to affirming some public goods as well. The scope and depth of which differ from society to society.

  • Clare Krishan

    Silent Hand capitalism where the fiscus is being fisked is no capitalism at all! Université d’Angers Professor Jörg Guido Hülsmann critiques two recent defenders of fisc(k)alism-as-capitalism (St Louis Fed Chairman Poole and Laurence Summers) in “Beware the Moral Hazard Trivializers” at

    …crisis is the result of longstanding political interventionism… our monetary system creates incentives for irresponsible behavior (moral hazard) … is … cause of recurrent crises. Financial regulation does not eliminate moral hazard. It merely channels it into forms of behavior that are not yet regulated… The foregoing considerations are perfectly straightforward. They are a hard pill to swallow, though, for true believers in the benefits of paper money and monetary policy.”

    Is Acton a true believer? If so in what? Mammon or God? Perhaps this simple catechetical inquiry would suffice to determine what “corrupting powers” Acton is really afraid of?

    ___Is fisking(*) a sin or not?___

    Consider, if by ‘fisking’ Acton understands Central banking as “central” (forgive the pun) to a Keynsian economy in a managed democracy, agreeing with archSocialist Orwell’s “All pigs are equal, but some pigs are more equal than others” then no, fisking isn’t sinning.

    Or demure for a moment and consider why our Lord whooped *ss when those privileged with the safekeeping of deposits of certain forms of legal tender were misappropriating their clients property? [ a rhetorical question, anti-semitism is not the intended answer ] What is so objectionable about fisking that it enraged our Lord? Could it be ‘sinful’?

    If Acton readers agree with my latter characterization, then the author must do more to clarify his position on economic ethics and policies. Benign neglect and ignorance are no excuse. We need a caring-hand capitalism: one that recognizes the concupiscence of original sin, not these Calvinist-elect prosperity gospel platitudes on “thrift.”

  • Anonymous

    Where’s the silent hand on irresponsibility?
    As Alisdair MacIntyre writes in “After Virtue”

    Justice, whose justice? Power, wealth and fame can be ill-gotten, so who cares?