PowerLinks - 03.08.13 | Acton PowerBlog

PowerLinks – 03.08.13

by Joe Carter on Friday, March 8, 2013

Capitalism vs. the Free Market
Ivan Pongracic, The University Bookman

For Sirico, to create a prosperous society people must be free, and to create a free society people must be virtuous.

Are There Limits to Religious Liberty?
Nathaniel D. Torrey, Juicy Ecumenism

It is interesting that we are willing to say religious liberty is limited in this way, when it causes physical or “mental” harm to a person, but when it comes to spiritual matters we are willing to let any religion have its way.

Five Faith Values to Practice at Work
Karen Wells, The High Calling

God calls us to do the same, to practice and to train ourselves in that which is good and right.

Are Riches and Righteousness At Odds?
Hugh Whelchel, Institute for Faith, Work & Economics

Christians often hear about how the Bible criticizes wealth and chastises the rich. Less discussed are the Bible’s instructions about how those blessed with affluence are to live with their wealth.

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RogerMcKinney

Professor Pongracic’s confusion over the term “capitalism” is surprising in a way, since he teaches economics. In another way it’s not surprising but highlights the impact of removing economic history from the curriculum of economics a generation ago.

As Deirdre McCloskey, Angus Maddison and other economic historians have demonstrated, something unique happened around 1600 in Western Europe. For the first time in human history per capita income exploded on a sustained path. Before 1600, improvement in per capita income were tiny and insignificant.

Many writers noticed the change and tried to analyze it, but Adam Smith did it best. His book correctly described the causes and the birthplace – The Dutch Republic of the 17th century. The term “capitalism” should be reserved for the system described by Adam Smith. It requires the rule of law, equality under the law, limited government, respect for property and free markets.

Smith described the Dutch as having mostly closely implemented his system of natural liberty, but they weren’t perfect. Humans find it difficult to be perfect. But the Smith/Dutch system should be the measure of capitalism. By that measure the US quit being capitalist around WWI.

Another cause of confusion is the false limiting of the choices to socialism and capitalism. A third system exists and is the oldest most robust system. I call it traditional economics and corruption characterizes it. Commerce happens, but corruption dominates. Corruption violates all of the principles of capitalism. Some writers call it “crony” capitalism, but it has nothing in common with capitalism other than the fact that commerce happens.

More confusion comes from identifying capitalism with commerce. Commerce has always existed and existed during the millennia in which people saw no improvements in per capita income; capitalism is a recent development.

As Dr. Sirico points out, capitalism is the reward for having the values necessary to implement the principles of capitalism. As people lose those values, society degenerates into socialism and traditional corruption, which describes the US today.