[Part 1 is here.]

The free economy frees entrepreneurs to create new wealth for themselves and others, which brings us to the issue of consumption. In his book Crunchy Cons, conservative author Rod Dreher describes consumerism this way: “Consumerism fetishizes individual choice, and sees its expansion as unambiguous progress. A culture guided by consumerist values is one that welcomes technology without question and prizes efficiency…. A consumerist society encourages its members both to find and express their personal identity through the consumption of products.”

Dreher’s critique of consumerism is pointed, and many people, including many Christians, could benefit from hearing it. At the same time, though, Dreher’s description runs the risk of obscuring the crucial differences between consumerism and capitalism.

It’s true that capitalist economies are far better at wealth creation than socialist economies, which is why freer economies tend to have fewer people living in extreme poverty. But capitalism and consumerism—far from being necessarily joined at the hip—are not even compatible over the long term. A moment’s reflection suggests the reason. Capitalism requires capital. You don’t accumulate capital by running up credit card debt at the mall, or by binge buying at Amazon Thanksgiving night. You do it through thrift and hard work, which then makes it possible to invest your capital in new ideas and enterprises.

We’re often told that the consumer is what grows the economy. We even hear this from proponents of capitalism. The grain of truth here is that producers need consumers to buy what they’re selling, and sudden shifts in consumer behavior on a large scale do cause problems as the economy adjusts. But it doesn’t follow from this that consumption is the fuel of a thriving economy.

The fuel and fire of a market economy is capital and creative labor directed at fashioning goods and services people want and need. The point should be obvious: the consumer didn’t produce the gross national product, and no nation ever got rich from its citizens running around consuming stuff.

A closely related confusion is the idea that capitalism is based on greed, an idea advocated even by some champions of capitalism, such as Ayn Rand. Those who rightly prize altruism hear this confused claim and wrongly conclude that it’s no wonder our society is going downhill; the whole economy apparently is based on greed! But capitalism isn’t based on greed since capitalist entrepreneurs do not have to be greedy to succeed.

Maybe the entrepreneur just enjoys making good movies, or fun cars, or delicious soups. Perhaps he enjoys serving customers well and giving some of the resulting wealth to help the less fortunate. Multi-billionaire Ingvar Kamprad, the founder of Ikea, reportedly chose to drive an old Volvo costing $1500, and has even been known to take the bus occasionally. Multi-billionaire entrepreneur Bill Gates lives more modestly than many millionaires and gives away billions to charity. For the capitalist entrepreneur, greed is optional.

Sure, we could quickly draw up a list of shamelessly greedy business tycoons, but greed exists in every human culture, in every profession, and even among the unemployed poor. Greed is universal. But free economies do a far better job than a socialist economies in giving those who are greedy socially useful ways to get rich.

Under rigid socialism, the primary means of getting ahead is by either working for the government and battening off the hard work of the citizenry, or by prospering in the black market. In a free economy, a greedy person might pursue one of these options, but he also has the option to get ahead by building a legal business that serves some completely legitimate want or need.

[Part 5 is here.]