How do potatoes from Idaho end up in supermarkets in New York City? As economist Walter Williams explains, its because of the power of the profit motive.
“When conducting Business as Mission, the primary purpose has to be to expand the Kingdom of God,” said Joseph Vijayam, founder and managing director of Olive Technology, a Colorado Springs-based information technology services provider. “Profits and an increase of shareholder wealth are an important result of a solid business that is well executed and are essential for the survival of any business, but they need not become the very purpose for existence.”
Vijayam invites Christian business leaders to reflect on the place of profits in the context of Tax Day here in the US: “I am not challenging business owners to stop making profits, but instead to look at those profits in a completely new way.”
In a piece for Comment magazine last year, “Reforming Economics,” I argued, “For too long a view has held dominance that has portrayed profit as a purpose or end, rather than as a means or a consequence. That is to say, the pursuit of profit is acceptable when it is couched within the broader framework of and constrained by the norm of service of others.”
Today’s NYT has an op-ed by David Brooks that’s been getting good cyber-circulation, “The Gospel of Wealth.” Brooks highlights in particular Southern Baptist pastor David Platt, who is touted as the youngest mega-church leader in the country. Rebelling in many ways from the new traditions associated with mega-churches, Brooks says Platt inhabits the nexus between “between good and plenty, God and mammon,” spirituality and materiality, and that Platt “is in the tradition of those who don’t believe these two spheres can be reconciled.”
Here’s what Brooks concludes: “Americans will not renounce the moral materialism at the core of their national identity. But the country is clearly redefining what sort of lifestyle is socially and morally acceptable and what is not. People like Platt are central to that process.”
It’s true that the call to follow Jesus is a radical call. But it is false to juxtapose that radicalism with a demarcation between those areas of life in which one can be faithful to him and not.
What we can really hope for is that each of us will be obedient to Christ in our own callings, whether in plenty or in want, in abundance or scarcity. In the realm of economics, for most people that will mean that they act responsibly with their money, avoiding the temptation to live in the midst of crippling debt and seeking meaning in buying and identity with what we purchase and consume. This is what I’ve called the “fourth” pillar of the new economy, “Spend all you can.”
But as Brooks points out, the pursuit of sustainable wealth and profit in the midst of responsible giving and saving isn’t at all a new idea. It’s only the excessive spending and unsustainable consumption of recent decades that make it seem new.
An essay of mine appears today over at the First Things website as part of their “On the Square: Observations & Contentions” feature. In “Between Market and State,” I explore the dialectic logic of market and government “failure,” which functions in part to provide us with a false dilemma: our solution to social problems must lie with either “market” or “state.”
I work out this logic in the context of the sub-prime mortgage crisis, and conclude that non-profits play a critical role as mediating institutions that are not driven in the first place by profit motives. A great deal of the economic woe of the last year or so has been the result of seeing the poor as objects of material gain rather than partners in charitable compassion. Read the piece over at the First Things site and discuss it here.
I should note that PowerBlog contributor Dr. William Luckey has provided a brief and challenging analysis of the role of non-profits. His survey of the treatment of non-profits in the literature includes the observation, “Many sources see the purposes of non-profits as taking up the slack from either market failure or government failure, thus revealing a pro-statist, anti-market bias.” The argument in my First Things essay takes the position that one purpose of non-profits is to “take up the slack,” so to speak. But I don’t see how this by definition reveals a “pro-statist, anti-market bias.”
As I say in the essay,
Advocates for government intervention abound nowadays. But apologists for the market economy do themselves and their cause no favors when they ignore the fact that there are limits to what the market can and ought to be asked to do. Indeed, much of what has been called “market failure” is actually the result of applying market-based solutions to problems for which profit considerations ought to be considered secondarily—if at all.
Within a market framework people tend to maximize efficiency and increase material well-being. But the market is not the answer for everything. It cannot tell us, for instance, how to arrange our familial or spiritual lives.
I was influenced in this line of thinking by a brief reflection from Arnold Kling, who writes about two propositions in the context of the sub-prime lending disaster: 1) Market failure is inevitable; and 2) Government failure is inevitable. He says, “In talking about the financial crisis, I believe that to speak the truth one has to accept both propositions. Most people prefer narrative, which either explicitly or implicitly denies one or the other.”
To be sure, I do think Luckey is right to call for “a completely new study of non-profit organizations,” an early attempt at which was made in the context of Acton’s own Samaritan Guide program. (With Marvin Olasky’s comment that the finalists tended to be either “rescue missions for the homeless or rehab centers for alcoholics and addicts” in view as well, see the conclusions of the promising paper, “Faith Makes a Difference: A Study of the Influence of Faith in Human Service Programs,” by Beryl Hugen, Fred De Jong, and Karen Woods.)
One non-profit ministry that I highlight in the First Things essay that is neither a homeless shelter nor a rehab center is the Inner City Christian Federation. This is a worthy organization that merits a great deal of attention in the debate about home ownership, the mortgage industry, and Christian charity.
As I also note in the First Things essay, this discussion about the credit crisis must go to our core assumptions about home ownership. A fascinating interview with Edmund Phelps, director of Columbia University’s Center on Capitalism and Society, picks up on some of these issues. Phelps has a lot of great things to say, and here’s one of them:
I’m hoping that the administration and other thought leaders will succeed eventually in bringing the country back to the older idea that the American dream is having a career, getting a job, and getting involved in it, and doing well. That was the core of the good life. That’s what we have to get back to, and get away from this mystique that the most important thing in your life that could ever happen to you is to be a home owner.
A handy chart showing the movement in trust in social institutions over the last thirty years according to the General Social Survey is available here.
Non-profits are increasingly being squeezed out between market and state, and the solutions they offer are either marginalized or subsumed under the logic of profit or coercion. As many others have noted, some recent policy initiatives, most notably lowering the limit on qualifying charitable donations, will only serve to exacerbate this problem.
The third week of the CRC’s Sea to Sea bike tour has been completed. The third leg of the journey took the bikers from Boise to Salt Lake City, a total distance of 444 miles.
The “Shifting Gears” devotional focuses especially on the theme of discipleship, of following Jesus in this third week. One way in which we follow Jesus is in the community of disciples. And as the day 16 devotional reads, “You can share everything and take turns doing the heavy work, but without forgiveness the fellowship will never last.” This gets at what differentiates what has been called the “communitarianism” of the early church from the secular visions of a socialist utopia. Only the church can rightly understand the realities of sin and forgiveness and their consequences for social life.
Day 17 quotes 2 Corinthians 2:17, “We do not peddle the word of God for profit.” This is an important verse, because it reminds us of the primacy of spiritual realities to the gospel message. The devotional puts this contrast starkly: “We are not like the giants of the cosmetic industry, pushing chemicals for profit. Rather, we peddle an ancient formula, ‘fragrance of life,’ simply as a celebration of God’s grace.” I appreciate the rhetorical power of this kind of juxtaposition, but I fear that it misses the point. Paul isn’t deriding business and the pursuit of profit in its own proper sphere. Instead, he’s warning against allowing the principles suited for one sphere (business) to invade another (church).
To the extent that it is the successful business leaders who are implicitly understood to embody religious and spiritual discernment and leadership, this text is a much more powerful witness against the church being run as a business than it is against business as a profit-driven venture. Even so, the devotional speaks rightly when it says, “Paul’s point is that we don’t speak of faith to gain our own advantage.”
The week concludes with a trip from Idaho to Utah. The prayer for day 20 notes that “Utah ranks first among all states in proportion of income given to charity by the wealthy. Today thank God for their generosity, and pray that the money will be used wisely and effectively by these charities.”
To get involved in giving to effective charities, visit the Samaritan Guide, and take a look at the charities that are working in Idaho and Utah, including Boise’s SAFE Center and Salt Lake City’s Spiritual Training Program, both rated “excellent” for their Samaritan Guide entries in 2005.
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.
When John concluded his gospel, he supposed that if all of Jesus’ doings were written down, “that even the whole world would not have room for the books that would be written.”
The last two millennia have seen quite a bit of change, to be sure. Christians have done their best to make John’s comment come true, filling the world with writings on the life of Jesus, the biblical revelation, and the implications of the gospel for every aspect of all walks of life.
But at the dawn of the third millennium, we are seeing an increasing shift to digital media (sometimes, but not always to the detriment of analog media like books), it’s conceivable that a single hard drive might have room for all the books that have ever been written (and not just the religious, theological, and biblical ones).
And as there has always been demand for the Bible (said to be the best-selling book of all time), so too there is demand for new and innovative ways to apply the power of computers to religious and theological texts. Currently these demands are being met by the de facto cooperation between non-profit and for-profit enterprises.
In addition to advertising on CCEL’s website and in their electronic newsletter, Ken Verhulst, a spokesman for CCEL, says that there’s an agreement for Logos software to be sold by CCEL. The non-profit then receives a share of the sale price. “These funds are used to keep CCEL going,” he says.
Phil Gons, who works in Logos’ press relations department, says that his company has “a good relationship with CCEL” and that they are in talks “about ways we can work together.”
Gons also points to BibleTech, a newly-inaugurated conference held in January hosted by Logos that had a large turnout of open source and non-profit folks. The conference website lists participants like OpenText.org, “a web-based initiative to provide an annotated corpus of Greek texts and tools for their analysis,” and the CrossWire Bible Society, “an organization with the purpose to sponsor and provide a place for engineers and others to come and collaborate on free, open-source projects aimed at furthering the Kingdom of our God.”
That isn’t to say that non-profits don’t feel some market pressures, too. Verhulst says that there is a strong push to move CCEL towards self-sufficiency. The donor who keeps CCEL going “is encouraging us to strive towards ‘independence’ — not profit status, just the ability to sustain ourselves.”
All this is a new twist on an old story in theological and biblical publishing. There have always been critics of major publishers like Zondervan, Thomas Nelson, and Tyndale, which are for-profit enterprises. Crossway, by contrast, is a non-profit venture that focuses on publishing around the English Standard Version.
The reality of the situation in the digital world is that open source and for-profit ventures are just as much partners as they are competitors. Given its practical focus, for example, CCEL generally limits itself to “public domain” works, while companies like Logos can use tools like their pre-publishing and community pricing systems to gauge market demand and bring major projects like Luther’s Works and Karl Barth’s Church Dogmatics to digital publishing.
As in other sectors, enterprise is the driver of innovation, without which other non-profit ventures might not be possible. Even “public domain” works were once published for sale. It isn’t the case, either in traditional or digital publishing, that the choice is simply between for-profit or non-profit efforts. Instead, we live with the all-or-nothing complementary reality of both for-profit and non-profit publishing. And we are better off for it.