Original caption: Joseph Alois Schumpeter (1883-1950), Czech-born economist and professor at Harvard University. His theories on the development of capitalism made him famous Undated photograph. --- Image by © Bettmann/CORBIS

Today is the 133 birthday of the late Austrian-born economist, Joseph A. Schumpeter. A Finance Minister of Austria and later Harvard professor, Schumpeter coined the term “creative destruction” in explaining how capitalism delivers progress:

The opening up of new markets, foreign or domestic, and the organizational development from the craft shop to such concerns as U.S. Steel illustrate the same process of industrial mutation—if I may use that biological term—that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism.

Although a messy process, creative destruction was, according to Schumpeter, often necessary for innovation. As Joseph Klesney noted in an Acton Commentary in 2001:
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Mini grantAmerican and Canadian college faculty: Acton is accepting proposals for mini-grants on free market economics. If you’re a professor or you know of a professor teaching in the United States or Canada, be sure to visit the Mini-Grants page. The deadline to turn in proposals is March 31, 2016 and grants can range from $1,000 to $10,000. Acton is accepting applications for proposals in course development and faculty scholarship.

Interested in applying, but not sure how to get started? Here are some characteristics of a successful grant proposal:

  • Have a clearly defined topic that the project intends to address, and why this is of value to the teaching, scholarship and practice of free-market economics.
  • Have clearly defined objectives.
  • Have a well-defined project budget.
  • Demonstrate that the individual and/or team members have related experience, technical knowledge, scholarly and/or business community networks, and other appropriate resources (intellectual, social, financial) that will contribute to the success of the proposed project.
  • Demonstrate the potential to improve understanding of free market principles.
  • Illustrate how the results will be disseminated throughout the larger academy.

To apply, email your application materials to scholarships@acton.org. For more information and to see a list of previous grant winners, visit Acton’s Mini-Grants on Free Market Economics Page.

Download a fact sheet.

crony-capitalismNote: This is the latest entry in the Acton blog series, “What Christians Should Know About Economics.” For other entries in the series see this post.

The Term: Crony capitalism (sometimes referred to as cronyism or corporatism)

What it means: Crony capitalism is a general term for the range of activities in which particular individuals or businesses in a market economy receive government-granted privileges over their customers and/or competitors.

Why it Matters:  For as long as there have been government officials, there have been economic cronies—friends, family, and associates who use their connections for their own financial gain.

In ancient Israel, for example, when the prophet Samuel appointed his own sons as leaders, they began to engage in cronyism: “[Samuel’s] sons did not follow his ways. They turned aside after dishonest gain and accepted bribes and perverted justice.” (1 Samuel 8:3).

Unsatisfied with these corrupt leaders, the elders of Israel asked Samuel to appoint a king over them. God told Samuel to warn the people of the consequences, which included even worse forms of economic cronyism: “[The king] will take the best of your fields and vineyards and olive groves and give them to his attendants. He will take a tenth of your grain and of your vintage and give it to his officials and attendants” (1 Samuel 8:14-15).

We read passages like that and instantly recognize this as unfair and unjust, a corrupting influence on both the people and the government. Yet we tend note to even notice the cronyism that occurs in our own economic system. Because the “dishonest gain” is often more subtle than the examples found in the Bible, we often do not recognize cronyism because we don’t know what to look for.
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Blog author: jcarter
Monday, February 8, 2016
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When Kirill and Francis Meet, It’ll be an Historic Kick in the Devil’s Gut
Deacon Keith Fournier, The Stream

It was the ongoing “Christian genocide” that finally brought about the meeting after twenty years of discussions. Pope Francis and the Russian Orthodox Patriarch Kirill will be meeting next Friday in the neutral location of Cuba, while the patriarch is there on an official visit and Francis is on his way to Mexico.

Conservatism and the Art of Catechesis
Isaac Woodward, Values & Capitalism

Several denominations of the Christian faith still have formalized methods of catechizing those new to the faith. Yet, it is all too clear that many of these efforts are not achieving the results one would hope they would.

What Should We Do About Natural Law?
James Kalb, The Catholic World Report

Our governing institutions and the public at large have staked their authority and actions on the rejection of natural law in favor of preference satisfaction. So what can be done?

How the Free Enterprise System Is Lifting Millions Out of Poverty Worldwide
Israel Ortega, Opportunity Lives

The free enterprise system has been the greatest force the world has ever known to reduce poverty and increase prosperity. The bad news is that many here in the United States are forgetting this important lesson.

superbowl-monkeyContrary to the trite assertion made every year by people who don’t know how to appreciate football, it is not really true that the commercials the best thing about the Super Bowl (at least not always).

Sure, it may seem that way because the television viewer is seeing commercials than actual game play (in an average game, the ratio of commercials to playing time is seven to one). The reality, though, is that most of the commercials aren’t all that memorable. Only a few stand out every year and they are almost always beer commercials.

But maybe (like me) you don’t like beer, or (also like me) you’re a Southern Baptist and aren’t supposed to condone beer commercials, or maybe (again, me) your just tired of the anthropomorphizing of Clydesdale horses. Beer commercials are also uninspired, they don’t generally tell us much about ourselves as a people (other than that Americans like to drink beer). That’s why I prefer the commercials that focus on vocation and stewardship.

Ads that focus on how we use (or misuse) our resources and vocational abilities have been some of the best Super Bowl commercials of all time. Here are seven of my favorite examples. What do you think these commercials tell us about the American view of stewardship and vocation?

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Unemployment-line-640x245Series Note: Jobs are one of the most important aspects of a morally functioning economy. They help us serve the needs of our neighbors and lead to human flourishing both for the individual and for communities. Conversely, not having a job can adversely affect spiritual and psychological well-being of individuals and families. Because unemployment is a spiritual problem, Christians in America need to understand and be aware of the monthly data on employment. Each month highlight the latest numbers we need to know (see also: What Christians Should Know About Unemployment).

Positive news is marked with the plus sign (+) while negative employment data is marked with a minus sign (-). No significant change is marked by (NC).
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On Jan. 27, Acton’s Rome office sponsored a presentation of The International Property Rights Index at the Dominican-run Pontifical University of St. Thomas Aquinas. The private seminar was a premier event in Rome for the index’s publisher, introducing data and case studies sampled from 129 industrialized and developing nations. It was attended by some 40 leveraged opinion makers from the ranks of legal, political, academic and religious sectors.

coverSpeakers included the university’s dean of social sciences, Fr. Alejandro Crosthwaite, who gave an excellent exposition of St. Thomas Aquinas’s treatise on property, including the medieval philosopher’s explanation of incentives for personal responsibility by way of individual as opposed to collective ownership. He also took time to explain what the Catholic Church teaches on the universal destination of goods, which is often misinterpreted as a contradiction to individual ownership. In referencing the Compendium of the Social Doctrine of the Church (quoted in part from No. 177), leaders in attendance were reminded:

“Christian tradition has never recognized the right to private property as absolute…The principle of the universal destination of goods is an affirmation both of God’s full and perennial lordship over every reality and of the requirement that the goods of creation remain ever destined to the development of the whole person and of all humanity. This principle is not opposed to the right to private property but indicates the need to regulate it. Private property… is in its essence only an instrument for respecting the principle of the universal destination of goods; in the final analysis, therefore, it is not an end but a means.” (more…)