Christian Resources in a Free Market

I have been surprised in the last year to see how aggressively (and defensively) some Christians defend the sanctity of the free market, and how much faith Christians place in the “invisible hand” of the market to do the work of God in the world.  To be sure, there is a religious component to free market ideology.  We talk of the “benevolence of self-interest” (to paraphrase Adam Smith), the power of “market forces,” (very spooky, when you think about it) and the capacity of capitalism to “create wealth out of nothing” (mirroring the doctrine of creatio ex nihilo.)

At the same time, however, I’ve figured out that much of the defensiveness comes from a misunderstanding of those who critique the ideology of free markets.  Defenders seem to reflexively assume that anyone who criticizes free markets, capitalism, consumerism, globalization or the financialization of the American economy (making money off money) have one thing in mind: state intervention.  But it is a false dichotomy to assume that a unrestricted global market and a state-run economy are the only options available.

When I criticize the free market, I do so from the perspective not of Keynesian economic policies (which are themselves far from socialist in nature), but from the perspective of the Christian doctrines of creation, stewardship and the telos of human life.  One of the major problems Christians must have with free-market ideology is that it doesn’t provide any means of internal critique.  The only definition of freedom provided is a negative one: ‘free from state control.’  Christian understanding of freedom goes far deeper and is comprised of a positive element: ‘free to serve God.’

So let’s consider two free-market scenarios, from William T. Cavanaugh’s short book Being Consumed: Christians and Economic Desire.

Reporter Bob Herbert visited a factory in El Salvador that makes jackets for Liz Claiborne line of clothing.  The jackets sell for $178 each in the U.S.; the workers who make them earn 77 cents per jacket (56 cents an hour).  The factory is surrounded by barbed wire and armed guards. A worker interviewed after her 12-hour shift told of being unable to feed herself and her three-year-old daughter adequately. Her daughter drinks coffee because they cannot afford milk; both mother and daughter suffer fainting spells. David Wang, president of Mandarin Company, which runs one of the plans in El Salvador, admitted to Herbert that the wages are inadequate: “If you really ask me, this is not fair.” But then he went on to offer a lesson in “free” trade. “In the United States, if you want to buy a Honda Civic, you can shop around and always you will find cheaper ones.”  This is what the clothing companies were doing, according to Wang.  “They are shopping around the whole world for the cheapest labor price.”

 

Cavanaugh describes a second company, the Mondragon Cooperative Corporation, which was founded by a Basque priest in 1956. It is also being run under no state intervention, and therefore a product of a free market.  Mondragon also manufactures goods, employing over 60,000 workers with annual sales over $3 billion USD.

What makes Mondragon extraordinary is that it is based on the principles of distributism: this idea – based on papal social teaching and promoted by Hilaire Belloc, G. K. Chesterton, and others – is that a just social order can only be achieved through just distribution of property and a recognition of the dignity of labor.  Mondragon is entirely worker-owned and worker-governed, and it is based on a system of one vote per worker.  At Mondragon they believe that labor hires capital, instead of capital hiring labor. Their capital comes largely from a credit union that is supported by workers and the community. The highest-paid employee can make no more than six times what the lowest-paid makes; 10 percent of surpluses are given directly to community development projects.  Not only is the company successful and laborers highly satisfied with their work, but the communities in which Mondragon plays a significant part enjoy lower crime rates, lower rates of domestic violence, higher rates of education, and better physical and emotional health than neighboring communities.

 

From the perspective of free-market ideology, there is no difference between the two organizations, since both are free from state intervention and both consist of entities (customers, owners, workers, etc.) entering into contracts uncoerced.  So the market itself lacks any mechanism or even perspective by which to say which of these situations is “better.”  For another example of a morally problematic situation created by free-market ideology, see Rhiannonator’s recent post.

Christians, of course, can only approve of or condemn any situation in the world by drawing on their own traditions, contrary to the intentions of globalizing economies to displace all such local traditions.  Free-market ideology tempts us to use ‘freedom’ as a code word to mask what are in fact bare predations of power, as in the case of the Salvadorian textile worker above.  Mondragon, in contrast is founded “on the recognition that true freedom requires a careful consideration of the ends of being human.”  The free market cannot provide the resources for such consideration; Christians must go back to the gospel of Christ.

What resources do Christians have in a global economy where freedom is equated with unrestrained power?

  1. First and most importantly, we have our traditions and doctrines.  The doctrine of creation keeps us necessarily grounded in the reality that wealth doesn’t spring from nothing, and that growth must come from work of real value: no Christian should have ever been fooled by credit-default swaps.  Meanwhile the doctrine of the abundance of the Kingdom of God frees us from the need to hoard our goods and cling possessively to objects as though they were ours.  As Thomas Aquinas put it, “Man ought to possess external things, not as his own, but as common, so that, to wit, he is ready to communicate them to others in their need.”
  2. With this tradition from which to draw, we are enabled to enter the market place seeking freedom in its positive sense.  Christians can organize corporations whose tasks are more than simply “returning a profit to the shareholder.”  Christians can create goods of actual utility and quality for the world to use.  Christians can enter into partnerships with small business owners in impoverished nations to interrupt cycles of poverty.  Christians can refuse to shop around for the lowest prices at the expense of human dignity.  Christians can enter into real relationships with the producers of their goods through farmers markets, co-ops, choosing credit unions over national and transnational banks, local jewelers, etc., as well as by purchasing Fair Trade whenever possible.
  3. If Christians can effectively model healthy, attractive and successful methods of working within the free market, governments and secular institutions can be “brought along.”  Hospitals, public education and the peace corps were all originally matters of Christian conviction before governments began to notice that they worked, and gradually took over those roles in society.  Christians can give shape to society specifically by serving it.

What do you think?  What other resources do Christians have for interacting with a free market?  What are the strengths and failings of the free market itself?  Why are there not more organizations like Mondragon?

Further resources
The Free Market: the enemy of freedom?
Mondragon, the remarkable achievement by Robert Gilman
50 Factors Within Nations that Determine their Wealth or Poverty by Wayne Grudem
How Did Goldman Sachs Contribute to the Financial Crisis? on Dollarish

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