The Virtues of Capitalism – Book Review

Book Reviews, Economy — By on July 19, 2010 at 8:44 am

As a quick primer, The Virtues of Capitalism: The Moral Case for Free Markets by Scott Rae and Austin Hill does an excellent job of hitting the talking points and fleshing out some of the back-story of the world’s most powerful economic system.  However, this book only offers a thin analysis of capitalism’s most profound moral and philosophical underpinnings.

“Can somebody name for me one area of our lives that has nothing to do with economics?”  It’s a provocative question which opens the book with authority.  Economics, we learn, is everywhere, and economic systems influence everything.  With this realization comes an obligation to think well about economics.

The first and second chapters of the book are directed at Christians or social conservatives tempted to concern themselves only with so-called “moral issues.”  Hill and Rae argue economics is ultimately a “moral issue.”  Both in the Old and New Testaments, God gave specific commands about how the poor ought be treated, how his followers ought to tithe and make use of their resources, and what the place of material possessions ought to hold in the life of the believer.  “God set human beings free to utilize their divinely endowed traits.  This is all a part of the responsible exercise of dominion over creation that brings innovation and productivity to benefit human kind.”[1]  The result of innovation and productivity is the production, distribution, and consumption of goods and services also known as economic activity.

At the foundation of all economic activity are moral agents acting either morally or immorally.  Though economic activity can be measured by data points of wealth creation and productivity, ultimately economic actions are measured by a moral standard of just, unjust, good or evil.  To this end, capitalism is the economic system that is most just and good, most consistent with Judeo-Christian belief about God’s order of things.  “Despite its flaws, failures, and imperfections, capitalism remains the most moral choice among the world’s economic systems… it best honors the human person, and is the way in which we can most productively order our lives,” Hill and Rae conclude.

Chapter 3 quickly examines the ancient virtues that uphold a thriving capitalist marketplace.  Among the virtues listed are creativity, initiative, cooperation, social stability, civility, and responsibility.  Hill and Rae believe the capitalist system, built as it is upon these virtues,  “generally demands that we do well by producing goods and services that meet the needs of others, rewards us when we do well, and becomes our incentive to continue to do well.  This cycle produces tremendous good for the individual person, as well as the broad society.”

Capitalism is not without its detractors and faults.  The remaining five chapters of the book deal with these.  Chapter four considers some of the weightier charges against capitalism.  Critics contend, for example, that capitalism is all about greed.  To this, Hill and Rae eschew the Randian argument that greed is good and instead offer the counter that, “greed is fundamentally a matter of the human heart, not of any economic system… Of course, greed comes out in capitalism.  But greed is hardly unique to capitalism.  In fact, greed flourished under various forms of socialism, and avarice is often the most blatant among dictatorships in the developing world.”  The compelling response points the reader back to Rae and Hill’s central premise that economics is ultimately a moral issue.

A strength of the book is its handle of recent political and economic events that have cast capitalism in a bad light.  Chapters 5-8 walk readers through our recent economic crisis.  They conclude that the crisis resulted primarily from a failure of individual actors to act virtuously, not from any glaring fault with capitalism itself.  Hill and Rae agree with former Vice President Al Gore, people who wielded great power to influence the economy acted greedily.

However, greed isn’t the only ailment to the system; government “bail outs” of key players exacerbated the problem.  Again, Rae and Hill consider the moral implications, “Easier, more palatable financing terms are being offered to people who, for whatever reason, have not acted responsibly with their existing financial commitments.  Conversely, borrowers who have continued to earn sufficient income in the midst of a recession and have been responsible to make their mortgage payments in a timely fashion, regardless of how much of a sacrifice those house payments may cost, remain ineligible for more favorable financing terms.  This amounts to the government rewarding bad behavior.”[2]  Hill and Rae do not believe all government intervention bad and they argue capitalism must be checked and balanced both by government imposed limitations as well as the proscriptions of moral teachings from the Church and society at large.

Though it offers a thoughtful and succinct response to many of the headlining criticisms of capitalism in the public square, The Virtues of Capitalism lacks a robust examination of the first principles under-girding capitalism’s deepest assumptions.  For example, the book tends to fall into the trap of considering capitalism’s material benefit to people and analyzing the justness of its distribution of material goods to individuals within society.  What about capitalism’s ability to most fully recognize the individuality of each person and empower him or her to fulfill uniquely God’s calling on their lives?

The Virtues of Capitalism: A Moral Case for Free Markets is a good read as a quick apologetic for capitalism.  It responds well to major criticisms headline the news and rightly points readers at the need for moral influence in the economic square.  Readers will delight in the book’s readability and adeptness at quickly summarizing and responding to big questions surrounding the free market.

[1] Scott Rae and Austin Hill, The Virtues of Capitalism: A Moral Case for Free Markets (Chicago, IL: Northfield Publishing, 2010), page 25.

[2] Ibid. 111


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