Steering a Middle Course (Pt.2)

Michael Metzger

When did people begin to consider capitalism crooked? The idea of capitalism is as old as Genesis. Its institutions date from the early Middle Ages. They kept capitalists steering a middle course. It wasn’t until capitalism’s social guardrails dissolved that capitalism veered off course. When did that happen?

The story of capitalism has its roots in the book of Genesis. God created in six days and rested on the seventh. Made in his image, human beings also work and rest on what is a day called Sabbath. Sabbath is celebration, requiring workers to amass capital from the previous six days so that there is food and drink. Amassing capital requires commerce.

This tradition was passed on to the Early Church. The Church father John Chrysostom praised commerce as what bonds communities.1 Augustine had capitalist leanings, writing that price was a function not simply of the seller’s costs, but also of the buyer’s desire for the item sold. This view informed monastic estates, which Randall Collins says developed commerce along the lines of “religious capitalism,” noting that the “dynamism of the medieval economy was primarily that of the Church.”2

We observe this dynamism in the 11th century. Thomas Aquinas explained just prices by posing this question: “Whether a man may lawfully sell a thing for more than it is worth?” He answered by quoting Augustine that it is natural and lawful for “you wish to buy cheap, and sell dear.” Saint Albertus Magnus advanced this line of thinking in the 13th century. He proposed that the “just price” is simply what “goods are worth according to the estimation of the market at the time of sale.” Here we see the idea of capitalism buttressed by institutions like the church and monastic estates.

The next development was responsive governments that began to appear in medieval Europe. These institutions sustained a substantial degree of personal freedom and providing safe havens for the flourishing of capitalism. By the 14th century, the term “capital” had come into use to identify funds having the capacity to return income.

The results were impressive. By the early 1700s, hundreds of thousands of formerly poor people were within a generation or two living in comfortable homes of their own in the New World. The colonists enjoyed a prosperity unprecedented in Europe.3 By 1740, the American population as a whole enjoyed a higher standard of living than the population of any European country. What accounted for this? Adam Smith knew.

In The Theory of Moral Sentiments, published in 1759, Adam Smith wrote that flourishing economies require “the best head joined to the best heart.”4 Heart is a metaphor for conscience. Good conscience makes for good economies. This set the stage for Smith’s second book, An Inquiry Into The Nature and Causes Of The Wealth of Nations, published in 1776. He envisioned a world of “universal affluence,” where “every woman, man, and child will be liberated from the prison of poverty.” While not a Christian, Smith was drawing on scriptures such as “The riches of the sea shall be lavished upon you and you shall possess the wealth of nations” (Isa. 60:5).

Within a generation, the term capitalism appeared, around 1810. It was understood as an economic system, dependent on an appropriate political system and a supportive moral-cultural system, uniting a large variety of institutions in the support of human economic creativity. It steered a middle course, largely because this form of capitalism operated inside a series of mediating institutions that served as social guardrails.

Alexis de Tocqueville coined the term mediating institutions. As the young Frenchman toured America in the early 1800s, he noted how Americans operated by “self-interest properly understood,” an interest that was never narrowly focused on the individual.5 Instead, mediating institutions – churches, schools, fraternal organizations, businesses, and professional associations – kept self-interest steering a middle course between unbridled liberty and unduly burdensome law. The American economy flourished.

In 1848, Karl Marx marveled at the newness and the greatness of this new thing called capitalism. “The bourgeoisie, during its rule and scarce 100 years, has created more massive and more colossal productive forces than of all preceding generations together.” But no system is perfect and Marx was troubled by how capitalism’s rewards were not spread equally. It was messy. Marx’s solution was introducing a mechanistic system.

In his 1867 book, Das Kapital: A Critique of Political Economy, Karl Marx reframed capitalism as markets without morality. He proposed a mechanistic system, critiquing capitalism as a system of market exchange and private accumulation of profit and calling for experts to spread economic rewards more evenly to the masses. The older social guardrails dissolved, leaving only government to steer economies.

Many have challenged Marx’s definition of capitalism, including Roger Wilkins. In a 2002 Washington Post op-ed piece he wrote: “Conscience is essential to healthy capitalism.” Conscience was long considered to be one of our strongest guardrails. Without it, capitalism is invariably corrupted. It makes no economic sense, “which is how millions of Americans are behaving,” writes David Brooks. “They do so because the social guardrails that used to guide behavior have dissolved.”6 Next week, we’ll review when conscience dissolved. Stay tuned.

Follow me on Twitter: @Metzger_Mike

1 Michael Novak, Business as a Calling: Work and the Examined Life (New York: Free Press, 1996), p. 46.
2 Randall Collins, Weberian Sociological Theory (Cambridge: Cambridge University Press, 1986), p. 58.
3 Michael Novak, “The Spirit of Capitalism.” Keynote address given at the 30th Pio Manzù International Conference “Islands without an archipelago: Economies, the masses, nation states in search of a new sovereignty,” October 17, 2004.
4 Adam Smith, The Theory of Moral Sentiments (Oxford: Oxford University Press, 1976 [1759]).
5 Alexis de Tocqueville, Democracy in America, ed. J. P. Mayer, trans. George Lawrence (New York: Harper Perennial, 1988), p. 526.
6 David Brooks, “The New Right,” The New York Times, June 10, 2014.


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  1. Mike an excellent review of Piketty’s “Capital in the Twenty-First Century can be found in the following link.

    Jonah Goldberg’s Excellent Take-Down of Piketty’s Capital in the Twenty-First Century

  2. Interesting as usual. However, not convinced that Adam and Eve were called to celebrate capital gain on the Sabbath. Sabbath was after six days of God’s work. Sabbath allows us to reflect upon the six days of grace and mercy God has given, providing a measure of humility and graciousness as we work on the next six days. Marx highlighted the benefits of those that control the means of production.Capital is not always earnt, some are fortunate to have some gifted to them. When is something a gift from God and when is it of man’s labour alone ?
    Is conscience at heart being conscious of God’s will ? The conflict arises as to differing interpretations reflecting emphasis of spirit and truth.

  3. A reflection on the prosperity of the 18th century American economy without the mention of slavery seems egregiously short-sighted. Moreover, to accredit the prosperity to social guardrails from institutions that propagated social injustices like slavery, gender norms and social classism suggests capitalism’s cruelty as an economic modality, and that prosperity is not worth the cost. I will be interested to learn how you make the case we have less conscience in our economy today compared to colonial America. It is self-evident conscience is a necessary consideration in market economies. However, it appears by comparing the relationship of conscience and economic growth in colonial America, to 21st century America, you are illustrating the relationship is less dependent than your narrative proposes.

  4. Your readers might also enjoy a book by Rodney Stark titled “The Victory of Reason: How Christianity Led to Freedom, Capitalism and Western Success.” It is a great history of the rise of Capitalism and subsequent turns.

  5. Slavery was one of many forms of labor in early Colonial America. Indentured servants were slaves for a certain period of years, usually to pay for their transportation costs. Over time black slaves were preferred over Indians and indentured servants. It made sense to use slaves in the south which had large plantations that would be impossible to farm without cheap labor. In the north, the farms were smaller and easier for one family to work.

    We look at slavery with 20th century horror, but in Colonial times, it was not so cut and dried. Only in the last 100 years has it become illegal everywhere.

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