We’re hearing much in the news these days about socialism versus capitalism. Jesus talked more about money and personal finances than any other subject. That’s because it’s a heart issue. The Bible says “For where your treasure is, there your heart will be also.” (Matt 6:21). But even on a national scale, there are many biblical principles which address economics.
Right in Genesis, in the Creation account not surprisingly, we see the first principles of economics. God created Adam and Eve and put them in the Garden of Eden. He told Adam to “tend and keep it” (Gen 2;15). Although Adam didn’t have to deal with thorns and thistles, tending the Garden was still work – work given before the “fall of man.” Work is good. It not only provides for man’s needs, but it keeps him from being idle and gives him a sense of satisfaction for a job well done.
God also gave Adam and Eve what we call the domain mandate (Gen 1:28). They were to have dominion over the creation, particularly the animal kingdom (man is not an evolved animal), and to subdue it. God is the owner, but man is the caretaker of the creation. Man is to study creation to gain knowledge about it (science). Technology and commerce then are man using his talents and abilities to apply this knowledge of Creation for the benefit of mankind and the glory of God. This involves wise stewardship and man is not to abuse what God has given him.
When God gave laws to the Israelites in the wilderness, after the Exodus, there were many economic principles. First of all, although in the “grand scheme” God owns everything, the concept of private property and ownership is very clear in the Bible. Otherwise It would not contain the many verses condemning stealing (Exodus 20:15, Deut 19:14; Ephesians 4:28a). God even addressed restitution: “If a man shall steal an ox, or a sheep, and kill it, or sell it; he shall restore five oxen for an ox, and four sheep for a sheep.” (Ex 22:1).
Now, it is very important that any economic system take into account the fall of man – the reality that man is a sinner. God knows this and looking at His economic system for the Jews, He knew that some would become lenders and some debtors. To avoid this situation from worsening, God set up an economic system in the Old Testament whereby all lands returned to their original owners and slaves were freed every fifty years, in the “year of jubilee” (Lev 25:10-13). This created a predictable 50-year economic cycle. It included seven Sabbaths of years where each seventh year debts were forgiven. This is a biblical principle behind debt forgiveness and bankruptcy laws. Also, in the sabbatical year, the fields were to lie fallow, to “rest,” and God would provide a threefold harvest every sixth year to carry them over until the ninth year (Lev 25:20-22).
A biblical economic system was found in the early New Testament church when all the disciples sold possessions and shared with one another. But it is important to realize that having “all things common” in Acts 2:44-45 was not Socialism or Communism. Possessions were given voluntarily. No one forced these early Christians to surrender their wealth to the church, and certainly not to the government. Today’s inefficient and corrupt redistribution of wealth by governments is a far cry from these early Christian acts of sharing and generosity.
During the Protestant Reformation, people’s focus was brought back to the Bible and we saw principles implemented – what we call the Protestant work ethic – which brought prosperity, particularly to the Protestant nations. People began to look at their vocations as a divine, “holy” calling, working “as to the Lord, and not to men” (Col 3:23). There was no job too small or menial, and there was no worker too insignificant. Everyone is made in the image of God; the ground is level at the cross. God wants each of us to be good stewards with the skills and abilities he’s given us.
Capitalism has a biblical foundation. It is best suited for a fallen world and free society. In capitalism, private property is respected (as discussed above), and people are allowed to use their talents and abilities to their advantage to work in the areas they excel in. It’s called comparative advantage or division of labor. We see the principle of division of labor played out in the church, the body of Christ: “But now indeed there are many members, yet one body. And the eye cannot say to the hand, “I have no need of you…Now you are the body of Christ, and members individually.” (1 Corinthians 12:20,21,27). There is incentive to work hard and diligence is rewarded to benefit one’s own self interest (Psalm 134:1).
In Capitalism, the “free market” tends to drive the economy. The desire for a good (or service) is the market demand; and the commercial availability of that good (or service) is the market supply – the law of supply and demand. In a free market economy, everyone, from the consumer housewife to the rich entrepreneur are making their own economic decisions in their own (“sinful”) self interest. As long as the government doesn’t intervene too much to distort these economic decisions, and thereby distort the free market, each person’s self-centered decisions are balanced against another’s. The business owner who is greedy and charges too much for his products will lose business to a competitor, encouraging the greedy owner to lower prices and operate more efficiently. Entrepreneurs, with the prospect of future (self-centered) benefits, are willing to take risks to develop new products and businesses, which create more jobs.
Ideally, in a free society where Christianity is allowed to flourish, if Christian virtue is incorporated into the economy, it also helps balance the affects of man’s sin nature (greed and selfishness). Business owners (masters) will pay an honest wage to their employees (servants) (Col 4:1). The owner even shows an interest and concern for his worker’s welfare. Employees will be willing to give their best efforts for the business (Col 3:22,23), if they trust that the owner will pass on to them the benefits of a prosperous company. If not, those employees will go work for another employer who pays a better wage or treats them better. Those who are wealthy will be willing to give to those in need (philanthropy) (1 Tim 6:17,18). Unfortunately, the more America or any capitalistic nation moves away from God and the Bible, these Christian virtues will play less of a role.
The foundation of socialism is different. In the 19th century, atheist Karl Marx applied materialistic (and evolutionary) assumptions to develop the economic theory of Communism. The sequence was to be Capitalism to Socialism to Communism. Because atheistic Communism rejects biblical truth, it rejects the concept of private property and the fallen state of mankind. Marx saw one monolithic unskilled “working class,” the proletariat. He rejected the idea of division of labor and vocational specialization, thereby stifling competition and incentive to work hard in one’s “niche” vocation. Historically, Communism and Socialism have ruined the economies and freedoms of nations. We saw it in the Soviet Union and we see it in Venezuela, Cuba, and North Korea today. That’s because a small, elite group of (sinful) government (party) officials, the central planners, keep all the “perks,” and inefficiently make almost all the economic decisions, which results in over-regulation and wasteful shortages of goods.
In summary, despite the shortcomings of the free enterprise system (Capitalism), it is the economic system best suited for prosperity in a fallen world. It works best when Christian virtues of integrity, generosity and compassion are exercised, and the maximum numbers of people are allowed to make the economic decisions with minimal government intervention. These bring about maximum economic freedom and equilibrium. Capitalism needs some governmental regulation to prevent excesses such as unfair monopolistic practices or environmental abuses. But the results of Socialism and Communism are scarcity of goods, poverty, loss of freedom, both economic and political, and in some cases, national collapse.