Capitalism and Mormonism

In this time of economic uncertainty and crisis, it seems perhaps worthwhile to reflect on our basic theological orientation toward capitalism. After all, some aspects of late 20th-century and early 21st-century capitalism seem to be responsible for our recent run of investment bubbles and collapses, and for the current credit crisis that has placed the U.S. at greater potential economic risk than at any other time in recent memory. How does the Mormon gospel see the seemingly imperfect but nearly ubiquitous economic system that we call capitalism?

Hugh Nibley has famously and extensively argued that capitalism is incompatible with, or perhaps even antithetical to, the gospel of Jesus Christ; several of Nibley’s classic essays in this vein can be found in the volume, Approaching Zion. In the opposite corner, and writing in explicit rebuttal to Nibley, BYU professor Phillip J. Bryson has a BYU Studies article from 1999 which argues that LDS church leaders have regularly and uniformly spoken in favor of capitalism as a system. How are we to approach this debate?

One interpretive possibility is to decide the matter by reference to the scriptures. After all, the standard works are canonized by a process of common consent, and therefore are collectively binding on the Latter-day Saints in a way that other texts in our tradition are not. While all of Bryson’s quotes are drawn from the speeches and writings of general authorities, few are drawn from the scriptural canon. Likewise, few of these remarks clarify whether the leader is speaking as a man and offering personal opinions or is speaking as a prophet. To the extent that such semi-ephemeral remarks contradict scripture, the standard works ought, perhaps, to win.

It is worth remembering, at this point, that the scriptures have rather harsh things to say about a great many aspects of current mainstream American (and to a substantial extent global) economic practice. Our scriptures categorically object to economic inequality (see, for example, 4 Nephi 1:3; D&C 49:20; D&C 78:5-6), refusal to give generously — indeed, perhaps to give everything — to the poor (e.g., Matthew 19:21; Mosiah 4: 16-23; D&C 56:16; D&C 104:16-18), desire for economic goods we do not currently possess (e.g., Exodus 20:17; Mosiah 13:24; Matthew 6:19-21 — note that the first two of these citations reflect the unfortunate worldview in which women are property), and self-interest (e.g., Luke 10:27; Mosiah 23:15; D&C 59:6; D&C 82:19). These passages amount to a thoroughgoing rejection of much of the way most of us live our economic lives. Do they also amount to a rejection of capitalism?

The answer, I think, is messy. It depends on how we define capitalism.

Bryson’s article provides an implicit definition of capitalism by choosing specific topics and themes in his selection of quotes from general authorities. Capitalism for Bryson, it would seem, is any system characterized by private property, money as a circulating medium, entrepreneurship, and market mechanisms for distributing goods and services. This is in fact quite a modest and inclusive definition of capitalism By its restraint, this definition manages the feat of including (much of) 19th-century Mormon economic history under a capitalist rubric. (Exceptions include some episodes early in Utah and during the United Order period when the existence of private property became ambiguous, as well as the persistent problem in 19th-century Mormon history that money was rare and much exchange had to be managed through credit or barter. Leonard Arrington’s Great Basin Kingdom has the details.)

Indeed, adopting Bryson’s implicit definition, there is no reason to see the scriptural passages cited above as contradictory with capitalism. After all, there is no logical reason that a system characterized by money, entrepreneurship, markets, and private property must necessarily lack economic equality. Likewise, such a system could certainly have inhabitants notable for their radical predisposition toward charity, reluctance to acquire material goods, and lack of self-interest. So one may well conclude that Bryson’s capitalism (as well perhaps as that of the church leaders he quotes, most of whom do not speak of capitalism per se but rather address narrower economic points) is in fact compatible with Mormon theology. However, one would be compelled to conclude that this Mormon-friendly version of capitalism would be radically different from the economic world we live in today.

Indeed, many or most analysts of capitalism see it as a system with additional defining traits beyond those central to Bryson’s analysis. Consider the following relatively well-known quote from perhaps the first great theorist of capitalism, Adam Smith:

…man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Nobody but a beggar chuses to depend chiefly upon the benevolence of his fellow-citizens. (An Inquiry into the Nature and Causes of the Wealth of Nations, Book 1, Chapter 2)

Most discussions of capitalism — and, one might note in passing, virtually the entire analytic apparatus of economic theory — incorporate this idea that capitalist economies are coordinated by the self-seeking actions of individuals. Indeed, self-interest is such a fundamental part of how most people understand capitalism that it even has a euphemistic name which it can use in polite company: the profit motive. The idea that self interest, or the profit motive, is a necessary definitional trait of capitalism is so common as to be nearly ubiquitous. Hence, in lieu of serious argumentation on this point, I will simply point you to this cartoon, designed for 11th-grade American history students, in which the profit motive is one of five definitional pillars of capitalism.

This raises some difficulties. While self-interest is a nearly universal defining trait of capitalism and is surely a preeminent characteristic of current economic life, it is also thoroughly opposed by the scriptures and is not generally supported by LDS church leaders. The principle of self-interest contradicts the gospel teaching that we ought to value the well-being of others just as much as we value our own well-being. It conflicts with the scriptural message that we ought not to acquire material treasure. It is the polar opposite of D&C 82:19’s instruction that we should all seek the interests of our neighbors and of God — not our own interests.

What would a capitalism that was friendly with Mormon theology, a capitalism without self-interest, look like? Property would have private owners, but those owners would be motivated by the collective good rather than their own personal good. Hence, private property would be managed as if it were the property of the collective. Regulation of private property by democratic political processes would be unnecessary because it would be redundant; private actors would anticipate the needs of the broader society and would act against their own self-interest for the collective good before any regulation was ever introduced.

Money would exist largely to facilitate spontaneous and ubiquitous transfer payments from the temporarily fortunate to the currently unfortunate — since the categories of rich and poor would broadly lose their meaning due to universal equality. Consumer and household debt would vanish as categories, since those who had resources would simply give to those in desperate need and those not in such need would never attempt to acquire goods of any kind.

The criteria for entrepreneurship would change radically. The entrepreneur would no longer seek investments with the highest possible expected rate of personal financial return. Instead, the entrepreneur would be motivated solely by the opportunities to create jobs and to fill some as yet unfilled social need. Hence, entrepreneurial activities would be designed to provide work for the maximum number of sustainable, productive employees, rather than to provide the highest realizable rate of return on the initial investment.

Markets would continue to function, but the criteria used by consumers acting in a market would also change dramatically. Rather than seeking the best good at the lowest possible price, people would seek to make the purchase that would be best for everybody. They would select the good that came closest to meeting the joint goals of best value (so as to save as many resources as possible for consumption by others), most creation of productive work opportunities for others, and fewest negative side effects for the community in general. This more complicated market calculus would profoundly change our relationship with the environment, the viability of advertising as an industry, and our current corporate culture.

The gospel as we have received it in the scriptures may or may not be antagonistic toward capitalism; this depends entirely on how capitalism is defined. Yet it seems to me that the revelations we have been given are profoundly and persistently critical of capitalism as we live it today. I stand implicated; I would seek repentance and further light and knowledge.

Comments

  1. Steve Evans says:

    Jay, would it be fair to say that the scriptures do not adequately speak in terms of systems and markets, but rather in terms of personal salvation and individual choices? How comfortable can we be deriving systemic conclusions from the sources available?

  2. Steve, I don’t think that’s right. The Bible in particular has a lot to say about social systems, and the Book of Mormon and Doctrine and Covenants are also interested in communities and societies as well as individuals. But the other point is this: systems such as capitalism are defined in part by individual motives, and the scriptures certainly have a lot to say about those.

  3. And I think that J.’s arguing that if any answers regarding socioeconomic systems can be extrapolated from the scriptures — if we can, in fact, assume that they have something to say beyond individualized, privatized, atomistic salvation and interiorized spirituality — that a capitalism that conformed with the ethical imperatives outlined by the gospel would look something like what he’s outlined above.

  4. Kyle Stewart says:

    I am in defense of capitalism because it allows individuals the opportunity to either live by the principles taught in the scriptures or for personal gain. Alternative market systems do not allow a person to exercise their agency as fully. Is it better to give willingly of your substance or have it forcibly taken from you for the same purpose?

  5. Kyle, let me note very specifically that your defense of capitalism is specifically a defense of private property and entrepreneurship. Your comments do not defend the profit motive or capitalism as currently practiced.

  6. Steve Evans says:

    Jay, fair enough. It just seemed to me to be one of those “get it out of the way” points to be made.

    Kyle, personal freedoms and capitalism have very little to do with each other. I assume by “forcibly taken from you” you’re referring to taxation (I love how American Mormons love to rant about taxes!), and almost every nation on earth taxes to some degree. America, that bastion of capitalism, taxes higher than many nations. Revolt!!

  7. Kyle,
    Why does it matter whether you give willingly or you give because your money is forcibly taken from you? (Actually, how about this: is it better to pay taxes cheerily or to give, of your own free will, to charity, but grudgingly?)

    For that matter, why can’t you both give and pay taxes? Dude, you’re setting up a false (and weak) dichotomy.

  8. To respond more directly to J.’s point, though, while I agree that, in many respects, the practice of capitalism is antithetical to Gospel teachings, I don’t find it inherently more antithetical than other potential economic arrangements. \

    Maybe better(and ignoring the city of Enoch, about which we know almost nothing): like Steve suggests, I don’t think scripture teaches us anything meaningful about systemic secular government (which is why, among other things, I don’t think that a flat 10% tithe argues in favor of regressive taxation). Rather, I look to Gospel principles to show me how I should navigate my life, whatever the system in which I live. We’re supposed, to some extent, at least, to transcend the natural man, but we nonetheless have to live inside of a natural man, and some of us have to live in capitalistic systems and others in socialistic, etc.

    Which isn’t to argue that we shouldn’t try to make the system conform to our ideals, just that scripture teaches us the ideal, not the system.

  9. Sam B., note that in this post I’m not talking about alternative secular systems. Rather, my sketch in the conclusion involves thinking carefully about how a gospel understanding would change our individual behavior within a capitalist system — and then thinking about how that changed individual behavior would itself alter the system.

  10. Kyle Stewart says:

    I see what you are all saying, especially about the profit motive being a pillar of capitalism but not one off religion. To me capitalism simply represents a society decision to allow its members the choice of what motivates their actions. It’s not a perfect system but more of a compromise that lets other members of society be greedy while still allowing the whole society to function properly. Capitalism as a whole will of course fail its people if enough make poor choices. Overall it has done its job well. This is getting a bit off the topic of the relationship between capitalism and mormonism though.

  11. private actors would anticipate the needs of the broader society and would act against their own self-interest for the collective good

    J., I think this statement requires elucidation. We would need to anticipate that 1,000 different private individuals and entrepreneurs would have 1,000 different versions of what constitutes the public good. As it stands now, they take their cues from observable market behavior and try to anticipate what consumers will want. Can you help me understand how private actors will know what actions will benefit the collective welfare? I think that is a lot harder to do than most of us think, what with unintended consequences, etc.

    Hence, entrepreneurial activities would be designed to provide work for the maximum number of sustainable, productive employees, rather than to provide the highest realizable rate of return on the initial investment.

    Without attempting to excuse the Enrons of the world, I will go out on a limb a little bit and say that most businesses I know actually do operate on this principle. If people were only interested in the maximization of profit, the only industries that would exist are loan-sharking, prostitution, and heroine importation. Most Mormons I know who invest in stocks are choosy, and would not invest in R.J. Reynolds stock, for instance, because they object to the business for private reasons.

    Rather than seeking the best good at the lowest possible price, people would seek to make the purchase that would be best for everybody.

    Wouldn’t the process for informing people about what is the best for everybody look a lot like advertising?

    J., these are my initial reactions. I hope these questions don’t look like objections, because they’re not. You’ve described the problems well and I’m hoping you can elaborate on the solutions you have proposed.

  12. I just gotta say that it is the ultimate irony that “capitalism” was first coined by Karl Marx.

  13. Sorry, J. That’s what I get for skimming a long, well-thought-out post in between assignments at work.

    Although I still would assert that scripture tells us very little (if anything) about capitalism; rather, it describes how we should act within the confines of the system we are in, and, I think, how we should act irrespective of whether we think it will alter the system. (Again, not that we can’t or shouldn’t try to make it better, but we need to make sure we ourselves are better, whether or not we see any progress in American capitalism.)

  14. Steve Evans says:

    Sam, I already tried that comment — didn’t work. Turns out the scriptures also talk about communities and priorities and allocations of resources, etc…

  15. Uh, no pun intended on the “coin.”

  16. Steve,
    Yes they do, but they don’t talk about the day-to-day of those communities. That is, they don’t talk about whether the people had property rights, or whether there was a centralized economy, or other mundane details like that. (The exception, of course, being the Law.)

    While they do speak of communities and priorities amd allocation, they’re generally agnostic about form; nothing I’ve read (in scripture) leads me to believe the capitalism or socialism is better, or that a democratically-elected government is somehow more sacred than some sort of heriditary kingship or a theocratic dictatorship, provided that the dictator really listened to God.

    As a culture, as a people, and as a nation, I agree that we have communal responsibilities, and I know from the scriptures what those responsibilities are. I’m just not convinced that the scriptures tell me what the best way to implement them is.

  17. (Although, for what it’s worth, I favor a regulated capitalism with progressive taxation, some of the money of which goes to redistributive purposes, and personal generosity of citizens, who are willing to work through public, private, and public-private means to make the country better.)

  18. Steve Evans says:

    Sam, I don’t think you’re right on #16. Consider the D&C.

  19. #1

    the scriptures do not adequately speak in terms of systems and markets, but rather in terms of personal salvation and individual choices?

    On the contrary, the scriptures (especially restoration scriptures) place salvation much more in a context of community than individualism. The personal choices mentioned are usually only applicable in some context of community as well.

  20. I think there’s a bit of a problem identifying “the common good.” Especially if we do it in some questionable criteria such as “jobs produced.” After all a good business owner should be looking at ways to increase productivity which typically means fewer people are necessary to do the same job.

  21. Steve,
    I’ve gotta get home, but I did think about it (and I confess upfront that my eyes tend to glaze over in the D&C, so I may be totally off). But it strikes me as containing Church governance; where it goes beyond that, I would argue it was because for the Saints at the time, church and state were essentially one, and the nitty-gritty of government that it describes doesn’t always transcend the situation where the revelations were received. (I’m kind of basing this on Arrington’s (I think) argument that the implementation of the United Order under JS and under BY was significanly different, partly because under JS, the Saints were in a mostly-agrarian time and place, whereas by BY, in order to make it, they had to adapt it to an Industrial Revolution world.) That is, the principles underlying the D&C apply and are binding, but the laid-out implementation may not bind us today.

    But those aren’t well-thought-out thoughts; it’s off the top of my head after entering my time and just before turning off my computer.

  22. Aargh! Clark, you make a great comment as I’m trying to leave, but that’s the problem J. seems to be pointing out–increased productivity, while a positive in a capitalist system, may not be of paramount importance, and may not even be a virtue, in a Gospel-oriented system.

  23. Mark IV, you raise a terribly difficult problem. Social choice theory has a lot to tell us about how difficult the collective good can be to identify. A large part of the problem is that self-interest is difficult to aggregate and that people will behave strategically in order to better approximate their own personal self-interest. My response on this point would be multifaceted and partial.

    First, I would hope that Christian abandonment of self-interest would help make problems of determining the collective good easier to resolve. If we come together as a group with all of us seeking each others’ interests, it seems possible that — with the help of the Spirit — collective discovery of collective good of the type that Rousseau invokes but never adequately explains might take place.

    Second, when such Christian unity is in short supply, the historic solution of Mormonism has been centralized theocratic coordination. In the 19th century, this involved mission calls to carry out specific economic activities. In the 20th and 21st centuries, mission calls continue to play this role to some extent, as do church management of donated funds in order to, e.g., carry out the Salt Lake City mall rehabilitation project. I think there are probably multiple legitimate points of view regarding this use of central church coordination to determine the collective good, but I wanted to note it as a historical and current reality in our tradition.

    Regarding maximizing profit versus employment, I actually don’t know that I agree that such is the norm in our current economic system. Certainly a major trend over the last few decades at least has been to boost stock prices by layoffs, a practice that seems to suggest a preference for profit and productivity over employment. As I understand it, the idea of “fiduciary responsibility” currently imposes on leaders of publicly traded corporations an obligation to seek the maximum long-term stock value by achieving the highest possible long-term profit on investment. Nobody awards stock points for achieving the highest possible long-term sustainable level of employment.

    Finally, regarding the question of whether communicating the best community good would look a lot like advertising, well, maybe a little. But the goal wouldn’t be to entice people into purchasing a specific product, but rather to quickly and easily communicate the major advantages and drawbacks of that product.

    Clark, I agree that a business owner who is a good capitalist should boost productivity. It isn’t at all clear that a business owner who is a good Mormon always ought to do so.

  24. StillConfused says:

    I don’t think that a profit motive is inherently bad. In fact, I would dare say that a profit motive is a good thing. Profits enable us to do more for our families and our communities. My financial freedom affords me the opportunity to run a charity in my spare time. I am extremely opposed to “collective good” mentality because it fosters people not being independent. That is so debilitating and, I think, against free agency.

    I am a driven person who loves to experience all that life has to offer and I have a great time doing it. It just so happens that many of the things that I like to do are profit making or expense reducing. I think that is a good thing

  25. The problem is that if a Mormon business owner doesn’t boost productivity then they will be clobbered by competitors who will.

    This is why this line of reasoning always kind of bugged me.

    We are in a global economy and many things that work when we were a primarily agricultural community simply don’t scale.

    Likewise as I pointed out in a Mormon Matters post on capitalism many matters only work if there is some central leader to decide who does what. Otherwise it just doesn’t work. While the decentralization and “chaos” of capitalism has a lot of strengths some moral decisions need organization above the business. That’s fine if Brigham Young is telling people who goes where. It doesn’t work so well if you are in a mixed free economy in a global market. And when the brethren clearly have no intention of engaging in that sort of leadership, advocating certain goals which demand such leadership is pointless.

    Most utopian schemes that attempt to work out the utopia in a free economy fail because of the structural limits inherent in that economy.

    While you aren’t necessarily making that move, I think many condemnations of the righteousness of LDS business people are misplaced precisely because of the structural limits inherent in the system. Further they are limits that entail either largely removing oneself from the larger community (i.e. forming some kind of commune) or else demand that our leaders act in a way they don’t appear willing to do.

  26. To be clearly I’m not saying businesses must only pursue the quickest buck with the least effort. But then most businesses are far more civil minded than that. However I am saying that some “common goods” simply aren’t things that can efficiently or reliably be pursued on an individual basis by business. Rate of employment being, to me, a key one.

  27. I would just like to say (hopefully no one else has pointed this out already), that a conversation about capitalism that does not include the fact that capitalism started as a social system. A system that privileged a class of “capitalists” who owned the means of production and most of the property. They used this wealth to accumulate more wealth, at the expense of a great many workers. Has anyone seen footage of 1930s strikes?

    It is not fair to simply state that capitalism is a system of distribution reliant of markets and entrepreneurship. It is to a remarkable extent (still) a social and even political system that has had a tremendous impact on how our nation has written its laws (the creation of corporate personhood), organized its cities (cars), and approached foreign relations (the war in Iraq).

    It is also important to note that capitalism is founded on the premise of infinite growth, an ecologically unfeasible and undesirable trait, that we are now beginning to see play out. I thus believe it to be dangerous not to attribute to capitalism all of its most heinous crimes; and adding the concept of charity to it seems almost ludicrous. I am much more apt to adopt Hugh Nibley’s dualism of Zion vs. Babylon, which states that you cannot build Zion with the tools of Babylon. However, I am certainly willing to try anything to make this world a better place, even if it means working within Babylon’s economy until something better comes along, or we muster the courage to flee from her retched waters.

    SEE: http://www.themormonworker.org for more articles on Capitalism and Mormonism

  28. StillConfused, I think there’s some degree to which the concepts we’re dealing with here are slippery. Gaining a profit can be a good idea, but the scriptures only look favorably on profits if they are acquired with the goal of building up the kingdom of God and our fellow people. If those are our goals, profits can be helpful — but they aren’t the only thing that can be helpful and we will certainly abandon the pursuit of them at any point when some alternative promises to more successfully help build the kingdom and our fellow humans.

    This doesn’t mean that individual effort is unnecessary, only that it should be directed to a different set of goals. We shouldn’t work hard to achieve and acquire, but rather to help others and indeed everyone.

    Clark, I think it’s too simple an apologetic to say that failing to boost productivity means the business will be clobbered by competitors. This is true in a frictionless economic world; another thing that is true in such economic worlds is that there is no profit for corporations because they compete the profit down to zero. In actual observed reality, corporations often generate millions of dollars in profit, suggesting at least some margin between current practice and economic failure. A fully Christian approach to economics would redirect at least some of that margin to employment and other aspects of the collective good.

  29. #23 – JNS, there is SO much I would like to say on this topic, but your second paragraph summarizes most of what I would say.

    One example: Part of a truly successful marriage is reaching the point where “what’s good for me as an individual” disappears completely from the mind and heart of each spouse and is replaced by “what is best for us as a couple” – when “I” means “we” – when I simply stop thinking of myself and think naturally and automatically of us. The next logical step is viewing my children in a similar way – as part of myself and no less important. When “my glory” means the success and joy of others, I believe I am “getting it”.

    That mentality can exist in most economic and political structures – and, imo, the mentality is MUCH more important than the system in which it exists.

    As to the employment vs. profit conflict, I think it’s just an extension of the marriage analogy. It all boils down to how I view myself and others.

  30. Perry Shumway says:

    It’s tautological and self-evident to argue that (a) self interest is inherent to capitalism, and (b) as individuals shun profits in favor of helping others, capitalism as a whole becomes less self-interested.

    The problem is that any critique of capitalism implies that current laws need to be changed, and although no one here is arguing for that, passive readers will assume otherwise.

    Of course capitalism is an imperfect system; of course people are more greedy than God would like us to be. Should we all try to be less motivated by personal profit, focusing instead on our neighbors’ needs? Without question. If a bunch of us do this, will our society become less self interested? No doubt. Is this the sole point of this post?

    Because to couch this seemingly obvious truth in terms of “capitalism” and “mormonism” and “profit motives” suggests – in spite of efforts to derail such detours (# 9 above) – that God or the prophets or maybe J. Nelson Seawright would prefer a social system in which the government diverted a higher percentage of financial profits to the needy. I’d be happy to argue all day long against such “compulsory compassion,” but I know it’s not the aim of this discussion.

    It seems that this particular blog isn’t about capitalism at all; rather, it’s simply another appeal for us to care more about our neighbors and less about ourselves. I have no dispute with that, but why all the talk about capitalism, if changing current US economic laws doesn’t factor into the discussion?

    Would it not have been more honest to simply describe this as Mormon views on self interest?

  31. BTW, I think we believe we “deserve” much more than we really do.

  32. Perry, I think it’s too narrow to equate the economic system with the legal framework. Becoming far more oriented toward others rather than ourselves would radically change society, and the scriptures call us to do far more than we mostly do.

    This isn’t about taxation rates or safety nets. That’s a different conversation altogether. I’m trying to talk about how much the gospel calls us to do. It’s enough.

  33. Perry Shumway says:

    #32 – “I think it’s too narrow to equate the economic system with the legal framework.”

    Agreed. It’s equally narrow to make capitalism synonymous with self interest.

    This is a discussion on self interest, not capitalism. If we were discussing the merits and weaknesses of capitalism from the Mormon perspective, we would include many topics beyond self interest, one of which would be the existing laws and their impact.

  34. I do not have a lot of time…

    I think that the market socialism spoken of by John Roemer is the type of capitalism could go with the principles of the restored gospel. I think that his market socialism could easily be called socialist capitalism. This strong type of social democracy recognizes the benefits of the market but maintains a committment to the socialist democracy and equality.

    Clearly Milton Friedman style capitalism is completely inconsistent with Mormon theology or any form of moral order. Don’t tell the economics department at the school I teach at.

  35. “It’s equally narrow to make capitalism synonymous with self interest.”

    Adam Smith does. So does much of the “mainstream” economics discipline.

  36. Stephanie says:

    Um, I may be a bit naïve, but the type of system you are describing sounds a lot like the law of consecration. The law of consecration was given to the Saints and then repealed because the Saints were not righteous enough to live it. If the Saints aren’t righteous enough, why would we expect it to work on a larger scale with people who don’t adhere to the concept of Christianity?

    When Christ is that central leader and all people are working under His principles (including self-reliance), I will be happy to change from a system of capitalism to consecration. In the meantime, not so much.

  37. Certainly there are frictions in the system that make any simple explanation overly simple. However my point is that in terms of competition if a competitor can make a product for less than you do there will be problem. Now one can deal with that with the targeting of specialty markets or unfulfilled niches. But the fact is that elevating maximizing job application is to emphasize maximizing inefficiencies which doesn’t seem a terribly wise strategy.

    Now certainly there’s more going on and one can eliminate jobs unnecessarily or for short term gains. But it seems to me that if your ‘high value’ is maximizing employment you’re going to be in a whole world of hurt.

  38. #37 – How about we rethink some of the central assumptions that just aren’t universal?

    There seems to be an assumption by some that making something at the same cost as competitors is the central issue. The owner of the company where I work has made FAR less over the course of the last 6 years than others in an identical position within this industry. Our overall costs to provide our service are roughly equal to our competitors; our price is dead center within the industry; his personal profit as the owner is substantially less than others. Why?

    He pays his employees more than our competitors, and he spends more money on training and expressions of gratitude. It’s a conscious choice he made due explicitly to how he views his role as an employer – to reduce his own profit by raising the standard of living of his employees. This is a result of his personal perspective, not “the system” in which he does business.

  39. Good post, J. It sounds like what you’re advocating is a voluntary socialism that still respects private property– in short, the redistribution of wealth by its owners. I think that the best example of such a system in operation today is probably the Hutterite communities. Such a system, I suggest, can only function within a thoroughly Christian community. So while it’s accurate to say that Christianity/Mormonism opposes capitalism qua selfishness, I think that it does not oppose it any more or less than it opposes the fallenness of man in general. I don’t think that Christians and Mormons who live in a pluralist state are called to oppose capitalism at a political level; simple pragmatism suggests that to do so would be ineffective until the root problem of human sin is corrected.

    Further food for thought can be found in Joseph Smith’s “political motto of the Church”:

    “The Constitution of our country formed by the Fathers of liberty. Peace and good order in society. Love to God, and good will to man. All good and wholesome laws, virtue and truth above all things, and aristarchy, live forever! But woe to tyrants, mobs, aristocracy, anarchy, and toryism, and all those who invent or seek out unrighteous and vexatious law suits, under the pretext and color of law, or office, either religious or political. Exalt the standard of Democracy! Down with that of priestcraft, and let all the people say Amen! that the blood of our fathers may not cry from the ground against us. Sacred is the memory of that blood which bought for us our liberty.” (Teachings of the Prophet Joseph Smith, 117)

    While he clearly opposes aristocracy, he advocates aristarchy. Aristarchy means “rule of the best”, whereas aristocracy is rule of the best-born. In other words, aristocracy’s based on birth, aristarchy on merit. In economic terms, aristarchy says that the best man earns the most wealth, whereas aristocracy says that the best-born man inherits the most wealth. It seems that in this motto Joseph Smith advocated the consolidation of at least power, if not wealth, in the hands of the talented few. This is the Enlightenment, capitalist ethic: ascendancy of the fittest.

  40. Bruce Kimzey discussed the same issue in the 1997 BYUH McKay Lecture.

    Dr. Kimzey takes a critical position on the current state of capitalism. He also details how a healthy dose of gospel living can correct capitalism’s shortcomings.

    If you don’t want to read the entire lecture, I highlight a few excerpts on my blog.

  41. JNS: While self-interest is a nearly universal defining trait of capitalism and is surely a preeminent characteristic of current economic life, it is also thoroughly opposed by the scriptures and is not generally supported by LDS church leaders.

    You are using the rather general term “self-interest” in a pretty narrow way here I think. Isn’t determining what is in one’s self interest inextricably connected to the philosphical/metphysical/theological views one holds? For instance, I assume that most Mormons who donate 10% of their income to the church in tithing and some separate amount in fast offerings believe that doing so is in their own best interests (at least spiritually).

    So if everyone were converted to the idea that acting like Jesus was in their self-interest it seems to me that capitalism would work just fine even with the self-interest component firmly remaining in place. In other words, I don’t think you are on safe ground when you broadly assert that the self-interest component of capitalism “is also thoroughly opposed by the scriptures and is not generally supported by LDS church leaders”.

  42. Russ Frandsen says:

    Except for details in the Law of Moses (which I doubt anyone wants to implement), the scriptures say virtually nothing about economic systems and property rights that are of a prescriptive nature. The descriptions that the Saints had all things in common and there were no poor among them is descriptive, not prescriptive. Even these descriptions give us no clue about the implementation of the social and economic structures associated with these descriptions.

    The Doctrine and Covenants does not give us any reliable instructions on the economic and legal arrangements of the Law of Consecration. The efforts in Kirtland, Missouri, and Utah were all abject failures. Revelations in the Doctrine and Covenants are relevant to the specific state laws (many of which were carryovers from the English common law) which were quite antagonistic to the communitarianism that Joseph tried to implement. These laws change over time, so the instructions in the Doctrine and Covenants that were fact specific to the law at that time does not provide a reliable guide today or in the future.

    In addition to the condemnation of personal greed and the oppression of the widows and orphans, the Book of Mormon and the Bible certainly have harsh condemnations of burdensome taxation – a warning to oppressive government.

    I think Latter-day Saints can justly celebrate the American free market system. It has generated the greatest affluence in history (that we know about), with the attendant benefits of reductions in disease, poverty and ignorance. It has allowed Church members to pay hundreds of billions dollars in tithing and other charitable donations that have sustained and enabled the expansion of the Church worldwide. I know of no other system (and I cannot conceive one based on empirical experience)that would be an equal or greater boon to God’s work on earth.

    I think it is a given in a world where there is opposition in all things that a system that is so powerful to create such good is also a system that others can abuse to create great evil. We live with this dichotomy every day.

    In my view, a free market system, sustained by free choice by the participants, running by freedom of contract in a well-ordered society sustained by the rule of law, with motivated participants who incorporate God’s admonitions of wise and beneficient stewardship, is most likely to achieve the ideals vaguely described in the scriptures.

  43. Steve Evans says:

    (hums the Battle Hymn of the Republic)

  44. JNS, I really liked this post and especially the last five paragraphs in which you outline what a Mormon capitalism would look like. I think you are right. The strength of the system you lay out is that it is based on every individual deciding for him or herself to consecrate back to the community and to manage their own private property for the good of the whole. I do believe that such a system would be most compatible with the types of condemnations on the prideful and on neglecting the poor that our scriptural canon provides us. But — and I assume you will agree — I don’t think this implies that other systems of redestribution are inherently unjust (a trap I think far too many Mormons fall into), for instance social market economies in which the free market still determines supply, demand, price, and such other basics but the government takes a more active role in the redistribution of property through its taxing power. (As we know, the U.S. tax rate is not particularly lower than the rate in most European countries despite the fact that the U.S. social safety net, e.g. health care, is far from the levels provided in Europe — that’s a matter of current spending choices and not of lower taxes.) It seems that many Mormons could benefit from a more generous attitude toward the poor, even if the mechanics of helping the poor are through government “programs” set up for that very purpose. None of this, however, implies that all of us should not be interested in and apply ourselves toward ensuring that the programs that are implemented are actually effective and that the tax money the government takes from us does not leak away in expensive pork barrell programs that do little to alleviate suffering.

    But I think that Chris in comment # 39 is also right: the voluntary redistribution perspective that our scriptures tell us we should be engendering really requires homogeneity of belief to work, does it not? How could this work in a pluralistic society? That is the real question. I am afraid I can’t see much of an answer. Hence, we need to work to improve the ability of secular governments to engage in effective programs that actually help the needy without a phenomenal waste of tax money.

    We could do a lot better as a society in the United States — and particularly as Mormons — in being sensitive to the needs of the poor and in finding ways to address their plight and suffering both through finding effective means of government redistribution of property (i.e. the right kind of taxes and programs because a high tax rate by itself doesn’t alleviate the suffering) and through simply donating more to charities and genuinely being less interested in the toys of life, including the 5,000 sq home, the boats, wave runners, four wheelers, etc. I fear that we all stand under condemnation (I recently read 2 Nephi again and I don’t see how any of us could escape this conclusion based on that text, particularly its Isaiah chapters) for our preference for toys that provide us an adrenaline rush over alleviating the suffering of the poor. Honestly, how do we justify our expenditures on leisure time activities when less fortunate children all over the world are starving and are missing their educations etc.?

    But I must also say that I agree to an extent with Russ Frandsen in # 42, and that is that we should perhaps not condemn a system just because it can be used by the cynical and greedy to an evil outcome. The free market system has paved the way for an affluence that has had knock-on effects in all areas of knowledge and science, including the alleviation of disease, ignorance, and even poverty. This brings me full circle to my first paragraph in this rambling comment: I could imagine that a free market system still underlies the Mormon capitalism that you outline in your main post — and that particular capitalism is possible when people are of one heart and one mind, that is, the society is religiously homogeneous.

  45. Russ, I think your perspective on the scriptures is narrow and comprises a de facto veto of revelation. The scriptures are replete with economic content, at both the individual and the collective level. None of that content has been repealed, and indeed we promise to live the law of consecration in the temple even today. Furthermore, much of the economic doctrine in the Doctrine and Covenants is taught as eternal truth and as a universal requirement for exaltation. We can obviously reject these ideas, but we ought to recognize that in doing so we are rejecting canonized revelations that have never been repealed.

    That said, please note that my post in no way speaks in opposition to markets and entrepreneurship. Those are powerful and effective institutions, and I think we’d be foolish to give them up. My point is that we ought to think carefully about the purposes for which we use those institutions.

    Geoff J., your concept of self-interest here is certainly much broader than the concept used in most economic discourse as definitional for capitalism. In most circumstances, individuals in such discourse are interested in maximizing their personal material well-being; spiritual issues are not typically brought into consideration. However, the scriptures I reference above would suggest that even your expanded concept of self-interest may be somewhat insufficient; seeking our own life means losing it and so forth. We’re instead taught to seek the interest of others and of the kingdom, with our own interest to come as a side benefit.

    John and Chris, in order to work as a system, the ideas in my post would almost certainly require a homogeneous religious community. I agree. My point here is to work out what a system in which everyone lived up to Mormon economic ideals would look like, and to suggest that it wouldn’t particularly resemble our current economy. That doesn’t mean we shouldn’t think carefully about second-best solutions, although it seems to me that the discrepancies ought to be occasion for serious personal reflection.

    John, I’m not sure exactly what you have in mind in characterizing U.S. tax levels as not particularly lower than those of most European countries. Most data suggest that there is a great deal of variation in tax rates and that the U.S. has nearly the lowest taxes of any developed country. For example, total U.S. taxation as a percentage of GDP in the U.S. is only about 3/4 of that in the U.K. That said, I certainly agree that there are serious discussions of priorities that we should have. Evidently, we as a country have chosen to prioritize economic assistance for wealthy economic elites over assistance to the poor; Bear Sterns gets a bailout, while the poor get a bankruptcy law that produces basically lifelong penury.

  46. Yes, you are right that the taxes are lower, just not signficantly lower, although I can attest that the 40% rate in the UK really makes you feel it more than the taxes I was paying in the US.

  47. the 40% rate in the UK

    40% on your earnings above £34k (=$70k)!

  48. John, I guess it comes down to what’s “significant.” The 25% difference between the U.S. and the U.K. in terms of taxation looks significant to me, but I obviously can’t object if you don’t think that’s a significant margin.

  49. JNS,

    Remember UK taxes pay for a national (communist) health system, which offsets living costs many Americans have to pay for on top of taxes. I suspect that John’s firm pays for private insurance too, so he has the best of both worlds.

    Of course, living in London is a financial drain, regardless of tax. (Which is why JF should take the English bar and move to the Shires!)

    Speaking of tax inequities: I have never gotten over the fact that Uncle Sam taxed my meagre grad student stipend. HM Revenue and Customs have the good heart not to tax students, so I guess you win some, you lose some.

    For the record, I am not a fan of the UK’s tax regime. It’s too high.

  50. Peter LLC says:

    the U.S. tax rate is not particularly lower than the rate in most European countries despite the fact that the U.S. social safety net, e.g. health care, is far from the levels provided in Europe — that’s a matter of current spending choices and not of lower taxes.

    Social security taxes in the US are about 6%, right? That is, employer and employee both contribute 6%. In Austria the figures are about 20% and 19%, respectively, just for social security (contributions are capped as in the US).

    In the US, income taxes vary between 10% and 35% with moderate progression. In Austria, the progression is rapid with the marginal tax rate on income between 10,000–25,000 at 38.3%, 43.6% on income between 25,001–51,000 and 50% on everything above that.

    I think it’s safe to say that at leat with regard to individual taxes, they really are higher, and that it’s not just a matter of spending priorities.

    Many European countries have tried to become more business friendly by lowering, inter alia, capital gains taxes. In Austria this is now “only” 25%.

  51. Peter LLC says:

    Speaking of tax inequities: I have never gotten over the fact that Uncle Sam taxed my meagre grad student stipend.

    Uncle Sam is a strange bird. The US is one of the few (only?) countries that taxes UN employees (the UN will reimburse you, however).

  52. Ronan, of course there are trade-offs regarding specific policy choices. My confusion was with response to John’s claim that there was no significant difference in tax levels, not in benefit levels of tax structures. I now think I understand the source of that confusion.

    Tax rates really do matter for social outcomes, of course. There’s only limited empirical evidence relating tax rates with patterns of economic growth, but higher income taxes in particular are quite closely associated with higher levels of social and economic equality. If you want to see class warfare in the modern world, tax policy is the place to look. For the most part, in recent decades, only one class (the wealthiest one) has been actively fighting this particular battle…

  53. Let me note that I see these discussions of tax rates as a pragmatic excursus on what to do in order to manage second-best societal conditions, and not an issue directly related to the post above.

  54. Peter,
    Enjoy paying your gross tithing, man…

    JNS,
    Sorry for the threadjack. It really is a great post, but way outside of my expertise so I’m going to shut up now except to say that there are people who devote their lives to studying things like the ancient Israelite economy, so be comforted to know that the Bible most certainly describes such things!

  55. J. I very much agree that we are talking about second-best solutions, and the detail of the implementation of Zion is a subject which merits our concern.

    It seems to me that the question you are getting at is the motive of the individual, and this is where it gets so tricky. A person with the purest of motives could do disastrous things (Abraham Smoot is a good example), while a person with ambiguous motives coud bring about much good.

    As I understand it, the idea of “fiduciary responsibility” currently imposes on leaders of publicly traded corporations an obligation to seek the maximum long-term stock value by achieving the highest possible long-term profit on investment.

    I would suggest that most of the fraud and rotten behavior committed by people in business is the result of focusing on the short-term rather than the long-term. Pirates in neckties and suits are looking for the quick money (seen Enron, again). If we define bad behavior as that which cannot be sustained over time, the goal would be to provide incentives to look at the very long term.

    I think you are probably right about the way markets behave in small, homogenous communities. People will shop at the local store with a limited selection of goods and pay higher prices than they would if they drove 15 miles to a larger town, but they know the local guy and feel connected to him. He reciprocates by sponsoring a little league team and donating to the high school play. So all the parties are acting in their own self interest, but are also acting out of altruism. A fallen world makes for all kinds of mixed motives.

  56. As a real life capitalist let me comment. Many of the BCC folks are in fact academics or employees so let me get my thoughts in on this.

    1. Capitalism is an “ism” in other words in a sense its a false idealogy that we will leave behind once we die. Like Conservatism or feminism or any other “ism” its easy to get wrapped up in being a capitalist and commit sin. I have seen the lust for money destroy a lot of good people over the years

    2. Capitalism works better then any other system that exists in a fallen world.

    3. The LDS church depends largely on the wealth created by US capitalism to fund its global operations

    4. Since the 1930’s LDS FP members have consistently opposed what they term as communism or socialism. Not just Benson

    5. No society currently really practices capitalism. Our economies are “mixed”

    6. JNS, your last few lines I think are accurate in the sense that our scriptural records etc are critical of the excesses of capitalism. Its the love of money not the money itself.

    7. Your middle paragraphs on solutions I think are essentially unworkable in a fallen world. Think of the attempts to live the United Order.

  57. Mark, I agree regarding pirates in neckties, etc. My point here, though, is that even what is seen as honorable behavior in the present economic system often, or even usually, falls short of the standard that Jesus has set for us. The New Testament standard would teach each of us to value $1 gained by anyone as much as we would value $1 gained by ourselves, the economic meaning of loving others as much as ourselves. (Actually this disregards a bit of nuance. Poorer people gain more out of an extra dollar than do richer people. So we ought in general to value $1 gained by anyone poorer than us more than we value $1 gained by ourselves, and $1 gained by anyone richer than us less than a $1 personal gain.) This would mean that we would happily reduce our own salaries to increase those of others in our companies, and that we would see success by a competitor as basically equally as good as success by ourselves.

    My point, in other words, is that the gospel standard seems to call for changes in our motivations that are not modest or marginal.

  58. bbell, the middle paragraphs are ideas that we could all live today. There are probably other ways of implementing the scriptures’ commands against self-interest. But if we choose not to follow those commands because we fear the consequences, it seems that we might have found the limits of our faith?

  59. JNS (#45),

    We’re talking about Mormonism and capitalism in this post so it makes sense to talk about how the concept of self-interest plays to a strictly Mormon crowd. My point is that the concept of self-interest does not necessarily conflict with the scriptures as you suggested. In Mormonism (not unlike most other religions), spiritual self-interest is an always-present idea after all.

  60. Geoff, yeah, well. As I mentioned earlier, I’m not sure the concept of “spiritual self-interest” helps too much. The scriptures teach us that the way to seek our spiritual self-interest is to forget about our spiritual self-interest and seek the interests of others and the kingdom, no? So this seems like, perhaps, a bit of a blind alley. In any case, your proposal doesn’t modify the conclusion that the kind of self-interest that drives modern capitalism is out of bounds in light of Mormon scripture.

  61. re point 2 in comment # 56, 2. Capitalism works better then any other system that exists in a fallen world.

    This rings true at first blush. After all, the genius of the Founders in the drafting of the US Constitution was that they proceeded from the premise of man’s corrupted nature and, based on that belief, built the checks and balances into the system that would be necessary not only to contain this aspect of human nature but also, paradoxically, to harness it for the common good (see, e.g. Federalist 51).

    Although this has indeed worked nicely (though not without its own difficulties), and although Latter-day Saints largely consider those who drafted the US Constitution to have been beneficiaries of divine inspiration (see, e.g.D&C 101:80), Latter-day Saints might well benefit from asking whether people really are fundamentally evil — or whether the Restoration teaches us something else about human nature. If we believe, as many/most of us do, that an Apostasy occured sometime after the death of Christ’s original Apostles by which many doctrines and ordinances were altered and/or corrupted, do we benefit from accepting the creedal Christian bandwagon on this point uncritically? I don’t claim to know the answer to that, although I have caught myself contemplating it before. Suffice it to say that I believe the answer could have implications for our view of the role of self interest in free markets.

  62. JNS,

    Maybe with a firm commitment to the ideals of the gospel a few people could live that way but not large swaths of people. The natural man syndrome is to compelling for most of us. I think that is where you get a bit “ivory tower”.

    My own reasons for being a capitalist are.

    Its the best possible situation for me to raise an LDS family. I work my own hours and am in control. No layoff, no move out of state with 3 weeks notice etc. Got soccer or tball practice today? No problem. Need a school volunteer? I can go. Yesterday my wife called and asked if I could go to a Rangers game with my oldest for school. My response… Why did you even call baby? Sign me up.

    So for me capitalism is a net benefit to me and mine.

  63. re # 62, I think one of JNS’s points in this post is that Mormons should be concerned with the needs and well-being of others as much as they are with theirs and their own.

  64. A few points:

    1. Although capitalism sounds like it is inextricably tied to economics, it is, as a term, actually very peripheral. I have on my desk the standard graduate text in microeconomic theory. It is the one I used ten years ago. The word “capitalism” is not in the index, nor do I ever remember the word coming up in the core currciulum. It is, really, a Marxist term more than anything. Hence the problem defining it. Economists use clear concepts that can be interpreted mathematically in order to prove things– concepts like secure property rights, contract enforcement, monopoly power, and perfect competition.

    2. You think that an entrepreneur should favor increasing productive employment as a goal along with or instead of maximizing profits. This sounds nice but is meaningless. What constitutes productive employment? Positive marginal product? But this ignores the other uses of that person’s labor which might have a higher marginal product. A competitive market with just profit maximizers is extremely pro-employment. Moreso, certainly, than the world we currently live in where regulations purportedly designed to help the poor encourage unemployment.

    3. Self-interest is not a well defined concept. It could mean greed or it could mean “whatever it is I want”. If your post is to say “Greed is not scriptural” well I think we could all agree with that.

    4. I fully agree that Mormonism is compatible with our current set of institutions, and that living our religion should involve a hefty dose of caring for the poor. Efficient production creates more goods with which to share. And they in no way constrain us from sharing those goods. Ergo, efficient markets probably are the best way to accumulate goods which we can then share.

    5. You allude to the difficult moral calculus of trying to make the world a better place with one’s purchases, but I don’t think you really give credence to just how bad a problem that is. Competitive markets, under the right conditions, use price signals to convey information that no agent possesses on her own. It is painfully easy to give examples of how trying to use one’s consumption decisions to better the world (rather than simply to get a good you want) gives either no benefit to the poor or actually hurts them. If you want to help people, use the market for charitable endeavors (such as the Church’s humanitarian aid or PEF line). If you want to buy shoes, use the shoe market. Mixing the two into one endeavor is an excellent way to not have the faintest idea if you are actually helping.

    In other words, it could easily be the case that you’ll think you’re helping and feel proud of yourself, but you won’t actually be helping, you’ll be hurting.

    6. Many of your ideas revolve around the idea of maximizing societal good instead of personal gain. I’m all for that if we know how to do it. There are lots of externalities that should be internalized. In the face of uncertainty, the most efficient way to do that is to use either price or quantity regulation imposed at the top and then let agents make choices that are good for them. Which kind of regulation to use depends on the kind of uncertainty one faces.

    7. Money is incredibly useful stuff. I don’t see any reason why it would not be used in a Zion community. There is a reason we don’t give tithing in kind anymore.

  65. A tidbit: The profit motive does not define how the individual measures their profit, or utility. A common construction is “enlightened self-interest” where my interest includes the well-being of ours. Self-interest is effectively an empty box in the capitalistic formula that anything can be put in… including all the gospel metrics.

  66. re # 64 — the voice of an economist was certainly needed here. Great comment.

  67. Frank, yeah, we agree on most of this. On point #5, the difficulty that I see is that the current system makes purchasing well even harder than you suggest. Many externalities are not captured in prices, and market actors have an obvious incentive to hide information about these externalities. So failing to make some extra effort to find these things out probably would lead people to make purchases that entail unnecessary harm of one kind or another.

    On point #2, I think your point is correct but perhaps somewhat unhelpful. I agree that a fully competitive market with profit maximizers does maximize employment — and drives profits to zero. Obviously, this world doesn’t exist and indeed probably can’t.

    I agree that opportunity costs matter. Yet in a world in which there is extensive unemployment (i.e., the one we live in), for a substantial pool of people the opportunity cost of working in any job whatsoever is extremely low. So, in a more perfect world, this would be an issue to which we should pay attention. In the present world, it isn’t.

  68. “On point #5, the difficulty that I see is that the current system makes purchasing well even harder than you suggest. ”

    I think it’s nigh unto impossible. Are you suggesting it’s worse than that? :)

    “On point #2, I think your point is correct but perhaps somewhat unhelpful.”

    You are referring here to my point that markets deal with this problem and regulation messes it up? That seems like it would be very helpful to a voter.

    “Yet in a world in which there is extensive unemployment”

    Which world are we talking about? Certainly the U.S. does not have extensive unemployment. It is currently 4.8%. Young black men have very high rates of unemployment. Are you saying that entrepreneurs should employ workers who cost more than they produce? I think that is a fine endeavor for D.I., but there is no need to mix it into every business endeavor. Here’s what I think would be a better plan. The entrepreneur runs a profitable business and then gives profits (for wage subsidies) to groups whose comparative advantage is hiring workers with almost zero productivity.

    Of course, some for-profit firms do have a comparative advantage here and so should take advantage of it. Wal-mart employs very low skilled workers productively, which, if your goal is employment, is a huge boon. Couple that with a wage subsidy (either by the government or a private group) and you could have a real winner.

    “for a substantial pool of people the opportunity cost of working in any job whatsoever is extremely low”

    unfortunately in many cases no. a fair chunk of people would rather not work at all.

  69. I should amend my first point, I think current price signals work pretty well for optimal allocation of a number of things. Other markets are infested with externalities, and I discussed in 6 approaches for dealing with that. Getting all that right as an individual consumer is, I’d guess, practically impossible.

  70. Frank, the world I was talking about is “the world.” Mormons don’t care about national borders, do we? We’re all brothers and sisters.

    You are referring here to my point that markets deal with this problem and regulation messes it up? That seems like it would be very helpful to a voter.

    No, I’m referring to your point that fictional frictionless markets with perfect information and competition solve this problem.

  71. JNS (#60): The scriptures teach us that the way to seek our spiritual self-interest is to forget about our spiritual self-interest and seek the interests of others and the kingdom, no?

    No. (Or, umm, yes, your “no?” is correct…) The scriptures say that it is in our spiritual self interest to love God and love one another and I know of no scriptures that indicate we should forget to do those things. You are apparently conflating material/temporal comfort and self-interest with spiritual self interest. The scriptures do tell us to not let our personal desires for earthly comfort get in the way of loving and serving each other.

    This is an important distinction that I sense you would like to ignore here. (I notice that others in this thread are taking issue with you equating the nebulous term self-interest with greed as well.)

  72. Geoff, people in this thread are unhelpfully conflating the idea of “utility” with the idea of “self-interest.” They should perhaps read their Hirschman, Mansbridge, and so forth.

    On your point, the idea of “spiritual self-interest” is a neologism. But consider Luke 17:33. It’s a call to repentance to us all; we all seek our own interests too often.

  73. JNS, we are all brother and sisters, but most entrepreneurs are employing people around them. How many readers on bcc are directly employing anyone that lives in a third world country? And outside the U.S. my point about regulations moves from somewhat important to central.

    “No, I’m referring to your point that fictional frictionless markets with perfect information and competition solve this problem.”

    By frictionless you mean perfect information and competition? What is your estimate of the search costs and lack of competition in the labor market? Given an estimate of those costs, one can calculate how much firms underpay workers and how much unemployment results. Why do you think they are large, aside from the regulatory burden I already discussed?

    But let me also make a methodological point. saying that assumptions don’t hold exactly does not prove anything. What you need to do is show that your proffered model fits the data better. As of now, your model is…. what? And how does that model lead to the conclusion that employers should pay workers more than their marginal product?

  74. …how does that model lead to the conclusion that employers should pay workers more than their marginal product?

    I don’t think I said that. On the other hand, an employer who valued workers’ utility at the same rate as her own would likely come close to paying workers their entire marginal product. The existence of substantial returns on investments suggests that this isn’t happening.

    To be clear: my argument on this point is simply that the current economic system provides ample evidence to conclude that most current businesspeople are not acting as if they had the Christian motive that sees a benefit to anyone as identically equal to an equivalent personal benefit.

    On the employment point, I don’t see your point. I agree that most BCC readers aren’t doing much to increase employment outside the U.S. That ought, perhaps, to be cause for concern.

  75. Frank, I think something fundamental to JNS’s post is a paradigm shift in the way people (in this case Mormons) view themselves in relation to others in terms of temporal well-being. The implication is that this would remove the fundamental premise of self-interest from the equation. Since I am not an economist, I am not sure how the absence of this premise would affect the rest of the conclusions one can arrive at through economic theory, as persuasive as those conclusions always are to me.

    Having said that, I see JNS’s post as being extremely theoretical because of the following:

    (1) we don’t live in a religiously homogeneous society so the type of voluntary socialism outlined in the original post isn’t workable in real terms;

    (2) even awareness of the Restored Gospel does not seem to enable people to base life decisions, especially those relating to sustenance and survival, on anything other than self interest — survival — in the first instance. No matter how hard we try, we typically aren’t going to let our own kids starve to make sure someone else’s kids don’t (understanding, of course, there will be the rare exception to that). Despite this, after we pass the level of mere sustenance, I think that 2 Nephi and other LDS scriptures (i.e. including the scriptures we hold in common with creedal Christians in the Bible) place us under condemnation for spending £75K on a Land Rover or some other toy while kids in our ward, town, or Darfur are starving and experiencing deprivations of every kind.

  76. Stephanie says:

    In the absence of a “United Order”, this article talks about how we can live the principles of the law of consecration in our own lives.

  77. “On the other hand, an employer who valued workers’ utility at the same rate as her own would likely come close to paying workers their entire marginal product. The existence of substantial returns on investments suggests that this isn’t happening.”

    A better way to think about it is as follows. You pay each good their marginal product so you give the right signals for future production of physical capital and human capital. Then you can donate the proceeds as you see fit. You talk in this example as if owners of businesses (or wage setters) own the capital, which is not really the right way to think about it. Capital is leased or rented and so demands its returns just like anyone else. In fact, it is how people save. And we are in favor of saving.

    “To be clear: my argument on this point is simply that the current economic system provides ample evidence to conclude that most current businesspeople are not acting as if they had the Christian motive that sees a benefit to anyone as identically equal to an equivalent personal benefit.”

    There is no need to condition on the word “businesspeople” when you can just as truthfully say “people”. The problem is not a business problem or a capitalism problem, it is a people problem. Focusing on it as a business problem is needless.

    john f.,

    “The implication is that this would remove the fundamental premise of self-interest from the equation. Since I am not an economist, I am not sure how the absence of this premise would affect the rest of the conclusions one can arrive at through economic theory, as persuasive as those conclusions always are to me.”

    Models that include some form of altruism are pretty common in public economics. The biggest problems one encounters in them is, under some conditions, everybody sits around trying to shove food in each other’s mouths (Mathematically speaking). Think of the problem when you and your wife are trying to decide where to go out to eat and you both just want to do what makes the other person happy. It can be hard to make a decision. Now multiply that by every person thinking about every other person for every good in each time period. (6 billion * 6 billion * a few million * 70). That is unsolvable.

    The welfare theorems in economics suggest that if at all possible you should run regular competitive markets, fixed up for externalities, and then redistribute outside those markets, not through them. This is probably impossible too, but orders of magnitude less impossible.

  78. Frank, your comments still don’t seem as helpful to me as they apparently do to you. For example, Jesus’s model of altruism may make decision problems difficult; I agree. Presumably, we have recourse to the Spirit to help, and presumably it’s also better to try to follow Jesus’s example but make mistakes than not to try.

    Your comment #78 seems quite a bit off track. I can’t imagine that you’re seriously arguing that the economy would look exactly the same if everyone’s motive in participating were to seek the good of everyone else as it does today. Your comments up to this point seem to have adopted an implicit strategy of raising details in order to obscure the obvious larger picture.

    Even on the details, I’m not sure your comments are totally in focus. For example, in the U.S., the wage share of GDP ranges from about 75 to 80%. Is that “most”? It’s certainly a majority, but it’s far smaller than the equivalent ratio for Japan, for example. Regarding paying marginal product for labor, I’d remind you that coerced labor is actually still widespread in the world, so this is also murky.

  79. JNS, I think we’re both interested in following Christ, the question is how to do that best. I am not sure what greater point it is you wanted to talk about. I guess you could poll your readers to see if they find my comments helpful :)

    “I can’t imagine that you’re seriously arguing that the economy would look exactly the same if everyone’s motive in participating were to seek the good of everyone else as it does today.”

    #78 was about the return to capital. Not about if everyone where an altruist. If everybody were charitable like Christ, the world would look very different, under any economic system. But the employers and workers could, and probably should, still receive their marginal product for their services in such a world.

    “Regarding paying marginal product for labor, I’d remind you that coerced labor is actually still widespread in the world, so this is also murky.”

    I am opposed to coerced labor. But I am not sure what it has to do with the post other than, don’t do it. My point is that the optimal thing for employers is to aim to pay a worker his marginal product. Also, that for most labor markets the best guess is that we are within shouting distance of that outcome now. Obviously I am referring to labor markets, rather than forced labor (which is not a market).

    As for the return to wages, where did you get the 80% number and why do you think Japan is higher? Let’s take that number and run with it. What it implies is that, outside of efficiency improvements, even entirely abolishing a return to capital and handing it to workers would only raise average labor income by 25%. Thus even if there were excess returns to capital, they can’t be all that huge, because 25% is obviously an overestimate. Second, those returns to capital are going to people who can then use that money to help the poor however they think best. There is no need to try to force welfare through the labor market. Although, as I said above, a well engineered wage subsidy could be a useful charitable initiative.

Follow

Get every new post delivered to your Inbox.

Join 9,833 other followers