Summer 2000
Reeling
from the laquiz jolts in NASDAQ prices, pictures of pinstriped investors
splash the front page of the morning newspaper.Factory
assembly lines generate new products cheaply and efficiently.Small
businesses line the streets of American suburbs, each entrepreneur with
his own vision for growth and prosperity.At
the same time, desperate people flee the poverty found in crumbling societies
to pursue new opportunity in a free market economy.In
many ways, the economic system of capitalism has fueled the principles
of freedom that promise the American dream.Two
men have most dramatically affected popular understanding of the capitalist
system: Adam Smith, the father of laissez-faire economics, and Karl Marx,
the father of communism.Smith’s
Wealth of Nations has been treasured as a handbook for economic
principles of individual freedom.Marx’s
Das Kapital proposed remedies to what he perceived to be the ills
of the Industrial Revolution and the capitalist system.Studying
the philosophies of Smith versus Marx provides an understanding of the
capitalist system, its communist counterpart, and the value of a Christian
perspective on economics.
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Born
in Kirkcaldy, Scotland, in 1723, Adam Smith worked as a tutor and Professor
of Logic at Glasgow University before retiring to devote his time to writing.His
most famous work, An Inquiry into the Nature and Causes of the Wealth
of Nations, has remained a beloved capitalist textbook for over two
centuries.Smith’s 18th-century
contemporaries measured the wealth of a nation by the quantity of gold
and silver it possessed.Challenging
popular conceptions about the nature of economic value, Smith transformed
economic thought with his principles of individual freedom and limited
government.He argued that personal,
self-motivated decisions would benefit all of society.He
extolled the merits of the diligent entrepreneur and the advantages of
capitalist development.In doing
so, Smith conceived economic principles essential to capitalism itself,
branding him as a primary target for the criticism of Karl Marx years later.
Popular
economic thought in Smith’s day focused on a system known as mercantilism.The
economic goal of mercantilism was to maximize a nation’s holdings in gold
and silver.Rulers operating on mercantilist
principles sent explorers to claim vast, undeveloped territories, hoping
to discover new sources of precious metal.They
also attempted to export large amounts of goods while importing relatively
little and pocketing the difference.If
a nation exported more than it imported, it enjoyed a “favorable balance
of trade.”Simply, mercantilism assumed
that money is wealth.The greater
the stockpile of gold bars, the richer the king, and the wealthier the
country.Gold, however, cannot be
planted as a cash crop or spun into clothing.Money
has no inherent value; it merely facilitates exchange for the truly useful
commodities of daily life.Smith
correctly identified the flaw in this system: a country could acquire huge
amounts of precious metals by exporting all domestic products and importing
only gold in exchange.However,
without those needed commodities, the people of this supposedly wealthy
country would starve.As Smith states,
“The increase of those metals will…be the effect, not the cause, of the
public prosperity.”
Smith
then presents his own thoughts on the meaning of economic value and the
path to national wealth.If gold
has no inherent value, then what does determine the value of any
given product?The economic value
of any commodity, Smith says, is equal to the amount of human labor needed
to purchase it.The actual time,
blood, sweat, and tears spent for a commodity to come into being determines
the true value of that object.Does
this value, however, always correspond to the price?A
person may have spent years planting an orchard of apple trees, irrigating
the land, grafting branches, and finally picking the apples when they are
perfectly ripened.However, if the
town grocery store is already stockpiled with fruit from the six apple
orchards down the street, he will be forced to accept a lower price for
his product, regardless of the countless labor-hours he has spent tending
to the orchard.“[Price] is adjusted...not
by any accurate measure, but by the higgling and bargaining of the market,
according to that sort of rough equality which, though not exact, is sufficient
for carrying on the business of common life.”This
vital distinction between value and
price substantially influences
Smith’s economics.
Smith reviews
the historical evolution of price to illustrate the difference between
value and price.In an undeveloped
society, determining price was relatively simple.If
twice the amount of labor was required to kill a bear than was required
to kill a deer, then one bear was worth two deer.In
a tribe of nomadic Indian warriors, the entire produce of labor belonged
to the laborer himself.The animals
he shot, the baskets he wove, the moccasins he beaded, all belonged to
the laborer to sell or keep as he saw fit.However,
this situation changed in the course of industrial development.In
a society where a handful of proprietors hires the laborers, the produce
of the labor is divided.The
laborer cannot own the entire value of a pair of beaded moccasins if the
employer has provided the beads, leather, knife and thread.“As
soon as stock has accumulated in the hands of particular persons, some
of them will naturally employ it in setting to work industrious people,
whom they will supply with materials and subsistence…In this state of things,
the whole produce of labor does not always belong to the laborer.”Instead,
the produce of labor is resolved into three component parts: wages, profit,
and rent.These compose the three
original sources of revenue.People
labor to earn wages, lease their property to obtain rent,
and invest their stock to yield profit.
The three original
sources of revenue (wages, rent, and profit) are also the three component
parts of the price of a commodity.Smith
applies this idea to define his natural rate, natural price,
and market price.The natural
rate for the wages of a job, the rent of a piece of land, or the profit
from a certain investment is simply their average rate.If
the man who scoops ice cream gets paid $5 an hour at Baskin Robbins and
$7 an hour at Marble Slab Creameries, then the natural rate for his wages
is $6 an hour.The natural price
of a commodity, therefore, is merely a compilation of the natural rates
of the wages, rent, and profit.“When
the price of any commodity is…sufficient to pay the rent of the land, the
wages of the labor, and the profits of the stock employed in raising, preparing,
and bringing it to market, according to their natural rates, the commodity
is then sold for what may be called its natural price.”The
“natural price” is a generic term for the common or ordinary price, the
cost necessary to bring a commodity to market.“The
natural price, or the price of free competition...is the lowest which the
sellers can commonly afford to take, and at the same time continue their
business.”The market price, on the
other hand, is the actual selling price, which may be above, below, or
exactly the same as the natural price.In
a capitalist society, the flux in the supply and demand of any particular
commodity determines market prices.Market
prices for Mickey Mantle rookie cards and Tickle-me-Elmos skyrocket when
excessive demand outstrips the limited supply of the commodity.“Whether
the price is, or is not more, depends upon the demand.”Smith
sees no moral connection between the natural and the market prices,
a tenet of his philosophy that Karl Marx would later denounce.Although
the natural price is a commodity’s “precise worth,” Smith does not argue
that market values should necessarily correlate with natural prices.Natural
and market prices may often align, but no ethical standard checks
the caprices of the marketplace.
Smith’s
position on natural and market prices significantly influences his view
of wage value and the laborer.To
determine the value of wage-labor, Smith again discusses the primitive
“original state of things.”In the
age before the appropriation of land, the accumulation of stock, the advent
of the corporation, or the beginning of Wall Street, the entire produce
of labor belonged to the laborer himself.Calculating
wage value was very simple.The
corn he grew was his corn; the wood he chopped was his wood.Whatever
value could be derived from his labors was completely his own possession,
his natural
wages, as previously described.This
situation changes, however; society does not continue in its primitive
state.When a handful of capitalists
controls the production of plows in a given country, their laborers cannot
own the entire crop of corn.“But
this original state of things, in which the laborer enjoyed the whole produce
of his own labor, could not last beyond the first introduction of the appropriation
of land and the accumulation of stock.”Instead,
the produce of his labor is split into the same three divisions of price:
rent, profit, and wages.With the
produce of labor thus divided, what determines the wages of the laborer?According
to Smith, wages are decided by bartering or contract between the employer
and his laborer.The dictates of
the market and the individual choice of the contracting laborer will determine
his payment.The capitalist must
increase the laborer’s wages if there is a shortage in the labor supply
or decrease them if a surplus occurs.Mutual
agreement and mutual self-interest are the foundation for their relationship.
Central
to the examination of a capitalist society is the very definition of the
word “capital.”According to Smith,
all personal possessions, investments, and hard cash can be divided into
two parts.The part from which a
man expects to derive his income is known as capital.The
other part supplies his immediate consumption: the grocery trips and utility
bills.The capital portion of his
stock is invested in an industry, where it is employed by the labor of
an assembly of people.It is the
labor of the factory workers who wind the thread spools in the textile
machines, the labor of the farm hands who plow the soil that enables the
capitalist to profit from his investment.
Smith
makes an essential separation of the two types of labor: productive and
unproductive.Productive labor yields
a tangible result.“[T]he labor of
the manufacturer fixes and realizes itself in some particular subject or
vendible commodity, which lasts for some time at least after that labor
is past.It is, as it were, a certain
quantity of labor stocked and stored up to be employed, if necessary, upon
some other occasion.”Productive
industries include agriculture, fishing, forestry, mining, construction,
and manufacturing.Unproductive labor,
in contrast, produces no enduring value.In
industries such as trade, finance, service, and government, no material
commodity is generated.Smith does
not dispute the necessity of these occupations, but he does distinguish
them from “productive” enterprise.“Their
service, how honorable, how useful, or how necessary soever, produces nothing
for which an equal quantity of service can afterwards be procured.”The
hairstylistprovides a service when she cuts
hair; the bag boy at Kroger’s provides a service when he carries groceries
to the car.Those same services,
however, cannot be exchanged for a new hairstyle the next month or another
free loading trip to the grocery store parking lot.
The distinction
between productive and unproductive labor is essential to understanding
the accumulation of capital.Industry
does not necessarily entail the accumulation of capital.A
given capitalist could work 60-hour weeks as the CEO for an oil company
and be paid several hundred thousand dollars a year without increasing
his capital worth.According to Smith,
saving is the key to capital accumulation.The
more a person saves, the more he adds to his total capital.“Capitals
are increased by parsimony, and diminished by prodigality and misconduct.”Frugality
makes the capitalist.Money-pinching
not only benefits the capitalist himself, but profits the rest of society
by providing employment and increasing productivity.“By
what a frugal man annually saves, he not only affords maintenance to an
additional number of productive hands…but, like a founder of a public workhouse,
he establishes as it were a perpetual fund for the maintenance of an equal
number for all times to come.”However,
the capitalist must not only save his money; he must invest the
capital in productive enterprise.“Whatever
a person saves from his revenue he adds to his capital, and either employs
it himself in maintaining productive hands, or enables some other person
to do so.”Rather than devouring
his money in unproductive expenditure, the capitalist scrupulously saves
his revenue as his capital accumulates in productive enterprise.
In the same
vein, Smith reproaches the man who distorts this system by dissipating
his inheritance.“By not confining
his expense within his income, [the prodigal] encroaches upon his capital.Like
him who perverts the revenues of some pious foundation to profane purposes,
he pays the wages of idleness with those funds which the frugality of his
forefathers had, as it were, consecrated to the maintenance of industry.”The
dissolute, spendthrift child becomes not only a disgrace to his family,
but a threat to society, as the reckless turbulence of his lifestyle compromises
productivity.“The conduct of every
prodigal, by feeding the idle with the bread of the industrious, tends
not only to beggar himself, but to impoverish his country.”The
spendthrift prodigal is the supreme enemy of the state.
Smith portrays
the entrepreneur as a virtuous, thrifty, independent spirit.Perseverance
transforms the penniless, industrious dreamer into a manufacturing giant,
a public benefactor.Therefore,
the risk that the entrepreneur takes by starting a business and
gambling on the future entitles him to a financial recompense.Smith
affirms this crucial point: “Something must be given for the profits of
the undertaker of the work who hazards his stock in this adventure…He could
have no interest to employ [the laborers], unless he expected from the
sale of their work something more.”The
entrepreneur has the rightto
profit from his investments.Ultimately,
the privileges of ownership are determined by capital investment.
Wealth of
Nations also extols the national
benefits of capitalism.The growth
of commercial trade and manufacturing provides a large market for raw goods,
thus encouraging cultivation of a nation’s natural resources.The
multitudes of entrepreneurial small-businessmen and capitalists introduce
a measure of freedom to the people.Instead
of living in “servile dependency upon [his] superiors,” the influence of
the individual citizen increases with his prosperity.Order
and good government are introduced with the progress of industry and civilization.Smith
highly praises the timesaving capitalist mechanism of division of labor.The
division of labor greatly multiplies productivity by honing the dexterity
of the individual worker in his particular field.It
facilitates the invention of huge factory machines which enable one man
to do the work of many.“The commerce
and manufacture of cities…have been the cause and occasion of the improvement
and cultivation of the country.”
The principles
of individual freedom that Smith advocates in Wealth of Nations are
crystallized in ideas regarding the “invisible hand.”Even
selfish pursuit of personal interest, he claims, will aid society.Therefore,
no regulation of commerce can increase the quantity of industry, because
personal advantage already directs individuals to benefit the public welfare.“[B]y
directing that industry in such a manner as its produce may be of the greaquiz
value, he intends only his own gain, and he is in this, as in many other
cases, led by an invisible hand to promote an end which was no part of
his intention.”The invisible hand,
rather than a specific, tangible precept, is the outcome of common individual
goals.When prices are too high,
the average consumer will buy less, reducing demand for the commodity and
eventually lowering prices.This
market equilibrium is maintained by isolated, individual choices that greatly
enrich the economy.Trade, instead
of being dubbed “favorable” or “unfavorable” based on the flux of imported
gold, becomes a win/win situation, each party exchanging for a commodity
they more highly value.Each individual
or business pursues their own interest, and consumers benefit from the
competition.Individual freedom
of choice promotes general prosperity.
Adam Smith
extends the concept of natural liberty to develop his principles of limited
government.Smith carefully outlines
the necessary duties of a government: to defend the country against foreign
invasion, to protect individuals from societal oppression, and to maintain
public works and institutions such as highways, bridges, and canals.Smith
grants no power to the government beyond these three areas.“The
sovereign is completely discharged from…the duty of superintending the
industry of private people, and of directing it towards the employments
most suitable to the interest of the society.”The
government has neither the right to “protect” domestic industry or to make
decisions for the individual citizen.This
principle is reflected in the trade legislation of a capitalist country.“It
is the maxim of every prudent master of a family, never to attempt to make
at home what it will cost him more to make than to buy...What is prudence
in the conduct of every private family, can scarce be folly in that of
a great kingdom. If a foreign country can supply us with a commodity cheaper
than we ourselves can make it, better buy it of them with some part of
the produce of our own industry, employed in a way in which we have some
advantage.”Instead of coddling domestic
business by sheltering it from competition, Smith’s government would allow
the people freely engage in foreign commerce and attempt to profit from
the outcome.
In Smith’s
capitalist society, the individual is free to profit from risk, suffer
loss from a bad investment, and accumulate capital through frugal living.He
possesses the right to pay or not pay the market price, to sign or not
sign a wage contract for his labor.The
mystic invisible hand constantly guides him, rerouting individual advantage
to promote the general welfare of society.Smith’s
economic principles are reflected in many passages of Scripture.The
picture of the industrious, virtuous entrepreneur appears in Proverbs 6:6-8:“Go
to the ant, you sluggard; consider its ways and be wise.It
has no commander, no overseer or ruler, yet it stores its provision in
summer and gathers its food at harvest.”The
parable of the talents in Matthew chapter twenty-five illustrates a biblical
concept of profit that resembles Smith’s belief in the rewards of diligent
investment.“Well done, good and
faithful servant!You have been faithful
with a few things; I will put you in charge of many things.Come
and share your master’s happiness!” (Matt. 25:23)However,
the fundamental principle of Smith-era capitalism is that every man should
be “left free” to pursue his own interest while responding to the fluctuating
free market.Government is limited.Therefore,
the principles of rugged individualism are a path to liberty and order
in society.
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In the throes
of an Industrial Revolution fueled by the writings of Adam Smith, another
philosopher embarked upon a career as a radical economic analyst.Karl
Marx was born to a Jewish family living in Germany in 1818, nearly forty
years after Adam Smith died.When
Marx’s father, a prosperous merchant, strategically joined a Lutheran church
in order to stimulate his business, the faith of idealistic young Marx
was crushed.Forever disillusioned
with religion, Marx’s search for meaning led him to the belief that economic
interests are what shape history.The
Communist doctrines he developed had a tremendous impact on the 20th
century.At one point in time, over
two billion people were living behind the iron curtain and under Communist
regimes.Marxian economics has captivated
the minds, infiltrated the cultures, and demanded the allegiance of people
all across the globe.Karl Marx’s
revolutionary work, Das Kapital (or translated, Capital)
outlines his economic suppositions and attacks the basic premises of free-market
society.
Marx begins
Volume One of Capital with a discussion of the value of market commodities.A
commodity is an external object which satisfies a human need (i.e. a blender,
a hatchet, or a ballpoint pen).Marx
defines two measures of commodity value: use-value and exchange-value.The
use-value of an object is determined by its utility to a particular person.This
value is realized only in consumption, or use of the commodity:
when the blender whips up a chocolate milkshake, the hatchet chops the
firewood, and the ballpoint pen scribbles down a memo on a Post-it note.Exchange-value,
on the other hand, is the proportion with which use-values are traded.The
exchange-value constantly varies with time and place, because it depends
upon the specific transaction.In
order for the concept of exchange-value to feasibly exist, Marx asserts,
there must be a “common element” in every commodity.If
a bar of iron is exchanged for a cup of corn, some equivalent component
must dwell in each commodity.“[A]
common element of identical magnitude exists in two different things…Both
are therefore equal to a third thing, which in itself is neither the one
nor the other.Each of them, so far
as it is exchange-value, must therefore be reducible to this third thing.”The
common element which determines the value of a commodity is the human
labor involved in the production.Hence,
the Marxian labor-theory of value was spawned.
Although the
concept of the labor-theory of value may seem relatively innocent, it has
profound economic repercussions.Marx
emphasizes the distinction between use-value and exchange-value.Use-values
are measured by quality; a high-quality product is more useful to the owner.Exchange-values,
on the other hand, are distinguished only by quantity.If
all quality traits and remnants of use-value are stripped away, a single
property remains: the fact that all commodities are products of labor.The
commodity becomes an abstract object, merely a unit of expended labor.Labor
itself is deprived of any specific, unique attribute.The
quantity of human labor involved production, whether it be laying sheet
rock or manipulating computer software, that quantity of labor determines
value- regardless of mental activity, innovation, or popular demand.“Nor
is [the commodity] any longer the product of the labor of the joiner, the
mason or the spinner, or of any other particular kind of productive labor…[T]he
different concrete forms of labor…can no longer be distinguished, but are
all together reduced to the same kind of labor, human labor in the abstract.”The
commodity becomes merely a residue, a “congealed quantit[y] of…human labor-power
expended without regard to the form of its expenditure.”The
final result of Marx’s human labor-theory of value is that all human labor
becomes equal, regardless of the type, field, form, or quality of the labor.Productivity
becomes an attribute, not an assessment of achievement.Value
is dictated by an invariable formula where the same amount of worth is
always created, despite fluctuations in labor efficiency.A
brand-new shirt with the price tags still dangling from the collar will
have precisely the same value when it has rips, speckles of paint and bleach
stains months later, because the same amount of human labor was invested
in its production.The essence of
value becomes an empty measurement.
Marx applies
his theory of value to the industrialized workplace with the concept of
surplus-value.According to Marx,
the total number of hours in a working day is divided into two parts: necessary
and surplus labor time.Necessary
labor time is determined by the amount of time a laborer must work for
his own subsistence.This amount
varies in different societies, based upon a laborer’s physical stamina,
mental capacity, and the public living standards.However,
in a capitalist nation, the working day can never be reduced to a bare
minimum of necessary labor time.Capitalist
society assumes that the owners of the means of production are entitled
to prosper from the labor of their employees.Capitalist
entrepreneurs must profit from an excess or “surplus” portion of labor
time.Marx declares that the laborer
should demand the full worth of his labor.According
to the Marxian theory of value, however, all value is determined by the
quantity of labor invested.Therefore,
the laborer should rightfully be paid the entire amount of worth
he generates, not merely the portion agreed upon in an employer/employee
contract.
Thus the clash
over the amount of surplus labor-time in the working day becomes the crux
of the working class struggle.While
Smith recognized that the capitalist has a right to profit from
his investments in an industrialized society, Marx claims that any attempt
to extend surplus-labor time defrauds the worker.By
increasing the portion of the working day devoted to capitalist profit,
the laborer is deprived of greater percentages of his rightful property.Even
the objective of increasing labor productivity stems from a depraved capitalist
motive, because increasing productivity extends surplus-labor time and
enriches the capitalist through continual exploitation.“The
objective of the development of the productivity of labor…is the shortening
of that part of the working day in which the worker must work for himself,
and the lengthening, thereby, of the other part of the day, in which he
is free to work for nothing for the capitalist.”This
secret agenda embodies the nature of capital itself.“Capital
therefore has an immanent drive, and a constant tendency, towards increasing
the productivity of labor, in order to cheapen commodities and, by cheapening
commodities, to cheapen the worker himself.”
To Marx, any
accumulation of capital results from a concept he dubs as “unpaid labor.”Because
of the division of the working day into surplus and necessary labor time,
the worker is paid for one day’s labor while the capitalist utilizes the
worth of multiple days.The portion
of the labor which benefits solely the capitalist is called “unpaid labor,”
because the worker is essentially toiling for free.In
short, unpaid labor is the stolen surplus-value confiscated from the worker,
who is paid only a small percentage of the value of his own toil.In
a capitalist system of production, a given capitalist invests his capital
in tools, factory machines, or other means of production and provides the
laborer with employment.If the
capitalist is to continue providing that employment, he must be allotted
some profit or return from his venture.In
order for the capitalist to benefit, however, he must confiscate a portion
of the produce in the form of unpaid labor.The
very definition of capital accumulation, according to Marx, is “the employment
of surplus-value as capital.”The
attempt to financially profit from a business venture becomes a corrupt,
swindling endeavor.Worker exploitation
is inherent in the capitalist system itself.
Marx
also depicts the development of capitalist production as the evolution
of a brutal, criminal system.In
the beginning, Marx says, there were two sorts of people: the “diligent,
intelligent, frugal elite,” and the lazy, ignorant spendthrifts.All
capital eventually accumulated in the hands of the industrious few, and
the majority was left with no commodity to market but themselves.The
wealthy minority, dubbed the infamous Marxian “bourgeoisie,” has long since
ceased to work, and have contented themselves with profiting from the labor
of the others.The very concept of
private property is fraught with degenerate capitalist connotations.Private
property is purchased with the enslavement of the working class, the proletariats.From
this original division of the entire human race into the bourgeoisie and
the proletariat, capitalism spreads to infect the nations, first through
colonization, and then through manufacturing and the division of labor.
Marx describes how European conquerors ceaselessly explored new nations
and overthrew neighboring governments, leaving devastated remnants of vanquished
peoples in their wake.He details
cruelty to American Indian nations and the atrocities of the African slave
trade, attributing all the barbarities of the colonization of the Americas
to capitalism itself.“The discovery
of gold and silver in America, the extirpation, enslavement and entombment
in mines of the indigenous population of that continent, the beginnings
of the conquest and plunder of India, and the conversion of Africa into
a preserve for the commercial hunting of blackskins, are all things which
characterize the dawn of the era of capitalist production.”Force,
oppression, and savagery are the roots of capitalist society.Shame
and conscience are numbed by the eternal capitalist hunger for more property,
more power, more capital.In one
of his most candid moments, Marx states: “Capital comes [into the world]
dripping from head to toe, from every pore, with blood and dirt.”
The second
way the capitalist system is perpetuated in society is through the development
of manufacturing and the division of labor.Marx
maintains that the division of labor begins with the dissection of an industry
into disconnected operations which become isolated, individual occupations.“This
accidental division…gradually ossifies into a systematic division of labor.”Eventually
these laborers become merely supplementary, incapable of individually producing
an entire product.“Manufacture…not
only subjects the previously independent worker to the discipline and command
of capital, but creates in addition a hierarchical structure amongst the
workers themselves…the individual himself is divided up, and transformed
into the automatic motor of a detail operation.”According
to Marx, the worker no longer belongs to himself, but to the ruthless,
crazed, salivating animal of a capitalist system which benefits the capitalist
at the worker’s expense.“The social
productive power…of capital…is enriched through the impoverishment of the
worker in individual productive power.”Rather
than making the free choice to enter a contract relationship, the employee
is enslaved by his employer.Unable
to provide his own maintenance or hack away his capitalist shackles, the
worker remains a feeble, impotent appendage of the capitalist system.
The Marxian
distaste for the Industrial Revolution reveals itself with even greater
clarity.Machinery, instead of being
a helpful time-saver, is only another means to lengthen the workday, because
expensive equipment cannot remain idle.The
urban population explodes.Women
and children are sucked into the vile system, paid only subsistence wages
for their hours of labor.Snatched
from their peaceful, pastoral wheatfields where chickens squabble in the
farmyard and an occasional cow lazily chews her cud, these workers are
confined in dark, smoky rooms in front of monstrous, deafening factory
machines.They work from six in the
morning until eight at night and walk home over muddied cobblestone roads
to a tiny landing flat still within the shadow of the giant smokestacks.“[The]
final form [of manufacture] is always the same- a productive mechanism
whose organs are human beings.”
Marx’s portrait
of the capitalist is harsh.He defines
a man as a capitalist if and only if his money constantly functions as
capital.“It is only in so far as
the appropriation of ever more wealth…is the sole driving force behind
his operations that he functions as a capitalist, i.e., as capital personified
and endowed with consciousness and a will.”The
capitalist therefore exists solely to perpetuate surplus-value and increase
his own profit.Healthy entrepreneurial
motives are unknown.He defrauds
his workers of their rightful wages, confines them in assembly lines in
crowded factories, and suppresses all conscience in the vicious cycle of
the marketplace.According to Marx,
material gain is the enlivening passion, the focal objective, the very
core of his entire being.“His soul
is the soul of capital.But capital
has one sole driving force, the drive to valorize itself…Capital is dead
labor which, vampire-like, lives only by sucking living labor, and lives
the more, the more labor it sucks.”Thus
the ordinary American businessman, the embodiment of the American dream,
is reduced to a mere parasite, the human incarnation of capital which lives
by draining the lifeblood of others.
Marx believes
that in time capitalism will fall.He
predicts that the enslaved mass of working citizens will rise up against
the iron rule, smash the chains of private property, eliminate surplus-labor,
and return the value of their labor to their own wallets.Hence
the infamous cry: “Workers of the world, unite!”1Revolt
against the despots; overthrow the bourgeoisie; unite as proletariats against
the misery, the injustice, the tyranny of capitalism.
~ ~ ~
Adam
Smith and Karl Marx were both significantly influenced by earlier philosophers.Understanding
the affect of G.W.F. Hegel on Karl Marx and the impact of Immanuel Kant
on Adam Smith provides insight into their respective spiritual views.How
do these philosophic ancestors transform Smith’s and Marx’s perspective
on the church, religion, and morality?To
which of these economic philosophies should a Christian adhere?Are
the capitalist, free-market policies of Adam Smith or the revolutionary
proposals of Karl Marx more conducive to Christian society and values?When
examined, the moral deficiencies of both men are exposed.
In
his writings about the progress of capitalism, Marx utilizes many of the
ideas of philosopher G.W.F. Hegel and the Hegelian dialectic process.Hegel
first advocated the notion that all philosophies and events in the history
of the world moved in a coherent, recurring process known as “thesis, antithesis,
synthesis.”The first phase, the
thesis, contains the original, foundational ideas which are soon countered
by an opposing theory known as the “antithesis.”Finally,
the “synthesis,” the last phase, mingles and blends the thesis and antithesis
into a harmonious compound.The synthesis
then becomes a new thesis and the process begins again.Marx
adopts this theory of progression, known as the dialectic process, in order
to illustrate the evolution of the classes from the feudal Dark Ages to
the Industrial Revolution to utopic Communist society.In
distinctly Hegelian terminology, Marx describes history in terms of economic
transformation.As philosopher and
scholar Dr. R.C. Sproul explains, “[Marx believed that] history is driven
not by the conflict of spiritual concepts or logical ideas, but by real,
concrete, material concerns.”2 For
Marx, the definition of human existence is pivotally related to work.He
identifies his own being in terms of labor.A
rural economy in which the subsistence farmer enjoys the fruit of his own
labor forms the thesis of this cycle.With
the transition to an industrialized economy, where people begin to work
for wages, the antithesis is posed.In
the antithetical phase, the market drives prices based on the principle
of scarcity.Marx violently objects
to this view of economic value.Instead,
he argues that the value of commodities be determined by the amount of
human labor invested in their production.Therefore,
the laborer has a right to the value he creates, a title to the
produce of his labor. The antithetical stage of this cycle violates this
privilege by allowing the capitalist to profit from his investments, confiscating
the value created by the laborers.According
to Marx, the antithesis is the reinvention of slavery imposed by capitalist
factory owners.
Marx
identifies the existence of the two initial phases of the cycle, but the
synthesis has not yet occurred.He
foresees an overthrow of the current system by the proletariat and the
common ownership of all property.Enthralled
with the specter of this utopia, he proclaims the Communist mantra:“From
each according to his ability, to each according to his need.”And
yet, history refuses to comply with this dialectic process.Class
warfare on a revolutionary scale does not occur.Here
is the crucial difference between Hegel and Marx.Hegel
believes that the dialectic process was a natural evolution; Marx declares
that change requires assistance.Marx
attempts to stir the masses, passionately denouncing their oppressors.He
believes that the new world order must be ushered into existence with bloody
revolution.Ultimately, according
to Marx, capitalists are the root of all economic evil; the elimination
of capitalism is the commencement of utopia.
The
worldview of Adam Smith, on the other hand, is most visibly influenced
by seventeenth-century philosopher Immanuel Kant.By
rejecting metaphysics, Kant essentially founds modern secular thought.He
formulates the “phenomenal/noumenal division” which denies any truth beyond
the physical realm and confined man to his own five-sense experience.Man’s
existence is determined by his mind, or, in Kantian terminology, his intuition.Smith
echoes these ideas by urging man to be directed by his own judgement and
experience, to “follow self-interest” in the true path to happiness.Any
divine law, reference to God or Scripture, or appeal to divine authority
is absent from Smith’s writings.He
identifies no concept of the human soul, no theological perspective to
his economics.In fact, Smith’s entire
philosophy is defined by material acquisition and productivity.The
implied result is that material society provides all blessings; the purpose
of life is to accumulate wealth.Adam
Smith marks the coming of the “material man,” whose only significance lies
in productive exercise of the economy.
Unlike
Marx, Smith has no vision of the “ideal” state.He
analyzes reality by observing the world around him, but he makes no plea
for a moral imperative.Smith is
interested in the phenomena, rather than finding the noumenal realities
that shape the phenomena.He
does make many astute observations about human character and correctly
identifies successful free-market principles.But
devoid of a Biblical worldview, his philosophy centers on the material,
rather than the divine.A single
predominant maxim remains: to follow self-interest on the yellow brick
road to blissful prosperity.
The
conflict of the Smith and Marxian philosophies with a Christian worldview
is eventually crystallized in the original question of economic value.For
Smith, value is subjective, determined by popular consensus and the mystic
dictum of the invisible hand.Each
individual price tag is figured by the flux of supply and demand.Economic
decisions are amoral; the marketplace reigns supreme.Smith
attempts to construct a society from which economic moral standards are
completely absent.His polite, casually
descriptive writing style ultimately does prescribe economic thought
by approaching those relationships without reference to any principle except
that of self-interest.The influence
of Immanuel Kant introduces the phenomenal/noumenal division into Smith’s
philosophy, thus erasing moral standards from the human experience.Only
an empty self-absorption remains:Be
true to yourself.Follow your heart.While
his principles of limited government and individual freedom do preserve
biblical principle, Smith espouses no ethical code higher than the economic
actions themselves.As contemporary
author Gary DeMar states in God and Government, “Christians…must
be aware of those who want to create a “free” market without the unchanging
economic laws of God that really govern our freedom.Any
economic system that omits God, not only as a factor in production and
economic prosperity, but also as the key to economics…is a false
system.”3Smith
confines man to a gilded cage.Blindly
towed by the caprice of self-interest, material acquisition ultimately
defines the purpose of existence.
Marx,
on the other hand, does espouse a moral critique on the subject of value.Value,
according to him, is objectively determined by the investment of human
labor.The sheer amount of
exertion, regardless of its quality, type, intensity, or productivity,
establishes a commodity’s value.The
product of this abstract, identical human labor is solely the property
of the laborer himself.Any attempt
to wrest this value from him is tantamount to crime.According
to Marx, societal ills are a direct result of capitalist interference,
a concept which contradicts the biblical principle of man’s depravity.The
Bible states that “All have sinned and fallen short of the glory of God”
(Rom. 3:23)“As it is written: ‘There
is no one righteous, not even one; there is no one who understands, no
one who seeks God.”(Rom. 3:10-12)This
corruption is plainly manifested in every individual.Marx
spends so much of his time whining about the fate of the working class
and wallowing in shallow self-pity that he fails to recognize this cardinal
truth: before the throne of God, employer and employee are equally condemned.The
attempt to pin the gross sum of global evils upon a single class of people
is to deny the inherent sin nature of all men, employer and employee alike.
Given
the conflicting worldviews of these philosophers, what economic position
should the Christian advocate?The
Bible reveals a God who is concerned about every aspect of our existence,
including the economic ordering of society.Biblical
principles of money management are expressed many times throughout the
Old and New quizaments.Detailed
instructions for tithing and sacrifice are included in the Pentateuch.Private
ownership is both endorsed and assumed as generosity is frequently commended
(Psalms 37:21) and irresponsibility condemned (Proverbs 6:1-5) in Scripture.
Perhaps
the most powerful and applicable Biblical principle of economics, however,
is the concept of ownership versus stewardship.In
chapter 19 of the gospel of Luke, Jesus tells the parable of a certain
king’s ten servants, who are each given a sum of money to care for in the
king’s absence.When the king returned,
he praises the servant who had wisely invested his money.“Well
done, good servant; because you were faithful in a very little, have authority
over ten cities.”(Luke 19:17, NKJV)The
servant who had poorly invested the king’s money, however, by hiding it
away, is sharply rebuked.The good
steward is applauded, the bad steward censured and disciplined.Obviously,
we should recognize the significance of the money God has entrusted to
us and make wise choices about how to employ it.On
the other hand, however, the Bible warns over and over again of the dangers
of valuing material wealth above God.“No
servant can serve two masters.Either
he will hate the one and love the other, or he will be devoted to the one
and despise the other.You cannot
serve both God and Money.”(Luke
16:31)“’Watch out!Be
on your guard against all kinds of greed; a man’s life does not consist
in the abundance of his possessions.”(Luke
12:15b)“For the love of money is
a root of all kinds of evil.” (1 Tim 6:10a)
In
contrast, the Christian should recognize that God ultimately owns
all of our possessions, our stocks, and our cash: not people as individuals,
and not the state.As Psalm 24:1b
says, “The earth is the Lord’s and everything in it…”It
is the fact that He has blessed us with material wealth that determines
how we should utilize our economic blessings in daily choices.Therefore,
the decision to buy a house or appliance or used car becomes more than
an evaluation of market price or an assessment of the human labor involved
in its production.The life-purpose
of each born-again Christian should influence each choice he makes, from
the most vital decision to the most insignificant daily purchase.As
Galatians 2:20 says, “I have been crucified with Christ, and I no longer
live, but Christ lives in me.The
life I live in the body, I live by faith in the Son of God, who loved me
and gave himself for me.”And again,
in 1 Corinthians 10:31, “So whether you eat or drink or whatever you do,
do it all for the glory of God.”The
true standard for economics is not the value of labor or autonomous personal
freedom.As Gary DeMar states, “The
Bible is the Christian’s standard, not the independent voice of
the individual or the collective voice of the majority.”Neither
Marx’s sovereign state, which determines a “fair” labor value for the worker,
nor Smith’s sovereign individual, operating in a free market, can lead
to the source of true freedom, found only in a relationship with Sovereign
God.
the
End
1
‘The Communist Manifesto,’ by Frederich Engels and Karl Marx
2
‘Ideas Have Consequences: An Overview of the Bible with R.C. Sproul,’ Copyright
1998 by Ligonier Ministries.
3‘God
and Government: Issues in Biblical Perspective,’ by Gary DeMar
Copyright
1989 by Primer Resources; Volume 2