Greed Is Not Good for Capitalism

Photo by Michael Longmire on Unsplash

Article originally posted here by The Gospel Coalition

by Greg Forster

Last week John Starke wrote for TGC about “The Myth of the Protestant Work Ethic.” I’m grateful to Starke for exposing the egregious theological errors in Max Weber’s theory of capitalism’s origins. But Weber’s theory of what happened next, the “cultural contradictions of capitalism” thesis, has done just as much damage. Christians ought to understand how Weber’s view of capitalism undermines the moral foundations of a humane and genuinely productive economy, promoting materialism, greed, faith/work dualism, debt, and crony capitalism.

Weber’s argument goes something like this: Teaching people to view productive work as a calling from God somehow (Weber is ambiguous about how) caused people to think their calling from God was to accumulate wealth for its own sake. Quickly, capitalism abandoned its Protestant foundations and became simply about the profit motive. This turned out to be an even more successful basis for the economic system, because it drove businesses to ruthlessly rationalize their operations to maximize profit. Thus we now live in a dehumanizing “iron cage” where every aspect of our daily work, down to the tiniest details, is controlled by the profit imperative.

I understand why many people find this account plausible. Recent events have made it clear that the spirit of greed predominates in some of our most prominent companies. In one part of the economy, the financial sector, greed seems to have spread beyond individual companies to become a systemic problem. And the iron cage resonates with many people unable to see how jobs on factory lines could be humanizing.

But does our greed problem really come from where Weber says it does? And is there really an iron cage?

Why Accumulate Wealth?

Weber’s reading of economic history is as selective, tone-deaf and sometimes outright fabricated as his reading of theological history. Weber scholars Peter Baehr and Gordon Wells note that from its first publication to the present day, historians and economists have almost unanimously rejected Weber’s Protestant Ethic. When I first picked it up, I was shocked at its cavalier treatment of the historical evidence.

Capitalism has not flourished most where there was a spirit of greed. It has flourished most where there was a spirit of stewardship—-a sense that we are responsible to make the world a better place. That—-not greed—-is what produces a capitalism that thrives.

The problem with Weber’s history begins at the beginning. He sees capitalism exploding into existence after the Reformation. In fact, the real historical scholarship shows it developed much earlier, and gradually.

As early capitalism grew, great theologians like Albertus Magnus and Thomas Aquinas wrestled with its implications. The theology they had inherited, influenced by Greco-Roman philosophies that looked down on work and wealth, said these practices should be morally corrupting and economically counterproductive. Yet the reverse was happening! People were serving each other, and the community was better off. Albertus and Thomas expressed reservations on some points, but on the whole they ended up embracing early capitalism. It facilitated good stewardship and human flourishing.

The Reformation did dramatically accelerate capitalism, in three ways. It permanently established fruitful human work and stewardship of creation at the forefront of Christian social teaching, thanks to the recovery of vocation. It demolished barriers to individual enterprise, empowering entrepreneurs. And it spread the spirit of stewardship beyond a few isolated cultural pockets, carrying it to all of Europe.

Yet even during the period Weber examines, he distorts the record. Weber makes a great deal out of one passage from Benjamin Franklin on the duty to accumulate wealth. Franklin wasn’t the only person talking about economics in early America; against that I would set this, from John Adams: “I must study politics and war that my sons may have liberty to study mathematics and philosophy. My sons ought to study mathematics and philosophy, geography, natural history, naval architecture, navigation, commerce and agriculture, in order to give their children a right to study painting, poetry, music, architecture, statuary, tapestry and porcelain.” Does that sound like the accumulation of wealth for its own sake?

Killing Business

Real-world familiarity with the way business and economics work will quickly demolish any idea that they thrive on greed. Nothing kills a business more reliably than a myopic focus on maximizing the quarterly earnings report. In the business world, this is old news.

True, in the short term you can get ahead by exploiting people and extracting their wealth. But in the long run, businesses only succeed in the market by maintaining a strong moral culture that humanizes work, builds trust with customers, and orients workers toward creating value and serving the customer with excellence. Large corporations can use crony capitalism and collude with politicians to stave off these market forces for a while, but not forever (as Wall Street, General Motors, and others are now learning). Likewise, a society can borrow trillions from its grandchildren to stave off the economic consequences of a materialistic economy, but not forever (as America is now learning).

This observation also refutes the iron cage. Weber wrote at a time when the latest fad among American businesses was the cockamamie idea that “scientific management” could identify the “one best way” to do every job, down to the tiniest details. But that whole movement collapsed. In the long run, the universe punishes hubristic rationalism and rewards humane social cooperation.

Talk to line workers in companies that are prospering long-term. They typically don’t think their work is dehumanizing. They’re right.

Christians know why humane approaches to work are more economically productive. God’s work creates things from nothing, and human work creates value (though not from nothing) because we’re made in his image. People were made to do fruitful work, cultivating more and more blessings for one another out of the creation order.

Vice and Virtue

At bottom, Weber’s core idea is that vice creates wealth more effectively than virtue. That’s not only false to history and contemporary experience; it’s also theologically unstainable. Weber could believe this view because it aligned with his Gnostic fact/value dualism. In that framework, it made sense that workers doing the same jobs would be identical and interchangeable for economic purposes (facts) regardless of their morals and motivations (values). Christ smashes this dualism. Economic growth is a moral and spiritual enterprise.

Why, then, do we see all this moral decay in our economy? Capitalism creates wealth, and there’s no denying wealth creates special temptations. You don’t have to accept Weber’s economic charlatanry to see that!

There are other factors. In a society with religious freedom, it is especially challenging to maintain a robust public moral culture. The academic discipline of economics has adopted a materialistic anthropology and utilitarian ethical assumptions. Our political system has adopted many policies and practices that incentivize materialism, exploitation, and crony capitalism.

But Weber’s influence itself is one of the most important causes. For a century, America’s cultural leaders have promoted the Weberian narrative that capitalism thrives on the profit motive. And as economist Arthur Brooks has recently written, societies tend to become what they describe themselves as being. If a society’s cultural leaders say the economy thrives on greed, people will internalize that expectation and act accordingly. Over time you will actually get an economy that runs (but not “thrives”) on greed.

Even some well-meaning people who promote the cultural contradictions narrative in order to warn us against greed are, I regret to say, part of the problem. Typically, they say something like: “Businesses thrive on the profit motive, so we need to do everything we can in cultural institutions outside the economy to counteract greed.” This signals to business leaders that they can go on ruthlessly maximizing profit with a clear conscience; they’re just doing their job.

The struggle to humanize capitalism is self-defeating if it assumes capitalism thrives on the profit motive. It can only succeed if it’s grounded in a moral affirmation of capitalism’s historic foundations in stewardship and value-creating work.