Don’t cut my Economic Pie: free market & private property

Samuel Gregg argues that Christians would do well to think a little more about economics and bring their theological resources to the public economic debates:

“Should Christians, for example, simply accept that governments may use force to redistribute wealth without continually subjecting this proposition – in each and every instance – to rigorous ethical appraisal?” (p33)

“The very phrase the market makes some Christians nervous. Though often portrayed in very impersonal terms, the market is no more than the ongoing interaction of freely chosen material exchanges between human beings. Obviously, market transactions do not always facilitate just results. But before Christians dismiss it as a decidedly anti-human phenomenon, it would be useful to gain a greater appreciation of its complexity. Upon doing so, they may well come to the conclusion that, to paraphrase Winston Churchill, the market economy is the worst of all economic systems – except for all the rest.” (p34)

“In philosophical terms, the case for the market economy draws upon a number of intellectual sources for support. These include:

• the Late-Scholastics (mainly Jesuits and Dominicans) associated with the Salamanca School of the late 15^th and mid-17tf CC;
• British classical economists such as Adam Smith; and
• the ordo liberal school associated with the University of Freiburgh, especially convinced Christians such as the Protestant Wilhelm Ropke and the Catholic Walter Euken, who consciously integrated the natural-law tradition into their proposition.” (p37f)

“Nations that have developed the institution of private property have invariably been rich in material wealth, but this wealth extends also to the sciences, art, and literature. Such flourishing occurs, in part, because private property guarantees that people can rest secure, knowing that the fruits of their creative work are recognised as belonging to them. To this extent, private property helps to promote self-reliance and a certain degree of personal autonomy.” (p38)

Property need not be theft:

“private property does not in itself create a “zero-sum” situation. If one person owns property, it does not mean that another is worse off. In fact, many people are potentially better off when someone acquires property because the acquisition often requires productive action that is morally and materially beneficial to others…. Moreover, the prospect of private ownership provides people with the incentive to transform “useless” resources into productive capital, and then exchange that property in order to satisfy other unmet needs.” (p39)

“Inequality of wealth is not necessarily unfair. Christianity has always affirmed that many factors must be taken into account when thinking about what constitutes justice in the material realm… such as need, merit, willingness to take risks, the function performed by a person, and the contribution made by a person.” (p39)

“… private property is actually a civilizing force.” (p39). It encourages free exchange without use of force, respecting of mutual rights etc.

We must count the costs of interference in the market for the redistribution of wealth:

“Economics tells us that changing the distribution of the fruits of economic activity is a costly business…. For reasons that economists can explain with some confidence, attempts by governments to alter the sizes of the individual slices of the economic pie tend to reduce the size of the pie itself, or at least prevent it from expanding as quickly as it might have otherwise.” (p50)

“… economic growth is the surest way to improve the material fortunes of those at the bottom end of the income and wealth distribution scheme. The best way to achieve some increase in the size of the smallest slices is to make the whole pie bigger. A rising (economic) tide lifts all boats.” (p50)

We must choose between equal-ness / sameness and efficiency / prosperity.

"… we have a substantial body of empirical evidence that favours the free market as a more efficient means of creating material wealth than any other economic system yet devised. Contemporary economists’ support for the free market is based more upon their acceptance of this evidence than upon ideological prejudice.” (p51)

“The market will create wealth with equal ease through the prostitution of women and children as it will through the design and manufacture of life-saving medical equipment. For this reason, many economists have acknowledged the need to place the market economy within a framework of law and upon a particular moral and cultural foundation.” (p51)