Defending the Free Market: The Moral Case for a Free Economy
Reviewed by Tom Lehman, Economics, Indiana Wesleyan University
Imagine a situation in which someone you know to be innocent is wrongly accused of crimes she did not commit, and the prosecution in the case is the actual perpetrator of those crimes. However, the accused innocent is not particularly appealing, is not always cooperative, is easily misunderstood, and on her own, seemingly does nothing to help her cause. Could you still defend this person? In his newest book, Defending the Free Market: The Moral Case for a Free Economy, Robert Sirico puts himself in just this position, defending free-market capitalism from both the outspoken critics of markets and against government interventions intended to restrain or redirect peaceful market relationships, relationships Sirico argues are supported by Judeo-Christian morality and social ethics.
Aligning the pragmatic efficacy of free markets to Christian virtue is the primary goal of Sirico’s newest book, and he undertakes this task with passion and wit in the face of what he believes are growing attacks on the free market, especially from within the Christian church. Sirico’s efforts are directed toward turning the tide away from socialist or “crony capitalist” answers to current economic problems, and toward true market capitalist solu-tions grounded, as he sees it, in traditional Christian principles.
Sirico, a Catholic priest by training, is a longtime apologist for market capitalism. He is co-founder and president of the Acton Institute, a think tank dedicated to connect-ing market-based economic policy with a Judeo-Christian vision of the free and virtuous society. His newest offering updates and adds considerably to similar tomes in this genre, 1 addressing especially economic policy debates emerging during and after the Great Recession, 2007-2009.2
Sirico has at least three goals in this book. First, he wishes to establish his own reputation as a former socialist and anti-market activist who slowly came to understand and eventually to champion the often-counterintuitive arguments in favor of market capitalism. With frequent vignettes from his childhood and young adult life, Sirico shares his own spiritual and intellectual odyssey with the skeptical reader, empathizing with the recurrent difficulty many non-economists have in accepting the argument that market verdicts, while imperfect, on balance produce socially beneficial outcomes in spite of the absence of “good intentions.” Second, the author warns the reader of the dangers inherent in current anti-market policy trends that he believes threaten the prosperity of a free society and, more importantly for Sirico, threaten the moral dignity of man in the exercise of his free will. Finally, Sirico hopes to present a coherent, economically logical and morally persuasive argument in defense of a free economy to popular audiences of Christian faith who may be skeptical of capitalism on ethical grounds. For such readers, what passes for “American Capitalism” in common parlance mistakenly becomes synonymous with a “free market.” In reality, this system, complete with deficit-financed subsidies to banks, corporations, and wealthy investors, is really a form of government economic planning quite contrary to free markets. Sirico hopes to make this distinction clear in order to help readers avoid incorrectly assigning blame for social ills to an economic system not actually in practice.
Sirico’s main thesis is that a true, market capitalist economic system (as opposed to socialism or “crony capitalist” variations) is based upon a non-arbitrary rule of law governing private property rights. It is evidenced in peaceful voluntary trade, and is not merely consistent with but is a virtual byproduct of the Judeo-Christian faith and tradition. The market process of voluntary trade is, according to Sirico, a manifestation of man’s ordained free will as he attempts to serve God, others, and himself through productive effort in the face of finite resources. In spite of sin, and given the condition of earthly resource scarcity, mankind’s inherent dignity can be fully realized only if he is permitted the widest exercise of free choice that alone a free economy and voluntary trade can provide. Sirico warns against what he sees as short-term and reactionary government intervention into markets, identifying in them not only their distorting affect and adverse practical consequences, but also subtle moral failings manifest by those who support them: the selfish inability to consider longer-term consequences on others (including future generations), and instead to live only for the moment and for one’s immediate gratification as a special political interest: in a word, hedonism.
The methodology of the text is a combination of storytelling narrative, normative ar-gument, exposition of economic principles and logic, and a review of supporting literature in the fields of economics, philosophy, and theology, written in a manner easily accessible to the lay and non-technical audience for which it is intended. The topics Sirico tackles are delineated by chapter, and each topic arises from a common objection to markets. Each of the ten chapters (other than the first) begins with an honest question critical of capitalism and the free market. Sirico does not intend these questions to be mere straw-men arguments easily swept away, but instead legitimate probing questions that a concerned skeptic might pose. An answer is then offered in a brief summary response, followed by an engaging discussion and unpacking of the topical arguments.
Sirico first lays out his definition of a free-market economy, one that is supported by a consistent rule of law governing private property rights leading to a process of freely determined prices, wages, and interest rates set by supply and demand. This implies a not insignificant role for government in upholding the rule of law and enforcing contracts, albeit one that is specifically limited in scope. Sirico ably counters the perception that markets are mere expressions of simple materialism and consumerism. A true market, argues Sirico, is not one prodded and pushed by government “stimulus” toward ever-higher levels of pres-ent consumption. Instead, when unmolested, it is marked by incentives encouraging people to save, to be others-directed, and to look toward the future with a concern for frugality and good stewardship.
Sirico then offers a chapter-by-chapter list of economic and moral topics related to the critique of capitalism, in each case presenting a balanced but forceful argument in favor of the free-market position. Poverty is best reduced through market-based business enterprise rather than foreign aid or government social programs. The Judeo-Christian God’s first recorded act was to create. For Sirico, a “theology of enterprise” means that man, created in God’s image, must become co-creator with God, and the avenue through which man can co-create is peaceful market-based entrepreneurship, serving his fellow man by producing and trading a valued good or service. Market work, including entrepreneurship, is therefore a form of worship to God as a vocation and calling. As such, occupational churning caused by the “creative destruction” of entrepreneurial innovation must be understood in proper context, where the unseen and widespread benefits outweigh the highly visible but relatively small and concentrated dislocation costs.
The sin of human greed (for Sirico distinct from self-interest or initiative) is a universal human attribute in any economic system, not confined to capitalism. In markets, the reward of profit and the penalty of loss, reflected in pricing signals, can harness self-interest and direct it toward the service of others as producers must subordinate themselves to their fel-low man. Non-market systems, decoupled from voluntary trade, instead frequently permit greed and materialism to play out in the form of political and legal plunder by one group against another. Without accurate prices, or profits and losses, service to others is often contrary to one’s own self-interest in these systems. Similarly, forceful redistribution of wealth in pursuit of the “idol” of material equality, according to Sirico, is really the highest manifestation of the sins of materialism and envy, greed’s twin. Consequently, it leads to dulled incentives to produce, reduced capital investment, lower employment and growth, and less, rather than more, opportunity for the poor.
Additional topics include a discussion of “smart” private charity versus government welfare, the imprudence of government-directed health care systems, and market-based solutions to environmental problems. Each is a balanced presentation including arguments with which most economists and other academics interested in this debate will already be familiar, but from which even many educated lay-persons could learn, even if they do not ultimately accept all of Sirico’s pro-market positions.
As an economist practicing in a free-market tradition, I am sympathetic to Sirico’s general arguments. I believe he makes a persuasive practical and moral case for the free economy. One minor criticism bears mention. As an advocate for private charity over gov-ernment redistribution, Sirico does well in summarizing the common critique of federal welfare. It may crowd out private charity by transferring responsibility for the poor from churches to government; reliance on the state instead of the church weakens, according to Sirico, the moral suasion that the church can have over the needy and the spiritually lost; it is often indiscriminate and fails to identify the deserving versus the undeserving poor; and it creates perverse incentives for poor mothers to remain unmarried, leaving poor children without fathers. However, Sirico, like many other critics of the welfare state, praises private charity but does not address an argument common in economics that private charity has publicly good attributes. Private charity is non-excludable in the sense that one person’s voluntary contribution to the poor may further a poverty-reduction goal valued by others. Assuming as much, some may give less to private charity in hopes of “free riding” on the donations of others, leading to a suboptimal amount of charity the greater the number of free riders. Government transfer programs thus become the “solution” to a potential free-rider problem that weakens private charity markets. Now, it is not at all clear that public poverty programs can achieve “optimal” aid to the poor, and I do not believe this argument undermines Sirico’s informed critique of the modern welfare state. However, I would like to see more critics of government welfare programs at least recognize the economic argument for state aid to the poor. In a sense, Sirico has offered a compelling rebuttal to this argument, but without first acknowledging it or giving it a hearing.
This is a minor quibble. In all, Sirico has written a superbly readable and passionate book, easily accessible to the lay reader, presenting a coherent and well-supported case for the free economy in an engaging and personable style. While the book’s arguments will naturally appeal to readers already supportive of free markets, the more important audience will be those within the Christian community skeptical of market capitalism. For them, Sirico’s reputation and intellectual journey may make him a credible apologist for a free economy, and his book may yet succeed in acquitting the wrongly accused.
Cite this article
- See Michael Novak, The Spirit of Democratic Capitalism (Toronto: Madison Books, 1990); Victor V. Claar and Robin J. Klay, Economics in Christian Perspective: Theory, Policy and Life Choices (Downers Grove, IL: InterVarsity Press, 2007); or Jay W. Richards, Money, Greed and God: Why Capitalism is the Solution and Not the Problem (New York: HarperOne, 2010).
- Readers seeking a counterargument to Sirico, or looking for arguments in the Christian tradition to which Sirico is responding in counterpoint, might consult John E. Stapleford, Bulls, Bears and Golden Calves: Applying Christian Ethics in Economics (Downers Grove, IL: InterVarsity Press, 2002) or William T. Cavanaugh, Being Consumed: Economics and Christian Desire (Grand Rapids, MI: Eerdmans, 2008).