Friday, February 28, 2014

Providing for the General Welfare: The Goal of Tax Reform

This article can be found at the Journal of Lutheran Ethics website.

Friday, February 7, 2014

Martin Luther Was Not Against Capitalism

I've recently read more than one article that paints Martin Luther as anti-capitalist. They offer quotes from Luther's writings pointing to his critique of (what they call) free markets.Granted, the articles at times used "emerging" and other such nuances.  This still irked me. Not because I am in love with our current flavor of capitalism (I am not), but because it shows how many Christian ethicists need a better background in economics.

Martin Luther died in 1546. That's the first reason why Luther never wrote against capitalism. It simply didn't exist during his lifetime. I'll grant that pinning a birthdate on an emergent economic order is impossible, but 1546 is nowhere close. Adam Smith's Wealth of Nations was published in 1776. Again, you can't date an emergent order on a book's publishing, but Wealth of Nations had such an effect on economic practice that it is difficult to ignore. So Luther died a full 230 years before Wealth of Nations.

But surely the emergent order that Smith described was in an inchoate form for many years preceding Wealth of Nations? Most assuredly. So let's look at exactly what these articles have used to portray Luther as anti-capitalist. The main quote I'd like to address is here:

“Daily the poor are defrauded. New burdens and high prices are imposed. Everyone misuses the market in his own willful, conceited, arrogant way, as if it were his right and privilege to sell his goods as dearly as he pleases without a word of criticism.”

This sounds like a resounding critique of free markets. Except that would require an anachronistic stretch. Free markets did not exist in Luther's time. Markets certainly did, but they weren't free. They were plagued by cartels, price fixing, collusion, and similar activities that would now be considered fraud (though given the lack of prosecutions from the financial crisis, they were probably to this day get off scot free). The economy of Luther's time and place was dominated by the Fuggers. Monopoly does not make for free markets either. So we can't read Luther's comments to mean he was against free markets or capitalism. We can certainly say he was against exploitation of the poor, though. That would be a great anchor on which to base an article. But it wasn't.

Luther is certainly critiquing a market, but not a capitalist free market. He's critiquing the market of his day and region. We would be silly to universalize these comments as a critique of capitalism or free markets in general.

This bias, though, isn't limited to Christian ethicists writing about economics. I see similar problems in what economists are writing about Uber -- the surge pricing taxi service. Economists are praising uber like it's the best thing since comparative advantage. Yet they don't realize that Uber, by itself, is not a free market tool. It is a monopoly. My state representative recently tweeted:

To which I replied:
If the question is "What would Martin Luther think of our contemporary flavor of capitalism?" the best answer is "I don't know." I would presume to put words into his mouth. I'm pretty sure he wouldn't like it. But it would be for different reasons than those given in the articles mentioned.