I keep thinking of the final words of a conference speaker on faith and economics. He was a retired economics professor at a well-known Christian college. And the final question asked by an audience member, following the speaker’s talk, was this: “What is one thing you wished every pastor knew about economics?” The speaker’s answer: “That the creation of wealth is not a zero-sum game.”
Maybe the speaker was on to something, but it still continues to strike me as a very odd thing to say. I suppose the speaker was thinking about Christians who take up the cause of the poor by railing against CEO salaries and other presumed obstacles to “social justice.” Perhaps the speaker had grown weary of the assumption that wealth is some sort of fixed-size pie, which simply gets divided among people: equitably or not.
Fair enough. In addressing poverty or any other economic issue, it’s not at all helpful for Christians (or for anyone else) to use a flawed and outdated model of how wealth is created. But I still wonder about the speaker’s answer. Is the fact that “wealth is not a zero-sum game” really the most important thing a preacher or any other Christian should have in mind when thinking about economic policies and proposals?
First, let me acknowledge the force of the pro-capitalist argument that one person’s wealth doesn’t necessarily take away from anyone else’s wealth. And the argument does have real force.
My landlady, when I lived in England, had two giant apple trees in her backyard. Every autumn, each tree would produce at least 500 or so apples. All of the boarders in her house would have their fill. She would invite friends and relatives to come over and pick apples. She would try to give them to neighbors. She would still have huge quantities left over.
She couldn’t give them away to neighbors because most people on our street also had apple trees. (They grow really well in southern England.) Oh sure, you could just bring a bag of apples to a neighbor, unsolicited. “Here are the apples I saved for you.” But the neighbor would just return the favor: “Thank you, and here is the bag I saved for you!” I remember lots of people on our street putting buckets of apples on the curb with signs that said, “TAKE ME, PLEASE.”
Meanwhile, the folks in southern Spain had a different issue. I went to southern Spain once in February. Orange trees galore. GALORE. Apparently they grow like Kudzu down there. Many streets are lined with them. In February, so I discovered, the ripened oranges border on a public nuisance. They fall to the ground in the streets and get squashed by car tires. Walking down the sidewalk, you’ll step on them and roll your ankle if you’re not careful. They give naughty children unlimited ammunition.
It’s not all bad, though. Coffee shops will serve big glasses of fresh-squeezed orange juice for about 50 cents. And this gets to the key issue. In southern Spain it’s incredibly efficient to produce orange juice. And they’ve already got so much of it, they’ll happily trade some of their juice for other things. For instance, they’ll happily trade with my landlady. Good thing for her, as she’s tired of gathering up rotting apples from her yard. My landlady is thrilled if she can get some orange juice in exchange for some apples. And orange farmers Juan and Maria down in Seville are thrilled to receive these apples in exchange for some of their orange juice, which is coming out of their ears by now.
So both parties are much better off than they were before. They each have more stuff than they otherwise would have had. And what if their circle of trade is expanded to include grape growers, wheat growers, cabinet makers, toilet makers, cell phone makers, and so on? Well, everybody can concentrate on making the stuff that they’re really good at producing. And by trading, everyone will end up with lots more stuff than they otherwise would have had. Wealth (as measured by the stuff one has, or the ‘standard of living’ one can enjoy) has been created.
Within this system, perhaps an inventor will create a fertilizer to help all apple growers or all orange growers produce even more fruit. Perhaps this inventor will sell the fertilizer to thousands of farmers. The inventor is probably going to get fabulously wealthy. But the farmers are also going to be better off in terms of how much stuff they’re able to gain by trading.
Or perhaps an entrepreneur will invest in ships and offer an effective way for more people to exchange more of their goods. Perhaps the entrepreneur also will become fabulously wealthy. But once again, everyone is benefiting. Wealth creation isn’t a “zero-sum game” like football or basketball, where one team winning by 10 points automatically means that another team must be losing by 10 points.
That was the most important lesson our original speaker, the Christian economist, thought every pastor should learn. It’s not a bad lesson. But in my next post I’ll offer my reasons for wondering whether this is really the economic lesson Christians should be prioritizing.
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One Response
You have shown that wealth creation is not a zero-sum game. But in oversimplifying you have failed to shed light on the inequalities of the system which you seem to dismiss. By only focusing on the orange tree owner, the apple tree owner and the ship owner and the new wealth each realizes you have completely neglected all those who pick and box the fruit, those who transport the fruit from the orchards to the shipyards, those who load and unload the fruit, those that sweep the decks, oil the machinery, and on and on. Wealth creation may not be a zero sum game, but each year there is a finite income for each business and the distribution of that income is in fact zero-sum. This is the point at which those who “rail against CEO salaries ad other presumed obstacles to ‘social justice'” have a problem. When CEO’s take ever increasing portions of the salary pie, every other portion must be diminished. Overall wealth is created, but practically speaking, this is not true for the vast majority of the labor force.
Clarification is needed with regards to inventors. Some inventors may become wealthy from their inventions and there are a few well known examples of this. Having worked in industrial R&D for twenty years, I would guess there are far more inventors who do not have this experience. Within a corporate structure the company owns the patents and inventions of the employees. The “reward” for an invention may be a framed copy of the title page of the patent and continued employment. In years gone by, Kodak was held up as an exception in that inventors would receive a small percentage of the profits from their invention for the first three years.
Adam Smith in The Theory of Moral Sentiments describes the “invisible hand” which results in “nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society..” In this day of greed, gluttony, and personal aggrandizement, the invisible hand has withered and is rarely seen.
Capitalism as an economic system is amoral, it can be used for good or bad. H. J. Heinz was a capitalist but his approach to his employees in the early 1900’s is far different than what is typically seen today. Capitalism will be no better or worse than the one in control.