Recently I wrote to you about the Founding Father’s emphasis on morals, and chronicled the Christian core values of Equality, Responsibility and Welfare that were critical to the success of our nation. And I added that these core values were responsible for creating the greatest nation ever. However, there is a fourth Biblical principle the Founders used that would eventually become the foundation of our economic system: human nature.
There are two schools of thought when it comes to human nature. The first says that we are naturally good. If this is true then we would find it easy to do the right thing since we are wired for it. And the only reason we do bad things is because we were taught incorrectly or our environment forced us. This is the belief behind socialistic utopian dreams that look forward to a time when all mankind will be unimpeded to live sacrificially alongside one another in peace and harmony. But is this dream a possibility?
Karl Marx popularized the slogan, “From each according to his ability, to each according to his need.” In other words, each would work to produce as much as he/she is capable, but would receive in return only as much as needed. This may sound wonderful and benevolent where everyone gets what they need and lives free from competition and responsibility, but it doesn’t take long for people to realize they don’t have to work very hard to get the same return.
For example, if a surgeon and ditch-digger are compensated equally, then what incentive has anyone to go to school an extra 10 years and suffer longer work hours and more responsibility? Or why should the entrepreneur take on extra risk and late nights if they are not compensated any more than the laborer? This is why socialism has never worked long-term in the history of mankind. When incentive is taken away, 90% of innovation and productivity also disappear. And when there is no productivity there is no wealth to fund this grand scheme for the government to ensure equal outcomes. This is why Margaret Thatcher profoundly stated, “The problem with socialism is that you eventually run out of other people’s money.”
The second school of thought on human nature says that man is born self-centered. This can be observed in every stage of human development. Consider infants; they appear to be innocent and cute when they are well fed and dry, but if hungry and wet they can be the screaming epitome of selfishness. And heaven forbid if you take a toy away from an infant. Because in the baby’s quest to retrieve the toy, the only thing preventing the little darling from tearing your arm off is a couple hundred pounds of body mass and some coordination.As we grow older we get better at hiding our selfish desires but an analysis of our decision-making shows us that they are still present. For example, do we generally make decisions that are sacrificially best for others; or best for us and our families? Do we find it amenable to submit to the will of another; or do we seek to accomplish our own will? If you are honest, you will find that deep down we all want to be our own boss. As a matter of fact, I would argue that there are only three reasons why we ever do something good: 1. Fear – of punishment/consequences for not doing the right thing; 2. Selfishness – usually there is something in it for us; and/or 3) Conscience – we all have a God-given internal moral barometer that, at times, forces us to do the right thing. Very seldom do we act out of pure selflessness.
The point is that human’s need incentive. Only through incentive will we produce and innovate to our full potential. Because capitalism harnesses this natural tendency it has proven to be the most productive, innovative and successful economic system of all time. Ironically, it has produced the most benevolent and just society of all time as well. After all, Americans are generally first to respond to international disasters with a generous helping hand.
Capitalism has also proven to be the most successful anti-poverty program of all time. If you live at the poverty level in this country you still rank in the top 20% of world income earners. This is because capitalism produces so much wealth that everyone prospers. It is no accident that immigrants from around the world flock to the U.S. every year. After all, no one ever heard of “Living the Soviet Dream”.
Surveys show that over 50% of college-age students today believe socialism is better than capitalism, citing fairness as a reason. While capitalism is not perfect, it is not nearly as bad as socialism that always results in a tiny portion of ‘haves’ and vast amounts of ‘have-nots’…and ZERO middle class! Instead, I would argue that capitalism takes advantage of human nature which in turn fosters hard work, individual responsibility and a sense of accomplishment. And those are characteristics to be proud of. Thankfully our Founding Fathers understood these concepts well.