I love reading Rabbi Daniel Lapin to broaden my Judeo-Christian worldview in a practical way. In his book Thou Shalt Prosper – Ten Commandments for Making Money, he teaches that the Jews always accepted that faith is the fuel that drives commerce, finances and religion. Jewish tradition shows that a close relationship exists between God and the marketplace. Lapin states…
“Economics used to be a field of study that was included with religion and theology. Adam Smith and many other 18th Century economists were religious philosophers before they were economists. When universities moved the study of economics from their religious departments to their science departments, they were actually driving a wedge between the profoundly uplifting activity of business and the moral arguments and spiritual dimensions that support economics.”
So no wonder some think capitalism is not moral. Jim Morrison says, “people say capitalism is greedy because it is about getting money. Such a claim is inherently ignorant and devoid of facts, especially the history of capitalism. The three pillars of capitalism are Incentive, Property Rights and Freedom as defined by Adam Smith in the The Wealth of Nations. Which one of these three…incentive, property rights or freedom is evil, greedy or out of line with biblical principles?”
Lapin defines “ethical” capitalism as a system where humans interact voluntarily with one another for economic gain. But enough of economic theory, how about a practical example?
Adam Smith put forth the idea of specialization…do what you are good at…Let each person or cooperation of person do what they do best. This was a radical idea at the time but quite common now. We don’t all individually grind flour and bake bread each day. No…we are happy to pay someone else to do this for us and feel fine with them making a profit. If their profit margin is too high then there is someone else up the street doing if for less. The free market keeps the price where it should be. If we want a special kind of bread we are willing to go to a specialty bread shop probably pay more for it. Likewise the baker has incentive to sell the bread for a profit that helps him feed his family, pay for housing and save some money for investing or maybe the purchase of the building he is now renting for his bakery.
Yes, as we will discuss in the next blog, capitalism can be tainted by greed but it is still the most superior economic system and has brought Americans, and all other nations who embrace it, unprecedented freedom and prosperity to enjoy. Capitalism creates a society that is suited for wealth creation. You may have never thought about the affect accumulating capital could have on your personal finances, but now is the time to start.