NICK EICHER, HOST: Next up on The World and Everything in It: redeeming capitalism.
MARY REICHARD, HOST: Free markets tend to get a bad rap today, especially from young people who blame them for income inequality and poverty, among other social ills. But a seminary professor and business expert says we shouldn’t give up on free-market capitalism.
EICHER: He argues we should refocus capitalism on the whole of human flourishing, not just the creation of wealth. On this week’s Listening In, host Warren Smith talks with Ken Barnes about the benefits of free markets.
In this excerpt from their conversation, they discuss a famous quote from the father of free-market economics— Adam Smith.
WARREN SMITH: “It is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard for their own interest.” I’ve heard that quote many, many times and it has come to be sort of a symbol for many of free market capitalism. Talk more about the importance of Adam Smith and where he got it right, and where he got it wrong.
KEN BARNES: Sure. Well, first of all, people take that quotation completely out of context. When he talks about the invisible hand, all he’s talking about is the phenomenon of self-correcting markets. And what he states simply as an observation is that people at the micro level aren’t always conscious of what their business is doing at the macro level. They are simply trying to survive. They’re trying to get by. They’re trying to eek out a living. And the cumulative effect of people eking out a living and trying to survive is that ultimately the whole culture benefits. But the fact that he talks about self interest, or theologically speaking, self love, doesn’t mean the same thing as selfishness, which is self concern at the expense of the other. So what has happened is people have taken and twisted Adam Smith and taken him out of context to suggest that he was an ethical egoist, like Ayn Rand, who’s become very popular nowadays.
The philosophy of ethical egoism is really quite pernicious and quite contrary to Christian theology. People forget that before Adam Smith wrote Wealth of Nations, he wrote a book called Moral Sentiments, in which he praises the virtue of trying to emulate God in love for our neighbor. And he predicates everything in Wealth of Nations based on this Judeo-Christian principle. So he was not an ethical egoist at all. If anything, he was a virtue ethicist because he believed deeply in the notion that individuals and nations should seek the common wheel, the common good. And so Adam Smith is one of my heroes because he believed that economic progress should help everyone, including those at the bottom. And if you ensure that those at the bottom are flourishing and not just surviving, the whole system benefits. So he is one of my heroes.