CAPITALISM & THE COVENANT COMMUNITY: A MODEL OF ECONOMIC WITNESS FOR THE 21ST CENTURY CHURCH by Charles J. Hartman, D. Min. Fellowship Bible Church Greenville, South Carolina ii Copyright © 2011 by Charles Hartman All rights reserved 3 TABLE OF CONTENTS CHAPTER 1. INTRODUCTION……………………………………………………… 6 Overview of Current Economic Crisis Capitalism vs. Communism in Evangelical Thought Economics as Ethics The ‗Dark Side‘ of Capitalism Salt & Light in the Economic Realm of Life 2. PRIMER ON ECONOMIC THEORY…………………..……………. 31 Summary of Capitalistic Economic Theory Adam Smith and The Wealth of Nations Chronic Misery: Malthus & Ricardo Neo-Classical Economics The Keynesian Revolution Monetary Interventionism 3. BIBLICAL AND THEOLOGICAL ANALYSIS……………………… 56 Does the Bible Speak to Economic Issues? Old Testament Survey: The Creation Mandate Patriarchal Prosperity The Mosaic Economy The Prosperity Gospel of Canaan The Holiness Code Prophetic Indictment New Testament Survey The Teachings of Jesus The Economic Life of the Early Church 4 4. WISDOM LITERATURE…………………………………………….. 90 Wealth & Poverty in Biblical Wisdom Literature Hermeneutics of Wisdom Literature Survey of Wisdom Literature The Book of Job The Book of Ecclesiastes The Book of Proverbs Debt Dissipation Dilligence The Building of a Model: Proverbs 11 & Ecclesiastes 11 Ecclesiastes 11- Bread Upon the Waters Proverbs 11:24-26 – Soul of Blessing 5. HISTORICAL SURVEY OF ECONOMIC TEACHING AND PRACTICE IN THE CHRISTIAN CHURCH………………………... 122 The Importance of Max Weber‘s Protestantism and The Spirit of Capitalism The Sanctity of Work Much Ado About Money Worldly Asceticism and Economic Practice 6. ECONOMICS AND CONTEMPORARY AMERICAN SOCIETY…. 149 The United States and Modern Capitalism Early Conflicts: Hamilton vs. Jefferson Early Monetary Policy Incorporation of the American Economy From Federal Reserve to TARP 5 7. CAPITALISM & THE COMMUNITY OF BELIEVERS…………… 178 A Review of Niebuhr‘s Christ & Culture A Review of the Character of Capitalism Historical Illustrations Amana Colonies New Lanark Enclave Economics A New (Old) Model for the American Church Triangulation: Creation – Covenant – Community Implementation of the Model Pastoral Training Revolving Credit Associations APPENDIX A – HERMENEUTICAL ISSUES……………………………… 218 BIBLIOGRAPHY ……………………………………………………………. 223 6 Chapter 1: Introduction Distant history is often categorized in terms of centuries, far distant history in epochs or ‗ages.‘ But the analysis of more recent history – say, that of the immediately preceding century – can often be subdivided conveniently by decade. Thus the Twentieth Century gave us the ‗Roaring 20s‘ and the Great Depression of the 1930s, the Prosperous 50s and the Rebellious 60s. The 1970s as a decade had its high point: the bicentennial celebrations of 1976 – and its any lows: from the debacle of Watergate to the humiliating Iranian Hostage Crisis. But the decade itself will probably go down in history as characterized through the famous ‗Malaise Speech‘ given by President Jimmy Carter on July 15, 1979. Although the President did not use the word ‗malaise‘ in the speech, his characterization of the economic situation facing the United States throughout the 70s was quickly summarized by both the press and Carter‘s political opponents as malaise. The basic economic parameters of that time seemed to confirm the diagnosis: the Federal Reserve‘s Prime Rate reached 11% in November of 1978 and would peak at 21.5% in December of 1980. Inflation averaged 11.3% in 1979 and rose as high as 13.5% in 1980. Unemployment hovered in the mid- to upper-single digits for most of the decade, and in the older industrialized regions was often twice the national average. Even today these numbers pale in comparison to comparable statistics in many Third World nations, but for the much vaunted economy of the United States in the late 1970s, they represented ‗malaise,‘ and fostered a deep-seated crisis of confidence. This crisis was not merely with reference to the country‘s leadership, it was a crisis of confidence in the very idea of the American Experiment. It was a crisis of confidence in the validity and durability of the free 7 market economy versus the Socialism of many European countries and the Communism of Soviet Russia. The ideological chasm between the economic system of the Soviet Union, representing the Communist worldview, and of the United States, representing the ‗free‘ world, was a major though often underrated, factor in the Cold War between the two superpowers. The militarism of both nations, and the periodic outbreaks of proxy wars between them, tended to focus attention upon the threat of a world-devastating nuclear conflict. But underlying and fueling the tensions between the Soviet bloc and the West was the battle of two vastly different economic theories. The United States championed the free-market Capitalist economic paradigm, while the Soviet Union touted the ultimate triumph of worldwide Communism. As early in the struggle as 1952, economist John Kenneth Galbraith wrote in American Capitalism, ―Indeed, for most Americans free competition, so called, has for long been a political rather than an economic concept.‖1 Perhaps this explains the measure to which the unexpected collapse of the Soviet Union in the late 1980s was viewed by many as a clear triumph for free-market Capitalism. That Capitalism would eventually triumph was not a foregone conclusion through most of the years of the Cold War. The ‗acquisitive‘ tendencies to which Capitalism appealed throughout its Golden Age, 1950 to 1970, made advocates of that economic system uneasy and detractors downright hostile. This consumptive, materialistic aspect of Capitalism, however, was much to be preferred to the straightjacket that Communism put upon the freedom of the individual man. Perhaps the best way to describe the feeling in the West regarding the eventual success of Capitalism vis-à-vis Communism was hopeful, rather than confident. Yet by the last decade of the twentieth century Capitalism reigned triumphant not only in the West where it had sunk deep roots for several centuries, but even in the former Soviet bloc nations of Eastern Europe. Russia 1 John Kenneth Galbraith, American Capitalism (Boston: Houghton Mifflin Company, 1956), 24. 8 was attempting a tentative shift toward a free-market economy, and even Communist China was relaxing central government controls and creating ‗free market‘ zones within its otherwise rigid statist system. So profound was the transformation in the world economic scene that at least one author is prepared to pronounce Capitalism as the ultimate victor – ―Capitalism will survive the current depression as it did the Great Depression of the 1930s. It will survive because there is no alternative that hasn‘t been thoroughly discredited, which wasn‘t as clear in the 1930s. It is clear now. The Soviet, Maoist, ‗corporatist‘ (fascist Italy), Cuban, Venezuelan, etc. alternatives to capitalism are unappealing, to say the least.‖2 The recent epic struggle between two world economic systems is without precedent in world history. For the majority of human history – it is not too much to say from the dawn of civilization to the middle of the nineteenth century AD – the nations of the world followed a similar, agrarian and somewhat feudal economic path. To be sure, there have always been disparities in wealth between nations and within nations. And there have been subtle economic shifts such as the discovery of the great Potosi silver mines in South America by Spanish explorers in the sixteenth century. There was not much difference, however, between the basic economic structures of the world‘s nations, and all but a few of the world‘s inhabitants lived an impoverished existence of borderline subsistence. The first true ideological conflict within the prevailing economies of the nations began to develop in the middle of the nineteenth century, when the writings of Karl Marx started to impact the economic thought of Europe. Marx‘ famous Communist Manifesto was published in 1848, at the same time free-market Capitalism, espoused seventy years earlier by Adam Smith, was flexing its youthful muscle with the Industrial Revolution. The darker side of the Industrial 2Richard A. Posner, A Failure of Capitalism: The Crisis of ‘08 and the Descent into Depression (Cambridge: Harvard University Press, 2009), 234. 9 Revolution – the sweat houses, child labor, pollution and substandard housing – fueled interest in the theory of Communism until the Russian Revolution of 1917 established the first communist nation on the planet – the Soviet Union. The twentieth century witnessed the titanic struggle between these two opposing economic theories – Capitalism versus Communism. By the middle of the century the world was rapidly aligning along either Capitalist or Communist economic lines, with the military power of the United States and the Soviet Union overshadowing each respectively. The voice of professing Christendom has not been unequivocal with regard to the two major economic combatants. Marxism took root within Roman Catholicism in Central and South America, while Evangelical Protestantism in the United States, Great Britain, and Northern Europe became increasingly aligned with free-market Capitalism. There is a certain correspondence between Catholicism‘s hierarchical and centrally-controlled ecclesiology and the statism of Marxist economic theory as it has evolved from Marx and Engel through Lenin and Mao. Conversely, the connection