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Wednesday, December 8, 2010

The Origin of Capitalism

We live today in a capitalist society and few of us ever think to question where did this economic system come from, how did it evolve?  It obviously replaced earlier economic systems.   As Christians we have to ask what is good and what is evil in it so we may know what to approve and what to condemn.

Capitalism happened because of the explicit permission of the church, but for certain reasons and with certain conditions.  The church had always taught against usury, the loaning of money at interest or charging of interest in financial transactions. It ran against the ancient Jewish traditions and the Gospels teachings to lend freely.  Usury was perceived to leverage someones sufferings, someones necessities against them. By borrowing at interest to meet todays needs we cause future sufferings.

Today much borrowing actually benefits the borrower, because it allows them to acquire property, or else to start and expand businesses. But still today we see the old evil hand of usury in the payday lending industry, in the high rates of credit card interest on personal credit cards, in the terms of mortgages in todays mortgage market, and in the staggering interests on student loans.  Moreover we see it globally in the IMF  and World Bank lending practices, in which a nation indebts itself to the global community.

But in the late middle ages there was none of this.  What there was however, was a desire to organize the transportation of goods from the Middle East.  This was a great enterprise and there were few who could by themselves afford to undertake it.  And there was a great profit to be made by it.  And a great desire on the part of people to receive the goods that could be transported. So the church, in looking at this situation said we will not consider this usury because you are offering great potential benefit to every investor and to those who wish to by the goods. It will be exempt from the ban on usury that the church has made because it will be considered as something done for the good of all.

In a way, at that time, Capitalism almost conformed to the sense of sharing I  wrote of yesterday ( Sharing: ).   It was a shared enterprise in expectation of future benefit for all.  And capitalism brought the goods to Europe.

But over time, more and more wealth has accumulated into the hands of very few  (see the Top 10%  and )

So as a result of that the benefits no longer spread equally.  Moreover, as a result of the relentless drive to profit for the few, virtually all restriction against usury has vanished.  The interest allowed by the government now on credit card rates now are greater than the interest rates that the Mafia used to let loan sharks charge.  As a society we live deeply in the sin of usury.  

The question is what to do about it.  State socialism tried to fix it and created totalitarian societies that striped dignity from human beings by political power just as certainly as capitalism stripped it from them financially.    My hope for the future lies in how the church in recent times has reexamined the global financial markets and sought debt forgiveness for poor nations.  I believe that it is time for the church to reexamine how capitalism is functioning and provide moral guidance to change the direction of our society. 

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