I want to challenge an idea that is so common, it goes unnoticed and unchallenged much of the time. It is the idea that capitalism (aka, a free market economy) is built on greed. Many even of those who advocate for some form of capitalism concede this point. Some have even tried to argue that the free market can turn vice into virtue, e.g., the "greed is good" mantra that was so common in the 1980s. But I do not believe we should concede this point. Free markets are not based on greed. The profit motive is not greedy per se. Sure, participants in the free market can be driven by greed, but I am not convinced that the free market system is built on greed in any meaningful sense at all.
Think about the greedy entrepreneur in a free market system. Out of greed, he raises prices on his product. But competitors in the marketplace undercut him so he struggles or goes out of business altogether. Or, out of greed, he decides to pay very low wages to his workers. What happens? His competitors hire away his best workers and, again, his business struggles. Or suppose our greedy capitalist decides to save money and maximize profits by cutting corners with the products he produces. As consumers discover this, they will flock to higher quality competitors, and again his business will suffer or collapse. [Sidenote: Does anyone think, e.g., that Chick-fil-A has enjoyed great success in the fast food market because of greed?]
It is not at all obvious that greed drives the market economy. Indeed, it seems to me that the free market is not built upon greed but upon service. The most successful entrepreneur will be the one who produces goods and services people want for prices they are willing to pay. In one sense his motivation does not matter; he has to act like a servant in order to succeed, no matter what drives him. Even if he does not love his customers, acting like he loves them will make him more successful, all things being equal. The competition the free market brings is a competition to see who can serve the best -- and thus that competition drives innovation, efficient use of resources, and improved customer service. The free market is the best way for man to fulfill the dominion mandate of ruling over the creation, as well as serving our neighbor and helping the poor.
A great example of all of this is Lawrence Reed’s I, Pencil (video available here). Reed, following Milton Friedman, demonstrates that no one in the world could make a pencil on their own. And if you could, it would cost an untold fortune in time and money. But the power of a global market brings us together, like diverse members of a single body, with each member serving the good of the whole. The free market rewards innovation, efficiency, and above all, service. It gives us a non-coercive way of working together to solve our problems and meet our needs. The free market can turn society (and ultimately all of humanity, if allowed) into into one body, with diverse members building for and serving one another, working for and compensating one another, selling to and buying from one another, so that we maximize our development and enjoyment of the resources God has granted to the human race. The free market actually turns secular society into an image of the body of Christ, one body with many members, each serving the common good, even as the one body as a whole serves the good of the many particular members (1 Cor. 12). This is how free markets work: one for all and all for one. A rising tide will lift many boats. The market is a form of mutual service where everyone wins. It is not a zero game; an economy built on freedom and service can actually grow. What of those who fail? The possibility of failure is certainly built into a market system, but even this serves the good of the whole. The market prunes out those who do not serve successfully so those resources can be better allocated. The market allows a great deal of trial and error, as businesses seek to find better and better ways to serve the wider society.
Some have said that markets have adversely affected the family. This is indeed possible when markets are divorced from a moral framework. There is no economic system that can bring lasting and solid prosperity to an immoral people. But when free markets are nestled into societies that honor God's Word and value God's creational structures (such as the foundational place of marriage/family, the distinctive cultures of the nations/people groups into which God has placed us, and the valuable but limited role of the civil magistrate in maintaining the common defense and promoting the rule of law), there is no question that free markets are the pathway to maximum human peace and prosperity. Others have argued that markets allow the rich to trample the poor, especially if monopolies are allowed to go unchecked. The problem here is not usually the market. Rather it is the rise of what could be called "crony capitalism" -- which is really not capitalism at all. When Big Business is allowed to enter into an alliance with Big Government, we do not really have free markets any more, and the there is no question power is being abused in order to crush "the little guy." But do not confuse the abuse of markets with free markets. The gospel sets us free -- and those who have been freed from sin will, over time, develop free societies, free economies, and free markets. When we abandon the gospel en masse, it should not surprise us to see various forms of slavery crop up, including bondage to regulated and manipulated markets.
What about socialism? It claims to be for the common good, but the history of socialist experiments in various countries shows otherwise. In socialist systems, the people do tend to become equal — equally poor. Meanwhile, those who run the socialized system — the central planners — somehow manage to get fabulously wealthy. Whereas free markets turn society into a body, each member serving the organic whole, socialism turns society into a pyramid, with the many on the bottom serving the few on the top.
What is the appeal of socialism given its colossal failures? Why is it so popular today, especially among the youth? I think it appeals to our envy. The main reason people go for socialism is because they think they will get more out of the system than they pay in. They think primarily of the benefits they can receive from the government for “free.” They do not think of the fact that those benefits have to be paid for somehow. As Margaret Thatcher wisely said, “The problem with socialism is that you eventually run out of other people’s money.” Socialism is appealing if it forces my rich neighbors to pay for my healthcare. But what if it the system forces me to pay for other people’s health care? Now it’s not so appealing. And this is why socialism always fails: It becomes a race to the bottom. It disincentivizes hard work, innovation, and customer service. Why try hard and go the extra mile in my business when so much of the profit will be taxed away from me to pay for benefits for my lazy neighbor?
It is actually socialism that is driven by greed and envy. No politician ever makes his pitch for socialism by saying, “This is your opportunity to pay other people’s medical bills.” Instead, it is touted as “free health care.” The only real appeal of socialism is, again, an appeal to our desire to get more out of the system than we have to put into it. The focus is on getting others to pay your way, not how you are going to pay theirs. After all, if you really want to pay others' medical bills, you can do it right now. You do not need to wait on socialized medicine to make generosity possible. Or to take another example: Bernie Sanders asks in a tweet, “How will free college change your life?” The vast majority of respondents talk about how glad they will be to have no college debt, to not have to worry about tuition bills, etc. Very few think of it as an “opportunity” to pay other people’s debts, to pay tuition for other students, etc. Again, the appeal is to the greediness of our hearts. It's about what we can get, not what we will have to give. And so it turns out that the promises of "free stuff" that socialists make are just the bait; there is a deadly hook inside, with the reminder that "there is no such thing as a free lunch." Someone, somewhere is paying for your "free" benefits. Did they owe that you? Is it really right for you to have it? Or is it stealing? And do you really want to pay for the benefits of others, especially if it means (as it so often does) you are really subsidizing their laziness?
Thus, I would argue that a free market system is morally superior, as well as practically superior, to a socialist system. The free market system is not based upon greed (though no doubt people will always be greedy). The system itself presses me to serve my neighbor and thus cultivates virtue. The free market accords with the best of human nature and with the limited purposes for which God ordained civl government. A socialist system does the opposite. It appeals to greed and envy and cultivates vices of laziness and theft. It grants the state god-like powers over human lives. An oversimplification? Perhaps. But all the historical evidence backs up this analysis. Free markets work. Socialism does not.