In celebration of all the stimulus about to begin in Washington, our readers need to consider a few of Matthew Burton’s thoughts on Calvin and Capitalism. Although it may have fallen out of favor, capitalism still has great merit. In a forthcoming work on Calvin and the capitalistic spirit, Matthew Burton opines as below.
Closer to our day in the 1960s Christian “socialists” and theologians turned up the volume on the evils of abundance and wealth. Citing Acts 2 out of its canonical context, they called for a simpler lifestyle, a feature often commended by collectivist theorists. Even faced with the myriad of benefits capitalism brings to society—enhanced employment and liberty only to mention a few—they still felt trapped in Weber’s “iron cage.” From Schnieder’s book The Good of Affluence, “Economists like Robinson and moral thinkers like Hauerwas feel the same is true of capitalism—that while it may bring about enormous good in the form of prosperity, its inner human workings are not good, but quite immoral.” The great 20th century social experiment needed anti-heroes for its lionization of free-love, peace, social liberties and expression. Fueled by a century of suspicion and attacks, and gas-lighted by the new liberation theology, the 1960s and 1970s cemented the concept of the immorality of wealth, making it part of the mainstream cultural consciousness.
Even today this holds true in terms of despising wealth; one only need to listen to the various criticisms of the latest vilified violator—big oil. In the past 3 years, the leaders of Exxon and others have been summoned before congress to defend their “excessive profits.” Almost as rite of spring passage, Congress berates Exxon and the other members of the cabal they call big oil. But are their profits truly excessive? For 2007, ExxonMobil made $40.6 billion dollars after taxes—a staggering sum. However, based upon their revenues of $358.6 billion, the net profit margin of 2007 was 11.3%. The table below shows financial data for the top ten stocks in the S&P 500 based upon market capitalization.
|Company||Net Profit Margin||Dividend Yield||Dividend $ Distributed|
|Proctor & Gamble||12.6%||1.9%||$4.2B|
|Johnson and Johnson||19.9%||2.5%||$4.67B|
|Bank of America||27.5%||6.2%||$10.87B|
Financial data courtesy of Baseline database, compiled by Thomson Financial, New York, New York.
Comparing Exxon’s profit margin to the other nine companies in the top ten, they are actually the 3rd least profitable. If Exxon is guilty of excessive profits, then what of Microsoft, Google, and Bank of America who have established corporations that withhold over 20% of the consumer’s dollar? Note also that Exxon has paid out over $7 Billion dollars in the form of dividends in 2007, yet Google has paid zero. Once the playing field is leveled by the magic of analysis, Google, Microsoft and others earn more per dollar spent and return less to shareholders. If the U. S. Congress was truly concerned about excessive profits they should mandate that every firm limit their profit margin to that of Exxon’s and redistribute the excess to the U. S. population.
Furthermore, ExxonMobil uses its wealth to reinvest in activity throughout the world, employing hundreds of thousands of individuals. For example, 22,000 employees are employed by Exxon in Chad. Is not that national economic system adjusted upward because of the employment of Exxon? What is the ultimate value to thousands of homes in Chad because of the trickle-down effect of the profits of Exxon? To take a snapshot of profit without context is always prone to distortion or manipulation. Profit and wealth, when not hoarded, has a multiplier effect that creates value. The political circus is at best a sideshow, but it reinforces the thought of our time, that wealth and profit in large portions are bad, socially frowned upon and may be subjected to redistribution. However, under an efficient market system which operates under biblical economic principles, the power of wealth as a tool of reinvestment and grace can be understood not as evil, but as good, creating value, impacting lives, developing communities and advancing the abundance of God’s creation to all men as an extension of his providence.
The point is that God created wealth and gave humans the ability to manage and exchange currency. Rather than restricting humans to barter or exchange of good alone, the free flow of capital is actually an exercise in dominion. It is another way that the crown of God’s creation stewards created aspects. The use of wealth to enrich the lives of our families and others is one way to glorify God. One cannot conclude from a study of Scripture that wealth is inherently evil; instead, it is a part of creation. While human envy, greed, or avarice may cast doubt about the management of wealth, those covetous desires can also be oriented toward other things that are not inherently evil. Calvin had a balanced enough view to understand that the Creator created even wealth. That wealth was never to become an idol, but in its right setting could be used further to comfort God’s creatures.
Wayne Grudem puts it well when he affirms that money is a fundamentally-good human invention that “sets us apart from the animal kingdom and enables us to subdue the earth by producing . . . goods and services that bring benefit to others. Money enables all of mankind to be productive and enjoy the fruits of that productivity thousands of times more extensively than we could if no human being had money, and we just had to barter with each other.”
Now that’s a voice we need to hear more!!