Michael Schluter Posted: 25 September 2009
Keywords: Finance & the Economy,
Many Christians accept Capitalism as broadly in line with biblical teaching. Its economic success appears to vindicate attribution of its origins to Christian theology. This confidence in Capitalism as the best available economic system has meant that Christians have failed to recognise that it is one of the main drivers of social and moral breakdown in Western societies. This paper will highlight five failings in the philosophical foundations and institutions of Corporate Capitalism, pointing to their devastating impact on families and communities, and how they bring about the growth of giant corporations and centralised state power. Christians need to search urgently for a new economic order based on biblical revelation. One such alternative will be set out in a future issue of Cambridge Papers.
Thank you, thank you, thank you, for putting into words what Me and my work colleagues have known for such a long time. Vive la revolution.
Peter Morgan 28 September 2009
Thought provoking - but because the argument keeps switching, I'm not sure whether the paper thinks any form of 'self-interest' trading or profit is acceptable. (See the food-importing, property developing, profit-making and linen trading 'wife of noble character' in Proverbs 31.) It switches between criticising Corporate Capitalism and then Capitalism and between specifically 'giant corporations' but then criticising all limited liability companies (including, therefore, small family businesses). Or was it interest charging and then the advent of joint stock companies (long before Adam Smith) where the rot set in? If it's giant corporations that are the problem, at what size does a company become a problem? Also, rather disquieted by the idea that a 'significant proportion of the population' are deemed unable to handle freedoms because of 'mental incapacity, poor parenting, lack of education, character weakness and other factors'. Is the implied suggestion that such people are also unable to properly exercise the vote, make key decisions like whether to marry, etc.?
Alan 8 October 2009
In a fallen world any economic system will be imperfect. The article argues that limited liability is morally suspect as debts remain unpaid when a company is insolvent. Whilst creditors and employees are likely to lose out to some extent in an insolvency, the alternative of unlimited liability will not protect employees ( the entity is still bust) and as for many companies their assets will be mortgaged to the bank, so even if the owners are bankrupted (with all the associated impact on their family)this is unlikely to raise sufficient be enable creditors to be repaid.
Limited liability encourages capital that would not be risked if shareholders were also liable for debts. Economic activity would be vastly reduced as the only those enterprises that have very limited capital needs that can be provided by owner/managers would be able to function. If capital is to maintain a relational link and have unlimited liability it is difficult to see how this can be feasible other than predominantly for small local companies probably owner/managed. If this constraint were applied it is difficult to see how there would be any export of capital. How would developing markets and countries obtain the funding they need. Opportunities for economic development in Africa for example would go begging for lack of capital.
Because man is sinful Corporate capitalism has very real dangers that's for sure, which is why we don't allow it to operate unfettered but require all companies to abide by multiple regularity requirements, whether these be to protect the environment, or employees from exploitation or regulations to prevent false security markets or unfair competition etc. Regulation is imperfect and getting the balance right is far from easy but the regulatory approach to seek to prevent the worst excesses and abuse of corporate capitalism is in my view better than outlawing limited liability.
Until we invent something better corporate capitalism is in my view the best of the alternatives. I await the future article on "what an alternative system might look like" with great interest.
Mike Gercke 19 October 2009
There is no doubt that regulation is needed to mitigate the social risks of rampant capitalism. However, I remain to be convinced that capitalism is bankrupt. How else can sufficient incentive for progress be provided (Schumpeter's 'creative destruction')? How else can capital be deployed to gain maximum benefit from innovation? How can the scale be achieved that allows modern technological products to be developed cost-effectively? How can individuals be given max choice and also made responsible for themselves? Future papers need to explore these questions and provide alternatives.
Paul 7 November 2009
"There are a number of reasons why, in the long term, a powerful, centralised state is a threat to personal liberty, to the stability of families and local communities, and to the institutions of civil society."
Powerful, centralised state. You mean like a socialist one?
J 12 October 2010