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Corporatism is an Economic Problem
Public-private partnerships and socialism in the name of CSR and ESG
“Honor the Lord from your wealth, and from the first of all your produce; So your barns will be filled with plenty and your vats will overflow with new wine” (Proverbs 3:9-10).
Christianity has had a complex relationship with business. We tend to support free market economics and entrepreneurship — especially family and small businesses. However, in America, many high-profile entrepreneurs funded by Silicon Valley venture capital have upended existing structures in a single-minded pursuit of wealth. Further, modern businesses are often tied to technology and media that are incompatible with the contemplative life and do not support the practice of morality. For example, Facebook, Twitter, Google, Amazon, Microsoft, and Apple all use data tracking and techniques designed to manipulate buyers. We need Christian business leaders to step up and develop creative systems that deliver products aligned with a Biblical worldview and godly values.
How do we address this disparity?
One roadblock we face as Christian leaders is the prevalence of corporatism today. To address this we need to confront the reality of incentives in our country.
Corporatism is another name for crony capitalism, a combination of the statist influence of supposedly private business interests. This subverts the system of wealth generation in this country by incentivizing corruption, lobbyists, and gaming the law. Hedge funds and investment banks use Environmental Social Governance (ESG) scores developed by billionaire Larry Fink and the World Economic Forum (WEF). These ideas are derived from an academic model of ethics that emphasizes the Corporate Social Responsibility (CSR) of a business goes beyond making products that make a profit and includes stakeholders (not shareholders, but public such as employees, customers, suppliers, media, communities, etc.) and environmentalism.
Conservatives think that government involvement in our economy perverts the general market forces that allow commerce to provide the goods and services we need. Our banks, investments, and businesses are regulated by government oversight. Certain people in local, state, and federal government positions control the flow of money in our nation, from Congress to the Presidential administration to various agencies and the Federal Reserve — this oversized influence directly impacts the success or failure of firms.
CEO’s strategies and the activities of employees in publicly traded companies reflect a view of economics where the power of the government benefits politicians and their friends or donors. Sometimes this is foolishly referred to as social enterprise or public-private partnerships. It has become logical, albeit unethical, for companies to essentially bribe politicians with campaign donations and other incentives. Colleges and universities promote a skeptical view of business which creates graduates who encourage the use of DEI and CRT. This continues in HR departments and marketing campaigns that push a liberal agenda (see: Bud Light and Target). The idea that the state should keep its hands off of business is disintegrated by the practice of a deep state system that runs businesses like attack dogs (see the Twitter files released by Elon Musk after he purchased the company).
We need to have a properly Reformed and Kuyperian view of the economy. The economy is apportioned under the spheres of the government, family, and the church. It is not a separate sphere of influence. There is no government ordained for commerce with different leaders. Instead, workers become leaders when they prove themselves as part of a family. They find favor in the eyes of the kings, princes, magistrates, and village elders in the sphere of government. And they must abide by the natural law or what you could call the “mandate of heaven” that rests on the shoulders of all men who are held accountable by God and his Church. This is the proper hierarchy of our society — one nation under God.
Economics in the Bible is consistently tied to kings and duty. It is not nearly as sanitized and hygienic as our modern dismal scientists assume. Markets have always existed. Trade and commerce are as old as human civilization. But, a modern definition of the economy - from French économie via Latin taken from the Greek oikonomia ‘household management’, based on oikos ‘house’ - is a social science that contains a veneer of reputable statistical analysis over a core assumption. It doesn’t really deal with the home and how we provide for our family as the term implies. Instead, our economists focus on the office and the board room. They assume that business is not personal and that humans are rational. Further, they imply the state doesn’t own the marketplace when it practically controls it. They indicate that morality is manmade when they refuse to apply objective standards to financial transactions and investments.
None of these things are true.
This is especially ironic considering the original economists were “moral philosophers” who traded in ethical principles of commerce over and against feudalism and mercantilism.
Before he wrote The Wealth of Nations (1776) Adam Smith wrote The Theory of Moral Sentiments (1759). In this earlier book, he emphasized sympathy, which he defined as the feeling of understanding the passions of others. For Smith, the economy was driven by the force of character, motivation, and social interaction. This idea is the opposite of Ayn Rand’s objectivism which celebrated the heroic, selfish, and productive capitalist. Her stories celebrate innovation and creativity but fail to center this impetus on our God-given image. Objectivism has been linked to libertarianism by many who see a connection between her philosophy and this political party which is associated with the Austrian school.1
Capitalism is a name given by Karl Marx for the free market economics described by Smith as the commercialization of primitive capital for production in what modern business textbooks would call vertical integration.2 But Smith’s notion of capital was based on God’s invisible hand guiding our exchanges. Instead, in her anger against Communism, Rand posited a philosophy of self-interest couched in stories that had no empirical value but drew clean lines for the political consequences of a dystopian collectivist fantasy. Her goal was correct but her methods were not just enough.
Yet both Smith and Rand used economics to address moral issues. Smith submitted his theory to God’s providence and Rand created imaginary god-men who could pursue their own righteous ethic without reference to God. These ideas percolated in the Austrian school of economics, which is generally right about the ideal function of our economy (see: The Road to Serfdom3 and Why Government is the Problem4). Hayek and Friedman with their acolytes rightly assess the problems with interventionist policies that stem from the views of John Maynard Keynes. But some Republicans seem to think that we can convince the kleptocrats to stop stealing from the public dole with books and arguments.
Traditionally Austrian economics gets this wrong, but with modifications from behavioral economics (see: Thaler5 and Kahnaman6) we can extend this theory of economics in the right direction. Free market and laissez-faire (hands-off) economics assume that commerce is somehow distinct from other areas of life. It is not. In fact, economics is intimately connected with the home and yet is now and always has been governed by the state.
Keynesism is a variant of socialism and Marxism that promotes government control. It is therefore the dominant strain of policy taught by statists who want to enhance government power over businesses. Keynes asserted that free markets have no self-balancing mechanisms that lead to full employment, so the government must step in. Keynesian economists justify government intervention through public policies that aim to achieve full employment and price stability. Both of these are not possible, even with draconian laws and massive regulation — which create temporary distortions in the market but precipitate bubbles and lead to a major collapse — unless the bubble is constantly inflated with future money in the form of perpetual debt that leads to an economic crater.
Instead, Christian servant leaders can integrate these premises with a Biblical understanding of business. We must prevent domination by corporatists through laws and the enactment of justice. This current pattern and status quo of public-private partnerships for the benefit of a few is, to note a turn of phrase, unsustainable. Jesus describes money in terms of control. “No one can serve two masters. Either you will hate the one and love the other, or you will be devoted to the one and despise the other. You cannot serve both God and money” (Matthew 6:24). When money is tied to power, prestige, and motivated by greed it becomes a cruel master for the pseudo-king and CEO. But when it is used to promote goodness and justice it is a useful servant.
We often replace wealth with the idea of earning a living because our society has substituted money for goods. But the idea of working was more directly tied to food in ancient times. “For even when we were with you, we used to give you this order: if anyone is not willing to work, then he is not to eat, either” (2 Thessalonians 3:10). We should see our business as provision, from God to us and for the benefit of others. Then our responsibility to glorify God and worship him will find proper expression in our business.
Block, W. (2005). Ayn Rand and Austrian economics: Two peas in a pod. The Journal of Ayn Rand Studies, 259-269.
Hayek, F. A. (1944). The Road to Serfdom: Text and Documents--The Definitive Edition. United States: University of Chicago Press.
Friedman, M. (1993). Why Government Is the Problem. United States: Hoover Institution Press.
Thaler, R. H. (2015). Misbehaving: The Making of Behavioral Economics. United States: W. W. Norton.
Kahneman, D. (2011). Thinking, Fast and Slow. United States: Farrar, Straus and Giroux.