Capitalism vs. Socialism

“Under capitalism, man exploits man. Under socialism, the reverse is true.”              (Polish Proverb)

“Growth for the sake of growth is the ideology of the cancer cell.” (John Nichols)


I recently followed a thread on another blog about capitalism and Christianity. I didn’t comment on that blog; I just read with interest. The topics of capitalism and socialism have been hot issues ever since President Obama took office.

Here are my thoughts on the subject.

  • Capitalism and socialism are economic systems, not governmental systems. (To say a government is “socialistic” simply means that country’s economy is a socialistic economy.) A democracy, republic, or dictatorship, can be either capitalist or socialist.
  • Very few economic systems are purely one or the other. The vast majority of countries (USA included) are a combination of both. For example, the United States is a capitalist economy with socialist tendencies. Germany is a socialist economy with capitalist tendencies.)
  • Neither economic system is perfect. Both are flawed. Both can perpetuate injustice. Both have strengths an weaknesses.
  • Capitalism is no more “Christian” than socialism and socialism is no more (or less) “evil” than capitalism.
  • Most of the political debate we hear concerning capitalism and socialism is based on fear and power grabbing.
  • All things being equal, my preference is capitalism.

Now, with all that being said, here is a quick (and overly simplistic) explanation of each economic system.

First, capitalism:

Capitalism is an economic system in which natural resources and the means of producing goods and services are privately owned. Capitalism has three distinct features:

  1. Private ownership of property
  2. Pursuit of personal profit
  3. Competition and consumer choice

“Justice” in a capitalist system is defined as freedom of the marketplace according to self-interests. In other words, “justice” is being able to “earn your own success.” One goal of capitalism is freedom to pursue your individual happiness. The theory is that if each individual is free to pursue their own happiness (with minimal governmental interference) they will be free to be more productive and creative. (In a purely capitalist system there would be no governmental interference or regulation. I, for one, do not think that would be a good idea.)

Closely related to capitalism is the free enterprise system. Free enterprise is the belief that earned success is the most just and fair system. Thus each person is responsible for their own success and happiness. Free-enterprise is built on three principles:

  1. Optimism – things will get better
  2. Meaning – all work has dignity
  3. Control over one’s own life

Now Socialism:

Socialism is an economic system in which natural resources and the means of producing goods and services are collectively owned. Socialism has three opposite distinctives from capitalism:

  1. Collective ownership of property
  2. Pursuit of collective goals
  3. Government control of the economy

“Justice,” according to Socialism, is not competing to gain individual wealth but meeting everyone’s basic needs in an equal manner. The goal of socialism is freedom from the basic necessities of life. The theory is that if each individual is free from the basic necessities of life (food, shelter, clothing) they will be free to be more productive and creative for the common good.

Here are some final thoughts:

  • A big criticism of capitalism is that it leads to greed and selfishness
  • A big criticism of socialism is that it diminishes ingenuity and creativity
  • Socialism believes the greatest inequality is economic inequality and so the answer is greater economic equality
  • Capitalism believes people flourish when they earn their own success
  • Capitalists and Socialists both believe their system is the most efficient and fair system

As a follower of Jesus Christ, don’t get sucked in to any debate that uses fear as a sledge hammer. Our faith, trust, and security are based on Christ and His finished work on the cross. God’s economy of grace, mercy, and forgiveness is far more valuable than any man-made economic system. Our responsibility is to look out for the poor and vulnerable in our society regardless of why they are poor and vulnerable.

About Pastor Kevin

I am a husband, father, pastor, teacher, scuba diver, reader, bike rider, that order.
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