Where Did Capitalism Come From; and Where Is It Going?

Capitalism is unquestionably the most productive economic system ever devised by human society. Even with its excesses and abuses as evidenced by the strikes and human suffering capitalism caused in 19^th Century America, still, it has produced goods and services that have been highly beneficial to society today.

To understand where this complex system of economics came from, we must first study the place where it did not originally arise and why it did not arise there. That place is China. The Zhou Dynasty in China was active from 1046 BC until its replacement by the Qin Dynasty in 256 BC. Zhou and Qin emperors ran a nation from a Confucian viewpoint that looked back into time and ancestry to find out how society should operate. Their administrative viewpoints were very similar to Western European feudalism. Administrators were chosen from family heritage lines and not from any merit of their own. These early dynasties did not provide the common people with property rights. Neither did they manifest rules of law. Laws that existed were only the capricious movements of the emperors acting on the instant impressions they had of how things should be adjudicated. They ruled over a society that was fraught with wars between competing states, and very little peace and security prevailed. In 256 BC, the Zhou emperors were replaced by Qin emperors who ruled China for only 15 years; but Qin rooted out the heredity system of government succession to a large extent and brought a system of merit into being for the first time. The Qin emperors were, however, very harsh governors; they taxed the people heavily and regulated all aspects of their existence. Their heavy-handed autocratic ways were so obnoxious to the people that they were soon replaced by the Han Dynasty. Confucianism reigned supreme in the thinking of the people and their administrators.

These early Chinese dynasties produced a nation with a bureaucracy and a functional situation where specialization and organization could coexist. These things were necessary for a stable economic system to develop and persist. But…although these things are necessary preliminaries for the development of a capitalistic economy, they are not sufficient.

The Chinese system of life did not lend itself to entrepreneurial, profit-seeking, businesses.

Western Europe, on the other hand, produced an environment with a very different system of thought. The difference was primarily the difference between Confucianism, which looked backward, and Christianity that saw things very differently and from a forward-looking perspective. Christians had the understanding that God had created a universe that was rational and, therefore, understandable. Christianity saw man as God’s image bearer and a creature with dignity, who deserved rights to property, and a stable rule of law, instead of the momentary judgments of emperors who might change decisions unpredictably. Christians came to believe that it is legitimate and desirable to understand God by looking carefully at his creation. Thus…the development of the forward-looking scientific method.

Science made it possible for people to profit from knowledge—thus…scientific thinking received an economic impetus. European society produced universities and scientists, the large majority of whom were professing Christians. To name a few: Francis Bacon, Johannes Kepler, Isaac Newton, Blaise Pascal, René Descartes, Robert Boyle, Michael Faraday, Clerk Maxwell, Copernicus, and Galileo.

Our Western way of life, including our capital-based economies, owe their existence to the Christian heritage we have received from the thinking of early Christian students and explorers of every type. Even such non-Christian 20^th Century thinkers as Alfred North Whitehead and J. Robert Oppenheimer have stressed that modern science was born out of the Christian worldview.

Today, however, we are in danger of reverting to the stultifying effects of high taxes and onerous regulations characteristic of the ancient Chinese. Many people seem to think that our Western system is “too big to fall;” but I fear that this is not the truth. Big government, high taxes, over-regulation, all threaten to shut down our successful free-enterprise system of government and economy. We need some government regulation, especially in the banking and medical areas; but this overactive government is drawing our economy and our nation into dangerous areas of discouragement, lack of motivation for gainful work, and resultant unemployment.

The capitalist system of economy is bound to produce some inequality of outcomes for the people, but as I expounded in my last blog post, this inequality and the opportunity to further and profit oneself in life is necessary for a healthy economic lifestyle.