Economics 101 & Public Square

Do Markets Give Power to the Powerful?

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A common criticism of free markets and market-based economies is that they make the rich richer, at the expense of everyone else – especially the poorest among us.

Is this true? If it is, as Christians, what should we do about it?

The Bible is clear that we as Christians are called to care for the poor and needy.

Deuteronomy 15:11  tells us:

There will always be poor people in the land. Therefore I command you to be openhanded toward your brothers and toward the poor and needy in your land. 

The Bible is also clear that it is sinful to pursue wealth and riches above Christ. While being wealthy is not itself a sin, wealthy Christians bear great responsibility. Because they have a greater ability to do so, the wealthy are to care for those around them. They, like all of us, must never let the love of money enter and takeover their hearts.

Scripture is clear on the dangers of being wealthy and the responsibilities that wealth brings. But what about power? Do markets give the wealthy power over the powerless? Do they provide a place for the rich to oppress the poor? Do markets exploit and keep the poor in poverty?  James 5:1-6 provides insight here:

Now listen, you rich people, weep and wail because of the misery that is coming on you. Your wealth has rotted, and moths have eaten your clothes. Your gold and silver are corroded. Their corrosion will testify against you and eat your flesh like fire. You have hoarded wealth in the last days. Look! The wages you failed to pay the workers who mowed your fields are crying out against you. The cries of the harvesters have reached the ears of the Lord Almighty. You have lived on earth in luxury and self-indulgence. You have fattened yourselves in the day of slaughter. You have condemned and murdered the innocent one, who was not opposing you.

It is important to really understand what the text is saying. Here, that the rich have acted in sinful and wicked ways. They have not paid the workers for work completed. This is theft. They “condemned and murdered the innocent one, who was not opposing you.” This is injustice.

Not paying people for earned wages based on completed labor is wrong and sinful. So is harming and keeping down those who have done nothing against you. The question is this: Are markets the cause of this problem?  Are markets oppressive because they reward people through profit? Does one man becoming rich keep a poor man in bondage?

Economics can help us here.

Money does not imply that you have great power. Money gives you opportunity, choice, and often the ability to make even more money. But is that power?

Merriam-Webster defines power as: “the ability to act or produce an effect.” Not coincidently, the second definition listed is “legal or official authority, capacity or right.”

The first definition applies to everyone. Each one of us has the ability to act or produce. That is how God created us. Did you eat breakfast, have a child, write a letter, start a business or make a pot of coffee?  You exercised power to accomplish all of those things.

The difference is in the degree to which we are capable of producing our desired results. Even the rich and brilliant Steve Jobs didn’t have the power to create the smartphone from start to finish. He needed A LOT of help, as our video demonstrates.

The market rewards innovation through profits, which can make people wealthy. It doesn’t, however, give wealthy people much power.

  • The super wealthy can’t force us to by their products.
  • They can’t force people to work for free.
  • They can’t charge whatever price they want.

Remember the second listed definition of power: “legal or official authority, capacity or right.” Legal and official authority is where people gain much power and can use that power to protect and benefit themselves at the expense of others.  Markets are incapable of doing this.

In a market setting, for Bill Gates to become wealthy, he had to provide a good or service that people actually like! His product had to make their lives easier, better, more efficient, more comfortable, or happier. We reward those people buy purchasing the stuff they create. If we don’t purchase it, they don’t gain wealth.

It’s when society allows entrepreneurs to gain special privileges through the state, what we call cronyism, that the wealthy truly have an opportunity to oppress the least among us.

In the coming weeks I’ll be taking a deeper look at cronyism, political power, and this criticism that markets make people rich at the expense of everyone else.

Until then, I’d love to hear your thoughts.

What do you think? Do markets allow for the wealthy to gain and wield more power over the rest of us? Leave your comments here

 

 

 

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  • Well said, and thank you for saying.

    • gregoryayers

      Approve.

  • Patrick Donohue

    This is the wrong question. By injecting the frame of markets you distort the issue and limit the answers. The question is, “Does wealth beget power?” Now most of us can answer this question.

    In this country, the USA, the system is designed and crafted by the wealthy for the wealthy. So, the answer is yes, wealth does beget power.

    Now you, an economist with a PhD, should know that once upon a time Political Economy sprang from Moral Philosophy and preceded what is known as “economics” today. As a child of Moral Philosophy, it was more humane and less sterile than it today. People like Jevons and later Marshall succeeded in divorcing “Economics” from the untidiness of Moral Philosophy in an effort to make it more scientific, sterile and consequently less humane and messy.

    In my humble opinion, the separation of Econ from MP denies reality and separates people from their responsibility toward one an other and the possible foreseeable consequences of actions.

    I digress…

    Money is the lifeblood of politics in capitalist societies. In the history of the USA the wealthy were not allowed the unfettered access that they now have, until Lincoln sat in the oval office. That is when they got their foot in the door and now one just has to walk down “K Street” in DC to get a feel for what is really going on.

    The richest 10% of adults on Earth own 86% of all wealth, and the top 1% account for 46% of the worlds total. Twenty-one percent of these people live in the USA by far the largest single concentration of wealth on the planet. There were 962,000 new millionaires created in the United States between 2011 and 2012. Further, there was no other country in the world that saw that group increase except Japan with 460,000 (Credit Suisse, Oct. 2012),

    Less than 1% of Americans Contribute 80% of funds to political candidates. Contributions from the top five sectors accounted for nearly 50 percent of the total $2.4 billion in 2008, compared with 10 percent from ideological/single issue groups and 3 percent from labor unions.(Federal Election Commission).

    The wealthy can influence the structure of the playing field and do. They change the rules to benefit themselves and their companies.

    Where did you get your PhD in Econ?

    You seem to be deliberately trying to Skew the View and distort reality.

    There is a market at work here and it’s offices are located on K Street in DC. It specializes in the Buying and Selling of politicians votes.

    It is hard to believe you have no knowledge of this “market”. I would say it is a miracle!

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