The Heart of the Financial Matter

The U.S. financial crisis has been front and center in the news and in discussions at the water cooler, to be sure. It's amazing how a singular vote in the House of Representatives--on whether or not the U.S. Government should spend $700 Billion of taxpayer money to buy bad mortgages--can grab our attention and the headlines. It's also fascinating to observe folks who normally don't give Wall Street the time of day perk up when it takes a nose dive of almost 800 points. As of this writing, however, it appears that Wall Street, contrary to yesterday's dire predictions, recouped almost 500 of those points in what looks like a pretty good day.

What's really going on, in the recent vote, in the Wall Street roller coaster ride, and in the pocket books on "Main Street" (to use the current politically fashionable word)? I won't pretend to be an economist, let alone to have grand answers, but I will pass on for your consideration some dispassionate explanation of what seems to be happening before our very eyes.

What is happening? It appears to be a tug 0f war between two vying economic systems: capitalism and socialism. That, it appears to me, is the real heart of the matter being played out in New York City, Washington, D.C., in the nation's headlines, and in the presidential campaign.

How can it be dispassionate in this time of highly charged emotions and over the top rhetoric? Because this was written in 1995 by Dr. David Noebel, a noted Christian apologist, in his book Understanding the Times: The Religious Worldviews of Our Day and the Search for Truth.

What Noebel has to offer won't put money in our pockets, ease our tax burden, set politicians straight, bring greedy CEOs to justice, or clean up the economic mess. But I hope that his words will help us understand what's happening before our eyes and inform us as we vote for the good of all people in our nation come November 4.

Here's Dr. Noebel:

We began our analysis of capitalism and socialism by noting that capitalism trusts the free market while socialism requires centralized control. From this most fundamental difference between the two systems springs a number of ramifications, including the counterproductive bureaucracies created by the welfare system in the United States. Because socialism requires a planned economy, including control over wealth, distribution, pricing, and production, it also requires a powerful central government to initiate the plans. As P.T. Bauer points out, "Attempts to minimize economic differences in an open and free society necessarily involve the use of coercive power." [P.T. Bauer, Equality, the Third World, and Economic Delusion (Cambridge, MA: Harvard University Press, 1981), p. 18] Thus, the socialist must rely upon increased political power to achieve his goals of economic equality and a planned economy.

In a capitalist system, in contrast, far less political power is necessary, because the government need not worry about controlling incomes, prices, or production. Citizens are free to determine how they will spend their money and how they will use their resources.

Clearly, there is a relationship between the type of economy a society chooses and the amount of freedom the individual must sacrifice. In a socialist society, the individual must relinquish to the government much of the control over his life. "The only way to arrive at equal fruits is to equalize behavior," says Beisner; "and that requires robbing men of liberty, making them slaves." [E. Calvin Beisner, Prosperity and Poverty: The Compassionate Use of Resources in a World of Scarcity (Westchester, IL: Crossway Books, 1988), p. 54] Economic freedom and the right to private property are crucial for political freedom. (Understanding the Times, p. 330-31)

What's at the heart of our current U.S. financial crisis? It would appear to be a wrestling match between capitalism and socialism. Only time, perhaps measured only in months and years, will tell which one will (or has) become dominant. But it seems prudent to bear Dr. Noebel's words in mind as we listen to, watch, and read news reports about our financial crisis. I pray that keeping this "big picture," the principles of the matter, in mind will help us citizens be informed on what's happening and speak up, especially to our elected representatives.

After all, such matters do affect us in the Church and how we can confess the Gospel of Jesus Christ.