The Morality of the Free Enterprise System

Body: 

July 13, 2012

By Brian Fikkert

“Free enterprise is… a moral imperative,” states American Enterprise Institute President Arthur Brooks in The Road to Freedom: How to Win the Fight for Free Enterprise. In light of rapidly increasing government expenditures and debt, Brooks argues that—at best—the U.S. is heading toward European-style, social democracy, an outcome he considers immoral.

Brooks founds his case on his belief that what brings people true happiness is “earned success,”—i.e. “the ability to create value in your life or in the lives of others…to define and pursue your happiness as you see fit.” In other words, people do not just want to have money; they want to earn money.  Hence, Brooks believes that free enterprise is morally superior because it rewards hard work and ingenuity, while democratic socialism reduces happiness by giving people material things they have not earned.

Brooks’ prescription: Massively reduce the scope of government to allow free enterprise to flourish, while providing a social safety net to enable the poorest to survive.

From a Christian perspective, there is much to like in Brooks’ arguments.

First, Christians can affirm Brooks’ view that human flourishing is not solely a function of how much humans consume. As the Center for Public Justice Guideline on Economic Justice affirms, human beings, as image bearers, are called to work, to creativity, to entrepreneurship, and to stewardship. A just economic system should foster all of these activities.

Second, Christians can join Brooks in lauding the role that free enterprise has played in lifting massive numbers of people out of poverty from the time of the industrial revolution through the present.

Third, Christians can agree with Brooks’ concern that a burgeoning government often undermines the functioning of other legitimate spheres of society, including the market, nonprofit organizations, the family, etc.

Finally, Christians should support Brooks’ belief in a social safety net that provides assistance to the poor without undermining their incentives to support themselves through their own work. These principles are elaborated in the Center for Public Justice Guideline on Welfare and in Toward Civic Justice and Economic Empowerment.

However, there are also some disturbing features of Brooks’ work.

At a fundamental level, Christians must reject Brooks’ ethical standard: human happiness as defined by autonomous human beings. Brooks’ ethics are rooted in Enlightenment humanism rather than the transcendent standards of God’s moral decrees. To determine if the free enterprise system is moral, Christians must determine if it satisfies biblical standards of justice, not autonomous humans’ notions of happiness.

Brooks’ appeal to human happiness as the moral standard necessarily requires him to provide empirical evidence that humans are happiest under a free enterprise system.  And here Brooks’ work is weak.  At first glance, Brooks appears to present a host of “scientific” evidence to support his claims.  In reality, he often overstates what his evidence demonstrates, and he ignores—or quickly dismisses—counter evidence. As a result, readers are given the impression that Brooks’ conclusions have been scientifically “proven,” when they have not been.

One glaring example is that in many empirical studies Americans actually report being less happy than residents of northern European social democracies. According to Brooks’ ethical framework, this should make social democracy more moral than free enterprise! But Brooks quickly dismisses this evidence by stating that although social democracy makes Europeans happy, it would not make Americans happy. Hence, says Brooks, free enterprise is moral for America. Case closed. Perhaps a bit more pause would be in order.

Another example of Brooks’ selective use of data appears in his discussion of whether or not America is a meritocracy, fairly providing an opportunity for all to experience “earned success.”  Although Brooks recognizes that America is not a perfect meritocracy, he dismisses these imperfections as minor.  Nowhere does Brooks even mention the enduring legacy of hundreds of years of historical and contemporary discrimination against African Americans, Native Americans and other minorities. And nowhere does Brooks mention research suggesting that the lack of a meritocracy in America may be contributing to America’s status as the most anxiety-ridden nation in the world.

Christians should carefully consider whether a free enterprise system is more moral than democratic socialism. It very well may be.  But we will need far more than Brooks’ most recent book to determine the answer.

—Brian Fikkert is a Professor of Economics and Community Development at Covenant College in Lookout Mountain, GA, and is the Executive Director of the Chalmers Center for Economic Development.

To respond to the author of this Commentary: capcomm@cpjustice.org

Capital Commentary is a weekly current-affairs publication of the Center for Public Justice. Published since 1996, it is written to encourage the pursuit of justice. Commentaries do not necessarily represent an official position of the Center for Public Justice but are intended to help advance discussion.