Magazine mogul offers Notre Dame students a moral case for capitalism
Steve Forbes, the Editor-in-Chief of Forbes business magazine, made a forceful argument for the Christian roots of capitalism during his visit to Notre Dame on November 5.
“The reason that commerce is based on morality is very simple: In true free markets, you succeed by meeting the needs and wants of other people,” Forbes said in his lecture.
According to Forbes, the concept of freedom has been integrally woven into the fabric of the Church. The Judeo-Christian interpretation of linear rather than cyclical time—an interpretation that allowed for the possibility of progress—primed an intellectual landscape ripe for discovery. In turn, a tradition of innovation was established by Church fathers like the apostle Paul, Albertus Magnus, and Augustine. The linguistic baseline for commerce was set in motion in the Middle Ages when, through the influence of the Catholic Church, Latin became a transnational language used across European borders.
The religious orders that sprang up throughout Europe, although sequestered in their monasteries, became renowned for entrepreneurship. Specializing in everything from cost accounting to the production of iron, wool, beer, and many other popular goods, Catholic religious orders became the highly skilled workforce of the Middle Ages.
“Our Judeo-Christian heritage led to more curiosity and experimentation in a way no other faith did,” he explained.
Forbes emphasized that the specialized workforce required by a capitalist economy demands cooperation and that capitalist societies produce citizens who are both civic-minded and faithful. In a capitalist system, individuals cannot work in isolation. To bring about the creation of something as simple as a pencil, a litany of enterprises must nimbly and agreeably coordinate their efforts—miners, lumber companies, manufacturers, sales personnel, and many other entities must collaborate to deliver a viable product.
Free markets demand not only cooperation, but also trust. Throughout history, the idea of trusting anyone outside of one’s family or ethnic group was not common. Capitalism transcends ethnic and other differences in pursuit of a larger cause. Individuals become dependent on one another to provide the essential services for sustaining life. As essential as food is to life, most people in Western nations trust the capitalist system to provide food regularly and abundantly.
Despite its detractors, most concede that capitalism has benefits. However, two common criticisms of the capitalist system are the distrust of the profit motive and the fear that capitalism inevitably degenerates into monopoly.
Many question the concept of profit altogether—why is it not the case that companies should pay a salary and surrender the margins to the consumer? Forbes suggests that the answer involves more than incentive. First, profit hedges risk. Inevitably businesses will suffer downturns. Profits allow for reinvestment that often fund research and development of new and innovative products.
Secondly, profit provides a direction for resource allocation. If a product is profitable, a firm knows to direct resources toward it. Moreover, profitability attracts competitors, and by the law of supply and demand, more suppliers will enter the market. However, when the market is dominated by only a few major players, this does not happen and price gouging occurs.
Milton Friedman—a famous free market economist who shaped many of Forbes’ views—asserted that monopolies are actually the result of government interference in capitalism, not capitalism itself. When certain companies are deemed too big to fail or certain industries are granted tariffs, monopolies will form. According to Friedman, in an unregulated economy, monopolies, and especially price gougers will always be temporary because smaller firms will always provide the better value over time.
Friedman’s most trenchant criticism of capitalism’s opponents is his statement that “underlying most arguments against the free market is a lack of belief in freedom itself.”
“[Capitalism] enables people from the most unlikely backgrounds to rise up,” Forbes said during his talk.
Despite his advocacy for capitalism, Forbes recognized that scandals can occur in market economies. However, capitalism is not the source of those scandals, he said. Human nature remains the same under socialism, capitalism, or anarchy. Capitalism does not fix human nature, it only directs the creative energies of human beings toward a productive outlet.
“It was refreshing to see such a successful man retain his values of faith and teamwork,” sophomore Susan Morand told the Rover in response to Forbes’ talk.
Michael Singleton is a sophomore finance major living in Alumni Hall. He is well-known for wearing fancy suits around campus for no reason at all. Contact him at msingle1@nd.edu.
Leave a Reply