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This review is from: The Virtues of Capitalism: A Moral Case for Free Markets (Paperback)
Capitalism's reputation has taken a beating in light of the recent financial crisis. According to politicians and pundits from both sides of the spectrum, capitalism is to blame. Not so, say Austin Hill and Scott Rae, who argue in their book that capitalism is our best bet. In fact, according to Hill and Rae, capitalism "remains the preferred economic system, even the necessary economic system, for any society that upholds a true sense of human rights."
Hill and Rae approach economics from a distinctly Christian perspective, showing capitalism to be both consistent with and supported by the Bible's teachings. Contrary to some, the sharing of goods as described in Acts does not advocate socialism. The sharing of goods was voluntary, as opposed to forced. Moreover, the authors show that economics itself is deeply intertwined with moral issues. Economic conditions can act as a powerful motivator either to encourage or discourage virtuous conduct. "[B]e honest and ask yourself: Is it ever more difficult to be the kind of spouse or parent that one aspires to be, when the economy is slow and personal finances are scares? ... [W]hen finances are plentiful, can the enjoyment of material goods enable a person to avoid or neglect other important areas of their relationships? And a final question... can economics impact one's relationship with their God."
Several misconceptions about capitalism are also dealt with. These include myths such as "The rich get richer at the expense of the poor," "Capitalism is based on greed," and "Capitalism leads to overconsumption and materialism." Economics is not a zero-sum game, argue Hill and Rae, and is based on self-interest rather than greed (There's an important distinction between the two). They explicitly reject Ayn Rand's response to the greed objection, which recognizes greed to be good.
Then, in plain and lucid language, Hill and Rae explain why the financial markets failed as they did. They go all the back to the dot-com bubble of the late 1990's and trace the events which led up to the housing bubble. The markets failed not because of capitalism, but chiefly because of excessive government regulations, and the the reckless behavior that results when government intervenes to shield people from accountability. In another chapter, Hill and Rae make the case that government intervention in free-markets is more of a hindrance than a help. "Generally speaking, government does not use resources as efficiently as do individual citizens and private enterprises."
Still, the authors recognize that capitalism has its limits. While it not may be the perfect system, it's the best out of all we have. "Capitalism," said Winston Churchill "is surely the worst economic system, except for all the others that have been tried." There are several pre-requisites that a society must fill before capitalism can flourish. These are what Hill and Rae mean by the virtues of capitalism. They list five such virtues, these being: creativity, initiative, cooperation, civility, and responsibility. Most important, however, is a stable moral system, which "is the sine qua non of the political system and the economic system. It reinforces the incentives provided by the political system, as it provides a moral foundation for personal habits and behaviors necessary for prosperity."
Overall, it's a great and easy to understand book. One drawback, however, is that it's a bit shallow. For a deeper resource, I would recommend Jay W. Richard's "Money, Greed and God: Why Capitalism Is The Solution and Not The Problem."