“Do not store up for yourselves treasures on earth, where moth and rust consume and where thieves break in and steal,” Jesus commanded his disciples, “but store up for yourselves treasures in heaven . . . For where your treasure is, there your heart will be also.” Some take this biblical passage and others like it as a direct assault on capitalist aspirations. But that’s a misreading of the text, and of capitalism.
Look carefully at the command. Whom does Jesus have in mind here? Clearly, he’s not referring to just anyone engaged in commerce or investment, or even to someone who happens to be rich. He’s talking about the person hoards his wealth-that is, a miser.
Misers keep their wealth, or rather, their money, safe. They hole up in their bedrooms, counting their gold bullion and hiding it in their mattresses. Jesus is condemning the person who by hoarding trusts his possessions rather than God. As he puts it elsewhere: “You cannot serve God and wealth” (Matthew 6:24).
For sustained prosperity, policy makers need to ask what policies best encourage entrepreneurs to act like entrepreneurs, and not like misers.
Many of the biblical warnings about wealth seem to apply to misers. But how many misers like Ebenezer Scrooge have you met? Do you know anyone who keeps a bag of money in his mattress, where he can count it? Probably not. We see misers on TV, read about them in children’s books and in Dickens. Sure, there are a few survivalists, who fear the imminent arrival of Armageddon. They separate themselves from society, and store up food, water, and guns for the dark night ahead.
But in capitalist societies, misers are hard to find. That’s because capitalism, when functioning properly, discourages miserliness, and encourages its near opposite: enterprise.
“The grasping or hoarding rich man is the antithesis of capitalism, not its epitome,” writes George Gilder, “more a feudal figure than a bourgeois one.” If you compare the miser with the entrepreneur, you’ll see that on the crucial points they are opposites. The miser prefers the certainty and security of his booty. Entrepreneurs, in contrast, assume risk. They cast their bread upon the waters of uncertainty, hoping that the bread will return with fish. They delay whatever gratification their wealth might provide now for the hope of future gain. The miser treats his bullion as an end in itself. The entrepreneur, whatever his motives-including the desire for more money-uses money as a tool. The carpenter uses hammer and saw; the doctor, scalpel and stethoscope; the entrepreneur, cash and credit. Only by the constant din of stereotype could we come to mistake the entrepreneur for the miser.
Capitalism, when functioning properly, discourages miserliness, and encourages its near opposite: enterprise.
In his modern classic, Wealth & Poverty, George Gilder explores a surprising feature of enterprise: supply precedes demand. After all, before you can exchange, you must first have something to exchange. I must have a good or service, a coconut or a potholder or an iPod that someone wants for trade to ever get started. Right off the bat, if I’m an entrepreneur, I have to think about the wants and needs of others. Great entrepreneurs succeed by anticipating and meeting the desires of others. In that sense, Gilder argues, they are altruistic-alter in Latin means “other.” Entrepreneurial investments, he argues, are like gifts, since they are made without a predetermined return. Competition between entrepreneurs in a free economy thus becomes an altruistic competition, not because the entrepreneurs have warm fuzzies in their hearts, or are unconcerned with personal wealth, but because they seek to meet the desires of others better than their competitors do.
Not for nothing did Ayn Rand dedicate her final lecture to a tirade against Gilder. But her official view of the capitalist, in the end, was skewed by the Marxist stereotype she had officially rejected. Gilder’s view captures much better the nature and subtlety of entrepreneurial capitalism.
‘The grasping or hoarding rich man is the antithesis of capitalism, not its epitome.’
Far from requiring vice, entrepreneurial capitalism requires a whole host of virtues. Before entrepreneurs can invest capital, for instance, they must first accumulate it. So, unlike gluttons and hedonists, entrepreneurs set aside rather than consume much of their wealth. Unlike misers and cowards, they risk rather than hoard what they have saved, providing stability for those employed by their endeavors. Unlike skeptics, they have faith in their neighbors, their partners, their society, their employees, “in the compensatory logic of the cosmos.” Unlike the self-absorbed, they anticipate the needs of others, even needs that no one else may have imagined. Unlike the impetuous, they make disciplined choices. Unlike the automaton, they freely discover new ways of creating and combining resources to meet the needs of others. This cluster of virtues, not the vice of greed, is the essence of what Rev. Robert Sirico calls the “entrepreneurial vocation.” Similarly, AEI’s Michael Novak has talked about business as a “calling.”
So why do so many defenders of capitalism turn, not to the insights of thinkers like George Gilder and Michael Novak, but to apostles of greed like Ayn Rand? My guess is that Rand continues to be popular because of a key literary insight: However much she officially praised selfishness, her protagonists are not misers. On the contrary, the heroes of her novels are entrepreneurs. How many other authors or playwrights have done that? Survey novels, plays, and movies with business people as characters. Ordinarily, those characters are the villains, not the heroes. In fact, I can think of only two well-known movies in which a business man qua business man is the hero: It’s a Wonderful Life and Charlie and the Chocolate Factory. And even here there are dissonant notes. In It’s a Wonderful Life, George Bailey is balanced by the easy-to hate, greedy banker, Mr. Potter. And Willy Wonka, though an entrepreneur, is a bit antisocial and eccentric.
The miser treats his bullion as an end in itself. The entrepreneur uses money as a tool.
So Rand stands out from the pack. Whatever her philosophical failings, she recognized the heroic aspects of entrepreneurship. Without entrepreneurs, little of what we take for granted in our economy and our everyday lives would exist. Here in my office, the concrete forms of entrepreneurial imagination are everywhere: paper, scissors, pens, highlighters, ink, CDs, an empty Tupperware container that held the pork loin I ate for lunch, a flat-screen monitor, fonts, lamps, lightbulbs, windows, sheet rock, speakers, a laptop computer, and an optical mouse. Behind all these visible objects lie real but less visible innovations in finance, manufacturing, and transport that I scarcely comprehend. All of these things are gifts from entrepreneurs.
Of course, entrepreneurial capitalism doesn’t exist in an anarchic vacuum. Some individuals may have an entrepreneurial vocation. For an economy to channel their energy into productive ends, however, it needs to provide incentives. On the one hand, if financial policies encourage entrepreneurs to take unsustainable risks-in the reasonable hope of a government bailout or a quick sale of a bad loan to a government-sponsored enterprise-then they’ll take those risks. On the other hand, if unvetted federal officials capriciously dictate limits to compensation for corporate executives, and politicians consistently debase the currency, entrepreneurs may become averse to productive risk-converting investments from risky, illiquid, long-range ventures into much safer silver and gold. So for sustained prosperity, policy makers need to ask what policies best encourage entrepreneurs to act like entrepreneurs, and not like misers. Now that I think of it, perhaps that ought to be the economic question of the day.
1. George Gilder, Wealth & Poverty (San Francisco: ICS Press, 1993), p. 30.
2. Ibid., p. 27.
3. Ibid., pp. 20-24.
4. Ibid., p. 37.
5. Robert A. Sirico, The Entrepreneurial Vocation (Grand Rapids: Acton Institute, 2001).
6. Michael Novak, Business as a Calling: Work and the Examined Life (New York: The Free Press, 1996).
Image by Darren Wambold/Bergman Group.