Capitalism Needs More Non-Profits

Last month I stirred up a bit of ill will by poking fun at advocates of distributism (see: Who Gets To Be the Czar of Aesthetic Consumption? ). As I said at the time, I like and admire them but get annoyed by their habit of taking their philosophy very, very seriously. What I didn’t explain is why I find it so annoying. The short answer: Because it causes otherwise smart people to miss obvious points of reality.

A prime example is calling distributism a “third way” between capitalism and socialism. The problem with that, as Matt Perman notes, is that once the definitions of capitalism and socialism are properly understood it becomes obvious that there is no third way (though, as Perman notes, there can be degrees). Fortunately, a third way isn’t needed since capitalism can do everything that distributist want their system to do.

For instance, one aspect of how capitalism can create a more “people-centered economy” is to increase the amount of capital that is dedicated to non-profits. As  Perman notes :

Even though we are in the midst of a quite severe (and long-lasting!) economic downturn, we are still a society of extreme abundance. An economist friend of mine recently pointed out that the US produces 1 billion units of clothing per year. The number could even be 100 billion; I can’t remember for sure. But it was simply massive.

I’m glad we produce a lot. I think that is a partial fulfillment of the creation mandate, and that it is good, not evil. However, I suggest that we could get by with producing less of some things in order to produce more of other things. We need more pastors. We need more missionaries. We need more people devoted to serving those in need. We need more people devoted to the causes of fighting large global problems, like extreme poverty and corrupt leadership. Many of these things cannot in themselves be done at a profit, but can and must be done.

When society reaches a point that we have a proliferation of trinkets and other such things, it’s not a sign that capitalism has gone bad. Rather, it’s a sign that we need to use the freedom that capitalism affords us to point our efforts more fully in another direction — namely, the social sectors. We need more non-profit organizations, more churches, and more people going in to ministry and non-profit work in general. We can afford it. It will mean less singing fish, and perhaps less pet rocks. More seriously, maybe we won’t be producing exactly the 1 billion articles of clothing per year (which I am fine with as long as Banana Republic doesn’t go out of business). The point of our prosperity is not simply or mainly to enable us to keep buying more stuff, though the desire to accumulate is not evil in itself. The point of our prosperity is, rather, to divert some of our ability to accumulate more to efforts that focus more directly on using our abundance to meet pressing global needs.

I know there is one important consideration and possible objection here, which is actually a point I’ve made for years and that I make in my book (if I don’t cut the chapter due to length). And the objection is that I may seem to be pitting business against social good, when in reality it is business, not charity, which is the long-term solution to global poverty.

So I want to say clearly that I am not doing that. I do believe that business is the only long-term solution to large global problems like global poverty. And I’m not saying that when a person opens a business and makes money that he is not contributing greatly to the welfare of society. They are. But business cannot do this alone, because not all needs can be met at a profit, and there is injustice blocking the way in many instances. We need to be a society of both excellent businesses and great non-profits.