The Difference Between Capitalism and Socialism

Dear Friends:

We hear a lot these days about the differences between capitalism and socialism. So, I looked into the two systems of thought and came across the following story which, I believe, quite accurately illustrates the difference between these two diametrically opposite worldviews.

A young woman was about to finish her first year of college. Like so many others her age, she considered herself to be very liberal in her beliefs and ideals. As such, she was very much in favor of higher taxes to support more government programs. In other words, she strongly advocated a redistribution of wealth from the rich to the poor in an effort to make everybody equal. Like any good socialist, equality was her primary motive.

She was deeply ashamed that her father was a rather staunch conservative capitalist, a feeling she openly expressed to him. Based on the lectures that she had participated in, and the occasional chat with a professor, she felt that her father had for years harbored an evil, selfish desire to keep what he thought should be his, what he had worked hard to earn.

One day she was challenging her father on his opposition to higher taxes on the rich and the need for more government programs. The self-professed objectivity proclaimed by her professors had to be the truth and she indicated such to her father.

He responded by asking, “How are you doing in school?”

Taken aback, she answered rather haughtily, “I have a 4.0 GPA. It’s tough to maintain. I am taking a very difficult course load. I am constantly studying. I have no time to go out and party like other people I know. I don’t even have time for a boyfriend. And I don’t really have many college friends at all because I spend all my time studying.”

Her father listened and then asked, “And how is your friend Audrey doing?”

She replied, “Audrey is barely getting by. All she takes are easy classes. She never studies. She barely has a 2.0 GPA. She is so popular on campus; college for her is a blast. She’s always invited to all the parties and lots of times she doesn’t even show up for classes because she’s too hung over.’

Her wise father asked his daughter, “Why don’t you go to the Dean’s office and ask him to deduct 1.0 off your GPA and give it to your friend who only has a 2.0. That way you will both have a 3.0 GPA and certainly that would be a fair and equal distribution of GPA.”

The daughter, visibly shocked by her father’s suggestion, angrily fired back, “That’s a crazy idea, and how would that be fair! I’ve worked really hard for my grades! I’ve invested a lot of time, and a lot of hard work! Audrey has done next to nothing toward her degree. She played while I worked my tail off!”

The father slowly smiled, winked and said gently, “Now you’re thinking like a capitalist.”

Believe it or not, our Creator has a lot to say about the proper ordering of society, including economics. Scripture encourages capitalism and discourages socialism. The place to start is with the eighth commandment which is based upon the concept of private property. “You shall not steal” [Exodus 20:15; Deuteronomy 5:19]. Stealing, or theft, is taking another man’s property by coercion, fraud, or without his uncoerced consent. Cheating, harming property, or destroying its value is also theft. It is not necessary for the victim to know of the theft for it to be unlawful. Thus, to ride a train or bus without paying one’s fare is theft, even though the transportation company is unaware of the act.

Our Creator’s order clearly includes private property. It also clearly approves of godly wealth. According to Proverbs 13:11, “Dishonest money dwindles away, but he who makes money little by little makes it grow.” The warning of God’s Word is against the proud who forget God in their wealth, not against the fact of wealth [Deuteronomy 8:17-18]. God blesses His saints with prosperity and wealth, as He did Job, Abraham, David, Solomon, and others. Wealth is one of the possible blessings of obedience to God’s law [Psalm 112:3]. It is arrogant and ungodly wealth which is condemned [James 5:1-6]. Wealth is an aspect of God’s blessing of His faithful ones: “The blessing of the LORD brings wealth, and He adds no trouble to it” [Proverbs 10:22]. The godly pursuit of property and wealth is thus fully legitimate.

Even Jesus taught that we should be rewarded for our hard work [Matthew 25:14-30; Luke 19:12-27]. And the principle of the harvest is based upon this same idea – you reap what you sow and in multiples thereof [Galatians 6:7]. Honest hard work results in Godly rewards (until the civil government interferes).

When the Israelites left captivity in Egypt, God (through Jethro, Moses’ father-in-law) revealed to Moses the perfect order of civil government [Exodus 18:13-27]. You see, there were only a few million men, women and children wandering around in the desert. I am sure there were a few “bad apples” in the bunch. So, Moses had to have some way of dealing with the law-breakers. That is why he needed a civil government. That is why civil government was created – to punish the law-breakers [Romans 13:3-4]. The purpose of civil government has not changed (at least not in our Creator’s eyes because God does not change – he doesn’t have to – he is perfect – any change would make Him less than perfect).

God, through Jethro, suggested that Moses set up a hierarchy of judges over the people. Judges “over thousands, hundreds, fifties and tens” [Exodus 18:21; Deuteronomy 1:15] The people were to choose these judges [Deuteronomy 1:13]. They were to choose “men who fear God, trustworthy men who hate dishonest gain” [Exodus 18:21]. As long as the people applied these criteria and chose capable and righteous men, justice was swift and fair, and freedom and liberty abounded. But when the people chose dishonest men – no justice, no liberty, loss of freedom.

The Israelites lived as a nation for over 400 years under this form of civil government. During all of this time, no taxes were levied. Revenue for the operation of the civil government was generated by fines paid by the law-breakers. There was no need for prisons as incarceration was never punishment for a crime. The only jails that existed were used to separate potentially violent criminals from the general population until they could be properly tried for their crime. A Godly government has no need to collect taxes or for prisons.

Then, after over 400 years, the Israelites rejected God and His government when they wanted a “king … like all the other nations … to lead [them] and go out before [them] and fight [their] battles” [I Samuel 8:20]. And the Israelites forgot the eighth commandment. And oppressive taxation soon followed. The forced confiscation of property became so oppressive that after about 120 years, the nation of Israel split into two nations [I Kings 12:1-24; II Chronicles 10:1-11:4] and ultimately were taken into captivity because of their rejection of God and His law.

Socialism rejects this principle of private property and as such, changes the eighth commandment to “You shall not steal except by the majority vote of the people.” It is a man-made system of government resulting in oppressive taxation which takes away our freedom and liberty. It eliminates employment opportunities, causes price inflation, and many other economic woes.

Some of you, as support for taxation by the civil government, might point out that Jesus said to “Give to Caesar what is Caesar’s” [Matthew 22:21; Mark 12:17; Luke 20:25]. It is true. Jesus did say that. And Paul restated Jesus’ principle in Romans 13:6-7.

However, you must remember that during the time both Jesus and Paul walked on the earth, the Israelites, because of their rejection of God and His law, were subjected to the man-made pagan law structure of Rome (Caesar worship). Jesus and Paul were reinforcing the fact that the Israelites were being punished for their disobedience and therefore had to live according to the man-made law structure of a perverse government. The Israelites were forced to pay homage to their captors as long as they rejected God and His law. So, part of Israel’s punishment for rejecting God and His law was forced confiscation of their property by a foreign pagan nation. In fact, every time Israel turned their back on God, the nation was subjected through captivity to a socialistic pagan foreign nation’s laws. In God’s Word, socialism is always associated with paganism.

Private property is a power which our Creator entrusts to man as a stewardship, because it is our Creator’s intention that man should have and exercise power unto the end that the earth be subdued and man’s dominion over the earth under our Creator be established. God gives to the civil government its due power in its domain – the punishment of law breakers. Private property is a power given to man to be used under God and to His glory.

If a nation applies God’s principles as revealed in His Word, then there will be no need for taxes. And, the principle of private property as established by the eighth commandment will result in more freedom and liberty than we have ever experienced in our lifetimes. This is what our founding fathers had in mind back in 1776. What gold is to money, God’s law is to liberty. Without God’s law, men, unions, corporations, and civil governments feel free to be a law unto themselves – to play god. Failure to teach the law of God paves the way to tyranny.

As our founding father James Madison said of God’s law:

We have staked the whole future of American civilization, not upon the power of government, far from it. We have staked the future of all of our political institutions upon the capacity of mankind for self-government; upon the capacity of each of us to govern ourselves, to control ourselves, to sustain ourselves according to the Ten Commandments of God. [Cited by F. Nymeyer, in Progressive Calvinism (South Holland, Ill.: Libertarian Press, 1958), IV, 31.]

What about you? Are you a capitalist, or a socialist? Which do you prefer?

Respectfully,
Mark