David Smith, guest column: In midst of amoral capitalism, we all suffer

By David A. Smith
January 14, 2009

When is paying your bills not a good thing? Apparently it is these days, when we pay off credit cards.

Recently both The New York Times and the Wall Street Journal reported a trend toward people using their money to pay down their credit cards instead of accumulating more debt. Sounds good, right?

Well, apparently this is actually a bad thing for retailers. It's not hard to see how this technically is the case. But a more interesting notion is how we've reached the point at which paying down debt, what used to be called "living within your means," is a bad thing for the overall economy.

What was once known as the Puritan work ethic has clearly been turned on its head. Perhaps we could benefit from having it righted.

Stories like this make me think back to 9/11 and the reaction afterward. On the following Sunday, after the stock market had spent the rest of that week closed and was about to reopen with great trepidation as to what would happen, a friend said to me over lunch that "the American people need to go out and spend money tomorrow. Whatever you've wanted to buy, buy it tomorrow."

Living in normal fashion

And then came the president's insistence that aside from shedding our shoes and belts at the airport we should go on with our lives in a normal fashion, though war was being waged in our name, ultimately on two fronts.

From an economic standpoint this meant for the homefront: Keep on spending. (It was one early clue, it occurs to me, that this president wasn't exactly a conservative.)

This all reminds me of the sacrifice to which the American people as a whole used to be called when war clouded the skies.

FDR, of course, was the best example of this, explaining in his fireside chats that because of WWII, severe economic hardship and shortages lay ahead for all Americans.

There was simply no chance of going about our lives in a normal fashion. Calls for national sacrifice were abundant then, just like the exhortations now for us to go out and spend money: Buy that plasma TV to boost the floundering economy. Go on denying yourselves nothing. It's good for the country.

Now, I'm not offering a critique of capitalism here. Although it's widely forgotten, no less than Adam Smith himself said that for capitalism to work, it has to have a firm moral underpinning.

Amoral capitalism runs off the tracks and lets self-interest give way to selfishness. Like every other kind of freedom, economic freedom requires a certain sort of behavior to function well. The more people are free to order their own lives the way they wish, the more there needs to be something internal that keeps the baser instincts in check.

Of course, in a free society, trying to enforce with laws what should be controlled by morality is fraught with difficulty: You can't force people to be good without taking away their freedom.

What acts as the check on the self-interest that energizes capitalism is morality.

Our exorbitant sailor-on-shore-leave style spending is a sign of this hollowing out of our moral centers, and it's even more shameful that it's now made to masquerade as our patriotic duty in times of crisis.

Say what you will about the Puritans. They understood that within a community, morality could not be merely a matter of individual preference. Capitalism, that best of existing economic arrangements, only works correctly when it functions within a moral framework.

To search for an amoral economic system is fruitless, because all economics have at their roots individual human behavior.

To think that a government-directed economy can provide a workable system is likewise wrong because the cost of this assumption is usually freedom.

So if you want to pay off your credit cards, bully for you. When we all do this, we'll have a chance to get on a sounder course. We can't spend our way to a strong country or to happy selves. Very few people regard credit and debt as a moral issue, but perhaps we should give it a try.

David Smith is a senior lecturer in history at Baylor University.