The Solution to the Abuses of Capitalism

Capitalism (the free matket) can be abused - but that doesn't mean the free-market system should be abandoned: it just means the abuses should be outlawed.

Don't disallow freedom - disallow the abuse.

We saw an example of this in Australia yesterday. A Singapore company was planning to buy an Australian company - but the Australian Treasurer Wayne Swan decided it was not in Australia's best interests, and blocked the purchase.

Another example is foreigners desiring to buy houses in Australia. Application for all residential purchases must first be made to the Foreign Investment Review Board, which answers to Treasury. There was once a time when the Government stipulated that foreigners could purchase only brand-new houses. This prevented foreign takeovers and spurred new construction.

Prime Minister Thatcher of the UK rarely intervened in the free market, but she did once - when the Kuwaiti Sovereign Fund wanted to buy BHP. She felt it wasn't in the UK's best interests for BHP to be owned by the Kuwaiti government.

Notice that such rules don't abandon the free market system entirely; such rules don't mean government controls business or controls the distribution of wealth - it simply prevents an abuse.

There is a precedent in Biblical Law for this concept. Moses' system was always entirely a free market (capitalist) system, however it was forbidden to sell rural tribal land to a buyer who didn't belong to the tribe: only inner-city land could be sold to outside buyers.

Moses also commanded that ancient landmarks should not be removed. That meant the heirs to traditional lands were protected from outside exploitation.

Abuses were prevented under Moses' law - but the system itself remained capitalist (free). There is no basis for communism in Moses' Law - but there were one or two examples in Moses' Law preventing the abuse of freedom (of capitalism).

Any intervention by the law in the free market should be careful to target only the specific abuse, and not to rob wider society of its freedom.

In a country like the Philippines, the solution to any perceived abuses of capitalism is not to impose communism (to rob freedom) on the entire nation - but to outlaw the specific abuse.

The answer is not for government to control businesses and control the distribution of wealth - the answer is just to target the specific abuse and outlaw it.

The Philippines already has some laws in place for this purpose. For example, I think foreigners can own only a 49% stake in a Filipino company; and I think there are restrictions on the value of Real Estate which foreign spouses of Filipinas can own.

When you think about it: our salvation is on the same principle. Christ has made us free, but we are not to use our freedom to indulge the flesh - rather, we are to by love serve one another. Our freedom in Christ can be abused, but God didn't respond to that by withdrawing our freedom - instead, He instructed us how to walk as Christ walked.

In the same way, the solution to the abuse of capitalism (freedom) is not to withdraw freedom (impose communism) but simply to outlaw the abuse.

But any such interventions in the freemarket ought only to be done very wisely and very rarely.

(Treasurer Wanye Swan's decision yesterday has denied the Australian owners $8 billion in sales. Plus the merger could have given access to $ trillions in investments to our region. It could have provided a lot of new jobs. But the Treasurer blocked it. The Treasurer's decision was never debated in Parliament and he has not explained all his reasons to the Australian public. Many Australians are disappointed with the Treasurer's decision, for obvious reasons. Others feel he hay have protected their best interests. If such interferences in the free market are not made only rarely and wisely, the interference itself can become an abuse.)