People talk like capitalism is some strange foreign invader, a mechanical system that was imposed on the world a couple hundred years ago, fueled by burning coal and emitting smoke, and certainly not anything organic to the social order.
This is preposterous. The Christmas story that surrounds us in this season, told millions of times in songs and sermons and popular lore, presumes capitalistic institutions. I mean by that: the story presumes private property employed in an extended order of production, organized by human volition, with owners, entrepreneurship, speculation, workers, and consumers all trading to their mutual advantage.
The central place of the merchant innkeeper is obvious enough. But consider scene two, introduced immediately after the trip to Bethlehem and the manger scene. It’s all about the shepherds.
And there were in the same country shepherds abiding in the field, keeping watch over their flock by night…. And it came to pass, as the angels were gone away from them into heaven, the shepherds said one to another, Let us now go even unto Bethlehem, and see this thing which is come to pass, which the Lord hath made known unto us. And they came with haste… – St. Luke 2: 8-11-20
Who were the shepherds? The profession has a documented existence going back some 6,000 years but anthropologists suggest that sheep were domesticated hundreds of thousands of years earlier. That makes shepherdry one of the oldest known professions, one that continues to this day.
The shepherds served as security workers and providers. Their main job was to keep the flock safe from invading thieves and from predatory animals, shuffle the sheep from pasture to pasture, and get them to the right spot so that they wool could be shorn and their milk taken for food. The end result is sold to weavers or cheesemakers or at the public markets.
The sheep were privately owned capital. They needed to be protected and cultivated, so that the produced goods could make it to the final consumers. It’s all an effort to — prepare yourself — make money. The protectors were most like paid in cash for their work.
Why was domestication of animals even necessary? It wasn’t always. But early man (we are talking about 500,000 years ago) discovered that without private animal ownership and breeding, people would starve. That’s because collective ownership led to the “tragedy of the commons.” That is to say, everyone rushes to right for what exists to the point that nothing exists for anyone (kind of like modern democracy).
In absence of ownership, people would kill any animals for food. They would kill them when they found them, eating what they could when they could. Sheep were particularly vulnerable to overutilization because human beings could catch them, unlike deer and tigers and the like.
The animals began to disappear, introducing the possibility of mass famine and death. In order to preserve them, much less use them to make clothing, animals had to be owned and reproduced and hence came domestication and the beginnings of capitalism.
Thus did ownership come about as a social convention as a way of addressing the great economic problem: nature herself does not provide enough of everything to go around. Using what we find, with no attempt to cultivate and allocate, is a prescription for death. Things have to be produced. Production is made possible through private ownership.
The same is true of the land itself. Through either title or informal convention, the pastures were owned privately as well. Shepherds had to know where to allow grazing or face accusations of invasion, trespassing, and theft. Even the Code of Hammurabi (the Babylonian legal document that traces to 1770 years before the events mentioned in the Bible) listed stiff penalties for uninvited grazing.
Also private were the products of the production cycle: the wool, the milk, the meat. In other words, there would be no shepherds without the existence of a capitalist sheep owner and pasture owner.
The shepherds were not typically slaves. There is a reason for this. The owner has to fully trust the shepherds, who worked under contract but could not be monitored. They would be in a position to steal. Forcing people into this role would not be a good idea. It’s best to pay them as willing workers, and count on their desire for continued employment to assure for a long-lasting and trusting relationship. In other words, they were just like us.
So, yes, they were paid. And with what money? They were paid with the saved proceeds of the previous year’s profit, mostly likely, given that banking institutions were not likely advancing loads. Regardless, the payment to present workers is granted unto the workers before this season’s profit is earned. The shepherd might also enjoy a bonus at the end of the season based on the return brought back to the owner.
No owner of sheep or pastures could know for sure that the wool, milk, and meat would turn out to be a good investment. The future is always unknown. There could be a blight, terrible weather, mass theft. The very employment of shepherds represented a speculation on the part of the capitalist — an entrepreneurial judgement made in a world of uncertainty.
The particular case reported in the Bible adds an interesting twist. An angel of the Lord shows up to tell the shepherds that a savior is born and that they should head to Bethlehem right away.
That’s an offer that is difficult to refuse. But there was a problem: work commitments and schedules. Money was tight and jobs that allow you to lie around in green pastures — living out the dream of the Psalmist — were not entirely easy to come by. So it is not likely they would just abandon their jobs. They surely had to ask permission and seek replacements. After all, the Bible tells us that they later returned to tell of the good news.
That means, essentially, that unless the shepherds took the whole herd with them, the owner gave them a bit of vacation time. The circumstances certainly seemed momentous enough to justify it. After all, an angel had appeared to them!
Note there was no legislation mandating worker leave. It was an agreement between the workers and the capitalist. And in the story as it appears in the Bible, they seemed to get along just fine. So much for the inherent conflict between labor and capital. Everyone figured out a way to trade and work without conflict.
This story resonates with us, as do many stories from the Bible, because so many deal with commercial realities that remain with us today. We are all workers with responsibilities. But there are also unforeseen circumstances that intervene. We hope that others understand and we work it out between ourselves in a mutually agreed upon way.
There are also capitalists who employ people and have to pay for security services. They have to speculate about the future, paying workers now before the profits appear later.
But such productive arrangements between people are only made possible by the existence of private property, not only in land but also in tools and machinery (and the sheep qualify as such). This is not anything unusual. It is normal life, wholly visible in the story of the birth of Christ. Capitalist institutions are so much part of our storied past — appearing everywhere in our songs, history, fiction, and our respective religious traditions — that we tend to overlook them. We don’t see what is everywhere around us.
And yet, for hundreds of years fanatics have tried to get rid of these institutions. Remember that it is private property, trade, and capitalist production processes that enable beautiful things to be born in this world. They are truly the foundation of peace on earth and good will toward all men and women.
I'm executive editor of Laissez Faire Books and the proprietor of the Laissez Faire Club. I'm the author of two books in the field of economics and one on early music. My main professional work between 1985 and 2011 was with the MIses Institute but I've also worked with the Acton Institute and Mackinac Institute, as well as written thousands of published articles. My personal twitter account @jeffreyatucker FB is @jeffrey.albert.tucker Plain old email is email@example.com
I would submit that the article is more about free enterprise than capitalism. I would have no objection to individuals accumulating capital and becoming exceedingly rich through their enterprise. But I do find the protection of capital in the their hands far less acceptable when the other factors of production are free and have to to move in accordance with market principles; particularly when through legal plunder they become a privileged few.
It is the instruments of capitalism that are abhorrent where through these instruments (corporations, nominee companies, trusts) the capitalist is permitted to plunder the capital of fellow stakeholders and actually benefit financially from this “legal plunder” and can do so even where he may have had no enterprise. The avoidance/evasion of tax is another issue which in effect imposes their tax burden on the less fortunate have to pay another form of theft.
Everyone’s capital should be treated equitably (even if the principle of unjust enrichment has to be applied) and capital must be free to move into the hands, if necessary, of those who can use it productively and capital must not be protected in hands of those who can’t.
The Salomon v A Salomon & Co Ltd  AC 22 case, a foundation on which capitalism was built, was arguably, the greatest travesty of “financial” justice and probably the most iniquitous judgment, in history.
My understanding is, that before the instruments of capitalism were formulated (ie legal plunder), the states of America may have had what was the best system: the “capitalist” was allowed to fail but he had to pay his debts or suffer some loss before being rehabilitated. Hopefully he wasn’t allowed to do what Salomon did: taking all the assets out of the business that was about to fail and leaving the creditors and other stakeholders to lose their capital in it, which I would think still commonplace today.
Socialism evolves into communism through big government and capitalism evolves into communism through its instruments when its corporations become too big to fail.
Take “capitalist” out of capitalist free enterprise and “representative” out of representative democracy and some progress will be made.
“That which hath been is now; and that which is to be hath already been; and God requireth that which is past. ” Ecclesiastes 3:15
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