“For the love of money is the root of all evil.” I Timothy 6:10


The dominance of global neoliberal economics and cries for economic justice in the United States has reignited a firestorm of criticism of the capitalist system. What once was a booming economic system that attempted to address and correct the horrors of feudalism has become a new method for delivering economic inequality on a global scale. Although one of its chief proponents, Adam Smith was also critical of the potential dangers of capitalism.

Smith wrote two seminal documents, The Theory of Modern Sentiments and The Wealth of Nations, which laid out his ideas and concerns about capitalism. The “father of modern capitalism” makes the argument that for capitalism to be the most successful economic system in history, capitalists must adhere to an ethical code of increased productivity and frugality, along with diminished misconduct and monopoly. He also warns of the dangers of excess, leisure time, and conspicuous consumption (Bassiry and Jones 1993).

Over a century later, Weber (1905) details the relationship between the Protestant Reformation and the European explosion of capitalism. The Protestant ethic of working your hardest for the glory of God while not accumulating massive amounts of frivolous wealth mirrors Smith’s ethical code and is central to the ideals of capitalist expansion.

Political sociologists study problems of globalism, neoliberalism, and growing inequalities within and because of the capitalist system. Smith and Weber, two of the most important classical theorists of the rise of capitalism both identified a similar element key to capitalism’s early success; an ethical code. As religion, specifically mainline Protestantism, has declined as a visible social component of late capitalist development, ethical standards underlying capitalism have receded from public discourse.

Suciu (2009) defines morals as “a set of forms of the social conscience which regulate the cohabitation of people in society.” He also defines ethics as “the set of values and norms that define in a certain society the man of honour and the rules of correct, dignified and successful behavior in the relation with the others.” In other words, ethics are values and norms that define rules for good behavior, while morals regulate the ability for people to live together. Morals are not the same as ethics, but the two concepts are parallels. For the purpose of this literature review, the two terms can, in most cases, be used interchangeably. Suciu also argues that Capitalism is moving through three stages, 1) Moral Capitalism, 2) Amoral Capitalism, and 3) Immoral Capitalism.


Suciu (2009) argues that Moral Capitalism existed in the era of the Protestant Ethic. However, Adam Smith’s critique of the morality in capitalism began in the Mercantilist Era of the mid-1700s. The political economy of the nation-state had become too centralized. To make the economy more democratic, Smith developed the concept of the Invisible Hand. For the first time in history, the idea that the consumer should be the deciding factor in economic exchange emerged (Bassiry and Jones 1993).

Adam Smith’s Ethic    

Smith (1759) writes extensively for the need for morality and ethics to be intertwined with capitalism in order to create a climate that would best benefit humanity as a whole, rather than pit people against one another in the pursuit of wealth.  He argues for necessary mutual sympathy with our peers, including strangers. He believes that we should employ amiable and respectable virtues like self-government, as well as social passions such as generosity, humanity, and compassion.

Smith also argues strongly against apathy, lack of virtue, and unsocial or selfish passions. Hatred and resentment are detestable passions that turn sympathy away, while grief and joy are selfish and elicit undesired responses from others. Finally, he argues against customs and fashion that negatively affect our judgment. Customs cannot abate negative actions from occurring. Fashions, specifically vices of the “superiors” or our leaders are thrust onto the individual. However, Smith also argues for a “natural” right and wrong that amplifies the potential positives of a custom so long as custom and nature are in sync.

Wilson (1989) writes that Smith addressed five potential moral problems with classical capitalism; the first of which occurs as the spirit of workers is crushed. This has come to fruition ever since the industrial revolution took hold. This very idea was addressed not only by Marx via alienation and Durkheim’s anomie, but by Weber’s iron cage as well. The increased rationalization and bureaucracy of capitalist corporations ensnares not just workers, but consumers in an iron cage of feeling disenfranchised by the organization they seek to patronize.

The second problem is anonymous price fixing on a massive scale. Beginning about a century ago, the United States federal government began to interfere and regulate businesses in our nation. Franklin Delano Roosevelt’s “New Deal” approach in the 1930s included mandatory price fixing, institution of a minimum wage, and high corporate tax rates.

This third type of moral problem, government intervention, was unlike anything America had seen before, but this approach has since been tried several times over. Lyndon B. Johnson instituted his “Great Society” which further increased government oversight in the 1960s. Bill Clinton’s Community Reinvestment Act tied government to the housing market. Even more recently is the Affordable Care Act signed into law by Barack Obama which creates a government run private healthcare insurance protocol with a mandated purchase provision for all Americans.

The “idle rich” is the fourth of Smith’s moral problems and is evidenced by the blue-blood “old money” in the United States. These are members of the highest social classes and their wealth has been passed down through lineage, rather than through continuous hard work. Old money heirs can often be identified by just their last names; Rockefeller, Hearst, and Vanderbilt for example. More contemporary examples of the idle rich would include celebrity heiresses Paris Hilton and the Kardashians.

Smith’s fifth warning is of ownership and control being separated as the scale and capital of businesses increase. As a company becomes larger and larger, the ownership typically moves from the individual who founded or owns the company to a board of investors or shareholders. Corporate decisions are no longer made for the benefit of the owner, but a conglomerate of other interested parties. Thus, all the moral problems that the father of modern capitalism spoke of have manifested over the last century in the United States. Morality is no longer a part of the free market.

Max Weber’s Ethic

In The Protestant Ethic, Weber (1905) detailed the very specific conditions that occurred along with the explosion of capitalism in Western Europe. This ethic is a combination of the calling, predestination, and asceticism. After the Protestant Reformation in the 1700s, Martin Luther introduced the idea of the calling, which is that all work is to be done in such a way that God is worshiped through labor. Regardless of the mundane nature of the task, followers of Luther were to work their hardest and give praise to the Almighty.

John Calvin’s concept of predestination is that God specifically chose, or predestined, certain individuals to enter into Heaven when they die.  These “elect” will be known through the divine blessings of wealth and success, thus earning copious amounts of money was desirable.

Richard Baxter’s ascetic Protestantism is the idea that the accumulation of wealth leads to lethargy and violates the calling for hard work. When a believer has too much free time, they are not serving God as they should. Therefore, working hard and earning money were admired so long as the business owner was not sitting on massive amounts of unspent wealth. Because of this Protestant ethic, entrepreneurs invested in expanding of their businesses and increased the wages of workers. The desire for maximizing profit was not a viable option.

The same cannot be said for the version of capitalism we see today. In fact, Weber writes that the spirit of Capitalism ceased to exist by the early 20th century, especially in America. Even though capitalist enterprise is essentially operating like a well-oiled machine, the system owes a debt of gratitude to Protestantism for laying the ascetic groundwork needed for the expansion of capitalism in the West.


Amoral Capitalism, according to Suciu (2009), began from the time of massive industrialist expansion and occurs when ethics no longer come from within the capitalist process and morality becomes an agent outside of capitalism.

Neoliberalism is rooted in 1980s Reaganism espousing a “leaner, meaner government.” The calling card for this branch is the “privatization” of as many industries as possible and the “personal responsibility” of citizens (Duggan 2003). Neoliberalism is a theoretical framework consisting of a maximization of liberty through private property, minimal regulations, free trade, and entrepreneurship. A free market must be set up in every institution, but the state must not interfere beyond the primary instituting of said markets (Harvey 2007). What neoliberalism does not address is the need for any type of ethic or morality.

Caring Crisis or Credit Crisis?

Caring, exchange, and threat are the three primary motivations for human interactions (Niskanen 2009). We help others because we care about those family, friends, and others that we are closest with. However, we need not focus on those we truly care about when making a corporate mutual exchange. We care about this group only as it relates to the cost-benefit analysis that makes for good business. Calls for “social responsibility” are found wanting as shareholders often work for their own interests above the common good, though many positive interactions occur in this arena. The final motivator is threat, which typically refers to government power to enforce taxation and regulation. The 2008 market crash occurred because the government failed to correctly monitor the situation. The proper balance for a neoliberal economy is to put the most weight on exchange while largely ignoring caring.

The over-indulgence of exchange has led to an “extra-capitalist margin” (Milbank and Pabst 2015) of a credit system built on high interest rates. The introduction of this system is largely to blame for the unequal and unjust version of capitalism that exists now. It is easier to give consumers easy credit than to teach them new job skills or increase their wages. There are many different varieties of Capitalism, according to Minsky (1994), but the institution of “money manager capitalism” into the system compounds the issues laid out by Smith, and increasing margins of wealth disparities between the rich and poor is dragging us into an immoral stage as predicted by Suciu (2009).


Immoral Capitalism is a more recent development in which the agents within capitalism – CEO’s, Boards of Directors, business owners, shareholders, entrepreneurs, and even consumers – are becoming immoral, thus, their business practices will follow suit (Suciu 2009). We may not be in a full-fledged immoral capitalist system yet, but the signs that we are moving from an amoral to immoral system exist. The tenuous relationship between capitalism and democracy has begun to break apart (Bassiry and Jones 1993) as the warnings of Smith are being ignored.

Although the ideas of neoliberalism may be valid and worthy of pursuit, the practical implications have been anything but what was desired. Harvey (2007) argues that neoliberalism across the planet has largely failed to create vibrant, egalitarian economies, although neoliberalism is also rarely performed in the way it was intended [an odd contradiction that is never properly addressed in my opinion, as Harvey constantly points out the failure of neoliberalism after acknowledging that no nation actually performs it in the ways he defined].

The wealth disparity has been growing between the top 1% which earns over 25% of all income, and the bottom 90% of Americans that earn less than 50% of our nation’s wages; marking an all-time record high for economic inequality (Pew Research Center 2013). This has led to outrageous political power on the behalf of the wealthiest Americans which undermines our democracy. Bassiry and Jones (1993) identify additional problems created by an emerging dual labor system of high-skill/high-wage and low-skill/low-wage jobs with increasing blocks to social mobility, and the shift away from productions towards an almost exclusively consumption based economy.

Capitalism in Crisis

The crisis facing capitalism is not a “normal” one, but refers to what Milbank and Pabst (2015) identify as the “tendency at once to abstract from the real economy of productive activities and to reduce everything to its bare materiality.” Demand has been depressed, and measures have not restored profits and growth. This is because public expenditure is massive, there is a growing scarcity for new sources of “primary accumulation”, and capital resources have been squandered through unnecessary mass reproduction.

Historically, when demand decreased, profits had to dip as well. However, in this mutated form of capitalism credit bridges the gap and artificially inflates consumer patterns, thus, driving demand higher than it should be. When the State intervenes (as Smith warned against), this “devil’s triangle” further increases inequality and debt. Constant materialization has removed any concern with humanity from the labor market. The “financialization” of capitalism includes long-term lines of materialization, the simultaneous inclusion of the “economic vicious circle” or devil’s triangle, and cultural reinforcement by the “aristocracy without honor.” This has led to a dysfunctional banking system that hoards money and only loans to the rich (Milbank and Pabst 2015).

Smith (1904) argues that the propensity to barter, trade, and negotiate is inherent only in humanity and is common to all men. Our different dispositions and talents allow us to specialize in a productive manner that serves the needs of others who may not share our particular proclivities. As technology and transportation advances, so must global capitalism and many of the problems that come with neoliberalism. Globalization has brought about an entirely new form of Capitalism (Milbank and Pabst 2015), but has become a “fact of life,” according to Epstein (1999). The most ardent capitalist supporters embrace globalization through trade, but not all implementation of these policies has been as rewarding as hoped.

De Soto (1999) discusses a failed ethical approach called “consequentialism,” or maximizing the benefits of an action while needing to adapt predicted human behavior to ethical rules. We cannot know all of the outcomes, or consequences, of an action, thus, rendering any predictability impossible. This cost-benefit analysis is simply not sufficient for justification of capitalism. There needs to be something more.


Western capitalism is in the midst of a “code red.” Despite reports of increasing employment and a soaring Stock Market, another crash may send the American economy into death throes. Capitalism, especially in the West, has gotten away from the ethical constraints identified by Weber and warned about by Smith. An ethic of hard work and asceticism, whether it be from a religious or secular source, may be necessary to save capitalism from falling into abject immorality.

The New Religious Ethic

Byron (1982) writes of three corners of Christianity that relate to capitalism. These are stewardship, or the management of our goods; the corporate personality, which is taking others into account in our actions; and the company which can be a way of sharing wealth that is more horizontal than vertical. This last idea is very similar to the asceticism of the Protestant Ethic.

The Protestant ethic in the form that Weber discussed may no longer be viable, as Americans are moving away from traditional religion (Emilsen 2012), especially Mainline Protestantism (Pew Research Center 2015, Smith, Emerson, Gallagher, Kennedy, and Sikkink 1998). The Evangelical Protestantism that has replaced the dwindling mainline denominations is less concerned with Baxter’s piety and asceticism. The “prosperity doctrine” of mega-Pastor Joel Osteen seems more like a return to the conspicuous blessings mentioned by John Calvin. Evangelicals are more concerned with soul winning than the dangers of wealth accumulation.

The East, however, specifically in Southeast Asia, is experiencing an upsurge in religion. Old Catholicism is being upended by a more Pentecostal version called “El Shaddai.” Of all of these nations, China is making the largest strides in their religious transition. It is estimated that China will soon have more Christians in it than any place other than the West (Hefner 2010).

While religion is on the rise, capitalism is expanding as well. Large swaths of Muslims in the region have come to embrace a “Muslim market” form of capitalism and economic growth (measured by GDP) in the region is outpacing that of the United States — 5% to 3% respectively (OECD 2016). Like the 18th century European spirit, contemporary Southeast Asian economic expansion under capitalism has been rapid.

The religious ethos puts people above property, but the neoliberal economic philosophy puts profit above people. The two oppositional forces meet in their distrust of centralized government to act as the arbiter of our wealth. Charitable giving, which used to be the primary source of human welfare, has given way to government spending through taxation.

We are seeing calls for a more socialized, big-government economic apparatus to act as a safety net, but would that be the best answer? Experts are divided. Conservative superstar economist Milton Friedman believes that the free market itself is a sufficient means of managing business ethics, but liberal John Rawls argues that a more redistributive economic system is the key. However, both agree that a viable ethical code must be interjected into capitalism if it is to function correctly (Devlin and Clark 2015).

The New Secular Ethic

It is possible to be both efficient and just, according to De Soto (1999). Redistribution may be immoral based on an evolutionary point of view which says that property rights made modern civilization possible and were formed by evolution, or a theoretical point of view where social organization is impossible because of the coercion necessary for organizational support of redistribution limits creativity, coordination, and entrepreneurship. However, there should also be an ethical point of view that gives human beings the right to the results of their “entrepreneurial creativity.” If citizens become aware of these concepts, calls for redistribution may fade away.

Not all solutions to the problem of neoliberal capitalism come from full-fledged socialism. Suciu (2009) proposed that some government regulation with the intent to protect from fraud is necessary. From the early days of corporate capitalism, four themes have been fairly constant (Epstein 1999). The first is that corporations are dominant forces that influence our entire social system. We see this in our advertising and media, the names of professional ballparks and stadiums that used to bear family, rather than product names, and they money that corporations spend on lobbying in Washington D.C.

The second theme is the “external legitimacy issue,” or a method of assessing corporate operations and impacts by addressing the utility and responsibility of the corporation. This happens when some outside entity or regulator comes into a business and checks over their practices to ensure safety and fairness.

Third, “economic imperatives” are when the productivity, return on investment, and efficiency are often the only factors being measured in evaluating business practices. However, social impact must also begin to be addressed, which leads to the fourth theme of “business ethics” – business needs to be accountable, ethical, and humane (Epstein 1999).

Conscious Capitalism (Fyke and Buzzanell 2013) is a promise from companies seeking to engage in corporate social responsibility that relies on spiritually-evolved leaders, a stakeholder orientation, a conscious culture, and a higher purpose than pursuit of profits. This is a voluntary, unregulated committed from corporations to improve ethics in business.

The free market has been hailed as the “marketplace of ideas,” so Epstein (1999) offers a few of his own. By keeping ourselves informed, as well as ensuring that our students and other corporations look to reconciliation of the “isms” – capitalism, socialism, communism – we can begin to solve some of the problems of inequality and lack of moral and ethical regulation in the global capitalist system. We need not tackle the world economy all at once, but we must each do our part to make our slice a better place. 

Works Cited

Bassiry, G.R. and Marc Jones. 1993. “Adam Smith and the Ethics of Contemporary Capitalism.” Journal of Business Ethics. 12(8): 621-627.

Brents, Barbara G. 2016. “Neoliberalism’s Market Morality and Heteroflexibility: Protectionist and Free Market Discourses in Debates for Legal Prostitution.” Sex Research and Social Policy. 13: 402-416.

Byron, William J. 1982. “Christianity and Capitalism: Three Concept from the Tradition, Three Challenges to the System.” Review of Social Economy. 40(3): 311-322.

De Soto, Jesus Huerta. 1999. “The Ethics of Capitalism.” Journal of Markets & Morality. 2(2): 150-163.

Devlin, John and Timothy Clark. 2015. “Capitalism, Ethics, and Inequality, an Essay.” Journal of Law, Business, and Ethics. 21: 103-111.

Domhoff, G. William. 2005. “Alternative Theoretical Views.” Retrieved on Nov. 11, 2016 from

Duggan, Lisa. 2003. Twilight of Equality? Boston, MA: Beacon Press.

Emilsen, William W. 2012. “The New Atheism and Islam.” The Expository Times. 123(11): 521-528.

Epstein, Edwin M. 1999. “The Continuing Quest for Accountable, Ethical, and Humane Corporate Capitalism.” Business and Society. 38(3): 253-267.
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Giddens, Anthony. 2001. “Dimensions of Globalization.” Pp. 245-252 in Seidman, Steven and Jeffrey Alexander, The New Social Theory Reader, NY: Routledge.

Harvey, David. 2007. “Neoliberalism as Creative Destruction.” The Annals of the American Acadamy of Political and Social Science. 610(21): 23-44.

Jenkins, J. Craig and Craig Eckert. 2000. “The Right Turn in Economic Policy: Business Elites and the New Conservative Economics.” Sociological Forum. 15(2): 307-338.

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Kitschelt, Herbert P. 1995. “Political Opportunity Structures and Political Protest: Anti-Nuclear Movements in Four Democracies.” Pp. 320-328 in Skocpol and Campbell, American Society and Politics, NY: McGraw Hill.

LaMothe, Ryan. 2013. “The Spirits of Capitalism and Christianity and Their Impact on the Formation of Healthcare Leaders.” Journal of Religion and Health. 52: 3-17.

Milbank, John and Adrian Pabst. 2015. “The Meta-Crisis of Secular Capitalism.” International Review of Economics. 62: 197-212.

Minsky, Hyman P. 1994. “Ethics and Capitalism.” Hyman P. Minsky Archive. Paper 186.

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Niskanen, William A. 2009. “The Undemanding Ethics of Capitalism.” Cato Journal. 29(3): 559-565.

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Pew Research Center. 2013. “U.S. Income Inequality, on Rise for Decades, is Now Highest Since 1928.” Retrieved Nov. 2, 2016 (

Pew Research Center. 2015. “Mainline Protestants Make Up Shrinking Number of U.S. Adults.” Retrieved Nov. 24, 2016 (

Smith, Adam. 1759. The Theory of Moral Sentiments. London: A. Millar.

Smith, Adam. 1904. An Inquiry into the Nature and Causes of the Wealth of Nations. Edited by Edwin Cannan. Library of Economics and liberty.

Smith, Christian, Michael Emerson, Sally Gallagher, Paul Kennedy, and David Sikkink. 1998. American Evangelicalism: Embattled and Thriving. Chicago, IL: The University of Chicago Press.

Suciu, Titus. 2009. “Is Capitalism Ethical?” Bulletin of the Transilvania University of Brasov. 2(51): 237-244.

Weber, Max. 1905/2002. The Protestant Ethic and the Spirit of Capitalism. Translated by Peter Baehr and Gordon C. Wells. London, England: Penguin Books.

Wilson, James Q. 1989. “Adam Smith on Business Ethics.” California Management Review.

Zizek, Slavoj. 2012. “Capitalism.” Foreign Policy. 196: 56-57.

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