Home > economics, poverty > >A Christian approach to economics

>A Christian approach to economics

>This is something I have become increasingly interested in. I do not have an extensive economic background but have read many articles over recent years. I have become increasingly capitalistic in my approach, though there are several issues that I have yet to resolve biblically.

I think a good economic policy can be formulated from the Bible but it needs to start from fundamental principles rather than taking a more pragmatic approach and learning from economies around the world. Not that there is anything wrong from learning from the events we see, the 20th century is pretty damning on communism as an economic solution (and any other solution it proposes), we do well to note it. The problem is that the preferred outcome of economic policies may not coincide with that of God. A reasonable goal of economics is maximising material prosperity for all citizens (though not necessarily equality of outcome) and maximising productivity while minimising labour. However God is more concerned with our response to Christ. And righteousness and justice are more important principles than profit. Of course an industry needs to make some profit (or break even) over time else it will fail; and people debate over the meaning of “justice” as it applies to economics.

I have not found a discussion of biblical economics that reviews all the relevant passages of Scripture and attempts a coherent and Christ honouring view. It may exist, I just don’t know of any. I recently found this paper by an Australian Andrew Kulikovsky whom I am more familiar with as an author of creationist articles. It is titled “A Biblical View of Economics and
Industrial Relations” and it is very much worth a read (I have a slightly different take on some ideas).

Clearly some people are poor because they are oppressed by others (Isa 10:1-2, Zech 7:10), but the Evangelical Alliance and other Christian socialists tend to view poverty as almost entirely a result of oppression, either directly (in the case of workers being oppressed by their employers), or indirectly (in the case of systemic denial of equality). They rarely acknowledge that many people—especially those who live in wealthy western societies—have brought poverty upon themselves through laziness, foolishness, impulsiveness and the like.

This is insightful in that it shows that so called “poverty” in the West is inappropriately labelled and cannot be equated to poverty of third world countries, not just in terms of wealth comparisons but in the causative factors of the lack of wealth. Now self-induced poverty may be due to bad behaviours that have been learned, or due to lack of appropriate behaviour because it has not been taught, but even so, the solution is different. It is the deficit behaviour that needs to be remedied rather than the deficit income.

Another complaint against capitalism is that it leads to inequalities in wealth outcomes. Though there is a range of incomes in a capitalist society it is still likely that wealth is more evenly distributed compared to other systems. For example, although Bill Gates is exceedingly wealthy, his income as a percentage of global wealth (or even US wealth) is much lower than in times past: compare Rockefellar. Kulikovsky gives further insightful analysis to this complaint,

Yet a common objection to capitalism among socialists is that 10% of the population owns 90% percent [sic] of the wealth. But even if this claim is accurate, there would in fact be nothing wrong with such a situation provided that the 10% acquired their wealth through legal, just and fair means. In essence, the situation is indicative of the fact that some people have contributed more to production than others, because they introduced major improvements and innovations. Therefore, the 90% of the wealth that is not only owned but also created and earned by that 10% (or by their parents or grandparents), ends up serving the rest of the population that did not contribute as much to production. Furthermore, if the rest of the population (or the government) attempt to force a transfer of wealth from that 10% to the most disadvantaged—as the Evangelical Alliance proposes—they will ultimately destroy the creation of the wealth that serves the least disadvantaged and destroy any hope they have of escaping their disadvantaged state. This is because the Christian socialists in the Evangelical Alliance have no concept of the production of wealth and how it is accumulated, but instead begin with the myth of the ‘distribution fairy’: that there is a finite amount of wealth in the world and that it is meant to be evenly distributed among everyone. These views come not from the Bible but from Karl Marx, and would naturally lead to the implementation of coercive policies that legally sanction theft and lead to a world that is physically empty of the production and accumulation of wealth. Instead of evenly distributing wealth, such policies end up evenly distributing poverty! As Reisman put it, the “thieves” end up as “starving wretches.” The truth of the above principles in born out in the actual history of all those societies that have adopted communism and other forms of socialism, and Zimbabwe, once the bread basket of Africa, is a current example of the poverty and economic ruin that comes from such policies.

Viewing wealth and produce as fixed implies that if anyone gains then someone must lose. But if wealth can be created then offense at the wealthy who created their own wealth is just envy. If every man grows 10 bushels of wheat a year and one man devises a method to grow 100 without preventing others from growing theirs, where is the injustice in that? If someone becomes wealthy at the expense of the work of the poor and refuses to pay them what he agreed in order to become rich, that is an offense. If a man creates work for others and in the process creates significant wealth for them as he creates wealth for himself, that is a good thing, even if he becomes richer than all his workers.

All in all an interesting read.

Categories: economics, poverty
  1. Ba
    2008 May 30 at 10:13

    I am reading book at the moment that called “Social Welfare and Individual Responsibility(For and Against)” by David Schmidtz and Robert E Goodin
    I am still on the ‘For’ side of Individual responsibility and have found it a really insightful read. Schmidtz, who is For Individual responsibility talks about a few things that really make sense to me. (from my memory)
    1. Snapshot vs Dynamic view
    Often welfare debates (especially for redistribution) focus on snapshots of people’s situation and assume that they can freeze time, balance us everyone’s $ need and make things alright.
    They do not regard the effect on future behaviour that redistribution can have. He had some interesting stats from the IRS I think where it showed how many in the lower quartile of earners had moved to the highest quartile of earners in just a year or 2 (can’t remember)
    2. Externalisation vs Internalised responsibility
    Effectively, if your negative actions and the consequences ensuing don’t have to be paid for by you, then you will have little motivation to regulate your actions. eg. If companies can operate a factory where they send polluting waste downriver because it is the cheapest option and it doesn’t affect their operation, then many do. (Heard of China, 19th C Western world?)
    But instead if they are penalised even more money for doing that than they would make then they would tend not do it.
    So where cost/consequences are externalised ie. passed onto others there is an inequitable transaction and nothing to regulate the behaviour if it is undesireable.
    Internalisation means that the actor is the one that bears the consequences, thereby being regulated by the reward of avoiding undesireable consequences.
    I recommend reading Schmidtz on this.
    I may add some more another time
    link to the book [http://www.amazon.com/Social-Welfare-Individual-Responsibility-Against/dp/0521564611]

  2. 2008 May 31 at 04:20

    Sounds interesting Ba, may have to borrow it sometime. Walter Williams talks about people shifting thru quintiles as they work.
    The other issue is that money for famine relief is different from a regular income to cover every cost of living at a level similar to acquaintances.
    One could argue for government involvement for the former if funds are available without agreeing to the latter.

  3. 2008 June 1 at 03:41

    Your blog reminds me of the parable where the labourers were taken on at different times of the day but paid the same amount. The workers had all freely agreed to what they were offered for their labour. They (those taken on earlier in the day) only felt aggrieved when they became aware of what their fellow workers (those taken on later in the day) had been paid in comparison to themselves. The text leads us to believe that the owner was in the right to do this and that the workers attitudes were what needed to change. A challenge to the modern labour / union movement. I have (through my employment) been undertaking some union training. Voluntarily, as I want to understand them more. There is a very strong sense that all are equal, all should be paid the same and that wealth is there to be distributed to the poorer by their modern masters who are “evil” by virtue of their wealth and power!. As your articles states, if it were not for those who possess the acumen, inclination and creativity for productivity then the less able or less willing would be even worse off. I could not agree more with the distinction you make between poverty in the third world and poverty of those in developed western nations. Having lived and worked for a year in West Africa, Niger, I find statements that imply poverty in developed western nations is comparable to that of third world nations incredibly ignorant, offensive and worrying because, potentially it shifts ones concern for these poor to ones own sense of increasing need. This is not to deny the needs of those who are poor or poorer in our society and the challenge of what the response to this should be,its the comparison that says the two are equally needy and that (perhaps by implication of this that the causes are the same) that concerns me.

  4. 2008 June 1 at 05:03

    I agree Blair. Where I need to think more is in the area of people’s background. Even a system that seeks to equalise opportunity does not do so because those who are “poor” in the West frequently come from backgrounds that preclude them taking up these opportunities or seeing them as such.
    Now I don’t think the response is governmental involvement as it seems to me to breed an attitude of self-deserving and victimhood. But I am aware that a kid with intellectual potential in a poor neighbourhood is less likely to maximise his education even if the “potential” exists. I think that God cares about that but I am not certain socialist economic policy is the appropriate way to address it.
    While there is evidence that conservative individuals give more of their own time and money than socialist individuals, there is possibly scope for even more.
    And while I can complain at the injustice of having the government take nigh on half my income in tax, and the fact is this is probably true (ie. injust), I am aware that I am born into a country that allows me to earn as much as I do. How many in the third world work much harder than me and barely get by?
    I guess I am saying that good economic policy creates wealth and is good for reducing poverty, yet I should seek this for the sake of the poor and be less concerned about myself.

  5. 2008 June 1 at 10:44

    “…yet I should seek this for the sake of the poor and be less concerned about myself…”
    I think this comment clinches it. Such an attitude can only come about through personal transformation and living primarily for the coming Kingdom of Christ. For such an attitude is of His Kingdom and not of this world. It turns this world’s values on its head because there is no reward, in this life – from the perspective – for living in such a way.
    Can a political or economic system ever fully grapple with that. It could be argued that one system may to a greater extent facilitate such values but then perhaps only for some people (even amongst those who wish to live this way – one way will not suit all).
    Change of tack: I’m sure you have considered this but, after my previous reply, it occurred to me that while Christ was highly productive (for want of a better word) in the lives of many of those who encountered Him, (not all knew Him as a positive force in their lives) can any direct economic measure be made of His contribution as we are so wont to do today? Should it be even be tried? The reason I ask this is that He never received an income but lived off the wealth (means)of others (frequently women). He did not accumulate or directly redistribute wealth – although He challenged a few others to do so, Zacchaeus and the parable of, the rich young ruler.
    While I believe there are sound spiritual reasons for Him not having a personal income, what I find interesting is that we don’t tend to uphold this as a model by which to live everyday ourselves. If anything it is looked down upon. Perhaps, in terms of those from the West, people involved in overseas mission came the closest to this ‘economic model’. One that is increasingly struggling today and not one that is generally used in ones country of birth. Even for those overseas now, increasingly we hear people speak of ‘tent making’ (paying ones own way). This can, however also be related to the local political and, to a lesser extent, economic climate.
    The modern house wife / husband comes to mind as a comparison (when thinking of Christ, economically speaking, as far as selfless labour and no income is concerned. Would not want to push this one too far). Highly active, creative and productive and without their activity many others who generate wealth, more directly and measurably, would not be able to do so.
    Because the housewife cannot show a pay cheque and because the economic benefit of such activity is more difficult to measure, it is a role and way of functioning that is still not valued and seen as legitimate, as it ought to be.
    I heard it said recently, “if you don’t work you should not eat.” What this person was referring to was working for an income. Is there a place in the modern economy, should there even be such a place, for people who legitimately function more along the lines of Christ’s personal economic model by virtue of what it is that they do? If not

  6. 2008 June 1 at 12:04

    Apologies Blair, I have the free haloscan option which limits to 3000 characters which leaves us making short comments, several comments to cover the ground, or blogging and linking to it. :)
    I have some thoughts about a few of your comments, may come back to them at a later stage. In terms of your housewife comment, given they demand goods but don’t supply them, this pushes up the demand for workers which are in a shorter supply and thus causes higher wages in economies where only one spouse works in paid income (all other things being equal).
    As well as your comments on Jesus’ means, one could specify his actions that caused economic damage such as the casting of demons into pigs. This should make us aware that the spiritual good overrides material good.

  7. Mark Call
    2008 June 19 at 18:21

    Check out Gary North, bethyada. He claims this topic as his “life’s work”.
    Here’s an excerpt from a recent email of his:
    Why do I think I have a monopoly in my selected
    calling? Again, Google. Search for “Christian economics.”
    Six of the first ten hits are to me, including the top one.
    In August of 1985, I was in the university office of
    Brian Griffiths. That same day — that same hour —
    Margaret Thatcher hired him as her economic policy advisor.
    He is now Lord Griffiths. He has written two books on
    Christian economics. He told me that day that he had never
    heard of Christian economics before he read my book.
    I did not know all this would happen back in 1973,
    when my book appeared. That same year, I began my lifetime
    project of writing an economic commentary on every verse in
    the Bible that relates to economics. So far, I have
    written 21 volumes. The latest went on-line this week.
    It’s in manuscript form. I will typeset it later this
    year, after I get feedback from readers who find typos.

    Click to access Prophets.pdf

    The book is on the economic views of the Old Testament
    prophets. For over a century, socialists and Social Gospel
    advocates have told the sheep in the pews that the Old
    Testament prophets preached either socialism or the welfare
    state. I see my number-one job in life as undermining
    people’s acceptance of such a view.

  8. 2008 June 23 at 10:19

    Thanks Mark, will have a peruse of his free stuff.

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