Christianity and Economics

B. Goudzwaard

Introduction

The broad setting of this article is how Christians view economic life today. Two aspects of this call for remark straight away:

These two aspects are, of course, interrelated. If Christians are not aware of any direct connection between their faith and their perception of economic life, their opinions will be very diverse, and any point of common orientation will be missed. At the same time, however, this observation raises intriguing questions:

These questions are of great practical importance, including in the area of education. What kind of curriculum should Christian schools use when dealing with economics and socio-economic issues? Can existing economic textbooks be used without any problem, or do we need a different approach? And what could possibly be said by Christian teachers about this subject?

 

What does the Bible say about economic matters?

The answer to the first question - whether the Bible has anything much to say on economic matters - is, in my opinion, strongly in the affirmative. I have at least three important arguments to support this.

 

  1. The Old Testament

The Old Testament gives a great deal of information on economic life through some of the some clear statements of the prophets - for example, on issues such as the needs of the poor, the necessary care for the land, good wages for completed labour, and the use and misuse of capital. Next to that, the Torah includes in nuce a complete economic order, giving the outline of a societal economic system, which has a very interesting consistency all of its own. This consistency is focussed upon realizing a number of purposes at the same time. These are:

One could say, of course, that this economic system is outdated. But its principles and purposes are not without implications for our present economic life.1

 

b) The New Testament

The New Testament in several places introduces the concept of economy (oikonomia), always in the context of God's calling to take good care of the household (oikos). The household includes not only the land, but also those who are working on the land and living from its fruits. The good steward (oikonomos) gives them their food in time. This last prescription is what we would call 'ethical', but in the New Testament it is an expression of 'good economy', of the responsible care for the household! "Economic" in the New Testament is a word loaded with normativity, and that normativity is not just "efficiency". Oikonomia is even related to the Eschaton, the Return of the (Land)lord, who comes back to his own property, asking us, as stewards, to render account. A steward (oikonomos) can therefore also fail or become disloyal, especially if he loses sight of the interests of the landlord and his people2. There is also, in the words of Jesus, an absolute difference between the priorities of the Kingdom of God and those of the Kingdom of Mammon. The difference is too strong to be ignored by any Christian.

 

c) A broad perspective

There is the ongoing confession in the Bible of economic life as belonging to the fullness of the earth as part of the Lord's creation. In accordance with the Gospel of John, Chapter 1, where God the Father speaks His creation into existence by His Word (Son) through His breath (the Holy Spirit), we are therefore able to speak of this world as created to Answer the Triune God, and it is therefore endowed with an "answer structure" (Bernard Zijlstra). This world is obviously created in such a way that everything in it is in one way or another related to the multi-colored calling of mankind to answer this speaking God, in the dialogue which we call human history. Economic endowments, natural resources, the human labour potential, the possibility of technical inventions are therefore never given to us to become a goal in themselves. They are destined to be in the service of:

Christians should therefore always have a "disclosed" view on all present social, economic and political realities - following their Lord who was the Word of God and the Answer to God in one person. Bonhoeffer's concept of the fore-last, das Vorletzte as presented in his Ethics3 is another way of saying the same thing. I love the emphasis here that meaning in our daily social and economic life comes to us from God, not only via his mandates in creation (Alpha) but also from the side of the "last things" (Omega) - the Eschaton being the end and fulfillment of history.

 

Conclusion: the role and influence of economic life

In conclusion then, it is not true to say that the Bible is silent about economic life. Christians who think and act as if this domain of their life is neutral, or that it belongs to the private realm, or who reduce the Biblical message to no more than an urgent plea to work hard, are simply holding an unbiblical opinion. So what then is the origin and background of such a common attitude?

Here, in my opinion, we have to look primarily at the role and influence of economic science, at economics as it is usually taught and as it has crept into the hearts and minds of us all (even if we are not aware of it). Standard economic science is built on a very closed worldview, which upholds the dichotomy between faith and science in a highly artificial way. Economics as we know it can even be seen as a direct offspring of Enlightenment thought, which almost continually guaranteed a kind of scientific neutrality for all sciences (along with the social sciences), getting rid of all kinds of religious critique and other so-called normative or metaphysical "overtones". My point is that we have all inherited that kind of scientific escapism in our bloodstream and mind.

This may be a sharp statement, even a kind of accusation, so it may be worthwhile looking carefully at the reasons for it.

 

The history of economic thought

Let us first take a quick look at the history of economic thought itself. In medieval times economics was a kind of sub-division of Ethics, and so open to all types of normative statements in the context of the well-being of the whole of human society. Thus we find comments in, for instance, Thomas Aquinas' work about the correct wage for labour, the good price - the so-called justum pretium - and the desirability of a prohibition of interest. In the time of the Renaissance also economic thought was changing. It substituted its serviceability to the doctrine of the church for a submission to the goals of the courts and the governments in order to realize the greatest possible accumulation of money (gold and silver). Economic thought, however, took a new turn at the beginning of modern capitalism, around 1770-1830. From that moment, the goals of the study of "political economy" became far less partisan. They were increasingly related to the desire to contribute to the material well-being of the population as a whole. But even Adam Smith, who wrote the main book about this subject (his famous inquiry into the causes of "The Wealth of Nations") did so as professor of social ethics! He was therefore not afraid of making economic judgments upon what in his learned opinion was "good" or necessary.

Yet in his work we also find the beginnings of another perspective. It is the approach which tries to frame or mould economic thought increasingly to the natural sciences, with their admirable high standards of objectivity and measurement. This is understandable, because not only had natural science in the 18th century already led to fantastic new discoveries (Newton was called "the light of the world", though he himself was a humble Christian), but it had also clearly shown that dealing with reality in mechanical-mathematical terms was a powerful instrument, which could lead to the formulation of important new scientific laws - laws which had never been found or could never have been found in the context of a limited organic or just theological view on reality. Adam Smith is the first economist who tries to understand economic life mechanically, as a functioning mechanism. And according to his friend David Hume, the result was excellent: in a lunaticís eyes it seems that Smith indeed invented society as a machine, composed of autonomous individuals as its working parts, and with a market "mechanism" as its unsurpassed core4. In this way a new perspective was opened for Economics, which gradually became a type of real science as respectable, for instance, as Physics: a science built on its own scientific foundations, no longer dependent on insecure subjective opinions or normative value-statements, but founded on the basis of experimentally-found concrete laws (supply and demand) and secure measurement (prices!). In the XIX century, the mechanical worldview began indeed to dominate all economic-theoretical reflections.

But an enormous problem soon posed itself. A stone always falls according to the law of gravity, but a consumer will not always buy more if the market price goes down. Consumers and producers are living beings, and therefore never fully predictable in what they do. However, the new concept of science asked for just those determinate results and predictable outcomes, derived on the basis of objective measurements! So what was to be done? Was it necessary simply to forget that economics could ever just be a natural science, but that it was and had to be a social science, more oriented to understanding than to a full explanation of human economic behavior? That, however, would have meant that value judgments could still enter, and that the theory would not have been entirely free from the influence of metaphysics or different kinds of religious beliefs. Or was it necessary to maintain the so-called objectivity and neutrality of economics at all costs?

This decision is, and always has been, a choice which in itself is not value-free. For here different views on humanity, society and theory clash with each other. The outcome of the debate was that the so-called "positive" and mechanistic view prevailed over the "normative " and more historical view. But this choice carried severe consequences!

The blueprint for a solution dictated that that if determinate outcomes are to be attained, with objective laws in economic thought in every case and at all costs, a solution must be found for the insecurity and whimsicalities of human behavior as such. Only two possibilities are available. The first is to internalize security, and the second is to externalize insecurity. You either have to make your theory immune to insecure outcomes, by presupposing a type of human being who is predictable and secure in all that he or she is doing (so internalizing security and determinateness in your theory), or you have to build up a type of economic theory, in which everything which causes insecurity or indeterminateness is removed from your own scientific domain (so to say externalized) by declaring it to be of a non-economic nature - as an issue properly studied by other sciences, or merely subject to probability-calculus.

The first possibility was chosen by John Stuart Mill (1844), who invented the homo economicus: the man who is always looking for the highest profits, the lowest prices, the maximum utility. He is secure and predictable and so, therefore, are the consequences of his actions. The theory now becomes determinate again - but the problem is that economic reality itself can easily escape from your theory! For if people act differently from the homo economicus, and they often do, then the theory has nothing to say.

So we see that economic theory, especially around 1870, began to follow the other line. It is the line of the externalization (elimination) of all forms and types of insecurity. A so-called "circle of data" is invented, a whole series of "given factors" for the economist.5 Data is no longer "explained", but accepted as given starting points for every economic analysis. To this data belongs, for instance, the preferences of the consumers: these are presupposed to be known, but also the desires of the producers are considered to be "given". Also the political and legal order is taken as previously known, together with the present state of technology and the size and capacity of the population. Everything which could possibly make the conclusions of the theory indeterminate is shifted by economic theory to the data-circle as the big asylum ignorantiae of economics, the biding place of all forms of ignorance. Also the word "circle" is indicative of how closed is the theoretical worldview which arises here. This circle of data, so to speak, surrounds what is fully determinate and measurable and therefore can be "explained" - which boils down to no more than all the movements of prices and quantities within the market-mechanism. The real markets are, one could say, stripped from all aspects of reality outside their mathematical and mechanical functions, to become fully determinate in their outcomes. So the new economic (neo-classical) theory gets its shape - the economic theory which still dominates economic thinking to this very day.6

But what kind of theoretical world is emerging in this way? Let us look at that question very carefully, for it could be that we see parallels, reminders of our own present world and of our own present ways of thinking - particularly if we are sincere Christians. To put it differently, this worldview could also be very similar to the world as it functions today, as well as the world as we have learnt to see it - but which may, in both cases, be an entirely different world seen from the viewpoint of the economy concept seen in the Scriptures.

In the following paragraph, I will try to mention three basic characteristics of this new artificially created world. These characteristics are:

(i) a lack of responsibility and accountability

(ii) a loss of qualitative aspects and insights

(iii) a restless and risky dynamism

When we have considered these three features, I will try to draw some conclusions from a Christian point of view.

 

  1. A lack of responsibility and accountability
  2. The first characteristic of the economist is that in his world the question of responsibility or accountability for economic problems or evils is no longer asked. To understand this, we only have to look at what happened to the place of the concept of causality in Economics. In his book on this topic7, Nobel-prize winner John Hicks gives an intriguing explanation of what happened to economic analysis when, as he says it, "the eighteenth century looking at causes and effects in a theologico-legal manner" could no longer be accepted. That was what he calls "the old causality", in which "every event must either be the act of some person, who was thus responsible for it, or it must be an "Act of God" (1979:5); in which, therefore, causes "are always thought of as actions of someone"(1975:6). That concept of causality had to go. It gave rise, for instance, to the debate "about the moral quality of supernatural actions", like the big earthquake at Lisbon (idem). But, so Hicks (1979:7, 9) continues: "The solution was found by the philosophers of the Enlightenment, Hume and Kant ... It was the old association between Causality and Responsibility which had to be rejected. Causality is a matter of explanation; but when we explain, we do not necessarily praise or condemn ... Economics, ever since that day, has been committed to the New Causality."

    I have quoted Hicks extensively because this is a very important point. To evade questions of a "supernatural" nature, to become a science which really could "explain" without any reference to God or belief, Economics chooses the type of causality which in relation to economic problems refrains from asking the "Who?" question. It no longer asks which agent has caused something (as is asked usually in the science of Law), but restricts itself to asking the "What?" question: what events or specific situations could have caused something to happen. Stated differently - and here we find something which has become a "natural" part of our own way of thinking and doing (and also, for instance, in politics) - if we are confronted with an important economic problem, let us say inflation, the growth of poverty, the rise of debt-burdens or the growth of unemployment, we have taught ourselves and others not to bother about questions of responsibility for those evils. We "explain" those phenomena in terms of the level of savings or consumption, the interest level, the level of government expenditures. The economist's world is a world free of accusations, free from any analysis of accountability for what happened8. References to guilt and debt never therefore enter the economic debate without being seen as unscientific, which also means that references made to the need for a different kind of behavior, or the need for redemption, have no chance. For economic theory has taught us to accept all economic subjects as they are, inclusive of their thrift, their eagerness, their self-centredness. There is an inner legitimization in that science for everyone and every economic agent to strive without any moral restraint for his or her maximum utility, income or power. So, if we meet an economic problem, we start with the question "What can we do about it? How can we cure the symptoms?", and never with the question "Who could have caused this?"9

    To summarise: Economics is a science which not only maximizes utilities, but also forgiveness. Maybe this is the reason why so many Christians like its approach?

     

  3. A loss of qualitative aspects and insights

But there is a second consequence. Economics has chosen to see the world as a quantifiable world. Qualitative aspects, for instance, related to the world of social interactions between people, to the world of their moral standards, or to the quality of health and the quality of nature which surrounds us, escape from economic theoretical reflections unless a price can be given to them, or if they can be introduced in a quantitative way in the "preferences" of economic subjects (such as consumers and producers). But of course this works if, and only if, these economic subjects actually "reveal" these preferences. If they like to squander their own health that is seen as a matter of their own choice. (Maybe this can also be expressed by saying that economics tends to recognize only "objects of use"; it has no interest in "objects of care" as such.)10

This narrow focus upon what is quantifiable and measurable often leads to incorrect economic conclusions, at the micro- as well as at the macro-level . A good illustration may be the way in which we all tend to perceive markets now.

Markets belong to all cultures; they have existed in all times. In principle, there is nothing wrong with them. Calvin even saw markets as a sign of the spiritual community between men and in that way as a token of the grace of God to us.11 But this high appreciation of markets relates of course to "real" markets, full of qualitative aspects such as social interaction, some degrees of care and loyalty etc. The market of the neo-classical economic theory misses out all of those aspects: here the ideal market is even anonymous. A large group of producers and consumers do not even meet each other; they only meet a given price. So what will happen if this, or similar concept(s) of the market, with their stress on individuality, anonymity, and autonomous feedback is given a central place in modern society, and even treated by some political currents as a compass which we have to follow in all circumstances? Then the social and moral quality of economic life will be drastically reduced. Even the inner limitations of every market tend to be "forgotten" - restrictions which can be observed by everyone:

Woe, therefore, to a society which thinks to do well by taking the market-mechanism as its final compass. It cannot evade the rise of markets in human organs, in the sexual "services" of women and children, and is bound to permit marketable "rights to pollute" in the poorest countries in the world. Neither will it be able to supply society with sufficient provisions of general or public health because, no matter how urgent the needs of the poor may be, they lack buying power.

 

(iii) A restless and risky dynamism

The final aspect of the strange world created in economic thought is its devotion to a risky but everlasting dynamism. This feature is of course related to the general Western faith in progress, which can be seen as an intrinsic and inalienable part of the whole Enlightenment movement.12 However, there is more to it than that. There is also a direct connection with the fascination for economic growth in the structure of economic theory. That fascination follows directly from the decision to see and declare human preferences as a datum, - a given factor or starting point for all economic analysis. The so-called "central" economic problem of scarcity is then automatically reduced to the question of how, given in principle, unlimited human needs or preferences, more goods and services can be produced in an efficient way to fulfil all these desires. The other side of the "economic problem", however, is that if the desires for goods and services themselves are chosen at a responsible economic level, then there can be an escape from economic theory. It is only the means which are the problem: their allocation, their distribution and their continuous growth.

The German philosopher Hegel was already aware that this may create a growing tension in human society. In his critique on civil society, as can be found in his Philosie des Rechts, (about 1826!), he defends the thesis that there is a narrow correlation between the expansion of production and the growth of human needs. The "labour system" and the "system of needs" of civil society are in his view directly interrelated; if more goods are available, all people want them, starting a process towards what Hegel called falsche Unendlichkeit (false infiniteness). The perception is wrong, that there is no possible limit to rising production and consumption; this is for Hegel no less than the prelude to the total breakdown of civil society, in which there is an increasing sense of scarcity as desires grow even more rapidly than the means allow.

Even in times of growing environmental and social problems, our modern society clings to its eagerness and acquisitiveness at all costs. But we should be aware that a real crisis is looming - one to which most economists turn a blind eye. In countries which are already rich, Economists simply continue to think of further expansion and accumulation. But is that not a type of blindness which is unacceptable from the viewpoint of Christian faith?

 

A few conclusions from a Christian point of view

Let me summarize, and see what conclusions may be drawn.

We have seen that economic science has tried in the last two centuries to create its own world, a world full of measurable entities and predictable results. But this is a world stripped of its qualitative aspects; a world in which no sins are committed, and no economic agent held accountable for economic evils; and a world devoted to a limitless expansion of means.

In this way, it becomes only too clear why so many Western Christians who have become accustomed to this way of economic (and social and political) thinking have a problem relating their faith to economic realities. If they are of good will, they speak of the desirability that soon a kind of bridge will be built between these two separate "worlds": the world of Christian faith and the world of the modern economy. But already by posing the problem in that way, clearly they are quite unaware of the fact that the living connection between faith and economic life, which existed for good or evil through the ages, has been deliberately and artificially cut into two parts by Enlightenment thought: a physical (mechanical) part and a so-called meta-physical one. In this way the wrong perception has been created in our hearts and minds, that indeed there is an inherent autonomy on economic life and in all practical economic reflections.

But there is a more sinister aspect to this: the theoretical world of an autonomous economy has also become, to a large extent, our practical world. This world is present not only in our perceptions but as a concrete reality, where we do indeed find markets organized as pure mechanisms; policies without any element of economic accountability or correction of wrongdoing; and a business-life for which the horizon has often become the fight for one's own market-share in the context of a limitless expansion. The belief in economic and technological autonomy has, to put the matter differently, become incarnate in our society. At the same time, it is leading us astray! To use, one more time, the last time, the concept of the data-circle: obviously the expansion of the market-economy itself has now become the real datum in society, the only given factor which everything and everyone around it has to accommodate, obeying its sovereign will: these include our desires (changed via commercials), our planet (eroded, sometimes exploited), the cultures of the South (dealt with as if they in themselves have no value), and our political systems (primarily economic communities). But such a degree of accommodation of the whole of society to the economy points to the existence of an idol - one worshipped perhaps by the whole of an alienated society.13

In telling you all this, I hope I am not discouraging you. In fact, it can be said that the more this analysis holds and is true, the more we as Christians can cherish real hope, and can also point to the solution of the crisis of our time. For this analysis shows that the deep economic problems of today do, in fact, have spiritual roots and are related to forms of unbelief - for which a solution is present. And to make that answer more apparent we urgently need personal Christian reflection on economic life - in our schools as well as in universities.

 

Notes

1. See, for instance, the publications of Abraham Joshua Heschel about the remaining significance of the Sabbath: The Sabbath, Its Meaning for Modern Man, Farrar, New York 1986.

2. An interesting addition in the New Testament is that in the case of abuse the failing steward is praised because of his capacity or shrewdness to make friends under the debtors of his Lord; he invests, as it were, in their loyalty to give him shelter and support in the future. (In Luke 16 the steward is able to do so by removing the accumulated interest already given loans, so that the Lord cannot do anything against him.) The economics of the Kingdom has many forms.

3. Dietrich Bonhoeffer, Ethik (Ethics), written in 1941. Chapter IV. Excerpts can he found in: Bonhoeffer Auswahl 4, Konseknenzen, Siebenstern Taschenbuch, Munchen 1970.

4. See the Introduction by Andrew Skinner in the Pelican edition of Adam Smith, The Wealth of Nations, 1970:12

5 For this data the concept of "categories" is used, the thought by which the scientist, according to Immanuel Kant, can order and "mould" his perception of reality. See R. Strigl, Die okonomische Kategorien and die Organisation der Wirtschaft, Jena 1923. Sgrigl was a Neo-Kantian and his approach is linked to that of Lionel Robbins in his famous Essay on the nature and significance of economic science, London 1952.

6. See in this context also the beautiful dissertation of Alan Storkey, Foundational Epistemologies in Consumption Theory, VU University Press, Amsterdam 1993.

7. John Hicks. Causality in Economics, Oxford 1979, published by Basil Blackwell.

8. Here I have to mention at least one important exception : the contribution of Amartya Sen, who, in his thorough analysis of the origins of famines in India, does not evade the "Who" question, and highlights especially the role of the landlords and the failing local government. Amartya Sen, Poverty and famines, An essay on entitlement and deprivation, Oxford 1982.

9. The awful consequences which this approach can have, and has already had, for the anti-poverty policy in the USA both on the democratic and the republican side, is illustrated in: Bob Goudzwaard, Who cares? Poverty and the Dynamics of Responsibility, in Stanley W. Carlson-Thies and James W. Skillen, Welfare in America, Christian perspectives on a policy crisis, Eerdmans 1996:49- 81.

10. Also here a concrete exception deserves mention: the work of Herman Daly, especially the last book which he wrote together with Cobb jr. a theologian: Herman F. Daly and John B. Cobb, For the common Good: reorienting the Economy towards Community, the Environment and a Sustainable Future. Boston 1999. For the distinction between objects of use and objects of care see also: Bob Goudzwaard and Harry de Lange, Beyond Poverty and Affluence, toward an Economy of Care, Grand Rapids, 1995.

11. See Andre Bieler, La pensee economique et sociale de Calvin, Geneve 1959:449- 453.

12. See for further comments about this Christopher Lasch, The True and Only Heaven: progress and its critics, New York 1991, and Bob Goudzwaard, Capitalism and Progress: a diagnosis of Western Society, Eerdmans 1982, ( to be reprinted in 1996 in England in the Classics Series of Patmos).

13. Elaborated further in my book Idols of our Time, IVP 1984.

 

BIBLIOGRAPHY

DALY, H.E. & COBB, J.jr., 1990. For the common good, redirecting the economy towards community, the environment and a sustainable future. London : Green.

GOUDZWAARD, B. & DE LANGE, H., 1995. Beyond poverty and affluence: towards an economy of care. Grand Rapids : Eerdmans.

GOUDZWAARD, B., 1996, Capitalism and progress; a diagnosis of Western society. Grand Rapids : Eerdmans.

STORKEY, A., 1993, Foundational epistemologies in consumption theory. Amsterdam : Free University.

TIEMSTRA, J. ed., 1990, Reforming economics; Calvinist studies on methods and institutions. New York : Edwin Mellen.