The Inseparable Link Between
Morality And Economics
in: A Man Of Principle: Essays in Honor of Hans F. Sennholz)
Dr. Judd W. Patton
What do modern day economists do? What procedures and methods do they employ? The standard textbook response is that economists formulate economic
principles that are useful in establishing policies designed to solve
economic problems. To discover
these principles, also known as generalizations, economists engage in
positive economics, that is, they hypothesize and theorize about empirical
observations, strictly limiting themselves to describing reality, and they
avoid issues or questions of what ought to be. The latter is called normative economics.
In this positivist approach there is an impassable line of
distinction between morality and economic science.
Morality is a “non-fact” for positive theory and analysis. To suggest that moral principles could be relevant “empirical
data” within the positivistic episteme clearly would be a serious breach
of scientific analysis and purity.
Yet, a little reflection, according to Henry Hazlitt, reveals that
economics and ethics:
fact, intimately related. Both are concerned with human action,
human conduct, human decision, human choice… There is hardly an
ethical problem, in fact, without its economic aspect. Our daily ethical
in the main economic decisions, and nearly all our daily economic
in turn, an ethical aspect.1
The subject matter of both morality and economics is human action.
Economic inquiry wants to know the cause and consequences of human
actions. Morality purports to
show which human actions are right or wrong. Clearly human action is the common denominator, suggesting a possible
link between moral principles and economic principles. Thus, could it be possible that a moral principle has its counterpart
in the economic realm? Could
both moral and economic principles be a part of an inseparable body of
thought? Could the economic and
moral realms be, in fact, in harmony with one another as opposed to being
hermetically sealed, unrelated areas of human knowledge as required by
The positivistic episteme rejects such questions out of
hand. Positive economics
excludes the possibility of ineluctable economic principles and it excludes
ethical or moral principles as relevant knowledge in explaining the
consequences of human action in the economic realm.
To repeat, morality is a “non-fact” for contemporary economic
To consider these questions, then, a new episteme is required – one
that can investigate a possible link between economic events and moral and
immoral human actions. The
purpose of this essay is to demonstrate that such an episteme not only
exists but reveals a necessary connection between ethical decisions and
economic results. Its analysis will address the basic premises of this
worldview, its methodology, and some of its magnificent economic and moral
laws, and it will demonstrate the interconnection of these two areas of
human action by analyzing some important economic issues of our day.
The science of economics is generally recognized to have begun with
the 1776 publication, An Inquiry into the Nature and Causes of the Wealth
of Nations, by the Scottish moral philosopher, Adam Smith.
Unlike his predecessors in previous centuries, he systematically
deduced many cause and effect principles that operate in a market economy. For this accomplishment he is recognized as the “Father of
Economics.” Adam Smith’s
efforts led to the rise of a tradition known today as the “Classical
School of Economics.” It
lasted nearly one hundred years and was developed by such great thinkers as
Jean Baptiste Say, David Ricardo, John Stuart Mill, James Mill, Nassau
Senior, and Frederic Bastiat. Together,
their ideas were a major force in ushering in the age of capitalism in the
eighteenth and nineteenth centuries.
For Adam Smith and most of the classical economists, economic science
(or, in their words, political economy) was a branch of moral philosophy
built on a moral base. Adam
Smith himself believed in the existence of a moral order that he called
natural liberty or natural law. Using
this framework he logically demonstrated that free markets were not only
vastly more productive than any other alternatives, but free markets were
also in harmony with the God-ordained order of natural liberty. To paraphrase Adam Smith, individuals within a capitalistic system of
private property acting in their own self-interest are led by an
“invisible hand” to promote the general well-being of society.
In the 1870s three economists working independently revolutionized
classical economic science by discovering the subjective theory of value as
the basis for market prices and phenomena. Carl Menger at the University of Vienna, William Jevons at Cambridge
University, and Leon Walras at the University of Lausanne each perceived
that it is acting, preferring, and valuing individuals who are the source of
market prices, not labor times as most classical economists had assumed. And thus, neo-classical economics was born.
Another equally revolutionary idea emerged during the nineteenth
century. The idea was that
economics should become an exact science, like the natural sciences, by
adopting its trial and error approach. The impetus given to this experimental or empirical method was due in
large part to the notable successes and progress of Newtonian physics,
biology, and astronomy. A
corollary to this development was that science should not have a moral
foundation, as did the work of Adam Smith and other classicalists. Science should be value-free.
Undoubtedly, no scientist should inject his opinions, prejudices, and
judgments into his analysis or work. Scientists
by definition are unbiased researchers. Nevertheless, a general understanding exists today that all science
is based on a foundation or paradigm that shades thinking and theorizing.2
To exclude God or revealed knowledge from their “starting point” in the
study of economic phenomena in an effort to be unbiased is to make man and
his reasoning the sole source of knowledge. This latter position is known as humanism. Humanistic trial and error science has no place for absolute,
universal principles. Clearly, they would claim, the testing process in
economics is never-ending. Economic
theories are not universal but they evolve and change continually.
This virtually unheralded revolution changed the scope of economic
science from a morally based, deductive science revealing universal
principles of human action, to a non-moral, humanistic, experimental science
producing principles that are relative to time and place, continually open
to refinement or refutation. As
one well-recognized scientific empiricist said, “Truth may exist in the
universe, but science can never know for sure if it has discovered it.”
Only one neoclassical school of economics has not followed the
humanist, no-truth, empirical methodology. Founded by Austrian Carl Menger at the University of Vienna, and
developed most notable by Ludwig von Mises (1881-1973), this tradition has
developed a body of economic principles based on the self-evident axiom that
mankind acts purposefully. Reminiscent
of Adam Smith’s work, these economic laws or principles are true and
timeless because they have been deduced by the rules of logic from a true
axiom. Unless a logical error is made, Austrian theory is true
and correct, providing mankind with essential knowledge of relationships in
the economic sphere. Austrian
principles reveal the necessary means to the attainment of economic goals.
Within this Austrian tradition a group of economists has endeavored
to expand the Austrian episteme to include the moral dimension.
For the most part, this episteme was developed in a fortnightly
journal entitled Christian Economics that spanned two decades,
Gary North is most emphatic about the Judeo-Christian foundation or
episteme for economic science. “I
am not arguing that Christians should develop a better approach to
economics, both theoretical and practical, but that Christians are required
to work out the Biblical principles of the only kind of economics that there
can ever be, revelational economics.”4 Let us examine North’s
Two Kinds of Economics
The Bible informs mankind that the fear (awe) of the Lord is a
foundational premise for all knowledge (Proverbs1:7). Christians take
seriously this admonition: “…and lean not to your own understanding. In
all your ways acknowledge Him, and He shall direct your paths.” (Proverbs
3:5-6). Indeed, the Apostle
Paul warns against the paradigm of humanism – man and his reasoning as the
sole source of knowledge – as the basis for any science: “See to it that
no one takes you captive through hollow and deceptive philosophy, which
depends on human tradition and the basic principles of this world rather
than on Christ” (Colossians 2:8, New International Version). The Greek
word for “basic principles” means “primary and fundamental principles
of any art, science or discipline.”5
Thus, the Bible reveals that there are only two broad worldviews or
paradigm – God’s and man’s. In
terms of economic knowledge, there can be only revelational or Biblical
economics and man’s economics. Mankind either develops economic knowledge
on the foundation God has revealed in His word, or mankind does not.
In the book of beginnings, Genesis, the Creator God explained
how man’s “alternative” view came about. God explained personally to Adam and Eve that they could eat of every
tree in the Garden of Eden except the tree of the knowledge of good and
evil. It was strictly forbidden. If they chose to eat of it, they would
surely die (Genesis 2:16-17). Adam and Eve disbelieved and disobeyed God.
They ate fruit from this forbidden tree and took unto themselves, and for
all mankind afterward, the discovery of knowledge apart from God (Genesis
3:22). Humanism was born.
Economically speaking, man has constructed his own economic systems
and generated his own diverse and numerous schools of thought that seem
right or good to him (Proverbs 14:12). Our point is that the Judeo-Christian
tradition must begin its quest for economic knowledge, understanding, and
wisdom – as well as for all areas of knowledge – within the revealed
episteme of the Bible (Matthew 4:4). According
to Gary North, this episteme and the substance of Biblical economics is an
almost untouched field for academic work.
Biblical Economic Paradigm
The Bible addresses a wide range of economic topics. For example, the parables of the pounds (Luke 19:12-26), of the hired
servants (Matthew 20:1-16), and of the talents (Matthew 25:14-30) are given
to make spiritual points but essentially economic in nature. They deal with
money, interest (usury), profit and loss, wages, entrepreneurship, and
contractual relations. The
Bible does not directly expound principles of economics. It does, however,
provide the essential framework for the systematic development of economic
The Bible identifies four paradigmatic premises for economic science.
The first premise mentioned previously is that God’s word (the Bible) is
the foundation for all knowledge, Christian wisdom, knowledge, and
understanding originate from fearing (respecting) God by striving to keep
His commandments, hating evil, and living by His every word (Ecclesiastes
12:13; Proverbs 8:13; Matthew 4:4). All
other knowledge and wisdom is prophesied to come to naught (I Corinthians
The second premise central to economic methodology is that man is a
purposeful being endowed with a spiritual essence that gives him a mind and
free will. Man is not an animal programmed with instinct but is, instead,
made in the very likeness and image of God (Genesis 1:26).
Man has a spiritual essence that imparts intellect (I Corinthians
2:12). This spirit, working within man, gives him mind power – something
not possessed by animals or other living organisms. When Adam and Eve
sinned, their descendants – humankind- were simply cut off from access to
God’s Spirit (Genesis 3:22-24) until Christ’s atoning sacrifice and
resurrection. Man is special and unique in God’s creation.
Man alone possesses an inner self of volition, self-awareness, and
the ability to choose goals and the means to fulfill these goals. He also
has the capacity to build Godly character, assisted by the Holy Spirit in
choosing the right and resisting the wrong (II Corinthians 4:16; 10:4-5).
Man acts; he values and prefers. He is a purposeful being.
A third premise is that God as Creator and Lawgiver (James 4:12;
Isaiah 33:22) has set in motion inexorable laws governing human action –
in the social, economic, and political realms – generating
“…life and prosperity” (Deuteronomy
30:15-20; Exodus 20:3-17). These spiritual laws reveal to humankind how to
love God (the first table of four laws) and how to love neighbor (the second
table of six laws, as summarized in Matthew 22:37-38). To obey and live
within these eternal principles of human action or conduct is to bring about
harmony, peace, economic prosperity, and liberty (James 1:25).
As Michael Novak put it: “Virtue can hardly help bearing material
fruit… The relation of
Creator to creation would otherwise seem odd.”6 Many verses
attest to a relationship between moral law and economic well-being (Job
36:11; Psalms 1:1-3; Joshua 1:8). Living
in defiance of these moral laws is the definition of sin: “…for sin is
the transgression of the law.” (I John 3:4). Moreover, sin entails
offenses. Since much of human
activity is economic in nature, it follows that many penalties will be in
the economic realm as well.
The fourth premise is that God has given mankind a stewardship role
on the earth (Genesis 1:28; Hebrew 2:6-8).
Indeed, the Greek word for economy, oikonomia, which
translates literally as “law of the household,” means stewardship.
God has given man the responsibility to care for the earth, though
God still retains ownership of all the earth (Psalms 24:1). According to
North, the Hebrew conception of property rights was covenantal.
It set boundaries on the power of individuals and the state to
administer property. God delegates to mankind the responsibility of acting
as stewards of His property.7
However, wise stewards need more than moral laws to carry out their
responsibilities. They need to
possess a knowledge and understanding of economic cause and effect.
For example, would abolishing private property in the means of
production (socialism) be an appropriate means to a more productive,
efficient economy? Would
protective tariffs or quotas reduce a nation’s unemployment rate or
balance of trade deficit? Would higher minimum wage legislation be an
effective policy to raise labor income? Would increasing the quantity of
money be a proper means for a central bank to lower interest rates and
thereby “fight” recession? Knowledge of the Ten Commandments does not
directly answer these questions. Godly wise stewards must also understand
the intimate relationship between moral laws and economic cause and effect.
Otherwise their economic behavior or advocacy of public policy may
contradict their moral standard. Biblical
or Christian oikonomia, then, is the administration of God’s way of
life on earth. How can these
economic laws or principles be discovered?
The key to understanding Christian economics and the generation of
economic principles lies in the second paradigmatic premise.
Mankind acts purposefully. The
Bible Clearly shows through numerous examples that when dealing with human
action, the scientific method of hypothesis and controlled experimentation
is inadequate. It cannot assess
the facts of reality. Empiricism
is appropriate for the purposeless realm of the natural sciences. It is misleading, however, in the realm of purposeful human
action, that is, in economics.
In brief, the scientific method alone cannot make the economic
understandable in terms of either human purposes or God’s purposes. Thus, it cannot establish the “facts of reality.”
Here are a few Biblical proofs.
As noted above, Adam and Eve observed that the forbidden fruit looked
good to eat. They ignored God’s directive and purpose.
It was not good to eat, regardless of sensory perception. Their observation, apart from a knowledge of God’s command, was
incapable of determining the facts of the situation.
Another example is Job. In
fact, the whole book of Job is a study in the failure of empiricism.
Job was righteous. God
even said so. But Job’s
problem was self-righteousness. After
Job finally lost everything, his friends pointed to his calamity as evidence
that he had committed some horrible sins. Since they did not grasp that God’s purpose
in afflicting Job was
to overcome his pride, their comments were misdirected, not factual. In the end, Job’s friends were chastised by God (Job 42:7).
The exodus from Egypt provides yet another example of the inadequacy
of the scientific method to deal with human action. God purposefully led the Israelites into a box canyon, trapped
between the mountain ranges and the Red Sea. Pharaoh thought the Israelites had trapped themselves (Exodus 14:3). But Pharaoh’s observation, without a knowledge of God’s
purpose, was faulty. God was
working out a great purpose: to deliver His people miraculously.
Had Pharaoh known that, his course of action would likely have been
different. Again, empirical
observation alone was incapable of discovering the truth of the
By excluding God’s purposes from economic analysis, it is
impossible to either grasp the facts of reality or existing relationships. Humanistic economic science, for example, could never discover that
individuals who tithe will receive economic blessings and those who do not
will be cursed (Malachi 3:8-10). Indeed
how can empiricists ever discover that failure to tithe is robbing God? How could they test the tithing law or the following economic
relationship: “He who has pity on the poor lends to the Lord. And He will pay back what he has given” (Proverbs 19:17)?
Likewise, it is just as important to base economic analysis on human
purposes. A classic
illustration is given by Israel Kirzner. Suppose an economist from Mars focuses his telescope on earth. Being an avowed proponent of the scientific method, he proceeds to
observe an interesting regularity. He
observes that at a specific time each day a moving box stops at a fixed box. In a matter of moments some tiny objects move from the fixed box and
disappear into the moving box. Further,
he observes that this occurs five out of every seven days. As he continues his research, he observes that sometimes the moving
box stops and leaves without any objects disappearing into it. At other times he observes the tiny objects moving at a rapid
rate, arriving just in time at the fixed box to be swallowed up by the
moving box. After extensive
empirical research, our Martian scientist may be able to establish a
tentative principle about moving boxes and objects. His theory may even provide excellent predictability as to when any
tiny object is going to miss or catch the moving box. Nevertheless, our Martian economist will have developed an incomplete
picture of what actually is happening – people catching a bus for work
Through numerous examples, the Bible shows clearly that the
scientific method, by itself, is an incomplete methodology for economic
science. In summary the
problems are: (1)
empiricism’s inability to identify and discriminate facts from non-facts
due to its abstraction from human purposes and God’s purposes as revealed
in the Bible; (2) its inability
to perform controlled, replicable experiments; and (3) the inappropriateness
of its goal to attempt to discover and measure quantitative relationships
that do not exist in the realm of human action due to subjective human
As Murray Rothbard has stated, “To ignore this primordial fact
about the nature of man, to ignore his volition, his free will, is to
misconstrue the facts of reality and therefore to be profoundly and
radically unscientific.”10 Rothbard and other Austrian
theorists identify the ordinary use of the scientific method for economic
theorizing as scientism – the unscientific attempt to transfer the
methodology of the physical sciences to the study of human action.
Since its inception, the Austrian tradition in general has been
keenly aware of epistemological issues for economic science, most notably by
Ludwig von Mises. The founder
of the tradition, Carl Menger, concluded that universal causal economic
laws, which he called verites de raison, could be discovered
by logical deduction by relating external events to human plans, purposes,
and values.11 As
Rothbard expressed it, “economic theory consists of the elaborations of
the logical implications of the concept of action.”12 But it
was Mises who developed most of this phenomenal body of economic principles
or laws in his magnum opus, Human Action.13
the Biblical paradigm and perspective, Mises and the Austrian school have
developed, by means of a “borrowed premise,” a major portion of Biblical
economics; that is, they have logically deduced inexorable, universal laws
of economics starting from the axiom that man acts purposefully.
While the Austrians outside the “Christian economic” tradition
have made the world understandable in terms of human purposes, their
framework and analysis, however, do not include making the world
understandable in terms of God’s purposes as revealed in the Bible. These
Austrians thus fail to perceive the inextricable relationship between moral
laws and economic laws, i.e., that violating moral laws also violates
economic laws. Nevertheless, they have provided necessary economic knowledge
and understanding for Biblical economics.
Seven Economic Laws
The following are some of the major laws of cause and effect derived
from and consistent with the axiom the humankind acts purposefully:
of Supply and Demand: Harmony
and balance between producers and consumers
is only attainable through market-clearing prices that reflect the
actual supply of, and demand for, a particular product or service.
Law: Supply creates demand, or salable production is the source
of the Comparative Advantage: Income
or production is maximized when each individual and nation specialize in
producing goods and services in which they have a cost advantage, that
is, in which they are more efficient or profitable than others.
of Employment: There
is always work to be done and, therefore, no fixed number of jobs, but
to be employable, individuals must accept wages and salaries (including
fringe benefits) that correspond to the market value of their service.
of the Quantity of Money: There is no economic benefit from increasing the quantity of
money. Prices and costs
adjust to the available supply. More
money means higher prices and less money means lower prices.
of Time Preference: Mankind
prefers a present good or satisfaction to the same good or satisfaction
in the future. That is, time is valuable; it commands a price (the
money drives “good” money out of circulation. More precisely, money artificially overvalued by government will
drive money artificially undervalued by government out of circulation.
Modern day positivist economists would, of course, deny and reject
the above seven propositions as eternal principles. But to Austrians and Biblical economists, these laws are deducible
from the axiom that mankind acts purposefully. They are principles to be learned and used to understand the causal
relationships in the economy. Specifically,
they are essential components for Christian stewardship.
For example, from these laws Christian stewards know that persistent
shortages and surpluses are one of the consequences of decisions to
implement legal price ceilings and price supports. Such actions fail to
“obey” the law of supply and demand.
Price inflation and business cycles are two of the consequences of
ignoring the law of the quantity of money. Unemployment, especially for the young and unskilled, is a
consequence of minimum wage legislation that violates the law of employment.
Lower standards of living are a consequence of protective tariffs and
barriers, that is, a failure to get in step with the law of comparative
advantage. Government deficit spending to “create demand” is
illusionary. It contradicts Say’s Law.14 And the loss of American silver coinage in 1964 was the consequence
of ignoring Gresham’s Law.
Now we come to a key insight of the Biblical economic episteme.
The economic difficulties listed in the preceding paragraph are the
consequences of not only “disobeying” economic laws, but the consequence
of disobeying moral precepts. Truth
is consistent. Stated
differently, these negative economic consequences are the result of
employing inappropriate economic means initiated by immoral human actions. Thus, every breach of the Ten Commandments by individuals,
businesses, or governments in the economy simultaneously leads them to
breach economic laws or sound stewardship principles! There is an interconnection and unity of the moral realm and the
One Indivisible Body of Science – Examples
Consider the issue of economic systems, capitalism versus socialism. Is socialism, where government owns and centrally directs all of the
factors of production, a system based on economic and moral principles? Absolutely not!
Economically, socialism contradicts the law of economic calculation. Rational, efficient allocation of economic resources is impossible
without a price system that accurately communicates to producers the
relative scarcities and demands in the economy. Socialism contains an economic paradox: the economy is planned but
planners have no mechanism or means to assess the profitability of any
endeavor. Therefore, unbalanced
production, shortages and unusable surpluses, duplication, time lags,
inefficiency, and appalling economic waste are guaranteed. Mises labeled socialism “planned chaos.”15
In the moral realm socialism violates the First and Eighth
Commandments against idolatry and stealing. In a centrally planned economy, the state becomes omnipotent and
pretends to omniscience, in place of the true Creator God.
Individual freedom is suppressed contrary to God’s will (Isaiah
61:1; James 1:25). The state
and its leaders become substitute gods.
Moreover, the Eighth Commandment, “Thou shalt not steal,” implies
private ownership. How can an individual not steal when all resources are owned
in common? Thus, socialism
defies at least two moral laws.
The Bible makes it plain that private property (Micah 4:1-4) and free
markets, along with entrepreneurial profit and loss (Matthew 25:14-30), are
the means He has created for mankind to carry out the assigned stewardship
role on earth. Stewardship
requires economic calculation (Luke 14:28) in “counting the cost,”
something a socialist economy can never perform because it has no genuine
price system. Thus, while
Christians can live under any economic system, only a free market economy is
consistent with moral and economic laws. Socialism
as an economic system is immoral. To
embark upon its realization is to violate simultaneously both economic and
Protective tariffs or other trade barriers also violate economic and
moral precepts. Trade
restrictions are contrary to God’s way of love toward neighbor. Christians should even love their enemies (Matthew 5:44). They should not be biases against other nationalities (Acts 10:34).
Tariffs and trade barriers are sought based on motives of coveting,
greed, selfishness, or even hatred. These
motives break God’s laws. And the breaking of eternal moral principles
necessarily causes mankind, via tariffs or trade barriers, to violate a
vital economic principle of stewardship, the law of comparative advantage. Tariffs bear false witness in that they misdirect and limit
entrepreneurial opportunities. Economic
progress is thwarted.
The most shocking example of the immorality of protective tariffs was
the Smoot-Hawley Tariff Act of 1930. The
sponsors wanted to force Americans to “Buy American” to eliminate the
historically high unemployment rate. But
foreign nations retaliated in kind. The
result was a disintegration of the whole world economy.
The worldwide division of labor collapsed. The Great Depression was the result. Hans Sennholz noted the true causes: “Social and economic
decline is facilitated by moral decay. Surely the Great Depression would be inconceivable without the growth
of covetousness and envy of great personal wealth and income, the mounting
desire for public assistance and favors.”16
Minimum wage legislation, a legal price “floor,” is contrary to
moral and economic precepts. As such it is an inappropriate and ineffective
policy to raise labor income, regardless of the “good intentions” of its
sponsors. Why? It is
because the legislation falsifies the market worth of some laborers. Many laborers, notably young and unskilled people, are legally priced
out of a job. Unemployment and
disemployment result for all laborers whose services are worth less than the
minimum prescribed by the legislation.
Once again it can be seen that moral and economic laws are tied
together. Minimum wage laws
simultaneously break the Ninth Commandment against false witness and the
economic law of employment. Thus
minimum wage laws are not in synchronization with the harmony designed by
God in the economic realm.
What if the economy is in a recession? Should the United States monetary authority, the Federal Reserve,
stimulate the economy by lowering interest rates through expanding the
quantity of money? From the
Biblical perspective, such an “easy money” policy is immoral and
economically counterproductive. Hazlitt
candidly explains why: “When modern governments inflate by increasing the
paper-money supply, directly or indirectly, they do in principle what kings
once did when they clipped the coins. Diluting
the money supply with paper is the moral equivalent of diluting the milk
supply with water.”17
An “easy money” policy, morally considered, entails false witness
and theft. Not surprisingly, it
also breaks an economic law – the law of the quantity of money. Moreover, inflation’s false witness causes a business cycle, since
inflation, or more precisely credit expansion, disorients and falsifies
business decisions. The credit
expansion appears to increase the supply of savings in the loan
market. In reality, there are no additional real savings or physical goods
available for entrepreneurial activity. Nevertheless, this artificial
expansion of the monetary savings will move interest rates lower than they otherwise would have been. A key economic signal is distorted.
This results in desynchronizing entrepreneurial plans from consumer
saving-spending preferences. The inevitable result must be malinvestment. A
recession is the painful but necessary means whereby misallocated resources
are liquidated and returned in time to profitable employments.18
Morally, Biblical economics understands inflation or monetary
debasement as equivalent to legalized counterfeiting.
Like a counterfeiter, inflation does not increase a nation’s real
wealth and, therefore, must redistribute income in a wanton fashion to
favored individuals or groups. The
Bible defines money as a specific weight of either gold, silver, copper, or
brass. God’s law condemns the
debasing of money (Isaiah 1:27; Amos 8:4-6; Micah 6:11).
As shown in Haggai (1:6-7), generally higher prices are a consequence
of monetary debasement, “and he who earns wages, earns wages to put into a
bag with holes.” It should
not be surprising, then, that inflation, as false witness and theft in
economic action, also violates an economic law, the law of the quantity of money. From
this law a Judeo-Christian steward knows that there is no social or economic
benefit from increasing the money supply. Inflation demonstrates, once
again, that every immoral action or policy has adverse consequences,
violating economic laws, that is, applying wrong means to chosen ends.
Finally, let us consider redistributive transfer payments.
Are food stamps, public housing, farm subsidies, Medicare, Medicaid,
Aid to Families with Dependent Children, and Social Security programs
consistent with moral and economic laws? Absolutely not! Each of
these transfer payments, often deemed entitlements, is contrary to the
Eighth Commandment against stealing. Of
course, many, if not most, believe these programs are acts of charity
of some social good. Actually,
these programs take income by political force from those who have earned it
and give it to those who have not earned it. Charity is voluntary; it is not expressed through government transfer
payments which are coercive. The
economic consequences of redistribution is to destroy or crowd out real
charity and thereby weaken individual concern for fellowman. It also diminishes productive expenditure in favor of consumptive
spending. The inevitable
consequence is capital consumption and lower living standards for all.19
Again, morality and the economic realm are seen to be tied together.
To accept the premise that the fear of the Creator God is the
beginning or foundation of all knowledge, implied by Proverbs 1:7, is to
admit to the possibility of a science of Biblical economics. An attempt has been made to demonstrate that there can be a unique,
if controversial, distinctive science of Revelational or Biblical economics.
It consists of an episteme of four foundational premises that produce
a body of immutable economic laws tied to moral laws. Together, they provide mankind with the stewardship principles and
wisdom to allocate and manage the earth’s resources successfully for
Undoubtedly, one of the most controversial features of Biblical
economics is its methodology. By superseding the scientific method, as
required by Scripture, and adopting the method of logical deduction from the
Biblical axiom that mankind acts purposefully, economic principles that are
timeless and universal may be discovered. This procedure might puzzle some economists and scholars. Yet these
conclusions follow from the premises. Thus,
there is no positive-normative dichotomy.
Economic principles reveal cause and effect relationships and
simultaneously “tell” mankind what he ought to do or advocate because
they are in harmony with moral precepts, The Ten Commandments. Our conclusion is that morality and economics are components in one
indivisible body of science. Dr.
Sennholz said it best: “In
God’s world, causes and consequences are connected logically. To offend against an economic principle, or to disobey an
ethical commandment is to suffer the inexorable consequences of our
action… His eternal laws and
principles invariably exact a price for all offenses.”20
Notes and References
1 Hazlitt, Henry, Foundations of Morality
(Los Angeles, CA: Nash Publishing, 1964),
2Kuhn, Thomas S., The Structure of
Scientific Revolutions (Chicago, IL: University of Chicago Press, 1962),
3Major thought leaders included Hans
Sennholz, Percy Greaves, Howard Kershner, R.J. Rushdoony and Tom Rose. For a
textbook in Christian economics, see Rose, Tom, Economics: Principles and
Policy from a Christian Perspective (Medford, CT: Mott Media, 1977). For
other developments of a systematic Biblical economic body of thought, see
Sennholz, Hans F., Three Economic Commandments, (Spring Mills, PA:
Libertarian Press, 1990), and North, Gary, An Introduction to Christian
Economics, (Nutley,NJ: Craig Press, 1973), and The Dominion Covenant,
(Tyler, TX: Institute for Christian Economics, 1982), p. ix.
4North, Gary, The Dominion Covenant,
5Thayer, Joseph H., Greek English Lexicon
of the New Testament (Grand Rapids, MI: Baker Book House, 1977), p. 589.
6Novak, Michael, The Spirit of Democratic
Capitalism (New York, NY: Simon & Schuster, 1982), p. 34.
7North, Gary, An Introduction to
Christian Economics (Nutley, NJ: Craig Press, 1973), pp. 212-213.
8Kirzner, Israel M. “On the Method of
Austrian Economics,” Edwin G. Dolan, ed., in Foundations of Modern
Austrian Economics, (Kansas City, MO: Sheed & Ward, 1976), pp.
9Patton, Judd W., An Inquiry Into Some
Economic Effects of Government Spending, (Ph.D. thesis on file at Grove
City, PA: Grove City College Library, 1981), p. 137.
N., Individualism and the Philosophy of the Social Sciences, (San
Francisco, CA: Cato Institute, 1979), p.3.
11White, Lawrence, Methodology of the
Austrian School (New York, NY: Center for Libertarian Studies, 1977), p.3.
12Rothbard, Murray N., Man, Economy and
State, (Los Angeles, CA: Nash, 1970), p.63.
13Rothbard, Murray N., The Essential von
Mises, (Auburn, AL: Ludwig von Mises Institute, 1980), p. 29.
N., America’s Great Depression, (Los Angeles, CA: Nash, 1972, pp.
von., Human Action, (Chicago, IL: Henry Regnery, 1966), pp. 679-680.
16Sennholz, Hans F., The Truth About the
Great Depression, (Lansing, MI: Constitutional Alliance, Inc., 1969), p.
17Hazlitt, Henry, What You Should Know
About Inflation, (New York, NY: Funk and Wagnalls, 1968), pp. 131-132.
18Rothbard, Murray N., The Essential von
Mises, (Auburn, AL: Ludwig von Mises Institute, 1980), pp. 18-20.
19Sennholz, Hans F., Three Economic
Commandments, (Spring Mills, PA: Libertarian Press, 1990), p. 13.
20Ibid., p. 42.
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