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The Inseparable Link Between Morality And Economics

(Published in: A Man Of Principle: Essays in Honor of Hans F. Sennholz)

February 3, 1992

by
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: 

    …are, in 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 decisions are in the main economic decisions, and nearly all our daily economic decisions have, 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 positivism?

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 science.

     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.

Historical Development

     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, 1950-1970.3

     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 assertion.

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 science.

     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 1:19-20).

     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?

Economic Methodology

     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 circumstances.

     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 each morning.8

      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 values.9

     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

     From 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:

  1. Law 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.
  2. Say's Law: Supply creates demand, or salable production is the source of demand
  1. Law 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.
  1. Law 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.
  1. Law 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.
  1. Law 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 interest rate).
  1. Gresham’s Law: Bad” 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 economic realm.

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 moral precepts.

     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.

Conclusion

     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 God’s glory.

     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),

p.301.

2Kuhn, Thomas S., The Structure of Scientific Revolutions (Chicago, IL: University of Chicago Press, 1962), p.2.

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, p. ix.

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. 45-46.

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.

10Rothbard, Murray 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.

14Rothbard, Murray N., America’s Great Depression, (Los Angeles, CA: Nash, 1972, pp. 11-38.

15Mises, Ludwig 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. 27.

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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