27 THE RICH GET RICHER; SO DO THE POOR (Revised: April, 2000) And the disciples came, and said unto him, Why speakest thou unto them in parables? He answered and said unto them, Because it is given unto you to know the mysteries of the kingdom of heaven, but to them it is not given. For whosoever hath, to him shall be given, and he shall have more abundance: but whosoever hath not, from him shall be taken away even that he hath. Therefore speak I to them in parables: because they seeing see not; and hearing they hear not, neither do they understand (Matt. 13:10-13).
The theocentric principle of this passage is God's absolute sovereignty in granting the gift of salvation to those whom He favors, and to remove everything from everyone else. This is not something that covenant-breaking man wants to hear. In fact, it is not something that most covenant-keeping men want to hear. It implies that God is absolutely sovereign in His distribution of the gift of salvation. He sends His people out to preach the gospel, but He clogs the ears of all those listeners whom He opposes.
The Kingdom of God The issue in Matthew is the gospel of the kingdom. Who would receive it? Not those whom God opposes, Jesus said. Who might that be? The context made it clear: the Jews. Then who was favored by God? Years later, Paul answered: the gentiles. The word of the Lord has come to them, Paul wrote, and they have responded in faith. Not so with Israel. Israel heard, yet she did not hear -- exactly as Jesus said. Paul wrote:
For the scripture saith, Whosoever believeth on him shall not be ashamed. For there is no difference between the Jew and the Greek: for the same Lord over all is rich unto all that call upon him. For whosoever shall call upon the name of the Lord shall be saved. How then shall they call on him in whom they have not believed? and how shall they believe in him of whom they have not heard? and how shall they hear without a preacher? And how shall they preach, except they be sent? as it is written, How beautiful are the feet of them that preach the gospel of peace, and bring glad tidings of good things! But they have not all obeyed the gospel. For Esaias saith, Lord, who hath believed our report? So then faith cometh by hearing, and hearing by the word of God. But I say, Have they not heard? Yes verily, their sound went into all the earth, and their words unto the ends of the world. But I say, Did not Israel know? First Moses saith, I will provoke you to jealousy by them that are no people, and by a foolish nation I will anger you. But Esaias is very bold, and saith, I was found of them that sought me not; I was made manifest unto them that asked not after me. But to Israel he saith, All day long I have stretched forth my hands unto a disobedient and gainsaying people (Rom. 10:11-21).
Paul here cited Isaiah: "Make the heart of this people fat, and make their ears heavy, and shut their eyes; lest they see with their eyes, and hear with their ears, and understand with their heart, and convert, and be healed" (Isa. 6:10). So did Jesus in this passage: "And in them is fulfilled the prophecy of Esaias, which saith, By hearing ye shall hear, and shall not understand; and seeing ye shall see, and shall not perceive: For this people's heart is waxed gross, and their ears are dull of hearing, and their eyes they have closed; lest at any time they should see with their eyes, and hear with their ears, and should understand with their heart, and should be converted, and I should heal them. But blessed are your eyes, for they see: and your ears, for they hear" (Matt. 13:14-16).
Israel desperately needed salvation. Their ears had grown dull; their heart had waxed gross. Nevertheless, Jesus spoke in parables so that the majority of His listeners would not understand His offer of salvation. He did not seek to sharpen the hearing of all who listened to Him. His words in this passage are inescapably clear: His offer of the gospel was presented in such a way that Israel would not hear and respond in faith. Calvinists understand this passage and accept it. Anti-Calvinists prefer not to discuss it, and when commenting on it, they have great difficulties. They have the same difficulties with Paul's similar words in the Book of Acts:
And when they [the Jews] had appointed him a day, there came many to him into his lodging; to whom he expounded and testified the kingdom of God, persuading them concerning Jesus, both out of the law of Moses, and out of the prophets, from morning till evening. And some believed the things which were spoken, and some believed not. And when they agreed not among themselves, they departed, after that Paul had spoken one word, Well spake the Holy Ghost by Esaias the prophet unto our fathers, Saying, Go unto this people, and say, Hearing ye shall hear, and shall not understand; and seeing ye shall see, and not perceive: For the heart of this people is waxed gross, and their ears are dull of hearing, and their eyes have they closed; lest they should see with their eyes, and hear with their ears, and understand with their heart, and should be converted, and I should heal them. Be it known therefore unto you, that the salvation of God is sent unto the Gentiles, and that they will hear it (Acts 28:23-28).
He Who Has, Gets The Jews had the law and the prophets. This was something of great value. The gentiles did not. Yet the Jews were about to be passed over by God. The gentiles weren't. This seems to imply that he who has, loses; he who has nothing, gets. "He that findeth his life shall lose it: and he that loseth his life for my sake shall find it" (Matt. 10:39).(1) Yet this passage states the reverse: "For whosoever hath, to him shall be given, and he shall have more abundance: but whosoever hath not, from him shall be taken away even that [which] he hath." How should we understand it?
Consider Jesus' interaction with the Pharisees regarding social outcasts. "And when the Pharisees saw it, they said unto his disciples, Why eateth your Master with publicans and sinners? But when Jesus heard that, he said unto them, They that be whole need not a physician, but they that are sick. But go ye and learn what that meaneth, I will have mercy, and not sacrifice: for I am not come to call the righteous, but sinners to repentance" (Matt. 9:11-13). The implication here is that all men are sick unto death. Some men recognize this; others do not. Those who acknowledge that they are sick will seek the services of a physician. Those who do not, won't.
What did Israel possess? Not good spiritual health, surely. What she possessed was the means of diagnosis: the law and the prophets, which testified to the spiritual sickness of man. Jeremiah warned: "The heart is deceitful above all things, and desperately wicked: who can know it?" (Jer. 17:9). Isaiah warned: "But we are all as an unclean thing, and all our righteousnesses are as filthy rags; and we all do fade as a leaf; and our iniquities, like the wind, have taken us away. And there is none that calleth upon thy name, that stirreth up himself to take hold of thee: for thou hast hid thy face from us, and hast consumed us, because of our iniquities" (Isa. 64:6-7). The Pharisees read these ancient warnings, but they did not perceive that the warnings applied to them. Israel had the kingdom of God, but it was about to be taken away from them: "Therefore say I unto you, The kingdom of God shall be taken from you, and given to a nation bringing forth the fruits thereof" (Matt. 21:43).
What was the deciding factor in maintaining the kingdom grant? Good fruit. Jesus earlier had said: "Either make the tree good, and his fruit good; or else make the tree corrupt, and his fruit corrupt: for the tree is known by his fruit. O generation of vipers, how can ye, being evil, speak good things? for out of the abundance of the heart the mouth speaketh. A good man out of the good treasure of the heart bringeth forth good things: and an evil man out of the evil treasure bringeth forth evil things. But I say unto you, That every idle word that men shall speak, they shall give account thereof in the day of judgment. For by thy words thou shalt be justified, and by thy words thou shalt be condemned" (Matt. 12:33-37). He had called for ethical consistency. He had called men to live out their confessions of faith. He wanted them to see exactly what they are from God's point of view. He called for ethical self-consciousness.
It is not the mere possession of God's law that can secure salvation. Men must obey it. But they do not obey it. Thus, they are in need of a savior, a kinsman-redeemer. The gentiles recognized this need; the Jews did not. The Jews had known of the coming savior (Isa. 53), but this did them no good. The gentiles had not known, but they would soon recognize Him when His disciples brought word of His redemptive work on their behalf.
What was it that the gentiles possessed? The knowledge of their own covenantally bankrupt status before God. This knowledge would soon bring them the kingdom grant: incorporation into the church. What did the Jews lack? This same knowledge. They would soon be disinherited: excluded from this incorporation. He who had nothing, gained; he who had something, lost.
This passage deals prophetically with men's respective positions after the inheritance had been transferred. The kingdom of God would go to the gentiles, Jesus later warned the Pharisees. Then the traditional covenantal system of rewards and curses would prevail: those who have will receive. Those who have nothing will lose even that which they had possessed.
If I have nothing, how can I lose it? This initially makes no sense. But it makes sense within the context of Old Covenant Israel. The Jews had something valuable: the Mosaic law. Paul wrote: "Wherefore the law is holy, and the commandment holy, and just, and good. Was then that which is good made death unto me? God forbid. But sin, that it might appear sin, working death in me by that which is good; that sin by the commandment might become exceeding sinful. For we know that the law is spiritual: but I am carnal, sold under sin" (Rom. 7:12-14). To ignore the law's testimony is to risk losing everything, Paul warned. The Mosaic law tells us that we have nothing of value to bring before God. Conclusion: "For all have sinned, and come short of the glory of God" (Rom. 3:23). James agreed: "For whosoever shall keep the whole law, and yet offend in one point, he is guilty of all" (James 2:10). This was the fate of Old Covenant Israel: possessing something valuable, the law of God, Israel had nothing except the law's condemnation. Having nothing, meaning having a false hope in salvation by law, Israel soon had the kingdom taken away. The gentiles, not having received the Mosaic law, having only the work of the law written on every person's heart (Rom. 2:15), accepted the gospel's message of redemption. The gentiles received something: redemption.
From this point on, the covenantal system of historical sanctions goes into operation: he who has, gets. God's grace pours down visibly on those who have already received the grace of redemption. "But thou shalt remember the LORD thy God: for it is he that giveth thee power to get wealth, that he may establish his covenant which he sware unto thy fathers, as it is this day" (Deut. 8:18). The covenant's blessings reinforce men's faith in the covenant. As a result, they exercise greater faith. The process of linear economic growth begins.
A Thing of Value We learn in this passage that he who has nothing nevertheless will eventually receive great gain. How can this be? We find the same seeming anomaly in Proverbs. "There is that maketh himself rich, yet hath nothing: there is that maketh himself poor, yet hath great riches" (Prov. 13:7). The man who attains great tangible wealth but nothing else possesses nothing of value in God's eyes. The man who makes himself poor in the world's things for God's sake thereby gains something of great value in God's eyes. He who gives up the pursuit of the world's treasure for the sake of God's eternal treasure has made a wise exchange. He who fills his life with things that deflect him from service to God has made an unwise exchange. "For what is a man profited, if he shall gain the whole world, and lose his own soul? or what shall a man give in exchange for his soul?" (Matt. 16:26).
The "nothing" that the rich man possesses is the thing that he shall lose: treasure. His tangible wealth has no exchange value in the marketplace of souls. If he loses his soul, he loses his tangible wealth, too. This is how a man with nothing can lose that which he has. He has nothing of value in God's eyes: no marketable capital. God then condemns him to hell because he possesses nothing of eternal value. Eternal life is obtained in this life or not at all. "He that believeth on the Son hath everlasting life: and he that believeth not the Son shall not see life; but the wrath of God abideth on him" (John 3:36).
But what of the man to whom something of eternal value has been given by God? On the basis of this gift, he will eventually possess greater abundance. More than this: the tangible wealth of the one who has nothing of eternal value is transferred to the man who has received something of eternal value. This wealth transfer is also taught in Proverbs. "A good man leaveth an inheritance to his children's children: and the wealth of the sinner is laid up for the just" (Prov. 13:22). The man who seeks great tangible wealth at the cost of God's kingdom may achieve it, but over time, his accumulated wealth will flow to covenant-keepers. The process of spiritual gains and losses is eventually reflected in the realm of economics.
This passage indicates that God's people will inherit the earth in history. The tangible wealth of covenant-breakers will eventually be transferred to covenant-keepers. This may be by the conversion of covenant-breakers: God's dispossession of Satan in history.
Regression Toward the Mean There is an old saying, "The rich get richer, and the poor get poorer." As it applies to things of the spirit, this is an accurate summary. It corresponds to what Jesus taught in this passage. But does it also apply to economics? If it does, then this process somehow overcomes the statistical phenomenon known as regression toward the mean.(2)
Free market economic theory teaches that if an entrepreneur discovers a new way to generate an above-market rate of return, other entrepreneurs will seek to discover his secret. Profitable information is bought and sold and stolen. Over time, new profit-producing techniques spread across the economy. As they do, their rate of return decreases, as more producers adopt the once-secret technique. This is why above-market rates of return tend to disappear. The economist calls this the unhampered free market's tendency toward equilibrium. Few concepts are more important than this one in modern economics.
There is an anomaly, however -- one that is almost never discussed: the highly unequal distribution of income. My failure to recognize this in Chapter 67 of Inheritance and Dominion was an error. I wrote: "There is a bell-shaped distribution of wealth within a society because of the predictable outcomes of increased temptations that occur on the far ends of capital's spectrum." But there is no bell-shaped curve for either income or wealth. I had not recognized the continuing relevance of Vilfredo Pareto's discovery.
The 20-80 Rule(3)
The Bible's recommended goal is middle-class wealth. Jesus said, "For the poor always ye have with you; but me ye have not always" (John 12:8). This statement appears in three of the gospels (Matt. 26:11; Mark 14:7), but not Luke's. If we will always have the poor with us, then we will always have the rich. The question is: How many rich people will we have? Even more important, how much tangible wealth will the rich control? The answer is, most of it.
The shape of either a nation's wealth distribution curve or its income distribution curve does not resemble the shape of its population curve. The population curve bulges with the middle class. Both the income distribution curve and the wealth distribution curve bulge with the rich, generation after generation. This does not mean that the same families stay rich. It does mean that the richest 20 percent of the population own most of the wealth and gain most of the income at any given time. The shape of the income distribution curve resists alteration, generation after generation.
Italian sociologist-economist Vilfredo Pareto in the late nineteenth century made detailed investigations of the distribution of income in Europe. He discovered an amazing fact: the slope of the income curve, from the richest to the poorest members of society, was similar in every nation that he studied. The richest members gained most of the nation's income. This statistical relationship, first published in 1897,(4) has not changed over the last century, irrespective of the economic policies of individual industrial nations. Later studies by other economic historians indicated that in 1835-40, 1883, and 1919 in Great Britain, the top ten percent earned 50 percent of the nation's income.(5) This statistical relationship has come to be known as the Pareto Law or the Pareto Rule, although Pareto did not ascribe a law's degree of predictability to it, at least not in his later work. A 20-80 distribution has been found to apply in social institution after institution, as well as in their diverse operations.(6) No one seems to know why. An economist wrote in 1965: "For a very long time, the Pareto law has lumbered the economic scene like an erratic block on the landscape; an empirical law which nobody can explain."(7)
A 1998 study by the Centre for the Study of Living Standards in Ottawa, Canada, reveals that the 20-80 rule still applies quite well in the United States. The top 20 percent of the population owned 81% of household wealth in 1962, 81.3% in 1983, 83.5% in 1989, 83.7% in 1995, and 84.3% in 1997. For the top 1%, the figures are as follows: 1962: 33.4%; 1983: 33.8%; 1989: 37.4%; 1995: 37.6%; 1997: 39.1%.(8) The changes have been in the direction of greater concentration of tangible wealth in the United States.
This seems impossible. Don't middle-class people own their homes? No; they reside in them, but they borrow to buy them. They pay mortgages. The rich are the holders of these mortgages. Title is passed to the home owner, but the asset has a debt against it. Most middle-class Americans own very little debt-free marketable wealth. They use debt to buy depreciating assets: consumer goods. They do not save. The rich use their money to buy appreciating assets and income-producing assets. They save a much higher percentage of their wealth. When the rich in one nation cease to save at high rates, the rich in another nation will replace them. This is why the United States today runs a massive balance of trade deficit. Consumers in the United States are borrowing from Japanese and European investors to buy consumer goods. Foreign manufacturers send their agents to the United States to sell their goods, and consumers take on the debt. "The stranger that is within thee shall get up above thee very high; and thou shalt come down very low. He shall lend to thee, and thou shalt not lend to him: he shall be the head, and thou shalt be the tail" (Deut. 28:43-44).
There is no known way for any industrial society to alter significantly the share of tangible wealth owned by the rich. When political force has been applied in the form of tax policy, the percentages have stayed pretty much the same. It is not even clear that there will be different wealth holders after the new taxation policies are in force, unless the existing wealth owners are deliberately expropriated or executed, as they were in Communist nations. Finally, there is no legitimate biblical justification for using the monopolistic force of civil government to redistribute private wealth in order to achieve greater equality.
The key economic issue regarding wealth distribution is this: the lawful means for gaining control over tangible capital. How do producers gain their share of national wealth in a particular nation? By power, by bribery, by political skills, or by satisfying consumer demand? To benefit the largest number of people in society, civil governments should establish legal guarantees to all owners of property. This will encourage the self-interested rich to continue to use their wealth for consumer-satisfying purposes. The rich should continue to save, invest, and provide tools for their employees. The legal protection of all people's right to own and use property will also encourage the bottom 80 percent to do the same. Through competition to satisfy consumers, members in lower-income groups will replace those in the higher-income groups. The percentage of tangible capital in each quintile will not change very much, but the amount of wealth produced by this capital will increase dramatically over time, as the compound growth process takes over.
Capital accumulation by the rich is the most important measurable source of a capitalist society's increasing tangible wealth. The rich provide the money that buys the tools that raise the wealth of the other classes. But tools are not enough to make a society rich among nations. A society's other classes must possess moral capital, such as the willingness to work hard, future-orientation, honesty, and reputation. Moral capital is intangible, but it is nonetheless real. It produces income for its owners.
Pareto's anomaly is a real one. If ten percent of the population receives half of the national income, or if twenty percent of the population receives seventy or eighty percent, and this continues generation after generation in nation after nation, where is the evidence of equilibrium? Why shouldn't the distribution curves of both income and wealth be more continuous? Why should they be permanently skewed to the right? If there is open entry into the capital markets for eighty percent of the population, why shouldn't wealth be more evenly distributed? Is there some psychological barrier to entry, such as a widespread fear of losing investment capital or the fear of becoming self-employed, that keeps the distribution curves skewed?
There is continuous movement into and out of the top twenty percent. The story of rags to riches to rags in three generations is a familiar one. Some very wealthy families do seem to maintain their presence over several generations. This may be due to political favoritism, i.e., restrictions on competition. It is hard to say. Detailed academic studies of permanent intergenerational wealth at the top are not very common.(9) But there appears to be considerable mobility into and out of the top quintile for most of its members. But there is not mobility of the distribution curve itself.
Moral Capital
If we consider moral capital as income-producing capital, then the Pareto rule does not apply. There is only so much moral capital that any person can possess. The rich cannot amass moral capital in the way they can amass tangible capital. If the members of all economic classes in a society were to have approximately the same moral standards and degree of adherence to them, then the shape of the curve of society's moral capital would match the shape of the population curve.
Let me clarify my argument by an example. Assume that in nation A, only the rich are literate. This means that the national rate of illiteracy is 80 percent. In nation B, there is almost universal literacy. Without knowing anything else about the tangible wealth of either nation, which one would you guess has the richest rich people? I am speaking only of the top 20 percent of the population. I would guess nation B. But what if I'm wrong? What if nation A is richer, perhaps because it is a small, oligarchical, oil-exporting nation? Which group of rich people do you think will be richer in a century if the literacy rates stay the same in both nations, assuming that the rich in both nations do not send their investment capital outside their respective countries? I would still guess nation B. This has nothing to do with investment decisions made by the rich. It has everything to do with the determination of the less rich to learn how to read -- a determination based on their moral capital. A rising tide of literacy raises all economic ships: poor, middle class, and rich. I argue that this same principle of national wealth formation applies to moral capital in general.
Without widely distributed moral capital, today's rich people could not retain the market value of their investment capital for long. Competent and honest employees would become increasingly scarce and costly, thereby lowering the value of their investment capital. Voters would become envy-driven. They would elect politicians who would seek to confiscate the wealth of the rich in the name of the poor on behalf of middle-class voters (minus 50 percent for government handling). Per capita productivity would slow, stagnate, or fall. So would the nation's wealth. The shape of the wealth distribution curve would remain the same -- heavily concentrated in the top 20 percent -- but the growth of wealth in society would slow down or even decline.
To Inherit the Earth The Bible teaches that covenant-keepers will inherit the earth.(10) If the covenant-breaking rich continue to own most of the wealth, how can covenant-keepers inherit the earth? Or are we to believe that this inheritance is post-historical? The Old Covenant texts that forecast this inheritance do not indicate that the inheritance is post-historical.
His soul shall dwell at ease; and his seed shall inherit the earth (Ps. 25:13).
For evildoers shall be cut off: but those that wait upon the LORD, they shall inherit the earth (Ps. 37:9).
But the meek shall inherit the earth; and shall delight themselves in the abundance of peace (Ps. 37:11).
For such as be blessed of him shall inherit the earth; and they that be cursed of him shall be cut off (Ps. 37:22).
How can Christians inherit the earth if the rich own most of it, and Christians are told not to seek riches? The only solution that makes sense to me is postmillennialism. God's kingdom will be extended by widespread religious conversion. The vast majority of people in all income groups will be brought to saving faith. Even the rich minority will be converted. If they aren't, then they will be replaced by Christians who become wealthy through serving consumers more efficiently. Inheritance of the earth will be by conversion, not by a minority of Christians buying up the assets of the world. Redemption is spiritual, not financial.
The Spread of the Gospel The key factor in contributing to the permanent wealth of nations is saving grace. Special grace is fundamental. Contrary to Adam Smith's Wealth of Nations, private property is secondary, for it is an outworking of God's common grace. Without special grace to some members of society, common grace cannot be sustained indefinitely.(11) The nation will eventually adopt capital-reducing measures based on envy or the desire to preserve the existing distribution of wealth. The statistical law of large numbers operates in nations.
If Pareto's rule applies internationally, as it seems to today,(12) then there will continue to be inequality, but the same minority of nations will not retain the advantage over the others. The international wealth distribution curve will continue to be skewed to the right, but those inside the top quintile will change. The key issue is this: On what basis does a nation enter the top fifth? By covenant-keeping or covenant-breaking? In either case, no nation is likely to stay on top permanently. Either negative sanctions will come against covenant-breaking nations, or else other covenant-keeping nations will be blessed even more by God. But in the second instance, every covenant-keeping nation will get richer, as will rich and poor residents in all of them.
Jesus said, "Either make the tree good, and his fruit good; or else make the tree corrupt, and his fruit corrupt: for the tree is known by his fruit" (Matt. 12:33). The evil tree is eventually cut down: "Even so every good tree bringeth forth good fruit; but a corrupt tree bringeth forth evil fruit. A good tree cannot bring forth evil fruit, neither can a corrupt tree bring forth good fruit. Every tree that bringeth not forth good fruit is hewn down, and cast into the fire. Wherefore by their fruits ye shall know them" (Matt. 7:17-20).(13)
So, the spread of the gospel produces positive economic effects. God rewards covenantal faithfulness with prosperity (Deut. 8:18). This prosperity is not to become a snare: "And thou say in thine heart, My power and the might of mine hand hath gotten me this wealth" (Deut. 8:17). If it does snare the unrighteous society, then the "nothing" which it has -- its wealth -- will be removed from it.
The long-term movement of the kingdom of God is from poverty to wealth. To sustain their wealth and expand it, covenant-keepers must sustain their confession and their obedience to God's law. The mark of their commitment is their willingness to spend a portion of their wealth to take the good news of salvation and wealth to others. They must share their tangible capital with others, but more important, share the covenantal basis of their tangible capital: their moral capital. They must seek to take the gospel to those who suffer poverty because of their rebellion to God. Covenant-keepers are to use their economic capital to capitalize the poor in spirit. If those who have received wealth from God on the basis of their confession and obedience are successful in their efforts to share the wealth, the poor will get richer, and so will the rich. Increasing productivity for all is produced when the productivity of the poor increases. The increase in capital will increase the division of labor, which will in turn produce greater equality but also greater wealth for all.
Unequal Distribution of Wealth The nagging question does not go away: What about income inequality? In every modern society that economists have investigated, there is huge inequality. Twenty percent of the population owns most of the tangible wealth. Even after almost a century of steeply graduated income taxes and graduated inheritance taxes, steep inequality persists.
Pareto did not explain the existence of income inequality. In the century since he published his findings, no economist has come up with anything approaching a widely accepted explanation. We do not know why this inequality continues to exist in the face of both free market competition and socialist taxation.
The disparity in income and wealth may have something to do with disparities in future-orientation. Most people are not highly future-oriented. They are not willing to save money at low rates of interest. They prefer to borrow. They go into debt in order to buy consumer goods that depreciate. They do not get on the growth side of compound interest.
The disparity in income and wealth could be the result of inherent productivity of innovation. We might argue that successful new production methods produce enormous wealth for their early discoverers, who retain their wealth until innovative competitors find replacement methods. This explanation relies on a concept of economic growth that is overwhelmingly based on entrepreneurial skills rather than on moral capital. Surely, Christians' moral capital has not elevated them into the top twenty percent of wealth holders over the last century.
The entrepreneur bears a heavy load of uncertainty. Most people prefer to avoid this. They prefer predictable wages to market risks and uncertainty. They are willing to accept less income in order to avoid the loss of both capital and income. Those entrepreneurs who survive free market competition become rich. Thus, the rich are always a minority.
An entrepreneurship-based explanation of income inequality reinforces the idea that Christians' inheritance of the earth will take place as a result of widespread conversions, not by any uniquely confession-based advantages possessed by Christians. Moral capital sustains the social order that allows entrepreneurship to produce wealth for all, but mainly for those who possess the skills. Moral capital does not make a majority of people wealthy. It does not even make Christians wealthy in comparison to successful entrepreneurs. But it makes all men richer over time. It makes sustained economic growth possible.
Few people believe this today. Almost no economist believes it. Economists believe that the free market social order is self-reinforcing and expansionist, irrespective of God, Christianity, or supernaturalism generally. They believe that the economic fruits of capitalism will persuade voters of the truth of its roots, and the roots are found in Adam Smith's Wealth of Nations: private property and personal self-interest. God's covenant has nothing to do with it.
Conclusion The rich will get richer if their tangible wealth rests on their covenantal faithfulness, i.e., their moral capital. The expansion of covenantal wealth is based on the process of obedience-abundance-greater obedience, greater abundance (Deut. 8:18). This is a system of positive feedback. But if the tangible wealth of the rich is based on their faith in their own autonomy, they will eventually get poorer. Positive feedback reverses (Deut. 8:19-20).
Richard Koch, who has written a book on profitable applications of Pareto's rule, thinks that positive feedback is the key to understanding why the 20-80 phenomenon exists. "In the absence of feedback loops, the natural distribution of phenomena wiuld be 50/50 -- inputs of a given frequency would lead to commensurate results. It is only because of positive feedback and negative feedback loops that causes do not have equal results. Yet it also seems to be true that powerful positive feedback loops only affect a small minority of the inputs. This helps explain why those small minority of inputs can exert so much influence."(14)
Do the poor get poorer? Yes, if their poverty is spiritual. No, if their poverty is the result of their open hands to others. "For ye know the grace of our Lord Jesus Christ, that, though he was rich, yet for your sakes he became poor, that ye through his poverty might be rich. . . . But by an equality, that now at this time your abundance may be a supply for their want, that their abundance also may be a supply for your want: that there may be equality: As it is written, He that had gathered much had nothing over; and he that had gathered little had no lack" (II Cor. 8:9, 14-15).
One goal of the gospel is to make all men rich spiritually. But in achieving this, the gospel necessarily must make men tangibly richer. The covenant's upward movement of confession-obedience-wealth will spread the blessings of both tangible and spiritual wealth to more people. But it may not spread tangible wealth evenly, according to Pareto.
The top priority in this passage is to gain the abundance that comes to him who has something. "For whosoever hath, to him shall be given, and he shall have more abundance: but whosoever hath not, from him shall be taken away even that he hath." This possession is redemption. He who has nothing -- no redemption -- will lose even the wealth that he has. This threat points to final judgment.
This process of spiritual development -- positive feedback -- is reflected in the realm of economics. There is a means by which the rich get richer, long term. They get richer under free market capitalism by enabling the poor to get richer. They invest capital that provides the tools that increase the productivity of workers. The rich increase their incomes when the poor increase their incomes. Economic theory teaches that the rich do not get rich by exploiting the poor. On the contrary, they get rich by extending to others their knowledge of way to long-term wealth, i.e., compound economic growth. To sustain this process long term requires an open, merciful hand.(15)
Footnotes:
1. Chapter 24, above.
2. Gary North, Inheritance and Dominion: An Economic Commentary on Deuteronomy (Tyler, Texas: Institute for Christian Economics, 1999), ch. 67, subsection on "The Tendency Toward the Middle."
3. This subsection and the one that follows ("Moral Capital") are reprinted from Gary North, Treasure and Dominion: An Economic Commentary on Luke, electronic edition (Tyler, Texas: Institute for Christian Economics, 2000), Introduction.
4. Vilfredo Pareto, Cours d' Econonomie Politique, vol. 2 (1897), pp. 370-72. The book has still not been translated into English, although it remains famous.
5. D. H. Macgregor, "Pareto's Law," Economic Journal (March 1936), pp. 81, 86. Reprinted in Mark Blaug (ed.), Vilfredo Pareto (1848-1923) (Brookfield, Vermont: Edward Elgar, 1992), pp. 21, 26.
6. Richard Koch, The 80-20 Principle: How to Achieve More With Less (Garden City, New York: Bantam Doubleday Dell, 1998).
7. Josef Steindl, Random Processes and the Growth of Firms: A Study of the Pareto Law (London: Charles Griffin, 1965), p. 18. Cited in ibid., p. 3.
8. John Schmitt, Lawrence Mishel, and Jared Bernstein, paper prepared for a panel on "Economic Well-being in North America," Canadian Economic Association Meetings, May 31, 1998, Table 7. This document is on the World Wide Web at: http://www.csls.ca/new/rtw.html#17 .
9. In the United States, Ferdinand Lundberg wrote several books on this topic, but he was always considered a maverick historian by academic historians. His books are not cited by historians very often, especially The Rich and the Super-Rich: Who Really Owns America? How Do They Keep Their Wealth and Their Power? (New York: Lyle Stewart, 1968).
10. Gary North, Inherit the Earth: Biblical Blueprints for Economics (Ft. Worth, Texas: Dominion Press, 1987).
11. Gary North, Dominion and Common Grace: The Biblical Basis of Progress (Tyler, Texas: Institute for Christian Economics, 1987), ch. 6.
12. Koch, 80/20 Principle, p. 22: eighty percent of the world's wealth is owned by twenty-five percent of the world's population.
13. See Chapter 18, above.
14. Koch, 80/20 Principle, p. 15.
15. See Chapter 10, above.
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