Chapter 4: Imputation
Christian Economics: Student's Edition
[Updated: 3/1/18]
And God saw everything that he had made, and behold, it was very good. And there was evening and there was morning, the sixth day (Genesis 1:31).
Point four of the biblical covenant is sanctions. It asks: "What do I get if I obey? Disobey?" How does this relate to imputation?
"Imputation" is not a familiar word these days. In Christian theology, it refers to God's sovereign judicial declaration as the cosmic judge: "guilty" or "not guilty." It refers specifically to God's imputation of Jesus Christ's perfect righteousness to the objects of God's special or saving grace, who are then reckoned by God as covenant keepers. Christ's judicial payment to God is the legal basis of redemption, which means "to buy back." It is a substitute payment on behalf of the redeemed.
In the field of economics, imputation means "to attribute value to." An individual evaluates the value of some good or service in terms of his personal scale of economic values at the moment. This scale of values is ordinal: first, second, third, etc. This is a subjective action. Economic value is subjective. But, after making this evaluation, a person then decides what he is willing and able to pay to gain either the ownership or the temporary use of this desired item. He makes a bid to purchase or rent. Others also make bids. The result of these competing bids is an objective price. So, imputation is subjective, but the final price is objective. This is how value and price are related in the free market. This is a conclusion on Jesus' parable of the pearl of great price. "Again, the kingdom of heaven is like a merchant in search of fine pearls, who, on finding one pearl of great value, went and sold all that he had and bought it" (Matthew 13:45--46). The great subjective value of the pearl resulted in a high price. Others saw the value of the pearl and were also bidding.
How do we know that something is good? When I say "we," I mean each individual, but I also mean groups. We make evaluations as individuals. Next, we take specific actions in light of these evaluations. We must then bear the consequences of our actions. We also are members of groups that make evaluate situations and then make collective decisions. The members must individually bear the consequences of their collective actions. After the final judgment, we must bear the these consequences individually. So, each person's primary focus should be on how we as individuals decide what is good and what is bad--morally, but also technically. We must individually decide what is right to do, and then decide how to do it right.
We are not autonomous. We are subordinate to God. We are stewards. So, we are required to make our evaluations and decisions in terms of our covenantal roles as stewards. We should ask: "What is best for God?" Our evaluations and decisions should be theocentric.
The fourth point of the biblical covenant has to do with covenantal oaths: the judicially binding vows that we take in the special judicial presence of God. We take formal oaths individually, as family members, as church members, and as citizens. These vows possess greater authority than other promises. They are covenantal, not merely contractual. The eternal stakes are much higher with covenants than with contracts. Three of these vows involve corporate membership. Individual vows to God and vows made in church carry into eternity.
To understand how we can evaluate the way God does, we should consider the week of creation.
Point one of the biblical covenant is God's transcendence, yet also His presence. This is the biblical issue of God's sovereignty. It asks: "Who's in charge here?" How does this apply to economic imputation?
The creation week was sequential: start to finish. It was linear.
At the end of every day except day two, God announced His evaluation: good. This was a public declaration. Only God heard it, but that was sufficient.
On what basis did He make these evaluations? I offer this explanation, which is structured in terms of the five points of the biblical covenant. First, God had a goal: the kingdom of God. The week's creation produced the future arena of this kingdom. Second, He had a plan. But because God is both omniscient and omnipotent, it was more than a plan. It was a decree. Third, there was a blueprint: standards. These were subjective, because God had established them, but they were also objective, also because God had established them. God's sovereign subjective judgments are declarations of what is objectively true. Fourth, He evaluated His daily work in terms of all three: goal, decree, and standards. He made these evaluations both individually and corporately, for God is the Trinity. Fifth, there was a sequence to the week. The week ended with rest, which was the culmination of the work.
Point two of the biblical covenant is hierarchical authority. It asks: "To whom do I report?" How does this apply to economic imputation?
God holds all people responsible for imputing value in terms of His standards. Is this just? Yes. Why? Because they are made in the image of God. But sin has made this task impossible for covenant breakers. To assist covenant keepers in this task, God has given them the mind of Christ. "For who has understood the mind of the Lord so as to instruct him? But we have the mind of Christ" (I Corinthians 2:16).
Adam and Eve faced a decision. Should they delay eating from the forbidden tree and also from the tree of life? Or should they eat immediately? If so, from which tree? If we accept the Bible's account, we might be tempted to call this a no-brainer. "Eat from the tree of life. Now!" But this test was not about testing their intelligence. It was about testing their loyalty. This test was about evaluating the locus of sovereignty. Adam and Eve imputed high value to the forbidden tree and low value to God's word. They thought the serpent might be correct; they would not die, and they would become wise in the ways of ethics, knowing good and evil. They decided to test the word of God vs. the word of the serpent. Only people who thought they were sovereign would have done this. The stakes were too high otherwise.
They imputed value to the forbidden fruit. "So when the woman saw that the tree was good for food, and that it was a delight to the eyes, and that the tree was to be desired to make one wise, she took of its fruit and ate, and she also gave some to her husband who was with her, and he ate" (Genesis 3:6). It was a joint decision. It was a team effort.
They imitated the procedure of God in the creation week. First, they had goals: to become wise. Second, they had a plan: to violate God's law by eating. Third, they had standards: man's test. Fourth, they imputed high value to the fruit, some value to the serpent's word, and little value to God's word. Fifth, their program had a sequence. Eve listened to the serpent. She ate. She gave fruit to Adam. He ate.
Point three of the covenant is law. It asks: "What are the rules?" How does this apply to economic imputation?
God had set forth a simple ethical standard: do not eat. He had announced a negative sanction: if you eat, you will die. This was a law. It had a negative sanction. This was a test based on ethical cause and effect.
The serpent had also set forth ethical standards: go ahead and eat. He had announced a positive sanction: to know good and evil. He had denied the promised negative sanction. They would not surely die.
Adam and Eve decided to run their own test. God was testing them. They would now test God. They would test the two ethical systems: God's and the serpent's. They had to make an assumption to run this test: they were sovereign. They also made this assumption: their test was authoritative. God's test of them was not.
They imputed high value to the serpent's interpretation of God's law. They imputed low value to the explicit words of God. Like a chemistry experiment gone wrong, their test of God's law blew up in their faces.
Point four of the biblical covenant is sanctions. It asks: "What do I get if I obey? Disobey?" How does this apply to economic imputation?
We come now to the heart of the matter: judgment. This is the art of applying fixed laws to specific circumstances. We do this in every area of life.
For economic theory, the following issues are involved: imputing economic value (subjective) to goods and services, deciding how much to bid (objective) in order to buy or control these assets, estimating the future income and the costs of owning capital assets (objective), and discounting this expected future net income by the rate of interest in order to arrive at the maximum price to pay for capital (objective). What do I mean by costs? A cost is whatever I must forfeit in order to purchase some asset. If it costs money (objective), what is the most valuable (subjective) thing that I could otherwise do with the money that I will have to give up in order to own the asset?
1. Limited Knowledge of the Future
Unlike God, men are not omniscient. None of these estimates can be known by human beings with certainty. Therefore, everyone must deal with uncertainty. Paul wrote: "For now we see in a mirror dimly, but then face to face" (I Corinthians 13:12a). There are specialists who deal with economic uncertainty. They are called entrepreneurs. Sometimes they are called speculators. They perform the important economic service of bearing the costs of uncertainty. They try to buy low and sell high. But how can they buy low if they are competing with other entrepreneurs? Only because rival entrepreneurs do not see the opportunity. They do not see that future customers will pay as much as they eventually do, or buy as many products. Rival entrepreneurs therefore do not enter the capital markets and bid on the raw materials, labor, and other production goods and services. This keeps prices lower. This makes available an entrepreneurial opportunity. However, if the entrepreneur buys the production goods, but customers do not buy them all at a price that will produce a profit, he will lose money. Is this analysis biblical? Are there biblical examples? Yes. Consider Jesus' parable of the hidden treasure. "The kingdom of heaven is like treasure hidden in a field, which a man found and covered up. Then in his joy he goes and sells all that he has and buys that field" (Matthew 13:44). A man finds a hidden treasure. He does not steal it. He wants to own it. If anyone else knew it was there, that person might bid a lot of money to buy the field and thereby become the owner of the treasure. The man who found the treasure does not want to face competition from anyone else in purchasing the field. He buries the treasure, making it less likely that anyone else will discover it. Then he buys the field. The seller does not know about the treasure. If he did, he would not sell the field for the price of the field. He would sell it for the price of the field plus the expected price of the treasure. This is the entrepreneur's goal: "Buy low. Sell high." The man who found the treasure benefits from hidden knowledge. The treasure can be bought for a low price only because of the ignorance of other potential buyers, who also want to buy low and sell high. The discoverer wants to profit from the difference between the present price of the field and the future price of the treasure and the field. Most of the profit will come from the sale of the treasure.
The discoverer seeks a profit. The potential to make a profit comes from others' ignorance regarding the presence of a treasure. The treasure can be had for a minimal payment, but only because of widespread ignorance regarding its whereabouts. This is the conceptual model for all profit. It stems from widespread ignorance regarding the present value of something, which in the case of the parable is the field. If other investors recognized the presence of a profit opportunity, they would enter the market and bid up the price of the field. The price of the field would soon exceed the expected value of the treasure: field plus treasure. The field has minimal value in comparison with the treasure.
If the field had been located in downtown Jerusalem in Jesus' day, or downtown Rome, the market price of the field might have been greater than the price of the treasure. There would have been some profit opportunity, since the treasure was worth something, but not so great proportionally than if the field had been located in some distant village.
There was always the possibility that the owner of the field had put together a fake treasure. It looked real, but it wasn't. The discoverer would not have been able to get the treasure examined by an expert. That would have involved sharing the information with the expert. The expert might have had more money than the discoverer to buy the field. He might have grown inquisitive. So, the discoverer pays more than he should to buy the field. This strategy was common in the American West in the days of the gold rush in California after 1848. The owner of an abandoned mine would put bits of gold ore in the mine. This was called "salting the mine." Then he would wait for some profit-seeking amateur to discover the gold. He would sell the mine at a large profit over what it was worth without veins of gold. The buyer would suffer a loss. There is always a possibility of a loss in any entrepreneurial venture. That was not true before the fall.
2. Before the Fall
There was no possibility of a loss in the world before the fall of man. There was only one negative sanction, death, and it was covenantal. The rest of creation was a large field that was filled with treasures.
A river flowed out of Eden to water the garden, and there it divided and became four rivers. The name of the first is the Pishon. It is the one that flowed around the whole land of Havilah, where there is gold. And the gold of that land is good; bdellium and onyx stone are there (Genesis 2:10--12).
The whole earth was filled with buried treasures: valuable metals of all kinds. The land itself was productive: a farmer's treasure. The land was there for the taking. But Adam and Eve were too busy eating from the forbidden tree to be concerned about the treasures they were not digging up or not planting.
They made the greatest entrepreneurial error in history. It began with misleading information.
But the serpent said to the woman, "You will not surely die. For God knows that when you eat of it your eyes will be opened, and you will be like God, knowing good and evil" (Genesis 3:4--5).
Eve was deceived. She took the serpent's words seriously. She decided that the information that her husband had given her was incorrect. She imputed greater value to the serpent's word than her husband's. "So when the woman saw that the tree was good for food, and that it was a delight to the eyes, and that the tree was to be desired to make one wise, she took of its fruit and ate, and she also gave some to her husband who was with her, and he ate" (Genesis 3:6). Adam imputed greater value to the serpent's word than to God's word, but only after his wife ate. She became his experimental test case. She did not immediately die. So, he ate.
Neither of them accurately forecasted the future impact of the promised negative sanction or its inevitability. They discounted the odds of the probability of being discovered by God as thieves. They discounted the probability of God's imposition of the penalty. They brought the possibility of loss into a world without negative rates of return. That was the world we have lost.
Point five of the biblical covenant is succession. It asks: "Does this outfit have a future?" How does this apply to economic imputation?
Inheritance began with God's transfer of the earth to Adam and Eve. They were the children of God. They received their inheritance at the beginning of their marriage. They were supposed to continue the practice of endowing their children with an inheritance when they married.
Death would end all inheritance. But God showed grace to them. He gave them a stay of execution. He allowed them to extend their lives and their family. This was an act of grace, meaning unmerited favor. But God had another motive: to fulfill His original goal. He would extend His kingdom in history under the new conditions. He would not give Satan and his subordinates the satisfaction of having lured mankind into rebellion and certain death. Death was still certain, but not immediately. He also gave the serpent a promise. This promise was representative of how He would deal with all of the representatives of Satan. "I will put enmity between you and the woman, and between your offspring and her offspring; he shall bruise your head, and you shall bruise his heel" (Genesis 3:15). It involved inheritance: offspring. This meant time.
If Adam and Eve trusted God, they would have hope. Their heirs would impose negative sanctions against their deadly enemy. God cursed the serpent physically, making it crawl on its belly and swallow dust. That curse was a token of the deadly future sanction of death by head-crushing. Despite God's promise of death for individual heirs, there was a promise of victory to mankind. Their heirs would impose justice on Satan's minions. The covenant-keeping children of Adam and Eve would extend the kingdom of God through time and across borders: boundaries. But there would be conflict. There would be pain: bruised heels. Covenant keepers and covenant breakers would battle for control until the end of time. At the heart of this battle is ethics: the law-order of God vs. the law-orders of men.
Adam and Eve failed in their work of imputation. They did not impute high value to God's word. They did not impute high value to the tree of life. They did not impute high value to the other trees and capital assets in the creation. They imputed high value to the word of the serpent. They imputed high value to the forbidden tree and the promised wisdom that eating its fruit would provide. But they did impute value. Imputation is an inescapable concept. It is never a question of imputation vs. no imputation. It is always a question of imputing value in terms of a specific law-order: God's or self-proclaimed autonomous man's.
The key to dominion in the garden was obedience to God. He had given them only one prohibition. They had disobeyed it. Now God would multiply His laws, for the whole earth had become an ethical battlefield between the kingdom of God and the kingdom of self-proclaimed autonomous man. This warfare was revealed in Cain's murder of Abel (Genesis 4). There would be no permanent peace treaty in history between these kingdoms. There would only be temporary truces or cease-fires. Each side would then use the truce to plan a new campaign. There could be no ethical neutrality between the two kingdoms. Jesus said: "Whoever is not with me is against me, and whoever does not gather with me scatters" (Matthew 12:30). In the garden there was only one battlefield: inside the boundary around the forbidden tree. The war between the two kingdoms would begin there. The tree was off-limits. The rest of creation was on-limits. The task of applying God's law to specific circumstances was easy. There was only one law: avoid the tree. There was no threat of negative sanctions outside that boundary. There were no weeds. There was no sweat. That was the world we have lost.
_______________________________________________________________
For the rest of this book, go here: //www.garynorth.com/public/16564.cfm