Chapter 11: Providence
Christian Economics: Student's Edition
[Updated: 6/1/19]
He is the image of the invisible God, the firstborn of all creation. For by him all things were created, in heaven and on earth, visible and invisible, whether thrones or dominions or rulers or authorities--all things were created through him and for him. And he is before all things, and in him all things hold together (Colossians 1:15--17).
Are there economic laws? Yes. How can Christians be sure? Because these laws are manifestations of the providence of God. The regularities that we see in nature, including human nature, exist only because God is in complete control of everything. He is not capricious. The universe reflects His orderliness. The strongest biblical testimony to this fact is God's self-revelation in Job, chapters 38 to 42. If you have any doubts with respect to God's sovereignty, read those chapters now. Then return to this chapter. I mean this. It is far more important that you understand Job 38 to 42 than that you understand this chapter or this little book. First things first.
What if human beings could not perceive this orderliness? What if they had no capacity to understand the regularities of nature and therefore the predictability of these regularities? Would there still be economic laws? Yes. Would people be able to put these laws to productive use? No. If they could not understand them, what good would it do them in making sense of the world around them? None. Could human beings exercise dominion if they did not perceive nature's regularities? No.
There are economic laws. We know this because of the dominion covenant (Genesis 1:26--28). We know this because of God's revelation of Himself and His sovereignty in history. We know this because we can and do make sense of the orderliness of the world around us. The world is orderly. Our minds are orderly. The orderliness of our minds corresponds to the orderliness of the world around us. Apart from faith in God, this correspondence between our minds and the world around us would make no sense. It would not be logical. Eugene Wigner won the Nobel Prize in physics in 1963. Three years earlier, he wrote an article for a mathematics scholarly journal: "The Unreasonable Effectiveness of Mathematics in the Natural Sciences." It is online. I suggest that you read it. It is readable, unlike most articles in mathematics journals. He ended it with these words: "The miracle of the appropriateness of the language of mathematics for the formulation of the laws of physics is a wonderful gift which we neither understand nor deserve. We should be grateful for it and hope that it will remain valid in future research and that it will extend, for better or for worse, to our pleasure, even though perhaps also to our bafflement, to wide branches of learning." There is a theological word for a wonderful gift which we neither understand nor deserve. That word is "grace."
What Wigner wrote about the amazing yet scientifically unexplained relationship between mathematics and physics applies to every other field of study. The coherence between the logic of our minds and the regularities of the world outside our minds is a gift. Specifically, it is a gift from God. This gift rests on the providence of God. He created the universe, and He also sustains it. He is sovereign over it. The English word "providence" is related to the word "provide." God has provided gifts: laws of nature. There are laws of economics only because there are providentially sustained regularities in nature, including human nature. Every science should begin with the doctrines of God's creation and providence. So should every academic discipline. So should every human enterprise. This is why I am beginning Part 3 with the doctrine of God's providence.
Point one of the biblical covenant is God's transcendence, yet also His presence. It asks: "Who's in charge here?" How does this apply to providence?
God's omnipotence is a non-transferable attribute of God. Two others are omniscience and omnipresence. God has control over all the cosmos: an estimated two trillion galaxies with an estimated hundred billion stars in each galaxy. Also, don't ignore all the electrons, protons, and neutrons. Throw in the quarks. The universe looks immense to us, but not to God. He runs the whole show. This is the biblical doctrine of omnipotence.
Humanists deny that such a God exists. They are joined by innumerable Christians who say that while God could control everything, He chooses not to. Yes, they admit, God may well control two trillion galaxies and their stars, along with their electrons, neutrons, and protons, but He does not control you and me--not completely, anyway. He has exempted us from such all-embracing controls.
The Bible teaches otherwise.
As for you, you meant evil against me, but God meant it for good, to bring it about that many people should be kept alive, as they are today (Genesis 50:20).The king's heart is a stream of water in the hand of the Lord; he turns it wherever he will (Proverbs 21:1).
"I made the earth and created man on it; it was my hands that stretched out the heavens, and I commanded all their host. I have stirred him up in righteousness, and I will make all his ways level; he shall build my city and set my exiles free, not for price or reward," says the Lord of hosts (Isaiah 45:12--13)
Then Job answered the Lord and said: "I know that you can do all things, and that no purpose of yours can be thwarted" (Job 42:1--2).
Our God is in the heavens; he does all that he pleases (Psalm 115:3).
What shall we say then? Is there injustice on God's part? By no means! For he says to Moses, "I will have mercy on whom I have mercy, and I will have compassion on whom I have compassion." So then it depends not on human will or exertion, but on God, who has mercy. For the Scripture says to Pharaoh, "For this very purpose I have raised you up, that I might show my power in you, and that my name might be proclaimed in all the earth." So then he has mercy on whomever he wills, and he hardens whomever he wills. You will say to me then, "Why does he still find fault? For who can resist his will?" But who are you, O man, to answer back to God? Will what is molded say to its molder, "Why have you made me like this?" Has the potter no right over the clay, to make out of the same lump one vessel for honorable use and another for dishonorable use? (Romans 9:14--21)
For the purpose of establishing the foundations of Christian economic theory, I begin with Genesis 50:20. Joseph spoke to all but one of his brothers, some of whom had sought to kill him, and all of whom sold him into slavery. "As for you, you meant evil against me, but God meant it for good, to bring it about that many people should be kept alive, as they are today." There were the plans of the many: the brothers. There was the plan of the One: God. God's plan was sovereign; the brothers' plans were not. God possessed omnipotence; the brothers did not. Yet the brothers were responsible before God for their evil deed. They knew this. They feared Joseph. This is why he comforted them. He showed mercy to them. He showed grace. So had God.
What has this to do with economic theory? This. People make decisions to buy or sell, to save or consume, to invest or donate. They are completely responsible for these decisions. They may even be legally liable for the outcomes of some of these decisions. But not one decision is made outside of the providence of God. Not one of them comes as a surprise to God. God never says: "Well, what do you know about that? Who would have guessed?"
Here is God's promise to covenant keepers. "And we know that for those who love God all things work together for good, for those who are called according to his purpose" (Romans 8:28). This should give covenant keepers confidence in making decisions. The outcomes of their decisions are unclear to them. They seem uncertain. But they are not random. The world is orderly. That is because it is sustained by an omnipotent God who has a decree for all of history.
Point two of the biblical covenant is hierarchical authority. It asks: "To whom do I report?" How does this apply to providence?
God's order is at bottom covenantal. This means that it is moral. It reflects God's moral character. Covenant breakers deny this.
For the wrath of God is revealed from heaven against all ungodliness and unrighteousness of men, who by their unrighteousness suppress the truth. For what can be known about God is plain to them, because God has shown it to them. For his invisible attributes, namely, his eternal power and divine nature, have been clearly perceived, ever since the creation of the world, in the things that have been made. So they are without excuse. For although they knew God, they did not honor him as God or give thanks to him, but they became futile in their thinking, and their foolish hearts were darkened (Romans 1:18--21).
The Bible teaches the doctrine of cosmic personalism. The universe is not impersonal. It is inherently personal because God created it out of nothing and continues to support its operations providentially. It is not the product of impersonal forces.
The affairs of men are governed by ethical laws. Moses warned the generation of the inheritance of Canaan not to forget the God who had delivered their enemies into their hands.
Beware lest you say in your heart, 'My power and the might of my hand have gotten me this wealth.' You shall remember the Lord your God, for it is he who gives you power to get wealth, that he may confirm his covenant that he swore to your fathers, as it is this day (Deuteronomy 8:17--18).
This passage is the heart, mind, and soul of Christian social theory. If this passage is not true, then the affairs of men are governed by non-covenantal forces. These forces are therefore autonomous: self-law, not God's providential law. These supposedly autonomous forces are then discovered, one by one, by covenant-breaking intellectuals and scientists. If this passage is not true, then there is no such thing as biblical social theory, including economics. There are at best competing humanistic social theories, which are then "baptized" by academically employed Christians, who know their place in life: subordinates to covenant breakers.
Point three of the biblical covenant is ethics. It asks: "What are the rules?" How does this apply to providence?
The laws of economics include these: (1) supply and demand, (2) high bid wins, (3) when the price falls, there is an increase in the quantity demanded, (4) producers compete against producers, while customers compete against customers, (5) sooner is better than later at the same price, (6) there is a hierarchy of economic values, (7) this hierarchy is subjective, (8) it is ordinal (first, second, third), not cardinal (exactly so much more), (9) more is better than less at the same price, (10) there are no free lunches, (11) at zero price, there is greater demand than supply, and my favorite: (12) it is better to be rich and healthy than it is to be poor and sick. This last one involves an ethical judgment: better.
Are these laws in the same way that the law of gravity is a law? No. What are the most important differences? First, no one can explain the law of gravity, but almost anyone who reads this book and understands it can explain economic laws. Economic laws make sense. The law of gravity doesn't. Am I exaggerating? How can you answer this? "Why is there attraction at a distance in an interstellar vacuum between objects with mass?" Newton discovered the mathematical laws of gravity. To explain them, he appealed to the providence of God. This appears in the section of the Principia titled "General Scholium." He wrote: "This most beautiful system of the sun, planets, and comets, could only proceed from the counsel and dominion of an intelligent being. And if the fixed Stars are the centers of other like systems, these, being formed by the like wise counsel, must all be subject to the dominion of One. . . . This Being Governs all things, not as the soul of the world, but as Lord over all: And on account of his dominion he is wont to be called Lord God [pantokrator], or Universal Ruler." He also wrote: "I have not as yet been able to discover the reason for these properties of gravity from phenomena, and I do not frame hypotheses." He was wiser than his successors, who think they can leave God out of their explanations.
Second, economic laws are not governed by mathematical formulas. The laws of gravity are. So, astrophysicists make far better predictions regarding the trajectories of planets in the solar system than economists make regarding the timing of recessions. Economists offer explanations for recessions. These explanations do not agree; there are rival explanations. Most of them posses at least a surface plausibility. In contrast, astrophysicists do not offer coherent explanations for why planets are attracted to the sun in unbreakable recurring patterns across a vacuum. There are invisible cosmic strings that link the planets, stars, and galaxies. But if you don't believe in a sovereign creator God, your explanation for this will not make sense to anyone except you. Also, your theory will be replaced soon by another even more complex, incoherent, and implausible theory.
Why any economist would want to imitate physics as a science is beyond me, but a lot of them do. They write articles and books that are as unreadable for non-economists as physicists write. Physicists are not trying to persuade non-physicists. Economists whose articles resemble physicists' articles are also not trying to persuade non-economists. This puts them at a disadvantage with those of us who do write for non-economists. You are reading this book. You are not reading a scholarly journal in economics. This is good for me. Let me assure you, this is also good for you.
Economic laws are imposed by a providential God. The laws governing scarcity in the post-fall world are the result of God's curse of Adam's body and the ground (Genesis 3:17--19). Similarly, the laws governing individual self-interest are also the result of God's curse on Adam and the ground. These effects are consistent with the effects of sin in people's lives. They are the result of individuals' assertion of their autonomy from the God of the Bible. Adam Smith, a theological deist, did invoke God in his book, The Theory of Moral Sentiments (1759; revised in 1790), but not in The Wealth of Nations (1776). The Wealth of Nations is implicitly atheistic. There is no trace of theistic causation in The Wealth of Nations. Mankind is described as if people were autonomous. Economists ever since have imitated The Wealth of Nations, just as physicists have imitated those parts of Principia other than "General Scholium." Newton did not believe in either human or cosmic autonomy. Neither did Smith. But their self-professed heirs do.
There are patterns of behavior in people's lives that allow economists and economic forecasters to predict events with greater accuracy than the vast majority of people who have never studied economics. These patterns are the result of human nature in a providential world. They are also the result of differences in geographical environments: location, rainfall, soil fertility, and similar attributes. If these patterns of behavior were not pervasive, we could not make long-run economic decisions with accuracy. We would all be flying blind. This includes economists.
Point four of the biblical covenant is sanctions. It asks: "What do I get if I obey? Disobey?" How does this apply to providence?
Every covenant has positive commands and negative commands. Every covenant also has corresponding sanctions: positive and negative. This is the model for all social life. Economists have been far more productive than other social scientists in specifying economic sanctions and their consequences, both individual and corporate.
Consider this positive sanction: profit. The entrepreneur who forecasts future conditions of supply and demand more accurately than his competitors do will be able to buy or sell production goods in terms of his forecasts. Because his competitors are not actively bidding for production goods today, he can buy low now and sell high later when demand unexpectedly increases, meaning unexpected by his competitors. Also, if he thinks demand will fall, he can sell his production goods for cash today, and wait for prices to fall. Then he can buy back similar capital goods more inexpensively. This is sell high and buy low. Both approaches produce a profit. The opposite decisions produce losses: buy high, sell low.
If economic sanctions were random, we could not plan successfully. We would be making investment mistakes at least half the time. This would keep us from fulfilling the dominion covenant. God wants mankind to fulfill this covenant; hence, He has created a world in which there are predictable economic sanctions. These sanctions are providential. This is true of sanctions in every area of life, but they are more consistently true in economic affairs. The science of predictable sanctions is far more developed in economics than in any other social science.
Point five of the biblical covenant is inheritance. It asks: "Does this outfit have a future?" How does this apply to providence?
Covenants have positive and negative commands. They have positive and negative sanctions. These sanctions have social effects over time: the expansion of some people's wealth, and a reduced expansion or even reduction of other people's wealth. This also applies to groups. These effects are consistent with what the Bible teaches.
As for the saints in the land, they are the excellent ones, in whom is all my delight. The sorrows of those who run after another god shall multiply; their drink offerings of blood I will not pour out or take their names on my lips (Psalm 16:3--4).But the meek shall inherit the land and delight themselves in abundant peace. The wicked plots against the righteous and gnashes his teeth at him, but the Lord laughs at the wicked, for he sees that his day is coming (Psalm 37:11--13).
The righteous shall inherit the land and dwell upon it forever (Psalm 37:29).
Truly you set them in slippery places; you make them fall to ruin. How they are destroyed in a moment, swept away utterly by terrors! Like a dream when one awakes, O Lord, when you rouse yourself, you despise them as phantoms (Psalm 73:18--20).
The ethical battlefield of covenantal history is not level. It has been tipped by God against covenant breakers who violate His laws, which are at bottom ethical laws. Those who conform to His laws benefit. Those who do not are led into paths of destruction: slippery places.
The process of compound growth, generation after generation, has transformed the world. It has made the world a far better place to live for vastly more people. There were about a billion people in 1800. Today, it is more than seven times that many. The extension of private property and the rule of law produced this compounding. So has a new respectability of business profits, which itself was the product of a change in outlook, beginning in the Netherlands in the seventeenth century.
This has to do with inheritance and disinheritance. "A good man leaves an inheritance to his children's children, but the sinner's wealth is laid up for the righteous" (Proverbs 13:22). This is the twofold effect of the covenantal structure of history.
The doctrine of God's providence is an extension of the doctrine of God's creation. The doctrine of creation is an affirmation of God's omnipotence.
The doctrine of God's providence stands in stark contrast to the doctrine of man's autonomy, i.e., self-made law. The doctrine of man's autonomy comes in two forms: the one (the state) and the many (the market). There is an endless debate between statists and individualists-anarchists. Which is sovereign: the state or the individual? The political abandonment of Marxist economics by Communist China in 1979 and the Soviet Union in 1991 produced a loss of confidence on the part of socialists. There are few people today who claim to be socialists. The suggestion that the state should own the means of production is no longer taken seriously by most intellectuals. But the idea that there should be no state has only rarely been taken seriously by anyone.
Critics of the free market argue that the system of profit-and-loss accounting does not take into consideration the macro effects of individual profits. They say that there are negative macroeconomic effects that arise from microeconomic profits. An example is pollution. Businesses that emit pollutants profit from this. They transfer costs to society: victims of pollution. Corporate profits rise. So, the fact that a transaction is regarded as profitable by the participants is not recognized by macroeconomists as a valid argument that society is better off. It may be worse off. Similarly, defenders of individualism speak of the loss of wealth that comes from government regulation. What seems good to state officials is not good for the broad masses of humanity.
The inability of secular economists to resolve this fundamental disagreement over the relationship between free market pricing and its social effects has led to a permanent division within the camp of the economists. This representative example of the one/many dualism in secular philosophy has never been solved to the satisfaction of the competing schools of economic opinion. The hypothetical cosmically impersonal system of free market pricing, which is based on the auction's principle of "high bid wins," works well for individuals, according to most economists, but apart from the concept of God's providence, defenders of the free market cannot show logically that it benefits society, which is a collective concept. It is illogical to begin with the assumption of methodological individualism, and then expect it to lead to truths regarding what is good or bad for collectives.
The doctrine of God's providence teaches that the results of the private property system are beneficial to individuals and also to society. This system did not evolve from a hypothetical social contract. It is the product of God's intervention into the lives of the Israelites under Moses. It is the product of a Trinitarian (One/Many) God. It is therefore consistent with a covenant-based collective social order and also the individual participants who constitute this social order. The allocation system based on "high bid wins" brings greater wealth and a wider range of choices to productive people who own something of value to bid with. It also provides poverty-stricken people opportunities to work and accumulate capital by participating in the market.
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