Christian Economics: Student's Edition
[Updated: 1/18/18]
For it will be like a man going on a journey, who called his servants and entrusted to them his property. To one he gave five talents, to another two, to another one, to each according to his ability. Then he went away. He who had received the five talents went at once and traded with them, and he made five talents more. So also he who had the two talents made two talents more. But he who had received the one talent went and dug in the ground and hid his master's money. Now after a long time the master of those servants came and settled accounts with them (Matthew 25:14–19).
The owner transferred assets to his stewards. This was a test. He did not tell them that it was a test. He simply transferred the assets and departed. But they knew that there would be a day of reckoning. This was the day when the open accounts would be settled. This parable appears as the introduction to Jesus’ description of the final judgment.
The transfer of assets was an act of delegation. The owner transferred legal sovereignty to his stewards. They had full control over the assets. They acted in his name. But this was also act act of delegating wealth. They had capital to work with. They were his economic agents. They acted on his behalf. Their competition would be economic. Economic competition here is an analogy for comprehensive competition. In Luke’s version of this parable, the owner transferred political control over cities to the winners in the economic competition (Luke 19:11–27).
There are two branches of the human family: adopted heirs and disinherited members. They compete for wealth in history, but they also compete in all other areas of life. Economic competition is readily understandable. This is why Jesus preached what I call pocketbook parables. He knew that his listeners would get the point faster and clearer this way.
The two families compete with each other in history. It is the competition between two kingdoms. The two kingdoms represent God and mammon. Jesus said: “No man can serve two masters: for either he will hate the one, and love the other; or else he will hold to the one, and despise the other. Ye cannot serve God and mammon” (Matthew 6:24: King James Version). Mammon was a Syrian god of wealth. The English Standard Version translation reads: “No one can serve two masters, for either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve God and money.” The word mammon implies more than money. It means riches in general. I interpret it as follows: “more for me in history.”
The issue here is competition between the kingdom of God vs. the kingdom of man. It manifests itself in every area of life. But this competition is seen above all in the realm of economics. The dividing line is covenantal representation: point two of the biblical covenant. The dividing line is not riches vs. poverty. It is riches on behalf of God vs. riches on behalf of man. This also applies to institutions. It is covenantal conflict. It is a war to the death. But this war is seen in economic affairs as competition.
Socialists always said this: “There should be cooperation, not competition.” This meant that they wanted politically appointed central planners to decide who gets what and on what terms. Then the masses without power or independent sources of money were supposed to cooperate with the central planners by accepting whatever resources the planners allocate without complaint. This system of allocation invariably led to tyranny: monopoly control by political elite. It also led to falling production and widespread poverty. This was why socialism was abandoned in practice and then in theory in the final quarter of the twentieth century. Men put up with tyranny, but they would not put up with socialist poverty in the midst of capitalist plenty. China abandoned socialist ownership in the late 1970s. The Soviet Union shut down on December 25, 1991.
Competition in economics is always based on an offer: “Buy this from me, not from someone else.” It is analogous to marriage: “Marry me, not someone else.” It is analogous to church membership: “Join our church, not another one.” It is analogous to politics: “Vote for me, not someone else.” Competition is basic to life. It is inescapable.
Rival economic systems are in competition. So are rival businesses. So are rival economic theories. Ultimately, rival confessions of faith are in competition. This is not well understood in the modern era of humanism, which preaches the religious neutrality of economics, politics, education, and all other areas of public life outside the four walls of the church. Neutrality is a myth.
The essence of competition is competition for authority, meaning decision-making for ourselves and for others under our authority. This is at bottom competition for responsibility to act on behalf of the sovereign. There is no agreement on who this sovereign is: God or mammon. This competition over authority and responsibility will go on until the end of time.
He put another parable before them, saying, “The kingdom of heaven may be compared to a man who sowed good seed in his field, but while his men were sleeping, his enemy came and sowed weeds among the wheat and went away. So when the plants came up and bore grain, then the weeds appeared also. And the servants of the master of the house came and said to him, ‘Master, did you not sow good seed in your field? How then does it have weeds?’ He said to them, ‘An enemy has done this.’ So the servants said to him, ‘Then do you want us to go and gather them?’ But he said, ‘No, lest in gathering the weeds you root up the wheat along with them. Let both grow together until the harvest, and at harvest time I will tell the reapers, “Gather the weeds first and bind them in bundles to be burned, but gather the wheat into my barn”’ (Matthew 13:24–30).
Note: nothing intervenes to separate the wheat and tares (weeds) in history. The weeds and the wheat compete without any period of separation: not seven years or three-and-a-half years. There is no temporary period of rest and recreation in heaven for the wheat before they return to history. The only way out of history is death.
Point two of the biblical covenant is authority. This can also be described as hierarchy. In every organization there is a hierarchy. The person at the top of this hierarchy has the authority to give lawful commands. Those beneath him have a responsibility to obey.
Point two of the biblical covenant is associated with the covenant itself. It is the arrangement by which God rules His kingdom. All men are responsible to God as His creations, but covenant-keepers acknowledge this obligation.
The dominion covenant found in Genesis 1 sets forth the chain of command: God > mankind> creation.
And God blessed them. And God said to them, “Be fruitful and multiply and fill the earth and subdue it, and have dominion over the fish of the sea and over the birds of the heavens and over every living thing that moves on the earth” (Genesis 1:28).
Mankind represents God to the creation, and also represents the creation to God. Put differently, mankind must serve the creation. “The Lord God took the man and put him in the garden of Eden to work it and keep it” (Genesis 2:15). Mankind is in the middle.
This original, pre-fall hierarchy serves as the model for a Christian society. Jesus made it clear that the means of success in His kingdom is service to others (Matthew 20:25--28). The path to leadership is a servant’s path. He contrasted this with rulers among the gentiles. They sought authority as a way to command others. This is not the correct approach, Jesus said—not in the church, not in the family, and not in the state.
What about in the economy? The economy is not covenantal. It is not established by a formal public oath before God, unlike church, family, and state. Market exchanges are contractual. They are promises. A contract is analogous to a covenant, but it does not have the same degree of authority. If Jesus’ words apply to binding covenants, then they surely apply to contracts. The means of success is service.
In the hierarchy of the free market social order, consumers possess final economic authority. This is because they possess money. Money is the most marketable commodity. When you walk into a store, you do not have to plead with a salesman to take your money. You do not have to offer him a discount to take your money. Far more likely is this scenario: the salesman pleads with you to part with your money. He may even offer a discount for cash. Why? Because what he is selling is not the most marketable commodity.
The seller is not in authority. The buyer is. Let me clarify this. The seller of goods and services is not in authority. The seller of money is. We call the seller of goods a seller. We call the person who spends money a buyer. But both of them are sellers, and both of them are buyers. Both parties surrender ownership. Both parties take ownership. This is what every sale is: a transfer of ownership.
The seller must serve the buyer because the buyer owns the most marketable commodity: money. Nevertheless, the buyer must serve the seller by handing over his money. If there is not mutual service, there will be no sale. This is why Jesus’ words apply to the free market economy. The free market economy is a gigantic system of mutual service. The study of economics is the study of how this system operates.
Point one of the biblical covenant is God’s transcendence, yet also His presence. This is the biblical concept of God’s original sovereignty. It asks: “Who's in charge here?” How does this apply to the idea of service?
The Christian doctrine of authority by means of service begins with the doctrine of the incarnation of the Second Person of the Trinity in the Person of Jesus Christ.
Do nothing from selfish ambition or conceit, but in humility count others more significant than yourselves. Let each of you look not only to his own interests, but also to the interests of others. Have this mind among yourselves, which is yours in Christ Jesus, who, though he was in the form of God, did not count equality with God a thing to be grasped, but emptied himself, by taking the form of a servant, being born in the likeness of men. And being found in human form, he humbled himself by becoming obedient to the point of death, even death on a cross. Therefore God has highly exalted him and bestowed on him the name that is above every name, so that at the name of Jesus every knee should bow, in heaven and on earth and under the earth, and every tongue confess that Jesus Christ is Lord, to the glory of God the Father (Philippians 2:3–11).
The incarnation involved the ultimate service by the ultimate Being. This service was unto death: the supreme sacrifice for others. Yet this was not designed to humiliate Jesus permanently. On the contrary, it was designed to elevate Him. The path of incarnation was this: God became a man, who surrendered power to the state and the church of His day, thereby establishing the judicial foundation of total authority. As the resurrected Jesus announced to the disciples,
“All authority in heaven and on earth has been given to me. Go therefore and make disciples of all nations, baptizing them in the name of the Father and of the Son and of the Holy Spirit, teaching them to observe all that I have commanded you. And behold, I am with you always, to the end of the age” (Matthew 28:18–20).
When Jesus contrasted the way to authority in the church vs. the way to authority among the gentiles, He was presenting a model of dominion. It was the same model that God had established for the redemption of mankind. This is God’s way to overcome the kingdom of Satan, which is the kingdom of self-proclaimed autonomous man. The competition between the kingdom of God and the kingdom of man is not based on power. It is based on ethics. Might does not make right. Right eventually makes might. But it takes time for covenant-keepers to figure this out. They read it. Jesus taught it. But they find it difficult to believe. It is not the familiar way of autonomous man.
Point two of the biblical covenant is hierarchical authority. It has to do with God’s delegation of limited sovereignty to man: the dominion covenant. How does this apply to the idea of service?
Covenantal authority is both hierarchical and horizontal. This fact is not intuitive.
Authority brings responsibility. To whom is someone in authority responsible? First and foremost, he is responsible to God. God is sovereign. He is the Creator. He providentially maintains the creation. He brings preliminary judgments in history. He answers prayers. He brings final judgment. He is in charge. This is standard Christian doctrine. It is not controversial.
God demands service to others as the means of demonstrating allegiance to Him. In the passage on the final judgment, Jesus said:
“When the Son of Man comes in his glory, and all the angels with him, then he will sit on his glorious throne. Before him will be gathered all the nations, and he will separate people one from another as a shepherd separates the sheep from the goats. And he will place the sheep on his right, but the goats on the left. Then the King will say to those on his right, ‘Come, you who are blessed by my Father, inherit the kingdom prepared for you from the foundation of the world. For I was hungry and you gave me food, I was thirsty and you gave me drink, I was a stranger and you welcomed me, I was naked and you clothed me, I was sick and you visited me, aI was in prison and you came to me.’ Then the righteous will answer him, saying, ‘Lord, when did we see you hungry and feed you, or thirsty and give you drink? And when did we see you a stranger and welcome you, or naked and clothe you? And when did we see you sick or in prison and visit you?’ And the King will answer them, ‘Truly, I say to you, as you did it to one of the least of these my brothers, you did it to me’” (Matthew 25:31–40).
The covenantal doctrine of authority is inherently a doctrine of representation. Jesus made it clear: the poor are representatives of God. How people treat the weak and poor reflects their view of God’s treatment of them. Covenant-keepers perceive that they are weak and poor in the sight of God. So, there must be submission upward. But this is demonstrated by service downward: service to those who cannot repay.
There is more. There is also service outward. We serve those who can repay. In voluntary exchanges, this service is immediately repaid. Adam Smith put it famously in Wealth of Nations.
But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Nobody but a beggar chooses to depend chiefly upon the benevolence of his fellow-citizens (Book 1, Chap. 2, para. 2).
So, we must serve others. Why? Because we want their cooperation. Why? Because we need help. This leads us to a consideration of the fourth authority: ourselves. We are self-interested. This means there is service inward. Smith grounded his book on this crucial insight. We serve in order that we may be served. We are all buyers. We are all sellers. We need help. To obtain it, we offer help.
In covenantal economics, covenant-keepers are told to serve others. But this service need not be a one-way street in every case, or even in most cases. There is mutually advantageous service. It is negotiated for the sake of our own goals and comforts, and also for those under our jurisdiction.
Point three of the biblical covenant is law. It asks: “What are the rules?” How does this apply to the idea of service?
Jesus preached to Isralites. These people were under the domination of Rome. They were not citizens of an independent nation.
Jesus did not teach revolution as a legitimate way to throw off bondage. He taught service.
“You have heard that it was said, ‘An eye for an eye and a tooth for a tooth.’ But I say to you, Do not resist the one who is evil. But if anyone slaps you on the right cheek, turn to him the other also. And if anyone would sue you and take your tunic, let him have your cloak as well. And if anyone forces you to go one mile, go with him two miles. Give to the one who begs from you, and do not refuse the one who would borrow from you” (Matthew 5:38–42).
This was prudent advice to people in political bondage. If someone in power decides to single you out for poor treatment, respond with above-average service. The archetype of this was Jesus on the cross. “Father, forgive them, for they know not what they do” (Luke 23:34b). Go the extra mile with those above you. Go the extra mile with those below you.
What about our relationship with judicial equals? Do the same. In a free market, two bargainers both own assets. They wish to gain an exchange. The best approach is to offer a better deal. Go the extra mile. If you are selling something, ask for less in return. The transaction is more likely to take place. In the free market, this is the strategy of price competition. This is the insight of a fundamental law of economics: “When the price is reduced, more is demanded.”
The principle of going the extra mile governs employee relations. The employee should do more than what is expected. Why? Because this is a competitive way to avoid being fired when the economy sags. If you are on the “short list”of employees to be kept on the payroll, this is an advantage.
Jesus gave this advice to oppressed people. The correct way to deal with people who do not appreciate you is to identify yourself as a cooperative person. Such people are hard to find. The same holds true for any group. If the Jews had not rebelled militarily against the Roman emperor Vespasian in AD 69, Vespasian would not have sent his son Titus to besiege the city of Jerusalem in AD 70. The Romans burned the city and the temple. This ended the Mosaic sacrificial system. This was what Jesus had predicted would happen a generation earlier.
But when you see Jerusalem surrounded by armies, then know that its desolation has come near. Then let those who are in Judea flee to the mountains, and let those who are inside the city depart, and let not those who are out in the country enter it, for these are days of vengeance, to fulfill all that is written. Alas for women who are pregnant and for those who are nursing infants in those days! For there will be great distress upon the earth and wrath against this people. They will fall by the edge of the sword and be led captive among all nations, and Jerusalem will be trampled underfoot by the Gentiles, until the times of the Gentiles are fulfilled (Luke 21:20–24).
Better to have gone the extra mile.
Point four of the biblical covenant is sanctions. It asks: “What happens if I obey? Disobey?” How does this apply to the idea of covenantal service?
There are positive economic sanctions and negative economic sanctions. These are the key economic sanctions: profit and loss.
When someone performs well on a long-term basis, those who do business with him want to maintain the relationship. It takes time and effort to locate someone who is reliable, whose word can be trusted.
I have written for many years that there are three keys to business success.
1. Do what you said you would do.
2. Do it at the price agreed on, or lower.
3. Do it on or before the deadline agreed on.
It boils down to these: quality, price, and time. Anyone who consistently performs as promised, or a little better, will find that he is seldom out of work. There will be demand for his services.
If someone gains the reputation that he will not cheat a buyer, he will have clients. Wherever this internal commitment to not cheating is widespread in a group or a society, the cost of doing business will fall. There will be an increase in the number of voluntary exchanges. The market will be extended. Why? Because of this rule: “When the price falls, more is demanded.” The division of labor will increase. Specialization will increase. Efficiency will increase. Per capita wealth will increase.
Trust takes time to develop. It can be lost in one transaction. It is a valuable resource, but it is a fragile resource. It is a capital asset. It makes a trusted person, company, or group more valuable to others. This increase in value can be converted into money. There will be repeat business.
Point five of the biblical covenant is succession. It asks: “Does this outfit have a future?” How does this apply to the idea of service?
In business, most of the net income usually comes from repeat business. It costs a lot of advertising money to generate a new customer. The profit from this new customer comes from repeat sales. It is much less expensive to generate a repeat sale than the first sale. There is a marketing concept called the lifetime value of the customer. How many sales will there be? What is the expected average profit per sale? These estimates are crucial for estimating how much money must be devoted to advertising.
Businesses that get repeat business from the same customers for years are profitable. Their marketing costs are low in relation to the profits generated over years. But to achieve this desirable situation, a company must deliver high-quality goods on a predictable basis. The customers must trust the company not to cheat them. But even this is not enough. The company should also go the extra mile.
The company that continues to improve quality and service will grow. If a company continues to satisfy its customers and attract new ones, it will expand its sales, profits, and market share. This is the basis of long-term expansion. This is how a few firms become dominant in the market place. The continual reinvestment of profits, the continual improvement of product quality, and constant attention to what customers want and are willing to pay for are marks of dominant companies in any market niche.
Jesus called the disciples to a life of service to the members of the church. They were not to lord it over others. They were to serve faithfully. This strategy leads to success whenever it is implemented systematically. If this becomes the outlook of the church’s leaders, the church will grow.
What is true of the church is true of business. When a business’s owners and senior managers set the pattern of above-average customer service, they will be imitated by their institutional subordinates. The business will grow. The business will be able to serve a larger number of customers. This will generate repeat business. The business will prosper. Everyone connected with the business will benefit financially. Their ability to save money for the future will help generate future profits. Their dominion will increase.
The dominion covenant is all about responsibility. Mankind rejected this covenant at the fall. Redemption is the program by which God is restoring the original dominion covenant. This involves the restoration of responsibility. This means individual responsibility. It also means institutional responsibility.
One means of increasing responsibility is capital. It is a tool of production. The Christian is to view wealth as a means of dominion. It provides capital. Capital enables covenant-keepers to subdue the earth to God’s glory at a lower cost. As wealth increases, so does responsibility.
Christians should not pursue wealth unless they are also pursuing responsibility. Wealth is usually regarded as an end in itself. It should not be pursued for the sake of increased consumption. To do so is a covenantal error. Wealth should be regarded as a means to an end. To regard wealth as an end is to misunderstand the dominion covenant. Wealth is primarily a tool of production. Some of it may be lawfully consumed as a reward, but not all of it. If all of it is consumed, there can be no inheritance of capital.
Most people do not want any more responsibility. They much prefer leisure. But almost everybody wants more money. This is illogical. You cannot get more money without getting more responsibility. But people prefer not to admit that there is an unbreakable connection between money and responsibility.
If Christians understood this, and if they would structure their household budgets accordingly, they would begin to increase their influence in society. Thrift requires the adoption of a future-oriented worldview, one stretching down through the generations until the final judgment.
Dominion requires increased responsibility. Here is a law of political power: “Power flows to the person who takes responsibility.” In economics, wealth flows to the person who takes responsibility. The Christian way to power is different from the power seeker’s way: service. So is the Christian way to wealth: service.
But Jesus called them to him and said, “You know that the rulers of the Gentiles lord it over them, and their great ones exercise authority over them. It shall not be so among you. But whoever would be great among you must be your servant, and whoever would be first among you must be your slave, even as the Son of Man came not to be served but to serve, and to give his life as a ransom for many” (Matthew 20:25–28).
_________________________________
For the rest of this book, click here: //www.garynorth.com/public/department188.cfm
© 2022 GaryNorth.com, Inc., 2005-2021 All Rights Reserved. Reproduction without permission prohibited.