Introduction

Gary North - May 27, 2017

Updated: 1/13/20

Christian Economics: Teacher's Edition

See to it that no one takes you captive by philosophy and empty deceit, according to human tradition, according to the elemental spirits of the world, and not according to Christ. For in him the whole fullness of deity dwells bodily, and you have been filled in him, who is the head of all rule and authority (Colossians 2:8–9).

Introduction

Even an introduction sometimes needs an introduction.

This book is the second in a series. The first book is Christian Economics: Student’s Edition. It introduces people to the fundamental concepts of Christian economics. These concepts are tied to the biblical covenant model: God, man, law, sanctions, and time. I summarize this model in my short book, God’s Covenants. You can download it for free here: http://bit.ly/gncov.

In the field of economic theory before the fall of man, these covenantal categories were these: creation, stewardship, property, imputation, and inheritance. These were challenged by the fall of man. The rival categories are these: chance, autonomy, theft, bureaucratization, and disinheritance. Christ’s redemption has restored the original structure in terms of the post-fall economy: providence, service, protection, entrepreneurship, and compounding. These concepts are easy enough to understand, but they are not intuitive. It takes an understanding of covenant theology to identify them. I assume that you have read the student’s edition. You are ready to go to the next phase: teaching.

Here, I develop the details of Christian economics. The categories in this book are familiar to anyone with an introductory understanding of economic theory. Note, I do not say “textbook understanding.” I have in mind something different: an understanding of economic causation that allows Christians to understand and explain the day-to-day operations of the national economies around them, wherever and whenever they live. They must understand these day-to-day operations in terms of biblical economic categories if they are ever to become successful teachers. My goal is to persuade readers of this book to become teachers. I am, in short, trying to recruit you.

A. Academia

Introductory books are always concerned with recruiting. This is surely true of economics textbooks. An economics textbook, as with all textbooks, is a tool to recruit and train future academic specialists. Every textbook is written to be acceptable to most members of an academic guild. The guild is always divided into warring camps of competing scholars. A textbook is written to conceal this war from naive and trusting students. Economics textbooks for high school students are written to prepare readers to become familiar with the terminology of a generic lower-division college textbook. A lower-division college textbook is written to prepare students for upper-division textbooks. These in turn are written to prepare students for graduate school. Each economics textbook removes the reader further from the real world of economic processes and institutions.

The vast majority of articles published in the most prestigious scholarly journals in economics are incomprehensible to intelligent readers. They are rarely read by scholars. They are published in order to persuade old men who run academic departments to grant tenure to assistant professors. Tenure guarantees a person lifetime employment by his university. Tenure is the product of a system of financing that does not exist in a free market. It is the product of state intervention into the higher education market. Tenure is based on the production of articles that no one in a free market would pay for. The standards of performance are not imposed by the free market. The reward is not granted in a free market: immunity from being fired. Tenure is a suitable goal for a person who is a poor teacher, or someone who fears the competitive marketplace of ideas. He is a person with low self-confidence in matters intellectual. He seeks deliverance from market competition. He gains it through employment by a non-market institution that is shielded by the state from competition.

If you accept the principles of my books on Christian economics, you will not be granted tenure. It is unlikely that will get a job offer in a tenure-track program. But you will have this advantage: you will understand economics. You may not understand academic economics, but this is not a liability in the real world, where there is no tenure.

The dominant interpretation of economics today is Keynesianism. The main rival school of interpretation is known as monetarism, or Chicago School economics. Other schools of opinion are public choice, rational expectations, and the newest major school of thought, behavioral economics. On the fringes of academia are the last remaining defenders of Marxism, which never had many university professors in the West, and the defenders of what is known as the Austrian School, which also had very few representatives, and none on any Ivy League campus. There were a few economists who had been followers of Ludwig von Mises in the 1920s and 1930s, but they de-emphasized or abandoned this position in the 1940s. Only then were they invited to teach in Ivy League universities. I have in mind Gottfried Haberler at Harvard and Fritz Machlup at Princeton. No Austrian has been on an Ivy League faculty since 1983, when Machlup left Princeton. Haberler left Harvard in 1971.

Christian economics is closer to Austrian School economics than it is to the other schools of opinion. Why is this? Because Austrian economics begins with a theory of purposeful action. It places purpose at the center of economic analysis. So does Christian economics. Austrian economics discusses purpose in terms of personal goals. So does Christian economics. The issue of purposeful action inescapably raises the issue of personal responsibility for the outcomes of purposeful action. Both Austrian economics and Christian economics focus on responsibility. Austrian economics also places private ownership at the center of economic analysis. So does Christian economics. The crucial difference lies in this: Austrian economics sees the individual as autonomous. Christian economics does not. It proclaims autonomy as an incommunicable attribute of God, along with omniscience, omnipotence, and omnipresence.

To this Christian framework should be added some of the insights of behavioral economics. These insights are much closer to the real world than to the rarefied models of the non-Austrian schools. There is no comprehensive theory of behavioral economics. It consists of a series of observations about how people act in the real world. It offers explanations of why people act this way. It rests on psychology in a way that all other school of economics do not. The realism of behavioral economics can be considerable. It should be taken seriously by all economists on a case-by-case basis.

B. Structure

This book is divided into six parts.

Part 1 is The Auction Process. I argue that to understand the free market, you must understand an auction. If you understand an auction, you can extend this understanding into every nook and cranny of the economy. If you do not understand an auction, you will not understand the economy. The more equations and graphs that you understand, or think you understand, the less you will understand the economy.

Part 2 is A Moral Auction. It explores the moral and legal principles that support the auction.

Part 3 is Protecting the Auction. The auction is not an agency of coercion. The state is. The state must protect property rights by the threat of violence.

Part 4 is Manipulating the Auction. Every intervention by the civil government is a disruption of the auction process. It should be justified only as a way to preserve the auction or to preserve the moral order of the society that sustains the auction.

Part 5 is The Non-Profit Sector. All institutions are part of the auction process, but all non-profit institutions are governed by non-market principles and practices. To confuse these arrangements with open-bid auctions is to misunderstand them.

Part 6 is Rival Worldviews. The worldview undergirding secular economics is Darwinism. I discuss the fundamental incompatibility of these views as they apply to economics.

There is no previous book on economics that has adopted anything like the structure of this book. The content will be familiar to anyone who has read widely in Austrian economics, but not the presentation. That is because this book is geared to teaching. It will prepare you to answer questions regarding the applications of the student’s edition. It will give you greater confidence about your potential to become a teacher. It will help you to make connections that you may not have considered before: connections between theory and practice, and also connections within the economy that you may not have considered before: connections between theory and practice, and also connections within the economy.

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For the rest of the book, go here: https://www.garynorth.com/public/department193.cfm