Introduction to Part 5: Non-Auction Sectors
Christian Economics: Teacher's Edition
For the wife does not have authority over her own body, but the husband does. Likewise the husband does not have authority over his own body, but the wife does (I Corinthians 7:4).
As soon as we move from the profit sector to the non-profit sector, attitudes change, institutions change, and the laws change. The non-profit sector is fundamentally different from the auction sector. This is because some things are not for sale at any price, and should not be. A husband may not sell his wife or his children to the highest bidder.
The logic of economic theory ceases to be applicable in any consistent way in the non-profit sector. Economic theory applies only to those areas of life that are governed in terms of the auction’s fundamental principle of exchange: high bid wins. In any area of life in which this principle of exchange is not dominant or even legal, the logic of economics ceases to function. It produces silly results. It no longer provides analysis with any pattern based on this system of causation: “if . . . then.”
I have never read an economic treatise, let alone an economic textbook, that devotes a paragraph, let alone an entire chapter, to this distinction. Economists write as if they were setting forth universal principles of human action. They are not. They are setting forth analytic principles that apply only to market exchange. Throughout history, the market has been peripheral in the lives of most people. Most people have been farmers in tightly knit local economies. There was some barter, but not much. There were occasional regional fairs in the later middle ages, but only in a few regions. There was no developed monetary economy in the West for half a millennium. Gold coins only reappeared in the twelfth century. Towns had trade, but most people lived on farms until the twentieth century.
The logic of economics applies only to trade. The economic sanctions of monetary profit and loss are endogenous, i.e., internally consistent. This is why economics is the most logical and most scientific of the social sciences. But this system of accounting applies only to marketable products. If something cannot be exchanged because of custom or law, then there is no endogenous system of causation. This would not apply: “When the price falls, more is demanded.” This does not explain why men get married rather than consort with whores, despite the high cost of supporting a wife for a lifetime, and despite the threat of being nagged for a lifetime. Solomon did not write this about whores. “It is better to live in a corner of the housetop than in a house shared with a quarrelsome wife” (Proverbs 21:9; 25:24). He wrote it twice to make his point. But he did not recommend consorting with whores. “For a prostitute is a deep pit; an adulteress is a narrow well” (Proverbs 23:27).
A church cannot sell salvation to the highest bidders. When the Catholic Church tried to do this in 1517 (indulgences), it produced the Protestant Reformation. A state cannot lawfully sell the decisions of judges to the highest bidder in a court case. If it does, it loses legitimacy, and is therefore more easily overthrown. This is why the logic of economics does not apply to families, churches, and states. These institutions are governed by principles other than the right to bid for services rendered.
For most of life, the realms of family, church, and state absorb more of our time and our wealth than market transactions do. Beginning around 1800 in the United States and Great Britain, the percentage of people’s money and lives that is devoted to market affairs has risen. So has per capita wealth. As the division of labor outside of the family has increased, the range of market transactions has increased. The principle of high bid wins has extended its reign. This has given economists opportunities to apply the logic of economics in new realms. But economists have hesitated to write detailed treatises on the family, the church, and the state. The economic school of analysis known as public choice has applied some of the insights of economics to some aspects of civil government, with varying results. But economists generally ignore the non-profit sector. Nobel Prize-winning economist Gary Becker was an exception. He wrote a book, A Treatise on the Family. It is one of the truly silly books in the history of economics. The many formulas are giggle-producing whenever they do not produce narcolepsy.
In this section, I discuss a few aspects of family, church, and state that are not subject to the logic of economics. I explain why they aren’t.
Then I examine charity and education. The same conclusion applies: without a market for exchange, people must impute economic value without guidance from internally generated prices within the organization.
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