Updated: 1/13/20
Christian Economics: Teacher's Edition
Wives, submit to your own husbands, as to the Lord. For the husband is the head of the wife even as Christ is the head of the church, his body, and is himself its Savior. Now as the church submits to Christ, so also wives should submit in everything to their husbands (Ephesians 5:22–23).
Paul’s analogy of marriage as a reflection of Christ’s love for His church places marriage on a high plane. Marriage is more than an economic arrangement, just as Christ’s relationship with His church is more than an economic relationship. Both relationships are overwhelmingly judicial, for both are covenants. Yet to define them as exclusively judicial would be both a conceptual error and a theological error. It would place marriage as well as Christ’s love for His church on a plane with civil government, which is exclusively judicial. That would require a reduction in the authority of both the family and the church. It would also reduce the commitment of men and women to each other. It would make marriage a matter of convenience that can lawfully be terminated at the pleasure of one of the parties, just as political bonds may lawfully be changed by the people under civil jurisdiction. This right of termination was possible for husbands under the Mosaic law (Deuteronomy 24:1–4). Jesus annulled this option, which bothered the disciples (Matthew 19:3–12).
It would be theologically monstrous to argue that Jesus would ever auction off the church to the highest bidder. This was Satan’s temptation in Matthew 4 and Luke 4. The devil offered Jesus the kingdoms of this world, as if he owned them to sell. Jesus rejected the offer emphatically: “You shall worship the Lord your God and him only shall you serve” (Matthew 4:10b). For Jesus to abandon the church, He would have to break His oath to the church. If this were a possibility, the author of the epistle to the Hebrews would not have written this: “Let us hold fast the confession of our hope without wavering, for he who promised is faithful” (Hebrews 10:23).
Thus, the parties to a marriage covenant do not have the right to transfer their rights to anyone else at any price. There is no ownership, which always involves the right to disown. These are legal claims. “The husband should give to his wife her conjugal rights, and likewise the wife to her husband. 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 7:3–4). The mutuality of these legal claims precludes the right of disownership. This places the marriage bond outside of the auction process.
From the late seventeenth century through the mid-nineteenth century in Great Britain, there was an astonishing social practice among the lower classes. Husbands auctioned off their wives in the public square. This was illegal, yet some magistrates allowed it. The wives had to agree for the auctions to be held. Divorce was legally available only by an act of Parliament. Only the rich could pay for this. The sales of wives was one way around the law.
The academic discipline we call economics applies to the market’s auction process. It does not apply well either predictably or conceptually to those areas of life that are outside the social practices and legislation governing the auction. There is no lawful exchange of ownership. There is neither a buyer offering money nor a seller allowed to accept the offer. This means that the endogenous sanctions associated with exchange, i.e., monetary profit and loss, do not apply. This in turn means that the logic of economic theory is not applicable in a predictable fashion. This logic may explain some peripheral issue, but our understanding of the institution’s core functions is not gained through an extension of economic science. This conclusion is obvious with respect to the family, but it also applies to church and state.
In order to make these issues clear, I have adopted the five-point biblical covenant model to explain the economics of the family. This is because the family is a covenantal institution. Its operations are not contractual-legal. It is not governed by the auction's rule: high bid wins.
God has established the family as the primary agency of dominion (Genesis 1:26–28). God’s sovereignty is at the heart of existence. Man is made in God’s image. Here, I mean mankind both in terms of individuals and collective humanity. He created a male-female team to act as His stewards. God’s creation of all things out of nothing is at the heart of economic theory, as is the case with all areas of thought. The family did not evolve out of purposeless, meaningless random change. It was not the product of Darwinian evolution. God had purposes for the family.
Men have purposes. In this sense, they reflect God. They have goals, from short term to long term. They wish to achieve certain things in history. The more future-oriented they are, the more they conform to God’s model. These general goals can be elucidated in words. In the context of corporate business, these goals are called a mission statement. They do not spell out the details of a plan to implement them. They make clear only the general goals that will guide people in putting together a plan in order to count the costs.
Biblically speaking, the judicial head of the household is the husband. He is held accountable by God. But in the family’s division of labor, he is supposed to listen to his wife’s opinions. She must bear some of the costs. Her cooperation is likely to be greater when he considers her opinions. She has specialized knowledge. The biblical model is the wife described in Proverbs 31: an entrepreneur who buys property and runs the household, which frees up her husband to serve as a civic leader in the gates of the city (v. 23).
There are economic considerations involved in all areas of family life. These involve the cost of time and its allocation within the family, the cost of food and shelter, and lifestyle in general. There are short-term, mid-term, and long-term plans in every family. These are governed by the general pattern of birth, child-rearing, old age, and death. These are biologically imposed limits. There are also limits imposed by the personal skills of family members. There are limits of geography. Within these limits, families must work out their plans.
One of the goals specified in the dominion covenant is biological reproduction. Mankind is to fill the earth. This is clearly a joint goal. God has imposed it. Husband and wife jointly reproduce. Because of contraception techniques, modern families can decide whether to reproduce, or when, and under what circumstances. This is called family planning. Because of the nature of some contraceptives, wives are in control of the decision. This is unique in history. This has made the overall goal of reproduction a joint decision.
Husbands have the primary responsibility for supporting their families. They are the institutional shields against the negative sanctions of the outside world. There is nothing in humanistic economic theory that imposes this responsibility. This is imposed from the outside by societies. Societies impose negative sanctions on husbands who refuse to abide by these standards. These sanctions can be social and legal. They can be economic.
The family serves as a trustee for God, both judicially and economically. The husband is the trustee for God (vertically) and also for his wife and his children, both judicially and economically. He has horizontal responsibilities: economic responsibilities outward to customers to the extent that the family is involved in the division of labor. In order to become richer, families must participate in the division of labor.
Part of preparation for the future involves training the children to become responsible adults. This is an economic burden. It requires large investments of time. In an advanced society, it demands formal education. Parents must pay for this if they cannot either persuade or compel others to do this.
Parents must prepare for the time in which they are forced by old age to work fewer hours or work less intensely physically. Old age forces these restrictions. The husband must factor in the likely limits of productivity that he will face when he is old. These limits can be seen only in general terms. Responsible planning must deal with them.
Within the family hierarchy, there is no system of prices. In this sense, it is comparable to any other corporation. Prices are set outside the family. There is a competitive market that is governed by the auction’s principle of high bid wins. There are capital markets that set the prices of capital equipment. There is nothing comparable to this inside any organization that has no ability to buy or sell, i.e., to own or disown.
A company can hire and fire. A family cannot. This makes planning a matter of subjective valuation by the head of the household. He must design a system of sanctions that will enable him to achieve his goals for the family. He must motivate family members to cooperate with each other in fulfilling his goals for the family. He must persuade them to work in a team effort. But the sanctions must not involve dismissing and replacing them.
How can the head of the household establish objective performance criteria in order to maximize the subjective valuation of his assessment of the family’s goals? In terms of humanism’s theory of methodological individualism, it is impossible to make scientific comparisons of subjective utility. He must think representatively on their behalf. But how? How can he design the required system of rewards and punishments to gain the cooperation he needs to attain the goals?
Then there is the issue of priorities. These are hierarchical: first, second, third. They are ordinal. They are not cardinal. They cannot be measured. There is no objective hierarchy of values. A goal is not objectively this much more valuable than some other goal. According to subjective value theory, people use each additional unit of income to attain the most important as-yet unfulfilled goal. This is the concept of marginal economic value. It underlies all modern economics, especially Austrian School economics. It was first articulated by Carl Menger in 1871. The priorities are individual. There has never been a functional theory of collective economic values. Any theory of collective economic planning necessarily rests on the existence of an objective collective hierarchy of priorities. It must also rely on a theory of knowledge that is collective. But no such theory exists. All theories of individual decision-making are inherently based on nominalism: individually imputed value. There is no way to derive a concept of collective and objective value from nominalism.
This was the basis of Ludwig von Mises’ path-breaking essay in 1920, “Economic Calculation in the Socialism Commonwealth.” He concluded that all socialist economic planning is irrational. There is no way for the planners to obtain objective prices that accurately reveal the priorities of consumers. There is no private ownership. There is no way for asset owners to bid for other assets.
This criticism extends beyond civil government. It applies to every non-profit institution. Most institutions in society are non-profit. Surely, the family and the church are. So, how is the plan of the head of a household said to be rational? How can the subjective economic evaluations of the head of the household reconcile the subjective economic evaluations of all family members? He can announce his plans, but these plans are representative. They should lead to objective decisions. But there is no scientific way for the decision-maker to know whether his decisions are conformable to God’s, his wife’s, and his children’s assessments.
This is the problem of the imputation of value: point four of the biblical covenant. This is the issue of sanctions. Point four is always related to point two: hierarchical authority. The imposition of sanctions (point four) is always hierarchical (point two). The biblical solution of this dilemma is the doctrine of man as the image of God. Man has the analogous ability of God’s to impute value. God has the ability to assess and apply perfectly His permanent standards to historical situations. But humanist economic theory relegates God to Kant’s noumenal realm, where scientific cause and effect do not apply. He is not seen as the Creator and Final Judge.
This is the issue of ethics. It is the issue of law. Christian economics rests squarely on this confession of faith: there are God-ordained and Bible-revealed standards in history. God is the cosmic law-giver. He rules in terms of law. There is nothing outside His sovereignty. Cause and effect in history is always ethical. Men are legally responsible to God. This is the basis of priorities in history. These priorities are theocentric.
This is the basis of property rights, which are inescapably the right to exclude. Property rights are grounded in the Bible’s story of the forbidden tree in the garden. But, institutionally speaking, the family is archetype of the right to exclude. Each spouse possesses the God-given legal right to exclude sexual access to the other. This right of exclusion is not subject to negotiation. This means that each partner possesses a legal monopoly. Each partner surrenders the right to choose another at the time of the marriage. This surrender is based on public oath in most societies.
Humanist economics has no doctrine of the permanent surrender of the right to negotiate a sale or lease. On the contrary, it is grounded in the right of such negotiation. This phrase governs economic theory: “Every man has his price.” For the humanistic economist, every decision is a trade-off. There are no absolutes. There is no absolute objective value. All value is relative. But wherever there is a doctrine of final judgment and then eternal torture by God (hell and the lake of fire), there are absolutes. There is no rational trade-off. There is only eternal suicide. “For what will it profit a man if he gains the whole world and forfeits his soul? Or what shall a man give in return for his soul” (Matthew 16:26)? This is why Solomon said, speaking of God, “He who fails to find me injures himself; all who hate me love death” (Proverbs 8:36).
There is an inescapable conflict between humanism’s view of the economics of the family and the Christian view. These views cannot be reconciled. The humanist view is grounded in the autonomy of the individual man or woman, methodological individualism, evolutionary ethics, evolutionary economic law, economic theory as value-free, and the heat death of the universe. For the humanist, there is no sovereign God who imputes final value and meaning to individuals and collectives. Here is the confession of faith for humanistic economics: “Men are not made in the image of a God who sovereignly imputes both meaning and value to human actions in terms of fixed laws—ethical, judicial, and economic.”
For any collective, there must be a decision-maker. Someone must give the orders. Someone must be held responsible. There can be no social order without this. This is why point two of the covenant (hierarchy) is connected to point four (sanctions). In the family, this is the head of the household. While it is easy enough to understand this, it is inherently impossible for the humanistic economist to analyze the role of the head of the household without invoking sociology: institutions, shifting alliances, and a fundamental unpredictability. Humanistic economists dismiss sociology as the social science in which there is only one law: “Some do. Some don’t.” But when they face the problem of the scientific impossibility of making interpersonal comparisons of subjective utility, they begin to sound like either sociologists or physicists. In other words, they sound either imprecise or silly.
The economic sanctions of the free market are these: monetary profit and loss. These arise in the context of forecasting and planning. They arise in the context of “high bid wins.” This is not the context of the family. There is no bidding for resources. There is no open entry. There are subjective imputations. There are objective arguments. “But, dad, everybody’s going.” “It’s just not fair.” “You let Mary do it when she was my age.” There must be objective decisions. They will not be based on high bid wins.
The concept of inheritance is basic to family economics. It is analogous to the concept of succession in political theory. But, in the family, inheritance is either by name or confession. The question is this: Will it be by the family’s name or by Christ’s name? There are two families of man, each structured in terms of a confession and a name: Adam’s and Christ’s. One family is disinherited in eternity. The other is adopted. This has implications for history.
This is a covenantal issue: multiplication. It is basic to the dominion covenant. How are one’s heirs to exercise dominion? This requires capital. “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). The number of heirs must expand. Their capital must expand. These are covenantal commands. They are basic to the extension of the kingdom of God.
Economists almost universally favor economic growth. They regard this as the way to solve all economic problems. They do not distinguish between the rival families. They do not see economic growth as an aspect of covenantal sanctions. “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). Wealth is the confirmation of God’s covenant. Here is the pattern: wealth => obedience => wealth.
How does anyone know that wealth is a blessing? There is a standard involved: “More is better than less, other things being equal.” This is an assessment: “better than.” This is a value judgment. But economic theory is supposed to be value-free, according to humanists.
Capital is not a free good. The accumulation of capital requires four things: abstention from consumption in the present, accurate forecasting of future demand, accurate forecasting of costs, and the courage to act. Entrepreneurs must buy low and sell high. The steward who buried his coin failed as an entrepreneur (Matthew 25:24–30).
Future-orientation is basic to leaving an inheritance. Capital accumulation must be multi-generational. A single generation can end the process through bad investing and capital consumption. The limited-liability corporation is the market’s answer to the failure of the next generation to build capital. But a corporation is not confessional. It is also not a family. It is not bound by an oath.
The family is not a market phenomenon. It is the primary source of the economy. It is not the product of the market. Throughout history, the division of labor within the family was the most important source of entrepreneurship and specialization. It was the most important source of capital. Only since about 1800 in the West did the free market supersede the family as the primary source of capital, entrepreneurship, and economic growth.
The family has no system of open entry. There is no open bidding for resources within the family. There is therefore no pricing. Without pricing, there is no way to establish a predictable connection between subjective value and resource allocation. This is not fatal to the family unit. The family unit is small. It is governed by the integrating factors of love, hierarchical responsibility, and charity. It is not governed by the auction’s principle of high bid wins. It is not governed by the extension of high bid wins: “Buy low. Sell high.” So, the logic of economic theory does not apply effectively to the family. There is no system of endogenous sanctions imposed by objective accounting: monetary profit and loss. This reveals the institutional limits of economic logic.
This reveals the institutional limits of economic logic in analyzing the five economic points of the biblical covenant.
1. Methodological individualism vs. corporate responsibility (trusteeship)
2. Subjective value theory (nominalism) vs. God’s subjective imputation of objective economic value
3. The absence of any legal right to sell (disown) family members as property
4. The illegality of “high bid wins”
5. The absence of any internal corporate means of pricing
6. The absence of objective profitability (accounting)
This is why economists generally avoid discussing the economics of the family. This is a great irony. The English word “economics” derives from the classical Greek word, oikonomia. This in turn derives from two words in classical Greek for household (oikos) and law (nomos). In fact, economics has almost nothing to do with the laws of the family.
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