Updated: 1/13/20
Christian Economics: Teacher's Edition
Now when Simon saw that the Spirit was given through the laying on of the apostles' hands, he offered them money, saying, “Give me this power also, so that anyone on whom I lay my hands may receive the Holy Spirit.” But Peter said to him, “May your silver perish with you, because you thought you could obtain the gift of God with money! You have neither part nor lot in this matter, for your heart is not right before God. Repent, therefore, of this wickedness of yours, and pray to the Lord that, if possible, the intent of your heart may be forgiven you. For I see that you are in the gall of bitterness and in the bond of iniquity.” And Simon answered, “Pray for me to the Lord, that nothing of what you have said may come upon me” (Acts 8:18–24).
Simon was a magician. He was famous as a result of his supernatural abilities. He liked this fame (vv. 9–12). He saw that the apostles possessed the power of imparting the Holy Spirit. He wanted to possess this power. So, he made them an offer of money if they would transfer this power to him. Peter condemned him verbally for having made this offer. He threatened God’s curse on him. Simon repented. He did not know that he would become infamous in history for having made this offer. The word simony derives from his name. This is the practice of purchasing a high church office.
He made an error of theological judgment. He believed that power granted by God to the apostles was for sale to the highest bidder. It was not. The authority of the church is not for sale. Nothing associated with God’s judicial imputation of sin or righteousness is for sale. God grants redemption without any payment or promise of payment by the recipients. This is the doctrine of God’s sovereign grace. Covenant breakers cannot pay God in advance, nor can they repay Him after the fact. They do not possess anything of value in God’s eyes that could compensate Him for the value of the gift of salvation. Paul wrote: “For by grace you have been saved through faith. And this is not your own doing; it is the gift of God, not a result of works, so that no one may boast” (Ephesians 2:8–9). He also wrote this: “For you were bought with a price. So glorify God in your body” (I Corinthians 6:20).
The Catholic Church in 1517 sold indulgences to those seeking release from God’s posthumous negative sanctions in purgatory. Martin Luther publicly called the legitimacy of these sales into question on October 31. He posted 95 theses against the sale of indulgences on the door of the church at Wittenberg. He offered to debate anyone on each of them. He naively thought the Pope would join him in his opposition. Thesis #5 said: “The pope neither desires nor is able to remit any penalties except those imposed by his own authority or that of the canons.” Thesis #21 continued: “Therefore the pope, when he uses the words ‘plenary remission of all penalties,’ does not actually mean ‘all penalties,’ but only those imposed by himself.” Thesis #91 insisted: “If, therefore, indulgences were preached according to the spirit and intention of the pope, all these doubts would be readily resolved. Indeed, they would not exist.” Luther misjudged Leo X, who went along with the sale of indulgences. The money was being used to build St. Peter’s cathedral.
Simony was indirectly involved. The sale of indulgences in the German states under John Tetzel was organized by Archbishop Albrecht von Brandenburg, who needed money to repay the German bank that had lent him the fortune he had used to purchase two archdioceses from Pope Leo X in 1515, when Albrecht was 23 years old. As part of his repayment plan to the bank, Albrecht transferred to the bank the ownership of his right as archbishop to sell indulgences. Any money that Tetzel collected in those dioceses was going to the bank. The Pope supported this arrangement. The Pope then threatened to excommunicate Luther unless he recanted. That was when Luther launched his open resistance to the Pope’s authority. The Protestant Reformation was born on the issue of the Pope’s offer to sell salvation.
The free market’s principle of high bid wins has no judicial validity in the church. This is why it is misleading to apply the categories of economic theory to every operation of the church. Yet it is true that prices for pastoral salaries are governed in part by high bid wins. Large congregations can afford to offer high salaries to men with exceptional preaching ability or skills in church growth. Pastors with these gifts must then make a career decision based on money as well as opportunities for service. When the offer is substantial, pastors are likely to conclude that their opportunities for service will be greater in a large, successful congregation. The only way to avoid this bidding is in denominations governed by bishops. This wage restraint can be enforced only if bishops are prohibited from making offers to pastors in another bishop’s jurisdiction.
Church members donate money to the church. This money pays for services rendered to the church as a whole, but not for services rendered to the donors individually. In a free market, a customer purchases a specific good or service at a specific price. There is an exchange. There is no system of exchanges within churches.
There was a time when families purchased access to specific pews on an annual basis. This was a way for congregations to raise funds. This practice was common in the nineteenth century. The Roman Catholic Church abolished the practice at Vatican II (1962–65). The practice had faded by 1900 in most Protestant denominations.
Churches do not sell access to the sacraments. They do not charge membership fees. They are open to the public. They are not by invitation only. The assets of the churches, mainly real estate, are controlled by a local non-profit board or by a distant church hierarchy. Real estate developers may make bids on the real estate owned by churches, but the board members are not allowed by God to profit personally from the sale of the property. This means that the costs of ownership are not borne by the owners. The economic definition of cost is this: the cost of the forfeited gain associated with a decision. In the case of rejecting an offer to purchase a church’s property, any costs are experienced only indirectly, as members of a committee. The church will not be able to pursue some course of action due to the rejection of the offer. This cost is real. But it is borne only representatively: in the name of the congregation and the name of God.
Members of a congregation may not approve of some expenditure of church funds. They may complain formally or informally to the officers of the church. But they act only as advisors. They possess no legal authority. They have no ownership rights regarding church expenditures. They do have legal control over their donations.
Members of Protestant congregations have the right to transfer their membership to another church. This is a way for them to belong to a church that meets their needs and wants. So, there is constant “shopping.” Members come and go. If many members depart, the church will lose income. The officers will have to make changes in order to keep the church alive. But the departures are rarely based on explicit threats: “If the church does not do something, I will quit.” That would be rejected automatically by most church boards. There is widespread agreement that church members with money are supposed to avoid such displays of money-based influence. This goes back to the epistle of James.
My brothers, show no partiality as you hold the faith in our Lord Jesus Christ, the Lord of glory. For if a man wearing a gold ring and fine clothing comes into your assembly, and a poor man in shabby clothing also comes in, and if you pay attention to the one who wears the fine clothing and say, “You sit here in a good place,” while you say to the poor man, “You stand over there,” or, “Sit down at my feet,” have you not then made distinctions among yourselves and become judges with evil thoughts? Listen, my beloved brothers, has not God chosen those who are poor in the world to be rich in faith and heirs of the kingdom, which he has promised to those who love him? But you have dishonored the poor man. Are not the rich the ones who oppress you, and the ones who drag you into court? Are they not the ones who blaspheme the honorable name by which you were called (James 2:1–7)?
This means that the allocation of scarce resources within a church must be based on what is good for God’s kingdom, not what is preferred by members with a lot of money. Ownership of resources is judicially representative: trusteeship for God. Gains and losses are not borne personally, only representatively. Resource allocation is not governed by the free market’s auction principle of high bid wins. In analyzing the five economic points of the biblical covenant, we find the same insolvable philosophical issues that arose in the analysis of the family.
1. Methodological individualism (nominalism) vs. corporate responsibility (trusteeship)
2. Subjective value theory vs. God’s subjective imputation of objective economic value
3. The absence of any legal right to sell (disown) church membership
4. The illegality of “high bid wins”
5. The absence of any internal corporate means of pricing
6. The absence of objective profitability (accounting)
God has established the church as the primary agency of redemption (Romans 12; I Corinthians 12). “And the angel said to me, ‘Write this: Blessed are those who are invited to the marriage supper of the Lamb.’ And he said to me, ‘These are the true words of God’” (Revelation 19:9). Only the church lawfully offers the sacraments that confirm the ecclesiastical covenant. God’s sovereignty is at the heart of the church’s existence.
The church extends into eternity. The family does not. The state does not. In the final section of the Book of Revelation, we read of the kingdom of God beyond the final judgment: the new heaven and new earth. The church is said to be the bride of Christ.
Then came one of the seven angels who had the seven bowls full of the seven last plagues and spoke to me, saying, “Come, I will show you the Bride, the wife of the Lamb.” And he carried me away in the Spirit to a great, high mountain, and showed me the holy city Jerusalem coming down out of heaven from God, having the glory of God, its radiance like a most rare jewel, like a jasper, clear as crystal (Revelation 21:9-11).
Biblically speaking, the judicial heads of the church are the church’s officers. They are held accountable by God. But in the church’s division of labor, they are supposed to listen to the church’s members. Members bear the financial costs. Their cooperation is likely to be greater when the officers consider their opinions. Members have specialized knowledge and specific tasks.
For just as the body is one and has many members, and all the members of the body, though many, are one body, so it is with Christ. For in one Spirit we were all baptized into one body—Jews or Greeks, slaves or free—and all were made to drink of one Spirit. For the body does not consist of one member but of many. If the foot should say, “Because I am not a hand, I do not belong to the body,” that would not make it any less a part of the body. And if the ear should say, “Because I am not an eye, I do not belong to the body,” that would not make it any less a part of the body. If the whole body were an eye, where would be the sense of hearing? If the whole body were an ear, where would be the sense of smell? But as it is, God arranged the members in the body, each one of them, as he chose. If all were a single member, where would the body be? As it is, there are many parts, yet one body (I Corinthians 12:12–20).
So, the church’s goals are basic to the goals of its members. They in turn participate in God’s work of redemption through evangelism.
There are economic considerations involved in all areas of church life. These involve the cost of time and its allocation within the church, the cost of charitable giving (Acts 6), the payment of pastors (I Timothy 5:17–18), and the purchase of real estate. There are short-term, mid-term, and long-term plans in every church. There are also limits imposed by the personal skills of church members. There are limits of geography. Within these limits, churches must work out their plans.
In Protestant churches that are not run by bishops, local church leaders have the primary responsibility for allocating church resources. They represent God judicially to the members. They also represent the members judicially to God. Representation is hierarchical: point two of the biblical covenant. Members donate money to support ministers and pay church bills. They have the primary economic authority. They may also have the right to hire and fire elders. As always, point two of the covenant, which is hierarchical authority, is associated with point four: sanctions. In Protestant churches, members can “vote with their feet.” They can leave a local church and join another. There is competition for members’ support.
Part of preparation for the future involves training the children of members to become responsible adults. This is an economic burden. It requires investments of time. Church leaders must instruct parents on the spiritual instruction of their children.
Within the church’s hierarchy, as in the family, there is no internally generated system of prices. In this sense, it is comparable to any other corporation. Prices are set outside of the church, especially real estate prices. Outside, 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. This is why economic theory is of marginal value in analyzing non-profit organizations. Their incentive structure is only loosely tied to objective prices.
Church planning is a matter of subjective valuation by the elders. They must adhere to a system of sanctions that God has mandated to enable them to achieve God’s goals for the church, both collectively and locally. They must motivate church members to cooperate with each other in fulfilling their goals for the church. They must persuade members to work in a team effort. But the church’s available sanctions do not involve dismissing and replacing members except for major moral infractions: excommunication.
How can the rulers of the church establish objective performance criteria in order to maximize the church’s goals? In terms of humanism’s theory of methodological individualism, it is impossible to make scientific comparisons of interpersonal subjective utility. Church leaders must think representatively on the members’ behalf. But how? How can they design a system of non-monetary rewards and punishments to gain the cooperation the church needs to attain its goals? The Bible does not explicitly say.
Then there is the issue of priorities. The same theoretical issues that confront the head of a family also confront church leaders. Here, I review what I wrote of the family. Priorities 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 objective: exactly 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. All theories of collective economic planning necessarily rest on the existence of such 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. But there is no way to derive a concept of collective and objective value from nominalism.
The church’s officers do not own the assets of the church. They lawfully possess the authority to allocate resources, but there is no individual ownership. This is why economic theory is even less applicable to the church than to the family. The head of a family does possess ownership of the family’s assets. He can buy and sell on his own authority in some societies. Prior to the early 1900s, men in the West had total authority to buy and sell the family’s assets. Parents today may or may not act as economic agents of their children. They cannot be fired by their children for malfeasance.
Voting members of a Protestant church can hire and fire pastors. They retain ultimate judicial authority. The officers really do serve the laymen in non-episcopal Protestant churches. There is competition in holding office. But the voting is by ballot, not by purchase. It is political, not economic. It is not governed by the principle of high bid wins.
Members can quit and move their membership to another church. There is competition. This competition is governed by the principle of high bid wins. But the bidding is not in money. It is in service: preaching, youth programs, geography, social positioning, and other non-monetary criteria.
There is no system of numerical accounting that determines the success or failure of church officers. The church is not governed by numerical standards of monetary profit and loss. Church officers must deal with economic uncertainty, but there is no feedback system comparable to a profit-seeking company’s double-entry bookkeeping.
For a survey of this issue, read my presentation in Section C of my chapter on the family, Chapter 45.
A profit-seeking business has one supreme criterion: “make a profit.” All else is subordinated to this. This is not true of the church. Jesus told Peter, “Feed my sheep” (John 21:17)
A business is evaluated continually by the capital market if its shares are bought and sold. A church has no shares to sell. No non-profit organization does.
There are criteria for church office. These are found mainly in Paul’s first letter to Timothy. They are as follows:
The saying is trustworthy: If anyone aspires to the office of overseer, he desires a noble task. Therefore an overseer must be above reproach, the husband of one wife, sober-minded, self-controlled, respectable, hospitable, able to teach, not a drunkard, not violent but gentle, not quarrelsome, not a lover of money. He must manage his own household well, with all dignity keeping his children submissive, for if someone does not know how to manage his own household, how will he care for God's church? He must not be a recent convert, or he may become puffed up with conceit and fall into the condemnation of the devil. Moreover, he must be well thought of by outsiders, so that he may not fall into disgrace, into a snare of the devil (I Timothy 3:1–7).Deacons likewise must be dignified, not double-tongued, not addicted to much wine, not greedy for dishonest gain. They must hold the mystery of the faith with a clear conscience. And let them also be tested first; then let them serve as deacons if they prove themselves blameless. Their wives likewise must be dignified, not slanderers, but sober-minded, faithful in all things. Let deacons each be the husband of one wife, managing their children and their own households well. For those who serve well as deacons gain a good standing for themselves and also great confidence in the faith that is in Christ Jesus (I Timothy 3:8–13).
These are primarily ethical criteria. Money is relevant insofar as a leader should be charitable. Giving money away, not accumulating it, is the standard. This distinguishes a church leader from a business leader. Elders are entitled to salaries, but they must first qualify ethically for this double honor, as Paul calls it (I Timothy 5:17–18).
These standards do not govern businesses. Therefore, economic theory has little to contribute to a proper understanding of the church.
There is an inescapable conflict between humanism’s view of the economics of the church and the Christian view. These views cannot be reconciled. What the humanist says of the family, he also says of the church. It is not governed by a sovereign God in terms of authoritative laws. Read Section D in Chapter 45, on the family.
Christians understand that God is the source of justice. They also recognize that He is the source of all accurate knowledge. He is omniscient. His interpretation of the world is perfect. No one else’s interpretation is perfect. Therefore, God’s interpretation is authoritative. Man’s is not.
God’s omniscience includes the imputation of economic value. God imputes value subjectively. His church is the beneficiary in eternity. It also benefits in history. Redeemed mankind has begun to be restored to the ability possessed by Adam: accurate imputation. Adam violated this at the fall. He decided that his autonomous assessment was superior to God’s. Jesus has come to restore the assessment we have lost.
The natural person does not accept the things of the Spirit of God, for they are folly to him, and he is not able to understand them because they are spiritually discerned. The spiritual person judges all things, but is himself to be judged by no one. “For who has understood the mind of the Lord so as to instruct him?” But we have the mind of Christ (1 Corinthians 2:14–16).
The officers of the church through prayer and biblical understanding can more closely assess the mind of Christ. The Holy Spirit guides them (John 16:13). They can make judgments regarding the best uses of the church’s assets. They serve as judges, both judicially and economically. Their subjective imputations come closer to God’s authoritative imputation. If there were no mind of Christ, then there would be no way to reconcile the individual economic imputations of church officers and the individual imputations of church members. There is a corporate imputation of economic value. If there weren’t, then all organizations would be economically blind. The fact that modern economic theory, which is based on the unproven and unprovable presupposition of methodological individualism, cannot make scientifically valid interpersonal comparisons of subjective utility does not mean than men, made in God’s image, cannot do this. If they couldn’t, then there could be no policy recommendations for decision-makers in collectives, including the church.
The concept of inheritance is basic to church economics. It is analogous to the concept of succession in political theory. But in the church, inheritance is by confession of faith—of the church and also the members.
Then I saw a new heaven and a new earth, for the first heaven and the first earth had passed away, and the sea was no more. And I saw the holy city, new Jerusalem, coming down out of heaven from God, prepared as a bride adorned for her husband. And I heard a loud voice from the throne saying, “Behold, the dwelling place of God is with man. He will dwell with them, and they will be his people, and God himself will be with them as their God. He will wipe away every tear from their eyes, and death shall be no more, neither shall there be mourning, nor crying, nor pain anymore, for the former things have passed away” (Revelation 21:1–4).
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 corporations are not confessional. A church is. Its members are bound by public oaths before God.
The church is not a market phenomenon. It is not the product of the market. Throughout history, the division of labor within the church has been the most important source of the extension of the kingdom of God. It provides its members with marching orders.
The church, unlike the family, has a system of open entry. People can join a church at any time. They can also leave. This is an indirect bidding for resources. But there is no pricing. There is no open bidding. Without pricing, there is no way to establish a predictable connection between subjective value and resource allocation. This is not fatal to the church. Most churches are small: about a hundred adult members. They are governed by the integrating factors of love, hierarchical responsibility, and charity. They are not governed by the auction’s principles of high bid wins. They are 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 church. There is no system of endogenous sanctions imposed by objective accounting: monetary profit and loss. This reveals the institutional limits of economic logic. This is why economists generally avoid discussing the economics of the church.
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