Introduction to Part I
Updated: 1/20/20
Now then, if you obediently listen to my voice and keep my covenant, then you will be my special possession from among all peoples, for all the earth is mine. You will be a kingdom of priests and a holy nation for me. These are the words that you must speak to the people of Israel (Exodus 19:5–6).
God spoke these words through Moses to the people of Israel just before He announced the Ten Commandments (Exodus 20) and the case laws that provide guidelines for how these commandments are to be enforced by the state (Exodus 21–23). The idea of God’s covenantal relationship with mankind is central to the Bible, beginning with Genesis 1: the dominion covanant.
Part I of this book is devoted to the five covenants. The dominion covenant establishes the structure for the other four. It defines mankind, whether covenant-breakers or covenant-keepers. God is the Creator (Genesis 1). His role as Creator established His ownership of everything. In Volume 1, Student’s Edition, I begin the section on pre-fall covenant with ownership, meaning God’s original ownership. In judicial terms, this is sovereignty. God is sovereign over the creation.
Then there is point two: stewardship. When God created mankind, He assigned to the entire human race, represented judicially by Adam, the task of administering, developing, and defending His property. This task had a judicial function: trusteeship, meaning legal representation: “in the name of.” God required them to defend His property against invaders: a judicial function. They failed to do this. Instead, they allied themselves covenantally with an invader, the serpent, who was a trustee (judicial agent) of the great invader, Satan. By this satanic covenant, which involved breaking God’s law governing His exclusive property (point three), the tree of the knowledge of good and evil, they became invaders of God’s exclusive property. They became thieves. Their task also had an economic aspect: stewardship, meaning economic representation: “on behalf of.” God required them to increase the economic value of the earth and its fruits. With their rebellion, they chose to increase the value of the creation on their own behalf. They became worshipers of mammon: “more for me in history.”
The dominion covenant was not a temporary requirement of the Old Covenant. It was the foundation of Jesus’ parable of the talents in Matthew 25 and the parallel parable of the minas in Luke 19. God is described as a rich man who goes on a journey. He gives coins to three servants. At that point, they become stewards along the judicial and economic lines of Adam and Eve. When he returns, he demands an accounting: point four of the biblical economic covanant. He sees what rate of return each of them has earned on his delegated property. He rewards each of them according to his rate of economic return. Two of them are given more responsibility for extended dominion (point five). The faithless steward loses everything. He is disinherited.
The dominion covenant applies to all of life, not just to the narrowly defined realm of economics. So does the message of the two parables of the stewards. But most people understand economic issues far more readily than they understand theology, especially covenant theology. This is why Jesus offered economic parables, which I call pocketbook parables. He was trying to communicate theological and ethical truths. The familiar activities of the economic realm made His teaching task easier.
The requirements of the dominion covenant are comprehensive. They involve every area of life. They therefore involve all institutions. Institutions are corporately responsible before God. Responsibility is not limited to individuals. Therefore, the covenantal institutions of family, church, and state are bound by the terms of the dominion covenant. So are non-covenantal institutions such as charitable organizations, schools, businesses, and all other agencies. Why? Because they either own or administer property as stewards. There is no such thing as autonomy in the realm of creation. Everything is dependent on God the Creator, who is also the cosmic Owner in His legal capacity as Creator. “For every beast of the forest is mine, and the cattle on a thousand hills. I know all the birds of the mountains, and the wild beasts of the field are mine. If I were hungry, I would not tell you; for the world is mine, and everything in it” (Psalm 50:10–12).
Christians must understand the basics of the dominion covenant if they are to understand the basics of the four covenants: individual, family, church, and state. This is why I begin with the dominion covenant. It presents the fundamentals of economic analysis, pre-fall and post-fall. It sets forth both personal and institutional economic responsibility before God, men, and non-human species. This responsibility is comprehensive because the dominion covenant is comprehensive. After the fall of man in the garden, mankind and also the creation have been in need of comprehensive redemption: buying back. This redemption, as with trusteeship and stewardship, is both judicial and economic. Jesus’ death, resurrection, and ascension had both a judicial aspect and an economic aspect. Christian theology, especially in the West, has focused on judicial redemption: the substitutionary atonement of Christ for the sins of men. But this narrow focus limits the scope of Christ’s redemption. Because God loved the whole world (John 3:16), He gave His son up to death on the cross to save the whole world. This does not mean that every person is saved eternally, but this act of God’s grace is the judicial basis for the preservation of the world from destruction. It is the judicial basis of God’s extension of both special (saving) grace and also common (healing) grace: gifts unmerited by the recipients. This is the meaning of grace: an unearned gift. This healing involves bodily health, psychological health, and economic health. To argue that these aspects of health do not come from God is to deny the clear teaching of James. “Every good gift and every perfect gift is from above. It comes down from the Father of lights. With him there is no changing or shadow because of turning” (James 1:17). Denying this is a crucial error of non-Christian economists. Do not make this mistake.
The dominion covenant provides the judicial and economic context of Christian economics. When you begin to re-think economics in terms of the dominion covenant, this should give you confidence about your personal program of economic reform. This program of reform should affect every area of your life, just as the dominion covenant extends to every area of life. It applies to the other four covenants: individual, family, church, and state. It also applies to all non-covenantal activities and institutions, including your calling, your job, your volunteer activities, your education, and your business, if you own one. I cover these in Part II.
In Student’s Edition, I discuss the economic covenant as it applies in three covenantal administrations: creation, fall, and redemption. Prior to the fall, the economic categories were these: ownership, stewardship, property, imputation, and inheritance. Men were to think God’s thoughts after Him as creatures: the task of imputation (point four). God imputes value to His creation. Men are to do the same, not as autonomous agents, but as covanant-keepers (point two). The fall of man substituted new categories for the same structure: chance, autonomy, theft, bureaucratization, and disinheritance. This is covenant-breaking man’s new world order. It moves in the direction of empire: the kingdom of man. It is a hierarchy of power, not service. It is a manifestation of the power religion. We see this in the confrontation between Moses and Pharaoh. Autonomous man believes that he is not responsible to God. He is responsible only to himself or the state, which has power. He seeks to occupy the top of the pyramid of power, just as Pharaoh did.
Christian economics restores the original theocentric framework of economics. For chance, it substitutes providence. God is the source of coherence, meaning, and purpose. For autonomy, it substitutes service. Men advance economically by service to others. For theft, it substitutes leasehold. There are ethical laws governing the use of God’s property. For bureaucratization, it substitutes entrepreneurship. Decentralized planning in a market order replaces central planning by the state. For the destructiveness of disinheritance, manifested above all in the process of cosmic entropy—the heat death of the universe—it substitutes economic compounding. In Christian economics, God is honored as the sovereign agent of the redemptive process: buying back the creation in history. The kingdom of God becomes the focus of Christian economics, not the kingdom of man.
With this as background, it is time to discuss the role of Christian economic activism. This is the process of economic redemption.
In Student’s Edition, I argued that there have been three economic covenants. I followed a theologically conventional three-part structure for explaining the historical eras: creation, fall, and redemption. I argued that there was an original economic covenant between God and man, but the fall of man split mankind into two parts: covenant-keepers and covenant-breakers.
The original five-point covenant model was this: God, man, law, sanctions, and time. I discuss this in my book, Unconditional Surrender (2010). Rev. Ray Sutton discusses it in his book, That You May Prosper: Dominion By Covenant (1987). (http://bit.ly.rstymp)
The economic covenant is an extension of that original covenant. In the original economic covenant, there were five points: ownership, stewardship, property, imputation, and inheritance. After the fall, covenant-breakers implicitly adopted versions of the following economic covenant: chance, autonomy, theft, bureaucratization, and disinheritance. There was no detailed theory of economics in the ancient world. But, except for the biblical theory and creation, no theory of the origin of the universe stated that God created the universe out of nothing. Therefore, no rival theory of economics could begin with God as the absolute owner of creation.
I argue that Christian economics must be covenantally consistent with the original economic covenant that prevailed in Eden. Therefore, it must be self-consciously in direct conflict with the structure of humanistic economics. I also argue that the economic covenant in the era of redemption is different from economics that prevailed prior to the fall and therefore prior to the curse of Eve, Adam, and the earth (Genesis 3). The covenantal principles are the same, but the applications are different. My alternative to humanistic economics is this: providence, service, leasehold, entrepreneurship, and compounding.
1. Providence
The doctrine of God’s providence is based on the doctrine of the sovereignty of God. The doctrine of the absolute sovereignty of God is the theological foundation of the idea of God’s absolute ownership of the creation. However, by focusing on providence, I move the discussion away from God exclusively to both man and God. A covenant-keeping man can look to the providence of God and have legitimate confidence in both his understanding of economics and his understanding of his role in history. I am not arguing that man in any way is the source of providence. I am arguing rather that man participates in a providential world and therefore a providential economy. This should give confidence to people who believe in Christian economics.
Providence is closely associated theologically with purpose. God had purpose in the creation. Therefore, men have purposes. They are made in God’s image. The idea of God’s purpose in the process of the creation is the chief source of the conflict between the biblical doctrine of creation and Darwinism. Darwin denied any trace of purpose in the universe. A Christian view of creation insists that there was purpose from the beginning. The creation was an extension of God’s original purpose. Therefore, the Christian economist ought to argue, purpose is foundational to the understanding of economics. Man is made in the image of God. This is why men have purposes, and this is why they enter into trade with each other. The division of labor enables them to achieve their purposes in life at a lower cost.
It is worth noting that the idea of purpose is basic to free market economic theory, especially Austrian School theory. Ludwig von Mises began his economic analysis with human purpose. He developed his treatise on economics, Human Action (1949), with purpose as the starting point of economic theory.
Why do I argue that covenant-breaking economics’ first principle is chance? The ancient pagan world saw the origin of the universe as the outcome of an interaction between some deity and chaos. Modern cosmology sees the outcome of a process of cosmic dualism: randomness vs. mathematically governed laws. It is the same form of dualism that the ancient world had, except for this: the coherent aspect of cosmic order in the ancient world was personal Some deity sought power over chaos, which was pure chance. In contrast, there is no personal source of order in Darwinian biological evolution and also cosmic evolution. The Big Bang was impersonal. The formation of the galaxies was impersonal. There was absolute mathematical law, but there was also absolute randomness in the development of the galaxies, the origin of life, and the origin of man. Modern economic theory is universally Darwinian. Therefore, it rests on these five points: chance, autonomy, theft, bureaucratization, and disinheritance. That is because these theories are anti-biblical. They are anti-God. They are the attempt of autonomous man to steal the lawful inheritance that God has provided to His people.
2. Service
With respect to the second point of economic covenant, stewardship, service is not inconsistent with stewardship. It is an aspect of stewardship. But, because of the incarnation of Jesus Christ, which is the consummate manifestation of service in history (Philippians 2:5–8), service becomes the primary focus of stewardship in the era of redemption. This is because the New Testament teaches that the primary means of stewardship to God is service to other men. This emphasis on service is consistent with a common defense by free market economists of the free market. They argue that producers must meet the expectations of consumers. If producers fail to do this, they got a business. I agree with this analysis.
The second point of the covenant-breakers’ economic covenant is the autonomy of man. I believe that it is the second point of Darwinian evolution in general. Man’s autonomy supposedly began with the autonomy of the universe approximately 13.7 billion years ago: the Big Bang. That was a matter of chance. For the Darwinist, there is a difference between the autonomy of the universe and the autonomy of man. The universe had no consciousness. It therefore had no purpose. Man does have consciousness. He does have purposes. Because man has the power of thought, man is the only agent in the universe known to have purposes. By this sleight-of-hand operation, or slight-of-mind operation, man becomes God in humanist thought. This is an operational divinity. Humanists do not refer to man as God, but they believe that man alone has a characteristic feature that Christians attribute to God: purpose. They deny purpose to the cosmos; they assert it with respect to man.
3. Leasehold
The third point of economic covenant prior to the fall was property. This is consistent with the third point of the economic covenant in the era of redemption: leasehold.
How is the concept leasehold different from the concept of property? It is not different in principle, but it is different and application. Leasehold specifies God’s terms of temporary ownership to mankind. The leasehold must protect the owner from theft. God announced that the tree of the knowledge of good and evil was off-limits, and this was basic to mankind’s dominion in the garden. Everything else was open to man. In the world after the fall, the leasehold must be for more detailed in order to prevent mankind’s constant attempt to steal from God. They cannot steal directly from God any longer, so they steal from each other. Other men are made in the image of God, and therefore the theft of their property is the representative and judicial equivalent of the theft of God’s property.
Property owners design written lease agreements to protect themselves from theft by those to whom they have granted temporary use of their property. It was easy to specify what was off-limits prior to the fall of man: do not eat from one tree. It is far more difficult to specify what is off-limits today. All property is subject to theft. Therefore, in every lease contract, the owner must be careful to spell out as many restraints against theft as he can think of and that he can also afford to enforce in a court of law.
The third point of the economic covenant for covenant-breakers is theft. Why do I say this? Because the serpent’s temptation in the garden was tied to theft of God’s property. The economic logic of covenant-breakers always begins with the autonomy of man. Modern economics assumes that man is sovereign because he alone has purpose. It does not begin with God’s absolute ownership. Inherently, it is Adamic economics. Adamic social thought is always based on theft because it is based on the principle of autonomy.
4. Entrepreneurship
The fourth point of the redemption era’s economic covenant is not intuitive. For that matter, neither is the fourth point in the economic covenant before the fall: imputation. Imputation is easier to understand than entrepreneurship the doctrine economic imputation is extremely important in Austrian School economic theory. It was the foundation of Austrian economics, beginning with Carl Menger’s Principles of Economics (1871). The Austrians argue that the imputation of economic value is exclusively personal and subjective. Men impute economic value to goods and services. Similarly, the doctrine of imputation is crucial to some forms of theology, especially Reformed (Calvinistic) Protestant theology. Reformed theologians argue that God imputes—judicially declares—the judicial status of Jesus Christ to redeemed people. This judicial declaration by God of the innocence of an individual, which is based on Christ’s innocence, is at the heart of Reformed theology. It should be at the heart of your theology, too. The doctrine of economic imputation should be at the heart of your economic theory. Note that I do not base the logic of economic imputation on the autonomy of the individual. I base it on God’s declarations at the end of five of the six days of the creation week that His work was good. God is my model, not autonomous man. What God did in the creation week, we can do every day. We make subjective assessments of goods and services.
Why do I shift from imputation to entrepreneurship? There is certainly imputation in today’s economic world. It is at the heart of my economic theory. (For the record, it is also at the heart of my theory of historiography, but that must wait for another book. Of the making of books, there is no end.) But it is not enough to impute value to scarce resources. Consumers do that all day long. What is crucial in the era of redemption is the transformation of society by covenant-keepers so that society will conform to biblical moral and judicial standards. The emphasis is on transformation. The emphasis is on innovation. In other words, the emphasis is on activism.
Similarly, in Austrian School economics, the entrepreneur is at the heart of the economy. No other school of thought gives more emphasis to entrepreneurship than the Austrian School. The key scholar here is the former Ph.D. student of Ludwig von Mises, Israel Kirzner. But he is not alone. Austrians argue that the entrepreneur constantly searches for opportunities to buy and sell. He tries to buy low, and he tries to sell higher. If he is successful, he receives a profit. If he is unsuccessful, he receives a loss. The entrepreneur is the key figure in reducing uncertainty for consumers. He is also the key figure in economic innovation. He is the primary source of innovation in an economy. One of the great blessings of the free market is that it allows entrepreneurs to seek profits, thereby enabling a handful of them to become very rich by satisfying consumer demand.
As I argue in this section of the book, entrepreneurship can be found in all four covenants: individual, family, church, and state. But people’s motivations in each covenant are different, and the success indicators are different. Economics today is mainly the study of the market process. The goal of business entrepreneurs is monetary profit, which in turn is based on standards of accounting. It is consistent with Austrian School theory that Ludwig von Mises said that the discovery of double-entry bookkeeping was one of the greatest innovations in the history of the world. In contrast, I argue that entrepreneurship is not limited to the market process. It is imperative that Christian activists in the realms of family, church, and state become entrepreneurs. The goal is not to make money. The goal is to transform the world, covenant by covenant, institution by institution.
I argue that the fourth point of the covenant-breakers’ economic covenant is bureaucratization. Bureaucratization is the economics of empire. It is the economics of all forms of socialism. It is the economics of the welfare state. Theologically speaking, bureaucratization is the economics of the power religion. It is the economics of state central planning in all forms. I am not arguing that all forms of bureaucracy are illegitimate. As Mises argued in his little book, Bureaucracy (1944), bureaucratic management is basic to all civil government. Civil government is not profit-seeking. It is funded by money from taxation. There has to be some form of bureaucracy wherever there is civil government. But bureaucratization as a way of life and as a way of thought is basic to the modern state. This state collects taxes in excess of 10%, which is God’s limit on the tithe. The conflict between Moses and Pharaoh was a conflict between the greatest bureaucracy of the ancient world and the people who would soon become a nation with no central government at all. I wrote a book on this: Moses and Pharaoh: Dominion Religion Versus Power Religion (1985). It is an economic analysis of the first nineteen chapters of Exodus. This is reproduced as the first volume of my economic commentary on Exodus, Authority and Dominion (2012).
5. Compounding
The fifth point of the pre-fall economic covenant was inheritance. The idea of inheritance is still crucial in most forms of modern economic theory. It is equally crucial in Christian economics. In the era of redemption, the compounding process is basic to the extension of dominion in a world of cursed scarcity. It is not sufficient that people leave an inheritance to their children or nonprofit institutions. It is imperative that each generation leave even more wealth to the next generation. This is evidence of dominion. This inheritance should mainly be in the form of capital. This capital is to be used for financing productive activities. These activities are supposed to lead to dominion.
It is only since about 1800 that the world has begun to manifest economic compounding on a systematic basis. Beginning in English-speaking North America and Great Britain, economic growth began to increase steadily. The increase has been in the range of 2% per year per capita. This has transformed the world. It transformed the Western world within one century, and it transformed the rest of the world in the next century. Today, poverty is being eliminated. Grinding poverty that threatens people with starvation will have disappeared by 2050. This is the literal fulfillment of Jesus’ recommended prayer request: “Give us this day our daily bread.”
Never before in the history of man has economic growth and population growth been sustained at such a high rate for over two centuries. We live in an unprecedented time. Economists still are not agreed on what happened around 1800, but they all agree that sometime between 1780 and 1820, the process of long-term economic growth began.
On the point of compounding, modern economists seem to be agreed with Christian economists. In fact, the one issue on which they all agree is that economic growth is a great benefit. Only a handful of economists, on the fringes of the profession, have attempted to deny the legitimacy of economic growth. Economists pay no attention to them. While there is a great deal of disagreement as to which government policies or lack of policies encourage economic growth, economists are agreed that economic growth is a great benefit. This is one of the rare areas in which they almost save it is a moral imperative for governments to foster economic growth. They are sorely tempted to invoke morality on this point.
Why do I say that the fifth point of modern economics is disinheritance? I have three reasons. First, covenant-breaking man from the beginning sought to gain the inheritance on his own terms. That was part of Adam’s rebellion. Second, after the division of mankind into covenant-breakers and covenant-keepers, covenant-breaking men always insisted that the real inheritance belongs to them. They do not agree with the many passages in the Bible that insist that the righteous will inherit the earth. Third, and far more fundamental philosophically, is this. Covenant-breaking cosmologists all believe in some form of cosmic evolution. Cosmic evolution will end, they assure us, with the heat death of the universe. This supposedly is the inescapable implication of the second law of thermodynamics: entropy. All life will end. At that point, there will be no one to impute guilt to anyone else. So, there is no biblical God. Also, there will be no final judgment. Furthermore, all purposes will end. The Big Bang will culminate in the Big Freeze. This is covenant-breaking man’s way to escape the doctrine of God’s final judgment. This is also a way of disinheriting covenant-keepers in the world beyond the final judgment. Covenant-breakers scoff at the idea of the new heaven and new earth (Revelation 21:1–4). Finally, there is no permanent meaning, for there will be no one to impute meaning. We are back to the document imputation: the fourth point of the economic covenant.
With this background, you are ready to read Part I.
_________________________________
To read the entire book, go here: https://www.garynorth.com/public/department197.cfm.