Updated: 5/13/20
Where is the wise person? Where is the scholar? Where is the debater of this world? Has not God turned the wisdom of the world into foolishness? Since the world in its wisdom did not know God, it pleased God through the foolishness of preaching to save those who believe. For Jews ask for miraculous signs and Greeks seek wisdom. But we preach Christ crucified, a stumbling block to Jews and foolishness to Greeks. But to those whom God has called, both Jews and Greeks, we preach Christ as the power and the wisdom of God. For the foolishness of God is wiser than people, and the weakness of God is stronger than people (I Corinthians 1:20–25).
Paul was adamant: the natural man, meaning the covenant-breaker, is incapable of correctly understanding this world. He does not interpret what he sees in terms of the special revelation of the Bible. He invokes some other voice of authority. He speaks on behalf of the world in its wisdom. Paul insisted that the wisdom of this world is foolishness. In contrast to the world’s wisdom is the power and wisdom of God. Covenant-breakers dismiss this wisdom as foolishness. It has no standing in their eyes, meaning no authority. [North, First Corinthians, ch. 1] A thousand years earlier, Solomon wrote this in the name of wisdom: “Now, my sons, listen to me, for those who keep my ways will be blessed. Listen to my instruction and be wise; do not neglect it. The one who listens to me will be blessed. He will be watching every day at my doors, waiting beside the posts of my doors. For whoever finds me, finds life, and he will find the favor of the Lord. But he who fails, harms his own life; all who hate me love death” (Proverbs 8:32–36).
In both of these cases, we see a clash of rival worldviews. Members of each group dismiss as foolish the professed wisdom of the other group. We see rival standards of wisdom. They have rival standards of foolishness. Both standards cannot be wise. They are mutually exclusive. There is no way to reconcile these worldviews. The presuppositions governing each outlook are irreconcilable with the other’s outlook. The arguments that each group’s representatives make are irreconcilable.
This is why the presuppositions of every academic discipline should be stated at the beginning of any systematic discussion of the discipline. Yet this is never done. Academicians avoid any discussion of the presuppositions that undergird their disciplines. These presuppositions are implicit, but they are inescapable. Nevertheless, academic authors attempt to escape any responsibility for even announcing these presuppositions, let alone defending them philosophically. Part of this is because of a long-term strategy that humanists have used to undermine their opponents. But, in most cases, the practitioners of an academic discipline are unaware of either the philosophical foundations of the discipline or what I call the cosmological foundations of the discipline. They are uninterested in exploring these issues.
Apologetics is the philosophical defense of the faith. I have been an adherent of the explicitly Calvinist philosophy of Cornelius Van Til ever since my senior year of college, 1962–63. I took his course in apologetics at Westminster Seminary in Philadelphia in 1963–64. In the summer of 1963, I became heavily influenced by R. J. Rushdoony when he hired me as a well-paid summer intern at the Center for American Studies. Before this, he had sent me one of Van Til’s books in the fall of 1962. He had been a follower of Van Til ever since the spring of 1946, when he read Van Til’s recently published criticism of the anti-biblical theological system known as neo-orthodoxy: The New Modernism. Rushdoony then made a detailed study of Van Til’s writings. His first book was on Van Til’s philosophy: By What Standard? (1959).
Van Til was a philosophical presuppositionalist. He argued that all men begin with presuppositions regarding the way the world works. These presuppositions are not provable by an appeal to man’s autonomous logic, he argued. There is no such thing as autonomous logic or autonomous anything else, other than God. Men can think coherently only because they presume that their presuppositions about the world are true. Van Til denied the possibility of the self-proclaimed, self-contained logic of man: an unbroken and consistent development of a worldview from logically provable presuppositions to logical conclusions. The rival presuppositions that undergird men’s rival forms of logic cannot be proven by an appeal to any system of autonomous logic. All roads of logic lead back to one or another competing theory of origins, which announce the way the world works and therefore also the way that a person’s perceptions and explanations of the world work. The question of cosmic origins is therefore the crucial foundational aspect of men’s thinking. This is because the question of origins is the question of sovereignty. The child asks: “Who made God?” The first-year cosmology student may think, but fear to ask this in class: “What was there before the stuff that blew up in Big Bang?” These are the same question.
I come to a study of economics by way of the Bible’s doctrine of God’s sovereignty, which rests on the Bible’s account the origin of the universe (Genesis 1). This means that I believe that the Bible is the voice of authority. It represents God in history. Logic is subordinate to the revelation of God in the Bible. This affirmation sets my approach to economics apart from humanistic schools of economics. This separation is based on a conflict between presuppositions and therefore between epistemologies. I offer a different answer to the question: “How do you know?” Put differently, this is the crucial question: “Who says?”
Christians must learn not to think of themselves as being dependent on intellectual scraps that fall from the humanists’ epistemological table. The Canaanite woman knew better (Matthew 15:21–28). [North, Matthew, ch. 35] I did not write this book for non-Christians. I wrote it for Christians. I want my readers to be aware of the biblical alternative to the primary presupposition of humanism: the evolution of the cosmos and therefore also mankind. I want them to be able to participate in scientific endeavors without implicitly accepting Darwinism. If this is you, then I wrote this book for you.
The vast majority of modern academics are Darwinists, either explicitly (rare) or implicitly. This is true of economists. Ludwig von Mises and F. A. Hayek were both Darwinists. Hayek devoted considerable space in his writings to this topic. I discussed this in Appendix B of my book, The Dominion Covenant: Genesis (1982). A long section of it examines Hayek’s Darwinism. I reprinted it in Volume 2 of Sovereignty and Dominion, the 2012 edition of my Genesis commentary. Other economists are not forthright about their Darwinism. They do not self-consciously apply their implicit Darwininan theory of cosmic and social origins to their monographs and textbooks. Their Darwinism serves as a backdrop to their writing.
I am not speaking here of the tiny and peripheral late-nineteenth-century intellectual movement known as social Darwinism. That movement is thought to have had only two major defenders, both of whom were sociologists: the British scholar Herbert Spencer and the American professor William Graham Sumner. Spencer became an evolutionist before Darwin’s famous book. He coined the phrase, picked up by Darwin in a later edition, “the survival of the fittest.” Neither he nor Sumner was a social Darwinist. Social Darwinists justified the free market’s system of competition by an appeal to biological competition: “nature red in tooth and claw.” As an intellectual movement, it had few supporters. Both Sumner and Spencer believed that the free market is a social arrangement for peace and voluntary cooperation, not conflict. Mises agreed. He wrote against social Darwinism in Human Action (1949). “Reason has demonstrated that, for man, the most adequate means of improving his condition is social cooperation and division of labor. They are man's foremost tool in his struggle for survival. But they can work only where there is peace. Wars, civil wars, and revolutions are detrimental to man's success in the struggle for existence because they disintegrate the apparatus of social cooperation” (VIII:8:2).
If most economists are Darwinists, then the debates between the schools of economic opinion are at bottom arguments “within the camp.” Economists argue about the proper institutional arrangements for any society to make productive use of scarce resources, including the knowledge of how to use these resources. I am arguing for a radically different approach to economics. Economic theory must not begin with Darwinian theories of cosmology: cosmic chance vs. unbreakable cosmic laws. Instead, it must begin with the related doctrines of God’s creation of the universe out of nothing and His providential administration of the creation. Christian economics must begin with the doctrine of the sovereignty of God, not the doctrine of the sovereignty of the evolving cosmos. Therefore, it must not begin with the Darwinian economists’ derivative presupposition of the sovereignty of man, either individual man or collective man. I have spent the last half century developing this idea of these two incompatible rival presuppositions in social theory in general, but especially economic theory. This is why I am devoting Part 1 of this book to a consideration of foundations. It is why I wrote the Student’s Edition in terms of three approaches to economic theory: pre-fall (covenant-keeping), post-fall (covenant-breaking), and redemptionist (covenant-keeping).
If you locate foundational books in any field of scholarship, which are exceedingly rare, you will not find one that begins with the doctrine of cosmic origins. A book may discuss certain presuppositions about the nature of man or logic. It will not discuss the relationship between the author’s presuppositions regarding the origin of the universe and man’s role in the universe. Instead, the author will write as though there were universal agreement on this topic. He assumes that he can begin discussing specific issues of his chosen academic discipline. He is not forthright about his views regarding the crucial five issues of social science: sovereignty, authority, law, sanctions, and time. He is probably unaware of the centrality of these issues. I have spent over three decades arguing that these five issues are implications of God’s creation and His subsequent delegation of derivative, limited sovereignty to man as part of the dominion covenant.
The Bible makes it clear that the fundamental presupposition that the Christian must begin with is the doctrine of God’s creation of the universe out of nothing. The Christian should also make clear that the God of creation is a Trinitarian God. This is what distinguishes Christianity from Judaism and Islam. Yet it is exceptionally rare for any Christian scholar to begin his discussion of any aspect of his academic discipline in terms of the doctrine of creation. Van Til began his books with a discussion of what he called the Creator-creature distinction. This was central to his apologetic method, meaning his philosophical approach to understanding reality. It is not central to modern Christian scholarship. It should be.
The silence of the academics, whether Christian or humanistic, regarding the relationship between the doctrine of origins and their specific academic disciplines works to the advantage of covenant-breakers. This silence confuses the reader. The reader does not understand how fundamental the doctrine of origins is. He is not taught this in school. He does not read this in specialized works of scholarship. The doctrine of origins is always the starting point for a consistent doctrine of sovereignty. Who is sovereign in history? Is it the Trinitarian God of the Bible? Is it some other god? Is it autonomous man? Is it the impersonal evolutionary process that will ultimately destroy all life, all purpose, and all meaning in the inescapable heat death of the universe? These are fundamental questions. They are foundational questions. Yet these questions are never raised in monographs, textbooks, scholarly articles, and those exceedingly rare intellectual exercises, treatises.
Any discussion of epistemology should come after a discussion of the origin of the universe. This is because the question of origins is the question of sovereignty. Social thought, if it is to be consistent, must always discuss these five points: sovereignty, authority, law, sanctions, and time. Put differently, these are sovereignty, hierarchy, ethics, causation, and time. Sovereignty must always comes first. In modern scholarship, and in most Christian scholarship through the ages, the doctrine of sovereignty is left unstated. This silence benefits covenant-breaking scholarship at the expense of covenant-keeping scholarship. It relegates to the realm of irrelevance the fundamental question of existence: “Who’s in charge here?” The Bible is clear: the God who created the cosmos out of nothing is in charge.
Immanuel Kant has been the dominant philosopher in the West for over two centuries. His intellectual categories shape social philosophy, including economic theory. He was a cosmic evolutionist. He wrote Universal Natural History and Theory of the Heavens in 1755. He wrote it anonymously. In the Preface, he declared: “I accept the matter of the whole world at the beginning as in a state of general dispersion, and make of it a complete chaos. I see this matter forming itself in accordance with the established laws of attraction, and modifying its movement by repulsion.” Out of chaos came order through unbreakable laws. The universe was self-created. It is autonomous. Man is therefore autonomous. Modern Big Bang cosmology is essentially Kant’s cosmology with equations.
Few social theorists understand the extent to which they are Kant’s disciples. Nonexistent is the textbook and rare is the treatise that discusses the author’s assumptions regarding epistemology, which is the question of what men can know and how they can know it. The treatise by Mises, Human Action, is an exception. Mises devoted the first hundred pages to epistemology. He did not discuss in detail the fundamental issue of epistemology, namely, the relation of external reality to the mind of man. He did not use the terminology of Immanuel Kant: noumenal and phenomenal. He did not cite passages in Kant’s works or works written by disciples of Kant. He did at least briefly discuss the supreme issue raised by Kant: the nature of the connection between the autonomous mind of man and the equally autonomous external realm of nature. I discuss this in Section D of Appendix A: “Reason: Deductive.” Mises insisted, as Kant had, that “The logical structure of the human mind creates the reality of the action.” The human mind is therefore authoritative. But man’s mind itself dualistic. It is somehow unstructured (indeterminate freedom of choice) and also the source of structure (logic and mathematics). How can this be? Kant did not say. Therefore, Mises did not say. In short, he did not explain his a priori presuppositional epistemology of economic reasoning in terms of the philosophy of Kant, who suffered from the same dualism. He simply assumed it. I discuss this in greater detail in Chapter 4, Section E. I single out Mises for two reasons. First, I am familiar with his writings on economic epistemology. Second, he was almost alone in his detailed discussion of economic epistemology.
Scholars begin with an implicit assumption: everyone agrees on the basics. This includes the basics of the origin of the universe, the cause-and-effect relationships that presently govern the universe, the logical structure of the human mind, the ability of men to perceive the cause-and-effect relationships in the external world, and a multitude of other related assumptions. Here is the problem: there is no agreement on the basics outside of academia. Different worldviews have different interpretations of these issues. There is no common logic of human reason. That is because there is no agreement on the covenantal issues of God, man, ethics, sanctions, and time.
Because humanistic authors rarely write treatises, they do not discuss at the beginning of their treatises what their views are regarding God, man, ethics, sanctions, and time. They also do not explain their concepts of sovereignty, authority, law, causality, and time. Instead, they begin discussing specialized issues of their academic discipline—issues that are implicitly based on the unstated presuppositions that undergird the worldview of each author. The authors assume the existence of intellectual and moral neutrality. This assumption has been basic to the justification of tax-funded education since at least 1800. Modern education is based on the myth of neutrality. But Jesus taught that there is no neutrality. Men are either with him or against him. “The one who is not with me is against me, and the one who does not gather with me scatters” (Matthew 12:30).
The myth of neutrality began no later than classical Greek humanism. It began with pre-Socratic philosophers five centuries before the birth of Christ. The assumption of the myth of philosophical and ethical neutrality has been crucial in the long-term strategy of humanists to undermine all theological worldviews other than humanism’s theological worldview. Humanism’s worldview is intensely theological. It has very definite ideas about God, man, ethics, sanctions, and the final judgment: the end of history. These ideas are contrary to what the Bible teaches about all five topics.
Humanists have gained tremendous financial support for academic institutions run by humanists and funded by taxpayers. The moral and rhetorical justification for tax funding is this: there is agreement among all schools of opinion on the fundamental issues that are important to academia. One of these assumptions is this: the God of the Bible is irrelevant to academic topics. When it comes to formal classroom education, most Christians agree with the humanists on this point. This is why they are defenders of tax-funded education. The Christians’ compromise with the myth of neutrality goes back to the second century A.D. Christian scholars attempted to defend the gospel by invoking Greek philosophers. This tradition was extended in the medieval world by Christian philosophers, most notably Thomas Aquinas.
If there is a single issue that divides the Christian worldview from all rival worldviews it is this: the doctrine of God’s creation of the universe out of nothing. This is the historical and cosmological foundation of the Christian doctrine of sovereignty. It is irreconcilable with the humanists’ concept of the origin of the universe as the Big Bang, which supposedly took place 13.7 billion years ago. They do not explain where the original stuff that blew up came from. They conveniently ignore that topic.
Men who are committed to a specific worldview must deal with specific aspects of the covenant structure. They must offer specific content to each of the biblical covenant’s five categories: God, man, law, sanctions, and the final judgment. Cosmic evolutionists offer a theory of a final court of appeal: the heat death of the universe. It will be impersonal. The history of the universe will be from the impersonal Big Bang to the impersonal heat death of the universe. This will be the ultimate ashcan of history, to use a phrase made famous by the Russian Marxist theorist and revolutionary Lev Bronstein, who took the name Leon Trotsky. Darwinists prefer not to talk about this aspect of cosmology. It is too depressing. The heat death of the universe is the final triumph of death over life, time, and meaning. There is no higher court of appeal for the evolutionist. I discussed this in Chapter 2 of my book, Is The World Running Down? (1988). I reprint it in this book as Appendix B. I also discuss it in Chapter 6 of Christian Economics: Student’s Edition.
Christianity teaches a doctrine of the final judgment. It is presented in Matthew 25. Jesus, in His capacity as the Second Person of the Trinity, is omniscient. He will judge everyone in terms of his words and his deeds. “When the Son of Man comes in his glory and all the angels with him, then he will sit on his glorious throne. Before him will be gathered all the nations, and he will separate the people one from another, as a shepherd separates the sheep from the goats” (vv. 31–32). Here is the permanent outcome: “These will go away into eternal punishment, but the righteous into eternal life” (v. 46). There is no higher court of appeal. This will be the visible triumph of life over death. It will be the eternal affirmation of time and meaning: from creation to final judgment.
In humanism’s economic theory, there are rival theories of what constitutes the earthly court of appeal. Free market economists identify this final court as the market process. Consumers decide what to buy and what not to buy with their money. Their independent assessments lead to either profit or loss for sellers. This is a system of economic sanctions. In contrast, socialist economists identify the earthly court of appeal as the state, meaning agents of state bureaucracies that are part of the national program of central economic planning. Bureaucrats decide at the end of the planners’ specified period of production which producers receive bonuses or promotions, and which ones do not. This is a system of political sanctions. In between these two systems are Keynesian theorists. Their system is a system of pricing based mainly on the market process, but governed from the top by two groups: politicians who decide to run national government budget deficits of varying sizes, and central bankers who influence the supply of money by buying or selling government debt issued by national governments.
The rival worldviews of free market economists and socialists cannot be reconciled. The first major economist to argue this point was Mises, who wrote a long essay in 1920: “Economic Calculation in the Socialist Commonwealth.” Mises argued that, lacking market-generated prices, central planners could not know what goods and services are desired by consumers. Without prices for capital goods, planners would not know the economic value of specific tools of production. They would have to rely on prices in non-socialist societies. This article has been ignored by economists. There were initial supporters in Europe among younger socialists who abandoned their commitment to socialism, most notably Hayek, but interest in Mises’ theory of the inherent irrationality of socialist planning faded in the 1930s. It became one of the two cornerstones of Austrian School economics, along with Mises’ business cycle theory, which was based on central bank operations to increase or decrease the money supply.
I have argued that rival covenantal presuppositions about the nature of God, man, law, sanctions, and time lead to rival concepts of sovereignty, authority, law, sanctions, and time. Yet I have also argued that the policy conclusions of humanistic economists, especially Austrian School economists, are similar to the policy recommendations that I have presented for over five decades. How can this be if my logic is consistent? Shouldn’t rival presuppositions lead to rival economic policies?
We are now back to the observation made by Rushdoony in 1959 in his book on Van Til’s philosophy, By What Standard? I quoted it in the Introduction. Covenant-breakers are like rustlers in the Old West in the United States. They swing wide ropes. “The natural man has valid knowledge only as a thief possesses goods.” Van Til put it this way: “The natural man must not be encouraged to think that he can, in terms of his own adopted principles, find truth in any field. He must rather be told that, when he finds truth, even in the realm of the ‘phenomenal,’ he finds it in terms of principles that he has ‘borrowed,’ wittingly or unwittingly, from Christianity. The fact of science and its progress is inexplicable except upon the presupposition that the world is made and controlled by God through Christ and that man is made and renewed in the image of God through Christ.”
I have long used analytical categories of Austrian School economics. But I have not used them because of Mises’ a priori epistemology, which I do not accept. I explained why as far back as 1976 in my article, “Economics: From Reason to Intuition.” I reprinted it as an appendix in The Covenantal Structure of Christian Economics. I reprint it as Appendix A in this book. Major Austrian School categories are taught in the book of Genesis: purpose, planning, private property, entrepreneurship, profit and loss, and economic growth. The Austrians’ hostility to inflation was announced by the prophet Isaiah: “Your silver has become impure, your wine mixed with water” (Isaiah 1:22). [North, Prophets, ch. 3] I have grounded my opposition to fractional reserve banking on the book of Exodus. “If you take your neighbor's garment in pledge, you must return it to him before the sun goes down, for that is his only covering; it is his garment for his body. What else can he sleep in? When he calls out to me, I will hear him, for I am compassionate” (22:26–27). [North, Exodus, ch. 49:J] If a man has pledged his cloak as collateral, he can only pledge it to one lender. A second lender cannot collect the cloak when the first lender already has it. This is like fractionally reserved banks, which issue more fiat money loans to borrowers than the bank has in reserve.
I have a different starting point for my epistemology, i.e., my theory of truth. I begin with the Bible, not with the writings of Mises, Hayek, and Rothbard. I have made productive use of many of their economic discoveries, but I am not dependent on Immanuel Kant, as Mises and Hayek were, or on Thomas Aquinas, as Rothbard claimed to be in the area of ethics, although not economic theory. Rothbard claimed, following Mises, that economic theory is value-free. This has been the claim of all schools of academic economic thought, except the Marxists, since the 1870s.
When I began college in 1959, I had no one to go to for guidance in these matters. I did not know of Van Til. I did not hear of Rushdoony until the spring of 1962, when I read Intellectual Schizophrenia (1961). I met him that summer at a two-week conference for conservative undergraduates. After the conference, he sent me one of Van Til’s books, but I do not remember which one. It was a spiral-bound syllabus. It was not The Defense of the Faith, which was published in a revised edition in 1963, which I read that summer, before I went to Westminster Seminary in the fall. In early 1962, I was committed to Mises’ humanistic a priorism. Then I learned about biblical a priorism. That changed my thinking and my life. I spent the summer of 1963 reading Mises’ most important books, and also Rothbard’s Man, Economy, and State. In seminary the following spring, I wrote a term paper for Van Til on Rothbard’s epistemology, which was Mises’ a priorism. I had abandoned it in 1962.
For readers who are unfamiliar with these issues, I recommend Van Til’s book, A Survey of Christian Epistemology (1969). Next, read Greg Bahnsen’s collection of extracts from Van Til’s writings, plus Bahnsen’s comments: Van Til’s Apologetic (1998). Then read Bahnsen’s book, Presuppositional Apologetics: Stated and Defended (2008).
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