Updated: 2/28/20
The Lord God commanded the man, saying, “From every tree in the garden you may freely eat. But from the tree of the knowledge of good and evil you may not eat, for on the day that you eat from it, you will surely die” (Genesis 2:16–17).You shall not take the name of the Lord your God in vain, for the Lord will not hold him guiltless who takes his name in vain (Exodus 20:7).
You shall not steal (Exodus 20:15).
Point three of the biblical covenant model is ethics. It is associated with law. Both ethics and law have to do with boundaries. Some acts are prohibited. They have judicial boundaries around them. In the case of property, it also has judicial boundaries. It may even have physical boundaries that mark the legal boundaries. In the section on history’s redemptive era, the Student’s Edition chapter on boundaries is Chapter 13: “Leasehold.” The leasehold is the document that establishes the responsibilities of the owner and the leaseholder. The model is God’s leasehold with mankind.
1. Covenantal Foundations
This chapter is an extension of the third law under judicial (theocentric) laws: God prohibits theft. In Chapter 2, I wrote: “This stipulation was an aspect of point three of the biblical covenant. It placed a legal boundary around a forbidden tree. This legal boundary identified the tree as forbidden. They were not to eat from it. It did not belong to them. It belonged to God. Any violation of that boundary would result in the negative sanction of death. This stipulation is the origin of private property. It was primarily judicial in origin” (2:C:3).
This chapter is also an extension of the third law under judicial (representative) laws: trusts are binding. In Chapter 2, I wrote: “A trust is a legal document that places legal boundaries around the use of specific pieces of property. A trust is the judicial model for all forms of private ownership. It is a legal arrangement by which an owner of property establishes a legal entity that provides benefits for named beneficiaries. The owner transfers the ownership of property to the trust. He appoints (names) a trustee to act on behalf of beneficiaries. This model for this system of property transfer is God’s delegation of property to men. They hold this property in the name of God, whether or not they acknowledge this legal arrangement” (2:D:3).
This chapter is also an extension of the third law under stewardship laws: ownership involves exclusion. I wrote in Chapter 2: “God excluded Adam and Eve from access to the forbidden tree. He established a property right. There was a legal boundary around that tree. Property rights are always about boundaries: legal, institutional, and geographical. All legal rights are about boundaries. Owners have the right of exclusion. They have the right to use their property as they see fit, as long as it does not interfere with someone else’s use of his property” (2:E:3).
2. Multiple Boundaries
The commandment against taking God’s name in vain is the third in the list of God’s Ten Commandments. This commandment establishes a property right in God’s name. God owns His name. He has rules regarding the use of His name. This appears in the first list of five commandments, which I have called the priestly commandments. The commandment against theft is the eighth commandment. It is the third commandment in the second list of five commandments, which I call the kingly commandments. I discussed the third and eighth commandments in my commentary on the Ten Commandments, Decalogue and Dominion, which is the second volume in my economic commentary on the book of Exodus.
Point three of the biblical covenant has to do with ethics. It therefore has to do with law. Law imposes boundaries: “thou shalt” and “thou shalt not.” Boundaries are basic to the concept of property: “mine” and “yours.” Boundaries are point three of the biblical economic covenant. This is why I selected this title for my commentary on Leviticus: Boundaries and Dominion. Leviticus is the third book of the Pentateuch: the first five books of the Bible.
Boundaries are associated with names and naming. God named Adam. Adam named the animals. Then Adam named Eve. A name identifies a species or a person. The act of naming separates the named entity from other named or unnamed entities. That is, a name places boundaries around a person or object. A name reinforces individuality. It places boundaries around the person named. It says “this person is unique.”
There is a book of life (Philippians 4:3). It is filled with names. It is the most important list in this world or outside this world.
God names people in order to identify individual responsibility. This act of naming makes someone legally responsible for his actions. Naming is therefore itself a judicial action.
When Moses asked God who he should say told him to bring the message of liberation to the Israelites, God named Himself: “I am that I am” (Exodus 3:14a). This could also be translated “I shall be what I shall be.” Moses had a good reason to ask God for His name. God was asking Moses to speak covenantally in God’s name. Moses wanted to know the name of the God for whom he was speaking judicially. He knew that the Israelites would demand to know. Moses needed proof that he was not speaking autonomously, i.e., on his own authority. God’s answer identified Himself as autonomous, self-defined, and self-contained. Theologians call this aseity: self-contained. This is an incommunicable attribute of God.
A man is also bounded by other characteristics: genetic, social, historical, and covenantal. All of these features bind him. Yet this binding also provides opportunities. He is a specific person with specific abilities in a specific place at a specific time. His environment binds him, but it also empowers him. Just as a clock binds a person’s day, so does it enable him to master his use of time. He is inside boundaries, but he can extend these boundaries. Boundaries are like levers. They establish some limits, but they extend boundaries of different limits.
Point one: God’s sovereignty. We should always begin our economic analysis with God. This methodology is theocentric. God has ownership of His name. This is because He is the cosmic Owner. He owns Himself and all of His attributes. This is the biblical doctrine of self-ownership. Original ownership applies only to God. It is an incommunicable attribute of God. As the Owner of His name, He has placed a boundary around His name. God’s self-naming is the model of this relationship between name and ownership.
Name and property are linked judicially in the Decalogue, which is the most important written covenantal document in history. Private property begins with a person’s name. A man is a legally identifiable agent. His name identifies him. It says, “you, not someone else.” This is the basis of judicial responsibility. It is also the foundation of economic authority. This is the theological basis of the third law in the list of kingly laws: the prohibition against theft. God has delegated ownership to agents in history. They represent Him. Others are not to invade these legal boundaries.
It is legitimate to speak of a person’s self-ownership as long as this is defined within the framework (boundaries) of the biblical covenant model. Self-ownership is an aspect of trusteeship: delegated legal ownership. It is also an aspect of stewardship: delegated economic authority.
As a parent, God named Adam. God requires parents to name their children. Parents are under His sovereignty. He delegates the authority to parents to name their children, but this does not revoke His position as the cosmic Namer. He gives names to all mankind, but He does so through His delegated agents. This is why God had Adam name the animals in the garden. Adam was classifying them. He was evaluating their position in the natural order. Then God gave Adam a wife. Adam named her.
The creation is finite. To master it, men must first name its parts, i.e., classify these parts. Carl Linnaeus was a Swedish biologist in the eighteenth century. He developed a system of naming that transformed the science of biology. He recognized that until we classify something by naming it, we cannot study it scientifically. We cannot grasp why it is similar to some things, yet also different—continuity and discontinuity. We must know where it fits in the grand scheme of things. The very phrase “scheme of things” implies both order and purpose.
The authority to name things is a God-given authority. The person with the authority to establish names possesses a unique hierarchical position at the top. The question, “Who’s in charge here?” can be accurately answered by identifying the person with the legal authority to name people and things. The person who possesses this authority is the source of boundaries. These boundaries mark people, places, and things. The rebels at Babel announced that they would make a name for themselves (Genesis 11:4). When the Communists took over in Russia in October 1917, they re-named cities. They drew new maps. After the fall of the USSR in December 1991, the new rulers in Russia re-established the original names. This was a mark of the transition out of Communism and back to a non-Communist social order. Naming is a serious business.
Point two: hierarchy. Having named a person, God then delegates to him secondary ownership over himself. This applies progressively as a person moves from childhood to adulthood. Parents exercise decreasing authority. At some point, societies determine that people are adults and therefore are legally responsible for their behavior. This is basic to all social orders. A person who is responsible for his actions is legally in control of himself. A man owns himself as a steward owns other forms of property. This is not autonomous self-ownership, but it is delegated self-ownership. Name and property are linked legally.
Some humanistic free market economists misappropriate what is an incommunicable attribute of God. They say that each person is a self-owner. They are vague as to the degree of self-ownership. Does the state have some share of this ownership? Does the family? Anarchists go even further. They argue that each individual’s self-ownership is absolute. The most prominent anarcho-capitalist theorist in the second half of the twentieth century was Murray Rothbard. In a 1982 article, “Law, Property Rights, and Air Pollution,” he wrote this. “The basic axiom of libertarian political theory holds that every man is a self-owner, having absolute jurisdiction over his own body. In effect, this means that no one else may justly invade, or aggress against, another's person.” This is libertarianism’s non-aggression axiom, which is the supreme axiom of libertarianism. Rothbard then drew economic conclusions. “This system establishes the right of every man to his own person, the right of donation, of bequest (and, concomitantly, the right to receive the bequest or inheritance), and the right of contractual exchange of property titles.” The claim of absolute self-ownership is a conceptual act of theft. It is a violation of God’s absolute ownership claim on each person. Absolute self-ownership divinizes the individual. The anarchist’s practical problem is that there are lots of other equally self-divinized individuals. Some of them seek power through violence. They do not honor the rights of weak competitors. They do not honor the libertarian’s non-aggression axiom, which is at bottom an ethical standard: a matter of right and wrong. In the anarchist’s hypothetical world, there is no higher court of appeal for the weak to appeal to for justice. There is only power. In the name of absolute individual liberty, the anarchist’s worldview produces collective power: from the bully to the gang to the criminal syndicate to the warlord to the nation-state.
The Christian view is that self-ownership is delegated by God. It is not absolute. It is bounded by law and time. It is bounded by multiple institutional hierarchies. This delegation of ownership is an aspect of the dominion covenant. In obeying it, an individual seeks to increase his ownership of goods and streams of future services. He purchases assets. He thereby declares limited legal sovereignty over them. This is an extension of his name. He is bounded by his name: a person legally responsible before God. He is also bounded by what he owns, beginning with himself. He extends his legal jurisdiction by accumulating property. He does this by extending his economic jurisdiction. He offers services in exchange for money. He owns these services because they are extensions of himself. Because he owns them, he can rent them. He possesses what others want. He possesses bargaining power. His economic bargaining power is an extension of his delegated legal sovereignty.
This raises the issue of resource allocation (category two). An individual owns a resource. He has the legal authority to decide what use is highest on his own value scale. The more versatile the asset, the greater the range of uses to which it can be put. Money is the most marketable commodity. This was Carl Menger’s insight in 1892. It was developed in detail by Ludwig von Mises in his book, The Theory of Money and Credit (1912). If a resource has a price, there is demand for it. There is someone bidding for it. The owner has the economic responsibility to decide whether to sell or rent the resource to the highest bidder. If he decides not to sell or rent it, he becomes the highest bidder. This is called reservation demand. The owner decides what to do with the asset in terms of his hierarchy of values. The asset or the money it can bring can be used to do several things. The owner ranks these: first, second, or third. He then puts the asset to use.
To maximize his monetary income, he must be ready to sell an asset to the highest bidder. This allows others to register their willingness to own or rent the asset. Through competitive bidding, the owner and the would-be owners register their respective demand. The owner can refuse an offer, thereby becoming the highest bidder. But all of this is in response to the respective hierarchy of values of each bidder. The subjective values of the participants are manifested through a system of objective bidding. This establishes the free market price of the asset. The values are hierarchical and subjective. The bidding process is horizontal and objective.
The bidders are limited by the resources they own or can borrow. They make objective bids in terms of what they own and how much they are willing to surrender in order to make the purchase. Specific bidders make specific bids in terms of specific values and specific possessions. The Bible’s system of private ownership allows individuals to compete for ownership of other people’s resources. By specifying individuals who must make these estimates and decisions, the system of private property links responsibility to ownership. Owners make their decisions in terms of their values and their assets. There is no way for them to separate responsibility from ownership. The legal responsibilities of ownership are equated with the economic benefits and liabilities of ownership. The person who owns an asset bears the cost of making an allocation decision that does not maximize his income. It focuses his attention on the market for the asset. He can ignore this market, but only at a price: forfeited income.
The individual asks: “What is the benefit for me?” This has to do with ownership. In asking this, he has a personal economic incentive to pay attention to bidding for the asset. This system of competitive bidding lets a potential buyer reveal what the benefit is for the owner. When the existing owner decides there is a greater benefit for him by exchanging the asset for something else, the two owners make an exchange. Each owner believes there will be more in it for him after he makes the exchange.
Because ownership is decentralized widely to individuals, the specialized knowledge that owners possess is put to service of the others. An owner seeks ways of attaining a greater level of satisfaction from the assets he owns. To discover a way to maximize his satisfaction, he must take into consideration the objective bids of others. What they want and are willing to pay affects his ability to pursue his wants with whatever he can pay. The greater the market value of whatever he owns, the more effectively he can pursue his own goals. So, he seeks ways to maximize the economic value to others of the assets he owns, which includes his knowledge of specific circumstances: his circumstances and also the circumstances of others, as reflected in market prices. He can see what others are willing to pay for the assets he owns.
To increase the accuracy of his bidding, he must gain better knowledge of what others are willing and able to pay for his assets. This imposes search costs on him. Time and searching are not free resources. The purpose of this search process is to gain greater knowledge of what others are willing to pay. As with any other asset with a price, accurate knowledge is not a free resource. People cannot locate it free of charge. They must search for it. They cannot initially know how much knowledge is available at a particular price. The free market is a bidding system for accurate knowledge. It rewards accurate knowledge. Through bidding, men call forth knowledge that would not otherwise have been available to them.
Knowledge and scarce resources are offered for sale to the highest bidders. This is the result of God’s initial distribution of resources. The wealth possessed by individuals is put to the use of others. That which is owned legally is put to use by the highest bidder. (He who gains or retains ownership is the highest bidder.) No one compels others to share their knowledge, yet this knowledge is brought into the marketplace to be put to use by others. No compulsion is involved. Individuals are bounded, but through the pursuit of profit on a free market, they increase the supply of knowledge available to them. This increases their ability to conserve resources and also maximize the subjective value—objective income—of the assets they own.
Point three: ethics. Law places boundaries around men. We are bounded, but this gives us opportunities to specialize. We hear of a “Renaissance man.” This is someone who conforms to the Renaissance ideal of a man well-versed in many fields. But such a person always faces the problem of deciding what to specialize in. If someone can do many things well, his cost of doing one thing extremely well is high. He has so many skills that would pay well. The one that he must forego is a high-value opportunity: at the top of a long list of forfeited opportunities. His foregone opportunity is his cost. He must choose wisely. He must decide what is best for him, as well as for God and potential consumers. He needs far better judgment than most people possess.
To specialize profitably, a person must be able to say “this is mine.” This applies to his work. It applies to whatever he owns and seeks to improve. Biblical law enables property owners to exclude others from their property. In real estate, this property is identified by landmarks. These landmarks identify the legal zone of responsibility for the use of this property. The property produces income over time in some form. The owner possesses legal control over this stream of income. To private property are attached various legal rights, meaning above all the right to exclude. The concept of a property right means the right to exclude—a legal immunity. The archetype was the tree of the knowledge of good and evil in the garden. It was God’s property. He did not delegate control to Adam and Eve. He excluded them (Genesis 2:17).
Individuals are bounded by time and place. A person is born at a time in a place. He grows up in specific places in a particular era. He becomes familiar with the boundaries of time and place as they apply to him. The narrow focus of time and place in someone’s life enables him to specialize. He gains expertise in time and place.
We speak of saving time. But do we save time? There is no bank account for deposits of time. Time cannot be set aside in reserve “for a rainy day.” It cannot be purchased for money in any market. Yet it can be purchased with righteousness. “If you will walk in my ways to keep my statutes and my commandments, as your father David walked, then I will lengthen your days” (I Kings 3:14). Because of this, there is the phenomenon known as bargaining for time. It is a common feature of the response to the news that a person is dying. He bargains with God for more time. He promises to do something important for God, as a person imagines. This is not an irrational response.
When we say that we save time, we mean this: we achieve our goals for a reduced expenditure of time. We allocate less time. We do this by becoming more efficient in our use of time. Time is a scarce resource. Once it passes, it is gone forever. Time is a nonrenewable resource. Indeed, it is the archetype of a nonrenewable resource. So, men are cautioned not to waste it. Jesus said: “We must work the works of him who sent me while it is day. Night is coming when no one will be able to work” (John 9:4). In short, we economize. But this raises the question of how to evaluate our time management objectively.
Point four: sanctions. In economics, sanctions mean either profit or loss. These accounting concepts are basic to the task of economizing: cutting losses and increasing profits. This procedure is basic to overcoming the limits imposed by scarcity. Scarcity is defined by economists as follows: “At zero price, there is greater demand than supply.” This is another way of saying “something commands a price.” Scarcity imposes boundaries. Because of scarcity, men must gain control over more scarce assets in order to increase their consumption. They must extend their jurisdiction. There is also a scarcity of time. People die.
Scarcity has been cursed (Genesis 3:17–19). Therefore, it is mandatory that covenant-keepers seek to overcome scarcity progressively in history. The marks of this are rising output and falling prices. We all want to buy things cheaper. We all want more for our money. This is universal. It is not confined to covenant-keepers. So, we search for ways to reduce the cost of maintaining our lifestyles. The dominion covenant was given before the fall and the curse of the ground (place) and the curse of death (time). This covenant is still in force. The evidence that almost all mankind honors it is the universal quest for more. To gain more for ourselves, we must extend our control over more. We must subdue the earth.
Cursed scarcity is a negative sanction. To offset it, there must be positive sanctions. There must be ways of offsetting the curse. The Bible describes this in Deuteronomy 8. After describing God’s miraculous intervention on behalf of the Israelites in the wilderness, Moses said this. “But you may say in your heart, ‘My power and the might of my hand acquired all this wealth.’ But you will call to mind the Lord your God, for it is he who gives you the power to get wealth; that he may establish his covenant that he swore to your fathers, as it is today” (Deuteronomy 8:17–18). This teaches emphatically that an increase in wealth is a sign of the covenant. It is evidence of the covenantal structure of economics. Positive economic sanctions confirm the covenant.
There is a long tradition for economics textbooks to begin with scarcity. This is garden-of-Eden scarcity. The most rigorous of the textbooks in the Chicago School tradition, Allen and Alchian’s University Economics (3rd ed., 1972), may be the only textbook ever written that begins with Chapter 0: “How Much Mathematics and Graphs?” Chapter 1 is titled “Scarcity, Competitive Behavior, and Economics.” It begins: “Ever since the fiasco in the Garden of Eden, most of what we get is by sweat, strain, and anxiety. Two villains—nature and other people—prevent us from getting what we want. Nature is niggardly: it provides fewer resources than we could use, and much of what is available is made useful only by hard work. As for other people, the problem stems not from malevolence: their wants and ours simply exceed what is available.” Mark Skousen, a Mormon who writes from an Austrian School perspective, begins his textbook, Economic Logic (3rd ed., 2009), with a discussion of Adam and Eve after their expulsion from the Garden. They had to work. So do we. This refers back to Genesis 3:17–19: the curse of the ground. Roger Leroy Miller in Chapter 1 of his textbook, Economics Today (8th ed., 1994), writes in the Introduction: “Economics is the study of how people make choices to satisfy their wants. Wants are defined as all the things people would consume if they had unlimited incomes.” Chapter 2 is titled, “Scarcity and the World of Trade-Offs.” Edwin Dolan, in his textbook, Basic Economics (2nd ed., 1980), titles Chapter 1, “What Economics Is All About.” The first section of the chapter is “Scarcity and Choice in Economics.” He writes: “In economics, scarcity means that people do not have as much of everything as they want.” I could go on, but my time is scarce. So is yours.
Secular economists never start where the Bible starts: ownership. Why is this? The main reason is their quest for universality. Scarcity is universally recognized. It is acknowledged by every economic theory. In contrast, the question of ownership raises fundamental ethical questions. Who owns something? On what legal basis? On what moral basis? These are questions that cannot be settled by an appeal to ethically neutral logic. This is because there is no such thing as ethically neutral logic. But economists usually rest their case on what they assume to be ethically neutral logic. So, they begin with scarcity.
The free market’s system of profit-and-loss accounting enables resource owners to deal with scarcity in a positive way. Over generations, this leads to compound economic growth. This is the connection between point four of the biblical covenant and point five.
Point five: succession. In Christian economics, succession involves expansion through the generations. This expansion is an aspect of the dominion covenant: man’s obligation to multiply (Genesis 1:28). This means demographic compounding. The great biblical passage on this is God’s promise to Abram of heirs. “Then he brought him outside, and said, ‘Look toward heaven, and number the stars, if you are able to number them.’ Then he said to him, ‘So will your descendants be.’ He believed the Lord, and he counted it to him as righteousness” (Genesis 15:5–6). [North, Genesis, ch. 22]
Compounding is also known as positive feedback. Profits are reinvested. The economic base expands at an accelerating rate because the reinvested profits expand along with the original base. Economic growth is the result of net compound economic blessings. Positive economic sanctions overcome specific limits—boundaries—of scarcity over time. The promise of compound economic growth is an affirmation of dominion. When a man accumulates capital, he is better able to extend his dominion. He is also better able to put that property to whatever uses he chooses. His range of actions increases because he possesses more wealth.
This promise of economic growth was unique in the ancient world. Only the Hebrews believed that this is possible. One confirmation of God’s covenant with His redeemed people is economic growth (Deuteronomy 8:17–18). This means that covenant-keepers should expect economic growth if they remain faithful. Compounding wealth is promised as a confirmation of compounding ethical progress, what theologians call progressive sanctification.
The promise of compound economic growth was a promise to individuals and institutions that comprised the covenantal community. The promise had to do with individual progressive ethical sanctification: adherence to biblical law. Progressive ethical sanctification is rewarded with greater wealth: a reduction of the boundaries imposed by scarcity. This in turn produces national wealth by means of a greater division of labor.
Economic growth is biblically normative. In no other ancient religion was economic growth normative. This outlook was unique to the Hebrews. It could exist only because of the biblical concept of time: creation, fall, and redemption. In the biblical account, history is linear. All rival outlooks in the ancient world were cyclical. In a cyclical universe, all progress is either temporary or an illusion. But, in the biblical worldview, because individual progress is at bottom ethical, and because there are positive economic sanctions for personal ethical progress, long-term economic growth is a real possibility. There is no biblical theory of inevitable ethical reversion to the mean. There can be permanent ethical progress. There is also a clear doctrine of covenantal inheritance. This applies to both ethics and capital. Inter-generational ethical progress is possible. Therefore, so is compound economic growth.
Deuteronomy 8:17 warns against attributing economic growth to autonomous man. This is the essence of ethical rebellion: using the fruits of the covenant to praise autonomous individual productivity or even corporate productivity. But the very possibility of ethical rebellion points to the possibility of long-term ethical progress. Temptation need not be submitted to. “No temptation has overtaken you that is not common to all humanity. Instead, God is faithful. He will not let you be tempted beyond your ability. With the temptation he will also provide the way of escape, so that you may be able to endure it” (I Corinthians 10:13). There is nothing inevitable about a reversion to the status quo ante, either ethically or economically.
The Third Commandment, which announces God’s rule regarding His name—an exclusion law—is law three in the list of five priestly laws. The eighth commandment protects property from theft: another exclusion law. It is third in the kingly list of laws. Name and property are linked covenantally.
God delegates to parents the legal authority to name their children. When a person reaches adulthood, he becomes a legally responsible agent. He has a name. He has an identity. This legal authority under God is also economic authority. The person is legally responsible primarily to God and secondarily to other people. This includes economic responsibility. By tying legal authority to economic authority by means of private ownership, God establishes a comprehensive system of responsibility. Property rights are ultimately legal categories. Only secondarily are they economic categories. In short, covenantal authority is superior to economic authority.
The libertarian doctrine of absolute self-ownership as the foundation of property rights rests on the false doctrine of man’s autonomy. The concept of self-ownership is legitimate in this sense: self-ownership is delegated ownership. All ownership is delegated ownership. Ownership by legal adults begins with delegated self-ownership. The individual is owned by God, not by the state. The adult individual is owned by God, not by the family, until such time as an individual marries. At that point, mutual ownership and obligations begin (I Corinthians 7:3). Each partner has legal claims on the other.
Trusteeship (point two) by specific individuals (point three) over specific assets (point three) in terms of fundamental law (point three) is the foundation of property rights. A trustee acts as the legal agent of the owner. He defends the owner’s assets from unauthorized use by interlopers, who either assert a superior claim of ownership or else steal it. In doing so, he inescapably acts also as an economic agent of the owner. He must consider objective bids for ownership from other stewards of the same owner. These other stewards may not acknowledge their position as legal and economic agents of the owner. They may assert their ownership of their very being—their “name” in the broadest sense. They may assert an autonomous legal claim over the goods under their administration. But this does not change the covenantal structure of ownership.
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