Updated: 3/2/20
Then Job rose, tore his robe, shaved his head, lay face down on the ground, and worshiped God. He said, “I was naked when I came out of my mother's womb, and I will be naked when I will return there. It is the Lord who gave, and it is the Lord who has taken away. May the name of the Lord be blessed.” In all this matter, Job did not sin, nor did he accuse God of wrongdoing (Job 1:20–22).
I regard the book of Job as the most enigmatic book in the Bible. In my 31 volumes of economic commentaries on the Bible, Job is the shortest: only six chapters. It is the shortest strictly academic book I have written: under 60 pages. [North, Job]
It begins with a strange encounter between God and Satan. The first two chapters tell the story. God verbally provoked Satan. There is no other text in the Bible that presents God and Satan face to face. Here is God’s provocation.
Then it was the day when the sons of God came to present themselves before the Lord. Satan also came with them. The Lord said to Satan, “From where have you come?” Then Satan answered the Lord and said, “From wandering on the earth, from going back and forth on it.” The Lord said to Satan, “Have you considered my servant Job? For there is no one like him on the earth, a blameless and upright man, one who fears God and turns from evil.” Then Satan answered the Lord and said, “Does Job fear God without reason? Have you not put a barrier around him, around his house, and around all that is his from every side? You have blessed the deeds of his hands, and his cattle have burst forth in the land. But now stretch out your hand and touch all that he has, and see if he does not curse you to your face.” The Lord said to Satan, “Behold, all that he has is in your hand. Only against him himself do not stretch out your hand.” Then Satan went away from the presence of the Lord (Job 1:6–12).
God knew exactly where Satan had been. Satan knew that God knew. This was not supernatural small talk. This was an encounter set up by God for His purposes. God was in charge. Satan did not approach God. God approached Satan. The book of Job conveys a theological message: God’s purposes are His own. He answers to nobody. Satan answered to God. God did not answer to Satan.
To understand this book, we must understand Satan’s motivation in life and his method. His motivation is to cut God down. He is unable to do this. He lacks power. He has a strategy: to thwart God’s dominion covenant with mankind. He understands that the conflict between him and God cannot be settled by power. He would lose. But God has enabled him to strike at Him covenantally through mankind. Satan has more power than man does in history. The book of Job is the clearest presentation in the Bible on the nature of this confrontation.
God has a covenant with mankind. In the garden, the serpent, as Satan’s covenantal agent, confronted Eve, Adam’s agent. He deceived her. He told her that she could eat from the forbidden tree and gain a benefit: knowing good from evil. She would not suffer the promised negative sanction: death. Eve tested the serpent’s word by eating. Then Adam did. God brought negative sanctions. He definitively killed them on that day. The curse of death was on them and us. “By the sweat of your face you will eat bread, until you return to the ground, for out of it you were taken. For dust you are, and to dust you will return” (Genesis 3:19). He cast them out of the garden with only the clothes on their backs, which were provided by God by His grace. “The Lord God made for Adam and for his wife garments of skins and clothed them” (v. 21). Their curse of death developed progressively until they died. Then to dust they returned.
What did Satan get out of this? First, he got satisfaction. He had brought God down a notch, or so it seemed. He seemingly had disrupted God’s plan for the ages by turning God’s designated trustees against Him. Second, he got power in history. He became the prince of the power of the air (Ephesians 2:2). He bought time for himself. This was a vast distribution of wealth and power: from mankind to Satan and his angelic host. He could not accomplish this by a direct assault of God. He could accomplish it only because God’s trustees are ethically vulnerable. He lured Adam into a disastrous act of theft. Theft is the archetypal sin for mankind.
The book of Job makes sense only in terms of this ethical confrontation. Job was fulfilling the terms of the dominion covenant. He was, in this sense, a new Adam. “There was a man in the land of Uz whose name was Job; and Job was blameless and upright, one who feared God and turned from evil” (Job 1:1). He was also exceedingly rich by the standards of the day. “He possessed seven thousand sheep, three thousand camels, five hundred pairs of oxen, and five hundred donkeys and a great many servants. He was the man who was the greatest of all the people of the East” (v. 3). He was not vulnerable to Satan’s direct temptations. “On each son’s assigned day, he would give a feast in his house. They would send and call for their three sisters to eat and drink with them. When the days of the feast were over, Job would send for them and he would consecrate them. He would rise early in the morning and offer burnt offerings for each of his children, for he would say, ‘It may be that my children have sinned and cursed God in their hearts.’ Job always did this” (vv. 4–5). He offered sacrifices for his family. In this sense, he was an archetype of Jesus Christ, who offered the supreme sacrifice for His family: covenantally adopted mankind. Christ is the Creator and the Redeemer. Job was economically creative, and he was his family’s redeemer. Satan could not touch him, literally and ethically. He dearly wanted to do both. He wanted a replay of Adam’s fall. God deliberately gave him this opportunity.
God bragged about Job’s righteousness. Satan responded by asserting that Job’s righteousness had nothing to do with ethical commitment. God had purchased Job’s obedience. God had made him rich. Take away Job’s riches, Satan said, and he would curse God. He was arguing that Job’s motivation was not righteousness; it was greed. His motive was impure.
Did Satan really believe this? Perhaps he did. Perhaps he was interpreting Job’s behavior in terms of his own motives. But I doubt it. Satan knew Job was not vulnerable to his wiles. He could not get to God through Job in the way that he had gotten to Adam, by turning Adam against God by persuading him to become a thief. He could not tempt Job by offering him wealth or inside information about God’s motives, which was inaccurate information, as Adam soon learned. He could tempt Job only by bringing him under negative historical sanctions. God let him conduct this test. Yet it is clear from the text that God had initiated this test. He had His own purposes. He did not explain these purposes to Satan. By not revealing the facts of this confrontation to Job, God never explained His purposes to Job. He did reveal this much to Job: He is absolutely sovereign, and therefore Job had no moral right to complain about what had happened to him. He revealed this in chapters 38–41. The one wise counselor who came to Job, Elihu, the fourth one, had told Job the same thing (Job 32–37). [North, Job, ch. 5] This is why God did not judge him at the end. He did judge the first three (Job 42:7–9).
The book of Job is based on the covenantal structure of history. Righteousness brings positive sanctions; rebellion brings negative sanctions. This is stated most clearly in Leviticus 26 and Deuteronomy 28. Without this understanding, and without this presupposition, there cannot be Christian social theory of any kind. This system of sanctions is the covenantal foundation of all Christian social theory. If this system is not still in force, then there is no predictable relationship between righteousness and blessings, nor is there a predictable relationship between rebellion and cursing. If this is the case, then Satan has a fighting chance in history. If this is the case, then Satan can reward covenant-breakers, and they can gain control over the affairs of men. Satan dearly wants this to be the case. He is willing to intervene on the side of covenant-breakers by rewarding them handsomely, not because of his love for them, but because this seems to thwart God’s dominion covenant in history.
Satan’s plan for Job is clear to readers: he would bring negative sanctions against the most righteous covenant-keeper on earth. This would baffle Job. Why had these sanctions come on him and his family if covenantal causation in history is what God says it is: ethics-based? This confusion would break his commitment to God. God understood the logic of Satan’s position, and he authorized Satan to bring negative sanctions against his wealth, including the murder of all of his children.
Job still did not rebel. He uttered his famous words: “It is the Lord who gave, and it is the Lord who has taken away. May the name of the Lord be blessed.” So, Satan escalated the conflict. He told God that if God allowed him to take away Job’s health, then Job would curse him. God authorized this in Job 2. But his plan did not work with Job. It did work with his wife. “Then his wife said to him, ‘Do you still hold fast to your integrity? Curse God and die.’ But he said to her, ‘You talk as a foolish woman talks. Should we receive the good from God and not receive the bad?’ In all this matter, Job did not sin with his lips” (Job 2:9–10).
Job did eventually sin. He demanded an explanation from God. Why had he come under these negative sanctions? He had been faithful to God’s word and God’s requirement for sacrifices. The three counselors presented the same argument to him. Job constantly said that he had not sinned, and the counselors insisted that he must have sinned; otherwise, the curses would not have come on him. Only Elihu understood the truth of the matter. He warned Job not to ask God to explain Himself. He did not accuse Job of having sinned before the curses. He was warning Job not to sin by demanding an explanation.
The book of Job rests on this presupposition: there is a predictable relationship between covenant-keeping and blessings. There is also a predictable relationship between covenant-breaking and curses. These sanctions are predictable in history. They do not apply solely to the afterlife. If this is not the presupposition of the book, then the book makes no sense. Job’s rebellion makes no sense. Satan’s temptation makes no sense. God’s provocation of Satan makes no sense.
The book of Job is about the redistribution of wealth by violence. Satan intervened in order to strip Job of his wealth and his health. There was no other way for him to persuade Job to rebel. He blamed God for having placed boundaries around Job’s wealth. That is, he blamed God for establishing Job’s property rights in his wealth. Satan railed against the legitimacy of these property rights. Job did not deserve such protection. Job was simply milking the system. Job was a hypocrite. Job was a rebel at heart. Take away his wealth, and he would openly defy God. Satan was ultimately saying that God’s protection of Job’s property was based on this fact: God is a fool. God can be easily conned by a con man. Job was the ultimate con man: an ethical con man. He pretended to adhere to the ethical terms of the covenant, but it was all a sham. Satan would prove to God that it was a sham. Satan would thereby prove to God that the covenantal predictability between righteousness and blessings is at bottom nothing but a subsidy to hypocrisy.
Once again, Satan proved himself to be a rebel. Once again, he struck out at God’s system of property rights through a covenant-keeper. This is Satan’s way to undermine God’s plan for history. He strips away visible blessings from a righteous man. This strategy was partially successful with Job, who did not curse God, but who demanded an accounting from God. Above all, this strategy was unsuccessful with Christ. Satan told Christ that if he would worship him, Satan would give Christ the whole world (Matthew 4:9). [North, Matthew, ch. 3] This was a lie. Satan did not own the whole world. He was not the Creator. Christ was. Christ was God come back into history in bodily form, just as He had revealed Himself to Adam, in order to reestablish the property rights of covenant-keepers to the whole world, which Adam had possessed. Christ would redeem them spiritually, and through them, redeem the world. To redeem is to buy back. Covenant-keepers would henceforth buy back the world as Christ’s trustees. They would not use violence or fraud. They would adhere to the law of the covenant. Christ definitively restored the dominion covenant as it had existed in the garden. His people are progressively to extend their dominion.
It is never a question of redistribution or no redistribution. It is always a question of redistribution according to which system of civil law.
God provided an initial distribution of wealth to Adam. Then he gave Eve to Adam. The two were not to stay in the garden forever. They were to leave the garden and extend their dominion across the face of the earth. Their net worth could appreciate only through the division of labor. They would be given children. Each of their children would inherit an appropriate portion of Adam’s possessions. As they spread across the face of the earth, they would exchange goods and services with each other. They would earn income at varying rates according to services of varying prices and quality. The system of production would be governed by the supreme legal foundation of economics: the protection of property rights. There would be no threat of theft, except the forbidden tree, which would remain in the garden. Only by eating at the tree of life could individuals definitively escape the threat of negative sanctions through rebellion.
Theft is Satan’s supreme temptation to man. His goal is to reverse the dominion covenant in history. Again and again, Satan and his covenantal disciples challenged the legitimacy of the existing distribution of wealth. They challenge the legitimacy of Job’s declaration: “The Lord gives, and the Lord takes away. Blessed is the name of the Lord.” The Lord is not capricious in His continuing redistribution of wealth in history. This is the economic lesson of the book of Job. There is covenantal predictability between covenant-keeping and economic success, and also between covenant-breaking and economic failure. It may take time for this to play out visibly, but this is the heart of the dominion process.
Satan wants to break this predictability. This predictability is a threat to his kingdom. All of his economic schemes are based on either violence or fraud. Criminal theft is one way. War is another. Political revolution is another. Sometimes he uses democratic political forces that demand that the government use the threat of violence to redistribute wealth on a basis different from the laws of covenant-keeping: defense of private property and contracts. The supreme law of covenant-keeping in economic matters is this: you must not steal (Exodus 20:15). [North, Exodus, ch. 28] This remains the law today. Property rights, meaning rights defending ownership, are at the heart of the dominion covenant. They are at the heart of Christian civilization. Satan therefore raises up critics who complain that the market process produces illegitimate results. The free market process makes some people rich, and it makes other people poor. This, they say, is a violation of ethics. It must be stopped through political reform. It must be stopped through government regulation. Most of all, it must be stopped by tax policies that take wealth from the rich and give it to the poor (minus 50% for government handling). These tax policies violate the fundamental principle of biblical civil law: equality before the law. “Do not cause judgment to be false. You must not show favoritism to someone because he is poor, and you must not show favoritism to someone because he is important. Instead, judge your neighbor righteously” (Leviticus 19:15). [North, Leviticus, ch. 14] This principle of civil law appears in the middle of a recapitulation of the Ten Commandments. “Do not steal. Do not lie. Do not deceive each other” (v. 13).
Economic theorists line up on one side or the other in the debate between those who would let free market forces distribute wealth vs. those who want intervention by the civil government to veto the constant distribution of wealth produced by the competitive auction process of the free market. Humanistic free market economists do not cite the Bible. They do not invoke ethics. They invoke economic efficiency and economic growth. They claim, correctly, that a rigorous defense of property rights is the most important single factor in promoting economic growth. Keynesian critics challenge this, calling attention to the redistribution of wealth that takes place during a recession. Socialists deny that either the free market economists or the Keynesians have a legitimate case. They invoke morality. They claim that the existing redistribution of wealth is morally illegitimate. They do not explain their morality. They do not tell us what the source of this morality is. But they invoke it.
The twentieth century was a kind of experimental laboratory in which the claims of the three camps were tested. The socialists and Marxist Communists lost the debate. Their economies created so much havoc and poverty that the world abandoned the socialists’ key idea, namely, the ownership of the means of production by the state. But Keynesians and welfare state economists continue to gain the greatest support politically around the world. The voters remain committed to Satan’s accusation against the legitimacy of the market’s distribution of wealth, which is the inevitable result of a systematic defense of private ownership by the society and by the state. Am I saying that the welfare state is Satanic in origin? Yes, I am. Am I saying that the welfare state is an ethical rebellion against God and His moral law? Yes, I am. I am encouraging you to do the same. This is not acceptable rhetoric in higher educational circles. It violates standards of academic propriety. I do it anyway. Satan and his disciples should not get a free ride from Christians. This is a war to the death covenantally. It is a war for civilization. The stakes are high.
We read in Proverbs: “A good person leaves an inheritance for his grandchildren, but a sinner's wealth is stored up for the righteous person” (13:22). [North, Proverbs, ch. 41] Because I believe in the long-term accuracy of the forecast of economic success by covenant-keepers and economic failure by covenant-breakers, I also invoke economic theory in defense of the Bible’s private property order. This legal system creates the long-term economic distribution that Proverbs forecasts. There can be a delay. Psalm 73 reminds us of this delay. “But as for me, my feet almost slipped; my feet almost slipped out from under me because I was envious of the arrogant when I saw the prosperity of the wicked. For they have no pain until their death, but they are strong and well fed. They are free from the burdens of other men; they are not afflicted like other men. Pride adorns them like a necklace around their neck; violence clothes them like a robe. Out of such blindness comes sin; evil thoughts pass through their hearts” (vv. 2–7). [North, Psalms, ch. 17] It also reminds us the outcome. “Then I went into God's sanctuary and came to understand their fate. Surely you put them in slippery places; you bring them down to ruin. How they become a wilderness in a moment! They come to an end and are finished in awful terrors. They are like a dream after one wakes up; Lord, when you arise, you will think nothing of those dreams” (vv. 17–20).
Almost from the beginning of the Soviet Union in October 1917 until its economic collapse over seven decades later, intellectuals and most economists in the West told us that the Soviet economy was growing. These assessments were based on statistics published by the USSR. They were fake. Furthermore, a high percentage of the increased output was redistributed by the central government into military equipment and central planning projects related to military production. Little of this wealth passed to Soviet citizens. A few Western economists warned their colleagues about this, but to no avail. I cited some of them in Appendix B, “Soviet Economic Planning,” in my book, Marx’s Religion of Revolution (1968). Two decades later, the author of the most successful college textbook in economics, Paul Samuelson, a professor of economics at the Massachusetts Institute of Technology, in the 1989 edition of his textbook wrote this: “The Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive” (13th edition, p. 837). In 1989, the Soviet economy was in the final stages of collapse. In December 1991, the Soviet government disbanded. The Russian Federation replaced it. Something much more like a free market economy was established, and then, for the first time in almost eight decades, rapid per capita economic growth began. Communist China had experienced the same thing throughout the 1980s.
I do not believe that economic theory is value-free. It is value-laden. Christian economic theory must begin with the doctrine of the dominion covenant. Christian economists must confront the welfare state in the name of God, not simply in the name of economic efficiency. This is what I am doing here.
Mankind is the God-delegated owner of the earth. This ownership is derivative. Prior to the fall, there was only one family of God. After the fall, there are two: adopted sons and disinherited sons. The conflicts of history are aspects of a struggle for this inheritance: point five.
Marx’s famous phrase in The Communist Manifesto (1848) is this: “The history of all hitherto existing society is the history of class struggles.” These words began Section I: “Bourgeois and Proletarians.” Yet he never defined class. In Chapter 52 of his posthumously published third volume of Capital, “Classes,” he wrote: “The first question to be answered is this: What constitutes a class? — and the reply to this follows naturally from the reply to another question, namely: What makes wage-labourers, capitalists and landlords constitute the three great social classes?” The immense manuscript ended after two brief paragraphs. He never defined the central concept of his lifetime’s work. Marx had an exceedingly narrow concept of the nature of the covenantal struggle in history. His ideas had great influence in the twentieth century after Lenin’s successful revolution in Russia 1917, but they rested on a conceptually flawed understanding of historical development.
Where does property (point three) come from? From God. “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). [North, Epistles, ch. 34] James made this clear: all positive sanctions are from God. This includes the ownership of property. Benefits are a matter of grace. Grace means unearned benefits. God does not deal with men as economic trading partners. He does not surrender ownership of anything in order to get something of greater value to Him in return. He gives men blessings in order to attain His purposes. These are gifts, not something that men have earned. Men are always in debt to God. But God, in His grace, forgives the debts of covenant-keepers. This is why Jesus told His disciples to pray this: “Forgive us our debts, as we also have forgiven our debtors” (Matthew 6:12). [North, Matthew, ch. 12:B]
Aren’t all hard-working people entitled to benefits? Haven’t they earned these benefits? Jesus called all of us unprofitable (unworthy) servants. “But which of you, who has a servant plowing or keeping sheep, will say to him when he has come in from the field, ‘Come immediately and sit down to eat’? Will he not say to him, ‘Prepare something for me to eat, and put a belt around your clothes and serve me until I have finished eating and drinking. Then afterward you will eat and drink’? He does not thank the servant because he did the things that were commanded, does he? Even so you also, when you have done everything that you are commanded, should say, ‘We are unworthy servants. We have only done what we ought to do’” (Luke 17:7–10). [North, Luke, ch. 41] Adam’s sin put all mankind onto the negative side of God’s ledger on judgment day. Only by God’s special grace is anyone found on the positive side of God’s ledger. Apart from special grace, all people are losers. Common grace allows covenant-breakers to produce benefits, but these benefits do not overcome the liabilities. The benefits they produce are by means of God’s grace. So, we are back to James’ declaration.
God owns the world because He created it. He delegates ownership of specific legal rights of control to specific individuals and specific institutions. He holds them accountable for as long as they retain ownership. This is the biblical concept of ownership. Then what biblically legitimate complaints do non-owners have against an existing distribution of property? One complaint would be this: the present owner stole the property he now controls. Another would be this: he threatened violence against the original owner to gain ownership. If the owner refused to sell, the would-be owner threatened to harm him. Another would be the use of fraud in the sale. God has laws against such actions. But what if the present owners hold title without having violated any of God’s laws? They purchased the property through voluntary transactions. Then the complainers have no biblically valid complaint. This is redistribution through voluntary exchange by means of God’s legal order.
God’s initial distribution to Adam was the whole world, minus the forbidden tree. After the fall, Adam’s distribution was the whole world, minus the garden and the tree of life. “So God drove the man out of the garden, and he placed cherubim at the east of the garden of Eden, and a flaming sword that turned every way, in order to guard the way to the tree of life” (Genesis 3:24). [North, Genesis, ch. 13] This was God’s secondary distribution. It was a matter of God’s grace. Mankind is still under the terms of the dominion covenant. Mankind still is required to administer God’s property in His name (trusteeship) and on His behalf (stewardship).
As men have spread across the earth, their competition against each other for control of scarce resources has produced bidding wars. Prices appeared because of scarcity: “at zero price, there is greater demand than supply.” God prohibits violence as a means of increasing individual wealth. He also prohibits theft. Men are supposed to gain sufficient wealth to accumulate capital by means of service to others. One aspect of this capital-accumulation process is profit-seeking service to customers. Those servants whose services are purchased by customers make profits if they have provided these services at prices higher than their costs of production. But it was God who provided them with the strategies they used to make profits. These strategies were gifts from God. Owners hold title to these profits only at God’s grace-based discretion.
Humanistic free market economists never start their analyses with the concept of ownership. I believe that the primary reason why they refuse to do this is that the issue of ownership raises two related issues that they do not wish to consider, let alone discuss publicly: (1) the moral foundation of ownership; (2) the source of original ownership. They maintain that economic theory is value-free. They therefore face a conceptual problem: the legal issue of ownership is inescapably moral. Men ask this: “Who has the right, meaning the legal right to exclude, to control a particular piece of property? On what legal basis does he have this right?” All legal systems are grounded in some concept of morality. Humanistic economists do not wish to confront this issue. So, they begin with this presupposition, which may or may not be stated in their books: “Given the existing distribution of ownership. . . .” They pretend that if they ignore an externally given institutional moral fact from outside the market process, they will not have to discuss morality in their subsequent analyses. In other words, if they exclude morality from the beginning, they can exclude morality all the way to the end. So, they always ignore the issue of the moral foundation of ownership.
Second, they do not discuss the origin of ownership. They avoid this topic for the same reason. The original owner had a legal claim to the property. On what basis did he maintain this claim? Christian economics makes this clear: God was the original Creator, and therefore He was the original Owner. He set the terms of the leaseholds for His property. He also set the legal boundaries of His property. He also established the legal framework for adjudicating the issue of ownership. Humanistic economists do not want to raise the issue of God, so they ignore the issue of original ownership. Step by step, this trail leads back to someone who announced: “This property is mine!” They do not want to confront the issue of the public’s response: “On what basis?”
Critics of capitalism exploit the economists’ silence regarding the moral basis of private ownership. They claim that they come in the name of a higher morality. Humanistic economists insist that they do not come in the name of any morality at all. They have surrendered the moral high ground. The only moral ground visible to most voters is the low ground of political coercion and theft by the ballot box. This political morality is proclaimed by the enemies of the free market: “Thou shalt not steal, except by majority vote.” Millions of voters have larceny in their hearts, so they line up behind competing groups of political thieves. They do so in the name of a morality that is designed to replace God’s.
One economist in the free market camp established his reputation internationally by denying both the moral case and the economic case of property owners in disputes over the use of their property: Ronald H. Coase. He wrote what became the most prominent academic journal article in the history of economics: “The Problem of Social Cost.” It was published in 1960 in the University of Chicago’s Journal of Law and Economics, which was a new journal at the time. Coase argued that it does not matter what the initial distribution of property is. Economic analysis can safely ignore this question. He argued that the government’s judges should award property rights on the basis of social benefits to society. He used a famous argument from the early nineteenth century regarding sparks from coal-fired railroad engines that set fire to crops. The Mosaic law is clear on this issue: the person who sets the fire is legally responsible. He must pay the victim the value of the destroyed crops. “If a fire breaks out and spreads in thorns so that stacked grain, or standing grain, or a field is consumed, the one who started the fire must surely make restitution” (Exodus 22:6). This law had been the basis of British common law for centuries. Coase abandoned this principle of legal liability.
Coase argued that this view of ownership and liability is not economically relevant. Judges should decide whether the public gains greater economic value by forcing the railroad company to impose spark inhibitors or by allowing the crops to burn. He did not explain how judges could decide this by using economic logic. He did not mention the crucial (and unanswered) theoretical issue that confronts all humanistic free-market economic theory, namely, the impossibility of making scientific interpersonal comparisons of subjective utility. There is no objective value scale for judges to use in handing down such a decision: railroad vs. farmers. Furthermore, Coase’s view of civil law would create political warfare between owners of property. Owners think they have a moral right to their property. Coase’s approach to civil law would lead to resentment and violence. Yet Coase convinced the entire economics department of the University of Chicago of his position in one evening of discussion. The department then hired him. He won the Nobel prize in 1991, primarily based on this essay. This is the moral no ground of modern free-market economics.
I wrote a book against this theory of ownership in the year after he won the Nobel prize: The Coase Theorem (1992). A decade later, I wrote an article for The Journal of Libertarian Studies critiquing Coase’s view: “Undermining Property Rights: Coase and Becker.” Coase never replied in print. None of his followers ever replied in print.
Humanistic economists insist that economic theory is value-free. They insist that they do not believe in economic theory as resting logically or methodologically on any moral system. They deny that the coherence that they affirm between the profits of individual entrepreneurs and national economic growth is in any way based on ethics. They usually defend honesty in business, especially adherence to contracts, as productive of cooperation. Honesty increases the division of labor, which in turn increases efficiency. Increased efficiency produces greater output per unit of resource input. This produces individual wealth. It also creates national wealth. So, they insist, they are favorable to morality as a pragmatic strategy of wealth creation. But they deny emphatically that economic science has any ethical component. It is not grounded in morality. Rather, it is grounded in efficiency. Economic theory reveals the ways to wealth: greater per capita capital investment, a greater division of labor, greater specialization of production. These are exclusively matters of technique, not morality. They are matters of entrepreneurial alertness in a market system governed by economic laws, such as the law of supply and demand. There is a metaphorical invisible hand, but there is no hand of God.
Economists are aware that effective advertising increases business profitability. They understand that advertising is a factor of production. It increases sales. They do not understand that this analysis also applies to ideas. The efficient marketing of ideas involves carefully crafted appeals to people’s self-interest. This is why Jesus used pocketbook parables to convey theological truths and thereby produce righteous living. Most people believe that there is an overarching coherence between doing the right thing and prospering personally. They do not see this coherence as exclusively pragmatic. They see it as grounded in morality.
Free market economists come before the general public with a message. They come in the name of improving our world. They ask people to believe that economic freedom produces greater wealth for all. They ask them to believe that if politicians reduced the existing level of state coercion in the economy, most people would be better off economically. But they refuse to invoke God’s morality and personal righteousness based on this morality. They deny that they come in the name of morality. Rather, they come in the name of efficiency. “Put your trust in the metaphor of the invisible hand.”
They are openly challenged by politicians and moralists who come in the name of the poor, the afflicted, and the economically dispossessed. The critics blame immoral businessmen for exploiting the weak. They point enthusiastically to government-funded wealth redistribution programs and massive public works projects that are easily visible. They call on voters to elect politicians who will enact new programs of wealth redistribution from the rich to the poor. The argument seems logical. There really are rich people. Conclusion: they must have gained their wealth by exploiting the poor. So, it is time for voters to elect politicians who will bring judgment day. Really. This time the politicians really will pass such laws. They have promised to do this ever since the Great Depression in the 1930s. Somehow, there is still exploitation. Somehow, there is still poverty. But this time, things will be different. “Trust us.”
Free market economists have charts that they somehow think will prove their case, but no one except other economists can understand these charts. Most of the other economists believe in state intervention into the operations of the economy. Next, free market economists offer equations. No one except other economists knows what they are talking about, and most other economists have rival equations. Free market economists insist that they come in the name of efficiency, not morality. Voters think of themselves as moral, but most of them suspect that they are not very efficient. So, they dismiss the arguments of free market economists. They cannot follow these arguments. They do remember this: “Economic theory is not grounded in morality or faith in God.” Then they vote for politicians who promise to redistribute wealth and stamp out exploitation of the poor. Free market economists shake their heads in despair. “The voters just cannot follow simple arguments.” On the contrary, voters can follow the economists’ arguments quite well. The economists are denying fundamental premises of the voters’ lives. First, the world is not ethically random. Second, there is an invisible God who is not a metaphor. Third, He rewards those who do the right thing. Free market economists cannot persuade them to substitute the economists’ recommendation: “Do the thing right.” The economists preach efficiency. The interventionists preach ethics. “Do the right thing.” Free market economists lose the political debate. They do not understand why. They are blind to their own blindness.
God grants life. He also grants salvation. “God chose to give us birth by the word of truth, so that we would be a kind of firstfruits of all the things that he created” (James 1:18). This is entirely at His discretion. Paul wrote: “For he says to Moses, ‘I will have mercy on whom I will have mercy, and I will have compassion on whom I will have compassion.’ So then, it is not because of him who wills, nor because of him who runs, but because of God, who shows mercy. For the scripture says to Pharaoh, ‘For this very purpose I raised you up, so that I might demonstrate my power in you, and so that my name might be proclaimed in all the earth.’ So then, God has mercy on whom he wishes, and whom he wishes, he makes stubborn” (Romans 9:15–18). This is true of the grant of eternal life. How much more is it true of ownership of goods, which are of far less value! How much less value? This much: “For what does it profit a person if he gains the whole world but forfeits his life? What can a person give in exchange for his life?” (Matthew 16:26). [North, Matthew, ch. 35]
1. Inequality Is Universal
There is eternal inequality between covenant-breakers and covenant-keepers. The blessings are enormous; the penalties are enormous. Compared to this inequality, all other forms of inequality border on the irrelevant. Nevertheless, they are not historically irrelevant. History develops in terms of these inequalities. But these inequalities are not the primary cause of history’s development. God’s decree is. Jesus said this of Judas: “But pay attention. The one who betrays me is with me at the table. For the Son of Man indeed goes as it has been determined. But woe to that man through whom he is betrayed!” (Luke 22:21–22). Judas was unequal to Peter, both as a disciple and as an historical figure. Judas was the consummate destroyer in history. Peter became a builder.
All of life is based on inequalities. There are genetic inequalities. There are inequalities in terms of geography. There are inequalities associated with specific skills. There are inequalities associated with when people are born. Some people have skills that are either economically irrelevant or marginal in a particular time frame. If they had been born a decade later, they would have been extremely successful. There are inequalities associated with the happiness of marriages. There are inequalities with respect to the size of churches. Most of these inequalities are not causally associated with conditions that civil governments can or should interfere with. They are therefore not the focus of political mobilization.
This immunity from politics is not the case with economic inequality. There has always been criticism of the free market because a few people get rich, but most people do not. The percentage of people who get extremely rich is low. This has been true in every society in history. Economic inequality is built into the creation. There is only one owner at the top: God. In every field, there are only a few virtuosos. They may or may not make a lot of money, but they are clearly the best in the field. As long as no money is involved, there are few critics who complain about the unequal distribution of unique degrees of talent—artistic, athletic, or scholarly. But, as soon as business is involved, there are legions of critics who say that the free market system is unfair. They call for politicians to redistribute wealth on the basis of state power. They despise the existing distribution of wealth. They despise the idea that God has allocated wealth on the basis of grace. They reject the idea that competition in an open market should lead to a few people who get very rich and the masses who remain relatively poor. They despise capitalism, despite the fact that only capitalism has produced enormous economic benefits for all members of society.
2. Capitalism’s Critics
Critics of capitalism are almost always critics of inequality. They are also critics of the idea that God has imposed inequality, especially in the area of wealth. They want the state to redistribute wealth by the threat of violence. They do not believe that God owns the world. They do not believe that God has used the competitive market process to allocate wealth in terms of consumers’ expenditures of money. They do not believe that consumers, because they own the most marketable commodity, money, possess greater authority in the market process than producers do. They blame producers for economic inequality. They never blame consumers. They see themselves as consumers, and they think they have pure hearts. Therefore, if someone has gained enormous wealth in a competitive free market, the market process must be at fault. They do not blame rival consumers who are competing against them. They do not believe that prices are set on this basis: consumers compete against consumers; producers compete against producers. So, they call on the power of the state in the name of a higher morality. But a morality that seeks to be higher than God’s morality is not a reliable morality.
There is also the issue of civil justice. The Bible demands that civil courts judge in terms of the law, not in terms of a man’s economic condition (Leviticus 19:15). This is the biblical principle of equality before the law. This is the equality that God demands. This raises an economic question. Some people have skills that the market rewards with money. If the civil law treats these people as it treats all people, they will be allowed to keep their wealth and accumulate more if they continue to satisfy consumers. This creates a dilemma for the defender of equality. He must choose between two concepts of equality: equality before the law or equality of economic condition. F. A. Hayek, a legal theorist and an economist, explained this dilemma in his book, The Constitution of Liberty (1960). “From the fact that people are very different it follows that, if we treat them equally, the result must be inequality in their actual position, and that the only way to place them in an equal position would be to treat them differently. Equality before the law and material equality are therefore not only different but are in conflict with each other; and we can achieve either the one or the other, but not both at the same time. The equality before the law which freedom requires leads to material inequality. Our argument will be that, though where the state must use coercion for other reasons, it should treat all people alike, the desire of making people more alike in their condition cannot be accepted in a free society as a justification for further and discriminatory coercion” (Chap. 6:2).
Equality before the law, meaning a legal order that does not discriminate in terms of a person’s economic condition, rich or poor, is a fundamental principle of personal freedom. This is why the Bible, by demanding that the state enforce the principle of equality before the law, promotes the development of a free society. Conversely, this is why widespread hostility to biblical law in the area of biblical law’s enforcement of private property rights undermines a free society.
3. Jealousy and Envy
Some of the critics are driven by jealousy. They believe that if they can coerce rich people to sell some of their wealth to other rich people, the state can legitimately tax them at high rates and transfer the tax money to the state. They believe in state power. They believe that the state can and should distribute most of the wealth in society. In contrast, there are some voters who are not driven by jealousy. They are driven by envy. They don’t really believe that they will personally benefit from a massive redistribution of wealth from rich people to the state. But they so deeply resent the fact that rich people are rich that they are willing to allow the state to confiscate large portions of rich people’s wealth. They promote this even when they know that state confiscation will reduce the productivity of rich people, which will in turn reduce the economic growth of the economy. They are so deeply resentful against the wealthy that they are willing to sacrifice their own personal economic gains in order to see the rich suffer the loss of their wealth.
The jealous person thinks this. “He has something of value that I want. I can take some of it from him if I threaten violence against him. He can keep some of his wealth, but I will keep some of it. This is negotiable.” The envious person thinks this: “I can never get my hands on his wealth. But I don’t think anyone should have so much wealth. I am willing to destroy his wealth even at the cost of suffering some economic losses.” It is possible to negotiate politically with a jealous person. It is not possible to negotiate politically with an envious person.
It is dangerous to indulge in the sin of envy. It is blinding. It is all-consuming. Nothing can placate it. The envious person resents the fact that the target of his envy is in a position to bargain with him. He does not want to make a deal. He wants to destroy his enemy. Of all people in history, Judas was the man most driven by envy. He wanted to tear Jesus down. The 30 pieces of silver were simply an excuse. He tried unsuccessfully to give back the money later on (Matthew 27:3). He wanted to tear Jesus down with such a degree of fanaticism that he chose eternal damnation. He thought it was worth the trade. Then he committed suicide. His envy destroyed him.
Humanistic economists do not try to persuade voters that the welfare state is immoral. They do not believe that economic analysis should rest on morality. Therefore, they make the case against the welfare state on the basis of the greater economic efficiency of the free market. But this does not persuade the most committed critics of the free market. The critics hate inequality to such a degree that they are willing to sacrifice economic efficiency, even when they are the beneficiaries of economic efficiency. In short, they are driven by envy. It is not possible to argue logically with people who are driven by envy. They must either be converted from envy on the basis of a higher morality, or else they must be outvoted. Economic logic does not persuade them. Certainly, a supposedly value-free economic logic does not persuade them. They think of themselves as moral crusaders. They are in fact immoral crusaders.
In May 1976, two of America’s most prestigious and best-funded conservative educational foundations, the American Enterprise Institute and the Hoover Institution, held a conference on income redistribution. At that conference, some of America’s senior economists gave lectures. Printed versions were published in 1977: Income Redistribution. As is the case with most collections of lectures by professors, it sank without a trace. One of the contributors was a sociologist, Robert Nisbet. He was the best-known conservative sociologist in America. He had been my mentor a decade earlier. He was on my Ph.D. committee. The most important theme in his career was this: political centralization. He was a defender of localism, decentralization, and voluntary associations. He was a great fan of the original sociologist, Alexis de Tocqueville, a French visitor to United States in 1829 and 1830. He wrote the two-volume set, Democracy in America, which appeared in 1835 and 1840. The fundamental theme of that book was the spread of equality throughout the West, but especially in the United States. Nisbet began his article with a quotation from the end of the second volume. “The nations of our time cannot prevent the conditions of man from becoming equal, but it depends upon themselves whether the principle of equality is to lead them to servitude or freedom, to knowledge or barbarism, to philosophy or wretchedness.”
Tocqueville had it wrong, both conceptually and historically. Equality was not increasing in his day. The rhetoric of equality was, but equality was not. Conceptually, hierarchy is built into the cosmos. The Second Person of the Trinity is subordinate to God the Father. But there is also equality, as seen in the doctrine of the ontological Trinity. We must affirm both positions. It is not a question of either/or. It is a question of both/and. The social and political balance is achieved by the grace of God through biblical law. Equality before the law produces the inequality of wealth. Any attempt by critics of any quality to use the state to redistribute wealth must invoke the principle of inequality before the law.
Critics of the free market system have been arguing for centuries that the free market creates economic inequality. They are correct; it does. They are opposed to this inequality. Nisbet’s article is devoted to a careful consideration of the ethics of this hostility to inequality and also the political implications. He thought this hostility is based on the sin of envy. He was familiar with the classic book on envy by Helmut Schoeck, Envy, which had been published in 1966 in German, and was published in 1969 in English.
Nisbet contrasted two kinds of equality: equality before the law and inequality of economic results from the law. The first is basic to the common law. The second is basic to all systems of socialism, at least as a theoretical ideal. I argue that the West has held to the concept of law which Moses announced to the people of Israel. “Do not cause judgment to be false. You must not show favoritism to someone because he is poor, and you must not show favoritism to someone because he is important. Instead, judge your neighbor righteously” (Leviticus 19:15). In opposition to this is egalitarianism. Nisbet devoted three pages to this topic. He made this observation. “. . . equality has a natural affinity with the whole idea of centralized racialist government. Edmund Burke said, correctly: ‘Believe me, sir, those who attempt to level never equalize.’ But it is hard nevertheless to prove difference between leveling and equality when large masses of people are involved, and when central bureaucracy, working in the name of humanitarianism or social justice, is at the helm. Even if one were indifferent to equality as such, adoration of central planning, central management, of economy and society would, I think, necessarily bring one around to adoration of the quality” (pp. 184–85).
There is something else to consider. “Fifth, equality is the only possible value that can really serve revolutionary aspiration. All revolutions in history, the American Revolution possibly in part excepted, have been mounted on an assault against inequality. Freedom can serve as the point of departure for liberation movements—liberation from whatever kind of imagined or perceived tyranny. But freedom, in any genuine sense of the word, cannot be successful as the continuing theme of a revolution, for, once a revolution has been successful in military or political terms, the people are, by definition, made free. But not equal. Not immediately. Hence the need for a process of permanent revolution in society that can be best generated by the value of the quality and that can be justified by incessant references to the surviving consciousness of aristocrats, businessmen, Trotskyites, confusions, and so on” (p. 185).
Nisbet was opposed to both revolution and war. He was convinced that war and revolution centralize political power. He made a profound observation. “The reason centralization of power so easily results from revolution and war, so evidently links them, is its ineradicable relation to equality—or, at very least, to leveling. It is not possible to centralize power in a society without, in some degree, equalizing. Correspondingly, it is not possible to effect equality, in sudden and calculated fashion—or at least to effect a claimed equality of economic and social condition—without in large degree centralizing and bureaucracy ties and political authority” (pp. 191–92).
In every socialist society, we still find economic inequality. The system of economic sanctions that enables some people to get rich is different from the free market’s principle of high bid wins. The hierarchy is based on political power. F. A. Hayek devoted Chapter 10 of his 1944 book, The Road to Serfdom, to this topic: “Why the Worst Get on Top.” They get on top because they are ruthless. They use political power as a means of enhancing their own positions. The more ruthless they are, the more likely they are to get on top. In the twentieth century, we had the triumvirate: Stalin, Hitler, and Mao. But the master tyrant was Lenin. He provided the original model. He created the institutions of tyranny that led to the slaughter of perhaps 100 million people under Communism. The Soviet Union led to the rise of Hitler and World War II, in which another 80 million may have perished. Without Lenin, there would not have been Hitler, Stalin, or Mao.
It takes centralized and political power to extract sufficient wealth from the rich to distribute it to the poor. Once the instruments of terror are created, then a new hierarchy comes into power. This was the lesson of Russian Communism and Chinese Communism. The redistribution of wealth was achieved by the control of the instruments of terror, not the principle of high bid wins. This redistribution did not lead to equality. It just led to a different group at the top of the economic pyramid.
Every program of politically imposed equality is based on coercion by the state. This coercion is justified in the name of ethics. The ethical system begins with a denial of both the legitimacy and the efficacy of the biblical principle of equality before the law.
God is the source of the initial distribution of wealth. He established the legal and moral order that He wants every society to use in the defense of private property. These laws can be found in the Bible. When these laws governing private property are enforced by the civil government and by custom, the result is the creation of the free market social order. The free market social order is the inevitable product of biblical law and biblical morality. Christian critics of the free market are always critics of biblical law. They are critics of economic inequality because they are critics of biblical law. They all rejected the judicial principle of Leviticus 19:15. They want the civil government to identify economic inequality as proof of immorality. They demand that the civil government decide cases on this basis: to seek greater economic equality by refusing to enforce equality before the law. You cannot have equality before the law and economic equality. This is because people are innately unequal. If the state treats them equally, the results will be unequal. This is true in every field. It is surely true in athletics. It is surely true in artistic performance. It is therefore also true in economic performance. But the critics of economic inequality deny this. They deny the legitimacy of the principle of equality before the law. They believe in the power of the state to achieve greater economic equality by the threat of violence against economically successful people. They so despise economically successful people that they are willing to surrender the biblical principle of liberty: equality before God’s law.
History is the story of the redistribution of wealth, power, influence, and all of the other blessings of life. These blessings are constantly being redistributed from some people to others, and from some groups to others. The supreme question with respect to redistribution is this: on what covenantal basis is this redistribution taking place?
Throughout history, there have been political special-interest groups that come in the name of a higher morality and insist that the civil government must intervene into men’s economic affairs in order to achieve a just distribution of wealth. This argument rests on a presupposition: the existing distribution of wealth is illegitimate. Different groups offer reasons for this supposedly illegitimate distribution. They offer different theories of the proper legislation for the state to restore legitimacy. In all cases, there is an underlying morality that governs the call for the state to redistribute wealth. This morality is not always admitted in public. The philosophical details of this morality are rarely developed by the critics. Nevertheless, millions of voters respond favorably to these claims, in much the same way that Adam responded favorably to a similar accusation against the existing distribution of knowledge. The temptation to steal property that belongs to someone else is a permanent temptation in the hearts of men. This is why the commandment against theft is the premier commandment in economic affairs. Christ’s response to this temptation was definitive: “Again, the devil took him up to a very high hill and showed him all the kingdoms of the world along with all their splendor. He said to him, ‘All these things I will give you, if you fall down and worship me.’ Then Jesus said to him, ‘Go away from here, Satan! For it is written, “You will worship the Lord your God, and you will serve only him”’ (Matthew 4:8–11). [North, Matthew, ch. 3] Satan has no legitimate ownership claim to anything. Christ created the world. He is the cosmic Owner. Satan holds whatever he controls only on the basis of having deceived Eve and having lured Adam into an act of theft. They transferred allegiance to him by accepting his word rather than God’s. Then they became thieves. Satan is the consummate thief. He is a squatter in history.
The Bible affirms the legitimacy of the state’s redistribution of wealth only in this case: restitution to victims of theft, fraud, or negligence. If someone is the victim of theft, and the thief is captured, tried, and convicted, the state should demand the payment of restitution from the thief to the victim (Exodus 22:1, 4). [North, Exodus, ch. 44] A call for political reform that is based on the restoration of this principle of wealth redistribution by the state is legitimate. I am aware of no such political movement anywhere on earth.
Another legitimate reform would be to abolish existing programs that use the state to redistribute wealth. But this would mean eliminating most national legislative programs and all existing tax systems. The modern state is built on comprehensive wealth redistribution. It will take generations to return to anything resembling the biblical legal order governing property rights.
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