Kruse Kronicle

Economic Misinformation in Theological Education

—

by

mwkruse
in ,

Last Monday, Calvin Theological Seminary (CTS) and Western Theological Seminary sponsored a debate in Grand Rapids, Michigan, between Dr. Ronald J. Sider (Evangelicals for Social Action) and Fr. Robert Sirico (Acton Institute) on the topic of "Wealth and Poverty in Light of the Gospel: How Can Christians Work Together if We Disagree?" I downloaded the debate the next day and listened to the whole thing twice.

Today the Acton Institute PowerBlog had a post called Wealth and Poverty in Light of the Gospel that gives links to the debate, a link to my brief review from last Tuesday (thank you very much), and a review from the online CTS student publication Kerux by Chad Vandervalk called Social or Capital? Regular blog readers know my rants about the lack of understanding of basic economic ideas in seminaries. Mr. Vandervalk's observations have provided me with a textbook case of what I am talking about.

Mr. Vandervalk writes:

The discussion between Sider and Sirico reminded me of some of the things I have been thinking about while reading seminary book of the quarter, Freakonomics by Stephen D. Levitt and Stephen J. Dubner. Sirico advocated for a type of market economy brought to its fullness in Christ, however, the free market economy is not based on Christian principles, but rather on the sinful principle of unabated self-interest.

During Thursday's town hall discussion of Freakonomics, several CTS faculty members gave their opinion of the book and the issue of self-interest. "It sure makes you think about sin as self-interest," said John Rottman, associate professor of preaching. Calvin Van Reken, professor of moral theology, said, "Self-interest is not always sin. There are times, such as when a person is hungry and tries to find something to eat, that the pursuit of self-interest is not sin. When it comes at the expense of others, then it is sin."

The interesting thing about the economic portrayal of individuals is that they always pursue their own self-interest regardless of others, and this portrayal seems to explain and predict the behavior of individuals rather well. The irony of the market system is that it uses this sinful motivation of thousands, or millions of people to produce the most efficient economic outcome. Adam Smith explicates in Wealth of Nations that the unabated pursuit of one's own economic gain actually has the effect of lowering these economic gains to the most efficient levels. It seems to me that the visioning of some Christofinal market system where everything works in harmony and all people are afforded their rights and dignity is a bit naive. I do not think that a system of exchange rooted in condoning and even encouraging greed and the relentless pursuit of more could ever reach some kind of Christofinal conclusion.

……

And yet I also agree with Sirico when he points out that markets are the most efficient method of distributing scarce resources when the market is structured correctly. The problem with Sirico's assertion is that most of our markets are not structured correctly to produce the optimum economic outcome.

These statements are about as exasperating as it gets for me, and yet I am not singling out Mr. Vendervalk in this discussion. I quote him here because his ideas are ubiquitous on seminary campuses. So a priori are these sentiments that someone who challenges them is either A.) a layman without theological sophistication, or B.) someone trying to justify an immoral system with theology, and likely with ulterior motives.

Guess how this plays out regarding how pastors view congregants engaged in business? What is their estimation of the spiritual vitality of someone who would involve themselves in such sordid dealings? The best that can be hoped for from such compromisers is that they will give part of their time to the real ministry done in the Church and contribute a tithe of their tainted earnings. If you think businesspeople don't pick up on these ambivalent, if not disapproving, vibes, think again. Many businesspeople are very aware that, in the pastor's eyes, being a Christian in business is not much different from being a Christian pornographer.

At the heart of this is the prevalent myth that capitalism is based on greed and selfishness. Vandervalk writes, "…the free market economy is not based on Christian principles, but rather on the sinful principle of unabated self-interest." Vanervalk, along with many others, assumes self-interest as a synonym for selfishness. It isn't. His characterization of Smith is both common and false. Capitalism is based on what Adam Smith called self-interest or self-love, but these are not synonyms for selfishness. It is not "…unabated pursuit of one's own economic gain." The entire call of God in Scripture is to abandon selfishness and a call to do what is in our self-interest.

It is Theologically and economically in my self-interest to put others first and not be selfish. In Matthew 7, Jesus said, "Do not Judge …" Why? "… so that you may not be judged. With your judgment, you will be judged, and the measure you give will be the measure you get." Is this not a direct appeal to our self-interest, the avoidance of judgment? In Mark 10, James and John ask to be seated on God's left and right hand. Jesus did not rebuke this ambition. Instead, he tells them, "Go for it! And here is how you do it: put everyone else ahead of you." If you want to be first in the Kingdom, it is in your self-interest to put others ahead of yourself.

Profit-making in a free-market economy is not evil. It is about win-win situations. I specialize in goods and services that I can produce cheaper and better than you. If you value the goods and services I have and offer to pay an amount for them that is worth more to me than the goods I make, then we both win. The difference between my value of the product and what you paid me is my profit. You profited by parting with less valuable resources than the investment of time, energy, and resources you would have had to put into supplying the product yourself. You profit too. You turn around and offer goods and services that I buy similarly. The economy is an endless cycle of these win-win transactions. The beauty of this is that even the greedy person, to get all the loot they want, still must outdo the others in giving the customers what they want. It channels their greed toward productive ends.

The fundamental issue here is how do people define what is in their self-interest. Materialistic people who have no time horizon beyond their retirement and no sense of each human being as image bearers of God will have one assessment of what is in their self-interest. People who see themselves as temporary stewards of another's resources, have an eternal time horizon, and value each person as created in the image of God will have a different assessment of what is in their self-interest. The free market economic system is, without question, the most effective framework for magnifying individual citizens' collective contribution to virtuous behavior. It is also the most effective framework for magnifying individual citizens' collective contribution to sinful behavior. Everything turns on the virtue and values of the players in the economic system.

Now here is where many will say that this demonstrates why we must have extensive government involvement in the operations of the economy. People are sinful, and all these individual economic actions will only lead to a sinful economy. Vandervalk writes, "The problem with Sirico's assertion is that most of our markets are not structured correctly to produce the optimum economic outcome." So who will restructure them for us? The government? Are these not the same sinful people participating in the economy and making sinful economic decisions? All we have done is transfer sinful people's widely dispersed economic decisions to a centralized authority of a small group of sinful people with coercive power. The answer to too much evil in the marketplace is not the transfer of activity to government entities but the production of more virtuous people in the marketplace. A free-market economy will not produce a perfectly just outcome, but no economic system can! It is not a trade-off of an unjust system for a just one. It is a trade-off between competing unjust systems, and free markets have demonstrated the ability to create the greatest prosperity with the least injustice. The great temptation is to abandon the best structure for dreams of the perfect structure, which will not exist until Christ returns. It is utopian deception.

Society is responsible for creating just structures and taking care of the least of these. But let us not conflate government with society. Government is one institution in society, among others. Central to society creating just structures and caring for the poor is the institution of the family aided by intermediary institutions like the Church, voluntary associations, schools, and local government. There are some things that only a national government can do well in promoting justice and compassion, but the most critical aspect in realizing this goal is virtuous people as free actors in the various institutions of society.

Millions of God's ministers are at work in the economy doing the godly work of selling goods and services, making profits, and creating wealth for their workers and themselves, all as good stewards of God's resources. Pastors decry the nation's moral decline even as they look askance at the very ministers God has entrusted to them to be agents of salt and light in the economy. In doing so, they undermine the revival and renewal they seek.

There are two books I wish I could put on every seminarian's reading list. First is The Victory of Reason: How Christianity Led to Freedom, Capitalism, and Western Success by Rodney Stark. Stark does an exceptional job of concisely showing how Capitalism is a natural extension of Christian thought developing over centuries. Christianity introduced the world to linear time, progress, reason, and people as God's image bearers, which became foundational to our present market economy. Second, I highly recommend a book by one of my economics professors at Eastern University, John Stapleford, called Bulls, Bears and Golden Calves: Applying Christian Ethics in Economics. The book can be read either as a primer to economics from a Christian perspective or as a companion to major introductory economics (college level) textbooks. As this post has touched on the nature of capitalism and Adam Smith, I recommend a recent article in the Journal of Markets and Morality by Robert A. Black called What did Adam Smith Say about Self-Love? (Spring 2006, v. 9, n. 1. 7-34.)

At the very least, I challenge seminary professors and seminarians to at least entertain the idea that their perceptions of market economies have been shaped more by collectivist Enlightenment social theories in the academy than by an honest appraisal of market economies in the light of God's Word. As long as marketplace ministers keep getting patronizing pats on the head about how they don't understand theology or the subtle (and not so subtle) intimations that they are little more than Christian pornographers, don't count on renewal in the Church in our lifetime.

Comments

5 responses to “Economic Misinformation in Theological Education”

  1. Chad Vandervalk Avatar
    Chad Vandervalk

    Though I respect what you are saying, I would have to respectfully disagree regarding my economic education. I would like you to know that I have a BA in Economics, as well as a MSc from the London School of Economics. I am not misinformed regarding the facts and mechanisms of the capitalist system.
    I am also aware that the capitalist system developed out of the Christian culture of Europe. However, the underlying assumptions of the economic system as we know it and experience it are not really Christian. The interesting result of Adam Smith was that pursuing my own self-interest, or to put it more plainly, making all my decisions based solely on what would be the best for me, actually reduces the extra profits in the system as a whole and produces the most efficient outcome.
    Viewing the system itself as being based on un-Christian motives does NOT imply that everyone who engages in this system engages with un-Christian motives. There are many people who are very successful in the system because they view their opperation as being the most stewardly.
    We may disagree, but that is not due to ignorance on my part.

    Reply
  2. Michael W. Kruse Avatar
    Michael W. Kruse

    Chad, thank for the come back. I have to admit I had to go back and reread here. After six months and my memory gets stale. (Shoot, after six hours and my memory gets stale.)
    I hope it was clear that my post was not intended to be personal. I’m glad to hear of you economics background (certainly more credentialed than mine.) You appear to have come to your conclusions from an informed perspective. Fair enough. I still disagree with your assessment. Unlike in your case, I deeply suspect that much of the hostility toward economic freedom ubiquitous from the religious higher education has more to do with a general disdain for the vita activa and a large uncritical acceptance of evaluations made about economics from various branches of the humanities than it does with any real engagement with economics.
    My position is this proto-capitalism was in place in Northern Italy and emerging elsewhere in Europe 300 years before Smith was on the scene. Going back to Augustine there was theological justification for trade based on mutual assessment of the worth of an object instead of some intrinsic value the object had. Aquinas theologically justified nearly all the major tenets that underpin capitalism like private property, free trade and even the legitimizing the use of interest (while officially not approving of it) in the 13th Century. The Scholastics over the next few centuries expanded on this work going in different directions but particularly among the Spanish Scholastics, the ideas that lead to capitalism were evident. By the 17th century, all that really remained was to emerge was a way to amass capital on a limited liability basis with proportional shareholder interests (corporations) and power plants that would lead to the industrial revolution.
    Smith was operating directly out of this milieu. I am persuaded that Smith is being read through the eyes of later philosopher/economists to say things he did not (Possibly John Stuart Mill beyond.) Smith was no orthodox Christian but his economic philosophy was still very much rooted in orthodox Christian thought. I think what he said in Wealth of Nations about self-interest/self-love is greatly distorted and Wealth of Nations is frequently considered apart from its companion work The Theory of Moral Sentiments.
    For Smith, attending to one’s interests did not mean to the exclusion of care for others. Furthermore, Smith was addressing what system of relationships best guaranteed a just and productive society. Smith believed benevolence to be among the highest of virtues and believed all were obligated to practice it. However, no individual can fully trust other individuals to act benevolent on a consistent basis. Therefore, it is better to have people acting on my behalf because they see at as in their “self-interest” to do so not out of benevolence.
    “But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interests their self-love in his favour, and show them that it is for their advantage to do for him what he requires of them… It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.” (Wealth of Nations, bk 1, Chap 2)
    From The Theory of Moral Sentiments:
    And hence it is, that to feel much for others and little for ourselves, that to restrain our selfish, and to indulge our benevolent affections, constitutes the perfection of human nature; and can alone produce among mankind that harmony of sentiments and passions in which consists their whole grace and propriety. As to love our neighbour as we love ourselves is the great law of Christianity, so it is the great precept of nature to love ourselves only as we love our neighbour, or what comes to the same thing, as our neighbour is capable of loving us. (Section 1, Chapter 5, Paragraph 5)
    Capitalism had been in formation long before the 18th Century and was grounded in orthodox Christian teaching. There is nothing inherent in capitalism that requires a materialistic individualistic mindset for it to work and it was not grounded in it. Capitalism was hijacked by Enlightenment and Modernist impulses, and yoked to their materialistic individualism. It can be unyoked. When you critique capitalism, I think you are objecting to materialism and individualism. I join you. However, I reject that the assertion that capitalism is inherently based on selfishness. It should be redeemed not discarded.

    Reply
  3. dlw Avatar
    dlw

    I think the issue appears to be a matter of semantics…
    Smith, along with the Scottish Common Sense Realism Enlightenment, held with more continuity with the past of Christendom and Scholastic insights that no doubt helped provide the framework for the emergence of Capitalism in Great Britain and the US and elsewhere…
    But more needs to be said. Smith was writing in the early days of the Industrial Revolution and was naive wrt later developments. We know now that the pursuit of pecuniary gain does not by any means benefit “the public good” and that there are ongoing concerns with the frameworks that markets operate within.
    The real failing seems to be the extent that we obfuscate how the debate is most often about the framework, not the use of markets to decentralize economic decision-making…
    Adam Smith needed an editor! Or so said my professor Warren Samuels, the top Adam Smith scholar in the world! He also is by no means the end-all-be-all fount of knowledge for our economic-social-legal relations, as his writing really was more geared for 18th ctry underdeveloped Scotland, learning from Mercantilistic writings in England, Physiocrats in France and a Deism that no doubt bore some continuity with Constantinized Christianity, though perhaps less with biblical Christianity in its emph on the rat’l individuals’ pursuit of self-interest, rather than the cultivation of institutions that help us to be more disciplined in our lives and less bounded in our altruisms.
    dlw

    Reply
  4. Michael W. Kruse Avatar
    Michael W. Kruse

    Last month I went to a book signing and presentation by P. J. O’Rourke’s new book “On the Wealth of Nations.” He was pointing out that in the eighteenth century the physical mass of the book said something about the price you should pay. Weighty book had more than one meaning. 🙂
    When it comes dense stuff seriously in need of editing, some of the worst I have read was sociologist Talcott Parsons. I had a prof who said 90% was verbiage, 9% well known sociological knowledge, 1% may actually have said something … and then the prof made us read Parsons anyway! 🙂
    Your take on Smith is pretty much what I have read as well. Smith seemed to have been clueless about the industrial revolution happening right under his nose. I think Smith was a transitional figure with a strong residual of orthodox Christian thinking married to emerging Enlightenment thinking. It wasn’t that he got everything just right but he did manage to frame a great many of the basic concepts that would influence economics. (Also, I think it was in David Warsh’s “Knowledge and the Wealth of Nations” where it was suggested that Smith had virtually described increasing returns but may not have fully comprehended what he was on to.)
    What I reject is the caricature of Smith as the founder of capitalism, divorced from Christian ethics, teaching a “greed is good” type of selfishness. That is the charge I frequently hear leveled at capitalism. While the philosophy was not precisely biblical it shared more in common with it than it did with “survival of the fittest” mentality that would prevail at other times. I think Smith’s contribution was in articulating the relationship between many key variables that had been emerging in Europe over the previous centuries and creating a rudimentary model that helped frame analysis. In that sense, his work was deeply rooted in Christian thought because the variables themselves emerged from the Christian milieu. Greed is not elemental necessity to capitalism. It is a ubiquitous human malady which capitalism, combined with other structures, can channel toward productive ends.

    Reply
  5. dlw Avatar
    dlw

    Smith needed an editor…
    Parsons was way over-rated. Geoffrey Hodgson in his “How Economics forgot History” pretty much accuses Parsons of plagiarism and playing into how Sociology and Economics were carved up into separate spheres in the beginning of the 20th ctry.
    I think Smith pulled together stuff from different streams in a framework that was generally optimistic that, despite the relative constancy or non-perfectibility of selfish human nature, changes in the legal framework could foster both growth and development and a general transfer of decision-making from the lords who inherited and squandered their well-being to the merchants who earned and stewarded their well-being.
    I think that Smith’s notion of the propensity to truck, barter and exchange as the basis for the division of labor is an important one. They generally tend to follow with our ability to use our knowledge of nature to reduce the transaction costs of doing business, our ability to form/manipulate values with each other, and our ability to will changes in existing arrangements. All of these presuppose institutions that make our relationships more peaceful…
    I think that Smith was appropriated in the 19th ctry “Classical economics” in ways that Smith would not have approved of. Roger Backhouse in his “The ordinary business of life” suggests that Smith’s system would have been seen by his fellow Scottish Common Sense Realists as presupposing a just distribution of resources, such as was attenuated seriously during the 19th ctry in England.
    “”Smith’s contribution was in articulating the relationship between many key variables that had been emerging in Europe over the previous centuries and creating a rudimentary model that helped frame analysis.”
    -sounds like what I said above, of course, the caveats mentioned above also still matter greatly… 😉 The “Christian” milieu that Smith wrote from was one that was damaged by the horrors of the 30 years war and its after-effects when Christianity did practically-speaking get subverted into an opiate for the masses in much of Europe.
    dlw

    Reply

Leave a Reply

Discover more from Kruse Kronicle

Subscribe now to keep reading and get access to the full archive.

Continue reading