Economics in Christian Perspective

Theory, Policy and Life Choices

Victor V. Claar, Robin J. Klay

• Publisher: IVP Academic
• Year: 2015
• ISBN:
  9780830899906
• Topic: Theologie & Religion
• Subtopic: Christliche Theologie

Unemployment. Environmental damage. Poverty. Economists Victor Claar and Robin Klay critically engage mainstream economic theory and policy recommendations to provide guidance for faithfully and responsibly addressing these and other important economic issues. Affirming that a just and prosperous society depends for its continued success on maintaining the right balance of power among three principal spheres--democratic governments, market-organized economies, and strong moral and cultural institutions--Claar and Klay demonstrate how Christian principles and values guide and undergird a flourishing and just economy. This text is for use in any course needing a survey of the principles of economics.

1

Christian Faith in Relationship to Economic Activity

Framing the Issues

Christians are commanded to conduct every aspect of their lives in response to the call and grace of God in Christ. Clearly, many dimensions of their lives are interwoven with markets. As a result, Christians seek to buy and sell, and to save and invest, in the light of gospel values. They must do so with an awareness of their own limitations, trusting that God will bless and use their lives. Though their ultimate motivations may differ from those of non- Christians, Christians must deal with the same physical, psychological and economic realities as everyone else. Throughout this book we intend for our examination of economic forces and moral values to also engage those outside the Christian tradition.

One of the fundamental assumptions economists make about human activity is that we are limited in our choices by scarce time, resources and knowledge. Christians acknowledge that reality. Like others, they cannot be in two places at once, know the price of everything or provide for themselves and their families without working, saving and carefully considering their budgets (e.g., how much and what to purchase, in keeping with their values). Furthermore, although Christians are called to have “faith that can move mountains,” they are taught not to defy gravity or tempt God by jumping from rooftops (recall Jesus’ refusal of that temptation [Mt 4:5-7]). Likewise, they would court physical and spiritual danger if they ignored real limits to their material and financial resources.

While painfully aware of their human limitations, and recognizing the pervasiveness of sin, Christians maintain reasoned hope for themselves and for the world. Securely founded on the life, death and resurrection of Jesus Christ, their hope transcends the evil they encounter. Their hope ultimately transcends material scarcity, but they live without any pretensions of treading somewhere above the earth-bound paths of non-Christians. They trust in God’s promises of blessings on earth and in the completion of his perfect love in the kingdom of God, which is already here yet still to come in fullness.

Throughout this book we propose to equip readers with an understanding of the economy within which they make dozens of daily choices, and to affirm the spiritual values required to live out their decisions about work, as well as buying and saving, in ways that please God. We do not presume to map out precisely how every Christian or group of Christians should deal with all economic matters. We make use of different traditions for their useful insights regarding how Christian values can be put to work in the economy.

We emphasize the points at which reflection on Christian truths and values is most appropriate and useful for illuminating economic activities. We show how Christians can faithfully interact within the market system without caving in to materialism (see chap. 2 for the development of this point). We also acknowledge that the very limitations of markets open up places for collective action, organized in the private sector, by churches and other associations. We discuss the roles of governments at all levels, which constitute another key realm of human social activity. We show governments acting in ways that may either enhance the creative energies and expertise within the other two realms or weaken their capacity to address big social questions.

The Pillars of a Just and Abundant Society

Traditional economic textbooks portray economies along a continuum, in order to illustrate various degrees of government power relative to the market. Thus, at the far left is a combination of central economic planning and government ownership of all property—best illustrated by the former Soviet Union, present-day Cuba and North Korea. At the far right is minimal government and freedom for markets to deliver any goods and services people are willing to pay for (including morally inferior products, like pornography). Hong Kong is the best example. At this same right-hand end of the spectrum, governments are expected to avoid trying to reduce income disparities between the rich and poor, because it is assumed that the primary social value to be defended is freedom of individual choice, not equality.

Today, nations are located at various points along the left-right spectrum. Thus, to the left of the mid-point is democratic socialism (represented by Sweden and several other countries in Western Europe), a system in which markets play the key roles in production (i.e., there are few state-owned enterprises). Nevertheless, their governments are expected to deliver health care and education, and to lower poverty levels by taxing high incomes and spending on many public services. To the right of center are large and small countries, like the United States and New Zealand. New Zealand maintains a very limited role for government. By comparison, the size and activities of government in the United States are large and extensive—putting the United States to the left of New Zealand. However, compared to most nations in Western Europe, the U.S. government plays a more restricted role in the economic sphere—as evidenced by a largely private health care system, lower spending on poverty programs and unemployment benefits, and lower tax rates that are intended to encourage investment and entrepreneurship.

In this book we discuss relationships between governments and markets (at local and national levels) that conform to Christian teaching and respect economic insights about such things as improving efficiency. We emphasize relationships that do not require a prominent role for churches in promoting legislation and shaping policy. Instead, we describe a third realm of social power and influence: institutions of private, collective action (like churches, schools and museums) that are free to fund, teach and exercise their values for the benefit of society. We picture society as a tripod, supported by three poles, each of which must have the size and integrity to enable people and their communities to thrive. These poles are democratic government, the market economy, and strong religious and cultural institutions. Novak (1982) masterfully develops this theme.

We propose to illustrate how societies that are based on healthy relationships among the three poles produce a rich variety of solutions to meet social, economic and spiritual needs, even as these needs evolve over time. In small and poor societies, for example, families are the main source of education and health care as well as the chief “employers.” In other societies, religious associations—like mosques or churches—provide most education. In richer and more diverse societies, pre-university education takes place mainly in government-funded schools, while spiritual needs are addressed by religious organizations.

To remain healthy, societies must be vigilant regarding the rights and responsibilities of the three sectors—governments, markets and private/voluntary organizations—so that none unduly encroaches on the domain and responsibilities of another. During the second half of the twentieth century, in Europe and the United States, governments grew to meet new social expectations, such as provisions for unemployed workers and retirees. In later chapters we examine what economic theory and Christian teaching have to say about how expansion of some government responsibilities and budgets can impair the ability of markets and private voluntary organizations to perform their functions well.

Recognition of problems in the regulatory role of government has prompted waves of deregulation throughout the industrialized world over the last three decades (in banking, transportation, etc.). More recent efforts to expand collaboration between governments and private voluntary organizations (e.g., via President George W. Bush’s faith and community-based initiative) require careful study. It is still an open question whether such partnerships, using tax money, can achieve the desired social outcomes without violating basic church-state separation or compromising the holistic missions of religious organizations (see chap. 11).

In modern societies a balanced relationship among governments, private voluntary organizations and markets leaves individual and group participants in each realm relatively free to exercise their unique talents, insights, resources and values. Thus, for example, we point out the relative advantage to society of governments setting out minimal standards for environmental health, but doing so in ways that preserve access to resources and relatively free choice by individuals, businesses and private voluntary groups regarding their use of water, air and land (see chap. 5). Such economic freedoms, we argue, are absolutely essential for a majority of people to utilize and develop fully their talents and other resources for the sake of personal, social and even spiritual good.

The choice a society makes is, however, not between government action (based on a specific set of moral principles) and completely free, individual action disregarding social benefits and moral values. Even with democratic governments, free markets and strong private voluntary associations in place, the ultimate course of any society depends on the continual exercise of personal responsibility in commitments shared with others and based on fundamental values. Christians would add that the future course of any society also depends on effective Christian witness. Spirit-empowered witness and the resulting deep religious conversions, alone, have the power to infuse the realms of government, markets and private voluntary institutions with godly motives, and to guide their activities in the light of truly great visions for life on earth.

One of the reasons we emphasize the crucial roles of moral and cultural institutions is that when they are strong (partly as a result of being given legal stature), such institutions are able to undertake a huge variety of tasks by making use of voluntary contributions of time and money. If, instead, governments assume primary responsibility for providing education, arts, health care and help for needy people, their control results in too little innovation and too many one-size-fits-all public services. One reaction to this inherent problem in education has been the creation of charter schools and support for school vouchers. Both reflect a keen interest by many people to see educational innovation benefit from vigorous competition among many different models, so that excellence builds in places where it has sadly lagged (e.g., especially in poor urban neighborhoods, but also in the whole U.S. public school system).

Finally, in countries where the only funds to support public services come from tax revenues, much less can be achieved. Many citizens of such countries consider their primary duty to society to be fully exercised by paying their taxes or by engaging in political activism on behalf of tax fairness and particular government spending priorities. By comparison with Americans, for example, the French expect much more of government and less of the private voluntary sector. Measured in terms of employment, the U.S. private voluntary sector is almost twice that of France (3.7 percent of the population versus 2 percent in the mid-1990s) (CIVICUS 1997, pp. 49, 150). An interesting comparison can be made between France and the United States regarding the respective roles of private and government sectors in their aid to Third World countries. In 2002, U.S. citizens privately donated on average five cents per person to Third World assistance, and thirteen cents through their government. On the other hand, French citizens privately donated an average of one cent per person, but twenty-five cents per person through their government (Foreign Policy 2004). The Center for Global Development publishes a weighted Commitment to Development Index (CDI). Besides aid, other factors affecting international rankings include trade policy and investment. France and the United States shared seventh place in the 2004 rankings of twenty-one nations, with the Netherlands and Denmark in first place, Australia, the United Kingdom and Canada just ahead of the United States and France (also tied with Germany and Norway for seventh place out of twenty-one countries), and Japan in last place.

Concentration of social goals in the domain of government, especially when undertaken by national governments, can have the unintended side effect of undermining personal moral action and leaving untapped the skills and community resources that could be used to meet crying social needs. Chapter four presents a careful consideration of the domains in which governments can be expected to enhance public welfare, and of the economic principles that suggest appropriate boundaries around that sphere of public life.

The histories of Western societies differ with respect to the relative powers and responsibilities of governments, markets and private/voluntary organizations. A comparison of France and the United States provides an example, but does not explain how or why those differences occurred. After his visit to America in the early 1800s, Alexis de Tocqueville wrote Democracy in America, in which he marveled at the ways that Americans organized themselves in every town and hamlet to deal locally with problems they identified—rather than expecting governments to assume primary responsibility for their solution. This, he thought, was the reason why democracy worked in America. By contrast, the French government actually prohibited private organizations from providing services to meet social needs until the law was changed at the end of the nineteenth century. The state was to be the sole provider.

Some of those who have supported recent efforts in the United States and elsewhere to constrain government powers, in favor of markets and private/voluntary organizations, argue that governments gradually took over many functions that could be performed better by the other two sectors. Those who continue to favor a large government role in the provision of social services, including education, health care and retirement benefits, argue that government is the only sector capable of coordinating services and distributing them fairly, because markets (they believe) undermine communal responsibility.

On the other hand, some religious leaders insist that governments have stepped into social gaps because moral values—such as personal and communal responsibility, charity and love—were being eroded by materialism and other secular values. They often argue that the first line of religious offense against social ills is spiritual and moral renewal. Only then are people and communities empowered to change their social environments through loving service. Throughout this book we discuss all of these possibilities, beginning in chapter two, where we examine the claim that free markets promote increased materialism.

In addition to the otherwise untapped resources made available to society through the work of moral and cultural institutions, those same institutions often have an advantage over governments in meeting local and individual needs. Many are grassroots organizations by virtue of their proximity and experience, who understand unique local situations and make intelligent use of local networks (sometimes relying on subsidies from public funds). For a parallel reason John Stuart Mill’s ([1859] 1974) influential essay On Liberty, as well as recent governmental reforms around the world, highlights the benefits of allowing as much state and local autonomy as possible in the design and delivery of public services. (See chapter 8 regarding the importance of political and economic reforms in the Third World.)

Christian Principles and Values Undergird a Flourishing and Just Economy

It is hard to think of any Christian principle or value that is irrelevant to economic activity. Consider teachings on the importance of prayer and how best to pray; or contemplate God’s invitation to each person to entrust themselves to Christ—as their Savior, friend and Lord. If somehow such practices and commitments were strictly spiritual, they would have no connection to the economy. However, the Bible and the church consistently teach that attempts to love and pray to God are meaningless unless they cause Christians to behave differently in the “real world” than they would without spiritual moorings.

James wrote in his epistle that “faith by itself isn’t enough. Unless it produces good deeds [expressed in love for neighbors and strangers], it is dead and useless” (Jas 2:17). Furthermore, the first petition in the Lord’s Prayer—“may your Kingdom come soon” (Mt 6:10)—cannot be realized without collaboration among “little Christs” (from which we get the word Christians) and with Jesus Christ, whose life on earth demonstrated how to live fully. Likewise, the petition to “give us today the food we need” (Mt 6:11) is rightly understood to entail both human work and God’s blessing of the earth, with all its potential to bring forth plenty. It is also a prayer for spiritual food, without which work cannot achieve its full potential for people and their communities (for more on this, see chap. 9 about work and vocation).

Although some biblical teachings may be a step removed from direct economic application, the themes that most relate to the economy can be gathered under five broad headings. We offer these without extensive justification in the form of biblical texts or theological writings, although we will provide abundant suggestions for further reading. Most principles appearing below are discussed in Donald Hay’s (1991) book Economics Today: A Christian Critique. With some modification we make use of his choices because they reflect both Catholic and Protestant thinking about these matters, and they do so with clarity and brevity. The basic Christian principles on which economic life should be organized are revealed by certain attitudes and actions in response to God’s creation and gifts to each per...