Establishing the Boundaries of a Biblical Worldview

Economics

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“The primary cause of financial struggle is simply not knowing the difference between an asset and a liability.”

SSo says Robert Kiyosaki in his book, Rich Dad, Poor Dad. Economic categories are no longer what they were. It is now common to hear government officials say that the revenue they did not receive was a “cost” to the government.

Imagine going to the company accounting system and entering an amount in the costs of the company for revenue that was not obtained. “Let me see, we should have had another $10 million this year. Let’s put that in as a cost to the business. Better still, make it $10 billion.”

And you think corporate fiscal accountability is bad.

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If the [economic] problem is the shortage of money, why not allow private counterfeiting? Is it a form of theft? Then so is official counterfeiting. Will private counterfeiting debase the value of the currency and investments presently held by the public? Then so will official counterfeiting. Will private counterfeiting destroy the people’s faith in the existing currency unit? Then so will official counterfeiting. Will private counterfeiters lack the self-restraint needed to steal from the public slowly, and to debase the people’s holdings of money-denominated assets? Then we are arguing about time, not principle.

In short, if it is wrong and self-defeating for private counterfeiters, it is equally wrong and self-defeating for official counterfeiters. Yet the official counterfeiting still goes on. It is called progressive monetary policy.[1]

Footnotes    (↵back returns to text)
  1. From Ian Hodge, Baptized Inflation: A Critique of ‘Christian’ Keynesianism (Tyler, TX: Institute for Christian Economics, 1986), p. 137.↵back

Statistics are a highly logical and precise way of stating half-truths inaccurately.
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The place of mathematics and statistics in modern society is very much the result of a philosophy that identifies the mind of man as the arbiter of what is true. The sciences are, apparently, our only true guide to life. This results in a biased dependence upon mathematics in particular since it has a veneer of scientific accuracy. Science has become the tool for man to remake the world according to his own plans. And beware those who dare disagree with the scientists! It is this assumption of modern science, and its statistical manifestation in the field of economics, that needs to be challenged.

Earlier this century two schools of economic thought appeared which have relied on mathematics to substantiate their basic ideas. Neither of them were distinctively Christian in origin, yet both have been defended in the name of Christianity in later years. One school had its origin in a British engineer, Major C.H. Douglas, and is popularly known as Social Credit. The other received its basic popularity from John Maynard Keynes, a person just as famous, maybe even more famous, for his perverted lifestyle than for his economic theories. Both schools of thought have relied on one particular premise from which they built their respective ideas. Both Major Douglas and Keynes believed that the economic problem was not enough money. However, they disagree in the manner in which this basic premise is worked out and integrated into the respective theories, especially the solutions offered as a remedy to the perceived problem. They argue their views strongly, suggesting there is statistical evidence that “proves” their theory.

Neither Keynes nor Douglas, however, originated the underlying philosophy of their views. That privilege remains with Pierre-Joseph Proudhon whose dictum — property is theft — was to rattle the cage of every nation around the world. It also forms the basis for the anti-capitalist mentality of our age. But the statement “Property is theft” provided the backdrop for Proudhon and his disciples, Keynes and Douglas, to state their case. Statistics of any kind really do not tell us anything about property rights.

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Magna Carta (British Library Cotton MS Augustus II.106)

The attempt to limit government that almost succeeded

King John was in turmoil. England was under interdict from the Pope, and he himself had been excommunicated. There were threats to the realm from home and abroad. The new century was not particularly working out for him. By 1213, however, he had been absolved from excommunication, the clergy reinstated to their churches. But now a group of barons was breathing down his neck. They demanded his affirmation that he would continue “to maintain the ancient laws of the realm.” His track record on that score was not encouraging.

It is every Englishman’s heritage that Magna Carta established the rights and freedoms of Englishmen. But Magna Carta became the document that kings would use to destroy its very principles. Three months after the signing of the Great Charter civil war was still evident, over the principles in the Charter. In other words, the Magna Carta was never really implemented in its original form.

The years prior to 1215 were of great disturbance in England. The disturbance was over the extent of the power of the king. And there were nobles to the north of London who favored no increase in the monarch’s powers. Naturally, the king disagreed with this, and was willing to use whatever force was necessary to have his way. The issue was money—taxation.

The barons, however, were united in their views and willingness to do whatever was necessary to limit the king’s powers. They saw any increase as a denial of their freedom.

To understand this background, step back to Alfred the Great and his willingness to apply Old Testament legal requirements as the laws of England. Among these were a strong sense of property ownership, found in Exodus chapters 21-23.

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Originally published October, 1991.

We take many things for granted. When we have a headache, we reach for the aspirin. When we’re sick we pay a visit to the doctor. When we’re hungry we go down to the supermarket and buy our food. When the car’s out of gasoline, we pull up to the bowser and “fill ‘er up.” When we wish to have a holiday, we think little of hopping into the car for a 1,000 kilometer journey, and maybe no more about jumping aboard an airplane for a favored destination. We accept these things as just being “there.” Yet it is clear that a few centuries ago, and even only a few decades ago, many of the things we take for granted were not available. Our forefathers did not take these things for granted. Why, then, is it possible for us to have this attitude about a whole range of economic goods and services that our forefathers did not enjoy?

For an understanding of this we must start in the Bible at the book of Genesis, and the very first chapter. Here we discover several things pertinent to a study of wealth.

First, it is clear that God, our Creator, is a creative Being. He works in the act of creation, and continues to work, personally governing and supervising all that occurs in His creation.
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From the archives. Originally published June, 1991.

CONTENTS

1. Rising GNP is needed For Economic Growth

2. Wealth Can Be Legislated

3. Labour Unions Raise Living Standards For All

4. Import Less, Export More

5. Conclusion

EVERY AGE HAS POPULAR MYTHS which govern the way people act. Our age, despite its so-called scientific basis, is no exception. While a complete list of the myths that exist in the realm of economics would require a rather large book, it is possible for us to list some of the more popular and influential myths that appear today.

Myths are not always recognized in their age. Despite the fact that people may or may not recognise them, they are still myths, beliefs which are actually untrue. It is their false nature which makes them myths. It is because they are believed as being true that they are such a danger. When myths become the basis for human action, rather than things which are true, then society has clearly drifted into the practice of witchcraft, no matter what pretences are used to justify their actions.

Moreover, the continuation of myths is assured. According to economist Don Paalberg,

Economics is especially plagued with myths because this is a field in which everyone considers himself an expert. An architect designing an apartment building would not be challenged by the ordinary citizen as to the adequacy of the foundation he plans. The average citizen is not likely to dispute the doctor’s diagnosis or the pilot’s decision. But the economist enjoys no such shield from public appraisal; he will be challenged on almost every point by people who think their economic sense is better than his.

With everyone qualified, at least in his own mind, to interpret economic events, there arise fragmentary and inconsistent explanations for observed events. And since the events of greatest interest are those that are unusual, many of the economic myths unknowingly deal with the aberration rather than with the norm.[1]

1. Rising GNP is Needed for Economic Growth

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Footnotes    (↵back returns to text)
  1. Don Paalberg, Great Myths of Economics (Cleveland, OH: World Publishing, 1968), pp. 5-6. While I have taken the title for this essay from this excellent book by Don Paalberg, I have argued for myths which Mr Paalberg does not discuss in his book.↵back

People are more important than things because people create, use, abuse and destroy things. Furthermore, when people are treated as more important than things, there tends to be harmony and cooperation in a society. What usually follows is more voluntary sharing, justice and collaboration concerning things. This cooperation — covenanting and contracting — in turn creates more prosperity, more things. So prosperity long-term for any society rests upon having its priorities straight, placing its primary emphasis on people rather than things (and money).

“This emphasis on people rather than things is the essence of why the Bank of the People’s Labor at Mondragon, Spain has been so successful long-term. No business failures; no loan failures; the highest productivity in all of Spain, the highest profitability (nearly double that of its competitors), and the highest morale and innovation ratings possible — all characterize Mondragon. Success there has been achieved in all areas. Success is a by-product of doing things correctly. Ultimately, ideas do have consequences. Religion comes down to economics.

“Critical to the achievement at Mondragon, although unstated and possibly unrecognized even by these people, is that they have established their priorities on people systems and effectively checkmated the natural inclination to focus on the time value of money with its compounding effect. The compounding of money in a fractional reserve, debt-based, interest-sensitive society, such as ours, inevitably leads to a focus on things (and money) rather than people. The reason for this is because the challenge of compounding is a challenge which no individual or society can meet or beat long-term. The compounding of interest, money earning money on money, is relentless, ruthless, and eternal, unforgiving of mistakes and eventually is exponential. By contrast, men do make mistakes, need rest, do not forecast the future perfectly, make poor use of human and natural resources and are fortunate if they can simply achieve arithmetic economic growth. Therefore, it is no surprise that die slave-like god of debt money and compound interest eventually forces all to bow at its altar. As men are forced to serve this god of money (mammon), inescapably then money (and things) become more important than people.”[1]

Footnotes    (↵back returns to text)
  1. From R.E. McMaster Jr., The Christ Within: The Church and New Age Seek Him (Phonix, AZ: A.N. International, Inc., 1995), p. 359.↵back

In 1855, George Sweet highlighted the forthcoming changes to contract law. The changes that were introduced became known as limited liability law. The impact on the nature of contract and on business in general is hard to underestimate. Sweet, a barrister at law, explored the legal issues around the question of determining who is the debtor in business transactions.[1] Here’s a summary of some of Sweet’s key arguments in his presentation against limited liability.

It comes as no surprise that Sweet would link the question of debts (i.e. losses) to the question of profits. Profit and loss have a direct correlation to one another, according to Sweet. “A trader with limited or no liability is, like a corporation, an anomaly incapable of existence under any system of laws which does not make express provision for it.”[2] In other words, limited liability does not exist unless special provision is made for it. Who, then, is responsible for debts? Liability for debts is the express privilege of those who plan to collect the profits. “A little consideration will allow us to see, that the notion of sharing in the profits of a trade, with exemption from the duty of paying for the trade debts, could not possibly be recognized in the growth of the unwritten, judicial or common law of a state; and, therefore, that no system of law needs to contain, or can logically contain, any prohibition of such trading.”[3] For Sweet it is a matter of law and of logic that liability can be stepped around by those who plan to collect the profits. It can’t be done, he says. It is an “anomaly” to suggest there is a business person or corporation that has limited or no liability.

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Footnotes    (↵back returns to text)
  1. London: C. Roworth and Sons. Available as a free download from Google Books.↵back
  2. Sweet, p. 7.↵back
  3. Idem.↵back

Using political power to bestow benefits on the poor only encouraged the poor to expect entitlements.

houses of parliament london england

The global financial crisis highlighted yet again the age-old question of government control of the economy. Can government really ‘control’ the economy and keep it in ‘balance’?

It also highlighted the changes that have gone on around the world in recent decades. China and India, for example, have become economic powerhouses, even though their economies have been centrally managed. But the significant changes in these places have not come through more government control, but with the government getting people involved in ownership in the means of production.

But the Evangelicals, convinced of the rightness of their own moral convictions, were happy to bypass the church as the agent of change and contribute to the development of state intervention.

The Russian experiment in publicly owned goods turned out to be a failure. Even after the Berlin Wall came down and the markets were liberalized, there was a period of failure, since the private economy had not established itself. The Russian leaders moved everything along with their creative bonds, given to the citizens who could then exchange them for stock ownership in companies. In other words, they made each citizen an instant capitalist to teach them the important lesson: You have to take care of yourself.

It is unfortunate that Western nations such as England lost their world economic leadership. And it is a tragedy that they lost it under the impetus of well-meaning Christians such as William Wilberforce and Lord Shaftesbury. The Evangelical awakening following the Wesleyan revivals created a religious fervor in England of great magnitude. It promoted Christian values, and Christians saw the need to be catalysts of change. And the British parliament became the tool for righting many of the social wrongs that were evident. Whether it was slavery, children working in coal mines, or establishing a 10-hour working day, government legislation was the vehicle to usher in the new morality of the Victorian Evangelicals.

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