Public Theology & Christian Living

(First published in Areopagus Journal Vol. 10 No. 4 – Christian Economics)

by Shawn Ritenour

Notwithstanding the conventional lay-wisdom that Adam Smith was the father of economics, scholarship beginning in the 1950’s has shown that economic analysis was developed within the Christian scholastic tradition, culminating in the school of Salamanca which reached its high point near the end of the sixteenth century.¹

The scholastics often applied their understanding of Christian natural law to the economic problems of their day. Not surprisingly, these theologians developed an economic approach that grew out of their Christian world-view. However, the advent of nineteenth century historicism and the subsequent domination of positivist neoclassical economics during the twentieth century resulted in an economic science the relevancy of which has increasingly been doubted. We need not despair, however. There is hope that we can recover sound foundations for a realistic, true economics.

Economics is a social science devoted to discovering laws that regulate human action in exchange. Consequently, the object of study in economics is human beings. For economic laws to exist, there must be some common characteristic or regularity among human beings that allow for regularities in human interaction to occur. Scripture reveals that all humans are made in the image of God and, hence, engage in action. The Christian view of man as a rational actor serves as a sure foundation for economic science that allows us to derive true economic laws to which we must reconcile ourselves when considering social policy.

Christian Anthropology and Human Action

Christian anthropology begins with the fact that man is created by God in His image (Gen. 1:27). We understand more about the nature of man, then, as we understand more about the image of God. Christians understand the “image of God” to mean God’s likeness. Man is God’s replica on earth.² Traditional Christian theology asserts that in being made in the image of God, man is like God in his intellectual and moral nature.

If man is God’s replica, then we can learn about the nature of man by examining the attributes of God. For the subject of economics, it is sufficient to stress only a few characteristics of God as revealed in the Bible. Christian theology teaches that God is a rational being.³ Scripture speaks of God as Wisdom and Logos. God is rational and the source of all rationality. Christians know from Scripture that God thinks. The prophet Isaiah tells us that God has thoughts which are higher than man’s (Isa. 55:8-10). God’s thinking includes his plans. In his letter to the Ephesians, the Apostle Paul tells us that even before the foundation of the world God chose to save Christians (Eph. 1:4–5).

Scripture likewise affirms that, not only does God think, but He acts as well. Within only the first four verses of Genesis, we learn that God created, spoke, and divided (Gen. 1:1, 3–4). All of these are actions. Paul wrote to the Colossians that God is actively sustaining and holding together all that is (Col. 1:15–17). The Bible describes the actions of God in the framework of choice. Isaiah 14:1 is only one verse among many that explains that God chose Israel as His people from all possible alternative races. Moreover, God specifically acts with a purpose.⁴ God created the sun, moon, and stars in order to serve as signs, seasons, days, and years and to give light to the earth (Gen. 1:14–17). God created these heavenly bodies with specific ends in mind.

Because God thinks and acts with purpose and because man is made in the image of God, it is reasonable to conclude that man is able to think and act with purpose. It can be inferred, then, that a very important part of the image of God is reason: the ability to think rationally, in terms of cause and effect.⁵ God is a spirit. A spirit is a rational, moral, and free agent. Likewise, man is a rational, moral being who is a free agent.⁶ Although one could rest his case on such logic, the Bible also explicitly reveals man to be a creature who thinks and acts with a purpose.

God relates with man in a rational manner. When calling to humanity that they should follow Him, God implores, “Come now, and let us reason together” (Isa. 1:18). God appeals to our reason and expects us to make the reasonable choice based on the facts as God reveals them. Once when the disciples were puzzled over Jesus’ warning concerning the “leaven of the Pharisees and Sadducees,” Jesus says to them “O you of little faith, why are you discussing among yourselves …?” (Matt. 16:8). The Greek word translated as “discussing” in the English Standard Version is rendered as “reason” in the King James Version. This word is dialogizomai, from which we get our English word dialogue, and means “to reckon thoroughly, i.e., to deliberate (by reflection or discussion),” and is rendered elsewhere in Scripture as “consider,” “muse,” and “think.”⁷Jesus, then, indicates that man is a being who uses his mind to rationally contemplate questions.

Not only does the Bible characterize man as one who thinks, but also as one who acts. Scripture indicates that in acting, man routinely applies means to achieve an end. The Apostle Paul wrote of humanity as “they that use this world” (1 Cor. 7:31). The Greek word translated as “use” is chraomai, and means “to employ.”⁸ Paul explicitly recognizes that things in this world are used by people as means to achieve ends.

An example of this is King Solomon’s importation of goods from various foreign countries. On one occasion he had his merchants buy linen yarn, a chariot, and horses shipped from Egypt. Scripture explicitly refers to the silver coins used to buy the merchandise as means (1 Kings 10:28–29; 2 Chron. 1:16–17). Here the word in the Hebrew is yad, which literally means “open hand,” an idiom used to express the power by which one can achieve something.⁹ The silver of Solomon’s buyers was the means, the open hand, to a chariot, horses, and linen.

Solomon, when he embarked on the construction of the Temple, needed to obtain materials allowing him to achieve his ends. He used his own unskilled laborers and contracted with Huram, the King of Tyre, for the use of Huram’s skilled metal workers and for the purchase of cedars (2 Chron. 2:1–10). How does Solomon view these laborers and lumber if not as means to achieve the end of building the temple? Additionally, the Apostle Paul tells Timothy to “use a little wine for the sake of your stomach and your frequent ailments” (I Tim. 5:23). Paul is obviously not calling for the drinking of wine as an end in itself, but explicitly as a means of treating Timothy’s illness.

Finally, earlier in the same letter to Timothy, in a most striking passage for the purposes of this article, Paul reveals that even the very Law of God, which surely has intrinsic value as the objective standard by which we are commanded to live, can be used as a means to achieve an end. Paul tells Timothy that “we know that the law is good, if a man use it lawfully” (1 Tim. 1:8). Note that not only is the Law an end for man to strive to keep, but it is also a means to knowing what is sin, so that man might become convicted of his sin and turn to Christ for salvation (Rom. 7:7–13).

Great pains have been taken to demonstrate that, when characterizing human action, the Bible affirms the means-end framework again and again. This is because some Christian economists have asserted that “means-end schema” is “a methodological lie.”¹⁰ However, as is clear from the exposition above, using means to achieve an end is the very epitome of action by human beings as described in both the Old and New Testaments.

The Bible also characterizes action as necessarily involving choice. When engaging in action, each person has a number of ends he can serve, but the means available are scarce. Also, most ends can be satisfied in various ways. Action, then, necessitates choice. Action is the choosing to satisfy one end while leaving the other end unsatisfied. It is choosing one means of satisfying an end while setting aside alternative means that could be used.

Throughout the Scriptures, man is shown as having to make repeated choices between competing ends and the means to achieve those ends. Moses exhorts the Israelites to “choose life” instead of the death associated with disobedience to God (Deut. 30:19). Later Joshua, when exhorting the Israelites to remain true to the covenant between God and them, concluded by saying, “And if it seem evil unto you to serve the Lord, choose you this day whom ye will serve” (Josh. 24:15). A similar decision is set before the Israelites by the prophet Elijah when he demands that they choose between worshiping God or worshiping Baal (1 Kings 18:21). The Psalmist indicates that man will make choices regarding the path he takes in life and that God promises good instruction if man makes choices that are good (Ps. 25:12). Indeed, the ways of the oppressor are the result of choices made by him (Prov. 3:31).

At the heart of choosing is preferring one thing over another. The prophet Isaiah (7:15-16) foretold that the Christ would “refuse the evil, and choose the good.” The Apostle Paul tells the Philippians that he had a hard time choosing which he would prefer, to remain alive on earth or die and depart to be with our Lord. He says, “Yet which I shall choose I cannot tell” (Phil. 1:22). Clearly, the Bible characterizes choice as the act of preferring one thing to another, of choosing one alternative and forgoing another. Choosing, therefore, involves preferences.

Christian doctrine teaches that when making such choices, man acts as a free agent. As a free agent, man is free to act in whatever way his will dictates.¹¹ J. Gresham Machen was correct to characterize the Christian view of human action as the manifestation of free choice based on subjective preferences. When discussing the freedom of God as being analogous to the freedom of man, he writes:

Does the freedom of a man’s will mean that a man acts independently of his motives? Does it mean that when a man chooses to do one thing rather than another thing his choice is determined by nothing at all except that just that it is his choice?. . . Surely the actions of a person, just because they are free actions, and not mere meaningless vagaries of chance, are determined by motives. When a man is placed before some important turning-point in his life, he sets before himself the considerations on one side and then the considerations on the other side, and then in the light of those considerations, of the preponderance on the one side or on the other, he acts. It is just that operation of motives in determining the man’s action that make the action a truly personal action and so makes it in the right sense of the word a ‘free’ action.¹²

As Machen indicates above, choice involves comparing two or more alternatives and choosing that which is considered preferable. Hence, in choosing, man necessarily evaluates alternatives. The Bible tells us that God imputed value to creation when he declared it “very good” from His viewpoint (Gen. 1:31), and He imputes righteousness to believers in Christ (Romans 4:24).

Not surprisingly, the Bible also affirms that humans, who are created in God’s image, impute value to economic goods according to their own value scale.¹³ The Hebrew word most often translated as “value” in the Old Testament is arak, which means literally “to set in a row, i.e., arrange, put in order,” and has been translated also as “esteem” and “estimate.”¹⁴ Note that according to Scripture, value entails an ordinal ranking. At the end of Leviticus, the priests are instructed to set redemption prices, as given by God, for individuals making singular vows of service in the tabernacle. If a person making such a vow was considered poor by the priest, then the priest himself was to set the price according to the value or arak he imputed to that person (Lev. 27:8, 12, 14). Additionally, when a field of land was to be sanctified to the Lord, the priest was to determine the redemption price according to what he thought it was worth (Lev. 27:23). The word translated “worth” is the Hebrew word mickah, which literally means “enumeration,” implying “valuation.”¹⁵ Matthew states that the Israelites who paid thirty pieces of silver for Jesus’ betrayal subjectively valued how much it was worth to them (Matt. 27:9). Twice it refers to “value” placed on Jesus. The Greek word translated as “value” is timao, which means “to prize, i.e., fix a valuation upon; by implication to revere.” ¹⁶Again the notion is that value is subjectively imputed to something or someone.

One could deduce, consequently, that if the Bible indicates that people make value judgments that are subjective, then when they choose alternatives based on their subjective evaluation, their action will be done according to their own preferences. This is a very controversial notion among many Christian economists because they often consider the concept of action motivated by subjective value scales as the same thing as action motivated by the greed of homo oeconomicus.¹⁷ A lot of confusion would be avoided if it were recognized that acting in accordance with one’s value scale is only that: acting in accordance with whatever motivates action, whether higher and nobler or lower and base.

Needless argument could also be avoided by recognizing that God’s own Word describes man as acting according to his own preferences. Indeed, God often appeals to our own self-interest when persuading us to obey Him. In describing the era before the Israelites were given a king, the Bible reveals that “every man did that which was right in his own eyes” (Judges 17:6). When the Apostle Paul was waiting in Athens to be joined by his colleagues Silas and Timothy, he was moved in his spirit by the Athenians’ idolatry and disputed with the Jews and religious Gentiles, and then with the Epicureans and Stoics (Acts 17:16–18). What drove Paul to debate Christianity with these groups was his own values.

One might argue that while it is true that people can be motivated to do that which is right, this is not the same as acting in one’s self-interest. Christian doctrine, however, teaches that such a righteous vs. self-interest either/ or dichotomy is a confusion that results from an erroneous view of sin. Samuel Waldron writes:

It is often said that sin may be spelled s – e – l – f. . . . Such sentiments do, of course, have an element of truth in them, but they are so ambiguous and confusing that both logically and practically they form a very bad definition of sin. . . . Our truest and highest self-interest is always consistent with the glory of God. Definitions of sin as self-love tend to drive a wedge between God’s glory and our good and lead thereby to moral confusion in the lives of the people of God. They steal from the biblical motivations for doing right and serving God. The entire Bible from beginning to end witnesses to the truth that it is normally in our temporal interest to serve God, and it is always in our highest interest and is thus an expression of true self-love.¹⁸

God tells us that a husband should love his wife, because in doing so “he loves himself” (Eph. 5:28). God commands us to honor our father and mother so that our “days may be long” and that “it may go well” with us (Exod. 20:12; Deut. 5:16). God promised the Israelites several blessings including bountiful fields and storehouses if they obeyed His commandments, and He promised severe curses if they disobeyed His commandments (Deut. 28). Jesus calls those who “labor and are heavy laden” to come to Him and He will give them rest (Matt. 11:28).

Moreover, in what is perhaps the most profound question ever posed to man, Jesus asked “What will it profit a man if he gains the whole world and forfeits his soul?” (Matt. 16:26; Mark 8:36). The obvious answer is nothing, with the implication being that a man’s profit will be much greater if he gains his soul by following God instead of the world. Note that Jesus poses this question in economic terms, explicitly appealing to man’s sense of self-interest. To claim that man does not act in accordance to his own value scale implies that God does not know what He is doing by repeatedly appealing to man’s self-interest in converting him.

Finally, while describing man as a rational actor similar to God, it is important to note a significant difference between God and man regarding action. Christian doctrine teaches that God is omniscient. However, man is a finite being. Consequently his knowledge is never exhaustive. Man is incapable of knowing everything. Additionally, man presently suffers from the consequences of the fall from grace due to the sin of Adam. We make mistakes. We can be led astray by our own biases and selfish desires. Man does not have full knowledge about the present and cannot perfectly foresee the future.

In summary, Christian anthropology characterizes man as a free rational agent who engages in purposeful behavior. In doing so, man applies means according to ideas to achieve ends. Such allocation of means requires choice which itself necessitates preferring one thing to another. Such preferences are made according to the subjective values of the human actor. Man undertakes action in the face of incomplete knowledge in the present and must speculate about an uncertain future.

Praxeology
The Christian view of man as a rational actor has certain important implications for economic method. Any sound economics that is relevant for the created order in which God has placed us must take human action fully into account. In fact the very starting point for economic analysis is human action. The first task of economics, consequently, is to logically unpack the implications of human action. Sound economics, therefore, discovers truth by beginning with the premise that humans act and then deduce implications of their actions. For example, action requires choosing between alternatives, which implies valuation of alternatives, which further implies the economic categories of benefit, cost, profit, and loss. Such analysis allows us to deduce economic laws such as the law of comparative advantage, and the laws of supply and demand.

Such a method allows us to discover economic laws that are indeed laws and can serve as a sure guide when faced with questions of economic policy. If we begin with a true premise and we make no mistakes in our logical deduction, our conclusion is necessarily true. Such is the case with good economic analysis. Scripture and general revelation both instruct us that humans act, so we know that that is a true premise. Therefore, all sound logical deductions from that fact are also true. Furthermore, because economic principles are deduced from the axiom that humans act, they are valid whenever and wherever human action occurs. Because they are true for all beings made in the image of God, they are universally valid for all people and for all time.

Such a sound economic method also implies a couple of important limitations for what economics can tell us. In the first place, economics can never provide quantitative laws. Because of human volition, there are no quantitative constants in economics. The law of demand tells us that if the price of gasoline increases, the quantity of gasoline that buyers are willing to buy will be lower than it would be otherwise. However, the law of demand cannot say by how much, because the buyers are humans with wills who can change their preferences. We are not machines.

Additionally, economics cannot tell us what is morally good or ethical. Economics studies how people act to achieve their given ends, not how their ends are formed or what their ends should be. Economics does not tell us what is good or beautiful. We should not conclude that the music of Lady Gaga is either good or beautiful merely because it hit the top of the Billboard charts.

The economic method described above is called the praxeological method.¹⁹ By rooting economic analysis in the study of human action, we are subsequently able to explain voluntary exchange, the emergence of money, price determination, income distribution, the purchasing power of money, economic expansion, business cycles, and the effects of state intervention in the economy using principles that are both realistic and universally true.

Conclusion
Christian anthropology describes human beings as free rational persons who act to achieve their ends based on speculations of uncertain future events. When one looks at Scripture for information regarding the nature of human action, one finds that God’s revealed Word tells the reader that man is created in God’s image with the ability to think and act purposefully, by making choices based on subjective evaluations determined by his own value scale. The forgoing analysis demonstrates that embracing praxeology as a method, because it incorporates the Christian view of man, allows us to develop a true economics that is useful for solving important social problems as well as demonstrating something of the beauty of how God works.

Those who choose to reject the teachings of economics, however, are essentially rejecting what God has revealed about the nature of man. They do so at their own peril, because such intellectual rebellion opens the door for embracing destructive economic policies such as Keynesian fiscal stimulus, monetary inflation, socialized health care, and living wage laws. All of these policies have grave negative consequences that are the result of economic law. Just as we are not able to overturn the law of gravity merely by passing legislation enabling one to jump off the Empire State Building and fly by flapping one’s arms, neither can we violate the economic laws which God has established and hope to usher in prosperity.

Shawn Ritenour is Professor of Economics at Grove City College, Grove City, Pennsylvania.

Notes
¹On the development of economics in the Scholastic tradition see Raymond de Roover, “The Concept of the Just Price: Theory and Economic Policy,” The Journal of Economic History 18:4of Economic History 18:4 34; Marjorie Grice-Hutchinson, Early Economic Thought in Spain 1177-1740(London: George Allen & Unwin, 1978); Alejandro A.Chafuen, Faith and Liberty: The Economic Thought of the Late Scholastics (Lanham, Maryland: Lexington Books, 2003); and Murray Rothbard, Economic Thought Before Adam Smith: An Austrian Perspective on the History of Economic Thought, Vol. I (Cheltenham, UK: Edward Elgar, 1995), 29-133.
²Samuel E. Waldron, A Modern Exposition of the 1689 Baptist Confession of Faith, 2nd ed. (Durham, England: Evangelical Press, 1995), 83-84. 
³Carl F. H.Henry, God, Revelation, and Authority, Vol. 1 (Waco, Texas: Word Books).
⁴ Gary North, The Dominion Covenant, 2nd ed. (Tyler, Texas: Institute for Christian Economics, 1987), 19.
⁵Gordon H. Clark, A Christian Philosophy of Education, 2nd ed. (Jefferson, Maryland: The Trinity Foundation, 1988), 130-39.
⁶Charles Hodge, Systematic Theology, Vol II (Grand Rapids, Michigan: Eerdmans, 1871), 96-99.
⁷James Strong, A Greek Dictionary of the New Testament in Strong’s Exhaustive Concordance (Gordonsville, Tennessee: Dugan Publishers, n.d.), 22.
⁸Ibid., 78.
⁹James Strong, Hebrew and Chaldee Dictionary Accompanying the Exhaustive Concordance in Strong’s Exhaustive Concordance (Gordonsville, Tennessee: Dugan Publishers, n.d. ), 47.
¹⁰John P. Tiemstra, “Christianity and Economics: A Review of the Recent Literature,” Christian Scholars Review 22:3 (1993): 227-247.
¹¹Robert L. Dabney, Systematic Theology (Edinburgh: Banner of Truth Trust, 1985), 120-32; Charles Hodge, Systematic Theology, 278-309.
¹²J. Gresham Machen, The Christian View of Man (Edinburg: Banner of Truth Trust, 1965), 27-28.
¹³Tom Rose, Economics: Principles and Policy from a Christian Perspective, 2nd ed. (Mercer, Pennsylvania: American Enterprise Publications, 1996), 99-100.
¹⁴James Strong, Hebrew and Chaldee Dictionary, 92.
¹⁵Ibid., 66.
¹⁶James Strong, A Greek Dictionary of the New Testament, 72.
¹⁷J. Esmond Birnie, “Utilitarian Economics: A theory of Immoral Sentiment?” Christian Scholars Review 29:1 (1999): 11-24.
¹⁸Samuel E. Waldron, A Modern Exposition of the
1689 Baptist Confession of Faith, 100-01.
¹⁹The roots of the praxeological method go back to the Spanish Scholastics and was most fully developed by the Ludwig von Mises in the Austrian school of economics. Because all economic action is human action, Mises thought economics was best pursued in the tradition of his Austrian predecessors, Carl Menger and Eugen von Böhm-Bawerk, who placed acting man at the center of their analyses. For an important scholarly treatment of the development of Mises’ thought within its Austrian setting, see Jorg Guido Hülsmann, Mises: The Last Knight of Liberalism (Auburn, AL: The Ludwig von Mises Institute, 2007). For an introduction to praxeological economics beginning with a Christian view of epistemology and man, see Shawn Ritenour, Foundations of Economics: A Christian View (Eugene, OR: Wipf and Stock, 2010).

Questions for Ritenour’s “Christian Anthropology and Economic Method”
1. What is economics? What is required for economic laws to exist?
2. What characteristics of God are relevant to understanding human beings and their economic endeavors?
3. What is the biblical view of man that Ritenour sketches?
4. What implications does the biblical view of man have for economics?