Economic Doxologies
And when a long succession of illustrious scholars has drawn more reassuring conclusions from [political economy] after devoting their entire lives to its study; when they assert that freedom and the general welfare are perfectly compatible with justice and peace, and that all these great principles run parallel to one another and will do so through all eternity without ever coming into conflict, do they not have on their side the presumption that stems from all that we know of the goodness and wisdom of God, as manifested in the sublime harmony of the physical universe?
~ Frederic Bastiat[1]
The Sweat of Your Brow
“Since the discouraging fiasco in the Garden of Eden, all the world has been a place conspicuous in its scarcity of resources, contributing heavily to an abundance of sorrows and sins.”[2]
Armen Alchian and William Allen launch their classic textbook, Universal Economics, with this stark assessment, echoing Genesis 3’s language.[3] A minor quibble to begin: Something is scarce if the desire for it is greater than what is freely available in nature. In other words, scarcity wasn’t foreign to Eden. Adam and Eve couldn’t be in two places simultaneously. Even in Eden, scarcity reminded us of our creatureliness. Still, the Fall’s fallout saw God cursing the ground, and dramatically intensifying scarcity.
Economic science then arose as an extensive commentary on the consequences of living “east of Eden.” So Alchian and Allen continue, correctly perceiving that postlapsarian scarcity has plunged mankind into toil and sorrow:
“Most of what you enjoy is acquired by your efforts, accompanied by strain, sweat, and anxiety. Two apparent devils restrict what you can have—the limited amounts of goods and services available, and the rest of us who also want them.”[4]
Scarcity, in other words.
In a recent book on economic literacy, which expounds “four pillars of economic understanding,” Peter Boettke (GCC, ‘83) identifies scarcity as “the first pillar,” arguing that it “brings truth and light to the darkness and pierces the fog to make sense of all human endeavors.”[5]
This essay examines Boettke’s four pillars for what the Christian economist, specifically, can glean from them. Christians at times eye economists warily, agreeing with the foremost critic of economics, Thomas Carlyle, that it is a “dismal science.”[6] Yet, this is our Father's world—which He pronounced “very good”—and economics is indispensable to grasp how it works.[7] I will argue that the “pillars of economic understanding” are not merely consistent with Christian teaching, but that they positively enhance the Christian economist’s understanding, obedience, and ultimately worship.
Economics may not be known for inciting a worshipful response, but maybe it should be. In 1850, the magisterial-though-unfinished magnum opus of Frederic Bastiat—Economic Harmonies—appeared.[8] The name stemmed from his argument that, in free societies, the interests of mankind are essentially harmonious. Contrary to the view of his contemporary Karl Marx, Bastiat shows, for instance, that the interests of capital and labor are aligned and not at odds. In this and other works, he likewise demonstrates that trade is mutually beneficial, even when it crosses political boundaries. And so on. In my opinion, Bastiat could just as well have titled his treatise Economic Doxologies because the phenomena he examines reflect the mind of the Creator and therefore call forth a properly worshipful response.
Before doxology, however, the economist must perceive the seriousness of mankind’s “social dilemma.”[9] Thus, Boettke’s first pillar of economic understanding offers a sobering reality check. We inhabit a world of dramatic tradeoffs where utopia is unobtainable, philosopher Belinda Carlisle’s theorizing notwithstanding.[10] The Christian economist repeats after both Genesis 3 and the iconic Thomas Sowell: Reality is not optional.[11]
The first pillar of economic understanding enables us to accurately and unflinchingly diagnose the social predicament of Adam’s fallen race. But don’t despair! Accurate diagnosis aids our efforts to “fill and subdue” the earth, while somehow still “loving our neighbors as ourselves” along the way.[12] In fact, denying scarcity and its implications risks “stamp[ing] out society and the human race,” as evidenced by various twentieth century experiments to deliver mankind from “the kingdom of necessity” to the “kingdom of freedom.”[13]
The Price System Declares the Glory of God
In the face of heightened scarcity, common grace offers mankind a lifeline: cooperation.[14] Adam Smith marveled: “Man stands at all times in need of the cooperation and assistance of great multitudes, while his whole life is scarce sufficient to gain the friendship of a few persons.”[15] And, famously:
“It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from 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.”[16]
Exchange hinges on a radical idea: My wants don't oblige my neighbors. Want something? Offer value. Exchange demands maturity, not toddler tantrums. In exchange, we heed the apostle Paul’s admonition to “look not only to [our] own interests, but also to the interests of others” on a truly grand scale.[17]
Trade gives rise to prices. And the price system inspires Boettke’s second pillar of economic understanding. Briefly, the price system transforms efforts to provide for self into gains for countless other people. Considering what the price system facilitates, we are reminded of G.K. Chesterton’s oft-quoted observation that, “The world will never starve for want of wonders; but only for want of wonder.”[18]
Consider: A Concord grape farmer in Washington state innovates a new growing technique that is more resistant to pests. Competition kicks in and other farmers imitate. Larger yields follow, and world jelly prices fall. Jelly consumption rises, spurring demand for peanut butter. The price of peanut butter rises momentarily, and Gujarat, India peanut growers expand by hiring more workers at wages that beat the alternatives. New peanut farm workers unknowingly help Pennsylvania jelly eaters satisfy their desire to eat more PB&J sandwiches. It’s cooperation on a massive scale, displaying God’s “goodness and wisdom,” as Frederic Bastiat notes in our epigraph.
Prices generate profits and losses, which guide scarce resources to where they can help the most at the least sacrifice. When producers err—say, by transporting peanut butter via planes instead of cheaper trains—they incur losses, which incentivizes adjustments.[19]
Vernon Smith, a Christian and Economics Nobel laureate, captures the wonder we should experience when we reflect on the price system, “At the heart of economics is a scientific mystery: How is it that the pricing system accomplishes the world’s work without anyone being in charge?”[20] This, the central question of economic science, should stir our hearts like the Psalmist who wondered at the heavens.[21]
For the Christian, the second pillar of economic understanding is an occasion for doxology. The economic laws which give rise to the prices that facilitate widespread cooperation are part of the created order that our good God created and declared ‘very good.’
After Darkness, Light
The foreword to Universal Economics begins: “Living is an important activity.”[22] True, but Scripture demands more: “Be fruitful and multiply and fill the earth and have dominion...”[23]
The Fall complicated the Mandate, but it wasn’t revoked when the “creation was subjected to futility.”[24] Mankind must flourish, cultivate Creation's potential, and innovate. Mercifully, Boettke’s third pillar—“hope”—offers reasons to think human flourishing is attainable, even in this “vale of tears.”[25]
History proves it. Millennia of stagnation gave way to a staggering 3,000% living standard increase in Great Britain from the late 1700s to today.[26] Critics scoff that you “can’t eat growth rates,” but higher incomes buy better food, medicine, housing, and leisure. The last two centuries saw plummeting rates of child mortality, disease, illiteracy, starvation, and many other ills. Now, we read (a historical anomaly) by safe, cheap lightbulbs, not dangerous, expensive candles.[27] Most of us do, that is—Google the infamous picture of North and South Korea at night.[28] True, money can’t “buy” happiness but try being happy when plague claims your child and thieves take your livelihood. Today, life is far less “nasty, brutish, and short” than for our ancestors.[29]
Why? Economics reveals that human flourishing arises under specific institutional conditions (i.e. “rules of the game”) that either mitigate or exacerbate scarcity (revisit pillar one).[30] Institutions can be formal, like government enforcing private property rights, or informal, like a social milieu that honors innovators and market entrepreneurs.[31]
In fact, all societies have entrepreneurs—“profit-seekers.” But do they gain by “taking” or “making”—by slicing the pie differently or by baking a bigger pie?[32] Prosperous societies have rules—protection of private property rights and respect for innovators—that reward “making” through entrepreneurial, market-tested innovation. They also discourage “taking” from small-scale porch-pirating to large-scale election of Congressional representatives who will do your dirty work via regulations to raise rivals’ costs.[33]
No society has coerced, enslaved, taxed, regulated or threatened its way to prosperity. Yet, every society embracing voluntary exchange and market-tested innovation has seen ever-expanding ‘mass flourishing.’[34] Some scholars have thought it a “happy coincidence” that peaceful and voluntary social interactions foster prosperity. To the Christian economist, this harmony isn't coincidence, but divine design, as Bastiat suggests in our opening quote.
For the Christian, economics is indispensable for explaining why some societies “fill” and “subdue,” while others languish and stagnate. Economics reveals how Paul’s admonition to “no longer steal” but to “do honest work with [our] hands” generates mass flourishing.[35] Importantly, it also reveals what honest work is. Earning an income by restricting your neighbor’s ability to produce and sell isn’t.
The Least of These
Boettke names his fourth pillar “compassion,” writing: “Economic teaching should stress how economic progress doesn’t result in gains only for the wealthy, but lifts the least advantaged from their previous precarious situation through material betterment.”[36] Two-and-a-half centuries earlier, Adam Smith noted, “No society can surely be flourishing and happy, of which the greater part of its members are poor and miserable.”[37] Where have we heard similar concern for the poor? Try Scripture: “Whoever is kind to the poor lends to the Lord”—a jarring claim about the omnipotent Creator.[38]
For the Christian economist, economics identifies effective public policies that genuinely benefit the poor amidst an ocean of feel-good proposals. For the “good works” of James’ epistle to be truly good, they must be effective, not merely performative, and certainly not counterproductive.[39]
To avoid misunderstanding, it is crucial for economists to insist that we cheer for many of the laudable goals that our neighbors and political representatives espouse. For example, everyone of goodwill wants to help the poor, but economics teaches that minimum wages harm the least skilled and washing machine tariffs (or, any tariffs) make the poor poorer.[40] These claims are no less true for their inability to generate a bipartisan “minimum winning coalition.”[41]
By illuminating which approaches succeed or fail to help the poor, economics informs ethical discussions, since the efficacy of our choices is important for identifying moral courses of action. Thus, 19th-century American economist Condy Raguet could argue, anticipating elements of the contemporary economist consensus on trade, that protectionism violates Christian neighborly love:
“If there be one truth which the Christian dispensation enforces with more than peculiar emphasis, after man’s duty to God, it is man’s duty to neighbor. Now what does [protectionism] teach? Why, that individuals, pursuing particular branches of industry, should consult their own interests, without any regard to the interests of their neighbors…”[42]
Here, Raguet argues that Christian ethics prescribes “duty to neighbor” with economics demonstrating protectionism’s contradiction of this duty.[43]
To the Christian, economics provides a framework for assessing which policies “do good,” and which merely “mean well.”[44] Responsible obedience to our Lord demands that we distinguish between policies that are “kind to the poor” and those which “oppress” them.[45] Knowing the difference requires we embrace economics. The fact that economics enables us to distinguish is more reason for praise.
The End of the Matter
There is no “Christian economics,” just as there is no “Christian calculus.” There is good economics; there is bad economics, a distinction that is admittedly a bit beyond this short essay, but which Boettke expounds at great length in his book.
Ultimately, good economics is the Christian economist’s intellectual filter for claims about filling, subduing, changing, or improving the world. It illuminates causes and consequences in our fallen, scarcity-bound reality. It ought to provoke wonder and worship, whether by explaining the price system (commonly called “microeconomics”) or the grand sweep of economic history (commonly called “economic development”). Finally, it grants wisdom to discern when “meaning well” converges to or departs from “doing good” in our efforts to uplift “the least of these.”[46]
Not bad for a “dismal science.”
[1] Bastiat, Frederic. Economic Sophisms. (Irvington-on-Hudson: Foundation for Economic Education, 1996 [1845]), 72.
[2] Alchian, Armen and William Allen. Universal Economics. (Indianapolis: Liberty Fund, 2018), 3. Though published in 2018, the book is a “classic” because it is a descendant of Alchian’s well-known earlier text, University Economics, first published in 1964.
[3] All Scripture references are from the English Standard Version. Genesis 3:17-19: “Cursed is the ground because of you; in pain you shall eat of it all the days of your life; thorns and thistles it shall bring forth for you; and you shall eat the plants of the field. By the sweat of your face, you shall eat bread…”
[4] Alchian, Armen and William Allen. Universal Economics. (Indianapolis: Liberty Fund, 2018), 4.
[5] Boettke, Peter J. The Four Pillars of Economic Understanding. (Great Barrington: American Institute for Economic Research, 2020). For the direct quotation and to see a summary of the four pillars, see: https://www.aier.org/article/the-four-pillars-of-economic-understanding/
[6] To learn the rather magnificent history of the term “dismal science,” see: https://www.econlib.org/library/Columns/LevyPeartdismal.html
[7] Genesis 1:31.
[8] Bastiat, Frederic. Economic Harmonies. (Irvington-on-Hudson: Foundation for Economic Education, 1996 [1850]).
[9] To borrow the title of a classic collection of essays by economist Gordon Tullock.
[10] See: https://genius.com/Belinda-carlisle-heaven-is-a-place-on-earth-lyrics
[11] Sowell, Thomas. Is Reality Optional? And Other Essays. (Stanford: Hoover Press, 2020).
[12] Genesis 1:28 and Mark 12:31, respectively.
[13] For the first quote, see: Mises, Ludwig von. Human Action. (Auburn: Ludwig von Mises Institute, 1998 [1949]), 881. The second set of phrases comes from Socialism: Utopian and Scientific by Friederich Engels, first published in 1880.
[14] Buchanan, James M. “What Should Economists Do?” Southern Economic Journal (1964): 213-222.
[15] Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations, Volume 1. (London: Methuen, 1904 [1776]), 16.
[16] ibid., 16.
[17] Philippians 2:4. Also, see: Muller, Jerry Z. “The Neglected Moral Effects of the Market: Arguments from the Last 300 Years.” Journal of Applied Corporate Finance Reprint (2024): 1-4.
[18] Chesterton, G.K. Tremendous Trifles. (New York: Dodd, Mead, and Co., 1909), 7.
[19] See this argument fleshed out in a classic 1920 article by Ludwig von Mises: Economic Calculation in the Socialist Commonwealth.
[20] Smith, Vernon L. “Microeconomic Systems as an Experimental Science.” The American Economic Review 72, no. 5 (1982): 923-955, 952.
[21] Psalm 19:1.
[22] Alchian, Armen and William Allen. Universal Economics. (Indianapolis: Liberty Fund, 2018), xxiii.
[23] Genesis 1:28.
[24] Romans 8:19. Genesis 9:1.
[25] Psalm 84:6.
[26] Explore this link: https://ourworldindata.org/economic-growth. And see: DeLong, J. Bradford. “Cornucopia: The Pace of Economic Growth in the Twentieth Century.” National Bureau of Economic Research, working paper (2000).
[27] Nordhaus, William D. “Do Real-Output and Real-Wage Measures Capture Reality? The History of Lighting Suggests Not.” In The Economics of New Goods (Chicago: University of Chicago Press, 1996), 27-70.
[28] See here, for example: https://www.nationalgeographic.com/pages/article/140226-north-korea-satellite-photos-darkness-energy
[29] Probably the most famous phrase from Leviathan, the 1615 classic by Thomas Hobbes.
[30] See: North, Douglass C. “Institutions.” The Journal of Economic Perspectives 5, no. 1 (1991): 97–112.
[31] See: Boettke, Peter J., and Rosolino A. Candela. “The Applied Theory of the Bourgeois Era: A Price-Theoretic Perspective.” Journal of Contextual Economics 3-4 (2020): 355-366.
[32] Baumol, William J. “Entrepreneurship: Productive, Unproductive, and Destructive.” Journal of Political Economy 98, no. 5 (1990): 893-921; Murphy, Kevin M., Andrei Shleifer, and Robert W. Vishny. “The Allocation of Talent: Implications for Growth.” The Quarterly Journal of Economics 106, no. 2 (1991): 503-530.
[33] Salop, Steven C., and David T. Scheffman. “Raising Rivals' Costs.” American Economic Review 73, no. 2 (1983): 267-271.
[34] I wish I could claim credit for ‘mass flourishing,’ but attribution is owed to: Phelps, Edmund S. Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change. (Princeton: Princeton University Press, 2013).
[35] Ephesians 4:28.
[36] https://www.aier.org/article/the-four-pillars-of-economic-understanding/
[37] Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations, Volume 1. (London: Methuen, 1904 [1776]), 91.
[38] Proverbs 19:17.
[39] James 2:14-17.
[40] Neumark, David, and Peter Shirley. “Myth or Measurement: What Does the New Minimum Wage Research Say about Minimum Wages and Job Loss in the United States?” Industrial Relations: A Journal of Economy and Society 61, no. 4 (2022): 384-417. Clemens, Jeffrey. “How do Firms Respond to Minimum Wage Increases? Understanding the Relevance of Non-Employment Margins.” Journal of Economic Perspectives 35, no. 1 (2021): 51-72. Flaaen, Aaron, Ali Hortaçsu, and Felix Tintelnot. “The Production Relocation and Price Effects of US Trade Policy: The Case of Washing Machines.” American Economic Review 110, no. 7 (2020): 2103-2127.
[41] The phrase comes from the classic 1962 book by William Riker and Anthony Downs, The Theory of Political Coalitions.
[42] Raguet, Condy. The Principles of Free Trade. (Indianapolis: Liberty Fund, 2011 [1835]), 410. For the modern consensus on trade, see: https://www.kentclarkcenter.org/surveys/free-trade/.
[43] See, for example: Irwin, Douglas A. Free Trade under Fire. (Princeton: Princeton University Press, 2002).
[44] See: Coyne, Christopher J. Doing Bad by Doing Good: Why Humanitarian Action Fails. (Stanford: Stanford University Press, 2013).
[45] Matthew 25:31-46; Proverbs 19:17; Proverbs 14:31.
[46] Proverbs 4:7; Matthew 25:40. Also, see: Bradley, Anne and Art Lindsley, eds. For the Least of These: A Biblical Answer to Poverty. (Washington, D.C.: Institute for Faith, Work, and Economics, 2014)