The theological meaning of economics

The theological meaning of economics

Robert H. Nelson

Economist like to claim that their discipline is “value-free.” In this view, an economist is a technician, like a plumber or electrician. Hence religious are more a factor in preparing economic proposals than they are in repairing a furnace.

In reality, however, many economist to adhere to a set of values–to what I call an “economic theology.” This secular faith shapes their way of thinking about, judging and building the world.

Economic theology starts with the recognition that through most of the history humans have been afflicted by poverty, hunger and disease. These problems are considered the fundamental reasons that human beings have so often killed, stolen, lied, cheated and committed so many other evils. They have simply been driven to these acts by economic circumstances. Original sin, according to economic theology, is material privation, the condition in which most people have lived.

If this diagnosis is correct, then the means of abolishing evil is clear: salvation lies in eliminating all shortages of goods and services. And the path of redemption ca be found in the teachings of those who understand how to get rid of material scarcity: the new priesthood of economists.

It has long been evident that Marxism is religion of this kind. Marxism holds that society will descend into increasing turmoil until the apocalyptic moment of triumph: the arrival of the kingdom of heaven on earth. In the gospel of Marx, the laws of economics replace the acts of God.

It is not only Marxism, however, that operates like a secular religion. So do capitalism, non-Marxist socialism, American progressivism and other economist systems. Despite their differences, these belief systems share an underlying belief that economic progress will lead to transcendence of the current world. Each sees economic progress leading to heaven on earth.

Despite spectacular levels of material abundance, the 20th century has not witnessed the moral and spiritual improvements so many prophesied. Indeed, the two world wars, the Holocaust, Siberian prison camps and many other horrors have demonstrated all too clearly that increased productivity does not necessarily lead to social perfection; it can in fact lead to a new hell on earth. As a result, many now discredit the fundamental premise of economic theology–the belief that the driving forces of history, the real sources of human misbehavior and the path to a new world are grounded in economic conditions.

The upshot is that however unfamiliar professional economist and theologians may be with another, they are being driven to a common ground. Economics is in part a matter of religion, and religion can hardly afford to ignore economics. One sign of this trend was Pope John Pauls II’s 1991 encyclical Centesimus Annus, which addressed the theology of economic systems. Partly to encourage greater dialogue between economist and theologians, I want to trace briefly the evolution of economic theology and the central role it has assumed in the modern age.

John Calvin introduced a new element into theology that would prove to have major economic repercussions. In a sinful world it is especially necessary, Calvin preached to achieved tight discipline and rigorous self-matery. Rather than retreat into the monastery, however, the devout should assert their self-discipline in business and other worldly affairs. Calvin’s theology of predestination added a further powerful ingredient to economic pursuits. Skills previously regarded as perhaps economically useful but certainly not noble were for the first time associated–according to Calvins understanding of success in a calling–with an improved likehood of salvation. In at least this limited respect Calvin was the first economic theologian.

In the mid-18th century David Hume developed philosophical speculations in a number of areas that could also reverberate throughout the modern era. In exploring the nature of justice, Hume asks what would happen if there were “such profuse abundance of all external conveniences, that… every individual finds himself fully provided” in all respects. In that case, Hume said, “Why call this object mine, when upon the seizing of it by another, I need but stretch out my hand to process myself what is equally valuable?” Society in such a circumstances would be in “such a happy state, every other social virtue would flourish, and received tenfold increase.” It would, in short, mean general happiness and joy; a state of absolute abundance would amount virtually to the secular salvation of humankind.

Hume’s Scottish compatriot and good friend Adam Smith investigated in great detail how society might in fact maximize its material wealth. The market operates by rules as systematic as those Newton had uncovered in physics. Equivalent to the force gravity is the force of self-interest. Allowing self-interest to operate freely could yield a harmony in society as perfect as that of the solar system in the physical world.

The leading theologians of several centuries thought that god had made a rational universe. Indeed, theologians such as Thomas Aquinas believed that to be have according to the laws of nature, as discovered through reason would be to live according the God’s plan. In the 18th century many people saw the perfection of the free markets as the final fulfillment of a rational and ordered world. As Paul Tillich observed, “The idea of providence is secularized in the Enlightenment,” and “the first clear expression can be seen in the area of economics. It was expressed by Adam Smith… in his idea of harmony”–a harmony formed by the hidden hand of the market, which without any conscious intent or plan yields an efficient division of labor and distribution of goods.

Free-market economics assumed the individualism of the Protestant outlook; it was blessed by the scientific authority of Newton and promised to create the harmony between human being and nature that Aquinas envisioned. since it brings together the authority of Calvin, Newton and Aquinas, it should not surprise us that this message has shaped much of modern life. Free-market economics further promised a rapid expansion of material production; it would make conflicts over poverty irrelevant and allow general happiness to prevail. With science revealing the laws of the market, people would no longer feel compelled to fight, lie or succumb to any other evils that resultws from failure to understand and to act in accord with the rational mechanism of society. The economic path laid out by Adam Smith was, many of his followers believed, the secular message of a new heaven on earth.

Whereas the 18th century sought to establish perfect harmony in society, the 19th century was more interested in the mechanisms of change. Historian J.L. Talmon wrote that the 19th century was marked by “an idolization of History” that resulted from the “collapse of concrete historic continuity.”

A strong that history has a definite direction and an ultimate outcome, and that events of the world reflect an underlying purpose, are central features of the Judeo-Christian heritage. In the 19th century this understanding was seculized by theorist of new economic systems. They believed it was not God but the laws of economics that controlled history. It was not the Bible but the science of economic evolution that spelled out a heavenly destination.

According to Marx, the triumph of the proletariat would be accompanied by the elimination of scarcity and thereby restore humans to their true, more innocent and happy nature. Christianity had long taught that government and property were regrettable necessities required by humans sinfulness; Marx, in his way, took a similar view.

However, in the second half of the 19th century Herbert Spencer’s influence exceeded Marx’s. Spencer disptited capitalism’s claim that a free market would provide a happy and harmonious world. Rather, economic progress occurred through a fierce evolutionary struggle that was driven by the unyielding law of the survival of the fittest. Yet Spencer also preached that economic history indicated that society would eventually reach a new stage in which selfishness would wane and altruism prevail. Spencer’s laissez-fairs vision of capitalism presented another message of economic redemption.

If humanity is to behaved through the satisfaction of all material needs, then labor, capital and other economic inputs must be used with miximal efficiency. These ideal was held by many leading members of the American progressive movement, which took shape around the end of the 19th and the beginning of the 20th century. Efficiency has assumed such an exalted status that the progressive outlook has been labeled by several historians as the “gospel of efficiency.”

The leading figure in the creation of the American Economic Association in 1885 was the progressive economist Richard T Ely. A proponent of the social gospel, Ely believed that “Christianity is primarily concerned with this world, and it is the mission of Christianity to bring to pass here a kingdom of righteousness.” What we learn about heaven in the Bible is in fact meant to apply to this world, Ely claimed. It was “as truly religious a work to pass good laws as it is to preach sermons.” For this purpose, moreover, it is not the knowledge that is found in the Bible but rather the laws of economics that are indispensable. The path to earthly salvation “in its elaboration, becomes social science”–and especially economic science. Thus Ely proposed to locate the new profession of economics in schools of theology.

The most visible economist of the progressive era,. Thorstein Veblen, secularized this message. Society, according to Veblen’s ideal, would be directed by a “soviet of technicians,” including prominent “production engineers” and “production economists.” Veblen’s promised land was, as a later American historian described it, “a self-operating utopia where dispassionate, expert engineers would oversee a society of individuals comprehending and loving their work.”

The most influential economist of the 20th century was John Maynard Keynes. In his 1930 essay “Economic Possibilities for Our Grandchildren,” Keynes argued that markets and capitalism were necessary in the short run but could be dispensed with in the long run. Rapid economic growth achieved under capitalism would fairly soon (within 100 years) mean the effective end to economic scarcity. The resulting condition of general abundance would allow “a return to some of the most sure and certain principles of religion and traditional virtue–that avarice is a vice; that the exaction of usury is a misdemeanor; and that love of money is detestable.” Acknowledging that the market system was founded on self -interest and other false values, Keynes nevertheless believed these features should be tolerated “for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight.”

The rise of Washington, D.C., from a sleepy southern town to the planning and administrative headquarters of the United States was fueled by the progressive gospel. National leaders were to heed the authority of a new priesthood: economists and other social-science experts. Only the federal government would have the resources and incentives to bring together the best of the best. Planning was to be comprehensive, and this could be accomplished only by a central authority at the national level. Administration was to be scientific and removed from politics, performed by the independent civil service, the independent regulatory commission, the Bureau of the Budget, and a vast array of executive agencies.

The legitimacy of the new administrative state, ostensibly based on value-free science, actually rested on the authority of a powerful secular faith in economic progress. As its leading priests, economists were invited into the halls of power, serving as technical advisers and chief representatives of moral authority.

During the second half of the 20th century many economists challenged the progressevist vision. They questioned the ability of the central government to engage in comprehensive planning, and doubted that government should play as large a role as the early progressives had envisioned. They argued that the market had major advantages that progressives had failed to appreciate. Planning would still be necessary, they recognized, but it should guide the manipulation of taxes, interest rates, fiscal policy, definitions of property rights, and other levers that could steer the market while employing the

market’s extraordinary efficiency. This scheme revised the progressive gospel, but the essentials of the gospel have still been maintained in the prescriptions of such contemporary economists as Paul Samuelson, James Tobin, Robert Solow and Charles Schultze. Both the older progressive gospel and the new message of “economic progressivism” blend the 18th- and 19th-century perspectives. From the 18th century they take the promise of harmony, based on the conviction that the world can be made a rational place through economic understanding. Both interpretations also incorporate the expectation that growing material abundance will perfect the human condition.

Although its influence is eroding, such faith remains prominent in popular culture. For example, a Time magazine article not long ago examined the way companies provide day-care services, maternity leaves and other benefits to accommodate employees’ changing family circumstances. Arguing that these trends should be encouraged, the Time reporter suggested that these services made it easier for parents “to raise healthy, happy children,” which would help to ensure “the quality of the next generation of workers” and in this way represented “a critical investment in America’s economic future.” In the writer’s view, the measure of a business’s value is its contribution to material productivity and society’s continuing economic progress.

Although Economic progress was for many years virtually the national religion, at the end o the 20th century most people, including many economists, have concluded that salvation is something that economics cannot and should not try to deliver. This is not to say that pursuit of material comforts should be dismissed. The alleviation of poverty, hunger, disease and other economic deprivation throughout the world remains a goal widely shared.

The market system, overseen to some degree by government-has, I believe, proved to be the most effective way to obtain these benefits. The problem for theology is that throughout the modern age the institutions of the marketplace have received their strongest support when they have been considered not merely a provider of the good life but the path to secular salvation. Millions of people in the modern age have found a moral basis for capitalism in the preaching that its economic workings will–in the long run at least–bring about heaven and earth. Economic theology has been not a complement to but–at least for many people a substitute for a genuine theology.

It is not clear whether the market can function as effectively as it has in the past once it is divorced from the moral authority and social legitimacy provided by the modern secular faiths of economic salvation. Neither theologians or economists have determined how to resolve this tension–how to elevate efficient production of goods and services to an important social goal that commands widespread allegiance and support without making the increase of material production a means of transcedence in itself. In fact, few have even tried to resolve it. Theologians can often provide sound religious answers, but their economic grasp is frequently weak; most economists have barely begun to think about incorporating an explicit religious dimension into their professional efforts.

If economic theology has been the religion of modernity then it may be a sign of the postmodern era that people are anxiously pressing religion and economics to work together provide a set of newly. integrated answers.

COPYRIGHT 1993 The Christian Century Foundation

COPYRIGHT 2004 Gale Group