Wednesday, June 22, 2011

God the Economist. Book Review (#15 of 2011) Part 1

God the Economist: The Doctrine of God and Political Economy by M. Douglas Meeks.

This book may take several blog posts to scratch the surface. The notes and bibliography make up about 20% of the book, and the breadth of sources is incredible. It is a 5 star book for its scholarship alone.

Meeks is currently a theologian at Vanderbilt, associated with the Methodist Church as well as the United Church of Christ. He examines philosophy ranging from Aristotle to Hegel. He cites economists from Smith to Veblen. He looks at the Torah and he looks at the early church fathers. Every sentence in this book requires unpacking and contemplation, and it may be the most difficult book I've read in ten years. Mostly because it is philosophical rather than practical.

I would describe Meeks as a theologian attempting to build a bridge between theology and economics. He is approaching from the theology side and admits that it's "painfully obvious" he is not an economist. The closest book I've read to this is Halteman's Clashing Worlds of Economics and Faith, which one can see as building the bridge from the economics side, but that book has about 1/10 the depth of this one.

Meeks' attack on my moorings is unflinching, mainly because he knows more about biblical history and philosophy than I could ever hope to. His assault is mainly focused on liberal philosophy which came out of the Enlightenment and the neoclassical economic theories that built on it.

He does not examine many actual events or give many illustrations. This is not Rodney Stark's book, and while I think Meeks could agree with Stark's hypothesis that the Enlightenment built on Christian principles of equality which fostered the importance of individual freedom and property rights leading to capitalism and economic development, Meeks would disagree that individual freedom and property rights as defined by classical liberals is compatible with the biblical concept of property rights. Hence, as Europe developed a market system based on a modern concept of property rights and individual freedom it became a godless place marked by inequality, greed, and spiritual confusion. (Meeks doesn't say this about Europe, these are my conclusions drawn from his logic.)

Questions that arose as I read the book:

1. Are Christianity and neoclassical economic thought compatible?
2. How should we approach scarcity? Is the idea of scarcity compatible with Christian living?
3. Are Christianity and libertarianism compatible?
4. How now shall we live?

#1 is hugely important because neoclassical economic thought underpins about 90% of what's taught in schools today. You are either part of the "neoclassical synthesis" or a heterodox economist (Marxist, Austrian, a few others, who are basically philosophers and not "economists" by a modern definition.)

The foundation of neoclassical thought comes primarily from the works of the "classical economists," the "moral philosophers" from the late 1600s to mid 1800s: Locke, Hume, Rousseau, Smith, Ricardo, Say, etc. These are the founders of "classical liberalism," from which our modern Libertarians come from. Some of the fundamental tenets of classical liberal philosophy and classical economic theory (these are my crass words):

1. Individuals have certain unalienable natural rights, and individual freedom is of utmost importance. All men are equal in the eyes of God (a Christian spin on it).

2. We have a limited number of resources for an unlimited amount of wants and needs-- ie: scarcity. (The fundamental question every society faces is what to produce and for whom to produce it for.)

3. A free market allows free, self-interested individuals to organize their society effectively without the need for a monarch or central authority to rule over and exploit them.

4. A free market is the best system for allocating scarce resources to satisfy the unlimited wants and needs of individuals and maximize the overall welfare of the society.

5. The wealth of a nation is measured by how much it produces.

Meeks, like Halteman, states that the Trinity, Israel, and the Church are all communitarian. There are no radical individualists in Scripture, everyone is part of a greater fellowship. God's guidelines for Israel's economy all involved how individuals were relating to their community, with God at the center. So, the classical liberal approach of putting the freedom of an atomistic individual at the center of the economic rules is contrary to Scripture.

"The individual should be understood as an intrinsically communal being" (58). "(However,) [t]his does not mean by any stretch of the imagination giving up market mechanisms and many other advances in modern economy. But it does mean learning how to discern those spheres of economic power that must be made accountable to popular will" (57).

Because Meeks does not see the free market delivering what it promises (#3 above)-- a way to organize society without domination. Because capitalists accumulate wealth--surplus--as a means for obtaining more wealth (as Adam Smith describes in WoN), which others will not have access to. As certain wealthy people begin to control access to means of production, they enjoy a power others do not (sort of what we'd call "market power" today) and may attract a " enlist command and obedience on a vast scale." Propertlyless persons become dependent upon the wealthy for livelihood. Furthermore, because modern property rights allow owners to refuse others the use of property, those with the most property will dominate (Pg. 59-61).

Meeks admits that the market system "emancipate(d) society from harsher precapitalist modes of domination: slavery, serfdom, and the absolutist state" (61). But real equality is only found in perfect competition-- which is almost never found in real life. If a country moves toward privatization, how it assigns property rights initially will have an influence on inequality (see 1990s Russia, though the Coase Theorem has something to say here).

Meeks also makes a Marxist-style argument that surplus accruing to capitalists is derived from production and not the exchange. Workers are separated from the product they are producing, the right (like patents) to produce it belongs to the owner, thus creating inequality. "Workers maintain the right of exit but lose the essential right to make choices about their lives and the community in which they live" (Pg. 63). Again, in a world of perfect competition workers are perfectly free, they have unlimited options to choose from to find employment. But the real world doesn't look like this. Someone threatened with termination has lost her liberty because the costs of losing the job could be much higher than a lost wage.

"Whatever the value of the liberal argument that market exchange enhances democracy, it is also true that unaccountable control and domination within market exchange deters democracy. Market theory, however, asserts that whatever happens in the market has its justification because of human nature."

This type of "domination" is shown as the antithesis of biblical community. There were rich and poor in Israel, but the poor were given access to property that belonged to the rich-- they were allowed to collect grain to satisfy their need before the harvest, allowed to pick up the fallen grain, and allowed the edges of the field. (If you argue that this was an exclusive right, you could undermine Meeks here as showing that God allowed for some "exclusive" rights, and thus some form of inequality existed in the biblical system.) Land was returned to its original owners every 50 years. Lending at interest (ie: for profit) was forbidden.

Basically, an Israelite wasn't allowed to use his property in a way that harmed members of the greater community. Members of the community were allowed access to his property but with the understanding that no one was to take advantage of the other. Personal freedom had its limits, and libertarians would find anathema the vast amount of regulations that existed for Israelites in regards to what they could not do with their property (regulations on eating, washing, etc.).

So, the classical liberal idea of individual freedom being more important than the welfare of the community and being the center of building a market should be alarming to Christians.

I will address the issues of scarcity and measuring the wealth of nations in subsequent posts.

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