Live After Quit

Making Nonsense from Sense: Debunking Neo-Calvinist Economic Thought

A few years ago I wrote about some of the errors made by economists who try to apply what they believe are Christian principles to both Austrian and neoclassical economic analysis. These economists believe that the standard economic way of thinking is not only fatally flawed but actually immoral, and that an entire new paradigm must be brought to economics.

In the mid-1990s, I taught economics as an adjunct at a Christian college near Chattanooga, being essentially the entire department. For the most part, it was a good experience, and the students were attentive and talented. However, in the spring of 1995, I was asked to teach a course (along with other faculty members) from a neo-Calvinist perspective, which meant presenting a very different view of economics using a neo-Calvinist book, Responsible Technology, which is an attempt to explain modern technology and its role in society from a neo-Calvinist perspective.

(My father taught at this college for thirty years and many members of my family are alumni, so this was a place that was central to me in my formative years. My disagreements with their approach to teaching economics are not a condemnation of the entire college or the people I knew there.)

It was not long before I was at odds with others teaching the same course, as the neo-Calvinist perspective came from a worldview that closely resembles what Jeff Deist has called “The New Antieconomics.” Deist writes that instead of approaching economic analysis from the perspectives of scarcity, choice, and opportunity cost, the “antieconomics” movement approach turns things upside down:

Antieconomics . . . starts with abundance and works backward. It emphasizes redistribution, not production, as its central focus. At the heart of any antieconomics is a positivist worldview, the assumption that individuals and economies can be commanded by legislative fiat. Markets, which happen without centralized organization, give way to planning in the same way common law gives way to statutory law. This view is especially prevalent among left intellectuals, who view economics not as a science at all, but rather a pseudointellectual exercise to justify capital and wealthy business interests.

Indeed, the economics chapter of Responsible Technology declares:

Conventional wisdom views economic activity as being imposed by the rigors of scarcity, even if the only conception of such scarcity is that of too little money with which to purchase too many goods. This view implies that if only there were enough of the stuff of this world provided for us, no economic necessity would be imposed on us. There would be no need to make economic choices, and economists would be unemployed. But we are in fact faced with what has been described as the “niggardliness of nature,” which at times threatens our very existence and always withholds some of the fruits we want.

The technological-economic path leading from this starting point is the arduous, anxious wrestling with nature to wring out of it its reluctantly gained fruits. The tools in this struggle are something like the implements of warfare, and the result is frequently violent, leaving scars on both sides: the exploitation and the degradation of nature—sometimes described in terms of rape and pillage—and disharmony and angst in the lives of human beings. No one expects economic life to be pretty. In any case, the fundamental underpinning for economic activity in this view—whether Western or Communist—– is the need to overcome scarcity.

A radically different view of the nature of economic activity begins with God’s entrusting the care and use of the earth to humankind. This care began in the Garden of Eden, and although that paradise did not last long, the activity itself continued, though tainted by sin after the Fall. To be entrusted with an endowment of resources and to be given the responsibility to choose how those resources should be used is an awesome yet delightful task.

After establishing the idea that scarcity and choice are inappropriate terms for the discussion of economics, the book presents a straw man interpretation of standard economic theory:

The conventional view of economics takes as its most fundamental proposition the assertion that economic behavior is the result of autonomous individuals making choices so as to maximize some subjective quality, such as their psychological satisfaction or pleasure. Those individuals are presumed to be cut off not only from any transcendent norms for governing economic activity but also from human community; they are supposed to make only independent decisions about their own, but no one else’s, economic condition. As a result, they never engage in or value the underpinnings of community: cooperation, concern for one’s neighbor, or public-spiritedness. Even the place of justice in the good economic life is left in doubt.

Economic theory claims that persons compete and struggle for the maximum individual benefit that can be garnered from any given situation. Altruism becomes the antithesis of economic rationality: Either it makes no sense at all, or it interferes with achieving economic purposes. This is the economic theory that for more than two hundred years has served to teach those who seek to gain more economic wisdom. According to this view, servanthood is abdication, a surrendering of the battle for supremacy and freedom. Stewardship is for the weak, the losers.

Thus, the neo-Calvinists castigate those of us who favor free markets with a straw man and a non sequitur rolled into one: since we see the necessity of a price system, we must not value anything that can’t be priced. Once scarcity as economists describe it is debunked, the book declares,

scarcity will not necessarily be vanquished, although its painful consequences may be reduced. In addition, certain present forms of contrived scarcity—developed through persuasive efforts to increase desire or through monopolistic efforts to restrict supply—may be eliminated. The finiteness of the creation remains a reality under all circumstances, but to the Christian, economics is simply the care for a garden of limited size.

Prices also come under scrutiny; the book labels them a cause, not an effect, of scarcity:

Economics—strongly affected by a mechanical rationalism borrowed from Cartesian influences and Newtonian mechanics—sought both a precise measuring rod for economic value and . . . a deterministic view of how economic value comes into being. The result was a price theory of value that today pervades both the halls of academia and everyday consciousness. Price theory holds that economically valuable things are those with prices, that economic value is proportional to price, and that nonpriced entities are economically valueless.

I politely but vociferously objected to the economics chapter of the book, telling the other professors that nothing could be salvaged from it that was academically useful. At that point, I probably was the least popular member of the college faculty. That was my last semester, as I left for graduate school at Auburn University, where I received my PhD in economics.

Again, this viewpoint reflects the Deist critique of “antieconomics.” Scarcity according to neo-Calvinists is caused by prices and profit-seeking capitalists, who hold back supply to enrich themselves. Neo-Calvinist Loren Wilkinson outrightly declares that private property is itself the source of scarcity. In fact, the application of basic economic theory such as marginal utility is illegitimate from the neo-Calvinist perspective. Addressing the classic example of how people, facing different constraints, might choose food differently at a cafeteria (where one pays a separate price for each item) than at a smorgasbord (where one pays up-front and can eat what one wishes), Wilkinson writes:

We have adopted the scarcity mentality: no scarcity, no economizing. . . . Contrast this with the entrustedness view of the same choice: If it is God’s creation—here in the form of food—shouldn’t wise and frugal use of it, as a response to the Creator, follow, regardless of how we are paying?

Any serious economist (as opposed to an antieconomist) recognizes this statement as near-meaningless rhetoric. As in most of the neo-Calvinist economic literature, there are proclamations and high-minded statements, but no meaningful method for how an economy can operate under such a worldview.

The upshot of neo-Calvinist thinking is that through rhetoric and special revelations, they can “solve” the Misesian socialist calculation problem. In the neo-Calvinist way of thinking, we need not depend so heavily on prices for information about relative scarcities to learn how best to steward our time and resources. We need only have a more enlightened, selfless conscience. In fact, according to them, once the world is rid of capitalism, markets, prices, and trade, scarcity itself either disappears or is strongly diminished.

In almost three decades since I taught at that college, the anticapitalist bent in economics has become only stronger, and the economics program at that school is no exception. In a recent posting, a student wrote the following about the microeconomics course she took there:

This class got me hooked on Econ and was the first place I fell in love with markets, only to fall out of love again later. Regardless, it was easily the most gratifying introduction class I’ve taken, and Dr. XXX’s tests are truly a (college) right [sic] of passage. Also this class will open your eyes to the evils of capitalism, which is the gift that keeps on giving. (emphasis mine)

She also wrote approvingly about the international economics course:

To be honest, I was not going to recommend this one until I realized how much it actually affected the way I thought about international politics. Any class that examines the entire world will necessarily only scrape the surface of the issues involved, and this class is no different. For an Economics elective it is not terribly dense, making it an ideal class for non-majors to take and gain some insight into how global trade and monetary policy make everyone’s life hell. (emphasis mine)

Now, one always must be careful of judging the content of an entire course from one student’s musings, but others familiar with what is taught at the school have given me similar accounts. One can conclude that neo-Calvinists do not even have to acknowledge the Misesian socialist calculation problem because their theology allows them to declare that economic theory itself is responsible for most of the scarcity. Do away with these constraints, and the world is one happy place. In making decisions, moral certitude substitutes for information about relative scarcities.

The source of such reasoning comes from the belief that while God’s original creation was tainted by the sins of Adam and Eve, God’s overall plan remains unchanged. In fact, despite a few shortcomings, such as floods, earthquakes, killer storms, droughts, and erupting volcanoes, the earth is pretty much what it was the day that God declared it to be good.

Thus, argue neo-Calvinists, economic thought must conform to the world as God originally intended it to work before what is called the Fall. If the world before original sin was one of abundance, then we must view the present world in the same way and all economic analysis must be in line with such thinking. God, after all, did not place Adam in a world of scarcity; why would He do any less for us?

Those that have gone to conferences attended by neo-Calvinists can attest to how they interact with “less enlightened” economists—that is, those who believe that scarcity and choice really are essential to better understanding our world. They do not engage the rest of us; they instruct us in the Truth, and those that fail to listen are deemed knaves and fools.

In 2002, Timothy Terrell and I presented a paper on valuation in environmental matters at a Christian economics conference and later had it published in the Journal of Markets and Morality. The paper deals with these issues in much more detail than is possible here.

As I see it, neo-Calvinists have created a fantasy world and demand the rest of us believe in it. Indeed, to antieconomists of this stripe, it is our very belief in scarcity that causes scarcity in the first place. Not surprisingly, neo-Calvinist views on economics ultimately degenerate into a statism in which socialism not only provides a holy antidote to conventional economic thinking, but also does God’s work of ridding the world of scarcity and want.