Effective value

Posted: April 8, 2014 in 1. Intro to Economics?

As previously stated economics is largely concerned with efficiency, however the ability of a good or service to satisfy a want directly impacts efficiency. While a good or service may be able to be produced very cheaply if it doesn’t satisfy a want it is ultimately a waste of resources (inefficient). Therefore economics must be understood in terms of both effectiveness and efficiency.

You have heard it said that “One man’s trash is another man’s treasure.” This saying emphasises the fact that different people can value the same thing very differently. A good that satisfies a want can be seen as valuable.

Capitalism recognises that self-interested individuals value things differently. To achieve a coordinated outcome between individuals capitalism uses markets to allocate resources efficiently and effectively. This is achieved through the use of prices and competition.

My next post will discuss the link between individual value and prices. It will also discuss how prices and competition are used to produce an efficient outcome in markets.


Capitalism is the dominant economic system today. While there are countries that are still controlled by communist governments their economies are in transition to capitalist (mixed market) systems. While both systems provide mechanisms for distributing resources and satisfying wants they do it in very different ways.

In short, capitalism is marked by private ownership of resources and the use of competitive markets and self-interested individuals to create an efficient allocation of resources. Individuals acting out of self-interest will direct resources in markets to produce an efficient and effective outcome. Markets where there is strong competition will produce a least cost (efficient) allocation of resources in production.

Capitalism and communism are considered to be at opposite ends of the spectrum, especially considering that communism presents the strongest criticism of capitalism.

Communism is marked by the ideal that humans are basically good, however this goodness is suppressed by social structures (feudal, capitalist, etc).  By removing these structures all things would be commonly held (public ownership) for the common good, decisions of what to produce and how much are determined by the central government.

Communism was never thought of as a system that existed in isolation. It was envisaged as the final step in the evolution of human social structures. A final stable (ideal) human system where humans could realise their full potential (goodness). Capitalism is seen as inherently unstable, containing the seeds of its own destruction. A system built on promoting the self-interest of individuals would only seek to alienate people from one another and devalue any community that exists. Just as capitalism had evolved from former structures the ultimate future of capitalism lay in communism.

It becomes clear that the ideal of the inherent goodness of humanity and the ultimate perfection of human societal structures in the present age is at odds with Christian doctrine. Seeking perfection of human community apart from Christ and the persistence of sin in the present age is against the core message of the Bible. It is this fundamental misunderstanding of human nature that caused the fall of communism.

In my next post I will begin discussing capitalism more fully.

Whether you like it or not you are impacted by and participate in economic decisions on a daily basis. Whenever you purchase or sell anything you are participating in an economy. Also most of the decisions made by governments today are underpinned by economic thinking and analysis.

The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.
John Maynard Keynes, The General Theory of Employment, Interest and Money

Economics is a powerful tool that can be used by and profoundly impacts individuals, businesses and countries.  Elections can be won or lost on economic issues.  A political party’s ability to demonstrate that they are better at managing the economy can be the deciding factor in democratic elections.

It is the responsibility of each individual to understand and engage with economic issues on a daily basis.  However economic issues and theory are complex, largely because economic systems are human systems, and are primarily concerned with the interactions between individuals.

The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.
F.A. Hayek, The Fatal Conceit

There are 2 sayings that emphasise the complexity of economics and its application:

  1. If you ask 5 economists a question you will get 6 different answers; and
  2. The answer to many economic question is “It depends.”

While economics can be complex it can be understood. Keep asking questions and testing everything. I hope to present basic economic theory in an accessible/usable way. I will discuss issues associated with the whole economy and the interactions between individuals. In my next post I will begin discussing the dominant economic systems.

The purpose of this new series of posts is to provide Christians with a sound basis for understanding economics in the present age and the age to come. This should help to dispel many of the misconceptions and misrepresentations of economic theory and its application today.

What is Economics?
Despite the wide-reaching application of economics to almost every area of life it is primarily concerned with solving one seemingly simple problem that arrises from 2 simple assertions:
1. Mankind has a finite resources available to it.
2. Humans have an unlimited number of wants and desires (including needs).

Therefore the problem economics seeks to answer is:

How do you satisfy the unlimited wants of mankind using the limited resources available?

This means, at its core, economics is primarily concerned with efficiency. Therefore economics is concerned with organising society for the purpose of efficiently directing resources to satisfy the wants of individuals and groups. For thousands of years practical philosophers have proposed various solutions to this problem. Seeking to determine which human wants and desires should be satisfied, i.e. what and how much should be produced?

3 Simple facts
There are 3 simple facts that need to be stated before continuing:
1. Economic systems are human systems, primarily concerned with human interactions.
2. Current economic theory does not have an ethical system built into it. This needs to be added by the society in which it operates.
3. Neither capitalism nor communism (2 dominant economic systems) are inherently Christian.

Keep these facts in mind when reading future posts in this thread.

Like any good story that has twists and turns, action and romance there is always a big reveal at the end. This is also true for the story of the Bible.

Once everything that God set out to do in the old creation has been done, all mankind has been called to account and Jesus reigns supreme, God will reveal the new creation. He will give it to mankind and mankind to it. All the imagery of Revelation 21-22 points toward the undeniable fact that all are one in God, perfect unity.

Then I saw a new heaven and a new earth, for the first heaven and the first earth had passed away, and the sea was no more. And I saw the holy city, new Jerusalem, coming down out of heaven from God, prepared as a bride adorned for her husband. And I heard a loud voice from the throne saying, “Behold, the dwelling place of God is with man. He will dwell with them, and they will be his people, and God himself will be with them as their God. He will wipe away every tear from their eyes, and death shall be no more, neither shall there be mourning, nor crying, nor pain anymore, for the former things have passed away.”

And he who was seated on the throne said, “Behold, I am making all things new.” Also he said, “Write this down, for these words are trustworthy and true.” And he said to me, “It is done! I am the Alpha and the Omega, the beginning and the end. To the thirsty I will give from the spring of the water of life without payment. The one who conquers will have this heritage, and I will be his God and he will be my son. But as for the cowardly, the faithless, the detestable, as for murderers, the sexually immoral, sorcerers, idolaters, and all liars, their portion will be in the lake that burns with fire and sulfur, which is the second death.”
(Revelation 21:1-8 ESV)

The old creation is no more, with its last remnants swept away into Hell. In that day hope will be realised and the unity (glory) of God will be perfected in all things, he will be all and in all. As in the beginning it is not what it looks like (physically) that matters, rather it is the perfection of unity between God, man and creation that matters.

Then came one of the seven angels who had the seven bowls full of the seven last plagues and spoke to me, saying, “Come, I will show you the Bride, the wife of the Lamb.” And he carried me away in the Spirit to a great, high mountain, and showed me the holy city Jerusalem coming down out of heaven from God, having the glory of God, its radiance like a most rare jewel, like a jasper, clear as crystal.
(Revelation 21:9-11 ESV)

There will be no barrier and no mediator between God and man, man will live in the presence of God forever. Unrestricted access to the source of life and love. This new union of man and creation (in God) will last forever and the darkness of sin and disunity will have no place in the new creation. This has been secured by Jesus Christ the new head of this new creation.

And I saw no temple in the city, for its temple is the Lord God the Almighty and the Lamb. And the city has no need of sun or moon to shine on it, for the glory of God gives it light, and its lamp is the Lamb. By its light will the nations walk, and the kings of the earth will bring their glory into it, and its gates will never be shut by day—and there will be no night there. They will bring into it the glory and the honor of the nations. But nothing unclean will ever enter it, nor anyone who does what is detestable or false, but only those who are written in the Lamb’s book of life.
(Revelation 21:22-27 ESV)

While the unity that existed in the beginning was the same type as the unity that will exist in the new creation there is one fundamental difference, Jesus. Jesus is a better head than Adam ever could be. Jesus, the perfect union of God and man, makes all the difference in the new creation. He will not rebel against the union of God because this would require him to rebel against himself and break the mould of unity that all things were created to fit. Instead he will remain true to God and himself forever, securing the lordship of the entire human race over creation.

Then the angel showed me the river of the water of life, bright as crystal, flowing from the throne of God and of the Lamb through the middle of the street of the city; also, on either side of the river, the tree of life with its twelve kinds of fruit, yielding its fruit each month. The leaves of the tree were for the healing of the nations. No longer will there be anything accursed, but the throne of God and of the Lamb will be in it, and his servants will worship him. They will see his face, and his name will be on their foreheads. And night will be no more. They will need no light of lamp or sun, for the Lord God will be their light, and they will reign forever and ever.
(Revelation 22:1-5 ESV)

The End

This is only the beginning.

The enemies of Christ must be cast into hell before the new creation can be inaugurated. Hell is not part of the new creation.

Unity can’t exist between God and those who will not willingly submit to his headship (though all will submit, willingly or unwillingly). Not all who are born of Adam will be reborn in Christ and receive all the good that comes with being united to God and others (in Christ).

Hell is not part of the new creation. Those who are cast out out of the presence of God have no place in the union of the new creation. At the end of Revelation 20 the Bible describes the final judgement after the last war. All those who will not bow the knee willingly are thrown into the lake of fire (hell). This is to ensure that they are dealt with before the union of the new creation is inaugurated. If they are judged after the new creation is inaugurated this will restart the cycle of a divided creation making perfect unity in Christ impossible.

Then I saw a great white throne and him who was seated on it. From his presence earth and sky fled away, and no place was found for them. And I saw the dead, great and small, standing before the throne, and books were opened. Then another book was opened, which is the book of life. And the dead were judged by what was written in the books, according to what they had done. And the sea gave up the dead who were in it, Death and Hades gave up the dead who were in them, and they were judged, each one of them, according to what they had done. Then Death and Hades were thrown into the lake of fire. This is the second death, the lake of fire. And if anyone’s name was not found written in the book of life, he was thrown into the lake of fire.
(Revelation 20:11-15 ESV)

God will have his day in court. There is only one justice, the justice of God. In unity justice for one is justice for all. Only those who are united in him will be vindicated. Those who are not united in Christ will be condemned by their own actions.

The sins of some people are conspicuous, going before them to judgment, but the sins of others appear later. So also good works are conspicuous, and even those that are not cannot remain hidden.
(1 Timothy 5:24-25 ESV)

All that will matter on that day is unity in Christ. God will separate the sheep from the goats, the faithful from the unfaithful. Those who actively and faithfully live out their union in Christ will be set aside to live in union with God forever, in the new creation. By this shall all mankind know the faithful who are in Christ, that they loved one another. Christians will be distinguished by their love in unity, glorifying God by living out their unity in Christ.

“When the Son of Man comes in his glory, and all the angels with him, then he will sit on his glorious throne. Before him will be gathered all the nations, and he will separate people one from another as a shepherd separates the sheep from the goats. And he will place the sheep on his right, but the goats on the left. Then the King will say to those on his right, ‘Come, you who are blessed by my Father, inherit the kingdom prepared for you from the foundation of the world. For I was hungry and you gave me food, I was thirsty and you gave me drink, I was a stranger and you welcomed me, I was naked and you clothed me, I was sick and you visited me, I was in prison and you came to me.’ Then the righteous will answer him, saying, ‘Lord, when did we see you hungry and feed you, or thirsty and give you drink? And when did we see you a stranger and welcome you, or naked and clothe you? And when did we see you sick or in prison and visit you?’ And the King will answer them, ‘Truly, I say to you, as you did it to one of the least of these my brothers, you did it to me.’
(Matthew 25:31-40 ESV)

The Glory of God is in his oneness/unity. There can be no greater pursuit or life of value than a life lived in union with God. In unity mankind was designed to reflect to glory of God, glorifying him in every action.

Those who will not unite in Christ will be cast out forever. All benefits of unity (in God) received in the present age (though they were not united to him) will be removed forever (the love of family, any good thing, etc). Their fate will be one of eternal torment, beings created to exist in unity with God and one another yet unable to achieve this in the slightest. There will be no hope of reprieve from this torment, no death to look forward to. In that day they will know their own actions condemned them. God will glorify himself by condemning those who will not unite in him, vindicating himself before all.

“Then he will say to those on his left, ‘Depart from me, you cursed, into the eternal fire prepared for the devil and his angels. For iI was hungry and you gave me no food, I was thirsty and you gave me no drink, I was a stranger and you did not welcome me, naked and you did not clothe me, sick and in prison and you did not visit me.’ Then they also will answer, saying, ‘Lord, when did we see you hungry or thirsty or a stranger or naked or sick or in prison, and did not minister to you?’ Then he will answer them, saying, ‘Truly, I say to you, as you did not do it to one of the least of these, you did not do it to me.’ And these will go away into eternal punishment, but the righteous into eternal life.”
(Matthew 25:41-46 ESV)

There is a war coming between sons of Adam and the sons of God. This is a war between the old and new creations, between the broken union of man and the new humanity in Christ. This must happen before the new creation is established. The amnesty of the present age is passing and when it does the sons of God will unite for the last human war. This is a human war because mankind was given authority over creation (in the beginning), so at the end of the present age mankind will regain its place over creation, in Christ. Order will be reestablished.

Then comes the end, when he delivers the kingdom to God the Father after destroying every rule and every authority and power. For he must reign until he has put all his enemies under his feet. The last enemy to be destroyed is death. For “God has put all things in subjection under his feet.” But when it says, “all things are put in subjection,” it is plain that he is excepted who put all things in subjection under him. When all things are subjected to him, then the Son himself will also be subjected to him who put all things in subjection under him, that God may be all in all.
(1 Corinthians 15:24-28 ESV)

This war is necessary. Christ, who is head of this new human union (and new creation), must subjugate every other government and authority who does not subject themselves to his rule willingly. So that all may be brought to account under the good order that God established in the beginning.

In the process of uniting all thing under his authority Christ will dominate death and raise all from the dead. Just as mankind is united in death the sons of God be united in life. Once Jesus Christ has put all things under his feet he will then put himself under the authority of God the father. The phrase “…that God may be all in all” (vs28) is the language of unity, a union that all Christians will share in as part of the new creation. This is an image of complete consistency with and submission to the authority of God the Father, where no part of creation is in revolt or rebellion against God. The kingdom of God is a perfect union under the order, rule and authority of God the father. Christ will hand over all authority to God so that all things will be subject to God. Never again will mankind seek to wrestle control of creation from God because Christ who is the head of all will not fail where Adam failed, to do so will require him to rebel against himself (he is God also). In this way the future of the new creation will be secure in Christ.

During this last war, creation will unite in rebellion against God one last time. Seeking to destroy their common enemy, God’s chosen king (Christ). They will not prevail, they will be defeated swiftly and without mercy.

Then I saw heaven opened, and behold, a white horse! The one sitting on it is called Faithful and True, and in righteousness he judges and makes war. His eyes are like a flame of fire, and on his head are many diadems, and he has a name written that no one knows but himself. He is clothed in a robe dipped in blood, and the name by which he is called is The Word of God.  And the armies of heaven, arrayed in fine linen, white and pure, were following him on white horses. From his mouth comes a sharp sword with which to strike down the nations, and he will rule them with a rod of iron. He will tread the winepress of the fury of the wrath of God the Almighty. On his robe and on his thigh he has a name written, King of kings and Lord of lords. Then I saw an angel standing in the sun, and with a loud voice he called to all the birds that fly directly overhead, “Come, gather for the great supper of God, to eat the flesh of kings, the flesh of captains, the flesh of mighty men, the flesh of horses and their riders, and the flesh of all men, both free and slave, both small and great.” And I saw the beast and the kings of the earth with their armies gathered to make war against him who was sitting on the horse and against his army. And the beast was captured, and with it the false prophet who in its presence had done the signs by which he deceived those who had received the mark of the beast and those who worshiped its image. These two were thrown alive into the lake of fire that burns with sulfur. And the rest were slain by the sword that came from the mouth of him who was sitting on the horse, and all the birds were gorged with their flesh.
(Revelation 19:11-21 ESV)

Those who will not unite in Christ willingly have no place in the new creation, this is why hell is so important (more on this later). At the end of the book of Matthew describes the final judgement of God where he will separate those who are united in Christ (the sheep) from those who would not submit willingly (the Goats).

“When the Son of Man comes in his glory, and all the angels with him, then he will sit on his glorious throne. Before him will be gathered all the nations, and he will separate people one from another as a shepherd separates the sheep from the goats. And he will place the sheep on his right, but the goats on the left. Then the King will say to those on his right, ‘Come, you who are blessed by my Father, inherit the kingdom prepared for you from the foundation of the world.
(Matthew 25:31-34 ESV)

While similar in some respects, sheep and goats are not the same species and as such they have no place coexisting, the goats must be separated out. Note that this distinction between species is not made effective until the final judgement and it is God who makes this distinction not man. So in the present age while there is still time Christians must strive to make Christ known and leave the judgement and punishment of the goats to God at the time of his choosing.