Economics and Christianity

Posted: February 2, 2014 in 1. Intro to Economics?
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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.

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Comments
  1. […] I’m very much looking forward to reading this series by my friend Thomas Clay, reflecting on the subject of economics from a Christian point of view. Thomas is a deeply thoughtful Christian who has a strong research background in economics. Thomas writes: […]

  2. Alex says:

    I agree that economics doesn’t contain a full ethical system. However, I suggest that it does assume at least a couple ethics, namely:
    1. That it is good to attempt to fulfil at least some of the unlimited wants of mankind
    2. That it is good to employ at least some of our limited resources in achieving ethic 1.

    In this sense, one could see economics as coming from the same line of thought as utilitarianism. Indeed, “satisfy[ing] the unlimited wants of mankind” is called “maximising utility” in some textbooks.

    Now that I’ve written that, I’ve begun to wonder…

    When economics is applied, most people assume that its aim is to fulfil as many wants as possible. Indeed, if one isn’t careful, one is quite likely to read the “problem economics seeks to answer” (above) in exactly this way. But if you do, you’ve suddenly fallen into utilitarianism. Economics is different to utilitarianism, but how many people realise this?

    • Thomas Clay says:

      You are right in saying that economics does seek to do good. Where a “good” in economics is defined as anything that satisfies a want or need (positive utility) and a “bad” is something that produces dissatisfaction (negative utility). Therefore the good that economics seeks to achieve is satisfaction of wants. However what most people may not be aware of is the fact that without more comprehensive ethical system economic systems can lead to logical conclusions that Christians would consider bad/wrong.

      While economics has been influenced by utilitarian thinking and is considered an important part of the history of economic thought, the current orthodox thinking is not strictly utilitarian. While the theory does not exclude an outcome where utility is maximised for everyone in practice the distribution of resources is very uneven.

  3. Dennis (Ph D from LSE decades ago) says:

    Starting a discussion about “economics from a Christian point of view” may be best done (in my judgement) by defining what parts are open to “Christian” insights and what are not. Presumably we are talking about economics as applied in this fallen world. If so, then much Christian insight into the basic, broken nature of mankind is irrelevant (not wrong, just irrelevant).

    Even then, much economic analysis can be done regardless of the underlying value system – otherwise it would not have been possible to analyse the Soviet command economy (for which the political and social background was atheism) and to expose its deep flaws that were based on fallacies about how humans would respond to the incentives autocratic systems set in place. A few decades ago Richard Lipsey wrote a textbook entitled “An Introduction to Positive Economics”. In it he tried to maintain the distinction between positive and normative economics where the values of the economist, or society or vested interests affected the questions one might ask, but not the analysis of the problems, once framed, to be solved.

    Just to make my case a bit more pointed, what do we think of “mathematics from a Christian point of view”. Does such a study even exist? If it does, the parts where Christian comes in are presumably prtyy specific and certainly irrelevant for much of the field that mathematics spans. I don’t think I can define the areas and there is no need to in this discussion, but can Thomas – or someone else – do that for “economics from a Christian point of view” befiore we get much further along?

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