God is a Capitalist

Thursday, August 31, 2017

How Baptists do economics

Baptists form the largest Protestant group of Christians in the US and so could have a large impact on how US voters understand political economy. But do Baptists have anything unique contributions to offer on economics? Chad Brand, professor of Christian theology at The Southern Baptist Theological Seminary in Louisville, KY, answers that in his 2012 book Flourishing Faith: A Baptist Primer on Work, Economics, and Civic Stewardship.

The most important contribution Baptists make is their history of distrust of government resulting from centuries of persecution. Lutheran, Reformed and Anglican Protestants all formed close ties with the state from their births. They were supported by taxes and used the brutal power of the state to enforce their particular views, often against Baptists, whereas Baptists generally insisted on a separation of the two spheres.

Readers today might be confused about that historical antipathy toward the state because since the rise of the Moral Majority in the 1980s Baptists seem to have decided to take a shortcut to building the Kingdom of God by using the power of the state. Dr. Brand reminds us, “Scripture teaches that all humans are sinners. A PhD from Harvard does not diminish that, and might even make it worse if those elites believe that their education makes them morally better people.” Brand echoes the public choice political economy of James Buchanan that economists and politicians are not saints or angels and usually have some goal in mind besides the public good:

“In our day, as in theirs, it is all being done ostensibly 'for the good of the people.' In reality, it is being done for the glory of politicians and as a pathway for them to seize ever more and more power.”

Public choice should be adopted as Christian political economics by all pastors. Brand never mentions the “Baptists and Bootleggers” theory, but he gets awfully close at times. And the author is convinced that the Bible requires restrictions on the state:
Scripture advocates a limited state and since it teaches that remedial justice, that is, the care of the genuinely poor, is primarily a function of the church and generous individuals who give of their own initiative to help others....As the New Testament scholar Oscar Cullmann has shown, the notion of an expansionist state with a high level of authority over the details of people’s lives cannot be proven from the New Testament (The State in the New Testament). 
Dr. Brand could have made a stronger case for the Biblical support for capitalism. He wrote, “We have to say that the Bible does not explicitly lay out a theory of economics in a political context." However, in his sixth chapter he defines political economy as “...a term that refers to the simple fact that in any given nation or state, governing structures adopt a certain way to relate to the economy." And that is exactly what God did in the Torah when he gave Moses the laws to govern the nation of Israel. As I show in my book God is a Capitalist, Israel had no human executive and no legislature. I had only 613 laws to guide judges. The laws were divided into moral, religious and civil, with most of the civil laws designed to build a rock wall around property rights. Essentially, Israel as God determined it was a libertarian’s dream!

Some things the author gets wrong. He wrote, “What should be obvious from this brief survey is that the rise of economic fortune for the Europeans was the increase in trade. Trade, throughout history, has been the key to economic development.” Trade can assist development, as Ricardo made clear with his theory of comparative advantage, if it results in lower prices. But trade is mostly a consequence of economic development. How is a nation going to trade if it has nothing to trade with? The cause of economic development is greater savings invested in better tools for workers.

Another mistake: “By the middle of the eighteenth century a revolution in the development of technology had begun to transform England. This 'revolution' was due mostly to the rise of modern natural science that had begun in earnest a century earlier.” Actually, science didn’t contribute to economic development until the 20th century. Until then, science dealt mostly with physics and astronomy. Mechanics and tinkerers contributed all of the new technology that powered the industrial revolution. And that “revolution” began in the Dutch Republic two centuries before. Besides, China had been far ahead of Europe in the sciences before the industrial revolution, and later the USSR had world-class scientists, but neither enjoyed growth in standards of living as the West did.

Brand errs on the origins of economic thinking when he writes, “Prior to his book [Smith’s Wealth of Nations], six thousand years of human history had passed “without a seminal work being published on the subject that dominated every waking hour of practically every human being: making a living (Mark Skousen, The Making of Modern Economics).” I find it hard to believe that Skousen is unfamiliar with the works of the theologians at the University of Salamanca, Spain in the 16th and 17th centuries. Hayek held a meeting of his Montpelerin Society in Salamanca to honor the school as the birthplace of Austrian economics. Smith was the last in a long line of scholastics beginning with those at the university at Salamanca and Smith contributed very little to their understanding. The Salamancan theologians were the first in the West to call for a state reduced to protecting the life, liberty and property of the citizens. One even advocated killing any king who became a tyrant.

Finally, Brand accepts the idea that capitalism began in the monasteries of medieval Europe because they developed advanced accounting and business techniques. Following historians such as Rodney Stark of Baylor University, he defines capitalism as large scale, sophisticated business. There are several problems with that definition. 1) It places the birth of capitalism about 500 years before the explosive growth of wealth in the Dutch Republic and England, too distant to earn the honor of fathering capitalism. Even Marx didn’t push the date back that far. 2) Monasteries were schools of socialism. The monks and nuns owned nothing. The monastery owned everything, just as the government owned it in the old USSR. 3) All socialist states have used advanced accounting and sophisticated business structures, so those can’t define capitalism.

Institutions define capitalism and they are Christian individualism, the rule of law, limited government, private property and free markets. Property doesn’t exist without free markets. Also, capitalism is mass production for the masses that raises standards of living by raising wages and reducing the costs of consumer goods. Production in the monasteries was small scale craft production for the wealthy. Mass production didn’t begin until the Dutch Republic.

Those are major irritants in an otherwise excellent introduction to the Protestant and Baptist perspective on economics. Still, I highly recommend Dr. Brand’s book.
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