Jerry Bowyer at IWU on Biblical Economics

KERN sponsored a visit by Jerry Bowyer to IWU these last couple days. Yesterday he presented on Biblical Economics Principles.

1. I substantially agreed with Bowyer on most things. Our own Tom Lehman might be surprised to know that I actually agree with him on many, many aspects of economic principles. Of course both of them are light years ahead of me on the math. They are truly economics scholars.

To set some background, Bowyer's conservative political credentials are solid. For example, he completely rejects Keynes as the purveyor of an atheistic system. More on that below. So any comment that might sound balanced should be taken in light of a joke he made about the Republican party: "It's my party and I can cry if I want to."

2. Here are some of his thoughts that I tweeted yesterday:

a. "I want both a pro-growth approach and a safety net that is more like a trampoline" (these are not exact quotes). Jerry Bowyer on the negatives of both political parties. The Republicans have the right economics, he was saying. But Democrats express Christian values when they want there to be a safety net.

Economically, Bowyer argued that only prosperous nations can afford a safety net. He heavily critiqued Bernie Sanders, whom he has debated, for wanting a 90% tax rate. That would kill the growth that affords a safety net. Bowyer advocates a safety net that is more of a trampoline, one that doesn't create dependence.

b. "My experience of the poor is not that they are sponges but that they usually have some sort of block."

His point here is that he finds that a lot of those who are dependent are not so by choice but because they either don't know how to get out of their rut or have something standing in their way.

c. "The Bible has a lot to say against hoarding but seems in favor of 'investment.'"

Wesley was invoked here--"Earn all you can, save all you can [in terms of being conservative in your spending], give all you can." Lehman also argued Wednesday at lunch that profit is a sign that demands are being met, that people are getting what they want.

3. So I agree with a lot of the economic fundamentals that both Bowyer and Lehman are suggesting here. For example, I agree with both that modern economics is not a zero-sum game today (the biblical authors thought of it in zero-sum terms in light of the culture of their day). Economic prosperity has the potential to create prosperity across the board.

Perhaps unlike Lehman, however, I don't think this is automatic. Care has to be taken that production is done in a just way. And I suspect some safeguards need to be in place in relation to the hoarding of prosperity.

Bowyer argued that most of the wealthy do not hoard beyond about 5 million, if I remember correctly. It's just hard to increase one's standard of living beyond that point, he suggested. I was impressed with Bowyer's Christian values.

4. There was one theme that I would significantly nuance myself. It's the suggestion that, somehow, biblical economic values didn't really get put into play until the Industrial Revolution. It reminds me of oneness Pentecostals who claim that their understanding of the Bible is the correct one, yet their movement started in 1916. The idea that 1500 years or more passed before someone finally implemented the true biblical teaching on economics seems highly suspect to me.

Yes, I believe that a regulated capitalism currently is the economic system with the best shot at bringing about the core Christian value of love on the largest scale (that could change in some future yet to come). But to suggest that it wasn't until modern times that true biblical values were played out seems suspicious, and I think it's absurd to suggest that the Church from 100-1500 was somehow "pagan" or at least based on pagan presuppositions.

The core values of Christianity were incarnated to begin with in the cultural thinking of the biblical authors and audiences. That's how revelation works. I agree with Bowyer that they were translated into more hard core Platonic and Aristotelian forms in the first 1500 years of Christianity. And I agree with him that these philosophical translations did not lead to economic flourishing or the flourishing of knowledge.

But here's my central claim. What changed in the late Middle Ages was the rise of modernism as the culture into which Christian values were translated. First, there was the rise of nominalism, which broke up the absolutism of Platonism and Aristotelianism. This coincided with the rise of the individual datum and the individual person. So we have the rise of empirical method and individualism.

So Christian values were applied in a new way, and it is these modernist presuppositions in combination with Christian values that gave rise to modern flourishing. As individuals gained in significance, the Christian value of the individual rose. Capitalism and democracy rose. The result is a world that has flourished as never before in human history.

So it would seem that Christian values have always played themselves out against the backdrop of other philosophical frameworks that are cultural. This fits with the incarnated nature of revelation.

5. Let me also repeat what I have repeatedly said. If worldview talk is limited to ideas, it is absurd. The Bible is clear that our actions play out our deep seated desires. Even to take the biblical word "mind" in a purely ideological sense is to read the Bible anachronistically in the light of certain modern categories.

If we are to use worldview language in a robust way, we have to talk about beliefs that go down to our bones or, as Jesus said, the heart (Mark 7). The NT is full of language about our "lusts" and "desires," not to mention our "flesh."

So if we are to ask what the impact of Keynesian economics is, then we must look at its effect, not Keynes as a person or even his underlying presuppositions. Does his approach result in an effect that "loves neighbor" best? I certainly would not claim so. But to dismiss his approach we need to look at its results, not the person (ad hominem fallacy) or his reasons for formulating it (genetic fallacy).

Actually, it's ironically Platonic to dismiss his system because of its ideological starting point. This approach sees concrete economic realia as a kind of embodiment of his ideas.

Keynes, Hayek, and Friedman

My attempt to overview these three in brief:
__________
John Maynard Keynes (1883-1946) was perhaps the most influential economist of the twentieth century, and his perspective was that the government frequently needs to intervene into economic matters in order to avert or alleviate financial crisis. [1] For example, Presidents George W. Bush and Barack Obama largely followed the advice of Keynesian economists when they spent massive amounts of money in the 2008 world economic crisis order to keep major banks and businesses from failing, while also pumping money into the system.   Although not all economists agree, most also believe that the New Deal projects of Franklin Roosevelt along similar lines helped speed the American recovery from the Great Depression.

Friedrich Hayek (1899-1992) is often placed at the other end of the economic spectrum, although Hayek and Keynes did not disagree on everything. [2] He and the “Austrian school” of economics reflect a minority position among economists, but nevertheless one that has had significant impact. While Keynes advocated intense involvement of government during times of economic crisis, Hayek was more to blame government involvement for economic crisis in the first place.  A key cause of the Great Depression for Hayek was the fact that the Federal Reserve Bank (in the 1920’s artificially allowed more money into the market than it should have, leading to an inevitable contraction later.

While Hayek’s theories have occasionally had great influence, the Austrian School is considered to be “heterodox” by most economic experts, outside the mainstream.  Along with Keynesian economics, the other main approach to economics is the monetary approach, with Milton Friedman as its best known proponent. [3] Monetarism can be seen both as a development and critique of the Keynesian approach.  For Keynes, the key factor in a stable economy was to make sure the total of government and private spending are in equilibrium with the total demand for goods and services at any particular time and price level.  When the private sector stops spending, the government has to pick up the slack, even when it causes deficit spending.

By contrast, Friedman (like Hayek) thought governments more often than not compounded problems when they intervened in economic crises.  He did believe in government involvement in the economy, but it was largely to make sure the money supply always kept in equilibrium with the Gross Domestic Product (GDP—the total value of the goods and services produced in a nation).  In his view, this policy would keep prices relatively stable.  Since this approach is purely mathematical, it requires no value judgments on the part of economic leaders.  Nothing special should be done in an economic crisis because he believed systems would eventually reach equilibrium on their own.

[1] Keynes’ key work was The General Theory of Employment, Interest and Money (1936).

[2] Hayek’s key work was The Road to Serfdom (Chicago: University of Chicago, 1944).

[3] Friedman’s key work here, which he co-wrote with Anna Schwartz, is A Monetary History of the United States 1867-1960 (Princeton: Princeton University, 1963).