Posts tagged with: economics

Courtesy Evangelical Outpost and the always-interesting 33 Things, here’s a video on the strangeness of the economics of incentives and punishments:



The lesson here is that people in real life, body and soul, are not simple rational economic actors who respond only to material realities.

We exist in the context of social webs and relationships. But we also have non-material faculties; consciences, free choice, creativity, speculative reason.

Homo economicus is useful as a partial model of human behavior, but it is not exhaustive, comprehensive, or reliably predictive. Why do economists try to universalize this model?

My theory is that it is in part a response to the post-Englightenment subversion of the unified field of learning. Theology was displaced, albeit briefly, as the queen of the sciences. Philosophy could not hold on, and was torn down by the clamoring crowd of other disciplines. Now each discipline seeks to place itself upon the throne, thus we get tyrannizing and universalizing claims from every academic discipline. Everyone tries to explain everything in the terms of their own discipline, and these explanations are therefore by necessity reductive.

For a bit more, see “Requiem for Homo Economicus,” from the Journal of Markets & Morality 10, no. 2 (Fall 2007): 321-38, in which Edward O’Boyle argues, “Burying homo economicus and substituting homo socioeconomicus brings the basic unit of economic analysis out of the individualism of the seventeenth and eighteenth centuries into the personalism of the twentieth century.”

To these models, we ought also add homo religiosus, all the while recognizing the each are models and therefore limited, partial, and provisional relative to the comprehensive picture of humanity in imago Dei.

Here’s OpenMarket:

Plain and simple economics — not the alleged machinations of Big Oil or Congress’s unwillingness to put a price on carbon – explains why America remains dependent on petroleum.

We are still not beyond petroleum. In fact, we’re quite a ways away.

Judith Dean, currently an international economist at the U.S. International Trade Commission, has a worthwhile exploration of the relationship between Christian faith and economic research (HT). It’s up at the InterVarsity site for the Following Christ conference and is titled, “Being a Good Physician: Reflections on Christianity and Economic Research.”

There’s a lot of good, challenging, and insightful stuff here. As always, read it in full. But here’s a bit that’s especially incisive:

Especially for those working in government policy making bodies, there is a role for advocating change where policies are seen as creating results which are intolerable from the Christian standpoint, or where the economic system fails to address problems which a Christian cannot ignore. Large groups of such advocates already exist, quite often centered around specific issues. Though these groups may include economists, they are quite often made up of non-economists who care deeply about a particular problem (e.g. R. Sider, J. Wallis, and T. Campolo, who all have written about poverty issues). Some of these groups zealously advocate particular solutions to what they view as egregious injustices in the economy. Yet, lacking economic understanding, they fail to see that their proposals themselves are sometimes flawed.

Here the Christian economist’s expertise may be called upon to inform these “advocate groups” about the nature of the problem and the implications of different solutions. Many Christians want to be better informed in order to become better advocates. Yet they do no know where to go to get information. Sound economic reasoning which is made accessible to a non-professional audience is sorely needed. It is odd indeed that most contemporary Christian writing on economic issues for the general public is done by theologians or sociologists.

Note here the vigorous sense of Christian advocacy in the public square, and how it is to be informed by solid economic, social, and historical research. Note too that the advocacy described is generally not that which ought to be pursued by the institutional church, but by Christians organizing themselves organically in civil society.

As a theologian often writing on economic and public policy matters, I heartily endorse Dean’s call for more sustained, careful, and intentional engagement of Christian economists on these matters.

Read “Being a Good Physician: Reflections on Christianity and Economic Research” and leave a comment below.

Via the Volokh Conspiracy:

Mario Rizzo and Gerald O’Driscoll point to dueling letters to the editor from 1932 in The London Times by John Maynard Keynes and F. A. Hayek on whether government spending can help cure contemporary economic woes. The letters, unearthed by Richard Ebeling, show that today’s debates over economic policy are, in many respects, a rerun of the debates of the 1930s.

Everything old is new again! Related: Fear the Boom and Bust

In the most recent edition of the Harvard Journal of Law and Public Policy, Acton’s Research Director Samuel Gregg has an article in which he argues that the ongoing financial and economic crisis has raised serious questions about the credibility and usefulness of much mainstream contemporary economics. Drawing partly on his recent book, Wilhelm Röpke’s Political Economy (2010), Gregg suggests that much mainstream economics after Keynes became gradually dominated by a fixation upon econometrics that has threatened at times to reduce economics to a poor cousin of mathematics. As Gregg writes:

Since John Maynard Keynes’s time, mainstream economics has undergone a steady process of mathematization and immersion in abstraction. One need only glance through their nearest copy of the American Economic Review and observe the plethora of algebra that is now central to most mainstream economists’ argumentation. (p.445)

Gregg suggests that this partly reflected an unhealthy relationship between parts of the economics profession and the trend to government economic planning that accelerated after World War II. In this connection, Gregg notes:

The postwar “new economics” helped to support the belief that the state could “manage” the economy and therefore facilitated expectations that governments should attempt to do so. Governmental institutions committed to interventionist policies wanted macroeconomic research that added empirical credibility to such proposals. . . . A form of collusion consequently developed between the postwar economics profession and states pursuing interventionist strategies. (p.454)

In the second part of the article, Gregg makes the case for a re-look at the type of political economy pursued by Adam Smith: i.e., one committed to a fuller appreciation of reality.

Economists wishing to re-engage economics in a wider discussion about the truth of human reality could thus do worse than return to the writings of Adam Smith. Here one finds a truly synthetic approach to comprehending not just the economic dimension of human reality, but also how that economic component fits into a fuller picture of human reality—one that is committed to treating moral virtues as real to the same extent as the forces of entrepreneurship and peaceful free exchange, not to mention institutions such as the rule of law that are the very stuff of modern flourishing economies. Returning to Smith does not imply wholesale abandonment of all the tools and methods developed in a range of different schools of economic thought since 1776. It does, however, suggest that efforts to quarantine economic science from normative considerations or even knowledge of the basic moral goods knowable by human reason ought to be themselves viewed as unreasonable and unscientific. (p.463)

Read Gregg’s “Smith versus Keynes: Economics and Political Economy in the Post-Crisis Era” in its entirety in the Harvard Journal of Law and Public Policy.

Last week’s Acton Commentary, “Unity or Unanimity at Reformed Council?” was picked up by a number of news outlets, including the Detroit News and the Holland Sentinel. The latter paper published a response to the piece by Jeffrey Japinga, “Intersection of economics and faith is valid subject for church council.”

I think Japinga misreads me, and in doing so (perhaps unintentionally) ends up agreeing with me. He thinks that I oppose the Accra Confession because “what it says disagrees with the conclusions of the Acton Institute.” I do disagree with the Confession on those grounds, to be sure. But that Accra and Acton conflict on economic questions is really the least of my concern in opposing the Accra Confession.

My greatest problem with the Accra Confession is that it proposes to make its own position a matter of confessional integrity. When Japinga compares the confession to the Acton Institute’s core principles, for instance, he’s making a number of category mistakes. The Acton Institute is a nonprofit educational and research organization, a think tank. The World Communion of Reformed Churches purports to be a global institutional representation of the Christian church.

Can you see the difference? It is the job of organizations like Acton to engage in debates in the public square about political policy, prudential and particular concerns, in this case economic. This isn’t the primary task of the institutional church, however.

What I really want at the WCRC is the “kind of open, healthy discussion” Japinga celebrates. I don’t really desire to expel what I consider to be the voices of liberation theology and neo-Marxist ideology from the WCRC. That’s not in danger of happening any time soon and my book, Ecumenical Babel: Confusing Economic Ideology and the Church’s Social Witness, describes some of the reasons why.

My real concern is to see that voices that view globalization as having good aspects as well as bad, as the Accra Confession most certainly does not, are not excluded from the Reformed ecumenical discussion. I believe the adoption of the Accra statement as a confessional standard would do just that and serve to silence dissent and undermine intellectual diversity. It would turn an economic ideology (one that also happens to be false) into an article of the Reformed ecumenical faith.

As Ernest W. Lefever writes, “Taking sides and not taking sides both have moral and political pitfalls. But supporting the wrong side is the worst of all options.”

This week’s Acton Commentary from Jordan Ballor:

Unity or Unanimity at Reformed Council?

By Jordan Ballor

Global Christianity comes to Grand Rapids, Mich., this weekend in the form of the Uniting General Council of the World Communion of Reformed Churches (WCRC). Thousands of delegates, exhibitors, and volunteers will gather on the campus of Calvin College to mark the union of two Reformed ecumenical groups, the World Alliance of Reformed Churches (WARC) and the Reformed Ecumenical Council (REC). This new global ecumenical body will include 227 denominations in 108 nations worldwide, with over 80 million Christians of broadly Reformed, Congregational, and Presbyterian membership.

But the proceedings over the next two weeks will go far beyond mere celebration and praise at the joining of these various groups. The future course of the newly formed WCRC will be set at this first council, and all signs point to an institution defined by a narrow set of advocacy items rather than a Gospel-oriented vision. As WARC president Clifton Kirkpatrick has said, “A true test of the value of our impending union will be how it enhances and strengthens our commitment to economic and ecological justice.”

The basis for the WCRC’s exploration of justice is a document called the Accra Confession, named for the last general council of WARC, held in Accra, Ghana in 2004, which produced the text in response to a perceived crisis of the Christian faith. In the words of the Accra Confession, the crisis calls for “a decision of faith commitment,” specifically focused on condemning “the development of neoliberal economic globalization.” At the core of this “faith commitment” is a perspective that views the developing world as victimized at the hands of a vast conspiratorial network of developed nations, multinational corporations, and global financial institutions. The primary villain in this “neoliberal empire” is the United States, cast as the leader of “the coming together of economic, cultural, political and military power that constitutes a system of domination led by powerful nations to protect and defend their own interests.”

The South African economist Stan du Plessis has criticized the Accra Confession for this perspective, one that in his view “substitutes a narrow ideology for a critical understanding of modern economies.” And so the problem with the Accra Confession is not just that it takes sides on questions of economic prudence and policy, although this is something that institutional churches should always be wary of. As the great Princeton ethicist Paul Ramsey wrote in 1967, “The specific solution of urgent problems is the work of political prudence and worldly wisdom. In this there is room for legitimate disagreement among Christians and among other people as well in the public domain–which disagreement ought to be welcomed and not led one way toward specific conclusions.”

The compounding problem with the Accra Confession is that it takes the wrong side, the side that embraces an essentially neo-Marxist narrative of Third World alienation and victimization, and seeks “justice” in the form of retribution against First World villains. Far from promoting the kind of unity that is at the core of ecumenical efforts, this kind of rhetorical and ideological confessionalism drives apart those who ought to be joining together. It pits the rich against the poor, north against south, east against west, inserting the divisive language of economic class into the definition of the Christian church.

Wholesale rejection of globalization should not be made into an article of the Christian faith. But this is precisely what the Accra Confession does. And if the World Communion of Reformed Churches adopts the Accra Confession or its underlying economic worldview in the coming weeks, it will be undermining its own stated commitment to “unite Christians for common witness and service to the world.”

Blog author: jballor
Thursday, June 3, 2010
By

I just finished writing a review of Robert H. Nelson’s book, The New Holy Wars: Economic Religion vs. Environmental Religion in Contemporary America (Penn State University Press, 2010) that will appear later this year in Calvin Theological Journal. It is a good book. It is a timely book. There are flaws, but overall there is much to learn from Nelson’s analysis.

I found a good summary passage that appears as a footnote on p. 171:

The terms ecology and economics have common linguistic origins, both derived from the Greek word oikos for home. Both offer grand theories of the world that reflect a vision of the actual relationship of human beings and nature. The largest “ecology” and the largest “economy” are in each case the whole world, including all its creatures, human and nonhuman. There are then many subecologies and subeconomies that ecological theory both seek to integrate within their respective overall systems of thought. It has proven difficult, however, to apply mathematical and other rigorous scientific methods to understand the workings of the largest economic and ecological systems, thus often encouraging in both cases those who do undertake such efforts to interject their own strongly held values and beliefs in implicit ways—that is, to turn economics and ecology into metaphors of religious thought.

That should give you an idea of what Nelson means when he describes economics and environmentalism as competing secular “religions.” I expect to post a series of reflections on the book in this venue in the coming weeks, as it is a significant work that merits more comment and attention than could be devoted to a short book review.

At the Volokh Conspiracy, Todd Zywicki looks at a new article by Zeljka Buturovic and Dan Klein in Econ Journal Watch which aims to “gauge economic enlightenment based on responses to eight economic questions.” Among other things, the researchers filter the survey results for political ideology. Zywicki’s highlights:

  • 67% of self-described Progressives believe that restrictions on housing development (i.e., regulations that reduce the supply of housing) do not make housing less affordable.

  • 51% believe that mandatory licensing of professionals (i.e., reducing the supply of professionals) doesn’t increase the cost of professional services.
  • Perhaps most amazing, 79% of self-described Progressives believe that rent control (i.e., price controls) does not lead to housing shortages.
  • Zywicki said that “the questions here are not whether the benefits of these policies might outweigh the costs, but the basic economic effects of these policies. Those identifying as “libertarian” and “very conservative” were the most knowledgeable about basic economics. Those identifying as ‘Progressive’ and ‘Liberal’ were the worst.”

    Volokh blogger Ilya Somin follows with a number of caveats about the survey.

    The study certainly rings true when measured against the economic pronouncements of “progressive” faith-based groups. As I showed in my review of Prophet Jim Wallis’ latest book, the religious left’s understanding of basic economic principles is pretty dismal.

    Former Acton colleague, Jay Richards just reported that his book Money, Greed, and God has just been released in paperback. It is a thoughtful Christian analysis of the market economy and an excellent summary of the many key fallacies that plague the way we understand–or rather misunderstand–economics.

    He writes:

    My tentative title for the book had been The Christian Case for Capitalism. I had even referred to it that way for a couple of years while I was working on it. But the publisher came up with Money, Greed, and God: Why Capitalism Is the Solution and Not the Problem. I have friends who still think my original idea is preferable, but I’m not so sure. I’ve haven’t gotten a sense that anyone has been confused about the title. The only negative effect is that a few wags have suggested that “Money, Greed, and God” sounds like the platform for the Republican Party. I gotta admit, that’s pretty funny.

    In any case, the more controversial question has been, why did I choose to defend something called “capitalism”? Wouldn’t it have been better to put “free enterprise” or “free market” in the title? I do have some thoughts about that, which I’ll write about later. But I should say that I was quite intentional in defending something called “capitalism.”

    You can also order a copy of the book at the Acton Book Shop. We’ll have paperback copies in stock soon.