When discussing the role of economics in our life and world I am always careful to make a distinction: life is economic but economics is not all of life. I’ve suggested this broader understanding of personal and social interests has been common among major free-market theorists since Adam Smith. Economics itself is the product of the sustained reflection of Christians on nature, the scriptures, and their own experience in crafting the institutions, ethics, and law which birthed the tradition of ordered liberty. Lord Acton so ably described this tradition as the belief in, “The society that is beyond the state – the individual souls that are above it.”
Economics is a way of thinking which is essential to guiding our moral action in a world of costs and constraints. It helps us act prudently by drawing our attention to not only the immediate but the long-term effects of action. It then holds that attention on the consequences of that action for the entire community. As the economist Kenneth Boulding pointed out most of our actions towards those that we are closest to and most intimate with take the form of gift and not exchange. The theologian Herman Bavinck describes the family itself as the basis for this ‘grants economy’, “In the family we get to know the secret of life, the secret, namely, that not selfishness but self-denial and self-sacrifice, dedication and love, constitute the rich content of human living.” It should not surprise us that the best in life is freely given for our relationship with God, whom we should fear, love, and trust above all things (Ex. 20:3), is entirely gracious.
Modern social scientists will often refer to this economy of gift as ‘social capital’. Ryan Streeter, director of domestic-policy studies at the American Enterprise Institute, has a written a short thoughtful history on the diminishing role social capital has had in our policy discourse even as we increasingly recognize its importance to human flourishing,
In the years since, research has taught us that social networks, voluntary activity, and other sources of social capital are positively correlated with a wide range of vital goods, such as better health, less crime, better jobs, more happiness, more effective schools, and more productivity. If we could sum up social capital’s benefits, we might say that they serve two of the things Americans care most about: economic well-being and happiness. But our political leaders have lost the knack for talking about this straightforward fact, and although the case for grounding policy in an appreciation of the importance of social capital is now better supported than ever, it is also much more rarely articulated. To see how that might change, we should begin by considering how our interest in civil society and social capital began — and how we let it slip into the background of public debate.
Streeter is not alone in his concern. Economist Raghuram Rajan in his recent book, The Third Pillar: How Markets and the State Leave the Community Behind, argues that those relationships of gift Bavinck calls the secret of life are essential to give our lives meaning,
They offer their members a sense of identity, a sense of place and belonging that will survive the trials and tribulations of modern life. They do this through stories, customs, rituals, relationships, and joint celebrations or mourning so that when faced with a choice between self-interest and community interest, or between community members and others, members are more inclined to put their own community first. Often, communities inculcate shared values and goals in members, as well as imbue in them a sense of personal utility from various actions that benefit the community.
Rajan argues that the state and the market have crowded out the role once reserved for communities. Economist Arnold Kling, in his thought-provoking review, observes,
For a solution to this vicious cycle, Rajan envisions a central government that provides local communities with financial support but without the bureaucratic controls that come with current programs. He would like to see communities develop the leadership and initiative to implement local solutions to their problems.
This is precisely the approach Streeter regrets playing an increasingly small role in our public policy debates. As Joe Carter recently bemoaned it seems, “You can have any economic policy you want so long as it’s socialism.” While a commitment to make public policy decisions which empower instead of overwhelm local communities is both welcome and consistent with the principle of subsidiarity Kling notes the paradox of the materialist nature of much of this debate,
This materialist determinism afflicts many economists. I think that we are wiser if instead we allow for beliefs, especially shared beliefs, to act in their own right as a causal force in human affairs. Indeed, if ideas do not matter, then why bother writing this sort of book?
Perhaps the reason why things like ‘social capital’ no longer loom large in the public debate is that we talk about them as if they were just another economic input or output. In thinking of family, religion, and community as things which policy makers can simply conjure by issuing the right kind of tax credit or block grant are we not forgetting the insight even the better economists treasure, that economics is not all of life? Public policy can certainly harm community and can, in limited ways, help to safeguard it. Ultimately the graces of family, religion, and community are just that. Gifts from our God and neighbor.