Important: The Covenantal Model

Or, How God deals with Men.

Christians would be wise to have a strong grasp on this.

Especially those Christians who wish to bring society into conformity with the Word of God, without some all-powerful — read: crushingly oppressive — State or Church

The quote below is a cut-n-paste from The Covenant Model

The full manuscript, written by Gary North, is posted here: https://www.garynorth.com/public/department196.cfm

—<Quote begins>—

God said, “Let us make man in our image, after our likeness. Let them have dominion over the fish of the sea, over the birds of the sky, over the livestock, over all the earth, and over every creeping thing that creeps on the earth.” God created man in his own image. In his own image he created him. Male and female he created them. God blessed them and said to them, “Be fruitful, and multiply. Fill the earth, and subdue it. Have dominion over the fish of the sea, over the birds of the sky, and over every living thing that moves upon the earth” (Genesis 1:26–28).

Therefore keep the words of this covenant and do them, so that you may prosper in everything that you do (Deuteronomy 29:9).

Analysis

God created man on day six. Before He did this, He had a purpose for mankind: dominion in history by covenant-keepers. Mankind would represent God to the creation in God’s name (legal) and on God’s behalf (economic). Purpose precedes planning. Purpose is an aspect of God’s decree for the creation. The apostle Paul revealed what this purpose was.

God chose us beforehand for adoption as sons through Jesus Christ, according to the good pleasure of his will. Our adoption results in the praise of his glorious grace that he has freely given us in the One he loves. In Jesus Christ we have redemption through his blood and the forgiveness of sins, according to the riches of his grace. He lavished this grace upon us with all wisdom and understanding. God made known to us the hidden purpose of his will, according to what pleased him, and which he demonstrated in Christ, with a view to a plan for the fullness of time, to bring all things together, all things in heaven and on earth, under one head, even Christ. In Christ we were appointed as heirs. We were decided on beforehand according to the plan of him who works out everything according to the purpose of his will (Ephesians 1:5–11).

Before God created man, He announced His plan for man. Mankind would be male and female. Jointly, they would fulfill God’s plan of dominion (Genesis 1:26–28). [North, Genesis, ch. 3] They would rule over plants and animals. They would rule over the creation. He announced their dominion assignment. “Be fruitful, and multiply. Fill the earth, and subdue it. Have dominion over the fish of the sea, over the birds of the sky, and over every living thing that moves upon the earth” (v. 28b). Next, He provided capital in the form of delegated ownership to enable them to fulfill this assignment. “God said, ‘See, I have given you every plant yielding seed which is upon the surface of all the earth, and every tree with fruit which has seed in it. They will be food to you. To every beast of the earth, to every bird of the heavens, and to everything that creeps upon the earth, and to every creature that has the breath of life I have given every green plant for food.’ It was so” (Genesis 1:29–30). In review, God provided raw materials before He created humans. Then He gave humans life. Then He transferred raw materials to them. This sequence is the first example in the Bible of this fundamental principle: grace precedes law. [North, Genesis, ch. 4]

He brought them into a covenantal relationship with Him. As I will show in this chapter, this covenant had a structure: sovereignty, authority, law, sanctions, and inheritance. This structure was revealed chronologically. First, He created them. This was the essence of His sovereignty over them. Second, He gave them an assignment: administer the resources. He possessed authority over them. He delegated assets to them. Third, He gave them an ethical command. “From the tree of the knowledge of good and evil you may not eat’” (Genesis 2:17a). Fourth, to this command He attached a negative sanction for disobedience. “On the day that you eat from it, you will surely die” (v. 17b). [North, Genesis, ch. 9] Fifth, He announced a law of dominion through generational separation through time. “Therefore a man will leave his father and his mother; he will be united to his wife, and they will become one flesh” (v. 24). [North, Genesis, ch. 13]

The covenant model is basic to Christian theology. It provides an explicitly Bible-based structure for Christian theology. This structure is derived from the structure of the Bible, beginning with the creation story. It structures the sequence of the Pentateuch: Genesis (origins/sovereignty), Exodus (authority/hierarchy), Leviticus (ethics/law), Numbers (oath/sanctions), and Deuteronomy (covenant renewal/inheritance). It also provides the structure for Christian social theory in general. This structure is basic to Christian economics, as I have shown in Volume 1: Student’s Edition.

The book of Deuteronomy is the book of covenant renewal. It is also the book of inheritance. Moses was the last survivor of the generation of the exodus from Egypt. He outlived his brother Aaron (Numbers 20:28). In Deuteronomy, we have the record of his long speech to the generation of the conquest. First, He surveyed the history of the exodus and the years in the wilderness. This included God’s imposition of the Ten Commandments (Exodus 20), which Moses recapitulated in Deuteronomy 5. [North, Deuteronomy, ch. 13] Then he announced this. “Now these are the commandments, statutes, and decrees that the Lord your God has commanded me to teach you, so that you might keep them in the land that you are going over the Jordan to possess; so that you might honor the Lord your God, so as to keep all his statutes and commandments that I am commanding you—you, your sons, and your sons’ sons, all the days of your lives, so that your days may be prolonged. Therefore listen to them, Israel, and keep them, so that it may go well with you, so that you may greatly multiply, in a land flowing with milk and honey, as the Lord, the God of your fathers, has promised you would do” (Deuteronomy 6:1–3). [North, Deuteronomy, ch. 14] These statutes and commands were the words of the covenant. He had announced this to their parents. “He took the book of the Covenant and read it aloud to the people. They said, ‘We will do all that the Lord has spoken. We will be obedient’” (Exodus 24:7). They had broken God’s laws repeatedly. They had wandered for 40 years in the wilderness. So, Moses warned this generation: “Therefore keep the words of this covenant and do them, so that you may prosper in everything that you do” (Deuteronomy 29:9). [North, Deuteronomy, ch. 71] Here, in just one sentence, is God’s law of prosperity. This is a law of Christian economics. It is not a law of humanistic economics, but it should be. A. The Five Points: A History

Sections A and B are taken from the Preface to my book, The Covenantal Structure of Christian Economics (2nd edition, 2019). I reproduce this material here because I am well aware that some readers have not read that book, do not intend to buy that book, or cannot locate a free PDF of that book. This information is crucial to my concept of Christian economics.

The most important influence in my thinking after I began writing my economic commentary was Ray Sutton’s development of the five-point covenant model. An early variant appeared in Meredith Kline’s 1963 commentary on Deuteronomy, Treaty of the Great King. He in turn got the idea for this from George Mendenhall, who wrote about it in 1954. [George Mendenhall, “Covenant Forms in Israelite Tradition,” Biblical Archaeologist, vol. 17 (1954), pp. 50–76. Mendenhall, Law and Covenant in Israel and the Ancient Near East (Pittsburgh: The Presbyterian Board of Colportage of Western Pennsylvania, 1955). For a detailed analysis of his thesis, see René Lopez, “Israelite Covenants in the Light of Ancient Near Eastern Covenants, Part 1,” CTS Journal, vol. 9 (2003) (http://bit.ly/LopezCovenants1), ibid. Part 2, vol. 10 (2004). (http://bit.ly/LopezCovenants2)] Sutton’s book was far more developed than Kline’s. I helped him edit the manuscript in 1986 and 1987. It went through several major revisions before my Institute for Christian Economics published it in 1987: That You May Prosper: Dominion By Covenant. Sutton presented the covenant model in this form:

1. God (transcendent, yet immanent)
2. Hierarchy
3. Ethics
4. Sanctions
5. Continuity

A reader recommended this restructuring:

1. Transcendence/presence
2. Hierarchy
3. Ethics
4. Oath
5. Succession

The acronym is THEOS, the Greek word for God.

In my 1980 book, Unconditional Surrender: God’s Program for Victory, I instinctively adopted the first three: God, man, and law. In the third edition, published in 1988, I added time. In the 2010 edition, I completed it by adding sanctions. I hope that this is the final edition. Here are the five inescapable components of covenant theology.

1. God
2. Man
3. Law
4. Sanctions
5. Time

This structure is visible in the structure of the Pentateuch.

1. Genesis (origins)
2. Exodus (authority)
3. Leviticus (law)
4. Numbers (sanctions)
5. Deuteronomy (inheritance)

I put all this into one short (for me) book: God’s Covenants (2014). [http://bit.ly/5covs] I also discussed the five covenants in history: dominion, individual, family, church, and state. This laid the foundation for my identification of the five inescapable factors in all social theory.

1. Sovereignty
2. Authority
3. Law
4. Sanctions
5. Succession

B. Economics: Five Points Times Four

I begin with God. Here are the theocentric judicial principles of economics in 15 words.

Judicial (theocentric)
1. God owns everything.
2. God delegates ownership.
3. God prohibits theft.
4. God evaluates performance.
5. God mandates growth.

God designates men as His trustees. As trustees, they are authorized to act in God’s name as judicial representatives. Here are the rules of trusteeship in 15 words.

Judicial (representative)
1. Owners are trustees.
2. Trustees possess authority.
3. Trusts are binding.
4. Trustees are accountable.
5. Trustees designate successors.

There are also economic aspects of delegated ownership. God requires men to act as stewards. These are responsibilities of property management. Men must act on God’s behalf. They must put His interests above their own. The laws governing men’s stewardship are structurally the same as God’s laws of ownership, but suitable for creatures. Here are the rules of stewardship in 15 words.

Stewardship Laws
1. Purpose precedes planning.
2. Priorities structure planning.
3. Ownership involves exclusion.
4. Owners evaluate performance.
5. Owners designate heirs.

Trusteeship has two aspects: judicial and economic. The judicial aspect is a matter of guardianship. The economic aspect is stewardship. This distinction goes back to God’s designation of Adam as His trustee over the creation. The garden was Adam’s testing place. God told Adam to dress the garden and keep it (Genesis 2:15). [North, Genesis, ch. 9] Stewardship was economic. Guardianship was legal. Stewardship involved increasing the value of the property. This is the meaning of “dress.” Guardianship involved defending God’s property from unlawful invasion. This is the meaning of “keep.” Other translations translate “keep” as “work.” Stewardship is trusteeship on behalf of. Guardianship is trusteeship in the name of. Both responsibilities are aspects of ownership: God’s original ownership and man’s delegated ownership.

Ownership is an inescapable concept. It is never a question of hierarchical ownership vs. no hierarchical ownership. It is always a question of who is the supreme owner. This structure of ownership leads to laws of economics. These laws are not autonomous. They are the results of God’s covenantal ownership. These laws govern the structure of production. Here are these laws in 15 words.

Economic Laws
1. Owners adopt purposes.
2. Prices provide information.
3. People prefer more.
4. Scarcity imposes costs.
5. Growth reduces scarcity.

C. Judicial (Theocentric)

Introduction

I argue in this section that God’s Bible-revealed law lays the foundation of economic laws. More fundamentally, I argue that biblical covenants are superior in authority to any contract. Contracts are not sealed by a public oath before God. Biblical covenants are. They are holy. There are contractual aspects of covenants, but calling them contracts is misleading. Couples publicly say marriage vows. To speak of a marriage contract is misleading.

Because I take this view, I argue this: the judicial aspects of ownership are superior to the economic aspects of ownership. Christian economists should begin with the concept of ownership as primarily judicial and secondarily economic. This is the opposite of what humanistic economics presuppose. They believe that economic theory is autonomous. Therefore, its truths do not rest on a theory of law. Academic economists never explicitly announce this operational but implicit presupposition in their textbooks and treatises. Nevertheless, this presupposition regarding the judicial autonomy of economic theory permeates all of humanism’s economic theory. This is why they begin their analyses with some aspect of scarcity, not ownership. I do not.

1. God Owns Everything

I devote Chapter 1 of The Covenantal Structure of Christian Economics to this topic: “The Judicial Sovereignty of God.” Here is where Christian economics departs from humanistic economics: at the beginning. I do not mean merely the beginning of economic analysis. I mean the beginning of time: the creation. The universe began with God’s creation. So, not only is God in the picture, but He is sovereign. He is sovereign because He created the universe out of nothing. In doing this, He thereby established full ownership of the earth. “The earth is the Lord’s, and its fullness, the world, and all who live in it. For he has founded it upon the seas and established it on the rivers” (Psalm 24:1–2). [North, Psalms, ch. 5] Therefore, Christian economics announces: “God owns everything.”

God’s sovereignty precedes man’s authority. God delegated authority to man. This can legitimately be described as limited sovereignty. In this sense, it is like delegated ownership: limited. But God was sovereign before He created man. He created the cosmos before man appeared on the scene. God’s ownership is original. It is based on His creation of everything out of nothing. This is why man’s ownership stems from God’s original ownership. There is delegated ownership from God to mankind.

God was not dependent in any way on the cosmos. He extended His sovereignty over it, day by day, in the creation week. This was not economic sovereignty. He was not making exchanges. He was not limited by scarcity. He did not have to give up ownership of anything in order to gain ownership over something else. The question arises: “How was His sovereign ownership established?” By His words, day by day. This was judicial sovereignty, not economic sovereignty.

2. God Delegates Ownership

The story of the creation week includes the dominion covenant that God established with mankind through Adam. This was the judicial basis of point two: “God delegates ownership.” This is the legal basis of all ownership. Man is not autonomous. Man answers to God. This means that individual men and also institutions answer to God.

I began this chapter with the dominion covenant (Genesis 1:26–28). This was a covenant. God made it verbally on behalf of mankind. God said, “Let us make man in our image, after our likeness. Let them have dominion over the fish of the sea, over the birds of the sky, over the livestock, over all the earth, and over every creeping thing that creeps on the earth” (v. 26). This was before He created them. Next, He created them. He then announced His assignment to them as judicially representative agents. “God created man in his own image. In his own image he created him. Male and female he created them. God blessed them and said to them, ‘Be fruitful, and multiply. Fill the earth, and subdue it. Have dominion over the fish of the sea, over the birds of the sky, and over every living thing that moves upon the earth’” (vv. 27–28). They did not affirm this covenant. They were not yet created.

This was a legal transfer of property. It was necessarily a legal transfer of authority. Ownership always involves legal authority. This transfer was legally representative. Adam and Eve legally represented all humanity. This is why, after they rebelled, God placed the negative sanctions of death, cursed scarcity, and painful childbirth on the children of Adam and Eve. Original sin was and is judicial/covenantal.

Mankind’s ownership is derivative. It is based on a covenant. This covenant was judicial. It remains judicial. This is why any discussion of ownership is inherently judicial. More than this, ownership is primarily judicial. This is why I place the concept of judicial trusteeship above the doctrine of economic stewardship. Because God is sovereign, I place original ownership above representative ownership. God’s sovereignty is superior to man’s authority.

3. God Prohibits Theft

God’s delegation of ownership also raised the issue of property rights: God’s ownership of the forbidden tree. Men were not to eat from it. This is the basis of point three: “God prohibits theft.” This was not stated in the dominion covenant in Genesis 1. The words in Genesis 1 did not involve a prohibition and its associated negative sanctions. The covenant document was completed by God in Genesis 2. “But from the tree of the knowledge of good and evil you may not eat, for on the day that you eat from it, you will surely die” (2:17). The stipulation is in the first half of the sentence. The sanction is in the second half.

This stipulation was an aspect of point three of the biblical covenant. It placed a legal boundary around a forbidden tree. This legal boundary identified the tree as forbidden. They were not to eat from it. It did not belong to them. It belonged to God. Any violation of that boundary would result in the negative sanction of death. This stipulation is the origin of private property. It was judicial in origin. It was not economic in the sense of profit and loss. It was not a capital asset. Rather, it was judicial in the sense of profit and loss. There was a potential profit: the knowledge of good and evil. Adam and Eve would become as God, the serpent promised. This was a judicial goal. There was a potential for loss: death imposed by God, the judicial owner of the tree. From God’s point of view, there was nothing economic about the arrangement. This was not part of the market process. It was strictly judicial. That is to say, it was strictly covenantal. God had nothing to lose. He also had nothing to gain. That is because God is sovereign; man is not. God is not governed by scarcity; man is.

Here is my main point: ownership is primarily judicial. It is secondarily economic. It is therefore conceptually incorrect to begin economic analysis with a discussion of scarcity. It should begin with ownership. This is true of humanistic economics as well as Christian economics.

4. God Evaluates Performance

God the Father sits on the throne of judgment (Revelation 20:11–15). Jesus sits at His right hand (I Peter 3:21–22). This is a judicial matter: God’s high court. God declares men’s guilt or innocence. Theologians call this judicial declaration imputation. But the concept of imputation applies to more than judicial performance. It applies to economic performance, aesthetic performance, and all other kinds of performance. God’s imputation is authoritative. There is no appeal beyond it.

The negative sanction of death was an indicator of God’s judicial sovereignty over them. He had already judged His work on the first six days. He announced that His work was good. He would henceforth judge mankind’s performance, day by day, just as He had verbally judged His own performance at the end of each day of the creation week, except for day two. Therefore, we can say that God evaluates performance.

There were twin sanctions: profit and loss. The main profit was never mentioned by God: eating from the tree of life. This would have been a communion meal. Mankind would have gained the positive sanction: eternal life without any possibility of death, and therefore also with no possibility of sin. That would have ended God’s test. So great was this profit opportunity that, after man’s fall and his condemnation by God, God placed a flaming sword in front of the garden, so that man could not enter the garden and eat from the tree of life (Genesis 3:24).

God’s silence regarding the tremendous profit associated with the tree of life indicates that the key covenantal issue in the garden was property rights. Specifically, it was God’s property rights. What was covenantally relevant was the legal boundary around the forbidden tree. Legal boundaries are associated with point three of the covenant. We can see their importance by the magnitude of the negative sanction that God imposed on Adam and the sons of Adam: death. The New Testament makes this even clearer. It is only in the New Testament that we read about the ultimate negative sanction: the lake of fire (Revelation 20:14–15).

Knowing good and evil was an aspect of judgment, meeting point four of the covenant. The lure of the forbidden tree was primarily judicial, not economic. The serpent did not tell them that the forbidden fruit would taste really good. He told them that they could become as God, knowing good and evil. This was all about judicial imputation, not economic imputation. This is why I conclude that the judicial aspect of trusteeship is more fundamental than the economic aspect. The story of the sequence of the fall of man proves this.

Even without a communion meal at the tree of life, there was another source of profit: their ownership of all the trees in the garden and all the world outside the garden. Adam ignored this arena of economic profit, once Eve tested him. Adam in rebellion saw his potential profit solely as the result of eating from the forbidden tree and thereby becoming as God judicially. He wanted to escape his own finitude. He thought that a meal at the forbidden tree would give him this benefit. He chose a communion meal with the would-be god represented by the serpent: Satan. This is why the temptation was not primarily about economics. It was about covenantal authority. This is why economic theory is subordinate to covenantal theory. It is why covenantal theory, which is primarily judicial, should be the starting point of economic theory and all of the other social sciences and humanities.

5. God Mandates Growth

God told mankind to multiply. Conclusion: “God mandates growth.” The multiplication process was biological. But biological multiplication necessarily has an economic implication associated with it: per capita wealth. If the number of people expands, then non-human wealth must expand with it in order to avoid the progressive impoverishment of individuals.

God told them that they could eat from any tree in the garden. This included the tree of life, but God did not say this explicitly. Anyway, the text does not reveal such a revelation, and I assume that He remained silent. He expected Adam and Eve to figure this out. They did not. There is a familiar English phrase associated with such blindness: their inability to see what was right under their noses. They were not initially blind judicially. They were not under the bondage of sin. They could have seen this. But they did not see it after the temptation. They did not even look for it. All they saw was the forbidden tree. They wanted to eat from it. They wanted this more than anything else.

The issue of economic growth is secondary to the issue of the extension of mankind’s judicial dominion. The issue of dominion over the earth has historically been the issue of an expanding population. This was set forth clearly in the dominion covenant. We need human beings to exercise judgment. They must exercise economic judgment. This is an aspect of economic growth. But the primary aspect of dominion is ethical/covenantal. We can see this in the words of Paul: “Do you not know that the believers will judge the world? If then, you will judge the world, are you not able to settle matters of little importance? Do you not know that we will judge the angels? How much more, then, can we judge matters of this life?” (I Corinthians 6:2–3). [North, First Corinthians, ch. 6]

Because dominion is ethical/covenantal, corporate inheritance in history will be ethical/covenantal. God issued the dominion covenant to Adam and his heirs (Genesis 1:26–28), but there is now a covenantal separation between disinherited families and adopted families. Adoption (salvation) is by grace alone (Ephesians 2:8–9). Grace precedes law. Then comes law. Covenant-keepers are required by God to build God’s kingdom in history (Matthew 6:33). [North, Matthew, ch. 15] This takes capital. God promises to supply this capital. This is seen clearly in God’s promise that covenant-keepers will become the primary heirs in history. “But the meek will inherit the land and will delight in great prosperity” (Psalm 37:11). Jesus repeated this promise: the meek will inherit the earth (Matthew 5:5). [North, Matthew, ch. 4]

Conclusion

These five covenantal points are inescapable implications of Genesis 1–2. They are primarily judicial points. God established these spheres of responsibility. He holds men accountable for meeting His standards.

The humanistic economist does not begin with Genesis 1–2. Instead, he begins with some aspect of the creation. He does not begin with ownership. That issue raises the question of the judicial basis of ownership. This issue leads to the next question: the moral legitimacy of ownership. This is the issue of ethics. Humanistic economists almost universally assert that economic science is value-free, or at least it should be. Therefore, any consideration of the issue of original ownership would be regarded by most economists as an illegitimate topic, by definition. Why? Because the question of original ownership would import the issue of morality into economic analysis. Humanistic economists see morality as an extra-economic issue. For them, ownership is an externally imposed condition, by definition, as all moral issues are. This approach is basic to most social scientists. They shove questions of morality out of their analyses. But they always import morality back into their policy analyses, one way or another. This is surely the case in economic science.

The humanistic economist usually begins with a discussion of scarcity and a few of its implications. Assuming the existence of scarcity is not controversial. An economist will not be criticized by his peers for starting his analysis with scarcity. That is because every economist acknowledges the reality of scarcity, defined as follows: “At zero price, there is greater demand than supply.” This is why there are prices. In the case of Adam Smith’s pioneering book, The Wealth of Nations, Smith began with a consideration of the division of labor, which is an outworking of men’s attempt to overcome scarcity, thereby becoming richer. Smith assumed scarcity. He did not define it. He also said nothing about original ownership.

I wrote in Chapter 1 of The Covenantal Structure that this avoidance of any discussion of original ownership by humanistic economists is part of their implicit presupposition of man’s autonomy. The assumption of man’s autonomy is basic to all humanistic thought. It is the heart, mind, and soul of humanism. It has been all the way back to the pre-Socratic philosophers. Here is what I wrote: “Man is said to be unlike anything that preceded him. Man is purposeful. He plans in terms of his purposes. He shapes the present in terms of a vision of the future. With man, purpose entered what had been a purposeless environment. This makes man fundamentally different from the rest of his environment, and possibly unique in the entire universe. Man arose out of purposelessness, but he now imposes change on his environment in terms of his purposes. Purpose is therefore original with mankind. Original purpose is seen by humanists as the central factor in defining sovereignty. In this regard, they agree with Christians. The debate is over who the original sovereign is: God or man” (p. 26).

The next five points are matters of grace: special and common. I discussed the two categories of grace in my book, Dominion and Common Grace (1987). Common grace refers to unearned and undeserved blessings from God to humanity in general. Special grace refers to undeserved blessings to covenant-keepers. In both cases, the blessing involves an opportunity to serve God, which is an honor. It is a mark of ethical rebellion to regard this honor as a liability.D. Judicial (Representative) Laws

Introduction

The five points in Section C refer to God. God is the Creator. He is therefore the Owner, which is a judicial category more than it is an economic category. The judicial category defines the economic category. The next five points refer primarily to man as God’s judicial agent. This is a matter of trusteeship. Trusteeship has an economic aspect: stewardship. I consider stewardship in Section E.

Trusteeship refers primarily to God’s name and His reputation. The third commandment has to do with the protection of God’s name. “You must not take the name of the Lord your God in vain, for I will not hold guiltless anyone who takes my name in vain” (Exodus 20:7). It is part of what I call the priestly laws of the Ten Commandments. The third commandment parallels the eighth commandment, which is the third commandment in the kingly laws. “You must not steal from anyone” (v. 15). [North, Exodus, ch. 28] They are linked together. They both have to do with the protection of private property. The property being protected by the third commandment is God’s name. This refers in the broadest sense to God’s reputation. It also has to do with the kingdom of God. The kingdom of God has more to do with trusteeship in the legal sense than it does with stewardship in an economic sense. It has more to do with a mission statement than a profit-and-loss statement. Stewardship has to do with increasing the market value of God’s property.

I focus here on trusteeship, not stewardship. When I searched for the correct categories of man’s trusteeship, I first looked at the categories of God’s ownership. Man is made in God’s image. Therefore, it seems theologically reasonable to discuss trusteeship in terms of God’s original ownership. I looked for parallel judicial principles: original and delegated.

1. God owns everything./Owners are trustees.
2. God delegates ownership./Trustees possess authority.
3. God prohibits theft./Trusts are binding.
4. God evaluates performance./Trustees are accountable.
5. God mandates growth./Trustees designate successors.

1. Owners Are Trustees

This is delegated ownership. This is not original ownership. It is judicially based on God’s original ownership. Here is the supreme implication: this form of ownership is in no way autonomous. This is why Christian economics rejects any suggestion that there is autonomy in economic relationships. All wealth, including knowledge, is delegated by God to men.

Men hold their wealth as trustees. Trustees are legal agents. They act in God’s name. The Christian trustee is supposed to identify himself with God and with the work of God. He must guard against gaining a bad reputation for himself, for he is a legal agent of God. There is a hierarchy involved: point two of the biblical covenant model. This aspect of trusteeship is a matter of covenantal representation. This has to do with a statement of faith. It also has to do with a moral code associated with the statement of faith. This judicial standpoint is the legal foundation of the economic aspects of ownership.

This judicial hierarchy is the basis of a crucial implication of Christian economics: man does not own himself. This has an important implication for a consideration of humanistic economics: economic analysis must not begin with the doctrine of self-ownership. This is a fundamental criticism of some varieties of free market economics.

The biblical doctrine of ownership as trusteeship serves as a refutation of all forms of socialism. There must be multiple trustees in a Christian commonwealth: a division of responsibility. This means that private property is the dominant form of ownership. God has delegated ownership to a multitude of trustees. There is a biblical principle here: multiple responsible agents. Solomon announced: “Where there is no wise direction, a nation falls, but victory comes by consulting many advisors” (Proverbs 11:14). [North, Proverbs, ch. 31] This is the division of intellectual labor. It undergirds the international division of labor.

2. Trustees Possess Authority

This authority is legal: the authority to allocate property among competing uses. Humanistic economists refer to this allocation process as economizing. This concept is basic to humanistic economics. Owners decide what to do with their property. Christian economic theory declares that owners are God’s trustees. Trustees decide what to do with God’s property. God holds them accountable for the use of His property, as we see in Jesus’ parallel parables of the talents (Matthew 25:14–30) [North, Matthew, ch. 47] and the minas (Luke 19:11–27). [North, Luke, ch. 46.]

Ultimately, this authority is the right to buy, sell, or give away property. This is the right to transfer ownership and therefore legal liability to others. This is the judicial basis of exchange. The free market is a gigantic auction process. It rests on this legal right to buy and sell.

This principle serves as a prohibition of what is known as the welfare state. Owners act judicially in the name of God. This is the judicial basis of property rights. These rights are legal immunities against those who would interfere with the ownership or use of other people’s property. This prohibition applies to state officials as well as private thieves. Any attempt by officers of the state to transfer property from one owner to another must be based on biblical law. There is one form of legitimate wealth transfer: restitution to victims from criminals or people who have damaged others (Exodus 22:1, 4). [North, Exodus, ch. 43] Any transfer of wealth based solely on economic inequality is prohibited by God’s law. “Do not cause judgment to be false. You must not show favoritism to someone because he is poor, and you must not show favoritism to someone because he is important. Instead, judge your neighbor righteously” (Leviticus 19:15). [North, Leviticus, ch. 14]

Trusteeship is superior to economic stewardship. It is better to lose money in a good cause than to make money in an evil cause. Of course, it is best to make money in a good cause. It is a good thing to do well by doing good.

3. Trusts Are Binding

A trust is a legal document that places legal boundaries around the use of specific pieces of property. A trust is the judicial model for all forms of private ownership. It is a legal arrangement by which an owner of property establishes a legal entity that provides benefits for named beneficiaries. The owner transfers the ownership of property to the trust. He appoints (names) a trustee to act on behalf of beneficiaries. This model for this system of property transfer is God’s delegation of property to men. They hold this property in the name of God, whether or not they acknowledge this legal arrangement.

The model for trusteeship is Jesus, God’s Son. Jesus is the designated trustee for God the Father. Paul wrote that Jesus created the universe. “The Son is the image of the invisible God. He is the firstborn of all creation. For by him all things were created, those in the heavens and those on the earth, the visible and the invisible things. Whether thrones or dominions or governments or authorities, all things were created by him and for him” (Colossians 1:15–16). Jesus is therefore the original Owner. He holds this property in trust for God the Father. Paul wrote this about the day of final judgment: “Then will be the end, when Christ will hand over the kingdom to God the Father. This is when he will abolish all rule and all authority and power. For he must reign until he has put all his enemies under his feet. The last enemy to be destroyed is death. For ‘he has put everything under his feet.’ But when it says ‘he has put everything,’ it is clear that this does not include the one who put everything in subjection to himself. When all things are subjected to him, then the Son himself will be subjected to him who put all things into subjection under him, that God may be all in all” (I Corinthians 15:24–28). [North, First Corinthians, ch. 17] God the Father empowered Jesus to serve both as Creator and Trustee on His behalf.

Jesus represents God. He said this repeatedly in His earthly ministry. This is what got Him crucified. He was acting in the name of God more than he was acting as the administrator of God’s property. But He was both. A trustee is always both.

4. Trustees Are Accountable

There is no ownership apart from legal accountability. There is therefore no such thing as autonomy in the creation.

God holds owners accountable in the broadest sense: morally, legally, confessionally, and economically. They will give an account of their trusteeship at the final judgment. They must act as intermediaries between God and His property. They must evaluate their administration of God’s property in terms of God’s ethical and legal standards. They must think God’s thoughts after him. What God judicially declares—imputes—they must impute. Whatever God imputes economic value to, they must impute economic value to.

This is why every owner had better be eternity-oriented. Jesus’ parable of the rich farmer described how not to serve as a trustee. “The field of a rich man yielded abundantly, and he reasoned with himself, saying, ‘What will I do, because I do not have a place to store my crops?’ He said, ‘This is what I will do. I will pull down my barns and build bigger ones, and there I will store all of my grain and other goods. I will say to my soul, “Soul, you have many goods stored up for many years. Rest easy, eat, drink, be merry.”’ But God said to him, ‘Foolish man, tonight your soul is required of you, and the things you have prepared, whose will they be?’ That is what someone is like who stores up treasure for himself and is not rich toward God” (Luke 12:16b–21). [North, Luke, ch. 25] The farmer had focused on economic profit. He had missed the point: he was God’s trustee.

Trustees are accountable to God. This is why God prohibits theft. God transfers property to someone to serve as His trustee. He wants this person to be economically productive on His behalf. A thief decides that he will take possession of this person’s property. He has other uses for it. The thief then becomes accountable to God in two ways: as a thief and as a trustee of God’s property. Even if he is a superior investor, the profits will testify against him on judgment day.

What is true of a thief is also true of a welfare state official who takes title to a piece of property in the name of the state in order to transfer it to others. It does not matter what fine-sounding justifications he and the politicians in whose name he is acting have for the property. These are not God’s purposes. Bureaucrats and politicians will give a final accounting to God for their unilateral transfer of property to the state. So will the voters who elected the politicians who passed a law to authorize this transfer of ownership. The welfare state indicates that God is a thief. This is a perverse testimony. This is the reason why the so-called social gospel of wealth redistribution by the state is not the gospel of Christ.

5. Trustees Designate Successors

This principle applies to all forms of property and all legal arrangements for the protection and maintenance of property. This goes back to God’s arrangement with Adam and Eve regarding the garden. “The Lord God took the man and put him into the garden of Eden to work it and to maintain it” (Genesis 2:15). [North, Genesis, ch. 9.] His children would inherit his property. Inheritance is the legal basis of today’s property. Property can be held in trust for designated beneficiaries through the ages. The trustees are required by the trust document to administer the property in the trust in terms of the stipulations of the document.

Trustees can resign, be removed, retire, or die. Beneficiaries can die. The trust perseveres. The desires of the founder of the trust are supposed to be adhered to by the trustees. This structure of succession applies to churches, charitable foundations, and even profit-seeking corporations in rare instances. This is the basis of continuity. This continuity is primarily moral. In some institutions, this can be understood as confessional. An institution’s mission statement is an example of such attempted continuity. In contrast, there is no assurance that the economic assets in the trust will maintain their market value over time. The trustee must be willing to preserve the trust’s mission statement at the expense of increasing the value of the property inside the trust.

Conclusion

In section D, I have considered the judicial issue of man’s subordination to God. This is the issue of man’s judicial authority and God’s judicial sovereignty. Ownership is primarily a matter of judicial trusteeship. It is only secondarily the issue of man’s economic stewardship.

The humanistic economist believes in man’s authority. He does not believe in man’s subordination to God. This outlook inescapably transfers sovereignty from God to man. Man becomes the primary owner in the economist’s thinking. This does not solve the issue of whether autonomous man is primarily individualistic or collective. It therefore does not solve the problem of the free market vs. socialism. The fundamental issue for the humanistic economist is never the issue of original ownership, which is a judicial issue: the legitimate source of delegated ownership. For humanism, man becomes the operational god. This is the fulfillment of the serpent’s original temptation. The serpent did not tempt Adam and Eve with promises of great wealth. He tempted them with the promise of becoming equal to God in their understanding of good and evil. Yet this promise of equality was a deception. The serpent was really tempting them to claim superior judgment to God. No one who claimed anything else would be foolish enough to risk his life by violating God’s explicit law. [North, Genesis, ch. 11]

The humanistic economist implicitly claims original autonomy for mankind. He therefore implicitly claims original ownership for mankind. This is a judicial claim. It has economic implications, but the primary implications are judicial. That is to say, they are covenantal. They are not simply matters of richer or poorer. They are matters of life and death. They are matters of covenant-keeping and covenant-breaking.

E. Stewardship Laws

Introduction

We come now to economic aspects of delegated ownership. God requires people to act as His stewards. Stewards are responsible for property management. People are supposed to act on God’s behalf. They must put His interests above their own.

Stewardship laws lead to institutional arrangements that establish the market value of property. These are laws of ownership, which are therefore also laws of disownership: exchange. The judicial laws of trusteeship have more to do with the allocation of God’s property in terms of a confession of faith. They are intended to uphold God’s name, meaning His reputation. In contrast, stewardship laws have more to do with biological multiplication and economic growth than they do with the maintenance of God’s reputation or the mission statement of an organization. Therefore, from a Christian point of view, stewardship is subordinate to trusteeship. This is obviously not the case with humanistic economics.

A good way to understand the difference between trusteeship laws and stewardship laws is to focus on the difference between the third commandment, which defends God’s name, and the eighth commandment, which defends private property. The Ten Commandments are divided between the priestly laws (1–5) and the kingly laws (6–10). First, there is the law against the misuse of God’s name (commandment three). Second, there is the law prohibiting theft (commandment eight). The third commandment is point three in the priestly laws. The eighth commandment is point three in the kingly laws. The third commandment is not about stealing an economic asset. It is about maintaining the property of God, His name. This is not marketable property. It cannot be bought and sold in a market. Guarding the exclusive use of His name from invaders is more important to God than protecting specific pieces of private property from thieves. Modern man does not see it this way, i.e., hear it this way. This is a mark of modern man’s rebellion against God.

1. Purpose Precedes Planning

The model here is God’s purpose in the original creation. He had a purpose. I have mentioned it before, but it is a good idea at this point to cite it again. This is from the English Standard Version (ESV): “Blessed be the God and Father of our Lord Jesus Christ, who has blessed us in Christ with every spiritual blessing in the heavenly places, even as he chose us in him before the foundation of the world, that we should be holy and blameless before him. In love he predestined us for adoption to himself as sons through Jesus Christ, according to the purpose of his will, to the praise of his glorious grace, with which he has blessed us in the Beloved” (Ephesians 1:3–6). The key phrase is this: before the foundation of the world. He then implemented His six-day plan.

The theocentric principle that purpose precedes planning also applies to human action. Human action is purposeful. This was the insight of economist Ludwig von Mises in his book, Human Action (1949). I argue that the authority for this insight is the Bible’s story of the creation week. Mises developed his logically deductivist system of economic theory on the basis of this axiom of action. In contrast, I do not call the Genesis creation story an axiom of action. I call it the theocentric model for human action. Austrian School economics is closer to Christian economics than any other humanistic school of economic thought. This rests in large part on the fact that Mises began his economic analysis with the principle of each individual’s purposeful action.

Man is made in the image of God. Thus, when a man thinks purposefully, he represents God. He is thinking in terms of the first point of the covenant, which is the sovereignty of God. The sovereignty of God is demonstrated in God’s creation of the universe out of nothing. This is why purposeful human action reflects God’s creativity. This is how we know that God is creative. He has purposes before He has plans of action.

God judges people, not simply in terms of the outcome of their actions, but also in terms of their motivations. We cannot read each other’s minds, but we can draw inferences from what other people have said they wanted to accomplish. We can compare what they said with what they actually achieved. We impute economic value to the outcome of their actions, but we also impute motivation to their actions. Their motivations reflect their trusteeship more accurately than their plans of action. A common saying is this: “The end justifies the means.” This principle of action is not biblical. The ends are supposed to govern the means. Our plans are supposed to reflect our purposes, not just in terms of their economic outcomes, but also and even more so in terms of our purposes. Purposes are more fundamental than plans. Our plans are supposed to be morally and confessionally consistent with our purposes.

2. Priorities Structure Planning

There is a hierarchy of priorities in human action. We have limited resources. We have purposes. We design our plans to fulfill our purposes. But we should face the fact that we have limited resources. We cannot achieve everything we would like to achieve with the resources at our disposal. This is an aspect of scarcity. This limitation was also true in the garden of Eden before the fall. Scarcity is not a curse on man; rather, it is a condition of his finitude. In Genesis 3, God cursed the pre-fall system of scarcity (Genesis 3:17–19). [North, Genesis, ch. 12] Had there been no scarcity in the garden, there would have been no valuable capital assets to defend and improve. But there were.

Because we have limited resources, we have to allocate these resources in such a way that we hope will achieve our highest priorities. We will run out of resources before we run out of priorities. This is why we economize. This is the essence of resource allocation. Some economists define economics as the science of human choices in the world of scarce resources. A famous book that takes this approach was written in 1932 by a disciple of Mises, Lionel Robbins: An Essay on the Nature and Significance of Economic Science. He wrote: “For rationality in choice is nothing more and nothing less than choice with complete awareness of the alternatives rejected. And it is just here that Economics acquires its practical significance. It can make clear to us the implications of the different ends we may choose. It makes it possible for us to will with knowledge of what it is we are willing. It makes it possible for us to select a system of ends which are mutually consistent with each other” (p. 136). Our priorities are numerical: first, second, third, and so forth. We cannot place numerical value on the degree of satisfaction that we want to achieve from our allocation of resources. This is the difference between ordinal priorities and cardinal priorities. We cannot estimate cardinal priorities. There is no objective value scale for subjective value. So, we cannot impute objective value to our priorities. We can compare our priorities only subjectively. We want A more than we want B at some objective price. We cannot say exactly how much more we want A rather than B at this price. Then we choose some and eliminate others in an orderly way: the order in which we would like to achieve them with the limited resources that we possess or hope to possess within the time frame of our plan.

3. Ownership Involves Exclusion

The model for this stewardship law is marriage. Here is biblical evidence for this statement. In the list of five kingly commands in the Ten Commandments, the commandment against adultery precedes the commandment against theft. God owns the family, and He has established the judicial obligation of exclusion for husbands and wives. A husband excludes all other men from bonding with his wife, and his wife does the same with him. Each partner has a legal claim on the other’s faithfulness. Once people understand this principle, they are ready to understand the prohibition against theft. All over the world and in every society, husbands and wives understand this principle of exclusion.

God excluded Adam and Eve from access to the forbidden tree. He established a property right. There was a legal boundary around that tree. Property rights are always about boundaries: legal, institutional, and geographical. All legal rights are about boundaries. Owners have the right of exclusion. They have the right to use their property as they see fit, as long as it does not interfere with someone else’s use of his property.

This means that inclusion and exclusion go together. They are two sides of the same coin. This is also true of inheritance and disinheritance. Inheritance and disinheritance are concepts that are extensions of the commandment against theft.

4. Owners Evaluate Performance

This is an extension of the fourth law of the theocentric judicial covenant: God evaluates performance. Delegated owners also evaluate performance. They are supposed to evaluate performance in terms of the criteria established by God. They impute economic value because they are made in the image of God. They are able to do this because God does this. They are stewards of God’s property, so they have to be able to evaluate performance. They do as creatures what God does as Creator. They are supposed to think God’s thoughts after Him. They can do this self-consciously as stewards of the Creator God, or else they can do it as implicit stewards of some other god. This other god may be the state. It may be the free market. Ultimately, a self-proclaimed autonomous man serves himself as god.

This is the economic doctrine known as imputation. It is fundamental to Austrian School economics. The founder of Austrian School economics was Carl Menger. In his book, Principles of Economics, published in 1871, he shifted the origin of economic value from objective economic value, which had been dominant among classical economists from Adam Smith to Karl Marx. He substituted the concept of subjective value. This rested on a concept of subjective evaluation. This was a crucial development in the history of economic thought. Menger shifted economic theory from realism to nominalism. This is rarely if ever discussed in histories of economic thought, but this was the philosophical heart of his remarkable philosophical breakthrough. Philosophical realism and philosophical nominalism had been debating points in Western philosophy ever since the fourteenth century. Economists prior to Menger had explained economic value in terms of objective inputs, either the labor theory of value or the cost-of-production theory of value. The two explanations were opposed to each other, but they were unified in their commitment to philosophical realism.

My version of Christian economics is not based on either realism or nominalism. It is based on covenantalism. Both realism and nominalism have fundamental contradictions that they cannot answer. This is not the place to discuss these contradictions in detail, but they do exist, and they are perennial. Here is a brief summary.

I begin with realism. I mention two contradictions. First, if we argue that economic value comes from labor, then why is a waterfall that can generate electricity valuable? No human being made the waterfall. Second, somebody may invest a lot of money in resources in order to produce a product that turns out to have little or no economic value when it is brought to market. Its price is too low to cover the costs of production. How is this possible if economic value is derived from objective costs of production?

Next, there is nominalism. This traces economic value back to individual imputation. This imputation is subjective. Subjective value theory has a major problem. According to subjective value theory, it is impossible to make interpersonal comparisons of subjective utility. Lots of people subjectively impute different values to a particular item. When the time comes to decide a corporate economic policy, policy-makers must be able to discover what the correct economic value is. Problem: there is no way to know. An item’s price will be determined by competitive objective money bids in the free market, but the person making the highest bid and who takes it home may not impute much value to the item. He may be extremely rich, and buying it does not involve any kind of serious sacrifice or desire on his part. Someone else who really wanted it will not be able to buy it. He could not offer a higher bid. Critics of the free market have complained against this outcome for two centuries. There is no way for a free market economist to argue logically on the basis of subjective value theory that any society is benefited by a system of competitive bidding that allows individual high bidders to win.

5. Owners Designate Heirs

Men die. This negative sanction imposes responsibilities on owners to designate heirs, either individual or institutional. This raises the problem of unwise heirs. Solomon wrote: “I hated all my accomplishments for which I had worked under the sun because I must leave them behind to the man who comes after me. For who knows whether he will be a wise man or a fool? Yet he will be master over everything under the sun that my work and wisdom have built. This also is vapor. Therefore my heart began to despair over all the work under the sun that I did. For there might be someone who works with wisdom, with knowledge, and skill, but he will leave everything he has to a man who has not made any of it. This also is vapor and a great tragedy” (Ecclesiastes 2:18–21). [North, Ecclesiastes, ch. 4] There is no simple solution to this problem. Solomon was known as a wise man (I Kings 10). He left his kingdom to an unwise son. His son imposed rigorous taxes. Ten of the tribes of Israel revolted against him (I Kings 12). [North, Historical Books, ch. 20] The kingdom was never reunified under the rule of an Israelite king.

In order to fulfill God’s requirement of compound economic growth, there must be inter-generational wisdom passed on by owners to their as yet non-owning sons and daughters. This wisdom must include the knowledge of how to increase per capita wealth. The solution to this problem eluded mankind until about 1800. Only then did per capita wealth increase every year by 2% or more. That compounding process has created the modern world. Economic historians have asked this question: “Why did this begin sometime around 1800 in only two regions, the British Isles and English-speaking North America?” So far, they have not come to any agreed-upon solution to this question. Human history changed sometime around 1800, and we do not know why. Why did this development not begin in the tiny nation of Israel no later than 1400 B.C? What factors prevented this?

Property owners should teach their children whatever they know about the relationship between biblical ethics and personal responsibility in numerous areas of life. If they do not, their children are unlikely to be economically successful. Then a major problem appears: the dissipation of family inheritance. The larger the number of children, the more rapidly the per capita inheritance disappears. Very few families in history, other than royal families in prosperous nations, have been able to sustain a program of increasing per capita wealth beyond three or four generations. The most famous of these families is the Rothschild banking family. They have done this for two centuries. But there are few others. The DuPont family in the United States has been successful. The Rockefellers have been successful. Probably least known is the Sassoon family, a family of Middle Eastern Jewish merchants. They do not reveal to the public what family members are worth, but they have been rich for over two centuries. These families are hardly representative of families in history.

Throughout history, societies have faced this problem: regression to the mean. Spectacular performance economically by a company rarely is maintained for more than half a century. Here, we are not speaking of families. We are speaking about corporations. They are far more competitive economically than families in their ability to hire specialized talent in order to maintain long-term economic growth. Owners designate heirs, but in our day, the functional owners are senior executives. One way to transfer wealth within a company is by granting stock options to young men who are expected to be highly productive employees in the future. The future value of these options is dependent upon the performance of the company over time. Share value must rise for the options to become valuable. Shares must reach a “strike price.” The ability of senior managers to hire such people and to reward them in such a way that their efforts will benefit both the employees and the company over decades is a rare skill. Apparently, it cannot be taught. It has not been taught in graduate schools of business.

Conclusion

Stewardship laws govern all men, but only covenant-keepers acknowledge that God has established these laws. They recognize that they are the economic agents of God because they are the judicial agents of God. Not many Christians understand this. Until most Christians recognize this and then structure their lives in terms of it, they will live on the scraps that fall from the tables of the humanists. In my era, this is a lot of scraps. Furthermore, there is not much responsibility in feeding off of these scraps. To the degree that Christians seek to avoid increased responsibility in history, they must content themselves with scraps. The kingdom of God will exist in the shadows of society. It will be seen as a refuge for people who want to avoid the risks of life, who do not want to increase their responsibility for exercising leadership.

It is not easy to sell responsibility. But this is what discipling the nations requires (Matthew 28:18–20). [North, Matthew, ch. 48]F. Economic Laws Ci>Introduction

These are fundamental laws that govern the economy as a whole. They are not laws of trusteeship, meaning judicial laws that govern the affairs of individuals and institutions in their capacity as representatives of God. They are not stewardship laws, meaning ownership laws that govern the affairs of individuals and institutions in their capacity as representatives of God. Rather, they are laws governing the market process. They are outworkings of the three previous sets of five laws each. These five laws prevail across time and across borders. They are the kinds of laws that are discussed by humanistic economists in textbooks, monographs, and scholarly journal articles. In this sense, they are laws governing conventional economic theory. They have been investigated by economists for many decades.

Economists believe that their theories apply accurately to economic practices and also economic results. They believe that the economy is governed by laws that can be discovered by economists. They do not argue that these laws are equivalent to laws of physics. This is because men make decisions, unlike inanimate objects. These decisions are not always predictable. Nevertheless, most economists eventually use the phrase “laws of economics.” If there were no such laws, then whirl would be king in economic affairs. In such a world, economists would not be able to make predictions any more accurate than by flipping a coin. (Some critics of economists say that economists are even less capable than people who make predictions by flipping a coin.)

The heart of economic analysis is this phrase: “If . . . then.” If economists were not able to argue plausibly that there is a predictable connection between a carefully defined if and a carefully defined then, economics would not be a social science. It would have no legitimacy. It would have little or no influence. Because economics is regarded as a science, it does have legitimacy, and economists have more influence than members of any other social science, I conclude that there are causal connections linking prices and outcomes, and causal connections can be discovered, described, and occasionally taken advantage of by entrepreneurially minded economists.

1. Owners Adopt Purposes

This is a universal law. This is because people are made in God’s image. He adopts purposes, so people do, too. Purpose should be the starting point of all Christian social theory, including economic theory.

Purposeful action as a starting point is most consistently developed by members of the Austrian School of economics. Purposeful action was the central premise of Mises. All other schools of free market economic opinion accept some variation of this statement: “People act.” Free market economists believe that people make choices between alternative courses of action. They do not believe that these people act irrationally most of the time. Above all, economists believe that people respond in a predictable way to incentives. If people did not respond predictably to incentives, then economists could not make plausible predictions about what people will do if given opportunities to improve their situations. This outlook is encapsulated in this phrase: “When prices fall, the quantity demanded increases.” A wise economist adds this qualifying phrase: “Other things being constant.” If people did not increase their purchases of goods that now sell for less than before, then economists could not say anything coherent about the market process.

Economic science deals with connections between ends and means. Economists speak of ends as being subjectively determined. Then they discuss a man’s choice of specific objective means from among a variety of scarce means. By “scarce,” economists mean this: “At zero price, there is more demand than supply.” An economist begins his analysis with a consideration of people’s subjective purposes (ends) in order to discuss the ways in which they choose objective means to achieve their ends.

A Christian economist should also begin his analysis with this philosophical presupposition: the universe was created by God alone, and it is presently sustained by His providential power. A Christian economist believes that there is a subjective coherence in the minds of men that corresponds to the objective coherence of the objective, external world. On what basis does he believe this? Because he believes in the providence of God. He does not assume that man’s mind is autonomous. He also does not assume that the market process is autonomous. He believes that nothing except God is autonomous. He believes in a purposeful God, a purposeful creation, a purposeful providence, and purposeful human beings who are made in the image of God. In short, he assumes cosmic personalism. I selected this title for Chapter 1 of my economic commentary on Genesis: “Cosmic Personalism.” This is not the starting point of humanistic economic theory.

2. Prices Provide Information

Prices are crucial for setting priorities. Without prices, we fly blind. We do not know what things cost. We do not know what people have recently bid in order to buy or rent scarce resources. In a world governed by scarcity, prices are tools of understanding and therefore tools of action. Prices are the most important sources of information that lead to the coordination of competing economic plans of action.

Prices are objective. They are the product of competitive bidding in the market. They are the results of the people with specific information who are willing to put money on the line by buying or selling assets. The information conveyed by prices is highly specific. We can legitimately say this: prices are necessary but not sufficient in conveying accurate information to decision-makers. Without money prices, the only economy that could exist would be a barter economy, which is primitive. Most of the world’s population would die within a month or two. Mises argued in his famous 1920 essay, “Economic Calculation in the Socialist Commonwealth,” that without prices generated by competitive free market bids, central planners would be unable to allocate goods and services according to what people want. Central planners would be blind. This is especially true of the prices for capital goods. Without prices, the economy would become irrational.

F. A. Hayek in 1945 extended this argument in his essay, “The Use of Knowledge in Society.” He argued that prices are society’s indispensable means for the free market to coordinate the economy. They are necessary for sharing valuable information. People in local markets bring their best guesses regarding the value of specific goods and services. In this way, the best economic information is harnessed to serve society. I would add this: prices are offered free of charge to nonparticipants in specific market transactions. This is a tremendous benefit for society. In this sense, all of society becomes a kind of free rider on the best information that individuals possess about market conditions.

3. People Prefer More

Of course, a wise economist adds this qualification: “at the same price.” This is one of the fundamental laws of economics. It is a law of human nature. Why do I say this? Because the dominion covenant is basic to human nature. People are to multiply. This means population growth. Also, in order to avoid declining wealth per capita as a result of a growing population, people must increase their output. There must be economic growth. So, God has built into most people the desire to own more.

There are two motivations here. One is the worship of mammon: “more for me in history.” The other is capital appreciation for service to God. Jesus said: “No one can serve two masters, for either he will hate the one and love the other, or else he will be devoted to one and despise the other. You cannot serve God and wealth [mammon]” (Matthew 6:24). [North, Matthew, ch. 14] So, men’s motivations for greater wealth are different. But the desire to own more is widespread: a nearly universal trait.

If this law were not true, economic science would not be possible. If people were not willing to give up some of what they presently own in order to secure better conditions for themselves in the future, as they see fit, it would not be possible to explain the market process. It is unlikely that there would be much of a market process. In a family, people are willing to sacrifice for others. In small local churches, this is occasionally an important aspect of church life. But in society at large, where people do not know each other, and people are not bound by love or a sense of obligation, if people did not want more, they would not cooperate with each other. The division of labor would collapse. Starvation would be a constant threat. It is no longer a threat to most people.

So, the desire for more sustains society. Nevertheless, Christ warned against the god of mammon. He indicated that the God of mammon is the greatest rival to the God of the Bible. Yet the most important economic motivation appears to be the worship of mammon. Why would God place this at the center of the dominion mandate?

The correct answer has to do with the difference between common grace and special grace. Common grace is what God gives to all men. It is a blessing undeserved by anything they have done or will ever do. It is an undeserved blessing. They worship the God of mammon. They worship themselves. But, in worshiping themselves, they strive to increase their wealth. They must increase their output. They must increase their efficiency. They must become more productive. They must serve paying customers. This division of labor increases the wealth of almost everybody in society. The desire for more encourages peaceful cooperation. Is this grace? Yes.

Common grace is not the same as special grace. Special grace has to do with soul-saving and God’s kingdom-building. This is the grace extended by God to covenant-keepers. In their lives, the worship of mammon is a liability. It is a threat to their wealth—wealth in the broadest sense. Jesus announced this command in the same passage that He warned against the worship of mammon. “But seek first his kingdom and his righteousness and all these things will be given to you” (Matthew 6:33). [North, Matthew, ch. 15] Yet, already in this exposition of God’s kingdom, Jesus had already encouraged covenant-keepers to accumulate more. “Do not store up for yourselves treasures on the earth, where moth and rust destroy, and where thieves break in and steal. Instead, store up for yourselves treasures in heaven, where neither moth nor rust destroys, and where thieves do not break in and steal. For where your treasure is, there will your heart be also” (Matthew 6:19–21). [North, Matthew, ch. 13.] The question is this: “In which location will covenant-keepers accumulate more?” Mammon’s kingdom-building mandates the accumulation of wealth solely in history. God’s kingdom-building mandates the accumulation of wealth in both history and eternity.

4. Scarcity Imposes Costs

Here is the economist’s definition of scarcity: “At zero price, there is greater demand than supply.” It is a universal definition. I know of no school of economics that opposes this definition. I know of no superior definition.

In the biblical covenant model, point two is closely related to point four. Hierarchy is closely related to sanctions: performance. Planning for the future is closely related to profit and loss. The quest to gain profit and avoid loss is a great motivation for planning carefully. The goal is profit; the means are scarce. By scarce, I mean they command a price. For people who are purchasing capital assets or raw materials, prices are costs.

Jesus warned us to count the costs (Luke 14:28–30). [North, Luke, ch. 35] He discussed personal sacrifice for the sake of the kingdom in terms of prices. “The kingdom of heaven is like a treasure hidden in a field. A man found it and hid it. In his joy he goes, sells everything he possesses, and buys that field. Again, the kingdom of heaven is like a man who is a merchant looking for valuable pearls. When he found one pearl of very great value, he went and sold everything that he possessed and bought it” (Matthew 13:44–46). [North, Matthew, ch. 31] We are to assess our priorities in terms of the cost of attaining them. This is what it means to discuss the relationship between ends and means. It is the discussion of prices. It is therefore a discussion of price formation. Point two in the list of economic laws is this: “Prices provide information.” Prices are the way that we estimate costs. They are the way that we estimate how many of our priorities we can attain in a particular period of time. Prices remind us of the burden of scarcity. They remind us that we are finite. We cannot attain all that we would like to attain at zero price, including the price of time. For finite creatures, time is not a free resource. This is especially true of dying finite creatures. There was finitude before the fall, but after the fall, there is also death. You and I are running out of time. We need to place a price on the time remaining to us. Second, we had better acknowledge that accurate, relevant information is not a free resource. Once we understand this, it shapes our decisions and our institutions. The best book that I have ever read on this was written by Thomas Sowell: Knowledge and Decisions (1980).

5. Growth Reduces Scarcity

We learn from the third law of economics that people want more [at the same price]. We learn from the fourth law of economics that scarcity imposes costs. Because we want more, we would like to reduce our costs. We have a solution with the fifth point: economic growth reduces scarcity. This law is an implication of this biblical law: “But you may say in your heart, ‘My power and the might of my hand acquired all this wealth.’ But you will call to mind the Lord your God, for it is he who gives you the power to get wealth; that he may establish his covenant that he swore to your fathers, as it is today” (Deuteronomy 8:17–19). [North, Deuteronomy, ch. 22] Moses said that increasing per capita wealth is God’s blessing for obedience to His laws.

God wants His people to steadily and systematically overcome cursed scarcity (Genesis 3:17–19). Why? Because He wants them to extend His kingdom in history. This process takes capital. The means of production are not free of charge. But if we can find ways of lowering the costs of production, we thereby gain the ability of extending his kingdom more efficiently. We can achieve this at a lower price. To imagine that God does not favor economic growth is to imagine that the dominion covenant has not been extended into the world beyond the fall of man. But it has been extended. Jesus spoke about it repeatedly. He even said that we should sacrifice all that we own to buy the pearl of great price. Of course, because entrance into God’s kingdom is only by God’s grace, the kingdom is not for sale. So, what did Jesus mean? He meant that God’s kingdom is not going to be delivered to His people on a silver platter. We should not expect to make bread out of stones. “Then Jesus was led up by the Spirit into the wilderness to be tempted by the devil. When he had fasted forty days and forty nights, he was hungry. The tempter came and said to him, ‘If you are the Son of God, command these stones to become bread.’ But Jesus answered and said to him, ‘It is written, “Man shall not live on bread alone, but by every word that comes out of the mouth of God”’ (Matthew 4:1–4).

Consider this petition in the Lord’s prayer: “Give us today our daily bread” (Matthew 6:11). [North, Matthew, ch. 12:B] If economic growth were not a blessing, God would not ask us to pray this prayer. Hunger is a curse. Therefore, we are to pray for its reduction. Increased economic growth is therefore a legitimate goal for every Christian. It takes capital to build the kingdom of God. There are no free lunches made out of stones. The only free lunch in life is God’s grace. But this lunch was not free. The crucifixion was not free.

Conclusion

I have categorized these five principles as economic laws. A critic might say that these are not laws in the way that the statement that “sooner is better than later [at the same price]” is. This is correct. They are laws analogous to the ways that the 15 laws are. They are fundamental rules that enable us to understand the world around us. Economic laws are not autonomous. They are implications of the previous 15 laws. They are true only because the previous 15 laws are true. They are therefore derivative.

Humanistic economists do not regard economic laws as derived from legal principles. They see economic regularities as aspects of the human condition, which is cosmically autonomous. They implicitly assume this: “Man is autonomous. Therefore, economic laws are autonomous.” Some economists begin with the logic of the mind to derive economic laws. Mises is the premier example. Other economists look to detailed historical studies of the market process to identify regularities that have the status of laws. The German historical school of the nineteenth century is an example. Most economists choose something in between. They do so in a non-self-conscious way. This is basically the ancient philosophical debate between Parmenides, the defender of an unchanging logical system, and Heraclitus, who believed that history changes everything, including human laws and logic.Conclusion

This chapter is a development of my Preface to The Covenantal Structure of Christian Economics. There, I presented my suggested four areas of covenantal thought in economics: judicial (theocratic), judicial (representative), stewardship laws, and economic laws. I begin with fundamental law, meaning biblical law, not economic analysis. I also begin with God, not man. My thinking is self-consciously theocentric. You can see this in the final typeset editions of my economic commentaries on the Bible (2012). I begin Chapter 1 of Volume 1, Sovereignty and Dominion, with these words: “The theocentric principle here is God as the Creator. From the point of view of economics, this is God as the cosmic Owner. It corresponds to point one of the biblical covenant.” I continued this practice of identifying the theocentric principle at the beginning of every exegetical chapter in all 31 volumes. I recommend this practice. The Trinity is the center of the universe, metaphysically speaking. It should be at the beginning of covenant-keepers’ thinking in every area of life.

Christian social theory should always begin this way. It should begin with the Trinity, and it should begin with the judicial structure of the covenant. Man is under God’s law, now and forever. God uses this law-order to judge the performance of individuals and collectives. We must search the Bible for guidelines in judging every field of thought, including academic thought. To do this, an investigator of a particular field would be wise to examine the covenant structure of the field. He should ask himself this: “In what ways do the covenant’s five categories apply to the field I am investigating?” If the investigator can identify these applications, he has begun to “crack the code” of that field. Without gaining insight into the applications of all five categories, he will miss important aspects of the field. The covenant’s five points are the starting point for any investigation. The other issues of the field are subordinate to these five.

You can use the four volumes of Christian Economics to begin to gain insights as to how this can be done in a specific field. You may find that there are other applications of one or more of the five points that would provide greater insight into economics, both in theory and practice. But I warn you of an ancient rule: “You cannot change just one thing.” If you substitute a different application of a category, this will have ramifications for your understanding of Christian economics as an integrated whole. Be alert to these subordinate ramifications. You will have to re-think more than one modification you make to the system I have developed here. “My son, be aware of something more: the making of many books, which has no end and much study brings weariness to the body” (Ecclesiastes 12:12). It takes its toll on the mind, too. But, as they say, use it or lose it.

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