Markets and Miracles:
What the Market Economy Needs to be �Moral�

Economics & Law — By on August 29, 2005 at 1:55 am

Almost everyone has heard economics referred to as “the dismal science.” And if you took a course in macroeconomics you probably recognize that the appellation was given by the Scottish historian Thomas Carlyle. But what few people realize is that Carlyle coined the term in an 1849 magazine article titled Occasional Discourse on the Negro Question in which he denounced the two groups within the UK who championed the cause of antislavery: market economists and evangelicals.
Today we have become so accustomed to hearing criticisms of free market economics from socialists, Marxists, and other extremes of the political left that we find it difficult to imagine that it being opposed by conservatives. Attitudes toward the market economy, however, have less to do with the political spectrum than they do with the conception of who should retain control over economic life. Progressives, fearing that no one is in control and that powerful will take advantage of the weak, believe the state must step in to prevent inequitable and unjust outcomes. Conservatives (as we would define them today), by contrast, put their faith in the system itself and believe that left unhindered by the state, is sufficient to lead to the best possible end result. Libertarians, who view markets as morally neutral, contend that the individual, when allowed total liberty, will usher in the ideal end state. While all of these positions have some merit, they all ultimately fail when they leave out the most significant reason for putting our trust in the markets: because all control ultimately belongs to God.
Recognizing this fact, however, does not release homo economicus from all responsibility. A market is, after all, merely a mechanism for buying and selling goods and services. And while it is often viewed as highly individualistic and selfish, the fact remains that markets cannot exist without a network of humans in relationship with one another. As with all human interactions, though, our natural proclivity to sin can have a detrimental effect. Market forces and outcomes are prone to injustice and inequitable distribution precisely because man is by nature a sinful creature.
As Christians, we can never embrace any system or institution without being wary of how we are likely to abuse it for our own depraved purposes and rationalize our reasons for doing so. This is the primary reason we cannot fully embrace either a conservative or libertarian view of market economics.


But we should also be leery of falling for the progressive tendency to believe that government is the proper defender against economic injustice. While we might agree that protections are often necessary, we should reject the notion that the state has the moral authority to carry out that task. As William McGurn writes in Is the Market Moral?, it is naive to expect government to properly counter powerful market forces when the state has a monopoly on power. Indeed, there are few examples in history where government has circumvented the natural inclinations of its citizens in order to make a market more moral.
If governmental intervention is not the answer, how then should we show concern for the poor? By providing them the opportunities, the resources, and the freedom to more fully enter the market economy. As McGurn points out, “For the poor the real danger is almost never markets and almost always the absence of them.”
“It strikes me as not a coincidence,” adds McGurn, “that the God who made thinking beings in his own image appears to have put us in a world in which our wealth and well-being depend not only on our own freedom but that of our neighbors.”
How odd it is that we believe that free markets are beneficial for our own lives yet reject it as a solution for our neighbors. We wouldn’t accept having our own economic freedom and access to markets stifled by an intrusive government yet we often believe this is the best option for “the poor”, whether in our own inner cities or on the continent of Africa. Why is there two sets of standards for how to increase freedom and prosperity?
In a post on ethics and markets, Andy Morriss recounts an anecdote he heard on the radio:

One minister recounted how another minister had told him how God had answered his prayers and healed a headache the second minister had before a major sermon. The first minister commented on how arrogant the second minister was, to demand a miracle to cure his headache when God had already provided aspirin. Surely it is arrogant for us to pray for miracles to relieve drought and poverty when God has already handed us the means to do so – markets. Again, however, we rarely hear moral criticism of those who refuse the miracle of the market and insist that God (or someone) perform the far greater miracle of making economic planning work.

This raises an interesting question for Christians: Does God’s sovereignty not extend to markets? If so, then why do we expect, as Morris says, for God to circumvent the institution he has created and provided for our well-being by providing a “miracle?” The primary reason, in my opinion, is that we no longer think theologically about economics. While we evangelicals often form our views on such institutions as marriage and the family from our theology, we acquire our understanding of markets from our politics. If we subscribe to a progressive politics, then we adopt the Left’s criticism of markets. If we subscribe to conservative politics, then we embrace the Right’s unquestioning allegiance to unfettered markets.
What we need is a third way. We need a clear Christian vision that understands that markets are a moral sphere (contra the libertarians). We need to promote the idea that free individuals rather than government force is necessary to carry out this task (as the left often contends). We need to realize that the “market” is not a mystical system that will miraculously provide for our neighbor (as many conservatives seem to think). What we need is develop a coherent Biblically-based conception of how the market as a human institution can be used for the redemptive purposes of our Creator. As with every institution, what the markets need is for Christians to act more like Christ.



  • http://addisonrd.com michael lee

    this dovetails nicely with the newly emerging reality of ethical content as a market commodity:
    http://addisonrd.com/WordPress/?p=172

  • dr sardonicus

    But if you follow this line of reasoning, then you have to defend the proposition that God intended some people to be poor.

  • ucfengr

    then you have to defend the proposition that God intended some people to be poor
    Dr S–Poor relative to what? In countries with market-based economies, the poor are relatively well off. In the US, the poor have access to adequate nutrition (obesity, not malnutrition being the largest health problem), healthcare, transportation, and even have money to spend on entertainment (movies, TVs, etc.). It is mostly in places where you don’t have funtioning markets that you see true, grinding poverty.

  • http://www.burtonia.com/blog/index.php?/archives/111-Markets-and-Christians.html Burtonia Blogs

    Markets and Christians

    Excellent, thoughtful post at Evangelical Outpost on how Christians need a Biblical way of thinking about the operation of markets.

  • http://thoughtrenewal.blogspot.com Lyn

    I agree that “markets cannot exist without a network of humans in relationship” and so, although I may not be able to impact global economics (although, obviously, some individuals are in a position to do just that, viz Greenspan, et al), I can impact my personal economics and those I do business with. It is in this context primarily that we as Christians are to practice fairness, grace and all other virtues. And by influence one small economy at a time, we can positively influence the world. Pollyannish? Possibly. But this is the model we have in Jesus Christ, who started with 12 . . . Thoughts? lgp

  • http://www.davidopderbeck.com/throughaglass.html dopderbeck

    It seems to me that this post misunderstands the fundamental nature of a “market”. A fundamental aspect of the “market” is that it is amoral; it merely represents the sum of the preferences of all consumers in the market. Indeed, a “market” isn’t itself an institution, it’s a collection of preferences.
    If you want to influence the market based on specific moral principles, you need to act through other institutions to change consumer preferences. For example, the state might impose taxes or regulations, churches might instruct their members to engage in boycotts, or consumer groups might press for “socially responsible” investment funds. Since we do all these things already, it seems to me that a concept of how morality should influence free markets already exists.

  • tommythecat

    lord, won’t you buy me a mercedes benz?
    my friends all have porches,
    i must make amends.

  • http://jimgilbertatlarge.blogspot.com/ Jim Gilbert

    Joe,
    Love him or hate him, Gary North was decades ahead of other evangelicals on this subject.
    Forgetting theonomy, reconstructionism, and Y2K (which he got spectacularly wrong), his economic commentaries on the Pentateuch are remarkable works.
    Too bad the mere mention of his name causes his critics to convulse and hack up fur balls.

  • http://www.evangelicaloutpost.com Joe Carter

    doperdeck A fundamental aspect of the “market” is that it is amoral; it merely represents the sum of the preferences of all consumers in the market.
    For this to be true, preferences would also have to be amoral. As a Christian I have a difficult time believing that any action performed by sinful humans is completly amoral.
    For example, the state might impose taxes or regulations,…
    Taxes and regulations are as likely to be immoral as moral.
    …churches might instruct their members to engage in boycotts,…
    As I’ve argued before, there is nothing inherently moral about boycotts. Most of the time they are simply un-biblical uses of power.
    …or consumer groups might press for “socially responsible” investment funds.
    But what does “socially responsible” mean if markets are amoral?

  • http://www.dedelen.com/cerulean.html DLE

    Joe,
    I blogged a thirteen part series that examines economic and business systems (plus the rise of the Industrial Revolution and its fallout within the Church in America.) The last entry includes some radical ideas for a truly Christian, countercultural business and economic ethic. If any of your readers are interested, they can find it at this link.

  • http://www.davidopderbeck.com/throughaglass.html dopderbeck

    Joe:
    For this to be true, preferences would also have to be amoral. As a Christian I have a difficult time believing that any action performed by sinful humans is completly amoral.
    I think you’re missing my point, or that we’re talking past each other. I certainly agree with you that no human preference is “amoral” and that sin corrupts all human preferences in some way. But a “market” isn’t an institution that can influence preferences ex ante. Rather, a market is the sum of consumer preferences ex post.
    Let me focus it a little more this way: in economic theory, a “market” isn’t an institution with a moral framework apart from the preferences of consumers. A “perfect market” — in economic, not moral terms — is one in which consumers have perfect information and there are no exogenous influences on consumer preferences. Producers offer a good or service, consumers evaluate price and quality and the extent of their resources, and consume it (or not). That’s a “market.”
    It just doesn’t make sense, then, IMHO, to speak of a “market” as an institution with its own moral structure. What you need to talk about is how other institutions can influence markets for ethical or moral purposes.
    Taxes and regulations are as likely to be immoral as moral.
    Certainly taxes and regulations can be either moral or immoral. Whether they’re “as likely” to be one or the other isn’t a statement we can make on a blanket basis; it depends on innumerable social and political factors. If we want to inject ethical or moral issues into market preferences, though, a principal way to do that is through government regulation. This is, for example, something we do through environmental laws, securities regulation, and progressive taxation. Now, I’m not suggesting that any particular kind of regulation or taxtion is good or bad on the whole — just trying to focus on what you actually need to do to affect consumer preferences.
    As I’ve argued before, there is nothing inherently moral about boycotts. Most of the time they are simply un-biblical uses of power.
    I don’t necessarily disagree with you. I don’t mean to suggest boycotts are a good thing. But again, if you want to exert moral influence on markets, boycotts and such by churches are one way to try to do that.
    But what does “socially responsible” mean if markets are amoral?
    An investment fund isn’t a “market.” It’s a type of good / service offered through a market. Offering a “socially responsible” investment fund isn’t itself a means of influencing consumer preferences; it’s an effort to supply existing demand for such funds. But the promotion of such funds — through advertising, church-based campaigns, or favorable regulation — would be a means of influencing demand and thus injecting a moral perspective into the market transaction. Again, I’m not suggesting any of these options are good, but they are the sorts of things you need to think about if you want to exert moral influence over markets.

  • tim stanley

    Clear something up for me, guys. I was under the impression that the moral realm dealt specifically with human actions and choices, i.e. only actions can ultimately be assigned a moral value.
    In my mind, the market is indeed a mechanism. And within the market humans certainly make real choices. Certainly those individual choices can merit moral approval or condemnation. But the market itself is merely the venue and cannot properly be called moral or immoral, good or evil.
    I’m probably missing something. Can anybody help me here?

  • http://www.davidopderbeck.com/throughaglass.html dopderbeck

    Tim — that’s sorta what I was trying to say. But I wouldn’t even say a market is a “venue” because in economic terms the “market” isn’t the physical space in which trading occurs (e.g., the New York Stock Exchange trading floor, or your local produce store).

  • Terry

    Joe’s last paragraph is revealing. I don’t think it’s by accident that he uses the Clinton/Blair term “third way”. In the Clinton/Blair sense the “third way” meant that the engine of the market would be harnessed to achieve political goals. I believe Blair used the analogy of a galley, with the market system providing the power and the politicians providing navigation and setting goals.
    I think that a Christian Third Way would find itself eventually in the same bind that Clinton & Blair’s Third Way found itself — namely that Blair’s metaphor is flawed, and it’s impossible to cleanly seperate the function of the market and the function of setting public policy.

  • http://www.danielnairn.blogspot.com Daniel Nairn

    It seems obvious to me that a market is intrinsically moral, although the moral element may be lost in it’s vast expanse. This would be more clear in a hypothetical small market where the “network of relationships” is tangable. Imagine a village with no outside contact where the inhabitants must trade their goods and services in a direct and relational way with each other. This is rather crude, but I think the mere closeness of community would drive home the point that our actions have real human consequences. Now, enlarge that picture exponentially and you have the modern globalized marketplace. All interactions are not transparently human but rather are cloaked in a shareholder anonyminity. Thomas Friedman calls this “amoral” phenomenon the “digital hordes.”
    Now, my point is not that we need state-control or some other level of beaurocracy. This would certainly be no way to resurrect the relational element of markets. But we do need to acknowledge the moral ramifications of our consumer choices. If we don’t want to call consumer choices “market” that’s fine. Whether we eat or drink, we do all things to the glory of God.

  • giddy

    “Attitudes toward the market economy, however, have less to do with the political spectrum than they do with the conception of who should retain control over economic life.”
    Wrong. They have to do with the principle underlying the “Tragedy of the Commons,” and the fact that laisse faire economics results in advantage being of the less privileged and the destruction of the environment, generally speaking.
    Progressives believe that government should step in and hold back the less appealling results of the market economy, and create, generally, a safety net regarding healthcare and retirement, worker safety laws, fair labor laws, and pollution controls.
    The higher you are on the economic ladder, the less regulation you want for obvious reasons. The rest of us either care too much about other people, or are less privileged.

  • Terry

    Perhaps it would be best to use history as our guide. During the High Middle Ages something close to the arrangement Joe suggests did exist, though the theory of the intelligent decsion making by the marketplace was undeveloped. The medieval idea of fairness and tradition routinely overruled the entrepeneurial spirit. The result was anything but an economic success story.
    If we don’t trust history it might be best, instead, to pay heed to the words of the Son of Man as related in Luke: Ye cannot serve God and Mammon.

  • StudentToo

    As an economist you address a subject I am deeply interested in. I think there are two basic arguments for relatively unfettered markets, one moral and the other practical. But as a preliminary, it should be pointed out that markets are an inevitable product of societies larger than a few dozen people. The question is not whether to have markets–that is not within our power to decide–but to what extent, and in what way, to interfere with them.
    The moral argument for markets is based on the idea of service. The essential insight of Adam Smith was that in a free-market economy, the only way to do well (economically) is to serve your fellow man. Who decides what constitutes “service?” The very fellow man you intend to serve. To use Adam Smith’s example, if I am a baker, the only way I can succeed as a baker is to serve my fellow man by providing good bread at a reasonable price. No one has to buy my bread–after all, they can always go to the bakery down the street.
    But of course, in a fallen world our desires are sometimes perverted (markets for pornography), and the existence of all sorts of “market imperfections” ensures that a completely moral and efficient outcome is never attained. So, no one truly believes in unfettered markets. After all we all want to prohibit markets for murder. The problem is that governments have most of the same problems markets do. All government decisions are made by fallen people, and there is no guarantee that their decisions will be any more moral than the market outcome. In a market economy people are tightly restricted by the presence of competition in the harm they can do. If I try and pass off poor-quality bread to my customers, it isn’t long before they figure it out and quit patronizing me. Governments are not so restricted, and so are capable of much greater evil. The history of the 20th century suggests that the greater the scope of government interference, the more likely it is that the government’s interference will be for evil rather than good.
    The second argument for relatively unfettered markets is efficiency (efficiency is not without its moral dimension, but that is not the point here). Economic theory and much sad experience indicates that interfering with markets comes with a very high price. We prohibit markets for murder, but we have to spend billions to enforce the prohibition (and still do not completely eliminate them). We prohibit markets for cocaine, and in exchange get increased murder rates and contribute to the destabilization of foreign countries. We try to help the poor and end up with people choosing welfare over work. So we have to balance the cost of our proposed interference with the real-world benefits. I tend to be of the opinion that we poor limited and fallen humans will rarely be able to do better than the market, however imperfect it may be.
    The market certainly produces imperfect outcomes, but we live in a world of trade-offs and imperfect outcomes. The real question is whether, and to what extent, we can improve on them. In a fallen world, I am not hopeful. (and I apologize for the length).

  • http://mumonno.blogspot.com Mumon

    What we need is a third way. We need a clear Christian vision that understands that markets are a moral sphere (contra the libertarians). We need to promote the idea that free individuals rather than government force is necessary to carry out this task (as the left often contends). We need to realize that the

  • http://www.centeredwork.com AndyS

    Joe wrote:

    Attitudes toward the market economy, however, have less to do with the political spectrum than they do with the conception of who should retain control over economic life.

    In response Giddy wrote:

    Wrong. They have to do with the principle underlying the “Tragedy of the Commons,” and the fact that laisse faire economics results in advantage being [taken] of the less privileged and the destruction of the environment, generally speaking.

    Progressives believe that government should step in and hold back the less appealling results of the market economy, and create, generally, a safety net regarding healthcare and retirement, worker safety laws, fair labor laws, and pollution controls.

    The higher you are on the economic ladder, the less regulation you want for obvious reasons. The rest of us either care too much about other people, or are less privileged.

    I have to agree with Giddy.

    If you take the commandment to love your neighbor as yourself to heart, how can you let your neighbor remain outside the economic system—without health care, without employment, etc.?

    This common tendancy to dismiss government as something evil that can do little good is something I don’t understand. We formed the government of the US to provide a “more perfect union.” It is not something outside ourselves—not in a democratic/republican form anyway—but rather it is us collectively; it is the response of a large number of people in a geographic area to organize and maintain a healthy environment in which to work and live.

    Daniel Nairn makes an important point when he says: “It seems obvious to me that a market is intrinsically moral, although the moral element may be lost in it’s vast expanse. This would be more clear in a hypothetical small market where the “network of relationships” is tangable.”

    Now 220+ years after the formation of our system of government we are faced with vast markets and an economy measured in trillions of dollars. Yet, even so, it is human acts that drive it, each one a moral choice. Do I buy from this company or that? Do I use just what I need or anything I desire and can afford? Do I accept an offer of employment from an unethical company?

  • http://www.centeredwork.com AndyS

    StudentToo wrote:

    The market certainly produces imperfect outcomes, but we live in a world of trade-offs and imperfect outcomes. The real question is whether, and to what extent, we can improve on them. In a fallen world, I am not hopeful.

    That’s one of the most jaded, self-serving statements I’ve heard in a while. After reading your condescending lecture on capitalism I expected something better than “ah, heck, I don’t have a clue.”

    Joe wrote:

    What we need is develop a coherent Biblically-based conception of how the market as a human institution can be used for the redemptive purposes of our Creator. As with every institution, what the markets need is for Christians to act more like Christ.

    and

    We need to promote the idea that free individuals rather than government force is necessary to carry out this task (as the left often contends).

    For heaven’s sake, how about addressing the problem of poverty head on? Free individiuals as well as God and Christians have had plently of time to address the problems in our economy and we are still waiting.

    And please, what does it mean “for Christians to act more like Christ”? I’m hopeful there is some answer hidden in there yet those are your final words. You seem to back away just as you get to the interesting part, or is it because you couldn’t get two Christians to agree on a common meaning of the phrase?

  • http://www.evangelicaloutpost.com Joe Carter

    giddy Wrong. They have to do with the principle underlying the “Tragedy of the Commons,” and the fact that laisse faire economics results in advantage being of the less privileged and the destruction of the environment, generally speaking.
    Progressives believe that government should step in and hold back the less appealling results of the market economy, and create, generally, a safety net regarding healthcare and retirement, worker safety laws, fair labor laws, and pollution controls.
    You claim I am wrong…and then make an argument defending exactly what I said: “Progressives, fearing that no one is in control and that powerful will take advantage of the weak, believe the state must step in to prevent inequitable and unjust outcomes.”
    Next time you might want to control that knee-jerk reaction long enough to respond to what I actually write. ; )

  • StudentToo

    AndyS wrote
    That’s one of the most jaded, self-serving statements I’ve heard in a while. After reading your condescending lecture on capitalism I expected something better than “ah, heck, I don’t have a clue.”
    In your earlier post, you quote approving Giddy saying that laisse faire economics results in advantage being [taken] of the less privileged and the destruction of the environment. I agree that correcting those are good ends. So give me a program that will correct them and not produce consequences worse than the disease.
    I would also remind you that those problems are not consequence of laisse faire economics, but are universal. In fact, the worst examples tend to be precisely where laisse faire economics are NOT practiced. A free market is probably the best solution to the problem of advantage being taken of the less privileged. In a free market the less privileged are as free as anyone else to go patronize a competitor (if you look around the world, monopolies are almost always the product of government action, not market outcomes). There is still lots of room for Christian compassion, but that is tangential to operation of an economic system.
    My conclusion is not “ah, heck, I don’t have a clue” as you gloss it, but “this world is not perfectable.” Certainly some things can be improved, and I very much believe in trying. But at the same time, we have to understand that we are severely limited in what we can do. If we try and make perfect what cannot be perfected we will almost certainly do more harm than good.

  • http://www.centeredwork.com AndyS

    StudentToo writes:

    In your earlier post, you quote approving Giddy saying that laisse faire economics results in advantage being [taken] of the less privileged and the destruction of the environment. I agree that correcting those are good ends. So give me a program that will correct them and not produce consequences worse than the disease.

    There are many examples: Government intervention in the 1930′s helped to create the most productive agriculture the world has ever seen. Government sponsored research created the polio vaccine to name but one incredible medical invention with huge positive consequences for world health. The government created the interstate highway system and what is now known as the world wide web. Rural electricfication had a huge positive impact on millions of lives — another government project. Medicare and Medicaid provide millions with healthcare that otherwise they would do without.

    Your position is reprehensible.

  • StudentToo

    AndyS
    First, I never said that the government is incabable of accomplishing good. What I said was that there are always side-effects, and that often those side effects are worse than the problem to be solved. In several of the examples you cite, the ill effects are not hard to find.
    Where good can legitimately be done, we should by all means do it. But never think that there are no costs. It is not “reprehensible” to observe that good intentions do not guarantee good results; it is not “reprehensible” to point many cases where people intending to accomplish good have caused more harm than they releived; and it is not “reprehensible” to ask, when the next well-meaning program comes along, whether it will follow down that same path.