Why is Economics Relevant as a Discipline of Academic Study?
[This is part 2 of my posts with notes from my presentation at the 2009 TPA Homeschool Conference. The topic is Understanding and Teaching Your Children a Biblical View of Economics. Read Part 1 here.]
We saw in Part 1 that economics deals with choices humans make in light of scarcity and that we are called to be stewards of the resources God has entrusted to us. Various sub-disciplines and schools of thought exist within economics, and our purpose now is to briefly examine why economics is relevant. Why should we care about economics, and why is it important?From a biblical perspective, economics, in a nutshell, deals with wise stewardship of the resources God has entrusted to us. Austrian School economist Ludwig von Mises wrote in his treatise, Human Action, “Whether we like it or not, it is a fact that economics cannot remain an esoteric branch of knowledge accessible only to small groups of scholars and specialists. Economics deals with society's fundamental problems; it concerns everyone and belongs to all. It is the main and proper study of every citizen.” Perhaps now more than ever, our world faces unprecedented challenges, economically and otherwise, as a result of God’s judgment for economic foolishness and disobedience to principles in His Word. There has never been a more exciting and important time to learn, understand, and apply distinctly biblical economics.
In our day, economics has largely been subverted as a tool for ungodly men to advance their agendas of power and domination within society (Mark 10:42). - “Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.” –J.M. Keynes, an ungodly, humanistic economist
- “Economics is haunted by more fallacies than any other study known to man.” –Henry Hazlitt, a free-market journalist and writer on economics
- “When economics becomes a branch of politics, it ceases to be economics and becomes messianic. It becomes an instrument of power whereby men play god and plan to use human beings as their raw material.” –R.J. Rushdoony, a Christian scholar and theologian
R.J. Rushdoony also wrote, “Economics deserves a place in the high school curriculum, not as a branch of civics or civil government, but as an independent law sphere.”
To elaborate on Hazlitt's statement from Economics in One Lesson, cited above, there are two primary reasons Hazlitt gives that economics is so haunted with fallacies: 1) the powers that be often have a vested interest in propogating economic nonsense (e.g., the "too big to fail" myth regarding financial institutions and manufacturing companies), and 2) we often ignore the long-run implications of economic policies and actions on the whole of the economy, choosing to focus instead on what is easily and immediately seen in the short-run for a smaller sub-set of the economy (e.g., Bastiat's "broken window" fallacy).
OUR THEME: Christians must study and advance a distinctly biblical view of economics to counter economic folly so prevalent in our day and to affirm Christ’s Lordship over this field.
In the next post, we will examine how economics can be taught from a distinctly biblical perspective.
What is Economics, Anyway?
[This is part 1 of my posts with notes from my presentation at the 2009 TPA Homeschool Conference. The topic is Understanding and Teaching Your Children a Biblical View of Economics.]
The word "economics" comes from the Greek words oiko and nomos, meaning "household" and "law" or "rule," respectively. Thus, economics deals with stewardship or management of household resources. In the New Testament, oikonomia is translated as "stewardship" or "dispensation." God created and owns all things, and He dispenses His resources to us as mere stewards.
Ludwig von Mises defined economics as a praxeological discipline, meaning "the science of human action." He said that economics deals with individual choice and decision-making oriented toward maximizing satisfaction of unlimited wants through scarce means.
Textbooks often define economics as the "science of scarcity and choice." Human wants are theoretically unlimited, meaning we are never satisfied and can never have enough. At the same time, the available means to satisfy our wants are limited. Thus, we must make choices in light of scarcity. We must choose which of our unlimited wants to satisfy with the limited resources available to us.
Disciplines within economics include the following:
- “Micro” = study of individual units (individual person, household, firm, individual market)
- “Macro” = study of a nation’s economy as a conglomerate
- “International” = study of economic relationships among nations
- “Positive” = “the way things are,” “pure science”
- “Normative” = “the way things ought to be,” “values-based,” “ethics-oriented”
Some of the "schools of thought" within economics include the following:
- Austrian = free market, anti-statist intervention, honest money, “deductivist”
- Chicago/Monetarist = semi-free market, libertarian, “empiricist”
- Marxist = communist/socialist, politically totalitarian
- Keynesian = pro-statist intervention, anti-free market
The "deductivists" (e.g., Austrians) premise their epistemology and method on axioms (i.e., self-evident truths) from which a body of economic truth can be rationally deduced. The "empiricsts" (e.g., Monetarists) start with observation and experimentation, much like the traditional scientific method used in the "hard sciences." Other schools of thought include historicist (deriving truth from studying history) and mathematical (analyzing theories and problems of economics primarily through mathematical models). This list is certainly not comprehensive, as there are many other schools of thoughts and distinctives of the schools listed. As we will see later, Christian economics does not fit squarely within any of these, as Christians presuppose God as the Creator and Owner of all things, and His Word as our starting point and final court of appeal for all truth.
In the next post, I will summarize why economics is relevant as a discipline of academic study.
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