The next post in our series comes from my friend Dr. Brad Littlejohn.

My esteemed predecessors in this series have offered bracing words of optimism in the face of Trump’s hostile takeover of the GOP. This manifestation of divine judgment may be a blessing in disguise if it hastens the collapse of the unstable alliance between evangelicalism and the GOP. And such a collapse may be a blessing for many reasons, not least for affording evangelicals the opportunity to abandon the crumbling cliches of moribund Reaganomics and go back to the drawing board in search of a just, free, and prosperous economic order.

The GOP has broken into two main camps on economics.

In recent years, the Reaganite legacy, to which nearly all quarters of the GOP have done lip service, has bifurcated into two main camps, both professing themselves pro-business and pro-market, but with rather different ideas of what that meant. The first camp, increasingly representing the so-called Establishment GOP and the DC insiders who have taken such a shellacking these past couple years, could without too much injustice be called the crony capitalist wing of the GOP. Their pockets lined more and more by generous campaign donations from big business and the 1%, their time more and more occupied dining with corporate lobbyists, and their futures well-secured by the revolving-door policy that ensured posh private-sector jobs once they left public service, they barely kept up the pretense that “free-market policies” meant anything other than corporate welfare. Of course, it needs no Bernie to tell us that the same fate has by and large befallen the mainstream of the Democratic Party, which is only superficially less “pro-business” than the Republican establishment. The only real economic argument between the two main parties was how many crumbs to throw to the downtrodden masses in the form of tax credits or welfare payments.

The second camp, perceptive enough to see in these market distortions a betrayal of true free-market ideology, called for rolling back all government involvement in the business sector, returning the country to a pristine state of nature in which, it is supposed, innovation and small business will thrive. This Tea Party wing ran an intellectual spectrum from angry “Don’t-Tread-on-Me” anti-taxation populism (a large chunk of which Trump has successfully co-opted) to a more sophisticated upper echelon who read Rand, von Mises, and Rothbard and mistake their metaphysical fancies for economic theory.

The clash of these two wings was most eloquently displayed when House Majority leader Eric Cantor, a leader of the pro-business wing, suffered a shocking primary defeat to Tea Party upstart David Brat, a liberal-arts college professor whose main claim to fame (or at least expertise) was a bizarre, rambling article for the biblical studies journal Interpretation called “God and Advanced Mammon.” In the essay, Brat invokes the libertarian non-aggression principle to argue that Christians should not support laws against usury, since that would be “coerc[ing] our fellow citizens to act in ways that follow our Christian ethical beliefs.” Upon leaving the house, the defeated Cantor immediately accepted a position as vice chairman of investment bank Moelis & Company, with annual compensation of $3.4 million.

Neither of these two wings of the late great Republican Party were without their merits. Although “crony capitalist” is not a moniker anyone wants to be saddled with, many of these politicians were, notwithstanding the anti-establishment ire that seems to burn hotter every day, decent, intelligent, broadly well-intentioned leaders who understood a lot about how government worked and successfully enacted a number of useful policies that kept this country running.

Likewise, the Tea Party wing was driven in large part by righteous indignation at the collusion of big government and big business (especially Wall Street) and the resulting thicket of red tape that made it increasingly difficult for ordinary Americans to start and run businesses in the face of crippling regulatory costs. The Tea Partiers at their best also recognized that the collusion of establishment Republicans and establishment Democrats helped perpetuate a welfare state that trapped the poor in a cycle of dependency, rather than creating real freedom of opportunity and financial self-sufficiency. Their de-centralizing small government instincts also reflected something like the venerable “principle of subsidiarity”—that matters ought to be handled by the smallest, lowest, or least centralized authority that is able to competently handle the matter.  

The problem with the Tea Party was not so much with the problems it named but with the naiveté of the solutions it advocated. “Just get the government out of the market” they proclaimed, and all our myriad problems would spontaneously self-correct. Despite frequently being loud in their denunciation of liberals and moderate Republicans who “just don’t understand economics,” most Tea Partiers showed almost no interest in the complex data-driven debates of contemporary economists, whether on the pros and cons of minimum wage, optimal tax rates for stimulating growth, or the need to regulate externalities.

Worst of all, they failed to recognize that nature abhors a vacuum—that if you broke the current unholy ties between government and big business, but left government intact, and big business intact, new forms of collusion would quickly spring up to fill their place. Indeed, if you shrink the government while leaving big business intact, you will simply make it easier for corporate actors to co-opt the machinery of government to consolidate their market power and increase their profits. If we look around the world at the countries with the smallest federal governments (measured by government spending as a percentage of GDP) the looked-for beacons of freedom turn out to be notoriously corrupt sub-Saharan African countries. In other words, there is little reason to expect that Tea Party policies on the whole would do much more than recreate, after 10 or 20 years, a less prosperous and more anarchistic version of the current crony capitalist status quo.

Now is the time for evangelicals to revisit basic economic questions.

For evangelical Christians, who have been disproportionately represented among Tea Party ranks, there should be deeper reasons for dissatisfaction with the libertarian lurch as the only alternative to the crony capitalism of the Center or the social capitalism of the Sanders Revolution. While the non-aggression principle (which is often invoked to describe government action in the market as violent aggression against individuals) bears a superficial resemblance to the ideas of Christian charity and Christian liberty, in fact it would have greeted by incomprehension or repulsion by Augustine, Aquinas, Calvin, and all the architects of Christian political thought.

By restricting the vision of political economy to the goal of maximizing individual freedom, the Tea Party vision forfeits any idea of the common good as the guiding principle of political life and in fact further entrenches the moral degeneracy of contemporary liberalism’s idolatry of self-determination. It also tends to lose sight of large-scale social or structural harms that today’s large-scale economic actors often directly or indirectly perpetrate, and by preventing government from taking action to redress them, it encourages the exploitation of the poor and defenseless.

With the 2016 Republican primary representing the political collapse of both wings of Republican economic policy, it is high time for evangelicals to put our heads together—with one another and with thoughtful analysts across the political spectrum—and start sketching a better alternative. Thankfully, we need not look to some utopian “Third Way” or “gift economy” for our alternative, but can begin by retrieving some common-sense reflections that were thoroughly understood by an earlier era of economists (or political economists, as they then called themselves), however much our current political haze may have shielded them from view.

Being “pro-market” is meaningless.

The first basic insight we need to recover is that, in the abstract, the call for pro-market policies is vacuous; it’s like saying, “I’m pro-law.” Ok, great, so are all but a few anarchists, but what sort of laws? Or in this case, what sort of market? Well, a “free market,” we’re told. But this is merely shorthand for “a market in which participants are free in their various business dealings.” And how might we achieve that?

Consider the following illustration of our current predicament. If you took 10 people who’d never seen a basketball before, put them on a court, split them into teams, gave them a ball, told them the objective was to get it through the hoop, and then said, “Now have at it, boys!” you might well have 48 minutes of rather poor entertainment, a few remarkable individual exploits, and probably a fair bit of blood on the floor, but you would not, properly speaking, have a game of basketball. Competition without rules and structures isn’t a game; it’s just pure Darwinian survival-of-the-fittest competition. And it’s ugly. No doubt a few of the bigger, stronger, and more selfish players would realize that they could get a lot further by trampling and bludgeoning the smaller players. A few participants would thus be free to play, whereas others would only be free to be beat up.

Now imagine that there were a couple referees there, but since they had no rules to guide them, their interventions were pretty much random, whenever they felt that things were getting out of hand. Except they quarreled ceaselessly between themselves. One was a bleeding-heart liberal who wanted to blow the whistle any time someone got hurt, whereas the other was a former Marine drill sergeant who lounged on the sidelines, saying, “Let ‘em play.”

Imagine further that at the end of the game, the referees would randomly take points from the winning team and award them to the losing team—not enough to change the overall result usually, but to make the outcome look closer than it really was. Imagine finally that the players who racked up the most individual points (by whatever means necessary) got to vote on who the refs were for the next game. That’s sure to turn out well….

Our current political-economic predicament is not far from this. Thankfully we are not so crazy as to try a market with no rules whatsoever, nor have we so lost our common moral heritage that many economic actors are willing to do whatever it takes to get ahead, but we do talk as if “the market,” in its pure, native state, exists in a vacuum of rules and definition; some even openly defend this idea, speaking of the “spontaneous order” that will emerge from a multitude of individual transactions. Against this background assumption, our two main political parties have been like the two referees, intervening to regulate the market when things get out of hand, and redistributing gains from the winners to the losers at the end of the process, and quarreling endlessly with each other as to how often to intervene, and how many points to redistribute.

Whatever the result of their quarrels, one thing is guaranteed: their decisions will feel arbitrary and unjust to the players on the court, many of whom will start to wonder if their lives would be better without any refs. But of course the real problem here is not the referees, but the absence of a commonly-agreed rule book, some definition in advance of what the game is and how it is to be played. Instead of forever bickering about re-distributions, what we should be paying attention to are the pre-distributions, or questions of market structure, that determine most of all how the game will play out.

True guiding principles for the market exist, but they are usually complicated.

So what might such a rule book for the market? Thankfully we already have quite a substantial rule book, but unless we actually pay attention to it, and ask ourselves to what extent the rules make sense, are fair, and maximize the freedom of the participants, we are apt to become trapped in sterile debates about “those blasted refs.” The market depends on all kinds of rules, like those that govern property, bankruptcy, and corporations, and very few of these rules are somehow self-authenticating or self-generating; rather, it is the task of political societies to figure them out. The suggestion that property rights are subject to political determination may at first strike some readers as radical and Marxist, but it is on reflection mere common sense, as can be seen from considering the newest form of property rights—intellectual property.

Imagine I come up with an idea—a really good idea. Do I own it? That is, am I entitled to personally enjoy all the financial benefits of that idea in perpetuity? That seems a bit extreme. First of all, from a mere pragmatic standpoint, even if I should own it and should enjoy all the financial benefits, there is obviously no way I will be able to do so without government help. Laws must come to my aid and formalize my right and enforce it against all comers. But to do so in perpetuity would be well-nigh impossible—ideas, after all, have a way of floating around mysteriously. Purely from a practical standpoint, then, there seems to be good reason to put some time limit on my ownership.

This becomes clearer when we consider the demands of a free market. This usually means, above all, freedom of competition. Clearly a market in which a few actors can enjoy a huge competitive advantage for a very long period of time, with government protection, is one where competition will be steadily suppressed. Even if another market actor also came up with a fantastic idea that he could profit off of, odds are that he would be trampled underfoot or bought out by his powerful rivals long before he could do anything with it. Maximum innovation would seem to depend on maximum competition, which would almost then seem to demand zero anti-competitive restrictions on intellectual property.

But of course, if there were no protections for a good idea, then there would be little incentive to invest the time and labor into coming up with one, so clearly some kind of intellectual property right should be protected. And we haven’t even brought in other more abstract, but equally important considerations: For instance, what does it  mean to come up with a new idea anyway? In the world of ideas, every idea is to some extent a product of what came before, and odds are that most of the previous ideas I am building on are in the public domain. Indeed, hundreds or thousands of other people may have contributed materially to my insight, so is it fair for me to acquire an exclusive individual right just because I was the one who put the key pieces together? Probably not; my community and society as a whole probably deserves some of the credit, and thus some of the benefits.

The point of all this is that these things do not just decide themselves; someone has to decide, and they have to decide carefully, with an eye to considerations of justice, pragmatism, and maximizing freedom of competition. At first glance, all this might seem to be a unique problem of intellectual property, given its vagueness and elusiveness. But real property is subject to many of the same ambiguities, if we ever paused to question it.

Indeed, land and natural resources are subject to a considerably more profound ambiguity—namely, that no one “came up with it,” the way we come up with an idea; or rather, only God did. The rest of us just found it. And there’s a finite supply of it, unlike with ideas, so it’s even more problematic for a small group to monopolize it in perpetuity. Plus, since all land touches other land, what I do with my land may have harmful effects on owners around me (noise, pollution, etc.). Rules for the just ownership, use, and distribution of the proceeds of land are among the most essential rules for making a free market work, and yet they are almost never discussed in today’s political-economic brawls.

Similar points might be made much more briefly about bankruptcy law, which is in a sense the inverse of property law—it governs when you are allowed to break a property right, specifically your creditor’s right to some of your property. If property rights were absolutely inviolably sacred, then bankruptcy should never be allowed. And yet it has been crucial to the survival and flourishing of societies throughout history, beginning with ancient Israel, where bankruptcy rights are built into the Mosaic law as a bedrock of Israel’s economy.

This is one point where we have to ask “whose freedom?” when we hear of a call for a “free market.” Because ultimately, without bankruptcy protection, the freedom of creditors to collect their dues no matter what is their freedom to enslave their borrowers; such debt-slavery was common in the ancient world and still is in some parts of the world. To maintain maximal freedom for as many market actors as possible, the rules of the market must allow for orderly bankruptcy when debts become unpayable. But the rules must somehow do this without creating moral hazard for people to borrow recklessly without fearing the consequences. It’s not an easy tightrope to walk, but that’s still no excuse for failing as abysmally as we in modern America have.

Consider the absurdity of the recent financial crisis, where major banking corporations (already the beneficiaries of generous legal bankruptcy protections) had their debts unconditionally backstopped (even though they more than anyone knew the risks), while individual Americans with far less means remained saddled with credit card debt and un-bankruptable student loan debt (even though they were systematically deceived about the risks by their creditors).

Indeed, let’s consider the problem of corporations a bit more closely. The die-hard free marketeer has at least this much in common with the radical leftist: They both want to do away with corporations. At least it would seem they must. After all, if what someone wants is a self-organizing, self-regulating market that’s not dependent on government, then where on earth would limited-liability corporations come from? Corporations after all are a creature of law through and through, the product of a particular Western legal tradition that depend on the government for their creation, preservation, and protection. And while they obviously are capable of generating enormous prosperity, they’re not without their problems.

In fact, it’s interesting just how many characteristics a large corporation, the darling of many small-government conservatives, shares with the centralized governments these conservatives malign. Unwieldy and bureaucratic? Check. Makes decisions and sets prices primarily through central planning rather than based on flexible direct responses to day-to-day market signals from customers? Check. Run by people most concerned with maximizing their own power and prestige? Check. So large that its leaders are not meaningfully accountable to their constituents? Check. Able to make rash, inefficient decisions because they’re playing with other people’s money and have legal liability protections? Check. The list goes on and on. Indeed, a government with a $100 billion budget is better than a company with a $100 billion at least in this: It is theoretically accountable to act impartially in the public good. Of course, this does not mean that a sound political economy should try to do away altogether with corporations; clearly not. But it should be attentive enough to recognize that, beyond a certain size, they impede rather than improve market freedom and efficiency.

There are three basic principles that should shape evangelical reflection on economics.

This concern leads us back to the first principle that should shape our economics, the principle of subsidiarity mentioned above—that matters ought to be handled by the smallest, lowest, or least centralized competent authority. This principle, which should be the first central principle for evangelical economic theory, has the weight of biblical and classical wisdom behind it, and as I said before, seems to be the basic instinct driving many small-government conservatives, especially Christian conservatives. And the beauty of many of the  questions of market structure I’ve mentioned above is that we can start to effectively tackle them at the level of local politics—indeed, local politics is often concerned above all with questions of just and orderly property relations, both private property issues (zoning, etc.) and common property (city parks, public utilities).

That said, subsidiarity must stand alongside other principles as well. The problem with the appeal to subsidiarity lies in the oft-neglected word competent. While it is true that we’d all be a lot better off if more decisions were taken at the local level, we shouldn’t deceive ourselves into thinking that local authorities are competent to handle matters of international banking or address environmental impacts from BP oil spills. Only a legal authority on the level of a state or province can properly oversee economic activities on a statewide scale, only a national legal authority can properly oversee corporate behemoths that operate on a national scale, and only international laws and courts can properly oversee multi-national actors whose activities span the globe.

If you don’t want political power concentrated at the federal and international level (and really, what sensible person does?) then the only meaningful way to de-centralize it is to structure the market so that economic power does not become concentrated at the national and international level either. And this means that evangelical politics, however much we might like to retreat into our little communities, Benedict-style, cannot turn its back on national and international issues, or on the need to elect thoughtful, moral, and qualified representatives to tackle these issues at that level.

A second point also bears highlighting. The objective of this re-focusing on questions of market structure is indeed a maximization of individual and communal freedoms and a reduction in intrusive regulations and redistributions. To return to our basketball example, a well-written rule book should make it possible to have fairer and more fulfilling games without constant intervention by the referees. Indeed, if everyone has sufficiently internalized the rules, then in low-stakes settings, the players might even be able to be self-policing (as in the neighborhood game of pick-up basketball). If monopolistic asymmetries of economic power are prevented, then constant government interventions to prop up the poor will be less necessary.

However, if the rules are distorted, weighted to the advantage of certain entrenched economic interests, then they will have to be changed, which in the near term means governments will have to act. Indeed, since economies and societies are always changing, laws will need to change from time to time too. Free market zealots will cry foul, protesting government “intrusion” into the “pure and natural” operations of the market, just as nostalgic basketball fans might have protested the introduction of the 3-point line or other rule changes, as if the earlier form of the game was its true “state of nature” version, and any changes are certain to be for the worst. We must not let a commitment to “the free market” get in the way of taking action to free the market, any more than we should let a commitment to a “free citizenry” get in the way of freeing slaves and making them citizens.

This leads to a final point. The process of re-dressing the distorted rules that govern our markets today will be a messy one, requiring lots of trial and error and yes, compromise. In issues where the exact truth or right of the matter is not entirely clear, as it will rarely be in issues such as how to write the bankruptcy code, compromise is unavoidable.

But we are not without principles and precedents to guide us. Indeed, prior to the last century, most writing on economic issues (including by many great Christian moral thinkers) focused on precisely these questions of market structure. And we are also likely to find unexpected allies and co-belligerents. Across the political spectrum, Americans are deeply frustrated with the contradictions and injustices of our economy, and the bungling of politicians who keep trying to Band-aid its open sores. As evangelicals enter a time when their moral convictions seem more and more exiled from the public square, it is more important than ever to identify areas of shared moral concern with our unbelieving or liberal neighbors, and areas of political action where we can continue to build bonds of neighborliness and gain opportunities for Christian witness. A renewed commitment to cultivating a just and free political economy is just such an opportunity, and now is the time to act on it.

Dr. Brad Littlejohn is the president of the Davenant Trust, a nonprofit dedicated to promoting reformed evangelical scholarship and resourcement. He blogs here.

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Posted by Brad Littlejohn

Brad Littlejohn (Ph.D, University of Edinburgh, 2013) is the President of the Davenant Trust and the author of "Richard Hooker: A Companion to His Life and Work," along with articles on historical theology and Christian ethics. He is also a member of Covenant Investment Advisors, LLC. You can see more of his work at bradlittlejohn.com.

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  • Physiocrat

    A well written piece that makes an attempt to engage in serious economic matters which is rare in most Christian circles.

    However the idea that the “free market zealot” is all for maximisation of individual welfare is a caricature. All it states is that all action should be voluntary- it could take the form of an anarcho-syndicalist commune or the Amish society. Second the author derides spontaneous order without argument. The attempt of an argument against it is that we need a rule enforcer, which is true, but has a glaring error is assuming it must be a monopolist. History is replete with overlapping jurisdictions such as in mediaeval Europe and laws courts such as the Law Merchant. Further, there is no theoretical reason why they could not work.

    To come to a full view requires a fully fledged theory of property- I’m not convinced of Rothbard’s case since it needs to be an outflow of a fully fledged moral theory grounded in man’s natural end. That said at present I see no viable alternative to the first user principle.

    • hoosier_bob

      Why must Christian moral theory necessarily rest on a deontological approach? In a fallen world, I question how well I can know “man’s natural end” with sufficient clarity to construct a functional ethical system. I can, however, generally know (and test) whether certain rules yield efficient results. That seems like a more robust way of thinking about ethics than to impose some idealist principle onto human conduct.

      I do agree that we can often trust spontaneous order to lead to beneficial outcomes, at least when the means of getting there are not rigged. In some cases, after all, monopolies are simply more efficient. Monopolies are only bad when they were not achieved through superior skill, foresight, and industry.

      • Physiocrat

        I wasn’t suggesting a deontological approach more an Aristotelian one. The reference to natural ends is in fact intrinsic to the possibility of knowing anything. To avoid the view that the world is in fact entirely static nor entirely in flux (both which are ultimately self refuting) requires the concept of act and potency. If the world were entire act nothing would change but to argue as such would be self refuting. Also entire potency would be that, potency and thus would not exist. Therefore objects must have act, as they are, but also the potential to be something else. Now since potential necessarily implies potency for something, natural ends are thus established. It is of course an epistemological issue problem to discover what is man’s natural end however I see no categorical difference between discovering man’s nature and the nature of dolphin; it is a quantitative rather than a qualitative difference. Nevertheless, the only genuine alternative to grounding morality in man’s nature is divine command theory which ends up being arbitrary. I’ve found Ed Feser’s writing on these issues most enlightening.

        By monopolist I meant a legal one: that there could be no other legal providers of a good/service. Of course though, in some industries having a single provider makes the most sense and there’s no reason for any interference. That said in most cases these days it is a result of significant barriers to entry.

        On intellectual property: it is an absurd concept. Creation (of an idea more specifically in this case) is neither a necessary nor sufficient criterion for ownership. It is not sufficient since one man could create an original sculpture and I could purchase it and it would be now mine despite not creating it. However, if I was to trespass into my neighbour’s garden and use his stone to create an original statue it would not be mine.

        • hoosier_bob

          Thanks. The whole “natural end” stuff sounded like the bunk that one hears from NNL types like Robert George. As long as one arrives at those “natural ends” via some form of epistemological realism, I have no objection.

          I reread your piece, and now see your point regarding the monopolist. Yes, private international law is a good example of a system that functions relatively well despite the absence of a monopolist.

          Regarding IP, I agree with you as far as copyright is concerned. Posner argues persuasively that copyright laws do not have a utility-maximizing effect. Concerning the statue, the copyright has nothing to do with who owns the statue itself. One can sell the statue and still retain the right to make future reproductions. Sale of the statue does not confer onto its buyer the right to make future copies. And while your neighbor may retain title to the statue you made out of her block of stone, the statue’s creator would still retain the copyright. So, the neighbor could keep the statue, but she could not make additional copies of it without the trespassing creator’s permission.

          • Physiocrat

            I understand the present legal framework- it just makes no sense. In my example creation doesn’t allow you to own anything actually thing. You could claim you owned a pattern of arrangement of atoms but this does not translate into any particular item.

            Further, the copyright statute gives legal rights to intangibles which dictate what tangibles can do- it undermines actual property rights. Ideas are fundamentally non-scarce, once in existence, so don’t need economising unlike physical resources. Me having an idea does not stop you from having the same one at the same time unlike me eating the pizza which obviously stops you from eating it. The oddness of intellectual property rights can also be seen by the arbitrary time period they are assigned with.

            Finally, on a consequentialist point from the meta studies I’ve seen most investigations on whether patents encourage innovation say it makes no effect and in some cases retards innovation.

            A world without intellectual property rights just needs a different business model.

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  • hoosier_bob

    Nice piece. I’d suggest that the most productive avenue for Christians to explore lies in the literature of institutional economics. Key authors include Ronald Coase, Douglass North, Oliver Williamson, and Gary Becker. These authors also provide a fair number of insights into how institutions can nudge people toward social conservatism without relying on explicit moralism. Explicit moralism tends to induce backlash, so is often the least effective way of encouraging wise decision-making. More evangelicals need to take up the challenge posed by James Davison Hunter and focus their efforts on building robust institutions that embody implicit moral cues, rather than relying on explicit moralism.

    I would note, however, that anti-piracy laws protect expressions of ideas (i.e., copyrightable material) and not the ideas themselves. The ideas themselves would find protection under the patent laws. Further, bankruptcy cuts off contractual or tort obligations, not property rights. If a creditor has a right to gain title to your personal or real property, it has that right via a contract or by virtue of having a valid tort claim against you. In fact, many forms of “property” today are nothing more than a collection of contractual rights, called intangible property. And that brings up the whole question of what does it mean to have a “free market,” when the traded “property” largely consists of intangibles that are purely creatures of contract law.

    Even so, this is about the most intelligent thing I’ve seen written by an evangelical on these topics. If I could go to church and find plenty of people with whom to discuss Coase and Becker, I may start going to church again.

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