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Archive for February, 2007

Roepke in Geneva: Revidivus

Roepke brought the wisdom of his humane economics to Geneva. History is repeating itself as Roepke disciple/scholar Dr. Ralph Ancil toils amidst the hallowed halls of Geneva College in Beaver Falls, Pa.

Readers will be aware that Geneva College is the denominational college of the RPCNA. Although Dr. Ancil is not an RP (yet, we dare to hope!!!) his insight into the moral framework of free markets will no doubt be a great blessing to a college seeking to apply the Kingship of Christ over all areas of life.

Readers wishing to find a good introduction to Roepke’s ideas will find Ralph Ancil’s address to the prestigious Philadelphia Society illuminating.

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Roepke and the Human Economy
W.H. Chellis

Since we are talking economics here at De Regno, I must admit a prejudice. I have never been a fan of the “dismal science.” Yet, not all economists are made equal. Among 20th Century economists, the German born Wilhelm Roepke (1899-1966) has no peer (at least from my conservative and Christian perspective).

Roepke combined the classical economics of Adam Smith with the best of the European Christian humanist tradition. A primary author of Germany’s post-WWII “economic miracle”, Roepke is known for his books The Human Economy, The Social Crisis of our Time, and The Moral Foundations of Civil Society.

Roepke, who taught for a number of years at the Graduate Institute of International Studies in Geneva, was a critic of the “cult of the colossal.” A Protestant, Roepke understood the social and moral framework upon which a humane free market must rest. A champion of economic freedom, personal restraint, and the principles of subsidiarity, Roepke was a critic of the “cult of the colossal.”

Christians who want to think about how their faith applies to economics will find no better guide than Wilhelm Roepke.

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Small is Still Beautiful, Pt. 2: “Economics and the Soul”
Charles Brown

This section of the book begins by counting the real cost of free trade. Conventional economists consider global free trade to be good—invariably and indisputably. Critics of this sacred dogma are condemned as “protectionists”. We live in a climate today where no one questions the assumptions upon which free trade theory is based. But changes in the world over the past few decades must lead us to reconsider the whole notion. Four billion people have entered the world economy in recent years. Workers in the United States now compete directly against laborers in China and India, although labor costs in the developing world are as little as 1/50 of those in the developed world. Since an American manufacturing company can save about 20% of its sales volume by moving its production to the developing world, there is little choice left but to send those jobs overseas. The economy virtually demands that companies do this; if not, a company won’t be able to compete against the cheaper labor.

The economic elites tell us that new jobs in the service sector and the high-tech industry should replace the lost manufacturing jobs. But this advice is short-sighted. Technological advances are making it easier to send those jobs overseas as well. Indeed, some companies have already begun outsourcing their customer service to places like India. Of course, on the positive side, global free trade has provided us with lots of cheap goods. However, “the hidden surcharge on cheap imported goods is yet to be paid.” And it may very well be a steep price to pay—not only the loss of American jobs, but also damage to the earth itself. “If the rest of the world prove to be as good consumers as the Americans…they will require 674 percent of the world’s finite resources, nearly seven times more than are actually known to exist.” At this point, conventional economists assure us that “something will turn up”—either more of the natural resource or a substitute for it. Is this optimism warranted? Is global free trade really a theory that you want to follow blindly?

Following Schumacher closely, Pearce offers an alternative to the global free trade theory which prevails in our contemporary culture. “To become truly relevant, economics must look beyond itself: the ‘how’ of economics needs to be reconciled with the ‘why’ of human existence. Economics needs to become meta-economics.” There are three parts to this theory of meta-economics: 1) an examination of the intrinsic purpose of economics; 2) a recognition that the physical factors of life are essentially qualitative as well as quantitative; 3) a consideration of man in his wholeness, not merely as an economic being.

“The fundamental error of modern economics is its mechanistic approach”, treating the actions of men “essentially the same as the behavior of atoms.” Pearce goes on to quote at length from the economic historian R. H. Tawney concerning modern political and economic thought: “Its essence is a dualism which regards the secular and the religious aspects of life…as parallel and independent provinces, governed by different laws, judged by different standards, and amenable to different authorities. To the most representative minds of the Reformation as of the Middle Ages, a philosophy which treated the transactions of commerce and the institutions of society as indifferent to religion would have appeared, not merely morally reprehensible, but intellectually absurd.”

Conventional economics teaches us to get rich and be happy. With no concept of “enough” but only “more”, it encourages greed. In fact, economist John Maynard Keynes went so far as to say that “avarice and usury” must be “our gods for a little longer” until everyone could become rich, and at that time they could then turn their attention to ethics. Once again, we see evidence of how modern economics is driven by a mechanistic materialism. It confuses need and greed; the former is physical, the latter metaphysical. Economics must address the metaphysical. Greed must not be fostered. Such desires need to be restrained and reduced. Man will not find happiness via uncontrolled economic growth. What does it profit a man if he gains the whole world and loses his own soul?

Finally, Pearce concludes this section with a chapter on “Economics with Soul”. Having demonstrated the subservience of economics to philosophy, Pearce proceeds to show how the concept of economics changes drastically when the underlying principles of philosophical humanism and materialism are replaced with Christian teaching. He focuses on the example of labor. In conventional economics, we are trained to view labor as a necessary evil. Both the employer and the employee see it this way, as an inconvenience. The employer’s ideal is “output without employees”, while the employee’s ideal is “income without employment”.

But for the Christian, labor constitutes “a road to holiness” (according to the Second Vatican Council). In our work, we develop our personalities and gifts; we learn to work with others; we learn to work for others to improve the broader society. Our work should promote the dignity and well-being of man. Many of today’s jobs, though, are dehumanizing—men are treated like machines. The emphasis has been shifted “from the worker to the product of the work, from the human to the sub-human.”

As a second example of the difference which Christian doctrine makes in our economic practices, Pearce cites the natural environment. The self-centeredness of modern economics means that the surrounding world is disregarded. But the Christian respects nature as the handiwork of God. Thus, economic development cannot ignore the moral dimension—”the use of the elements of nature, the renewability of resources, and the consequences of haphazard industrialization.

Commentary
It’s not hard to see how this section of Pearce’s book intersects with our purposes here at De Regno Christi. Jesus Christ is King, even of economics. As with all the other areas of life, economics cannot be divorced from the rule of Christ. Our economics must have a soul, and that soul must be shaped by the royal law of Christ. “Man shall not live by bread alone.” Greed is a sin, a deadly one, for individuals and for nations. When a national economy is driven by avarice, we have a huge problem. Our natural propensity for “more”, encouraged by our national economy, needs instead to be restrained.

Furthermore, when our labor practices treat a man as a machine, denying that he is God’s image-bearer, something is terribly wrong. Labor is a part of God’s good creation. Adam had work to do even before the Fall. Work is not a necessary evil, even though our modern economy sure makes it difficult for us to find anything “good” in our work. While it’s tempting to work simply “for the weekend”, we need to rediscover the wisdom and goodness of God’s law which commands us, “Six days you shall labor, and do all your work.”

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A local currency for a local economy
Charles Brown

Since we’ve been talking about Schumacher recently, I had to pass along this link to a practical Schumacherian idea: BerkShares in the Berkshires.

HT: Rod Dreher

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Crunchy Con in Indy
Charles Brown

Readers of this blog need to familiarize themselves with the work of Rod Dreher, an editor with the Dallas Morning News and a very good blogger. His 2006 book, Crunchy Cons, is must reading.

Anyway, for those who are interested in meeting him in person, he’ll be speaking at a conference in Indianapolis on April 14. More details may be found here.

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Small is Still Beautiful, Pt. 1
Charles Brown

The book, Small is Still Beautiful: Economics as if Families Mattered, was recommended to the readers of this blog not long ago. It’s my intent to provide a review of each of its five sections. The author, Joseph Pearce, builds off of the work of E. F. Schumacher, who wrote Small is Beautiful in the mid-1970s. Schumacher championed the idea of economic self-limitation. This virtue is enshrined in the everyday realities of family life—the family being “the smallest and most beautiful part of any healthy society.” In the home, we are taught to live selflessly and to sacrifice for others. According to Pearce, “Small is still beautiful, because families still matter.”

Part One is entitled, “At What Price Growth?”, and it details the problems with our contemporary economic principles and practices. The problems begin with our very definition of economics. The conventional definition views people as either producers or consumers of goods and services. The problem with this view is that it does not account for the spiritual dimension of human life. For Schumacher and Pearce, then, “economic problems cannot be solved using purely economic methods.”

Not only does conventional economics have a shaky foundation, it also has questionable goals. It worships economic growth as an end in itself—regardless of the spiritual, social, or ecological costs. “The health of persons, communities, and the land itself may be sacrificed so that desires may be satisfied more quickly, more cheaply, and more efficiently.”

At this point, Pearce offers statistics which illustrate the escalation of economic growth in recent decades. For example, Western economies grew as much in the two decades between 1950 and 1970 as they had in the entire millennium which spanned from 500 to 1500. Pearce points to the Sherman Antitrust Act as the main reason why the United States advanced well beyond the European economies during the 20th century. Large companies “outmaneuvered” the Antitrust Act through legal mergers and acquisitions. This dynamic in America gave birth to “the Big” and smothered “the Small”. Companies of enormous size now dominate our domestic economy.

The question to be asked concerning this cancer-like economic growth is straightforward: Benign or malignant? Initially, at least, we might be tempted to think that this economic growth is harmless. Its benefits seem to far outweigh any of its problems. After all, aren’t the “developed” nations better off than the rest of the world? But to diagnose this situation requires us to ask other questions: “What is wealth? Does money buy happiness? Can material possessions prevent personal sorrow or suffering?” The root problem of most economists is their mechanistic materialism. According to them, someone who is ten percent richer in money will generally be ten percent richer in happiness. But recent studies have actually demonstrated that the opposite is true: Greater wealth brings less happiness and more social upheaval. At the very least, we must recognize with Schumacher that economic judgments are “fragmentary”, since so many important factors are not included in the decision-making process.

Pearce exposes the “fundamental flaw” in the way in which economic growth is measured. Economists follow the gross national product (GNP). If GNP increases, then the economy is growing. And since growth is always good, an increasing GNP must be a sign of a “healthy” economy. According to these standards, it is more “economic” to eat your dinner at a restaurant, to have your car fixed at a garage, and to put your elderly parents in a nursing home. Because it is purely quantitative, GNP “makes no allowance for the quality of life.” GNP puts a strain on happy, self-sufficient families because it tells them that they are bad consumers.

To see the absurdity of measuring a healthy economy based on GNP, think of the tobacco industry. First, the companies themselves make a huge profit. Then, governments make billions through taxes. Also, because of cancer, there are billions spent on building hospitals and employing health care workers. All of these things add to the GNP, making us “wealthier”, technically speaking. But how much happier do cigarettes and cancer make people?

Pearce concludes this section of the book by explaining the “expand or die” mentality of modern economists. The burden of debt which we carry as a nation demands that our economy continue to grow, but this growth requires further investment and borrowing. It’s a vicious cycle; we’re constantly chasing our debt. Pearce quotes a modern economist: “In our present economic system, the choice is between growth and collapse, not growth and stability.” Of course, the problem with this economic system is that the kind of growth it demands cannot continue indefinitely. Our ecological resources are limited. “Imagine everyone in China owning two cars.” Economic theory demands “expand or die”, but ecological reality gives the warning, “expand and die”.

The solution, however, is not to stop growing. Schumacher also believed that there must be growth, but he thought of economic growth in a different way. He made the analogy to human growth. Physical growth is good for a child, but not for an adult. An adult cannot grow taller, only fatter. Thus, a different kind of growth is needed for an adult. The “developed” nations need to grow in cultural and spiritual areas. Instead, though, we have become overdeveloped (“obese”) economically.

Commentary
For the average citizen, economics is a familiar subject, but not necessarily an understood subject. We tend to idolize “the market” and “Wall Street”, but Pearce gives us reason to pause and reconsider what the pundits are telling us. Economics is far from an exact science. The economic growth for which all of our politicians like to take credit is actually a malignant growth. In the end, it’s going to kill us (unless something else does it sooner).

Yes, Pearce sounds an alarmist note in this book, but he also offers an alternative to the prevailing economic beliefs. The way forward from here is to recover the Small and the Beautiful. Self-control is the virtue most needed in our day, but how many people are talking about it? Is the church even talking about it?

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New Contributors
W.H. Chellis

De Regno welcomes three new contributors.

Rev. Dr. Carl Trueman, Professor of Church History at Westminster Theological Seminary and Reformation21 superstar.

Rev. Charles Brown, Pastor of the Westminster Reformed Presbyterian Church, co-editor of Semper Reformanda (RP Theological Journal), and owner of small dog named Snoopy (not really but how cool would that be?)

Rev. Dr. Michael Lefebve, Pastor of the newly minted Christ Church in Indianapolis Indiana. Michael has recently returned to the US after finishing his Ph.D. work at the University of Aberdeen.

We look forward to their contributions.

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