Small is Still Beautiful, Pt. 2: “Economics and th…

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.”