No Free Lunch: Economics for a Fallen World: Third Edition, Revised

Chapter One: Introduction to Economics 17 pay.” We will see in chapter 8 that Communism also suffers from a calculation problem; Communism is unable to rationally allocate resources. Both of these problems led to the eventual collapse of the Soviet economy. Many see Socialism as a “third way” between free markets and Communism. Under Socialism, individuals can own private property and there can be retail markets, but the tools of production (all capital assets) are owned and production is directed by the state. Socialism suffers from many of the same problems as Communism. The closer it approaches Communism, the worse the outcome, while the more it resembles free markets, the better it functions. One of the central questions of our times is one that has been around for several centuries: how should we collectively organize economic activity? Should it be centrally planned by the government (with the complete power of the state behind it for implementation), or should it be allowed to emerge through the voluntary actions of individuals in society? Should we have socialism or should we have free markets? In a socialist system, the means of production are owned by the state; individuals are not allowed to own productive capital but instead must work according to the state’s direction. In some more extreme cases, the choice of their occupation can be decided by others, but in any case they would have to work in some part of the government system— they would not be allowed to own capital goods and produce in pursuit of their own goals. A free market system, naturally emerges where private property and its necessary corollary, free exchange, is allowed. The Bible does not explicitly endorse any economic system, and to ask which economic system God supports is to ask the wrong question, as our Biblical introduction to this chapter argued. Nevertheless, God has revealed principles which guide our support for one system over another, and the four pillars we’ve just reviewed provide strong support to prefer free markets. Being created in the image of God and having the associated stewardship requirements of Godly dominion over creation means that each person created Imago Dei has a responsibility to steward the resources that God entrusts to them for His glory. From a Christian perspective, the question of private property vs. communal property is more properly thought of not as an ownership issue, but as a stewardship issue. God owns it all (Psalm 24:1) and demands individuals exercise stewardship of His creation for His own glory. The Ten Commandments give us further understanding, as both the 8th and 10th commandments refer to individual ownership, especially the 10th: You shall not covet your neighbor’s house; you shall not covet your neighbor’s wife or his male servant or his female servant or his ox or his donkey or anything that belongs to your neighbor. -Exodus 20:17 Not only does part of this commandment explicitly highlight private ownership since it applies to “anything that belongs to your neighbor,” but it also includes private Socialism: an economic system where the means of production are owned by the state but consumers goods are owned by individuals