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

Chapter One: Introduction to Economics 18 ownership of capital equipment. An ox was a primary piece of capital equipment in the Old Testament since, as noted in Proverbs 14:4b, “…much revenue comes by the strength of the ox.” While this verse highlights ownership responsibilities, it is important to note that to have stewardship responsibilities (which come from a vertical relationship with God) we must have ownership rights (which reflect a hori-zontal relationship with others in society). While the world only sees ownership rights, Christians see the spiritual dimension of stewardship responsibilities. The parable of the talents (Matt 25:14-30) reveals that all of us as individuals will be judged for our stewardship of resources that rightfully belong to our Creator God. A proper Biblical perspective should preclude selfish action as we exercise stewardship; we are admonished in Philippians 2 to “not merely look out for your own personal interests, but also for the interests of others.” Rather than thinking in terms of private property rights, the Christian thinks in terms of individual stewardship responsibilities. But the exercise of these responsibilities is under an individual’s control, not under collective control. Further, being created in the image of God means perhaps the most important thing we steward is that of our individual lives. Each of us has unique gifts and talents, and our differences allow us to serve others in a socially cooperative way through the market process. Are we using our lives in a way that allows us to fully use our abilities in pursuit of Godly service to others? The economic critique of socialism revolves primarily the ability to know how to allocate scarce capital in the absence of market prices (see this chapter’s Great Economist, Ludwig Von Mises). Socialism suggests that a board of elite experts would have the ability to guide capital allocation. The issue is not how to decide how many consumer goods, for example, would be produced. Trial and error in state stores could potentially come close to market processes. The issue is in what should be produced? What production process should be used? What kinds of capital equipment should be produced? What research should be conducted to discover new scientific processes? How much of our effort should we allocate? Early socialists glibly suggested the elite planners would use the best technique. But the best technique is precisely what is in flux every moment of the market process as entrepreneurs daily try to shape consumer demands with new and innovative products and services and producers work to streamline and make more efficient productive processes. It is precisely the incentives inherent to the competitive market process which generates the dynamism we see. Under socialism, there would be no way for the central planner to generate this information. Nobel Laureate F. A. Hayek called this the Knowledge Problem, since there was always knowledge that was impossible to articulate (tacit) to central planners. The very act of aggregation of data to send to socialist central planners would eliminate the important signals necessary to adjust production. This lack of knowledge fits with the biblical understanding of the finiteness of humanity. It would take an omniscient being to be able to have the necessary knowledge to control the whole economy and lead it to innovate in the way a market economy adapts. This omniscience is denied to finite/