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

Chapter One: Introduction to Economics 19 dependent man. This suggests that socialism is not likely to be effective, and indeed, the judgment of history is that socialism does not work (in the sense of achieving its goals). Finally, we must recognize the fallen nature of humanity. What economic system is going to most constrain the harm we can do to one another? It is precisely the competitive part of the market process which provides the institutional incentives for selfish producers and customers to work with each other in ways that are fair to both. Especially when the transaction is not a unique event, i.e., there will be potentially future transactions, each party in the market knows they will not be able to profit from future exchanges if they behave badly—with other options, people can vote with their feet. This option is not available when there is monopoly power, and the most dangerous monopoly is when the monopoly is joined by the coercive power of the state. Under socialism, there is no alternative if we are disappointed in public provision of goods or services. Further, as F.A. Hayek argues, there is a risk that the continued pursuit of socialist goals that are in conflict with individual’s true preferences will lead to increasingly authoritarian measures. As we will see in subsequent chapters, free markets provide incentives for individuals to use their God-given talents to serve one another, while competition in free markets inhibits one’s ability to exploit others. Other systems may restrain the evil of the market by exercising collective choice, but those systems suffer from the ancient question of “who will watch the watchmen.” History is replete with examples of strong states purportedly preventing individual harms that result in monstrous collective harms (such as with Joseph Stalin in the Soviet Union). OTHER BIBLICAL CONSIDERATIONS FOR ECONOMIC SYSTEMS THE NECESSITY OF CHOICE IN GOD’S GRAND SALVATION NARRATIVE After the Fall, God’s grand narrative is to call a people to Himself and save them from their sins through their faith (trust) in God’s salvation through the sacrifice of Jesus Christ on the cross. Yet God is not content with just saving a people; He intends to ultimately make a new heavens and new earth, and we will be in reality the new creations that we are judicially in God’s sight now. This process of salvation is intimately connected to our choices—we choose to trust in Christ and we are saved, we moment by moment trust Christ and act according to His plan and we increasingly are conformed to His image. The Bible outlines God’s plan for choice from cover to cover. In the garden, Adam and Eve were allowed the freedom to choose to follow God (symbolized by the tree of life) or to disobey God (eat of the tree of the knowledge of good and evil). Deuteronomy 28-30