Jesus Creed

Jesus Creed

Economics at the Jesus Creed: Michael Kruse 8

posted by Scot McKnight


Today I’m departing some from offering basic economic concepts and interjecting a sociological element into our discussion.

 There is considerable energy to today around the idea that Christians need to resist impersonal capitalism and Western individualism. The most common characterization of relationships in the church in the New Testament is family so the conclusion is made that we need to function more like family. As long as we understand the New Testament family in context I’m inclined to agree. 

Is family a useful metaphor in thinking about economics systems? Is the Christian critique of capitalism, on the basis of family, a sustainable critique? 

I don’t think it is and what follows tells why. I’m interested to know what you think.

ON the Origin of Economics…. It might be surprising to learn that “economics” gets its name the world of the Greco-Roman household … the New Testament context. The Greek word oikonomia meant “household management.” The household was headed by the paterfamilias. There are three elements to his authority according to M. I. Finley in “The Ancient Economy”:


Potestatas – Power
over children (including adoptees), his children’s children, and his slaves.

Manus – Power over
his wife and his sons’ wives.

Dominium – Power
over his possessions. (19)

 This scheme applied to wealthy Roman estates as well as to common
peasant households, but the business of running an estate was more complex. Ancient
Greek moral philosophers offered practical instruction on household management,
particularly concerning management of wives, children, slaves, possessions, and
politics. (Similar household management instruction is found in New Testament: Eph.
5:21-6:9, Col. 3:18-4:1, 1 Peter 2:13-3:9, and Titus 2:1-15.)

Xenophon’s Oikonomikos,
written in the Fourth Century B.C.E., is a prime example of this genre. Treatment
of topics we think of as economics was rudimentary. It focused on economizing …
being thrifty. The abstract idea of a “market” as the exchange of a product by
all buyers and sellers according to prices generated by supply and demand
curves was not in view. Finley writes that modern economic concepts like labor,
production, capital, investment, income, circulation, demand, entrepreneur, and
utility, cannot be translated into Greek or Latin. (21) There was no separate
economic sphere of life. Everything “economic” was bound up with kinship and
politics. Two thousand years later, Enlightenment philosophers resurrected the
ancient Greek concept of household instruction in moral philosophy, updating it
with modern insights. Thus was born the field of political economy.

An important development by modern thinkers has been the
conceptualization of society (even the globe) as a household supervised by an oikonomos … the household manager. The oikonomos was a trusted servant to whom
the paterfamilias trusted day-to-day
management of the estate. Moving into the Nineteenth Century, the drive to
apply scientific rationalism to the study of political economy resulted into
the fracturing of the discipline into subfields like sociology, political
science, and economics. Not until the publication of Alfred Marshall’s Principles of Economics in 1890, did the
modern discipline get its present name. But at is core, economics was born out
of the Enlightenment’s quest to control and improve the world through
scientific-rationalism. Scientific-rationalism would allow human experts to
become the oikonomos.

Modern “Household Management”

It is paramount to see the shift of moving from the management of households to the notion
of management of society as a household.
Economic activity in the ancient world was embedded in pyramidal structures of
kinship, patronage, and politics, with exchange playing a subordinate role. Modern
economics certainly includes economization, but the central driver in our
economy is exchange. Modern economies are incomprehensibly complex webs of
exchange involving an incalculable number of transactions directed by price as determined
through supply and demand. No one can stay on top of it all. Each of us
individually has a miniscule impact on the economy. Some larger entities like corporations
can have greater impacts. Institutions like the Federal Reserve Bank or the
federal government can have a significant impact. But can anyone actually manage
the economy in the sense of managing a household?

Many Christians who distrust economists actually share these
oikonomos assumptions. It is said
that we are stewards of creation but what does it mean at a societal level? “Economic”
stewardship in the Old Testament was a by-product of obeying the covenant.
Jesus and other New Testament voices gave ethical instruction about
relationships of people in face-to-face community but there is little guidance
for managing an economy. The idea of some entity functioning as the oikonomos of the economy is not in view,
yet this mindset is at least implicit in much of the ethical teaching we hear
today. Thus, many economists and Christian moralist agree there should be an oikonomos, it is just that the former believes the oikonomos should be informed by
scientific rationalism, while the Christian believes the oikonomos should be informed by Christian ethics … the family
metaphor serving as a guide.

Face-to-Face Community and Commercial Society

Is this Christian vision possible? Anthropologist Robin
Dunbar claims the maximum number of people an individual can have sustainable
relationships with is 150 people. It is also interesting to note that nearly
every movement that has embraced communal living has unraveled in one or two
generations because of the consequences of size. As a community becomes larger
than a few dozen people, accountability that comes from constant interaction
brakes down. Loafers begin living off the work of others. Trust dissolves.
Differing visions of how to live emerge. (The Hutterites are an exception to
this dynamic. When their communities reach 120 people, they divide the
community and start a new one.) To treat others as family means being close
enough in proximity to know each other’s character and shortcomings, to learn
to love and cherish each other, and to know each other well enough to respond
to each other on and individualized basis. This type of community is only
possible in small groups and cannot be extended to society.

Economist Paul Heyne distinguished between face-to-face
community and commercial society. In face-to-face community, people know one
another well. They know each other’s character, proclivities, and shortcomings.
They care for each other. Modern families are face-to-face communities. It is
possible to imagine a few families living in some type of communal covenant. Commercial
society is what integrates face-to-face communities into a larger whole. The
entities of commercial society are incapable of treating people on a highly
individualized basis. It is impossible for any person or entity to have sufficient
personal knowledge of hundreds … much less millions … of people. Yet
coordination and integration at this level is essential for a number of
reasons, not the least of which is illustrated by the pencil manufacturing
example I gave earlier
in this series

Heyne suggests that face-to-face communities are ethically governed
by the Golden Rule “Do for others what you would like them to do for you.” Action
is taken on a personalized basis. Commercial society is governed by the Silver
Rule, “Don’t do to others what you would consider unfair if they did it to you.”
Action is taken on an impartial standardized basis.

Several Christian traditions exhort us to forsake
selfishness and individualism for the sake of the common good. But imploring
people to function more like family, to uncritically apply ethics of
face-to-face communities to societal decisions, and to seek the common good,
are inadequate. They do not sufficiently account for the lack of personal
knowledge societal institutions possess in relating to people at such an
individualized level.

Furthermore, many decisions at the societal level are made
in contexts of considerable uncertainty. Opportunity costs are often
significant. For example, every dollar spent on climate change mitigation is a
dollar unavailable to spend on health care, poverty alleviation, or to be left
at work growing the economy. Overspending on climate change mitigation relative
to its threat means many other opportunities will be needlessly lost. Yet, under
spending relative to what is needed may mean serious harm for humanity and the
environment. What dollar amount, and which program of mitigation, equates to
the common good? Frequently, economic questions are less about right and wrong
and more about assessing and managing risk. It is one thing to proscribe
selfishness but quite another to prescribe the common good.



In closing, I don’t want to suggest that the implausibility
of having a global household manager means that economics can’t give us very
useful information for tackling economic challenges. There is considerable
difference of opinion on how much economic performance can be enhanced by
interventions. What separates most liberal economists from conservative
economists is not the belief in the necessity of markets … they are needed …
but in how well the markets function. The libertarian folks see markets as imperfect,
but functioning well enough that interventions will only create distortions.
Liberals see markets as much less efficient and believe societal outcomes can
be improved through a variety of interventions. There are folks in between. (More

I will have more that relates to managing economies in my
next post on capitalism and economic systems. For now, what do you think? Does the distinction between face-to-face
community and commercial society ring true for you? What implications do you see
for theological reflection of on economic questions? Is “family” an appropriate
metaphor for directing our behavior in mass society?

Comments read comments(21)
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posted October 28, 2009 at 7:27 am

Interesting post. This layperson would like to comment on a couple of things:
1. You say that almost every communal living group has unraveled in a couple of generations but can’t the same be said of most businesses or commercial enterprises? A business flourishes for a while, grows big, fades, people mourn for a bit and some new business takes its place. Does that mean free enterprise is a failure? I say this, because I think we tend to judge certain categories more harshly than others or hold them to a higher standard.
2. You say that any dollar spent, eg, on climate change is a dollar not spent on health care or growing the economy. But doesn’t that contradict the idea that wealth is not finite, that investment (including investment in things like health care) can produce wealth, the point made so well in earlier posts? That we can, in fact, have it all? I say this (I “get” your larger point in this example) because I think there is a tendency to again, be favorably prejudicial towards free enterprise or commercial activities: they can’t be restrained no matter the temporary impoverishment and suffering of some, because they will “raise all the boats” … somewhere … down the road. But if we want to reverse the equation and say, OK let’s put the needs of people first and invest in that and that will raise all boats, we certainly can’t do that!!!
3. Are we stuck with “irreducible complexity” in economics? Is that a dodge? Is that an excuse for not doing what we need to be doing?
4. Are we caught in a dualism between economics as family, a metaphor I also don’t like, and “irreducible complexity?” Is there a third or fourth way?
5. What of the contention of some economists that we are going to go back to smaller, less complicated markets after peak oil (meaning relatively soon) when it becomes prohibitively expensive to ship good halfway around the world? Shouldn’t we be preparing for that?

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Travis Greene

posted October 28, 2009 at 9:18 am

“There was no separate economic sphere of life. Everything “economic” was bound up with kinship and politics.”
How are things different now?

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posted October 28, 2009 at 10:34 am

Well, Michael, you certainly did depart from the basics! (You might want to follow this with a basic level intro to why, based on the lack of knowledge of any attempted oligarchical market management vs. that of free individuals at the grassroots level, imposed communism writ large or some other large scale market control must fail.)
I don’t know that it is only or chiefly the family metaphor in the scriptures that fuels the Christian critique of full laissez-faire capitalism at the macro-level. To me, the strongest macro-critiques are the “interventions” that are embodied in the Mosaic law as a means of preventing capital from concentrating and keeping poverty from becoming a generational hole. This gives me, at any rate, reason to believe that laws/governmental policy can be helpful to correct at least some of the problems that would otherwise result from fallen individuals in a totally free market. Of course, figuring out the best ways to translate such policies from the land based economies to ours is no small undertaking. And, figuring which societal interventions would be best forgone in favor of voluntary individual compliance is also very tricky. Those questions, to me, is where rigorous economic study can be helpful, even if flawed.

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Michael W. Kruse

posted October 28, 2009 at 10:55 am

#1 Diane, I?m in the economic laity as well. :-)
1. My comparison wasn?t communes/families versus businesses. The issue I wanted to raise is this: Can society function as a commune/family writ large? I?m saying no because communes/families aren?t scalable beyond a certain small size.
That isn?t a slam on communal living. In fact, I suspect some of the solution to our sense of isolation in the West may be to innovate toward some more communal living arrangements. But even if we did this we are still left with how to integrate economic life of all the communes. Communes rise and fall. Businesses rise and fall. Commercial society is needed to link the activity of all these entities together. Trying to apply ethics of family to commercial society won?t work.
2. At any given moment wealth is finite but (hopefully) growing. During any particular period we are consuming some of our wealth or putting some to productive use. If you begin consuming wealth faster than the productive capacity to create it, then we are living on borrowed time. There will be nothing to invest in the needs of people.
3. ?Is that an excuse for not doing what we need to be doing?? Can you point me to the omniscient objective source that has revealed what we need to be doing? Isn?t this appeal to unqualified certainty a bit Modernist. :-)
I don?t think I dodged anything. I set up a dichotomy with climate change as an example. Over react and we forgo much good that could be done. Under react and we could do great harm to the future. Give me the infallible and risk free oracle that answers that question? I say again that many economic decisions are not about black and white, right and wrong, but about being prudent in the face of uncertainty.
4. But as a thought experiment I?d suggest going back and looking at the example I gave of making a no. 2 pencil. Alternatively, here is a link to a map showing where all the components of a laptop computer made in Shanghai come from. Give me a model that will coordinate the production of these and millions of other products.
5. This presumes oil is the only source of energy we will ever have moving goods. I think we will see a move to many smaller forms of business but large businesses and international trade aren’t going away.

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Michael W. Kruse

posted October 28, 2009 at 11:26 am

#3 T
#3 T
As N. T. Wright once said, I can’t say everything all the time all at once. :-) I’m not making a case for laissez-faire capitalism or against regulation. I’m raising the epistemological question and suggesting that solving the problem via family writ large doesn’t get it.
I had hoped my concluding paragraph made clear that there are a range of opinions on how well markets work and how they should be regulated. My climate change example was intended to point out that not acting (regulating) can be every bit as dangerous as acting. I don’t see that highlighting the human condition of uncertainty makes a case for any particular solution.

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Michael W. Kruse

posted October 28, 2009 at 11:51 am

#2 Travis
Most people in our day can readily identify separate spheres of life with their own institutions and patterns of relationship: Family, education, business, politics. In New Testament times, by and large, families were businesses and businesses were families. Decisions were deeply influenced by achieving honor and avoiding shame and fulfilling obligations within the patronage system. The economic implications were frequently incidental. Your status in societal hierarchy determined your work not your abilities. The idea of building capital and growing wealth over an extended time horizon was absent. We don?t even know the size of the Greek and Roman economies (apart from historical extrapolations) because no records were ever kept to monitor economic activity. It wasn?t a separate sphere of life to be studied and managed.

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posted October 28, 2009 at 11:59 am

Really interesting post on so many levels!
I sense the notion of “subsidarity” underlying your understanding of the different kinds of social oikonomia. Good! This is an important principle in Catholic Social Teaching, and I think a correct one: things ought to be handled by the smallest competent unit of authority. Thus it is wise, I think, to suggest that “private exchange” — a very small unit of authority — often is better suited to regulate commerce than “government” — a very large unit of authority. There’s a great deal of resonance here with Kuyper’s notion of “sphere sovereignty.” It can serve as an important theoretical / theological basis for the (relative) independence of the family and the church from the state.
I think the historical claim that experiments in communal living tend to die out after a generation or two is significantly overstated, however. An important counter-example are monastic orders still in existence today that go back to the middle ages. And this year’s Nobel winner in economics — Eleanor Ostrom — won the prize for her work on non-market solutions to the tragedy of the commons — i.e. on enduring economic societal structures based on common pool resource management. It’s interesting to think about subsidiarity in relation to common pool resource management, because the kinds of oikos that live this way do tend to be comprised of smaller units (the local fishing village, or the local monastery).

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posted October 28, 2009 at 12:23 pm

Michael (5),
Yes, I wasn’t disagreeing with you, except to note that the strongest biblical grounds, for my part, for government intervention at a macro-level was the example and purposes of the Mosaic law, not the family metaphor used there elsewhere in the scriptures. I didn’t think you were arguing for a liberterian economy. You made it clear that you weren’t really saying how much (or what kind) of government intervention would be helpful in the market place.
That’s great stuff about Catholic social teaching. I’d not heard it. Interesting, too, because I it appears to present the argument for as little top-down decision-making as possible. Is this principle appreciated/employed outside of the social teaching of the Church, do you know? Because it would seem to work against much of the ecclesial structure.

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Michael W. Kruse

posted October 28, 2009 at 12:26 pm

#7 Dopderbeck
“subsidarity” “Kuyper”
As to communal orders, I think the size of individual communities is the an key issue. While orders may have monasteries in many locations my perception is that the individual communities are usually small. This would parallel the Hutterites and other communities.
There is a long and recurring history in the U.S. of communitarian movements emerging based on the Bible (including the Pilgrims) only to die out or morph into other structures.

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Michael W. Kruse

posted October 28, 2009 at 12:34 pm

T #8
Here is an excerpt from some writing at my blog last year:
“Sphere Sovereignty
Sphere sovereignty was first articulated by Abraham Kuyper more than one hundred years ago in the Netherlands, but it is grounded in perspectives that preceded Kuyper. Others have since reworked Kuyper?s conceptualizations. At is core, sphere sovereignty maintains that a set of institutions and traditions emerge in a society that address a particular aspect of human existence. These institutions and traditions form a sphere of competence that is not directly under or over the sovereignty of another. Thus, there are spheres of marriage and family, government, business, the arts, religion and so on. We don?t run our families like we would run a business and we don?t run our government like we would run a family. While all spheres of life do interact and touch on each other, there is a need for each sphere of society to be reticent about intruding to deeply in the institutions and traditions of other spheres.
Subsidiarity is a term coined by Pope Leo XIII in 1891 to describe a principle that holds that government should only get involved in initiatives that exceed the capacity of individuals and private groups. Within society?s various institutions, functions should be carried out at the most localized level possible, with regional and national levels executing only those functions that can not effectively be done locally.
Whether in name or not, this concept long preceded Pope Leo XIII. For instance, the tenth Amendment to the U. S. Constitution says:
‘The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.’
This is just one example of subsidiarity evidencing itself within Western thought.
Some see these two perspectives as expressions of libertarianism. Not so. Pure libertarianism believes in the perfectibility of humanity through the elimination of not only government, but other institutions that constrain individual liberty. Sphere sovereignty and subsidiarty value societal institutions, including government, and they see the panoply of institutions as essential for human flourishing among carnal human beings.”

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Travis Greene

posted October 28, 2009 at 12:38 pm

Michael @ 6,
I know what you’re getting at. But I think the separateness of family, education, work, etc. is vastly overstated in our society. For instance, “Your status in societal hierarchy determined your work not your abilities” is still largely true in many ways. We have more social/economic mobility than they did, and good for us, but we don’t live in some kind of pure meritocracy. And I don’t really buy Kuyperian sphere sovereignty, which I think undergirds a lot of your discussion here.

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Michael W. Kruse

posted October 28, 2009 at 12:59 pm

Travis #11
I’m not intending to state things in terms of absolute binaries. Of course everything is connected. And yes, I’m loosely coming at this from I Kuyperian standpoint but sphere sovereignty, even as indicated by Kuyper is not complete autonomy. My discernment of distinct institutions predates my acquaintance with Kuyper and emerges from my academic work in sociology.
What troubles you most about Kuyper?

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Travis Greene

posted October 28, 2009 at 3:13 pm

Michael @ 12,
I should start by admitting my knowledge of Kuyper is mostly secondhand, but the problem for me is statements like this: “Thus, there are spheres of marriage and family, government, business, the arts, religion and so on.” This seems to me to dovetail very nicely into conceiving of “religion” as separate category that has no business infringing on the other categories; a fine thing in moderation.
There are different disciplines that have their own conventions and histories, of course, but I much prefer the Kuyper who said, “Oh, no single piece of our mental world is to be hermetically sealed off from the rest, and there is not a square inch in the whole domain of our human existence over which Christ, who is Sovereign over all, does not cry: ‘Mine!'”

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posted October 28, 2009 at 3:26 pm

T (#8) asked: is this principle appreciated/employed outside of the social teaching of the Church, do you know? Because it would seem to work against much of the ecclesial structure.
I respond: Sure — local polity is delegated to the local parish, regional polity to the Bishops, and so on. As Michael mentioned, subsidiarity isn’t libertarian — it’s authoritarian in that authority is delegated and derivative. Ultimately it reflects the Biblical teaching about Christ being the head of all things and of every other institution, including secular government (Romans 13), deriving its authority from Christ.
Michael (#12) — what troubles me about Kuyper is the use to which his ideas have been put by the religious right. There’s this weird mix of theonomist and Kuyperian ideas in so much of their rhetoric, which ultimately really does owe more to libertarianism than to Kuyper or any other Christian ideal. I might even suggest that Kuyper and in particular Dooyeweerd are closer to what we might consider “European-style socialism” than to American individualism.

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Michael W. Kruse

posted October 28, 2009 at 3:57 pm

Travis #13
That’s helpful.
By “religion” we’re talking about religious institutions. Sphere sovereignty would protect the integrity of religious groups to worship as they want and to promote the values wish to promote. It would also protect other spheres from being dominated by religious institutions.
People are going to operate according to some set of values in each sphere. Kuyper clearly saw these as emanating from a society embracing Christian values. But the way change is accomplished is by persuasion of people to a set of values that are infused into the institutions they participate in rather than religious institutions dictating to other institutions what values will be observed. That is how every square inch is conquered.

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Michael W. Kruse

posted October 28, 2009 at 5:12 pm

#14 dopderbeck
And that is precisely why I usually talk about the general ideas as opposed to mentioning Kuyper by name. However, I’ll note that the Abraham Kuyper Center is located at Princeton University … hardly a hotbed of right wing theonomists. :-)

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Blessed Economist

posted October 28, 2009 at 11:01 pm

I agree that a global household manager is not the basis for a credible solution to economic issues. There would be no boundaries on the state as oikonomos.
That said, face-to-face community is far more important than many realise. It is really a matter of horses for courses. A face-to-face community could not produce a good laptop or cellphone. On the other hand, entities in commercial society are not very good at providing love or social support. We need both, but we need to push the balance back towards face-to-face community.

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posted October 29, 2009 at 2:18 am

Michael, first I just have to say what a wonderful job you have done on this series. Your writing is very insightful and gloriously NOT the same stuff we’ve all read a hundred times.
More later, when I have time to read the comments.

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John W Frye

posted October 29, 2009 at 12:20 pm

As I reflect on my own reactions and impressions to this excellent series, I believe that I am not too far afield in saying that most evangelicals don’t know and, sadly, don’t care for learning these things. In a world where we have reduced the robust Gospel of Jesus (to use Scot’s phrase) to “how to get to heaven when you die,” most Christians want all things simple and microwavable. I appreciate being educated and challenged by both Michael’s posts and all of the comments.
Only in Disneyland can “family values” drive macroeconomics (but of course that is not even true of Disneyland/world).

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posted October 29, 2009 at 3:18 pm

Hope this doesn’t come too late in the discussion, but I believe this video explains very well about how Christianity actually supports/complements capitalism.

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posted October 29, 2009 at 10:38 pm

Michael, you may have simplified for the purpose of this blog, but there is a significant disparity between economists over what works economically. You noted, “Thus, many economists and Christian moralist agree there should be an oikonomos, it is just that the former believes the oikonomos should be informed by scientific rationalism, while the Christian believes the oikonomos should be informed by Christian ethics … the family metaphor serving as a guide.”
However, many economists have come to realize that there is no metanarrative that humanity can name, “scientific rationalism.” What is rational to one culture is irrational to another: for instance, Americans have central heating in their homes and apartments, and many Japanese homes have space heaters that are carried from room to room (not heating any room that is unoccupied).
Some economists (e.g., Herman Daly, Josh Farley [disclaimer: Josh is my cousin]) have come to the same conclusion I did when I was working in Economic Research for one of the regional Federal Reserve Banks: the underlying premise of neoclassical economics, that humans will maximize their economic choices by making rational decisions, is fundamentally flawed. What constitutes “rational” is about as problematic for humans as what constitutes “truth”!
Some economists who’ve examined the way capital markets and capitalism really work to the detriment of the environment, our progeny, the future, the poor, have begun thinking in terms of the intersection between economics, sociology and community cooperation as an important corrective to the abstractions of money, econometric modeling, statistical projections, etc. These fundamental differences in economists’ outlooks on macroeconomic markets and microeconomic household decision-making can not be as neatly simplified as the Harvard U’s professor whose blog you linked.
Rather, ISTM, it is a more apt metaphor to describe this way of economic thinking as “Third Way” along the lines Scot’s recent blog postings on that subject. It’s not a matter of self-correcting or other-correcting mindsets in economic regulations. Rather, it’s a matter of other-focus, considering the betterment of the community, our children and their children, the health of the environment and the plight of the poor. Personally, I find this kind of economics the most compelling!
Thanks for your thoughtful posts!

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