The views expressed in this article are of the author only and do not necessarily represent those of the Center for Pastor Theologians.
The Wealth of Nations
Adam Smith
Capital: Volume 1
Karl Marx
Pastors clearly need to grasp the moral and cultural realities of economic systems if they are going to help people understand their daily work as discipleship. Moral and even metaphysical assumptions are embedded in economic systems, shaping both the personal and public meaning of every person’s work. Many of these presuppositions originate in the academic discipline of economics. A pastor who has a basic familiarity with the moral and metaphysical development of academic economics will be better equipped to help people understand their daily lives as they go out into the world in the power of the Holy Spirit and strive to live each day for Christ.
Adam Smith is as good a starting point as any. The systematic study of economics had begun to take meaningful shape as a branch of moral philosophy in the High Middle ages, and reached a quite advanced state of development in the late Middle Ages and the Reformed scholastic period. However, when Smith arrived on the scene, the Christian legacy of economics as a branch of moral philosophy was in the process of being overthrown. The reigning economists of the day were of the radical Enlightenment mold – the French “physiocrats,” so called because they studied economics the way one would study physics. People pursue their self-interest just as objects obey the Newtonian laws of motion, and that’s all there is to it. The amoral view of life implied by this approach was triumphantly championed by Bernard de Mandeville, the Ayn Rand of his day.
Smith rescued the moral dimension of economics, but at a great cost. He insisted on grounding economics in ethics – holding out the good of mankind as its proper purpose, heaping scorn upon the selfish tendencies of the commercial and political classes, and deploying his most withering rhetoric against the poisonous ethical cynicism of de Mandeville. His great objection to mercantilism (which was the central battle of his career) was not that it was inefficient, but that it was unjust. It arbitrarily starved the powerless to put money in the pockets of the powerful.
However, the morality with which Smith rescued economics was not Christian morality; it was a morality that made sense to the secular Enlightenment. He assumed too much integrity in creation, thinking virtue and cooperation would be relatively easy to maintain if people were rationally educated. And he measured the value of labor only in physical terms, thinking (as Arthur Brooks once put it) that economists could measure the value of a person’s work by using “beads of sweat” as the unit of measurement.
Smith’s signal contribution is not the insight that the division of labor delivers gains in economic well-being. That was recognized as far back as Plato and Aristotle. Smith’s key argument was that these gains can be dramatically expanded by widening the scope of trade. With more trade, a wider variety of labor specializations becomes possible. (A coworker of mine once remarked that politicians want us to see the Chinese as a billion people out to steal our jobs, when we ought to think of them as a billion customers we could serve; this illustrates the enormous value of trade.) Mercantilism, by restricting trade, denied all people the opportunity to specialize in labor that served the needs of people in other countries.
Smith was not naïve about the dangers of the division of labor. He devotes a section of The Wealth of Nations to warning against the possibility that people’s horizons would be shrunk, that they would come to live in a very small world where they saw nothing other than the narrow tasks before them. He called for improvements in the education of children (in schools) and adults (in churches) to help people maintain a wider perspective and understand their place in the world. That is still a word in season! Interestingly, against the monopoly systems of education and religion in his day, Smith advocated parental school choice and religious freedom.
The seed of evil sown by Smith’s naturalism and materialism did not flower much in his own day. But in the 20th century it killed about 100 million people. Marx’s murderous indifference to justice and human life is his own responsibility, but the core fallacies upon which his cockamamie economic theories are built had been endorsed by Smith a century before, as a result of his inadequate moral and metaphysical presuppositions.
Marx detaches the economy from transcendent purpose. He assigns it the (admittedly very important) job of producing worldly goods, but he sees nothing higher than that in economic exchange, as the medieval and Reformation Christians did. In this, he follows Smith.
Marx also follows Smith in thinking the value of any commodity is simply the value of the labor to produce it, which in turn is merely a function of physical exertion. Contrary to popular opinion, this was not the medieval or Reformation view. Earlier economists knew that the economic value of a thing was a function of the needs, decisions and character of its owner. This fact would be rediscovered in 20th century economics, though too late to save the world from the depredations of Marxism.
Without Smith’s moral concerns to restrain it, in Marx this materialism about value became an engine of destruction. If economic value is objective, scientists can calculate the optimal economic arrangements. Groundless theories based on arbitrary assumptions could be concocted to show that anyone who makes a profit is unjust and exploitative. This is how stewardship over economic goods was taken away from ordinary people and placed in the hands of elite experts – and once people were reduced in this way to the status of domestic animals, they lost their dignity. Enslaving or killing them in the name of the common good became plausible.
Another key inheritance from Smith is historicism. Marx famously thought that economic history was an inevitably unfolding dialectic, with the forces of ignorance and poverty receding slowly but inexorably before an emerging tide of enlightenment and productivity. This is usually understood as a reaction against Hegel’s idealism, but it is also an echo of the economic historicism of the physiocrats and the Scottish Enlightenment, including Smith.
Once we come to appreciate that economic value is spiritual, and not subject to objective calculation, Marx’s hugely complex and intricate theories fall down like a house of cards. Smith’s work survives better, because he is more concerned with economics as moral philosophy than with formulas and calculations. Yet even Smith’s book largely reads as a product of its Enlightenment period. The bankruptcy of both authors’ economic materialism has been long since exposed and rejected among professional economists. Alas, their response has been to overreact, retreating into a radically subjective utilitarianism. The task of building an economics that appreciates both the material and the spiritual, the objective and the subjective, is still before us.
Greg Forster (PhD, Yale University)
