The Austrian school of economics is centered on the individual. It is not that we are rugged lone wolves who have no need for community, but that we act within our communities as individuals. From this standpoint, the economy is driven by individual consumers making individual choices. These choices are what drive prices and lead business owners to make decisions.
In a similar way, Jesus showed the world that through a relationship with God, one’s fate no longer depends on the behavior of their leaders(s), but on an individual’s personal relationship with their Creator. This relationship is complex and driven by a desire for wisdom in one’s daily choices.
The Division of Labor and The Body of Christ
Adam Smith was a pioneer of economic thought in the late 18th century. He wrote that prosperity comes from the division of labor. When someone specializes in making wheat, another in turning wheat into bread, another in growing tomatoes, another in raising pigs, and another in butchering pigs to turn them into ham, a consumer can buy a sandwich for a few dollars that would have cost them thousands of dollars and countless hours of labor to do themselves. This is the case for the division of labor. When the economy is structured for people to specialize in their business activities everyone enjoys more benefits.
Another great example of this principle is in Leonard Reed’s essay I, Pencil. In the essay, Reed illustrates how all the materials and manufacturing required to produce a simple pencil(that today anyone can buy for less than a dollar) would cost so much for an individual to produce that it would be nearly impossible. Through the division of labor millions of people from different nations, who speak different languages, who have different backgrounds and beliefs are able to work together to increase the prosperity for all via specialization.
This is also a picture of how the Body of Christ works. God has created all of us to be unique individuals. While the desire to change the world in big ways can be tempting, and knowing where to start can be overwhelming, Christians have to remember that we are part of a body. We can not be the whole body. We can instead strive to function in the specific role that God designed us for. We each have specific spiritual gifts, desires, and passions, and find ourselves placed within unique families and communities. If you tap into how the Holy Spirit is moving in your heart, wherever you find yourself, you will find your specialization. Paul talks about this in 1 Corinthians 12:
But as it is, God arranged the members in the body, each one of them as he chose.
If all were a single member, where would the body be? As it is, there are many members, yet one body.
The eye cannot say to the hand, “I have no need of you,” nor again the head to the feet, “I have no need of you.”
(1 Corinthians 12:18-21)
What a beautiful picture of specialization! By appreciating the diversity within the body, we are able to embrace our specific role within the body and unite as others embrace theirs. The whole body, unified in purpose, is able to do amazing and impossible things that none of us could imagine doing alone.
Economic Calculation and Being a Servant
The true giant of Austrian Economics, who gave us a complete and consistent economic theory in the 20th century, was Ludwig von Mises. He argued that the reason socialism could never be successful was due to the problem of economic calculation.
When bureaucrats interfere in the market, they have no basis to accurately allocate resources and, inevitably, the market ends up with surpluses and shortages. He argued that by allowing supply and demand to dictate prices, resources can be allocated correctly. The subjective theory of value also plays into this; nothing has inherent value, but a product or service’s value is dictated by what people are willing to pay for it. If no one is willing to pay for something, it signals to the market that resources should be allocated elsewhere. No one has to facilitate this process, it happens organically as business owners are most successful when they use resources efficiently to best serve their customers. The development of new products, advancements in technology and businesses shifting to be more environmentally conscious, emerge from business owners paying attention to what their customers want and finding ways to serve them.
Jesus spoke many times on how our mission on earth is to love and serve those around us. He said, “whoever wants to be first must be last of all and servant of all” (Mark 9:35). He showed us this when he washed the feet of his disciples. We bring the Kingdom of Heaven to Earth when we are focused on loving and serving those around us. Now, of course, some business owners may be motivated by profit in their serving, but God looks at the true intention of our hearts and it is not enough just to look the part, we have to actually be motivated by love.
There is no better way to learn how to serve someone than to actually know and love them. You can’t blindly rely on a church or other organizations to allocate the resources of your service. To truly serve others requires you to do the work, to get involved in the messy reality of human relationships and become personally aware of what the people in your life value.
Regulation and Heavy Burdens
In a democracy, people tend to win elections by promising to solve problems through legislation. How many laws would you guess you’re required to follow right now? A thousand? Ten thousand? A million? The US currently has so many laws that no one knows how many there actually are. Then, of course, there are state and local laws on top of federal laws, so it’s estimated that the average person commits about three felonies a day. Maybe you’re committing one right now. Maybe I am too.
The strategy seems to be that if more and more laws are passed, eventually we will create a utopia. This has led to the United States to be the world champion for having the highest percentage of its population in prison. It’s not uncommon to hear someone exclaim “there ought to be a law” about anything that mildly irritates them. A quick Google search will take you to numerous examples of people calling the police when their fast food order is wrong, a store wouldn’t give them a discount, or they spotted some kids selling lemonade without a permit.
Where does all of this come from? Humans have a natural desire to set the world right. We want to see good being done, we want to see justice, and we want to end suffering. These appear to be good values to pursue, that is until we try to put each other in bondage to accomplish them.
The study of economics shows us that every regulation put in place by the state works like throwing a wrench in the gears of the market. People are underserved, the market is slow to innovate, new businesses are barred from starting, dangerous black markets form, and yes, people needlessly end up in prison. To our further detriment, business regulations in the US are primarily written by lobbyists who work on behalf of big corporations. These groups are able to manipulate the system to their benefit.
The FDA is a good example of this. This department justifies its existence by playing on fear and the desire for the things people put into their bodies to be safe. Not only does the FDA classify Frosted Flakes as healthier than avocados and regulate things like cannabis and raw milk that destroy the lives of peaceful people, but the biggest contributors to the FDA’s budget are pharmaceutical companies. The FDA requires extremely high fees to be paid to test and approve medications, so if a small company is not able to afford FDA approval for something like low-cost generic insulin, larger companies are able to keep charging as much as they want for insulin. This is the way the system is designed to work. Regulations are born out of fear. They lead to a system where businesses are drawn away from serving and being people-driven and drawn toward finding ways to destroy and tear down the competition.
It works the same within the Church. We can get so caught up in trying to control each other, in wanting to be right, in wanting to win and have others live up to our expectations, that we appeal to an authority that will force others to act and believe the way we think is correct. But this, we must remember, is the very reason Jesus often admonished the Pharisees. “They tie up heavy burdens, hard to bear, and lay them on the shoulders of others; but they themselves are not willing to lift a finger to move them” (Matthew 23:4).
No matter how hard we try, we cannot force other people to adhere to our standard of morality. The way we bring justice and goodness to the world is by shifting our focus toward serving and loving others and away from trying to control them. Just like in the market, if we allow ourselves to be driven by fear it will lead to us tearing others down. If we allow ourselves to be driven by love, we will heal the world.
One of the ways Jesus described the Kingdom of Heaven was in his parable about the wheat and the weeds is this:
He put before them another parable: “The Kingdom of Heaven may be compared to someone who sowed good seed in his field; but while everybody was asleep, an enemy came and sowed weeds among the wheat, and then went away.
So when the plants came up and bore grain, then the weeds appeared as well. And the slaves of the householder came and said to him,
‘Master, did you not sow good seed in your field? Where, then, did these weeds come from?’ He answered, ‘An enemy has done this.’
The slaves said to him, ‘then do you want us to go and gather them?’ But he replied, ‘No; for in gathering the weeds you would uproot the wheat along with them.
Let both of them grow together until the harvest; and at harvest time I will tell the reapers, Collect the weeds first and bind them in bundles to be burned, but gather the wheat into my barn.”
(Matthew 13:24-30)
God created this world to be perfect and good. He intended for us to be free, and this parable reminds us that, to bring God’s Kingdom to earth, our purpose is not to tear out the evil, but to grow the good. This is why Austrian Economics aligns with God’s plan to restore the world so well. It is the study of how the choices we make as individuals can shape the world we live in for better or worse, and how everyone and their neighbor plays a role in choosing what they will serve. God’s desire is for us to lovingly serve each other, not to control each other, and, in its ideal, Austrian Economics recognizes that if we do this we will find abundance and prosperity.
Contributors
You can learn more about Abby Cleckner and this article in the first episode of The Bad Roman Podcast (coming Spring 2020).