Forbes Jerry Bowyer 8/24/2011 @ 3:26PM |1,360 views Classical Economics And Its Religious Underpinnings
I spent a couple of days in a TV studio recently, recording a series of short teaching sessions on the basic principles of classical economics and how they apply to investments. Since the idea of God was integral to the founders of classical economics, and the firm which requested the series was sympathetic to that idea, I spent time reading Jacob Viner’s unfinished book, Providence and the Social Order in preparation for the project. Viner was a professor of economics at the University of Chicago and taught, among others, the great Milton Friedman. Some of Viner’s colleagues at Chicago believed that he had read more economic history than any man ever had. Viner had a life-long interest in writing about the theological roots of modern free-market economics, but because there was little interest in the topic among economists in the mid-20th Century he put the project off for most of his life. Eventually he was able to start to write on this topic, but by then it proved to be too late for him to finish it before his death. After several decades of research, Viner concluded that Smith was an example of a strand of thought which he called “optimistic providentialism.” This view goes back to the early Christian church fathers, as far back as the time of St. Augustine. It grew to eventually become popular in intellectual circles at the time of Smith. Viner pointed to the extremely important idea he dubbed “providential abundance,” which held that the universe was designed by God to be abundant. The necessities of life were widely distributed by Him, and even the luxuries of life could be had when free people are allowed to pursue self-interest. Man, being in possession of free will, could waste and squander opportunity through plunder, war and empire, but those were not the original design. Frederick Bastiat develops this idea more fully in Economic Harmonies, arguing that peaceful labor and abundance was the Edenic intention, but that there had arisen a “misunderstanding between God and mankind,” in which the latter chose the path of coercion. According to Bastiat, the laws of economics are much like the laws of physics, in that they are rational and inviolable and reflections of the mind of God. But in some sense they are even more remarkable in that they involve the meshing of elements, which unlike those of nature, are sentient. Let us not thus condemn mankind until we have studied its laws, forces, energies, and tendencies. Newton, after he had discovered the law of gravity, never spoke the name of God without uncovering his head. As far as intellect is above matter, so far is the social world above the physical universe that Newton revered; for the celestial mechanism is unaware of the laws it obeys. How much more reason, then, do we have to bow before the Eternal Wisdom as we contemplate the mechanism of the social world in which the universal mind of God also resides (mens agitat molem)? But with the difference that the social world presents an additional and stupendous phenomenon: its every atom is an animate, thinking being endowed with that marvelous energy, that source of all morality, of all dignity, of all progress, that exclusive attribute of man — freedom! Bastiat argues that the virtue of the doctrine of providential economic harmony is that it is simple, but that its simplicity also makes it vulnerable. The friend of liberty reminds us of this simple truth over and over, that God created the world with a plan that free individuals pursuing peaceful commerce would be of benefit to all. The enemy of liberty, on the other hand, never ceases dreaming up new ideas for the reordering of society, sitting in their studies scribbling promises to the masses which will never come to fruition. But each promise which offers paradise in exchange for surrendered liberties weakens the desire for liberty. Socialists, Bastiat said, have the advantage of always being able to think up something new and allegedly improved. The newness, the fashionableness of statist schemes is a problem for the classical view, but it seems that the erosion of the belief in God may have been more of one. When modern economics attempted to gain scientific legitimacy by jettisoning the idea of God and, eventually, any fixed principle at all, in some sense it cut off the limb on which it was sitting. The idea of providential abundance was extremely important to the defense of the market order. God made a world which is fit for us, and He made us fit for the world. Resources are abundant and responsive to our touch. To use a modern analogy, commerce and technology work so well because we run on the same software, the mind of God. Man and nature are, therefore, compatible because we have the same designer. When the modern mind shifted away from a designed world to one governed by blind, evolutionary processes, the classical free-market consensus began to erode. Yes, there were a few social Darwinists who used the analogy of natural selection to explain market processes. But for every nearly forgotten Herbert Spencer who tried to rebuild a free-market public consensus on survival of the fittest, there were more Marxes, Engels, Shaws and Keynes who were more gifted propagandists and more ambitious candidates for the newly vacated office of god-man. The planless masses refused to live without a plan from above. If God were taken from them, they would be given a plan by a new class of planners. Whether fairly or not, the men who used Darwin to sell socialism to the world, were far more successful than those who used him to sell freedom. Classical economics was well into its second century before leaving God behind. Was it right to do so, or is He, as Smith and Bastiat and many others seemed to believe, foundational to the free-market order? -- Centroids: The Center of the Radical Centrist Community <[email protected]> Google Group: http://groups.google.com/group/RadicalCentrism Radical Centrism website and blog: http://RadicalCentrism.org
