Categories
Archive Book Reviews Chuck Huckaby

Redeeming Economics: Rediscovering the Missing Element

Redeeming Economics: Rediscovering the Missing Element
By John D. Mueller
ISI Books, 2010 (hardback, 480 pages)

Reviewed by Chuck Huckaby

As the 2012 Presidential elections draw near, the presidential candidates are offering a variety of economic proposals to stimulate our struggling economy. How are we to seriously evaluate which, if any, are likely to succeed based on sound economic theory? Does Christian theology (or even “natural theology”?) play a part in guiding our evaluation of both sound economic theory and these individual proposals?

John Mueller in Redeeming Economics: Rediscovering the Missing Element says “Yes”. As the speechwriter and economist for Congressman Jack Kemp from 1979–88, he was responsible for analyzing and developing policy options from his classically Christian perspective. Often disdained by those who rejected his application of moral philosophy from Augustine and Aquinas to economic policy, Mueller’s sport and revenge has been to build a business around predicting the economic disasters that result when morality and markets are divorced in public policy.

Mueller begins by affirming the classic economic distinctions of Thomas Aquinas as he pondered the day to day meaning of the command to “love your neighbor as yourself” (Matt. 22:39). In Thomistic (“Scholastic”) theory, there are four elements to consider:

  1. Production
  2. Just Exchange
  3. Final Distribution
  4. Consumption or Utility

In Mueller’s approach to economics, he considers that Adam Smith oversimplified economic theory by considering only the first two elements, production and exchange. Following Smith the “Neo-Classical economists” did begin to reintroduce the concept of consumption or utility into their equations. Mueller, the Neo-Scholastic, considers that they, too, missed something. As a result, today’s Neo-Classical economists also fail to achieve optimum accuracy because they neglect final distribution.

Aquinas’ third element accounts for the completely “human factor” in economic decision making: social relationships expressed as love or hate, self-sacrifice or criminality.

For Christians seeking the nexus between economics and theology, Mueller notes that the link is found in the doctrine of divine providence. Adam Smith called this the “invisible hand” because of the amazing way markets work. Before him, though, Augustine had attributed the “hidden equity” of the marketplace to the “Supreme Equity”, i.e. God. Though Smith noted the impact of pantheistic determinism in observing economic interactions, Mueller’s project is to demonstrate how only Neo-Scholastic economics genuinely considers the impact of the imago Dei in human affairs that secularist economics overlooks.

Those Protestants wondering if they can accept these theories because of their connection with Rome will have their concerns anticipated in a way by Mueller. Unlike later Christian Distributists who base the work self-consciously on post Reformation papal encyclicals, Mueller first recognizes the Biblical basis for Augustine’s and Aquinas’ reasoning. He follows by noting the general consensus that existed among both Protestants and Roman Catholics in the area of economic theory that existed until and even influenced America’s “Founding Fathers”.

In stark contrast, economist Adam Smith is exposed on several fronts for what he eliminated from Christian economic theory. The real question Mueller notes on p. 49 is “why were his subtractions so popular?” For one thing, Smith had renounced his Christian Baptism to become an apostate. His “invisible hand” was a Stoic, pantheistic one, not the manifestation of Abraham, Isaac, and Jacob’s personal God. And therein lies one modern attraction.

Economists following Smith’s Stoicism can practice their art without the need of acknowledging any concept of justice or morality in economics (p. 53). Once that secular position is embraced, there remains no need to prohibit any activity as long as it might somehow be considered “gainful”. Smith’s economics in one way freed the West from having to ask moral questions about economic behavior. This amoral impact was only rivaled by evolutionary doctrines that deny any revealed or “natural” norms exist for noneconomic behavior.

Mueller’s critique of Smith does not end there. Perhaps the most shocking part is his reminder that Marx and Lenin simply took Smith’s theory about the “surplus value of labor” to its logical conclusion. The redistribution of wealth they proposed would be harmless if Smith’s thesis were sufficient to explain economic reality. Mueller’s work leads one to conclude that the disastrous results of the Communist era can be linked, at least in part, to Smith’s failure to account for the divine and human factors in economics that Augustine and Aquinas were familiar with centuries before. As he shows in his last chapter worldviews have consequences!

As a test case for Neo-Scholastic theory, Mueller offers an analysis of the relationship between Fatherhood and Homicide while taking the book Freakonomics to task (Chapter 8). The Freakonomics authors believed legalized abortion accounted for lowered crime rates. Mueller demonstrates, instead, that the Freakonomics authors have not only fudged the data but that they have also failed to see a larger trend: The greater the number of men who are active as father-providers, the lower the homicide rate (p. 185). While most studies of fatherhood are devoted to the relationship between fatherhood and its impact on the next generation, this analysis is interesting for noting the present benefits of fatherhood in the present as well. Unfortunately only the bogus economic sensationalism of Freakonomics reached the popular press, not this amazingly profound news!

Mueller looks for a new economic era characterized by a Neo-Scholastic approach which accounts for all four elements when determining economic policy.  Currently, he notes, economists look at marriage in a utilitarian way that defines “marriage” with concepts that could as equally be applied to “hotels, brothels, and dormitories” (p. 111) but which do not account for the prevalence of the traditional family. No wonder there are so many “economic conservatives” who can’t find a good reason to uphold “traditional marriage”. Their failure to exalt traditional marriage results from a defective economics, not simply a defective theology.

Neo-Scholastic theory about the missing element in today’s economics also explains why our former Republic is devolving into a “winner takes all” kleptocracy where power and special interest pleading, not principle, rule (p.113ff). Redeeming Economics critiques both Democrats and Republicans for their self-serving policy recommendations. For example, he has criticized both Democrats and Republicans for their deficit spending, promotion of unsound currency (theft through inflation), payoffs to select constituencies, and lack of fiscal discipline.

While some consider him essentially “just another conservative in the pocket of Big Business”, that would be inaccurate. In this and other writings he has shown his concern for the “Home Economy” vs. the “Market Economy”. In fact, he has regularly criticized icons of the conservative movement like Dick Armey and Steve Forbes for their “flat tax” as well as proponents of the so-called “Fair Tax” for engaging in more Republican “sleight of hand”.

All these proposals shift the general costs of government onto the backs of workers and away from the main Republican constituency. Likewise he has routinely come out against the privatization of Social Security as hurting women, workers with lower income and education levels, and African Americans while publicly contradicting a Heritage Foundation study in the process. He reminds us that every time “privatization” of the plan is mentioned, the actual transition costs have doomed it. Indeed, Mueller’s book and other writings continually advocate for solutions that at least hold the potential of building a larger pro-family consensus than currently exists and doing so across party lines whenever possible.

More specifically, Mueller calls for the reform of the tax system through a tax which is, indeed flat, but which falls equally on property and labor income. He suggests that the tax be implemented in such a way that income tax returns become a thing of the past, except for self-employed individuals and businesses. He elsewhere calls this the “Family Flat Tax”. That proposal would finally relieve the disproportionate tax burdens placed on the income from employment versus the income from investment.

Democrats (and even “pro-family” Republicans) revolt at Mueller’s observation that “workers” do not emerge full grown on the scene.The fertility and nurture of mothers is required to keep any economy from ultimate self-destruction. As other researchers have shown, though, when it comes to getting mothers away from their children and out of the home, Welfare State Socialists and “Capitalist” Big Business find themselves oddly aligned.

Why? Socialists “can’t get government into the home unless you first force mothers out of the house” Mueller notes elsewhere. Likewise the alleged “foes of Socialism” want women out of the home in order to drive down labor costs as Carlson observes. At times, these two alleged “enemies” have even formed outright political alliances for the purpose of getting mother away from home to advance their agendas! Neo-Scholastic economics recognizes the mother’s role in a variety of ways that neither Democrat nor Republican approaches to economic solutions normally do.

It’s interesting to read Redeeming Economics alongside the work of another author who writes out of a concern for Aristotle, Augustine, and Aquinas: Toward A Truly Free Market, by John C. Médaille. In comparing the two it is obvious both are working from a “Scholastic” perspective, yet their policy recommendations are poles apart.

The former endorses a gold standard and federal taxation based on employment and investment income. The latter rejects the gold standard as impractical and rejects income as the basis for taxation except in the case of monopolies. In addition to user fees for some services, the latter favors a Georgist approach to taxation where taxes are based on the market value of land and other natural resources one claims for exclusive use. Both works are “pro family”, though the latter voices a greater concern about the rise of “Big Government” and corporate monopolies.

Confusing? Absolutely!

The issues that Mueller’s conversation partners like Médaille and Lynn raise regarding the destabilization of the Middle Class, the danger of monopolies, and the ubiquity of crony capitalism are critically important. As a result, they find Mueller’s prescriptions a bit too tame to say the least. Lynn in particular writes articulately about the need for pre-Reagan anti-trust enforcement to stop eviscerating the Middle Class. In fairness to all sides, this reviewer has come to conclude Mueller would likely say that his prescriptions for tax fairness and the elimination of subsidies, if implemented, would achieve many of the ends his critics aim at bringing to pass. Chapter 15, titled “Injustice in Exchange: Unemployment”, is where he makes his case in this regard. The verdict is still “out”, however, because neither Mueller’s theories nor those of his constructive critics are being implemented.

Redeeming Economics uses everyday examples… a mother’s decisions about milk, a lemonade stand and a neighborhood yard sale, for example. Nevertheless, the material is rather complex. For that reason, it may not receive the wide reading it deserves.

Republicans swept in to office on a wave of electoral discontent are now left with the difficult task of actually governing. So far most of their proposals have been considered partisan and easily categorized as “favoring the rich” because they fall into precisely the traps Redeeming Economics warns about. Mueller’s work offers them (and their fellow elected officials from the other side of the aisle) a way forward past the stereotypes in ways demonstrably better for women, African Americans and the Middle Class – if they will listen.

Christians seeking a nuanced free market economic theory based on something other than unbridled baptized avarice will find the book an insightful contribution in bridging the alleged chasm between “economic conservatism” and “social conservatism”.

If the reader is wondering how current proposals from the President or his potential challengers rank in terms of Neo-Scholastic economics, it’s safe to say that, thus far, they have all “been weighed in the balance and found wanting” (Dan. 5:25–27).

Rev. Chuck Huckaby is Minister of Congregational Life at First Protestant Church of New Braunfels, TX.

Permissions: © WorldViewChurch.org. Reprinted by permission. Originally published 2011.

2 replies on “Redeeming Economics: Rediscovering the Missing Element”

Comments are closed.