Buddhist Catholic Contemplative Evangelical General Christian Hindu Jewish Latter-day Saint Muslim New Visions Progressive Christian

Beliefs

Topics

Columnists

Resource Library

Research Tools

Video

Podcasts

Thought Readers

Faith In Media Tracker

Newsletters

Ad-Free & Subscriber Log-In Subscription Support

Follow Patheos

Jesus Creed

Home
Evangelical
Economics at the Jesus Creed: Michael Kruse 6

Economics at the Jesus Creed: Michael Kruse 6

Last updated on: October 14, 2009 at 5:51 am by Scot McKnight

Economics at the Jesus Creed: Michael Kruse 6 2009-10-14T05:51:24-05:00 Scot McKnight

LOGO Patheos Explore the world's faith through different perspectives on religion and spirituality! Patheos has the views of the prevalent religions and spiritualities of the world.

Today we turn to the topic of wealth. Let’s start with a simple question: What is wealth? The answer may not be as obvious as it seems. Consider the following.

The Nature of Wealth

How much would you say a diamond is worth? Our first inclination is to determine its size, cut, color, and clarity. But we have overlooked a fundamental question: Worth to whom?

A diamond I find while hiking will have great value to me. I know it can be exchanged for goods or money. However, if I find the diamond while hopelessly stranded on a remote island, then the diamond is of little value. It only has value in the context of a community engaged in exchange.

No material item has intrinsic economic value. While connected with matter, wealth is a socially constructed reality that reflects a community’s valuation of tangible and intangible goods. Money is medium of exchange that we use to quantify the value of goods.

Let’s probe
deeper. Which is more valuable, a
diamond or a bottle of water? Water is absolutely essential to survival. Go
very long without water and we die. Yet many people live long healthy lives
without ever owning a diamond. Surely a bottle of water is worth more than a
diamond. Yet which costs more?

Economic
value is not tied to how important something is to our basic existence or to
what social good it brings. It is tied to what economists call marginal
utility.

Utility means the ability of
something to satisfy a human want.

Marginal
utility refers to the usefulness attributed to one additional unit of a
something.

Most products have declining marginal utility. That means each succeeding
acquisition of something gives less utility than the one before it. A thick
juicy hamburger may have great utility for me when I’m hungry but a second one
is likely to have less utility. By the third or fourth burger, the marginal utility
is probably zero.

Therefore,
while water is absolutely essential, it is also so abundant and inexpensive
that any particular bottle of water is of minimal value. Water is to be had inexpensively
elsewhere. But because diamonds are scarcer relative to the number of people
who desire them, replacing a diamond, or obtaining an additional diamond, is
costly. The price of an object is determined by people bidding for the next unit
of an good, based on the collective utility of bidders.

Wealth and
Trade

Consider a
game teachers use to illustrate the benefits of trade. (I’m borrowing from Jay
Richards here.) The teacher purchases a number of items of similar cost and
randomly distributes them to thirty students in a class. Each student is told
to rank how much they value their item on a scale of one to ten. The values are
totaled for a class score.

Next, the
class is broken into groups of five. The students are invited, if they wish, to
exchange their items with each other. (Scot gets a John Calvin 500th
Birthday commemorative figurine. I get a Cubs headband. We trade. [SMcK: Indeed!]) After
exchanging, each student is told to record how much they value the item they
possess and the values are summed again. The total class score goes higher.
Students are then invited to repeat the same exercise with anyone in the class
and record their values. The total score goes still higher.

In the world of
international trade, it is not as simple as this but the basic point is true: Wealth has been created without creating anything.
Markets (i.e., people freely exchanging what they have for what they value
more) moves goods from less-valuable uses to more-valuable uses.

Wealth and
Labor

Marginal
utility has important implications for labor as well. If we aren’t going to
produce everything we consume, then we will need to create something of value for
exchange. Value is determined by the collective utility of people in the market.
Based on the values communicated by market prices, and based on our gifts,
passions, and opportunities, we set about to transform matter, energy, and data
from less useful forms into more useful forms that meet other people’s wants
and needs.

This means
that labor, like goods, has no intrinsic economic value. It has economic value
insofar as it contributes to the production of something with economic value. I
can become as proficient as I want at making square-wheeled wheelbarrows. If no
one buys them, my labor has no economic value. And just like diamond example,
the amount paid for a particular kind of labor is not related to its importance
for the good it does.

Kevin
Garnett, forward for the Boston Celtics, makes $25 million a year playing
basketball. Yet, the median salary for a paramedic is about $37,000 a year. Few
would doubt paramedics play a more vital role in society than athletes. So why
the difference? The supply of people who can be recruited to become competent
paramedics is far more abundant than the supply of people who can play forward
at Kevin Garnett’s level. (Note: This is an extreme example to make a point. Don’t
get lost in whether or not you think people should value basketball. The issue
is that, just as with diamonds, there were will always be certain types of
labor we will pay more for than for labor which is more essential.)

Until very
recently in human history, the vast majority of people lived in small
communities with undifferentiated labor that rarely produced much of surplus.
The range of goods produced was very narrow and there was little trade beyond
the community. Prices were generally set by custom or by some authority. The
economy was a static zero-sum game and the price of goods and labor were
perceived as inherent in the goods. For centuries, economic thinkers were
trapped in this mindset. Political economists like Adam Smith, David Ricardo,
and Karl Marx subscribed to the labor theory of value, which says that the
value of a good is somehow tied to the amount of labor applied in making or
acquiring the good. As we have seen, this is in error. From the late nineteenth
century on, marginal utility has become the accepted determinate of value.

Theology and
Wealth

One of the
most common traps I see for Christian social thinkers is the materialist trap
of seeing economic value as inherent in goods or in labor. The human role of
producing goods from natural resources, the socially constructed nature of
wealth, and the market as a dynamic information and incentive system moving
goods to most valued uses, is invisible. Goods seem to have emerged in finished
form, with their own inherent value, and in fixed quantities. They need only to
be distributed.

Thus, when
disparities between people groups emerge, rather than asking why the less
wealthy group has experienced less productivity, developed insufficient social
constructs to support wealth, and created inadequate markets to distribute
goods, we frequently hear zero-sum thinking. We hear things like “the rich are
getting richer and the poor are getting poorer,” or the “United States has 25%
of the world’s wealth and only 5% of the population” (with no awareness that
the United States creates 25% of the worlds wealth), or as one quote I recently
read said, “You cannot abolish poverty unless you also abolish
affluence.” All of these are steeped in the zero-sum thinking of the
ancient world … the world from which the Bible emerged.

Uncritical
application of biblical passages touching on wealth to our present context
leads to well-intentioned but destructive actions. There is a widely held view
that poverty is a material issue. Shift material from one location to another
and the problem is solved. Clearly, in some urgent and disastrous cases, redistribution
of good is what is needed. But we do not exist for consumption. We are creative
beings made in the image of God for community. One way we realize this is by
using our creativity to transform matter, energy, and data from less useful
forms into more useful forms, and engaging others in exchange.

When people from
around the world who are in poverty are surveyed they do not identify lack of
material goods as their biggest challenge. They identify shame and despair. In Compassion, Justice and the Christian Life,
Robert Lupton writes:

“…when the
labor you offer is unneeded in the marketplace or when your abilities are worth
less to employers than the amount of your welfare check, you are exchange-less.
Indeed, poverty may be defined as having little of value to exchange. And when
society subsidizes you for being a noncontributory, it has added insult to your
already injured self-esteem.” (43-44)

When we move
to the international level we have prosperous nations subsidizing entire
nations. Apart from relief to stabilize people in crisis, it seems to me that
poverty alleviation is less about redistributing goods and more about restoring
dignity and inclusion in a dynamic wealth-creating economy.

The above
should not be construed as a tacit justification for every aspect of the
existing economic order. Rather, the intent is to show that critiques of
economic behavior based on a zero-sum mindset and on assumptions of inherent
economic value in goods and labor are errant.

There are
endless ramifications of seeing wealth as the socially constructed reality that
it is. What are your thoughts? What challenges or troubles you about this
understanding of wealth? What does this mean for theological reflection and
Christian mission?

Economics

Previous Post

October 14, 2009

God Hides in Plain Sight 6

Next Post

October 14, 2009 Acts and Mission 43

Browse Our Archives

Select a Category Acts of the Apostles Adam Advent Anabaptism Angels Anglican Apologetics Atonement Baptism BCP Prayers Bible Biblical Studies Birds Blogging Bloglossary Bonhoeffer Books Calvinism Christianity Church Church History Coffee Colossians Commentary Recs Conversion Creation Creeds Culture Death Ecclesiastes Economics Education Embracing Grace Emergent Emerging Movement Eschatology Essays Ethics Eucharist Evangelicalism Family Fasting Fathers Fellowship of Differents Footsteps Tour Fun and Whimsical Gospel Grace Happiness Heaven Hell Holy Spirit Irenaeus James Jesus Jesus Creed Job Justification Kingdom of God Law Lectures Lent Liberalism Love and Marriage Mabanteneni Manhood Mary Miracles Missio Alliance MissioLife Missional Missional Jesus Movies and Film New Perspective Northern Seminary OneLife Origins Project Orthodox Parables Pastor's Spouse Pastoring and Leading Pastoring and Preaching Patristics Paul Paul-John Tour Pharisees Pietism Political Theology Prayer and Formation Preaching Problems for Faith Psalm 119 Psalms Public Issues Purgatory Religions Resurrection Revelation Romans Rule of JCreed Science and Faith Sermon on the Mount Sports Ten Commandments Theology Third Way Top Ten Lists Translations Uncategorized Universalism University Ministry Way Out Weekly Meanderings Wisdom Women and Ministry Work Worship Writing & Blogging Youth Ministry

Select a Month July 2021 January 2020 December 2019 November 2019 October 2019 September 2019 August 2019 July 2019 June 2019 May 2019 April 2019 March 2019 February 2019 January 2019 December 2018 November 2018 October 2018 September 2018 August 2018 July 2018 June 2018 May 2018 April 2018 March 2018 February 2018 January 2018 December 2017 November 2017 October 2017 September 2017 August 2017 July 2017 June 2017 May 2017 April 2017 March 2017 February 2017 January 2017 December 2016 November 2016 October 2016 September 2016 August 2016 July 2016 June 2016 May 2016 April 2016 March 2016 February 2016 January 2016 December 2015 November 2015 October 2015 September 2015 August 2015 July 2015 June 2015 May 2015 April 2015 March 2015 February 2015 January 2015 December 2014 November 2014 October 2014 September 2014 August 2014 July 2014 June 2014 May 2014 April 2014 March 2014 February 2014 January 2014 December 2013 November 2013 October 2013 September 2013 August 2013 July 2013 June 2013 May 2013 April 2013 March 2013 February 2013 January 2013 December 2012 November 2012 October 2012 September 2012 August 2012 July 2012 June 2012 May 2012 April 2012 March 2012 February 2012 January 2012 December 2011 November 2011 October 2011 September 2011 August 2011 July 2011 June 2011 May 2011 April 2011 March 2011 February 2011 January 2011 December 2010 November 2010 October 2010 September 2010 August 2010 July 2010 June 2010 May 2010 April 2010 March 2010 February 2010 January 2010 December 2009 November 2009 October 2009 September 2009 August 2009 July 2009 June 2009 May 2009 April 2009 March 2009 February 2009 January 2009 December 2008 November 2008 October 2008 September 2008 August 2008 July 2008 June 2008 May 2008 April 2008 March 2008 February 2008 January 2008 December 2007 November 2007 October 2007 September 2007 August 2007 July 2007 June 2007 May 2007 April 2007 March 2007 February 2007 January 2007 December 2006 November 2006 October 2006 September 2006 August 2006 July 2006 June 2006 May 2006 April 2006 March 2006 February 2006 January 2006 December 2005 November 2005 October 2005 September 2005 August 2005 July 2005 June 2005 May 2005 April 2005 0000

TAKE THE

Religious Wisdom Quiz

True or False: Psalm 23 begins with 'The Lord is my shepherd; I shall not want.'

Select your answer to see how you score.

FALSE TRUE