In lieu of an abstract, here is a brief excerpt of the content:

13 What We Should and Should Not Learn from Economics Economics is the discipline that sets out to understand economic life. Thus, this social science should play a critical part in any attempt to answer questions about morality in economic life today. It is essential to understand what is occurring in economic life and what will change if we try to improve it. Moral values and religious vision are necessary for any Christian approach to economic life, but they are not sufficient. Good intentions do not guarantee good outcomes. Economic science is a complex discipline both because of the intricacies of its concepts and because there are several different groups or schools of economic thought. To simplify the first, this chapter will present only a handful of ideas—those most basic to “the economic view” of the world. To simplify the second, the chapter will focus on the insights of “mainstream” economics, the majority position within professional economics in the United States. Other schools of economics—such as Institutionalism, Marxism, social economics, and others—have important things to say. Some of that will appear in the second half of this chapter in a critique of the mainstream approach, but throughout this chapter, “economics” and “economist” will refer to the mainstream. The constraints of space are the reason behind this restriction. The contributions of economics to Christian moral discernment The following six insights are fundamental to economics and helpful to moral reflection.1 Economics says much more, of course, but these are most basic. 217 SCARCITY IS PERV ASIVE. The first insight is that scarcity is pervasive and fundamental. Scarcity names the condition that exists when our goals lie unachieved because of the limited resources we have at our disposal. Scarcity is most dramatic among the desperately poor of the world, but scarcity is also a characteristic of even the wealthiest nations and families. Implicit in this notion of scarcity is the economist’s definition of the true cost of anything as its “opportunity cost.” That is, the cost of any goal is the next most attractive alternative that is foregone to achieve it. Thus, the true cost of buying a new car is not best described by its price but by what else you could have done had you used the money differently. Similarly, most college students think that the cost of education is the monetary cost of tuition, room, board, books, and fees. However, this is a dramatic understatement, since in most cases, the largest single cost of going to college is the employment income that the student foregoes by taking time to be educated. We should also note that the inclusion of food and lodging in the cost of college actually overstates its real opportunity cost because everyone needs to eat and sleep, whether they are in school or in the labor force. Economists attend to two of the most fundamental means to resist scarcity: production and exchange. Humans have been “producing” economic goods since the era of our hunter-gatherer ancestors. Exchange is nearly as ancient: an attempt to improve our economic well-being by trading that which we have in abundance for something we don’t have enough of, interacting with another whose own abundance and shortfall is the inverse of ours. This insight into the role of exchange and its impact on production is at the heart of the fundamental answer that Adam Smith gave to the question implicit in the title of his best-known work, An Inquiry into the Nature and Causes of the Wealth of Nations.2 Smith argued there, and economists since have largely agreed, that this interest in improving one’s economic well-being through exchange leads to a greater specialization of labor (which he called the “division of labor”), where more and more persons each produce a narrower range of products or services because they can increase their economic well-being by producing what they’re most efficient at and entering into exchange with others. Without specialization, there would be neither schools nor cars, neither cellphones nor books, since we’d all be subsistence farmers. One of the most important insights arising from this analysis is that, even today, scarcity is the most fundamental reason why there are poor nations. Although many who are cheerleaders for “free” markets rarely admit it, wealthy nations—as well as individuals and corporations from wealthy nations—have 218 | Christian Economic Ethics [18.117.142.128] Project MUSE (2024-04-25 16:20 GMT...

Share