Category: Economics

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Economics Eschatology Ezekiel

Ezekiel, Nature, and Grace

In my ongoing reading of Ezekiel along with Robert Jenson’s Brazos Commentary, I came to the amazing poem in Ezekiel 27:1-36.  This text is a lament over the fall of Tyre, a pagan port and trading city on an island.  The poem pictures Tyre as a splendid ship:

They made all your planks
    of fir trees from Senir;
they took a cedar from Lebanon
    to make a mast for you.
From oaks of Bashan
    they made your oars;
they made your deck of pines
    from the coasts of Cyprus,
    inlaid with ivory.
Of fine embroidered linen from Egypt
was your sail,
    serving as your ensign; 
blue and purple from the coasts of Elishah
    was your awning.

The texts lists every sort of valuable good traded with Tyre by surrounding nations, including Israel:

silver, iron, tin, and lead . . . human beings and vessels of bronze . . .horses, war-horses, and mules . . . ivory tusks and ebony . . . turquoise, purple, embroidered work, fine linen, coral, and rubies . . . wheat . . . millet,honey, oil, and balm . . .wine of Helbon, and white wool . . . wrought iron, cassia . . .saddlecloths for riding . . . lambs, rams, and goats . . . all kinds of spices, and all precious stones, and gold . . . choice garments, . . . clothes of blue and embroidered work, and . . .carpets of coloured material, bound with cords and made secure. . . .

Notwithstanding its prosperity, Tyre ultimately is set up for judgment and ruin:

Your riches, your wares, your merchandise,
    your mariners and your pilots,
your caulkers, your dealers in merchandise,
    and all your warriors within you,
with all the company
    that is with you,
sink into the heart of the seas
    on the day of your ruin.

It’s tempting to suggest Tyre is judged because of its luxuries, but the text doesn’t exactly say so.  In fact, in his commentary, Jenson suggests that God regrets that Tyre must face judgment:

In our text, God regards humanity’s natural achievements with admiration, but he does so within a context of sorrow for their failure, a failure that is measured by the supernatural demands and promises made to his own people.  This suggests, for one thing, that the gift of natural goods to all humanity is not finally independent of the gifts made in history to God’s people:  the story of the Lord’s conflicts with and benefits to his people encompasses the stories of the Lord with the Gentile nations — how that is to be worked metaphysically currently divides the theologians.  And it further suggests that that the Lord’s supernatural regard to natural gifts is always at once affirming and mournful.

Jenson Commentary, 217.  Jenson’s comment puts the lament of the fall of “Babylon the Great” in Revelation 18 — clearly, I think, an echo of this text from Ezekiel — into a somewhat new light for me.  Revelation 18:11 contains a similar list of luxury cargo:

And the merchants of the earth weep and mourn for her, since no one buys their cargo any more, cargo of gold, silver, jewels and pearls, fine linen, purple, silk and scarlet, all kinds of scented wood, all articles of ivory, all articles of costly wood, bronze, iron, and marble, cinnamon, spice, incense, myrrh, frankincense, wine, olive oil, choice flour and wheat, cattle and sheep, horses and chariots, slaves—and human lives.

Perhaps here, too, God regrets the destruction of these cultural artifacts, although I think both here and in Ezekiel the inclusion of human beings / slaves suggests part of how the culture became corrupt.  Yet in Revelation 21, we see the New Jerusalem, a city built of gold and jewels, to which the “kings of the Earth” bring their glory (Rev. 21:24), suggesting that the finest things of culture are not finally destroyed after all.

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Economics

William Cavanaugh, Trade, and Scarcity

William Cavanaugh is a contemporary theologian everyone should read.  In his book “Being Consumed:  Economics and Christian Desire,” Cavanaugh brings his scholarship on Augustine’s treatment of “desire” into the contemporary economic sphere.[1]   As with Luther, however, I have to take issue with some of the ways in which Cavanaugh characterizes “the market.”  He relies heavily on Milton Friedman for the concept that “[a] market is free if people can satisfy their wants without harming others, even if there are utterly incommensurable ideas about what people ought to desire.”[2]  I think there is some confusion here between Friedman’s general views on market economies in relation to macro-economic factors and basic principles of microeconomics.  From a microeconomic perspective, it is also true that a “free” market responses to consumer preferences, but the measure of a truly free, efficient, competitive market is that the price of goods sold equals the producer’s marginal cost.  A lower price eventually would put the producer out of business, and a higher price would allow the produce to obtain a surplus above a competitive level.  The reason it is generally a bad idea for governments to set quotas or prices on consumer goods is that government quotas or price regulation interferes with the market efficiency that leads to what Luther had in mind:  the price is what the market price on both the producer and consumer side will bear, no more and no less.

I think Cavanaugh also is somewhat mistaken in one of his central arguments:  that “[t]he very basis of the market, trade – giving up something to get something else – assumes scarcity.”[3]  Much here depends on what we mean by “scarcity.”

Scarcity can mean that if I possess something necessary for survival, you cannot simultaneously possess an adequate supply of the same kind of thing, and therefore we cannot both survive.  If there are 100 total units of food available, and I possess 75 units, you can possess only 25 units.  Whatever food I possess takes away from your food.  If we both need 75 units of food to survive, one or both of us must starve.

Scarcity also can mean that there are not enough goods to satisfy everyone’s desires — which is not the same as everyone’s needs.  Perhaps there are 150 units of total food available, and we each need only 75 units to survive.  I am a glutton, however, and I desire 125 units.  If I can fulfill my desire, you will starve.  But if some portion of my desire goes unfulfilled, we can both survive.

I think what Cavanaugh wants to suggest is that scarcity in this latter sense often produces scarcity in the former sense because human desire is often so twisted.  Tonight I will go to a restaurant, and I will eat far more than I need to survive.  Meanwhile, not far from where I live there are cities with food deserts, where young children cannot obtain enough quality food to grow healthy, while in yet other places people are starving to death.  But it is not necessarily the case that the food I will eat tonight takes food out of the pockets of those other people.  In the first sense of scarcity, far more than enough total food is produced in the world for me to enjoy a nice meal at a restaurant and for everyone else at least to eat well enough to live in decent health.

Moreover, it could be possible for trade to supply what people need. Indeed, trade could provide a mechanism for disciplining excessive desire. Perhaps I have a 10 acre field, and I can grow enough wheat for my family’s needs, plus a surplus, but I cannot at the same time raise sheep.  I have a surplus of wheat, but a deficit of wool.  Perhaps I am a glutton and I would like to eat all the wheat myself, but meanwhile I am freezing to death because I lack clothing.  At the same time, perhaps you have a 10 acre field that supports sheep, but not wheat.  You have a surplus of wool, but a deficit of wheat.  Perhaps you are a clothes hound and you would like to hoard all the wool for yourself, but at the same time you are starving.  In this context, it is possible for us to engage in a market exchange that allows us both to obtain adequate bread and adequate clothing, even though that requires some compromise of each of our desires.  Cavanaugh does not seem to imagine a world in which this sort of market exchange could be part of a just society, but this is precisely the kind of exchange a truly free market is supposed to foster.  Even though in economic terms there is “scarcity” here, it seems to me that there is also a kind of “abundance,” of the very sort God had in mind when he gave humanity dominion over creation while at the same time giving us responsibility to work the Garden.

Of course, Cavanaugh is not fundamentally wrong about misplaced desire and its distributional consequences.  More than enough food is produced globally to feed everyone, with plenty left over for nice restaurant meals, but poverty and inequality prevent at least a billion people from obtaining enough to eat.  There are many causes of this poverty and inequality, including corruption and the failure of the rule of law, but some of it is caused by those of us in the developed world who desire certain kinds of goods and lifestyles that are supported by unjust laws and policies, including exploitative labor conditions in much of the developing world, unbalanced intellectual property rules, lack of access to capital, the legacy of slavery and colonialism, and so-on.  My point here is just that “trade” is not in itself the problem, but rather “trade” is part of our created stewardship.

[1] William T. Cavanaugh, Being Consumed:  Economics and Christian Desire (Grand Rapids:  Eerdmans 2008).

[2] Ibid., Kindle Loc. 107.

[3] Ibid., Kindle Loc. 936.

Categories
Economics Luther

Martin Luther on Economics

Martin Luther fascinates me, not least because he is such a bundle of contradictions.  This is true as much in his economic thinking as anywhere else.  In his sermon “On Trading and Usury,” Luther argues that it is sinful for merchants to sell their goods for the highest possible profit. [1]  Here, he says, “occasion is given for avarice, and every window and door to hell is opened.”[2]  Luther says the ideal civil law would involve a government agency that would set a fair price, but he thinks “we Germans have too many other things to do; we are too busy drinking and dancing to provide for rules and regulations of this sort.”[3]  Since government regulation of this kind is not feasible, he suggests that “the next best thing is to let goods be valued at the price for which they are bought and sold in the common market, or in the land generally.”[4]  He also suggests that crafts people should price their goods based on the amount of labor they put into creating them, at a rate comparable to a day laborer in some other occupation.[5]

Luther’s argument here is interesting because, to anyone with a sense of how economics works, it seems incoherent.  The “highest possible profit” for any commodity is simply the price the market will bear, which is one of Luther’s suggestion for a fair price.  It may be that Luther is writing against the backdrop of an economy that is not really a free market because of the influence of trade guilds and general lack of consumer information.  Perhaps candle makers in Wittenberg could charge much higher prices than candle makers in Münster because the markets were so localized.  Or, perhaps the furniture maker’s guild artificially inflated prices because of its monopoly on the trade.  In any event, in modern regulatory economics, that kind of problem is addressed through antitrust law, not through government price-setting.

Luther’s alternate suggestion of setting a price equal to the value of labor in another occupation – in addition to being inconsistent with looking to an ordinary competitive market price – makes no sense unless the other occupation involves comparable skill, training, precision, and so-on.  Even then, the monetary “value” of a unit of labor is not something that can be established ex ante without reference to the market for whatever commodity the labor produces.  What Luther seems to have in mind here is luxuries versus necessities.  He might have a point on this score.  Modern microeconomics recognizes that demand for luxury goods (sometimes called “Veblen” goods after the economist who first described this effect in detail) is highly price inelastic – that is, the quantity demanded does not vary significantly as price is raised.[6]  This is why a mid-range Mercedes costs $25,000 or so more than a comparable quality Toyota.

[1] Martin Luther, “Trade and Usury,” in William C. Placher, ed. Callings:  Twenty Centuries of Christian Wisdom on Vocation (Grand Rapids:  Eerdmans 2005).

[2] Ibid., Kindle Loc. 3091.

[3] Ibid., Kindle Loc. 3113.

[4] Ibid.

[5] Ibid.

[6] For a description of this and other price elasticity effects, see David W. Opderbeck, Patents, Essential Medicines, and the Innovation Game, 58 Vanderbilt Law Review 501 (2005).