Two More on Economics

Two More on Economics April 9, 2019

As I said in an earlier post, I don’t really care for economics. I’m glad there are people who do, but I’m not one of them. With that said, I’ve found myself this semester in the position of having to read more on economics than at any time since I was an undergrad years and years ago. So I thought I’d share my misery with our readers (or our “reader”, depending on which analytics we look at…). Or, to put it a different way, the two books I’ve read most recently on economics are actually pretty decent as books, that is, they’re well-written, so I thought I’d pass them along with a comment or two.

Image: Pixabay

The first isn’t really a book, it’s Leonard Read’s classic short story “I, Pencil.” (Available for free here.) In it, a pencil describes its family tree and walks us through the steps that have to be taken in order for it to be created. Over and over again the pencil points out that “no single person on the face of this earth knows how to make me.” Instead, “millions of human beings have had a hand in my creation,” from the lumberjack who felled the tree to the miner to dug up the graphite to the smith (or, you know, robot) who forged the alloy of the brass top. In fact, not only does no one know how to make a pencil, but no single person is even capable of doing so. Despite the absence of a single maker, billions of pencils are made every decade. Bringing the government in to oversee or direct the process would only destroy the quality of the pencil itself:

“The lesson I have to teach is this: Leave all creative energies uninhibited. Merely organize society to act in harmony with this lesson. Let society’s legal apparatus remove all obstacles the best it can. Permit these creative know-hows freely to flow. Have faith that free men and women will respond to the Invisible Hand.”

As I said in my previous review, Christians who believe in original sin should always flinch back a bit from the idea of leaving sinners totally without restraint. That’s not to automatically grant the argument of those who believe in absolute government control, but the nearly-religious language of “I, Pencil” (“have faith that free men and women will respond to the Invisible Hand”) should make us nervous. We certainly ought not replace God with the government, but neither ought we replace God with the market–even if we capitalize the “M” in the word.

To that end, I strongly, strongly recommend Nicholas Wapshott’s even-handed books Keynes Hayek: The Clash that Defined Modern Economics. This book focuses on two men, John Maynard Keynes and Friedrich von Hayek, who at the beginning of the 20th century outlined the foundations of the two theories that would come to dominate virtually all political and economic discussion from then until now. Their competing answers to questions like: can the economy be “planned”? should the government intervene when the economy is down? What kind of monetary policy should be in place with regard to things like interest rates, cash supply, taxes, spending policies, and countless other questions have been debated, starting with Keynes and Hayek. The former believed that an active government policy could offset massive unemployment without the fear of tyranny, so long as a healthy culture exercised a common-sense restraint on the reach of government. (Keynes was obviously a very British writer.) Hayek, by contrast, believed that inflation was the greater evil than unemployment, and government intervention in the marketplace leading to tyranny was the greater evil yet. And so the natural up-and-down cycle of the marketplace simply ought to be weathered as best as possible with minimal government involvement.

Obviously that’s a massive oversimplification, but Wapshott spends 300 pages walking through the unfolding of these difficult arguments. And while the subject matter isn’t my cup of tea, it is certainly the case that it is important to understand. Why do we respond the way we do when an economic crisis comes along? Why do we react so strongly at other times?

As I’ve said other places, as Christians we can take pretty much either position on these arguments. Christ didn’t die for us to set us free from socialist economics or from libertarian free market politics. And as such we, with moderation, are free to go the direct we think most serves God and our neighbor. Wapshott’s book is helpful in showing us that, as with Keynes and Hayek themselves, it is possible to be on either side of this debate and genuinely believe you are doing what is best to serve our neighbors.

Dr. Coyle Neal is co-host of the City of Man Podcast and an Associate Professor of Political Science at Southwest Baptist University in Bolivar, MO

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