Question

Succinctly explain the way economic thought evolved from Biblical Times to the Protestant Reformation and the implications of that evolution for society.

Answer 1

BIBLICAL “CONTRIBUTIONS” TO ECONOMIC THOUGHT The Bible (Old and New Testament combined) illustrates the Christian path to salvation. Although a formal articulation of economic theories is not set out, certain prescriptions for right economic conduct (normative economics) are described. The major tenets might be distilled as follows:

1. God is ultimately in charge of the economy, although this may not involve daily intervention, and scarcity is a problem only God can fully overcome.

2. God cedes some power to people, granting them free will.

3. God provides guidance through the law, parables, prophecies, and interventions that range from miracles to wrath.

4. Economic matters are both vital and trivial. Proper conduct is essential for salvation (at least in the Old Testament), yet pursuit of economic gain is insignificant, if not detrimental, in the grand scheme of things.

The Old Testament The Old Testament details early history, the law, and prophecies, where the law most directly affects economic behavior and outcomes. In the book of Leviticus, for example, the concept of value and possible strands of wage and price theory are described. The Lord said to Moses, “Say to the people of Israel, when a man makes a special vow of persons to the Lord at your valuation, then your valuation of a male from twenty years old up to sixty years old shall be fifty shekels of silver, according to the shekel of the sanctuary. If the person is a female, your valuation shall be thirty shekels. If the person is from five years old up to twenty years old, your valuation shall be for a male twenty shekels, and for a female ten shekels. If the person is from a month old up to five years old, your valuation shall be for a male five shekels of silver, and for a female your valuation shall be three shekels of silver. And if the person is sixty years old and upward, then your valuation for a male shall be fifteen shekels, and for a female ten shekels. And if a man is too poor to pay your valuation, then he shall bring the person before the priest, and the priest shall value him; according to the ability of him who vowed the priest shall value him

The New Testament In the New Testament the emphasis changes from the law to reconciliation and salvation through Jesus Christ. The economic focus changes as well: there are still notions of right conduct, but they are less rigid and motivated differently. The miracles of Jesus are described in the New Testament and are used to demonstrate how God transcends the known physical, political, religious, and economic laws of the time. Perhaps the miracle most obviously connected to economic concepts is the feeding of the “five thousand.” As written in the Gospel according to Mark: The apostles gathered around Jesus, and told Him all that they had done and taught. He said to them, “Come away to a deserted place all by yourselves and rest a while.” For many were coming and going and they had no leisure even to eat. And they went away in the boat to a deserted place by themselves. Now many saw them going and recognized them, and they hurried there on foot from all the towns and arrived ahead of them. As He went ashore, He saw a great crowd; and He had compassion for them, because they were like sheep without a shepherd; and He began to teach them many things.

The Effects of the Reformation on Economic Activity and Thought The theology of the Protestant Reformation does not represent a systematic body of economic thought, but it did help legitimize economic activity, including the accumulation of wealth. That dramatic shift in cultural values helped make modern capitalism possible, along with the theories that have emerged to explain its workings.

Although through Calvinism prosperity may have become the new “badge of honor,” lavish consumption and the flaunting of wealth in other than industrious ways was discouraged. Implicitly this encouraged saving, which, when combined with the drive to increase production and a more relaxed view on usury, would ultimately facilitate the accumulation of capital for industrialization. When the limitation of consumption is combined with this release of acquisitive activity, the inevitable practical result is obvious: accumulation of capital through ascetic compulsion to save. The restraints which were imposed upon the consumption of wealth naturally served to increase it by making possible the productive investment of capital

The Reformation, with its message that people are justified by faith and not by works, undermined the moral fabric of society. Catholicism had provided a set of moral laws that rapidly eroded with the Reformation. This weakening of morality had a significant impact on economic activity and thought. The economic importance of the tendency of the Reformation to lower the moral tone of society and to weaken the respect in which morality was held, can only be realized when we remember the essentially ethical nature of economic teaching in the Middle Ages. Protestantism substituted an individualistic for a corporate conception of man’s economic relation to society, and the idea of Christian solidarity disappeared with the destruction of the old Church