Economics 101: Image

Then God said, “Let us make man in our image, after our likeness.” – Genesis 1:26

God thinks and acts, and does so with purpose:

• “God created the heavens and the earth.” – Genesis 1:1 ESV
• “God sent me before you to preserve life.” Genesis 45:5 ESV
• “For God so loved the world, that he gave his only Son.” John 3:16 ESV
• “even as he chose us in him before the foundation of the world, that we should be holy and blameless before him.” Ephesians 1:4 ESV

Since “God created man in his own image,” man also thinks and acts with purpose:

• “for you know that the testing of your faith produces steadfastness. And let steadfastness have its full effect, that you may be perfect and complete, lacking in nothing.” – James 1:3-4 ESV
• “Sing praises to the LORD, who sits enthroned in Zion! Tell among the peoples his deeds! For he who avenges blood is mindful of them; he does not forget the cry of the afflicted.” Psalm 9:11–12 ESV
• “One thing have I asked of the LORD, that will I seek after: that I may dwell in the house of the LORD all the days of my life, to gaze upon the beauty of the LORD and to inquire in his temple.” – Psalm 27

God acts because he acts. He has no needs to be met. He is not unsatisfied with what He has. Or who He is. All that is required to satisfy God is contained within Him.

Man, however, is quite different. He is not self-sufficient. He has desires and needs that can only be satisfied from without. Because of this, man acts, and only acts, to better his condition, i.e., to gain something he lacks. Here are a few quotes that help explain this:

“All men seek happiness. This is without exception. Whatever different means they employ, they all tend to this end. The cause of some going to war, and of others avoiding it, is the same desire in both, attended with different views. The will never takes the least step but to this object. This is the motive of every action of every man, even of those who hang themselves.” – Blaise Pascal

“You, being a rational person, will always choose what seems to you to be the right thing, the wise thing, the advisable thing to do. … Our choices … are determined by influences and considerations which we find attractive and compulsive, as the case may be.” – John Gerstner

So what does all this have to do with economics?

Francis Wayland says that science is “a systematic arrangement of the laws which God has established…” When we think of science, we tend to think of the study of the laws that God made to guide the operation of the natural world. But economics is also a science that focuses on the study of God’s laws. Economics is different from the natural sciences, though, because it studies the laws that God made to guide the action and interaction of man. And all of those laws derive from the fact that man acts because he is made in the image of God.

Another way of putting this is that human action is the axiom that is the basis for all economic laws: supply, demand, diminishing marginal utility, increasing marginal costs, etc. All economic laws are derived from the simple fact that man acts.

This means that laws of economics are a priori; based on who we are, not on what we observe. We do not have to observe anything about the world to know economic laws are true. In fact, observation cannot prove or disprove economic laws. Instead, economic laws operate in the same fashion as the laws that govern geometry.

Everyone has heard of the Pythagorean Theorem, which can be expressed in the equation a2 + b2 = c2. The proofs of the theorem are not made by observation, i.e., measurement, but instead are derived from the properties of a right triangle, such as proportionality. Similarly, economic laws were not discovered by observation, they instead were derived from the axiom of human action.

Interestingly, though, while economic (or geometric) laws are not discovered by observation, they are descriptive of reality. They really describe how people interact with each other in the marketplace. These two quotes provide further insight into this:

“The existence of a distinct science of economics can be traced back to the discovery that there is a predictable regularity to the interaction of people in society.” – Gene Callahan

“The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups. – Henry Hazlitt

Economic laws really do tell us how the world works. And their regulatory provides us with the concept of the immutability of economic laws: economic laws, like the law of demand, can no more be broken than the law of gravity. Economist Art Laffer describes immutability like this:

When people break the laws of the city or state where they live, they usually have to face consequences. They may pay a fine or have to do community service. In more severe cases, they may have to spend time in jail. But there are those situations where criminals get away with breaking the law because the crime cannot be traced back to them.

This is too often the case when it comes to attempts by policymakers to break economic laws. Of course, try as they may, they cannot be successful. Economic laws cannot be broken—only ignored. Thus these failed attempts leave a convoluted trail of unintended consequences harming people who don’t understand what went wrong or who caused the problem.

Whatever their political leanings may be, all policymakers greatly benefit from a thorough understanding of economics. Perhaps the greatest lesson to be learned from economic laws is that there are limits to what can be accomplished in the political realm. Learning where those limits are, and what is better left to individuals in the marketplace, will go a long way toward eliminating the unintended consequences that cause harm to so many.

Laffer kindly calls the consequences of many of our political laws that violate our economic laws “unintended.” However, the consequences of policies such as the minimum wage, paying mothers to have baby’s without fathers, and occupational licensing are too well known to make their consequences in most cases unintentional.

Christians should understand that economic laws were made by God and that we can use Scripture to help us understand what public laws and policies comport with Scripture. The failure of Christians to do this has led to great tragedy and sorrow, particularly among minorities in American today.