06
Dec
2015
The Tension Between Economics and Religion
My Bible study partner sent me a quote from C.S. Lewis, who worried that the ancient Greeks, the Jews in the Old Testament, and the Christians in the Middle Ages all condemned interest (or usury), and yet this practice of charging interest–of trying to earn a rate of return on an investment–was the foundation of our modern economic system.
I actually discussed this (though not definitively by any stretch) way back in 2006 in a lecture at the Mises Institute. (I read the Lewis quotation around 7:55.) Through this whole video, I’m now thinking, “What jacket was I wearing? I don’t think I have that anymore.”
It’s impossible not to charge interest in one form or another, since it’s merely the value you place on future goods in terms of present goods.
If you are forbidden to lend at interest you can skip the risk of lending by just keeping your money or goods and have the same rate of return as if you loaned at zero percent.
If the borrower valued the use of the money or goods more than the amount, with interest, that he would have given up, then the borrower is hurt by the restriction on lending at interest.
The interest is being charged whether or not the money is loaned; The would-be loaner just happens to have the higher bid.
[Aside: The Greenbackers overlook the fact that the division of labor and technology allows certain individuals to make a profit by being more efficient for the same amount of money. When the value of money increases in this way, in terms of goods, it becomes possible to pay off more interest. But the value of money is not allowed to rise under a continually inflating money supply, which results in price inflation.]
Dr. Herbener – Looks just as excited as always.
Also I spot tons of empty seats. Is this because this was before the ‘Ron Paul Revolution’?
An overhead projector – I remember those things.
You should change your header at the top to ‘The personal blog of Robert P Murphy, servant of a Jewish carpenter’
I think your floppy disk story got cut short in the video. Something about you emailing yourself a file instead of carrying a floppy, and then it cuts to a different scene.
Re: the crowd, this was (what was then called) the Austrian Scholar’s Conference. It was for academics to present new papers, it wasn’t a big blowout event for the public.
Re: the anecdote, I was saying the file size of the PDF was 666k when I attached it to the email I was sending myself. I think they cut it for brevity since I talked about the same thing with the bubble sheet evaluating NYU.
Hi Bob,
You mentioned blasphemy against the Holy Spirit here, which prompted me to search several Christian sites to see what their definition of this was. All of their answers varied to one degree or another. One website gave several interpretations that (even within the same site) seemed to have minor contradictions. Would you please explain your view of the unpardonable sin? I ask because I value your interpretation.
Hey can you remind me where (ballpark) in the video I talk about that? I want to see the context.
It is about from 37:00 to 38:00.
Hi TR,
Yeah, I am not sure myself. I have always found that fascinating that Jesus said that, since we otherwise think He has covered all of our sins.
I wonder if it is something like, you need the Holy Spirit in you to transform yourself, and so if you reject the Holy Spirit, you’re definitely damned. But, I admit you could make the same argument about Jesus.
I see, this is really interesting (and kind of disquieting). I read on CARM.org that it is the specific act of believing or stating that Jesus performed his miracles through the power of the devil, but on most other sites it is interpreted as something like, refusing to accept the Holy Spirit. Thanks for your response, it means a lot!
Well right, in context when Jesus said that, it was directly after people accused Him of performing miracles that way. But then the question is, what is the more general nature of the unpardonable sin?
You guys are touching on a part of the Bible that is difficult. IN literal sense there cannot be any more blasphemy because Jesus no longer walks the earth in a mans body. So yo cant accuse Him of conducting miracles with devil power. IN a larger sense, blasphemy would be anytime you say that the Holy Spirit cannot conduct a miracle. therefore you have limited the Spirits power, exhibited lack of faith, hence lack of salvation, ultimately unpardonable sin.
Bob. Thanks for referencing your discussion on interest. I think it is right to be open about the difficulty we face with passages like Mat 5:42 and Rom 13.
Most who spoke in your Q&A were just offering their favorite “loopholes” to the difficulties you discussed. The suggestions seemed to be “all over the map” and none seemed very convincing to me. I feel like we should have better responses.
Do you feel that we have not done a very good job of providing solid systematic answers to those who argue that Jesus and Paul command us to be devout statists?
I agree OFelixCulpa. I myself am not totally satisfied with my own views on Romans 13 in particular.
Is there a reason that some libertarians have a problem with fractional reserve banking, but not with interest-bearing loans? It seems like these two practices are pretty similar. In both cases, there are more claims on money than there is actual money. In both cases, the debtor is hoping he will have the resources he needs when it comes time to pay his creditors, with no guarantee that those resources will actually appear. What is the fundamental difference here?
One is based on allowing someone to lend what they do not have to someone who has only a hope to produce something they might have whereas simply lending to someone what you do have only leaves the variable of they may fail, if they fail then that is the ‘risk’ I took in lending the money to them.
You may as well ask why Grain Operators in the 1800’s did not get the same option as banks. Why could it only be ‘fractional reserve’ with banks, why not with everything, any commodity for that matter. I think that is self evident that doing this same thing with gold, or copper, or even oil causes major issues.
I still don’t have a satisfactory resolution of this:
Economics: “It’s completely meaningless to say that someone ‘wants something more’ than another person. It’s all just ordinal preference rankings. You can’t compare subjective utility between people.”
Christianity: “Wasn’t it so epically awesome that this poor woman gave two copper coins as charity? That obviously meant a lot more to her than the thousand gold coins to the rich guy!”
Silas, the apparent contradiction bothers you more than it bothers me.
(C’mon kids, that was funny. Even Knox should be chortling.)
ROFL! Good one! 🙂
I don’t get the joke. Shouldn’t you be worrying about that apparent contradiction way more?
Really? That was witty even by non-economist standards.
The non-Christian’s resolution is clear, namely that many branches of Christianity came into existence about 1800 years prior to the introduction of subjective value theory.
The Christian resolution is that the subjective marginal value of the hypothetical widow’s two bits was almost certainly greater than the value of the hypothetical rich man’s huge donation because of its significance to her well being, based on what we see in our everyday lives.
Parables don’t always have to include a Utility Monster clause.
Thanks for the utility monster quip!
Not intended as a quip. Jesus didn’t teach with parables to express literal or economic truths any more than the authors of the gospels wrote to express historical truths about Jesus. As Obama would agree, it’s all about the narrative.
Bob,
I think you’ll be interested in the Catholic Church’s position on usury, which is not what you think it is (a blanket prohibition of charging interest) but rather a blanket prohibition of charging interest on certain kinds of loans:
https://zippycatholic.wordpress.com/2014/11/10/usury-faq-or-money-on-the-pill/
You’ll learn a lot by reading through that FAQ, even if you don’t agree with the Church’s position on the issue.
Jeff thanks, but I don’t think the Catholic Church has a blanket ban on interest. I taught history of economic thought and we got into the interest/usury distinction that Aquinas (I think?) made, among others.
Okay, so I have a bit of a different take on Romans 13:1 – 7. In order to talk about this I am going to be VERY general and I am going back to the days of Jeremiah.
In Jeremiah we have the prophecies of captivity and capture if the Children of Israel do not heed God. What does God tell them? That he has given the world into the hands of the Babylonians, Nebuchadnezzar to be honest. They are to stop their trade with Egypt and form an alliance with Babylon. This was an unpopular idea to say the least. Much of the wealth of the kingdoms came from trade with Egypt.
In this we see God giving guidance to those that will listen and telling of repercussions that will occur if they do not. In Romans 13 I do not think Paul is suggesting that ALL POWER comes from the state. But that there will always be a state in which you must submit to ( social contract if you will ). God is ultimately above all of this and God also knows that man is capricious in the formation of states and governments. All Government claims it is ‘for the people’ even those that allow slavery ( which was alive and well at the time of Christ and Paul ).
Now as God is not concerned with people’s ‘physical state’ – for instance – He allowed the People of Israel to be slaves in Egypt for countless generations, He is concerned for their mental and spiritual states. Not only that but does not God council all to come to Him so that He can give them sustenance?
Finally, lets face it, if we cannot seek God through the holy spirit and must ONLY rely on understanding the words in a language that is 2,000 years old then we are in trouble. I know God can speak to us if we listen. So it is that through this we can learn what He would have us do with this information.
As far as interest, would that not then mean that if the state allows interest that interest can be paid? Would not following that law not mean that we were against God? What if the law required us to stone the prophets? I would suggest that ‘the law’ and authority of rulers is not ‘of God’ in the way that I think people can interpret Paul’s writings. In his epistles Paul was writing to various people about SPECIFIC questions that they had.
If we had the questions that were sent, such as perhaps one of the congregation had started to say that they should not pay taxes to the state since they paid a tithe to the church and that there was only God’s authority on the Earth anyway, that the response that Paul wrote was to that regard.
Anyway, fun topics.
Regarding R13: Maybe it is prescriptive rather than descriptive? R13 suggest a government that is very limited in scope, size and influence. Essentially its only job is to punish evil and commend goodness and is to do this day and night or 24/7/365. IN other words, if government does anything other than what is prescribed, it is not a legitimate government ordained by God.