Editor’s Note: The following is an excerpt from There’s No Free Lunch: 250 Economic Truths, by David Bahnsen, published this month by Post Hill Press.
One of the challenges in understanding economics, or for that matter, teaching it, is first defining it. There are all sorts of subjects and disciplines where intelligent men and women disagree over particulars, but few I can think of where the basic definition of the subject is disagreeable. I am convinced that a substantial amount of the travesty of economic teaching permeating today starts with a flawed definition.
Dylan Pahman defines an economy as “the cultivation of creation, through human labor, for the provision of human needs, through relationships of exchange.” This captures the essence of the great contribution from Ludwig Von Mises — that fundamentally economics is the study of “human action.” Pahman adds the anthropological necessity to how we understand human action as the basis for economics, and he specifies the area of human action that is distinctly economic — that is, relationships of exchange.
If economics were what we are told it is today — a series of metrics and formulas intended to optimize the distribution of scarce resources — then There’s No Free Lunch would primarily be a math or science book. But it is not, because economics is not a math or science discipline.
Vladimir Lenin famously said that any business could be run by “anybody who can read and write and knows the first four rules of arithmetic.” His egalitarian worldview that desired everyone “doing the same work and receiving the same wages” only partially explains his tragically flawed view of what a business was and how it could succeed. Lenin’s fundamental flaw was not understanding the humanity of a business, which is to say, the innovation and creativity that drive enterprise.
But even that can be restated more accurately this way: Lenin (and all socialist/Marxist/collectivists) failed to understand that man is created in the image of God. Business cannot be reduced to the commoditized functions of technocratic operations, because business flows from the creative spirit of mankind, and the creative spirit of mankind comes from our status as image-bearers of God. If you get this wrong, you will get everything else wrong. Lenin is case in point.
So it is with the broad study of economics. Not only do our business endeavors in the modern context of professional pursuits stem from important truths about the human person, but so does everything that forms civilization. It has always been so.
Human flourishing is the aim of my study of economics. I do not believe that a secular view of markets, divorced from the dignity of mankind that flows out of creation, can lead to the kind of human flourishing for which our hearts yearn. A secular view of markets can be thought of as right-wing (Randian) or left-wing (collectivist), but both stand together in failing to put the focus on the dignity of the human person — a dignity understood best by viewing man as image-bearers of God. God is the creator and innovator, and man, as His image-bearer, is to be creative and innovative. If we never studied another thing about economics but understood that, we could do far, far worse.
Today, we are somehow engaged in a great debate over basic matters of freedom and agency in our market economy. Individual responsibility’s stock is trading at a lower and lower level. Class warfare is at a high, and many on the right are joining those on the left in disdain for economic achievement. A materialistic view of poverty alleviation rules throughout the culture, one that neither alleviates poverty nor solves for the woes of what truly ails mankind.
I am unwilling to view the subject of taxation or the size of government as merely “econometric.” Measurements of Gross Domestic Product (GDP) may serve a data purpose in some analysis, but they are not the aim of economic study. We care about economic growth because we care for the human person, and the human person can flourish when he is free to grow and prosper. What optimizes this aim is my desire, and what impedes this aim is my enemy. If and where increased government spending impedes future economic growth, it needs to be understood and analyzed for that purpose — not as a mere data analysis.
There are two leading trends in economics right now that must be resisted. One is the mystifying movement toward greater collectivism as a means of improving the needs of the underprivileged. It is a futile and dangerous effort, but one that can do great damage as it is embraced. The other is a sort of apathy or complacency about sound economics from those who know better. This apathy would be forgivable if economics were merely math, merely formulaic, merely academic. But it is the well-being of humanity on the line, and our recent amnesia of what the stakes are in this debate runs the risk of doing great harm to civilization.
The times call for courage. The times call for hard work. But if the demands are high, it is because the stakes are even higher. They are nothing less than the future of human liberty, which means the future of civilization.
— Henry Hazlitt
It is far too easy to lose passion for that which has enabled our abundance and prosperity when we are so engulfed in the blessings of our abundance and prosperity. Our tasting of the tree of a market economy does not actually require us to know how the tree was planted.
We do not need to understand economics in order to experience the benefits of freedom of exchange and production. But we may very well need to understand economics in order to sustain and maintain the institutional framework that enables us to realize the benefits that flow from freedom of exchange and production.
— Peter J. Boettke
The debate over economics today is not one that just threatens the fruit from the tree, but the tree itself. The ongoing maintenance of the framework that has allowed for such unprecedented prosperity requires a review of first principles and a reaffirmation of the applications that come from these principles. Engaging this cause intellectually is a great adventure, as Hayek said, but it also is a moral imperative.