For a Divine Economy, follow the Old Testament

Ross Gittins, June 2006

Most of us assume the solution to problems with the economy lies in coming up with something new. But a group of Christian thinkers in Cambridge believe the answer lies in getting back to the economic model laid out in the bible.

Don’t laugh. This is Easter Monday. And it’s a group with more PhDs than you’ve had haircuts. But you’re allowed to be amazed. The things these guys want to do would shock a lot of Christian economists and business people. They’re from a Christian research group, the Jubilee Centre, founded by Michael Schluter. Dr Schluter is better known as the director of the Relationships Foundation.

A biblical economic model?

You didn’t know there was an economic model in the Bible? That’s because it’s in the Old Testament, part of the laws laid down for the conduct of Israelite society. According to the economist Paul Mills, when you consider Old Testament law as a whole, ‘an integrated economic model emerges which satisfies the prerequisites for both efficiency and fairness without the wasteful and damaging side effects entailed in the current Western economic model.’

Our present compromise between relatively free markets on the one hand and, on the other, a sizeable role for the state in the form of redistributive welfare and regulation, has a number of worrying features that are undermining its long-term viability. ‘The workings of the market system tend to commercialise every relationship and erode family and community structures by emphasising rootlessness, mobility and the 24-hour society,’ Dr Mills says.

And the complex system of taxation, redistribution and welfare has various well-known shortcomings: taxation distorts people’s behaviour, much effort is expended on compliance and collection, and then the welfare system distorts recipients’ behaviour. ‘Rather than a system of taxation and redistribution after the process of wealth creation, the initial allocation of wealth needs to be roughly equitable and maintained over people’s lifetimes,’ he says.

Labour, land and finance

The key to understanding the biblical model is that the production and sale of goods is almost entirely left to the unfettered operation of market forces, while the laws governing the use of labour, the allocation of land and the role of finance are tightly drawn so as to ensure a minimum level of income and wealth for all. The rough equality of wealth, income and opportunity are encouraged without the need for a large centralised state. And the interests of ‘finance’ are made subservient to those of interpersonal relationships.

Apart from the ceremonial food laws and the observance of the Sabbath, the only constraints on trade in biblical law were the exhortations to merchants to maintain fair weights and eschew adulteration. Without a lot of redistribution and regulation, there was a capped and proportional rate of income tax. Tithes of 10 per cent of income were levied – although the number of tithes per year could vary. There was a well-defined code of property law and debt collection, including fines for theft and bonded labour for the repayment of debts.

But here’s where it gets interesting. When the Israelites first entered the land of Canaan, the land was divided by tribe then clan and family, ending up relatively even per person. A freehold market in agricultural land was prohibited, but a leasehold market was permitted, thus giving families in dire straits access to the market value of their land.

But every 50 years there was a Jubilee year, when the ownership and occupation of land had to revert to the traditional family owners, regardless of who’d leased the land in the intervening period. Thus the Jubilee ensured that the initial extended family structure was preserved and rooted in an ancestral locality. It prevented the accumulation of large estates by the wealthier families or foreclosing moneylenders and also prevented the development of permanently landless poor.

Turning to wages, the welfare provisions of biblical laws should have kept them above subsistence levels. Employers were required to pay wages punctually and be responsible for workers’ safety. And no one was to work on the Sabbath. Then, of course, there’s the scripture quoted by Christ: ‘the labourer is worthy of his hire’.

Now finance. It was prohibited to charge interest on loans, whether for commercial or consumption purposes. And all debts – and debt servitude – were cancelled every seven years. The prohibition on interest encouraged both non-interest charitable lending and risk-sharing business finance. That is, the lender would be rewarded with a share of the business’s profits – but would also share any losses. This was considered a less exploitative way of providing funds to firms.

Applying biblical insights

So by these unusual means – the Jubilee, the Sabbath and the laws preventing usury and permanent indebtedness – were created the conditions necessary to give economic independence to the poor and to place a brake on the economic power of the rich.

‘Of course,’ Dr Mills concedes, ‘the application of these biblical insights to contemporary conditions requires great care. Modern conditions and technologies are very different. And you’d have to win broad public support, not just seek to impose things by religious authority. Nevertheless, the practical wisdom of the model itself is too valuable to be dismissed as lightly as it has been,’ he says.

Take, for instance, the Jubilee year, which not only recognised the contribution of widespread property ownership to economic freedom, but underlined the importance of rootedness and a sense of place. ‘It is only through the physical and prolonged proximity of extended family members and neighbours that society can deliver care of dependants without ever greater reliance on the state or on purchased “care”. Yet current economic thinking encourages workers to be as geographically mobile as possible, leading to prolonged disparities in regional incomes and to family breakdown,’ he says.

So you wouldn’t try to reinstitute the Jubilee literally but government policy could be more explicitly geared to encouraging regional rootedness and identity. For example, students could be encouraged to study at local universities through preferential loan terms.

Or, take the Sabbath. The principle of having one day of rest in every seven ‘ensures that work and consumption can’t be the all-encompassing object and idol of our lives. The requirement to rest from work is a necessary antidote to the prevalent materialism of Western society that believes getting and spending to be the goal of existence.’

And wider benefits to society flow from a shared day off, we’re told. It enables families and communities to develop a rhythm and routine to their lives and plan shared leisure activities with other family members. Without a common day off, families in particular have difficulty co-ordinating their time off, leading to stress and a higher divorce rate. ‘It is barely credible that politicians and employers pay lip service to “family-friendly” employment practices but do not promote Sunday as a shared, common day of rest,’ Dr Mills concludes.

This article was published on 17 April 2006 by the Sydney Morning Herald. Ross Gittins is the Economics Editor.

 

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Category: News and Reviews

June, 2006

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