“Nobody knows anything.”[1]

William Goldman, not to be confused with William Golding, author of Lord of the Flies, sums up the problem of attempting to be certain about the success of a film—“Nobody knows anything.”[2] Goldman should know. He was a successful novelist and screenwriter with several Academy Awards and big screen blockbusters to his credit.[3] Goldman was not saying that Hollywood types are generally ignorant or stupid. He was pointing out that they are not omniscient. They don’t have enough knowledge about people and their tastes to know whether a film will be a success. It’s always been that way, and it will always be that way.

For example, Disney executives sold off much of the investment rights to The Sixth Sense (1999) to Spyglass because they did not believe the film had commercial viability.[4] After finishing the filming of Jaws, nicknamed “Flaws” by the crew, Richard Dreyfus commented on a talk show that it was going to be a flop. The star of the show, a 40-foot mechanical shark, was beset with problems and hardly appeared in the movie. Both movies exceeded the expectations of the studio executives. The Sixth Sense, costing just $35 million to make, has earned more than $665 million in gross receipts worldwide. Jaws has brought in $470 million since its release in 1975.

We can apply Goldman’s film thesis to economics. On the one hand, nobody knows whether a new entry into the marketplace will be successful. Pet rocks made somebody a ton of money, while the superior Beta tape format sank almost without a trace. Chris Anderson, editor of Wired magazine and author of the book The Long Tail: Why the Future of Business is Selling Less of More (2006), describes how “at the beginning of every season, retailers always try to guess what the popular color is going to be [for Kitchen Aid products]. And there’s always one they miss. [In 2005 it was tangerine. Nobody knows why, but it was tangerine.”[5] Henry Ford didn’t have this problem since between 1913 and 1926 the Model-T was only available in black. There is a simple answer to the question why the retailers didn’t know what color will be popular, they’re not God. Like the rest of us, they are finite, fallible, and fallen creatures who don’t know everything. “We live in an imperfect universe. We are not perfect creatures, possessing omniscience, omnipotence, and perfect moral natures.”[6]

Christian Economics in One Lesson

Christian Economics in One Lesson

Christian economics must begin with the issue of ultimate ownership. This sets it apart from modern economic analysis, which begins with the issue of scarcity. Second, this leads to the issue of theft, which in turn raises the issue of ethics.

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What’s true of individuals is also true of groups of individuals who attempt to plan the economy based on what they think they know about what people need, want, and should have. So, while “nobody knows anything” in terms of what will succeed in the marketplace, there are fundamental first principles that we can know that tell us why economics works the way it does. The most fundamental question is, How do we account for these fundamental first principles? Are they derived from reason? But all economists claim they are using reason in the formulation of their paradigm. For example, as Thomas Sowell writes, “There are basic propositions and procedures in economics on which a Marxist economist like Oskar Lange did not differ in any fundamental way from a conservative economist like Milton Friedman.”[7] Then there’s the question of whose definition of reason is most reasonable? The French elevated reason to the status of a god with bloody results. The more fundamental issue is how do we account for the reasonableness of reason and the logic of logic in a naturalistic worldview where the only thing that matters is matter?

What is Economics?

Thomas Sowell defines economics as “the study of the use of scarce resources which have alternative uses.”[8] While this is a good textbook definition, it assumes too much. It doesn’t explain the source of resources, why they are scarce, and why we should care at the moral level. We need a more basic definition going back to fundamentals.

The word economics is derived from two Greek words: oikos, meaning “house,” and nomos, meaning “law.” Almost all modern definitions of economics, like contemporary definitions of “government,” assume that the State, civil government, is the starting point in understanding economic theory and practice. To grasp these, so the argument goes, the role the State plays in economic decision making in the allocation of scarce resources must first be considered. For many, this is a reasonable and moral starting point when resources are scarce, and people have needs.

On the other side of the economic spectrum, classical liberals, libertarians, anarcho-capitalists,[9] and even some conservatives contend that the means of production should be privately owned, economic decisions also should be made privately with goods and services exchanged in a free market with little or no positive state intervention. The role of civil government in economic matters should be minimal, being limited to the protection of individual rights and property. This follows the older definition of the word “economy” found in Noah Webster’s 1828 American Dictionary of the English Language: “**Economy—**Primarily, the management, regulation and government of a family or the concerns of a household.” The use of “political economy” as a definition does not appear until the eighth and ninth entries.

To understand Webster’s emphasis on the family in the area of economics, it’s important to study his definition of “government” to see that its political aspects follow self-government:

“GOVERNMENT, n. 1. Direction; regulation. ‘These precepts will serve for the government of our conduct.’ 2. Control; restraint. ‘Men are apt to neglect the government of their temper and passions.’ 3. The exercise of authority; direction and restraint exercised over the actions of men in communities, societies or states; the administration of public affairs, according to the established constitution, laws and usages, or by arbitrary edict. ‘Prussia rose to importance under the government of Frederick II.’ 4. The exercise of authority by a parent or householder. Children are often ruined by a neglect of government in parents. ‘Let family government be like that of our heavenly Father, mild, gentle and affectionate.’ Kollock. 5. The system of polity in a state; that form of fundamental rules and principles by which a nation or state is governed, or by which individual members of a body politic are to regulate their social actions; a constitution, either written or unwritten, by which the rights and duties of citizens and public officers are prescribed and defined; as a monarchial government, or a republican government. ‘Thirteen governments thus founded on the national authority of the people alone, are a great point gained in favor the rights of mankind.’ J. Adams.”

For Webster, government is first “self-government” which extends to the government of the family. Civil government has its God-ordained role in our world, but individuals, families, and their economic decisions are neither defined nor regulated by it. Webster’s definition assumes a moral order based on a biblical worldview. He begins with the presupposition of God’s government over all things and the delegation of that government to His created order bound by specific laws.

Modern economic theory presupposes that markets need to be regulated so there will be a “just” accounting for everyone. If there is inflation (an increase in the money supply), interest rates are raised. If the economy is sluggish, governments will increase the supply of money to stimulate growth. If one segment of society is being left behind economically, taxes will be raised and income redistributed to smooth out the inequities in the name of “social justice.”[10] Such an approach, as R. J. Rushdoony shows, assumes the divine attribute of omniscience for the State.

It presupposes a sovereign political state with a monopoly of money creation. It presupposes an omniscience on the part of the state and its functionaries that is utopian. It has awarded to the state, by default, the right to control the central mechanism of all modern market transactions, the money supply. It has led to the nightmare of inflation that has plagued the modern world, just as this same sovereignty plagued Rome in its declining years. In the case of ancient Rome, it was a reasonable claim, given the theological presupposition of the ancient world (excluding the Hebrews and the Christians) that the state is divine, either in and of itself or as a function of the divinity of the ruler. Rulers were theoretically omniscient in those days. Even with their supposed omniscience, their monetary systems were subject to ruinous collapse. Odd that men today would expect a better showing from an officially secular state that recognizes no divinity over it or under it. Then again, perhaps a state like this assumes the function of the older, theocratic state. It recognizes no sovereignty apart from itself. And like the ancient kingdoms, the sign of sovereignty is exhibited in the monopoly over money.[11]

The advocates of a free market and those who declare for a managed market claim to promote justice with their policies. Again, there is little argument over wanting to establish a just marketplace, the question is, how do we account for justice? What is its source? Mutual consent? Public opinion? Enlightened self-interest? Those involved in economic transactions believe and hope for an agreed upon set of rules (laws) that apply to all equally, especially since “we live in an imperfect universe.” Like reason and justice, how do we account for the validity of these rules?

The Maker vs the Takers

The Maker vs the Takers

Theologians virtually ignore the economic commentary in the Bible. In the few cases where it gets any attention, economic commentary in the Gospels and other New Testament writings tend to lapse into simplistic class warfare nostrums. Liberation theologians import Marxism wholesale (but they try to sell it retail) into theology.

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[1]William Goldman, Adventures in the Screen Trade (New York: Warner Books, [1983] 1989), 39, 41, 48, 459: “Goldman was talking about the film business and picking winners. His dictum applies to any industry where the results are affected by the interaction of huge numbers of people. Sort of like the property and stock markets and the business world. After the event economists tell us why the economy changed. Bankers explain movements in interest rates. Stockbrokers clarify market gyrations. All with 20/20 hindsight. Popular prognosticators make dozens of predictions then point to the ones they got right. . . . The keyword is ‘knows.’ Knowledge! Facts! Data! Wisdom! If analysis could give accurate predictions, we wouldn’t have booms and busts. Pricing information would be accurate. But certainty is impossible”: www.wealthesteem.org/nobody-knows-anything-william-goldman (August 20, 2002).

[2]William Goldman, Adventures in the Screen Trade (New York: Warner Books, [1983] 1989), 39.

[3]Goldman’s filmography is long and impressive: Butch Cassidy and the Sundance Kid (1969); The Stepford Wives (1975); Marathon Man (1976); The Princess Bride (1987).

[4]James B. Stewart, Disney War (New York: Simon & Schuster, 2005), 334.

[5]Chris Anderson interviewed by Rick Newman, “Inside the ‘New Economy,’” U.S. News & World Report (July 24, 2006), 19.

[6]Gary North, “Gold’s Dust,” in An Introduction to Christian Economics (Nutley, NJ: The Craig Press, 1973), 46.

[7]Thomas Sowell, Basic Economics: A Citizen’s Guide to the Economy, rev. ed. (New York: Basic Books, 2004), 4.

[8]Sowell, Basic Economics, 1.

[9]An anarcho-capitalist “supports the idea of natural law, rejects the nominalist tradition, rejects relativism both on ethical and epistemological grounds, supports entrepreneurship and free market, praises division of labor and monetary economy, builds its morality on the nonaggression axiom, rejects the necessity for economic regulation, undermines the government itself by demonstration of its failures, and shows how society is shaped by human action.” Mateusz Machaj, “A-Team Stands for Anarcho-Capitalism” (July 17, 2006): https://mises.org/wire/team-stands-anarcho-capitalism

[10]See Gary DeMar, “Is Social Justice Just?,” in Liberty at Risk: Exposing the Politics of Plunder (Powder Springs, GA: American Vision, 2003), chap. 11.

[11]Gary North, “The Myth of Insufficient Gold” (October 3, 2003): www.lewrockwell.com/north/north213.html