ECONOMICS

MAX L. STACKHOUSE

The field of economics encompasses the study of how natural resources

are drawn from nature and processed by human activity to become
valueadded products for consumption or commodities for exchange; the
study of how complex services are developed by coordinating human
activities so that particular services can be rationally provided, bought,
or sold; and the study of how the resulting resources are allocated, and
how the costs and benefits of these processes are calculated.
Highly specialized subdisciplines of this vast field developed after the
Industrial Revolution, the rise to social dominance of the modern
business corporation, the sharp debates between capitalist and socialist
theories during the nineteenth and twentieth centuries, and the
increased globalization of the contemporary world. Econometrics seeks
to measure actual processes and their consequences in a delimited
institutional range—a family, firm, nation, industry, or segment of the
population such as a race or a class. Regression analysis seeks to
develop models that can interpret the relative effects of a variable or a
set of variables.
Other subdisciplines focus on policy-making and are intended to bring
desired social results. Macroeconomics, for example, focuses on tax or
other governmental policies that aim to enhance development or public
services, reduce poverty or inequality, or control behaviors that damage
the common welfare (crime, environmental damage, drug abuse, child
pornography, health or safety, etc.). Microeconomics seeks to enhance
the efficiency, productivity, profitability, and viability of companies that
operate in various markets. Labor economics, which often engages in
advocacy, studies both political and business policies from the
standpoint of their effects on employees and workers’ unions. Despite
their differences in focus, experts in all economic subdisciplines agree
that without a sound economic infrastructure, societies falter and
people suffer.

History
Economic activity has always been a part of human existence. Hunting,
gathering, and cooking have taken place since humans first appeared.
Production by craftsworkers to supply goods for trade and for
merchants has been present in all of recorded history. Early theories of
economic life date back to discussions about farmers and peddlers in
the Arthashastra, an Indian treatise on governance from about the third
century B.C.E. The concept of shangye (commercial occupation) in early
Confucian texts sought to spell out the relationships of economic actors
to political and social life. Economic theories also turn up in ancient
Greek writings. Plato (c. 428–347 B.C.E.) saw the foundation of The
Republic as rooted in economic life (Book 2), and in Politics Aristotle
(384–322 B.C.E.) developed the idea of the “management of the
household” (oikonomia) and applied it to the polis.
Moreover, economic issues were taken up by religious prophets and
moral philosophers in allknown cultures, and in the West the blend of
biblical themes and Greek philosophy has decisively shaped the social
and ethical perceptions of economic life and policy. That is so despite
the fact that economics in its modern mode has sought to differentiate
itself from these social, ethical, and spiritual philosophies. Indeed, it
has become a truly autonomous science on the model of the natural
sciences since, at least, the French physiocrats and the English post-
mercantilist economists from Adam Smith (1723–1790) through the
utilitarians to John Maynard Keynes (1883–1946) and the German
socialists and the Austrian libertarians. It is these modern Western sets
of perspectives and debates that have most shaped what is today
understood as the discipline of economics.
Economics as a discipline, for all its achievements, is not identical to
economic life. The heirs of Adam Smith, and those of Karl Marx (1818–
1883) or Friedrich Hayek (1899–1992), have developed refined theories
that describe how the “rational choices” of persons, families, classes,
governments, businesses, or market mechanisms (such as a stock
exchange, employment and wage rates, or a futures market) typically
manifest themselves, although economists know that they are working
with abstract models. The great advantage of such models is that they
can be developed and applied in many concrete circumstances by ruling
out idiosyncratic and extrinsic contingencies that may also influence
decisions or policies but are not directly economic factors. The best
economic theories not only have a mathematical and philosophical
mark of elegance, they also have a high degree of reliability when
applied to specific questions and adjusted to specific contexts.
These models work best in an environment that shares a common
society, a common culture, and, since they deeply influence the
perceptions and expectations of persons and communities, something of
a common set of religious convictions.
That is because the “conditionalities” of behavior, what strict economic
theory considers to be idiosyncratic or extrinsic contingency, are
different where divergent cultural, social, or religious convictions shape
morality in distinctive ways. It is true that no one wants to be cheated
and that stealing or exploitation is recognized as wrong in every culture,
even if it occurs. And it is true that people seek the well-being of the
persons or groups that are most important to them in all sorts of social,
cultural, or religious conditions. But it is also the case that a
polygamous tribal person, for example, or a Hindu caste member, a
dedicated leader of an Islamic brotherhood, or a Buddhist nun will have
different senses of what constitutes the well-being of persons and
groups. It is, thus, not at all surprising that the banking systems in
different parts of the world are operationally different, that corporations
are formed in distinctive ways and led with diverse understandings of
the proper role of leadership, and that workers variously evaluate their
obligations to firm, family, nation, political ideology, and faith.

Basic disputes and issues

The attempts to account for these contextual differences are among the
key subjects of cultural studies, the sociology of religion, and
comparative religious ethics to the extent that these fields bear on
economic matters; the issues are paralleled by political, legal, and
aesthetic studies. In the West, John Locke (1632–1704) and Thomas
Hobbes (1588–1679) can be considered exemplars of a primal
disagreement about how economic life works in society. For Locke,
persons have a right to their “proprium,” that property that they
appropriate from nature by honest labor and that is necessary both for
their individual existence and for the support of their family. On these
bases, people form a civil society with others and construct a political
society for the protection of their own and others’ well-being. They are
aided in this effort by the fact that all persons can, in some measure,
recognize the “self-evident truths” of a universal moral law, guaranteed
both by reason and by Christian scripture.
If the political society does not work, or violates the moral law, the
people have a right to alter it to restore their economic and social well-
being. For Hobbes, perpetual conflict over scarce resources could not be
resolved by either reason or religion, and thus a sovereign had to
impose a collective order by force. Politics must control economics, and
no rebellion was allowed. The obvious and brutal conflicts of interests,
ideologies, and religions demanded state power so that economic well-
being could be obtained beyond the natural state of war. In this
paradigmatic dispute, one finds not only the question of the relationship
of the bee to the hive in economic life, but the issue of the relative
priority of civil society to political society as determinants of economic
existence.
A second set of disputes can be seen in the controversies of those who
follow Georg Wilhelm Friedrich Hegel (1770–1831) and those who follow
his disputatious disciple, Marx. Hegel held that spiritual or mental
(geistliche) realities fundamentally shape material realities in a decisive
dialectic.
Marx, famously turning Hegel on his head, argued that it was not
“superstructural” factors that shaped “substructural” factors, but
rather the material realities of life that determined human
consciousness.
Any correlation between religious orientation and economic life was an
effect of economic forces that evoked the religious sighs of the people,
while those who had control of the means of production perpetuated
these dreams to control the workers.
These theories combine in mixed ways. A version of the materialist view
can be found among various contemporary disciples of Charles Darwin
(1809–1882). Some of them, including the Nobel Prize winning
economist Gary Becker (1930– ), hold to an “evolutionary psychology” in
which individuals make “rational choices” about not only business
matters but also about whom to marry and whether to have children on
the basis of their calculation of material interests. A collectivist view of
economic behavior is set forth by Edward O.
Wilson (1929– ) in his sociobiological theories; this view sees religion as
an illusory cultural by-product of collective material and instinctual
dynamics.
More influential in the understanding of the relationship of religion and
economic life is the work of Max Weber (1864–1920). His five volumes
on the Sociology of Religion and his three volumes on Economy and
Society, written early in the twentieth century, argued that different
religions have distinct effects on economic (and political) life and on
various classes and occupational groups in society.
Weber saw not only that the late medieval Roman Catholic faith had an
economically positive influence in the emerging free cities of northern
Europe in the very early stages of modernity, but that the Protestant
ethic gave impetus to the formation of what is now known as the break
with traditional, feudal economies and the development of modern
capitalist industries. Weber’s arguments were doubted during the harsh
realities of the Great Depression (which saw greater use of Marxist
theory and the rise of Fascism), and were often ignored after World War
II when Keynes’s economic theories came to ascendancy, but Weber’s
work regained attention after the collapse of the Soviet Union in the
early 1990s and the resurgence of religion all over the world. Today, few
economists think that Weber’s treatments of India and China were fully
adequate, and questions about aspects of his views of Catholicism,
Protestantism, and Islam are manifold. Yet, it is widely held that the
questions he raised and the methods of investigation he developed are
among the most definitive for the ongoing discussions between religion
and economic life.
In a postmodern age, the predicted certainties of inevitable
secularization that seemed beyond dispute, of a purely scientific view of
reality that could provide firm foundations for progressive public policy,
clear-minded corporate decisionmaking and personal rational choices
without illusion, and the end of both ideology and religious myth seem
positively silly. Indeed, it turns out that a deep convergence of inter-
contextual reasonability and moral conviction, not equally available in
all religions, are critical for the economic wellbeing of persons and
peoples. The body of contemporary literature that points in this
direction is found in a host of Weber-influenced studies that document
the interactions of religion and economic life, and point out that the
basic assumptions behind contemporary secular economic theory are,
in fact, echoes of religious convictions that are well, but not fully,
masked.

See also CULTURE, ORIGINS OF; MATERIALISM; MORALITY

Bibliography
Berger, Peter. The Capitalist Revolution: Fifty Propositions about Prosperity, Equality, and Liberty.
New York: Basic Books, 1986.
Harrison, Lawrence E., and Huntington, Samuel P., eds. Culture Matters: How Values Shape
Human Progress. New York: Basic Books, 2000.
Küng, Hans. A Global Ethic for Global Politics and Economics.New York: Oxford University Press,
1999.
Landis, David S. The Wealth and Poverty of Nations: Why Some are So Rich and Some So Poor.
New York: Norton, 1997.
Nelson, Robert H. Economics as Religion: From Samuelson to Chicago and Beyond. University
Park: Pennsylvania State University Press, 2001.
Sen, Amartya. Development as Freedom. New York: Anchor, 1999.
Stackhouse, Max L.; McCann, Dennis P.; Roels, Shirley J., eds. On Moral Business: Classical
and Contemporary Resources for Ethics in Economic Life. Grand Rapids, Mich: Eerdmans, 1995.
Stackhouse, Max L., with Peter Paris, eds. God and Globalization, Vol. 1: Religion and the
Powers of the Common Life. Harrisburg, Pa.: Trinity Press International, 2000
Stackhouse, Max L, with Don S. Browning, eds. God and Globalization, Vol. 2: The Spirit and the
Modern Authorities. Harrisburg, Pa.: Trinity Press International, 2001
Stackhouse, Max L., with Diane B. Obenchain, eds. God and Globalization, Vol. 3: Christ and the
Dominions of Civilization. Harrisburg, Pa.: Trinity Press International, 2002.
Weber, Max. Economy and Society: An Outline of Interpretive Sociology, trans. Ephraim Fischoff
and others, eds. Guenther Roth and Claus Wittich. Berkeley: University of California Press,
1978.
Weber, Max. Sociology of Religion, trans. Ephraim Fischoff. Boston: Beacon Press, 1993.