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Economy Restored: A Blueprint for a Biblical Model of Government

By Ian Hodge
November 01, 2006

We all know something is wrong with the economy. But how would it look once it was put right? Would there really be little or no taxation? Would money be gold and silver, or paper and plastic as it is in most parts of the world today? Is negligence a legitimate ground for fraud? What would happen to Medicare and Medicaid? And would the civil authorities have the power of eminent domain?

Consider, for example, Enron. Not the company, but what it has come to stand for. Corporate crime. Or, at the very least, corporate mismanagement. Promises to investors and shareholders that cannot be met and could never have been met at the time they were made. And Enron is known not because it is a unique situation, but because the numbers of people and the amount of money involved were huge.

Presuppositions: The Regulative Principle

In order to address these issues, however, it is imperative to clear the air over one important presupposition. Everyone agrees that somehow the Bible contains answers to the issues that define a Christian economy. But how the Bible ought to be read is a critical consideration.

For example, in the debate of the Regulative Principle, the question is whether or not those things that are done in a worship service should be specifically defined in Scripture, or whether things can be included that have not been specifically excluded in Scripture.

The same debate is necessary in consideration to a Biblical economy. Can the government do anything it likes unless it is expressly forbidden in the Bible? Or must it confine itself to those things that are clearly defined in Scripture?

Take the example of the ambulance service. There is no particular command in the Bible that says the government should operate the ambulance service, as governments do in many parts of the world. On the other hand, there is no express prohibition in the Bible that it should not do this. Because there is no prohibition, would it be legitimate for the government to run the ambulance service?

How you read the Bible, then, will govern the kind of answers you come up with in defining a Biblical economy. It is the perspective of this writer that the Regulative Principle approach is the only way that the priority of the family can be maintained and property rights can be established in favor of the family.

This way of thinking, incidentally, is not new. The principle of federalism is built on the notion that a constitution is a limiting document. It limits the government to do those things and only those things that are expressly set down in the constitution. In countries such as the U.S.A. or Australia today, this issue is quite prominent, as new interpretations of the constitutions of those nations are offered to allow the federal governments to do things that were never conceived by the founding fathers.

When you read the Bible, you cannot help but come to this conclusion. It is apparent that in Eden there was no need for human government. God was in direct contact with His creation, and Adam and Eve were quite capable of taking leadership from Him.

The Fall, however, changed this. Now man’s desire was to be his own god, making up his own rules. The Creator God could take a backseat from now on. His rules were no longer needed. Man had come of age.

In addressing this problem, the problem of sin, the Bible is quite clear. It is God’s law that defines righteousness and justice. It is God who determines the boundaries of what men may and may not do, and what they should and should not do.

In Eden, however, even after the Fall, there was no civil government established by God. Only in the exposition of the law in Exodus, for example, do we see the pattern of civil government established. It had a limited role, to punish evil. It was not a legislative role; it was not an administrative role; it did not provide services of any kind except one: judiciary. And even in this it was limited, with the people themselves required to participate in the apprehension and punishment of those violating the law of God.

A Biblical Economy

The key headlines of the Biblical economy are thus the moral requirements that fall out of the Ten Commandments. First, the necessity of complete honesty in business dealings. This is key to any economy. Even in a Biblical economy, man’s knowledge is at best limited. People might have good intentions, but negligence can and should have a role to play in any economy.

Negligence can have different aspects. We might not intend to break a person’s leg, but if our negligence in some way causes it, should we be liable for the expense involved in having it treated? A person might have the best intentions when asking others to invest in his business venture, but if he is negligent in the claims about the business prospects, or negligent in omitting certain key points that eventually cause the investors’ loss, should the businessman be held accountable for the loss of the investors? Does caveat emptor mean that the Biblical entrepreneur is exempt from negligence issues?

Can a business owner claim that the value of his shares is $10 when the market says they are worth $0? Or rather, should he make such a claim when this abstraction called the market disagrees with him? After all, doesn’t the free market economy allow each of us to have a subjective opinion that may be radically different from the next person’s?

The answer to this one is simple. You can have a different opinion of the value of your shares. Rushdoony highlights the nature of fraud when he says, “A man may willingly purchase an item under the impression that it is what it is represented to be, but fraud [misrepresentation – IH] on the part of the seller makes it clearly theft.”1 Fraud can take place not only in the thing represented, but also in relation to its value.

Now it might be argued, Why would anyone invest under such circumstances? Surely prudence would govern investors, and if they were foolish enough to invest without doing their homework, they deserve what they get.

A Biblical economy will continue to have a Department of Securities whose role it will be to determine if negligence has occurred, the making of unwarranted or false claims about an enterprise or its management and using that to attract investment capital. And their role would be to implement the principle of restitution so that those who mislead might be held responsible for their misleading advice.

The restitution laws of Scripture establish the idea that at the end of the day we are responsible in some way to help our neighbor keep what he has. If we steal, then we must repay what we stole. If we are negligent—intentionally or otherwise—we are still responsible to make sure we don’t disadvantage our neighbor in any way.

Second, however, is the deeper question of who should operate this Department of Securities. There is no reason that this needs to be a function of the state. It could—and should—be an activity of the free market. There is a need. Individuals could provide this service.

But who will enforce private judgments? There is clearly a role here for government, not as prime investigator, but as enforcer of judgments that are handed down in private arbitration. This fits within the description of Romans 13 that the civil authorities are to punish evil.

Third, now that there is a role for government, how will the government be paid? Does it need to tax? If so, how much? To answer this question, you only need to consider what are the functions that God has given to the government? The government appears to have a very limited role. In fact, it is strictly confined to jurisdiction in matters of punishable offenses. But even here it is limited to one of judgment only. Execution, for example, was to be undertaken by the community. The people in a local community, starting with the witnesses, had the responsibility of inflicting punishment upon a murderer.

If this is the limited role of government, then it is not so easy to see why there is no taxation as we know it for the political state in Scripture. Now there were lots of payments in the Old Testament of one kind or another. But they were invariably tithes or atonement payments. Even the poll, or head, tax was not a tax to government. It was atonement money paid by those who reached a certain age. The fixed amount nominated by God did not go to pay for civil services; it was to be used in the tabernacle of meeting (Exod. 30:11–16).

It is difficult to get from this picture to the idea that somehow the government should have money for public education, health, roadwork, and national security. Again, do we look for those things expressly commanded, or those not prohibited?

Given there is an identified role for judicial judgment somewhere in the community, how should these services be paid for? It seems the Bible is silent on an express command. Therefore, we can only conclude that those who make use of the service should be the ones to pay for it.

But direct taxation is not the only form of taxation. Historically, charging fees on imports and exports has been a fund-raising tactic of government. But if the Regulative Principle applies, it is difficult to find a directive to those exercising judicial judgments that they can charge foreign and local importers taxes on goods. Unless, of course, it is merely a way to meet the costs of running ports, harbors, and points of entry into the country. But that only moves the discussion about the role of government in managing ports, harbors, and border patrol—and there is nothing to indicate this is a function of civil government.2

Fourth, if the only function of civil authority is to make judicial decisions, then the question of what kind of money should exist is also to be answered by individuals. In other words, people should be able to make any kind of exchanges they like, unless those exchanges are prohibited by God’s law. They can exchange labor for food, tomatoes for gold. They could even exchange beef for paper—provided no one has interfered with the value of that paper by printing an artificial value on it, then coercing acceptance of the paper at that artificial value. Determining what will be money is not a function of government, but the government could enforce contractual conditions that involve money.

Fifth, it is evident that the question of property in its specific case of real estate, and in a broader sense of dealing with any economic good or service, is also addressed by the prohibition against theft. In Old Testament times land was distributed to eleven tribes. One tribe had no inheritance in the land. Their job was to provide a number of services to the community, and owning land, perhaps, would cloud their judgments.

In the new heavens and new earth talked about in Scripture, is there to be any other system of land ownership? The New Testament has not abandoned family ownership in favor of some kind of communal living. Ownership and control of all kinds of property, land, homes, cars, bicycles, watches, telephones, and televisions belong to the family, not that of the wider community.

Sixth, while family ownership is the basis for the Biblical economy, there are still rules that govern it. In particular, the Sabbath laws would have a significant impact on economic activity. Every Sabbath day is to be a day of rest. One year in seven is not only a yearly rest, but all lenders are required to cancel debts. In the year of Jubilee—seven Sabbath years plus one, fifty years—not only were debts to be cancelled, but the land was to be returned to its original owning family.

If nothing else, this puts an end to the modern concept of eminent domain. The government may not confiscate people’s property for its own use, even when it pays fair price, as the story of Naboth and his vineyard indicates (1 Kings 21).

Seventh, another major element of the Biblical economy is health and welfare. Again we search in vain to find an express command for the political order to get involved. Each citizen of the kingdom, however, has a responsibility to help those in need, as the parable of the Good Samaritan indicates. In this matter, the Amish are a better example than the Anglo-Saxons. Their concept of community takes care of the practical needs of each other.

Eighth, if the Regulative Principle is applied, there are no grounds for occupational licensing by the civil government. There is little evidence that licensing by the authorities improves standards. It does cause higher charges, restrict choice, and diminish innovation.3 But this would leave ground for private licensing that could recognize skill levels in particular occupations. But private licensing carries with it no punishment for those who refuse to take the license.

Ninth, the last aspect of the economy in its broader sense has to do with international trade. Events inside the border might seem to be taken care of without political interference, but international trade is something that requires government intervention, so the argument goes. Yet there is no inference in Scripture that the political order is to control cross-border transactions. This is difficult to conceive, given centuries of government interference in cross-border trade.

Interestingly, the Old Testament is adamant that the application of God’s law in all its glory would have an evangelistic effect on the other nations around Israel. There is to be a free market within the national borders that is surrounded by God’s law. And this very same standard is to be applied to those outside the nation unless indicated otherwise. Usury, therefore, could be charged on foreigners, but not to the fellow-Israelite. Usury on foreigners, however, was not compulsory. And this is not the same as saying that the political order must determine who can transact business within the nation and at what prices those transactions should occur.

Conclusion

The Biblical economy as outlined here is a far cry from the one we live in. This should not be surprising. There have been several hundred years of development of the modern state, with its control of the courts, control of taxation, and control of the borders. And the last ingredient to add to this is abandonment of the family and church as the key communities, replacing them with the modern state.4

Contemporary mankind sees no hope outside of the political order. Elections in every country are held to provide the solution for all the nation’s ills. Apparently “we, the people” keep electing the wrong people to civil office because the problems persist. Never is it suggested that the solution to the country’s woes is a return to God and His laws as the way of righteousness and prosperity. Our mistaken loyalty to the nation-state of the modern world—idolatry, the Bible calls it—prevents us from seeing the glory and splendor of the Christian commonwealth with God as King and royal law-giver (James 2:8).

Ian Hodge is a businessman, musician, and author living in the United States. He has recently released Ian Hodge’s Read, Write & Play Music, a self-instructional music program for home educators that applies the classical concept of education to music. See www.readwriteplay.com for details.


1. R. J. Rushdoony, Institutes of Biblical Law, vol. 1 (Presbyterian & Reformed Publishing Co., 1973), 453. See a fuller discussion pp. 496–499.

2. A comprehensive discussion on taxation can be found in Edward A. Powell and R. J. Rushdoony, Tithing and Dominion (Vallecito, CA: Ross House Books, 1979), especially chaps. IX, X, and XI.

3. S. David Young, The Rule of Experts (Washington, DC: The Cato Institute, 1987).

4. Joseph R. Strayer, On the Medieval Origins of the Modern State (Princeton, NJ: Princeton University Press, 1970).


Topics: Biblical Law, Economics, Government

Ian Hodge

Ian Hodge, Ph.D. (1947–2016) was a long-term supporter of Chalcedon and an occasional contributor to Faith for All of Life. He was also a business consultant in Australia, USA, Canada, and New Zealand, and a prominent piano teacher in Australia.

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