About a week ago I attended a conference commemorating the twentieth anniversary of the founding of the Ludwig von Mises Institute, a think-tank in Auburn, Alabama. It was an exhilarating experience.
To many chalcedon.edu visitors, the name Mises (pronounced Meeses) is familiar. Ludwig von Mises (1881-1973) was one of the most prominent and prolific members of the "Austrian school" of economic thought, so-called because of its development by Austrians like Mises. Though "Austrian" economists are a small minority among economists today, the school has made some important contributions to economics. In a critical debate with socialists in the 1920s, Mises contended that an economy without free market prices could not function rationally — an argument that statists have yet to answer successfully. This, and other aspects of Austrian thought (such as its unique theory explaining recessions) are still being developed today.
Methodologically, the Austrian school is fundamentally different from mainstream economics. Austrian economists reject the mathematization of economics as inappropriate for the study of human action. The Austrian method of deducing economic principles from certain "universally accepted" axioms bears an affinity to Van Til's presuppositional method — we might take exception to the axioms, or their alleged "self-evident" nature, but the basic method would remain familiar. The Austrian emphasis on the individual, which logically leads to severe limitations on the civil government, produces policy conclusions similar in many cases to those of Christian Reconstructionists.
R.J. Rushdoony certainly recognized the relationship, and his writings reflect the influence. Rushdoony felt personally indebted to those who had kept the Austrian tradition alive. When the festschrift to Rushdoony, A Comprehensive Faith, appeared in 1996, Rushdoony sent Mises Institute president Lew Rockwell a copy, signed "with respect and appreciation."
There are many areas of economics and political philosophy where Christian Reconstructionists can claim the Austrian school as an ally. One of the easiest places to see this is in the writings of both groups on money and banking, particularly Ian Hodge, in Baptized Inflation. Hodge writes, "Only two groups forthrightly call for stable money — after a return to a full gold coin standard with 100% reserve banking — with prices adjusted solely by free market competition, whether up, down, or sideways: the Austrian school and the reconstructionists."1
Hodge also uses Mises' definition of money, and he is obviously familiar with the Austrian theory of recessions and depressions: "Fractional reserve banking is a form of fraud. It results in painful depressions that are the result of euphoric, fiat-money-induced inflationary booms."2 Rothbard's What Has Government Done to Our Money is employed to advantage, and, citing America's Great Depression, Hodge criticizes the problematic Consumer Price Index in favor of the Austrian definition of inflation.3
Rushdoony frequently used Austrian scholarship for support, which is reflected in his writings on inflation. "Inflation is one of the results of managed money, and managed money is the cornerstone of socialism," he wrote. "In fact, socialism is impossible without managed money. Managed money is the deliberate, state-controlled debasing or counterfeiting of money as the basic form of social planning."4 In the same essay, Rushdoony relied upon the works of Austrians Wilhelm Roepke and Hans Sennholz for their discussions of repressed inflation.5 Mises is present throughout.
Many other works by Christian Reconstructionists employ Austrian theory to support sound money,6 detail the causes and destructive results (moral and economic) of inflation,7 and contend against Keynes' economic ineptitude.8 From time to time the Journal of Christian Reconstruction has carried essays by Austrians from outside the Reconstructionist camp. In one of the early issues is an important essay by Austrian heavyweight Murray Rothbard.
Christian economist Gary North, onetime editor of the Journal of Christian Reconstruction, cut his teeth on Austrian economics. When Rushdoony brought North to the free-market Volker Fund as a summer intern in 1963, North used the time to read the major works of Ludwig von Mises, F. A. Hayek (who later won the Nobel Prize in economics), Murray Rothbard, and Wilhelm Roepke. North later described it as "the most important 'summer vacation' of my life."9 Certainly North's writings on economics reveal the Austrian influence.
In many respects Biblical economics can be characterized as closer to Austrian economics than to any other secular school of thought. Of course, there are areas of disagreement, and I have myself argued in print that the ethical defense of property rights employed by most Austrian scholars has serious shortcomings. Yet there is much to commend the school of thought to both casual and serious students of economics.
Seeing the success with which the Mises Institute has promoted the ideas of Mises and other Austrian economists over the past twenty years, I started thinking about the work of Chalcedon. R.J. Rushdoony's work, and the work of those he inspired, merits even greater attention among Christians because of his vast contributions to a Biblical theology and worldview. To this point, the Chalcedon Foundation has performed a valuable service in keeping Rushdoony's books in print, and promoting a Reformed worldview through many other in-print and online resources. But there is much more to do. Lew Rockwell asked me recently when Chalcedon would begin putting Rushdoony's work online. I had to reply that I did not know of any plans to do so. Such a monumental task takes financial resources — which can only come from the generosity of those who appreciate the magnitude of what R.J. Rushdoony did. I suspect there are enough of us indebted to Rush that such a future project is not unrealistic.
After twenty years, hats off to the Mises Institute for its uncompromising promotion of free markets. Its success is an inspiration. With many other Christians seeking insights in the field of economics, I say thanks for a great work, "with respect and appreciation."
1. Ian Hodge, Baptized Inflation (Tyler, TX: Institute for Christian Economics, 1986), pp. 195, 196.
2. Ibid., pp. 163, 164. Cf. pp. 130, 131, 153, 174, 197, 198.
3. In passing, Hodge makes clear the relationship between Christian Reconstruction and Austrian economics: "…Dr. North and Rev. Rushdoony rely on the insights of the Austrian school…." (p. 262, see also p. 108.)
4. Ibid., p. 641.
5. Ibid., pp. 641, 642.
6. Rousas J. Rushdoony, "Hard Money and Society in the Bible," in Hans F. Sennholz, Gold Is Money (Westport, CT: Greenwood Press, 1975).
7. Gary North, "Isaiah's Critique of Inflation," The Journal of Christian Reconstruction, 7:10-30 (1980), pp. 31-39. This entire issue of the Journal was devoted to a symposium on inflation, to which Hans Sennholz, among others, contributed. Also see R.J. Rushdoony, Roots of Reconstruction (Vallecito, CA: Ross House Books, 1991), pp. 539, 590-593; Gary North, The Dominion Covenant: Genesis. An Economic Commentary on the Bible, Volume 1 (Tyler, TX: Institute for Christian Economics, 1987 ), pp. 92, 93; and an appendix by North in R.J. Rushdoony, The Institutes of Biblical Law (Philadelphia: Presbyterian and Reformed, 1973), pp. 799-824.
8. R.J. Rushdoony, Roots of Reconstruction (Vallecito, CA: Ross House Books, 1991), p. 619.
9. Gary North and Gary DeMar, Christian Reconstruction: What It Is, What It Isn't (Tyler, TX: Institute for Christian Economics, 1991), p. x.
- Timothy D. Terrell
Timothy Terrell is associate professor of economics at Wofford College in Spartanburg, South Carolina. He is assistant editor of the Quarterly Journal of Austrian Economics and is an Associated Scholar with the Mises Institute.