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Chalcedon and the Economic Future of the West

The Chalcedon Foundation has played an important part in the redevelopment of a Christian world and life view: a view of life that is governed in all its aspects by Christian faith and belief in the Bible as the sourcebook on how to live.

  • Ian Hodge,
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In the twentieth century, the Chalcedon Foundation has played an important part in the redevelopment of a Christian world and life view. Redevelopment here is used quite consciously, as early Protestant thought clearly had in mind a view of life that was governed in all its aspects by Christian faith and belief in the Bible as the sourcebook on how to live. It is this view that Chalcedon has revived.

Protestantism, of course, does not have a singular claim on the concept. Long before Luther’s break with the Catholic Church, there is clear evidence that life was seen in its religious perspective, and that proper faith required the ordering of society according to Biblical teaching.

This is the faith that transformed Europe into Christendom. It is not essential to agree with everything done in the name of Christianity in the medieval period in order to accord recognition to the fact that Christian faith replaced the faith of an older order that saw politics as the pinnacle of social order.

Chalcedon, in calling for a return to applied Christianity in economics and other realms, thus continues a long tradition of Christian practice that will, in time, see the restoration of a new Christendom that will embrace not just Europe, but the whole world. Chalcedon’s call to return to Biblical economics, however, has some key elements that set it apart from secular calls for economic reform, even though there are similarities at some points.

The Nation-State and Economic Control

Ancient civilizations exhibited some characteristics of the modern world. Among these is the belief that the political order is the supreme authority in all matters. Concomitant with this belief was a belief in the taxing power of the political order, for taxation, argues Chalcedon, is the singular and most important mark of sovereignty.1

The belief in the sovereignty of the nation-state, however, went through a period of decline in some parts of the world, starting after the collapse of the Roman Empire in the fifth century A.D. Rome, for all its initial commitment to democracy and the rule of law, had degenerated into a hard-fisted machine that controlled the lives of its citizens to the point of despair. For example, it was necessary to obtain permission from a “competent” authority in order to dispose of goods and chattels. Ironically, the Roman state at one time existed for the purpose of protecting the property rights of its citizens; it ended with “a system of servitudes unparalleled in the annals of civilized man.”2

The Romans were caught in a philosophical problem that manifested itself in the realm of economics. Although engineers had developed the water mill capacity to three horsepower during the first century B.C., the Romans were reluctant to develop technology because of the effect it would have on unemployment. Vespasian refused a labor-saving device that would help in the transportation of heavy columns on the grounds that he needed to look after the free wage earners. Technological advancement would create unemployment, it was believed. Rather than provide an environment where entrepreneurs could develop new business activities, the Roman world instead based its economy on slavery and serfdom.3

Our interest here, however, is not so much with the economic problems of those nation-states that exalt the political order as supreme authority.4 Rather, our purpose is to understand the philosophical underpinnings of a society that attempts to control all economic aspects of its citizens. More importantly, however, is to recognize the Christian resistance to such an idea that the all-powerful state should become God.

Christianity, past and present, is troubled by the concept of law. It is currently in ambivalence towards the Ten Commandments and what these imply. But this was not always the case. In fact, there is a clear line of evidence to those of faith which shows that when Christianity held to the Ten Commandments as the moral standards required by God of all men, this was the period of Christianity’s greatest triumphs in its attempts at world evangelism.

The reasons for this are simple. Christianity is, at the end of the day, the religion that adequately explains the origins of law, man’s revolt against law derived from above, and man’s attempts to institute law from below. History is replete with failed civilizations that have attempted to institute law from below. Law from below makes man the determiner of what is right and wrong, good and evil (see Gen. 3:5), and society will either fall into anarchy with all men being their own lawmakers, or else the lawmaking function will be centralized in the political order.

But the political order is never satisfied with second place. Where once the Christian idea of God as sovereign was predominant, there were other ideas nipping at its heels. The kings of Europe and elsewhere were certainly not satisfied with taking second place in the realm of lawmaking. Too much was at stake, especially since taxation and the power to tax was a central issue in the debate.

Too often, churchmen failed to see the issue.5 The result, by the time of the Reformation, was an almost total capitulation everywhere to the idea that supreme authority, if it resided anywhere, resided in the political order, either in the king or in the parliament.6 In England this issue was resolved by 1660 and later events. In the American context the issue was resolved almost a century later when the federal government was established on questionable authority.7

Despite all its checks and balances, the idea of a government limited by constitution is under challenge around the world. The Biblical origins of the concept of federalism,8 the idea that the national government is to be limited by a document called the Constitution, is an idea that is hardly expressed today.9 To be sure, there is more than enough debate over the Constitution and what it means, but to place the Constitution in an historical Christian and Biblical context is hardly ever done.

The First Commandment, however, stands against the claims of the all-powerful political order. “Thou shalt have no other gods before me,” declares the triune God of the Bible. One of the main characteristics of God is His lawmaking authority. For the political order to claim this prerogative is the state’s claim to be God, and consistent Christianity has always resisted such a claim.

In almost half a century of writing, Chalcedon has revitalized the historic Christian position against divinity manifesting itself in the created order. Which means that for economics Chalcedon has distanced itself from the schools of economic thought competing for our attention.

The Ultimate Question: Ownership of Property

Economics, argued the great Austrian economist Ludwig von Mises, can be boiled down to one proposition—the question of ownership of property. Either it will be individual ownership or it will be publicly owned. The first of these is the capitalist order, the second creates the communist or socialist economic order. These may be better expressed as a command-ordered economy, since the government, through whatever means it chooses, commands the use of economic resources.

The beauty of the capitalistic system is enhanced when it is appreciated, argued von Mises, that economic calculation is impossible under a command system.10 For more than a century, economic thought has been revolving around the issue of ownership and the use of the means of production.

Ownership, it needs to be said, has an identifying characteristic: the right of dispossession. When the question of ownership comes into dispute, it is readily resolved when the question is asked: “Who has the right to dispose of this property?” Whoever possesses the legal right to do this possesses the legal ownership of the property in question.

In the introduction above, I referred to Rome’s disposition that people need the approval of competent authorities to dispose of property. This effectively made the Roman state the owner of all property.

In the modern world, a similar claim is made by most political orders. People are not free to trade with whomever they like, whenever they like, under whatever circumstances suit them. Rather, political masters circumscribe economic events such as buying and selling. In the name of “good government” all kinds of rules and regulations are promulgated in an effort to ameliorate the human condition. One needs a license  to sell goods and services. Certain goods may not be sold without government approval. There are even attempts to regulate prices in some areas, especially by providing subsidies to certain producers, thus attempting to manipulate the price to favor local producers. Prohibition is thus alive and well on planet earth at the beginning of the twenty-first century.

But Chalcedon revived an alternative to these two views of property. Argues Rushdoony:

We are accustomed to thinking of land as either “private,” i.e., individually owned, or state owned, i.e., socialism. A variation of non-statist ownership is corporate possession. The Bible gives us a different standard. Land in the Bible was allotted to families. It was community property. The individual head of a family was thus regarded as a trustee whose duty it was to preserve what he had inherited from the past, improve it, and pass it on to the future.11

This puts a different slant on things. For more than two centuries economists have tried to argue theirs was a value-free discipline. But in their efforts to create a non-religious, value-free economics, they completely dismissed another alternative: family property.

Chalcedon’s insistence on the Bible as the source for answering the question, “How then should we live?” provides another solution to the economic problems that face us. This does not mean, however, that all the issues and answers provided by the other economic schools were wrong. It’s just that their focus was misplaced and therefore their solutions often questionable. For example, in the individualistic notion, there is no commitment to family as the basic institution in society. While individual economics does not deny the family as being important, its theories certainly don’t provide for a family-based society as does Chalcedon’s recognition of family-based property.

The implications for this in the modern nation-state are enormous. Either individualist or family property ownership cut against the idea that the state can, through its regulatory processes, become surrogate owners of property. But trying to oppose community ownership on individualistic grounds is, in one sense futile, because corporate ownership by the state is an attempt to avoid some of the pitfalls of individualism.

The Biblical notion of family property, however, already addresses the concerns of the socialist. Property is to serve the needs of the community, a broader concept than serving the needs of the individual. But the community in the Biblical scheme is the family, not the tribe or the nation-state.

While the concept of property rights is more readily identified, however, the issue of what constitutes property is up for grabs, at least in one key area, money.

Property Rights Versus Taxation

We live in a world that is governed by money; money that is the product of the nation-state. There is no international money other than that accepted by individuals. Governments have worked long and hard to abolish international money in favor of national money. This is the essence of political control, and also the liberator for national monetary policy. A nation that is involved in international money does not have the freedom to manipulate its money supply as much as it will have if money is a national creation.

Already there are disputes amongst European Community countries over money issues. Interest rates, manipulated by government, are subject to restrictions upon joining the EC. For some, such as Germany, such restrictions are hard to live with.

But our concern here at the moment is with taxation and its relationship to property rights. Taxes historically have marked the nature of a civilization. High taxes are identified with the decline of civilizations, as in Rome. With the need for more money came a tax revolt, the response to which was the use of torture to extract taxes and an inability to get out from under the burden of taxes.

The modern nation-state is also identified by taxation. National boundaries delineate taxing jurisdictions. Religious and cultural considerations are no longer used to identify national borders, and hence provide a reason for so much turmoil around the world, whether it is in Serbia, Croatia, Bosnia, Nigeria, Sudan, Turkey, or Iraq. Those in political power will do almost anything to maintain their taxing jurisdiction over diverse groups of people, with the necessary use of force to ensure compliance.

In some parts of the world, those influenced by a strong Christian worldview, property is protected by law. Magna Carta (1215), for example, is a document about property rights, among other things. There could be no confiscation of property without immediate payment. The U.S. Fifth Amendment carries a similar protection of private property. While this principle is well established in law in the West, there is one commodity that does not enjoy such a protection: money.

At the end of the day money is, as the economists remind us, merely the most marketable commodity. It is the most easily exchangeable, provided it carries with it some of the other functions of money. It must, for example, maintain its value over time; it should be portable and easily divisible. But most of all, it must be readily accepted in exchange transactions.

Historically, gold and silver have served this purpose. They are commodities. They are in high demand and short supply. Short supply is the necessary activity that maintains value in gold and silver. They are readily transported and easily divisible. And, more importantly, they are beyond the control of kings and princes — and acts of Parliament or Congress. Or so people thought.

If the confiscation of property by the state, such as foods or land, is to be paid for immediately by the state, then there is no immediate economic advantage for the state to take property. Confiscating land has longer-term issues involved with it, but the confiscation of food and its immediate payments puts the state in a neutral economic position.

The confiscation of land has broader implications, since it can deny income to the present owner if the land is used for productive purposes. Again, if adequate compensation is made, the political order makes no real economic gain out of this transaction.

Now if money, being gold or silver, is perceived as property, then the same rules of compensation should apply. And if the tax payer is immediately compensated for his loss of tax, then the taxing entity makes no gain at all.

Historically, the idea of money as property assisted in curtailing the taxing powers of the political order. The revenue sources available to the authorities were charges for certain services (e.g., import and export taxes), or even a tax on ordinary trade, the sales tax.

With abandonment of money as property, money no longer fell under the compensation claims of property.12 Now the tax could take property (money) and not have to make due recompense. Now the confiscation game worked in the favor of the political order. And this is where we find ourselves today, under the yoke of a system of government that the West has not seen since the collapse of the Roman Empire. There, taxes were high and compulsory, and tax agents could use torture, if necessary, to obtain the taxes.13 And while our political masters may not use torture today to extract taxation, they certainly meet the similarities of high and compulsory, which earmarked Rome in its decadent stage.

The revolt against the income and property taxes that is occurring in Western countries cannot be sustained without a return of the idea of money as property. When ownership of money is restored, as against the notion of mere possession, then there is a real possibility of battling the idea that the state may take property so long as it is in the form of money.

Property and ownership are the marks of power. Whoever has property is a king in his own castle and can take certain steps to protect himself from invading forces, even when those forces are his members of Congress or Parliament. Without wealth we are left destitute and dependent upon the taxing authority to sustain.

The Two Roads to Capital Formation and Debt

How to make the best use of money today is an idea that has an almost universal answer. The way to wealth, it is argued, is OPM (Other People’s Money). The propensity to use debt as the way to wealth cuts against older views of capital formation which required saving and investment.

Chalcedon calls us back to this older view of capital formation. If nothing else, by placing a six-year limitation on debt, Chalcedon has severely restricted the idea that debt is the way to wealth.14

Not so, argues the modern world, capitalist or socialist. The debts of all the nations throughout the world are evidence of the impossibility of eliminating physical money and merely using computer-generated wealth. But if this could be done, it would have been done by now, for physical money restricts the ability of the all-powerful nation-state to implement its total plan for saving society.

Commodity money, such as gold and silver, also places a limitation on governments, a limitation they try to overcome by abolishing commodity money in favor of paper money and fractional-reserve banking, which requires borrowers to create money out of nothing. Try as they might, however, the governments of the world cannot overcome the economic result of creating more money, either through the press or the banking system. And the economic result is rising prices. In an earlier period, creating more money was called inflation, which led, it was argued, to higher prices. Today, higher prices are called inflation, and many do not consider the effect of what we now need to call monetary inflation on the economy.

In the modern world of the blind leading the blind, a return to the Biblical concept of hard money, that is money that is either gold or silver, stands as a light to the nations that truly seek a real expansion of the economic condition of its subjects. In the long run, debt is not the way to wealth. To be certain, in the short run people can accumulate wealth—but only at the expense of those who come later. No point illustrates the futility of debt better than the limitation placed on loans. There are twenty-five or thirty-year loans. Why this limit? Why not fifty years? Even better, a hundred years. Then the debt can be paid by the grand-children.

This is the reverse of the Biblical position on wealth. In the Bible, the current generation is to build a capital base for future generations. “A good man leaveth an inheritance to his children’s children: and the wealth of the sinner is laid up for the just” (Prov. 13:22). Today, this notion is reversed. Now a man leaves an inheritance of debt to his children’s children—at least if news reports can be believed that mortgages in Japan had reached 100-year levels. And once the idea of debt as the way to wealth is accepted, there is no reason not to have 100-year mortgages.

Thus, Chalcedon’s position on debt reverses the currently accepted position and instead requires the accumulation of capital—that is, saving—as the means to wealth. Saving, however, requires a different attitude to consumption. The debt economy requires immediate consumption. We cannot wait, it says, so we will borrow and consume now.

The Biblical position, however, requires the opposite attitude. We cannot consume now because we need to save for the future, it says. Thus, it is necessary to put a rein on appetites and work for a future benefit that, in the Biblical phrase, accumulates to the children’s children. Thus the saving generation does not necessarily see the fruits of its abstention from current consumption. With the eye of faith, however, it does see that the children, and the children’s children, and those that follow, can receive the benefit of compound interest over time—a long time, that is.

Biblical Law Versus Statist Fiscal Policy

Chalcedon’s call to a Biblical economics, as stated above, requires a return to property money; that is a commodity that is recognized as property but also serves as a medium of exchange. Such a view runs right against the modern notion of monetary and fiscal policy as operated by governments around the world.

Monetary policy is policy that controls money and its supply. Hence the use of the printing press, when required, to manufacture notes and coin to supply more purchasing power. The inflationary effects of monetary policy, well recognized by economists and politicians, has come under attack, so fiscal policy has taken a more prominent role.

Fiscal policy is policy that relates to the manipulation of credit and therefore purchasing power. Economists and investors await eagerly the Federal Reserve’s pronouncements about interest rates. For interest rates serve to encourage the debt market.15 Lower interest rates mean people can borrow more. Higher interest rates reduce the amount that can be borrowed. And when the government’s advisors believe the economy is over-heating (i.e., when it thinks people like you and me are spending too much money), it raises the interest rates, thus reducing the expansion of purchasing power through debt.

The Momentous Choices Before Us

It can be seen that the modern economy discourages what the Bible encourages. Whereas money should be property (commodity) money, money is notes, coin, and massive amounts of credit. Whereas debt should come with severe limitations, six years according to Chalcedon, the modern nation-states want no limit on debt and their manipulation of debt to suit political agendas. Whereas the Biblical idea of taxation prohibits the confiscation of property by taxing authorities, governments around the world depend on their tax officials to bring in whatever levels of tax are needed for the current and future political program. Whereas property in the Biblical scheme is family property, in the modern nation-state with its belief in eminent domain, property is, at the end of the day, property of the state.

Thus in the Christian scheme of things, the family is considered far more important than the political order. A social order based on family property would address many of the anomalies that exist in the nation-states that see themselves as being the highest point in the legislative chain. By insisting on a Biblically based economic system, one that is obtained from above, Chalcedon has cut against the modern notion that all power and authority come from below, in the created order. Thus there are two worldviews in conflict, and the economic realm exemplifies the issues and highlights what is at stake.

A real problem exists in the Christian community, however, for Chalcedon’s Biblical agenda to be put in place thus offering a more human economy, requires acceptance—first—by the Christian population. Unfortunately, there is no agreed Christian agenda on economic reform. Until Christians of diverse origins can work together and find a way to agree on Biblical teaching, perhaps along the lines of the early church councils which actually dealt with some of the issues in a broader context,16 there is little hope of reform along Biblical lines.

Real reform, then, requires men of faith and wisdom to develop a practical plan of reform. After all, Chalcedon has done the intellectual work and laid down the exegetical challenges. Now what’s needed is leaders who will take the agenda into the public arena and, against all odds, argue for a return to a moral economic environment that exalts the triune God of Scripture. This, after all, is our calling in Christ, and we should not be slow to do what is required of us.

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.

1. Edward A. Powell and R.J. Rushdoony, Tithing and Dominion (Vallecito, CA: Ross House Books, 1979).

2. Charles Norris Cochrane, Christianity and Classical Culture: A Study of Thought and Action from Augustus to Augustine (Oxford: Oxford University Press, 1940), p. 307. See also Henri Pirenne, A History of Europe from the Invasions to the Sixteenth Century (London: George Allen & Unwin Ltd., [1936] 1939).

3. Jean Gimpel, The Medieval Machine: The Industrial Revolution of the Middle Ages (London: Pimlico [1976] 1992), pp. 8,9.

4. For a more detailed analysis of the economics of centrally controlled nations and the influence Christianity eventually had in this regard, see my book Making Sense of Your Dollars: A Biblical Approach to Wealth (Vallecito, CA: Ross House Books, 1995), Ch. 1.

5. Hilaire Belloc, How the Reformation Happened (Rockford, IL: Tan Books [1928] 1992).

6. There are exceptions. See for example, Samuel Rutherford, Lex, Rex (Harrisonburg, Sprinkle Publications, [1644] 1980).

7. In fact, there is ample evidence that Christianity, Catholic and Protestant, has failed to adequately deal with the claims of the all-powerful nation-state.

8. Federalism and feudalism are related to covenant, and covenant is a Biblical concept.

9. J. Althusius, Politica, An Abridged Translation of Politics Methodically Set Forth and Illustrated with Sacred and Profane Examples, translated by F.S. Carney (Indianapolis, IN: Liberty Fund, 1995).

10. See Trygve J.B. Hoff, Economic Calculation in the Socialist Society (Indianapolis, IN: Liberty Press, [1949] 1981).

11. Rousas John Rushdoony, Systematic Theology, Vol. 2, (Vallecito, CA: Ross House Books, 1994), p. 972.

12. See Mark Skousen, Economics of a Pure Gold Standard 2nd edition (Auburn: Praxeology Press, 1988), p.21ff.

13. Will Durant, Christ and Caesar (New York: Simon and Schuster, 1944), p. 643ff.

14. Rousas John Rushdoony, Institutes of Biblical Law, Vol. 2, Law and Society (Vallecto, CA: Ross House Books, 1982), pp. 166–170.

15. Although in Japan in the 1990s, zero interest rate has not been successful in stimulating borrowing and therefore economic activity.

16. Rousas John Rushdoony, The Foundations of Social Order (Vallecito, CA: Ross House Books, [1968] 1998), ch. 7, “The Council of Chalcedon: Foundation of Western Liberty.” According to Rushdoony, the Council of Chacledon (A.D. 451), “handed statism its major defeat in man’s history.” For this reason, Rushdoony took the name Chalcedon for the foundation he established whose purpose was again to challenge statism in the twentieth century and beyond.

  • 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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