Gary North and Christian Economics

For many theologically conservative Christians, it seems impossible to carry on a discussion of economics without eventually referring to the work of Gary North. For nearly three decades, North has contributed voluminously to a Biblical understanding of economics, as well as other topics. By my count, he has written 45 books and countless articles, and he continues to write. Some books are daunting tomes, such as Tools of Dominion, which weighs in at 1296 pages. All of his economic commentaries are available at www.freebooks.com.

In the summer of 1962, about three years before he started the Chalcedon Foundation, R.J. Rushdoony was teaching at a two-week summer seminar at St. Mary’s College. At that seminar he met North, then a young college student. North wanted to develop his interest in Biblical economics, and had questions about the free-market economist Ludwig von Mises. Rushdoony responded by obtaining an internship for North for the following summer at the William Volker Fund, where Rushdoony was a staff member. At that time the Volker Fund was one of the best-endowed free-market foundations in the United States. That same year the fund published the first edition of libertarian Murray Rothbard’s magnum opus, Man, Economy, and State, and it later financed several of Rushdoony’s early books.

North described that summer of 1963 as a turning point: “Essentially, I was paid $500 a month (a princely sum in those days) to read books. It was during that summer that I read the major works of Ludwig von Mises, F. A. Hayek, Murray N. Rothbard, and Wilhelm Röpke. It was the most important ‘summer vacation’ of my life.”¹

In the following years, North began his work on what he called “Christian economics.” Leonard Read of the Foundation for Economic Education recognized North’s potential and put North on his senior staff in 1971. While at FEE, North completed his doctorate in history, writing a dissertation in economic history that served as the foundation for his book Puritan Economic Experiments. He also began the research for his Introduction to Christian Economics. Already North was a prolific writer and an intellectual force to be reckoned with.

In 1973, North joined Rushdoony’s Chalcedon Foundation staff. While there, he started the Institute for Christian Economics, which published many of his major books and newsletters over the next three decades. For a short time beginning in 1976, North took a political detour, serving as a staff member for Ron Paul, a well-known Texas Congressman and occasional candidate for President. After this, North began writing full-time.

North and the Austrians
Ludwig von Mises and the other “Austrian” economists whose work North read in 1963 have had a lasting influence on him. Though the foundations of Christian economics are necessarily different from the humanistic presuppositions of economists like Mises, Rothbard, or Hayek, North rightly believes that Christians can benefit from their explanations of economic processes and agree with many of their conclusions. Like the Austrians, North has argued against centralized government planning and has supported private property as a necessary part of a prosperous economy. Like Mises and Rothbard, North has been an unflagging advocate of the gold standard, and has denounced inflationary policies. In Sanctions and Dominion, North made productive use of Mises and Rothbard in his criticism of the use of statistics in central planning. The Austrian influence in this area shows up again clearly in Moses and Pharaoh, in a discussion of the problems of socialistic economic calculation.²

But North has been careful to point out problems with the Austrian school as well. Whereas most Austrians have seen the market as impersonal and purposeless, like Darwinian evolution, North says that the market “has a whole series of purposes for man because it is a direct outgrowth of the application of fundamental moral and economic principles that were established by God to meet the needs of responsible human agents. It is a part of God’s comprehensive social law-order.”³ Biblical economics, North adds, is covenantal. Unlike the radical individualism of Austrian economics and libertarian politics, North holds to the Reformed ideas of covenantal blessing and cursing. God’s judgments are not limited to personal, individualistic penalties, North says. “God does not promise that every good man will prosper economically, or that every evil man will be brought low. What the Bible promises is that covenantally faithful societies will prosper in the long run, and that covenantally rebellious ones will be crushed eventually….”⁴

The Source of Value
A core part of economic theory, no matter what theory it is, is deciding where value comes from. The Austrian economists say that value is subjective — that it is determined by the individual valuer, and is not inherent in objects (“Beauty is in the eye of the beholder”). Therefore, the logically consistent radical individualist can never make statements about the relative costs and benefits of different economic systems. The individualist cannot say that policy A is better than policy B for a society, because to do so would assume that the individual can read the minds of countless people and compare each person’s well-being. Clearly, mind-reading is impossible. North concludes that pure subjectivism cannot provide us with answers to many important questions in economics (“What is beauty? What is truth?).

In practice, economists who claim that value is subjective borrow from objective values. North roots out this inconsistency in the Austrians, and attacks it in mainstream economists (who are less aware of their own philosophical assumptions and generally make easier targets).

After one of his scathing attacks on socialism, Ludwig von Mises concedes that his arguments will carry no weight with those who object to his ultimate goals. He writes:

Those who prefer penury and slavery to material well-being and all that can only develop where there is material well-being may deem all these objections irrelevant. But the economists have repeatedly emphasized that they deal with socialism and interventionism from the point of view of the generally accepted values of Western civilization.⁵

Thus Mises departs from subjectivism in appealing to a set of objective values — the values of Western civilization. What are these values, exactly? On what basis does Mises say that we should accept them? North does not let him get away with this. Being a good Van Tilian, North hits economists at the level of their presuppositions.

Mises makes another mistake, North says, in following Immanuel Kant’s idea of preconceived categories of human knowledge. These are Mises’ points of reference. But how does Mises know that his categories of human knowledge match the real world?

North goes after Milton Friedman as well. This possibly has greater import for modern economics, as Friedman’s approach is far more common today than is Mises’. The Nobel Prize-winning Friedman, though correct in many of his conclusions, has feet of clay. Friedman’s approach is essentially to examine “raw” data and, by reasoning, draw value-free conclusions from observation of them, frequently with the aid of statistics. But what of this “raw” data? North objects that there is no such thing. The “real world,” he says, “…is really the product of our senses, as interpreted by our minds.… The data are already interpreted as we receive them.”⁶ Thus there can be no data that are untarnished by our presuppositions, ready for us to apply pure, value-free reason. The data are “value-corrupted” by our value-laden minds from the start.

In interpreting these data, Friedman wants to appeal to the scientist’s “judgment,” “intuition,” and “experience.” According to Friedman, “The construction of hypotheses is a creative act of inspiration, intuition, and invention; its essence is the vision of something new in familiar material.”⁷ North recognizes here Friedman’s appeal to faith in the intuition of the human mind:

How can we have such faith in the coherence of our minds, the orderliness of nature, and the intuitive ability of our minds (or whatever it is)…. We have faith — a remarkable quantity of faith. Without it, there could be no economics. So our neutral, rationalistic practitioners simply put this statement of faith in the back of their minds and forget it. Epistemology, at the really crucial points, is not a popular topic among secularists.⁸

Misesian radical subjectivists and Friedmanite positivists alike have a problem. To find structure enough to make a discipline like economics, we must have a reference point. For Mises, it was found in the values of Western civilization, or in preconceived mental categories. For Friedman, it was found in man’s ability to make judgment calls. But, as Van Til writes, “Man himself and the facts of his experience are subject to change. How is he ever to find within himself an a priori resting point? He himself is on the move….”⁹ Both Friedman and Mises, however, cling to the idea of a secular, autonomous discipline. North’s concluding prescription is a Biblical one:

Every man requires limits on his thought processes…and this means authoritative revelation.… He needs biblical law to help him construct social and economic institutions, each with its proper legitimate sphere of authority. Men are not autonomous, and by claiming full autonomy they hurl themselves into the intellectual void of intuition. The faith of the secular economist in the full autonomy of the discipline is a shaky faith indeed.¹⁰

North’s Lasting Impact
In addition to dealing with the philosophical foundations of economics, Gary North has managed to effectively communicate the virtues of a free market and the many applications of Biblical economics. His style is forceful and direct — and not always appreciated. He exudes confidence. This is how it is, he says. Take it or leave it. In a generation of waffling if-that’s-OK-with-you Christians, North is hard-core. But his undiplomatic approach has become infamous, and has probably restricted his impact in some circles.

North’s forte is economics. Where he departs from his specialty he sometimes runs into trouble, as with his forecasts of severe consequences from Y2K computer bugs. (Of course, some would say that in making dire predictions he was not departing from his specialty at all!) But North’s economic commentaries (and much of his other work) will remain a valuable resource for decades to come. There is room to find fault with North, but no one who wishes to understand Biblical economics should neglect his three decades’ worth of prolific output.

Notes

1 Gary North and Gary DeMar, Christian Reconstruction: What It Is, What It Isn’t (Tyler, TX: Institute for Christian Economics, 1991), x.

2. Gary North, Moses andPharaoh: Dominion Religion Versus Power Religion (Tyler, TX: Institute for Christian Economics, 1985), 54-59.

3. Gary North, Inherit the Earth: Biblical Principles for Economics (Ft. Worth: Dominion Press, 1988), 10-11.

4. North, Moses and Pharaoh, 110.

5. Ludwig von Mises, Theory and History (New Rochelle, NY: Arlington House, 1969), 33.

6. Gary North, ed., Foundations of Christian Scholarship (Vallecito, CA: Ross House Books, 1976), 83.

7. Milton Friedman, Essays in Positive Economics (Chicago: University of Chicago, 1953), 25.

8. North, Foundations of Christian Scholarship, 83.

9. Cornelius Van Til, An Introduction to Systematic Theology. Syllabus, Westminster Theological Seminary, 1961, p. 167.

10. North, Foundations of Christian Scholarship, 100.