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On the Origin of Value and Its Relationship to Profits, Interest, and Money

The concept of value that we will explore corresponds to the worth that we attribute to material objects. Such value is subjective, volatile, and unmeasurable. But at one point it translates into prices that consumers will agree to pay in money. The sale of a company’s products will translate into income for laborers and owners of capital.

  • Daniel Depelteau,
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© Daniel Depelteau

The concept of value that we will explore corresponds to the worth that we attribute to material objects. Such value is subjective, volatile, and unmeasurable. But at one point it translates into prices that consumers will agree to pay in money. The sale of a company’s products will translate into income for laborers and owners of capital.

Over and above the mercantile result of value imputation, there are processes designed by God to allow Him to enter the economic production. Examining these processes will help to understand how God may participate in the work flow of economic production and distribution of income, and to substantiate how monetary policy could be conducted. As one might expect, current policy-making in those areas tends to move away from Biblical grounds rather than closer.

The income that results from economic production can be distributed between two main types of revenue: wages and profits. It is commonly understood that wages are the price of labor. But if profits are prices—call them return on investment or interest—it has not been clearly decided as to what factor they should be attributed. Marxists hold that it is the price of labor—for labor is, according to them, the only source of value. Free market economists say that it is the price of capital. And again, some (free market) economists of the Austrian school do not retain capital as a factor of production. To them, profits are the result of a behavior called “time preference.” Following their reasoning, interest or profits are the price of time.

Money as a store of income carries such value through time. In this process, as is generally accepted, a payment of interest accrues to the owner of the savings. The logical basis on which we agree to pay interest influences the way monetary policy should be conducted.

In this analysis, the creation of wealth through profits and interest is linked to demography. The management of profits and money is set upon Biblical principles of justice where free banking is a possible, even Biblical, framework for promoting economic growth and development. Most contemporary theories on these subjects suffer from the confinement of the contemporary scientific method and lack a relationship with ethical conduct that will bring justice into the distribution of income.

In the book of Jeremiah,1 the plan of God for the salvation of His people is interwoven with that of the creation as a whole. The implication is that God is involved in the functioning of this world to a much deeper degree than we generally tend to think.2

The Issue in Perspective

The framework of analysis used by Böhm-Bawerk in 1884 to analyze the existing theories of capital, interest, and income distribution offers a method that can help us make advances again today.3 His fundamental question is used here as a basis for the analysis: what is the originating factor that can explain the appearance of excess revenue over costs? His analytical review of the then-existing theories offers penetrating insights into the problem. However, his subsequent model of profit formation and income distribution has not been as successful. In contemporary economics, the theory on this subject now rests on the foundations laid by Irving Fisher in 1930.4 Böhm-Bawerk thought that Fisher’s contribution was remarkable, since it built on some elements that were common with his own analysis. But according to him, Fisher’s development was guilty of circular reasoning. Fisher replied to this criticism, but Böhm-Bawerk had passed away in the meantime. So the issue was abandoned.5 A model has been proposed more recently by George Reisman, but it is not much more successful from this author’s point of view.6

The solution given to this problem by Karl Marx in 1867—the exploitation theory of value—has changed the world, precisely because it provided an explanation for a prevailing injustice in income distribution. Very simply put, the theory says that the rich have become so by stealing from those who are now poor as a result of the injustice. We now know the devastating effects that that theory has had in the past, and even today, even though it has been proven wrong.7

The Marxist theory draws its credibility from the fact that there is a persistent reality of poor segments of population within Western societies and in developing countries. The free market-based society has evolved in a fashion where the general distribution of income leaves much less room for crying injustice than it did in the nineteenth century. Most Americans and Europeans have a decent income that allows them to satisfy their basic needs. So, the Western free market structure still has the upper hand in the organization of society. But there are still huge and growing gaps in the distribution of income within Western societies and outside them in the developing world.

So, despite the prevailing organization of society, the “profit question” is still begging for a consistent answer that will bring a sense of justice.

Economic Value

The value attributed to an object by a consumer is a psychological phenomenon.8 It can be volatile. That value is personal and cannot be measured.

Similarly, economic value cannot be produced in the same way as a good or a service can be produced. Value is an attribute that is determined by those who seek to acquire goods. In other words, value is in the “eyes of the beholder.” Neither capital nor labor can “produce” value that is beheld in the heart of consumers.9 Goods and services receive value from people who purchase them. The price of a good will hold only as long as someone agrees to purchase it at that price. This is one of the arguments that explain why the “exploitation theory of value” cannot hold.

The value that we will refer to is the market price of an object. We will refer to it as “economic value” or “revenue.” The economic value of production—its revenue—is the product of its price times the amount of merchandise manufactured. The price is the explicit manifestation of a value imputed to a product as determined by the market; this implies that consumers have expressed their desire to acquire the product given their capacity to purchase it. The economic value distributed as revenue will come from that part of the output that will have been purchased by customers, at a price resulting from the bargaining process within the marketplace. The total income (aggregate revenue) of a population corresponds roughly to the economic value of the total products and services manufactured and purchased by it.10

Aggregate revenue can grow over time, and it can also shrink. As a population grows, given constant technical manufacturing procedures, aggregate revenue will tend to grow with it. Conversely, if it diminishes, aggregate revenue will tend to diminish. Also, given a constant population, aggregate revenue will grow with the capacity of the population to produce more goods using new technology. It will have a tendency to fall if equipment and systems are not maintained and improved upon.

In short, economic revenue is that part of the general (psychological) value that becomes materialized through the market system and is transformed into income.

Economic Value Creation and Profits

The puzzling aspect of the systematic appearance of profits from economic production and market operations is the fact that we are facing a phenomenon of “economic revenue creation”: there is more economic revenue existing at the end of the production process than there was in the beginning. After having paid for all the inputs, including the entrepreneur’s salary, there remains a “net income” or profit.

The net income from the process has been created ex nihilo. It is not the result of transformation. It was created out of nothing. We can see that, for a given amount of goods or services that was produced and sold, it results from the price difference between the cost of the inputs and the price that consumers agree to pay. But if we really understood how it was created, we would not need to ask who owns it. On one hand, capitalists say, of course, that since they own the production process, it belongs to them.11 On the other, those who hold on to the “exploitation theory of value” say that only workers can “produce” value and that therefore they are the sole owners of the net economic value. This issue deserves attention.

The basic difficulty comes from the fact that something has been created out of nothing. As human beings, we find it impossible to understand how this can happen in general. This problem is like that of understanding how the universe began if there was nothing before it.

Man cannot create ex nihilo. Man can make something new out of existing materials. But the power to create ex nihilo is an attribute of God alone.

Can God Participate in the Economic Process?

We need to bring God into the economic analysis. Any form of thinking process that has not been reset on Biblical grounds lacks a determining source of information for the foundation of science.

We need to ask four fundamental questions—questions that in fact must be answered for humanity:12

1.   Where does the world come from? (ontology)

2.   Where does true knowledge come from? (epistemology)

3.   What is the ultimate source and absolute standard of value? (axiology)

4.   Who or what controls the direction of time, or history? (teleology)

Before answering the questions, we need to address a matter of methodology. Such questions, beginning with the first, have tasked scientific researchers for as long as we can remember, and there is yet no scientific answer. Below we examine this issue a bit further. Formally speaking, we need to use presuppositions. That is, we admit a principle as a truth without proof. We need to do this because God is removed from the possibilities of scientific research. Immanuel Kant demonstrated that by reason alone, man cannot prove the existence of God.13 Moreover, Jesus said that God will not be found by the wise and intelligent.14 But for our purposes, He reveals Himself: the Bible is the Word of God. There is no need to prove that He exists. We can accept the existence of God as a fact.

Answer to first question: Following Augustine (354–430), bishop of Hippo, who was the first to systematize a Biblical Christian worldview,15 we presuppose that the world was created by God.

Answer to second question: It follows that all knowledge, to be useful in this perspective, must be consistent with the will of God as revealed in the Bible—His word in written form—and from the illumination of the Holy Spirit.

Answer to third question: To be absolute, a standard must be able to be a standard for itself. However, only God can be a standard for Himself. Thus, only God can be an ultimate and absolute standard for anything, including the imputation of value. As for man, created in the image of God and reconciled to Him through the blood sacrifice of Jesus Christ, God imputes value to him (he is redeemed) because the spirit of God dwells in him.

Answer to fourth question: On that basis, God controls the direction of time, of history, by means of His covenant. Any discourse on the origin of value that does not fit into the above framework is not consistent with God’s plan for His creation.

God is a logical starting point for the analysis of value, for God is the point of origin of creation as a whole—and thus of all value created. And not only is God a logical starting point, but also a logical end point. For creation was made for His glory.

But How Does God Enter the Economic Process?

Two observations can be made. The first relates to demography, and the second relates to the capacities, or the talents, that individuals possess.

First, men and women reproduce themselves and so they bring into existence other human beings. But in so doing, men are not the creators of other human beings. They perform a pre-programmed procedure that yields systematically the same result. Their only decision is to initiate a process—which they have not designed themselves—by which a human being is born.

We can ask where the spirit of one child comes from, when it is “created.” The spiritual counterpart to the biological process that takes place when a life comes into existence has not been revealed to mankind. However, what we have from the Bible to that effect, states that it is God Himself who imparts the spirit (the breath) to man, thus making him a living being.16 That is the created part ex nihilo.

Second, in the population of a country, we observe that all the talents, trade, and professional specialties are available to produce the goods and services that it needs to be able to grow and prosper. We can ask, who provides such talents in the minds and bodies of individuals? As we know, this is part of genetic development. The “selection” of gifts takes place at the fertilization level. If the “choice” was purely random, could there exist a self-regulating equilibrium of the distribution? It is safe to attribute to God the general distribution of talents within populations.17 At the moment of conception, an embryo receives both its breath of life and the talent that will position it in the organization of society.

There is a statistical confirmation of the place of demography and of the creative capacity of mankind to contribute to the creation of income. The 2000 Economic Report of the President of the United States18 reported on the basic factors that could explain the real growth of the gross domestic product (GDP). It appeared that there were two factors: the demographic growth of the labor force and the growth of productivity. These two factors are directly linked to the two nodes that were identified previously as the points of entry of God in the economic process.

It follows that the presence of God is immanent in the economic process. From that position, God provides for all populations on earth the necessary basic elements that they need to become, grow, and develop in their search of their future. Whether or not God will be part of their own future is another matter.

So, the creation of income ex nihilo is the result of (a) mankind’s faculty to develop and accumulate knowledge, by which it produces goods and services, imputes value to and consumes them, and (b) God’s intervention in the growth and character of the human population—the consumers of value.19 Thus the creation of revenue ex nihilo is a phenomenon in which God plays a role.

We see this in the order of creation. God intervenes in a way that touches every human being. The Kingdom of God is at work not only for those who believe in Him, but also for the entire population, however defined.

God as an Actor in the Economic System

The question asked earlier was: what could be an originating factor for the net economic value that is not dependent on some other element of the creation itself, such as labor, capital, or time? Despite formidable advances in economic thinking in other areas, research on that question has not led to any breakthrough since Irving Fisher.20

We have identified that God is an actor in the economic system. Significantly, this fact is rooted in God’s own words. God depicts Himself as an actor when He makes this formal promise to His people: “If you fully obey the Lord your God and carefully follow all His commands I give you today, the Lord your God will set you high above all the nations on earth.”21 He then describes how Israel’s economic output will be touched and made prosperous in many ways: “The Lord will send a blessing on your barns and on everything you put your hand to … The Lord will grant you abundant prosperity in the fruit of your womb,22 the young of your livestock and the crops of your ground …The Lord will open the heavens … to send rain on your land in season and to bless all the work of your hands.”

In this passage, the “prosperity in the fruit of the womb” is emphasized intentionally. We have identified that this is where God, in His immanent presence, intervenes directly in all fertilization processes. But there, He can favor those who are in covenant with Him, as He did for the servants that worked at building His tabernacle and His temple. In His capacity to impart the breath of life, there is additional power that He can use in relationship with the covenant or otherwise as He sees fit. In relation to the building of the tabernacle, at the time of Moses, He imparted several talents to the people entrusted with its construction.23 The Israelis’ extraordinary capacities to create income was a gift from God.

Increased income also implies that the output of Israel’s economic production will be purchased, and that value will be imputed to their economic production by potential consumers, be they from Israel or another country. As God moved the heart of Pharaoh in the pursuit of the Hebrews,24 God sees to it that there are customers who are willing to purchase the goods and services produced in Israel.

The purpose of His promise of prosperity is that “all the people on earth will see that [His people are] called by the name of the Lord.”25 That promise was kept until the reign of Solomon. But the Hebrews could not fulfill God’s requirement in the long run because their heart was not delivered from sin. God made that promise also—and even more so—to His people in Christ, for it is Christ who fully and perfectly accomplishes the law—which is the order of the universe.

God is the originating factor in the creation of net income. Isaac was made prosperous because of his covenant with God.26 The Old Testament shows how God, through His covenant, transformed the condition of His people from that of desolate slaves to the most powerful nation on earth. The form of the alliance has changed since then, but God’s purpose remains the same: that His name be glorified on earth as it is in heaven. It is now the purpose of the body of Christ to manifest His glory. In the concrete form of modernity, the consequence of God’s involvement in His peoples’ economic processes could be that His peoples’ economic growth pattern becomes independent of the business cycle. There is a condition for this, as we will see below.

An Analogy with the Causal System of Aristotle

Having a given worldview will impact how scientific research will evolve. A simple analogy using the set of fundamental causes developed by Aristotle will put this into perspective. Jean-Marc Berthoud showed their consistency with a Biblical Christian worldview.27

The four fundamental causes are: the formal cause, the material cause, the efficient cause, and the final cause. For example, in the case of a house, the formal cause corresponds to the architect’s plans; the material cause, obviously, corresponds to the materials used in the construction process; the efficient cause links to the work involved in the general building process; and the final cause corresponds to the final use made of the house.

If we apply these to the scientific process, we see that it has erred and led men to believe that God had no part to play in science. Today, the scientific process dwells only on two causal factors: the material cause and the efficient cause. The other two causes were eliminated from the scientific process early by Galileo because he believed that they contributed nothing to the understanding of creation.28

Scientists have since followed Galileo’s example. In that respect, economists have done the same and have contributed maybe more so than others to the general belief that men could “chart their own course” by studying market trends and modelling economic behavior, without reference to the formal and final causes of economic phenomena.

From our Biblical Christian worldview, we see that God is the author of the plan, the formal cause. He is the author of creation, the material cause. Through the demographic process, He is part of the efficient cause. And He is the final cause. As we mentioned earlier, God is more involved in the functioning of this world than we realize.

There is a limitation to the extent to which we can chart God’s role in earthly processes. Calvin wrote extensively on this subject,29 and we can only follow his conclusion that men are “close” causes of men’s actions while God is a “distant” cause. It is not possible for men to completely penetrate the counsel of God and see the totality of His plan.

What we absolutely need to know is what God wishes for us to learn about Him, through His involvement in the economic process. He wants us to know where His heart is, so that we can partner with Him in creation. He wants us to understand His power and His compassion, His wealth and His humbleness, His glory and His meekness … in the distribution of income.

The Management of Profits

The consequence of the above is that God plays a role as an originator of net revenue (profit income) which entitles Him to a right of ownership. Its appropriation should follow God’s rules to achieve His purpose in terms of justice. But His way of dealing with profits is not a simple arithmetical rule. He needs for His people to understand His heart and share His burden.30

The issue that needs to be addressed relates to the seemingly unlimited capacity that Western capitalism has to feed its wealth through profits.31 Our common sense warns us that there is something wrong in this state of affairs. This is partly why Marx believed that capitalist production begets its own negation and establishes the socialist ownership of the means of production.32

The question is: what limitations, if any, could God impose on the accumulation of wealth through the rate of profit? From the reading of the Pentateuch, it is obvious that God is not opposed to an unequal distribution of wealth. The basic rule that He gave in that respect is the following: one that has much should not have too much, and the one that has little should not lack basic necessities.33 What does it mean more specifically to “not have too much”? We understand that the door is not open to unlimited accumulation of wealth.

God required His people, the Hebrews, through sabbatical years and the Jubilee, to periodically restore the initial distribution of capital that He originally ordained, to lend with no interest to the people of Israel, and to regularly cancel debts. The reason for this is that the people of God did not achieve its wealth by its own strength but by the grace of God; for the people of God were all slaves, a condition from which they had no means of escape, if not by the sheer power of God alone.

And so He requires His people to remember their former condition—and the grace that He manifested—by asking them to extend this grace among one another on a continuing basis. This is where His heart is and where He is expecting us to meet Him. Should His people agree to manifest His grace, God will see to it that their prosperity would never tarry, as He promised. The redeemed sons of God in Jesus Christ who share in that same grace have no less a tribute to credit to God, for they were cursed to die.

How could we apply such principles today? After due and just payment to all factors of production and investments, profits could be used, in part, to invest in the development of projects explicitly conducive to the growth of the Kingdom of God.

Such profits could also be applied to funding projects and investments in a way that is indirectly conducive to building the Kingdom of God. They could finance schools that teach curriculum subjects but from a Biblical Christian worldview. They could finance Christian universities that will train economists, businessmen, mathematicians, lawyers, biologists, astronomers, and philosophers on how to use their academic knowledge from a Biblical Christian worldview.

Robert LeTourneau set a good example in this regard.34 He loved God deeply. God gave him talents that enabled him to conceive new earth-moving machines. He is recognized as having been ahead of his time by years if not decades. His technologies spread around the world. He became wealthy to the point that he could invest very large sums of money in the Kingdom. In his desire to serve, he founded and financed a private Christian university.35

More recently, J. Gunnar Olson created the International Christian Chamber of Commerce.36 As we will see below, his story is about how he could start and grow a new business, from scratch with no capital, and see its explosive growth under the direction of the Holy Spirit. Many such stories exist but there is no reason for them to remain exceptions. God gave entrepreneurs the power to create and multiply wealth to empower the Kingdom on His behalf, in a partnership with Him. Christian entrepreneurs such as LeTourneau and Olson should dominate the world economy.

This is consistent with the recommendation of Jesus that we should worry about the Kingdom and not about our own welfare.37 That this applies to corporate behavior as well as individual behavior is self-evident.

One may ask: is it not enough to tithe? If we consider profits, we understand that they are an economic value created ex nihilo. Does it not become obvious that God created the economic process so that He could create value in a fashion that is proper to Him, but also that He could involve human beings in the process in a way to glorify His name? Through that process, His sons and daughters can partner with Him in the distribution of income. The rule of 10 percent made sense in the old alliance because it was a period of formation, designed to help us grow in the understanding of God’s heart. But in the new alliance in Jesus Christ, God is embracing the earth, empowering His nation in Christ to overcome the forces of sin on earth. Through the covenant written on His people’s hearts, He can speak directly to His children what amount needs to be transferred to what purpose for the achievement of His Kingdom, as He did in the hearts of Robert LeTourneau and J. Gunnar Olson.

The matter of sharing our income with God is central to the discussion. The question is not how much God is “entitled” to. God wants to be generous not only with us, but to others also who hope in Him because they are out of resources. He desires that we be manifested as His ambassadors by our giving in turn into the hands that are stretched out with no hope other than in God. And the more we participate in His distribution of income, the closer we become to Him and the more power He will manifest through our endeavors—because through us, He becomes real to those who put their hope in Him.

If the people of God could understand His heart, God could bless His people economically as He promised. Then the path of economic growth for God’s people could follow a different one than that of the rest of the world.

The Condition for Having God as a Business Partner

The first question would be, “What would be the contract?” The answer is the Cross of Jesus Christ. It means accepting Him as Savior and Lord as well, which opens the way for Jesus to speak into one’s life. It implies that He is obeyed when directing one on a path that one would not have chosen from a human point of view. It means relinquishing the position of sole commander in one’s own life.

This is the kind of relationship that Robert LeTourneau and Gunnar Olson had with God. And this they share with other Biblical leaders, such as David and Job.

When David went up to Goliath, he knew! He knew that he would dominate over God’s enemy, because he had accepted the Lordship of God over himself. He did so by accepting that the law would be his unique counselor. This is the essence of what we read in Psalms from David in general, but 19, 23 and 26 especially. God had given David victory over formidable odds already, since with no more than a sling he could defeat lions whose physical power largely exceeded his.38 He had a commanding relationship with God because not only was he submitted to Him, He dwelled in David’s heart. Embracing God’s command as expressed in the law—not in a resigned fashion but with love because God’s Word is the truth, the way and the life—gave David a level of authority unmatched in the seen world. Goliath could not see who was coming up against him. God gave David His power and authority.

Job declared spontaneously that he had accepted the Lordship of God over his life when he said:

Naked I came from my mother’s womb, and naked shall I return. The Lord gave, and the Lord has taken away; blessed be the name of the Lord.39

Job never accepted the charges of his “friends” because he knew! He knew the heart of God. His blessings had been so abundant:

… because I delivered the poor who cried for help, and the fatherless who had none to help him. The blessing of him who was about to perish came upon me, and I caused the widow’s heart to sing for joy. I put on righteousness, and it clothed me; my justice was like a robe and a turban. I was eyes to the blind and feet to the lame. I was a father to the needy, and I searched out the cause of him whom I did not know. I broke the fangs of the unrighteous and made him drop his prey from his teeth.40

When God joined the conversation that Job was having with his “friends,” He confirmed that Job had not sinned. And for having accepted His Lordship throughout and despite his trial, God increased by twofold His blessings towards His servant Job.

Robert LeTourneau was committed to serving his Lord on a fulltime basis, but he was not a theologian. When he prayed about this with his pastor, the answer that came from his pastor was: “You know, Brother LeTourneau, God needs businessmen as well as preachers and missionaries.”41 Robert LeTourneau was not highly educated. He started from scratch. But God inspired him and gave him wealth. In his desire to serve, LeTourneau used his wealth like Job did.

In a similar fashion, Gunnar Olson’s deep desire was to start a company in partnership with the Holy Spirit. He was led to relinquish all his savings. Before starting, he had only a dime in his pocket. His office had been lent to him. He didn’t have a car.42 The Holy Spirit did not need more than his heart. In the end, he could build an enterprise that grossed several millions in turnover. “He is currently (in 2017) the owner and Chairman of ALFAPAC AB, a high tech plastic film manufacturing company, the Chairman and owner of ALFAPAC ACON AB, the Holding Company of the previous company, and the Chairman and owner of MODEFA EXTRUDING AB, a plastic film extruding and printing company.43, 44

The Rate of Interest and Monetary Institutions

Revenue “creation” corresponds to the net increase in income. Money is used to measure economic revenue. To an increase in aggregate revenue there is normally a corresponding increase in the stock of money, which is referred to commonly as money “creation.” The parallel growth of both revenue and money at a constant rate maintains the stability of prices.

To be able to measure aggregate revenue, store it over time, and simplify the exchange of goods and services (including loans), the economy needs a stock of money. This is consistent with Biblical principles.45

Given a stock of money, there are two subjects that need to be examined. The first one relates to the ethical issues regarding the treatment of interest. The other addresses the structure of the monetary system.

The Rate of Interest

It follows from our analysis that the existence of excess revenue over costs is not something that can be suppressed, unless God decides to withdraw from the process. Excess revenue over costs is dependent on the inherent characteristics of populations and the immanent role of God.46 In that context, rates of interest on the money market parallel the rate of growth of aggregate revenue.47 Monetary rates of interest reflect the work of God in the creation. They cannot be suppressed altogether any more than the growth of population can be stopped.

However, the Bible does suggest that zero interest rates should be practiced in specific circumstances. A practice of zero interest rate then requires that its function be replaced by something else; in God’s promise to His people, God insures that economic growth will not suffer from a practice of zero interest. He will see to it that their economic output, and thus their income, grows at a rate greater than that of other nations despite their adoption of a zero interest rate.

Earlier attempts at banishing interest rates in Europe could not be successful, as it happened, because those attempts did not rest on a comprehensive foundation anchored upon God’s economic principles. If the people of God apply all of God’s principles in the economic order, then God will participate in their economic output and the growth of their income, as we have seen above.48

The instructions that God gave in Exodus, Leviticus, and Deuteronomy in that respect can be applied today.49 John Calvin reaffirmed those in the sixteenth century, and so has Rousas John Rushdoony in the twentieth century.50 The fundamental principle was simple: no interest should be charged in the case of loans to the needy, but interest could be charged for investment loans. The body of Christ could define practical ways in which this can be done.

We could add that among Christians, we could consider not charging interest for any type of loan. But our conclusion is that this can work only in the framework of a covenantal relationship with God, meaning that it is indispensable that Jesus Christ be recognized as Lord, that His decisions be applied in the daily lives of all those who claim to be part of His Kingdom.

Monetary Institutions

The second question deals with the presence or absence of metal reserves for the backing of the stock of money. The difference between a system with or without a metal reserve can be described by illustrating how new money is brought into the operations of exchange.

In a system based on metal reserves, a metal is monetized by depositing the metal in banks, in exchange for money notes. Ore from a mine can be melted into ingots and deposited in a bank, in exchange for bank notes. By that process, using a 100 percent reserve ratio, the quantity of money in bank notes in circulation can only increase by the exact same amount as metal reserves. A metal is used as a store of economic value that is imparted to money, which in turn serves as a medium of exchange. The increased amount of gold (or another precious metal), times its price, forms the counterpart to the increase in the stock of money. The idea of using a commodity as “numéraire” for the system of exchange is derived from the simple transformation of existing ore, which is within the competence of man to achieve (a competence which God bestowed upon His image-bearers). This concept is consistent with Biblical values.

In a system without metal reserves, it is a touchy matter to decide how the stock of money should increase to meet the increasing economic value of production. The system that is applied by central banks runs along the following lines: to increase the stock of money, bonds are issued by the government and bought by the central bank—debt is created. To pay for these bonds, the central bank adds the amount of money to the government’s bank account literally by writing in the amount, plain and simple. It thus “creates” the new money necessary for the purchase of the bonds by a stroke of the pen. That money is then distributed in the economy through regular governmental spending.51 In this system, debt is the counterpart to the increase in the stock of money.   

The money created parallels that of economic value, both created ex nihilo. But when a loan is granted, debt accumulates and involves the payment of interest. The crucial question reduces to this: to whom does this interest belong? Is it normal that the population who is at the origin of the income should pay interest on top of the income that it created?

The supplementary money that is created is the mirror image of the net revenue produced by the economy. The real net economic value belongs to those who generated that revenue. Why should they borrow money and pay interest to monetize what belongs to them? It should be obvious that the interest paid on the corresponding sums of money to lenders has no legitimacy. Only a metal reserve free banking system could avoid this pitfall.52

These observations are important, for they support the theses that have been defended so notably by Rushdoony and North, as referenced earlier. These observations also support the theses of the Austrian school of economic thought about money, in particular those formulated by Ludwig von Mises.53

In Conclusion

The basic role of economic theory is to explain who does what in the economic production and market processes, and who is entitled to what in the distribution of income. The above analysis reframes the theory within a Biblical Christian worldview and introduces the part played by God.

God’s part in the economy relates to a most sensitive element of economic production, namely profits—the creation of net income. It is at the heart of income distribution. It is the privilege of God’s people in Christ to demonstrate the truth and reality of God’s purpose on earth through income distribution based on God’s principles.

Jesus Christ is God incarnated in the created world. After having created the economic process, in which He is immanent, God opened the way to enter man’s economy explicitly through the body of Christ. A working economic relationship between God and His people could lead the Christian community to follow an economic growth pattern that is independent of the business cycle.

In that perspective, the body of Christ could carefully examine the way its savings and investments could be managed. It could innovate ways to manage its savings independently of the banking system, using a set of interest rates that conforms to God’s instructions.

The body of Christ could become the source of change on earth—by the power of God—that all nations could look up to. In that line of thinking, the recommendations of John Calvin with respect to the role of the Church,54 emphasized and further developed by Rushdoony,55 are applicable in full.

[The author wishes to thank Silvia Baer, Isabelle Shannon, Jean-Marc Berthoud, Glenn Martin†(1935–2004), Tom Rose, Daniel Shannon, and Michel Tricot for their helpful comments. Of course, any remaining error is the author’s sole responsibility.]

1. Jeremiah 33:19–21; 25–26.

2. The first Christian writers on economic matters go as far back as the early Church. Although we would not necessarily agree with their analysis and recommendations today, we mention among them Clement of Alexandria (about 150–215), Ambrose (340–397), and Chrysostom (347–407), followed later on by Thomas Aquinas (1225–1274). See Joseph Schumpeter’s History of Economic Analysis, Oxford University Press, New York, 1994, p. 71. John Calvin (1509–1564) became a major leader in Christian economic reform in the sixteenth century. He is recognized for his contribution to the “liberation” of capitalism from the shackles of prohibitive Christian doctrinal views on interest. More recently, Rousas John Rushdoony headed (from 1965 onwards) the Chalcedon Foundation, a Christian educational organization devoted to research, publishing, and promoting Christian reconstruction in all areas of life. His magnum opus, Institutes of Biblical Law (1973), includes a seminal effort to re-establish Biblical principles in the management of money. His views continue in the direction set out by John Calvin, but he extends the analysis to criticize modern banking practices. In 1975, he contributed a segment in a book edited by Hans Sennholz: Gold Is Money (Westport, Connecticut: Greenwood Press). In September 1981, he published an analysis in the Chalcedon Report #193 titled “God, the Devil, and Legal Tender,” in which he asserts that gold and silver reserves should be reinstated for the backing of money. For a complete list of R. J. Rushdoony’s contributions to subjects related to economics and the Bible, and for an extensive resource list of contributors to the Reconstruction movement, visit the Chalcedon Foundation at In the same perspective, Landa Cope, International Dean of the College of Communication for Youth With A Mission’s University of the Nations, showed how the teachings of the Old Testament are still relevant for discipling a nation today. Her teachings can be downloaded from a website ( that she created especially for this subject. In the following of Rousas J. Rushdoony, Gary North wrote extensively on the subject of economic behaviour and Biblical principles, notably Honest Money—Biblical Principles of Money and Banking, Biblical Blueprint series #5, Institute for Christian Economics Freebooks, 1986. For other contributions of North on this and other topics, visit the Institute for Christian Economics Freebooks at Also of interest are: E. L. Hebden Taylor, Economics, Money and Banking, Christian Principles, The Craig Press, 1978; Brian Griffiths, The Creation of Wealth: A Christian Case for Capitalism, InterVarsity Press, 1985; Tom Rose, Economics: Principles and Policy from a Christian Perspective, American Enterprise Publications, Mercer, 8th printing, 2000; Stephen C. Perks, The Political Economy of a Christian Society, Kuyper Foundation, Taunton, England, 2001; Craig Hill and Earl Pitts, Wealth, Riches and Money, Family Foundations publishing, Littleton, Colorado, 2001.

3. Eugen von Böhm-Bawerk, History and Critique of Interest Theories, first edition in 1884, re-edited by Libertarian Press, South Holland, Illinois, 1959.

4. Irving Fischer, The Theory of Interest, MacMillan, New York, first edition 1930, reprinted in 1977.

5. Eugen von Böhm-Bawerk, Further Essays on Capital and Interest, first edition in 1912, re-edited by Libertarian Press, South Holland, Illinois, 1959, pp. 162–193. In that book, Böhm-Bawerk reacted to an earlier work by Irving Fisher, The Rate of Interest, published in New York in 1907. Fisher rewrote that book into The Theory of Interest, published in 1930. In this later work, Fisher explains (p. viii) that the arguments were rewritten entirely but the mathematical model remains the same. He discards Böhm-Bawerk’s charge of circular reasoning by saying that “The causal solution cannot be so simply conceived as to make one factor solely cause and another solely effect. The advance of all science has required the abandonment of such simplified conceptions of causal relationship for the more realistic conception of equilibrium.” The Theory of Interest, op cit., p. 484 n. (Emphasis is Fisher’s.) Böhm-Bawerk passed away in 1914; he could not reply to this rebuttal. Following his line of reasoning, he might have replied that the problem at hand is not one of endogeneity but one of exogeneity. In this essay, we retain the important question as to what exogenous factor causes the “excess of revenue over costs” to arise. That factor could then act as a determinant of a just distribution of income. There is an ethical appreciation to this matter which mathematics cannot address, however elegant and precise mathematicians’ analyses and solutions might be. The reader is encouraged to read George Reisman’s view on this concept of equilibrium. Reference to his book is given in note 6. On page 9 of his treatise, he says that equilibrium analysis “takes attention away from the real-world operation of the profit motive and of the market processes by means of which the economic system continually tends to move towards a state of full and final equilibrium without ever actually achieving such a state.” (Emphasis is Reisman’s.)

6. George Reisman, Capitalism—A Treatise on Economics, Jameson Books: Ottawa, Illinois, 1990. Reisman’s approach rests on the time preference proposed initially by Böhm-Bawerk and retained in the literature on the subject. However, Reisman faces the same limitation as did Böhm-Bawerk and his followers, namely the one that comes from dualism: the separation of material from spiritual problems into different and unrelated domains of investigation.

7. Böhm-Bawerk wrote a complete and systematic refutation of that theory as early as 1884, in his important History and Critique of Interest Theories, op cit., pp. 241–321. He observes: “The perfectly just proposition that the laborer should receive the entire product may be understood to mean either that the laborer should now receive the entire present value of his product, or should receive the entire future of his product in the future. But Rodbertus and the Socialists expound it as if it means that the laborer should now receive the entire future value of his product.” p. 264. (Emphasis is Böhm-Bawerk’s.) A more recent refutation of the exploitation theory can be found in George Reisman’s Capitalism—A Treatise on Economics, Jameson Books: Ottawa, Illinois, 1990.

8. See Tom Rose, op cit., pp. 21, 99–100.

9. See Böhm-Bawerk, op cit., pp. 90–92.

10. For a complete discussion of this subject, we must refer the reader to economics textbooks.

11. Truly they own the equipment, the production process, and the output, since they have purchased the equipment, the labor, and materials entering the production. They own the products and services that are produced by them and, therefore, the income from the sales of these products and services. If the price agreed to by consumers for these products and services is superior to the cost paid for the inputs of labor and material that entered the production process, there is creation of value and income. If consumers buy none of the items produced, the costs transform into a loss. There is no value created; rather, it is destroyed. There is no income. We see that consumers are determinant elements of value creation.

12. The four fundamental questions are borrowed from Glenn Martin (1935–2004), formerly professor at Indiana Wesleyan University, Indiana, U.S.A.

13. Immanuel Kant, Critique of Pure Reason, Penguin Classics, 2008, Second Part, Second Division, Chapter III.

14. Matthew 11:25; 1 Corinthians 1:19; 3:19–21.

15. Saint-Augustine, City of God, Modern Library, 1994.

16. Genesis 2:7; Isaiah 2:22; Psalm 144:4.

17. This is akin to the general equilibrium of genders among populations on earth. There is no demographic explanation for this equilibrium.

18. Economic Report of the President, United States Government Printing Office, Washington, 2000, p. 85.

19. This observation fits very well with William J. Baumol’s proposition by which the “natural” rate of growth of an economy depends on the rate of growth of the population and that of productivity. See Roy F. Harrod, “An Essay in Dynamic Theory,” Economic Journal, March 1939. A more recent formulation of this point can be found in Roy Harrod, Economic Dynamics, MacMillan, London, 1973, pp. 16–31. An application of this principle can be found in The Economic Report of the President, United States Government Printing Office, Washington, 2000, p. 85.

20. See note 5.

21. Deuteronomy 28:1–14.

22. Emphasis is the author’s.

23. Exodus 35:31–35.

24. Exodus 14:8.

25. Deuteronomy 28:10.

26. Genesis 26:12–14.

27. Jean-Marc Berthoud, L’école et la famille contre l’utopie, L’Age d’Homme, 1997, pp. 227–255.

28. Jean-Marc Berthoud, op cit., p. 236.

29. For a synthesis, see Cornelius Van Til, The Theology of James Daane, Presbyterian and Reformed, Philadelphia, 1959, pp. 50–53; quoted from Jean-Marc Berthoud, op cit., p. 254.

30. In Job 29, Job explains where his wealth came from and how he shared God’s burden for the needy.

31. As a case in point, George Reisman asserts, “The principle that man’s desire for wealth is limitless is fully consistent with the law of diminishing marginal utility, one of the most important and well known principles of economics.” op cit., p. 49.

32. Karl Marx, Das Kapital, 7th ed., Hamburg, 1914, Vol. I., p. 728. (Quoted from Ludwig von Mises, Planned Chaos, 5th reprint, Foundation for Economic Education, Irvington-on-Hudson, New York, 1977, p. 35.)

33. In reference to the manna, Exodus 16:18. Emphasis is the author’s. One should keep in mind that the amount of resources at one’s command means nothing to God. If we have more to manage, we have more to be accountable for (1 Corinthians 3:9). The attitude of our heart towards the Kingdom is what really matters, as the widow’s offering teaches us (Mark 12:41–44).

34. Robert LeTourneau, Mover of Men and Mountains, Moody Publishers, Chicago, 1972.

35. See

36. J. Gunnar Olson, Business Unlimited, ICCC, Sweden, 2002

37. Matthew 6:31–34.

38. A lion can weigh between 150 kg to 250 kg, run up to 60 km/h and jump up to 11 meters.

39. Job 1:20–21.

40. Job 29:12–17

41. Robert LeTourneau, op cit., p. 109. This took place around 1920.

42. J. Gunnar Olson, op cit., p. 51.


44. For further reading, we recommend Dennis Peacock, Doing Business God’s Way, Rebuild, 2003.

45. See Deuteronomy 14:22–26; 15:1–11.

46. This observation could be related to the analysis made by Patrick J. Buchanan in his recent book The Death of the West, Thomas Dunne Books, New York, 2002. In that book, he shows how dying populations and immigrant invasions imperil whole countries and civilizations. He observes that whole populations are dying because they have relinquished Judeo-Christian values.

47. The argument draws from the analysis made by Böhm-Bawerk and from which he concludes that “surplus value” manifests itself directly in the form of interest on the money market. See E. von Böhm-Bawerk, Positive Theory of Capital, first edition in 1889, re-edited by Libertarian Press, South Holland, IL, 1959, p. 323.

48. See note 24.

49. Exodus 22:25–27; Leviticus 25:35–55; Deuteronomy 15:1–18.

50. Rousas John Rushdoony, op cit., pp. 473–481. In that passage, Rushdoony recalls the declarations of John Calvin on the subject of interest.

51. For a detailed but user-friendly presentation of the mechanism, see G. Edward Griffin, The Creature from Jekyll Island, American Media, 3rd Edition, 1998. For an evaluation of the Federal Reserve from a Christian point of view, see Tom Rose, “90 Years and Going Strong? An Evaluation of the Federal Reserve: Its Motivation and Founding,” in Chalcedon ReportBanking on the Future, August 2002, pp. 12–15.

52. On free banking, see the following references: Lawrence H. White, The Theory of Monetary Institutions, Blackwell Publishers, 1999. Larry J. Sechrest, Free Banking: Theory, History, and a Laissez-Faire Model, Quorum Books, London, 1993. George A. Selgin, The Theory of Free Banking, Rowan and Littlefield Publishing, Totowa, New Jersey, 1988; from the same author, Bank Deregulation and Monetary Order, Routledge, London and New York, 1996.

53. Ludwig von Mises, The Theory of Money and Credit, translated from the German by H. E. Baton, Jonathan Cape, London, 1934, re-edited by Yale University Press in 1953, and by Liberty Funds: Indianapolis, Indiana, in 1981. Consider the following statement from p. 480: “The eminence of the [100%] gold standard consists in the fact that it makes the determination of the monetary unit’s purchasing power independent of the measures of governments. It wrests from the hands of the ‘economic tsars’ their most redoubtable instrument. It makes it impossible for them to inflate.” Brackets and their content added by the author.

54. The Swiss pastor-economist André Biéler wrote a thesis in which John Calvin’s theological anthropology and sociology are summarized. In his book, the relationships between the Church and civil governments are depicted by Calvin as being in perpetual tension but not in conflict. The role of the Church is to “criticize” the work of the government in view of the Word of God but always in a constructive fashion. Calvin’s worldview can be easily drawn from Biéler’s work. See André Biéler, La pensée économique et sociale de Calvin, Librairie de l’Université, Georg & Cie S.A., Genève, 1961. See in particular pp. 184–305.

55. See references at the beginning of the essay, in note 2. 

  • Daniel Depelteau

Daniel A. Depelteau, MA (Economics) McGill University, Canada; Consultant in Public Health Finance; formerly: Deputy Under Minister of Health and Advisor to Minister of Finance (Canton of Vaud, Switzerland)—Achieved a reform of finance for the chronic care of the elderly, applied in all cantons of Switzerland; Finance Director, Boas Group; Director of FH Switzerland, fundraising NGO.

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