The Roots of the Global Economic Crisis

[The following post, refreshed  from its original publication, is highly relevant to the current political-economic environment.]

The global economic crisis is, at its root, a moral and metaphysical crisis. Our economic principles and polices are founded on assumptions which are either theistic or atheistic. One set of assumptions fits reality the way God has made it, the other occupies a world of illusion.

A theistic set of assumptions assumes that the universe is an open system. An open economic system begins with a transcendent Creator who stands outside the universe. The universe is open to the intervention of God, the angels, and humankind – the imago Dei. In this system, wealth can be created.

An atheistic set of assumptions understands that “nature” is all there is; the universe, like a huge machine, is a closed system. There is no God, nor are there angels to interact with the system. Humankind itself is part of the system – a cog in the machinery. In a closed metaphysical and economic system, resources are fixed things, in the ground. To put it differently, resources are both physical and finite.

In contrast, the theistic economic system assumes that the greatest source of resource is the human mind: innovation and creativity. Resources do not come from the ground but from the human imagination. These resources have only two limitations: the first is human imagination; the second is a lack of moral stewardship.

The open system model of economics is a positive sum exercise. The proverbial economic pie can expand and grow larger based on freedom of enterprise, human creativity, and stewardship of nature. Or, more simply, wealth can be created!

The closed system economic model is a negative sum exercise. There are only so many resources to go around. If one person or nation has more wealth than another, the wealth was stolen from the other person or nation; this is the root of the cause of poverty. When the problem is defined in these terms, the solution is to “spread the wealth around” through taxation of the wealthy or through overthrowing the existing government. This is the Socialist or Marxist economic model; this model defines justice as an equal distribution of resources through coercion or physical force if necessary. Power is the end game!

While Socialism and Marxism demand economic justice – equal economic outcome-the Stewardship Economy defines justice as equality before the law (rule of law, not rule of man) with each person given the opportunity to develop their own God-given potential and vision. This is free enterprise.

There are two major schools of economic thought examining the current global economic crisis. One wants to free individuals, corporations, and government institutions from responsibility and wants to confiscate wealth from those who have acted responsibly to bail out those who have not been responsible. Encouraging irresponsibility will only make matters worse in the long run.

The second school will call for economic responsibility; a return to stewardship, thrift and long-term time frames. It will call for those who acted irresponsibly to pay the price for their foolishness in the short run to make for healthier families, communities, and nations in the long run.

We will either learn from this crisis or we will try to have simple and painless solutions which will only put off the day of economic reckoning.

– Darrow Miller

placehold

  
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2 Responses to The Roots of the Global Economic Crisis

  1. I must confess I’ve been uneducated about these principles all my life and now struggle to see the current crisis through Biblical lenses.
    I praise and thank God for you as you help us all to see more clearly.

    Um abraço [Brazilian greeting meaning ‘A hug’]

    Fernando Guarany Jr
    Parnamirim – RN – Brazil

  2. Fernando

    Thank you for your encouragement. I hope the things that we write on this blog will challenge you to think more and more in terms of first principles.

    Merry Christmas

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