Economics Versus the Economy
Economics is fairly easy to define. It’s the academic discipline that studies the economy,
just as chemistry is the academic discipline that studies how chemicals behave and political science is the academic discipline that studies political behavior.
What is the economy? turns out to be a harder question. Let’s start with what economics calls it. Economics talks about the economy as the way in which people make decisions about their resources when they have to make tradeoffs. So, if they have limited resources, even if they have a lot of resources, they are still limited. You can’t eat your cake and have it, too.
If I spend $10 on this item, that’s $10 fewer that I have to spend on other items. If I spend half an hour praying, that’s half an hour I don’t have to work on my homework or do whatever it is that I wanted to do. If I tell you that you’ve got to watch this new streaming TV series, that’s one fewer TV series that I have capital with you. If I’m constantly telling you to watch things you’ll start ignoring me so I’ve a limited capacity in our relationship to urge you to do things. So these resources that we have that are limited require us to make trade-off decisions.
Economists talk about the economy as the social system in which people are making trade-off decisions about their money, about their resources, about their work, their time, their leisure, and the other things they have to make trade-offs about.
In a more narrow sense, the economy is the social structures that are specially created to help manage those trade-offs. Things like businesses and markets—which exist primarily for the purpose of facilitating trade-offs like that. But if we take a Christian perspective, we can add more to that. We can see the economy as a social web that God has created for people to serve each other with their work. When God creates Adam and Eve in the garden, he creates Adam and Eve in order to take good care of the garden. There’s work before the fall, work is a part of God’s intention for human beings when he creates them. When he looks at Adam he says, “It’s not good that the man should be alone. I will create a co-orker for him,” someone to collaborate in the work of taking care of the garden and ultimately taking care of all of creation as God’s image-bearing stewards or custodians of the world that God’s created.
Our daily participation in the economy is really a front line in the holy war between good and evil in our universe.
So when we engage in the economy what we’re doing is trading our work with each other. I make shirts and you make shoes. So I take the money that I make from making shirts and I use them to buy your shoes, and you take your money from making shoes and use it to buy my shirts. So money is being exchanged, but ultimately, it’s work that’s being exchanged because I do my work and you do your work.
At the same time, we also need to see the economy as a place where the enemy is active and where the fall has had a pervasive effect. So that there’s a created intention for the economy that it be a web of love and service where people are taking good care of each other through their work, but it’s also a place where greed and pride and sloth and envy and all the other sins are very much a presence and are even incorporated into the institutions that we participate in. So in one sense, our daily participation in the economy is really a front line in the holy war between good and evil in our universe which is a little bit different than what you get from an economics textbook.
Greg Forster is the author of Economics: A Student’s Guide.
- A Christian’s Perspective on Economic Downturn (Greg Forster)
- Why Giving 10% Isn’t Enough (Greg Forster)
- The Economy Is about More than Money (Greg Forster)