Indispensable Economics Are there economic laws?

Aug 7, 2008

In the latest edition of an otherwise scholarly theological journal, a writer, who only ever writes about one subject, attacked the free market as usual.  He wrote:  “Neither can economics be satisfied with leaving human beings to the mercy of markets with their supposed ‘laws.’. . .”  While there is certainly no space to take on his whole article, this part might just be the most serious error in it.

This particular writer, and those trained in his school, which he denies is the German Historical School (but it is,) operate from a nominalistic approach.   Nominalism, a school of thought begun in the Middle Ages by the Franciscan, William of Ockham, denies that there is any human nature.  Therefore, human beings have no necessary consistency in them.  In ethics, each person makes up his own code, and the codes can be very much at odds.  To a nominalist, everything is will alone, not reason.  This is why the writer in question asserts that people are at the “mercy of markets.”  To those who think like this, everything is power.  Even in moral theology, the reason one obeys the Ten Commandments is that it’s God’s will only, and there is no connection with those commandments and the nature of things.  God could have commanded ten other things we were to avoid, and we would be required to obey them, because they are His will, even if they were the opposite of those actually listed.  (I am sure many people would not have any trouble with the commandments were that the case)  Thus, to those who think in this manner, markets are power, and that’s why there are no laws of economics.  That’s why corporations are evil; because money gives them power, which they use to take advantage of others.

The truth of it is that human beings do participate in a common nature, created by God, and this common nature leads people to think and act alike generally speaking.  The laws of economics come from this consistency of human nature.  Markets do have laws because people make free choices as to what is best for them.  The market exists for the sake of the consumer, which includes everybody.  If I go to the store and want to buy bananas, and the bananas are rotten, why should I buy them; to support the farmer or the store?  If we all did that, people would be encouraged to make junk and I would be encouraged to continue to buy it even if it did not fulfill my needs.  Why would I do that?

Let’s take the example to a higher level.  I know that there is a demand for office space in my city, so I want to build a tall office building.  The office building has to be tall because land in a city is very scarce and therefore very expensive, so I have to build “up.”  To do so I need strong steel.  If company X has crummy steel, it will not hold up and the building will come crashing down at the first sign of stress.  So I must go to company Y that sells steel that will be appropriate to the height of my proposed building.  Should I buy the company X steel because I feel sorry for the workers who will not get my business?  You tell me; rather you go tell that to the families of the victims of my collapsed building. 
 
Will the steel from company X be cheaper?  Perhaps.  If I buy it and the building comes tumbling down, am I evil?  Well, we cannot judge the soul of another, nor can we read his mind.  One thing we do know is that this builder did ignore the laws of economics (and probably those of engineering as well).
 
Think about the decisions in your life, and see if there are no laws governing your decisions.  If gasoline is $.10 per gallon cheaper in the next town, which is 45 minutes away, would you think it is worth it to drive there to get that particular gas, given not only the price but the time involved, and whether it is raining or snowing, and other things that you have to do?  Well, you just did a cost-benefit analysis, which every sane human being does in their head many times a day whether they realize it or not.  How can anyone say that there are no laws of economics.

|