The New Faith: A Review Of "Economics As Religion" By Robert H. Nelson

The New Faith: A Review Of "Economics As Religion" By Robert H. Nelson

Ciesla Book Review In The American Enterprise
September 01, 2002

The House of Bishops of the Episcopal Church offered the following opinion on the cause of the September 11 attacks: "The affluence of nations such as ours stands in stark contrast to the other parts of the world wracked by crushing poverty which causes the deaths of 6,000 children in a morning:" The bishops' opinion is a variation on a theological theme: Poverty is the source of evil. Salvation is contained in the wealth of nations. This view is not Christian. It is based on a competing religion whose creed replaces Original Sin with scarcity and Paradise with prosperity. That religion is economics.Robert Nelson, professor of public policy at the University of Maryland, examines this idea in Economics as Religion: From Samuelson to Chicago and Beyond. Today's economists, says Nelson, serve as "the priesthood of a modern secular religion," forming the basis of America's core social value: economic efficiency. Behind the technical jargon and mathematical models, economists are "engaged in an act of delivering religious messages... promises of the true path to salvation in this world, to a new heaven on earth."Nelson perceives two schools of thought in the development of economics: Roman and Protestant. The Roman tradition with its emphasis on natural law, an elite priesthood, and belief in a rational world, is likened to the rise of American Progressivism and its faith in the scientific management of society by a class of experts. The apex of this ideal is found in Paul Samuelson's 1948 textbook, Economics, which fused post-WII America's new enthusiasm for science with the Keynesian fine-tuning approach to the market. Economics, writes Nelson, with its heroic "poetry of large government" and commandments against monopoly and inefficiency, served as a Progressive's bible.Samuelson's romantic view of progress was seen as utopian by a new generation of economists led by Frank Knight at the University of Chicago. Nelson classifies this response to Progressivism as "Protestant" in character. Knight scorned the notion that a class of experts could determine the path to prosperity. Like Martin Luther, he advocated "a priesthood of all believers," acting in their own self-interest. "Human reason," he believed, "was a frail instrument, often corrupted by the baser elements in human nature." Private property was a necessary evil.Such individualism and belief in a world corrupted by sin, fundamentally Calvinist in nature, regards each individual as responsible for his own salvation. Breaking with Keynesian conventional wisdom began the genesis of libertarian thought at Chicago. A new economic gospel extolled freedom as a means of "maximum power for an individual to control his or her own actions" believing that "men prefer freedom to efficiency."Where Nelson applies these two Christian traditions as a loose guide to the evolution of the economics profession, it provokes useful debate. But later, Nelson's analysis becomes self-serving. Looking at the ideologies that compete with economics for believers, he finds two: radical environmentalism and Roman Catholicism.In reading selectively Pope John Paul II's recent encyclicals on capitalism, Centesimus Annus, and on human rights, Evangelium Vitae, Nelson finds them (in combination) critical of both Samuelson's progressive gospel and Gary Becker's utilitarianism, on the grounds that both emphasize secular humanism.This is a misreading of Centesimus Annus. The encyclical speaks of a joyful entrepreneurial spirit, stressing the importance of intellectual capital, initiative, and skill, while warning against the "consumerist values" that result in a society driven purely by self-interest. Rather than opposing economic progress, the Pope defines a Catholic Work Ethic. But Nelson merges the encyclical on capitalism with papal writings on abortion to conclude that the Pope shares an antiprogressive affinity with enviro extremists, "offering a high moral sensitivity that is not accompanied by a similar economic knowledge and sophistication."This is a gratuitous reading. It is clear that the Pope recognizes a crucial piece of the market paradox: Capitalism works best in a moral society. Human beings are the world's most valuable resource.Nelson demonstrates nicely that the methodology of economists is far from value-free. That is not necessarily bad, but Nelson stresses that economists must recognize the implications of their assumptions. They would stand to gain by including culture and religion in their analyses, something that most economists are reluctant to do. At best, ignoring the fundamental forces that shape human societies leads to less meaningful results. At worst, economists risk becoming irrelevant within the social sciences.Nelson's book is a challenge to economists to see their field anew. If they accept the challenge, it may shed light on puzzles that plague academicians and policy makers alike: Why does the West succeed at building robust economies, while Russia, Africa, and the Islamic world struggle with the basics of a market system? If private property is the key, why do some societies protect it, while others do not? How does a nation build a society of trust? What is ultimately at the root of the wealth of nations?The House of Bishops might be surprised at the answer.