At Work & Public Square

An Economic Lesson from the Sermon on the Mount

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Matthew is a book written for first-century Jewish Christians. It is full of important lessons and facts about Jesus’ life and ministry, and like all the gospels, is primarily focused on individuals and personal behavior as opposed to the Old Testament which deals more with the conditions of the nations.

Matthew records the most famous Christian sermon of all time, the Sermon on the Mount, in chapters 5:2 to 7:27. The Sermon contains a number of great lessons with economic application.

One of the most important lessons in the Sermon of the Mount deals with keeping one’s word in agreements and contracts. In Matthew 5:33-36 Jesus tells us that we should not swear or take oaths. We should simply let our “yes” and “no” stand for themselves. The implication here is twofold:

  • One, Jesus explicitly states we cannot impact what happens in heaven or on earth. We can’t even always control what happens to the hair on our own heads, so on what grounds can we swear an oath by any of these?
  • The second is implied. We should tell the truth and keep our word, and should not need to emphasize our willingness to keep it by swearing an oath.

As Calvin states in his commentary on Matthew 5:37,

Christ now prescribes, in the second place, a remedy; which is, that men act towards each other sincerely and honestly: for then simplicity of speech will have quite as much weight as an oath has among those who are not sincere. Now, this is certainly the best way of correcting faults, to point out the sources from which they spring. Whence comes the great propensity to swearing, but from the great falsehood, the numerous impositions, the unsteady and light conduct, so that hardly anything is believed? Fairness and honesty in our words are, therefore, demanded by Christ, that there may be no longer any occasion for an oath.

Trustworthy contracts are the glue of a market economy. Any exchange is a contract , requires trust, and assumes honesty by all the parties to the deal. Calvin explains that this is how men should act toward each other. Men most often act toward each other when they conduct business. The teaching is much broader, but it has many implications for business.

There are many levels of trust involved in even the simplest of contracts. Think about purchasing gas. You drive into a station, put a credit card into a machine, pump fifteen gallons of liquid into your car, and drive off. You never talk to anyone, they never talk to you, you never verify that the liquid is actually gas, and the station workers never verify that you are the actual owner of the card. At any of these points, the transaction can come undone if either party is untrustworthy. Fortunately, we have not had such a universal breakdown in basic trust.

The deterioration of trust has changed the way we do business. There was a time when a man’s word was trusted as reliable. It may be that the era of the “handshake deal” was not as prominent as nostalgia may lead us to remember. It was, however, much more prominent than it is now, as were things such as “signature loans” at the bank. These sorts of business deals are rare now because we do not trust each other as much.

The breakdown of honesty is very costly, as even the simplest deals now require reams of paperwork, signatures, initializing, disclosures, notarizing, and so forth. All of this costs time and money, and slows down and even prevents deals getting done. Economists call these “transaction costs.” Think of them as roadblocks. They prevent the smooth flow of goods and services, and in some cases, they stop the flow altogether.

If all men followed Jesus’ teaching, not only would we have more peace and harmony, but we would actually be wealthier since we would have fewer transaction costs.

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Photo: Saint Matthew and the Angel by Rembrandt. Courtesy of Jean Louis Mazieres.

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