Economics 101

Is Income Inequality Ever Natural and Biblical?

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Income inequality is a fact of economic life. People are born with different gifts, and they choose to pursue them differently in the marketplace. As such, our gifts carry unequal earthly rewards, one of which is in the form of income. The market is an earthly construct which can dole out only earthly rewards.

The looming question is whether this economic reality is necessarily unbiblical.

To best understand this, we need to go to scripture on two fundamental points: the distribution of gifts and abilities; and examples of God’s earthly rewards for stewardship within the context of market exchange. We’ll discuss the first today with the following excerpt from my chapter in IFWE’s latest book, Counting the Cost: Christian Perspectives on Capitalism.

Diversity of Gifts Leads to Specialization

Understanding why income inequality exists requires an understanding of how we are created. Scripture tells us that we are created in God’s image (Gen. 1:26–27), which implies uniqueness:

Then God said, “Let us make mankind in our image, in our likeness, so that they may rule over the fish in the sea and the birds in the sky, over the livestock and all the wild animals, and over all the creatures that move along the ground.”

So God created mankind in his own image,
in the image of God he created them;
male and female he created them.

God is unique—there is only one God. Man, too, is unique, both physically and spiritually. Each person on this Earth has a unique genetic code, or DNA. In addition to our specific genetic proclivities, we are all created with unique sets of talents and skills. God calls us to use those gifts to glorify him by fulfilling the cultural mandate, filling the earth, and exercising dominion.

In 1 Corinthians 12:4–11, Paul explains that our gifts are different, the service of those gifts is different, and there are different types of working (the gifts manifest themselves in entirely different ways); but in all of them, God is at work for the common good. We all have dignity, but our created differences result in inborn inequality, which serves to make us all better-off. It releases us from trying to become perfect in all things.

Economists refer to this uniqueness as the law of comparative advantage. If one individual or company can produce a good or service at a relatively lower marginal and opportunity cost (which is the cost of the next-best alternative), then they are better-off specializing in the production of that good or service and trading with others. This is a relative comparison of skills across individuals or companies.

Our God-given skills, which lead to our comparative advantage, foster interdependence. The neurosurgeon needs the janitor and vice versa. If the surgeon had to produce everything he or she needs to perform surgery, lives would be at stake. In a society where we are encouraged to use our skills in the service of others, we create more employment opportunities than there would be otherwise.

Specialization frees up our time to focus on using our gifts most productively, and that freed time is an opportunity to further the kingdom of God in other ways. A single man who sends his laundry out rather than spending hours on it himself frees himself for other kingdom-building work.

This is important because we live in a world of scarce resources and limited time. The market rewards and punishes in dollars, which sends signals about how people prefer to use scarce resources. Those dollars reflect the market return to one’s comparative advantage, reconciled with what consumers want and need (consumer demand). Market signals help inspire greater flourishing.

Markets allow us to allocate scarce resources most productively. Earth’s scarce resources have multiple and competing ends, and all our choices involve trade-offs. Markets help resolve to which ends we allocate those scarce resources by bringing together the most willing demanders with the most willing suppliers to engage in mutually beneficial trades.

This process expands the spectrum of what we can enjoy just by pursuing our comparative advantage and trading with one another.

Some skills are scarcer and may be in greater demand than others, and that is why incomes will always be unequal (different). Income inequality is an economic reality manifested from the biblical principle of uniqueness. Income is not the only earthly reward either; it’s just the only reward bestowed by the market. It is critical that people pursue unique callings so that we can all enjoy greater levels of flourishing by serving each other.

Viewing Life Through the Lens of Scripture

As I’ve shared in the excerpt above, it’s critical that we look at this topic and others like it through both a biblical and economic lens. As Christians, we believe that all scripture applies to all of life, and that the Bible is the best tool God gives us to understand what he wants for his creation.

When we understand our different gifts and how they are rewarded differently in the market, we see that there is some income inequality that is “natural” to a flourishing society. But there is income inequality that is destructive, and it’s important to know the difference. Ultimately, the gained insight will help us judge systems like capitalism from an honest and well-informed perspective.

Editor’s note: Continue reading Anne’s chapter “The 1 Percent: Is Income Inequality Evidence of Exploitation in Counting the Cost: Christian Perspectives on Capitalism. Get 15% OFF when you use the code: CTC15.

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