The Law of Supply and Demand

v.23 All things are lawful for me, but all things are not expedient: all things are lawful for me, but all things edify not. 24 Let no man seek his own, but every man another’s wealth. 25 Whatsoever is sold in the shambles, that eat, asking no question for conscience sake: 26 For the earth is the Lord’s, and the fulness thereof. 27 If any of them that believe not bid you to a feast, and ye be disposed to go; whatsoever is set before you, eat, asking no question for conscience sake. 28 But if any man say unto you, This is offered in sacrifice unto idols, eat not for his sake that shewed it, and for conscience sake: for the earth is the Lord’s, and the fulness thereof: 29 Conscience, I say, not thine own, but of the other: for why is my liberty judged of another man’s conscience? (1Co 10:23-29)

In chapters 8-11 of First Corinthians, he is addressing the question of whether a Christian can lawfully eat the flesh of an animal that was sacrificed to an idol. His answer is not a simple yes or no; but a treatise on the subject that highlights some principles of Christian ethics that will have applications that go beyond the matter in question.

In this passage of Scripture, the Apostle Paul commends to us a serious regard for the interests of others that modifies the general principle of liberty with respect to the pursuit of our own interests. I have drawn attention to this emphasis by italicizing the relevant portions in the text as given above. In this case the believer is to consider the conscience of others before availing himself of the liberty to eat meat which may have been offered to idols.

If the one who offers the meat tells him that it was offered to idols, we are to decline. This is not for our own conscience’s sake; for we are free in the matter. It is, after all, food, and it is not in any way affected by any ceremony. It is for the sake of his conscience that offered it to us. To eat it would make us seem to approve of idolatry by participation in it; weakening his conscience, which is the opposite of what a Christian should do. Our goal is to make men’s consciences sensitive, to inform them with the word of God as to right and wrong.

As Jesus put it, and Moses before him,”Love thy neighbor as thyself.” And “…all things whatsoever ye would that men should do to you, do ye even so to them”, adding “for this is the law and the prophets” — that is, the substance of the Scriptures’ teaching. And Paul the apostle commands Christians “Let no man seek his own, but every man another’s wealth”. (1Co 10:24) Could it be more clear that at the center of the ethic of Christianity, and of biblical Judaism, is the consideration of our neighbor’s good as well as our own?

What does all this have to do with the law of supply and demand? First what is this law of supply and demand? Is it a law which we are commanded to obey? Of course not. It is a law in the sense that it is generally observed in the behavior of human beings in the realm of commerce. It is, in other words, descriptive, rather than prescriptive.

Well, then, what does it describe? It describes the tendency of buyers to pay as little as they can for goods and services, depending on the variable of “supply”; and of sellers to raise the price of their goods as far as they can, depending on the variable called “demand”. Using the terminology of mathematics, we might say that supply and demand are inversely proportional.

The word “supply” means the quantity of a particular kind of goods currently available for sale within a sphere of commerce — what we call, an “economy”. “Demand”, on the other hand, is used of the aggregate amount of money that prospective buyers have available to spend on a particular kind of goods.

Well, then — and here we enter the heart of my subject — is it ethical to behave in these ways? Is it ethical, in biblical terms, to maximize personal advantage in our commercial transactions with other people? I submit to you that, in the light of the Scripture texts I have drawn attention to earlier, the answer must be a resounding “No!” In fact, this is the exact opposite of loving one’s neighbor as oneself.

In the Psalms , it is written, “Blessed is he that considereth the poor: the LORD will deliver him in time of trouble.” (Psa 41:1)

Solomon was very concerned about the well-being of the poor. Twenty-nine of the Proverbs are about the poor as a class. Among them, we find this:

24 There is that scattereth, and yet increaseth; and there is that withholdeth more than is meet, but it tendeth to poverty. 25 The liberal soul shall be made fat: and he that watereth shall be watered also himself. 26 He that withholdeth corn, the people shall curse him: but blessing shall be upon the head of him that selleth it. (Pro 11:24-26)

The wise man is here condemning the practice of withholding his goods from the market in order to raise the price, in other words, to decrease the supply. This kind of behavior finds its ultimate expression in monopolism. The Westminster Larger Catechism, in the list of sins forbidden by the eighth commandment, “Thou shalt not steal”, is included “ingrossing commodities to enhance the price”. One of the proof texts is Proverbs 11:26.

On the other side, Solomon observes the selfish desire to pay as little as possible for goods, by pretending that they have no great desire to purchase them; in other words, they pretend that there is little demand for such goods, either because they are not worth the asking price, or because they can be bought more cheaply elsewhere. All the while, they know that the price is fair, but they try to get a better deal. Then they boast to their friends and neighbors of the great deal they made:

It is naught, it is naught, saith the buyer: but when he is gone his way, then he boasteth. (Proverbs 20:14)

Matthew Henry comments:

How apt are men to decry the goods they wish to purchase, in order that they may get them at a cheaper rate; and, when they have made their bargain and carried it off, boast to others at how much less than its value they have obtained it! Are such honest men? Is such knavery actionable? Can such be punished only in another world?

One of the central questions of economics is “How are prices to be determined?” Socialists say, by the all-wise state. Capitalists insist that the law of supply and demand is the answer. The Bible says, “Neither the one or the other.” The determination of prices is the prerogative of the buyer and the seller in any transaction. In every transaction, the buyer is to consider the seller’s interests; and the seller is to consider the buyer’s. The seller needs to make a profit on the sale; and the buyer should not try to reduce the price so much that the seller’s profit is eliminated. The buyer needs to receive value proportionate to the amount of money he is spending, according to his own evaluation; and the seller needs to make a reasonable profit on the transaction — not “make a killing”.

In other words, commerce should be personal. There is a person at both ends of the transaction; and each should seek the other’s benefit as well as his own. Socialism deprives both parties of this freedom when the secular state sets prices. Capitalism at least gives buyers and sellers the freedom to negotiate the price of goods between themselves. But the acceptance of the law of supply and demand as a vital and ethically neutral part of the system makes Capitalism an engine of greed, encouraging the one who is in the stronger position to take advantage of his neighbor. Ever since Adam Smith wrote The Wealth of Nations, it has been a basic postulate of Capitalism that men, in serving their own self-interest, best serve the interests of society. Thus, the selfish principle of competition, rather than unselfish cooperation, is embodied in Capitalism. But how can the desire to get as much as one can, without regard to others, or even to their disadvantage, lead to a general prosperity? It can only work against it.

Competition leads to lower prices for goods, to be sure; but what else happens? When the price reaches a certain point, the profit in selling a particular good is gone, the seller must either cheapen it in some way that is not obvious to the buyers, thereby cheating them; or they must stop offering the product for sale altogether: for if they raise the price, people will either go elsewhere or do without. How is this good for society?

If the pursuit of self interest is good for society, what do we say of Capitalist businessmen who create pollution, excessive noise, and dangerous working conditions in the name of self interest. In fact the whole people end up bearing the cost of pollution, and protecting themselves from the noise, and living in dangerous conditions.

Does the pricing of labor, in the case of the working poor, according to the law of supply and demand, lead to the prosperity of society? At the present time, it is said that there are more jobs than there are people to fill them; but it should be noted that it is qualified people that are in short supply. Why is this? Because in an industrial society, the jobs become increasingly technical, and require both high intelligence and expensive training. There is little place for people who cannot afford the training, or who do not have the capacity for it. They must accept whatever job they can get — sometimes two or three jobs — just to support their families. Since there are so many of these “wage slaves”, the Capitalists can pay them a low wage and not worry about retaining them. The victims of this abuse are forced to have fewer children. Is this for the common good?

It was Capitalists who legalized usury, which in the Christian west, as well as in ancient Hebrew culture, was outlawed. Usury in the Bible is not the charging of too much interest; but the charging of any interest. Usury is the great engine of the accumulation of wealth. In usurious transactions the borrower can lose; but the usurer cannot: he always wins. If he is repaid, he collects the usury, which is pure profit without labor. If he is not, he recovers the goods lent, or their value in money, even if it ruins the borrower.

Capitalism will always create a dominant class of super-rich people, who are very good at seeking their own self-interest; while at the same time impoverishing the greater part of the people. Liberals are not wrong when they say that pure Capitalism makes the rich richer and the poor poorer. They are wrong when they advocate the state as the solution to this evil; for Socialism leads to the same result.

What then? If neither Capitalism or Socialism is an ethical system, then what is the alternative? I answer, biblical agrarianism.

In an biblical agrarian society, many of these problems do not exist. For one thing, on a homestead farm, there is work for all, even children, who learn to work at a young age, and have the pride of making a contribution to the family’s interests. The jobs, once learned, can be pursued with profit whenever the need arises. The homestead is largely self-supporting, and so there is much less need for commerce or money. When there is no usury, a young man can buy a home with much less money. He can grow his own crops and raise his own cattle — even build on to his house as his family grows. Barter can be used for many things. There is no need of someone to manage the money supply. Many people will have no need of banks, because they do not need to borrow money or worry about having it stolen. If they do need money, they can borrow it from family or friends, or the church can give it to them.

There is no need of professional lawyers, because cooperation, rather than competition, rules the people’s dealings with each other; and because the law consist in relatively few basic principles, which can be applied to many situations. The law changes little over time, so that the people can know it for themselves.

Many other advantages of biblical agrarian versus technological society could be named; but this suffices to show that there is an alternative to Capitalism and Socialism, which are both systems for the organization and exploitation of the masses in our technological society.

Howard Douglas King

November 26, 2018

Edited March 1, 2018

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