From the Easy Chair

Economics From a Biblical Perspective

Professor: Dr. R.J. Rushdoony

Subject: Conversations, Panels and Sermons

Lesson: 176-214

Genre: Speech

Track:

Dictation Name: RR161E10

Year: 1980s and 1990s

Dr. R. J. Rushdoony, RR161E10, Economics From a Biblical Perspective, from the Easy Chair, excellent colloquies on various subjects.

[ Rushdoony ] This is R. J. Rushdoony, Easy Chair number 56, October 14, 1983.

We are at the Beverly Garland in Sacramento in the midst of our conference on the arts and the media. And we have some very distinguished visitors and friends with us here whom we plan to have a session with this evening. And Otto Scott is here with me and we are going to talk with R. E. Mc Master. Now most of you are familiar with R. E. He is a distinguished economist. He is the author of a number of books. His publication, The Reaper one of our trustees regards as the most trustworthy guide in financial counseling.

So it is a great pleasure to have you here tonight, R. E. And before we begin, I am going to tell everyone we are going to talk about economics. We are going to talk about it from a Christian, from a biblical perspective.

One distinguished sociologist on our mailing list who does not agree with us nonetheless has said in a recent address to a group of scholars that at the heart of economics is religion. So that he said the fundamental issue between Adam Smith and Karl Marx was not economics, it was religion, that Adam Smith represented a covert Calvinism and, of course, Karl Marx and explicit Humanist and Atheist.

Well, R. E., first of all, you have had quite a distinguished background and you have had some remarkable experiences including your trip to Guatemala this year where you went at the request of then president Rios Mott to give him counsel about the reordering of life in Guatemala. Would you like to tell us a little bit about that trip before we get on to some of the problems that we are facing in this country economically?

[ Mc Master ] Well, basically what Rios Mott was dealing with in Guatemala was an attempt to try to apply Christian Reconstruction principles to a political and economic arena in a country which is.... and in a culture, a Latin American culture, that has never known the meaning of Christian Reconstruction.

I think it was Adam Smith who recognized that in the development of both South and North America that even though Latin America apparently at this time had greater resources and a more educated class, it was North America that had a superior idea and the superior idea would leads to the economic prosperity of the countries long term. And I think that has been the case in North America. Latin America and Rios Mott had the very difficult problem of facing basically four hierarchies if power: vertical, pyramid type hierarchies that had ruled and continued to want to rule Guatemala as a opposed to his Christian decentralization plan. Those hierarchs were the traditional Roman Catholic Church where three out of four priests now are Marxists. The multinational corporate empire of ... of U S origin ruled historically, but with aid of the U S military. The landed gentry class there who had used the local military in many cases to slaughter the Indians which were indigenous to the region. And then finally now the growing Marxist, Communist influence coming through Cuba and Nicaragua.

The receptiveness to the ideas of Christian reconstruction in the area of politics, particularly in the area of economics were well received by both the Francisco Marquand University there who were Austrian in their perspective of economics, by the chamber of commerce and business who were looking for a more free market perspective, by the agricultural exporting interests who were faced with the black market exchange controls and some of the higher level of Rios Mott’s administration, particularly his private secretaries. However, due to the strength of the military bureaucracy in that country that controls the economic bureaucracy, because Rios Mott was unable to move fast enough in the way of economic and political reforms, a coup took place.

[ Rushdoony ] Rios Mott was on our mailing list, as you know, and had a number of our books.

You spoke of the pyramids of power there.

[ Mc Master ] Yes.

[ Rushdoony ] Would you say that we have a similar problem in this country?

[ Mc Master ] Without question. One of the ways that ... that I apply the... the research you do in Chalcedon is to try to formulate or glean from your research principles that are applicable. And one thing that I note is that whenever men withdraw from Christian godly principles that vacuum of unbelief is filled by ... is filled by vertical man made institutions. And so what we are seeing today is the bureaucracy, that pyramid type bureaucracy and our... in our federal government, basically, emulating and... and more or less reflecting what we see... what we have seen historically in Latin America.

[ Rushdoony ] We have a thoroughly humanistic system of economics today, of course. I think we would both agree on that. What are its prospects in the next decade?

[ Mc Master ] Well, I think the prospects for our humanistic economics is defined by the dismal science as they define economics today. Ultimately they are dealing with a presuppositions regarding the two ingredients of economics, land and labor, that being basically that man is environmental and... and ... in his economic determination. He has unlimited wants and needs. That is the half of the equation for your demand, labor. The other half has to do with... has to do with land and that is that resources are limited. And so how can economics be anything other than a dismal science when you have limited amount of economic resources and you have a man with unlimited wants. And yet classically, Christian perspective is that man can discipline himself and overcome. He does not necessarily have unlimited wants. In fact, the Christian perspective is that man builds up surplus that he passes on to his next generation through inheritance and also he gives to those who have... who have needs.

With regard to the land we know from Mark 4:28, for example, that ultimately money is a form of commodity if it is honest. And because energy from the sun can be translated into commodities, we have a potential unlimited source of wealth in terms of just what we have coming from agriculture. This, of course, excludes the creativity of man, which finds new and better uses for resources down throughout time.

So where the Christian perspective of economics is a positive one, due to a positive view with regard to the land and labor, our humanistic economic perspective is clearly dismal.

So effectively ideas have consequences. Thoughts precede actions. And until we change our thinking with regard to the presuppositions of dismal economics, humanistic economics, we are not going not going to change our economic view long term. For example, only two percent of the people in this country today at retirement are self sufficient economically and yet we are considered the most prosperous country on the face of the earth. Something is patently wrong. What is wrong is that ultimately we have... we have... we have moved away. We have disregarded our Christian, economic base.

[ Rushdoony ] Before I ask Otto to jump into this I want you to talk a little bit about something you worked on before you went to Guatemala and you developed... and let me add we are looking forward to the work you are going to do in the area of economics, of biblical economics. You had 80 pages of notes on the economic implications of debt.

[ Mc Master ] Yes.

[ Rushdoony ] Would you like to comment a bit on that subject? Because I feel that that is a key as we approach the future as to what will happen.

[ Mc Master ] In isolating the factors that impede prosperity for a culture, for a civilization, one of the primary ones is debt. And not only looking at the biblical condemnation of debt, but also attention to think God’s thoughts after him. Why did he prohibit debt with regard to man’s well being in time?

It became very apparent that economic prosperity, the combination of land and labor results in savings, capital, and that is the basis for further and increased... great... greater prosperity. And yet the opposite are antagonistic to savings and capital is debt, because debt is the consumption of the savings.

Work, which is necessary for economic productivity, is, by its very nature, a long term activity. It requires the foregoing ... the... for... the selecting against present preferences in lieu of future benefits. Well, that is what savings is. And yet debt is a borrowing from the future by mortgaging the past to consume in the present. That puts us back in a classic short term pagan perspective.

It was interesting in my research that I came across the fact that pagan priests held pot latches where the ... the... the natives, the primitives brought their wares, their economic wealth, tokens of wealth to the priest and the priest smashed them. Effectively that is what we have done with our wealth in terms of the 850 billion dollars that has been loaned to Communist and third world countries. That wealth is gone. That debt will never be repaid. It has been effectively been smashed by the pagan priests in our country.

There are so many things that can be said negatively about debt. It assumes you can predict the future correctly. And yet we saw in the case of ... of real estate loans in 1979 as well as oil industry loans where banks that over extended themselves that hadn't predicted the future correctly the whole debt system gives rise to the cyclic boom, bust cycle, which leads to insecurity in the economic affairs. It allows speculators to become excessively rich with an increasing base for the poor which leads, ultimately, to a sympathetic if not a realistic revolution of Communism.

People assume today that the business cycle is a normal function of a godly economy because that is all they have known all their lives. In fact, it is a linear consistent growth of economics in a non debt based economy with honest money that leads to security and prosperity across the board throughout time.

[ Rushdoony ] Otto, do you have some questions you would like to ask?

[ Scott ] Well, I have some comments I would like to make. The modern economist, it seems to me, to be existing in a present world. Everything is... seems to be discussed by the modern economist in terms of today and now. But when I read Adam Smith I was very much impressed by the historicity. Adam Smith was not only a moral philosopher, but also a historian. Now if we look at economics from a historical viewpoint, for instance, the United States which takes great pride in its prosperity though the decades is largely the creature of the English navy during the 19th century which provided the shield behind which we conducted our trade with the world. Also we had free oil, or practically free oil which enabled our industrial machinery to grow. And we had Protestantism in the dominant position with its idea that work is a form of vocation and that the market place is a godly function.

You were talking about Guatemala and Guatemala has the opposite tradition. In Guatemala you have the {?} you have the large landowner. You had the Indian peon. You had the army, very austere sort of high faulting officer group and you also had Catholicism which has never really understood Capitalism in the Protestant sense. They understand rents. They understand interest. The understand that sort of thing, but they don’t really seem to understand Capitalism in... in the way that Max Weber described it as depriving yourself in the present for future benefits, for that matter, for future generations and so forth.

And it does seem to be rather striking that so little is said about the context of economics when we discuss economics with the average American economist and the varieties of Christianity have a lot to do with all of this.

[ Mc Master ] Yes. In fact, one of my observations in my preliminary study prior to journeying to Guatemala was that the reason Latin America had never really developed economically ... economically is because it never had undergone a Protestant Reformation.

[ Scott ] That came to you.

[ Mc Master ] Yes.

[ Scott ] When you studied it.

[ Mc Master ] Yes, most definitely. And I think economists, as all of us tend to be if we are... if we are not biblically attuned, are products of their culture. And we live in a culture that is exceedingly short term oriented. So they can’t see the forest for the trees today.

[ Rushdoony ] Let me interject here something, R. E., that you may not know. Otto is bilingual. He is part Spanish in background and Latin American as well as Irish and basically Scott. So he has a Catholic background as well as an old Scottish Calvinist background. So he has the ability to see into these various cultures and to appreciate them as well as to be critical of them from within.

Now one of the things that I think is important in terms of what you were saying earlier, a society that is debt oriented is going to be past oriented, past bound. And we are facing the greatest crisis in world history which is a religious and an economic crisis without having any future orientation. Would you agree with that or want to comment further about that?

[ Mc Master ] I agree with that, because the intellect of our culture is bankrupt in both of those areas in terms of the establishment thinking.

[ Scott ] You don't think the Americans have any vision of the future at this point?

[ Mc Master ] I think it is minimal. Cultures either emphasize work or leisure. And yet television occupies 15 years of the average American’s life these days. And wherever they emphasize work on television they emphasize people playing at work. So what we see, in fact, in the major media of the television which obviously dominates our culture, is an emphasis upon leisure which, again, brings us back to that pagan short term orientation versus the classic Christian perspective that man has a calling, he is created for a purpose. He must work.

In fact, if we look at it, man is commanded to work six days. Furthermore, the Bible gives the death penalty if a man doesn't work. If a man doesn't work he doesn’t eat. If he doesn’t eat he dies. So this ties into a... a. the basic humanistic Christian historical conflict with regard to how man spends his time. And work versus leisure and the television industry is a primary enemy of economic prosperity in this country by its emphasis upon leisure.

[ Rushdoony ] You know, that is quite a point. About 15 years of time before television with all the goofing off a lot of workers do and the coffee breaks and what not, I wonder if some of them work anywhere near 15 years.

[ Mc Master ] Well, you... you notice on television that even when they show people working, they are really playing. They are not being productive.

[ Rushdoony ] And television never shows them in any truly Christian activity. So it gives us a very grim picture of the content of our life. Now I believe they are dishonest to a degree in eliminating Christianity entirely from television. It is never shown in pictures except historical pictures. But I think you are all together accurate with regard to the play aspect and tragically so.

[ Scott ] I am also struck by the fact that the great many younger Americans apparently feel that corporations or other people should come along and assign a vocation to them. The idea that a vocation is something that comes from God. Time and again it seems to be foreign to them. I keep running, time and again, into men who say, “Well, I wanted to be this, but I had to earn a living and therefore I became that.”

Now everyone’s, I think, has a vocation. If you reject the vocation then you are pressed into a sort of a labor situation where you are going to do things that don’t give you any satisfaction. If you have the courage to follow your vocation God will take care of you, but this particular lesson is hardly ever mentioned.

[ Mc Master ] Yes. Basically what we have today is a pervasive slave mentality. Where there is no vision the people perish.

[ Rushdoony ] Yes.

[ Mc Master ] And yet we still see consistently in statistics that 80 percent of the jobs created in this country are created by entrepreneurs, new businesses who have a sense of calling who then create new wealth and create jobs in the process as they create demand. So our government in terms of its subsidies to large businesses is antagonistic to the basic source that... that creates employment in our culture.

[ Rushdoony ] You are in Washington quite a bit. What is your general impression of things there?

[ Mc Master ] Disneyland on the Potomac.

[ Rushdoony ] That includes the White House.

[ Mc Master ] Yes. One of the things that struck me in... in my experiences in Washington, DC was how consistently people could live that far removed from reality, how the money, ego, pride, conflict... conflict in lifestyle is so pervasive there and the consistent way of life that it no longer even relates intellectually much less actually to what takes place in the real world that provides them with a living. Government is always consistently an economic parasite. And the economy... the economy can always exist without a government. A government cannot exist without an economy. And so they literally bite the hand that feeds that there today.

[ Scott ] Something like Versailles, isn’t it, and the Ancion Regime?

[ Mc Master ] I think that is a close analogy.

[ Rushdoony ] And the interesting thing is when you are in Washington, people cannot understand why you live at the other end of the country for them the only important things that occur, occur in Washington. I have been told that. I have also been told the same thing by New Yorkers, by the way. And I believe the only important things that occur in this world occur where God is at work.

[ Mc Master ] One aspect of Christianity that has become overwhelmingly important to me with regard to its application to the economics is that Christianity is based upon the cooperation and the harmonious interaction among men. In fact, a working definition can be human action. Yet we know in the economic arena, trade, capital investment always moves consistently to areas where there is peaceful, cooperative human interaction.

Well, what does government do? What government does today consistently whether it is in the Marxist areas of the world or western civilization is promote conflict by way of redistribution of wealth that creates further growth in the parasitic bureaucracies which are, in fact, in... inhabiting to the very nature of what creates wealth, which is free, peaceful trade.

[ Scott ] Well, we get into... recently I read a ... a distinction between Marxist historians and regular historians in which the writer, Richard F. Hamilton, in his book Who Voted for Hitler traced the electoral process in the Weimar Republic. Now he said a western historian knows that if five important Germans were supposed to have a meeting regarding the campaign and if one of theme was sick, his absence was important and significant at that period. But Marxist doesn’t believe individuals are important. A Marxist believes that there is an inexorable, invisible tie which sweeps all people wily nilly towards certain predetermined goals.

Now when I listen to the... or read the average American economist, it seems to me that he is always talking about market forces and he is never talking specifically about people. And yet it is people who compose the economy.

[ Mc Master ] Well, it is the difference between the historic, the pressing top down flaming entity, going back to Egypt, Babylon, versus historically the experiment in freedom and liberty that gives fruit... fruition to that tremendous human energy and drive that we experienced in this country.

So basically our thinking has become pagan as we have become increasingly antagonistic to cultural Christianity.

[ Scott ] Is it become Marxist, do you think, without admitting that it is Marxist? You know, we have Socialism...

[ Mc Master ] Yeah.

[ Scott ] ... without calling it Socialism.

[ Mc Master ] Yes, yes. It... to the extent that we evaluate man in terms of environmental determinism whether it is in terms of a status by way of his material possessions or in terms of evaluating what a man needs and defining wealth and poverty in terms of material possessions, that is a classic Marx... Marxist perspective.

[ Scott ] Well, according to a Marxist, now, an R. E. Mc Master is not a market factor. If you didn't exist the Marxist would say that somebody would have to invent you, right?

[ Mc Master ] I don’t know. I will have to ponder that one a bit.

[ Scott ] Somebody else under another name would be doing what you are doing.

[ Mc Master ] Well...

[ Scott ] Now you know that is nonsense.

[ Mc Master ] They are talking about... they are basically, you know, working under the theory of evolutionary chance as opposed to the Christian perspective of the sovereignty of God. You know the... the basis of ... of Marxism, purported Marxism, Marxism as it is packaged and sold in the modern world today, is that all of us are equal. Well, anyone that has looked around has got a lick of sense knows that we are not equal in terms of our talents and abilities in this world and classically the... the American Christian perspective was that we are equal under God’s law. We were all fallen individuals. And turning that on its head what I realized in terms of... in terms of Christian cooperation was that it is our inequality in talents and abilities and in callings that are God given that are a true blessing.

[ Rushdoony ] Yes.

[ Mc Master ] Because... because each of you can do something in a superior way than... to the way I can do it. Means that I need you. And because I have talents and abilities that are superior in certain areas than what yours are in those areas, you need me. And so once we see the world in terms of our different abilities and inequalities being a blessing, leading to the cooperation of ... and the specialization and division of labor. When we need each other all of a sudden the sense of conflict in society that is... that is... that is created by government tends to fade in importance, because it is not our own economic well being long term to be in conflict.

[ Scott ] How sensible.

[ Mc Master ] Well....

[ Scott ] It is destructive.

[ Mc Master ] I don’t find many things that are sensible, back in Washington, so if I know if I get a consistent negative response, I must be on the right track. And this country opinion there as well as in the market place.

[ Scott ] Well, we have economists like Albert whose books sell in the millions. What do you think of that fellow?

[ Mc Master ] Well, Galbraith has been a... has been a primary 20th century figure, particularly post World War II figure as is Samuelson. And I think classically they have reaped what they have sown in the chaos that we have and presently with regard to international money markets and our politicized economy is a result of their faulty thinking. Once again, thoughts precede actions and our actions in our economic arena today are the result of ... of the bankruptcy of those economic presuppositions.

[ Rushdoony ] We have people in Washington telling us that inflation has been licked. I have heard bankers assure us that inflation has been licked by this administration. Would you like to comment on that?

[ Mc Master ] Well, inflation has been licked to the degree that when you are in the eye of the hurricane the storm is over. Inflation is a... today is primarily a function of the ... of the federal reserve monetization of the debt. But even more so, the creation and use of credit and the fractional reserve banking system where each dollar is multiplied up to seven times. What an incredible counterfeiting machine that is.

[ Scott ] Well, this has been going on an awfully long time, though.

[ Mc Master ] Right, but debt to an economic system is like drugs to an addict. It takes increasing doses of inflation and increasing pumping up of the money supply to create a... to create a higher high or an inflationary boom and we have reached the point where the money markets are sophisticate and so attuned to the factors of inflation that they are reacting instantaneously to fears of inflation which hype up interest rates which are, of course, the thermometer of a dead economy.

As I analyze it what we have seen since effectively 1913 is increasing volatility which is leading us to the extremes of either sever run away hyper inflation, deflationary depression or an inflationary depression or the third option war. But those are the only three options I can see that are inflationary fiat money that made ... that a debt based economy can give us as this point. And none of the... and the point... and the point I want to make clearly is that none of the three any longer are painless. We have passed the point where there are any painless options.

[ Rushdoony ] Now how would you assess the likelihood of each of those three alternatives occurring?

[ Mc Master ] Well, I think... I think as much as possible in terms of federal fiscal and monetary policy we will continue to walk the tight rope as long as we can and fine tune with either the federal reserves open market operations. I don’t think the budget is going to be cut until there is far more demand for it coming from the grass roots sector and it is not there.

[ Rushdoony ] No.

[ Mc Master ] I think the easiest option, the politically most viable option from a Machiavellian perspective is war.

[ Scott ] War. Well, where would we fight? We have an... a country that has lost its nerve. How is it possible for a country that has lost its nerve and is governed by a cowardly government to fight?

[ Mc Master ] Well, I am not talking of a major war, I am talking about a planned conflict, a 1984 type... type scenario where you have a theater war that just creates enough energy in the economy to keep it going.

[ Scott ] Something like the ... the Vietnam thing?

[ Mc Master ] In the Middle East and Central America.

[ Scott ] In the Middle East. That slow seepage which gears up the munitions business and the armaments business and siphons a certain number of young men from the job market, that sort of thing.

[ Mc Master ] Or that... that would... that would be effective. Or what we could see is an effective partitioning off of spheres of influence with regard to us having more influence in Central America and the Soviet Union that thereby acquiring more influence in the Middle East. They control the supply of oil in the Middle East, therefore, they can hold up international banking structure.

[ Scott ] This is an Orwellian view, you know. He had projected for 1984 three large powers who had an artificial war going on at all times.

[ Mc Master ] I read somewhere that his original title for that book was 1948.

[ Scott ] He wrote it in 48 and he just turned it around to 84.

[ Rushdoony ] He was describing the world he saw coming into existence in 1948, yes. So he simply turned the title around.

[ Scott ] It is interesting that if Orwell had been a Christian I think he might have believed in something a little better. We had two writers, one... one was Rachel Carson and the other was Orwell, both of whom had terminal illnesses and neither of whom were Christians so they left us a terrible script.

[ Mc Master ] Yes. You have said that what? Three, four percent of the Puritans and the Presbyterians reformed England. What do we have now? Fifty five million, approximately one quarter of the U S population that claims to be born again Christians.

[ Rushdoony ] Yes.

[ Mc Master ] If that particular Christian group could become motivated and see that biblical Christianity is neither faith nor works, but both, faith having the object of works, then they would see that the application of Christianity in time, their faith applied ultimately will be manifest itself in the economic arena because man is far from the dust of the earth and he is also created in the image of God which establishes both his economic roots as well as his spiritual roots. And in terms of classic Christian Reconstruction, God gave Adam the responsibility of being the economic overseer of the garden. He gave the Hebrew nation the responsibility of economic dominion with regard to the nation of Israel and the Church—since the completed work of Christ—has been given the whole world for economic dominion.

[ Scott ] Yes.

[ Mc Master ] And it begins in this country and evangelism and economic Reconstruction in the Christian sense should spread out globally, because Christianity is a religion of peace, God given, God coming to man. Economics, man interacting with man is an activity of peace. The two work in harmony. And I think that is the essence, from an economic perspective of what James two is all about.

[ Scott ] Well, we have this, I think, one of the problems in the United States is that economic news or news of economic significance is misreported. You have been... you... you mentioned the distortions of television regarding work and leisure. Now there was a... a period of time some sort of a movement to say, first, what is the news of the week and, second, what is the hidden story of the week.

Last week, for instance, the biggest hidden story was the crisis in Israel. I didn’t hear a word about it on the radio. Israel has been indexing its inflation to wages and so forth, prices for a number of years now and finally the sequence is beginning to break down. So they had to suspend the stock exchange because all the Israeli were beginning to turn their shekels into dollars and the government stopped the stock exchange and stopped the exchange of the currency. Then prices rose 40 to 50 percent and inflation... and the shekel was dropped officially 18 and a half percent. Hardly a word appeared in the American media. Isn’t this remarkable?

[ Mc Master ] Well, it is remarkable. But it is also consistent with... with the public educational system in this country which has virtually a vacuum of economic education, so why would people be interested in economics when they have no frame of reference for it?

[ Scott ] Well that is a good point.

[ Mc Master ] The... the free market is discussed when it is discussed by the media and usually maligned, and what they are referring to is the evolutionary free market, the... the free market of dog eat world debt capitalism, survival of the fittest, the rich get rich and the poor...

[ Rushdoony ] That is a very good point.

[ Mc Master ] ...get poorer. They have not ... they have not even considered the perspective that Christians... there is no such thing as an absolute free market because there is no such thing as absolute freedom. Freedom is always bounded a law.

[ Rushdoony ] Good.

[ Mc Master ] And it is by knowing and understanding the freedom of the... of the Christian market place as defined by... by the law such as do debt, such as honest money, that we provide basically the harmony in the market place via those rules between the one and the many, between the individual and the group.

[ Rushdoony ] I think that point is a very important one because the contemporary idea of the free market as you indicated is a very fallacious one.

[ Scott ] It is a... it is a caricature.

[ Rushdoony ] It is a caricature. And too many assume that the free market presupposes the Darwinian conflict of interests world, which, if it were the case we would have to say we cannot be for the free market. But the free market only is free in terms of the harmony of interests and God’s plan for man, God’s purpose, God’s law.

[ Mc Master ] It is the same thing that is laid out biblically between a man’s riches being his God and, thus having a very remote chance of entering the kingdom of God, versus economic prosperity being a blessing as a result of Christian fidelity.

[ Rushdoony ] Yes.

[ Mc Master ] The way I express that to my clients is that self interest is best served by service. The reason the Church has always had a hard time dealing with economics is that Christianity focuses upon stewardship and service while economics focuses upon self interest. But the... the harmonious integration of those two, in terms of the unity amid diversity is that Christianity focuses on whoever will be great, must be least. In other words, whoever will be lead, whoever will be economically elevated must first serve. And so the Christian perspective in economics is that my self interest as a business man is only served secondarily to serving you, my clients. And so what that does is brings about he harmony of interest, a win, win transaction rather than a conflict of interest.

Making money is a by product of doing something correctly, of providing a good ... a needed good and service that is desired by the people in the market place.

[ Scott ] I think one of the things that we are victimized by is an idea originally floated into the public arena by Woodrow Wilson. Mr. Wilson felt that any man who tried to better himself was betraying a selfish interest. He exempted himself from that description, of course. And the... our media seems to go along the same line. They don’t want businessmen to speak up because they say they are... they represent a special interest, a selfish interest.

[ Mc Master ] It... it depends on the presupposition upon which you are operating. A business man can say, “Basically I want to make money,” and money becomes his God and he can look at a conflict of interest in terms of win lose translations and get as much as he can, as fast as he can and giving as little as possible. But hat is not the classic Christian economic perspective. The classic Christian economic perspective is that by developing my talents, by exercising that long term view, by serving my fellow man in line with my calling, that blessing will flow back to me automatically. It won’t be a focus. It will by a byproduct of doing things under godly service.

[ Rushdoony ] By the way, you know that Henry Ford made a fool out of Woodrow Wilson because Wilson strongly opposed the new motor car that was coming into existence. He felt it would widen the gap between the rich and the poor. That didn't prevent him from having the most expensive motor car of his day available for the president. But he felt it would widen the gap between the rich and the poor because only the rich could afford it. Within a few years Henry Ford made a fool out of him by producing the Model T and putting the working man of American on wheels.

[ Scott ] I think that is a marvelous example. I also think that there was another marvelous example of the errors inherent in economic forecasting that I was told by an elderly man years ago who interviewed when he was a young man an elderly investment advisor regarding the possible profit or loss of the automobile industry. And the old man said, “Well, now look. We have a vehicle that has to be fueled at frequent intervals. It breaks down frequently so he would have to have spare parts and people to repair it. It can only travel upon a paved path.” And he said, “When we add these factors up, the fuel, the repairs, the roads and so forth, it is obvious that the whole country would have to change in order to accommodate it. So therefore it has no future.”

Now there is nothing wrong with his logic.

[ Mc Master ] He as just negative. He was pessimistic. That is interesting because one of the things you see in terms of ... of the Christian world view consistently versus the pagan world view is that the Christian world view stemming from the sovereignty of God and his predestination is that you can have positive creative factors moving forth.

[ Rushdoony ] Yes.

[ Mc Master ] Human... human activity is never static. Human relationships are never static. They are either growing and overcoming or they are declining into turmoil. And so what we see today by way of the dismal science is that decline.

[ Rushdoony ] Yes.

[ Scott ] Well, the Guatemalans, revert back to Guatemala, and other Central Americans with whom I am familiar don’t like to be referred to as part of the third world. They like to be referred to as... I mean consider themselves as part of the West. And culturally, of course, they are not part of the third world. They are not primitives. They are not uneducated. They are not anti Christian or non Christian. They are Christians and they have excellent schools and great many cultured people. But economically they belong in the third world category. Is that what you would say?

[ Mc Master ] Yes. Yes, but chiefly with regard to the... the economic development out... outside the city. In Guatemala there is a unique distinction and this, I understand, is true of other Latin American countries between the development of the city, in this case Guatemala city where they are ruling elite or educated in Europe and this country, often with graduate degrees, a 20th century city by any major. And yet 100 miles out in the countryside we go back 100 years in terms of very primitive cultures. And the question that confronted us down in Guatemala was: How do you bridge that gap between a 20th century culture and a 19th, 18th... perhaps an 18th century culture in some cases with regard to economic development?

You know, the root economics comes from the word economia. And it means home rule or home law. So that brings us back to the concept of the family. And it is interesting that the New Testament Scriptures speaks that if a man does not provide for his family he has effectively denied the faith and is worse than an infidel. So there we se the very relationship between Christianity and economics in Scripture.

But tying that into present day relation and the development of the Third World, it has been uniquely proven in case after case globally in Third World developing countries that that only entity that works in terms of building the culture from nothing economically is the small family farm, not a tenant farm, but a small family farm that is owned by a family.

What do we have there? We have there the basic institution by which the individual becomes harmoniously related to the group in terms of the one and the many. Through blood line a man and his family become one.

We also have the essence of real new wealthy coming from the sun through the soil in the small family farm. Both are uniquely tied together, land and labor in that entity, the small family farm. And it is a small family farm, private ownership that has been shown to provide the wherewithal by which men will become long term oriented, will develop those agricultural crops, store up capital, excess that will lead to trade, then the creation of small industry which ultimately then progresses into large industry and then a full fledged culture. And that was the challenge in Guatemala. It was to provide the Indians there with enough stability in terms of military protection so that they could develop their small family farms.

See, the military option, whether it is the Soviet Union that we are talking about or it is the... or the military dictatorships of Latin America is by its very nature, a short term solution. It has to be imposed continually short term to work, because the reality of the natural self interest of man long term is to have human needs in terms of social relationship with his fellow man as well as economic needs. And those keep coming to the surface in all these military dictatorships. Poland is an excellent recent example. Nicaragua, El Salvador are also good examples presently where the military solution, the conflict solution is not the natural God given solution to solving man’s... man’s need long term as they exist in the created realm.

[ Rushdoony ] We certainly have the conflict solutions here.

[ Mc Master ] Absolutely.

[ Rushdoony ] How would you compare the situation then between, say, Guatemala and the United States?

[ Mc Master ] Well the nature of the conflict is different. There not only are they combating external enemies in terms of conflict, of course, capital and trade and economic development as I mentioned earlier flees conflict. But there you also have the historical conflict between the ruling elite, the large land owners and... and the... and... and the... and the Indians, the peasants, peons.

Here conflict is less open and far more managed. Conflict is created in this country. It is created by the bureaucracies. If I was in charge of a federal agency and I wanted to build an empire, I know the only way I can build that empire is by furthering conflict among my constituents that I regulate. If I solve a problem in the commodities futures trading commission, all of the sudden I have worked myself out of a job. So the very nature of being a bureaucrat or a bureaucracy is to promote its own self interest long term which by its very nature means it needs more regulations, thus, the creation of more conflict.

It is a much more insidious thing in this country that is not readily recognized or acknowledged.

[ Rushdoony ] What is the...

[ Mc Master ] One other.... one other... one other point along that line.

[ Rushdoony ] Yes.

[ Mc Master ] Is that ... is as... as it was flipped from Christianity envy, covetousness has become predominant in our culture. And so we have also called upon government the great false God to be the redestributor of wealth, giving vent to that.

[ Scott ] Well, yes. The government is going to soften the disparity between various talents. It is going to be fairer than God, God having made some people smarter than others and larger than others and so forth. The government is going to repair the errors of God.

[ Mc Master ] The question is: Who will be the central planner?

[ Scott ] Yes.

[ Mc Master ] I... the factors I have come across in terms of... in terms of isolating four or five that I think have inhibited real {?} in our country as I discussed in my books and I am really moving increasingly into the area of Curtain economics in The Reaper. Is that men acting irresponsibly in their own self interest by acting short term therefore give rise to government. Secondly, dishonest money, the use of debt, absentee ownership of land, all these things inhibit wealth creation.

But when I look a the results of government programs as they are instituted, first of all, they are instituted in response to a short term crisis, which, by the time the government has recognized them has... has already... the government always has the wrong thing at the wrong time, because the market place has already started to respond to the crisis. The oil shortage is a good example of that.

But what government does is the wrong thing at the wrong time and it ... what it consistently does is creates conflict and dependency long term.

[ Scott ] Tell me. What do you think of Robert Reich’s argument? Have you... you are familiar with it? He feels that we are moving from an industrial to a service economy. This is like saying, as far as I can see, that instead of being able to manufacture our own products we will all wait on one another’s table.

[ Mc Master ] The service economy can work internationally assuming what you have is a global system of free trade and cooperation, a global environment that is not marked by conflict.

See, the development, as I see it, of the world economically is an extension of the evangelism of Christianity globally, the goal is...

[ Scott ] That is interesting.

[ Mc Master ] Well, if you are going to establish the Christian ethic in men which ... which gives rise to the long term view that sense of stewardship and responsibility, having a calling, that will be manifest in terms of their economic development.

We could have a service economy long term and prosper, conditioned upon the fact that the rest of the world is willing to trade freely as we develop those third world countries first agriculturally and then industrially. But what we see today is just the opposite. We see the rise of Protectionism, which has always been a forerunner... an indicator or a forerunner of war. And so what we face in this country is being cut off because when push comes to shove, agricultural economics is basic, then industrial production and then a service economy. And so we are literally at the mercy of the world it... in an environment of conflict if we depend upon a service economy to survive.

[ Scott ] In other words, Mr. Reich is conducting a sort of an economic disarmament program.

[ Mc Master ] Yes and he... and he... and it is a ... it is a... it is a whim of wishful thinking in that we could have a peaceful global economic arena when, in fact, it is increasingly one of conflict.

[ Scott ] Does he carry this back to the difference between Adam Smith talking about a moral order and the contemporary minded modern economist who is talking about impersonal forces without regard to the context?

[ Rushdoony ] I think by bypassing totally the Christian perspective he is talking in a vacuum with no real relationship to reality, because at base economic problems are religious problems and unless you deal with that religious issue, first and foremost, you are not dealing with the heart of the matter.

[ Mc Master ] The essence of overcoming in a Christian perspective, of dominion, of occupation, of thy kingdom come, they will be done on earth as it is in heaven is that man is willing to undergo short term pain for long term gain which is totally opposite from the pagan and the... and the evolutionary perspective of... of short term gain and long term pain, as Kane said, the long when we are all dead.

The point being is that what stimulates man to undergo pain short term and... and to reap long term benefits. It comes ultimately back to that religious question that there is... that the hairs on his head are numbered, that God has a calling for him, that there is a purpose for his life. He derives a sense of security from the fact that there is a sovereign God.

[ Rushdoony ] I think Keynes, who was the father of the kind of economics that has brought us to this crisis set it well when he saw what the future was like and described it. He knew what departure from gold and from a free market was going to do to the world. And once much later—this was at the time of Versailles that he stated the economic consequences of beasts and so on—much later when he was asked about the consequences of his own economics, he shrugged and said, “In the long run we are all dead.”

[ Mc Master ] Yes.

[ Rushdoony ] Now if you are not a Christian, you are not going to be interested in the future. All you are going to be concerned about is getting what you can now. And Keynesian economics is a present oriented economics. It burns up the future in order to exploit its own possibilities in the present. So now we are in then future that Keynes created.

[ Mc Master ] Other than our heritage from the past which we see evident materialistically all around us, what is the difference between the mindset in America today economically and that of the primitive in the bush with regard to leisure, with regard to present day orientation, with regard to increasing and encroaching poverty.

[ Scott ] Well, we have our corporate structure is set up on the three month basis. Every three months every public company has to issue a quarterly report. And if the quarterly report shows a decline in earnings per share, the stock holders would meet to say, “What is the matter with our management?” So that every three months there is a yardstick which has to be met. Now you can’t get much shorter ... much shorter reigns than three months. You can’t make a long range economic plan if in the meantime you are not permitted to sacrifice on the quarterly basis.

[ Mc Master ] That is why we have seen so many finance MBAs become presidents of corporations. No longer do we have the wisdom of broad based generalists heading corporations, but rather we have specific short term oriented finance men who are reacting to the... to the short term orientation of the... of the stock holders.

[ Scott ] It might make me a little nervous because thy all sound alike. If I ...I... I have often felt like making a bet with somebody that we could devise two or three financial questions that we would then talk to every MBA in the United States I bet we would only get three answers.

[ Mc Master ] Well, the nature of the MBA program on the university level is basically to be a corporate manager. It is not to be creative. It is not to be a man that is full of wisdom and that has a generalistic overview. And sow hat we are faced today in terms of large corporations in many cases as a product of our educational institution are men who do not have the ... the spirit or the education necessary to lead us out of this economic crisis.

[ Scott ] How did you get this perspective?

[ Mc Master ] Oh, maybe I have always ... maybe my red hair has always made me contrary. I... I wanted to know what was truth. I wanted to know what worked. I wanted to understand both in terms of deductive and inductive thinking how the world of abstract truth integrated with the world of changing facts, how stability in terms of ... of an abstract model worked out in the constant flux of facts in the real world so that there could be a... a constant improvement. And a productive use of my time, specifically on... on earth.

My goal when I was 20 was I wanted to be able to think like a man 60 by the time I was 30.

[ Scott ] How do you suppose man like, say, of 60 thinks.

[ Mc Master ] Well, I... I associated myself with a lot of men who were 60.

[ Scott ] I see.

[ Mc Master ] And older and who had harmony in terms of their professional lives and their private lives. And I went to school on them.

[ Scott ] So you began to dredge the generations ahead of you.

[ Mc Master ] Of course. Through both, you know, through actual experience as well as from historical research.

Why... why... why... why waste your life learning the hard way?

[ Scott ] You might not find out what the other fellow learned.

[ Mc Master ] That is right. Why not learn from his mistakes? Why not be a good apprentice?

[ Rushdoony ] Well that is a remarkable perspective, because our world today wants to reject...

[ Mc Master ] Authority.

[ Rushdoony ] Authority.

[ Mc Master ] Most direct authority.

[ Rushdoony ] ... authority and experience and to act as though wisdom was born with them. And I feel that until we do respect authority and we respect the wisdom and experience of the past, we are in trouble.

I think Disraeli described it very well, this ... Disraeli had tremendous insights at times and he saw this attitude of being totally contemporary coming in. And so he described the current wisdom. He said, “Practical men are men who practice the blunders of their predecessors.” And it was because they were unwilling to learn from the past. Therefore, they could only repeat the mistakes of the past because they were not learning from the mistakes of the past and the wisdom of the past. So they simply repeated the blunders.

[ Mc Master ] Exactly. Healthy Christian civilization is a multi generational in nature which means that each generation that comes up can learn more quickly and apply in a more productive way the lessons of the generations that went before have already learned and then when they reach that level of competence, they can step out and become creative.

[ Rushdoony ] Yes.

[ Mc Master ] And it is that that leads to the economic prosperity stemming ultimately from the biblical model of what... what is true.

[ Rushdoony ] I read somewhere a study that showed that children who had the advantage of a couple of generations, that is not only their parents, but their grandparents in the home or next door, had a tremendous advantage over other children, because they had a breadth of experience feeding their minds. They also had a couple of generations to bounce their own feelings and reactions and experiences to. So that is something we have forsaken because in terms of Darwinian thinking each new generation represents a step higher than the previous one. And so the wisdom of the past is neglected.

[ Mc Master ] Two footnotes to that. The research that I have done has indicated that real roots in a family are not established until you have three generations. And where they have interviewed grandchildren who have ... who have expressed a ... a lack of interest in their grandparents, what they have found with further testing and questioning is that there is a suppressed rage there, a real longing for that fellowship of those multi generations.

[ Rushdoony ] Yes. Well, of course, I come from a background where my father’s family had lived in the same spot for about 1500 years the same building and he could recite the names of his ancestors back into the Middle Ages and earlier.

[ Mc Master ] You know...

[ Rushdoony ] So... That is an important heritage.

[ Mc Master ] The essence of business, of economic exchange is the ability to covenant, the ability to contract.

[ Rushdoony ] Yes.

[ Mc Master ] Yet the ability of contract is no better than the character of the individual. If you can, in the training up of a child in the way he will go train him so he moves from being a taking, selfish infant... infant, into a mature, giving adult by balancing law and love in his life, he reaches the point because of family training when as a mature adult he has the ability to covenant and contract which is the essence of economic growth.

[ Rushdoony ] Yes.

[ Mc Master ] So the family, ultimately, has a primary influence, not only in a small family farm, but also in terms of the ethics of the market place in economic productivity.

[ Rushdoony ] Well our time is almost up. Let me add one little note to that. We are seeing a revival of family life because the Christian school movement is not only bringing the generations together—and you are very active. In fact, you have started a Christian school as one of your projects. But it is also teaching a respect for parents and grand parents to the children. So we are in the Christian community seeing the restoration of God’s basic order of the family.

Well, it has been a delight to have you here, R. E., and we will look forward to doing this again and it has been a lot of fun and also very enlightening. Thank you very much.

[ Mc Master ] My pleasure. Thank you.

[ Voice ] Authorized by the Chalcedon Foundation. Archived by the Mount Olive Tape Library. Digitized by ChristRules.com.