What decisions would God make to create economic justice if He were Chancellor of the Exchequer?
How would He set taxation and interest rates, or any other economic rules, in order to create a national economy that balances wealth creation and justice?
It’s not such a far-fetched question. And we have many of the answers from the books of Leviticus and Deuteronomy. Wisdom from thousands of years ago turns out to be far more radical and enlightened than anything that other individuals or political parties have come up with in the millennia since…
On the first lesson of my GCSE economics we learned about the four factors of production, and the rewards for each:
- Land – and the reward for having land is Rent
- Labour – and the reward for labour is Wages
- Capital – and the reward for capital is Interest
- Enterprise – and the reward for enterprise is Profit
In an economy these four things are the prime elements required to make wealth. And each factor is able to generate money – hence there is a reward for each.
(Here’s an interesting aside; in our society we tend to heavily tax labour (we pay income tax) and then enterprise (companies pay corporation tax). But we pay less tax (or certainly the richest pay less tax proportionately) on capital and on land (everyone agrees that council tax, loosely based on land, should be reformed, but no political party dares to do so). We also tax sales (you pay 20% VAT on most of the things you buy). Most economists agree that council tax and sales tax are two of the most regressive taxes, i.e. the poorest end up paying an unfair contribution to the exchequer through these taxes compared to the richest. Maybe we should look to make these fairer in order to pursue economic justice?)
So let’s look now at what the Old Testament laws decreed about taxation, and then about the four factors of production. (Be warned, what comes next may be quite radical for many people who have not read these parts of the Bible before… and yet it may be the greatest system for economic justice ever created.)
Taxation (or Tithing)
The Old Testament law didn’t have a system of taxation as such, but you could argue there is some approximation with tithing. The tithe is often considered to be a 10% contribution to the priests, who would also give a proportion of this to the poorest in society. And so many churches now preach an equivalent that 10% of our income should be tithed to the local church. But that’s not quite what the tithe was in the Old Testament.
Be sure to set aside a tenth of all that your fields produce each year. Eat the tithe of your grain, new wine and olive oil, and the firstborn of your herds and flocks in the presence of the Lord your God at the place he will choose as a dwelling for his Name, so that you may learn to revere the Lord your God always. But if that place is too distant and you have been blessed by the Lord your God and cannot carry your tithe (because the place where the Lord will choose to put his Name is so far away), then exchange your tithe for silver, and take the silver with you and go to the place the Lord your God will choose. Use the silver to buy whatever you like: cattle, sheep, wine or other fermented drink, or anything you wish. Then you and your household shall eat there in the presence of the Lord your God and rejoice. And do not neglect the Levites living in your towns, for they have no allotment or inheritance of their own.
At the end of every three years, bring all the tithes of that year’s produce and store it in your towns, so that the Levites (who have no allotment or inheritance of their own) and the foreigners, the fatherless and the widows who live in your towns may come and eat and be satisfied, and so that the Lord your God may bless you in all the work of your hands. (Deuteronomy 14:22-29)
The tithe was actually each family taking 10% of their income/wealth each year, and travelling to Jerusalem for a huge party, where they were to rejoice in the presence of God. This would have provided something for the Levites, since they received a portion of the meat, grain and wine from each sacrifice. But the majority of it remained with the family who feasted. So the purpose of tithing was really about worship, and to teach people to trust in God more.
Every three years the full tithe of produce was given to the Levites. So in effect you could argue this was an overall tax rate of 3.33% on wealth/ income (i.e. one third of 10%). And above this amount people were to be generous to the poor, the foreigners, the widows (i.e. the vulnerable in society) and also the Levites. But this generosity was to go beyond the tithe – two thirds of the tithe was to help each family to celebrate and have a huge party in the presence of the Lord. Not many churches who preach tithing teach this actual definition of what the money was used for!
Now let’s move on to what the bible says about each of the factors of production. Firstly capital, i.e. money.
Do not charge a fellow Israelite interest, whether on money or food or anything else that may earn interest. You may charge a foreigner interest, but not a fellow Israelite, so that the Lord your God may bless you in everything you put your hand to in the land you are entering to possess. (Deuteronomy 23:19-20)
So money was not to be lent to others for interest. Very controversial, since that is one of the foundational principles of our economy, i.e. those who have money loan it to those who need money, and in turn they make more money from it.
But God still encouraged people to loan money, especially to those who needed it. Yet it was not to be done as a means of money making, but of helping the poor.
At the end of every seven years you must cancel debts. This is how it is to be done: Every creditor shall cancel any loan they have made to a fellow Israelite. They shall not require payment from anyone among their own people, because the Lord’s time for cancelling debts has been proclaimed. You may require payment from a foreigner, but you must cancel any debt your fellow Israelite owes you. However, there need be no poor people among you, for in the land the Lord your God is giving you to possess as your inheritance, he will richly bless you, if only you fully obey the Lord your God and are careful to follow all these commands I am giving you today. For the Lord your God will bless you as he has promised, and you will lend to many nations but will borrow from none. You will rule over many nations but none will rule over you.
If anyone is poor among your fellow Israelites in any of the towns of the land the Lord your God is giving you, do not be hard-hearted or tight-fisted toward them. Rather, be open-handed and freely lend them whatever they need. Be careful not to harbour this wicked thought: “The seventh year, the year for cancelling debts, is near,” so that you do not show ill will toward the needy among your fellow Israelites and give them nothing. They may then appeal to the Lord against you, and you will be found guilty of sin. Give generously to them and do so without a grudging heart; then because of this the Lord your God will bless you in all your work and in everything you put your hand to. There will always be poor people in the land. Therefore I command you to be open-handed toward your fellow Israelites who are poor and needy in your land. (Deuteronomy 15:1-11)
They could charge interest to foreigners, but not to fellow Israelites. And all debts to fellow Israelites were cancelled every seven years. So they were still to loan money, but to do so as a means of helping people, not as a means of making money or trapping people in debt.
Reading on we find the Old Testament law had something to say about labour.
If any of your people—Hebrew men or women—sell themselves to you and serve you six years, in the seventh year you must let them go free. And when you release them, do not send them away empty-handed. Supply them liberally from your flock, your threshing floor and your winepress. Give to them as the Lord your God has blessed you. Remember that you were slaves in Egypt and the Lord your God redeemed you. That is why I give you this command today.
But if your servant says to you, “I do not want to leave you,” because he loves you and your family and is well off with you, then take an awl and push it through his earlobe into the door, and he will become your servant for life. Do the same for your female servant.
Do not consider it a hardship to set your servant free, because their service to you these six years has been worth twice as much as that of a hired hand. And the Lord your God will bless you in everything you do. (Deuteronomy 15:12-18)
The Old Testament society did permit slavery, but it was an especially enlightened form of slavery. Slaves were not to be abused, and would receive the security of a roof over their head and good food to eat. And above all this, they were to be released every seven years (presumably the same year that debts were also cancelled). So labour was always to be rewarded, and not exploited by the wealthy.
Now we come to the most radical part of the economic system. Here is how God said they were to treat land ownership…
The Lord said to Moses at Mount Sinai, “Speak to the Israelites and say to them: ‘When you enter the land I am going to give you, the land itself must observe a sabbath to the Lord. For six years sow your fields, and for six years prune your vineyards and gather their crops. But in the seventh year the land is to have a year of sabbath rest, a sabbath to the Lord. Do not sow your fields or prune your vineyards. Do not reap what grows of itself or harvest the grapes of your untended vines. The land is to have a year of rest. Whatever the land yields during the sabbath year will be food for you—for yourself, your male and female servants, and the hired worker and temporary resident who live among you, as well as for your livestock and the wild animals in your land. Whatever the land produces may be eaten.
“‘Count off seven sabbath years—seven times seven years—so that the seven sabbath years amount to a period of forty-nine years. Then have the trumpet sounded everywhere on the tenth day of the seventh month; on the Day of Atonement sound the trumpet throughout your land. Consecrate the fiftieth year and proclaim liberty throughout the land to all its inhabitants. It shall be a jubilee for you; each of you is to return to your family property and to your own clan. The fiftieth year shall be a jubilee for you; do not sow and do not reap what grows of itself or harvest the untended vines. For it is a jubilee and is to be holy for you; eat only what is taken directly from the fields.
“‘In this Year of Jubilee everyone is to return to their own property.
“‘If you sell land to any of your own people or buy land from them, do not take advantage of each other. You are to buy from your own people on the basis of the number of years since the Jubilee. And they are to sell to you on the basis of the number of years left for harvesting crops. When the years are many, you are to increase the price, and when the years are few, you are to decrease the price, because what is really being sold to you is the number of crops. Do not take advantage of each other, but fear your God. I am the Lord your God.
“‘Follow my decrees and be careful to obey my laws, and you will live safely in the land. Then the land will yield its fruit, and you will eat your fill and live there in safety. You may ask, “What will we eat in the seventh year if we do not plant or harvest our crops?” I will send you such a blessing in the sixth year that the land will yield enough for three years. While you plant during the eighth year, you will eat from the old crop and will continue to eat from it until the harvest of the ninth year comes in.
“‘The land must not be sold permanently, because the land is mine and you reside in my land as foreigners and strangers. Throughout the land that you hold as a possession, you must provide for the redemption of the land.
“‘If one of your fellow Israelites becomes poor and sells some of their property, their nearest relative is to come and redeem what they have sold. If, however, there is no one to redeem it for them but later on they prosper and acquire sufficient means to redeem it themselves, they are to determine the value for the years since they sold it and refund the balance to the one to whom they sold it; they can then go back to their own property. But if they do not acquire the means to repay, what was sold will remain in the possession of the buyer until the Year of Jubilee. It will be returned in the Jubilee, and they can then go back to their property.
“‘Anyone who sells a house in a walled city retains the right of redemption a full year after its sale. During that time the seller may redeem it. If it is not redeemed before a full year has passed, the house in the walled city shall belong permanently to the buyer and the buyer’s descendants. It is not to be returned in the Jubilee. But houses in villages without walls around them are to be considered as belonging to the open country. They can be redeemed, and they are to be returned in the Jubilee. (Leviticus 25:1-31)
This is incredibly counter-cultural stuff to our modern, property-obsessed society. There was an understanding that the land ultimately belonged to God, not to any individual. And so rather than the rich being able to buy up and hoard land, it was to be redistributed equally and fairly amongst every household every 50 years!
This Year of Jubilee would have happened once in a lifetime for most people, and would have been a huge year of festivals and rejoicing. It would also coincide with a year of cancelling debts and of freeing slaves, resulting in a two-year jamboree.
The Jubilee didn’t take away rich people’s wealth, but in an agrarian society of subsistence farming it did redistribute the greatest means for creating wealth… the land. And it created a level playing field where everyone had an opportunity to work hard and create wealth if they chose to. There’s an interesting exception where properties in walled cities (i.e. urban houses) were not redistributed – these could be bought up and kept for generations. But the rural societies (usually the poorest) would always have this system of reset, to stop them falling into poverty, and to stop the rich from buying up all the land and charging endless rents.
For this final factor of production there are no direct laws. Profits made from enterprise would have been treated as wealth, so people would pay tithes on it each year as discussed above.
But it’s interesting that those concerned with economic justice in our modern world usually say the way to achieve justice is to raise taxes on the wealthy, either on their income or their company profits. Would a more biblical way to work towards economic justice be to become more concerned about land reform/ equal land redistribution, and to stop punishing those in debt with crippling interest rates?
So how would God act if He were Chancellor?
- A flat percentage tax rate on annual income/ wealth/ enterprise?
- An interest rate of 0%, so people cannot make money from the debts of others.
- But an expectation that those with money should loan it to the poor, with a cancellation of debts every seven years. (This would encourage only responsible lending, and help those in greatest financial need.)
- A redistribution of the land every 50 years, ensuring everyone had an equal share.
This incredible system allows for individuals to make and keep wealth through their own economic activity/ entrepreneurship/ initiative, and yet prevents the poorest being trapped in crippling debt burdens, and through land redistribution enables everyone to have access to the greatest means for making money.
No wonder one person once described this whole economic theory as “bullet proof” when it was first explained to him!
By contrast, our economic system penalises the poorest. We charge higher interest rates to those with little or no money compared to those who have lots of money. This makes borrowing more expensive, and can tip some of the poorest over into unsustainable debt, where they keep paying money on interest and never manage to escape from debt. This seems to be very much against God’s will.
We like to think we are more enlightened than the Old Testament society – and perhaps we are on the issue of labour, since we have abolished slavery. But their system was far more enlightened than ours on the use of capital and land. If we want to bring about economic justice, maybe we should look at changing our practice here, rather than thinking that raised taxes are the best solution to economic fairness?
God is profoundly interested in economic theory, and how to structure a national economy in a way that enables wealth creation but ensures economic justice for the poorest. Are we prepared to listen, and try to implement some of these principles?
This is controversial stuff… some come along and join the discussion. The next two Thursday evenings we’ll continue to look at God’s Economy. We’d love to have you with us.