The Surprising Relationship Between Economics and Theology

The thinkers of the Scottish Enlightenment illuminate how we think about the relationship between economics and theology

By Erik W. Matson

Despite their apparent contrast, there are important historical connections between economics and theology, found especially in the work of Scottish Enlightenment thinkers such as Francis Hutcheson, David Hume, and Adam Smith.

In the West, economics is one of our dominant modes of discourse about prosperity. That has not always been the case. For much of history, prosperity and human welfare were discussed in terms of Christian theology.

Despite their apparent contrast, there are important historical connections between economics and theology. They are not so distant as one might think. An appreciation of the connections helps us better understand the history of economic thought. It can inform ongoing dialogues between theology and economics and shape our understanding of our concrete moral obligations and orientations in public policy.

The science of economics has no precise origin. But a major stream of economic thought came forth in eighteenth-century Britain. In the British tradition, economics or political economy flowed partly out of the study of natural theology—the study of God and the created order through reason and the senses, as opposed to special revelation. Economics was not then perceived as a science of cold, soulless calculation, as it is sometimes depicted today. Rather, the study of commerce was frequently understood as an exploration of the providential order with direct implications for ethics and public policy. The theological, ethical, and political dimensions of economics are especially apparent in the work of a line of eighteenth-century Scottish philosophers, including Francis Hutcheson, David Hume, and Adam Smith.

At the turn of the eighteenth century, Scotland was an economic backwater. Edinburgh was a cramped, poor, and dirty town. Commercial activity was stagnant. After years of bad harvest in the 1690s, followed by a misguided attempt to start a colony in Panama, the country was a place of extreme poverty. Men like Hutcheson, Hume, and Smith looked to use philosophy to speak into these social and economic ills. They aimed to bring philosophy into the coffee houses of Edinburgh and Glasgow to encourage reform and affect revitalization. Their efforts involved a mode of analytical reasoning and discourse called political economy, which later evolved into “economics.”

Economics emerged partly as a set of reflections on subjects including exchange, money, pricing, and production. More than that, however, economics emerged as a policy science—a “science of the legislator,” as Adam Smith would describe it in 1776. As a science for legislators, Hutcheson, Hume, and especially Smith provide support for a presumption of liberty in economic policy. The presumption of liberty holds that policies that infringe on property and freedom of contract bear the burden of proof. Smith enshrined these sensibilities in what he dubbed “the liberal plan,” which he described as a “violent attack” on the extant web of harmful government interventions and cronyism in the British polity. The liberal plan rests partly upon economic analysis of the productivity of the division of labor, the gains from international and domestic trade, the coordinating effects of the market process, and the knowledge problems inherent in many government interventions.

A less appreciated contribution of the Scots’ writings in political economy deals with the character of virtue. After growing out of natural theology as an exploration of the providential order, Scottish economic insights return to cast light on moral theology, or obligations in light of God’s created order, by teaching us of the habits, attitudes, and policies that serve desirable ends.

Virtue involves serving the good of others. Especially in the more moderate (as opposed to orthodox) theological circles in which men like Hutcheson and Smith moved, neighborly love through acts of benevolence was the central ethical teaching. Connecting the idea of virtue to serving the good of others shapes our ethical discourse. But it underdetermines our precise obligations. How in practice are we to serve the good of others? And on which others should we focus our attentions? In an increasingly complex world of international finance, transcontinental trade, and urbanization, such questions are difficult to answer. In a commentary on early modern Christian economic thought, the economic historian R.H. Tawney put the point like this, in a 1922 lecture:

Granted that I should love my neighbor as myself, the questions which, under modern conditions of large-scale organization, remain for solution are, Who precisely is my neighbor? And, How exactly am I to make my love for him effective in practice?

Tawney dubiously claims that medieval religious teaching supplied no answer to such questions. By the Reformation, however, these issues received increased attention. Martin Luther, for example, devoted considerable energies to developing a doctrine of vocation. He taught how God uses men and women in their ordinary stations of work, marriage, parenthood, and government to serve the good of their neighbors. We love our neighbor and glorify God by diligently and faithfully focusing on our ordinary tasks. God providentially weaves these tasks together in a way that provides for good of others. In observing God’s providence, and his condescension into ordinary life, each person may understand herself as cooperating with God as she goes about her day-to-day affairs.

Following Luther, and especially Calvin, English Puritans further elaborated theologies of vocation. Richard Baxter, in a work called How to Do Good to the Many, argued that each serves the good of others, by God’s providence, even as she acts to meet her own needs. In emphasizing the difference between intentions and beneficial outcomes, Baxter’s ideas anticipate some of the classical tenets of eighteenth-century political economy. Several years after Baxter, the Puritan minister Richard Steele penned a work called The Tradesman’s Calling, in which he discussed the virtues of a calling to private enterprise and the ways that the ends of business serve the good of others.

Writers like Baxter and Steele prepared the way for a commercial or bourgeois ethos that ascended in the eighteenth-century. Their work emphasized in theological terms why doing good is not inconsistent with doing well, once we realize that honestly doing well for ourselves through private enterprise serves the good of our familiars and communities, but also the good of strangers in distant corners of society beyond our awareness.

Tawney makes a cynical remark that for Richard Steele “trade itself is a kind of religion.” Something similar was said in the eighteenth century about the Anglican clergyman and economist Josiah Tucker, who was accused of making a religion of trade and a trade of religion. Such accusations are skewed. Steele, and later Tucker, did not make trade into a religion; but they did realize that considerations of trade should inform, to an extent, the practical teachings of religion. If we have a duty as Christians to serve the good of others, we ought to know how to do so effectively. That knowledge involves reflections on economics.

In God’s providential economy, Steele says, “every Pin and Nail in the Building…contributes to the Beauty and Strength of the [whole] Work.” Men like Hutcheson, Smith, and to some extent Hume, would make steps in the eighteenth century to describe, in terms available to theist and non-theist alike, how that could be possible in the human economy. In analyses of the division of labor, the coordinating powers of the market process, the benefits of arbitrage and speculation, and the gains from international trade, we learn how, to use Smith’s language, we can “cooperate with the Deity” in serving the multitudes of humankind by pursuing honest income, and by using our incomes in becoming ways to support those in our immediate spheres of influence.

Drawing on insights from Aristotle and Cicero, Francis Hutcheson went to lengths to illustrate private ownership as a way towards virtue, that is, as an institution facilitating virtuous ends. Ownership gives incentive to industry, as each is confident that the returns to his labor can be used to support his loved ones. Ownership enables exchange and specialization. Exchange and specialization lead towards material prosperity and improvement. Property and the division of labor, Hutcheson argues, are a part of the “moral government of the Deity.” On recognizing that government, and the ways in which our enterprises contribute to the good of others, we can conceive of ourselves as serving the whole of humankind as we honestly focus on our part.

Hume is somewhat of a different case, in part because of his irreligiosity. But note that Hume too advocates the virtues of enterprise on account of the widespread benefits it entails. The arch skeptic himself, “not only as a man but as a British subject,” says he “pray[s] for the flourishing commerce of Germany, Spain, Italy, and even France itself.” In so doing, and in calling attention to the productive powers of exchange and innovation, Hume joins with Hutcheson in advancing diligent enterprise as a way in which we make a becoming use of ourselves in the service of others. It is interesting too that Hume’s essay in which the previous comments are found was cited with approval by the theologically orthodox minister John Witherspoon in his own illustration of the mutual benefits of free exchange between independent nations.

The case is clearest in Adam Smith. In a chapter in his book The Theory of Moral Sentiments Smith affirms that the virtuous person ought to be concerned with the happiness of humankind. But he emphasizes that our abilities to serve humanity in the abstract are limited. The good of the universe is, he writes, “the business of God and not man.” To man, he continues, “is allotted a much humbler department, but one much more suitable to the weakness of his powers and to the narrowness of his comprehension; the care of his own happiness, of that of his family, his friends, his country.”

This teaching, however, must be considered in tandem with the breadth of economic analysis presented in The Wealth of Nations that teaches how we metaphorically cooperate with the multitudes of humankind through the division of labor, and how our honest efforts are coordinated, perhaps by the invisible hand of God, into a beautiful whole—a whole that liberally provides for the material needs of the many.

The teachings of some of the Scottish economic thinkers of the eighteenth century, in other words, enliven the theological ideas about vocation brought forth in the sixteenth and seventeenth centuries. They confer dignity on ordinary work, innovation, and the pursuit of honest income, illustrating how we can, in an increasingly complex world, serve the good of the whole by focusing on the part of the whole with which we are familiar—our family, friends, and communities. In the context of liberal political rules that protect the lives, liberties, and property of individuals, we can, the Scots believed, be confident that such efforts will be coordinated—either metaphorically or literally by the invisible hand of God—into a beautiful whole.

Erik W. Matson is a Senior Research Fellow at the Mercatus Center and the Deputy Director of the Adam Smith Program at George Mason University. He serves as a lecturer in political economy at The Catholic University of America in the Busch School of Business.

Acknowledgement: This is a version of an essay previously published online by National Review on September 27, 2022, reproduced with permission.