A Review of ‘The Poverty of Nations’ by Wayne Grudem and Barry Asmus

9781433539114_p0_v6_s260x420Barry Asmus and Wayne Grudem, The Poverty of Nations: A Sustainable SolutionWheaton: Crossway, 2013. 402 pp. $23.97.

I had heard some good things about The Poverty of Nations, and one of its co-authors (Wayne Grudem) is practically a legend in theological circles.  So, when the book popped up as an option on my Beyond the Page account, I jumped at the opportunity to read and review it.

Most of us probably took some kind of ECON101 class in college, and it was probably really boring.  But who’s ever heard of a Biblical economics textbook?  Can such a thing even exist?  Grudem and Asmus’s work might surprise you.  The Bible actually has a lot more to say about money, goods, and services than you might think.

That being said, I do not claim before or after having read this book to be an expert on these issues, but I feel much better equipped to think through the complicated issues of national and global economies after a thorough reading of this dense book.  Let me break down some of the basics for you.

A Simple Truth.

This is the pulsing heartbeat of the book: “If we want to solve poverty, the correct goal is that a nation continually produce more goods and services per person each year.”  A nation’s poverty level is determined by its per capita income (the average amount of annual income per person).  Per capita income is calculated by adding up all of the goods and services produced by a nation in a year and dividing it by the number of people living in that country.  So, Grudem and Asmus argue, the solution is simple: increase the total sum of goods and services produced, and the per capita income will increase, lifting the nation out of poverty.

The goal is simple, but attaining that goal is much more complicated.  After explaining several economic systems that fail to produce prosperity, the authors land at what they call The Free Market system.  In a free market, the people have full control over the production of goods and services.  The government’s role is to protect this free market system and to provide equal opportunity for all individuals to freely choose when, where, how, and what they will or will not produce.

Grudem and Asmus explain that the Bible assumes a free market environment.  The commandment “Do not steal” (Exodus 20:15) assumes private ownership which is foundational for any free market system.  Many other instances in the OT and NT command the protection of private ownership and encourage generosity with personally owned resources.  Rather than seeking to intrude or force economic growth, a government’s job is to punish abuses like stealing, lying, and dishonesty, which hinder economic growth, and to create an environment where the people have the freedom to produce goods and services.

I really appreciated the discussion on the workings of a free market system.  They use a pencil as an illustration.  In a free market system, no one person knows how to make a pencil.  Multiple companies are involved, from those who cut down the trees, to those that mine the graphite, to those that create the erasers, to those that actually take these resources and shape them into the end product.  No one person knows how to make a pencil, and yet pencils are being made.  A free market is a complicated system of dependent individuals and companies.  The authors argue that in fact interdependence is a mark of a healthy economy, while independence leads to poverty.

Grudem and Asmus also argue that a free market system actually promotes Biblical virtues like cooperation, honesty, and concern for the needs of others.  They seek to demonstrate how it encourages fairness, peace, and productivity.

A large portion of the book is dedicated to delineating the duties of the government.  Poverty of Nations argues that a government’s job is not to take an active role in the economy, but to protect the freedoms of the market place.  A government must protect against crime, disease, violation of contracts or copyrights, and destruction of the environment while also ensuring freedoms to own property, to buy and sell, to work, to access useful knowledge, to exercise religious beliefs, and to become wealthy by legal means.  These protections and freedoms must be extended to all classes, races, genders, and persons in any nation that is going to grow and prosper.

Some Major Pluses.

This book is plain.  Grudem is a very systematic writer, and his work delineates every part of his argument down to the last detail.  There is not much flourish, ‘I-told-you-so’ attitude, or arrogance.  Even a guy like me, with no prior economic training, could pick up the book and understand pretty much everything.

Grudem and Asmus do a good job of showing how personal and social freedoms are essential to a nation’s economy.  An economy is not just dollars and cents.  It is affected by the freedoms the citizens are (or are not) afforded.  As impoverished nations seek to grow and prosper, certain freedoms are going to be essential to economic growth.  I believe the chapters about promoting Biblical virtue in a society were also a very helpful nuance.  As Christians, we are concerned with obeying God’s command to “be fruitful and multiply” the resources of God’s creation, but we are equally concerned with matters of the heart.  It is good to see that both of these objectives can be pursued together.

The chapter about the Fair Trade movement was particularly intriguing.  Though perhaps an unpopular evaluation, I believe it was an accurate assessment.  They argue that the Fair Trade movement unfairly manipulates the price of goods (coffee in particular) in a way that will bring long term harm to farmers.  The inflated prices that Fair Trade farmers receive for their coffee encourages them to ignore the laws of supply and demand.  Whether the demand for coffee is actually increasing, Fair Trade encourages farmers to produce more and more coffee because they are guaranteed a high price.  Fair Trade prices discourage farmers from diversifying their crops and learning to produce new products when and if the price of coffee drops.  Fair Trade inevitably leads to oversupply, which depresses global prices and hurts farmers who are not a part of the Fair Trade program.

Lastly, Grudem and Asmus take an approach that seeks to empower individual nations.  Their advice is not based on foreign aid (in fact, it discourages it); they seek to provide solutions that any nation and any government could implement without outside help.  This is an admirable approach.

A Few Detractions.

As an American reading a book that is primarily targeting impoverished nations, there were instances where I winced at the Amero-centricism found between the covers of the book.  It was difficult to resist the feeling that the Free Market system being proposed was in fact an American economic system.  I don’t think Grudem and Asmus intended this, but at times the book leans too heavily on positive examples from the United States when they surely could have drawn from many other successful free market economies across the globe.

How plausible is it that an impoverished nation will pick up this dense book written in English and wade through its arguments and actually seek to implement them?  Much of the book is specifically directed at government leaders, calling on them to establish freedoms and protections.  That is quite a small target audience.  Chances are nearly 95% of those who read this book will be seminary students, pastors, or theologians who comprehend the arguments of the book but have absolutely no power to implement them abroad.  I’m not sure this is necessarily a fault of Grudem and Asmus, but it is a sad fact.

This book could have been at least 1/3 shorter.  There are times when it feels like the authors are redoubling their efforts, traveling down the same paths covered earlier in the book.  It is possible that this stems from the systematic approach taken by the authors.  Their desire to make each chapter well contained as a stand-alone article meant principles and basic terms were repeated over and over.

Conclusion.

Overall, I thoroughly enjoyed reading The Poverty of Nations, and I benefited from its Biblical approach to an issue of monstrous importance.  I would recommend this book for any pastor who wants a crash course in economics, and several of the initial chapters would be really helpful for those who want to establish a broad understanding of how economies function.

Disclosure clause: I received a free Kindle Edition copy of The Poverty of Nations from Crossway.  I was in no way influenced to provide a positive review of this book.