Home / Austrian Economics / Christian Economics in One Lesson, II: 9: Consumer Sovereignty
Print Friendly and PDF

Christian Economics in One Lesson, II: 9: Consumer Sovereignty

Written by Gary North on May 28, 2016

So when even[ing] was come, the lord of the vineyard saith unto his steward, Call the labourers, and give them their hire, beginning from the last unto the first. And when they came that were hired about the eleventh hour, they received every man a penny. But when the first came, they supposed that they should have received more; and they likewise received every man a penny. And when they had received it, they murmured against the goodman of the house, Saying, These last have wrought but one hour, and thou hast made them equal unto us, which have borne the burden and heat of the day. But he answered one of them, and said, Friend, I do thee no wrong: didst not thou agree with me for a penny? Take that thine is, and go thy way: I will give unto this last, even as unto thee. Is it not lawful for me to do what I will with mine own? Is thine eye evil, because I am good? So the last shall be first, and the first last: for many be called, but few chosen (Matt. 20:8-16).

Jesus’ parable of the laborers in the vineyard is one of His kingdom parables (Matt. 20:1). It illustrates a biblical principle: the absolute sovereignty of God in offering the terms of salvation. The Jews had been given this offer first. The gentiles came later. Those Jews who complained that the gentiles were being given access to the kingdom, despite the fact that Jews had been laboring in God’s kingdom for generations, were missing the point, the parable teaches. God’s absolute sovereignty governs the granting of special grace to whomever He chooses.

The Jews, He knew, would complain that they had worked the whole day under the blazing sun of redemptive history, whereas the gentiles had come into the field only at the end of the day. Why should the gentiles be paid as much as the Jews? The answer was straightforward: the Jews had agreed to work for that wage at the beginning of the day. The man doing the hiring had made a different offer later in the day to others, but what legitimate concern was that to those who had arrived in the fields first?

The employer, as a buyer of labor services, had made a series of offers. Throughout the day, the hired laborers had accepted his offer. He kept hiring more of them for their sake and his: “And about the eleventh hour he went out, and found others standing idle, and saith unto them, Why stand ye here all the day idle? They say unto him, Because no man hath hired us. He saith unto them, Go ye also into the vineyard; and whatsoever is right, that shall ye receive” (vv. 6-7).

He paid these late-comers a full day’s wages. They had not been told exactly what wage to expect. The employer had promised only to pay them what was right. They had taken a chance with him, and they had been well rewarded for their venture. They surely were not complaining. The complainers – were those who had received a specified wage contract. Yet they had been paid exactly what they had been promised.

The theological point – that God is sovereign in offering salvation to those who are called either early or late — was conveyed by what I call a pocketbook parable. Men understand employment contracts far more readily than they understand theology. Jesus taught a kingdom principle by way of an economic principle.

Legal Sovereignty

We should examine the economics of this parable in greater detail. The employer had jobs to offer. The laborers had labor to sell. It was, as they say, a buyer’s market. There were laborers standing around throughout the day waiting for some employer to make them an offer. Those who accepted this man’s offer early in the day locked in a day’s wage. They did not take a chance that they would receive a better offer later in the day. They assessed the job market in the morning, and they decided that the employer’s offer was the best one likely to become available that day. They took it.

They had the right to turn down his offer. “No thanks,” any of them might have said. “You’re going to be out here trying to hire other workers later in the day. I would prefer to lounge around in the shade until the last hour. Then I’ll work for you for what you’re offering me now for a full day’s labor.” There are those who say the same thing in their youth regarding their eternal salvation. “I have my life to live. I have wild oats to sow. When I’m old and infirm, I’ll take you up on your offer of salvation. That way, I’ll have enjoyed this world to its fullest, and I’ll enjoy the coming world, too.” He wants the benefits of heaven at the lowest possible cost in terms of what he must forfeit in this world.

Such a person has not considered the possibility that God may not resubmit the same offer to him later on. God can make the offer of salvation to anyone else on the same, better, or worse terms. The question is: is the person receiving the offer ready to accept it immediately? “Behold, now is the accepted time; behold, now is the day of salvation” (II Cor. 6:2b). The decision is his responsibility at the time the offer is made.

Similarly, the laborer is not legally compelled by the employer to work in his field. The offer is an offer, not a demand. The laborer has the legal right to refuse to accept it. He is sovereign over his own labor. The employer has no legal claim on his labor until he agrees to work for the employer on the terms they have mutually agreed to.

Each party to the employment contract makes a judgment regarding the present and future state of the job market. Each assesses what the other is willing to accept. The employer makes an offer; the laborer must decide. Each is legally sovereign over his own assets.

Consumer Sovereignty

The term “consumer sovereignty” was coined in the 1930’s by W. H. Hutt, a South African economist. He was not speaking of a consumer’s special legal sovereignty. He was speaking of economic sovereignty in the free market economy. The market is propelled by the money offers of consumers. More to the point, the market is driven by producers’ expectations about what future consumers will offer him for whatever it is he plans to sell.

If producers are legally sovereign owners of labor services and physical assets (labor and land), why are consumers said to be sovereign? Because consumers are the owners of the goods desired most by producers. The most universally desired good is money: the most marketable commodity. This is what consumers possess. Sellers of highly specific and less marketable consumer goods want money in exchange. Consumers are economically sovereign because they have money to spend.

They intend to buy the consumer goods or services for their own use. That is why we call them consumers. They are not middlemen. They look to their own desires when making their decision to buy or not to buy. They evaluate the value to them of their present array of assets and decide whether to rearrange them by giving up some assets to gain for others.

The consumer acts on his own behalf or those economically dependent on him. He has the legal authority to make and reject an offer. “I’ll buy that for this much money,” offers the consumer. The seller can reject the offer, but only at the cost of forfeiting ownership of whatever the consumer is willing to give up. Similarly, the early morning laborers in the parable could lawfully have rejected the employer’s offer, but only at the economic cost of forfeiting a guaranteed day’s wage.

The employer in the parable probably was not the final consumer, although he may have been. If the laborers were harvesting a crop that the employer intended to consume in his own household, then he was acting as a consumer: the final buyer. If he was acting as an entrepreneur who planned to sell all or part of the output of the laborers’ work, then he was a producer to the extent that he intended to sell. Someone was sovereign over him, i.e., the consumers who would either accept or reject his offer to sell him a portion of his crop.


The producer faces a narrow market. He produces one item or class of items. To do this, he must enter the producer goods markets and buy specialized production goods and services – raw materials, labor, space – that can be used in many ways. He makes these purchases by offering sellers an even more marketable commodity: money. That is, he moves from ownership of the most marketable good to ownership of less marketable goods. His goal is to produce an even more specialized, less marketable good or service.

Human labor services are widely marketable because humans are very flexible. So is land. But a specific crop is much more narrowly marketable. The market for fresh turnips is narrower than the market for freshly printed paper money, except in times of mass inflation. The reason why someone will forfeit money in order to buy the inputs that produce turnips is that he believes that he has a special advantage of some kind in the turnip market. He thinks that he can gain more income in the future through this specialized knowledge than he can by investing his money.

The employer in the parable forfeited ownership of money in exchange for somewhat specialized agricultural labor services. The laborers in turn gained access to a more marketable commodity – money — than the asset they surrendered: agricultural labor. The person with the money – the most marketable commodity – was the driving force in the marketplace. He could buy more things with his asset than sellers could buy with theirs. In other words, for as long as he possessed money, he possessed a wider range of options. He was economically sovereign because of the nature of the asset he owned.

(For the rest of my article, click the link.)

Continue Reading on www.garynorth.com

Print Friendly and PDF

Posting Policy:
We have no tolerance for comments containing violence, racism, vulgarity, profanity, all caps, or discourteous behavior. Thank you for partnering with us to maintain a courteous and useful public environment where we can engage in reasonable discourse. Read more.

Comments are closed.