History’s most remarkable economic transformation

OPINION:

Consider one of history’s most remarkable transformations: In 1800, 90% of humanity lived in subsistence poverty. Today, that figure has flipped, and according to the United Nations Development Programme (UNDP), 90% of all people have escaped poverty’s grip.

While the remaining 10% in poverty is still a global tragedy, we can celebrate an unprecedented and rapid decline in material deprivation over the past three decades.

Expanding worldwide prosperity means the vast majority of people are no longer struggling merely to survive and now have the opportunity to pursue broader human flourishing. In this moment, we must look backward to understand the ideas that enabled this transformation and look forward to the biblical vision of shalom, or holistic human flourishing, which goes beyond economics.

This rise in prosperity has followed an economic path envisioned centuries ago by Adam Smith, the 18th-century Scottish economist and philosopher often called the father of modern economics. Yet to reduce his ideas to the mechanics of markets guided by an “Invisible Hand” is to miss the moral and spiritual depth of his insights.

In “The Theory of Moral Sentiments,” Smith emphasized that human beings are social creatures shaped by sympathy, virtue and the desire for mutual recognition. Smith argued that people have an innate desire to trade because they are driven by a hunger to improve their lives. Since exchange alone does not increase the total amount of goods in the world, Smith understood the necessity of free markets with institutions, such as reliable currencies, accounting systems and just courts.

A vital feature of these markets was the increase in scale from village to country to worldwide trade, with a corresponding increase in prosperity at every level.

The conclusive step unleashed entrepreneurship and risk-taking through equity markets, which allowed venture capitalists to move beyond fixed interest payments to the unbounded future rewards of stockholder dividends.

Though neither people nor markets are perfect, this progression in free market capitalism over the past two centuries has enriched the lives of billions of human beings. In contrast, central planning has stifled innovation and trapped people in poverty in some of the poorest countries of the world, such as Cuba and North Korea.

Nevertheless, as Smith himself recognized, economic flourishing was never solely about the accumulation of material wealth. His vision of a well-ordered society aligns with biblical principles where individuals live with dignity, exercising their gifts, and engaging in honest labor that paradoxically serves the common good. While the Bible consistently affirms the dignity of work (Genesis 2:15, Ephesians 4:28), Jesus taught in the Sermon on the Mount: “Do not worry, saying, ’What shall we eat?’ or ’What shall we wear?’… But seek first the kingdom of God and His righteousness” (Matthew 6:3133).

This reorientation of priorities reminds us that true flourishing is found in right relationship with God, others and creation. The Hebrew concept of shalom describes this holistic well-being material, relational, spiritual and creational that God intended from the beginning.

In short, the escape from poverty opened the door to the pursuit of human flourishing, but we must also ask: What are we being freed for? Economic freedom creates the conditions for deeper pursuits worship, creativity, community, generosity and a relationship with God.

In this light, the path to flourishing is not just through markets but through moral formation and divine grace.

In an age increasingly tempted by promises of utopia through state control, we would do well to remember the wisdom of Adam Smith and the eternal truths of Scripture. Economic flourishing is a means to a greater end: the full, vibrant, God-honoring life of shalom.

• David Kotter, PhD, is the dean of the School of Theology and professor of New Testament Studies at Colorado Christian University.