How Big Is Your Slice of the Pie?
My husband majored in Business Economics in college and later went on to earn his Master of Business Administration. He loves learning about the concepts in economics and we have talked about these concepts our entire marriage. I understand some of it, but most of it goes over my head and is not exactly one of my favorite subjects. So naturally, I went to him to discuss Karl Polanyi’s book The Great Transformation: The Political and Economic Origins of Our Time. He read this book (or rather the Cliff Notes) in college. When my business savvy husband tells me this book is “thick” what hope do I have of understanding the concepts? Thankfully, my husband is a great teacher and knows how to explain things in a way anyone can understand. Our conversation centered around the differences between free market economies and regulated economies.
In order to better understand how a free market economy verses a regulated economy works, let me ask you a question. Would you rather have two slices of a 5-inch pie or one slice of a ten-inch pie? Why? Which one gets you more pie? Two is greater than one, right? Well in this instance it is not. Two 5-inch pies get you 39.27 square inches. If you divide that into eight pieces per pie, two slices equal 4.91 square inches. One ten-inch pie gets you 78.54 square inches. This gives you a slice that is 9.82 square inches, double the amount of pie.[1]
What does all this have to do with economics or Karl Polyani? My husband told me that a free market economy is better at enlarging the pie while a regulated economy is better at slicing the pie. The free market economy takes advantage of the fundamental motivations of greed. It says, if you work harder and are more productive you will make more money. This aligns well with the Protestant Work Ethic. In contrast, in a heavily regulated economy, there is less reward for hard work or invention.[2]
In his dissertation, Dr. Jason Clark comments, “The market is, if not a false body, then at least a competing body, to which humans have ceded all sociologic, because of its promise of actualizing community desire; however, it has never produced a community, but rather fostered an idealization and unrequited desire for community.” [3]
Is a free market economy ideal? We have a desire for community, but does it help to create that community? My daughter, along with many of her generation, would tell you hands down that it is not. She would advocate for the notion of a benevolent dictator. She is disillusioned with the gap between poverty and wealth in the world. Who can blame her? While Utopia is a nice idea, it is not something we will see this side of heaven. Our fallen nature means that there will always be someone looking to take advantage of any situation. The free market economy has led to great riches, but also great poverty. The pie may be bigger, but not everyone has an equal slice.
In Chapter Nine, Polanyi discusses Pauperism and Utopia. He writes about the economy in the wake of the Seven Years War:
In actual fact, prosperity was just around the corner, a prosperity of gigantic proportions which was destined to become a new form of life not only for one nation but for the whole of mankind. But neither statesmen nor economists had the slightest intimation of its oncoming. As for the statemen, this may have been a matter of indifference, as for another two generations the rocketing trade figures only dented the edge of popular misery. But in the case of the economists, it was singularly unfortunate as their whole theoretical system was erected during this spate of “abnormalcy,” when a tremendous ride in trade and production happened to be accompanied by an enormous increase in human misery.[4]
Pauperism was a result of a free market economy. Polanyi goes on to say, “Pauperism had become a portent. But its meaning was still anybody’s guess.” [5] We can see the continually growing gap between pauperism and wealth and the degree to which race plays part. The poverty gap shows most clearly along racial lines.
Polanyi discusses regulation of the market in chapter twenty-one. “A free supply of land, labor, and money continued to be available; consequently no self-regulating market system was in existence. As long as these conditions prevailed, neither man, nor nature, nor business organization needed protection of the kind that only intervention can provide.”[6] These conditions prevailed because of the oppression of others. Regulation aids with halting that oppression, but we cannot go back to a place before that oppression and the consequences have created an inequal society.
In an ideal world, poverty would not exist. Racism would not exist. We would all live in peace and harmony. Sounds like heaven to me and I look forward to getting there.
‘Then the angel showed me the river of the water of life, bright as crystal, flowing from the throne of God and of the Lamb through the middle of the street of the city; also, on either side of the river, the tree of life with its twelve kinds of fruit, yielding its fruit each month. The leaves of the tree were for the healing of the nations. No longer will there be anything accursed, but the throne of God and of the Lamb will be in it, and his servants will worship him. They will see his face, and his name will be on their foreheads. And night will be no more. They will need no light of lamp or sun, for the Lord God will be their light, and they will reign forever and ever. ‘” Revelation 22:1-5(ESV)
[1] https://www.omnicalculator.com/food/pizza-comparison
I used this website for my calculations.
[2] Andrew Hald, interviewed by author, San Francisco, March 1, 2023.
[3] Jason Clark, “Evangelicalism and Capitalism: A Reparative Account and Diagnosis of Pathogeneses in the Relationship” (2018). Faculty Publications – Portland Seminary, 164-165.
[4] Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time. (Boston, Beacon Press, 1944), Pg. 109.
[5] Ibid., Pg. 115.
[6] Ibid., Pg. 211.
About the Author
Becca Hald
Becca is an ordained Foursquare minister, serving as the Online Community Pastor at Shepherd's House Church. She has over twenty-five years of leadership experience both inside and outside the church. Becca has served her community in many capacities ranging from Administrative Assistant and Children’s Ministry Director to Secretary and President of multiple school organizations. She and her husband, Andrew have been married for over 25 years. They have two adult children, Drew and Evelyn. Her great passion is to equip others, to raise awareness about mental health, and to help reduce the negative stigma surrounding mental health issues. In her free time, she loves going to Disneyland, reading, sewing, and making cards.9 responses to “How Big Is Your Slice of the Pie?”
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Becca,
I enjoyed your post, I love the imagery and how you shared it in a way that made it very simple. I appreciate you.
I am struggling with this a little in my own life. When I first started the food ministry it was a free market. I was able to acquire almost 100,000 lbs of food a day.
Now two years later, it is a highly regulated market. I struggle to get a 25,000 lbs of food. Because of higher regulations and restrictions from the state, more food is going to waste.
It is a difficult situation because now I have almost $200,000 worth of equipment that I needed to conduct business in a free market. In a regulated market, I am struggling to pay for my equipment and started selling off equipment to balance out.
In regulated markets, there is also favoritism through relationships. Some people have more mouths to feed with that one piece of pie.
My question is to you and your husband. Does there need to more rules and legislation in a regulated market?
Will greed and covetousness always be the downfall of the free market system?
Thank you for your time and post. You are a gift.
Peace and Blessings.
Hi Greg! Great questions. My hubby is here to help me respond. Economically, the key is balancing your regulations so you capitalize on greed. To successfully balance regulation, the more appropriate approach is finding the balance between regulation and absolute anarchy. There has to be some regulation to balance things otherwise only those with money, resources, and relationship continue to get ahead. So the question to ask is when is regulation beneficial – when it compliments and strengthens the free market. For there to be a regulation, there has to be something more than just a Robin Hood approach of taking from the rich and giving to the poor. You have to keep the money makers making money to keep the pie getting bigger.
As for me, I think that we will not see any kind of truly fair system this side of heaven. I think that greed and covetousness will always get in the way and there will always be people who want to take any advantage of the system they can. I am so sorry that it is such a struggle for you right now. You are such an inspiration to me and I pray that God will continue to provide for your ministry and bless you through it.
Becca – You and your husband gave me a lot to think about! Thank you for using simple metaphors to explain a complex topic. Isn’t it interesting how the younger generation tends to focus on the downfalls of capitalism rather than the positives? I wonder if that will change as they age…
Hi Laura, thanks for your response. I am not surprised by the views of the younger generation. When you look at the world they are growing up in, it is very different from the one we grew up in. Instead of bomb drills from the Cold War, my daughter dealt with active shooter drills. Instead of political conversations where people could actually share opposing viewpoints and have a civil conversation, my daughter has watched as our country has become increasingly polarized. I do not know where her views will change as she gets older. I know that my views have changed much over the years, so I am sure as she grows and learns, she will see the world differently. I pray that we can help to turn things around and create a positive environment for her and future generations.
Becca,
Thank you for the response. I find that I struggle with the food ministry because it is constantly changing. My equipment has to change with it. I appreciate your husbands input as this gives me confidence and peace in my decisions I have made.
Bless you.
Becca, I vote we have your husband join us for our next class to talk about economics! Your summary, with the aid of your husband, of Polanyi was brilliant and clear. I guess we are all stuck between a rock and a hard place. What is the better route? Regulated markets (and who regulates anyways?), or self-regulated markets? Both have their problems. Thank you for your post Becca!
Lol David! I will just have to make sure my sound is turned up loud Monday morning instead of using my headphones. Then he will be there by default! As for which is better? I live the best I can in the system with are in and look forward to heaven! I do not think either one works well without Jesus.
Becca what a brilliant recap!
Im so glad that we have you and your husband to help us out here! What was one thing that surprised you that you grasped easily…. and what was is one thing that you just cant still wrap your head around…
I’m struggling with this part as a whole….
Thank you Alana! I am grateful for my husband and his ability to explain things. He really has a gift for teaching. I think understanding the concept of the size of the pie making a difference makes sense to me, but when it comes to economics in general, I mostly scratch my head. I have felt that since my husband understands, I do not need to. Maybe not the best approach to life!