An Economy of Grace: Inequality and Lutheran Witness

[1] Douglas Hicks opens his masterful 2000 book Inequality & Christian Ethics by asking the seemingly simple question, “equality of what?” Inequality, he writes, is often reduced to discussions of economic inequality, which tend to miss the complexity of inequality, where income is tied to other distributional and consequential imbalances of resources, assets, access, and outcomes. This is an important consideration. Nevertheless, we must start somewhere, and income inequality provides an accessible launching point. Taking both Hicks’ concern and the reality of the US context seriously, though, means bearing in mind the layers of inequality and the connections between them.

A Brief Survey of Inequality in the United States

[2] As research and reports have documented over the last several years, we are in the midst of a decades-long trend in increasing inequality in the United States. After World War II, income growth among Americans at all earning levels tracked fairly consistently together. As the economy grew, so did incomes, generally across the board. This changed in the late 1970s and early 1980s, when income growth at the top began to far outpace income growth at the bottom. The Congressional Budget Office estimates that between 1979 and 2014, after-tax incomes for the bottom 20% of earners grew about 69%. The middle 60% of earners saw average increases of less – about 42%. Meanwhile, over the same 34 years, the income among the top 1% increased 228%. This shift comes despite substantial volatility through the dot-com boom and bust of the 1990s and the Great Recession.1

[3] Other analysis is even starker. In 1980, the top 1% earned on average 27 times more than the bottom 50% of adults before taxes. In 2014, the top 1% earned 81 times more than the bottom 50%.2 Using perhaps the most popular measure of inequality within a country, the Gini coefficient, the United States ranks 119th out of 157 countries in equality of family income, with a Gini coefficient of .45.3

[4] Income inequality is important, in part because it is deeply interrelated with other forms, particularly in terms of life outcomes. The result is a convoluted network of disparities that, to some extent, statistically predetermines the capacity of individuals in the US to enjoy the goods that, taken together, form the common good. We can look at just a few of these to highlight this. In terms of health, there is substantial evidence of a causal link between income inequality and disparities in rates of illness, quality of care and longevity. People in poverty are more than three times as likely to have activity limitations due to chronic illness. They are more than twice as likely to experience chronic bronchitis, ulcers, liver disease, and vision problems, nearly twice as likely to have diabetes, and three times as likely to have kidney disease.4

[5] Communities with high rates of poverty are more likely to have landfills, toxic wastes sites, and sources of both air and water pollution located nearby. When combined with high rates of substandard housing the rates of asthma are nearly 50 percent higher for families with income below the poverty line than for families with incomes more than double the federal poverty line.5 All of this contributes to a wide disparity in life expectancy within the United States. This disparity between the richest and the poorest US counties can be as much as 30 years.6

[6] Educational attainment is another particularly salient example. Research demonstrates that the gap in achievement between children whose families had incomes at the 90th percentile and those whose families’ income was at the 10th percentile in 2001 was the equivalent of nearly 3 years of primary education, meaning that children of poor families tested nearly three grade levels below their wealthier peers.7 As Sasha Abramsky has put it, “the most successful eight graders from poor economic backgrounds had only the same chance of attaining a bachelor’s degree as the least successful eighth graders from the wealthiest echelon of society.”8

[7] Other examples may be mentioned, but the picture remains similar. The data bear – consistently and broadly – evidence that we are existing in a loose federation of Americas and that the monolithic “American experience” is not now and may never have been a reality. Inequalities related to income, health, education, experiences within the criminal justice system, economic mobility, access to land, access to clean air and water, and so on, are growing and have grown at such a rate that there now exists at least two Americas. There is one with access to a multiplicity of goods that would be the envy of the world and another forced to look on at their wealthier neighbors while facing the increased statistical likelihood of shorter, less healthy, and more vulnerable lives for themselves and their children.

Luther on Inequality

[8] While we cannot draw a straight line from the 1500s to today, we can at least look back to Martin Luther’s writings to demonstrate the relevance of his theology to these kinds of problems, an aspect that is often diminished if not dismissed in reflections on Lutheran ethics. As noted in the introduction to his writings on Trade and Usury in Luther’s Works, Luther “laid upon the heart of Christian hearers the uncompromising demands of God, and upon the hearts of statesmen and merchants the practical necessity for unselfishly seeking the ends of equity for all men. [Luther’s] views of economics, while temporally conditioned, were biblically determined, and must be seen in the light of his entire social ethics.”9 In Trade and Usury (1524), Luther outlines various nefarious practices that perpetuated inequality or defrauded people, particularly people living in economic vulnerability. These included practices that today might be labeled as price gouging, price fixing, market manipulation, and predatory pricing or under-cutting. This was made all the more unjust by collusion between the wealthy pirates of the marketplace and their willing collaborators in courts and governments.

[9] The common trait these tactics share is providing the occasion for profiting at the expense of another. The market, as one of several spheres where we encounter the neighbor, is not free of moral prescriptions or proscriptions, according to Luther. Maximally, the ideal is a public square in which we encounter the other with loving service. But minimally, these same public squares – market, court, government – should at the very least be structured by fairness and justice, to protect against exploitation, fraud, and theft.

[10] Absent this, Luther saw the cyclical development and entrenchment of unequal vulnerability among citizens. Decrying the power of the wealthy in both the marketplace and in government, he asked, “How could it ever be right and according to God’s will that a man in such a short time should grow so rich that he could buy out kings and emperors? They have brought things to such a pass that everybody else has to do business at the risk of loss…while they themselves can always win…these companies are always dealing with permanent and sure gulden for our temporary and uncertain pfennigs. Is it any wonder that they become kings and we beggars?”10 For Luther, it was not merely that the average citizen couldn’t get a fair shake in the market but rather that the system itself seemed designed to prevent this possibility by exacerbating the vulnerable economic situation most people lived in every day.

[11] This was not merely secular commentary on an emerging market economy but a theological critique of institutions, including the church. In the Ninety-Five Theses, Luther tackles not only the theological deficiencies of church practices around indulgences but also the economic implications of such practices in at least two ways. Individually, he chastises Christians who use their money to purchase indulgences rather than providing for their neighbors in need.11 Corporately, he chastises the Medieval Church, particularly for the pressure that indulgence preaching exerted on families in poverty, who felt compelled to take money that ought to be used for their family’s needs and “squander it on indulgences.”12 Luther saw this as a cause of growing poverty. Luther goes further in his writings on usury, where he condemns the church for permitting and practicing what amounted, in his eyes, to usurious practices through the usage of Zinskauf, a financial agreement that was often a “disguise” for usury.13

[12] While Luther does not seem to have employed our modern term of inequality, his writings reflect concern for the ways that economic practices perpetuated a system that enriched the few and impoverished the many. And he saw the church as failing in its duties to protect and serve people in need, to hold government and the market accountable, and to exemplify the gospel in both theory and practice. In what follows, I will briefly describe two fruitful resources that may be recovered from Luther to shape a robust, authentic, and effective response to inequality in the US on the part of the church.

Luther’s Critical Perspective

[13] The modern church has come a long way from Luther’s critical approach to economic justice. While some analyses of poverty within the church do look at the underlying causes, often, Christian responses ignore the structural roots of the problem. As activist Monica Lewis-Patrick has said, “churches and faith-based organizations seldom go beyond ‘philanthropic, do good in the hood projects.’ Charity is important but what is truly needed in the face of systemic injustice are policy changes.”14 It is often as if some sectors of the church believe that we have done our job if Christians pity the marginalized without ever acknowledging that we live in a society of centers and margins.

[14] This loss of a critical, structural perspective on poverty and inequality renders faith-based responses not only ineffective but harmful. Charity done absent a critical perspective that asks “why?” when confronted with divergent lived experiences of need can divert resources and attention away from practical, long-range solutions. It can also shift public attention away from deeper causes of injustice that must be addressed. In shaping the moral imagination of congregants, the church must begin to ask whether it is forming Christians according to their baptismal vocation “to strive for justice in all the world” or if we are forming them to be uncritical participants in a system that unconsciously perpetuates injustice.

[15] Here is where Luther’s own critical perspective can be instructive. His approach to institutions invited questioning along two related lines: first, how well does this institution reflect the intentions of God as revealed in Scripture, and second, how does this institution affect my neighbor, especially the most vulnerable neighbor? Clearly, Luther found both the emerging market economy of the 1500s and the church itself wanting when placed under such scrutiny. His writings reflect a profound understanding of what today we might call both structural injustice and intersectionality.

[16] As just one example, Luther sharply critiqued the Catholic Church’s judicial process, both at the Diet of Worms and in several writings. In this process, court cases were often transferred to Rome, forcing litigants to travel there from Germany. Calling the practice a “cruel game,” Luther writes that the situation “has finally come to the point where a poor man—but a Christian, whom God has redeemed with his blood—for the sake of the trifling sum of three or four groschen is not only cited to appear many miles away, put under the ban, and driven away from wife, children, and family, but the bright boys actually look upon this as a good thing to do, and even smile about it.”15 What is more, once in Rome, litigants quickly found that “a lot of money is the thing most needed.”16 Luther’s critique of ecclesial juridical practices uncovered a structure that placed poor litigants within a web of injustice.17 Thus, the problem of ecclesial courts demonstrates a critical perspective that discloses the injustice of the legal structure of Christendom, while naming the ways economic, political, and legal injustice intersect to foster vulnerability among the poorest of Europe’s citizenry.

[17] Significantly, Luther understood such a critical perspective and prophetic analysis to be a core responsibility of the church. Luther believed that the church had a special role both in holding economic actors accountable and itself practicing just and fair economic practices out of love of the neighbor. As such, even the catechisms, those core resources for training new Christians, are imbued throughout with references to economic behavior, from general teachings on greed to specific references to fair pricing. Thus, Luther’s writings can draw our attention to the forces shaping socio-economic, political, and juridical disparities in our own context.

An Economy of Grace

[18] Part and parcel of the often-uncritical view of inequality found among Christians in the United States is the prevailing view that poverty is the result of the economy working as it is intended, rewarding and punishing according to merit. Indeed, a 2017 survey by the Washington Post and the Kaiser Family Foundation found that Christians are nearly twice as likely as non-Christians to blame poverty on a lack of effort.18 The argument that inequality is a natural indicator of merit is endemic to the American understanding of capitalism. Yet for Lutherans, such a perspective on the economy is far too myopic, if not entirely mistaken.

[19] As Lutherans, we believe that God has great plans for our future. But until that time, God has instituted certain systems to allow us to live – and to live well – this side of the coming future reign of God. Recognizing the need for nurturing care and education, God establishes the family. Understanding the reality of threats to our safety and the need to organize our common life, God has given us government. These “orders of creation” are far from perfect, but they remain gifts of God, and we can recognize their imperfections, in part, because of our discernment of God’s intentions for these institutions and because we share the gift of reason that helps us distinguish justice from injustice, fairness from unfairness.

[20] For Luther, each of these institutions is purposeful and limited, with an end toward which God has created them and a particular sphere that circumscribes the limits of their proper functioning. The key point is that these institutions are meant to enable life. Through them, we are empowered to express our faith, practice love of neighbor, and experience the ever-present grace of God. The economy is no exception. As one of the orders of creation, Luther understood the economy as a gift of God through which we fulfill our vocations and, by so doing, meet our needs and the needs of our neighbors. Because of this intention in their creation, Lutheran theologian Carl Braaten argues, “Every structure of life must be examined as to whether it measures up to God’s intention for it, whether in its current form it works for the common good in the service of justice, liberty, and community.”19

[21] These orders are not to be confused with the full reign of God, but inasmuch as they are shaped by justice and peace, are meant to point to it. Braaten refers to them as “parables of the kingdom,” writing, “While they do not establish the kingdom, they may be seen as signs and anticipations of the eternal shalom for which the whole creation longs and waits.”20 This understanding of the economy as an order can open space for an alternative witness to what may be called the “economics of merit.” It can also foster a perspective on the economy as an expression of God’s grace intended for well-being now. In such an alternative witness, the basic operating principle of the economy shifts from the assignation of rewards and punishments in a system of merit to inclusivity and well-being in a system based on grace, that is, the experience of the goodness and giftedness of God’s creation and ongoing activity within the world.

[22] Thus, it is far too simplistic to dismiss the alternative witness of an economy of grace as merely claiming that everything bought and sold on the market ought instead to be free, or to say that no one should have to work. Indeed, work was understood by Luther to be a key way that Christians fulfill their calling to serve and love the neighbor. Luther’s economic critique was not of buying and selling per se but rather the rapaciousness of merchants who “wantonly oppress the poor and deprive them of their daily bread” thus disproportionately harming the underclass while creating an abundance of ill-gotten wealth for the rich.21 The economy, even marked by grace, still has a restraining function that pressures us to move beyond selfish desires. But it also is intended to be an institution in which all are able to participate and partake in the goods it provides.

[23] In an economy of merit, the goal is to accrue an abundance of benefits for oneself, ideally through one’s own efforts and talents. In an economy of grace, conversely, the goal is the well-being of all members of a community. It is rooted in mutual dependence and a sense of calling, not a competition for rewards. This inspires a commitment to both charity and justice and the re-shaping of structures and systems so that “all people [can] contribute their talents and creativity to the common good.”22 This means that, for Lutherans, the question is not whether our economy efficiently and consistently responds to an individual’s merit but rather whether our economy is structured such that all can participate and share in the goods necessary for life.

[24] This alternative witness enables us to dive more deeply into the qualitative nature of what it means to participate in the economy. Certainly, we “participate” in the economy as workers, and daily vocation ought not to be devalued. Merely having a job, however, is not sufficient for ensuring the wider goal of a more equitable distribution of goods in a community. Nor is it sufficient in creating pathways for achieving the higher ideals of our participation in the orders of creation as God has intended them. Government, the economy, family – these are not merely spaces for monotonous activity but have a deeper function as spaces for the formation and expression of “civil righteousness.”23 Humans are thus called to be active participants in the anticipation of the coming reign of God by seeking justice and peace through institutions. An economy of grace not only creates opportunities for enjoying the goods of creation but also creates opportunities to share in the creation of such opportunities for others. This implies going beyond ensuring full employment and higher wages, to protecting the ability of each participant in the economy to make meaningful decisions about the shape that economy may take. It means building not merely jobs to generate income but power to generate justice.

[25] Addressing economic inequality demands this consideration of unequal distributions of power. Indeed, a 2015 study by the International Monetary Fund found that changes in labor market institutions that reduce the power and protection of laborers, particularly the decline in unionization, are primary drivers of income inequality.24 As the influence of laborers over the policies and practices of the economy declines, inequality increases. This suggests, on the one hand, that income inequality is reflective of imbalances of power, and on the other hand, that establishing more equitable distribution of wealth and income demands establishing policies and processes that empower workers to shape the economy in meaningful ways.


[26] Exploring these questions requires extended, open debate and discussion not limited to faith communities, particularly since there is no reason to assert that faith gives us all the answers. But the heritage of Luther and Lutheranism gives us, at least, a place to start. It calls us toward an alternative witness that refuses complacency in the face of inequality and injustice. And it uncovers the error of claims that such questions are beyond the purview of the church. This heritage calls and equips us to recognize that the inequality we see in the US today is neither natural nor divinely ordained, but rather contrary to the intentions of God for our world. This heritage, too, assures us that addressing such earthly issues as income disparities is part of the church’s vocation of preaching the Good News by unequivocally declaring that another world is possible, a world where the common good is truly common. Perfection may be beyond us, but the Lutheran witness is a firm declaration that fairness and justice are not out of reach, nor is a world in which all are able to participate in their pursuit.


1 Chad Stone, Danilo Trisi, Arloc Sherman, and Roderick Taylor, “A Guide to Statistics on Historical Trends in Income Inequality,” Center for Budget and Policy Priorities, Aug 29, 2018. (accessed March 4, 2019).

2 Thomas Piketty, Emmanuel Saez, and Gabriel Zucman, “Distributional National Accounts: Methods and Estimates for the United States,” The Quarterly Journal of Economics, 133:2, May 2018: 557.

3 The Gini coefficient measures income inequality on a scale of 0.1 to 1.0, with 1.0 representing perfect inequality. The World Factbook 2016-2017, “Distribution of Family Income – Gini Index.” Washington, DC: Central Intelligence Agency, 2016. (accessed March 4, 2019).

4 Steven H. Woolf, et al, “How Are Income and Wealth Linked to Health and Longevity?” Virginia Commonwealth University and Urban Institute, April 2015, 2.

5 Lara J. Akinbami et al, “Trends in Asthma Prevalence, Health Care Use and Mortality in the United States, 2001-2010,” Washington, DC: Centers for Disease Control and Prevention, 2012. Available at

6 Alvin Powell, “The Costs of Inequality: Money = Quality Health Care = Longer Life,” The Harvard Gazette (Feb 22, 2016).

7 Sean F. Reardon, “The Widening Academic Achievement Gap between the Rich and the Poor,” Community Investments 24:2 (Summer 2012): 20-21.

8 Sasha Abramsky, The American Way of Poverty: How the Other Half Still Lives (New York: Nation, 2013), 25.

9 LW 45:238.

10 LW 45:271.

11 Thesis 45 states, “Christians are to be taught that he who sees a needy man and passes him by, yet gives his money for indulgences, does not buy papal indulgences but God’s wrath.”

12 Thesis 46. Cf. 51, 59, 60, 65, 66, and 86.

13 LW 45:306. There is no precise English equivalent to the Zinskauf, which was understood to be the “purchase” of what amounted to an annuity. Instead of lending someone a sum of money in exchange for interest, the creditor would “purchase” a fixed annual payment with the capital given to a debtor. See Sean Doherty, Theology and Economic Ethics: Martin Luther and Arthur Rich in Dialogue (Oxford: Oxford University, 2014), 55.

14 Tommy Airey, Thirsty in Detroit: Water Shutoffs and Baptismal Witness,” Christian Century, 133:11, May 25, 2016, 26.

15 LW 45:276-277.

16 Ibid.

17 See ibid and Martin Luther, “An Appeal to the Ruling Class of German Nationality as to the Amelioration of the State of Christendom” (1520), in John Dillenberger, ed. Martin Luther: Selections from His Writings (New York: Random House, 1962), 435.

18 Julie Zauzmer, “Christians Are More than Twice as Likely to Blame Poverty on Lack of Effort,” Washington Post (Aug 3, 2017). (accessed March 4, 2019).

19 Carl E. Braaten, “God in Public Life: Rehabilitating the ‘Orders of Creation,’” First Things (Dec 1990).

20 Ibid.

21 Luther, Lord’s Prayer, Fourth Petition, Large Catechism.

22 Helen Rhee, Loving the Poor, Saving the Rich: Wealth, Poverty, and Early Christian Formation (Grand Rapids, MI: Baker Academic, 2012), 210, quoting Douglas Hicks.

23 Apology of the Augsburg Confession, Article XVIII.

24 International Monetary Fund, “Causes and Consequences of Income Inequality: A Global Perspective,” International Monetary Fund (June 2015), 21 and 26.

Ryan P. Cumming

Ryan P. Cumming, Ph.D. is program director of hunger education for ELCA World Hunger and senior lecturer at Loyola University Chicago’s School of Continuing and Professional Studies.