Why Economics Matters

Why Economics Matters

I realize that, with the theologically-rich postings of my fellow T&C bloggers, my frequent rants about economics probably fall on deaf ears. Well, at least I give you an extra five minutes of your Monday evenings and Friday mornings (“Oh, a Shaughnessy post. I can safely skip that snoozefest.”).

But ever since I worked at the Acton Institute back in college, I’ve realized that good economics and good theology must go hand-in-hand. If we recognize that truth is truth and, as such, is tied to Truth, then we can uncover little bits of understanding about God in the world around us. The beauty evident at the microscopic level of created things points to a Creator, as does the observed order of galaxies. Though we consider humanity above the rest of material creation, we can still observe truths about human behavior that point to God. As C.S. Lewis and Peter Kreeft have pointed out, we all know there are things we should do that we don’t; so our consciences are a fingerprint of God left behind in each of us to point us toward Him. All societies everywhere accept the truths that the following traits are good: honor, loyalty, honesty, courage; and that the following traits are bad: treachery, lying, cowardice, laziness. So, again, there are universal truths about human behavior which, if followed, lead to human flourishing and which, if ignored, lead to human misery.

You might accuse me of overstating this, but I think there are interpersonal behaviors in the economic realm that fall into this category as well. Philosophically and empirically, it is clear that economic freedom practiced by people with a firm moral grounding leads to human flourishing. The most immediate gain is material prosperity:

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You will criticize me for being a materialist, but what does material wealth allow you to afford? Fancy cars and pointless gadgets, yes, but also better health care, education, a cleaner environment, and more leisure time (with which to read Bibles and blog posts).

And while you can observe history and see that enforced atheism goes hand-in-hand with an encroaching state, there is a growing consensus that economic freedom is a bad thing. There is even a growing movement away from economic freedom internationally. This is pretty clear at home, as demonstrated by the US falling to 18th place in economic freedom behind Hong Kong, Australia, and Canada. It’s also demonstrated in the public’s growing positive perception of the word “socialism” and the declining perception of the word “capitalism:”

 

Pew Research Center

More people under age 30 have a negative view of capitalism and a positive view of socialism, which suggests a very uphill battle to save our economic future, as the increasing popularity of same-sex “marriage” among this same age bracket suggests a very uphill battle to save our moral future.

Who or what is to blame for the bad image of capitalism? I can identify at least four:

  1. Marx and Marxists, who purport to “scientifically prove” that capitalism is inherently exploitative, only good at creating poverty, and doomed to implosion. The only problem with their theory is empirical: none of this happened, even when capitalism was marginally attempted. The socialists defend socialism by saying it has never been implemented 100%; but capitalism has led to rising living standards for the poor and everyone else even in societies where it has been implemented in a limited way.
  2. Middle of the road” advocates. This group rejects both capitalism and socialism, and believes that a policy in between will lead to prosperity and harmony. Rather than unfettered free markets, or a leviathan state, we can just have markets free enough but with significant regulation to prevent the bad capitalist stuff. Politically you can call these people moderates, but there is certainly a large number of them in the Catholic fold, who interpret social encyclicals (which of course have condemned socialism and an ethics-free capitalism) as suggesting the only legitimate Catholic social and economic policy is significant interventionism. The only problem with the middle-of-the-road theory is empirical: any effort to enforce a minor amount of regulation inevitably has led to a major amount of regulation.
  3. Crony capitalists. Wearing the badge of capitalism, these business leaders and trade organizations spend more time lobbying for political favors and protectionist legislation (usually against new small business entrepreneurs or foreign competition) than they do innovating. If the Occupy Wall Street folks said anything truthful, it is that the use of political power to benefit big business is harmful to society at large. The only problem with the theory that business benefits from cronyism is empirical: the attempts by established businesses to benefit themselves through dissuading competition results in lower incomes for all Americans, who then have less ability to afford the products of these same businesses (and who may be less inclinded to buy from them after observing their rent-seeking antics).
  4. Real capitalists. In a certain sense, our concupiscence and tendency toward envy make us suspicious of successful people around us. It’s abundantly clear that free market capitalism produces people like Bill Gates, Oprah, Steve Jobs, and Tom Cruise. It also produces a huge amount of people whom we consider “rich” because they break the $100k per year threshold. It’s also abundantly clear that there are people (myself included) within economies who do not achieve this level of income. Is it the fault of the “rich” that others are not rich? I don’t see how it can be, if the “rich” got that way by engaging in voluntary trades with others. It only takes a little reading of the lives of the saints to observe people around St. Therese, St. John of the Cross, and others who were envious of their spiritual growth, and it only takes a little reflection to observe how petty and spiritually ruinous that envy is. Should not envy of other’s material growth be seen in the same light? Yet both political parties cater to this envy, being neither the party of the “rich” or “poor” but the middle class.

While this election has me recharging my evangelistic batteries so that I can do my part to ensure that Catholics can start to vote like Catholics, it also has me recharging my economic batteries so that people who have benefitted so greatly from American free trade come to recognize its benefits and continue to squander it away.

4 Comments

  1. Well … maybe. You could also have a post on why demonology matters; but it would be a bad idea to encourage someone with an unhealthy attraction to the occult to read extensively on demonology. In the same way, someone with an unhealthy attachment to material goods — and these days, that’s most of us — is probably not helped by the suggestion to think even more about material goods.

    But since you bring up Capitalism in particular, let’s get a few things straight.
    1. Capitalism is not the same as respect for private property. Private property goes back as far as we have records, but Capitalism only arose when Western Europe had come to mostly disregard the Church’s teachings on usury.
    2. Apologists for Communism often say that the failure of real Communist states proves nothing, because they didn’t practice “pure” Communism. Apologists for Capitalism make the same kind of excuses to explain why the crony Capitalism of the railroad barons wasn’t *real* Capitalism, nor that of the owners of the Triangle Shirtwaist Factory — though of course, the reforms after that fire and the rise of unions are to be deeply lamented and make all subsequent “Capitalism” of an inferior kind.

  2. “crony Capitalism of the railroad barons wasn’t *real* Capitalism”

    Most of the railroad abuses and scandals have to do with State financing and power (Credit Mobilier, eminent domain, &c.). Call that real or fake capitalism, it is hard to see how the typical answer of giving more power to the State would solve it, since these were precisely the cases where the State was already involved.

    Re: Shirtwaist, the biggest problem was doors that opened inward, with a mass of rushing people pressing them closed. I have never once heard anyone anywhere on the political spectrum suggest that they installed inward opening doors as some sort of capitalist plot to kill people on the off chance there was a fire someday.

  3. @ThomasL — “Call that real or fake capitalism, it is hard to see how the typical answer of giving more power to the State would solve it ….” If more power had not been given to the State to solve that problem, ALL power would have been given to the State. It was by letting such problems fester that the groundwork was laid for more draconian changes, such as Communism; besides which you absolutely will want the State to be able to use force to enforce contracts, to protect (personal or business) property and make sure access isn’t blocked to businesses; also that the State should have power to build roads to support commerce, etc. You may think that the fact that workers today are rarely burned to death because the doors open the wrong way has nothing whatsoever to do with OSHA; you may think that the FDA should not be preventing hucksters from selling Radithor and that the FAA should not limit the number of hours a commercial pilot can be on duty; you may think mining regulations have nothing to do with improving safety for miners; you may long for the days when there was no telling just what was in your sausage; but you presumably want shoplifters prosecuted.

    Capitalists are really never anarchists; they believe in a plenty strong State, only they pretend that a State that they controlled would be pure, just, noble, and above reproach, and that any State intervention on behalf of the workers is a step on the road to perdition. And, as I said, they do not believe that the failure of the State to be pure, just, noble, and beyond reproach when under the control of their fathers is at all relevant; they’re just like the most obstinate Communists in that regard.

    Just as a mixed form of government works best, a mixed economy works best. All this praise of pure Capitalism is at best foolishness; at worst it is a very nasty lie, akin to advocating a diet of nothing but salt. If we back away from the demands of ideological purity on both ends and start trying to determine what kind of mixed economy would produce the best results, we may make some progress; otherwise all this is a waste of time.

    The first thing to establish is just what the heck you is meant by “best results”. For a Catholic, material prosperity is never the Summum Bonum, so economic goods must always be a means to some more important end. If you follow this line of thought far enough, you become something like a Distributist — in aspirations at least, though you may question the best means to achieve these goals.

  4. I’m an anarchist.