Economics: Love of God, Production and Free Market: Christian Judgment on Neo-liberalism
Chipi's note: As someone doing his economic studies and well-versed with Catholic social doctrine, I found this article to be not too comprehensive in its analysis, but the outcome is still the same if I had a chance to write something similar.
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By Rodney Moss
Neo-classical or neo-liberal economics upon which much free-market business practice is based differs rather radically from Catholic social thought.
Neo-liberal economics assumes that its economic theory is value-neutral and scientific in its analysis of concepts such as "production," "consumption," "money," "wealth," "capital" and "scarce" resources. Bannock, Baxter and Davis suggest that economics may be defined as "The study of production, distribution and consumption of wealth in human society."[1] Here the key ingredients in human economic activity would be individualism, hedonism and market competition. The human person is seen to be motivated by self-interest and wishes to maximize pleasure and avoid pain. There is no concern with the "common good."
Ideally the free market should, as Adam Smith suggested, work for the benefit of all members of society. Thus if each person follows their own self-interest in spite of not aiming to contribute to others, nevertheless, society as a whole will benefit. Adam Smith in his "Wealth of Nations"[2] calls this outcome "the invisible hand."
In this neo-liberal model, then, the common good is best served by the operation of the free-market system involving minimal government interference. Economic problems are best solved by promoting economic growth "generated by each individual's pursuit of self-interest in a free market regulated by the forces of market competition."[3] Development is seen in this model only in economic terms and is "economic centered," not "human centered."[4]
In contrast, then, what is the view of Catholic social thought on economics?
First, Catholic social thought does not view economics as concerned only with facts or being value-free/neutral as do the neo-classical/neo-liberal economists. Importantly, economic systems are seen as based on some set of values, whether that system be capitalist, socialist, Marxist or some other economic variant.
The importance of the dignity of the human person is central to Catholic social thought and to its view of economics and the economy. Economic choices, production and consumption involve human beings. Economics does not exist for its own sake: "The purpose of economics is the service of men, their material needs and those of their moral, spiritual and religious life. Economic activity is to be carried out according to its own method and laws but within the limits of morality."[5]
Economics and economic systems and activity cannot then be neutral or value-free, for they impact on human life and are also a product of human thought, creativity, choices and decisions. Like any other area of knowledge, economics has its particular laws and methods and a degree of autonomy but human beings are to have a priority and primary importance. In Catholic social thought economics is to be seen in the context of its contribution to the service of the human person as a whole being -- physical, spiritual, intellectual, moral and spiritual.
Secondly, in Catholic social thought, the scientific or qualitative aspects of economics are secondary to the human element. Therefore "[e]ven in social and economic life the dignity of the human person and the integrity of his vocation, along with the good of society as a whole, are to be recognized and furthered. Man is the author, the center and the end of all social and economic life."[6]
In other words, economics and economic life is to be at the service of human beings and not vice versa: "The ultimate and basic purpose of economic production does not consist merely in the increase of goods produced, nor in profit nor prestige; it is directed to the service of man, that is, in his totality, taking into account his material needs and the requirements of his intellectual, moral, spiritual, and religious life ..."[7]
Because the human person is viewed as a whole being -- physical, spiritual, intellectual, moral and spiritual -- he/she is not viewed as an "economic being," nor as an individualistic, purely rational being whose goal is material pleasure. Our goal is transcendent unity with God. "The highest reason for human dignity is man's vocation to communion with God."[8]
Thirdly, Catholic social thought is not based on the belief that individual self-interest should be pursued and that somehow this will contribute to the good of society. This was the assumption of Adam Smith. However, Wilber notes that "Scholarly work in economics over the past fifteen years demonstrates that, under conditions of interdependence and imperfect information, rational self-interest frequently leads to socially irrational results."[9] We need a "moral culture" to inform economic life.
Fourthly, the common good is central to Catholic social thought and can never be regarded as a mere byproduct of individual self-interest. The common good, that which transcends particular interests and which is a good in which all can participate, is very different from a "mechanistic" and individualistic view of society dominant in classical and neo-liberal economic theory.
Finally, economic problems are not solved by growth alone. In "Centesimus Annus," No. 29, we read: "[D]evelopment must not be understood solely in economic terms, but in a way that is fully human. It is not only a question of raising all people to the level enjoyed by the richest countries, but rather of building up a more decent life through united labor, of concretely enhancing every individual's dignity and creativity, as well as his capacity to respond to his personal vocation, and thus to God's call."
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NOTES
[1] Bannock, G., Baxter, R.E., and Davies, E., 2003, "The Penguin Dictionary of Economics," London: Penquin Books, p. 114
[2] Originally published in 1776, this edition, 2003, p. 527
[3] Wilber, C.K. 1991. "Incentives and the Organization of Work. Moral Hazards and Trust," in Coleman, J.B., "One Hundred Years of Catholic Social Thought. Celebration and Challenge," New York: Orbis Books, p. 212
[4] Henriot, J.P., 1993, "Who Cares about Africa? Development Guidelines for the Church's Social Teaching," in Williams, O.F., and Houck, J.W., eds., "Catholic Social Thought and the New World Order. Building on One Hundred Years," Notre Dame: University of Notre Dame Press, p. 212
[5] "Gaudium et Spes," No. 64
[6] Ibid., No. 63
[7] Ibid., No. 64
[8] Ibid., No. 19
[9] Wilber, ibid., p. 214
*~*~*~*~*
By Rodney Moss
Neo-classical or neo-liberal economics upon which much free-market business practice is based differs rather radically from Catholic social thought.
Neo-liberal economics assumes that its economic theory is value-neutral and scientific in its analysis of concepts such as "production," "consumption," "money," "wealth," "capital" and "scarce" resources. Bannock, Baxter and Davis suggest that economics may be defined as "The study of production, distribution and consumption of wealth in human society."[1] Here the key ingredients in human economic activity would be individualism, hedonism and market competition. The human person is seen to be motivated by self-interest and wishes to maximize pleasure and avoid pain. There is no concern with the "common good."
Ideally the free market should, as Adam Smith suggested, work for the benefit of all members of society. Thus if each person follows their own self-interest in spite of not aiming to contribute to others, nevertheless, society as a whole will benefit. Adam Smith in his "Wealth of Nations"[2] calls this outcome "the invisible hand."
In this neo-liberal model, then, the common good is best served by the operation of the free-market system involving minimal government interference. Economic problems are best solved by promoting economic growth "generated by each individual's pursuit of self-interest in a free market regulated by the forces of market competition."[3] Development is seen in this model only in economic terms and is "economic centered," not "human centered."[4]
In contrast, then, what is the view of Catholic social thought on economics?
First, Catholic social thought does not view economics as concerned only with facts or being value-free/neutral as do the neo-classical/neo-liberal economists. Importantly, economic systems are seen as based on some set of values, whether that system be capitalist, socialist, Marxist or some other economic variant.
The importance of the dignity of the human person is central to Catholic social thought and to its view of economics and the economy. Economic choices, production and consumption involve human beings. Economics does not exist for its own sake: "The purpose of economics is the service of men, their material needs and those of their moral, spiritual and religious life. Economic activity is to be carried out according to its own method and laws but within the limits of morality."[5]
Economics and economic systems and activity cannot then be neutral or value-free, for they impact on human life and are also a product of human thought, creativity, choices and decisions. Like any other area of knowledge, economics has its particular laws and methods and a degree of autonomy but human beings are to have a priority and primary importance. In Catholic social thought economics is to be seen in the context of its contribution to the service of the human person as a whole being -- physical, spiritual, intellectual, moral and spiritual.
Secondly, in Catholic social thought, the scientific or qualitative aspects of economics are secondary to the human element. Therefore "[e]ven in social and economic life the dignity of the human person and the integrity of his vocation, along with the good of society as a whole, are to be recognized and furthered. Man is the author, the center and the end of all social and economic life."[6]
In other words, economics and economic life is to be at the service of human beings and not vice versa: "The ultimate and basic purpose of economic production does not consist merely in the increase of goods produced, nor in profit nor prestige; it is directed to the service of man, that is, in his totality, taking into account his material needs and the requirements of his intellectual, moral, spiritual, and religious life ..."[7]
Because the human person is viewed as a whole being -- physical, spiritual, intellectual, moral and spiritual -- he/she is not viewed as an "economic being," nor as an individualistic, purely rational being whose goal is material pleasure. Our goal is transcendent unity with God. "The highest reason for human dignity is man's vocation to communion with God."[8]
Thirdly, Catholic social thought is not based on the belief that individual self-interest should be pursued and that somehow this will contribute to the good of society. This was the assumption of Adam Smith. However, Wilber notes that "Scholarly work in economics over the past fifteen years demonstrates that, under conditions of interdependence and imperfect information, rational self-interest frequently leads to socially irrational results."[9] We need a "moral culture" to inform economic life.
Fourthly, the common good is central to Catholic social thought and can never be regarded as a mere byproduct of individual self-interest. The common good, that which transcends particular interests and which is a good in which all can participate, is very different from a "mechanistic" and individualistic view of society dominant in classical and neo-liberal economic theory.
Finally, economic problems are not solved by growth alone. In "Centesimus Annus," No. 29, we read: "[D]evelopment must not be understood solely in economic terms, but in a way that is fully human. It is not only a question of raising all people to the level enjoyed by the richest countries, but rather of building up a more decent life through united labor, of concretely enhancing every individual's dignity and creativity, as well as his capacity to respond to his personal vocation, and thus to God's call."
--- --- ---
NOTES
[1] Bannock, G., Baxter, R.E., and Davies, E., 2003, "The Penguin Dictionary of Economics," London: Penquin Books, p. 114
[2] Originally published in 1776, this edition, 2003, p. 527
[3] Wilber, C.K. 1991. "Incentives and the Organization of Work. Moral Hazards and Trust," in Coleman, J.B., "One Hundred Years of Catholic Social Thought. Celebration and Challenge," New York: Orbis Books, p. 212
[4] Henriot, J.P., 1993, "Who Cares about Africa? Development Guidelines for the Church's Social Teaching," in Williams, O.F., and Houck, J.W., eds., "Catholic Social Thought and the New World Order. Building on One Hundred Years," Notre Dame: University of Notre Dame Press, p. 212
[5] "Gaudium et Spes," No. 64
[6] Ibid., No. 63
[7] Ibid., No. 64
[8] Ibid., No. 19
[9] Wilber, ibid., p. 214
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