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PART 2: Economics and Theology - Paul Heyne, “Are Economists Basically Immoral?” and Other Essays on Economics, Ethics, and Religion 
“Are Economists Basically Immoral?” and Other Essays on Economics, Ethics, and Religion, edited and with an Introduction by Geoffrey Brennan and A.M.C. Waterman (Indianapolis: Liberty Fund, 2008).
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Economics and Theology
Can Homo Economicus Be Christian?*
Can Homo economicus be Christian? The answer will depend both on how we understand Homo economicus and on what it means to be Christian. The first issue is surprisingly elusive and the second one highly controversial. Fortunately, this paper was commissioned to facilitate discussion, not to settle the matter.
The question before us is an important one. It is important because Homo economicus allegedly dominates capitalist societies, or market economies, or what I prefer to call, following Adam Smith’s suggestion, commercial societies. Christian critiques of commercial society, as well as other critiques based on moral considerations, have regularly focused on Homo economicus, and have often used his dominating presence to condemn such societies. Those Christians who understand how commercial societies actually work must decide how much weight should be assigned to these frequent and often impassioned criticisms, and should learn to challenge them effectively where they are misguided or ill-informed.
Homo Economicus Among the Economists
Who is Homo economicus? Is he a mere theoretical construct, no more than an analytical fiction, a heuristic device existing only in the models of economists? If so, he can hardly be Christian. Or is he in fact a flesh-and-blood person, capable (perhaps only after a conversion experience) of dwelling in the Kingdom of God?
The First Methodologists
Economists never have achieved a consensus on this rather fundamental issue. When John Stuart Mill began to reflect on the nature of the new science of political economy that had grown up in England in the early nineteenth century, he concluded that it
does not treat of the whole of man’s nature as modified by the social state, nor of the whole conduct of man in society. It is concerned with him solely as a being who desires to possess wealth, and who is capable of judging of the comparative efficacy of means for obtaining that end. It predicts only such of the phenomena of the social state as take place in consequence of the pursuit of wealth. It makes entire abstraction of every other human motive; except those which may be regarded as perpetually antagonizing principles to the desire of wealth, namely, aversion to labour, and desire of the present enjoyment of costly indulgences.1
Then he added this caution:
Not that any political economist was ever so absurd as to suppose that mankind are really thus constituted, but because this is the mode in which science must necessarily proceed. When an effect depends upon a concurrence of causes, those causes must be studied one at a time. . . . With respect to those parts of human conduct of which wealth is not even the principal object, to those Political Economy does not pretend that its conclusions are applicable. But there are also certain departments of human affairs, in which the acquisition of wealth is the main and acknowledged end. It is only of these that Political Economy takes notice. The manner in which it necessarily proceeds is that of treating the main and acknowledged end as if it were the sole end; which, of all hypotheses equally simple, is the nearest to the truth.2
For Mill, then, Homo economicus was an analytical fiction. And the discipline that employed this fiction did not pretend to explain all areas of human conduct.
Mill’s distinguished contemporary Nassau Senior saw the matter very differently. He asserted that the science of political economy was grounded on the true proposition “[t]hat every man desires to obtain additional Wealth with as little sacrifice as possible.”3 Here is how Senior interprets that proposition:
In stating that every man desires to obtain additional wealth with as little sacrifice as possible, we must not be supposed to mean that everybody, or indeed anybody, wishes for an indefinite quantity of every thing; still less as stating that wealth, though the universal, either is, or ought to be, the principal object of human desire. What we mean is, that no person feels his whole wants to be adequately supplied; that every person has some unsatisfied desires which he believes that additional wealth would gratify.4
Those unsatisfied desires, moreover, are as varied as human character.
Some may wish for power, others for distinction, and others for leisure; some require bodily and others mental amusement; some are anxious to produce important advantage to the public; and there are few, perhaps there are none, who, if it could be done by a wish, would not benefit their acquaintances and friends.5
The only object universally desired, according to Senior, was money, because money is “abstract wealth,” something whose possessor
may satisfy at will his ambition, or vanity, or indolence, his public spirit or his private benevolence; may multiply the means of obtaining bodily pleasure, or of avoiding bodily evil, or the still more expensive amusements of the mind.6
No area of human conduct lies outside the domain of political economy as Senior understands it. And Senior’s Homo economicus is a full-fledged human being. Senior considered Mill’s argument, in fact, and explicitly rejected it. “It appears to me,” he wrote,
that if we substitute for Mr. Mill’s hypothesis, that wealth and costly enjoyment are the only objects of human desire, the statement that they are universal and constant objects of desire, that they are desired by all men and at all times, we shall have laid an equally firm foundation for our subsequent reasonings, and have put a truth in the place of an arbitrary assumption.7
Perhaps the reason that Mill makes Homo economicus a mere analytical fiction is his exaggerated conception of David Ricardo’s role and influence in political economy. James Mill had put his eldest son through an intensive course on Ricardo’s Principles when he was only 13 years of age, and John Stuart seems never to have recovered fully from the experience. All his life he held an exaggerated notion of the merits and influence of Ricardo, who was notorious for deriving his conclusions in political economy from assumptions that were manifestly not true. As Ricardo once put it in a letter to his friend Malthus: “I imagined strong cases.”8
Do contemporary economists follow Mill or Senior at this point? Do they believe that people really behave, for the most part, as their models assume? Or do they regard Homo economicus as no more than a construct useful for analytical purposes? The safest answer is that they generally don’t think about it very carefully.
Among the most widely-cited recent examinations of the Homo economicus assumption is Amartya K. Sen’s 1977 essay on “Rational Fools.” Sen maintains that a poll of economists of different schools on the status of the rational choice assumption that many of them employ would reveal
the coexistence of beliefs (i) that the rational behavior theory is unfalsifiable, (ii) that it is falsifiable and so far unfalsified, and (iii) that it is falsifiable and indeed patently false.9
When the American Economic Association launched The Journal of Economic Perspectives in the Summer of 1987, it promised a regular feature titled “Anomalies.” An anomaly was defined as an empirical result that is hard to reconcile with the fundamental paradigm of economics. The feature’s statement of that paradigm contained an implicit definition of the Homo economicus who is supposed to inhabit the models of contemporary economists:
Economics is distinguished from other social sciences by the belief that most (all?) behavior can be explained by assuming that agents have stable, well-defined preferences and make rational choices consistent with those preferences in markets that (eventually) clear.10
This is very similar to Gary Becker’s well-known and forcefully defended summary of “the economic approach to human behavior”:
The combined assumptions of maximizing behavior, market equilibrium, and stable preferences, used relentlessly and unflinchingly, form the heart of the economic approach as I see it.11
What would a person have to do to demonstrate that he was not a Homo economicus by these definitions? I’m not at all sure. Behave capriciously? Prefer one thing today and another tomorrow? Choose without deliberating? Even these behaviors can be reconciled with the rational choice assumption, of course. People’s preferences change; people have a taste for variety; there is a marginal utility of not bothering about marginal utility. It doesn’t take a whole lot of ingenuity to come up with a rationalization to account for almost any anomalous behavior. Gary Becker adopts the assumption of stable preferences to avoid turning the assumption into a tautology with no refutable implications. If I read him correctly, he is coming down on Mill’s side. He does economics as if people’s preferences were stable in order to see what testable implications can be obtained. The Chicago methodology asserts that the realism of the assumptions is irrelevant—in some limited way that has never been completely clear to me.
I tried to get a clearer sense of what an official journal of the American Economic Association regards as the nature of Homo economicus by examining the content of the Anomalies feature from its initial appearance in the Summer of 1987 to its last regular appearance in the issue of Winter 1991 (after which date it was scheduled for only “occasional” publication).
Most of these columns treated anomalies that were related to the market-clearing rather than the Homo economicus part of the fundamental assumption. In the Summer 1988 issue, however, the feature editor and his co-author made this assertion: “Much economic analysis—and virtually all game theory—starts with the assumption that people are both rational and selfish.”12 The column then went on to demonstrate that the predictions derived from “the assumption of rational selfishness” are frequently refuted. The authors of the column seemed to be saying that most economists believe their assumption of selfish rationality accurately describes actual human nature, that the evidence refutes this belief, and that economists therefore ought to revise their beliefs to conform more closely to the available evidence.13 They take Senior’s position insofar as they want economics to be grounded in a true proposition regarding human nature.
The article in the succeeding issue dealt with the role of fairness considerations in economists’ analyses. Rational behavior is defined by some of the economists cited in the article as behavior directed exclusively at increasing monetary wealth, so that evidence that people’s utility functions contain non-monetary arguments becomes “anomalous.” The discovery in particular that people hold strong notions of fairness and are willing at times to sacrifice monetary wealth in order to uphold or enforce those standards is regarded as information that will surprise most members of the economics profession. Apparently the profession is wrong again in what it assumes about human nature.14
The article in the Spring 1990 issue dealt with preference reversals and was even more critical of accepted practice. The concluding commentary quoted David Grether and Charles Plott:
Taken at face value the data [showing preference reversals] are simply inconsistent with preference theory and have broad implications about research priorities within economics. The inconsistency is deeper than the mere lack of transitivity or even stochastic transitivity. It suggests that no optimization principles of any sort lie behind the simplest of human choices and that the uniformities in human choice behavior which lie behind market behavior may result from principles which are of a completely different sort from those generally accepted.15
Column editor Richard Thaler brought in two of his favorite coauthors, Daniel Kahneman and Jack Knetsch, to complete this line of attack on the Homo economicus assumption in the last regular appearance of the Anomalies column, in the issue of Winter 1991. The article showed that the basic notion of a stable preference order had to be abandoned or thoroughly revised in the light of all the evidence that people have strong biases in favor of the status quo and that preferences are neither symmetrical nor reversible.16
Homo Economicus Redivivus?
The Homo economicus that gradually expired in the Anomalies columns of The Journal of Economic Perspectives was a rather bloodless creature from the beginning, one well suited, perhaps, for a leading role in the purely formal dramas much preferred by contemporary economic theorists, but not someone likely either to animate an economic system or to give ethical offense. In the midst of all this, a more interesting and challenging portrait of Homo economicus appeared in Passions Within Reason, an influential book published in 1988 by Robert H. Frank, professor of economics at Cornell University.17 Frank had introduced his ideas to the economics profession in a widely-discussed article printed in the September 1987 issue of The American Economic Review: “If Homo Economicus Could Choose His Own Utility Function, Would He Want One with a Conscience?”18
The opening paragraphs of the article are worth quoting, both for the summary view that they provide of Frank’s work and for the confusion that they reveal about the basic nature of Homo economicus as understood by Frank.
The rational choice model takes tastes as given, and assumes that people pursue self-interest. The model performs well much of the time, yet apparent contradictions abound. Travelers on interstate highways leave tips for waitresses they will never see again. Participants in bloody family feuds seek revenge even at ruinous cost to themselves. People walk away from profitable transactions whose terms they believe to be “unfair.” The British spend vast sums to defend the desolate Falklands, even though they have little empire left against which to deter future aggression. In these and countless other ways, people do not seem to be maximizing utility functions of the usual sort.
In this paper, I investigate the familiar theme that seemingly irrational behavior can sometimes be explained without departing from the utility-maximization framework. . . . Instead of treating taste as a datum, I retreat a step and ask, “What kind of tastes would maximize the attainment of selfish objectives?” This is essentially the behavioral biologist’s approach. It treats tastes not as ends in themselves, but as means for attaining important material objectives.19
The casual assumptions in these paragraphs are their most interesting feature. Leaving a tip for a waitress whom we will never see again is, on its face, irrational behavior, not utility-maximizing behavior. Rational, utility-maximizing behavior would maximize the attainment of selfish objectives, which are all material objectives. The same assumptions run throughout the book. Self-interest is identified with selfishness, selfish interests are assumed to be material interests, and concern for justice or fairness is regarded as irrational. The chapter on “Fairness” (Chapter 9) is particularly revealing. “The self-esteem of professional economists,” Frank says at the beginning of the chapter,
derives in no small measure from their belief that they are the most hardheaded of social scientists. In their explanations of human behavior, only self-interested motives will do. . . . Material costs and benefits reign supreme. . . . The rationalists complain that fairness is a hopelessly vague notion.20
Frank wants to retain the self-interest model, the assumption that people are selfish, the claim that selfishness is rational, and the notion that people respond to material incentives. He proposes to deal with the many anomalies that this model encounters by assuming that people find it in their (selfish, material) interest to be known as persons with certain kinds of emotional commitments. If I am known as one who cares deeply about fairness, people will be less likely to try to cheat me, because they will fear that I might irrationally accept costs far beyond any benefits I might anticipate in order to punish their behavior. If I am known as one in thrall to such irrational emotions as love, others will be more willing to commit resources to the cultivation of mutually profitable relationships with me. Since the best way to acquire a reputation for having these emotions is actually to have them, it is in people’s narrow, selfish, rational, material interest to take on these emotions and to live accordingly.21
Many of the most eminent and sophisticated theorists in the economics profession make no effort to distinguish between self-interest and selfishness or between rational behavior and greedy behavior. In an essay written several years ago for The Public Interest, Frank Hahn asserted that Adam Smith was the first who realized the need to explain why millions of “greedy, self-seeking individuals” pursuing their ends with little control by government did not produce anarchy.22 Kenneth Arrow and Hahn, in the preface to their textbook on general equilibrium theory, equate “motivated by self-interest” with “motivated by individual greed.”23 This is an extraordinary state of affairs in a discipline descended from Adam Smith. Robert Frank goes so far as to claim that his theory is recovering the tradition advanced by Smith in The Theory of Moral Sentiments. Yet Frank himself has not begun to understand Smith’s theory of human nature. Smith distinguishes clearly between self-interest and selfishness and explicitly insisted, against Bernard Mandeville, that self-love could be a virtuous motive of action. Nonetheless Frank writes:
And in a passage that could easily have been lifted from Adam Smith, a prominent book on equity in personal relationships begins by saying that “Man is selfish. Individuals will try to maximise their outcomes.” Psychologist Daniel Goleman nicely summarizes the continuing trend: “In recent years, the mainstream of psychological research has looked at love almost as if it were a business transaction, a matter of profit and loss.”24
That is not Adam Smith’s theory.
Critics of the Economists’ Model
With the defenders of Homo economicus doing such a poor job of identifying him, the critics are free to accuse him of just about anything. A recent book that has had considerable influence among those who write on economics and religion is For the Common Good: Redirecting the Economy Toward Community, the Environment, and a Sustainable Future by Herman E. Daly and John B. Cobb, Jr., an economist and a theologian. Daly and Cobb lay the blame for many of the attitudes and policies that have, in their judgment, subverted community and destroyed the natural environment, at the door of economic theory. And one of that theory’s principal deficiencies, as they see it, is the conception of Homo economicus that underlies it. What is that conception? According to Daly and Cobb, Homo economicus has insatiable wants, is indifferent to his relative position in society, cares not a whit for the welfare of other people except in the rare case where he has affected their welfare through a gift, is completely uninterested in fairness, and refuses to make any value judgments. This Homo economicus is an abstraction, of course, not a real person. But according to Daly and Cobb, economists have forgotten the dimensions of human nature from which they have abstracted, and have then used the distorted anthropology adopted for “analytical convenience” to construct disastrous policy conclusions.25
It strikes me as preposterous to suppose that our contemporary environmental problems and the absence of effective community in our society are consequences of the methods, much less the methodology, of professional economists. Daly and Cobb’s strictures only demonstrate that economists take little care to clarify their working assumptions. I conclude that we will do best to abandon the abstractions of economic theory, to follow Nassau Senior’s counsel, and to look for Homo economicus in the world of real people.
Adam Smith’s Anthropology
When we do so, we probably ought to go back to Adam Smith, the man who started it all.
Smith’s published writings and lectures reveal a carefully-constructed, coherent, and—at least in intention—realistic anthropology. Smith does not assume for analytical purposes that people behave in some way other than the way he thinks they actually do behave. Moreover, he does not believe that they are consistently greedy or selfish, that they are interested exclusively or even primarily in material goods, that they pay no attention to justice or fairness in their decisions, or that they make rational choices consistent with a set of stable, well-defined preferences.
In the first place, it isn’t selfishness but self-love that motivates people in the Smithian world. While self-love or self-interest is certainly capable of producing selfish behavior, it need not do so. Self-interested behavior is morally neutral, embracing acts of laudable generosity as well as acts of despicable greed. In the Smithian world, people strive to further the projects in which they are interested. Whether those projects are commendable or contemptible is a matter for investigation. To condemn self-interested behavior, as Smith uses the concept, amounts to condemning purposive behavior.26
Smith goes further and tells us what the general project is that most people are in fact interested in most of the time. They want above all else to better their condition. The desire to better our condition, Smith says, “comes with us from the womb, and never leaves us till we go into the grave.” It is “uniform, constant, and uninterrupted,” so that “there is scarce perhaps a single instant in which any man is so perfectly and completely satisfied with his situation, as to be without any wish of alteration or improvement of any kind.”27
Does this mean that people want above all else to increase their monetary wealth or income? “An augmentation of fortune is the means . . . the most vulgar and obvious,”28 Smith writes, by which to better one’s condition, and thus the means that most people usually choose to employ. Consequently, most members of all societies work diligently and attempt both to save some portion of their income and to invest those savings prudently. Note, however, that augmentation of fortune is a means toward the bettering of our condition. Wealth without limit is not the goal of life.
What is the goal? It is ultimately enhanced standing in the opinions of those whose opinions matter to us. Our ultimate concern, according to Smith, is for our reputation. It is true that this concern will often lead to mere vanity; but it can also express itself as a love of true glory, or even, among the best of us or in the best moments of any of us, as a love of virtue. Vanity prompts us to appear praiseworthy even when we are not. The love of true glory, however, prompts us toward behavior that genuinely merits praise. Moreover, people generally learn that the easiest way to seem praiseworthy is to be praiseworthy, so that mere vanity will tend “naturally, or even necessarily,” to use one of Smith’s favorite locutions, to lead to the pursuit of true glory.
And those who love virtue will do what is praiseworthy even if, because of the ignorance or misunderstanding of other people, they expect it to bring them unmerited condemnation. The opinion that matters to those who love virtue is the opinion of “the impartial spectator,” the individual’s conscience or “the man within the breast” who judges the person’s actions with a full knowledge of motives as well as consequences and who always judges impartially.29
A clear implication of all this, but one that I have never seen explicitly noted, is that self-respect is for many people a primary objective in self-interested behavior. A large portion of the “anomalies” to which Frank and other students of the self-interest model have called attention disappear the moment we recognize that it is in many people’s clear self-interest to behave in ways that will allow them to retain their self-respect. Do we need any more than this to explain why people regularly leave tips for waiters whom they never expect to see again?
The frequent claim that Smith thought all would be for the best in society if individuals were left free to pursue their own interests ignores the important qualification that he laid down. When Smith argued that everyone should be “left perfectly free to pursue his own interest his own way,” it was only on the important condition that “he does not violate the laws of justice.”30The Wealth of Nations is peppered with condemnations of those who perpetrate injustice by violating the rights of others. The “invisible hand” will not extract the public good from the pursuit of private advantage when private advantage is pursued by means of unjust laws and regulations. Legislation is unjust, in Smith’s view, when it promotes the interests of one group of citizens by imposing unequal restraints on the actions of other groups.
To hurt in any degree the interest of any one order of citizens for no other purpose but to promote that of some other, is evidently contrary to that justice and equality of treatment which the sovereign owes to all the different orders of his subjects.31
As for the claim that Smith thought people were always calculating costs and benefits, always worrying about how to extract from available means the greatest quantity of satisfaction—this is another caricature. Smith was quite proud, in fact, of what he thought was his own original insight, that people often come to value the means more than the ends that the means were originally intended to promote. People often pursue power and riches throughout their lives at great personal cost, he insisted, despite the fact that these really do very little to ward off anxiety, fear, sorrow, diseases, danger, or death. “They keep off the summer shower, not the winter storm.” The pleasures of wealth and greatness nonetheless “strike the imagination as something grand and beautiful and noble, of which the attainment is well worth all the toil and anxiety which we are so apt to bestow upon it.” Moreover, this delusion, this confounding of means and ends, is what “rouses and keeps in continual motion the industry of mankind.” It is not “the lore of nicely-calculated less or more,” rejected by Wordsworth in the name of Heaven, that is responsible for the growth of national wealth—at least not according to Adam Smith. It is rather an almost irrational fascination with means that impels human beings “to cultivate the ground, to build houses, to found cities and commonwealths, and to invent and improve all the sciences and arts, which ennoble and embellish human life.”32
Perhaps this would be the proper occasion to add that Smith never thought of himself as laying the foundations for a new science of economic systems. He did not recognize the existence of any “economic” system that could be distinguished from the total social system and that was governed by laws of its own. Economic goods, economic motives, economic problems, economic factors—these are all anachronisms when we use them to discuss social thought prior to the nineteenth century. Smith does not speak of economic goods but of “necessaries and conveniences.” He knows nothing of economic motives, though he does know about desires to enhance our reputations, to augment our fortunes, to avoid irksome labor, to obtain present ease and enjoyment, to advance complex projects, to domineer over others, and to enjoy the merited respect of our fellows.
There was nothing narrow about the social analysis of Adam Smith. This probably makes his anthropology useless for those who want to do economics in the manner of Ricardo or of the general equilibrium theorists in our own day, who have transformed the Ricardian tendency to reason deductively from abstract premises into a methodological principle. But Smith remains an instructive guide for those who want to construct an economics that is relevant to public policy decisions. He also provides, it seems to me, an effective first response to those who despise commercial society for the human characters that it requires or produces. Homo economicus as Smith conceives him is completely capable of being a moral and public-spirited person.
Philip Wicksteed on Homo Economicus
The most careful and complete articulation of a realistic anthropology for economists is probably the one provided at great length, perhaps at excessive length, by Philip Wicksteed in The Common Sense of Political Economy.33 It has the special virtue of having appeared after the reformulation of economic theory at the end of the nineteenth century that produced the fundamental structure of that theory as it exists today. If Wicksteed had been a little less prolix, he might have been more widely read. And if he were more widely known, it is certain that much less nonsense would be uttered today about Homo economicus.
Wicksteed devotes attention to the two important aspects of economic man’s behavior: the economizing aspect and the exchange aspect. The first paragraph of the Introduction to The Common Sense spells out the economizing aspect:
In the ordinary course of our lives we constantly consider how our time, our energy, or our money shall be spent. That is to say, we decide between alternative applications of our resources of every kind, and endeavour to administer them to the best advantage in securing the accomplishment of our purposes or the humouring of our inclinations. It is the purpose of this book to evolve a consistent system of Political Economy from a careful study and analysis of the principles on which we actually conduct this current administration of resources.34
Wicksteed’s subsequent descriptions of the economizing process, invariably illuminating and frequently delightful, leave room for every kind of behavior in which human beings are known to engage. He does not, for example, use the principle of sunk costs to rule out behavior that would violate that principle. Here is a sample of what he says:
[T]he value of what we have does not depend on the value of what we have relinquished or endured in order to get it. If there is a coincidence, as in a wisely conducted life there will be, it is because the value that we foresee a thing will have determines what we will encounter or forego in order to get it. . . . We do not always like to face this fact . . . and accordingly we sometimes try to believe that a thing is useful or ornamental because we have given a high price for it, or valuable because we have taken trouble to get it. . . .
There is no doubt a strong tendency in many minds to economize a stock which was bought at a high price, even if it could be replaced at a low one, and perhaps a still stronger tendency to deal prodigally with a stock purchased at a low price, although it will have to be replaced at a high one. But this secondary reaction is recognized as irrational when we deliberately consider it.35
Here is Wicksteed applying marginal principles to the spiritual life:
In a story of South America, after the war, we are told of a planter who, when warned by his wife in the middle of his prayers that the enemy was at the gate, concluded his devotions with a few brief and earnest petitions, and then set about defending himself. Had he been a formalist those final petitions would never have been uttered at all; but under the circumstances the impulse to prayer, though sincere and urgent, became rapidly less imperative and exacting relatively to the urgency of taking steps for defence, as the successive moments passed. . . . [A]n entirely devout and sincere person may find himself in the dilemma of having either to curtail (or omit) family prayers or to hurry a guest over his breakfast and perhaps run him uncomfortably close for his train. If he shortens, but does not omit, the prayers, it shows that he attaches declining significance to his devotions as minute is added to minute. And in this we shall see nothing ludicrous, as soon as we give up the cant of the absolute in a world in which all things are relative.36
Will money buy happiness?
All the things that we so often say “cannot be had for money” we might with equal truth say cannot be had or enjoyed without it. Friendship cannot be had for money, but how often do the things that money commands enable us to form and develop our friendships! Domestic peace and happiness cannot be had for money, but Dickens’s Dr. Marigold was of opinion that many a couple live peaceably and happily together in a house, who would make straight for the divorce court if they lived in a van.37
Are human desires insatiable?
Indeed, just as it is easy to have so many houses that we have no home, so in general there is a point at which the command of exchangeable things may cease to support and begin to oppress, or feed upon, our store of ultimately desired experiences.38
Are people motivated solely by the desire to possess wealth?
Now since we have already seen that no ultimate object of desire can ever be the direct subject of exchange at all, we perceive at once that to regard the “economic” man (as he is often called) as actuated solely by the desire to possess wealth is to think of him as only desiring to collect tools and never desiring to do or to make anything with them.39
Unlike many contemporary economic theorists who seem unable to move beyond the maximizing concept, Wicksteed also saw clearly that there is much more to the science of economics than the “psychology of choice, or the principles which regulate our selection among alternatives.”40 The economizing aspect of economic life came to be emphasized only after the reformulation of economic theory that occurred in the last quarter of the nineteenth century. With Adam Smith the focus was on exchange. Indeed, Richard Whately protested in his 1831 lectures at Oxford University that the science of political economy might better have been called catallactics, or the science of exchanges, from the Greek word for exchange.41 Adam Smith had cited the division of labor as the principal cause of increasing national wealth. The division of labor, of course, requires exchange. Once the division of labor has extended itself throughout the society, then everyone lives by exchanging. Everyone “becomes in some measure a merchant,” Smith said, “and the society itself grows to be what is properly a commercial society.”42 The task Smith set for himself, especially in Book I of The Wealth of Nations, was to explain how such a commercial society is coordinated through the spontaneous formation and continual readjustment of relative money prices.
Here is Wicksteed’s description of “commercial society”:
Thus, by teaching Greek to men who can neither make shoes nor drive an engine, I can get myself shod and carried by men who have no wish to be taught Greek. It might be a valuable exercise for any one who is “earning his living” to attempt to go through a few hours or even a few minutes of his daily life and consider all the exchangeable things which he requires as they pass, and the net-work of cooperation, extending all over the globe, by which the clothes he puts on, the food he eats, the book containing the poems or expounding the science that he is studying, or the pen, ink, and paper with which he writes a letter, a poem, or an appeal, have been placed at his service, by persons for the direct furtherance of whose purposes in life he has not exercised any one of his faculties or powers. Such an attempt would help us to realise the vast system of organized co-operation between persons who have no knowledge of each other’s existence, no concern in each other’s affairs, and no direct power of furthering each other’s purposes, by which the most ordinary processes of life are carried on. By the organisation of industrial society we can secure the co-operation of countless individuals of whom we know nothing, in directing the resources of the world towards objects in which they have no interest. And the nexus that thus unites and organises us is the business nexus—that is to say, a system of exchanges, conducted for the most part in terms of a medium that enables us to transform what we have into what we want at two removes.43
Wicksteed devotes a long chapter entirely to “Business and the Economic Nexus,” in the course of which he manages to discuss and dispel most of the misunderstandings that have animated so many moral critics of commercial society. He is particularly good on the topic of egoism and altruism in “the system of ‘economic relations,’ ” defined as
that system which enables me to throw in at some point of the circle of exchange the powers and possessions I directly command, and draw out other possessions and the command of other powers whether at the same point or at some other.44
The economic relation is entered into, Wicksteed points out, “at the prompting of the whole range of human purposes and impulses, and rests in no exclusive or specific way on an egoistic or self-regarding basis.”45
[W]hen Paul of Tarsus abode with Aquila and Priscilla in Corinth and wrought with them at his craft of tent-making we shall hardly say that he was inspired by egoistic motives. It is, indeed, likely enough that he was not inspired by any conscious desire to further the purposes (pastoral, military, or what not) of the men for whom he was making or mending tents, but it is very certain that he was impelled to practise his craft by his desire not to be a burden to the Churches, and that his economic life was to his mind absolutely integral to his evangelising mission.46
The economic relation, Wicksteed argues, liberates people
from the limitations imposed by the nature of their own direct resources. And this liberation comes about by the very act that brings a corresponding liberation to those with whom they deal. “It is twice bless’d. It blesseth him that gives and him that takes.” Surely the study of such a relation needs no apology, and there seems to be no room to bring against it the charge of being intrinsically sordid and degrading.47
Why is this charge so frequently made? Wicksteed returns to “the example of the apostolic tent-maker” to show “the ground on which this stubborn prejudice rests.” Although Paul was not thinking of his own advantage when he was making tents, neither was he thinking of the advantage of those whose wants he was supplying.48 In fact, says Wicksteed, this is the essence of a purely economic transaction.
If you and I are conducting a transaction which on my side is purely economic, I am furthering your purposes, partly or wholly for my own sake, perhaps entirely for the sake of others, but certainly not for your sake. What makes it an economic transaction is that I am not considering you except as a link in the chain, or considering your desires except as the means by which I may gratify those of someone else—not necessarily myself. The economic relation does not exclude from my mind every one but me, it potentially includes every one but you. You it does indeed exclude. . . .49
Wicksteed summarizes the matter succinctly: “The specific characteristic of an economic relation is not its ‘egoism’ but its ‘non-tuism.’ ”50
The temptation to quote Wicksteed at length on this whole topic is irresistible:
A man’s purposes may, of course, be selfish, but however unselfish they are he requires the co-operation of others who are not interested, or who are inadequately interested in them, in order to accomplish them. We enter into business relations with others, not because our purposes are selfish, but because those with whom we deal are relatively indifferent to them, but are (like us) keenly interested in purposes of their own, to which we in our turn are relatively indifferent.51
A bit later he notes:
[I]t may be true enough that, as a rule, the average man of business is not likely to be thinking of any “others” at all in the act of bargaining, but even so the term “egoism” is misapplied, for neither is he thinking of himself! He is thinking of the matter in hand, the bargain or the transaction, much as a man thinks of the next move in a game of chess or of how to unravel the construction of a sentence in the Greek text he is reading. . . . It would be absurd to call a man selfish for protecting his king in a game of chess, or to say that he was actuated by purely egoistic motives in so doing. . . . If you want to know whether he is selfish or unselfish you must consider the whole organisation of his life.52
To those who would argue that, since every person should be the object of our direct interest and benevolence, the economic relation is fundamentally amoral or even immoral, Wicksteed replies that the position cannot be seriously maintained. “The limitation of our powers would prevent our taking an equally active interest in every one’s affairs.”53
While defending economic relations against the unthinking charges of moralistic critics, Wicksteed rejects the “school of cheerful optimism . . . based upon the creed that if every man pursues his own interests in an enlightened manner we shall get the best of possible results.”54 He is not a defender of laissez faire.
The enlightened student of political economy and of society will take care to assume nothing as to the economic forces except the constant pressure which they bring to bear upon men’s action and their absolute moral and social indifference. He will see that it is our business in every instance to endeavor to yoke these forces, where we can, to social work, and to restrain them, where we can, from social devastation; never to ignore them, never to trust them without examination; and no more to take it as axiomatic that they will work for social good, if left alone, than we should take it for granted that lightning will invariably strike things that are “better felled.”55
In the judgment of Philip Wicksteed, economist, theologian, scholar, and probably the most careful and thorough writer ever to examine the character of Homo economicus, there is nothing in his makeup to keep him from being a public-spirited and thoroughly moral citizen.
Homo Economicus Among the Christians
It may be the case that Christians make excellent citizens. The First Letter of Peter urges Christians to
maintain good conduct among the Gentiles, so that . . . they may see your good works and glorify God on the day of visitation. Be subject for the Lord’s sake to every human institution. . . . For it is God’s will that by doing right you should put to silence the ignorance of foolish men. Live as free men, yet without using your freedom as a pretext for evil; but live as servants of God. Honor all men. Love the brotherhood. Fear God. Honor the emperor. (I Peter 2:12-17)56
But it does not follow that behaving like a good citizen is the same as behaving like a Christian. Homo economicus as described by Adam Smith and Philip Wicksteed can be a thoroughly moral and public-spirited citizen. It remains to be asked whether he can also be a Christian. And there are good reasons to ask.
Homo Economicus and the Message of the Gospels
The New Testament is a socially more radical document than well-established churchmen have usually been willing to admit. The changes in language between the Beatitudes in Luke and the Beatitudes in Matthew are especially revealing. “Blessed are you poor” becomes “Blessed are the poor in spirit”; “Blessed are you that hunger now” becomes “Blessed are those who hunger and thirst for righteousness” (Matthew 5:3, 6; Luke 6:20-21). And the “Woes” that follow the “Blesseds” in Luke’s Gospel—woes to the rich, to those who are well-fed, to those who are currently laughing—don’t appear at all in Matthew’s version (Luke 6:24-26). One senses the hand of a conservative editor eager to adapt the extreme demands of the original message to the realities of social life.
There are at least two powerful tensions between the message of the New Testament and the character of Homo economicus, corresponding to each of the two aspects of economic man’s behavior pointed out by Wicksteed: the economizing aspect and the exchange aspect.
Various passages in Matthew 6 (also presented in Luke 12) well express the tension between the calculating, prudential attitude of Homo economicus and the Gospel imperative:
Do not lay up for yourselves treasures on earth. . . . For where your treasure is, there will your heart be also. (Matthew 6:19, 21)
[D]o not be anxious about your life, what you shall eat or what you shall drink. . . . Look at the birds of the air: they neither sow nor reap nor gather into barns, and yet your heavenly Father feeds them. (Matthew 6:25-26)
And why are you anxious about clothing? Consider the lilies of the field, how they grow; they neither toil nor spin; yet I tell you, even Solomon in all his glory was not arrayed like one of these. But if God so clothes the grass of the field, which today is alive and tomorrow is thrown into the oven, will he not much more clothe you, O men of little faith? (Matthew 6:28-29)
Mark and Luke both recount the story of the poor widow whom Jesus commended for contributing to the temple treasury “everything she had, her whole living” (Mark 12:41-44; Luke 21:1-4). Would not Homo economicus have to regard such behavior as imprudent at best and probably recklessly irresponsible? Wouldn’t he also be critical of the members of the Jerusalem church who, in their enthusiasm, “sold their possessions and goods and distributed them to all, as any had need” (Acts 2:45)? Yet Jesus does say, “Sell your possessions and give alms” (Luke 12:33). And all three of the Synoptic Gospels tell the story of the man who decided not to be a disciple when Jesus counseled him to sell all his possessions and give the proceeds to the poor (Matthew 19:16-22; Mark 10:17-22; Luke 18:18-23).
The Gospels advocate a trusting dependence on God that coexists uneasily with the desire of Homo economicus to make adequate provision for his own future. The determination to provide for oneself reveals a lack of faith, a lack of faith that in turn prevents people from practicing the mutual concern that will characterize the Kingdom of God. Luke presents this theme most clearly.
Consider the message of the forerunner, recounted by Luke as an introduction to Jesus’ ministry. When the multitudes who came out to the wilderness to be baptized by John asked him, “What then shall we do?” John replied: “He who has two coats, let him share with him who has none; and he who has food, let him do likewise” (Luke 3:7-11).
Jesus’ first recorded sermon, in the synagogue of Nazareth, took as its text the words of Isaiah:
The Spirit of the Lord is upon me, because he has anointed me to preach good news to the poor. He has sent me to proclaim release to the captives and recovering of sight to the blind, to set at liberty those who are oppressed, to proclaim the acceptable year of the Lord.
When he closed the book from which he had been reading, Jesus said: “Today this Scripture has been fulfilled in your hearing” (Luke 4:16-21).
Most scholars interpret this as a proclamation of the Jubilee Year, in which slaves are to be liberated, land returned to the families that have lost it through foreclosure, and all debts forgiven. The good news that God’s reign is being established is a message for the people of God, who are called to acknowledge the arrival of God’s kingdom by beginning to care for one another as God had intended they should do. Forgiving the debts of the poor is a part of that, a part important enough to be incorporated into the prayer that Jesus taught his disciples.
The ethos of the New Testament is radically communitarian. This has always posed problems for Christian thinkers who believe that Christian ethics must be “realistic,” capable of being practiced without disastrous consequences for the social order. One solution has been to bracket as “counsels of perfection” or “ideals” applicable only “eschatologically” all those New Testament injunctions that require us to give to everyone who asks, to repay evil with good, or to put the welfare of others ahead of our own. Another solution, but one that rarely obtains a serious hearing, is to assert that the agape commanded by the New Testament extends only to those in the household of faith,57 a community which people can choose to join, from which they can choose to exclude themselves, and from which they can be excluded (excommunicated) when their behavior reveals that they have in effect excommunicated themselves. The most common solution, however, is to invoke the ideals selectively, where it seems that they can be put into practice without overly disruptive consequences, and to ignore them the rest of the time. This is what usually happens among those who condemn as un-Christian the “non-tuistic” behavior of market participants.
“And as you wish that men would do to you, do so to them” (Luke 6:31; also Matthew 7:12). If that is indeed, as Jesus says in Matthew, “the law and the prophets,” it does seem that a commercial society is fundamentally incompatible with Biblical ethics. It also appears, however, that “the law and the prophets” never contemplated the evolution of commercial society, a society in which the division of labor has proceeded so far that almost all social interactions are between people who don’t even know one another. Any serious attempt to make the Golden Rule a guiding principle for the actual conduct of our everyday life would require, as a precondition, a thoroughgoing reorganization of society into small villages with no significant interaction among the villages.
Aristotle, one of the first serious thinkers to reject a society that featured extensive exchange among its participants, wanted something like that.58 Those today who might think they would prefer a society reorganized in this much simpler way have almost surely not thought about what this would entail. We would have to give up not just our air-polluting automobiles and leaf-blowers, but also our books, recorded music, antibiotics, modern dentistry, and, without doubt, a large portion of the earth’s people, who simply could not survive in a world that had sacrificed all the products of an extensive division of labor.
Christian Critics of Homo Economicus and Commercial Society
My goal in the preceding section has been to point out the tensions that I think exist between the character of Homo economicus and the ethos of the New Testament. I do not believe, however, that these tensions are the chief cause of the hostility toward Homo economicus and commercial society that one finds in so many Christian thinkers. I think that hostility, while perhaps nurtured to some extent by these tensions, is rooted in two misunderstandings that I would now like to explore.
Robert Bellah provides a convenient case study for examining the first of the misunderstandings. Bellah and the same colleagues with whom he wrote Habits of the Heart have recently produced another book, this one titled The Good Society. The Christian Century published an excerpt from the book in its issue of September 18-25, 1991, titled “Taming the Savage Market.”59
Why do they call the market savage? The only reason I could find in the excerpt is that the French (at least according to Bellah et al.) speak of American capitalism as “le capitalisme sauvage.” With all respect to whatever perceptions inspired the French critics whom Bellah quotes, savagery is not and cannot be the source of the specific ills that he blames upon the market. For the complaint of Bellah et al. is that Americans are increasingly finding the market more attractive than other institutions as the provider of the goods they want. Attractiveness is very different from savagery.
In an article written for the New Oxford Review, Bellah complains about “the colonization of personal and social life” by the market, and refers to this as “market totalitarianism.”60 What does he have in mind? Let’s see what he mentions.
There is a new McDonald’s on Pushkin Square in Moscow. A recent poll showed that the one thing affluent Americans said they could not live without was their microwave oven. An increasing number of Americans never have a meal together. The members of a church in the San Francisco Bay area can donate to the church for 90 days and then get their money back if they think they made a mistake or did not receive a blessing. Most students are in college today to acquire money, not knowledge. There are also a number of complaints included in a quotation from Robert Heilbroner: the movement of more women into the labor force and the rise of prepared foods, laundry services, home entertainment, and the pharmaceutical industry.61
In all these cases, the problem, insofar as there is one, has been created by the attractiveness of the opportunities that the market provides, not by the market’s savagery. What worries Bellah and his colleagues is that people are not cultivating families, neighborhoods, churches, and other face-to-face institutions because they find that they can obtain the services they want at lower cost through the market. It may be rhetorically effective to call this the savagery of the market and to refer to colonization and market totalitarianism; but it is sloppy thinking. The problem, as Albert Hirschman perceptively pointed out over 20 years ago, is that when people are offered a choice between “exit” and “voice” as ways of inducing other people and institutions to serve their purposes, their private benefit-cost analysis regularly finds “exit” more attractive. It’s easier to go somewhere else than to stay and fight about it.62
The exit option is the market option, as ordinarily understood: We patronize the grocery store of our choice rather than requesting representation on the board of directors of our neighborhood grocery store. An unintended consequence is that we develop no personal attachments or loyalties toward the institutions that serve us. While that might be completely acceptable in the case of grocery stores, the unintended consequences can become cumulatively disastrous when we use the exit option in our neighborhood, church, school, and even our family. The voice option nurtures loyalty, fidelity, deeper attachments, personal relationships.
It also generates problems, of course, such as tyranny, domestic abuse, personal harassment, and unhealthy dependencies. But no commercial society can succeed or even endure without support from those face-to-face institutions in which individuals are socialized and values are nurtured. Insofar as commercial society, by the very attractiveness of the opportunities it creates, undermines the smaller, face-to-face institutions within it, commercial society may be digging its own grave. Bellah and his colleagues, along with many other moral critics of commercial society, have allowed their hatred of this society to obscure their understanding of it. The saddest part of it all is that many people who read The Good Society will accept its fulminations as a legitimate critique of Homo economicus and commercial society. I am heartened by the number of reviewers, especially in periodicals that one would expect to be sympathetic to the book, who have already called attention to the superficiality of its analysis.63
Moral critics of commercial society have often failed to see that the effectiveness of commercial society, whether for good or ill, is largely a product of its persuasive character. Commerce is fundamentally a persuasive, not a coercive activity. It functions by offering people additional opportunities rather than by threatening to deprive them of opportunities—which is the essential distinction between a persuasive and a coercive institution. It is the sweetness of Homo economicus (per suavitatem = through sweetness) that makes him effective. Those who fail to see this will never produce an adequate diagnosis of the ills to which commercial society is in fact prone, much less a suitable prescription for the cure of those ills.
The second misunderstanding that produces so much hostility toward commercial society is found with distressing regularity in the social encyclicals of the Roman Catholic Church. It takes the form of the assumption that some vantage point exists above the fray, a vantage point from which, once it is attained, all social ills can be corrected. Since that vantage point exists, we have a moral obligation to ascend its height and set the social world in proper order. Consider the following excerpt from Centesimus Annus:
A given culture reveals its overall understanding of life through the choices it makes in production and consumption. It is here that the phenomenon of consumerism arises. In singling out new needs and new means to meet them, one must be guided by a comprehensive picture of man which respects all the dimensions of his being and which subordinates his material and instinctive dimensions to his interior and spiritual ones. If, on the contrary, a direct appeal is made to his instincts—while ignoring in various ways the reality of the person as intelligent and free—then consumer attitudes and life-styles can be created which are objectively improper and often damaging to his physical and spiritual health. Of itself, an economic system does not possess criteria for correctly distinguishing new and higher forms of satisfying human needs from artificial new needs which hinder the formation of a mature personality. Thus a great deal of educational and cultural work is urgently needed, including the education of consumers in the responsible use of their power of choice, the formation of a strong sense of responsibility among producers and among people in the mass media in particular, as well as the necessary intervention by public authorities.64
Questions come tumbling out. Who is the “one” who must be guided? Are business decision makers supposed to assess the overall cultural and spiritual effects of every new product they are thinking about introducing? If so, who assigned them such an awesome responsibility? Is there not something arrogant about taking this responsibility upon oneself?
What does it mean that an economic system “of itself” does not possess criteria for correctly making the distinction that the encyclical insists upon? Doesn’t an economic system include the ideas and values of its participants? If the people who participate in an economic system are not in possession of these criteria, who is?
Who is supposed to do all the educational and cultural work that is so urgently needed? Who is competent to educate consumers, producers, and the mass media? Who can be trusted with the task?
Does the last phrase perhaps imply an answer? Is government in command of the vantage point from which the overall truth can be discerned and all the proper measures put in place? Or is it only governments obedient to bishops?
A review by John Paul II of Rerum Novarum, whose 100th anniversary Centesimus Annus commemorates, reminds us that Leo XIII assigned some very large responsibilities to government. It must assure workers a just wage, defined as a wage sufficient to support the worker along with his wife and family and to allow for some saving; preserve Sunday as a day of rest; exercise a special care and concern for the weak and defenseless; and watch over “the common good” to ensure that every sector of social life, including the economic one, both contributes to the common good and respects the rightful autonomy of every other sector.65Centesimus Annus enlarges these responsibilities to include protection of the environment, stabilization of aggregate levels of economic activity, regulation of monopolies, and state production when the private sector is “not equal to the task at hand.”66
The extraordinary assumption running through all this is that the state is always “equal to the task at hand.” Recently decolonized states will sometimes lack “a class of competent professional people capable of running the State apparatus in an honest and just way”;67 but this is apparently never a problem in advanced societies.
Why do the social encyclicals (and so many denominational pronouncements on the economy) assume so casually and uncritically that the government always promotes the public interest? I would locate the answer in a failing that is characteristic of all intellectuals and not just of specifically religious thinkers. They believe—it is a matter of vocational commitment—that ideas and ideals matter. But they are unwilling to undertake, or at least reluctant to contemplate, the long and arduous task of acting on this conviction in the only way that is consistent with liberal and democratic principles.68 “Government” provides the shortcut they need. The myth of the benevolent despot satisfies the vanity of the “man of system,” who “seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board.” The Homo economicus assumption reminds him of the uncomfortable fact that “in the great chess-board of human society, every single piece has a principle of motion of its own.”69
Adam Smith recognized, perhaps with occasional lapses, that the desire of individuals to better their condition would be found among government officials as often as among merchants and manufacturers—and also, it might be added, among members of the clergy at all levels.70 In his social analysis, there is no position above the fray. Even the philosophers who write about social problems are themselves participants in the drama they are trying to describe.
I think that two of the characteristics of Homo economicus most offensive to religious critics are his limited knowledge and his partial interests. The existence of those characteristics implies that we cannot count on economic man, either singly or in concert, always to intend, much less always to achieve, the public interest.
But what follows from this? We can certainly work to expand the knowledge and broaden the interests of Homo economicus. But when we do so, we ought to be fully aware that we are working to expand one another’s knowledge and to broaden one another’s interests. For we are all instances of Homo economicus. Impartiality and omniscience have not been granted to any of us, not even to government officials and bishops. We are only human. And the same is true, I think, of Homo economicus. When properly understood, he is merely human.
Can Homo economicus be Christian? It’s always a possibility.
Economic Scientists and Skeptical Theologians*
How far should theologians trust economists? That is the question to be pursued but never quite caught in the essay that follows.
As economic issues have taken on a greater perceived importance in public life, theologians have become increasingly eager to discuss them.1 In doing so, they inevitably rely in part on the work of economists. By carefully selecting the economists whom they consult, however, theologians become their own economists to a very large extent. What criteria are they using to pick and choose? How are the theologians deciding which economists to trust?2
Theology and Mathematics
“One suspects sometimes,” the economist Kenneth Boulding observed more than thirty years ago, in a debate with the theologian Reinhold Niebuhr, “that there are only two rational sciences, theology and mathematics, and that all differences arise from the first and agreements from the second.”3 A substantial number of economists today would give a hearty second to the thrust of Boulding’s comment.
Many contemporary economists see their discipline as a branch of mathematics, in the enlarged sense intended by Boulding. They believe that the systematic, logical procedures of science are gradually producing a body of reliable knowledge about economic processes that deserves public acceptance. They also believe that the introduction of theological considerations, again in Boulding’s enlarged sense of the term, into the discussion of economic policies is more likely to confuse than to advance the cause of understanding and consensus. Milton Friedman spoke for many contemporary economists when he wrote:
I venture the judgment . . . that currently in the Western world, and especially in the United States, differences about economic policy among disinterested citizens derive predominantly from different predictions about the economic consequences of taking action—differences that in principle can be eliminated by the progress of positive [i.e., scientific] economics—rather than from fundamental differences in basic values, differences about which men can ultimately only fight.4
Friedman did not mean to say that values cannot be rationally discussed, since he has himself often argued on behalf of particular values. It is “fundamental differences in basic values” about which Friedman says we can “ultimately only fight” if we disagree. Since we always seem to be able to find further arguments to support any values we’re defending, we may never reach the point at which fighting is our only remaining recourse. Nonetheless Friedman and Boulding are advancing a significant claim, which we might state as follows: Debates about economic policy are likely to proceed more satisfactorily if they focus on “the economic consequences of taking action,” or the causal connections that the science of economics can establish, than if they wander off into theological issues or questions of basic values.
Science and Ideology
Boulding and Friedman both published the comments quoted in 1953, a decade before Thomas Kuhn published The Structure of Scientific Revolutions.5 Kuhn’s influential account of the role that paradigms play in the practice of any science raises serious questions about the sharp distinction between “theology” and “mathematics.” Widespread acceptance of Kuhn’s analysis has made it much more difficult for economists to ignore or dismiss charges of ideological distortion at the root of their work. The objectivity and value neutrality of properly conducted economic inquiry has had to be defended in recent years against the claim, coming from many directions, that economics is an ideology as much as it is a science. And theologians, upon being told that they are ignorant of economic science, can now more effectively reply that economists are in turn unaware of the hidden “theology” undergirding their scientific claims.6
Whether economics is a science, an ideology, or something of both, this much is clear: the conclusions that economists reach in the course of their inquiries must be believed if they are to be acted upon. And since economists are seldom kings, even the most solidly-established conclusions of economic science will have to be accepted by a large number of non-economists if they are to have any effect on public policy. People will have to be persuaded that what economists say they know is both true and relevant to the issues at hand.
When it comes to persuading theologians, mainstream economists operate under a severe handicap. By “mainstream” I mean those economists who believe that price theory, now often called microeconomic theory, is a powerful aid toward understanding the social interactions that we refer to as “economic activity.” The handicap under which mainstream economists labor in their efforts to persuade theologians is the basic hostility of the theologians toward what they take to be the micro-economist’s presuppositions. What seems initially plausible and, in some cases, almost undeniable to the mainstream economist will frequently strike the theologian as either immoral or absurd and possibly both. As a result, theologians tend to support or construct their positions on economic issues by consulting primarily economists who reject price theory or make little use of it.
The Influence of Adam Smith
Adam Smith is at the root of the problem. It is his conception of the way that economic systems work which modern theologians find objectionable when they encounter it in the analyses of contemporary economists. Smith taught that economic systems are coordinated by the pursuit of self-interest, and that they actually function more satisfactorily when participants aim at their own advantage than when they intend to pursue the public interest. Government direction of economic activity is neither necessary nor desirable, according to Smith, and it is seldom successful when it tries to divert resources away from the applications to which their owners prefer to put them.
Theologians object to the individualism and selfishness that seem to be assumed and endorsed in the Smithian approach. They are not willing to grant that social systems can be effectively and satisfactorily coordinated by the interplay of self-interested actions. They believe that a morally acceptable social system must offer a larger role for altruism, benevolence, and public-regarding actions. The Smithian system is condemned in their eyes by its rejection, as unnecessary and even counterproductive, of conscious efforts to promote the public interest. “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner,” Smith writes, “but from their regard to their own interest.”7 And again: “I have never known much good done by those who affected to trade for the public good.”8 The statesman, moreover, who would attempt to tell private people how they ought to use their resources, would be assuming an unnecessary and dangerous authority, Smith says, and one “which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.”9 All this is a scandal to the modal theologian of today.
The Smithian perspective nonetheless lives vigorously in the work of mainstream economic theorists. It is sometimes suggested that Adam Smith is alive and well only at such outposts as the University of Chicago. It would be more accurate to say that Smith lives almost anywhere that economists congregate. The exception would be those circles in which microeconomic theory is deliberately denigrated, or where economists are in conscious rebellion against the mainstream tradition. Unfortunately, many of Smith’s supporters help to perpetuate an erroneous notion of the Smithian vision.10 Their misrepresentations may have contributed to the rejection of both the Smithian view of society and the insights of economic theory into social processes. A re-examination of Smith’s actual doctrines might therefore go some distance toward overcoming the difficulties that economists currently experience in their efforts to communicate with theologians and other cultured despisers of economic theory.
The Smithian Perspective
In the first place, it isn’t selfishness but self-love that motivates people in the Smithian world. While self-love or self-interest is certainly capable of producing selfish behavior, it need not do so. Self-interested behavior is morally neutral, embracing as it does acts of laudable generosity as well as despicable greed. In the Smithian world, people aim consistently at the accomplishment of their own purposes.11 Whether those purposes are commendable or contemptible will vary from person to person and case to case. To condemn self-interested behavior, as Smith uses the concept, amounts to condemning purposive behavior. All purposive or “rational” behavior is self-interested; the moral quality of that behavior depends largely upon what purposes people find it in their interest to pursue.
Adam Smith believed that most people wanted above everything else to “better their condition.” The desire to better our condition, Smith says, “comes with us from the womb, and never leaves us till we go into the grave.” It is “uniform, constant, and uninterrupted,” so that “there is scarce perhaps a single instant in which any man is so perfectly and completely satisfied with his situation, as to be without any wish of alteration or improvement of any kind.” Moreover: “An augmentation of fortune is the means . . . the most vulgar and obvious” by which to better one’s condition, and so the means that most people choose to employ. Consequently, most members of all classes in society work diligently and attempt to save and prudently invest some of the income that their efforts produce. This dominant behavior on the part of the members of society promotes the division of labor and hence an expansion in the per capita production of the “necessaries and conveniences” of life.12
The desire to better our condition thus advances the welfare of others, and especially of the large majority, the laboring classes, who through this process come to be more adequately fed, clothed, and lodged.13 But the nagging question remains, is not this urge to better our condition, whatever its effects, excessively individualistic in intention and therefore in moral quality?
From Vanity to Virtue
It is not, at least not in Smith’s view. It is fundamentally a social urge, to begin with, because its final object is enhanced standing in the opinions of those whose opinions matter to us. Our ultimate concern, in short, is with status. It is true that this concern will often be no more than vanity; but it can also express itself as a love of true glory, or even, among the best of us, as a love of virtue. Vanity prompts us to appear praiseworthy even when we are not. The love of true glory, however, prompts us toward behavior that genuinely merits praise. And those who love virtue will do what is praiseworthy even if, because of the ignorance or misunderstanding of other people, they expect it to bring them unmerited condemnation. The opinion that matters to those who love virtue is the opinion of “the impartial spectator.” There would not seem to be anything inordinately individualistic or selfish in this view of human nature and social action.14
The claim that Adam Smith defended a society based on “unrestrained individualism” is wholly misleading. In any society, the freedom and power to act is always restrained by the freedom and power that others have. The issue is never whether individuals should be unrestrained, but rather what restraints ought to operate. A respect for justice is one restraint. When Smith argued that everyone should be “left perfectly free to pursue his own interest his own way,” it was only on the important condition that “he does not violate the laws of justice.”15
The Significance of Justice
The Wealth of Nations is peppered with condemnations of those who perpetrate injustice by violating the rights of others. Most of these indignant outbursts are directed against businessmen—“merchants and manufacturers”—who use their knowledge and influence to secure inequitable legislation. Legislation is unjust, in Smith’s view, when it promotes the interests of one group of citizens by imposing unequal restraints on the actions of other groups. “To hurt in any degree the interest of any one order of citizens,” Smith says, “for no other purpose but to promote that of some other, is evidently contrary to that justice and equality of treatment which the sovereign owes to all the different orders of his subiects.”16 The “invisible hand” will not extract the public good from the pursuit of private advantage when private advantage is pursued by means of unjust laws and regulations. The Smithian system is fundamentally misunderstood by anyone who ignores the role Smith assigns to “the laws of justice” in shaping legislation and restraining self-interested behavior.
Contemporary economists in the mainstream tradition are generally much less interested than Adam Smith was in questions of justice. It is nonetheless the case that supply curves and demand curves, the basic all-purpose tools in the economist’s analytical kit, presuppose an extensive consensus on rights and obligations.17 This consensus is usually taken for granted in expositions and applications of economic theory, and attention is focused on people’s responses to changing relative prices. The essential background of stable, agreed-upon values is simply regarded as given. It is easy to lose sight of what we take for granted; but it would be a serious error to claim that conceptions of fairness make no important difference to the way an economic system functions.
From Moral Philosophy to Economic Science
It did not take long, however, for Adam Smith’s successors to filter out the explicit ethical and political concerns that mark The Wealth of Nations. Within fifty years from the time of his death in 1790, the moral philosophy of Adam Smith had been thoroughly transformed into the science of political economy.18 Such typical Smithian terms as “generally,” “I believe,” “it seems,” and “perhaps” disappeared in favor of sharply etched postulates, principles, and laws. Adam Smith reasons with the reader; his successors, the political economists of the nineteenth century, are more eager to enunciate the truths that science has discovered.
Adam Smith, it is interesting to note, never thought of himself as laying the foundations for a new science of economic systems. He never even recognized the existence of any “economic” system that could be distinguished from the total social system in order to discern the laws governing its operation.19 Economic goods, economic motives, economic problems, economic factors—these are all anachronisms when we use them to interpret social thought prior to the nineteenth century. Smith does not speak of economic goods, but of “necessaries and conveniences.” He knows nothing of “economic motives,” though he does recognize such desires as those to better our condition, to augment our fortune, to advance complex projects, or to domineer over others. His book is not about economic factors and economic growth, but an inquiry into the nature and causes of the wealth of nations.
Whether or not economics today can properly be called a science, it is certainly a specialty. It was not a specialty in Adam Smith’s way of thinking. It became a specialty, with practitioners who claimed for themselves a superior knowledge, at the beginning of the nineteenth century. And in the last quarter of the nineteenth century, economics was academicized, acquiring its own professors and an accepted place in the structure of universities. The inevitable consequence was accelerating esotericism: economics grew steadily more technical, and its research results became ever more inaccessible to the non-specialist, except through faith.
That brings us back to the question with which this essay began: Why should theologians (or anyone else) have faith in economists?
The Problem of Credibility
This question has bothered economists almost since their specialty was born. Convinced that their gnosis includes vital truths, knowing that these truths have to be accepted by persons in power if they are to affect public policy, and aware of all the interests and prejudices eager to refute their doctrines, economists have frequently worked at enhancing their credibility.
The strategies have varied. Some have opted for rigorous deductions from undeniable axioms in order to construct irrefutable conclusions. Ricardo and his friend James Mill took this approach early in the nineteenth century,20 and Ludwig von Mises used it in the twentieth century.21 Though the preference of economists today for rigor over relevance is primarily a response to professional pressures, it has roots in the desire to construct arguments that produce inescapable conclusions. It doesn’t succeed as a strategy for authenticating economists’ results for the simple reason that non-specialists, being in no position to appreciate a rigorous argument, cannot be demolished by one.
In recent years a substantial number of economists have employed a “testable implications” doctrine to secure credibility for their views amid the clash of opposed opinions. According to this doctrine, competing claims can be judged by extracting their implications and comparing these implications with what we actually observe.22 This is certainly a commendable scientific procedure. But it rarely succeeds in settling policy disagreements, because there is always enough uncertainty and ambiguity in the application of the procedures to justify continued skepticism on the part of those who find the results unpalatable.23
Our question remains unanswered. When can theologians have confidence in economists? How are non-specialists to determine which, if any, of the contending claims that economists put forward are sufficiently well established to warrant acceptance?
The Concern for Policy
The question would appear to be most urgent for those who want to affect legislation or otherwise change the course of public policy. Shall we deregulate taxicabs in our cities? Remove price controls on natural gas? Bring the unemployment rate down below four percent? Impose restrictions on imports in order to reduce the international trade deficit? Put the Federal Reserve under tighter political control? Adopt an industrial policy in imitation of (or in defense against) the Japanese? What is the actual status of the social security system, and what should we do about it? How should health care costs be contained? What ought we to do about the “feminization of poverty”? Should we legislate equal pay for work of “comparable worth” as we legislated “equal pay for equal work”? What would be the probable consequences of various tax reform proposals?
Probable consequences—those are what we would like to learn about, and what the science of economics should be able to predict. “Different predictions about the economic consequences of taking action” are, according to Milton Friedman, the basic cause of disagreements about economic policy and also differences that economic science is capable of resolving—at least in principle. But can it do so in fact? The evidence that it can is extremely weak.
There are a handful of public policy issues where one might argue that economists’ predictions determined the outcome. The progressive deregulation of commercial airlines in the United States and the abolition of the Civil Aeronautics Board at the beginning of 1985 would be a prime exhibit. But even in this case one could also make a good argument for the essential irrelevance of economists’ predictions to the outcome, and the importance of fortuitous political factors. A decision that is based on scientific analysis ought to be firmer and less easily reversible than this decision would seem to be. (While the CAB has been abolished, most of its powers are latent in the hands of still-existing agencies, such as the FAA and the Department of Transportation.) In the city of Seattle, economic analysis led a few years ago to the deregulation of taxicabs. The cabs have recently been extensively re-regulated, against the nearly unanimous advice of economists.
There is a sizable set of policy issues on which something close to consensus exists among economists, but without any noticeable effect on policy outcomes. Farm price supports, rent controls, and legal restrictions on speculators of various sorts are regularly discussed in economics textbooks, because they are such clear examples of policies that fail to produce the consequences used to justify them—and because the policies conveniently remain in place, thereby illustrating both the applicability of economic analysis and the inability of that analysis to affect policy.
Who Cares What Economists Say?
Perhaps we should alter our original question. What difference does it make whether theologians trust economists, or what criteria theologians use to choose the economists on whom they rely? If it only matters because theologians want to affect policy outcomes, then it wouldn’t seem to matter much at all. Public policies don’t depend to any noticeable extent on the predictions that economists make about the consequences of taking action, or, for that matter, on the policy manifestos that theologians compose after consulting the economists of their choice. Public policies in a democracy grow out of a complex process of interaction among many people’s interests and values, a process that no one really controls and which even the most powerful political figures in the society can usually affect only marginally.
It isn’t that the opinions of economists don’t matter. They obviously matter to those in business and government who seek economists’ advice and pay for it, in the hope that economists can tell them things they want to know. Economists’ opinions also matter to their peers, because economics is played by the rules of the game of science, which call for specialized research within a fairly well-defined framework plus evaluation of the results by other members of the specialty. But if the opinions of economists shape the course of public policy, they would appear to do so only in a very slow and indirect way, and not at all in a way that could arouse legitimate fears of technocracy.
Much of the concern that one encounters today about economists as potential technocrats is a hangover from the 1960s, when economists were claiming to have discovered the secret of uninterrupted economic growth with perpetual high employment and no serious inflation. Those were the days in which many economists saw themselves as philosopher-kings, or at least as philosophers who had the ear of kings. The actual record of the U.S. economy with respect to growth, employment, and price stability since the 1960s would be grounds for an anti-technocrat revolt if economists actually possessed even a fraction of the influence they claimed to have.
The Primacy of Politics
The partially-comforting truth is that politicians only heed economists when doing so is likely to serve the politicians’ interests. It matters very little whether our elected officials find Keynesian or monetarist theories more convincing; whatever their theoretical convictions, the actions they actually take will be aimed at the next election. This is not said in any spirit of contempt for politicians, who are constrained by the system in which they find themselves. That system is one in which politicians cannot survive except by paying attention to the interests of those who are paying informed attention to the politicians’ decisions.
There is a “logic of collective action” that constrains the political process in a democracy, and it does not seem to produce a defensible version of the public interest from the welter of self-interested decisions that people make.24 That is one major reason why the analyses of economists have so little effect on policy. It is also a cogent reason for doubting that the inadequacies of the economic system can be corrected by the political system.
The Problem of Credulity
Why, then, should theologians trust politicians? Perhaps they don’t. They do, however, reveal a quite remarkable degree of confidence in “government.” One could easily compile a long list of statements by theologians, issued steadily over the past century and more, in which the deficiencies of the “economic” system are presented as conclusive arguments for government action. Is it by definition or by divine ordination that government always promotes the common good? Theologians have often ridiculed the “faith” of mainstream economists in the “invisible hand,” largely ignoring the actual analysis in which economists have specified the process by which, the circumstances under which, and the extent to which the pursuit of private interest promotes an efficient allocation of resources. By what process, one wonders, do these theologians suppose that government officials are constrained to promote a just assignment of tasks and benefits?
One of the principal criteria which theologians seem to use in selecting the economists to whom they will listen is the degree to which the economist exalts political processes over “economic” ones. If there is a persuasive rationale for this preference, it is never spelled out. The moral preference of many theologians for community over individualism seems to predispose them to favor “government” over “business,” without much regard for the ways in which governments and businesses actually perform.
The manifest failures of twentieth-century governments to produce results commensurate with their rhetoric has had an astonishingly small effect on theological ethics and church pronouncements. Even the murderous tyrannies that have been constructed in our century by governments acting in the name of noble ideals seem to be regarded by leading church officials more as aberrations that will be corrected next time than as evidence of some fatal flaw in the social vision of those who want a further politicization of contemporary social life.
It takes more than evidence to refute an ideology, and contemporary theologians who write about economic issues are almost always in the grip of a recognizable ideology. Since that word has so many pejorative connotations, however, let’s substitute “social vision,” and say that contemporary theological pronouncements on economics tend to reflect a particular social vision, one that is favorably disposed toward “government” and suspicious of “business.”
The pot is not trying here to lecture the kettle on its blackness. The policy-relevant work that economists do also reflects a particular social vision or ideology. Because economists generally want to be mathematicians rather than theologians (in Boulding’s sense), they are usually less willing or able to recognize ideological elements in their own work. A definite social vision does nonetheless inform economic theorizing and its empirical applications. Among mainstream economists, that vision is still in large part the social vision of Adam Smith, in which “society” is the product of many people’s intentions but not of anyone’s design.
None of us can reflect intelligibly upon the social order without the aid of such an informing vision, a set of preconceptions that pose the questions we will ask and that answer the questions we haven’t thought to ask. Mathematics, we might say, will always have its theological foundations. Moreover, the way in which economists influence the formation of social policy is primarily through their elaboration of a vision that proves attractive and compelling, rather than through their specific research output. Economists read and respond to “mathematical” studies; but citizens consult the “theology” which they find these studies expressing or supporting.
It is difficult to evaluate and discuss competing social visions. That is why it sometimes seems that “theology” is the source of all our differences and that we could come to agreement if only we resolved to focus exclusively on “mathematical” issues. But this is an illusion. Our “mathematical” discussions progress only insofar as they take place within a common, accepted “theological” framework. Absent this consensus, our progress will be largely toward mutual incomprehension.
Toward Choosing a Social Vision
A compelling social vision will be one that both explains and inspires. It will be able to account satisfactorily for the flow of events; but it will also give adequate weight to the values that emerge from those events. The Marxian vision survives and often prospers among theologians, despite its well-known explanatory and predictive failures, largely because it seems to give such vigorous support to the values that they cherish. The considerable explanatory power of the Smithian vision, by contrast, is generally not recognized among theologians, largely because they don’t give it a sympathetic hearing. They are prejudiced because of the support which it seems to offer to individualism, selfishness, and materialism—not a highly respected trio in most theological circles.
The Smithian vision deserves a more attentive hearing. The units of analysis in Adam Smith’s social vision are individuals; but the object of understanding is the cooperation that occurs among them. Self-love is assumed; but so is respect for the laws of justice. The Smithian vision tells us how the supply of “vendible” goods increases in a society; but it also explains the social origins and effects of government, churches, universities, and vocational associations. Human projects, great and humble, are acknowledged and honored in the Smithian vision; but the dangers of pride, pretension, and hypocrisy are also kept in mind, and their manifestations are exposed. The Smithian vision allows for extensive and fundamental social changes over time; but these changes are explained as the product of evolution within a stable framework, and are not assumed to require revolutions more likely to produce disruption than progress.
Most important of all, perhaps, for any dialogue between economists and theologians is that no one is in control in the Smithian vision. Everyone chooses, but all choices are constrained by the freedom and power to choose that others retain and exercise. There is no superior class with a special destiny, no elite ordained to guide the course of history, no secret gnosis to which the uninitiated must bow. In the Smithian vision, no human can prescribe the outcome.
Why is that vision generally so unattractive to theologians in our day? If it could be made more compelling and attractive, at least relative to the available alternatives, perhaps theologians would be willing to trust economists more than they currently do.
Christian Theological Perspectives on the Economy*
The most interesting fact about Christian theological perspectives on economic systems is how many conflicting ones there are.1
I do not know why this fact disturbs so few of those theologians who continue to draft or endorse new church pronouncements on the economy. If they believe that truth is most likely to emerge from contention among many conflicting viewpoints, they ought to be concerned that so little dialogue actually occurs among those who come to flatly contradictory conclusions about the implications of the Christian faith for the ordering of economic life. Perhaps they think that the task of theological ethics is to raise consciousness, and that the mere process of producing a church pronouncement justifies itself by generating concern. The trouble with such a rationale is that it undermines its own objective by implying that theological pronouncements are not serious intellectual statements.
It is hard to account for the apparent equanimity with which so many contradictory positions, all claiming to express the Christian vision, are met by those who claim to take the Christian faith seriously. It is easier, I think, to explain how this Tower of Babel arose and why it flourishes. The confusion of tongues reflects a profound uncertainty in our culture about the status and meaning of ethical judgments.
Ethical Judgments and Moral Visions
When we put forward ethical judgments regarding the economy, most of us believe that we are making statements about the world to which our judgments apply: about the actions of the people who participate in it and the situations of those who are affected by it. We do not believe that we are merely saying something about our own inner feelings in the guise of a statement about the external world. We may agree, in the spirit of tolerance and humility, that we are only offering “our own opinion” when we claim, for example, that “current levels of unemployment are morally unacceptable”; but we mean by this that we could be wrong, not that we are merely reporting how we feel when we contemplate a 7 or a 10 percent unemployment rate.
What exactly is it, however, about which we might be wrong? Suppose we wanted to test the statement just quoted, from the second draft of the Roman Catholic bishops’ pastoral letter on the U.S. economy, that “current levels of unemployment are morally unacceptable.”2 How could we do it? To what would one have to point, what arguments would one have to muster, to persuade the bishops that they are in fact quite wrong, and that current levels of unemployment are in reality altogether acceptable from a moral point of view? I do not believe that the bishops or any of the other commissions and task forces that have recently presented statements of the Christian perspective on economic life could give a satisfactory answer to that question. By this I mean that they could not give an answer that would satisfy themselves, one that they would be willing to articulate and defend.
The pastoral letter of the U.S. Catholic bishops contains a long chapter on “The Christian Vision of Economic Life.” It is in fact a hodgepodge of citations from the Bible, papal encyclicals, and other church documents, mixed with ringing assertions about dignity and justice that could only be questioned by someone who wanted to know exactly what they mean, sprinkled periodically with claims that I cannot believe the bishops intend to be taken seriously, all held together by little but a continuously earnest tone.3 The tedious length of the chapter serves to conceal these failings from all but the most patient and persistent reader. I am sure that most of those who actually tried to read the letter skimmed quickly through the rhetoric of Chapter II in order to reach Chapter III, where they could find out what the bishops actually wanted done about unemployment, poverty, farm prices, and international economic relations.4
The bishops set themselves an impossible task when they decided to construct a “moral vision” that could be used to make ethical judgments about the economy. Their vision had to be Christian, of course, and more specifically Roman Catholic, or the bishops would have had no warrant for issuing their letter. But they also wanted to enter into “a dialogue with those in a pluralistic society who, while not sharing our religious vision or heritage, voice a common concern for human dignity and human freedom.”5 Their “Christian vision” consequently had to express “universal moral principles.”6
No such vision can be constructed, least of all in the last quarter of the twentieth century. The idea of a single Christian vision on the economic order is troublesome enough. Will it be Thomist, Lutheran, Calvinist, Anabaptist, or Anglican? Which of H. Richard Niebuhr’s models for relating Christ and culture will it choose? When these questions are settled, the really serious difficulties begin. Will the universal moral principles be those of John Rawls, Robert Nozick, or Alan Gewirth? Or will they be the principles of those who say there are no universal principles, either because moral principles reflect social relationships grounded in modes of production, or because moral principles are given by each community’s history, or because moral principles are in the last analysis mere statements of personal preference?
The serious question is not whether a committee of theologians can articulate a Christian vision of economic life that is also capable of commanding the assent of all those who profess to value human freedom and dignity. They obviously cannot.7 The question is rather why so many Christians persist in believing that this can be done.
Yearning for Christendom
It is probably because they believe that it ought to be done. The Christian faith makes claims about a God who created heaven and earth, all things visible and invisible. It says that this God intervened in human history in the person of one Jesus of Nazareth. It asserts that this Jesus is now Lord and that all things are eventually to become subject to him. Does it not follow inevitably that there exist moral principles that are peculiarly Christian and yet sufficiently universal that they can be used to order social structures in contemporary societies? And if they exist, is it not the obligation of faithful Christians to discover them, articulate them, and secure their acceptance?
An affirmative answer will be automatic only for someone who assumes that Christus dominus implies Christendom, so that the Lordship of Christ entails the legislation of New Testament principles—suitably modified, of course, so that they can be accepted by “those in a pluralistic society who, while not sharing our religious vision or heritage, voice a common concern for human dignity and human freedom.” In an age when professed Christians were numerous, this fallacious identification of Christianity with Christendom produced political oppression. In our age it produces vacuous political pronouncements.8
The pronouncements of church commissions and moral theologians on the economic order are not merely useless; they probably do actual harm. They encourage posturing and oversimplification and thereby tend to polarize political discourse. Who is going to listen attentively and accept instruction from a group that begins by positing its own moral superiority?9 Such claims may be essential to Christendom, but they coexist uneasily with Christianity.
Most of the religious or theological statements on economic life produced these days, especially those published by so-called “mainline” church organizations, reveal a fundamental hostility toward or at least deep suspicion of “capitalist” institutions and policies. I want to argue in this section that the hostility and suspicion are even more radical than the authors of these statements realize. They are actually rejecting the economy.
We use the term “the economy” in everyday conversation with little doubt that we know what we mean and that we’re going to be understood correctly. But economists who have thought carefully about the subject matter of their discipline, about just what it is that economists do, are aware that “the economy” is an extraordinarily elusive concept. Alfred Marshall’s famous definition of economics, in the introductory chapter of his Principles of Economics, reveals the problem.
Economies: Material Goods or Monetary Transactions?
Marshall says that economics “examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of well being.”10 In reality economics ignores the vast majority of individual and social actions that affect “the material requisites of well being,” treating them as outside its concern. Moreover, neither “material requisites” nor “well being” turns out to have an essential connection to what economists study. How did we come to accept the odd notion that “the economy” produces the material requisites of well being? Anyone today who maintains that “the economy” has some special relation to “material goods” is almost certainly identifying “material goods” with whatever “the economy” produces. The Oxford English Dictionary illustrates the confusion when it defines “economic man” as “a convenient abstraction used by some economists for one who manages his private income and expenditure strictly and consistently in accordance with his own material interests” (emphasis added).11 This is simply wrong: Homo economicus has no particular attachment to material goods.
The identification of “economic” with “material” might have made some sense in a society where daily work was predominantly directed toward the provision of food, clothing, and shelter; but it makes no sense in contemporary societies like the United States. What Marx and Engels called “the production and reproduction of life,” or what we call “making a living,” probably has more to do today with desires for entertainment and social status than with materially grounded or physiological desires.12 The question remains therefore: What do we really have in mind when we talk about “the economy”?
We move much closer to capturing what actually seems to be meant by “the economy” when we focus on the description of economics that Marshall put forward in the second chapter of his Principles. There he informs us that economics concerns itself chiefly with those activities that are directed by the desire for money, where the force of people’s motives can be approximately measured by the amount of money they will be willing to give up to obtain a satisfaction, or the sum they will insist upon as a condition for supplying a service.13 This is much more accurate. There is obviously a close connection between the use of money and what we ordinarily think of as “the economy.” “The economy” appears to be the set of social interactions in which transactions are typically carried out through the use of money. Social behavior becomes “economic activity,” part of “the economy,” when money becomes the dominant medium of social exchange.
The Emergence of Economies
The idea of “the economy” as a distinguishable sector of society is a remarkably recent notion. It is part discovery, part invention, but in either case a concept that was generally unknown prior to the nineteenth century.14 I can find no evidence in his writings that Adam Smith, for example, recognized an economy or economic order or economic system within the societies whose workings he described. Smith discerned regularities within the flux of social interactions, regularities that could to some extent be systematized and used to predict the consequences of particular policies or to explain the evolution of certain institutions. He also saw that these regularities would lead, under appropriate conditions, to the continuous expansion of a nation’s wealth, the “necessaries and conveniences” available to its population. But he never discerned an “economy,” a distinct sector or segment of society on which one might have a special moral or religious perspective.15
What eventually gave rise to the concept of “the economy” was the eighteenth-century discovery that order can emerge from the interplay of human purposes without the benefit of any controlling design or consensus. This was first discovered in a sphere where it could be most readily observed and understood: the interactions of merchants and others who exchanged with the aid of money. The social “mechanism” by means of which these activities were coordinated became, in the nineteenth century, the subject matter of a special “science,” the science of political economy, which enunciated the “laws” regulating “the economy.” “The economy” then came to mean that sphere which these “laws” controlled.
I suggest that when we speak of “the economy,” we mean that abstraction from the total social system in which the self-interested activities of individuals are coordinated through the continuous comparison of quantified value magnitudes attached to the products of these activities. Stated more simply, “the economy” is the concept (!) of a social system tied together by the processes of supply and demand, with money prices usually providing the common denominator for evaluations by the transactors—the suppliers and demanders. In “the economy,” everything of interest has a money price.
Two points should be noted. When “everything has a (money) price,” everything becomes a substitute for anything else; and this makes coordination of activities much easier than it would otherwise be. But by making everything a substitute for anything else, the system also abstracts from the personal characteristics of participating individuals, except insofar as those personal characteristics affect the monetary value of their products.
Moral Criticism of “the Economy”
Some of the common moral criticisms that have been directed against the operation of such a social system reflect misunderstanding. There is nothing inherently selfish about such a system. Self-interested actions are not necessarily selfish actions. People are simply pursuing their own projects. And a system that coordinates the initially incompatible projects of diverse individuals should be applauded, not condemned as selfish.16 It is also a mistake to speak of the processes of supply and demand that bring about this coordination as “unbridled” or “unrestrained,” for they never are. Self-interested actions within “the economy” are regulated by the prevailing laws and the accepted morality of the society, as well as by the alternatives that other actors offer.
There is, however, one important moral criticism that can legitimately be raised against “the economy”: its de-personalization of social relations. As Thomas Carlyle complained and as Marx and Engels indignantly reminded readers of The Communist Manifesto, the system established the “cash nexus” as the controlling relation between people.17 To the extent that this is a vice, “the economy” is a vicious social system; for de-personalized transactions are the essential characteristic of “the economy.” Economic criteria, which is to say, the criteria appropriate to the functioning of “the economy,” are abandoned whenever decision makers substitute “personalized” criteria for monetary advantage.
I am not making any kind of recommendation here, but only pointing something out. It is silly to say, as some have done, that business decision makers ought to pay attention exclusively to monetary magnitudes or the anticipated return on investment. Such an attitude would be impossible even if it were desirable. Remember that “the economy” is an abstraction and that it exists wherever and to the extent that exchanged goods are valued predominantly for the sake of their contribution to the magnitude of monetary values. To argue that people should be treated “as individuals, not as commodities,” amounts to arguing that particular transactions ought to be withdrawn from “the economy.” Conversely, to argue that profitability should be the criterion for managerial decisions in business corporations, rather than some alternative conception of “social responsibility,” is to argue that social transactions in a particular area ought to be governed by the principles of “the economy.” Such arguments must be settled by inquiry and good judgment.
I have said nothing up to this point about capitalism versus socialism. The silence is significant. Because I do not call myself a socialist, I am reluctant to foist any definition upon those who do. But it seems to me that the fundamental arguments on behalf of socialism are always arguments for limiting the scope of “the economy.” Marx described capitalism as a system based on “commodity relations,” and looked forward to its displacement by some other kind of system. The only alternative I can imagine is a society based on personal relations. That isn’t what Marx had in mind, of course, since that describes the kind of society displaced by capitalism in the progressive movement of history. But history has yet to reveal any third option.18 We seem to be stuck with the choice between interacting on the basis of personal criteria and interacting on the basis of impersonal criteria, and our only choice is how to mix these two modes of social cooperation.
What Are We After?
Moral theologians are strongly disposed to condemn commodity relations as morally inferior to personal relations. They should notice, when they do so, that demonetizing social relationships is not sufficient to re-personalize them; demonetization may only succeed in making social transactions less effectively cooperative and more productive of frustration and resentment.
When money prices, rather than concern for each other as persons, coordinate social transactions, social cooperation becomes possible on a far more extensive scale. Those who would like to force all social transactions into the personal mode do not realize how much of what they now take for granted would become wholly impossible in the world of their ideals. Some might argue that it would be a better world today if “the economy” had not developed to the extent that it has over the past two centuries, so that people by and large still produced food, clothing, and shelter to satisfy their own wants and the wants of those whom they know personally. I think that such a judgment reflects either ignorance or arrogance and most likely some combination of both. In any event, we cannot abolish the past two centuries or the human populations and social achievements that these centuries have brought forth, and I do not believe that any of the moral critics of “the economy” genuinely want such an outcome. They are probably assuming that we can somehow render “the economy” morally acceptable without destroying it or giving up anything of human importance that it has created for us. I would hope that this is so. But I am certain that it cannot be done along the lines suggested by so many contemporary moral and religious critics of “the economy.”19
I do not know all that Christian love requires. But if it should require that we cooperate, through an extensive division of labor, in producing for one another food, clothing, shelter, medical care, prayer books, kneeling cushions, and other such material goods—then love requires that we interact extensively with one another on the basis of impersonal, monetary criteria. If we were all god-like, both in knowledge and impartial benevolence, we could do directly and personally for one another all that love requires. It is irresponsible, however, to argue on behalf of a moral vision that denies our humanity by insisting that we be gods. Until we have transcended the human condition, we had better learn to cherish “the economy” and to nurture the conditions that are prerequisites for its successful functioning.
Economists have not been very successful in countering the moral high-mindedness that leads so many contemporary religious leaders to repudiate essential features of the economic order. A large part of the reason is that the theologians and church officials who take the lead in articulating allegedly Christian visions of economic life do not trust economists. They think economists suffer from an ideological bias that makes them ultimately unreliable.
Positive-Normative: The Fateful Distinction
A distressingly large number of economists contribute substantially to this suspicion and mistrust through their endorsement and deployment of the positive-normative distinction. They have repeatedly insisted, in situations where theologians were listening, that economics offers a body of morally neutral social knowledge to which theologians must defer because it is science. It is ironic that economists accompany this claim to possess a body of authoritative knowledge with professions of great modesty. “We know nothing,” they say, “about values and norms. These are for others to determine. We are merely humble artisans, experts on nothing except the facts.”
It is hard to imagine a more effective procedure for alienating theologians—or anyone else of sense. As economists know perfectly well, “facts” have a prestige in our society that “values” do not possess; and the claim to be a “mere” custodian of the facts is the economist’s own form of moral superiority or arrogant humility. In reality, as everyone else realizes, economists have not created a body of knowledge that is independent of all political or ethical values. Our “facts” are not “data”; they are “made,” not “given.”20 So-called factual or scientific judgments are formulated on the basis of particular preconceptions and addressed to others who appropriate them on the basis of their own preconceptions.21 Economic theory is a set of special spectacles through which economists filter experience in order to manufacture facts. If economists cannot see that they are wearing such spectacles, or cannot recognize any of the ways in which political and ethical values have ground the lenses, they had better at least recognize that many others have noticed. Moral theologians have definitely noticed.22
The positive-normative distinction took deep root in the economics profession because economists have been frustrated, almost from the birth of their discipline, by the frequency with which their views are repudiated as mere political prejudice. Economists seem to have thought that they could secure acceptance for their presentation of the facts if they surrendered all claims to be able to deduce policy proposals from those facts.23 The strategy did not work, for reasons which are not hard to appreciate. Economists obviously did and do have policy preferences, and no one who wanted to oppose those preferences was going to begin by conceding the economists’ version of the relevant facts.
This untenable and rhetorically ineffective distinction acquired new vitality from certain developments in twentieth-century philosophy. G. E. Moore’s doctrine of the “naturalistic fallacy,” the misinterpretation of Hume that yielded the dogma of the is-ought disjunction, and the various projects for achieving a definitive methodology of science all helped give new life to a distinction that many economists badly wanted to make. When these philosophical movements disintegrated under more careful criticism, economists conveniently failed to notice. As Sidney Alexander succinctly put the matter, “the economist’s calendar of philosophy lies open to the year 1936”;24 and it tells them all that they need to know in order to feel comfortable and confident about inserting the positive-normative distinction into the first chapter of their textbooks and the opening or closing paragraphs of their articles.25
One unfortunate consequence of this, as I have suggested, is that it has aggravated the mistrust of moral theologians and similarly disposed critics of economics. By claiming that their analysis is independent of all ethical or political judgments, economists have succeeded only in convincing opponents that they are naive, philistine, and possibly even dishonest. That hardly helps when economists take it upon themselves to persuade theologians that their moral critique of market relations is confused and untenable.
The Fear of Value Judgments
While economists’ claims of dominion over the realm of fact have generally not been accepted outside their own circle, their claim to know nothing at all about values has been accepted much too readily. The strange notion that economic analysis has nothing to say about the justice or equity of any economic system is in part, I suspect, the illogical corollary of the view that it speaks authoritatively about efficiency.26 But it also reflects something of the deep confusion that I mentioned earlier about the meaning of ethical judgments.
Economists cannot admit that they might be able to say something about the justice of the phenomena they study because they can’t imagine what the subject matter of such a statement might be. Although most economists, like almost everyone else, regularly use moral language to approve or condemn, they are reluctant to do so in their professional work. Professional work should be confined to scientific judgments, judgments that can be defended or attacked as true or false because they make statements about reality, statements that others can compare with reality to refute or confirm. What is the reality, however, to which ethical judgments refer?
I suggested earlier that the authors of theological pronouncements on economic life, who cannot avoid the necessity of making moral judgments, construct vague, convoluted, and incoherent patchworks of slogan and quotation to conceal from themselves and others that they do not know (literally) what they are talking about. Economists, facing no imperative to make moral judgments, stay out of that swamp. An unfortunate result is that they surrender the area to those who know far less about it.
A major part of the fear that keeps economists from discussing the morality of economic phenomena stems from the conviction, which they seem to share with most moral theologians, that a valid ethical judgment has to be deduced from “universal moral principles.” But that isn’t so, as we discover if we pay attention to our actual practices when engaged in serious moral discussion. When I am discussing reforms in the law of tort liability over coffee with a friend or colleague, I use the language of morality without embarrassment. “It is unfair,” I say, “to impose punitive damages on a producer who could not reasonably have been expected to know the adverse consequences that followed the use of his product.” I do not worry whether the concept of fairness that I am implicitly using can be derived from some universally accepted moral principle. I am concerned only that my concept of fairness be accepted by the person to whom I am speaking. If it is, I proceed to show how and why particular practices offend against that concept. If I discover it is not accepted, I try to find out why it isn’t, and I probe for some similar or perhaps deeper concept of fairness that will be accepted by the person with whom I’m speaking, while still managing to express my own ordered judgments about fundamental fairness.27
What is the source of this disabling lust for universal moral principles? Why are economists so unwilling to make a public judgment until they have attained a god-like perspective? Is there a connection between their timidity in this area and their naive arrogance about “positive” economics? Do they suppose that their “positive science” does flow from “universal principles”? Is this all part of the pattern which includes the profession’s extraordinary devotion to formal theory and rigorous argument, even where it precludes any possibility of a contribution to public discourse?
The second section of this paper ended with a criticism of those moral theologians who despise market transactions because they want human beings to display a god-like omniscience and impartiality. This section concludes with a criticism of economists who, by a quite different route, have come to a remarkably similar conclusion: that human beings have no real authority to speak until they have transcended the human condition.
I want to return in this last section to the question of a Christian perspective on the economy. I shall assume the argument of section II and omit the quotation marks. The economy will be understood here as the whole set of impersonal, price-coordinated transactions in which the members of a society engage.
The New Testament Perspective
Any perspective held by a Christian could properly be called a Christian perspective. I am now searching, however, for a stronger sense of the term. If this strong sense is to mean more than any perspective at all that has been maintained and argued for by a substantial number of persons calling themselves Christians, then I think we must let the New Testament record be normative. A Christian perspective on the economy, in this strong sense, would be the perspective revealed in the New Testament writings.
It follows at once that there is no Christian perspective on the economy for the same reason that there is no Christian perspective on organ transplants. The issue simply was not contemplated in the first century of the Common Era, because the economy had not yet been discovered. What we do find in the New Testament is an extraordinary disregard for almost everything in which economists are interested.
Consider the account of the church in Jerusalem immediately after Pentecost, where the nature of the first Christian community is vividly sketched in a few brief sentences:
They met constantly to hear the apostles teach, and to share the common life, to break bread, and to pray. A sense of awe was everywhere, and many marvels and signs were brought about through the apostles. All whose faith had drawn them together held everything in common: they would sell their property and possessions and make a general distribution as the need of each required. With one mind they kept up their daily attendance at the temple, and, breaking bread in private houses, shared their meals with unaffected joy, as they praised God and enjoyed the favour of the whole people. And day by day the Lord added to their number those whom he was saving.28
The perspective described in these passages is one of joyful spontaneity. It is the opposite of the calculating, consequence-oriented perspective that we associate with Homo economicus. Not only do these people hold all their possessions in common, with no regard for the distinction between mine and thine; they also refuse to be concerned for the future. They liquidate their assets so that they can readily provide for anyone in need.
The reaction of the Jerusalem church to the Pentecost event appears to have been a courageous and faithful response to the proclamation of Jesus as recorded in the synoptic gospels: Take no thought for tomorrow; give to everyone who asks; do not pass judgment. Those who correctly hear what Jesus is proclaiming will be reckless of consequences in their social dealings. The underlying theme is the need to trust in God rather than possessions. It is easier for a camel to pass through the eye of a needle than for a rich person to enter the coming kingdom, because wealth tempts its owners to place their confidence and trust in their own possessions and thus to cling to what they have rather than share it with others. Those who are anxious about food and clothing do not understand what is required for life.
This is surely not advice for the operation of any economy. It would be odd, then, if this attitude of recklessness toward personal possessions were accompanied by a concern for the reform of social systems. No such concern can in fact be found in the New Testament. All three synoptic gospels record the question directed to Jesus about the payment of taxes and his response: Hand over to Caesar the things of Caesar, and to God the things of God.29 The Greek word apodote, translated render in the King James Version, conveys a sense of putting something away by surrendering control.
The Apostle Paul restates Jesus’ radical teaching of love toward one’s enemies in the 12th chapter of his letter to the Romans. Never repay evil with evil or seek revenge, he urges his readers. In the last verse of the chapter he writes: “Do not be conquered by evil, but conquer evil with good.” Chapter 13 then opens with the exhortation: “Let each person subordinate himself to the officers of the government.” Because government officials are God’s agents, the faithful should hand over (apodote) what is owed to such officials: obedience, respect, and taxes. Beyond this the only obligation that the faithful ought to owe is the obligation to love one another.
We encounter the same message in the other classical New Testament source for a doctrine of government, the First Letter of Peter: “Subordinate yourselves to every human institution for the sake of the Lord.” The emperor and his deputies are specifically mentioned. And Christians who happen to be house slaves are commanded to be obedient and respectful to their masters, even when those masters are perverse or unfair.30 Subordination of self to the ruling authorities is enjoined also in Titus 3:1. The Greek word in Romans, I Peter, and Titus is upotasso, which means to place oneself under, not merely to obey. The attitude of the Christian toward social institutions is to be one of dutiful acceptance and wholehearted service.
Christianity and the Ethos of Liberalism
It is quite true, of course, that the Roman empire was not a democracy and that the early Christians were in no position to influence the political institutions of their day. But it does not follow that the New Testament would have spoken in a wholly different manner had it been addressed to the members of a democratic society. To suppose that Peter and Paul would have sounded like Thomas Jefferson in an appropriate historical context is to make the very debatable assumption that the New Testament ethos is compatible with the democratic ethos. The New Testament ethos is no doubt compatible with a variety of governance mechanisms often associated with democracy, such as majority rule. But it is another question whether a successful democracy could ever have developed in a society most of whose members were committed to the ethics of the New Testament.
Those who profess allegiance today to both Christianity and democracy are eager to believe in their compatibility; but the historical record is not very supportive. Many centuries passed before democratic political institutions established themselves in any Christian nation, and then only after the Renaissance, the Reformation, and the Enlightenment had undermined the unity and authority of “Christian” culture. I suspect that the historical roots of democracy are to be found less in the teachings of the New Testament than in actual opposition to certain church doctrines and associated political practices. It may well be that the church doctrines against which “liberal” political thought was rebelling had distorted and even reversed the “political” teachings of the New Testament. But even if this is granted, we are a long way from establishing the fundamental compatibility of New Testament ethics and the liberal ethos that has undergirded durable democratic political institutions where they have arisen in the Western World.31
If the ethos of the New Testament is indifferent toward democracy, it is positively unfriendly, I think, toward the values, attitudes, and characteristic practices of “capitalism.” Is that sufficient to condemn capitalism for any one committed to the message of the New Testament? I don’t think so. I believe that “capitalism” is simply a pejorative synonym for “economy,” and that capitalism consequently cannot be rejected without simultaneously repudiating the basis of contemporary life. Christians who want to reject capitalism ought to know what else they are rejecting at the same time: the coordination of complex cooperative activities in the only way they can be coordinated. The cost would not be just the loss of some luxuries; it would be famine, disease, and a new dark age as the communities of science, literature, and art disintegrated right along with the institutions that provide our “necessaries and conveniences.”
State and Community
“Every state,” Aristotle says at the beginning of his Politics, “is a community of some kind, and every community is established with a view to some good.” That statement appeals strongly to moral theologians in our time, who tend to believe that the state should control or at least set bounds for the economy, that community ought to take precedence over the individual, and that a nation should be united in the pursuit of common goods. But the modern state is no polis; it cannot be a community (koinonia) of the kind that Aristotle contemplated; and the only goods that it can pursue justly and effectively will necessarily be highly general and abstract.
I am persuaded that the modern state does very well indeed if it simply manages to become a community of law, and to pursue the vision of impartiality before the law for each of its members. If it can do this at all adequately, many other communities will develop and thrive within it. If the modern state, urged on perhaps by religious visions, attempts to be a polis, it will not succeed. But it will both undermine and crush many of its citizens’ projects in the attempt.
One such project for which I am concerned is the radical koinonia of Christianity. That koinonia does not seem to prosper in ages of Christendom. I don’t find anything surprising about that, or about persistent efforts to re-create Christendom in the name of Christianity. Until I am shown otherwise, however, I will continue to maintain that these efforts reflect both a misunderstanding of the New Testament and an ignorance of economics.
Controlling Stories: On the Mutual Influence of Religious Narratives and Economic Explanations*
If the foundationalists in economics and the fundamentalists in religion are correct, this paper investigates illegitimate forms of influence. Because I am neither a foundationalist nor a fundamentalist, I did not set out to condemn either kind of influence. I shall nonetheless conclude at the end that the patterns of influence we can observe have generally not been salutary for either religion or economics.
Foundationalists and Fundamentalists
Foundationalists in economics are people who believe that economic science can and should consist of clear and unambiguous axioms and hypotheses that jointly generate implications that can be checked against equally clear and unambiguous observations. Foundationalists revere the positive-normative distinction, and maintain that a science of economics can be constructed that is uncontaminated by policy preferences or any other kind of normative judgment and, it goes without saying, is impervious to influences emanating from religious belief.
Religious fundamentalists are equally interested in secure and solid foundations. They ground their religious beliefs and practices upon a few fundamentals that they take to be sufficiently clear, unambiguous, and certain that they cannot be affected by the discoveries of any science or other form of inquiry.
I reject both foundationalism and fundamentalism. I believe that we do not fully know what it is we know, why we believe it to be true, where we obtained our knowledge, or everything that this knowledge implies.1
Storytellers in Economics and Religion
Both economists and theologians attempt to persuade, and they usually do so most effectively by telling stories.
The traditional storyteller begins, “Once upon a time. . . .” The persuasive economist begins, “Let’s assume that. . . .” Economists tell stories about demand curves that slope downward to the right, about the process of capitalizing expected values, about the exploitation of comparative advantage, about exchanges based on attention to marginal values, about persons pursuing the projects that interest them in accordance with the accepted rules of the game and paying attention to the net advantages of alternative means as reflected largely in the price tags attached to those means and generated by the totality of social transactions. They tell all these stories with the intention of persuading others that an orderly and cooperative pattern lies beneath the seeming chaos and conflict of observed social transactions, and that discernment of this pattern enables one to predict the general consequences of contemplated policies.
The claim that Christians tell stories is more familiar. (And I am going to confine my attention, for reasons of both interest and competence, to Christianity and economics.) I shall not deal with the question, “Are they mere stories,” because I don’t think mere should be used in this context to modify stories. As a non-fundamentalist, I do not believe that religious faith amounts to the acceptance of certain facts as scientific history or that faith is created and nurtured by empirical or logical demonstrations. To put my position simply and only a little bit misleadingly: Religious faith is born and grows in those who find certain stories increasingly compelling.
The Question and an Approach
Are the stories that economists tell when they are doing economics ever influenced in important ways by the stories these same economists rehearse when they are engaged in religious practices? Are the religious narratives that economists hear and repeat ever modified by the stories they are accustomed to telling in their work as economists?
My views on all this are apparently idiosyncratic. Let me try to spell out the main conclusions in advance. It is generally admitted without much argument that conclusions about economic policy are affected by religious beliefs, because policy conclusions require value judgments and religious beliefs generate value judgments. I think it would be a good idea to admit less and argue more, for the nature of this influence is far from clear. It seems to me that Milton Friedman was quite correct when he hypothesized (in his influential essay on “The Methodology of Positive Economics”) that disagreements about economic policy are more often rooted in disagreements about how economic systems function than in conflicting value judgments. If this is the case, how, by what process, do religious narratives influence economic policy judgments? I shall argue that religious narratives affect economic policy preferences indirectly, through their influence on conceptions of how economic systems function. In other words, people use their theology to choose the economics to which they will subscribe.
The great danger in an inquiry of this kind is that it can easily degenerate into a debunking and name-calling operation, in which opinions with which one disagrees are “shown” to be dishonest in the sense that they were not derived from the sources alleged by the author, but from concealed and less authoritative sources. Charges are made that theological positions have been taken on the basis of an economic analysis, and that judgments about the operation of contemporary economic systems have been proffered on the basis of documents that do not address the issues because they were written centuries ago. One way to reduce this danger is to discuss writers whom one genuinely respects.
A Case Study
Herbert Schlossberg is a careful and competent student of economics and theology with whose writings I find myself in substantial agreement. He therefore provides an excellent illustration and test case for the thesis I shall advance.
Schlossberg argues that an economic science informed by un-Biblical or anti-Christian presuppositions will be unrealistic in its analysis and misleading in its prescriptions. In a discussion of “The Imperatives of Economic Development” he writes:
Christians will be able to act more constructively in this area only as we think in a way that is true to our own traditions and cease accepting uncritically ideas on development advanced by experts who disagree with the fundamentals of the Christian faith. Expertise is almost always mixed with value judgments based on worldviews. The experts give us information and recommendations produced not only by scientific investigation, but also by the beliefs of the investigators and by those who interpret their findings. Even if we use this information well, we may come to the wrong conclusions, because the “facts” on which we are relying may be dependent on false ideologies.2
I completely agree that expertise comes mixed with value judgments based on worldviews. But is it true that Christians should for this reason look more critically upon the economic analyses of experts who disagree with fundamentals of the Christian faith? Let us see how Schlossberg implements his own recommendation.
In two earlier chapters of the book from which I took the passage quoted above, Schlossberg examined the views on economic development of Gunnar Myrdal and Peter Bauer. In the chapter on Myrdal, he emphasizes the philosophical and ethical presuppositions which, by Myrdal’s ready admission, inform his work in economics. And he writes at the end of the chapter:
Rooted in assumptions that depart from the Biblical underpinnings of our civilization, Myrdal’s ideas carry over the moral fervor but none of the understandings that are necessary for bringing healthy vibrant economies into existence.3
But Schlossberg also presents criticisms of Myrdal’s work that would be regarded as highly relevant by any secular economist. He argues that Myrdal ignores important evidence, makes insufficient use of the analytical tools of economics, and contradicts himself. Which of these sets of criticism—the theological or the scientific—provides the most cogent reasons for a Christian to reject Myrdal’s analysis of economic development and nondevelopment?
Schlossberg’s own answer emerges implicitly in his evaluation of Peter Bauer’s work. After a strongly positive review of Bauer’s contributions to the study of economic development (in contrast with the sharply negative review of Myrdal’s work), Schlossberg concludes as follows:
A major reason for the difference [between Myrdal and Bauer] is that Bauer insists that the economic data have to be taken seriously, refusing to burden them with ideological baggage. As we would expect, his work is much less value-laden than Myrdal’s, but he does provide clues that tell us something of his values. He is critical, for example, of the single-minded pursuit of increased income. Per capita income is reduced by both births and medicines, but people like to have children and would prefer to have them remain alive. Bauer is not unhappy that children are valued, and he does not believe it justifiable for planners to violate religious and ethical convictions in order to raise income. But Bauer stops short of specifying what the values that inform policy ought to be. That leaves the reader uncertain as to his foundational assumptions. In a world of economists who often substitute ideology for evidence, from what source does Bauer’s empirical orientation derive? We do not know. Nor can we easily determine the philosophical filters through which the raw data are filtered.4
We do not know Bauer’s “foundational assumptions”! Why then does Schlossberg accept Bauer’s economic analysis and its policy implications? I submit that it is because he finds Bauer to be a good economist. Bauer respects the data and makes extensive and able use of the tools of economics. He also rejects such notions as that an increase in per capita GNP is desirable even if brought about by a high rate of infant mortality. But so would many other economists, and probably without any assist from specifically Christian or Biblical values. It is characteristic of economists to ground “welfare” in the choices of individuals. A very conventional and thoroughly non-Christian (not anti-Christian) argument asserts that if parents invest resources in trying to prevent the death of a child, they thereby reveal that the satisfactions obtained from the child exceed in value the satisfactions they will lose through a reduced per-capita income for the family. Their real income consequently declines when the child dies. A fixation on per-capita GNP as the relevant measure of welfare in a society is as much an indicator of mindlessness as of anti-Christian or un-Biblical values.
How Clear Are the Foundations?
A serious problem for anyone who asserts that economics ought to be based on Biblical or Christian “foundational assumptions” is the difficulty in determining just what these assumptions are. In what follows I have extracted from Schlossberg’s chapter on “Imperatives for Economic Development” four of the assumptions that he specifically mentions as relevant to understanding economic development, and have added my own critical observations.
1.The earth was created by a just and loving God, so that its resources arenot going to “run out” before their Creator intends. Schlossberg employs this assumption to oppose highly alarmist claims of an impending ecological crisis. But one could concede this assumption and go on to ask whether anyone knows the Creator’s timetable. Is this assumption a prescription for good stewardship, which Schlossberg takes it to be? Why could it not just as well be used as a proscription against any kind of planning for the future? Jesus does say, after all, that we are to “take no thought for tomorrow” but to trust God’s providence. I grew up in a denomination that once condemned life insurance as an un-Christian reliance on one’s own resources for the contingencies of the future. I am not persuaded that this stance was contrary to the New Testament.
2.God created us in His image, but this image is marred by sin. This assertion can be made to imply almost anything, depending on whether the person using it chooses to stress the image or the marring. Schlossberg uses it to reject certain forms of historical determinism in favor of personal autonomy and the power to choose. Moreover, he views markets as an instrument used by people to make their choices more effective. However, one could also deduce from this theological assumption, as some have indeed done, fundamental limitations on human freedom and a consequent necessity for extensive government regulation of the economy. Moreover, if the market is seen as limiting people’s freedom to choose (by curtailing their power, which is in fact one of the consequences of open markets), an emphasis on human freedom could prompt, at least among those with a poor understanding of how markets work, a decided “theological” hostility toward them.5
3.The Biblical message on economics is that we reap the consequences of what we sow. But is that not a very partial presentation of the Biblical message on the matter of reaping and sowing? Doesn’t the Bible also say that God sends rain on the just and the unjust? Does the doctrine of grace have no implications whatsoever for the Christian’s understanding of the economic system? Doesn’t the doctrine that we reap what we have sown encourage the proud belief that we can justify ourselves by our achievements?
4.Work, an orientation to the future, investment, saving and the control of consumption are essential ingredients in a healthy economic system and specified in the Bible as requirements for those who are to be faithful to God. In each case I would want to ask, How much is required? Work can be an idol, and for many people it is. The net thrust of the New Testament seems to me to be more toward a high rate than a low rate of time discount. The exhortation not to lay up treasure on earth where moth and rust corrupt should raise at least a few questions for dedicated investors. And the New Testament admonitions to be recklessly generous could well be used to modify substantially the saving directive that Schlossberg finds in the Bible. The rate of economic growth will almost certainly increase in a society where these imperatives begin to operate. But I am not convinced that they are altogether Christian or Biblical imperatives.
On the Irrelevance of Assumptions
What do “foundational assumptions” mean, after all? I find myself increasingly attracted in an unexpected way to Milton Friedman’s old “irrelevance of the assumptions” argument. Whatever its deficiencies, it contained an important insight: A lot of different structures can be built on any given set of foundations, and foundations inadequate for some purposes may be more than adequate for others.
For example, I do not accept some of the fundamental assumptions of F. A. Hayek. Nonetheless I find his analysis of markets and “spontaneous orders” passing almost every test to which I can put it: coherent, consistent with the evidence, applicable to a vast range of circumstances, predictive, explanatory, generative of new insights. On the other hand, the fundamental assumptions of Ronald Sider agree substantially with my own. The religious narratives he tells are by and large the narratives that I also recount. Nonetheless I reject his basic social analysis because it fares poorly on the tests that Hayek’s analysis passes so spectacularly.
The evidence shows, I think, that theological assumptions almost never carry implications for the economy that are sufficiently clear to resolve issues in controversy. The “clear implications” are discerned only by those who have already reached these conclusions by other means. In the case of those economist-theologians who are today insisting that Christianity lends moral support to capitalism, I maintain that they discovered the virtues of capitalism through the study of economics, and that the theological support they find in the Bible is in fact a product of their economic analysis.
This is almost as true of those who use the Bible to condemn capitalism and endorse socialism. I say almost because I believe that it is easier to turn an impartial and uncommitted person who is also ignorant of economics into a defender of socialism on the basis of the New Testament than into a defender of capitalism. I disagree strongly with those critics who claim that liberation theology owes everything to Marx and nothing to the New Testament. The conception of the church that informs the writings of most liberation theologians is deeply grounded in New Testament narratives.
At the same time I find totally unpersuasive the attempts of liberation theologians to deduce recommendations for the reorganization of secular economic systems from these theological insights. The New Testament contains no advice for the reform of the Roman Empire or contemporary economic systems. It is concerned for the life together of those who acknowledge Jesus as Lord, and its message to the outside world is an invitation to join that company. Law is in the realm of coercion. While the New Testament does not condemn coercion—it even refers to those who “bear the sword” as God’s own agents—its narratives certainly suggest that Christians will not be interested in exercising dominion over others.
Influence and Resistance
If I were asked to explain why so many Christian thinkers continue to prefer socialism to capitalism, I would say that their religious beliefs have led them to read anti-market economics too much and too uncritically and pro-market economics too little and too unsympathetically. The fundamental flaw in all the successive versions of the U.S. Catholic bishops’ so-called pastoral letter on the economy6 was its utter neglect of the pricing system. The authors of the letter had obviously not given any sustained thought to the coordinating functions of the price system in a modern economy characterized by extensive division of labor and continuous change. Why? Because economics of this sort provides no grist to their mill. Since there were plenty of economists not especially interested in microeconomics, they felt no obligation to study those who were. One of the great advantages possessed by those who enter a discussion without knowing its context is that they can employ weak arguments with a clear conscience.
A partial understanding of economics can in turn influence one’s way of interpreting religious narratives. This explains, for example, the regularity with which theologians on the left read “poor” and “oppressed” as synonyms. Their understanding of the way in which economic systems operate tends to attribute both wealth and poverty to oppressive acts and institutions.
I would offer a similar analysis if asked to explain the relationship between the economics and the theology of those who take positions in economics with which I agree. Michael Novak is a particularly instructive case, because in the early 1970s he was “converted” to a new set of economic stories. Did he undergo a roughly simultaneous religious conversion? The religious narratives that inform his 1969 book A Theology for Radical Politics7 are very different, it seems to me, from the religious narratives contributing to the “theology of the liberal society” that Novak sets forth in his 1986 book on liberation theology, Will It Liberate?8 What was cause and what was effect? Did new religious insights produce a new appreciation of democratic capitalism? Or did a new appreciation of democratic capitalism produce new religious insights? My reading of Novak pushes me strongly toward the latter hypothesis. The new economics is clear, concrete, and buttressed by examples. The new theology is vague, abstract, and filled with ambiguities.
A Confessional Interlude
Perhaps I am making the mistake of assuming that everyone else thinks as I do. I know that I have over my many years of learning and teaching economics developed numerous clear and concrete convictions about how economic systems work in practice and what can and, more importantly, cannot be done to improve their performance. And I have a library of detailed stories that I regularly tell to students in my efforts to persuade them to view social transactions through the economist’s spectacles. It is very hard indeed for any new religious insights to topple this structure of interlocking secular beliefs. Any religious insights that seem to challenge these beliefs will in the process find themselves challenged. And they will probably be reformulated so that they are not inconsistent with those secular beliefs that I find myself unable to deny. I am like a Christian biologist whose thought has been so thoroughly penetrated by the theory of evolution that he simply cannot read the book of Genesis in a way that rules this theory out.
My theological thinking has been deeply influenced over the last decade or so by the writings of John Howard Yoder. Under his influence I have learned to read the New Testament in a different way, and I have modified the stories I tell about God’s saving work in history, about community, and about mutual obligation. How has all of this affected my economics? That is a question I have frequently asked myself.
As I reflect on the evolution of my social analysis or “social science thinking” since I first encountered Yoder, it seems to me that the economic stories I tell have simply been far too persuasive (to me) to be altered by the religious narratives I now find compelling. The implications of these religious narratives for my economic understanding are vague and ambiguous, too uncertain to alter the clear implications of my economic stories. If Yoder has influenced my social analysis at all, it has been by pushing me further in directions I was already inclined to go. Thus the pacifist stance to which Yoder’s narratives bear witness supports the preference for uncoerced exchange that is rooted in my economics. Yoder’s animus toward all-encompassing systems that lead Christians to prefer intellectual consistency to a lived-out faithfulness nurtures the hostility toward general equilibrium analysis and macroeconomic fine-tuning that I have developed through my work as an economist. Yoder’s way of doing theology has even helped to persuade me that Donald McCloskey’s way of doing economics is sound.
I do not want to blame any of this on John Howard Yoder or build any sort of case for my economics on Yoder’s theology or any other theology. I have offered a report of influences that is intended as a confession—an instructive confession, I hope—not as an argument.
A Few Concluding Thoughts
Theological economists and economic theologians are much too ready, it seems to me, to declare that God is interested in this or that social project. I can’t help but wonder how they came to know God’s interests and why those alleged interests so closely resemble the interests of the theologian making the claim.
Most of us have a strong desire to “get it all together.” The academic mind in particular deplores incoherence and inconsistency, and I think this is a useful trait. We also love to be correct, however, to win arguments, to rise triumphant over those who disagree with us. And so we often welcome support wherever we find it. We also go looking for it sometimes in places where it should not be sought. An economist ought to ignore any and all support for his economic analyses that comes from people who are not competent in the field. The ethos of science declares firmly that truth is not established by indiscriminate headcounting, but by consensus among those who are entitled to hold opinions because they can uphold those opinions. An economist who quotes a theologian’s views on, let us say, the importance of human work in the Creator’s plans as a way of supporting his own views on the feasibility of fine-tuning is out of bounds.
Theology, at least as it is commonly practiced today, is much less methodologically restrictive than economics. The theologian whose avowed concern is “the whole of God’s creation” may even reject the very idea of disciplinary trespassing. A few caveats can nonetheless be registered. Invoking the name of God in support of one’s position on controverted public policy issues has the effect of polarizing discourse. The claim that I am correct because my position is morally superior pollutes public discourse by turning discussions into arguments and arguments into fights. In the community of believers, pushing controversial public policy positions on the basis of dubious theological arguments has the effect of excommunicating all those who have been persuaded by an alternative analysis.
Religious stories and economic stories will continue to influence one another. That cannot be prevented. But it does not have to be encouraged.
[* ] Unpublished typescript prepared for a Liberty Fund conference, “Christianity, Economics, and Liberty,” in Alexandria, Virginia, 16-19 January 1992. Reprinted by permission of Mrs. Juliana Heyne.
[1. ] John Stuart Mill, “On the Definition of Political Economy; and on the Method of Investigation Proper to It,” written in 1831, first published in 1836. Reprinted in Collected Works of John Stuart Mill, vol. IV (Toronto: University of Toronto Press, 1967), p. 321.
[2. ]Ibid., p. 322.
[3. ] Nassau Senior, An Outline of the Science of Political Economy, first published in 1836 (New York: Augustus M. Kelley, 1965), p. 26.
[4. ]Ibid., p. 27.
[7. ] Nassau Senior, Four Introductory Lectures on Political Economy, first published in 1852. Reprinted in Nassau Senior, Selected Writings on Economics (New York: Augustus M. Kelley, 1966), p. 62.
[8. ] David Ricardo, Works and Correspondence, edited by Piero Sraffa with the collaboration of M. H. Dobb, vol. VIII, p. 184. The letter is dated May 4, 1820.
[9. ] Amartya K. Sen, “Rational Fools: A Critique of the Behavioral Foundations of Economic Theory,” Philosophy and Public Affairs (Summer 1977), p. 325.
[10. ] See almost any issue between vol. 1, no. 1 (Summer 1987) and vol. 5, no. 1 (Winter 1991).
[11. ] Gary Becker, The Economic Approach to Human Behavior (Chicago: University of Chicago Press, 1976), p. 5.
[12. ] Robyn M. Dawes and Richard H. Thaler, “Anomalies: Cooperation,” Journal of Economic Perspectives, vol. 2, no. 3 (Summer 1988), p. 187.
[13. ]Ibid., pp. 188-96.
[14. ] Richard H. Thaler, “Anomalies: The Ultimatum Game,” Journal of Economic Perspectives, vol. 2, no. 4 (Fall 1988), pp. 195-206.
[15. ] Amos Tversky and Richard H. Thaler, “Anomalies: Preference Reversals,” Journal of Economic Perspectives, vol. 4, no. 2 (Spring 1990), p. 209. The Grether and Plott article appeared in American Economic Review, vol. 69 (September 1979), pp. 623-38.
[16. ] Daniel Kahneman, Jack L. Knetsch, and Richard H. Thaler, “Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias,” Journal of Economic Perspectives, vol. 5, no. 1 (Winter 1991), pp. 193-206.
[17. ] Robert H. Frank, Passions Within Reason: The Strategic Role of the Emotions (New York: W. W. Norton and Company, 1988).
[18. ] Robert H. Frank, “If Homo economicus Could Choose His Own Utility Function, Would He Want One with a Conscience?” American Economic Review, vol. 77, no. 4 (September 1987), pp. 593-604.
[19. ]Ibid., p. 593.
[20. ] Frank, Passions Within Reason, pp. 163-64.
[21. ]Ibid., passim, but especially pp. 163-64.
[22. ] Frank Hahn, “General Equilibrium Theory,” The Public Interest, special issue (1980), p. 123.
[23. ] Kenneth J. Arrow and F. H. Hahn, General Competitive Analysis (San Francisco: Holden-Day, 1971).
[24. ] Frank, Passions Within Reason, p. 186.
[25. ] Herman E. Daly and John B. Cobb, Jr., For the Common Good: Redirecting the Economy Toward Community, the Environment, and a Sustainable Future (Boston: Beacon Press, 1989), pp. 85-96, 159-60.
[26. ] “How selfish soever man may be supposed,” Smith says in beginning The Theory of Moral Sentiments, thus leading many who have read no farther to conclude falsely that Smith presupposed universal selfishness. Adam Smith, The Theory of Moral Sentiments, first published in 1759 (Indianapolis: Liberty Fund, 1982), p. 9. For a clear statement of the distinction Smith made between selfishness and self-love, see op. cit., p. 309.
[27. ] The locus classicus is book II, chapter III in The Wealth of Nations. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, first published in 1776 (Indianapolis: Liberty Fund, 1981), pp. 330-49.
[28. ]Ibid., pp. 341-42.
[29. ] Smith, The Theory of Moral Sentiments, pp. 50, 309-11.
[30. ] Smith, The Wealth of Nations, p. 687.
[31. ]Ibid., p. 654. Since I have never seen a listing of the passages in The Wealth of Nations from which a reader can extract Smith’s views on the nature of justice and injustice, I’ll supply one here. The first number refers to the page, the second to the section paragraph: 43, 10; 138, 12; 145, 27; 157, 59; 174, 32; 326, 100; 448, 32; 530, 16; 539, 39; 561, 15; 582, 44; 588, 59; 610, 53-54; 626, 80; 654, 30; 687, 51; 722, 25; 815, 3; 827, 7; 898, 64; 910, 7; 932, 64.
[32. ] Smith, The Theory of Moral Sentiments, pp. 179-87.
[33. ] Philip H. Wicksteed, The Common Sense of Political Economy, first published in 1910 (London: Routledge and Kegan Paul Limited, 1933).
[34. ]Ibid., vol. 1, p. 1.
[35. ]Ibid., pp. 93-94.
[36. ]Ibid., pp. 79-80.
[37. ]Ibid., p. 153.
[38. ]Ibid., p. 156.
[39. ]Ibid., p. 163.
[40. ]Ibid., p. 40.
[41. ] Richard Whately, Introductory Lectures on Political Economy, delivered in 1831, 2d ed. (New York: Augustus M. Kelley, 1966), pp. 4-10.
[42. ] Smith, The Wealth of Nations, p. 37.
[43. ] Wicksteed, op. cit., p. 140.
[44. ]Ibid., p. 167.
[45. ]Ibid., p. 169.
[46. ]Ibid., pp. 170-71.
[47. ]Ibid., p. 173.
[49. ]Ibid., p. 174.
[50. ]Ibid., p. 180.
[51. ]Ibid., p. 179.
[52. ]Ibid., pp. 180-81.
[53. ]Ibid., p. 182.
[54. ]Ibid., p. 191.
[55. ]Ibid., pp. 191-92.
[56. ] The translation used is the Revised Standard Version.
[57. ] For a cogent presentation of this position, see Gerhard Lohfink, Jesus and Community, translated by John P. Galvin from Wie hat Jesus Gemeinde gewollt?, published in 1982 (Philadelphia: Fortress Press, 1984).
[58. ] See Thomas J. Lewis, “Acquisition and Anxiety: Aristotle’s Case Against the Market,” Canadian Journal of Economics, vol. XI, no. 1 (February 1978), pp. 69-90.
[59. ] Robert N. Bellah, Richard Madsen, William M. Sullivan, Ann Swidler, and Steven M. Tipton, “Taming the Savage Market,” The Christian Century (September 18-25, 1991), pp. 844-49.
[60. ] Robert N. Bellah, “The Triumph of Capitalism—or the Rise of Market Totalitarianism?” New Oxford Review (March 1991), pp. 8-15.
[61. ]Ibid., pp. 10-11.
[62. ] Albert O. Hirschman, Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States (Cambridge, Mass.: Harvard University Press, 1970).
[63. ] See for example Glenn Tinder, “An Innocent Proposal,” in The Christian Century (October 2, 1991), pp. 885-88, and the first part of “Disunited States” by Alan Ryan in The New Republic (November 4, 1991), pp. 28-30.
[64. ]On the Hundredth Anniversary of Rerum Novarum: Centesimus Annus (Washington: United States Catholic Conference, 1991), p. 71. Emphasis in original.
[65. ]Ibid., chapter I, “Characteristics of Rerum Novarum,” pp. 8-24.
[66. ]Ibid., pp. 78, 93-94.
[67. ]Ibid., p. 41.
[68. ] There is a chronic tendency for writers in the older Roman Catholic tradition to caricature liberalism in order to avoid dealing with it. For a recent example, see Francis Canavan, “The Popes and the Economy,” First Things, no. 16 (October 1991), pp. 35-41.
[69. ] The quotations are from Smith, The Theory of Moral Sentiments, pp. 233-34.
[70. ] Smith, The Wealth of Nations, pp. 788-814.
[* ] Unpublished typescript, reprinted by permission of Mrs. Juliana Heyne.
[1. ] For a widely publicized recent example, see Bishops’ Pastoral on Catholic Social Teaching and the U.S. Economy, released on November 11, 1984, and second draft, released October 7, 1985.
[2. ] For example, why was Charles K. Wilber, co-author of a recent book titled An Inquiry into the Poverty of Economics (University of Notre Dame Press, 1983), the only professional economist among the consultants to the Ad Hoc Committee on Catholic Social Teaching and the U.S. Economy?
[3. ] Kenneth E. Boulding, The Organizational Revolution: A Study in the Ethics of Economic Organization (Harper, 1953), p. 245.
[4. ] Milton Friedman, “The Methodology of Positive Economics,” in Essays in Positive Economics (University of Chicago Press, 1953), p. 5.
[5. ] Thomas Kuhn, The Structure of Scientific Revolutions (University of Chicago Press, 1962).
[6. ] Theologian J. Philip Wogaman, for example, has tried to describe the ideology that he thinks informs each of the principal schools to be found in contemporary economics, and then to criticize the economics by assessing the ideology. See J. Philip Wogaman, The Great Economic Debate: An Ethical Analysis (Westminster Press, 1977).
[7. ] Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, book I, chapter II, pp. 26-27 in the Glasgow Edition of the Works and Correspondence of Adam Smith (Oxford University Press, 1976; Liberty Fund, 1981).
[8. ]Ibid., book IV, chapter II, p. 456.
[10. ] Economists who intend no particular criticism of Smith persist in stating that his analysis presupposes universal selfishness, an inaccurate assertion that rouses immediate moral objections among many people. For example, the eminent British theorist Frank Hahn, in writing a layperson’s account of general equilibrium theory in economics, begins with Adam Smith. He says that Smith tried to explain how order rather than chaos emerged from the actions of “millions of greedy, self-seeking individuals.” Frank Hahn, “General Equilibrium Theory,” The Public Interest (Special Issue, 1980), p. 123. A new book by an economist appraising the market system asserts on the second page: “Adam Smith claimed that nothing more than selfishness is necessary for society to achieve optimal social outcomes.” Andrew Schotter, Free Market Economics: A Critical Appraisal (St. Martin’s Press, 1985), p. 2. Emphasis added in both quotations.
[11. ] F. A. Hayek recommends this way of characterizing the Smithian actor, and points out that freedom to pursue one’s own purposes is as important to the altruist as it is to the egotist. Friedrich A. Hayek, Law, Legislation and Liberty, volume I: Rules and Order (University of Chicago Press, 1973), pp. 55-56.
[12. ] The quotations are all from Adam Smith, op. cit., book II, chapter III. The core of Smith’s argument is presented in pp. 337-46.
[13. ] Smith differed from many of his contemporaries in the great importance he assigned to “improvement in the circumstances of the lower ranks of the people.” Ibid., book I, chapter VIII, p. 96.
[14. ] This summary of Smith’s views is based primarily on arguments presented in The Theory of Moral Sentiments, especially part I, section III, chapter II and part VII, section II, chapter IV. See pp. 50-58 and 306-14 in the Glasgow Edition (Oxford University Press, 1976; Liberty Fund, 1982).
[15. ] Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, book IV, chapter IX, p. 687.
[16. ]Ibid., book IV, chapter VIII, p. 654.
[17. ] A vast and instructive literature on the importance to economic processes of clearly-defined rights and obligations has grown up in the past quarter century. The seminal article is Ronald H. Coase, “The Problem of Social Cost,” Journal of Law and Economics, Vol. III (October 1960): 1-44.
[18. ] In France and England, writers could refer without explanation to “the science of political economy” by 1803 or 1804. For instances, see J. B. Say, Traité d’économie politique (1803), J. C. L. Simonde de Sismondi, De la richesse commerciale: Ou, principes d’économie politique (1803), and James Maitland, Lord Lauderdale, An Inquiry into the Nature and Origin of Public Wealth (1804).
[19. ] Thus Karl Polanyi properly (but not consistently) exempts Adam Smith from much of the indictment he levels against the classical political economists for transforming Aristotle’s zoon politikon into Homo economicus. See Primitive, Archaic and Modern Economies: Essays of Karl Polanyi, edited by George Dalton (Doubleday Anchor, 1968), pp. 127-29.
[20. ] T. W. Hutchison, “James Mill and Ricardian Economics: A Methodological Revolution?” in Hutchison, On Revolutions and Progress in Economic Knowledge (Cambridge University Press, 1978).
[21. ] See the methodological discussions at the beginning of Ludwig von Mises, Human Action: A Treatise on Economics (Yale University Press, 1949).
[22. ] The definitive exposition of the doctrine is the essay by Milton Friedman cited in note 4 above. Though identified particularly with the “Chicago School,” the doctrine has had a wide influence on economists’ methodological pronouncements.
[23. ] The deficiencies of the doctrine have often been pointed out, but seldom more concisely and cogently than by Ronald H. Coase in his lecture How Should Economists Choose? (American Enterprise Institute, 1982).
[24. ] The classic text is Mancur Olson, The Logic of Collective Action (Harvard University Press, 1965).
[* ] Reprinted from This World 20 (Winter 1988): 26-39, by permission of the publisher and Mrs. Juliana Heyne.
[1. ] A single illustration may be more effective than an attempt at documentation. Between January 1983 and October 1985, four vastly different visions of the economic order were published, all by committees of eminent Roman Catholics in North America: The Episcopal Commission for Social Affairs of the Canadian Conference of Catholic Bishops, Ethical Reflections on the Economic Crisis (Ottawa, January 5, 1983); Lay Commission on Catholic Social Teaching and the U.S. Economy, Toward the Future (New York, 1984); U.S. Bishops Ad Hoc Committee on Catholic Social Teaching and the U.S. Economy, First Draft: Pastoral Letter (Washington, D.C., 1984); and from the same committee, Second Draft: Pastoral Letter (Washington, D.C., 1985). The differences between the two drafts of the U.S. bishops’ pastoral are quite striking. Between the ethical reflections of the Canadian bishops and those of the U.S. lay committee that drafted Toward the Future, so great a gulf is fixed that none can pass.
[2. ]Second Draft: Pastoral Letter, para. 142.
[3. ] This description is harsh; but I think it is accurate. The text overwhelms the reader with citations from authorities—three Biblical references, for example, to buttress the claim that God is the creator of heaven and earth (para. 37), and no fewer than six books, cited in their entirety, without specific page references, to support the contention that “[i]n Luke Jesus lives as a poor man, and like the prophets takes the side of the poor, and warns of the dangers of wealth” (para. 56). Statements with no clear meaning abound, such as: “Basic justice demands the establishment of minimum levels of participation in the life of the human community for all persons” (para. 81). A good example of an assertion the bishops surely cannot intend seriously is that not only individuals but also the nation should make an “option for the poor,” so that “justice for all” requires “privileged claims” for some, namely, “those who are marginalized” (para. 89).
[4. ] I have discussed the pastoral letters on the economy with many people since the appearance of the first draft. Some strongly favored the pastoral, some were staunchly opposed. But I have spoken with only one person who admits to having read any of the drafts all the way through.
[5. ]Second Draft: Pastoral Letter, para. 34.
[6. ]Ibid., para. 133.
[7. ] For a carefully reasoned criticism of attempts to construct a Christian ethics that is grounded in universal moral principles, see Stanley Hauerwas, The Peaceable Kingdom (Notre Dame, 1983), pp. 1-2, 12-13, 17-18, 22-23. Hauerwas has written what he himself called a “broadside attack” on the methodology of all such documents: “Work as Co-Creation: A Remarkably Bad Idea,” This World (Fall 1982), pp. 89-102.
[8. ] A large part of the problem is that the political pronouncements of ecclesiastical groups usually have to be written by committees, and committees inevitably blur the issues they discuss. Any useful attempt to integrate religious conviction and economic understanding will be written by an individual, not a commission. But even such an excellent and still useful study as Denys Munby’s Christianity and Economic Problems (London, 1956) moves on a very high level of abstraction when it tries to articulate theological-ethical foundations. Munby wants to set out “certain principles which . . . would probably be accepted by most Christians” that are “the true principles of human nature in society, which form the basis of a Christian approach to social problems.” Op. cit., p. 33. But the principles he explicates, dealing with “Man and the Material World,” “Man and Nature,” “Man and Property,” “Human Societies,” and “The State,” yield no clear implications. They are vague, sensible, and not peculiarly Christian. In a revealing last paragraph to the chapter on “Christian Ethics and Human Society,” Munby writes: “The social principles are general, their application is unsure, they provide no certain guide to a changing world. But they are not entirely useless. And if we can sum them up in any way, it is in the phrase, ‘People matter’. . . and matter . . . because God made them and saved them.” Op. cit., p. 39. But “People matter” is a mere slogan that no one will deny and that leaves every disputed issue as open as it was before; and the reason given for why they matter makes the assertion religious, but adds nothing to its implications for understanding or ordering economic life.
[9. ] How could this be avoided, even by people determined to avoid it, when the group has no basis for asking to be heard except an alleged superiority of moral insight? And those who draft such documents don’t always make an effort to avoid it. The second paragraph of the U.S. Catholic bishops’ pastoral letter says: “We approach this task as pastors and teachers of the gospel. . . . The ministry of the Church has given it firsthand knowledge of the hopes and struggles of many groups and classes of people, both in this country and throughout the world.” There is much more with this tone.
[10. ] Alfred Marshall, Principles of Economics, ninth (variorum) edition (New York, 1961), p. 1.
[11. ] A Supplement to the Oxford English Dictionary, vol. I (Oxford, 1972), p. 905.
[12. ] Donald Snygg, “The Psychological Basis of Human Values,” in A. Dudley Ward, ed., Goals of Economic Life (New York, 1953), pp. 335-64. This is one of fifteen essays in the first volume of the series on ethics and economic life produced by a study committee established after World War II by the Federal Council of Churches. I cite the essay here because it perceptively undercuts a great deal of casual commentary on “economic man,” and also to remind readers that valuable thinking about religion, ethics, and economics was done long prior to the current surge of church pronouncements.
[13. ] Marshall, op. cit., pp. 14-15.
[14. ] Among the major discoverers were Bernard Mandeville, Richard Cantillon, A. R. J. Turgot, and a number of participants in the Scottish Enlightenment, including David Hume, Adam Ferguson, and, of course Adam Smith.
[15. ] I have found no clear instance prior to 1803 of a writer’s using the term “political economy” to refer to the science which contemporary economics continues and with whose founding Adam Smith is identified. In the writings of Smith and every other eighteenth-century English or French writer with whom I am familiar, “political economy” means what its etymology suggests: the art or science of managing the political household. The term shifts its meaning suddenly and decisively at the beginning of the nineteenth century, with the discovery that an oikonomia did not necessarily require an oikonomos, and might even function more effectively without one. The one place in The Wealth of Nations where Smith may be using the term “political economy” in its nineteenth-century sense is in his discussion of the Physiocrats, where he refers to it as a “very important science.” But elsewhere in the same discussion he also uses the term in a way that clearly makes it refer to the art or science of governing the state. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Indianapolis, 1981). Compare the uses of the term on pp. 678 and 679, which may convey the later sense, with his reference on p. 675 to “a political economy . . . both partial and oppressive,” which is clearly the eighteenth-century sense.
[16. ] I have discussed the misunderstandings that arise between economists and theologians around this issue, with special reference to Adam Smith’s views, in Paul Heyne, Economic Scientists and Skeptical Theologians, Occasional Report No. 1, Economic Education for Clergy, Inc. (Washington, D.C., 1985), pp. 3-6.
[17. ] Carlyle complained that cash payment had become the sole nexus of man to man in Chartism (Boston, 1840), pp. 58, 61. Marx and Engels refer to “the cash nexus” in the first section of The Communist Manifesto (1848).
[18. ] Denys Munby quotes the “cash nexus” passage from The Communist Manifesto and then comments: “Christians have usually cheered the Marxists at this point. But might we not turn this upside down and assert that it is precisely the glory of modern society to free men from the crushing burden of these so-called ‘idyllic relations,’ and to limit the impositions of men on each other to ‘callous cash payment’?” Denys Munby, The Idea of a Secular Society and Its Significance for Christians (London, 1963), pp. 23-24.
[19. ] F. A. Hayek constructed the arguments of the second volume of Law, Legislation and Liberty in large part as a response to just such religiously-based objections to “the discipline of abstract rules.” F. A. Hayek, Law, Legislation and Liberty. vol. II: The Mirage of Social Justice (Chicago, 1976), pp. xi-xii, 135-36.
[20. ] I use the etymology for dramatic effect, not to prove a point. I have no idea whether the history of the English words would support my argument.
[21. ] Donald McCloskey has done much in the last few years to make this approach more acceptable, or at least more familiar, in the economics profession. McCloskey, “The Rhetoric of Economics,” Journal of Economic Literature (June 1983), pp. 481-517. The argument is more fully presented in the author’s book with the same title (Madison, Wisc., 1985). For some evidence on the degree of its acceptance, see the review of two recent books of readings on the methodology of economics by Arjo Klamer in Economics and Philosophy (October 1985), pp. 342-49. These arguments are in part a recovery of important work done in the 1940s and 1950s by Michael Polanyi and incorporated in his Personal Knowledge (Chicago, 1958).
[22. ] J. Philip Wogaman, The Great Economic Debate: An Ethical Analysis (Philadelphia, 1977). In this book, widely used in the United States, I am told, in seminary courses on economics and ethics, Wogaman exposes what he sees as the ideological foundations of the major schools of economic analysis. It isn’t particularly relevant that his outsider’s understanding of economics leads him to set up straw men. The point is that he has helped convince moral theologians who deal with economists that economists have a hidden ethical-political agenda.
[23. ] The basic history is recounted with his usual scholarly care by T. W. Hutchison in “Positive” Economics and Policy Objectives (Cambridge, Mass., 1964), pp. 13-50.
[24. ] Sidney S. Alexander, “Human Values and Economists’ Values,” in Sidney Hook, ed., Human Values and Economic Policy (New York, 1967), p. 102.
[25. ] Any economists who want to invoke the is-ought dichotomy to support their use of the positive-normative distinction should at least read Stuart Hampshire, “Fallacies in Moral Philosophy,” Mind (October 1949), pp. 466-82, and Alasdair MacIntyre, “Hume on ‘Is’ and ‘Ought,’ ” The Philosophical Review (1959), pp. 451-68.
[26. ] That it does not in fact speak authoritatively about efficiency has been demonstrated many times in recent years by legal scholars seeking to contain the imperialistic advances of economics into law. One of the best demonstrations is by an economist: Mario J. Rizzo, “The Mirage of Efficiency,” Hostra Law Review (Spring 1980), pp. 641-58. The basic criticism is that efficiency is a ratio of valuations and that valuations presuppose rights to value and hence an existing set of property rights.
[27. ] Economists seem usually to assume that an ethical judgment about economic phenomena can only be a judgment about states of affairs. It rarely occurs to them that most of our moral judgments, when we are engaged in serious moral discussions, refer to processes. When economists use their analytical tools and skills to elaborate the processes through which particular situations emerge or that evolve out of particular situations, they regularly generate material that lends itself quite readily to evaluation by reference to the accepted moral criteria of those to whom the economists are speaking. See Paul Heyne, “Between Sterility and Dogmatism: The Morality of the Market and the Task of the Economics Teacher,” Journal of Private Enterprise (Fall 1986), pp. 14-19.
[28. ] Acts 2:42-47. The translation is that of the New English Bible.
[29. ] Matthew 19:23-26; Mark 10:23-27; Luke 18:24-27.
[30. ] Compare I Peter 2:11-3:17 with Romans 12:1-13:10.
[31. ] Frank Knight is one thinker who has argued strenuously for the essential incompatibility of the Christian and the liberal-democratic ethos. His most complete statement of the case is in Frank H. Knight and Thornton Merriam, The Economic Order and Religion (Westport, Connecticut, 1979; original publication in 1945). Richard John Neuhaus offers a very different sort of argument in Christianity and Democracy (Washington, D.C., 1981). For another position by a Christian that contrasts sharply with Neuhaus, see John Howard Yoder, “The Christian Case for Democracy,” in Yoder, The Priestly Kingdom (Notre Dame, 1984), pp. 151-71.
[* ] Unpublished typescript of paper presented to the Southern Economic Association session on “The Influence of Religion on Economics (and Vice Versa),” 18 November 1990. Reprinted by permission of Mrs. Juliana Heyne.
[1. ] Michael Polanyi’s Personal Knowledge (Chicago: University of Chicago Press, 1958) contains most of what I would want to say if asked to spell out my epistemological position. For a fuller understanding of the epistemology that informs this paper, or a clearer target for those who want to shoot down my arguments, consult the varied writings on the rhetoric of economics of Donald McCloskey, whose positions I almost always find insightful and persuasive. His basic book is The Rhetoric of Economics (Madison, Wis.: University of Wisconsin Press, 1985).
[2. ] In Freedom, Justice, and Hope: Toward a Strategy for the Poor and Oppressed, ed. Marvin Olasky (1988), p. 99.
[3. ]Ibid., pp. 62-63.
[4. ]Ibid., p. 98.
[5. ] As seems to have occurred in Economic Justice for All (1986), the Roman Catholic Bishops’ analysis of the U.S. economy. See, for example, paragraph 96.
[6. ] National Conference of Catholic Bishops, Ad Hoc Committee on Catholic Social Teaching and the U.S. Economy, Pastoral Letter on Catholic Social Teaching and the U.S. Economy, November 11, 1984, 1st draft (Washington, D.C.: United States Catholic Conference, 1984).
[7. ] New York: Herder and Herder.
[8. ] New York: Paulist Press.