The Online Library of Liberty

A project of Liberty Fund, Inc.

• Introduction
• Part 1: Economics and Ethics
• Chapter 1: Are Economists Basically Immoral? *
• Chapter 2: Economics and Ethics: the Problem of Dialogue *
• Chapter 3: Income and Ethics In the Market System *
• Part 2: Economics and Theology
• Chapter 4: Can Homo Economicus Be Christian? *
• Chapter 5: Economic Scientists and Skeptical Theologians *
• Chapter 6: Christian Theological Perspectives On the Economy *
• Chapter 7: Controlling Stories: On the Mutual Influence of Religious Narratives and Economic Explanations *
• Part 3: Economics, Theology, and Justice
• Chapter 8: Justice, Natural Law, and Reformation Theology *
• Chapter 9: The Concept of Economic Justice In Religious Discussion *
• Chapter 10: The U.s. Catholic Bishops and the Pursuit of Justice *
• Part 4: Economics and History
• Chapter 12: Christian Social Thought and the Origination of the Economic Order *
• Chapter 13: Clerical Laissez-faire: a Case Study In Theological Ethics *
• Part 5: On Teaching and Learning
• Chapter 14: “the Nature of Man”: What Are We After? *
• Chapter 15: Researchers and Degree Purchasers *
• Part 6: Teaching Economics
• Chapter 16: Economics Is a Way of Thinking *
• Chapter 17: Teaching Introductory Economics *
• Chapter 18: Teaching Economics By Telling Stories *
• Chapter 19: Between Sterility and Dogmatism *
• Part 7: Economic Method
• Chapter 20: Ethics On the Road to Serfdom and Beyond *
• Chapter 21: Measures of Wealth and Assumptions of Right: an Inquiry *
• Chapter 22: The Foundations of Law and Economics: Can the Blind Lead the Blind? *
• Part 8: Policy Commentary
• Chapter 23: What Is the Responsibility of Business Under Democratic Capitalism? *
• Chapter 25: An Economic Perspective On Illegal Drugs *
• Chapter 26: Economics, Ethics, and Ecology *

CHAPTER 4

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.

I.

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

Then he added this caution:

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:

Those unsatisfied desires, moreover, are as varied as human character.

The only object universally desired, according to Senior, was money, because money is “abstract wealth,” something whose possessor

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,

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

Contemporary Methodology

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

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:

This is very similar to Gary Becker’s well-known and forcefully defended summary of “the economic approach to human behavior”:

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:

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 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,

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:

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.

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:

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:

Here is Wicksteed applying marginal principles to the spiritual life:

Will money buy happiness?

Are human desires insatiable?

Are people motivated solely by the desire to possess wealth?

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”:

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

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

The economic relation, Wicksteed argues, liberates people

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.

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 bit later he notes:

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.

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.

II.

Homo Economicus Among the Christians

It may be the case that Christians make excellent citizens. The First Letter of Peter urges Christians to

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:

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:

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:

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.

[* ] 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.

[5. ]Ibid.

[6. ]Ibid.

[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.

[48. ]Ibid.

[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.