The central assumption underlying all of Liberal Economic Thought (in contrast to Catholic Economic Thought) is greed. Now Economic Liberals (“E Libs”) do not always use that word; they may call it “profit motive” or “self-interest” or “wealth maximization,” but all of these terms boil down to the same thing.
More clever E Libs will mask this principle by saying that it is only valid within the economic “framework.” Once wealth is generated morality may have something to say about what one does with it; but within the analysis of the process of production, profit maximization is the supreme criterion for evaluating economic choices: which alternative generates more wealth is the key to choosing human action (even if some concede that morality can put demands on the further use of this wealth). All other considerations eventually distill to this sole criterion.
Social responsibility, charitable giving, concern for the safety of workers and other values may be considered by E Libs but only after maximum profit or wealth maximization is attained. A decision to donate computers to a school is justified for a board of directors only to the extent the enterprise hopes to derive at some point a greater amount of wealth than expended in the donation through advertising or customer good will. This is why participants in a system controlled and ruled by Liberal Economic thought may be decent people, men who want to make moral choices, but their philosophy precludes the “intrusion” of such morals into the decisions of a business enterprise, wherein the generation of profit is the complete good to be sought.
This move exempts E Libs from the Moral (Divine and Natural) Law’s requirements of justice and fairness. Again, some E Libs make exceptions for a few egregious offenses against the Natural Law such as fraud and violence. Yet, Man is subject to the entire Divine and Natural Law. We are not free to pick and choose which norms to observe and which to leave outside of our artificial “framework.”
Now, one with a sensus Catholicus likely knows this philosophy is flawed. We will explore Catholic Economic Doctrine to see exactly why it is flawed.
As St. Thomas, relying on Aristotle, teaches: Man acts in accordance with ends. We choose actions that, in light of all the relevant facts, appear to attain a particular end. Some ends are incomplete; they do not perfect all of the aspects of Man’s nature. Some ends are more complete; they encompass more aspects of Man’s nature. The ultimate or most complete end of Man is eternal salvation; the beatific vision. In attaining this end, Man’s nature is perfected. Below this perfect end are other necessary ends which must be pursued in order to make the perfect end attainable. The highest natural end is the living of a virtuous life in peaceable society. Below this complete natural end, the creation of sufficient temporal wealth is one of the incomplete ends comprising it.
In order to come to know, love and serve God and live well with our neighbor in this world so as to attain his ultimate end—happiness in heaven—Man must satisfy the physical needs of his bodily nature. The satisfaction of human temporal needs provided by wealth is therefore one of the ends towards which Man’s nature, and hence Natural Law, direct him.
Yet, we cannot lose sight of the fact that this end is only intermediate, incomplete. Wealth or profit is not a final end in and of itself; it is a means to other ends and as such must be morally evaluated as a means. It must therefore be limited to the extent it conforms to the ultimate natural and supernatural ends of Man.
We see here that the E Lib’s fatal error is that he makes of an incomplete end the complete criterion of decision, within a “framework” he arbitrarily uses to insulate economic activity from the same degree of moral scrutiny that governs other human activity.
The effect of doing so is that the attainment of wealth becomes infinite. When an incomplete end is treated as a complete end it is distorted, and the proper orientation of Man towards his true end is obscured. This is why Man is required to place limits on the increase of wealth as a criterion of economic decision-making, just as he must place due limits on his concupiscent appetite.
The Pursuit of Wealth
The desire for wealth, much like the desire for other things, is not bad in and of itself but it needs to be constrained. The generation of wealth, according to Catholic Economic Thought, must be placed under constraint just as the desires of concupiscence must be subjected to Reason. Henry of Hesse explains it thus: “Whoever has enough for these things [to sustain oneself, to perform pious works, to make reasonable provision for future emergencies, or to support offspring] but still works incessantly to gain riches or a higher social status, or so that later he may live without working, or so that his sons may be rich and great—all such are driven by damnable avarice, physical pleasure and pride.”1
To possess enough for all this and still desire more exceeds the bounds of prudence. So, constraints on the desire for wealth are not excessive but rather very prudent. There is an outer limit to acquisitiveness. St. Bernard agrees with this conclusion: “In themselves, as regards man’s Spiritual welfare, they [riches] are neither good nor bad, yet the use of them is good, the abuse is bad; anxiety about them is worse; the greed of gain still more disgraceful.”2 The proper use of wealth is virtuous; its abuse—the greed of gain—is vice.
Yet Liberal Economic Philosophy says any choice which increases net wealth is a good choice; the principle acknowledges no limit. The profit motive in the E Lib’s philosophy cannot accept the limit defended in Catholic Economic Philosophy. Profit is always good and more profit is always better—again, within the “framework” that E Lib’s use to exempt “economics” from full moral scrutiny, while protesting that outside the “framework” capitalists can be moral and generous people when it comes to deciding how they will use their wealth.
St. Thomas uses an image from nature to demonstrate how being properly solicitous for temporal goods means holding such desire in its proper constraint–a befitting time. “The ant is solicitous at a befitting time, and it is this that is proposed for our example. Due foresight of the future belongs to prudence. But it would be an inordinate foresight or solicitude about the future, if a man were to seek temporal things, to which the terms ‘past’ and ‘future’ apply, as ends, or if he were to seek them in excess of the needs of the present life, or if he were to forestall the time for solicitude.”3 We may seek profits, but doing so in excess is, like being irresponsible about them (forestalling the time for solicitude), a vice.
Moral Restraint vs. Government Interference
Before proceeding in this argument I must pause to clarify that recognizing a necessary moral restraint on the profit motive is not analogous to asserting that the government must impose this restraint in all circumstances. The question of what is the appropriate balance among the Church’s public law, local government, national government and personal restraint as directed by a confessor is a question about the appropriate means. This is a large topic in itself; for centuries and in light of differing circumstances the balance among the internal forum (confession) and the various external fora (civil and ecclesiastical courts) has gone on and will continue.
Yet, proponents of Economic Liberalism often attempt to confuse the issue by raising this topic as a red herring. They conflate the argument that morality requires this restraint with the advocacy of a totalitarian police state. E Libs in doing so avoid having to argue the real issue: the profit principle cannot be the sole criterion of evaluating the justice and morality of economic choices.
Returning to the necessary restraint, recall the other ends of Man’s existence. What are these other ends? They are none other than the supernatural and natural ends of Man. Thus, for example, living justly or rendering to others their due is an end of the social nature of man. Justice is one of the cardinal virtues Man must strive to perfect on his path to the complete end. Thus, it is illicit to obtain profit by use of means that violate commutative justice (which includes more than fraud). Liberal Economic Thought rejects this constraint. This is to say nothing of the Divine Law in light of which Man’s actions must be judged.
The Catholic E Lib Tom Woods has argued “economics is a science whose purpose is to employ human reason to discover how man’s ends can be reached. What those ends should be is a matter for theology and moral philosophy to decide.”4 Whatever most efficiently gets us to the chosen end is the right economic choice. Yet, Catholic morality does not permit ambivalence about means. Even if one’s ends are good (as determined by theology and moral philosophy, as Tom would say), the means chosen must also be morally just. Thus, to claim that economics is merely the science of “means” is defective argument. The choice of means is not morally neutral. Means have moral implications.
A typical E Lib argument is that a low wage (one below the intrinsic value of the work performed for that wage) is acceptable if the free market will bear such wage (due to a large number of unemployed workers for example).5 It is argued that even the worker paid an unjust wage is better off in the end because the profit made by the employer increases overall wealth for society, or to put it in a favorite expression of E Libs, a rising tide raises all boats.
Conceding for the moment that this assertion is actually true (despite it being counterintuitive) Catholic Economic Thought prohibits paying an unjust wage as a means to this end. Even if more wealth is created for the economy or more people have jobs, if this end is achieved by a violation of justice, this end cannot justify an unjust means. A worker has been paid less than the value of the work performed. Society may have more wealth but the end of Man called justice has been violated by the use of an unjust means. So economics is “value free”6 simply because it refuses to consider the moral values that restrain making use of unjust means.
Now the reason E Libs cannot see the ends justifying the means error is that they assert that economic actions are amoral–have no moral implications. Tom Woods, for example, says “absolutely nothing in the body of economic law derived through praexology involves normative claims” and “it is absolutely senseless to argue that … economic law should be subordinate to moral law.” Tom asserts this based on an understanding of economics as merely the study of human action to discover independent natural laws or operations.7 Since these laws are part of “nature” they are not moral or immoral; they just exist. He even compares economic laws to the law of gravity.8 The fatal flaw in this thinking is that all human actions involve choice. Human actions are not like gravity, pre-determined and independently operating. Choices always have moral implications; they are either morally licit or illicit choices. Tom is right, economics involves the study of human actions. Yet, unlike the study of naturally existing gravity, all chosen human acts have moral implications and Natural and Divine restraints.
Take one of Wood’s favorite examples of an “economic law” akin in his mind to gravity: supply/demand price relationships.9 When supply goes down or demand goes up, prices go up. He asserts that empirically this can be observed and therefore the movement of prices up as supply declines or demand increases is morally neutral; it just happens by force of an economic “law of nature.” This assertion is false. Prices are not autonomous forces independent of human choice. Prices go up because people choose to increase them.
Now, it may be true that since the dawning of the Liberal Age people raise prices in these contexts because they believe, erroneously, that they have no choice: “Since prices always rise with supply decreases, I have to raise my prices.” In a Catholic Age, however, when people were not drunk with the propaganda of Economic Liberalism, this was not the normal reaction. The causes, nature and duration of the supply shortage, or demand increase, had to be considered before a guild, or a public authority, or a father confessor would permit a merchant to increase prices. Thus, prices could be altered, but only if there existed a morally licit reason to do so, such as a sustained increase in the cost of transportation of the goods.
Further, unlike Liberal Economics as defended by Tom Woods, Catholic Economics holds it morally impermissible to increase prices due to a particular need of a buyer of goods or services. St. Thomas teaches that it is unjust for a seller to charge more because a buyer is in particular need of a good.10
To use another example offered by Woods,11 if a crisis such as the terrorist attacks in New York were to occur and people were deprived of their homes, is it just to increase the cost of a hotel room by 185% simply because more people want rooms? Woods answers in the affirmative, claiming that allowing this sort of price-gouging is a good thing because it allows the resource—the room—to go to the person who values that resource the most. Actually it allows the room to go to those with the most wealth, who may or may not be the ones who value the room the most. A person of modest means who has no other place to find shelter for his family may place a greater value on the room than a millionaire who just does not want to spend a night with his in-laws. The difference is the man of moderate means has less wealth with which to express his greater value of the room.
Tom raises a red herring at this point, arguing that keeping room rates in a time of crisis at normal levels will cause a waste of limited resources with a family taking up two rooms when they would only use one if the prices were higher.12 First of all, it is precisely the wealthier room-renter, not the lower-income family man, who is more likely to hog rooms by renting more than one for his comfort, so the argument fails on that account.
In any case, since this outcome again involves human choice, it is not inevitable. The hotel owner can simply require that in emergencies a family of four may only rent one room so that others in need can occupy the second room. There is no need to increase the price by 185% to achieve a just rationing of scarce resources. Yet, since Tom has started from the false moral premise that prices and other economic decisions are independent of human moral choice, he argues falsely that economic choices should be allowed to fall where they may, as a ball dropped can only fall to the ground due to the law of gravity.
Thus, in the end this obscuring of the human moral choice involved in all economic actions becomes a facade behind which wealth can be pursued without moral limits.
Economics is not a discipline about invariable independent forces such as physics. It is the study of human actions relating to the means of creating temporal goods. Every human action and all means to ends must be oriented to and limited by the ultimate ends of Man.
This simple truth has been under attack for centuries by E Libs. It is time that Christ’s Truth, the moral Natural Law, be given its proper place within the discipline of economics. The only desire of Man which can morally be unlimited is the desire for God. The desire for wealth must be subject to just limits, with God and His law in view at all times.
- Henry of Hesse, De contractibus, in John Gerson, Opera omnia, 4 vols. (Cologne, 1483–4), 4, cap. 12, fol. 191ra.
- St. Bernard of Clairvaux, De consideratione, trans. George Lewis (Oxford, 1908), bk. 2, ch. 6, p. 47.
- Aquinas, Summa Theologica II-II, 55, Art. 7 Reply to Objections 1 and 2.
- om Woods, The Church and the Market (Lexington Books 2005), 31.
- Ibid., 50 et. seq.
- Ibid., 31.
- Ibid., 16.
- Ibid., 43.
- Ibid., Chapter 2.
- Summa Theologica II-II Q. 77, Art. 1.
- Tom Woods, The Church and the Market, 46-47.