Faithful Economics

25 Short Insights

Daniel K. Finn

• Publisher: Fortress Press
• Year: 2021
• Print ISBN: 9781506472799
• eBook ISBN: 9781506472805
• Topic: Theology & Religion
• Subtopic: Christian Theology

Careful moral reflection and action are important across all of modern life, but they are especially critical when it comes to our place as individuals and communities in matters of economics. We know intuitively that our daily decisions about money and markets have a deep impact on others, but it is easy to become overwhelmed and confused or, worse, to feel as if our actions don't make a difference.

Faithful Economics is the ideal guide for navigating this complex arena and coming to a deeper understanding of how our faith and our economic lives intersect.

In twenty-five short lessons, each digestible in one brief sitting, the author explores a wide range of topics from lobbying and just wages to globalization and Catholic social teaching. Each section illuminates the issues, explains the questions, and leaves the reader with clarity and understanding.

An ideal book for students, curious readers, and all who want to understand their place as a faithful participant in economic life.

Part I

Catholic Social Thought on Economic Life

1

The Moral Ecology of Markets

Abstract

No one can adequately endorse or critique markets without also making a moral evaluation of their context—their “moral ecology.” Four issues are necessarily included, at least implicitly, in every assessment of markets. This chapter does not endorse any one position on these elements but argues instead that seemingly incommensurable standpoints on markets—ranging from Marxist to libertarian—actually represent positions on these four fundamental issues.a

Several years ago, I had a visit at my office from Rev. Nicholas Holtam, who is now the Anglican bishop of Salisbury, England, and was then the vicar of the Church of St. Martin-in-the-Fields on Trafalgar Square, London. He was on a minisabbatical on our campus at the Collegeville Institute, and he wanted to know what advice I would have given in a situation where, some months earlier, he hadn’t been sure what counsel to provide: The CEO of one of the largest banks in London had described a couple of his outstanding bank vice presidents in their fifties who had each told him they intended to retire early and then “do something worthwhile” with their lives. The CEO wondered whether it was possible for work as a senior bank executive to be “worthwhile enough,” meaningful enough, for a fulfilling Christian life. He hoped it was. The banker’s question is a good one, and not just for bankers. Even if our daily work is to provide direct help to other people in need, we’re all deeply entwined in a global economy that treats some people very badly. What would our work and the world have to be like for us to conclude that our work was “worthwhile,” our participation in the economy blameless?1

Debates about the proper shape of economic institutions are at least as old as the effort to understand economic life. For the past 150 years, this debate has been primarily understood as a contest between “capitalism” and “socialism,” and arguments for the two sides have appeared to be incommensurable. That is, those arguments are so radically different that they can hardly be compared, and each participant must simply choose between left and right.

But there is not an incommensurability among the divergent positions. All perspectives on economic systems, from left to right, address the same four underlying issues.

Are Markets Just? That’s the Wrong Question

The analysis of the morality of markets must begin with the awareness that no single human institution—not even one as broad as the market—can be adequately understood without reference to its context. In this regard, we may borrow a concept from the realm of biology, where it is universally recognized that no single species of plant or animal can be understood without reference to its ecology, the context within which it lives. Our task, then, is to understand not only markets but the moral ecology of markets.

There are four elements of the moral ecology of markets; they are present, though often only as unrecognized background assumptions, in every moral evaluation of markets, whether endorsement from the right or criticism from the left. The point here, however, is not to provide a particular moral assessment of markets that the reader is encouraged to share. The aim is to recognize that all involved are addressing a common core of issues but are providing different answers.

Friedrich Hayek is not alone in claiming, erroneously, that “the demonstration of the difference between socialists and non-socialists ultimately rests on purely intellectual issues capable of a scientific resolution and not in different judgments of value.”2 (See chapter 11 for an analysis of Hayek’s claim.) On the contrary, only when a moral judgment is joined to an empirical assessment can the competing claims about alternative economic systems be adjudicated—or even understood.

An important implication of this argument is that the question “Are markets just?” defies an answer. It is the wrong way to think about the justice of markets. It’s like asking, “Are US courts of law just?” Deciding whether the results of opposing lawyers’ arguments for the plaintiff and defendant will eventuate in a just outcome depends on more than merely having the right rules for judges and juries to follow. The justice of a court system is threatened when any of several things in their broader ecology is badly constituted. As frequently happens in some nations, one can easily bribe the police to “misplace” incriminating evidence or can threaten a juror’s family to induce a favorable decision.

The proper question is, “Under what conditions are the outcomes of markets just?” To answer this question, we need to address the four elements of the moral ecology of markets.

The Legal Structure of Markets

Although libertarians and others on the political right are often critical of government “intervention” in markets, the truth is that the government “structures” markets, largely to prohibit abusive actions within them. Even libertarians agree that the outcomes of unrestrained interpersonal interaction will not be just if individuals engage in certain abusive activities such as the use of force or fraud in market transactions.

Of course, scholars and citizens with positions further to the left than libertarians have a longer list of “abusive” activities that must be prevented before they can consider the outcomes of market interactions to be just. For example, the Republican Party in the United States supports laws to prevent child labor and insider trading. The Democratic Party supports the universal option for parental leave upon the birth of a child, limitations on the prerogatives of firms to resist unionization, and further restrictions on property owners to protect the environment. Marxists might push to forbid private ownership of the railroads and other essential industries.

The debates about markets that actually occur in the halls of government do not concern the relative merits of overall economic systems, such as capitalism or socialism. They concern instead which actions are sufficiently abusive to call for government restrictions on them. Some activities are forbidden outright—for example, violating a legal contract or dumping poisonous chemicals in a river. But many abusive practices are prohibited through regulation as to how certain market activities must be conducted; for example, no one is allowed to claim to be a physician without training and certification.

The argument presented here will neither adjudicate such disputes nor propose a single set of market restrictions that will “truly” render the outcome of markets just. The point is that for any moral assessment of markets, it is far more productive to understand the arguments about economic life as debates about which activities are sufficiently abusive to call for their restriction. People on the left tend to feel the need to restrict further abuses, while people on the right tend to agree with free market advocate and economist James Buchanan that “little, if any, improvement in the lot of modern man is promised by the imposition of new rules by some men over other men.”3

The Provision of Essential Goods and Services

The second element in the moral ecology of markets is the provision of essential goods and services. This is quintessentially where the distributional shortcomings of the market are addressed.

This assertion might at first appear controversial because libertarians have traditionally denied that governments should engage in social provision. Instead, they endorse “minimal” states. Responsible governments should simply enforce the basic rules against force and fraud. For example, Robert Nozick rejects the very idea of economic rights (e.g., a right to food, clothing, or shelter): “No one has a right to something whose realization requires certain uses of things and activities that other people have rights and entitlements over.”4 People have the right to complete control over the resources they have justly acquired, and so, for libertarians, taxation to fund the implementation of the economic “rights” of others is a violation of justice. Taxation is theft, or even worse.

Because taxation in effect claims for the state a portion of one’s wages, it can be seen as equivalent to a claim on the labor itself. Thus Nozick asserts that “taxation of earnings from labor is on a par with forced labor.”5 As James Buchanan puts it, “I have repeatedly warned against thinking of the structure of individual rights in terms of an imputation of either final goods or units of productive capacity among persons. This is a pervasive error.”6 Both libertarians and their critics tend to see the libertarian perspective as denying that governments can justly tax their citizens to provide for essential goods or services needed by everyone.

This, however, is a misunderstanding. As philosopher Michael Walzer has put it, “Every political community is in principle a ‘welfare state.’”7 Even libertarians endorse the communal provision of those services they consider essential.8

Given the libertarian commitment to eliminating force and fraud, both a police force and a court system are essential for justice. If the police or courts are ineffective, force and fraud would prevail, and even libertarians would judge the spontaneous interaction of individuals in the market to be unjust. Thus police and court services are paid for by taxation and are provided even to those citizens too poor to pay for them (and even if those particular citizens were too poor to pay any taxes at all).

There are, of course, debates about what additional elements should be on the list. People further to the left have a longer list of “essential” goods and services. Such things as schools, city and national parks, roadways, emergency food assistance, and (with the exception of the United States) health care are items on which there is generally broad agreement in most advanced industrialized nations. There will continue to be arguments about which goods and services are essential. Still, it is clear that everyone believes that if essential goods and services are not provided, the outcomes of self-interested action in the marketplace will not be judged to be just.

The Morality of Individuals and Groups

The third element in the moral ecology of markets is the morality of individuals and groups, a major dimension of the quality of relations in economic life. Very few people would find markets morally attractive if all individuals sought only their own narrow interests and tempered this focus only in the face of laws limiting their activities.9

Interesting evidence for this reality appears even in the work of the most extreme of self-interest libertarians, Ayn Rand. Her heroes argue that those who preach love and generosity are corrosive of the moral fabric of society. But as Susan Moller Okin puts it, Rand and many other libertarians “take for granted that whole vast sphere of life in which persons (mostly women) take care of others, often at considerable cost to their advancement as individuals.”10 In addition, Rand’s heroes, despite their ubiquitous claims to be concerned only for themselves, always happen to be highly principled, periodically empathetic, and at crucial times, even kind individuals.

Although the minimal laws of the libertarian state would define the extent of any person’s obligations, even for libertarians, it seems this is not enough for a humane economy. One does not need to endorse the theory of justice of John Rawls to recognize his insight that a person’s sense of self-respect is grounded in the respect that others show, both in personal life and in the institutional configuration of society.11

An analogous argument can be made about the morality of groups. Many large business firms have a sizeable budget to shape their “corporate culture.” Mistrust toward others within the firm and a narrow pursuit of self-interest by individuals or departments are counterproductive.

There are, of course, debates about what exactly ought to be the moral principles employed by individuals and groups within markets. The point here, as earlier, is not to identify those particular principles that are best suited to the task but to argue that every defense or critique of the market must engage, at least implicitly, this third element in the moral ecology.

The Role of Civil Society

The final element in the moral ecology of markets is the presence of a vital network of voluntary associations that is often termed civil society. These would include a vast array of organizations larger than the family unit but smaller than the state, such as fraternal clubs, churches, parent/teacher associations, veterans’ organizations, chambers of commerce, labor unions, hobbyists’ associations, and a myriad of other groups.

Almost as diverse as the organizations of civil society are the interpretations of civil society according to various viewpoints along the political spectrum. As Adam Seligman has put it, “Right, left, and center, North, South, East, and West—civil society is identified with everything from multi-party systems and the rights of citizenship to individual volunteerism and the spirit of community.”12 Every perspective on markets, from adulation to condemnation, has been aligned with an endorsement of civil society in at least one of its meanings.

Individuals join such associations to further their interests—at times more narrowly construed, at times in honest attempts to promote the common good. Many of these organizations are themselves involved in the decisions about the laws that structure markets or about the provision of essential goods and services. Thus they are critically important for the appropriate resolution of the first two elements of the moral ecology of markets. Beyond that, however, the organizations of civil society are widely recognized as an essential training ground for an effective national democratic process.

Where people on the right tend to understand civil society organizations as a means for individuals to attain their own ends, people...

Table of contents

• Cover
• Title Page
• Copyright Page
• Dedication
• Contents
• Introduction
• Part I: Catholic Social Thought on Economic Life
• Part II: Understanding Economic Life
• Acknowledgments
• Notes
• Index