The term “economics” originally meant the study of household management. The art of household management, or economics, is not merely an internal art, whereby financial management of the household, its labor and material allocation, and services acquisition, for example, take place within the scope of a single household. Rather, households are not completely self-sufficient but must interact with one another and with the wider community in order to meet their needs. Exchange transactions among households are the basis of economic activity. Reality and reason posit that such exchanges are under the control of Christ’s direction. All of economics, all of society, must be regulated by the eternal law, the constitution of Christ the King. The dogma of the Kingship of Christ over all societies means that all of human life must be under the empire of Christ the King. Just as there can be no separation between Church and state, there can be no separation between the Church and economy. Christ is King not only of political societies but of economies as well.
Some argue that the phrase “Catholic economics” is nonsensical because there can be no “Catholic” economics; there is only economics. Those making such claims fail to understand that economic activity involves human action—investing, buying, selling, laboring, etc.—which has moral implications and is therefore subject to the law of Christ. We are whole beings. We cannot compartmentalize our existence or actions. We cannot be Catholics on Sunday or Catholics with respect to our religion but something else Monday through Friday at the office. To claim economics is somehow devoid of moral significance is to deny that it is a human activity.
In the same vein economic liberals will often seek to disqualify the Church from speaking on economics, claiming “it is just a science.” Even if economics were a science, which it is not, it cannot on its own answer the important questions about what we should do. Leo XIII shortcut this line of argument when he said in Rerum Novarum, “We approach the subject with confidence, and in the exercise of the rights which manifestly appertain to Us.”2 Pius XI echoed this statement more strongly in Quadragesimo Anno when he proclaimed, “there resides in Us the right and duty to pronounce with supreme authority upon social and economic matters,” and later stated that these issues are “subject to Our supreme jurisdiction.”3 This was not a new idea. These pontiffs were not stating a new truth, but they were merely reminding people that this has been the case since the beginning of Christianity. Church history is filled with cases of economic issues being settled by the Church in councils, papal decretals, ecclesiastical courts, and various synods. The very first Ecumenical Council of the Church, in Nicea, issued canons dealing with an economic issue, usury. The papal archives are littered with these questions, from Naviganti, dealing with sea loans, to In Civitate, dealing with credit sales, to Vix Pervenit, summarizing the teaching on usury.
Catholic economic doctrine is not new. The Church did not create a social and economic doctrine in recent times to supplement its sexual morality. The doctrine Leo XIII and Pius XI teach is merely the continuation of a long tradition going back to the ancient pre-Christian world. Aristotle had placed economics as a sub-discipline of politics (itself a part of ethics) and which Christians later understood to be itself subordinate to theology. The principles expounded in Rerum Novarum and its progeny are part of the perennial teaching of the Catholic intellectual tradition. Leo XIII and Pius XI certainly have applied this constant teaching to new situations (fractional reserve banking, the rise of communism, organized labor activities), but the doctrine they apply is not new.
The central assumption underlying all of liberal economic thought in contrast to Catholic economic doctrine is greed. Now economic liberals 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 economic liberals 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 economic liberals, 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 economic liberals from the moral (divine and natural) law’s requirements of justice and fairness. Again, some economic liberals 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 teaches, relying on Aristotle, men act in accordance with ends. We choose actions that, in light of all the relevant facts, appear to attain a particular end. Now 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 that 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, directs him. 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 economic liberal’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 desire for wealth, much like the desire for other things, is not bad in and of itself but it needs to be constrained and properly oriented to a higher end. The generation of wealth according to Catholic economic doctrine 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.”4 To possess enough for all this and still desire more exceeds the bounds of prudence. Constraints on the desire for wealth are not excessive but rather very prudent. There is an outer limit to acquisitiveness.
Saint 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.”5 The proper use of wealth is virtuous; its abuse—the greed of gain—is vice.
Liberal economic philosophy says any choice that increases net wealth is a good choice; the principle acknowledges no limit. The profit motive in the economic liberal’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 economic liberals use to exempt “economics” from full moral scrutiny, while protesting that outside the “framework” people can be moral and generous when it comes to deciding how they will use their wealth.
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 between 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. Economic liberals 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 it is the other ends of man’s existence. What are these other ends? They are none other than the supernatural and natural ends of man. 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 economic liberal Dr. Thomas E. Woods, Jr. has argued that “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.”6 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 Dr. Woods would say), the means chosen must also be morally just. Thus, to claim that economics is merely the science of “means” is defective. The choice of means is not morally neutral. Means have moral implications.
A typical 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).7 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 put in a favorite expression of economic liberals, a rising tide raises all boats. Conceding for the moment that this assertion is factually true (despite its being counterintuitive), Catholic economic doctrine 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”8 simply because it refuses to consider the moral values that restrain making use of unjust means.
Now the reason economic liberals cannot see the error of the ends justifying the means is that they assert that economic actions are amoral—they 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.”9 Dr. Woods asserts this based on an understanding of economics as merely the study of human action to discover independent natural laws or operations.10 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.11 The fatal flaw in this thinking is that all human actions involve choice. Human actions are not like gravity, predetermined and independently operating. Choices always have moral implications; they are either morally licit or illicit choices. Dr. Woods is correct; 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 for example one of Dr. Woods’s favorite examples of an “economic law” akin, in his mind, to gravity: supply/demand price relationships.12 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 Dr. 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.13 To use another example offered by Dr. Woods,14 if a crisis such as the terrorist attacks in New York were to occur and people were deprived of their homes, it is unjust to increase the cost of a hotel room by 185 percent simply because more people want rooms. Dr. Woods claims, however, that allowing this 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 not be the people 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.
Dr. Woods 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.15 First of all, it is precisely the wealthier room-renter, not the lower-income family, that is more likely to take more 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. This 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 percent to achieve a just rationing of scarce resources. Since Dr. Woods 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.
In the end, this obscuring of the human moral choice involved in all economic actions becomes a façade behind which wealth can be pursued without moral limits. No, 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 economic liberals. It is time that Christ’s truth, the natural law, be given its proper place within the discipline of economics. The only desire of man that 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.
Dr. Brian McCall, a professor of law at the University of Oklahoma’s College of Law, a contributor to The Angelus, Catholic Family News, and The Remnant, in addition to other journals, as well as a speaker at the 2011 Angelus Press Conference for Catholic Tradition on the Kingship of Christ.
1 This article is a condensed version of the argument contained in Brian M. McCall, To Build the City of God: Living as Catholics in a Secular Age (Angelico Press, 2014).
2 Leo XIII, Rerum Novarum, no. 16 (emphasis added).
3 Pius XI, Quadragesimo Anno, no. 41.
4 Henry of Hesse, De contractibus, in Gerson, Opera omnia, 4, cap. 12, fol. 191ra.
5 St. Bernard of Clairvaux, De consideratione, 47.
6 Thomas Woods, The Church and the Market (New York: Lexington Books, 2005), 31.
7 Ibid., 50ff.
8 Ibid., 31.
9 Ibid., 31.
10 Ibid., 16.
11 Ibid., 43.
12 See ibid., ch. 2.
13 Summa, II-II, Q. 77, art. 1.
14 Woods, The Church and the Market, 46–47.
15 Ibid., 47.