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Economics—When the Truth Really Matters



James V. Schall, S.J. - published on 11/22/14

Not all theories cause wealth. Not all theories alleviate poverty.

When the Canadian Jesuit philosopher, Bernard Lonergan, grew older, he decided to turn his attention to economics. After a lifetime devoted to metaphysics, theology, and such esoteric topics, especially with his interest in the nature of the sciences, he looked at the “social” science that is said to be nearest to the “hard” sciences, like physics. That science is said to be one that most relies on mathematics, method, and empirical verification, to wit, economics. John Mueller’s Redeeming Economicstakes up this quest in a new and systematic way. This book is a remarkable one that purports, with considerable evidence, to complete the overall nature of what economics really is. Modern economics has not been an “exact” science because its theoretic presuppositions, as Mueller points out, did not allow it to be complete.

The book might have been entitled “Scholastic Economics”. In fact, the abiding validity of the basic principles of economics found in the scholastic authors, notably Augustine and Aquinas, is the theme of the book. Namely, what are missing in modern scholarly economic theory are the four elements that were present in scholastic economic theory since Aquinas. We have to know first what we want or need, next how to produce it, then how to obtain it, and finally what to do with it after we get it. The book is a critique of modern economics from Smith, Bentham, through more recent economist up to Friedman, Rueff, and others. It is a fascinating read. Mueller understands that behind each economic theory, including “Scholastic Economics” is an understanding of the world, an understanding that must be coherent, defended, and articulated. Adam Smith, the founder of modern economics, was a Stoic, Bentham an Epicurean. Karl Marx wrote his dissertation on Epicurus and Democritus. Father Charles N. R. McCoy, in his great book, The Structure of Political Thought(1963), had already pointed out the relation of modern economic and political thought to the Stoics and Epicureans.

Mueller does not deny that these writers and their more recent disciples have valid points. But what they lack comes from their theory and shows up in the economic analyses that they propose. There are things their theories do not explain. Smith’s invisible hand was a this-worldly substitute for providence. It explained order but not freedom. The utilitarians thought that all human motivations were the result of pleasure and pain. Hence, they could not explain really why we might give a cup of water to the needy or, even more basically, have a baby and all that goes with it. Mueller maintains that Augustine was the thinker who supplied the last major element in a complete economics, which Aquinas put together in a whole. Augustine was able to explain free distribution of acquired goods. And this free distribution began with the family and in the domestic household that Aristotle posited as the beginning of human organization. What goes on in the household is, for the most part, beyond utility and necessity. Its realm is that of gift and sacrifice.

Mueller is careful to give simple examples of each of his points, which help make this book available to the general reader. But each point is backed by the usual careful analysis of data and theory that serves to establish each step of his argument. In this latter sense, this book is thoroughly academic and intended primarily for that audience. All economic (and other) changes begin in the mind where real issues are first hammered out. His thesis is simply that the full nature of economics as a practical science is now clear. The future of economics is in the hands of those who understand its completeness but in the light of its gradually learning its own theoretic deficiencies.

It has long been my opinion, for what it is worth, that Catholic social thought has lacked a complete and valid insight into the economic side of what it was proposing. The theories of consumption, unemployment, taxes, poverty, and wealth distribution that we find in so many Catholic and Christian sources simply lacked full understanding of what was at stake. This book, I think, along with Brian Benestad’s Church, State, and Society: An Introduction to Catholic Social Thought, supplies that need in a most careful manner. One simply cannot talk of unemployment without knowing what causes employment. In the beginning everyone is poor. That question is easy to answer, but not the one of why many are not poor. Not all theories cause wealth, not all theories alleviate poverty. There is a strict relation between intelligence and society, in this sense. This fact is why truth matters in economics.

One of the major contributions of this book is its analysis of the domestic, intermediate, and political economy. Mueller’s attention to the domestic economy is    particularly fine. What does go on in the home? Most of the important things, in fact. Jennifer Roback Morse, in her not-to-be-missed book, Love and Economics, had previously asked the question: “Why do not economists understand the home?” Basically, she said, because the household does not operate on the same principles that are implicit in utilitarian or stoic based economic theories that seek to explain it. Determinism, utility, and pleasure, though factors, are not the principles that explain life and community in any normal home. While there are elements of order, pleasure, and utility, there is also sacrifice, generosity, and gift that depend on human intelligence, virtue, and freedom. These elements explain the ultimate distribution of goods in a way that has been lacking to economists.

Mueller often cites Chesterton, a wise choice. Chesterton’s remarks about the family and its place in or outside of modernity remain fundamental. Chesterton’s What’s Wrong with the Worldwas precisely about the child, husband, wife, home, and education. What Mueller has done is to show that the action of each person in the economic order is either for someone else or for himself. The latter may be perfectly normal, as we are to look after ourselves, or it may distort things. One of the interesting aspects of Mueller’s book is his attention to crime as an economic factor, both its consequences and what it is usually about, the choice of self over others. Likewise, Mueller pays a good deal of attention to the relation of abortion and fertility, to population decline in major countries and to crime. It is a fascinating relation.

One might say that the conclusion of Mueller’s book is that we had it right in the first place. Muller’s discussion of the economic and political thought of American founders is very interesting in the light of natural law, prosperity, and the family, as well as international relations. This book also contains a discussion of inflation, monetary theory, international trade, money, and all other basic issues of economic theory. He sees the clear relation of immigration to abortion, and of divorce to poverty. In short it is a complete book. About the only thing that I found missing, and I may have missed it, was more of a discussion of wealth as a function of intelligence and of the importance of innovation. I am also a bit more understanding of Aristotle’s comment on natural slavery. I think what Aristotle was pointing out was the number of human beings in every age who cannot really manage by themselves. In the ancient world, they were in households; in the modern world, they are usually in institution (often killed in birth these days, alas). However, Mueller is quite clear that a growing economy is essential to general well-being, so the limits of growth thesis that would politically restrict population are in the end anti-human.

Mueller ends the book with a very interesting discussion of the relation of creation to determinist thought. Msgr. Robert Sokolowski’s little book, The God of Faith and Reason, had pointed out the importance of seeing the world not as a necessity but as the result of God’s independence of it, His free choice to create in the first place. Mueller sees this aspect also. He touches on Father Jaki’s point that generally science dies in those cultures that see themselves as deterministic so that no growth or change comes into their thinking. This view is much more contemporary than it might seem at first. All voluntarist theories of the world eliminate any natural order and hence any reason to be found in things to indicate what they are.

In conclusion, this book should be read by every student of economics, businessman, and householder. It is literally revolutionary. Its title “redeeming” economics means that it recognizes that many good theories were found in the history of our wealth creation, but still some things that were once know are now lacking. In their updated form, they serve to explain to us why our economy is often inadequate for its own ends and why it cannot fully explain itself. Mueller understands that, if we do not understand the family correctly, we will not understand economics correctly, for, after all, that it what the word means, the life and natural order of the household.

James V. Schall, S.J., who served as a professor at Georgetown University for thirty-five years, is one of the most prolific Catholic writers in America. . His most recent book is The Classical Moment: Selected Essays on Knowledge and Its Pleasures  (St. Augustine Press, 2014).

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