Why Catholics Don't Understand Economics

Inside Catholic ^ | 8/30/2010 | Jeffrey Tucker

[markomalley]

For years I've puzzled over the question of why Catholics have such trouble coming to terms with economics. This problem applies only to modern Catholics, for it was Catholics in 15th- and 16th-century Spain who systematized the discipline to begin with. That was long ago. Today, most of what is written about economics in Catholic circles is painful to read. The failing extends left and right, as likely to appear in "progressive" or "traditionalist" publications. In book publishing, the problem is so pervasive that it is difficult to review the newest batch.

It's not just that the writers, as thoughtful as they might otherwise be on all matters of faith and morals, do not know anything about economic theory. The problem is even more foundational: The widespread tendency is to deny the validity of the science itself. It is treated as some kind of pseudo-science invented to thwart the achievement of social justice or the realization of the perfectly moral Catholic utopia. They therefore dismiss the entire discipline as forgettable and maybe even evil. It's almost as if the entire subject is outside their field of intellectual vision.

I have what I think is a new theory about why this situation persists. People who live and work primarily within the Catholic milieu are dealing mainly with goods of an infinite nature. These are goods like salvation, the intercession of saints, prayers of an infinitely replicable nature, texts, images, and songs that constitute non-scarce goods, the nature of which requires no rationing, allocation, and choices regarding their distribution.

None of these goods take up physical space. One can make infinite numbers of copies of them. They can be used without displacing other instances of the good. They do not depreciate with time. Their integrity remains intact no matter how many times they are used. Thus they require no economization. For that reason, there need to be no property norms concerning their use. They need not be priced. There is no problem associated with their rational allocation. They are what economists call "free goods."

If one exists, lives, and thinks primarily in the realm of the non-scarce good, the problems associated with scarcity -- the realm that concerns economics -- will always be elusive. To be sure, it might seem strange to think of things such as grace, ideas, prayers, and images as goods, but this term merely describes something that is desired by people. There are also things we might describe as non-goods, which are things that no one wants. So it is not really a point of controversy to use this term. What really requires explanation is the description of prayers, grace, text, images, and music as non-scarce goods that require no economization.

 

So let us back up and consider the difference between scarce and non-scarce goods. The term scarcity does not precisely refer to the quantity of goods in existence. It refers to the relationship between how many of these goods are available relative to the demand for goods. If the number available at zero price is fewer than people who want them for any reason whatever, they can be considered scarce goods. It means that there is a limit on the number that can be distributed, given the number of people who want them.

Scarcity is the defining characteristic of the material world, the inescapable fact that gives rise to economics. So long as we live in this lacrimarum valle, there will be no paradise. There will be less of everything than would be used if all goods were superabundant. This is true regardless of how prosperous or poor a society is; insofar as material things are finite, they will need to be distributed through some rational system -- not one designed by anyone, but one that emerges in the course of exchange, production, and economization. This is the core of the economic problem that economic science seeks to address.

It is almost impossible to think of a finite good that is non-scarce. We can come up with a scenario, perhaps, like two people living in paradise surrounded by an ocean of bananas. In this case, the bananas would be a non-scarce good. They could be eaten and eaten forever, provided that the bananas do not spoil. Another proviso is that there can be no free trade between paradise and the rest of the world, else one of the inhabitants might get the bright idea to arbitrage between non-scarce bananas in paradise and scarce bananas everywhere else. In this case, the bananas would obtain a price and would therefore have to be called scarce goods, not non-scarce goods.

In the real world outside of the banana paradise, non-scarce goods are of a special nature. One feature is that they are typically replicable without limit, like digital files or the inspiration one receives from an icon that can be copied without limit.

 

As an example, consider the case of the loaves and fishes, an incident in the life of Jesus recorded by all four Gospel writers. Jesus is speaking to the multitudes, and the listeners grow hungry. The apostles only have five loaves and two fishes: These are scarce goods. They could have thrown them into the air and created a food riot over who got what. They could have opened a market and sold them food at a very high price, rationing them by economic means. Both solutions would produce outrageous results.

Instead, Jesus had a different idea. He turned the scarce bits of food into non-scarce goods by making copies of the scarce food. The multitudes ate and were full. Then the food evidently turned back into scarce goods, because the story ends with Jesus instructing his disciples to collect what is left. Why collect what is non-scarce? Clearly, the miracle had a beginning and end.

The story nicely illustrates the difference between a scarce and non-scarce good. Jesus often used this distinction in His parables, which are mostly stories about the scarce world told in order to draw attention to truths about the non-scarce world. Think of the merchant who bought pearls at a low price and sold them at a high price. One day he found the pearl of the highest possible value, and he sold all he had just to buy and hold it. The pearl, of course, represents salvation and the love of God -- non-scarce goods, because there is enough for everyone who desires them.

We are in fact surrounded every day by non-scarce goods exactly like the loaves and fishes. All ideas are of this nature. I can come up with an idea and share it with you. You can possess it, but in so doing, you do not take that idea away from me. Instead, you hold a replica of it -- just as real and intact as the original version. Words are this way: I do not need to parse them out in order to save some for myself. Tunes in music are this way, too. I can sing a tune to you, and you can repeat it, but this action does not remove the tune from me. A perfect copy is made, and can be made and made again unto infinity.

This is completely different from the way things work in the realm of scarce goods. Let's say that you like my shoes and want them. If you take them from me, I do not have them anymore. If I want them again, I have to take them back from you. There is a zero-sum rivalry between the goods. That means there must be some kind of system for deciding who can own them. It means absolutely nothing to declare that there should be something called socialism for my shoes so that the whole of society can somehow own them. It is factually impossible for this to happen, because shoes are a scarce good. This is why socialism is sheer fantasy, a meaningless dreamland as regards scarce goods.

 

The difference between scarce and non-scarce goods has long been noted within the Christian milieu. St. Augustine was once challenged to explain how it is that Jesus can speak for the Father in heaven though the Father is separate. He responded that there is a special non-scarce nature associated with words so that the Son can speak the same words and possess the same thoughts of the Father.

This is true on earth, too, Augustine continued:

The words I am uttering penetrate your senses, so that every hearer holds them, yet withholds them from no other. . . . I have no worry that, by giving all to one, the others are deprived. I hope, instead, that everyone will consume everything; so that, denying no other ear or mind, you take all to yourselves, yet leave all to all others. But for individual failures of memory, everyone who came to hear what I say can take it all off, each on one's separate way.

In saying these things, Augustine was both establishing and following up on a tradition that prohibited the buying and selling of non-scarce things. Jewish Halachic code prohibits a rabbi or teacher to profit from the dissemination of Torah knowledge. He can charge for time, the use of a building, the books, and so on, but not the knowledge itself. The Torah is supposed to be a "free good" and accessible to all. From this idea also comes the prohibition on simony within Christianity.

The moral norm is that non-scarce goods should be free. There is no physical limit on their distribution. There is no conflict over ownership. They would not be subject to rationing. This is not true with regard to material goods.

To further understand this, let's try an alternative scenario in which a non-scarce good like salvation (non-scarce because it is infinitely replicable) is actually a scarce good that must be rationed. Let's say that Jesus had not offered salvation to all but instead had restricted the number of units of salvation to exactly 1,000. He then put His apostles in charge of allocating them. (When I mentioned to this to a non-believing friend of mine, he said: "You mean like tickets to Paradise? I bought five of those in a Mosque in Istanbul!")

The apostles would have immediately confronted a serious problem. Would they give them all out immediately or dispense them over the course of a year, or ten years? Perhaps they suspected that the world would last another 100 years; they might limit the distribution of salvations to only ten per year. Or perhaps they needed to reserve them to last 1,000 years. Regardless, there would have had to be rules and norms governing how they were distributed. Perhaps this would be based on personal displays of virtue, of monetary payment, of family lineage, and so on.

No matter what the results, the history of Christianity would have been very different if Jesus had not made salvation a non-scarce good, but instead had limited the supply and charged the Church with allocation. There would have been no liberality in spreading the gospel. Forget the whole business of going to the ends of the earth or becoming fishers of men. Under a limited supply, the salvation could not be replicated. If, for example, the apostles had chosen a 1,001th person to be saved, eternal life would have been taken away from the first person to receive it.

 

This might sound preposterous and even frightening, but this is precisely the situation that persists with all materials goods in the real world. All scarce things are fixed, and all things must be allocated. Even under conditions of high economic growth and rapid technological progress, all goods in existence at any one time are finite and cannot be distributed without norms or property rights, lest there be a war of all against all. Another factor of production that is scarce is time, and this too must be allocated by some means.

As it happens, salvation is indeed a non-scarce good available to all who seek it. So are the intercessions of saints. No one fails to ask for the intercession of a saint, but one knows for a fact whether someone else is employing that saint at the moment. No, we rightly assume that saints have no limits on their time for prayer. Indeed, the limitlessness of salvation is the prototype for all forms of non-scarce goods like music, texts, images, and teachings.

But consider people who have dedicated their life to the work of these non-scarce goods. One can easily imagine that they find immense power and glory in these goods. I certainly do. They are the things to which all religious people have devoted their lives. This is a fantastic thing -- and truly, without non-scarce goods, the whole of civilization would come crashing down to the level of the animals.

At the same time, the world does not only consist of non-scarce goods. The economic problem deals with the issue of scarce goods. And this is just as important to the flourishing of life on earth. All things finite are subject to economic laws. We dare not ignore them nor ignore the systems of thought seeking to explain their production and distribution. Note that Jesus' parables deal with both realms. So should we all.

[MIchaelTArchangel]

Ping to read later.

[sitetest]

There’s a word for what you describe: subsidiarity. It is at the foundation of Catholic social teaching.

[from occupied ga]

Occupied GA's tagline is right on. It's not a poor person - or sick person, immigrant, or Catholic bishop - on your doorstep with a gun, as a rule: it's our very own government.

yes at the first level you're absolutely right; however, it is the poor people, the illegal immigrants who are empowering the government to loot the fruits of our labors. They're not entirely blameless. You have the thieves (government) and the receivers of stolen goods (your aforementioned categories) working in concert to empower themselves at our expense. The Catholic heirarchy should stick to faith and morals, not wealth distribution.

[Tax-chick]

The Catholic heirarchy should stick to faith and morals, not wealth distribution.

I agree with that.

However, I don't think that the worst-off classes wield sufficient power to control legislators. I believe those in government promote dependency for their own purposes of ego and power-seeking, rather than responding to the pressure of election results.

[MoHamhead]

For years I've puzzled over the question of why Catholics have such trouble coming to terms with economics. This problem applies only to modern Catholics, for it was Catholics in 15th- and 16th-century Spain who systematized the discipline to begin with.

Actually, 15th-16th century Spain went down the drain economically because they couldn't figure out that adding a lot of money (gold from the New World) without adding corresponding wealth was a bad idea. So, it's really a case of "same as it ever was".

[from occupied ga]

However, I don't think that the worst-off classes wield sufficient power to control legislators.

Not entirely by themselves, I agree, but they provide a voting block that is very important to re-elect the looters. Dunno if you ever pay any attention to neal boortz (boortz.com), but he calls them the looters and the moochers. The looters being the government bureaucrats who to the stealing, and the moochers are the recipients who receive the stolen goods. The Democrats are always trying to increase the moocher block at the expense of the rest of us. Boortz's solution - one I thought of before he did was to have a person choose wheter to receive welfare or vote. The EBT card or the voter card. Never happen of course, which tells you that they are important to keep the thieves in power.

[markomalley]

A Catholic sensibility at the micro-level works wonderfully. In other words, a business owner caring about his employees and thier families and arranging pay, work and benefits accordingly. At the macro level, with government transfer payments, government “charity” is not charity, it is redistribution with jail as the consequence if you want to keep your own money rather than have the politicians distribute it to their favored groups and friends.

At a macro level, authentic Catholic social teaching does just fine, as well.

Authentic Catholic social teaching is characterized, among other things, by the principles of subsidiarity and participation.

Subsidiarity means that we accomplish things at the most immediate level possible and that we don't let higher social orders subvert the responsibilities of intermediate social orders.

Participation means that it is each person's responsibility to "get his hands dirty." Merely taking care of a problem by paying one's taxes does not meet the obligation.

Taken together, this means that it is the responsibility of each of us to care for our families, our neighbors, and so on. And not just to throw money at the issue but to actually be involved.

It is that spirit which prompted people to erect parish schools for the education of the youth, rather than to depend upon the federal government for education. It is that spirit which prompted people to build charity hospitals and orphanages. It is that spirit which prompted people to form mutual aid societies like the Knights of Columbus. Dependence upon government, which, admittedly, is preached from far too many Catholic pulpits, is the antithesis of authentic Catholic social doctrine.

A couple of citations:

79. As history abundantly proves, it is true that on account of changed conditions many things which were done by small associations in former times cannot be done now save by large associations. Still, that most weighty principle, which cannot be set aside or changed, remains fixed and unshaken in social philosophy: Just as it is gravely wrong to take from individuals what they can accomplish by their own initiative and industry and give it to the community, so also it is an injustice and at the same time a grave evil and disturbance of right order to assign to a greater and higher association what lesser and subordinate organizations can do. For every social activity ought of its very nature to furnish help to the members of the body social, and never destroy and absorb them.

80. The supreme authority of the State ought, therefore, to let subordinate groups handle matters and concerns of lesser importance, which would otherwise dissipate its efforts greatly. Thereby the State will more freely, powerfully, and effectively do all those things that belong to it alone because it alone can do them: directing, watching, urging, restraining, as occasion requires and necessity demands. Therefore, those in power should be sure that the more perfectly a graduated order is kept among the various associations, in observance of the principle of "subsidiary function," the stronger social authority and effectiveness will be the happier and more prosperous the condition of the State.

Pius XI, Quardagesimo Anno (1931)

---

In recent years the range of such intervention has vastly expanded, to the point of creating a new type of State, the so-called "Welfare State". This has happened in some countries in order to respond better to many needs and demands, by remedying forms of poverty and deprivation unworthy of the human person. However, excesses and abuses, especially in recent years, have provoked very harsh criticisms of the Welfare State, dubbed the "Social Assistance State". Malfunctions and defects in the Social Assistance State are the result of an inadequate understanding of the tasks proper to the State. Here again the principle of subsidiarity must be respected: a community of a higher order should not interfere in the internal life of a community of a lower order, depriving the latter of its functions, but rather should support it in case of need and help to coordinate its activity with the activities of the rest of society, always with a view to the common good.

By intervening directly and depriving society of its responsibility, the Social Assistance State leads to a loss of human energies and an inordinate increase of public agencies, which are dominated more by bureaucratic ways of thinking than by concern for serving their clients, and which are accompanied by an enormous increase in spending. In fact, it would appear that needs are best understood and satisfied by people who are closest to them and who act as neighbours to those in need. It should be added that certain kinds of demands often call for a response which is not simply material but which is capable of perceiving the deeper human need. One thinks of the condition of refugees, immigrants, the elderly, the sick, and all those in circumstances which call for assistance, such as drug abusers: all these people can be helped effectively only by those who offer them genuine fraternal support, in addition to the necessary care.

John Paul II, Centesimus Annus, 48 (1991)

It would be nice to hear talk about the above in pulpits far more universally than we currently do.

[November 2010]

It would be nice to hear talk about the above in pulpits far more universally than we currently do.
____________________________________________________________

Indeed. John Paul lived through the Polish occupation by the Soviet Union . . . and the Soviets were “masters” at fine words about helping the working class while oppressing them with raw government power. The problem is the left’s capture of a (majority?) of the US Catholic pulpits and seminaries. So many Catholic families in the USA, much less Latin America, are followers of Liberation Theology to greater or lesser extents. The Catholic Church is top down . . . and the top, at least until JPII was not very interested in combatting Marxist and sexual politics dressed up as religion. It’s infiltration and the Catholic Church has been a target, just like the universities and news rooms.

[Zionist Conspirator]

I’d like to hear your thoughts on this issue.

[wideawake]

My thoughts are:

(1) Very few Americans have a good economic education. This certainly applies to American Catholics.

(2) The above article is written with very simplistic economic analysis: the author's statements regarding scarcity ignore the key economic principles of substitution and marginal utility. Saying that quantities of goods are "scarce" and "fixed" is misleading and is a forcing of economic thought into an inappropriate theological analogy.

(3) The foundations of modern economic analysis - including the preliminary investigations into price theory, monetary analysis, marginal utility and international trade were done by Catholics: the school of Salamanca, the Austrian School, Cantillon, the Physiocrats, etc. Adam Smith openly acknowledged his many debts to French economic research.

(4) What the Catholic Church has done a very good job of avoiding has been the elevation of economics to the central preoccupation of human activity. Much of what passes for "conservative economics" today is social Darwinism in drag. What the Catholic Church did a very poor job of from 1965-1985 was policing the "liberation theology" movement - whose advocates were very clever about championing the poor while pushing a Marxist analysis of society that is every bit as pernicious as the Darwinian analysis and as equally opposed to Scripture and Tradition as Darwin is. Liberation theology is now a spent force, but the damage wIll take decades to undo.

(5) The Church's three core principles of social teaching: (a) the God-given dignity of every human being (whether economically productive or not); (b) the preferential option for the poor and (c) the priority of subsidiarity in government are the foundation for an authentically Godfearing economics safeguarded against Darwinism and Marxism.

[Zionist Conspirator]

What the Catholic Church has done a very good job of avoiding has been the elevation of economics to the central preoccupation of human activity.

Economics can be the "central preoccupation of human activity" only for people who believe only matter exists. (This is not my original observation but that of a Catholic on the Internet I briefly corresponded with. We were both upset that all politicians and candidates wanted to talk about was economics and were remaining silent on moral issues.)

Much of what passes for "conservative economics" today is social Darwinism in drag.

Very true! I agree!

The Church's three core principles of social teaching: (a) the God-given dignity of every human being (whether economically productive or not)

The most important point of all. I'm sure you've read the same angry posts on FR that I have about "parasites" and "leeches." Perhaps they should all starve and "decrease the surplus population" (in Scrooge's immortal words)? All these "parasites" and "leeches" were created by G-d and have spiritual souls. Not that that matters to some people.

I've never understood the attraction of social Darwinism ("pull yourself up by your own bootstraps") to Calvinists ("it's impossible to pull yourself up by your own bootstraps").

Thank you, wideawake. I knew your observations would be rewarding for all who read them.

[verdugo]

re: The above article is written with very simplistic economic analysis:

I agree. The author says nothing in a lot of paragraphs. Your points say a lot in few words. THANKS for saving me time.

[redgolum]

Good points.

And it also shows why the modern Conservative movement will fail in the end. The driving force has been about economics, and more to the point, the leader's personal economics. There is only a little lip service to the social problems that are destroying the west from within.

I see it every day on FR, and you see it a lot more than me. Many here only measure the worth of a person in dollars and cents, and then only in how much it costs them.

[ex-snook]

"Why Catholics Don't Understand Economics"

Because Jesus was a Socialist because He was concerned about the poor?

[NHResident]

You are, unfortunately, exactly right. We are suffering from the results of the ecclesiastical ‘Gay Mafia’ and ‘Liberation Theologists’ that took over the American RC Church in the 60’s and through to the late ‘80’s. It’s going to be a long road back to normal.

[NHResident]

I’m afraid you misunderstand the article perhaps because your are reading it without context. You should read more carefully.

The author is discussing and describing ECONOMICS which attempts to explain how a market operates in the real world. Economics is NOT moral theology. It has no more to do with morality than the law of Gravity.

The author touches on theology to point out that it is a separate topic as pointed very eloquently by St. Augustine.

If you are sincerely interested in learning the role of the Catholic Church has played in the development of Economic Theory (and free markets), I suggest you read Thomas E. Wood book How the Catholic Church Built Western Civilization. It is extremely easy to understand and VERY enlightening.

[Zionist Conspirator]

I see it every day on FR, and you see it a lot more than me. Many here only measure the worth of a person in dollars and cents, and then only in how much it costs them.

Worth repeating.

[Salvation]

**Authentic Catholic social teaching is characterized, among other things, by the principles of subsidiarity and participation. **

What You [Catholics] Need to Know: Subsidiarity, [Catholic/Orthodox Caucus]

[Salvation]

Amen to your post. It bugs me a lot. I think that more important than the dollars and cents is the time we give to God.

[Salvation]

 

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CCC Search Result - Paragraph # 1894  (194 bytes )  preview document matches 4 In accordance with the principle of subsidiarity, neither the state nor any larger society should substitute itself for the initiative and responsibility of individuals URL: http://www.scborromeo.org/ccc/para/1894.htm

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CCC Search Result - Paragraph # 1883  (524 bytes )  preview document matches freedom and initiative. The teaching of the Church has elaborated the principle of subsidiarity, according to which "a community of a higher order should not interfere URL: http://www.scborromeo.org/ccc/para/1883.htm

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4:	CCC Search Result - Paragraph # 2209  (367 bytes )  preview document matches helping them and of supporting the institution of the family. Following the principle of subsidiarity, larger communities should take care not to usurp the family's URL: http://www.scborromeo.org/ccc/para/2209.htm

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CCC Search Result - Paragraph # 1885  (249 bytes )  preview document matches 5 The principle of subsidiarity is opposed to all forms of collectivism. It sets limits for state intervention. It aims at harmonizing the relationships between individuals URL: http://www.scborromeo.org/ccc/para/1885.htm

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CCC Search Result - Paragraph # 1894  (194 bytes )  preview document matches 4 In accordance with the principle of subsidiarity, neither the state nor any larger society should substitute itself for the initiative and responsibility of individuals URL: http://www.scborromeo.org/ccc/para/1894.htm

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CCC Search Result - Paragraph # 1883  (524 bytes )  preview document matches freedom and initiative. The teaching of the Church has elaborated the principle of subsidiarity, according to which "a community of a higher order should not interfere URL: http://www.scborromeo.org/ccc/para/1883.htm

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4:	CCC Search Result - Paragraph # 2209  (367 bytes )  preview document matches helping them and of supporting the institution of the family. Following the principle of subsidiarity, larger communities should take care not to usurp the family's URL: http://www.scborromeo.org/ccc/para/2209.htm