Faithful Economics: 25 Short Insights

By Daniel K. Finn

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.

• Language: English
• Publisher: Fortress Press
• Release date: Aug 3, 2021
• ISBN: 9781506472805

Book preview

Cover Page for Faithful Economics

Faithful Economics

Faithful Economics

25 Short Insights

Daniel K. Finn

Fortress Press

Minneapolis

FAITHFUL ECONOMICS

25 Short Insights

Copyright © 2021 Fortress Press, an imprint of 1517 Media. All rights reserved. Except for brief quotations in critical articles or reviews, no part of this book may be reproduced in any manner without prior written permission from the publisher. Email [e-mail] or write to Permissions, Fortress Press, PO Box 1209, Minneapolis, MN 55440-1209.

All Scripture quotations are from the New Revised Standard Version Bible, copyright © 1989 National Council of the Churches of Christ in the United States of America. Used by permission. All rights reserved worldwide.

Cover design by Alisha Lofgren

Print ISBN: 978-1-5064-7279-9

eBook ISBN: 978-1-5064-7280-5

While the author and 1517 Media have confirmed that all references to website addresses (URLs) were accurate at the time of writing, URLs may have expired or changed since the manuscript was prepared.

For Corin and Rhys

Contents

Introduction

Part I: Catholic Social Thought on Economic Life

1: The Moral Ecology of Markets

2: What Is a Sinful Social Structure?

3: On Badminton, Lobbying, and the Importance of Rules

4: The Logic of Gift in the Market

5: The Development of Moral Doctrine on Economic Life

6: What Ancient Monks Can Teach Us about Economic Life Today

7: Jobs and the Just Wage

8: John Locke’s 99 Percent Challenge to Catholic Social Thought on Property

9: The Misunderstanding in Self-Interest Rightly Understood

10: Nine Libertarian Heresies That Tempt Neoconservative Catholics to Stray from Catholic Social Thought

11: On the Failure of the Amoral Defense of Markets

Part II: Understanding Economic Life

12: The Five Problems of Economic Life

13: Consumer Complicity in Global Markets: How Buying Here Causes Injustice There

14: What You Should Learn from Economics

15: What You Should Not Learn from Economics

16: How Economics Lost Its Humility

17: Let’s Stop Bad-Mouthing Power

18: Republican Social Thought

19: Pre-K Education

20: Why We Need a Tax You’ve Never Heard Of: Smart for One, Dumb for All

21: Understanding Scarcity: How Being Poor Is like Being Too Busy

22: Mining: The Industry Everybody Loves to Hate

23: Is Cargill Killing Off the Family Farm?

24: Targeting Religious Voters: Caveat Credens

25: The Fourteen Causes of a Financial Crisis

Acknowledgments

Notes

Index

Introduction

When I entered graduate school at the University of Chicago nearly fifty years ago, I had the naive belief that if I simply learned both Christian ethics and economics, I would be ready to propose what to think about economic ethics and what government policies to endorse to serve the common good. But I soon discovered that although the social science and divinity school buildings were only steps away from each other on campus, the conceptual distance between them could hardly be larger. I had excellent professors in both places. But the methods of analysis, the character of a good argument, the standards for evidence, the methods for testing, and even the procedures for teaching were miles apart. At times, it felt like I needed a split personality to thrive in the two different worlds.

After more than four decades of thinking, teaching, and writing about the relation of Christian faith and economic life, there are still challenges. Yet looking back over what I’ve written during that time, I see there are many insights—some mine, some from others—that can assist any reader who is interested in the same important but confounding set of issues. This volume contains twenty-five of those insights concise enough to be articulated in about 2,500 words each. Because they are written as self-sufficient essays, the reader can start with any one of them and dip in wherever one pleases.

The chapters are taken from published work of mine, all altered, some extensively. Most are from books or articles in scholarly journals, but a number are from the less-formal Catholic journal of opinion Commonweal. Thus some have extensive notes citing sources, while others have none. The book is intended for a nonscholarly audience, so all such references appear as endnotes after the last chapter so as not to interfere with casual reading. All are used with the kind permission of the original publishers.

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 further to the left not only see them as ways to ensure the common good but often even understand participation with others as a human good in itself. Few scholars would disagree with Friedrich Hayek that totalitarian states strive to eliminate the organizations of civil society. Hayek says, The true liberal must, on the contrary, desire as many as possible of those ‘particular societies within the state,’ voluntary organizations between the individual and government.¹³

Thus because the moral assessment of markets depends on the earlier elements in this moral ecology, the absence of voluntary associations that make up a civil society is one of the primary cultural impediments to morally adequate market structures.

Conclusion

We can now return to the question of that CEO of the London bank. It is a question that each of us needs to answer. Considering your own value system, What are the market abuses that are so serious that they should be forbidden by law? What are the goods and services that are so essential that they should be provided communally if individuals cannot do so themselves? What are the standards of morality for individuals and groups? What should a vibrant civil society look like?

You have your own answers, and if the world you inhabit lives up to those standards, you can conclude that the moral ecology of markets is a just one and that your assertion of self-interest within the market meets the standards of justice. Of course, if, like most of us, you judge that this moral ecology falls short in some ways, you are left complicit in a system that is not yet just, and you are under an obligation to improve it.

a From The Moral Ecology of Markets: On the Failure of the Amoral Defense of Markets, Review of Social Economy 61, no. 2 (June 2003): 135–62; and The Moral Ecology of Markets: Assessing Claims about Markets and Justice (New York: Cambridge University Press, 2006). Used with permission.

2

What Is a Sinful Social Structure?

Abstract

For four decades now, popes and bishops have spoken about sinful social structures. Unfortunately, they have done so without explaining what a social structure is or how one can be sinful. Critical realist sociology provides a helpful framework for thinking about the nature of social structures. Building on a suggestion from Pope Benedict XVI, we can see how social structures can lead those within them to be sinful in a way analogous to how original sin can do the same. The chapter ends with a practical suggestion for uncovering injustice in organizations.a

Several years ago, I was leaving Guatemala on a Sunday morning when the newspaper ran a front-page story about a wealthy landowner who had been kidnapped a few days before. Such kidnappings for ransom occur there often enough that no one was surprised by the news, but this time, things were different. The victim was forty-one years old and was somehow able to escape his captors after a few hours. He returned to his home and reported the crime to the police, who sent to investigate the incident the same three men who had kidnapped him that morning, now in their police uniforms.

The man had connections, he knew the head of the nation’s Supreme Court, and the