Mar 29, 2004: Morality and the Market

In political debates about economic policy, decisions are as often made on ostensibly moral grounds as on questions of maximizing economic productivity. “Social justice” is often said to take precedence over economic questions, although not to the extent that many, particularly on the left, would wish for. At a recent academic conference at the Ludwig von Mises Institute, Professor Thomas E Woods, Jr argued against the intrusion of “moral science” on the province of “economic science”, particularly in Catholic social thought (see “The Trouble With Catholic Social Teaching“). Although the Professor does not deny that there is a “moral dimension to the economic order”, he argues that economics, as a value-neutral, scientific discipline, is not properly subject to “moral analysis”. In separating morality from economics to the extent that he does, however, he undermines both.

Much of Professor Woods’ argument hinges on an uneasy distinction between economics as action and economics as science. As action, economics is subject to morality. Therefore, economic crimes such as “fraud, theft, and malicious failure to meet contractual obligations” are condemnable. In a previous address, Professor Woods also maintains that “private property is just”. He establishes the justice and injustice of such things through a “simple reflection on the teaching of Christ, the Fathers, and natural law”.

For our immediate purposes, neither the particular authority to which Professor Woods refers, nor the particular content of the principles, is important. What is significant is that he establishes economic principles through a reference to a moral authority, although he would presumably characterize the establishment of such principles as a limitation on “marketplace” activity and not an intrusion on economics as a science.

However, when those interested in “social justice” appeal to the same moral authority, Professor Woods protests that this is an attack on the autonomy of science. “[E]xhortations” in favor of a “just wage” are not morality-based claims but are instead “a set of unproven assumptions about how economic relationships work” that do not recognize that “capital investment…is alone capable of increasing the overall stock of wealth”. In terms of his own particular faith, this is “an indefensible extension of the prerogatives of the Church’s legitimate teaching office into areas in which it possesses no inherent competence”.

Professor Woods’ claims certainly have the whiff of a double standard. His “simple reflection[s]” establish something as profound as private property, while the moral claims of others are counted among the moralistic intrusions upon science. In attacking the “social justice” advocates, he approvingly quotes Quadragesimo Anno, saying that “‘economics and moral science employs each its own principles in its own sphere'”.

In fact, rather than the double standard in his application of moral claims in the sphere of economic activity, the assertion that “moral science” (what an ugly phrase!) stands apart from economic science is the Professor’s most pernicious claim. While he may certainly be correct that the science of economics demonstrates that the demands of “social justice” are actually counterproductive and that advocates of a “just wage”, for example, are incompetent in matters economic, this does not constitute proof that morality and economics have separate spheres.

Indeed, Professor Woods, quoting Quadragesimo Anno again, says that economics and morality are not so distinct that one may assume that the former is not to some degree dependent on the latter. If it is the case, however, that economics and morality are separate spheres, with morality being the superior one, it is difficult to imagine on what basis Professor Woods is restricting the jurisdiction of the moral claim. He attacks the “just wage” on the grounds that it is economically inferior, but if it is a moral claim, which would necessarily have precedence over a mundane claim, he has no justifiable grounds for criticism. How can the terms of the relationship between morality and mundane economics be set from the mundane side? If the Professor’s economistic condemnation of “social justice” is correct in proving that his opponents are actually effectively encouraging poverty and, in one case he mentioned, something as unjust as child prostitution, this merely proves that it is economically problematic. But, if “moral science” is a separate and superior discipline, it’s claims cannot be challenged from an inferior discipline.

By attacking “social justice” doctrines from an economic point of view, he is, in fact, committing the same error that he accuses Catholic theologians of making. Although his error is more defensible in terms of the practical effects of his claims, from a logical perspective, he has made a greater error by trying to restrict the moral sphere by means of expanding the economic sphere.

Better that he had done away with the wall of separation he and thousands of years of Western history have erected between morality and economics and the spiritual and the mundane. Professor Woods hints at this by trotting out the tired but popular notion “that faith and reason are not in conflict, but rather constitute two harmonious paths to truth”. But, as is so often the case when using this doctrine, he does not achieve a true unity of the two. Rather, he says, by minding the laws of the mundane sphere, one promotes “overall prosperity”, which, in turn, makes space for more laudable aspirations, such as “less disease, more leisure time to spend with our families, and greater opportunities to enjoy the good things of civilization”.

Professor Woods concluded his speech with a quote from Wilhelm Roepke, who justifiably attacked the “disparagement of things economic”. But, Professor Woods himself is guilty of such disparagement, insofar as he reduces the work of man to little more than a necessary material exertion that should be allowed to run its course so as to provide leisure, even if the Professor hopes that that leisure would be spent on the “good things”. In this regard, we would like to quote Roepke, too: “[T]he market economy, with its variety, its stress on individual action and responsibility, and its elementary freedoms, is still the source of powerful forces counteracting the boredom of mass society and industrial life, which are common to both capitalism and socialism”. The boredom to which Roepke refers is, of course, profoundly destructive to the human spirit and psyche.

The “economic” activity of man is not merely economic. His work is, or ought to be, creative and an expression of self, an act of self-determination. It is not merely a way of acquiring leisure. That our work has been reduced to an economic function that serves the “overall prosperity”, even according to the theories of the defenders of free markets, is a monument to the degradation of man and an infringement upon his, in Roepke’s words, “fullness of personality”.

The free market ought not to remain free because of the amoral autonomy of economic considerations, but because it is a necessary by-product created by the desire to realize the fullness of the spirit.

March 29, 2004


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