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Thursday, 22 November 2012

Economics & Economists

It is frequently pointed out that Economics is not Normative. It does not tell us how we should organise society; it only tells us what the consequences of economic policies will be. I am not, of course, ignoring the fact that there are dozens of schools of Economics, furiously disagreeing with each other.

Economics is not normative. Nevertheless, when you have an idea about how society should be organised, you will very soon start thinking about economic policies.

Adam Smith the great Scottish economist, author of The Wealth of Nations (1776), was the author of an earlier book, The Theory of Moral Sentiments. He was first a moral philosopher and only secondarily an economist. This seems to me to be the right way round. Our parents first teach us to be good, only much later do some of us take an interest in economics; and only then because we wish to know how to do good and be good with respect to scarce goods. If all goods were as non-scarce as air, we would not have to trouble ourselves.

Adam Smith came to economics having started with morals. He was not the first. Among the earliest economists were the Scholastic Theologians in Salamanca in the mediaeval period. Theologians are obliged to wrestle with moral questions. This led the Scholastics into Economics.

Similarly, progressives in our own day start with ideas such as “fairness” and “social justice” and then construct economic policies with a view to achieving them. Sadly, because their hearts rule their heads, they construct disastrous policies, which have the effect of immiserating the people they were designed to help.

Moreover, because their economic ideas are little more than wishful thinking, they have to use coercion to put their ideas into practice. Violence (or, at least the threat thereof) is piled on immiseration and these have resulted in Hell on Earth in extreme cases, when the progressives thought they were creating an earthly paradise.

Perhaps this is why the Nazis have had a worse press than the Commies. Their “ideology” included the idea that might is right. The communists did to death human beings on a scale which surpassed the Nazis by orders of magnitude. But it is OK for students to have posters of Che Guevara on their walls, while Prince Harry gets properly condemned for wearing a Nazi uniform.

Progressives (including Nazis and Commies) are literally infantile. They start by saying, in effect, “Wouldn’t it be nice if...”. This prevents them from achieving an adult understanding that the world isn’t like that and that wishing won’t make it so.

It is no accident, I think, that free market economics had its origins in the Christian West. Nothing is more central to Christianity than the Doctrine of Original Sin. We deplore human evil and have an obligation to mitigate its effects; but we will never abolish it. The Catholic tradition with its reverence for Reason produced Western Science, as well entirely beneficent ideas about the value of every human life. Out of the Catholic tradition came the Scholastics; and the Scholastics produced free market economics.

I would like to close by mentioning three living thinkers, all Catholics, who have important things to say about Morality & Economics.

Tom Woods is an American “Austrian” historian and economist, who has written eleven books (and counting). I am going to recommend in particular The Church and the Market. It is magisterial. In it he critically examines Catholic Social Teaching as expounded in papal encyclicals in the nineteenth and twentieth centuries. Nowhere does he question the popes’ piety or moral sentiments. He does, however, take them and progressive Catholics to task over their economic prescriptions. He says that, as Churchmen, they have no special insight into what effects particular policies will have. If a pious and moral person, even a saint, were to recommend bleeding as a remedy for all manner of diseases, his piety and morals would not be at fault – only his medical expertise.

Jay Richards is an American philosopher. He characterises his attitude as a student thus: God cares about the poor. Socialism talks about the poor. Therefore Christians should be socialists. He then goes on to demolish eight myths relating to morality and economics. You can hear him on YouTube: Money, Greed and God.

Arthur Brooks is the founder of The American Enterprise Institute. He is an economist who is more interested in happiness than in money. He claims, with justification, that the intellectual case for free markets has been comprehensively won. The trinity of Capitalism, the Rule of Law and Private Property has given us the greatest increase in prosperity ever. What is needed is for free-marketeers to win the moral argument.

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