To Promote Justice, Study Economics
New York Times best-selling author Dr. Thomas Woods (The Politically Incorrect Guide to American History) has penned a very powerful book illustrating the compatibility between free-market capitalism and the Catholic Faith.
In The Church and the Market: A Catholic Defense of the Free Economy Woods's thesis is essentially this: economics is a science with verifiable laws, and Catholics who wish to promote justice in matters of finance should study it as a science. Woods writes:
Moral principles and economic science are meant to play complementary roles. A sound moral foundation can help us to evaluate existing economic institutions in light of genuine principles of justice. Without economic knowledge, on the other hand, the moralist’s advice can prove profoundly misguided, even destructive.
Champions of the free market such as Woods are frequently assailed by fellow Catholics for supposedly refusing to admit ethical principles into economics. As the above comment suggests, this is a straw man argument. Rather than subjugating the role of morality in monetary decisions, Dr. Woods insists that even seemingly peripheral decisions on inflation and fractional-reserve banking possess a moral component.
To provide an example of those who studied economics in order to promote justice, Woods offers the medieval Spanish scholastics. The primary objective of the Spanish scholastics was to answer moral questions regarding what constituted justice in the economic sphere, but they recognized that they had to learn the science of economics before they formulated their answers.
Intentions Cannot Argue with Results
The “just price” issue provides a classic example. Some Catholics maintain that in an effort for things be sold at a just price, the price should be set artificially. They claim that a just price determination cannot be obtained in a free-market environment.
Modern critics suggest that the medieval guild system was the proper entity to determine what this just price would be; but the Spanish scholastics, who lived during the time of the guilds, warned that this simply gives rise to a monopolistic structure. The way to determine the price (absent of course, of fraud) is for the free market to determine such a price. If exorbitant prices exist, competitors will enter the market and drive prices lower. Allowing the free market to determine a price is the natural way of determining a thing’s worth — there is no practical alternative.
The author uses a few examples to show how well-intentioned policies routinely backfire, causing more harm than good. For instance, Woods details how international aid has served to keep the residents of Third World countries in poverty, how welfare attacks the family, and how minimum-wage laws create unemployment. Woods, of course, agrees that Christians should aim at helping the poor, but posits that government programs are not the best, and are possibly the worst, way of achieving the end of benefiting the needy.
Facing America's Challenges
Woods spends almost a quarter of his book critiquing distributism, a wealth-redistribution-through-taxation plan popularized by Hilaire Belloc. Many modern distributists equate capitalism with the current American economic system. Woods illustrates that this notion is invalid, and carefully illustrates the dichotomy between the two, pointing out that the American system is, at times, both philosophically and institutionally hostile toward free enterprise. This is where Dr. Woods and his anti-capitalist opponents would agree: both find the American economic system troublesome.
The author lays waste many arguments in favor of distributism, pointing out that the amount of historical evidence against its efficacy is overwhelming. If distributism fails in theory, it is utterly destructive in practice.
Another fascinating observation the author makes is showing the similarity between Austrian economics and the economic thought of the Spanish scholastics in medieval Spain. It is ironic that while some Catholics who are philosophically of the Austrian school of economics are often criticized by fellow faithful for adhering to non-Catholic thinkers like Ludwig von Mises, the simple fact is that these Austrians possessed deeper admiration for the Spanish scholastics than do most Catholics. It is predominantly the Austrians who have ensured the survival of the work of these scholastics.
Critics of Woods unfairly argue that Austrians have made comments that were very incompatible with the Faith, and therefore they should not be studied. Of course, as Woods reminds us, St. Thomas Aquinas was criticized for hailing Aristotle’s brilliance, and St. Augustine no doubt was questioned for his preoccupation with Plato.
The Church and the Market is by no means an exhaustive study of the field of economics, nor is it meant to be. As Dr. Woods would no doubt agree, it simply scratches the surface of many important economic issues; what it is meant to do is challenge the reader to think differently about issues of money, finance, and taxation. As Catholics search for a system through which to promote justice in the financial sphere, perhaps they will find that free market capitalism is the best way to do it.
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John Clark may be reached directly at 888-764-2423.
