Morality and the Economy

THERE HAS BEEN A MODERN TENDENCY to put a rift between economics and morality. This was not always the case, as moral sentiments had traditionally been seen as a foundational part of the economic science and an increase in the wealth of nations. Economics was viewed as a moral science.

Beginning with the 19th century, starting with such thinkers as David Ricardo (1772-1823) and John Stuart Mill (1806-1873) and in earnest in William Stanley Jevons (1835-1882)and Alfred Marshall (1842-1924), however, the science of economics was progressively divided from morality and came to be viewed as a stand-alone natural or physical science that was empirically based, so as to be something akin to physics or chemistry with their natural laws which have no regard for morality. There is no right or wrong in the laws of thermodynamics. Nor was there right or wrong in the laws of economics. The market was governed by rational self-interest, and not morals. Political economy became economics. Some have called this process the "scientification" of economics.*

In her social doctrine, the Church insists that this separation of economics and morals is wrong and unwise. She insists on the classical and traditional link between morals and economics not be forgotten. "The Church's social doctrine insists on the moral connotations of the economy." (Compendium, No. 330). While the Church recognizes that economics has "its own principles in its own sphere" which is separate from moral science, she also insists that it is "an error to say that the economic and moral orders are so distinct from and alien to each other that the former depends in no way on the latter." (Compendium, No. 330) (quoting Pius XI, Quadragesimo Anno, 23). "The necessary distinction between morality and the economy does not entail the separation of these two spheres, but, on the contrary, an important reciprocity." (Compendium, No. 331)

As the Compendium puts it: "Just as in the area of morality one must take the reasons and requirements of economy into account, so too in the area of the economy one must be open to the demands of morality." (Compendium, No. 331) Economics must obtain values elsewhere than from economics. "[T]he purpose of the economy is not found in the economy itself, but rather in its being destined to humanity and society" since "man is the source, the center, and the purpose of all economic and social life." (Compendium, No. 331) (quoting Vatican II, Gaudium et spes, 63)

The Church insists that there is something greater than economics. A "meta-economic order" exists. Man does not live by bread alone. (Matt. 4:4, Luke 4:4) This seems to be just plain common sense. It is remarkable how this common sense eludes so many modernly.

"The relation between morality an economics is necessary, indeed intrinsic," continues the Compendium of the Social Doctrine of the Church, "economic activity and moral behavior are intimately joined one to the other." (Compendium, No. 331)

The fact that morality and the economy are intertwined does not mean that economic efficiency is not important. "The moral dimension of the economy shows that economy efficiency and the promotion of human development in solidarity are not two separate or alternative aims but one indivisible goal." (Compendium, No. 332). The term "economic efficiency" means a situation where it is impossible to increase general welfare from the available resources. In other words, any effort to make others better off will make others worse-off to the extent that the gains of one are offset by the losses of the other.

In fact, the Church recognizes that there is a moral duty to assuring "economic efficiency," as the "production of goods is a duty to be undertaken in an efficient manner, otherwise resources are wasted." The words "economic efficiency" quite clearly are a reference to the market economy or free economy. And yet "economic efficiency" has its limits. Economic efficiency cannot be sought in an immoral manner, "at the expense of human beings, entire populations or social groups, condemning them to indigence." (Compendium, No. 332) There is a moral limit to the cost/benefit analysis beyond which efficiency must not go.

So the Church gives its guarded approval of a market economy or free economy and even "capitalism" properly understood. Capitalism is a vague term, and so before approving of "capitalism," the Church defines what it understands as "capitalism."** "In the perspective of an integral and solidary development, it is possible to arrive at a proper appreciation of the moral evaluation that the Church's social doctrine offers in regard to the market economy or, more simply, of the free economy." "If by 'capitalism' is meant an economic system which recognizes the fundamental and positive role of business, the market, private property, and the resulting responsibility for the means of production, as well as free human creativity in the economic sector," then Church approves of capitalism. This form of capitalism the Church calls a "business economy," a "market economy," or simply a "free economy." (Compendium, No. 335)

While the Church does not begrudge self-interest insofar as it promotes the common good and is undertaken with justice and solidarity in mind, it does seek to distinguish that act from selfishness which seeks private benefit unjustly or in disregard of others. "The growth of wealth, seen in the availability of goods and services, and the moral demands of an equitable distribution of these must inspire man and society as a whole to practice the essential virtue of solidarity, in order to combat, in a spirit of justice and charity, those 'structures of sin' wherever they may be found and which generate and perpetuate poverty, underdevelopment, and degradation." (Compendium, No. 333) Simply put, we may not get rich at another person's expense.

"The economy has as its object the development of wealth and its progressive increase," and so the Church is not adverse--rather she encourages--economic activity. However, she rightly points out that wealth and its increase is something that is measured "not only in quantity, but also in quality." Wealth and progress are not reducible to "a mere process of accumulating goods and services." To be rich and vicious is not qualitatively wealthier or more conducive to happiness than to be poor and virtuous. There is wealth measurable in the specie of virtue.

To suggest that the measure of wealth is quantitative only, and not qualitative also, is an error, in fact is a "treachery" that can enslave us. It leads to a "civilization of consumption" or a "civilization of consumerism." We thus become "slaves of possession" and "slaves of immediate gratification." (Compendium, No. 334) (quoting John Paul II, Sollicitudo rei socialis, 28) This is a life of vice, not virtue. It is a life of fools, as we should remember that possessions and gratification of the world's goods does not protect us from the fact that there will be one night where our soul shall be required of us. (Cf. Luke 12:20)

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*A short synopsis may be found in James E. Alvey, "A Short History of Economics as a Moral Science," Journal of Markets & Morality 2, no. 1 (Spring 1999), 53-73.
**The Church does not approve of capitalism if it is understood to be "a system in which freedom in the economic sector is not circumscribed within a strong juridical framework which places it at the service of human freedom in its totality, and which sees it as a particular aspect of that freedom, the core of which is ethical and religious." (Compendium, No. 335)

Veritatis Splendor: Part 33--Human Equality and Natural Law

MAN DISPLAYS A GREAT DIVERSITY in his cultures and traditions, not to mention the tremendous diversity of natural, physical, intellectual, and psychological gifts in each individual man, woman, or child. Each man, woman, and child is different, and therefore incommensurable, uncomparable. And yet, for all their uniqueness and incommensurability, they are equal. Not only do they share a common human nature, they are equal when it comes to the moral law. Here is an unalterable, absolute, unchanging truth:

When it is a matter of the moral norms prohibiting intrinsic evil, there are no privileges or exceptions for anyone. It makes no difference whether one is the master of the world or the "poorest of the poor" on the face of the earth. Before the demands of morality we are all absolutely equal.

VS, 96.

The natural law, then, is a great equalizer. It cuts across the entirety of society, through all hierarchies, all socio-economic strata, all castes, all religions, all ideologies to govern all men in all societies, bar none:

In this way, moral norms, and primarily the negative ones, those prohibiting evil, manifest their meaning and force, both personal and social. By protecting the inviolable personal dignity of every human being they help to preserve the human social fabric and its proper and fruitful development. The commandments of the second table of the Decalogue in particular — those which Jesus quoted to the young man of the Gospel (cf. Mt 19:19) — constitute the indispensable rules of all social life.

VS, 97. By being the great equalizer, the natural moral law--and the human rights that flow from it--is a bulwark against totalitarianism of every kind--whether ideological or as a result of moral relativism. VS, 99.

There is no part of man's life--private or public--that would be outside the pale of the natural moral law. All his activities, from the most mundane to the most transcendent, are governed by moral considerations. "Thus, in every sphere of personal, family, social and political life, morality — founded upon truth and open in truth to authentic freedom — renders a primordial, indispensable and immensely valuable service not only for the individual person and his growth in the good, but also for society and its genuine development." VS, 101.

Democracy is not insulated from totalitarianism. It is an error to think that the democratic process is sufficient to preserve the freedoms and rights of its citizenry. Democracy coupled with moral relativism is a recipe for totalitarianism of a different kind. As the Pope, who haled from Poland and saw first-hand the evils of Marxist communism, warns:

[T]here is no less grave a danger that the fundamental rights of the human person will be denied and that the religious yearnings which arise in the heart of every human being will be absorbed once again into politics. This is the risk of an alliance between democracy and ethical relativism, which would remove any sure moral reference point from political and social life, and on a deeper level make the acknowledgement of truth impossible. Indeed, "if there is no ultimate truth to guide and direct political activity, then ideas and convictions can easily be manipulated for reasons of power. As history demonstrates, a democracy without values easily turns into open or thinly disguised totalitarianism."

VS, 101 (quoting Centesimus annus, 46).

The Ten Commandments, both in their general terms and through their more specific demands, are binding upon all men:

These commandments are formulated in general terms. But the very fact that "the origin, the subject and the purpose of all social institutions is and should be the human person" allows for them to be specified and made more explicit in a detailed code of behavior. The fundamental moral rules of social life thus entail specific demands to which both public authorities and citizens are required to pay heed. Even though intentions may sometimes be good, and circumstances frequently difficult, civil authorities and particular individuals never have authority to violate the fundamental and inalienable rights of the human person. In the end, only a morality which acknowledges certain norms as valid always and for everyone, with no exception, can guarantee the ethical foundation of social coexistence, both on the national and international levels.

VS, 97.

Manifestly, the world's "principalities and powers," its princes, ministers, and presidents, its multinational corporations, face and often cause "serious forms of social and economic injustice and political corruption," and these are often the result of violation of fundamental moral norms, particularly involving the violation of fundamental human rights which find their bases in those exceptionless norms of the natural law. Any reform, any "radical personal and social renewal capable of ensuring justice, solidarity, honesty, and openness," must not only be rooted in a "moral sense," but must also be "rooted and fulfilled in the religious sense." VS, 98.

This, of course, means that God must be at the center of all efforts at rectifying social and economic injustice among men.

Only God, the Supreme Good, constitutes the unshakable foundation and essential condition of morality, and thus of the commandments, particularly those negative commandments which always and in every case prohibit behaviour and actions incompatible with the personal dignity of every man. The Supreme Good and the moral good meet in truth: the truth of God, the Creator and Redeemer, and the truth of man, created and redeemed by him. Only upon this truth is it possible to construct a renewed society and to solve the complex and weighty problems affecting it, above all the problem of overcoming the various forms of totalitarianism, so as to make way for the authentic freedom of the person.

VS, 99.

The natural moral law, of which God is the author as he is the author of our nature, will therefore necessarily govern economic and political questions, as these are nothing other than personal questions of morality writ large.

The economic sphere, if governed within the natural moral law, will exhibit certain features:

• There will be a certain temperance, a moderation of attachment to the goods of the world.


• There will be an attachment to the virtue of justice, a desire to give to our neighbor his due.


• There will be a sense of solidarity among the members of the system, which means that the Golden Rule will be followed and kept, and that there will be a sense of shared duty, of the acceptance of burdens, of helping those who are weakest or poorest.


• Some behavior will not be tolerated:




• Theft, deliberate retention of goods lent or objects lost.


• Business fraud.


• Unjust wages.


• Forcing up prices by trading on the ignorance or hardship of the other.


• Misappropriation and private use of corporate property of an enterprise.


• Work badly done.


• Tax fraud.


• Forgery of checks and/or invoices.


• Excessive expenses.


• Waste of resources.


• Any enslavement of human beings, or any system that shows disregard for their personal dignity such as chattel slavery.

Similarly, the political sphere will be influenced by the natural moral law and will exhibit certain features:

• The governing authorities will recognize an obligation to tell the truth to those being governed.


• There will be an openness in public administration.


• There will be impartiality in the service of the body politic.


• There will be respect for the rights of political adversaries.


• There will be safeguards which assure fair trials and which prevent summary trials and convictions.


• Public funds will be justly and honestly used.


• Equivocal or illicit means to gain, preserve, or increase power at any cost will be rejected.