Review: Catholic Economics, Part I

Angus’ Sibley’s new book Catholic Economics: Alternatives to the Jungle touches many of the themes he examined in his 2011 book The Poisoned Spring of Libertarian Economics. Sibley, a longtime member of the London Stock Exchange who converted to Catholicism in 1999, could scarcely be more familiar with the “jungle” that is our world economy today. But, deeply read in Catholic Social Teaching, he sees in that teaching an alternative to what passes for mainstream, orthodox economics today. Anyone who cares about Catholic Social Teaching, or who has suspicions about the way our economy works today (and that latter category includes just about everyone who doesn’t have an office on Wall Street), should read this book.

Sibley’s basic thesis is simply stated: Classical economics, begun by Adam Smith, got many things wrong, most especially the idea that the object of economic policy should be to maximize consumer desires by obtaining lower prices through increased efficiency and avoidance of external restraints on trade. That idea wreaked social and moral havoc in the nineteenth century, and the nastier effects of the market were tamed in the first half of the twentieth century through government intervention, such as Social Security, and changing social mores that, for example, supported unions and shunned union-busting. Then, in the last decades of the twentieth century and unto today, the laissez-faire school of thought has been on the ascendant and is again wreaking social and moral havoc. The antidote to that havoc is Catholic Social Teaching.

Why should it be that the interests of consumers outweigh the interests of workers? And, how to balance those interests because, after all, most of us are both? Sibley points out in a fine section of the book that, whatever one thinks of the moral laxness of the prevailing economic orthodoxy, there is no denying it rests on the belief that consumption must continue to grow in order to stimulate economic growth, and that such consumption has put our entire planet in a bad way, a situation for which the libertarian economists, and their corporate backers, have no solution beyond funding studies that question the science of climate change.

It is not just this policy or that which Sibley thinks is wrong-headed about mainstream economics, it is the basics. For example he writes of one of the champions of contemporary libertarian thought, Friedrick von Hayek:

Hayek likened the free market to a game in which “there is no sense in calling the result just or unjust.” He even wrote that he would love to see the phrase social justice expunged from the English language. And he paid Catholics a pleasing but wholly unintended compliment: he complained bitterly that “the Roman Catholic Church especially has made the aim of social justice part of its doctrine.”

One of the claims made especially by Catholic apologists for libertarian economics is that the market is a mere tool, that can be used well or badly, that its workings are no different from the laws of nature, which only a fool would try to combat. Sibley argues convincingly that this understanding of economics as amoral is not only contrary to Catholic thinking, it does not make evidentiary sense. Economics is about human behavior, so it necessarily entails moral considerations, and some of the attributes of pre-modern economics, such as guilds, made powerful contributions to society that the contemporary jungle has been unable to mimic.

Sibley also recognizes, correctly, that the problem is not merely that in the late eighteenth century, Smith thought the laws of economics could be calculated with the precision of Newtonian laws of physics, a mistake common to that era but one which other disciplines in social science have come to recognize is faulty. The problem with contemporary, mainstream, libertarian economics is its anthropology: It presumes an understanding of the human person that is rigorously autonomous and excessively individualistic. And, no one can doubt that the Church has something to say about anthropology. The criticisms of liberation theology in the 1980s were made on these grounds and, as I have noted before, you could take those condemnation, cut, copy and paste new direct objects, and use the same documents to condemn contemporary libertarian economics.

Here, however, Sibley’s book gets uneven. The first two chapters deal with this issue of human autonomy and freedom, and he raises important points, such as noting that Catholic theology cannot be reconciled with a negative conception of liberty, a freedom from. But, Sibley runs through de Maistre and Tocqueville and Emerson and Orwell at lightning speed, and much of the necessary context is not provided. It is not clear to me why he chose de Maistre, rather than Hamann or Herder or Vico, all of whom were critics of the Enlightenment, and far more thoughtful than de Maistre. The narrative slows down and seems confused at times. These two chapters contain some good insights, but they desperately needed an editor to advocate for the reader.

In Chapter 3, Sibley is back in full stride as he explains financial capitalism and looks at why it is necessary and which abuses seem to stalk it. He notes how, until the Thatcher years, most stockjobbers and stockbrokers in the Coty of London were small firms whose partners risked personal bankruptcy is things went south. After the deregulation frenzy, these small, specialized firms were gobbled up big banks, which led to much larger sums going into investment strategies with increasingly short-term goals and higher trading volumes. This created a boom that was begging for a bust. Sibley also notes that the high marginal tax rates of the postwar era discouraged financial executives from seeking exorbitant salaries, but when Thatcher and Reagan cut those rates, they created an incentive for executives to reward themselves more than handsomely. Greed became good and thousands of Gordon Gekkos smelt the allure of filthy lucre, and followed their noses.  

I will pick up this review tomorrow.