Catholic Economist's Guide Book

This peculiar travel guide attempts to map out the relationship between Catholicism and economics. Some readers may be hoping to see Catholic teaching authorities accept more input from economists, while others might seek to critique certain approaches to economics from a Catholic perspective. Both might be true of some readers, and others may simply be Catholic students of economics seeking to better understand how those two parts of themselves can fit together.

(This guide is a wiki, which means that if you think of a way to improve it, whether in a small way by adding a relevant link or in a bold way by adding a new section, you can make the change right now. Don't worry, it's easy to undo any mistakes, though there will be a permanent record of your IP address or username making the edit. If a disagreement arises with different people undoing each other's edits, we will try to find a resolution on the discussion page.)

In general terms, scientific research and Catholic thought each have something valuable to offer the other. Theology should be informed by the disciplined study of humanity according to the various scientific disciplines. Science can benefit from a careful scrutiny of its ethical content and potential blind spots from the perspective of the Catholic tradition, the result of thousands of years of human experience and reflection and, for Catholics, the repository of God's revelation.

Relevant Economics Associations

There are associations for economists interested in discussing the relationship between economics and Catholicism, or Christianity more broadly. They host conferences or conference sessions and publish journals or newsletters.

• Catholic Research Economists Discussion Organization (CREDO)
  • helps organize the Lumen Christi Institute conferences held annually in Chicago, and organizes meetings at the annual ASSAs, starting in 2014
  • CREDO's newsletter, "On the Margin" began in March 2014, with plans to publish it semiannually
• Association of Christian Economists (ACE)
  • publishes the Faith & Economics journal
  • organizes sessions at the ASSAs
• UK Association of Christian Economists
  • publishes the ace discussion papers (the ACE Journal was discontinued in 2009)
  • hosts an Annual Study Group Conference, usually at Cambridge University
• Association for Social Economics (which was the Catholic Economic Society prior to a name change in 1970)
  • publishes the Review of Social Economy
  • publishes Forum for Social Economics
  • organizes a World Congress of Social Economics held every 2-3 years, and organizes sessions at the ASSAs as well as the meetings of five regional economics associations
  • a list of authors and articles in RePEc

Basic Catholic Ideas and Practices

While some might argue that economics and Catholic Christianity have no overlap, it seems clear that the Catholic faith has implications for the subject matter of economics. In some instances, there is alignment. For example, Catholic teaching affirms the dignity of the individual and economics generally defers to the free choices of individuals. However, a Catholic student may experience confusion or discomfort about other principles of economics. For instance, economics highlights the advantages of competition and seemingly seeks to uncover selfish motivations behind every human act, whereas Catholicism counsels working for the sake of others and claims that people are capable of loving others, including those completely unrelated to them, even when there is no possible benefit for themselves.

Pope Francis recently summarized the implications of faith for social questions this way, expanding on quotes from Pope John Paul II and the Compendium for the Social Doctrine of the Church:

To believe in a Father who loves all men and women with an infinite love means realizing that “he thereby confers upon them an infinite dignity”. To believe that the Son of God assumed our human flesh means that each human person has been taken up into the very heart of God. To believe that Jesus shed his blood for us removes any doubt about the boundless love which ennobles each human being. Our redemption has a social dimension because “God, in Christ, redeems not only the individual person, but also the social relations existing between men”. To believe that the Holy Spirit is at work in everyone means realizing that he seeks to penetrate every human situation and all social bonds: “The Holy Spirit can be said to possess an infinite creativity, proper to the divine mind, which knows how to loosen the knots of human affairs, even the most complex and inscrutable”. Evangelization is meant to cooperate with this liberating work of the Spirit. The very mystery of the Trinity reminds us that we have been created in the image of that divine communion, and so we cannot achieve fulfilment or salvation purely by our own efforts. From the heart of the Gospel we see the profound connection between evangelization and human advancement, which must necessarily find expression and develop in every work of evangelization. Accepting the first proclamation, which invites us to receive God’s love and to love him in return with the very love which is his gift, brings forth in our lives and actions a primary and fundamental response: to desire, seek and protect the good of others.

If it is true that "God, in Christ, redeems not only the individual person, but also the social relations existing between men," is it possible that economics and a theological understanding of redemption can be completely independent of each other? If it is true that "God's love...brings forth...[a desire for] the good of others," can that process be somehow invisible or irrelevant to economics? Perhaps so, but it is not immediately obvious how either is possible. If not, then understanding the relationship between theology and economics would seem to be an urgent task for theology and a potentially fruitful, though admittedly fraught, avenue for economics research.

Albino Barrera, O.P., has a number of books that address core theological questions related to economics: http://www.providence.edu/theology/faculty/Pages/abarrera.aspx Here is a nice review of one of his first books by Dan Finn: http://www.marketsandmorality.com/index.php/mandm/article/download/296/286

Catholic Social Doctrine

Catholic social doctrine (CSD) is the body of Catholic teaching on economic and social issues. Like all Catholic teaching, it is grounded in Scripture and Tradition. CSD in particular is generally given its definitive expression in papal encyclicals, the most recent of which is Pope Benedict XVI's 2009 Caritas in Veritate. The 2004 Compendium of the Social Doctrine of the Church summarizes previous CSD. Local bishops conferences apply CSD to particular situations, such as in the US Bishops' 1986 statement Economic Justice for All. (The current positions of the US Conference of Catholic Bishops on economic issues are summarized at this website.) The broader category of Catholic social thought includes the writings of other Catholic thinkers as well, such as Peter Maurin and Michael Novak.

The Second Vatican Council defined the Church's understanding of the relationship between science and doctrine this way: "...if methodical investigation within every branch of learning is carried out in a genuinely scientific manner and in accord with moral norms, it never truly conflicts with faith, for earthly matters and the concerns of faith derive from the same God" (Gaudium et Spes, #36) However, it is easier said than done to avoid improper conflicts between science and faith.

One example from CSD that many economists might find surprising is Pope John Paul II's notion that "superdevelopment" is just as problematic as the economic underdevelopment that results in poverty:

...side-by-side with the miseries of underdevelopment, themselves unacceptable, we find ourselves up against a form of superdevelopment, equally inadmissible, because like the former it is contrary to what is good and to true happiness. This super-development, which consists in an excessive availability of every kind of material goods for the benefit of certain social groups, easily makes people slaves of "possession" and of immediate gratification, with no other horizon than the multiplication or continual replacement of the things already owned with others still better.

There are, of course, two possibilities regarding statements of CSD that are seemingly at odds with the standard economic way of thinking. On the one hand, it is possible that the CSD statement is mistaken, suffering from an inadequate understanding of economics. On the other hand, it may be that the CSD notion points to a truth that is difficult to see through the lens of economics. In any case, Catholics and economists have a wide range of views on the relationship between Catholic doctrine and economics, though most commentators agree that there is some tension between the two. For example:

• Thomas Storck argues that, "Catholic moral teaching simply cannot accept the market according to its own logic..." in the The Distributist Review, for which he serves on the editorial board.
• Fr. Robert Sirico argues that Catholic teaching can and should fully endorse the logic of markets in Religion and Liberty, a publication of his Acton Institute.

Views of Economists

Contrasting views can also be found among economists:

• Tyler Cowan discusses (the apparent lack of) prominent Catholic economists in "Who are the Catholic economists?" and argues that Pope Benedict XVI's encyclical Caritas in Veritate is incoherent in his Wall Street Journal piece "Vaticanomics: The Holy Father Tackles Globalization."
• Joseph Kaboski interprets some of the key terms in Benedict's encyclical to make them more comprehensible for economists in his Comment on Hittinger’s “Divisible Goods and Common Good: Reflections on Caritas in Veritate."
• John Larrivee discusses the same encyclical in "Caritas in Veritate: Learning Lessons about Truth, Religion, and Civil Society from the Economic Experiments of the Twentieth Century".
• Heterodox economist Charles Wilber (emeritus at Notre Dame) argues that it is difficult to be a Christian economist in "Can a Christian be an economist?"
• Stacie Beck critiques Catholic social justice advocates (and a Catholic textbook for 4th graders, in particular) in America Magazine.
• Daniel Finn's book The Moral Ecology of Markets aims to mediate between conflicting views on the morality of markets.
• Andrew Yuengert describes his experiences with research integrating theology and economics in "The Conversation between Economics and Theology in Christian Colleges."
• Mary Hirschfeld surveys the challenging state of the dialogue between economics and theology in "Discussion: Economics and Theology in Conversation"

Economics of Religion

Some economists have analyzed religion in its various aspects, including Catholicism.

Broad Perspectives

Understanding the often caricatured viewpoints of "libertarians" and "social justice activists" can help illuminate existing debates on specific topics though there is a danger in oversimplifying opposing viewpoints and exaggerating distinctions at the expense of nuanced understanding.

Specific Topics

Immigration

USCCB Catholic Social Teaching on Immigration and the Movement of Peoples: http://www.usccb.org/issues-and-action/human-life-and-dignity/immigration/catholic-teaching-on-immigration-and-the-movement-of-peoples.cfm

Measurement of well-being

• Olinga Ta'eed and the measurement of intangible values.
• S&P "Catholic Values Index"

Relevant economic initiatives of Catholic inspiration

The Church has stated emphatically that Catholic Social Doctrine is not a third way between communism and capitalism, and is not an attempt to present technical solutions to economic problems. Needs and technical solutions vary over time and it is the role of the laity to apply Catholic Social Doctrine in particular contexts.

The Church has no models to present; models that are real and truly effective can only arise within the framework of different historical situations, through the efforts of all those who responsibly confront concrete problems in all their social, economic, political and cultural aspects, as these interact with one another.

Nomadelfia

On Sunday, May 21, 1989, Pope John Paul II visited Nomadelfia. Nine years before, when receiving a group of Nomadelfians at Castelgandolfo, he stated: "If we are called to be the sons of God and brothers, then Nomadelfia is a presage of the world to come"

Nomadelfia is a community of Catholics who voluntarily live with no private property and no money; all the goods are shared, the families are open to adopt children and live in "family groups" (4 or 5 families).

It was established by Dn. Zeno in 1948, but is a Catholic parish since the end of 1961. According to its official website, Dn. Zeno was in National Service in Florence when encountered an anarchist who sustained that Christ and the Church were obstacles to human progress; Zeno sustained the opposite but found himself overwhelmed by the background knowledge of the anarchist, then he decided: "I will answer him with my life. I will change civilization by first changing myself. For the rest of my life, I want to be neither a servant nor a master". Eventually, Dn. Zeno studied law and theology in Milan, and later became a priest.

During the World War II, Fr. Zeno welcomed abandoned children and founded "Little Apostles", soon, young faithful women joined the group and became "mothers of vocation". After World War II, in 1947, the "Little Apostles" occupied a former concentration camp and built their new town, naming it "Nomadelfia", "law of brotherhood" in Greek.

Even when facing many troubles, in 2011 Nomadelfia had a population of 320 people organized in 50 families. In 40 years, "mothers of vocation" had adopted more than 5000 children .

Employee stock ownership plans

Based on the fact that (fixed) capital (e.g. machinery) can participate in the production of wealth, Louis O. Kelso developed some economic ideas that come to be called "binary economics". If capital can produce wealth, then the only way to assure a living wage is the widespread participation on this capital, else, the workers face decreasing real wages over time. Kelso then proposed a plan to turn corporations into worker-owned companies without using expropiation: an extension of capital by a credit made to the workers, and paid by company's revenues.

Social credit

Mayor C.H. Douglas considered it odd that money is not a good with intrinsic value, but a medium of exchange created out-of-thin-air by bank's loans. This led Douglas to wonder why the banks (or the association of banks, called Federal Reserve in the United States) were the only ones with the capacity to issue money. Douglas proposed community-controlled emisions of money with a sort of living wage for every member of the community that comes not from the redistribution of income, but form the participation in the dividends of the social production. . In this sense, Social Credit seems like a technical proposal to answer the call of St. John Paul II in "Centesimus Annus":

(n. 34) It is a strict duty of justice and truth not to allow fundamental human needs to remain unsatisfied and not to allow those burdened by such needs to perish.

The core of the Social Credit is the so-called "A+B Theorem" that could be explained "a structural defect or rather a series of defects that either cause or permit a gap between the rate at which final prices are generated in the economy and the rate at which consumer incomes are liberated in the production of the respective goods and services" it could be roughly summarized in the money paid for goods and services is not used completely in the purchases of those same goods and services, then generating the need for credit.

"So now at last I have come to the question of money, which is what some people think that Social Credit is all about; but it isn't! Social Credit is an attempt to apply Christianity in social affairs; but if money stands in the way, then we, and every Christian, must concern ourselves with the nature of money, and just why it stands in the way, as it surely does."

In this sense, this face of the Social Credit schemes is a direct response to what Pope Pius XI wrote in the encyclical "Quadragessimo Anno":

106. This dictatorship is being most forcibly exercised by those who, since they hold the money and completely control it, control credit also and rule the lending of money. Hence they regulate the flow, so to speak, of the life-blood whereby the entire economic system lives, and have so firmly in their grasp the soul, as it were, of economic life that no one can breathe against their will.

Fractional banking lets financial system break any link with the real production .

"The root of the economic problem is not to be found in the mere fact that the private banks create the bulk of the money supply ex nihilo, nor in the mere fact that they then proceed to charge interest on the monies that they loan out. The root of the economic problem has to do with policy. The financial system serves the wrong policy. Instead of facilitating to the greatest possible extent the efficient delivery of those goods and services that people can use with profit to themselves, the conventional financial system centralizes wealth, power, and privilege in the hands of those who have acquired monopoly control over financial credit. The policy which the private banks currently administer is a self-serving policy in lieu of what might be termed common policy: that policy which would serve the best interests of each citizen."

Under this circumstances, Mayor C. H. Douglas proposed the creation of a debt-free dividend that should be distributed among every member. Basically, it "is to distribute economic votes (money) in the same way as are distributed political votes, that is, free of charge and on the basis that we all get an equal share, and in an amount equal to the deficiency of purchasing power at the time"

There is a strong relation between some proposals of the Social Credit and other from keynesian monetary economics , in fact, it's unavoidable to relate the Social Credit main ideas with those proposed by Modern Monetary Theory

In practice, one of the most known cases of Social Credit applied was Alberta, Canada

Cooperatives

Mondragón and Fr. José María Arizmendarrieta

Solidarism

Alberto Martén Chavarría and the solidarist movement in Costa Rica.

The intermediate structures.

The limits of the government-side implementation.

Economy of Communion in Freedom (EoC)

Chiara Lubich About profits and gifts. Giving enterprises social purposes

It has an special recognition in Benedict XVI's encyclical Caritas in Veritate :

46. When we consider the issues involved in the relationship between business and ethics, as well as the evolution currently taking place in methods of production, it would appear that the traditionally valid distinction between profit-based companies and non-profit organizations can no longer do full justice to reality, or offer practical direction for the future. In recent decades a broad intermediate area has emerged between the two types of enterprise. It is made up of traditional companies which nonetheless subscribe to social aid agreements in support of underdeveloped countries, charitable foundations associated with individual companies, groups of companies oriented towards social welfare, and the diversified world of the so-called “civil economy” and the “economy of communion”. This is not merely a matter of a “third sector”, but of a broad new composite reality embracing the private and public spheres, one which does not exclude profit, but instead considers it a means for achieving human and social ends. Whether such companies distribute dividends or not, whether their juridical structure corresponds to one or other of the established forms, becomes secondary in relation to their willingness to view profit as a means of achieving the goal of a more humane market and society. It is to be hoped that these new kinds of enterprise will succeed in finding a suitable juridical and fiscal structure in every country. Without prejudice to the importance and the economic and social benefits of the more traditional forms of business, they steer the system towards a clearer and more complete assumption of duties on the part of economic subjects. And not only that. The very plurality of institutional forms of business gives rise to a market which is not only more civilized but also more competitive. (Italics in the original)

A review of Lorna Gold's book on the Economy of Communion by Michael Naughton was published in the Review of Social Economy

Catholic Resources for Teaching Economics

• Catholic Business Education Project - Yeungert and others
  • Curricular Resources generated by the project
• Vocation of the Business Leader Curricular Resources, based on the document issued by the Pontifical Council for Justice and Peace
• Catholic Social Thought and the Economic Problem syllabus by Charles M. A. Clark
• Economics, Ethics, and Public Policy syllabus by Charles K. Wilber
• Teaching the Principles of Economics: Reconciling the Canon of the American Economics Association to Catholic Social Thought, by Douglas Meador, Ph.D. (requires subscription)

Abstract: The American Economics Association, through its Committee on Economic Education, has worked since 1950 to develop a set of standards for what is taught in introductory economics courses. The result is the Test for Understanding in College Economics. The TUCE has come to define a canon of expectations for students in college business schools. Some tenets of the canon set it at odds with Catholic social thought. This article attempts to place the AEA canon into a Catholic social thought framework and includes some concluding thoughts on pedagogy.

• Courses without materials available online
  • "Economics and Catholic Social Thought," taught by Joseph Kaboski at Notre Dame U.

Other Resources

• Pontifical Academy of the Social Sciences
• Catechism of the Catholic Church
• Journal of Catholic Social Thought
• Pax Romana: Catholic Movement for Intellectual and Cultural Affairs
• The Society of Catholic Social Scientists
  • They published an Encyclopedia of Catholic Social Thought, Social Science, and Social Policy
  • They also publish The Catholic Social Science Review
• Catholic Encyclopedia (1914)
• Oxford Handbook of Christianity and Economics
• Catholic Social Teaching and the Market Economy is a book published by the Institute of Economic Affairs, a British free market think tank. The full text is available free online.