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Cui bono? Bringing Thomistic thought to bear on modern economics

In her new book, economist and theologian Mary L. Hirschfeld makes a welcome contribution to a distinctive, Catholic way of looking at economics.

Photo by Markus Spiske on Unsplash

Last January, the Vatican issued a “Bolletino” titled Oeconomicae et pecuniariae quaestiones, subtitled “Considerations for an ethical discernment regarding some aspects of the present economic-financial system.” Like many such Vatican documents on complicated social questions, the Bolletino is a mixed bag. There are clear statements of longstanding Catholic principles, such as that “markets do not regulate themselves,” and a recognition that despite gains in wealth, inequality and poverty still remain, and in some places remain extreme. Further, the document notes that economics relies on a vision of the human person at odds with modern tendencies to define people as consumers or customers. So far so good. But the Bolletino also contains too-brief analyses of very abstruse financial instruments and a capsule summary of the “financial crisis” of a decade ago; it is likely that this is the first time the phrase “credit default swaps” has appeared in a Vatican document.

The Bolletino comes at an important time. Catholics, especially in America but throughout the West and the world, are rethinking once again the relationship between economics—particularly in its “global capital” or “neoliberal” varieties—and Catholic social thought. Until very recently, in the American or more generally Western context that debate was thought to have been settled. Communism was the enemy of the Church; it was also the enemy of capitalism. Some Catholic thinkers then thought that because communism opposed both, capitalism and Catholicism must be compatible with one another. Further, this “capitalism” was one of worldwide free markets with an emphasis on financial instruments and abstract forms of wealth, rather than industry or farming. The 1991 papal encyclical Centesimus Annus can be thought of as the high-water mark by proponents of this line of thought, since that document praised private property and seemed to condemn centralized planning and what it called “real socialism.”

But more recently a generation of Catholic critics has emphasized other parts of Catholic teaching, also evident in Centesimus and other papal writings. This teaching promotes ideas like the just wage, rights of workers against oppression, and a suspicion generally that economics is a standalone “science” separate form ethical concerns. More generally, this school of thought suggests that “capitalism” may itself inscribe patterns of behavior and injustice hostile to Catholicism.

Unfortunately, this important debate has been hindered by the fact that so few of the participants have the facility with both economics and theology to make sense of their commonalities and differences, or to think of the former in light of the latter. Theologians too often condemned the mere notion of business or profit-seeking as immoral; economists thought theology irrelevant to the hard facts of buying and selling. Now comes Mary Hirschfeld, who received her economics doctorate before her conversion, and her theology one afterwards. She knows economics as a discipline, and more importantly she knows how and where it diverted from Catholic thought and where it is the same. Her new book from Harvard University Press, Aquinas and the Market: Toward a Humane Economy, is a welcome contribution to returning to a distinctive, Catholic way of looking at economics, but one that does not rest on unrealistic abstractions or misunderstandings.

Hirschfeld identifies one critical commonality between Catholic teaching on economics, seen through the lens of St. Thomas Aquinas, and that of academic economists: both seek to explain human choices. For the economist, the dominant model is what is called “rational” choice theory. Now—and this is the first of Hirschfeld’s helpful correctives—rational choice theory is not the same as the concept of homo economicus, a being with no end other than the material. The rational choice model “simply says that people efficiently calculate how best to achieve their desired ends but is silent about the nature of those ends. Rational agents can pursue a range of ends, ruthlessly furthering their narrow self-interest in making as much money as possible, say, even if they were running a slave market, but the rational choice model can also account for a Mother Teresa, so long as she efficiently deploys her resources to succor the poor as well as possible.” That model is often reduced to complicated mathematical formulas that tend to marginalize the most important question: does it matter what those ends are, which people are so efficiently pursuing? Without them, those models tend to treat all ends as equal, and material ends as the only ones that count. Enter Aquinas.

Aquinas, too, knows that people make choices, but for Aquinas people are oriented toward happiness, not maximizing utility. That is, Aquinas sees a substantive good against which people’s choice can be measured. This difference in what Hirschfeld calls “metaphysical assumptions” about human wants “has important ramifications for how we understand human rationality, the role of economic activity, and the relationships between ethics and economic issues.” Moving from this basic commonality of human choice and core disagreement about the ends of our choices, Hirschfeld draws out the implications of a Thomist economics. In the traditional Thomist view “the good of economic efficiency carries no weight in its own right.” Rather, “neither markets nor natural wealth have value independent of their role in servicing the higher goods they support,” such as happiness. And as Hirschfeld shows, the abstractions of rational choice are fading before new kinds of thinking about economics that share the empirical and non-material interests of Catholic economics. Indeed, contemporary economics has even begun to recognize the role of happiness in economic decision-making, and that efficiency tells only part of the story.

Because modern economic theory places such emphasis on efficiency, the use of money as a means of exchange can threaten to replace the substantive goods represented by that exchange. That was one problem with the financial crisis: the complexity of the instruments being used was one thing, but the greater problem was that the market for these instruments had lost connection to reality and the goods those instruments were intended to serve. For Hirschfeld, as for Aquinas, economics is a matter of justice as well as exchange: for persons to demand the “lowest” price as determined by a formula can deny the fact that those in the other side of the exchange have their just needs as well. The emphasis is wrongly placed on squeezing out the greatest advantage against another, rather than seeking out the most just arrangement. Hirschfeld skips the vexed question of usury, but notes that Thomas’ focus on justice and substantial goods could support certain interest-bearing transactions.

It is when she considers the consumer economy that Hirschfeld’s analysis becomes even more radical. An economy is not only efficient to the extent possible, but well-ordered; “rational choice, in contrast, invites us to make our choices in a piecemeal fashion without thinking carefully about how various goods and services fit into the overall pattern of our lives.” If we believe that some goods are not served by efficiency, then an economy which stresses them (through the price mechanism) may themselves be harmful for human flourishing. Hirschfeld takes the example of household chores such as dishwashing. Modern appliances make work easier and quicker; but because our demand for convenience can be boundless, we make repeated choices for more and more such devices, which may lead us to remodel our homes, which then may cause a family to have to work harder to afford such and to spend less time together. A series of choices seen only from the vantage point of efficient time-usage, without being ordered to the substantive good (here, of family life), may very well result in less well being, not more.

A Thomistic economics teaches us that economic goods are, and are always, simply instrumental goods to assist us in human flourishing and ultimately in getting to Heaven. His teaching on private property, charity, and economic justice can help erode the emphases modern economic life places on measuring income as happiness and efficiency as an end goal, even if that goal crushes workers and results in less happiness. Hirschfeld has provided a new starting point for a discussion of what economics should be for.

Aquinas and the Market: Toward a Humane Economy
by Mary L. Hirschfeld
Harvard University Press, 2018
Hardcover, 288 pages

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About Gerald J. Russello 4 Articles
Gerald J. Russello is editor of The University Bookman ( and editor of two volumes of work by Christopher Dawson.


  1. Rusello mentions the Vatican document Considerations for an Ethical Discernment Regarding Some Aspects of the Present Economic-Financial System (Oeconomicae et pecuniariae quaestiones), May 2018.

    Hirschfeld’s book, which he then reviews, presents its case more at the level of microeconomics (consumer-level choices over ends as well as means, not limited to economic efficiency or utility alone), the Vatican document goes on to address the still-statistical level of macroeconomics and, now, new outside-the-box global implications involving long-term ends, side effects, and the common good.

    Some non-comprehensive observations:

    First, according to the Vatican, losers in the worldwide economy (imaged accurately as an “organism” or “entity”?) are no longer simply subject to possible exploitation as a “labor” input (a focus of Rerum Novarum, 1891). Now can they find themselves gang-planked as “outcasts” and “leftovers” (n. 15)? Might global market managers inadvertently TRIAGE some populations? e.g., who will finance water wells in expanding regions of desertification?

    Second, in view of intergenerational solidarity, Considerations also wonders if we too often are eating our seed corn for the future. British coal, American and rain forest timber, our global amniotic atmosphere (and even human ingenuity) are NOT INFINITE after all.

    Third, resonating with the Hirschfeld contribution, Considerations proposes that distribution of benefits AND the multiplication of benefits—-both together—-can proceed from a more person-oriented and relational economy (n. 20).

    (Considerations suggests, for example, a broad band of small-is-beautiful initiatives in the service of FAMILIES understood as more than economic units: “cooperative credit, microcredit, as well as the public credit, in the service of families, businesses, the local economies, as well as credit to assist developing countries.”)

    Fourth, on institutional architecture, what is the critical DIFFERENCE between a world authority or “government” and global “governance”? Pope Benedict XVI, in Caritas in Veritate (2009), and Considerations, both do a clearer job of integrating global solidarity with subsidiarity than does the (multi-author and hastily edited?) Laudato Si (2015).

    Benedict wrote: “…there is urgent need of a true world political authority, but also that,“…THE PRINCIPLE OF SUBSIDIARITY MUST REMAIN CLOSELY LINKED TO THE PRINCIPLE OF SOLIDARITY AND VICE VERSA (italics in the original), since the former without the latter gives way to social privatism, while the latter without the former gives way to paternalist social assistance that is demeaning to those in need.” (n. 58).

    Yes, a “new starting point for discussion.” And a worthy and more integrated perspective for good work by Catholic higher education whenever it outgrows its 1968 Land o’ Lakes snit.

  2. Good topical commentary. But Beaulieu is too kind in referring to Laudato Si as merely multi-authored and hastily edited. It is a laughable dung heap of failed German nihilism and self-contradiction within its pages.

  3. It never ever ceases to amaze me how people confuse the science of economics with moral questions. All economics as a science does is explain that if people have a specified set of preferences and a specified set of rules in which they can satisfy those preferences, then actions will play out in certain very specific way. You might not like that way and indeed that way may be bad objectively speaking, but at least you can know that it will play out in a certain way. For instance, if you make alcohol illegal, you get gangs and bootlegging and terrible government crackdowns. But you blame the messenger (Economics) for the message. Markets are simply the name we give to the phenomena of preferences working themselves out under a given set of rules. If you don’t like the outcome, then you can always change the rules which almost always means police and guns and violence. Or better yet, how about if, as disciples of Christ, we work to change the preferences. I really do not get what is so hard here. Stop blaming economics or the market when it’s really our sin hardened preferences that deserve the blame.

  4. Good article and comments. Strange how people who would never think of trying to defy the law of gravity and jump from an airplane without a parachute think nothing of twisting the laws of economics, a la Marx and Bernie, to suite their own purposes and then everything turns to dross. Economics takes a bit longer to manifest at times than physics but eventually it will have its way.

  5. The article performs an essential service in today’s society, reminding us that, just as the so-called hard sciences such as math and physics are based on the absolutes of objectively observed evidence, the social sciences are also based on an absolute. That is the natural law written in the hearts of every human being, and consisting of God’s Nature, self-realized in His Intellect and reflected in His special creation, man.

    The difficulty with the social sciences is that while God exists, and that existence and that of the natural law that is God can be proved by the force and light of human reason, we only know it by applying our imperfect human reason to the things created, not directly to the Creator. We therefore see “as through a glass in a dark manner” and are liable to make mistakes.

    That is why it might be useful to consider the possibility that the understanding of money in Hirschfeld’s book might not be completely adequate, or at least not expressed with sufficient clarity. I refer specifically to the implication that economic activity — exchange — is possible without money.

    Given the fact that the three mainstream schools of economics (Keynesian, Monetarist/Chicago, Austrian) and virtually all of the minor schools make the same assumption, it is completely understandable to assume exchange can be carried out without money. This assumption is based on something called “the Currency Principle,” which can be stated briefly as the theory that the amount of money (currency and currency substitutes) in a monetary economy determines the level of economic activity. “Money” is construed as a commodity that has an independent value in terms of which all other values in the economy can be measured.

    In other words, given the Currency Principle, “money” is only one of any number of media of exchange. Given today’s manipulation of national currencies by governments and the rise of crypto currencies, it is reasonable to conclude that if such shenanigans could be controlled or stopped entirely (such as by moving to a non-monetary economy), the result would be the reestablishment of the premier temporal virtue of justice in economic life.

    The shift away from a monetary economy to reestablish justice, while reasonable given the Currency Principle, would not be an optimal or even feasible solution given a different assumption known as “the Banking Principle.” This, too, can be stated briefly. The Banking Principle is the theory that in any economy the level of economic activity determines the amount of money — exactly the opposite of the Currency Principle. “Money” is not viewed as a commodity with an independent value, but as the means by which one person exchanges what he produces for what another produces.

    Thus, under the Banking Principle, “money” is THE medium of exchange, whatever form it takes, not merely one of any number of exchange media. Money is only a symbol with no value of its own when considered solely as money (when money is made of gold or silver, the gold or silver of course has value, but it may not be the same as the nominal value of the money made of gold or silver). Money only has value under the Banking Principle because it stands for the value of something that has been or will be produced and delivered on presentation of the money.

    Under the Banking Principle, money derives from production. In contrast, under the Currency Principle, production derives from money. It seems evident, then, that the Banking Principle is more consistent with common sense, and thus with the philosophy of Aquinas.

    To explain, the Banking Principle is based on “Say’s Law of Markets,” which is in turn based on Adam Smith’s first principle of economics: “Consumption is the sole end and purpose of all production.”

    With that as his starting point, Jean-Baptiste Say noted that it is impossible to consume that which has not been produced. If someone wants to consume something, he must either produce it himself, or produce something to exchange for what someone else has produced (this, of course, ignores charity, theft, or coercive redistribution; Say was addressing purely economic activity).

    Say concluded that we do not, then, purchase the productions of others with money, but with our own productions; we purchase production with production. This gives us the simplified statement of his law: production equals income, therefore supply generates its own demand, and demand its own supply.

    In Say’s Law, then, “money” is simply the abstract vehicle (the tool, if you will) by means of which the act of exchange is carried out when two parties come together and agree on the value of what they are exchanging. To speak, therefore, of moneyless exchange under the Banking Principle is to express that which is impossible.

    Karl Marx and John Maynard Keynes rejected Say’s Law because they assumed that human labor is responsible for all production, and they could not figure out how owners of technology could reap such immense profits except by stealing from labor. Say, however, assumed that production is the result not only of labor, but also of technology and land.

    The problem, of course, is that as technology advances and becomes more expensive, it becomes impossible for most people to purchase technology to replace their production by labor alone, so they end up selling their labor to owners of technology for what they can get. Say’s Law no longer functions when technology becomes more productive than labor and most people do not own technology. Hilaire Belloc made a similar observation in “The Servile State” in 1912.

    The solution, as Charles Morrison pointed out in 1854, is for workers to become owners of the technology that displaces them. In 1891, Pope Leo XIII expanded this to everyone, which Pope Pius XI reiterated in 1931, and G.K. Chesterton and Belloc made the focus of their theory of social reform.

    It was not until 1958, however, when ESOP inventor Louis Kelso and Aristotelian-Thomist philosopher Mortimer Adler published “The Capitalist Manifesto” (which does not actually describe capitalism!) that a solution was presented: people can purchase technology or any other form of capital on credit and repay the loan out of the future profits of the capital itself, and when the capital is paid for, use the income for consumption purposes. This, as Kelso pointed out, “restores” Say’s Law and the natural right of private property.

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