Economics

St. Thomas Aquinas and Adam Smith in a Time of Pandemic

A recent panel discussion shows how using both economics and theology can help us better advance the common good

Jacques Callot, “S. Thomas d’Aquin (St. Thomas Aquinas), March 7th,” from “Les Images De Tous Les Saincts et Saintes de L’Année (Images of All of the Saints and Religious Events of the Year).” 1636. From the Metropolitan Museum of Art

Do economics and theology need each other? This was the question posed to experts with the Mercatus Center at George Mason University and the Catholic University of America’s Institute for Human Ecology in a recent panel discussion.

These days, the two fields are rarely considered at the same time, but the intertwining of the two disciplines has a rich intellectual history that is now finding new light. For instance, Senator Marco Rubio (R-FL), himself a Catholic, has cited Catholic Social Teaching (CST) as a framework for economic policymaking that promotes the common good.

This event gathered panelists from both the economic and theological realms: Eileen Norcross, vice president of policy research at the Mercatus Center, has a background in institutional economics; Rosolino Candela is a senior fellow of the F. A. Hayek Program for Advanced Study in Philosophy, Politics and Economics at Mercatus; Joe Capizzi, executive director of the Institute for Human Ecology; and Mary Hirschfeld is an associate professor of economics and theology at Villanova University, fellow of the Institute for Human Ecology, and the author of Aquinas and the Market: Toward a Humane Economy.

What was intended to be a largely intellectual conversation became a more practical discussion in the face of the COVID-19 pandemic. Indeed, there is perhaps no better time to confront the moral underpinnings of economic methods than now, as the pandemic prompts Americans to ask tough questions about how our economy and our society should change going forward to guarantee a prosperous future. In this context, can economics learn anything from theology? What follows is a summary of some of the issues discussed by the panel.

Aquinas and the common good

Most people would agree that laws exist to promote the common good. This is the goal that one of the brilliant formulators of CST, medieval philosopher St. Thomas Aquinas, laid out in his Summa Theologiae: “Law is nothing other than a certain ordinance of reason for the common good, promulgated by the person who has the care of the community.” If this is true, we must have a clear definition of what the “common good” actually is. As the pandemic has shown, we are far from a consensus on what the common good looks like.

There is much to learn from the Catholic tradition, which focuses first on institutional conditions toward building a just society. According to CST, the common good is a habitat in which we all flourish. It is an ecology we build together, not merely the sum of the level of happiness experienced by individual members of society.

Does this mean that health and life are more important than economic prosperity and, circling back to the pandemic, that we should do whatever it takes to protect lives regardless of economic cost? Not necessarily; this is a false dichotomy, since policymaking always involves tradeoffs between the interests of different economic and social actors. However, this particular choice between saving lives and saving the economy need not be seen as a tradeoff. Rather, we should think about the relationship between saving lives and saving the economy, since the two priorities are interconnected: efforts to promote one do not necessarily have an adverse effect on the other.

The crisis has unveiled just how interconnected we all are, a core tenet of CST. We are discovering how much our health is entwined with the economy and our individual actions with the social order. In the contemporary age, we’ve grown increasingly atomized, yet a sense of common concern persists.

That concern brings individuals out of themselves and leads them to provide for others through mediating institutions such as neighborhoods, churches, and charitable organizations. In ways reminiscent of the spontaneous relief efforts in the wake of Hurricane Katrina, individuals and communities are stepping into the breach to help their neighbors afflicted by the virus, the lockdown, and the economic downturn. Local authorities are more attuned to the priorities and needs of individuals on the ground than centralized governments, and they should therefore be given precedence in decisions regarding resource allocation.

Altruistic acts may not neatly fit into economic models that emphasize profits and competition. Yet they are well explained by CST and certain schools of economic thought.

For example, consider the principle of solidarity, or the pursuit of justice and peace through acts of love for others. It goes hand in hand with subsidiarity, which holds that human affairs should be conducted by the lowest and most local possible level of authority, such that acts of solidarity are not hindered by decisions made at the top. Yet solidarity and subsidiarity are not only essential aspects of CST, they are also integral to the New Institutional Economics (NIE) tradition, which was developed by the economists Vincent and Elinor Ostrom. NIE studies polycentricity, or the emergence of governance from complex and overlapping centers of authority that enable individuals to help one another as they see fit.

The American economy embodies many aspects of solidarity and polycentricity, which means that centralized efforts are likely to deviate from their own goals, no matter how well intentioned. The Payment Protection Program and unemployment insurance benefits provide a prime example: the former aimed to incentivize businesses to retain workers, but the latter can grant more benefits to people if they stay unemployed. Both CST and NIE teach that such errors of conflicting incentives can be avoided by recognizing that central governments are unable to attend to individuals’ particular needs and acknowledging the inherently intricate nature of interconnected individual action.

On a large scale, this interconnectedness takes the form of markets, where individuals and groups of individuals (that is, businesses) engage in voluntary exchange. Markets are not perfect. In fact, they are inherently imperfect. Etymologically speaking, imperfection implies incompleteness, being “not thoroughly done.” As such, the inertia of market mechanisms echoes the Thomistic perspective of human flourishing as a striving toward perfection.

Self-interest and the common good

During times of crisis, when many people look to political leaders and the government for help, it’s easy to overlook the entrepreneurs, living and dead, who are also serving us. One example is Malcolm McLean (1913–2001), creator of the commercial container ship, which revolutionized global trade. Thanks to modern containers, trade volumes have gone up, shipping-related safety hazards have gone down, and supply chains are much less affected by public health crises than they otherwise would have been. Without the shipping container, imagine how much more difficult it would be for companies to continue to provide essential goods during the pandemic.

To be sure, McLean built a fortune from his shipping company. However, were it not for his ingenuity, weathering this pandemic would be much more difficult for everyone. Whether entrepreneurs are self-interested makes little difference if their activities promote the common good and benefit many.

Problems may arise when self-interest is unchecked. Here, a theologically informed economics (or an economically informed theology) has much to say as well. Adam Smith, who first argued that self-interested market actors promote the prosperity of all, also thought a lot about the nature of self-interest. His Theory of Moral Sentiments offers a much richer view of self-interest than purely individualistic utilitarianism, one that includes other-regarding or virtuous forms of self-interest, such as caring for other members of society without compensation.

The times ahead may be grim. The country may be plagued with more deaths of despair, more economic disparities, and greater generational divides and loneliness among elderly individuals than were observed before the start of the pandemic.

Though we face an uncertain future, that does not mean there is no hope. There is comfort in the fact that the pursuit of the common good, which is primarily reliant not on material wealth but on the purpose to be found in community, service, and ultimately faith, can be practiced no matter the economic context. There is comfort in the solidarity exhibited by Americans in their commitments to supporting one another despite the atomistic tendencies of modern society. There is comfort in our increased sense of the dignity of work as exemplified by the widespread appreciation for essential workers and first responders.

“To love is to will the good of the other,” said St. Thomas Aquinas. Economics may not perfectly account for love of neighbor, but much as entrepreneurs step into the breach to meet the needs of market actors, individuals and communities lend their love and support to those who need it, working together for the common good.

Submit a Letter to the Editor
Submit your letter
Subscribe to our newsletter