It’s not an exaggeration to say that both economics as a social science and the economics profession lost considerable luster following the 2008 financial crisis. For many people, it was simply astonishing that so few academic economists, not to mention the legions of economics PhDs working in the private sector and the world’s finance ministries, forecast one of the worst economic downturns in recent memory.
In some circles, this has led to soul-searching about economics’ nature and ends. Many scholars have questioned the rational choice model (the notion that individual actors will generally assign the scarce resources at their disposal in ways that realize the most preferable package of goods obtainable to them) which has exerted a powerful influence upon the framing of economic analysis.
There’s no shortage of economists who recognize that the crude homo economicus model developed in the nineteenth century was never meant to summarize the entirety of human motivation and action. Other economists have acknowledged the limits of the rational choice model while simultaneously defending it from straw-men criticisms. That said, some economists remain uneasy about many of the assumptions built into mainstream economics and the types of conclusions to which it points.
A 21st Century Economist Engages a 13th Century Theologian
Mary L. Hirschfeld is one such economist. In her book Aquinas and the Market: Toward a Humane Economy (2018), Hirschfeld describes reservations which she has long entertained about modern economics. She notes, for example, what she describes as the “obsession with sophisticated mathematical models” which prevailed in the 1980s. While that problem, she suggests, has somewhat receded, Hirschfeld has other concerns.
Economic language, Hirschfeld maintains, “masks ethical differences in the goods individuals choose to pursue” and obscures “the features of life that give it its richness, meaning, and moral weight.” To this we could add that economics embodies an implicitly consequentialist methodology. That’s fine for those things which can be reasonably measured. Quantifiable entities can be quantified. Neither morality nor happiness, however, are measurable phenomena, as some of the more honest utilitarians have long conceded as a major flaw in their philosophy.
Hirschfeld’s worries about some of modern economics’ underlying premises, and her concern that several unspoken and highly debatable ethical assumptions are built into contemporary economics, were magnified by an unexpected conversion to Catholicism on her part. The Catholic account of human happiness, she contends, “is radically at odds with the modern take on these questions,” an interpretation that, in her view, is personified by economics as an intellectual discipline.
In many ways, Hirschfeld’s book reflects her wrestling through these quandaries. Her way to try to address these issues is to seek to ground economics in the thought of Thomas Aquinas, most notably his metaphysics and understanding of happiness. This is new insofar as natural law scholars have generally studied economic issues and methodology from the standpoint of justice (legal, distributive, and commutative) and the liberties and responsibilities associated with property. Hirschfeld doesn’t neglect these dimensions. Her focus, however, is on some of the Summa Theologiae’s more expansive vistas.
This approach allows Hirschfeld to highlight parallels between Aquinas’s studies of, for example, the political and legal spheres of life and the methodological underpinnings and priorities of mainstream economics. Positive economics’ insistence upon paying attention to the workings of factors like self-interest and incentives mirrors, she argues, Aquinas’ interest in “realistic descriptions of human beings as they are.”
Hirschfeld’s primary objective, however, is to establish a Thomist foundation for economics, if not outline the contours of a fully Thomist economics. This, she believes, will allow a Thomist understanding of the nature of the good to shape economic ideas, practices and institutions so as to contribute to the growth of what she regards as a more humane economy. According to Hirschfeld, such a project would help economics take into account some of those truths about the good and justice that, in her estimation, modern economics willfully excludes from its typical modes of inquiry.
Should Economics Become Theological?
There’s much to be said for pushing back against tendencies to establish economics as an all-embracing explanation for everything. I’m not sure, however, that the best approach for dealing with that and other problems is to make over economics in a Thomistic image. I happen to think that orthodox natural law accounts of human reason, choice, action, and happiness (as exemplified in John Paul II’s 1993 encyclical Veritatis Splendor) are far superior to everything else on offer. But I also have doubts about efforts to reconfigure economics as a distinct social science on explicitly Thomist metaphysical foundation.
My primary reason for such reservations is that it’s precisely because post-Smithian economics deliberately focuses on very particular—and, to an extent, empirically-verifiable—traits of human behavior while ignoring others that modern economics acquired its great analytical value. As John Finnis observes in his 1998 book Aquinas: Moral, Political and Legal Theory, “Modern economics gets going with Adam Smith’s proposal that it be undertaken as a study of side-effects.”
By “side-effect” is meant an effect that is not intended; i.e., not chosen as a means or end. One insight of natural law theory into human action is that all choices have more than one effect. Many of these effects are not intended. Instead of thinking first and foremost about the object of a free choice to assess its morality, economics focuses on studying the consequences that flow from an act, but which are not the immediate object of someone’s choice.
This emphasis on the difference between what is chosen intentionally and the side-effects of that same choice appears both in Smith’s Theory of Moral Sentiments and his Wealth of Nations. In Book IV of the latter, for example, Smith states that the person who pursues wealth “intends only his own gain” yet is nevertheless “led by an invisible hand to promote an end which was not part of his intention” (my emphasis). That unintended end is the overall economic well-being and increases in the sum total of wealth in society.
Part of the economist’s work is to examine the relationship between the effects of the choices of individuals and communities which go beyond what is immediately being chosen. Consistent study over time of these relationships and the achievement of a certain degree of predictability about how these interdependencies affect each other is central to economic analysis. By identifying these relationships and sometimes even producing approximate quantifications of these relationships, economics assumes the analytical characteristics of a positive science, one that often focuses on understanding the reasons for discernible changes in economic activity.
This does not mean that the study of these relationships acquires the same degree of certainty that we find in some of the natural sciences. Alongside known side-effects, there are also unknown side-effects. Knowledge of all these known or unknown side-effects of choices is not possible for one economist or group of economists. No individual or group can know all the different side-effects of the choices of millions of people and the way they affect each other. There are therefore significant limits to economics’ capacity to make the type of predictions characteristic of the natural sciences.
The Limits of Thomistic Metaphysics
Grounding the economic technique on Thomist metaphysics or theology would not overcome these limits. But going too far down that path would also distract modern economics from realizing its immediate purposes which are not pursuing happiness per se or even justice for that matter. Those ends are the more direct focus of other disciplines such as philosophy as well as other spheres of human activity like religion, politics, and law. Of course modern economics can help, for instance, those charged with political authority to make the right decisions by providing them with forms of information which would not be otherwise obtainable. But trying to focus economics more immediately on all-round human flourishing or even a vision of happiness as compelling as that articulated by Aquinas would blunt its ability to contribute to decisions that help to build up those conditions (the political common good) that enable people to pursue happiness under their own volition.
Does this mean that we should settle for the unsatisfactory state of much contemporary economics that rightly concerns Hirschfeld? By no means. Rather, however, than seeking to submerge economics into Thomistic theological inquiry, present-day dissatisfaction with economics might be better channeled in other directions.
These might include closer definition of economics’ purposes, a clearer specification of the limits of economic analysis, a more careful delineation of economics’ relationship to other modes of inquiry, and deeper attention to the particular ways that economics can illuminate aspects of the truth that might otherwise lie dormant. These characteristics, accompanied by a sense that the particular knowledge obtained via the economic technique needs to integrated into a wider account of human choice and political action, offers some potential for a reordering of economics that would address Hirschfeld’s questions, but in ways that would preserve the greatest achievements of Adam Smith’s intellectual revolution.