Catholics and Libertarian Economics: A Reply to Samuel Gregg

As I said in my post a few days ago, Distributism is Not Dead, 

This was originally written by Dorothy Day and published in the 'Catholic Worker'  in the July-August 1956 issue. Its thesis is no less true today. Catholics on both sides of the political divide, those who support the Papally condemned theories of laissez-faire or free market capitalism and those who support the equally condemned theories of socialism continue to try to bury it.

This is an essay refuting a libertarian 'free marketer', which points out that the Church's teaching on economic morality is nothing new. Indeed it goes much further back than Pope Leo XIII. Mr Storck does an excellent job of demolishing the libertarian argument.

From the Distributist Review

Recently on the website Public Discourse of the Witherspoon Institute, Samuel Gregg of the Acton Institute had an article called “Markets, Catholicism, and Libertarianism.” Gregg begins by noting that there are many who have criticized Catholics, such as himself, who “regard markets as the most optimal set of economic conditions,” on the grounds that they “are effectively promoting libertarian philosophy.” But, Gregg goes on to claim, “a favorable assessment of markets and market economics need not be premised on acceptance of libertarianism in any of its many forms.” In other words, according to him, one can accept an approach to economics propagated by libertarian thinkers while at the same time disagreeing with the fundamental philosophical approach of those same thinkers.

Before dealing with the substance of Gregg’s argument, let me note two preliminary points. In the first place there is Gregg’s use of the terms market or market economy as apparent synonyms for free-market. This usage, though not uncommon, tends to prejudice the argument in that it suggests that market necessarily means free-market, and that the only alternative to a free-market is a non-market, Soviet-style command economy. In fact, markets can be of varying types and can make use of different methods of exchange of goods for goods, or money for goods, and, in fact it was medieval markets, where prices were often set by custom or regulated by guilds or civil authorities, that served as the backdrop for the idea of a market in the development of economic thought. Practically any type of economy will include some exchange of goods, so one should be aware that a rejection of free competition as the guiding force of market exchange need not equate to a rejection of markets as such.

The second point is more important. This is that, in discussing the Church’s position on economic morality, Gregg instances only the statements of Pope Francis in opposition to libertarian ideas. He never gives a hint that it is not only Francis who has been critical of a free-market or neoliberal approach to conducting an economy, but every pope who has touched on the matter since at least Leo XIII, including St. John Paul II in his much misunderstood encyclical Centesimus Annus, about which there exists so much misinformation and, dare I say, disinformation. But Gregg probably assumes that the vast majority of his readers have no idea of the teachings of prior popes on morality in economic activity; that, for example, Pope Pius XI in his 1931 encyclical Quadragesimo Anno wrote that “the proper ordering of economic affairs cannot be left to the free play of rugged competition” and that “Free competition, however, though justified and quite useful within certain limits, cannot be an adequate controlling principle in economic affairs.” By limiting his attention to Francis, Gregg can make it appear that it is merely the recent ideas of a quirky or even aberrant pontiff that he is differing with. Thus Gregg writes that “criticizing aspects of Pope Francis’s statements about economic questions doesn’t necessarily mean that you’re trying to promote libertarianism,” but it would not sound quite the same had he instead written something such as, ‘criticizing the explicit statements of numerous popes doesn’t necessarily mean that you’re trying to promote libertarianism.’ Gregg has framed the question as a conflict between Pope Francis and libertarian thought, whereas it is really a conflict between Catholic teaching and libertarian thought.

As to the substance of his article, Gregg admits that the chief free-market economic writers, from Adam Smith to Ludwig von Mises, generally had very suspect philosophical foundations for their thinking, such as David Hume or the utilitarianism of Bentham or Mill. But none of this need matter, he avers.

Tensions in Smith’s ethical theory, however, don’t invalidate the key economic insights expressed in his Wealth of Nations (1776). Smith’s systematic outline of basic staples of economic analysis—the division of labor, incentives, trade-offs, mutually beneficial exchange, unintended consequences, comparative advantage, etc.—don’t demand his reader’s assent to neo-Humean accounts of human action.

But this is not the case. In dealing with the multifarious economic activities of mankind it is clearly necessary to find some organizing principle or principles. Thus Smith necessarily begins with certain fundamental ideas which define and frame his economic analysis. But as I have shown here, here and here, his starting points are by no means necessary or obvious. Do we begin our analysis of economics by positing scarcity and everyone’s supposed desire for unlimited individual fulfillment, or do we begin by recognizing the bounty which God has provided the human race, and the relationship that economic goods should have to an ordered human life? Do we recognize that the Fall of our first parents has affected our appetites for external goods just as much as our appetite for sexual pleasure, and that a free-market or free competition is much like free sex or free love, in that both regard the appetites of fallen mankind as fundamental axioms of human behavior.

Moreover, it could hardly be the case that the well-known free-market economists created a body of economic thought independent of their philosophical presuppositions. Rather, their basic philosophical positions determined their approach to economics, which indeed is what one would expect. Theorists who are in any way consistent in their thinking necessarily base their economic ideas on their core philosophical positions. But if their fundamental philosophies are erroneous, as even Gregg admits to be the case, how is it that they created a body of economic thought untouched by those errors?

In 1971 Pope Paul VI in his apostolic letter Octogesima Adveniens (no. 35) commented on the revival of classical liberal ideology and the dangers that it holds for Catholics.

On another side, we are witnessing a renewal of the liberal ideology. This current asserts itself both in the name of economic efficiency, and for the defence of the individual against the increasingly overwhelming hold of organizations, and as a reaction against the totalitarian tendencies of political powers. Certainly, personal initiative must be maintained and developed. But do not Christians who take this path tend to idealize liberalism in their turn, making it a proclamation in favor of freedom? They would like a new model, more adapted to present-day conditions, while easily forgetting that at the very root of philosophical liberalism is an erroneous affirmation of the autonomy of the individual in his activity, his motivation and the exercise of his liberty.

It is not for nothing that John Paul II wrote in Centesimus Annus that Leo XIII’s Rerum Novarum criticizes two social and economic systems: “socialism and liberalism”.¹ The fundamental philosophical axioms of liberal thinkers are hardly a thing apart from their economic thought, and indeed color that thought, just as is the case with any other thinkers.

But there is another reason to object to Gregg’s thesis that a free-market approach to economics is acceptable for Catholics. This is the direct and explicit teaching of the popes, who in their teaching on economic morality have been clear that the libertarian approach to conducting economic activity is not compatible with Catholic teaching, that the economy needs more than the forces of competition as a sufficient regulating principle. One of the clearest statements of this is in the encyclical Quadragesimo Anno of Pius XI, who wrote,

Just as the unity of human society cannot be built upon “class” conflict, so the proper ordering of economic affairs cannot be left to the free play of rugged competition. From this source, as from a polluted spring, have proceeded all the errors of the “individualistic” school. This school, forgetful or ignorant of the social and moral aspects of economic activities, regarded these as completely free and immune from any intervention by public authority, for they would have in the market place and in unregulated competition a principle of self-direction more suitable for guiding them than any created intellect which might intervene.2

One could multiply similar statements many times over. Thus it is not the case that the only reason that a Catholic cannot accept libertarian economics is because of the erroneous metaphysical or ethical thinking of a Smith, a Mill or a Mises, but because of a clear conflict between the classical liberal and the Catholic understandings of how an economy ought to be conducted. As Pius XI noted, “the Encyclical Rerum Novarum completely overthrew those tottering tenets of liberalism which had long hampered effective intervention by the government” (Quadragesimo Anno, no. 27). It is not simply a matter of rejecting the more obnoxious aspects of the thought of Adam Smith or Ludwig von Mises, but of the fact that classical Catholic thought, as expressed so often in papal writings, has always been at odds with classical liberal thought, whether this be in metaphysics, in political philosophy or in economic thought. This is and has been the consistent teaching of the Church and just as Catholic social thought is a substantial whole, so is classical liberalism.

The interest in social thought and policy by Catholics is a good thing. What is not good, however, and in fact is very sad, is that so many Catholics ignore or explain away the existing body of papal social doctrine, and instead take up one or another of the existing secular doctrines, such as classical liberalism. But just as the loss of Catholic identity has been so harmful to the Church in other areas so is it in this area. Catholics need to regain a sense of the importance of being Catholic and of thinking with the Church. Only in this way is there any hope of a revival of Catholic life and a resurgence of that Catholic spirit which aims at nothing less than a conversion of all peoples along with their cultures to Catholic truth.

1. no. 10.
2. QA, no. 88.