Charlie Self, economic wisdom, history, theology, St. Thomas Aquinas

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How Do We Build a Virtuous Economy?

Everyday economic ethics according to St. Thomas Aquinas.

For any economy to work well, virtue is essential, personal and social. Collectivism can stifle creativity and worker incentives, while free market systems can leave entire classes of laborers behind as innovation outpaces professional skills. Economists around the world have affirmed that the conditions for sustainable economic flourishing include personal virtue, property rights, freedom of conscience, political liberty with just systems, and access to capital and markets.

Reflective Christians and thoughtful people of conscience have long wrestled with the justice of economic systems, their concerns spanning the implementation of any and all economic thought. In the 20th and 21st centuries, complete collectivism/socialism, with the economy under centralized government control, has proven to be unproductive and destructive of human well-being. From the old Soviet Union, to Nazi Germany, to Mao Zedong’s Great Leap Forward in China, hundreds of millions of people suffered under ideological and economic oppression..

And many folks are concerned about unregulated capitalism too, with significant income gaps between the rich and poor and concerns about exploitation of labor. There has been great progress for workers since the early 19th century through effective reform, economic growth, and the rise of collective bargaining. And the unprecedented rise in global prosperity since 1950, with billions emerging out of poverty, is largely a result of access to global markets and technological innovation, as well as education and training, property ownership, and investment opportunities.

Ethics and economics were inseparable until the 20th century. Until the last 130 years, economics was a subset of moral philosophy — as well as an emerging social science. Adam Smith’s famous affirmation of free markets in his 1776 classic, The Wealth of Nations, focused mostly on the virtues necessary for the “invisible hand” of the market to function well. But free market economics did not begin with Smith, nor did it begin with the protestant work ethic of the 16th century, an idea championed by the modern thinker Max Weber.

In the 13th century, one thinker determined that the most essential consideration for fair pricing and economic flourishing came down to one thing: virtue.

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The virtuous man will be fair in all his dealings, including economic ones, giving each his due and perhaps even more. But he cannot be virtuous on his own.

The Angelic Doctor speaks

St. Thomas Aquinas is perhaps the most influential philosophical and theological figure of the past millennium, and a major voice underlying these notions of economic and social virtue. Aquinas’ theology is considered foundational for the Roman Catholic Church, hence the “Angelic Doctor” honorific. Thoughtful believers from all traditions have benefited greatly from Aquinas’ synthesis of philosophy and theology, his outstanding apologetics, and his masterful Christian mind on a variety of topics, the economy included.

Aquinas applied his mind to economic wisdom, especially the notion of the “just price” in trade and transactions. His ideas come alongside an expansive historical moment, with Italian city states emerging as financial hubs and Western Europe awakening from her economic and social slumber. At the same time, the climate was in a warming cycle, and while the agrarian feudal system was at its height, there was a rising merchant class and increased trade among empires and emerging nation-states. The parallels with current changes are fascinating.

More than the market and the transfer of money, Aquinas saw the economy as the fruit of a virtuous life lived in community. In this framework, the needs of a community take precedence over production and consumption, especially once basic necessities (daily food, clothing, and shelter) are met. Aquinas does not, however, condemn commerce and profit per se. Community flourishing benefits from expansion of opportunity and trade, he would argue, and leaders are stewards of the well-being of their families and societies. He defends both private property and the common good. And he is putting forward these thoughts in an era of more static social classes, with the feudal idealism of an aristocracy that protected the peasantry and an emerging merchant class.

The market price, essentially, is determined when buyers and sellers negotiate and settle on a price agreeable to each side. For Aquinas, then, the market price is the just price — if the buyer and seller are honest and not trying to take advantage of each other. The ethical problem arises when there are dishonest participants, especially when civil law allows or encourages such dishonesty. A just price should reflect the worth or value of a good or service. But how is such value determined? Usually quite subjectively, hence common marketplace haggling. Aquinas affirms that these just prices vary over time and place.

As a moral theologian and non-economist, Aquinas understood the ethics of buying and selling as one part of a virtuous life, and the laws and customs of a society as things that can either help or hinder the pursuit of virtue. Simply, there can never be a just price if it is established between evil people or for nefarious ends. The moral character of the buyers and sellers is more important than the act of buying and selling itself.

Aquinas’ teaching on economics cannot be separated from what he says about God, reality, and virtue; the just price is not simply a matter of economics or individual practices. While Aquinas leaves room for subjective valuations and legitimate human freedom, these are still inseparable from concerns for humankind’s eternal destiny and the temporal common good.

Because humankind is a political animal, according to Aquinas, with natural fulfillment only taking place in community with others — as our earthly communities are imperfect preparations for eternal fellowship with God and each other — and with an axiomatic concern for justice. The virtuous man will be fair in all his dealings, including economic ones, giving each his due and perhaps even more. But he cannot be virtuous on his own. He needs friends who also love virtue, good laws and customs, and, above all, God’s grace. 

As with much of Christian thought, Aquinas’ ideas will not fit in the ideological boxes that polarize much of our world.

Applications for our contexts

Rightly understood, economic justice does not mean every person experiences the same exact outcomes. Justice well-applied includes access to capital, education, opportunities, and the personal and social relationships that empower flourishing. Aquinas’ teaching on virtue is essential for integrating sustainable systems, market opportunities and realities, and community flourishing. 

In our polarized world, there is an unbiblical tendency to separate personal and social ethics, to privatize moral and religious sensibilities. Yet any ideological assertion is unhelpful when it does not factor in the complexity of the human person, family structures, and social realities. Collectivists do not consider economic risk and reward, and historically, once they control industries, they no longer flourish. Even well-meaning attempts to “equalize” only tend to equalize scarcity, leaving the bureaucratic class living large and the masses poorer than before. And radical individualists focus exclusively on personal agency while forgetting the historical and systemic issues that undermine many entrepreneurs, especially the historically marginalized. 

Aquinas’ call for virtue can help business leaders decide ahead of time the moral vision behind their economic and social aims for their enterprises. A call to virtue will also hold political classes accountable for how their programs actually work. We have learned the hard way that government largesse alone is not sufficient for long-term flourishing. Aquinas’ understanding of negotiable prices can help people understand the complexity of a price. 

For example, the $175/hour labor charge for auto repair must cover rent, environmental concerns, workers’ compensation, salaries, supplies, and much more before the owner takes home a dollar. That expensive smartphone may be a big profit center for a large company, but millions of working folks have retirement funds invested in such companies. This is why the “fair” price is not set by government fiat. 

As we aim for wisdom in our changing world, sometimes it is good to go “back to the future” and learn from the saints upon whose shoulders we stand. 

This story is from Common Good issue
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