Robert Sirico, The Economics of the Parables, Acton Institute, parables, economy, wages, work

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What the Parables Teach Us About Our Economy

Yes, Jesus had something to say about the workplace, too.

The Parable of the Laborers in the Vineyard contains a hard truth: Workers are compensated by mutual agreement. In the whole scope of moral consideration, this may not be the final word, but it is the beginning word.

The manner in which the story unfolds conjures up a sympathy for the workers who worked all day and received no more than the workers who came at the last hour. But as we ponder it more deeply, we find ourselves wondering if our sympathy for the workers who labored all day is actually rooted in a kind of resentment against generosity. After all, no one is being defrauded here. Surprised — yes, even disappointed — but not defrauded or treated unjustly. The vineyard owner is right that his high wages for the last workers are a form of charity. There are countless spiritual and material insights one can extract from the details of this challenging story.

But we can also discern the practical economic import of the story as well. First, we learn that in an economy with ownership and wages there really is no equal pay for equal work — or rather, there does not have to be. What there is, is contracted pay for contracted work. Anything outside of this is discretionary. Certain moral claims may require paying more. Prudence is certainly necessary. And decency might demand a certain realization of non-market wage outcomes. As always, certain cultural norms or customs may apply. It is a good thing that every worker should be free to make a contract for whatever terms of employment he deems appropriate for himself, and that every employer be free to make any offer he deems sustainable for his business. After that, the legal obligation of both the worker and the employer is to be faithful to the terms of the contract. The worker may choose to work longer hours, just as the owner may choose to pay additional wages to latecomers. But human beings are more than contractors and contracted. Without this first step however, which reveals what the true costs are, the entire enterprise falters. This is the stuff of economics. It does us no good to obscure this reality, even if we may decide to supplement it on account of additional considerations.

Rewards in a market economy are not distributed as Karl Marx imagined them to be. Prices and wages are not determined by the amount of sweat and muscle expended; they are determined by the subjective value of the final product. Putting it another way, it is the value to those who will (or will not) purchase the product that determines the value or price of that product. Economists would say that this value is “imputed back” to all of the factors of production. For example, workers producing outdated computers can’t expect the same remuneration as those making the next generation of computers. Why? Because the monetary value of work is related to the market worth of what that work produces — that is, to the subjective value of the product to the one who buys it. And most people are just not going to buy outdated computers. The monetary value of work is not some arbitrary or capricious amount set by the owner or the producer; it is the price set by the consumer.

This isn’t because one group works harder than the other group, or is made up of people who are somehow better. It is because they are better able to serve people’s needs — as determined by those very people and the value they place on one product over another. That value is reflected in the wages they are paid. The landowner in Jesus’ parable was thrilled that his vineyard was harvested completely. One can imagine that it was a bountiful harvest — thanks to the perceptive and determined actions of the landowner. Happy about that, he distributed payment in a generous way. It is the final result — a job well done — that determined the wage. How very much like the market itself, which can even be “generous” to people that most of us wouldn’t regard as deserving.

By virtue of the limited material reality in which we live, human beings are dependent on market activities to ensure our survival. Still, because humans are more than material entities, there is also something due to human beings as human persons — something that exceeds the logic of the market.

The person in the best position to determine what the subsistence level is, is the worker himself. Too quick a regulatory fix — either in the labor market or in controlling the price of goods — creates a distortion, making it impossible to know what the real costs are, what a sustainable price or wage is.

The problem of sub-standard wages is a real one. But this real problem is not remedied by ignoring the information that free exchange yields, or pretending it doesn’t exist. While our intention would be to provide for the well-being of people, the lack of information will only hinder the prospects for human betterment that prosperity provides.

When businesses promote legislation that will hobble their competitors, they exhibit the very disposition of the first laborers who worked the longest. They are convinced that they should be rewarded at least as well for their labors as others. But in reality — in real life and in real markets, where rivalry and consumer tastes can take unpredictable paths because of human subjectivity, we see that no one has an entitlement to a profit. Enterprise means assuming risks and being willing to suffer a loss when one’s best judgment turns out to be less profitable than one hoped.

As Jennifer Roback Morse explains, efforts to correct for the apparent unfairness of the market actually reward envy and make it profitable. Borrowing language from moral theology, she says that regulatory structures and many other forms of political intervention actually provide an “occasion of sin.” That phrase is taken from the Act of Contrition, a prayer of sorrow and repentance, and it refers to a situation or an environment that, while itself is not sinful, nevertheless puts one in proximity to or on a trajectory toward sin.

It is not wise for recovering alcoholics to hang around bars, where they are merely providing themselves an unnecessary temptation against their sobriety. There is a parallel here with arbitrarily applied economic regulation: This kind of regulation gives business competitors something to use in preference to the difficulty of marketplace competition with other businesses. It places an entire economy on a deleterious and regulatory path moving it closer to the “sin” of economic dislocations and impoverishment.

Commerce itself can and in fact often does reinforce a wide range of traditional and practical virtues. Clean and clear lines of ownership, discernible boundaries of property rights, the enforcement of contracts —all these things discourage theft and encourage peaceful exchange, cooperation, and human solidarity. Vibrant capital markets encourage creativity and long-range planning, even as the system of profit and loss discourages waste and encourages a wise use of resources. Even the existence of interest rates discourages untrammeled consumption and rewards deferred gratification. When we add to all this institutions such as credit reports and other forms of reputation-tracking that encourage meeting one’s obligations and keeping promises, we can see the potential for a culture of morality to emerge from the free market naturally, without manipulation.

After all, in order to be practically generous — the virtue so abundantly displayed by the landowner in this parable — it is first necessary to have an abundant harvest, to create superfluous wealth, something that is possible only in a culture that prevents envy and jealousy from institutionalizing themselves and obscuring the information that free exchange makes available. The creation of wealth requires a society that rewards rather than penalizes productivity.

Adapted from The Economics of the Parables by Robert Sirico. Used with permission from Regnery Publishing.

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