Morality and the market

Individually, economists need to be saved as much as any other poor sinner. Collectively, the rest of us need to be saved from the fallen state of economics, says Catholic economist Tony Annett.

“Economics is basically part of political economy, which is part of ethics,” said Annett, author of the newly published book Cathonomics from Georgetown University Press. “But modern economics has completely lost that mooring. You can’t discuss economics without discussing morality at the same time.”

Annett is the rare economist unafraid of talking about morals and the market. In Cathonomics, he gets an assist from the last 130 years of papal encyclicals. Cathonomics is about economics, but it examines the economic life of nations and individuals through the lens of Catholic social teaching.

“It basically uses the encyclicals from Pope Leo XIII, Rerum Novarum (1891), all the way through to Pope Francis’ Fratelli Tutti (2020),” Annett said. “It’s kind of heavily tilted towards the magisterium of Pope Francis, given that that’s our current Pope.”

Injecting the encyclicals into how we think and talk about economics is Annett’s way of recovering the original, moral purposes of his discipline, so that economics might become more useful to society as a whole, rather than a tool of the wealthy to preserve their advantage.

“Part of our problem in modern society is that our economics have gone completely off the rails, with excessive individualism and competition and principles that don’t accord with the deepest truths of our human nature,” he said. “People are looking for an alternative. I’m saying, ‘There’s a ready-made alternative in clear view that has been around for the last 130 years. It’s called Catholic social teaching.’ ”

Annett is not alone in bemoaning the state of orthodox, mainstream, classical economics. Nobel laureate Daniel Kahneman has pointed out that economic models that assume consumers are rational actors whose desires and spending will naturally lead to the most good for the most people are simply wrong.

“I think economists have a moral responsibility to be more than just technicians. They have to recognize the limits of their models and recognize that their models have a certain incompleteness. They have to recognize that the people who use their models are going to be looking at what they say as advice, and that advice has implications for the well-being of people,” Kahneman told The New Yorker magazine in 2011. 

But technicians is what Annett sees coming out of faculties of economics and business schools everywhere.

“They prioritize people who can solve tricky math problems with very little relevance to the lives of people,” he said. “In my view, economics should be about the well-being of people. And it used to be about the well-being of people. But I wonder if it is anymore.”

As early as 1958 Canadian economist John Kenneth Galbraith, writing in The Affluent Society, recognized how economics had become hammer and tongs for a particular political persuasion.

“The modern conservative is engaged in one of man’s oldest exercises in moral philosophy — that is, the search for a superior moral justification for selfishness,” Galbraith wrote.

Modern popes have not recognized any of the proposed superior moral justifications for selfishness.

“Development is impossible without upright men and women, without financiers and politicians whose consciences are finely attuned to the requirements of the common good,” Pope Benedict XVI wrote in Caritas in Veritate (2009). “Both professional competence and moral consistency are necessary.”

In Fratelli Tutti Pope Francis argues that political and moral choices must shape our economies.

“We cannot expect economics to do this, nor can we allow economics to take over the real power of the state,” Francis wrote.

For Francis, the cost of a world, a culture or a nation dancing to the tune of markets is too great.

“We are more alone than ever in an increasingly massified world that promotes individual interests and weakens the communitarian dimension of life,” he writes. “Indeed, there are markets where individuals become mere consumers and bystanders.”

Libertarianism — a kind of radical individualism promoted through an ideology of free markets — has obscured the traditional Catholic belief in the universal destination of goods, said Annett. 

“There are certain libertarian Catholics who would lean much more towards an absolutist view of property rights,” he said. 

According to Pope Francis and going back at least as far as Pope Pius XI, property rights are secondary rights that take a back seat to the common good, said Annett. Or as Pope Benedict XVI wrote in Caritas in Veritate: “In and of itself, the market is not, and must not become, the place where the strong subdue the weak.”

In Cathonomics, Annett wants to speak to Catholics and non-Catholics “who are interested in a different, more humane set of principles on which to manage and operate a global economy.”