Catholicism and Austrian Economics

Em Morality and Economic Law: Toward a Reconciliation, Thomas E. Woods, Jr.

"(...)Let me be clear: those of us within the Church who advocate the Austrian approach to economics are not demanding that the popes preach Austrian economics from the Chair of Peter. No one with any knowledge of the development of economic thought among churchmen over the centuries would dare to claim that a single view could constitute "Catholic economics." Against those who suggest that a Catholic may look at economic matters in only one way, Professor Daniel Villey reminds us that "Catholic theology does not exclude pluralism of opinions on profane matters." We do not claim that ours alone is "Catholic economics," but merely that what we teach is not only not antagonistic to, but in fact is profoundly compatible with, traditional Catholicism.

A profound philosophical commonality exists between Catholicism and the brilliant edifice of truth to be found within the Austrian school of economics. The Austrian method of praxeology should be especially attractive to the Catholic. Carl Menger, but above all Mises and his followers, sought to ground economic principles on the basis of absolute truth, apprehensible by means of reflection on the nature of reality.

What in the social sciences could be more congenial to the Catholic mind than this?

Likewise, Austrian economics reveals to us a universe of order, whose structure we can apprehend through our reason. As Professor Jeffrey Herbener explains, "A causal-realistic approach to economics arose in Christendom because only there did scholars conceive of nature as an interconnected order, created in the flux of time by God out of nothing, and governed by God-ordained natural laws that human intellect could discover and use to comprehend nature, with the goal of ruling over it for God’s glory." The alternative is the world of John Stuart Mill, who posited that it was entirely possible that we might find some place in the universe where two and two do not make four—a view which, in Herbener’s words, "is grounded in the metaphysical position that the universe is not an orderly creation." Which one is more compatible with Catholicism should not be difficult to discern.

The Church has always maintained that faith and reason are not in conflict, but rather constitute two harmonious paths to truth. That is the approach toward the secular world that makes the most sense for a Catholic, and for which there exists considerable precedent throughout history. In the second century, St. Justin Martyr spoke of the "seeds of the Word" to be found in the ancient Greeks, and Clement of Alexandria insisted that the great works of the Greeks be studied at his renowned catechetical school. St. John of Damascus (John Damascene) adopted the same attitude. He favored the study and use of what was good in Greek philosophy because "whatever there is of good has been given to men from above by God, since ‘every best gift and every perfect gift is from above, coming down from the Father of lights.’"

In my book on Catholic intellectual life during the Progressive Era, I show that the same type of interaction with secular knowledge was at work in the early twentieth century as well. It is simply not possible to question the doctrinal orthodoxy of the men I profiled in that book. At the same time, they were not afraid to engage in selective appropriation of the best of secular thought wherever it contained an insight that might be of benefit to the Church, all the while keeping the Faith itself free from profanation.

Yet while the Church has not hesitated in the past to make use of whatever secular knowledge has to teach, what is especially interesting about the present case is that the secular truths that economic theory has to teach were in some cases anticipated or even discovered by some of the Church’s own theologians. The Austrian School carries forward a great many of the economic insights of the late Scholastic theologians—a source of pride, not shame, for modern-day Catholics. The Scholastics perceived clear relationships of cause and effect at work in the economy, particularly after observing the considerable price inflation that occurred in sixteenth-century Spain as a result of the influx of precious metals from the New World. From the observation that the greater supply of specie had led to a decline in the purchasing power of money, they came to the more general conclusion—an economic law, as it were—that an increase in the supply of any good will tend to bring about a decrease in its price.

The Austrian School also shows what reason, properly exercised, can accomplish, and surely this is something that Catholics, who have always granted reason its rightful due, ought to appreciate. The great economic treatises of Ludwig von Mises and Murray N. Rothbard begin with the axiom that human beings act, and proceed to the elaboration of an entire economic system from this irrefutable premise and a few subsidiary postulates. Austrians reject the mathematization of the discipline that other paradigms have encouraged, and dismiss artificial models that reduce man to a mere atom. They are methodological dualists who insist that the study of man, who unlike animals and inanimate things is endowed with reason and free will, is something unique, conceptually distinct from the study of the physical universe, and they criticize the attempt to fashion economics along the model of physics and the hard sciences.

This, clearly, is a system that is eminently congenial to the Catholic mind.

Economics does not contain all the answers of life, nor does it claim to. It does, however, show how the morally acceptable desire for profit leads to spontaneous social cooperation that obviates the need for a bloated state apparatus to direct production. It shows us the fascinating mechanisms by which peaceful social cooperation, without the initiation of physical force, leads to overall prosperity. This means less disease, more leisure time to spend with our families, and greater opportunities to enjoy the good things of civilization.

In A Humane Economy, Wilhelm Ropke wrote:

What overweening arrogance there is in the disparagement of things economic, what ignorant neglect of the sum of work, sacrifice, devotion, pioneering spirit, common decency, and conscientiousness upon which depends the bare life of the world’s enormous and ever-growing population! The sum of all these humble things supports the whole edifice of our civilization, and without them there could be neither freedom nor justice, the masses would not have a life fit for human beings, and no helping hand would be extended to anyone. . . . Romanticizing and moralistic contempt for the economy, including contempt of the impulses which move the market economy and the institutions that support it, must be as far from our minds as economism, materialism, and utilitarianism.

That is sound advice from a wise man. It also happens to be the very message that Catholics working within the Austrian tradition have been trying to convey.