What a Catholic Economy Looks Like

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Beautiful view of famous University of Salamanca, the oldest university in Spain and one of the oldest in Europe, in Salamanca, Castilla y Leon region, Spain

By John Horvat II, Crisis Magazine, August 2, 2018

The adjective Catholic is rarely employed to describe the ideal economy we need. Many would see its use as mere window dressing to make the free market appear a bit more compassionate. Everyone knows that the business of creating wealth comes from industry and business. The accountant’s ledger is the only true measure of this wealth. Catholic can only be, at best, a timid adjective that modifies the more efficient noun, economy.

I am the first to recognize that the role of economics is to define norms by which goods and services are produced, exchanged, and consumed. These norms are reflected in ledgers. However, economic activities also involve moral acts that are influenced by our free and rational nature and the pull of our sentiments. Thus, the Church can play an important role in the concrete functioning of an economy, although it is often hidden.

Generating Wealth in a Catholic Society
I was reminded of this fact by a news item that triggered these considerations. A 2017 Merrill Lynch report found that some 34.2 million people provide unpaid care to older people in America. Most of these caregivers are family. Together they form the backbone of the nation’s long-term elderly care system, supplying an estimated $500 billion in free care every year. This is three times the amount spent by Medicare’s long-term care budget.

I was struck by this example of a current economic problem—the cost of caring for the elderly. It is resolved with almost medieval means by non-monetary processes. While not all these care-givers are Catholic, their actions are modeled by Christian virtues reflecting the Church’s charity and solicitude for the suffering. This charity can far outperform government programs at no cost to the taxpayer. It provides better and loving care. There is no question that this care helps the formal economy.

And that is where the “Catholic economy” offers great benefits. In a Catholic society, there are many social and cultural structures like the care-givers that generate enormous value. The non-monetary processes found in family, religion, and communities are sources of immense material and spiritual wealth that largely go uncompensated, remain unrecorded, or defy quantification. Saint Thomas Aquinas called this economic activity, economia pura. It is that pure domestic economy that modern economists ignore because it cannot be found on spreadsheets. French historian Fernand Braudel claimed that one third or more of dealings in modern industrialized economies are found in this sector.

I believe these vast sectors constitute the heart and soul of the economy and merit my use of the august adjective of “Catholic.” Perhaps the most productive thing a person can do to fuel prosperity is to help make the economy more Catholic.

Defining These Areas
These wealth-generating social structures can be found everywhere in Catholic society. Most of them were unknown in pagan society. At the same time, they are systematically rejected and disparaged in our neo-pagan modern culture.

The first institution is the family based on the Catholic insistence of the insolubility of marriage. This extremely stable relationship is a dynamic source of uncompensated activity that freely provides its members with shelter, nourishment, education, affection, and healthcare.

The Church raises marriage to the level of a sacrament and thus provides the couple with the necessary graces and strength to bring new souls into the world and provide for their formation and education. The Catholic family becomes not just a basic social unit but an economic unit that generates and distributes wealth and benefits to its members.

There are other lesser institutions influenced by the Church that display similar qualities. We can refer to local, cultural, or religious associations that generate arts, civic spirit, and works of charity that enrich the community in ways that cannot be quantified. This can also be seen in any kind of organic neighborhood or ethnic community where inhabitants receive the great benefits of solidarity and a distinctive local identity.

Inside a climate of mutual trust provided by the Church, common local transactions, barter, or acts of neighborliness are clearly valuable actions that strengthen economy. We might also point to the long history of the Church’s support of agriculture where the land, besides freely giving its fruits and creating abundant wealth, also creates a sense of self-sufficiency, the development of character and a strong attachment to property.

All of these institutions and activities enrich society and culture. They have an indirect impact upon the formal economy and truly nourish and sustain it.

The Church Enriches Culture
However, it is the Church that is the principal agent in this society that supports the economy. It is not just a generic “Christian” outlook that made Western civilization economically great. The Church served as the foundation for our civilization, which includes our economy. That is why I use the adjective Catholic, and not the ecumenical Christian, to modify the ideal economy we need.

In the first place, the Church is an institution that enriches culture and generates enormous value in society in the spiritual sphere. We can look at her liturgical, moral, and religious acts that communicate untold spiritual benefits to a community. Giving meaning and purpose to life is a priceless commodity in today’s world of depression, hedonism, and loneliness.

The Church further gratuitously bestows culture, charity, and learning upon her children and society as a whole. It was the Church that first established universities and hospitals. Her religious orders freely served the poor in their hospitals and even went to the point of seeking out patients in the highways and byways. The Church has the unique ability to get people to think of serving others for the love of God.

Direct Support for the Economy
These indirect means are joined by more direct means by which the Church helped facilitate the smooth running of economies.

Transactions depend upon trust and honesty. As guardian of the moral law, the Church naturally issues objective norms that concretely help identify and denounce injustice in the economy and create a climate of trust. In addition, the Sacrament of Confession not only insists upon honest dealings but enforces restitution for theft or damage done.

Even in the field of economic theory, it was the Church that led the way. Contrary to the popular myth, the science of economics was not invented by Adam Smith (who saw Catholic charity as disruptive). The early foundations of economics are found in the writings of medieval figures like Saint Bernardine, Saint Antoninus, Saint Thomas Aquinas, and other early Scholastics.

Libertarians, the Austrian School of Economics and other economic schools all trace their origins back to Spain’s School of Salamanca (1500-1650). Its Dominican friars developed complex economic concepts like the theory of utility, the quantity theory of money, opportunity cost, and liquidity preference long before modern economists.

We cannot underestimate the role of the traditional teachings of the Church in forming the modern economy. This same moral guidance is still much needed in increasingly impersonal economies run by algorithms and quarterly earnings reports.

The Limitations of Catholic Economy
However, there are limitations to a Catholic economy.

Justice must govern every economy, whereas the Church depends much upon charity and poverty. This is why an economy cannot be governed by charity lest it leave the marketplace in the hand of those who would take advantage of the honest.

The Church is limited to creating the conditions for economies to flourish. It can do no more. The marketplace can never be a church although markets were often situated in the Church squares. Nor can a Church become a marketplace.

“Catholic” must always be an adjective to the noun “economy.” Whenever this adjective tries to become the noun, it quickly leads to the moneychangers of the temple who Our Lord so violently cast out.

A Terrible Alternative
I fear for the time when all vestiges of the Church are scrubbed from economy. Then there will be no more familial caregivers. The family will be reduced to a mere collection of selfish individuals. The moral law will be erased by the unbridled passions of frenetic markets. The marketplace will once more be left to the dog-eat-dog brutality of those who seek only their own profit. Society will fall apart, as it is today, and no amount of tax dollars, jobs or economic policies will put it back together.

That is why I use the adjective Catholic to describe the ideal economy we need. When the Catholic element is expunged, the heart and soul of economy will also be gone and we will be left with the terrifying ledger of a world without God.

Editor’s note: Above is an image of the University of Salamanca.