Aquinas and the Market: Toward a Humane Economy

289 Pages·2018·3.26 MB·English

by  Mary L. Hirschfeld

— AQUINAS AND THE MARKET —

Aquinas and the Market
TOWARD A HUMANE ECONOMY
Mary L. Hirschfeld
Cambridge, Massachusetts & London, England / 2018
Copyright © 2018 by the President and Fellows of Harvard College
All rights reserved
Printed in the United States of Amer i ca
First printing
Library of Congress Cataloging- in- Publication Data
Names: Hirschfeld, Mary L. (Mary Lee), author.
Title: Aquinas and the market : toward a humane economy / Mary L. Hirschfeld.
Description: Cambridge, Mas sa chu setts : Harvard University Press, 2018. |
Includes bibliographical references and index.
Identifiers: LCCN 2018007166 | ISBN 9780674986404 (alk. paper)
Subjects: LCSH: Thomas, Aquinas, Saint, 1225?–1274. | Economics— Moral and
ethical aspects. | Thomism. | Happiness— Religious aspects.
Classification: LCC HB72 .H57 2018 | DDC 380.1— dc23
LC rec ord available at https:// lccn. loc. gov/ 2018007166
Jacket design: Annamarie McMahon Why
Jacket art: Half-length figure of St. Thomas Aquinas presenting the model of a church,
tempera on board, attributed to Pedro Berruguete. Pinacoteca di Brera, Milan, Italy. ©
Mondadori Portfolio/Electa/Cesare Somaini/Bridgeman Images
Contents
Preface vii
1 . To Serve God or Mammon? The Dialogue between
Theology and Economics 1
2. The Rational Choice Model and Its Limitations 34
3. Happiness and the Distinctively Human Exercise of
Practical Reason: The Metaphysical Backdrop 68
4. Happiness and the Distinctively Human Exercise of
Practical Reason: Virtue and Prudence 95
5. Economic Life as Ordered to Happiness 118
6. From Liberality to Justice: Aquinas’s Teachings on
Private Property 161
7. Toward a Humane Economy: A Pragmatic Approach 191
Notes 219
Acknowl edgments 259
Index 263

Preface
My rather peculiar intellectual journey began with my pursuit of a Ph.D.
in economics at Harvard University, granted in 1989, and culminated
in a second Ph.D., in theology, from the University of Notre Dame in
2013. Economics and theology are two very dif er ent sorts of discourses,
and this book is the result of my efort to sort out the resulting cacophony
in my own head. When I began my career, I would never have imagined
writing such a book. For starters, I was an ordinary somewhat spiritu-
ally inclined but definitely not religious type when I began my academic
career at Harvard in the fall of 1983.
I went into economics for the same reason many, if not most, econo-
mists do. I thought economic flourishing played an impor tant role in
the pursuit of happiness. I wanted to make a positive contribution to so-
ciety. Accordingly, I wanted to work on developing policies that would
promote widespread economic prosperity. Also, I was good at economics.
Part of what attracted me to economics was the fact that its central in-
sight was counterintuitive: the best way to spread material prosperity is
by allowing individuals to pursue their own self- interest. The profit mo-
tive gives self- seeking individuals an incentive to provide goods and
ser vices that are of value to others. Markets coordinate the choices of
individuals far more efectively than any sort of government planning
can do. It is therefore a m istake to think that the economic evils we
viii PREfACE
confront are necessarily best solved by some sort of well- intentioned
government intervention.
At the same time, the discipline had smart things to say about the
limitations of markets and thus could also say something about why gov-
ernment sometimes r eally can help—so long as it works in a way that
re spects the fundamental logic of the market. By contrast with the other
humanistic disciplines I had dabbled in as an undergraduate, economics
felt like a science. There is a rigor to thinking like an economist, and it
seems to produce insights into the world that are obscure to others. Being
formed in the economic way of thinking is a conversion of sorts; one
learns to see the world in a dif er ent light. One can even sense a spirit of
evangelization among economists. Books like Freakonomics by Steven D.
Levitt and Stephen J. Dubner and Discover Your Inner Economist by
Tyler Cowen promise popu lar audiences a startling and better way to
understand the world and even to find a surer path to happiness.1
That sense of excited discovery began to falter almost immediately
once I began gradu ate study. To begin with, economics in the 1980s was
obsessed with sophisticated mathematical models, often seeming to
prize mathematical cleverness over generating insights into how the
world actually works.2 That prob lem has largely been corrected, as can
be seen in the spate of popu lar books following Freakonomics. Although
sophisticated theoretical models continue to be produced, the weight of
the field has steadily shifted t oward empirical work. Indeed, economists
have even begun experimenting in labs and allowing the results of those
experiments to inform their theoretical reflections.
But my unease was also rooted in a growing sense that there was
something of in the economic worldview. I was hardly alone in having
difficulty with that view. A cluster of crude complaints has long dogged
the discipline, and I was not fully persuaded by economists’ ready replies
to those critiques. The first of these complaints centered on economists’
depiction of human beings as reflected in the rational choice model,
which assumes that individuals efficiently allocate their scarce resources
(mostly income and time) to acquire the most desirable bundle of goods
available to them. It has its roots in the cruder concept of homo economicus,
or economic man, that developed in the nineteenth- century field of
po liti cal economy with the aim of focusing on how economic motives
PREfACE ix
would play out in market settings. The vast lit er a ture criticizing homo
economicus bleeds into modern- day critiques of the rational choice
model.3 Actual humans are not as individualistic and self- seeking as
homo economicus. But as economists are quick to point out, most of
those critiques are of the mark with re spect to the rational choice model,
which simply says that people efficiently calculate how best to achieve
their desired ends but is silent about the nature of those ends. Rational
agents might well simply ruthlessly pursue their narrow self- interest,
but the rational choice model can also account for a Mother Teresa,
as long as she efficiently deploys her resources to succor the poor as
well as pos si ble.
Other standard objections to the rational choice model are also readily
addressed by economists. Does the model assume people are omniscient,
capable of sorting through piles of information to arrive at the best pos-
si ble allocation of their limited resources? The rational choice model
can easily accommodate prob lems stemming from the fact that infor-
mation is limited and costly to acquire and from uncertainty about the
future. Is it reasonable to assume that individuals make the sort of
complicated mathematical calculations posited by the model? Milton
Friedman assures us that as long as the model predicts well, we need not
worry about w hether it is subjectively true that people solve complicated
prob lems in constrained maximization on the fly. Botanists use com-
plicated calculations to compute how leaves should respond to maximize
their exposure to available sunlight, calculations that lead to good pre-
dictions but d on’t entail strong assumptions about “smart” leaves.4 What
about the fact that people sometimes make systematic errors in judg-
ment, say, by being swept up in the euphoria surrounding a financial
bubble, leading them to purchase grossly overvalued assets? In the past
few de cades, economists have become more open to research from the
field of behavioral economics that discovers such cognitive “errors” and
helps them build models that better capture a ctual h uman decision
making.5
Although economists have good replies to the standard set of critiques
aimed at the rational choice model, something about the model none-
theless per sis tently nagged at me. The strength of the model is its ability
to map a wide range of motivations into formally identical mathematical