1 Restoring Economic Orthodoxy: Outline of (Neo-) Scholastic Economics John D. Mueller Director, Economics and Ethics Program Ethics and Public Policy.

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Presentation transcript:

1 Restoring Economic Orthodoxy: Outline of (Neo-) Scholastic Economics John D. Mueller Director, Economics and Ethics Program Ethics and Public Policy Center ( President, LBMC LLC ( Association of Christian Economists Conference Baylor University, 17 April 2009

2 What is Economics About? Well, what do people do all day?* Order in doing: 1. “Planting and building”: production 2. “Buying and selling”: exchange 3. “Marrying and giving in marriage”: distribution 4. “Eating and drinking”: use (consumption) *Luke 18: 27-28

3 Economics as human providence Order in planning: 1. For whom? 2. What? and 3. How (shall I provide)? 1.For whom: Augustine’s theory of personal gifts/crimes, Aristotle’s social, political distributive justice (distribution) 2.What: Augustine’s theory of utility (consumption) 3.How (a): Aristotle’s theory of production—of and by (i.) people and (ii.) property 4.How (b): Aristotle’s “justice in exchange” (equilibrium)

4 Positive: Augustine’s “Law of the Gift” Premises: 1. All persons motivated by love of some person(s). 2. Love is “willing some good to some person” (Aristotle). 3. We express personal love/hate by our distribution of goods. Descriptive (“positive”):Outer Acts toward: Kind of loveInner Act SelfOthers OrdinateBenevolenceUtilityBeneficence (Gifts) InordinateMalevolenceViceMaleficence (Crime) Prescriptive (“normative”): Two Great Commandments* Standard of benevolence (“goodwill”): negative Golden Rule (“Do not do unto others” = justice in exchange) Standard of beneficence (“doing good”): positive Golden Rule (“Do unto others” = personal gifts, distributive justice) *”Love God…with all your heart” (Lev. 19:18), “neighbor as yourself” (Deut. 6:5)

5 Gifts to others (express love) Crimes against others (express hate) Pure selfishness (assumed by Adam Smith and neoclassical economics)

6 How the Structure of Economics Has Changed (1): Simplified Element Outline DistributionConsumptionProductionExchange Scholastic (Thomas Aquinas) Yes Classical (Adam Smith) No Yes Neoclassical (Jevons, Menger, Walras) NoYes Neoscholastic (Scholastic outline, elements updated) Yes

7 How the Structure of Economics Has Changed (2): Detail Element Outline Distribution (Gifts/crimes & distributive justice) Consumption (type of utility) Production (people/property) Equilibrium (“justice in exchange”) ScholasticYes/YesYes (ordinal)Yes/YesYes Classical No/NoNoYes/No* (*“labor theory”) Yes Neoclassical Austrian (Menger) British (Jevons) Chicago (Schultz) Lausanne (Walras) No/No Yes (mixed) ordinal cardinal ordinal Mixed No**/Yes No*/Yes Yes/Yes No**/Yes (**“stork theory”) Mixed No (Mises) Yes ‘Neoscholastic’Yes/YesYes (ordinal)Yes/YesYes

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Divine Economy: The Three Theories of Providence 1. Biblically orthodox natural law: God freely created man as a rational animal though sinning person: free to choose persons as ends, other things as means (AAA’s*) 2. Stoic pantheism: Cosmos one big rational animal, God its immanent soul; man a puppet manipulated by “invisible hand” to “ends... no part of his intention” (Adam Smith) 3. Epicurean materialism: no Creator or providence, only “matter and chance”; man a clever animal choosing means, not ends: reason “slave of the passions” (Hume) Thus the “Choice of 1776”: Created Equal—Or Not? * Aristotle + Augustine, first integrated by Aquinas