Transcript 20090422 Mueller ACE 17Apr09s

Restoring Economic Orthodoxy:
Outline of (Neo-) Scholastic Economics
John D. Mueller
Director, Economics and Ethics Program
Ethics and Public Policy Center (www.eppc.org)
President, LBMC LLC (www.lbmcllc.com)
Association of Christian Economists Conference
Baylor University, 17 April 2009
1
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
2
Economics as human providence
Order in planning: 1. For whom? 2. What? and 3. How (shall I
provide)?
1.
2.
3.
4.
For whom: Augustine’s theory of personal gifts/crimes,
Aristotle’s social, political distributive justice (distribution)
What: Augustine’s theory of utility (consumption)
How (a): Aristotle’s theory of production—of and by
(i.) people and (ii.) property
How (b): Aristotle’s “justice in exchange” (equilibrium)
3
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”):
Kind of love
Inner Act
Ordinate
Benevolence
Inordinate
Malevolence
Outer Acts toward:
Self
Others
Utility Beneficence (Gifts)
Vice
Maleficence (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)
4
Pure selfishness (assumed
by Adam Smith and
neoclassical economics)
Gifts to others
(express love)
Crimes against
others (express
hate)
5
How the Structure of Economics
Has Changed (1): Simplified
Element Distribution
Consumption
Production
Exchange
Outline
Scholastic
(Thomas Aquinas)
Yes
Yes
Yes
Yes
Classical
(Adam Smith)
No
No
Yes
Yes
Neoclassical
(Jevons, Menger,
Walras)
No
Yes
Yes
Yes
Neoscholastic
(Scholastic outline,
elements updated)
Yes
Yes
Yes
Yes
6
How the Structure of Economics
Has Changed (2): Detail
Outline
Element Distribution
(Gifts/crimes &
distributive
justice)
Consumption
(type of utility)
Production
(people/property)
Equilibrium
(“justice in
exchange”)
Scholastic
Yes/Yes
Yes (ordinal)
Yes/Yes
Yes
Classical
No/No
No
Yes/No*
(*“labor theory”)
Yes
Neoclassical
Austrian (Menger)
British (Jevons)
Chicago (Schultz)
Lausanne (Walras)
No/No
No/No
No/No
No/No
No/No
Yes (mixed)
ordinal
cardinal
cardinal
ordinal
Mixed
No**/Yes
No*/Yes
Yes/Yes
No**/Yes
(**“stork theory”)
Mixed
No (Mises)
Yes
Yes
Yes
‘Neoscholastic’
Yes/Yes
Yes (ordinal)
Yes/Yes
Yes
7
8
9
10
11
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