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Economics as if people mattered


Small Is Beautiful, by E. F. ShumacherThe Occupy Wall Street protests have swept around the globe. While it is hard to identify a coherent program in these protests, it is clear that they have touched a nerve in Western society in regard to how the socio-economic system functions in the aftermath of the great financial crisis of 2008.

More extreme reactions can be identified in the Greek riots. The one clear note appears to be resentment at perceived corporate greed.

The Tea Party movement in the US, and its spin-offs around the world, such as the Convoy of No Confidence Rally in Canberra, express a similar anger at the status quo, though for them the growing debt crisis and a perceived culture of entitlement are the targets.

Both give expression to a crisis of confidence in the economic system and in the ability of our political processes to manage it.

Whatever the merits of such protests and the associated issues of free speech and democratic processes, it must be said that the capitalist system has shown itself over the last century as one that has been remarkably flexible and resilient.

It has seen off rival economic and political challenges from the extremes of right and left, and it is far too early to speak of any substantial challenge to its dominance today.

But perhaps there is a real taste for exploring alternatives.

In 1973 economist and philosopher E. F. Schumacher coined the phrase 'small is beautiful' — this was, in fact, the title of his seminal book on economics. In an age that had produced many great 'isms' (communism, fascism, capitalism) Schumacher advocated a more human-scale, decentralised approach to society. The subtitle to Small Is Beautiful was 'economics as if people mattered'.

In more recent times Schumacher has been described as the 'soul of the Green movement'. Satish Kumar, editor of Resurgence, sees in the Greens community and economic policies the influence of Schumacher's belief that 'the environment is not just an empirical, technical, policy matter; it is related to human values, which are a part of natural values.'

It is perhaps ironic that the Greens and other community-focused groups that are critical of the modern capitalist state draw on the ideas of a world-renowned economist, who in turn found inspiration from the social doctrine of the Church.

There is no single Catholic economic theory. The Church, however, can bring to the analysis of economics its understanding of the human condition, the importance it attaches to community, and values that inform the nature of the society we are trying to build. There will of course be substantial disagreements and debates in applying principles to economic practice.

Throughout this last century there have been numerous attempts to apply Catholic social teaching to the social realities of the time, though few today are really aware of them.

On the left, the idea of the social gospel played a significant part in shaping the rise of the labour movement and trade unions. In Australia, Cardinal Moran exercised much influence in this, along with unionists such as William Spence.

Christian Socialism has a long and proud history and has produced a wide range of thinkers and politicians up to contemporary times. Liberation theology has been deeply influential in many Third World countries. The emphasis across most of these groups was the primacy of the common good and a concern for the poor in the modern industrial world.

On the right there have been Christian capitalists and thinkers such as Michael Novak (The Spirit of Democratic Capitalism), as well as right wing critics of capitalism such as the corporatists, who have some influence on expressions of fascism.

The emphasis in these was on the fundamental importance of the family unit, the role of creativity in wealth creation and seeing socialism as detracting from human freedom.

Perhaps the most influential of the faith-based approaches to economic theory is that of distributism. Schumacher was influenced by distributist ideas that tried to explore a middle road between capitalist and socialist economic theory. In the English speaking world Catholic writers such as G. K. Chesterton and Hilaire Belloc popularised its early forms.

Schumacher was especially influenced by the principle of subsidiarity that was outlined in Catholic thinking and lay at the core of distributist thought.

Subsidiarity states that power and responsibility should be located as far as possible at the lowest, most local level of a society (though the Church doesn't always reflect this principle!). Thus it is uncomfortable with big government and big business, with aspects of both socialism and capitalism.

It is worth noting too, that often the principles of Catholic social teaching are largely unknown or ignored, even within the Church, and the fruits of sustained reflection on experience across many cultures and times are not explored.

Sometimes too, that treasure is brought to our attention from surprising sources. Andrew Brown, an editor with Britain's Guardian newspaper and an atheist, wrote recently that:

Catholic social teaching, and the attempts to produce an economics centred around the needs of humans, rather than of money, look like the only thought-through alternatives to unbridled market capitalism — and certainly the only ones which have a chance of widespread popular support.

Anglican theologian, philosopher and political thinker Phillip Blond has become a proponent of a form of distributism that has growing influence in British debates.

Blond is an adviser of the British Prime Minister, David Cameron. He argues that both capitalism and government are out of control, echoing ideas from both Occupy and the Tea Party. Blond speaks of an 'oscillation between extreme collectivism and extreme individualism', which for him are connected to a concentration of power both in government and the market.

He goes on to claim that Occupy and the Tea Party are 'essentially different expressions of the same phenomenon' in that they are expressions of resentment at the concentration of power in violation of the principal of subsidiarity, while the remedies they propose will fail because 'they demand salvation from either the gods of the market or government'.

In words Schumacher and the earlier Catholic distributists would have approved of, distributism, Blond argues, 'calls for going smaller and more local in search of solutions (music to the ears of classic conservatives) while leaving the central government to build the infrastructure and guarantee basics like education and health care (ideas that would warm any bleeding heart)'.


Chris MiddletonFr Chris Middleton SJ is the Principal of St Aloysius College, Milson's Point, in Sydney. This is an edited version of an article that originally appeared in the college's newsletter. 

Topic tags: Chris Middleton, Occupy Wall Street, Tea Party Movement



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Fr. Middleton touches on a wide range of ideas expressed by Catholic priests and laymen over the years in their endeavours to improve the quality of life for people in an increasingly complex society.
Whatever the best answers to the problems may be, it is clear - and dangerous - that wealth and power is moving into fewer and fewer hands, even in nominally democratic countries. J.K.Galbraith called it 'Corporatism' - as a successor to Capitalism.

The best remedy to current problems may be difficult to establish but the aim can be expressed in a single word: 'fairness'.
Eureka Street and Fr. Middleton should be congratulated in drawing attention to one of the great problems of our time.

Bob Corcoran | 08 November 2011  

Fine so far - but Chesterton, Schumacher and co do not face the underlying assumption driving much economics practice and rhetoric: "we must keep growing!" Clearly there are limits to growth, however defined.

I have found the UK Sustainability Commission Report, Prosperity without Growth, though ostensibly not arising from a 'faith-based' source (can there ever be a 'faith-free' opinion?), to be clarifying, challenging and most of all practical in giving me starting-points for personal change, community involvement and theological reflection. I'd be interested in others' responses.

The Report is available for download at http://www.sd-commission.org.uk/publications.php?id=914.

Charles Sherlock | 08 November 2011  

Fr Middleton wrote:"Liberation Theology has been deeply influential in many Third World countries" - and I note this article appeared in St Aloysius' College Magazine. I think it would have been advisable to inform the College's students that, while Liberation Theology has indeed had an impact, the Vatican, specifically the current Pope and his predecessor, has done its utmost to destroy the very concept by isolating and condemning its proponents. In 1984 Cardinal Ratzinger (the current Pope) charged the Liberation Theology champion, Leonardo Boff ofm, with using 'ideological' perspectives that were not fully informed by theology - Ratzinger's theology. Boff was finally driven from the priesthood because the 'official Curch' did not like the word 'theology' being associated with the word 'liberation' - another wonderful opportunity, to abide by the Gospel's injunctions regarding justice, lost.

John Nicholson | 08 November 2011  

Charles Sherlock is spot on in his response. The environmental challenge to global capitalism must now be the main game: it's not possible to have economic growth forever on a finite planet. And the today people telling us about the alternatives are Herman Daly and those associated with him re Steady State Economics in the US, and the New Economic Foundation in the UK - with Jackson's 'Prosperity without Growth' a leading document as Charles Sherlock says. These contemporary analysts deserve our strongest support; and yes, in the interests of fairness as well. Decent and valuable ideas and approaches can be gleaned from the distributists, etc., but global capitalism must be exposed for its ongoing dangerous consequences, that is, creeping growth at the expense of untold damage to the planet and its creatures.

Len Puglisi | 08 November 2011  

However one evaluates the Occupy campaign, one doesn’t need to be an economist to see that establishment economics is fundamentally dysfunctional. Astonishingly, the present economic mess has its roots in some very simple errors that were identified more than seventy years ago by Bernard Lonergan (1904-1984). Lonergan’s discovery of the science of economics identifies what is lacking in current economic theory: the empirically verifiable fact that there are two kinds of firms and hence two productive circuits. The basic circuit is the flow of consumer goods understood as a rate (so much every so often) and the producer circuit is the flow of capital goods and understood as a series of accelerators (speeding up, slowing down, maintaining) the rate of flow in the basic circuit. Although Lonergan’s writings have been available in the past two decades, they have not yet caught the attention of mainstream economists. Nonetheless some year twelve students--at the other well respected Jesuit school in Sydney-- are able, by simple observation, to verify Lonergan’s discovery and the prescientific presentation of a single circuit of firms and households as presented in the standard textbooks. While Lonergan valued Chesterton et al, distributionism is more a deus ex machina than a science.

Tom Halloran | 08 November 2011  

I smiled at Fr Middleton's parenthetical phrase (Though the church doesn't always reflect this principle!), when refering to the principle of subsidiarity.

I am reminded of what Chesterton wrote in What's Wrong with the World: "The Christian ideal has not be tried and found wanting. It has been found difficult; and left untried."

Applying what Christ taught by word and example as to how we can come to know and carry out the will of God His and Our Father to economic systems is no doubt difficult.
There's an understatement if I ever wrote one.

Some of those in the church who have been entrusted with handling its financial investments have seemed to serve Mammon more than God. Bishop Marcinkus former head of the Vatican Bank comes to mind.
I often wonder what approach Pope John Paul I (d Oct 26 1982) would have taken to social questions had he lived. In his short reign as Pope he certainly seemed to embrace the prefential option for the poor. Francis of Asissi would have loved him.

Uncle Pat | 08 November 2011  

Thanks, Chris for a splendid article. It is incredibly reassuring that the Principal of one of our schools has the ability to pass on to young people such a profoundly formative orientation. They will thank you forever for teaching them 'the faith that does justice'.

Joe Castley | 08 November 2011  

Thank you for this article. The relationship bewteen economics, good government and Christian living is a subject which needs continual examination and prayerful deliberation.

Patrick Kempton | 13 November 2011