GROVE CITY COLLEGE St. Thomas Aquinas: Economics of the Just Society Austrian Student Scholars Conference Hagan, Michael J. 12/12/2012 Introduction St. Thomas Aquinas, a medieval theologian and philosopher, is an important figure in the history of economic thought. Aquinas understands the economic ideas that economists rely on today, such as the law of supply and demand, subjective value theory, and the theory of time preference. However, Aquinas has misunderstandings in his economic understanding as well, such as in his philosophy of the society and of global trade. Aquinas applies his economic understanding to determine justice in economic matters such as pricing and usury. While economists study economics as a value free science, Thomas Aquinas readily enters into a value-laden form of practical economics. Thomas Aquinas is regarded as one of the greatest minds in medieval history. He is the epitome of the Scholastic school, a tradition of learning within the Catholic Church that emphasized the attainment of knowledge through reason rather than strictly through faith. Aquinas wrote extensively on theology and philosophy, and less extensively on just about everything else, including economics. Properly understanding what Aquinas has to say about economics is a useful study because he, despite being a theologian, is an important figure in the history of economic thought. For hundreds of years after his death his writings on price and usury were widely referenced, in and out of the Church. To properly understand Aquinas’ economic thought, significant time must be spent understanding Aquinas’ purpose and framework. This paper will thoughtfully introduce the reader to Aquinas’ framework and writing, explain Aquinas’ stance on multiple economic matters, and demonstrate his impressive knowledge of economics. Methodology 1 Many of Aquinas’ writings have been consulted in writing this paper including the Summa Theologica, Summa Contra Gentiles, “On Buying and Selling on Credit”, On Kingship, Compendium of Theology, “Letter to the Duchess of Brabant”, and more. These writing have been searched for areas where Aquinas deals with economic issues. Additionally, secondary sources addressing Aquinas’ economic and philosophical thought have also been taken into account, as to integrate other scholars’ interpretations of Aquinas’ thought. With all of that taken into account, here is compiled a thoughtful study and critique of Aquinas’ economic thought. In comparing Aquinas’ economic thought with modern economic thought, the paper will primarily refer to the Austrian school of economics, often appealing to the writings of Ludwig von Mises and Murray Rothbard. Comparing the Austrian school and Aquinas’ economics is useful because both systems rely on a thoroughly philosophical framework. Aquinas’ Framework To understand Thomas Aquinas’ commentary on economics, it is first crucial to understand the framework in which he writes. Most, if not all, of the situations in which he addresses economic matters are in the framework of justice. Aquinas confronts many challenging questions about whether actions are just. In the Summa Theologica, Aquinas (1981, II-II, Q58, A1) holds justice as the highest of the virtues and defines it as “a habit whereby a man renders to each one his due by a constant and perpetual will.” In discussing this definition, he stresses that an act of justice must be voluntary and that it must be committed intentionally. Aquinas adds that justice indicates a relationship with another. Lastly, Aquinas (1981, II-II, Q58, A11) concludes that since each man’s due is 2 that which is his own, “the proper act of justice is nothing else than to render to each one his own.” This conception of justice comes forth from natural law philosophy. Aquinas: Theologian, Philosopher, Economist? Thomas Aquinas is regarded as one of the most influential thinkers in the medieval era. Thomas Aquinas was not an economist. Rather, St. Thomas Aquinas is a theologian and philosopher in the Scholastic tradition. While Aquinas never published a treatise on economics, he has nevertheless been an important figurehead in the development of economic thought, especially in his work in just price and usury. In his theological and philosophical writings, he writes about many topics, including economics. However, he only focuses on these economic topics because they are important to his real purpose in writing, which is upholding justice according to natural law philosophy. As Joseph Schumpeter (1954, p. 90) described, “All the economic questions put together matters less to him than did the smallest point of theological or philosophical doctrine, and it is only where economic phenomena raise questions of moral theology that he touches upon them at all.” Rather than writing about the causes and effects of human action, most of what Aquinas and the Scholastics wrote deals with what actions are just in society. Therefore, Thomas Aquinas addresses questions of justice in terms of usury, the just price, and trade. By studying his writings and properly understanding their context, Aquinas’ economic thought can be collected, understood, and critiqued. Aquinas’ Philosophy of Man, Philosophy of Social Man Understanding human action is of the utmost importance to the study of economics. Hence, it is prudent to begin by looking to Aquinas’ philosophy of man. Aquinas writes 3 that all men are created by God and are made up of spiritual and earthly components. Man, unlike other creatures, is “master of his actions through his reason and will” (1981, II-I, Q1, A1). Aquinas (1981, II-I, Q1, A2) defines free-will as “the faculty of will and reason.” Free-will gives man dominion over his action. Aquinas (1947, p. 70) states, in the Compendium of Theology, that man has free choice and “the intellect does not act or desire without forming a judgment.” The judgments that lead to choices that man makes are free because man is in control of those choices. Aquinas also discusses what he calls the necessity of coercion. He defines this as “when someone is forced by some agent, so that he is not able to do the contrary” (Aquinas, 1981, I, Q82, A1). This necessity of coercion, which is simply when man is forced to do something against his will, is violent and entirely against the will of man. In discussing man’s action, Aquinas goes on to describe man’s action as it relates to his ends. First, he clarifies that all action is directed toward an end. Without an end in mind, man would not act because he would have no reason to choose an action. The end which man has in mind is what causes him to act, so that he may achieve that end. He also says that humans use their intellect to identify their end, the means leading to the end, and how they relate to one another (Aquinas, 1981, I, Q76). He further states that all that man desires is for the last end, “the fulfillment of their perfection” (Aquinas, 1981, II-I, Q1, A7). If an action is not directly for the attainment of the last end, it is a means to the last end. He also notes that men are in disagreement of how to fulfill this final perfection. Aquinas suggests several options, including the attainment of wealth, and explains why each is not man’s final end or his happiness. Finally he gives the answer that “perfect happiness can consist in nothing else than the vision of the Divine Essence” 4 (Aquinas, 1981, II-I, Q3, A8). Thus, Aquinas’ philosophy of man, man’s freedom of choice, and how man acts to achieve his ends can be properly understood. Individual Man Aquinas’ treatment of individual man and his means and ends is similar to the treatment given by the Austrian School economists, but Aquinas goes beyond the value- free boundaries of economic science by insisting upon justice as an end for all exchanges. In the Austrian school of economics, all economic law is founded on the concept of human action. Like Aquinas, Austrian economists understand man as a being who makes choices between differently valued means to achieve his ends. Ludwig von Mises (1966, p. 13) explains that “the incentive that impels a man to act is always some uneasiness.” This uneasiness, or discontentment, is similar to what Aquinas describes as the lack of final perfection, the lack of happiness. Man’s action continues to be driven to improve his situation in life and to satisfy his feeling of uneasiness. The man who has satisfied his ends, says Mises, would be happy and no longer act, because no further action would lead to an improvement. While the analysis of man by economists ends here, Aquinas continues into the realm theology in order to explain man’s specific purpose in life. Economics as a science makes no judgments on what this happiness is or should be. Mises makes clear that economics does not serve to identify whether there is an objective end to man or any plan that God might be involved in. In fact, Mises (1966, p. 14) says “nobody is in a position to decree what should make a fellow man happier”, which is exactly what Aquinas does. Aquinas firmly contends that satisfaction is only achieved in the presence of God in heaven. The major difference in the individual philosophy of man is that Aquinas always involves the value-laden features of human 5 action, while Mises and other economists avoid such discussions in a value-free treatment of facts about human action. If Aquinas’ idea of man as an individual is comparable to that of modern economics, his idea of man as an economic actor in society is not. Man as Economic Actor in Society In treating man as an economic actor, Aquinas and modern economists greatly differ. Economists in the Austrian school find it useful to start with the thought construct that Murray Rothbard (1998, p. 29) calls Crusoe Economics, which is “the analysis of an isolated man face-to-face with nature.” The goal of this construct is to better understand human action by removing the human from the complex realm of society, similar to conducting a controlled experiment. The Crusoe model is a way of simplifying the innumerable complexities of a complicated world economy and to study man and his actions at the simplest level. Rothbard (1998, p. 29) says that this model “has highly important and even indispensable uses.” Acting man is first described in his isolated environment, and then this theory is expanded as man interacts with another person and then eventually enters into society. The truths that are learned about man in isolation remain true in society. However, these truths might not have understood properly seen at the societal level if they had not been identified using the model of man in isolation.1 In discussing his philosophy of man, Aquinas describes man’s being, free-will, and purpose at the individual level. However, in economic matters, Aquinas always views man as a member of society. He does not use this model of man in isolation. Like most economists, Aquinas sees man as a social being. Unlike most economists, he only deals with man in this manner. He makes no attempt, as economists do, to hypothetically 1 Of course, economists who use the Crusoe model admit that such an isolated man does not exist. Mises (1966) explains that man is a social being and that “the isolated asocial man is a fictitious construction” (165). Robinson Crusoe is useful only as a though construct and rightfully recognized as fictitious. 6 remove man from society to understand his action. This is important because when Aquinas starts at the macro, or societal, level of human action his economic reasoning can be inconsistent because he does not work from the same praxeology of the micro level as economists do. Aquinas also differs with the economist on the understanding of society and man’s participation in society. For the economist, “society is concerted action, cooperation”, and it is the product of humans working together to achieve their individual ends (Mises, 1966, p. 143). It follows naturally from the praxeology of human action that in acting for his own benefit, man will cooperate with other men because it is often mutually beneficial to do so. This cooperation comes about in the formation of societies in the division of labor. In their own interest, men trade with each other and specialize in their areas of efficiency. It would be incorrect, though, to speak of cooperation as a society working for a common goal such as the common good. This human cooperation is still, however, fueled by individual actions which are fueled by individual ends and their attainment. It is a fallacy to speak of society having goals or ends, because society is simply a combination of individuals with their own ends. Mises (1962, pp. 78-79) writes on many separate occasions about the fallacy of speaking in collectives, saying that “only individuals act” and “society does not exist apart from the thoughts and actions of people” and society “does not have ‘interests’ and does not aim at anything.” Mises stresses that society is nothing more than men cooperating, each to achieve their own individual interests. Aquinas, on the other hand, explicitly condemns the idea of man working for his own good in society. He says “in an earthly kingdom peace ceases when the citizens seek each 7 man his own” (Aquinas, 1981, II-II, Q183, A 2). Aquinas views a man working for his own ends as a selfish and parasitic entity in society. He says that “where there are many men together and each one is looking after his own interest, the multitude would be broken up and scattered unless there were also an agency to take care of what appertains to the commonweal” (Aquinas, 1946). As has been shown above, an economist would say the exact opposite: cooperation in society arises specifically because men are working for their own ends and can do so more efficiently through cooperation. Aquinas also cites Scripture to convey his idea of society, “Where there is no governor, the people shall fall” (Eccl 4:9). Thus, Aquinas says that government must be established to tend society toward the common good, which would not be done otherwise. Again, this is antithetical to the claim of the modern economist, who says that the common good is a fallacy, and that ends may only be understood as belonging to the individual. While economists see the complementary nature of society as a beneficial organization of men working for their own good, Aquinas sees this as a contradiction or impossibility. Society in Aquinas’ view is mutually beneficial for man, but must be governed in such a way that man acts not for his own good, but for the good of the society. There are a number of reasons why Aquinas only considered man in society: the influence of the ancient Greek idea of society, Aquinas’ understanding of man as a social animal, the fact that he was writing for the purpose of establishing matters of justice, and the fact that his goal was not a systematic work in economics. It is also important to note that the idea of society it much different today that it was in Aquinas’ time. In the philosophy of the ancient Greeks, there was much emphasis on seeking justice in politics. The notion of the Greek city-state was founded in establishing 8 and upholding an objective idea of justice. Aquinas continues to write in this mode of politics, where justice is realistically sought after. It can be seen that this is true in Aquinas’ time by Aquinas’ correspondences. Royalty and other rulers wrote to Aquinas about certain issues so that they could be just in their actions. Since then, there has been a split between facts and values in society. Thus, the social sciences, including economics, attempt to conduct their study in a value-free manner. This ideology has created a modern society where justice and good are wholly subjective to the individual. Thus, we often omit judgments of value in our studies, and attempt to limit our judgments to the facts. This difference in the views of society is largely why Aquinas’ focus on justice seems so foreign to us today. For Aquinas, to understand a person was to understand him socially. Society and societal relationships were inherent to all of man’s dealings. Aristotle, in Nichomachean Ethics, describes man as a social animal. Aquinas, who was heavily influenced by Aristotle, follows this line of thought, constantly citing Aristotle’s claim about man’s social nature “almost every time a social topic is discussed” (Dempsey, 1795, p. 8). Men come into world with relationships and to separate man from these relationships, even in economic terms, was not an option for Aquinas. Treating isolated man in a theoretical construct, as economists do, was a futile form of reasoning for Aquinas because of his understanding of man’s inherent social tendencies. It also makes sense that Aquinas never leaves the realm of society because his purpose in writing on economic matters is usually to establish matters of commutative justice. As was mentioned earlier, justice manifests itself in rendering to others their due. Aquinas does not write about economics to derive economic laws of human action, but to 9