Abstract
This review was edited by the outgoing Book Reviews Editor, Nicholas Townsend
Aquinas and the Market is a book every economist and every theologian engaging the economy should read and it might well be the topic for a conference where economists discuss the goals and methods of the discipline. While behavioral economics, neuroeconomics and the role of social institutions in economic life have begun to erode the methodological wall between positive and normative economics, discussions in the discipline related to the pursuit of life’s ultimate purpose have been rare. However, Hirschfeld, who is well versed in the language and concepts of economics, theology and philosophy, takes the reader on a journey that explores how economics and life’s ultimate purpose might interact to create a more humane economy.
A central theme of this book is that contemporary economic theory assumes people focus on the efficient acquisition of material goods without focusing on the ultimate purpose of life and how it is achieved. This pragmatic realism approach envisions humans operating with a narrow self-interest to maximize utility. Economic models based on this assumption are then expected to be the best predictors of behavior in the economy, but any moral, ethical and theological perspectives are left for policy makers to apply if they choose to do so.
Chapter 1 discusses two approaches that fall short of an authentic theological economics. First, efforts to find areas where economics and theology might have similar values like freedom of choice are sometimes used to justify a system. Economies that redistribute resources to the poor might also get a theological blessing. While these values may be theologically important, this approach is limited because of its tendency to overlook other aspects of the system that need theological attention. The second approach has theologians defining appropriate goals and economists designing the means for achieving those goals. This division of labor approach minimizes theological reflection on many important aspects of economics. A third approach, used by Hirschfeld in this book, illustrates how an economist, heavily influenced by Aquinas, could enrich economics by focusing on the nature of true happiness and how it is achieved. This attempt to develop a theological economics is not a utopian dream that ignores humans as they are while rejecting mainstream economics. Rather, Hirschfeld suggests that an economist following Thomas will be able to provide an informed critique of traditional economics, carefully discerning what we can and cannot learn from it.
Chapter 2 explores the rational choice theory and the way economists use it. Efficiency is viewed as the satisfaction of personal preferences, but this ignores the fact that individual choices can be motivated by a variety of non-egoistic feelings. For example, rational choice theory often fails to predict how members of a family might relate to each other. Sometimes our preferred choices depend on what others expect us to do and so rational choice theory might fail in those cases as well. Hirschfeld concludes that ‘However, in practice, efficiency seems to be desirable not because it is a measure of preference satisfaction but rather because it is a measure of well-being’ (p. 61). Another shortcoming of rational choice theory is that it typically assumes that more is always better and scarcity is the norm. In short, much of what rational choice theory assumes about utility maximization does not necessarily equate to human well-being.
Given these shortcomings in economic reasoning, in chapter 3, Hirschfeld develops Aquinas’s metaphysical view that human happiness should be the goal of humans. True happiness comes not by acquiring more and more of one’s personal preferences, but rather when humans achieve their intended purpose. This purpose takes shape when we realize a fundamental truth about our temporal world: ‘that it is absolutely dependent on God. There is no aspect of creation that could subsist on its own, since that property belongs to God alone’ (p. 86). The intended purpose of creation, then, is to mirror the goodness of God rather than to accumulate as much material goods as possible. How this is done becomes the topic of chapter 4.
How we look at food might help us understand this chapter. Some see the main purpose of food as a short-term satisfaction of taste and appetite. They value sodium and sugar and whatever brings immediate taste and pleasure. Others see food as a means to the ultimate goal of a healthy body. They eat food prepared toward that end regardless of taste in the hope of enjoying a longer life. For Aquinas, the ultimate goal of life is not just to maximize our personal temporal pleasure, but to know and love God. ‘As humans we have the special gift of consciously choosing this path, and we do so by cultivating virtue’ (p. 101). Virtues are good habits we pursue that point us toward our ultimate goal. After exploring the various aspects of virtue, Aquinas illustrates how virtue and prudence together can lead to a flourishing life focused on life’s ultimate goal. But prudence is not just exercising rational choice as economists usually do. Rather it involves making decisions that reflect God’s goodness and thus fulfills our highest purpose in life. Aquinas refers to this process as seeking perfection rather than maximization.
With life’s ultimate goal in place, Hirschfeld considers in chapter 5 what a Thomist economics might look like. While perfect happiness comes when we reflect God’s goodness, there is imperfect happiness that we gain by acquiring what is necessary to maintain our temporal standard of living. In addition to items of natural wealth like food, shelter and health care, natural wealth can help us exercise virtue. Gift-giving that fosters good relationships and enhances the public welfare would be examples of virtuous economic behavior. While seeking material goods for these reasons can be an exercise of virtue, care must be taken to avoid excess and a deviation from the ultimate end of reflecting God’s goodness. Wealth accumulation and the view that more material goods are always better might well be a sign that the wrong end is being pursued. ‘Neither markets nor natural wealth have value independent of their role in serving the higher goods they support’ (p. 133). The danger of a monetized economy is that seeking more money and wealth becomes an end in itself and this desire for accumulation then spreads throughout all human activity. ‘Aquinas rank-orders states of happiness in this life in terms of how strongly the life is focused on God and how little the life depends on material goods’ (p. 148). A focus on money and profit maximization will hinder the imperfect happiness that economic activity should foster because they tend to become ends in themselves. In short, rational choice economics with its focus on the maximization of narrowly defined individual pleasure ignores an explanation of perfect happiness as an ultimate goal.
In chapter 6 Hirschfeld looks at the institutional arrangements that support economic life and how they might be ordered toward the ultimate good. A system designed to fulfill one’s basic needs in life can be virtuous. Owning private property and exercising self-love in a way that supplies basic needs can be achieved while holding the love of God as the priority in life. The problems come when we go beyond our basic needs when others have less than basic needs. Unfortunately, an economy that assumes more is better than less is in danger of escalating the expected standard of living, increasing income disparity, and putting damaging pressure on the environment. To escape these pitfalls we must identify with a community of faith that can discern how our use of resources can serve our ultimate purpose of reflecting God’s goodness. If we do this, we will see sharing not as altruism, but as a desirable normal action. Social status will not be bound as tightly to wealth accumulation. This effort to live as we were meant to live does not align with standard economic modeling practices. If human behavior involves narrow self-interest with a constant pursuit of more material resources, then we may get accurate predictions of what people will do. However, that approach will not lead to the meaningful virtuous life we were intended to live.
In the final chapter, Hirschfeld suggests that a Thomist economics would recognize how meaningful the pursuit of the higher goods can be for everyone. When people come to understand they will be freed ‘from the relentless pressure to raise their incomes, they would have more time to attend to their families, cultivate their relationships with friends and neighbours, and pursue higher goods’ (p. 191). This would not entail a wholesale rejection of what economics presently does. Specialization and trade in a market system, private property, and a properly focused optimization process are all useful tools to reach the desired outcome. The difference is in the final goal that is pursued, and on this point Aquinas has much to offer economics. Hirschfeld suggests that economics is usually taught as if humans operate as animals who optimize based on immediate impulses without carefully processed higher goals. This leads to a system of temporal value-free utility maximizing that is considered efficient and desirable.
The book closes with a call for more interdisciplinary interaction, with closing paragraphs of the book labelled, ‘Embedding Economic Analysis in a Holistic Account of Happiness’ (p. 209) and ‘Economics as a Participant in Cultural Conversation’ (p. 212). Reading those sections first would increase the motivation to explore the earlier chapters which contain in-depth theological and philosophical analysis.
This book is very relevant in these times when confusion about ultimate goals in life seems to be pressing increasingly hard on our social order. Yet the tendency to minimize liberal arts and move toward more pragmatic education draws us away from the kinds of interaction Hirschfeld recommends. This book may not be an easy read for economists with limited theological and philosophical backgrounds, but many practical examples are used well to explain and illustrate how economics inspired by the theology of Thomas Aquinas can contribute to genuine human wellbeing.
An economist might suggest that perfectly competitive markets do point us toward the ultimate good because resources are allocated to their most desired use and competition eliminates excess profit. In this case, if there is a problem, it is because individuals have distorted preferences and income distribution may be unfair. The corrective agenda then involves a refocus of individual preferences and a public policy that creates a better distribution of income. The economic system itself can still work if these adjustments can be made. Hirschfeld recognizes this but she does feel that a preference maximizing system has built-in biases against ultimate goodness. When these biases are recognized and our true purpose in life is understood, then economics, theology and philosophy can work together to form a system that will be humane, just and God-honoring. I enthusiastically recommend this book because it will help to move us toward that goal.