Acton University - Four Days of Classes on the Free Economy

Explore the intellectual basis of the free economy; discover why this cannot be separated from a culture of beauty and Catholic social teaching if we want a society that promotes the flourishing of the human person. Once again, I am going to encourage everybody to think about attending 'Acton University' . This is a residential course that takes place in Grand Rapids, Michigan. The dates are June 17-20.

The Acton Institute is an organisation devoted to the promotion of a free and virtuous society. Each person attending must sign up for a an integrated series of lectures so that each builds on the last. It is cleverly worked out so that the first lecture you choose restricts your choice for the second and so on.  It can be repeated year after year, so that each time you go you deepen your knowledge and understanding of the Free Economy. The Free Economy was defined by John Paul II  'an economic system which recognizes the fundamental and positive role of business, the market, private property and the resulting responsibility for the means of production, as well as free human creativity in the economic sector'. This is the form of capitalism that he affirmed as being consistent with the Catholic social teaching and the Catholic understanding of freedom. He went as far as saying that this is the economic system also that is the 'the model which ought to be proposed to the countries of the Third World which are searching for the path to true economic and civil progress'. (both quotes are from Centesimus Annus, 42)

Acton itself is ecumenical, but it is carefully designed so that as a Catholic I can choose courses that focus on Catholic social teaching or are consistent with it. As well as obvious courses such as a basic introduction to economics, they insist that everybody attends a class, for exampe, on Christian anthropology (brilliantly taught by Sam Gregg) and offer elective topics such as the theology of Benedict XVI, public policy, globalization, and the environment. What impressed me is that far from being the detached libertarians unconcerned with morality that some had portrayed them as, they were all profoundly interested in the poor and the foundations of a good and moral society. Furthermore, and again this goes against the way they were characterised, they were extremely interested in promoting a culture of beauty and seeing how this was connected to a free economy.

As this blog is about beauty and culture - I want to recommend to readers particular two lecturers who are at Acton again and address directly the connection between the economy and the culture: Michael Matheson Miller and Dr Jonathan Witt who are on the Acton permanent staff. As is true of all lectures at Acton U, their talks are accessible and entertaining, and each offered great insights into what forms culture.  I would recommend the classes of both lecturers very strongly. Dr Witt's focus on culture, in the lecture I saw last year, was on literary forms  and how it these reflects the worldview of the author. He has co-written an interesting book about science and culture called A Meaningful World. Many who criticise free market economics assume that those who advocate capitalism and the free economy are indifferent to cultural questions. This is certainly not true of those at Acton, the message that I took from my experience is that not only are they interested, but also that they see the existence of a culture of beauty is an essential aspect of a truly prosperous society.

Another highlight for me last year was the lecturer by Andreas Widmer who is director of the Entrepeneurship programs at the Business and Economics dept of Catholic University of America. His insights into how creativity and virtue meet in business are fascinating.

I want also to mention something that touched me personally when I attended last year. My wife is Venezuelan and through her I have become aware of how freedom has steadily become more and more restricted there; and how this has lead to a stifling of prosperity and a degrading of the culture. Since I came to realise this, it has been surprising to me how little of this people are aware of this in the West. It was gratifying to hear Fr Robert Sirico, the founder of Acton talk of Venezuela in his inaugural address and subsequently to meet a group of young people from Venezuela who wish to work towards greater freedom in this beautiful country. http://youtu.be/2Vc3mymrpSY

Just How Bad Were Working Conditions in the 19th Century?

If is commonly held that  working conditions in 19th century cities were much worse than those who lived and worked in the countryside at the time or earlier; similarly you will regularly hear that the creation of factories split up families because the father had to go to work for so many hours every day whereas previously they had seen much more of him. When I questioned the basis of this once with some, the answer I got was that 'Charles Dickens proved it'. This was not a satisfactory answer to me - even if his picture portrayed in his novels is accurate it represents at best anecdotal evidence. It would be foolish, I suggest, to draw any conclusions about the general situation at this period only by consideration of works of fiction written for popular consumption. It does not give us facts and figures that might indicate what living standards were actually like during the 19th century; how conditions in the cities compared to those in the country; and how those conditions compared to the those of the previous century. For an alternative view i looked to Capitalism and the Historians. This is a series of essays by economic historians who conclude that under capitalism in the 19th century, despite long hours and other hardships of factory life, people were in fact better off financially, had more opportunities to better themselves financially, had better living conditions and lived a life more supportive of the family life than those who lived in the country.

The five historians each describe first the life of the workers in the country, which were far worse for the most part than those in the cities. As a result, many people chose to leave the country and work in the city. This caused a problem for the the the landowners, who could not find the labour they needed to work the land and so they created a propaganda campaign highlighting the evils of the factories in order to dissuade their workers from leaving. The irony is that this propaganda was used by Marx and Engels who uncritically accepted much of it in their analysis of the factory system in Manchester. It is the Marxist propagandists who, harnessing envy of the vast riches for the industrialists, succeeded in making this the received wisdom. Furthermore, where there was injustice or dangerous working conditions, laws protecting workers were introduced quite quickly and without any input from Marx or Engels.

It is not true, either, if these are to be believed, that, as a general rule, industrialists thought that anything that any result of market forces was morally justified. There were some of course, but these were as likely to be landowners employing agricultural workers as factory owners in the cities. In fact, those who employed agricultural workers were much more successful in paying low wages because there wasn't the same scrutiny of them due to the success of their propoganda campaign. So for example, WH Hutt tells us that,  'Lord Shaftesbury, when asked by Therod Rogers why he had not sought to extend protective legislation to children in the fields when he knew that their work was ''to the full as physically injurious'' as premature labour in the factories, replied that it was a question of practical politics and that, if he had sought the emancipation of all, he would have obtained the support of no party at all'

A lot of the problems that did exist were created by the success of the industrial age and the developing capitalist system. Improved diet and better housing conditions lead to improved health and mortality rates. The huge growth in the population that ensued overloaded the infrastructure and in turn to huge problems in the cities because the sewage systems could not cope and this lead to disease as the River Thames, in London, for example, became an open sewer. And again, because we are dealing with a population that is larger than ever before, the scale of the problems is greater than ever before. But this in itself does not point to a problem that is inherently worse in industrialisation than in the agricultural economy.  The response was not immediate, but when, quite fairly it was dealt with by the society of the time. So in London in 1856 work on a sewers began, for example. This was so successful a project that much of it is still in use today, 150 years later. The story of the building of this system is one of engineers with great civic pride and dedication driven by genuine concern for the common good.

The contributors to this book by no means paint a picture of perfection but make the point that generally conditions were better than those of agricultural works and were steadily improving throughout the period. Everything I read here about 19th century England supports the assertion that where there is an economy that corresponds to John Paul II's 'free economy' we move towards a better society. Where it departs from it, for example where you have capitalists colluding with government to restrict competition, then problems do occur that will not be solved by the system itself, and the injustices that occur need to be addressed by increasing and protecting personal freedom.

How Free Economics and Catholic Social Teaching Created an Economic Miracle

Wilhelm Ropke: Swiss Localist, Global Economist by John Zmirak

I have been carrying out a little journey of investigation into the free economy and its compatibility with Catholic social teaching. I have concluded that the two are wholly compatible and despite the strongly held objections from some readers (this seems to be a subject that provokes strong reaction). The next question one might ask is how well does it work? In seeking and answer to this I looked to John Zmirak's excellent book about the Swiss economist Wilhelm Ropke 'perhaps one of the most unjustly neglected economists of the 20th century'.

Wilhelm Ropke was advisor to Ludwig Erhard the West Germany finance minister who engineered the 'economic miracle' after the Second World War. What Erhard introduced through a series of reforms enacted in 1948 was a free market system infused with the social values of Catholic social teaching. Most of the allies and economic experts assumed that free markets and capitalism had had their day and were advocating government controlled economic systems that owed much, still, to Marx. Politically there was no natural free market constituency so in a stroke of political genius, Erhard developed the phrase 'social market economy' to sell what he was doing to the German people.

Nevertheless, the conventional wisdom was convinced that this wouldn't succeed. As Zmirak reports: 'The eminent John Kenneth Galbraith wrote in 1948 (just after Erhard made his reforms) "There has never been the slightest possibility of getting German recovery by this wholesale repeal and it is quite possible that its reiteration has delayed German recovery. The question is not whether there must be planning, but whether that planning has been forthright and effective." '  Galbraith couldn't have been more wrong (and if ever we have evidence that in economics is a field in which reputations have nothing to do with the accuracy of predictions, this is it). The result of Erhard's reforms was as dramatic and economic resurgence as one could imagine is possible. While the population of one of the victors in the war elected a socialist government and was still living under wartime rationing of basic foodstuffs, Germany rose from the ashes. Within two years everything had changed dramatically.

As Zmirak tells us: 'Later Erhard praised Ropke for providing "to those trapped in socialist-collectivist thought...words of transformation, offering them once more firm ground under their feet and an inner faith in the value and blessings of freedom, justice and morality." By the end of his life in 1966, Ropke had become  a celebrity in his adopted Swiss homeland and a major figure within the American conservative intellectual revival.'

Some may be aware of Zmirak's other books - the 'Bad Catholic' series, light hearted and very funny examinations of Catholic culture. This book is very different. He describes everything in clear, precise and very readible prose that reinforces just how good a writer he is.

Buy the book here.

His website www.badcatholics.com is like not other I have ever seen. It includes several short video features that arise from the Zmirak imagination. Here is one entitled The Vatican Space Program...watch it yourself, I can't describe it.

http://www.youtube.com/watch?v=aUfhaSnuURQ

Is the Free Economy Really Free?

Harry Veryser's It Didn't Have to Be This Way: Why Boom and Bust is Unnecessary and How the Austrian School of Economics Breaks the Cycle (Culture of Enterprise) I recently posted  an article about Fr Robert Sirico's book in which he presented a moral case for the free economy, here. This provoked as strong a reaction as any I have posted. Many of the criticisms, it seemed to me, were aimed at views that we were assumed to hold (presumably because they imagine that everyone who was in favour of the free economy would think these things) even though it was not the case. For example, some suggested that Fr Sirico's book and my article were undermined by the fact that John Paul II and others have argued for a just wage. Nowhere did I, and to the best of my recollection nowhere in his book, neither did Fr Sirico say anything to undermine the principle of justice in general or  just wages in particular. In fact the opposite is true, right through the book it is apparent that the basic needs of the human person especially the poor are right at the forefront of Fr Sirico's concerns. Speaking for myself, I do not want to see unjust wages at all. Some seemed to suggest that there is an inherent contradiction between a just wage and the free economy and whether we knew it or not, acceptance of the free economy was a rejection of a just wage. I do not see any such contradiction. Neither, it appears, does John Paul II otherwise he would not state that both are necessary and in harmony with each other, in the same section of Centesimus Annus. 

I am happy to believe that I am wrong in this regard, and therefore misreading JPII. However, if I am to be convinced it would need someone to explain in more detail

Another criticism made was that the free economy 'is not free'. This assertion was based upon the fact that some advocates of the free markets, such as Milton Freedman, had a post-Enlightenment and therefore a flawed understanding of what freedom is. The question that arises is this:  is this flawed understanding of freedom intrinsic to the free economy? Or, put another way, does one have to have the post-Enlightenment understanding of freedom in order to be able to explain the free economy?

This would be a fair criticism if the economy was something created by those describing it. I see the economy as something not governed by a set of rules that are created by man, but an order that emerges spontaneously when there is a network of personal interactions. It is something that contains truths to be discovered rather than being a system that can be established made to behave in a particular way with rules set by economists or governments.

In advocating it, there is an assumption made: that a spontaneous order appears as a result of many personal interactions and that it does not need any human organisation (such as government) to direct it, except to protect personal freedom, private property, stable currency and efficient public services. This is the role of the state in regard to economics  - to guarantee this security (not that this is the only prerequisite - the development of a free market depends upon the culture too for example). I do not see that true freedom, according to the traditional understanding, is ever in opposition to the principles of justice. Therefore the protection of freedom will also help to ensure justice (including a just wage).

The free economy is one in which there is a place for the family, community, charitable action and institutions; it is in accord with the principles of subsidiarity and the common good. This is because when people act in freedom all of these things flourish naturally within society.

In observing how the economy works, the understanding of freedom the observer holds is irrelevant and provided we believe that the source is accurate in other respects we can learn much from an such accounts of the economy even from people whose worldview is diametrically opposed to our own (by all accounts Carl Marx was one of the best economists of his time). When it comes to consideration of what will happen in the future, we should be more careful, for no present situation is precisely the same as any in the past and there will always be an element of judgment - and this will be affected by how we believe people. One should use judgment but on the whole general descriptions of what will happen in the future (such as might appear in a basic economics text book), based upon good observation on the past will helpful whatever the source, I suggest.

Consideration of what one ought to do in terms of economic policy is going a step further still: I would look here to someone who both understands deeply how the economy works, and shares the commitment to Catholic social teaching. Even then, even if the economist does not share this view but, other things being equal, the outcome he desires is in accord with CST, I would still listen to his proposal about how to achieve it.

In regard to freedom: those who understand what freedom really is, therefore, will be best set to understand and explain this order and are those whom I am most likely to trust in taking advice about what to do (although to my mind this does not mean that all others are completely useless as I have suggested). I take freedom to be that as defined in Catechism: the power, rooted in reason and will, to act or not to act, to do this or that, and so to perform deliberate actions on one's own responsibility. By free will one shapes one's own life. Human freedom is a force for growth and maturity in truth and goodness; it attains its perfection when directed toward God, our beatitude: this could be summarised as: 'the capacity to choose the practical best'.

I have just read Harry Veryser's book It Didn't Have to be This Way - Why Boom and Bust is Unnecesary. Here is an account of the free economy in which the author is a committed Catholic who understands Catholic social teaching and explains how the two are compatible. One does not have to agree with Austrian economics if one is a Catholic, of course -  I am not suggesting that Austrian economics is the only account of economics that is in accord with Catholic social teaching. Rather, just as with Fr Sirico's book, a fresh set of criticisms that scrutinize the economics rather than adherence to Catholic teaching will have to be produced in order to undermine what he says. Certainly, one cannot criticise it on the basis of what Milton Friedman says, for Veryser differs from him and the Chicago school in a number of respects.

Verysers explanations are clear and readable and well worth reading for someone like me who is just starting to get to grips with all of this stuff.

In addressing the issue of the common good and the idea that a narrowly defined concept of self-interest governs the economy he writes the following:

'Critics of free-market economics might scoff at associating free markets with the common good. Since the time of the Enlightenment, a powerful (but controversial) strain of economic thought has held that rational self-interest governs all economic activity. Adam Smith put forward this idea in the Wealth of Nations, where he wrote: "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect  our dinner, but from their regard to their self-interest. we address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages."  Adherents of the classical school carried forth this idea in the nineteenth century, and more recently Ayn Rand, Milton Friedman and many secular libertarians have popularized the concept of rational self-interest. The Austrian School is different, however. From the start, Austrian economists have challenged the idea that rational self-interest drives all economics...The Austrian school also recognises that the concept of rational self-interest became a barrier to thoughtful discussion of economics. Almost from the beginning critics used the notion of self-interest to pillory the field of economics. Clergymen, social critics and many others derided economics as the science of greed. Even with the profession, more and more people came to see economics as a science dealing strictly with material wealth, which in turn lead to an overemphasis on mathematical measurement.' [p188]

'The concept of self-interest comes up short in explaining how economic decisions are made because as 'Austrians (and many others) have pointed out, the perspective is overly narrow. It fails to account for charitable instincts, decisions made to benefit one's family or community, and other factors that inform human action. The focus on self-interest also obscures the true role and ambition of economics. It helped lead to a strictly mathematical approach to economics. Such an approach attempts to apply methods from theoretical sciences, which study things over which we have no control (such as the motion of the planets and the structure of the atom) to the study of human action - those things that we can control. Pablo Triana in his book Lecturing Birds on Flying, identifies a key cause of the recent financial crisis: "our blind devotion to theoretical concoctions (especially if sponsored by rigorous-looking individuals with PhDs from prestigious universities.)" Triana notes simply: "The math had its chance, and couldn't have gone any wronger." ' [p199]

Does Mass Production and Industrialisation Automatically Mean Ugliness?

A look at British china and porcelain from the 18th and 19th centuries might suggest otherwise Since the period of the industrial revolution in the mid-17th century and in the 19th century when it took hold in society, I would contend along with quite a few other I think, that the culture has generally been in decline. But does this mean that the first is the cause or even a contributing factor to the decline? It is assumed by many to be the case, and we do, in my opinion, see clear signs of a decline in some areas of the culture at this time (especially so in the case of liturgical art and music). But I am not convinced that mass production or industrialisation are primary causal factors. I have always felt that the underlying design is the most important factor in the beauty of objects. There is nothing inherently less mass-producable or expensive about beautiful design. Beauty and elegance in design can be as cheap as ugliness. If we had designers who understood how to create beautiful objects, then mass production allows for the creation of lots of beautiful and affordable objects. This is a good thing, isn't it? Of course, if designers create ugliness, then mass production will churn lots of ugly objects of the production line too, without being the cause of it.

Also, just because two events, the increase in mass production and the decline in some parts of the culture coincide, it doesn't mean that one causes the other. Correlation does automatically mean cause and in this case, the correlation doesn't seem to me to to be as strong as one might at first suspect. 

In his book the Spirit of the Liturgy Pope Benedict XVI talks of a break between the culture of faith and the wider culture. The question is which declined first and which is the most powerful influence on that decline? In my assessment, it is the liturgy that is the primary influence on the culture of faith, and without a Catholic culture of faith

If industrialisation and mass production were the primary causes, (or more generally economic and social conditions) one would expect the negative effects since the 18th century to be most pronounced when the laissez faire, liberal economics were are their most present, which is this period of the 18th and especially the 19th century. However, that is not what I see. The mundane art and music of the period is still strong in many respects and it was not even uniformly bad yet in the realm of the sacred - sacred architecture flowered in the forms pioneered by the English Catholic convert WA Pugin. The general picture seems to be one of a slow decay in the liturgical forms first, with the wider culture following later.

The period when the decline of culture really accelerated is not this period, but the one following it, the 20th century. Traditional ideas of proportion and harmony were not finally and universally rejected in architecture until after the Second World War, for example. Yet in the 20th century, economic and social conditions improved and the supposed excesses of the capitalist system were curtailed by regulation in the West. 

A look at some mass produced objects of the period would help of course. Recently I was reading TS Ashton's economic history of the period The Industrial Revolution (Oxford University Press, 1968). He remarks at one point that the Wedgwood and Spode factories were founded in the 18th century and produced china and porcelain right through this period. So here I give you pottery from the factories of Wedgwood and Spode. This are made in Staffordshire in England and the factories are situated in the Midlands, right at the heart of where the British industrial revolution took place.

You can decide for yourself. Do you think they are ugly mass produced objects? If we think they are beautiful this suggests that mass production is not inherently bad. Given the improvements in the techniques of mass production, one would expect that degree to which a product reflects faithfully the original design is even greater than it was at this time. 

It is worth making the point also that Ashton discusses at length the living and working conditions of the poor during this period and compares them with the period before - the early 17th century and the 16th century. It is interesting that in his assessment things generally improved. He makes the point that although there were poor working and living conditions by today's standards, they weren't uniformly poor, and says that workers houses were as likely to be well made and well proportioned as not. Also he notes that people at the time were quick to respond to injustice and so laws protecting the conditions of workers were introduced from the early 19th century onwards. We should have a look at the workers cottages that were made in Britain at the time. There are plenty of Victorian terraces which are now sought after places for the well to do in the best parts of town - for example in Chelsea and Fulham. But that is another blog posting for the future.

Here is some china for you. When I was young, my parents had a period when they collected antique china and porcelain from this period and seeing the Spode particularly reminds of me china they used to possess. These works have passed the test of time for beauty that I always like to apply in trying to assess the beauty of, for example, a work of art. Has it transcended its own time? Do people today still see this a good and beautiful or is appreciation of it subject to the vagaries of fashion and so only temporary? The antique markets of the world suggest the former.

Photgraphs from top: Wedgewood designed by Lady Templeton, c1790-1800; Spode mid-19th century; Wedgewood vase, 1790; Spode vase 17th century; Spode 19th century plate.

The Instrinsic Morality of the Free Economy

Defending the Free Market: the Moral Case for a Free Economy, by Fr Robert Sirico Is commerce and trade instrinsically moral?

Critics of capitalism would say no. Some, who acknowledge that the free market works to a degree when considered in cold economic terms only, argue that it is impersonal and encourages a selfish, individualistic outlook that is contrary to the principle of love that governs properly ordered personal interraction. Therefore, they say, it undermines faith and contains the seeds of its ultimate demise. This view can be reinforced, strangely, by some advocates of capitalism who say that in consideration of the economy, the generation of wealth is the only thing that matters and provided no laws are broken, then all moral considerations are private and for each person to sort out for themselves in isolation. Some Catholics who believe in the free market struggle to reconcile this with some papal encyclicals on Catholic social teaching that are critical of some aspects of capitalism. They do so by saying that in some matters the popes go beyond their authority. They might correctly highlight social injustice, they say, but when they start to analyse the economic causes and recommend economic policies to help, they are misguided and what they say is wrong and will not work.

Fr Sirico in his book does not take the position of any of these camps. He argues for the good of the free market, and does so on two counts. First he emphasises the good of what the market produces, quite fairly in my opinion: the importance of wealth generation, especially for relieving poverty and how it is he most effective way of achieving this aim. Second, he goes further and argues that the basis of trade, the interaction of human persons freely entering into an agreement, is intrinsically moral. In doing so he never neglects the dignity of the human person in his thinking. He establishes his argument for the value of the free market from the basis of a human anthropology that is personal (that is one in which personal relationships are critical) and cites Catholic social teaching as the basis for it. He does not  say that selfishness is a virtue, or greed is good (as some who would expect to disagree with him might expect). Neither does he argue that consideration of what is most profitable entitles anyone to disregard any other aspects of morality. On the contrary he makes that case that consideration of the common good and of others in any transaction is essential if the free markets are to work. And furthermore where this love is greatest, business flourishes the more.  Of course naked selfishness does exist as it does in all spheres of human life, but he makes the point that point that the free market is remarkably efficient in channeling even actions motivated selfishly towards the common good. This is good to know, for which of us is totally absent of selfishness in dealing with others?

In reading this, it struck me that personal freedom, properly understood, is a crucial and vital component to this for it preserves the dignity of the human person in all these interactions. It is this personal freedom that fosters the genuine love for the other in all our interactions and economic interactions are no different. It is this participation in love, properly ordered to an economic interaction, that fosters the creativity which is so much part of an economy flourishing for the common good. The place of the law and regulation in this is robustly to preserve personal freedom. The natural tendency for many in a particular market can be to try to preserve or enhance market share by restricting the access to others. Those with the power to do so will influence government to introduce laws and regulations that stifle competition and so personal freedom. Fr Sirico does not support this form of capitalism and in this regard is in the same camp as some who I have met who consider capitalism wholly bad, because it is the only form of capitalism they know of.

In 1991, John Paul II wrote: 'Can it perhaps be said that, after the failure of Communism, capitalism is the victorious social system, and that capitalism should be the goal of the countries now making efforts to rebuild their economy and society? Is this the model which ought to be proposed to the countries of the Third World which are searching for the path to true economic and civil progress? The answer is obviously complex. If by “capitalism” is meant an economic system which recognizes the fundamental and positive role of business, the market, private property and the resulting responsibility for the means of production, as well as free human creativity in the economic sector, then the answer is certainly in the affirmative, even though it would perhaps be more appropriate to speak of a “business economy”, “market economy” or simply “free economy”. But if by “capitalism” is meant a system in which freedom in the economic sector is not circumscribed within a strong juridical framework which places it at the service of human freedom in its totality, and which sees it as a particular aspect of that freedom, the core of which is ethical and religious, then the reply is certainly negative.’ (Centesimus Annus, 34, 42)

I do not know if JPII created the phrase 'free economy', but Fr Sirico's use of this phrase in the title of the book suggests to me, that he is deliberately making a connection with the encyclical here.

What has this got to do with the Way of Beauty some might ask? If artists are to flourish, they not only have to paint well, but also must be able to sell it. It seems to me that whatever system maximises 'free human creativity in the economic sector', to quote from the paragraph above, is going to be the best to support cultural renewal.

Fr Sirico's book is available from Amazon here. He is the founder of the Acton Institute, www.acton.org, the mission of which is to promote a free and virtuous society characterized by individual liberty and sustained by religious principles. This organisation, among other things, publishes books and organises lectures and educational programs. Every year has is four-day residential even which offers many lectures by an excellent faculty called 'Acton University'. residential