Robert Sirico, a Catholic priest and co-founder of the Acton Institute, is perhaps one of the most economically literate clergymen you will find among America’s public intellectuals. While most seminaries do not train future pastors and lay leaders to think theologically about economics, Sirico says understanding questions about economics is necessary if Christian leaders want to rightly seek the good of society and train others to do the same. Joseph Gorra, founder and director of Veritas Life Center, talked Sirico about economic life and human flourishing.
At this year's Acton University conference, you spoke on how love is an indispensable basis for economic life. To some, that might seem odd if economic life is viewed as the maximization of utility and material well-being.
We can’t enter the marketplace as something other than what we really are, and real human love demonstrates the impossibility of being merely homoeconomicus(“the economic man”), which is essentially a thesis that reduces human beings to their materiality.
Humans are simultaneously material and transcendent, individual and social. We are not merely individual entities, though we are uniquely and unrepeatably that, even from the first moment of our conception. Yet the whole of our lives we are social and individual, material and spiritual. If we ignore this existential reality, then we fail to understand what it means to be human.
Love—authentic human love—helps us understand this anthropological reality. Even conjugal love offers more than physicality. In this act of love, we offer our whole selves, including our ideals, dreams, and indeed our future to one another—none of which exists in material reality. Love, especially in the biblical sense, is not merely what one wants for oneself, but is a free decision that wills the good of the person one loves. And this transcendent act, this non-material dimension of human anthropology—when open to new life—normatively results in other human persons who are made from the dust of the earth and the breath of life.
What is the most pervasive problem shaping our thinking related to economics and society?
In addition to the anthropological problem, people don’t think about economics much at all. This may be because we live in the most advanced economic society in history—including people in the developing world, because even though their lives are much more economically difficult than those in the developed world, they still live better than their ancestors did. Many people think we can just live off the legacy of a past prosperity; that we can live at the expense of everyone else. But this illusion can last only so long, and if we don’t attend to the dismal science of economics, we all will be in trouble.
Your book Defending the Free Market is less of an unbridled endorsement for capitalism as much as it is the moral case for a free economy. What can we gain by distinguishing freemarket from capitalism and then cronycapitalism?
I learned from my experiences in Latin America and Europe that the word capitalism is fraught with misconceptions. It is, in the first place, a Marxist word and is thus very narrow in its emphasis on the material. It refers only to stuff in the economy. A free market—or better, a free economy—refers to human action, where people make choices based on subjective needs, both as producers and consumers.
Crony capitalism or State capitalism is the antithesis of a free economy, which depends on favors from politicians to include or exclude people from the circle of exchange. Even Adam Smith acknowledges this in his Wealth of Nations, where he warns against this tendency.
Political analyst Yuval Levin said, “A capitalist system requires the kind of citizen that it does not produce.” How would you respond?
I would agree, but only if by “capitalist system” Mr. Levin means one that is without a moral understanding of enterprise, the rule of law, clear rights to property and contract, and all those elements that went into the development of the West. The problem is today we are losing the moral sensibility and the transcendent reference point, that which yields not merely material prosperity but moral purpose and significance.
I am not promoting merely a free society, but one that is both free and virtuous. Only this is worthy of human beings.
There is a longstanding Main Street vs. Wall Street attitude that tends to occupy the American popular imagination of pundits, politicians, populists, and some pastors. Given your theology of work, vocation, and economics, what is your take on that attitude?
The formation of a moral conscience within an entire industry necessitates examining two aspects. The first recognizes the hard work and creative endeavors of the many men and women who work in these businesses. Their work has improved the entrepreneur’s capacity to raise capital and allows common people to participate in some of history's most successful enterprises by way of a stock market. We must also see their work with full knowledge of the particulars. One could compare this to a quantitative strategist creating a new financial product to an automotive engineer devising a new vehicle safety system. Both exhibit a creative human contribution to the service of others through trade.
The second aspect is to examine the ethics of business models that make up this industry. Aside from debating interest rates and profits, few theologians today would see a moral impediment to profitably lending money to your neighbor. The real moral questions arise when our system of fractional reserve banking allows the financing industry to operate money with such economic exception. In many contexts, we have less of a Wall Street investor problem and more of a regulatory capture problem. It’s appropriate that people regard some Wall Street activities as immoral business, and I the think most beneficial thing to do going forward is help people understand the nature of sound money and its important role in our economy.
In recent years, high frequency trading has often dominated criticisms of Wall Street. What are the challenges we face in understanding this convergence of information technology advances, markets, and sometimes predatory activities?
The complexity of the trading activity creates situations that are sometimes difficult to distinguish as predatory or simply highly competitive.
Much high frequency trading is an outgrowth of a more antiquated market structure by which brokers and market makers operated a standard share distribution model intending to assist firms in raising capital, as well as to provide investors liquidity and reduce counter-party risk. High frequency trading could become predatory if relationships from the old market model prevent new participants from competing in a transparent and freely accessed marketplace, which can occur in a variety of circumstances. Not the least of which is when a distortion of free markets occur as political favoritism plays a significant role—through bailouts, for instance. Unlike the implication one often finds in many news headlines, it’s not the speed of trading as much as the quality, transparency, and freedom of the marketplace that will allow us to determine the moral fruits of this endeavor.
What blind spots do those on either the political right or left have in understanding inequality and poverty as a problem to be solved?
Both sides tend to leave out an aspect of reality. Those on the right believe the illusion that all that matters is economic efficiency, as though human beings do not matter. This fails because humans are also consumers who need to be able to purchase the goods and services being offered—which Henry Ford seemed to understand. And more importantly, workers are human beings; they have certain rights simply because they are humans, even if those rights aren’t the sole responsibility of employers.
Those on the left have a utopian dream in which everyone can be the same. But the very fact of human individuality shows its impossibility.
Underlying the call for equality in the material sense is the moral desire that people be able to live at a certain basic level of material dignity. It’s probably better to call this equity. Hence, we must speak about the floor in an economic sense, not the gap—much less the ceiling.
Regarding poverty, the image that comes to mind is a pie. If we think the world of riches is static, then we will see the normative solution as dividing it up—or redistribution. If, on the other hand, we see the pie as capable of being grown—that is, production—then the normative solution is economic liberty and initiative, which produce prosperity. Acton’s curriculum Poverty Cure, designed especially for churches, makes the case that at the international level, trade should be preferred, both morally and economically, over aid.
What is a moral case against raising a federal minimum wage as a way to alleviate poverty?
This is a well-debated topic in the economic literature, and I have no doubt that most people on all sides have the best of intentions. But there are several prudential reasons for shunning federally mandated minimum wages.
First, salaries are not arbitrary. They reflect what the business owner knows to cover the costs of production, which are usually under tight margins. If employers are forced by law to inflate wages to rates above the market rate, then either the costs are passed on to the consumers who also work for a living, or the least productive employees—most often minorities and teenagers—or those who were hired last are the first ones to be fired, lest the whole enterprise collapses. As a result, entrance into the world of work will be more difficult for those starting out, and they’ll never acquire habits of enterprise.
Additionally, if a minimum wage is a moral requirement of society as a whole, why should it be that the burden falls only on employers as opposed to something more akin to an earned income tax credit whereby people receive from society—at whatever level of government deemed prudent—a kind of negative income refund. I think this latter policy has its own problems, but it appears more just than singling out employers. Finally, why would such a thing need to be federally imposed when wage differentials vary?
So does paying a living wage meet the same objections as raising the minimum wage if a living wage is not regulated but at the discretion of a company to determine what is a just wage?
I do think that a living wage—an idea developed in the mid-16th century, which the Scholastics believed was best achieved by the market wage—is what people are looking for. I think it’s more prudent because a market wage will more closely respond to a living wage, generally because there’s more information available to all partners—employers, worker, and consumers—if the pricing structure is free from obfuscating governmental regulations.
Christians who are well formed in their moral obligations may well choose to pay above the federal minimum. When hiring in my parish, even for simple and temporary work, we haven’t paid a minimum wage in years. Probably the most dramatic example, though not very much reported on, is Hobby Lobby, which has paid its lowest wage earning employees multiples of the minimum wage for quite some time.
What can local churches and pastors do to help address short-term and long-term unemployment issues? Or is this something only policymakers and the business community can address?
Historically, churches have played a critical role in addressing these sort of questions, and I believe they still can, though not merely through direct charitable initiatives—which should be a given in any Christian society, in addition to the moral formation we’re called to offer people. To do this, we must think like business leaders, but whose bottom line need not be monetary.
Specific kinds of work training efforts imbued with moral sensibility would be one way to do this, which businesses operating under all kinds of regulations might find difficult. Imagine what it would look like if after two or three years of operation a church got the reputation of turning out workers from the church’s vocation training school, people who were not only highly proficient in their respective field, but also carried themselves with a sense of professionalism, honesty, and respect that made their employees desirable on the market for their habit of punctuality, politeness, and giving a real day’s work for a real day’s wage.
And what if our organizations developed from within the congregations and constituencies the kinds of insurance programs for health care, unemployment insurance, small loans for work related costs, and even supplemental wage assistance for disadvantaged people just starting a job, which some undeniably need. To the extent that our organizations become politicized and secularized, they will dissolve and lose their Christian identity.
I can hear the question forming in some minds: Well, isn’t that the job of government, and don’t these programs exist through various welfare schemes? There are two critical differences. First, the people involved in creating these programs and holding their participants to account within them would be people known to them. This accounts for much of the success of micro-loan efforts in India and Latin America.
Second—and here I call the church to particular account—we would need to ground such programs in a clear moral foundation. As Christians, we should seek to form men and women who are not merely workers, but prepare them to be evangelists as well, since they’ve had a profound personal encounter with the living Christ. Try getting that kind of program funded by the present welfare establishment.