Thursday, 2 September 2010

The evil of economics....

Ok so the title of the post is, let me say upfront entirely misleading, designed to suck you in, because I came across an interesting article and subsequent debate by Jeffrey Tucker on Why Catholics Do Not Understand Economics over at Inside Catholic.

Catholics and Economics

Many (particularly traditionally inclined) Catholics have serious problems with the discipline of economics. 

That's not entirely surprising - many seem to have a problem with the physical, biological and medical sciences as well. 

And just as 'denialists' of these other disciplines have concocted pseudo-science positions down the centuries, so too with economics, with curious and utopian ideas such as distributionism. 

That's not to say that the economic ideas and schools of economics should be accepted uncritically, and are always compatible with Catholicism.  But there are some basic concepts underpinning economics that I think do have validity and even usefulness as we seek to build a society that works for the common good.

Why Catholics instinctively reject the notion of scarcity

Mr Tucker makes the point that when it comes to material goods, the concept of scarcity is essential.  But catholics are inclined to instinctively reject it because when it comes to things spiritual, there is no corresponding concept of scarcity:

"I have what I think is a new theory about why this situation persists. People who live and work primarily within the Catholic milieu are dealing mainly with goods of an infinite nature. These are goods like salvation, the intercession of saints, prayers of an infinitely replicable nature, texts, images, and songs that constitute non-scarce goods, the nature of which requires no rationing, allocation, and choices regarding their distribution.

None of these goods take up physical space. One can make infinite numbers of copies of them. They can be used without displacing other instances of the good. They do not depreciate with time. Their integrity remains intact no matter how many times they are used. Thus they require no economization. For that reason, there need to be no property norms concerning their use. They need not be priced. There is no problem associated with their rational allocation. They are what economists call "free goods."

If one exists, lives, and thinks primarily in the realm of the non-scarce good, the problems associated with scarcity -- the realm that concerns economics -- will always be elusive. To be sure, it might seem strange to think of things such as grace, ideas, prayers, and images as goods, but this term merely describes something that is desired by people. There are also things we might describe as non-goods, which are things that no one wants. So it is not really a point of controversy to use this term. What really requires explanation is the description of prayers, grace, text, images, and music as non-scarce goods that require no economization."

In the material realm however, things are different:

"The term scarcity does not precisely refer to the quantity of goods in existence. It refers to the relationship between how many of these goods are available relative to the demand for goods. If the number available at zero price is fewer than people who want them for any reason whatever, they can be considered scarce goods. It means that there is a limit on the number that can be distributed, given the number of people who want them.

Scarcity is the defining characteristic of the material world, the inescapable fact that gives rise to economics. So long as we live in this lacrimarum valle, there will be no paradise. There will be less of everything than would be used if all goods were superabundant. This is true regardless of how prosperous or poor a society is; insofar as material things are finite, they will need to be distributed through some rational system -- not one designed by anyone, but one that emerges in the course of exchange, production, and economization. This is the core of the economic problem that economic science seeks to address."

Do go and read the whole article and take a look at the debate.

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