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Restoring Economic Orthodoxy: Outline of (Neo-) Scholastic Economics
John D. MuellerDirector, Economics and Ethics Program
Ethics and Public Policy Center (www.eppc.org)
President, LBMC LLC (www.lbmcllc.com)
Association of Christian Economists Conference
Baylor University, 17 April 2009
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What is Economics About?
Well, what do people do all day?* Order in doing:
1. “Planting and building”: production
2. “Buying and selling”: exchange
3. “Marrying and giving in marriage”: distribution
4. “Eating and drinking”: use (consumption)
*Luke 18: 27-28
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Economics as human providence
Order in planning: 1. For whom? 2. What? and 3. How (shall I provide)?
• For whom: Augustine’s theory of personal gifts/crimes, Aristotle’s social, political distributive justice (distribution)
• What: Augustine’s theory of utility (consumption) How (a): Aristotle’s theory of production—of and by (i.)
people and (ii.) property How (b): Aristotle’s “justice in exchange” (equilibrium)
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Positive: Augustine’s “Law of the Gift”Premises: 1. All persons motivated by love of some person(s). 2. Love is “willing some good to some person” (Aristotle). 3. We express personal love/hate by our distribution of goods.
Descriptive (“positive”): Outer Acts toward:Kind of love Inner Act Self OthersOrdinate Benevolence Utility Beneficence (Gifts)Inordinate Malevolence Vice Maleficence (Crime)
Prescriptive (“normative”): Two Great Commandments*Standard of benevolence (“goodwill”): negative Golden Rule
(“Do not do unto others” = justice in exchange)Standard of beneficence (“doing good”): positive Golden Rule
(“Do unto others” = personal gifts, distributive justice)*”Love God…with all your heart” (Lev. 19:18), “neighbor as
yourself” (Deut. 6:5)
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Gifts to others (express love)
Crimes against others (express
hate)
Pure selfishness (assumed by Adam Smith and
neoclassical economics)
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How the Structure of Economics Has Changed (1): Simplified
Element
Outline
Distribution Consumption Production Exchange
Scholastic
(Thomas Aquinas)
Yes Yes Yes Yes
Classical
(Adam Smith)
No No Yes Yes
Neoclassical
(Jevons, Menger, Walras)
No Yes Yes Yes
Neoscholastic
(Scholastic outline,
elements updated)
Yes Yes Yes Yes
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How the Structure of Economics Has Changed (2): Detail
Element
Outline
Distribution
(Gifts/crimes & distributive justice)
Consumption
(type of utility)
Production
(people/property)
Equilibrium (“justice in exchange”)
Scholastic Yes/Yes Yes (ordinal) Yes/Yes Yes
Classical No/No No Yes/No*
(*“labor theory”)
Yes
Neoclassical Austrian (Menger)
British (Jevons)
Chicago (Schultz)
Lausanne (Walras)
No/No
No/No
No/No
No/No
No/No
Yes (mixed)
ordinal
cardinal
cardinal
ordinal
Mixed
No**/Yes
No*/Yes
Yes/Yes
No**/Yes
(**“stork theory”)
Mixed
No (Mises)
Yes
Yes
Yes
‘Neoscholastic’ Yes/Yes Yes (ordinal) Yes/Yes Yes
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Divine Economy: The Three Theories of Providence
1. Biblically orthodox natural law: God freely created man as a rational animal though sinning person: free to choose persons as ends, other things as means (AAA’s*)
2. Stoic pantheism: Cosmos one big rational animal, God its immanent soul; man a puppet manipulated by “invisible hand” to “ends ... no part of his intention” (Adam Smith)
3. Epicurean materialism: no Creator or providence, only “matter and chance”; man a clever animal choosing means, not ends: reason “slave of the passions” (Hume)
Thus the “Choice of 1776”: Created Equal—Or Not?* Aristotle + Augustine, first integrated by Aquinas
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