Why Catholics Don't Understand Economics


(original article published by  InsideCatholic.com)

For years I've puzzled over the question of why Catholics have such trouble coming to terms with economics. This problem applies only to modern Catholics, for it was Catholics in 15th- and 16th-century Spain who systematized the discipline to begin with. That was long ago. Today, most of what is written about economics in Catholic circles is painful to read. The failing extends left and right, as likely to appear in "progressive" or "traditionalist" publications. In book publishing, the problem is so pervasive that it is difficult to review the newest batch.

It's not just that the writers, as thoughtful as they might otherwise be on all matters of faith and morals, do not know anything about economic theory. The problem is even more foundational: The widespread tendency is to deny the validity of the science itself. It is treated as some kind of pseudo-science invented to thwart the achievement of social justice or the realization of the perfectly moral Catholic utopia. They therefore dismiss the entire discipline as forgettable and maybe even evil. It's almost as if the entire subject is outside their field of intellectual vision.

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.

So let us back up and consider the difference between scarce and non-scarce goods. 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.

It is almost impossible to think of a finite good that is non-scarce. We can come up with a scenario, perhaps, like two people living in paradise surrounded by an ocean of bananas. In this case, the bananas would be a non-scarce good. They could be eaten and eaten forever, provided that the bananas do not spoil. Another proviso is that there can be no free trade between paradise and the rest of the world, else one of the inhabitants might get the bright idea to arbitrage between non-scarce bananas in paradise and scarce bananas everywhere else. In this case, the bananas would obtain a price and would therefore have to be called scarce goods, not non-scarce goods.

In the real world outside of the banana paradise, non-scarce goods are of a special nature. One feature is that they are typically replicable without limit, like digital files or the inspiration one receives from an icon that can be copied without limit.

As an example, consider the case of the loaves and fishes, an incident in the life of Jesus recorded by all four Gospel writers. Jesus is speaking to the multitudes, and the listeners grow hungry. The apostles only have five loaves and two fishes: These are scarce goods. They could have thrown them into the air and created a food riot over who got what. They could have opened a market and sold them food at a very high price, rationing them by economic means. Both solutions would produce outrageous results.

Instead, Jesus had a different idea. He turned the scarce bits of food into non-scarce goods by making copies of the scarce food. The multitudes ate and were full. Then the food evidently turned back into scarce goods, because the story ends with Jesus instructing his disciples to collect what is left. Why collect what is non-scarce? Clearly, the miracle had a beginning and end.

The story nicely illustrates the difference between a scarce and non-scarce good. Jesus often used this distinction in His parables, which are mostly stories about the scarce world told in order to draw attention to truths about the non-scarce world. Think of the merchant who bought pearls at a low price and sold them at a high price. One day he found the pearl of the highest possible value, and he sold all he had just to buy and hold it. The pearl, of course, represents salvation and the love of God -- non-scarce goods, because there is enough for everyone who desires them.

We are in fact surrounded every day by non-scarce goods exactly like the loaves and fishes. All ideas are of this nature. I can come up with an idea and share it with you. You can possess it, but in so doing, you do not take that idea away from me. Instead, you hold a replica of it -- just as real and intact as the original version. Words are this way: I do not need to parse them out in order to save some for myself. Tunes in music are this way, too. I can sing a tune to you, and you can repeat it, but this action does not remove the tune from me. A perfect copy is made, and can be made and made again unto infinity.

This is completely different from the way things work in the realm of scarce goods. Let's say that you like my shoes and want them. If you take them from me, I do not have them anymore. If I want them again, I have to take them back from you. There is a zero-sum rivalry between the goods. That means there must be some kind of system for deciding who can own them. It means absolutely nothing to declare that there should be something called socialism for my shoes so that the whole of society can somehow own them. It is factually impossible for this to happen, because shoes are a scarce good. This is why socialism is sheer fantasy, a meaningless dreamland as regards scarce goods.

The difference between scarce and non-scarce goods has long been noted within the Christian milieu. St. Augustine was once challenged to explain how it is that Jesus can speak for the Father in heaven though the Father is separate. He responded that there is a special non-scarce nature associated with words so that the Son can speak the same words and possess the same thoughts of the Father.

This is true on earth, too, Augustine continued:

The words I am uttering penetrate your senses, so that every hearer holds them, yet withholds them from no other. . . . I have no worry that, by giving all to one, the others are deprived. I hope, instead, that everyone will consume everything; so that, denying no other ear or mind, you take all to yourselves, yet leave all to all others. But for individual failures of memory, everyone who came to hear what I say can take it all off, each on one's separate way.

In saying these things, Augustine was both establishing and following up on a tradition that prohibited the buying and selling of non-scarce things. Jewish Halachic code prohibits a rabbi or teacher to profit from the dissemination of Torah knowledge. He can charge for time, the use of a building, the books, and so on, but not the knowledge itself. The Torah is supposed to be a "free good" and accessible to all. From this idea also comes the prohibition on simony within Christianity.

The moral norm is that non-scarce goods should be free. There is no physical limit on their distribution. There is no conflict over ownership. They would not be subject to rationing. This is not true with regard to material goods.

To further understand this, let's try an alternative scenario in which a non-scarce good like salvation (non-scarce because it is infinitely replicable) is actually a scarce good that must be rationed. Let's say that Jesus had not offered salvation to all but instead had restricted the number of units of salvation to exactly 1,000. He then put His apostles in charge of allocating them. (When I mentioned to this to a non-believing friend of mine, he said: "You mean like tickets to Paradise? I bought five of those in a Mosque in Istanbul!")

The apostles would have immediately confronted a serious problem. Would they give them all out immediately or dispense them over the course of a year, or ten years? Perhaps they suspected that the world would last another 100 years; they might limit the distribution of salvations to only ten per year. Or perhaps they needed to reserve them to last 1,000 years. Regardless, there would have had to be rules and norms governing how they were distributed. Perhaps this would be based on personal displays of virtue, of monetary payment, of family lineage, and so on.

No matter what the results, the history of Christianity would have been very different if Jesus had not made salvation a non-scarce good, but instead had limited the supply and charged the Church with allocation. There would have been no liberality in spreading the gospel. Forget the whole business of going to the ends of the earth or becoming fishers of men. Under a limited supply, the salvation could not be replicated. If, for example, the apostles had chosen a 1,001th person to be saved, eternal life would have been taken away from the first person to receive it.

This might sound preposterous and even frightening, but this is precisely the situation that persists with all materials goods in the real world. All scarce things are fixed, and all things must be allocated. Even under conditions of high economic growth and rapid technological progress, all goods in existence at any one time are finite and cannot be distributed without norms or property rights, lest there be a war of all against all. Another factor of production that is scarce is time, and this too must be allocated by some means.

As it happens, salvation is indeed a non-scarce good available to all who seek it. So are the intercessions of saints. No one fails to ask for the intercession of a saint, but one knows for a fact whether someone else is employing that saint at the moment. No, we rightly assume that saints have no limits on their time for prayer. Indeed, the limitlessness of salvation is the prototype for all forms of non-scarce goods like music, texts, images, and teachings.

But consider people who have dedicated their life to the work of these non-scarce goods. One can easily imagine that they find immense power and glory in these goods. I certainly do. They are the things to which all religious people have devoted their lives. This is a fantastic thing -- and truly, without non-scarce goods, the whole of civilization would come crashing down to the level of the animals.

At the same time, the world does not only consist of non-scarce goods. The economic problem deals with the issue of scarce goods. And this is just as important to the flourishing of life on earth. All things finite are subject to economic laws. We dare not ignore them nor ignore the systems of thought seeking to explain their production and distribution. Note that Jesus' parables deal with both realms. So should we all.