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The Wedding of Three Philosophical Traditions Toward a Refined Philosophy of Economics

The recent encyclical, Centesimus Annus, serves as a blueprint for a possible renaissance in economic thought. The encyclical blends philosophical traditions providing a new methodological approach for philosophy of economics. Using Centesimus Annus as a model, I set out to investigate new philosophical approaches to political economy. I investigated the inherent connections between ethics and economics through a presentation and augmentation of the value theory and ethics of the Austrian Economist, Ludwig von Mises.

Mises’ Human Action is compared with the value-based ethics of Dietrich von Hildebrand and the anthropology of Karol Wojtyla as found in Ethics and The Acting Person, respectively. The result of this dialogue is the enhancement of Austrian economics through the use of personalistic philosophy,phenomenological realism, and Christian social doctrine.This discussion merges three thinkers who have much in common but who are seldom, if ever, placed together. Wojtyla, Mises, and Hildebrand share a philosophical background founded in phenomenology. The separate but similar thought of these authors can be merged to produce a single philosophical approach to economics. The resulting combination is a solid philosophical foundation for a more human economy.

A common mistake for philosophers working within the field of economics is to assume that they are economists. The philosopher of economics must keep in mind that he is not an economist, while the economist should not pretend to be a philosopher either. A philosophy of economics will not directly tell how to increase a nation’s GNP. If someone is equally versed in both fields, all the better.

With this said, it remains possible for the philosopher to give advice and map out guidelines for the ethical concerns of political economy as well as discuss the foundational issues that underlie such an entity. I am not an economist. Yet I am capable of philosophically examining market phenomena.

For a foundation in economics I consulted the Austrian school of economics. I primarily relied upon the work of Ludwig von Mises and his attempt to uncover philosophical foundations for economics. One of the most influential voices of the Austrian school, Mises attempted to illustrate fundamentals for political economy in a philosophy of the human person. He constructed a system of economics around the central feature of human action.

The centerpiece of Mises’ economic philosophy is a phenomenology of human action. Mises formulated a scheme of praxiology, a science of human action based upon an inherent value theory and anthropology. Human preference determines market phenomena. Economics is primarily the study of deliberate human actions that can be derived from discerning subjective human preferences.

Mises argued that all human action is motivated by personal desires and discomfort. In the tradition of Menger, Mises challenges traditional economic orthodoxy that understands market forces as erected into some kind of absolute norm of all economic behavior. The result is the presentation of a subjective economics. The market is not an objective, impersonal force of nature over which we have no control.

Mises’ thought has been furthered by his student Murray Rothbard, and Mises’ work plays a role in libertarian economic thought around the world, especially in the United States.

Now Wojtyla and Hildebrand enter the discussion. Wojtyla was influential in forwarding the Polish school of personalism. This rigorous philosophical anthropology combines a classical metaphysics of the human person, as demonstrated in Thomistic thought, yet applies the methodology and attitude of phenomenological realism. The result is an accurate and commonsensical account of what man is.

The philosophy of the Polish school of personalism is circumscribed in the maxim “affirming the person for his own sake.” This essential insight into the tremendous value of the human person then colors all further philosophy and social science.

The insight into the value of the person cannot be deduced nor arrived at through linguistic analysis or armchair metaphysics but only through a phenomenological exposition of the human person as given in everyday experience. The human person is the centerpiece of existence, and this fact influences economics. Wojtyla’s philosophical anthropology supports and refines the subjectivist economic theory of Mises.

The phenomenological realist tradition with its maxim “back to things themselves” seeks essential insights into reality, even economic phenomena. Phenomenological realism is not caught up in any specific “system” of philosophical thought and is therefore free from philosophical presuppositions to investigate the truth in any system or phenomena. The phenomenologist takes reality as it is given and seeks for the truth there contained. If Marxism contains grains of truth, then the phenomenologist seeks to explicate them fairly without bias. Benefits of such an approach are the freedom from the needless language analysis of analytic philosophy, the absence of philosophical bias, and a lack of economic prejudice. Rather than get caught up in word games and systems, phenomenology seeks to get to the essence of what actually is.

Hildebrand, one of the founders and developers of the realist phenomenological tradition, lends to the discussion his value-based ethics. Using the notion of preference in determining value, as did Mises, Hildebrand leaves room for more than one sort of preference. Hildebrand’s distinctions of various kinds of human preference expands into a three-tiered system of praxiology that corresponds to a similar system of objective and subjective values. The result is a  further  expansion  of  Mises’ notion of economic praxiology–catallactics.

It is interesting to note that although Phenomenological Realism is a rather obscure and non-mainstream  philosophical movement, it is nonetheless influential. The movement’s center for research and study is the International Academy of Philosophy, located in the Principality of Liechtenstein. Here the works of both Wojtyla and Hildebrand are studied and taught in great detail, alongside other great philosophers and thinkers of the past and present. Josef Seifert, Rektor of the Academy, was himself a student of Hildebrand, and Rocco Buttiglione, the Academy’s pro-rector, is a student and advisor of Wojtyla. It is only recently that the Academy has turned the attention of its unique and rigorous philosophy to the concerns of political economy.

The above dialogue reveals much for economic theory and practice. Expanding the contributions of Mises with the insights of the other two authors yields a more complete philosophy of economics. The presented theories of value, human action, and anthropology form a coherent system of economic ethics.

In Human Action, Mises states that all human action is motivated by subjective desires and dis-ease. Acting man is eager to substitute a more satisfactory state of affairs for a less satisfactory state. Value is therefore equated with what is desired. Mises concludes not only to an economic subjectivism, but also to a value and ethical subjectivism. I wish to preserve Mises’ economic subjectivism while maintaining a realistic ethical objectivism. It is the application of the work of Hildebrand and Wojtyla that pulls Mises out of this overly subjective dilemma.

Mises’ philosophical anthropology permits only a praxiology of the subjectively satisfying. The additional insights of Wojtyla and Hildebrand allow for the much needed expansion of praxiology to include moral and political action. The result is an expanded three-tiered praxiological system. A theory of human action in three dimensions: political action, moral or ethical actions, and actions of  subjective desires,  results. All  three types of action converge in determining the workings and motivations of actual political economy.

The resulting philosophical system begins to address such issues as state intervention, just wages, workers rights, and the morality of profit motive. This fuller praxiological system corresponds with a wider and more complete value system considering both subjective and objective values. Economists deal with both sorts of values: objective ones–such as life, justice, and respect for the poor, and subjective ones–such as personal desire, taste, and whim.

Mises’ insights into the subjective nature of economics opens the way for the reassertion of the intrinsic links that exist between economics and ethics. Economic actions by their nature are social acts. Social acts many times invoke ethical concerns. Ethics may not be a direct concern in the formal science of economics, yet it is a concern in the actual everyday practice of economics–the reality we call political economy. Political economy does not consist of figures, graphs, and business reports, but of families, children, and human individuals trying to live out their lives according to their means.

The application of the personalistic maxim “affirming the person for his own sake,” recognizing the intrinsic worth of every human being, opens the way for a truly subjective economics–an economic system that not only has human action as its centerpiece but that also serves the needs and respects the dignity of all persons. Economics is made for man, not man for economics.

Wealth and profit should not be ends in themselves. Rather, wealth and profit are entities that can only be justified when placed at the service of human beings and the community at large. Business for the sake of business is not a self-justifying enterprise. Profit alone does not constitute moral justification for business. Business has a strict moral responsibility to society and needs to be morally justified through fulfillment of its social obligations. Money and profit are justified by the contribution they make to social justice. As Pope John Paul II puts it, wealth and profit carry with them a “social mortgage.”

Hildebrand’s ethics refute the ethical subjectivism so common in today’s libertarian social thought. It also outlines a political praxiology that justifies government interaction in the market in certain circumstances. A state has a right and an obligation to act in order to defend and promote certain values and goods. Sometimes this action has economic effects or involves direct action within or upon the market. Government action, however, need not lead to a command economy.

Market forces as such have no morality. But the persons who make financial decisions and who make economic choices within the market system do have moral responsibilities; and their choices are moral acts governed by the moral law and conscience. Investors and shareholders cannot remain indifferent to the social consequences of the decisions which they make or allow to be made on their behalf.

The market operates as a result of human choices and decisions. These are moral choices and moral decisions and must be governed by moral values of justice, fairness, and compassion. Left to themselves, market forces tend to favor the wealthy, the strong, and the powerful, and to hurt or even crush the poor, the weak, and the powerless.

The moral implications of economic decisions must be faced. The privileges that corporations enjoy in society and the incentives and concessions they receive from governments are granted in the belief that these publicly conferred privileges will be justified by the promise of new jobs, increased prosperity, and a fair distribution of resources and opportunities in the community at large. Surely this creates a heavy responsibility on the part of the business sector to devote its energies to delivering on these expectations.

Workers, too, have moral responsibilities no less demanding than those of employers. Those who have jobs with good wages and reasonable security may be said to carry with them responsibilities. They have obligations towards society in general in respect to the reasonableness of their wage claim, the honesty of their work practices, and the realism and responsibility of their approach to industrial relations. They have an obligation to see that the quality of their work and of their trade union practices do not jeopardize the jobs of others.

The complete dialogue that occurs between these thinkers on political economy is more detailed than can be mentioned in this short article. The conclusions of this philosophical discussion will not tell one how to increase their profits. Rather, my finding might provide guidelines for the moral use of wealth. Wealth and profit are positive, worthwhile ends, yet they need to be coupled with a proper sense of social obligation. It is hoped that the future will see a continuation of this line of work and new innovative philosophies working together with economics toward more humane economic practices.