Reprinted from Law & Liberty
Fr. Robert Sirico’s new book, The Economics of the Parables, opens by reflecting on why Jesus chose economic imagery so often for his parables. In the Gospels, we hear stories of investing, trading, planting, and managing estates (the book covers a baker’s dozen of these parables), though not once of composing music, studying for a test, or playing sports. Fr. Sirico’s answer is that economics is a universal human experience—each person faces limited time and resources—thus economic imagery is fitting for parables intended to last throughout history. This is a point familiar to economists; indeed, my favorite introductory textbook (fittingly entitled Universal Economics) begins with the story of Adam and Eve:
Since the discouraging fiasco in the Garden of Eden, all the world has been a place conspicuous in its scarcity of resources, contributing heavily to an abundance of various sorrows and sins. People have had to adjust and adapt to limitations of what is available to satisfy unlimited desires. Some individuals and societies have been much more successful than others in thus making do.
Fr. Sirico’s approach to discerning economic lessons in the parables of Jesus is mainly pastoral, and the close reader can discern his honest effort to follow the example set by Pope Francis, who has become known for his ability to apply spiritual truths to gritty, everyday life. The spiritual significance of the parables is deepened, he argues, by a clearer understanding of the economic forces at play. Thus Fr. Sirico uses material reality to draw his reader toward the transcendent.
This essay focuses on a theme that runs throughout the book, specifically, how understanding economics can be an antidote to the temptation of envy. To quote the great Peter Kreeft: “Envy, though not the greatest sin, is the only one that gives the sinner no pleasure at all, not even fake and temporary satisfaction.” Once it becomes clear where prices (and wages) come from, the role of private property plays in society, and what profit and loss signals mean, envy is uncovered as the irrationality that it is. Economists have understood the mechanisms behind these market phenomena since the 16th-century priests of the School of Salamanca, but it is up to each generation not to forget these lessons. This latest book by Fr. Sirico is evidence that he is doing his part.
I want to begin by defining economics, as is done in the beginning of the book (and to hopefully clear it up for any students currently discerning their college major!). In Fr. Sirico’s words, economics is “the discipline that elucidates the implications of scarcity in the material world: the entire complex nature of exchange, trade, and human action.” While it deals with topics like money and financial markets, economists are also very interested in law, family, and religion, since these also facilitate trade and undergird the economy.
One common frustration with economics, capitalism, or “the market” concerns how things are valued. Economists adhere to the subjective theory of value, which simply means that goods and services have value in the market because subjects—you and I–give them value. Jesus also assumes this in his Parable of the Pearl of Great Price, as Fr. Sirico recognizes in his chapter on the subject:
The pearl was a luxury good and is presented with no condemnation in the parable. Instead, Jesus portrays the merchant as wise for having his priorities right in selling what must have been a substantial amount of property in order to obtain it. What might be seen as a pointless material good, may be seen by others as something wonderful, even a reflection of the beauty of Creation itself. People’s perspectives, and thus the value they place on objects, differ.
If high prices tempt us to view all businesspeople as greedy, or if we are angry because teachers and nurses aren’t paid as much as CEOs, we would do well to recognize that the only sustainable way to change market outcomes is by changing what people value. Valuations can be mistaken (and often are), and incomes say nothing about the objective value of persons as such. The important moral question is not where economic value and prices come from, but what we ought to value.
The Parable of the Laborers in the Vineyard illustrates this tension. It was not the sheer effort or time put into harvesting that determined the workers’ market wage (a denarius), but rather how their production was valued in the market. The landowner also offered a daily wage to those who began their work later in the day, perhaps because their last-minute contributions were even more valuable to him, or simply to be generous in case he needed them again in the future. Cultivating good habits like generosity and charity takes place prior to the market, as Fr. Sirico’s emphasizes: “Market exchange turns on the subjective value that a consumer places on a product, not on the objective values that are better called virtues. The critical task of forming character and conscience rests primarily with parents in the home, spiritual directors and guides, and a host of other authorities, not on economic institutions as such.”
Another common misconception about economics that invites envy concerns private property. However, this reflects a modern forgetfulness, and Fr. Sirico reminds us that St. Thomas Aquinas pointed out the social function of the private property in the 13th century:
[It] is not merely legitimate for a man to possess things as his own, it is even necessary for human life, and this for three reasons. First, because each person takes more trouble to care for something that is his sole responsibility than what is held in common or by many—for in such a case each individual shirks the work and leaves the responsibility to somebody else, which is what happens when too many officials are involved. Second, because human affairs are more efficiently organized if each person has his own responsibility to discharge; there would be chaos if everybody cared for everything. Third, because men live together in greater peace where everyone is content with his task.
Every parable relating to economic matters assumes the legitimacy of private property. This is especially notable in the Parable of the Two Debtors, which Jesus narrated after a woman used her property (an expensive perfume) to honor him while those in power looked on with disapproval. In this parable, God is portrayed as a moneylender who, though having a legitimate claim to repayment, has forgiven much. Fr. Sirico also uses the Parable of the Sower, which illustrates how seed scattered under different conditions yields varying results, to illustrate how a system of private property is the fertile soil necessary for economic flourishing. When this system of private property expands to include more people (usually via population growth or immigration), then property ownership, contracts, capital markets, and profit and loss signals encourage virtuous behavior, such as long-term thinking and deferred gratification, that Aquinas had noted.
Still, envy may tempt us to support policies of redistribution which are ultimately counterproductive. Fr. Sirico also addresses this temptation when discussing the Parable of the Rich Fool: “[Redistribution] only moves around the wealth that has already been created . . . There are times when it’s a good idea to do this, especially within families. But if the redistribution is orchestrated by officials far removed from the concrete context, or motivated by avarice, or covetousness, or envy, it can be the occasion of sin.” Redistribution is a zero- or even negative-sum game, meaning that there are always winners and losers, and the potential sum of losses may be larger than the winnings.
Finally, it is easy to misunderstand the role of profit and loss signals in the market economy. Profit occurs when entrepreneurs manage their time and resources wisely in the face of persistent uncertainty about the future. Moreover, “wealth in a market economy is dynamic because to be ‘rich’ is a reversible condition, as any perusal of the various lists of the wealthiest will demonstrate from year to year.” Due to our natural limitations, economic losses are also possible. However, it is important to note that neither profit nor loss for Fr. Sirico implies any moral successes or failures.
One parable that clearly illustrates this is the Parable of the Talents: “Religious institutions, along with all those whose task it is to form the moral consensus, should recognize entrepreneurship for what it is—a vocation, a calling in need of formation, maturation, and clarity of mission.” The Parable of the King Going to War and the Parable of the House on the Rock are rife with lessons about entrepreneurship as well. Fr. Sirico reminds his readers that entrepreneurs are successful when they fulfill the desires of their customers. Here again, the lesson is that many unjust market outcomes are the result of fundamental institutions like families, churches, and schools, not fulfilling their responsibility to form characters oriented toward the good, true, and beautiful. Much of what economists refer to as “transaction costs” would be eliminated in an economy consisting entirely of saints, but that is unfortunately not the world we inhabit. Economics reveals how we depend on God and man for our everyday needs.
When I was an undergraduate student at Creighton University, Fr. Sirico came to campus to talk about his first book, Defending the Free Market. I was just about to leave on for a semester abroad in the Dominican Republic (of which a substantial portion of the program was meant to open our eyes to the flaws of capitalism), so I thought I should open myself to other perspectives. Fr. Sirico’s talk was the first time I encountered the explicitly moral case for economic freedom, and something in me stirred. I didn’t know it yet, but this would also be the message I would devote my life to sharing. His book came with me to the Dominican Republic, and surely enough, I saw with my own eyes how economic restrictions and controls (both ill- and well-intended) harmed the people there. The rest is, as they say, history.
As a Catholic Christian and an economist, Fr. Sirico’s new book has my strongest recommendation. The Economics of the Parables is an excellent contribution to a burgeoning literature in which scholars take both their faith and economics seriously (other noteworthy examples include Faith and Liberty, Economics in Christian Perspective, and Biblical Games). The book contains much more than I was able to address, such as interest and usury, government debt, business cycles, and so on. My only word of advice is that Fr. Sirico should consider doing the Old Testament next!