August 25, 2011

Introduction to economics

By Dr. William Luckey *

This is going to be a series of articles to help Catholics to understand economics.  Because of the serious deficit in the comprehension of economics by Catholics, this will be a daunting task, but the author will do his best. 

In order to understand this subject, there is a need to distinguish between the actions of human beings and the way those actions are perceived by those who study them.  The value of any writer’s thought is whether it jives with actual human experience.  Note, it is not your personal experience, but the general experience of humanity that counts.  This means that the economic system of a country and the writings of those who study it may or may not jive, depending upon how schooled in technique and objective the observer is.  It is a commonplace that witnesses to a crime, even if it is staged crime in a law school class, will differ widely in their descriptions of what occurred.  This means that no evaluation of how an economy works is valid when done by observers not trained in what to look for, not trained to analyze what they have observed, not to mention the fact that their experience may be limited to their own neighborhood or their personal experience, or one event.  Sadly, most people see themselves as experts on economics and political science, without having read or studied any serious work on these subjects.  Happily, this is not true of surgery.  Very few people try to instruct physicians on how to take out a gall bladder, but everyone “knows” about politics and economics, such that the layman considers his view of these subjects as good, or better than, those who have studied for years. 

Everyone must remember that the economic system is a given, and it is extremely complex. There are billions of transactions of every kind (not just business transactions) that occur continually each and every day. No human being or group of human beings or computer can ever monitor even some of those transactions. This is because a transaction is not a transaction until someone acts and another responds. One would have to be there to know the transaction; and who could ever do that? What we get is statistics which are nothing more than past history, a digest of what occurred a week or a month or two ago, by the time they are gathered.  While analyzing statistics can be helpful in telling one what happened, it is useless in informing us as to why it happened.  But a true science is not based on what, but on why, on cause and effect.  And the best way to understand economics as a science is to understand man, not data.

Economics begins with the “action axiom,” i. e., man acts.  There is no question that this is true, because even to argue with this you are required to act.  It is true that man also thinks, but we cannot know what he is thinking unless he acts.  So if a person says to himself that he going skiing tomorrow, it means nothing if he does not actually do it.  If I come up with a great theory of the nature of the universe, it is useless unless I act, in this case, tell someone either verbally or on paper.  We only know about Einstein’s fruitful “thought experiments” because he wrote about them.  Blessed Pope John Paul II tells us in the Acting Person that those who only have ideas live in a dream world.  Thinking about doing good does not make one good.  Thinking about going to France, does not get you there. Dreaming about a machine that you would like to invent that would be a great boon to mankind, does not help mankind at all.

But admitting that man acts does not explain how man acts.  Economics does not delve into the psychological tangles of the mind to explain why each man acts, but it does explain his actions to a great degree.  Aristotle correctly informs us that all men act for an end or goal.  In other words, people do not act for nothing.  Your mother may have asked you at one time, “What are you doing?”  You may have responded, “nothing.”  But was that really true?  Chances are that you were playing, chilling, thinking about what to do on Saturday, or brooding, or stalling so that you have to do your homework or chores, etc.  Even an act as innocuous as going to bed has a purpose to the person who does it.  He knows that if he does not get sleep he will be miserable the next day, if not dysfunctional. 

So, all men act for an end.  In addition, all men act for the good.  Your may object to this, pointing out correctly that the prisons are full of people who did not act for the good.  But as Aristotle says, men act for either a real good or a perceived good.  In other words, whether the action aimed at an objective good or not, even the bad acts seemed good to the perception of the actor at the time of the action.

Think of the bank robber.  No one goes through all that trouble because he was bored, but because it is seen as a solution to the robber’s money problems.  Later on, when he sees his picture on television and he has to go on the run, he might come to the realization that it was not really a good choice, and turn himself in.  But in this case, “good” again does not mean objectively good, but that the trouble he is in, and the inconvenience he caused himself, was not worth the money, which is slowly dwindling.

Here is presented to us another basic element of human action—all human acts are based on “subjective valuation.”  If an economist had a nickel for every time some well-meaning Catholic misunderstood or intentionally misinterpreted that term, he could retire.  Subjective valuation means that a person’s actions are based on things that HE thinks are of value.  This in no way denies the existence of objective values.  It just means that if a person has not subjectivised those values, he will not act on them.  If a guy think ballet is for sissies, he will never go to one.  If I fail to see the value of Catholicism, I will never become a Catholic. So everyone acts on his values.  Examine your self.  Ask yourself why you do not do certain things, even things that are perfectly moral and objectively good.  It is because YOU do not value them, while still insisting that they are objectively good.

Dr. William Luckey is the former chairman of the department of Political Science and Economics at Christendom College, where he is currently a professor.  He holds advanced degrees in Business, Economics, Political Philosophy and Systematic Theology. He was married in 1971, has four children and 12 (soon to be 13) grandchildren, and is a Lay Dominican.

You can visit his blog entitled Catholic Truths on Economics at:

* Catholic News Agency columns are opinion and do not necessarily express the perspective of the agency.


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