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Pham – Prospects For A Humane Economy In The Contemporary World

Prospects For A Humane Economy

In The Contemporary World

An Introduction

John-Peter Pham

The Philadelphia Society Fall Regional Meeting,

in cooperation with the Intercollegiate Studies Institute,

on The Humane Economy: Visions and Prospects,

Wilmington Hilton,

Claymont, Delaware,

October 10, 1998.

As I call to order this session on Prospects for a Humane Economy in the Contemporary
, I am particularly grateful to our secretary, Dr. William Campbell, for his kind invitation to
chair this panel whose topic is particularly dear to me, both as an economist and as a theologian. In
fact, it was Bill Campbell himself who, at a Piety Hill Seminar hosted by the unforgettable Dr.
Russell Kirk, introduced me to the thought of Wilhelm Röpke years ago when I was then a
wide-eyed undergraduate economics student from the University of Chicago, steeped in the arcane
ways of monetarism and mathematical analysis. Well, Bill, it did not take much for me to slide from
economism to economic philosophy to philosophy to theology – and the prospects for my personal
economy have been declining marginally ever since. Thanks, Bill.

When Dr. Campbell and I first discussed the possibilities of this regional meeting some months ago
– via E-Mail, no less – he offered me the incentive that if I helped out by chairing a panel, the
convention of the Philadelphia Society permitted the chairman to speak his mind before introducing
the panel. Well, we have an excellent group of panelists this afternoon, so I promise I will not delay
things too long. After all, being a Catholic priest, I am reminded of the story of the confrère who
got to heaven and was put out that St. Peter made him wait while a taxicab driver was
accommodated through the Pearly Gates. When he inquired how this could be in the rightful order
of things, the priest was told by St. Peter: "Your sermons always put people to sleep. Now, his
driving, his driving got them to pray."

In any event, our topic this afternoon: Prospects for a Humane Economy in the Contemporary
. In his A Humane Economy: The Social Framework of the Free Market, whose fortieth
anniversary of publication we commemorate this year, Wilhelm Röpke was prescient enough to
recognize that socialism, in all its forms, contained the seeds of its own destruction in its lack of
proportion and its inevitable orientation to overstepping its limits. In this regard, he remarked that:

The market economy is no exception to the rule. Indeed, its advocates, in so far as they are at all intellectually
fastidious, have always recognized that the sphere of the market, of competition, of the system where supply
and demand move prices and thereby govern production, may be regarded and defended only as a part of a
wider general order encompassing ethics, law, the natural conditions of life and happiness, the state, politics,
and power. Society as a whole cannot be ruled by the laws of supply and demand, and the state is more than a
sort of business company, as has been the conviction of the best conservative opinion since the time of Burke.
Individuals who compete on the market and there pursue their own advantage stand all the more in need of the
social and moral bonds of community, without which competition degenerates most grievously. As we have
said before, the market economy is not everything. It must find its place in a higher order of things which is not
ruled by supply and demand, free prices, and competition. It must be firmly contained within an all-embracing
order of society in which the imperfections and harshness of economic freedom are corrected by law and in
which man is not denied the conditions of life appropriate to his nature. Man can wholly fulfill his nature only
by freely becoming part of a community and having a sense of solidarity with it.

That community of both free markets and virtuous marketers alone constituted what Röpke defined
as the "humane economy," one fully in accord with the nature and dignity of man.

And I have no doubt that it would come as an immense satisfaction, if not vindication, to Röpke
were he alive today to see the extent to which his definition has been endorsed by the highest
authority of my own Roman Catholic Church. In the very first volume of Modern Age, Wilhelm
Röpke again revealed himself a prophet before his time and put himself on record as calling for
liberal thinkers to "examine Catholic social philosophy in all its sources, works, and documents, and
in all its aspects, to find out if it is akin to our idea of universal liberalism." That this dialogue –
carried on over the years by thinkers such as Michael Novak – bore fruit can be attested to in the
1991 publication of Pope John Paul II’s landmark encyclical letter, Centesimus Annus. While like
other papal documents, Centesimus Annus reaffirmed the classic themes of Catholic social
thought. But it was John Paul’s creative extension of that tradition that makes the encyclical a
singularly important document, one that reconfigures the boundaries of philosophical and theological
debate over the right ordering of culture, economics, and politics.

Like Röpke, the Pope argued that the "fundamental error of socialism is anthropological in nature"
and concluded that "not only is it wrong from the ethical point of view to disregard human nature,
which is made for freedom, but in practice it is impossible to do so." The Pope did not hesitate to
draw out the implications of his Christian anthropology of human freedom in the field of economics.
In fact, Centesimus Annus contains the most striking papal endorsement of the "free economy"
ever, an endorsement that comes in the form of the answer to a pressing question:

Can it be said that, after the fall of Communism, capitalism is the victorious social system, and that capitalism
should be the goal of countries now making efforts to rebuild their economy and society? Is this the model
which ought to be proposed to the countries of the Third World which are searching for the path to true
economic and civil progress?

The answer is obviously complex. If by "capitalism" is meant an economic system which recognizes the
fundamental and positive role of business, the market, private property, and the resulting responsibility for the
means of production, as well as free human creativity in the economic sector, then the answer is certainly in the
affirmative, even though it would perhaps be more appropriate to speak of a "business economy," "market
economy," or simply "free economy." But if by "capitalism" is meant a system in which freedom in the economic
sector is not circumscribed by a strong juridical framework which places it at the service of human freedom in its
totality, and which sees it as a particular aspect of that freedom, the core of which is ethical and religious, then
the reply is certainly negative.

Many defenders of the status quo have been quick to point out that this endorsement carried a
number of conditions. However, they cannot explain away passages such as:

The modern business economy has positive aspects. Its basis is human freedom exercised in the economic field,
just as it is exercised in many other fields.

It is precisely the ability to foresee both the needs of others and the combinations of productive factors most
adapted to satisfy those needs that constitutes another important source of wealth in modern society. Besides,
many goods cannot be adequately produced through the work of an isolated individual; they require the
cooperation of many people in working towards a common goal. Organizing such a productive effort, planning
its duration in time, making sure that it corresponds in a positive way to the demands which it must satisfy, and
taking the necessary risks – all this too is a source of wealth in today’s society. In this way, the role of
disciplined and creative human work and, as an essential part of that work, initiative and entrepreneurial ability
becomes increasingly evident and decisive.

Another task of the State is that of overseeing and directing the exercise of human rights in the economic
sector. However, primary responsibility in this area belongs not to the State but to individuals and to the
various groups and associations which make up society. The State could not directly ensure the right to work
for all its citizens unless it controlled every aspect of economic life and restricted the free initiative of

Indeed, besides the earth, man’s principal resource is man himself.

Be it as it may. What are the prospects for a humane economy as it has been defined it in the
political-economic tradition we have inherited from Wilhelm Röpke and the moral tradition which
John Paul II is the custodian?

In economic terms, as I am certain our panelists will detail for us, the prospects are quite good. In
essence, the liberal – or "conservative" in our American parlance – agenda is the only one being
seriously considered. In the United States, we have been treated to the happy spectacle a
Democratic president who entered office with an unreconstructed left-wing agenda signing a
welfare reform bill into law. While perhaps many of us are of the mind that that legislation did not
go far enough, but – be it as it may – that act was a significant step, a viewpoint reinforced when we
consider that that same president stood before the Congress of the United States and declared that
"the era of big government is over." Everywhere in Western Europe, with perhaps the exception of
France, governments have been elected or maintained power on the promise of respect for the free
market. Even the left-wing coalition of Romano Prodi in Italy has managed to be the most stable
post-war government by essentially being pro-business. All signs of good prospects.

However as Röpke pointed out four decades ago and John Paul II expressed in Centesimus
, "it is not possible to understand man on the basis of economics alone." Regardless of how
well the economy is going, if the data collected by the Pew Research Center in late August is any
indication, we have not secured the other half of the definition of the truly humane economy. When
asked what one word best described the present occupant of the White House, the top choice was
"liar" (42 percent), followed by "dishonest" (18 percent), and "untrustworthy" (12 percent). And
yet, with annoying – if not alarming – consistence, some 60 percent of those polled nonetheless
would not see him removed. While the economist in me is often at a lost to explain these data, the
theologian is not. It is, as John Paul II noted:

Nowadays there is a tendency to claim that agnosticism and skeptical relativism are the philosophy and the
basic attitude which correspond to democratic forms of political life. Those who are convinced that they know
the truth and firmly adhere to it are considered unreliable from a democratic point of view, since they do not
accept that truth is determined by the majority, or that is subject to variation according to different political
trends. It must be observed in this regard that if there is no ultimate truth to guide and direct political activity,
then ideas and convictions can easily be manipulated for reasons of power. As history demonstrates, a
democracy without values easily turns into open or thinly disguised totalitarianism.

In these lines one hears an echo of the truly prophetic voice of Wilhelm Röpke whose constant
reminder was that:

Economic life naturally does not go in a moral vacuum. It is constantly in danger of straying from the ethical
middle level unless it is buttressed by strong moral supports. These must simply be there and, what is more,
must constantly be impregnated against rot. Otherwise, our free economic system and, with it, any free state and
society must ultimately collapse.

Compound this moral collapse with the political correctness which makes the one unforgivable sin
of our times that of "judgmentalism" and our dilemma is all the more critical. It was Röpke who
reminded us that "discussion is possible only where opinions may be expressed in complete
freedom, but even then only on condition that both sides accept reason as the common
denominator." Where reason and the moral vision which is born of it clashes with inarticulate,
emotionalism, there can be no proper discussion. Thus, Röpke concluded that "contempt of reason
leads to contempt of man and humanity" and quoted Goethe:

Goethe knew what he was doing when he let the devil exult: "Reason and Knowledge only thou despise, The
highest strength in man lies! Let but the Lying Spirit bind thee, and I shall have thee fast and sure." And thus
we have arrived at the devil’s own present day.

All this, of course, is not an augury of good prospects for the humane economy in our times.

In the end, the humane economy is founded on neither economic axia or financial prosperity, but on
the correct vision of man – flawed, to be sure, but capable through reason and dialogue of devising
institutions and structures that permit imperfect men and women to work together or their own and
the common good. No one pretends that it will be easy to discern the common good in our
contemporary pluralistic societies. But we must insist that each and every one of us has the
responsibility to use our rational faculties to the fullest, bringing our beliefs and opinions closer to
such moral vision as is available to our mortal lights. On the success of that endeavor, ultimately,
would rest what I would posit to be the true prospects for a humane economy.

Without further adieu, then, I have the privilege of introducing our distinguished panel this afternoon:

Dr. Richard W. Rahn is presently president and chief executive officer of Novecon Ltd. and
Novecon Management Co., L.P. Dr. Rahn has served as vice president and chief economist of the
Chamber of Commerce of the United States, where he managed the Chamber’s Economic Policy
Division and served ad the Chamber’s spokesman before the U.S. Congress, the national news
media, and civic, business, and professional groups on economic and tax issues from 1981-1990.
During the same period he served as executive vice president (1986-1991) and a member of the
board of the National Chamber Foundation (1986-1993), and as editor-in-chief of the Journal of
Economic Growth
(1986-1990). Dr. Rahn has directed or participated in economic growth
projects in a number of countries, including Brazil, Estonia, Hungary, Mexico, the Philippines, and
Thailand. He served as the U.S. co-chairman of the Bulgarian Economic Growth and Transition
Project (1990) and was a member of the U.S. Committee to Assist Russian Reform (1992-1993).
Previously, Dr. Rahn has served in a variety of academic and governmental advisory capacities. He
received his B.A,. in economics from the University of South Florida (1963), his M.B.A. from
Florida State University (1964), and his Ph.D. in business economics from Columbia University
(1972). He has published more than one hundred articles in newspapers, including the Wall Street
and The New York Times, as well as in numerous books, magazines, and professional

Dr. Peter J. Boettke is an associate professor of economics at George Mason University and
editor of The Review of Austrian Economics. Previously he was a senior research associate of
the Austrian Economics Program at New York University and director of NYU’s Summer
Advanced Seminar in Austrian Economics. He is the author of The Political Economy of Soviet
an Why Perestroika Failed: The Politics and Economics of Socialist
as well as editor of several other works, including The Collapse of Development
and Market Process Theories. Since earning his B.A. in economics from Grove City
College and his Ph.D. in economics from George Mason University, Dr. Boettke has served in a
number of academic positions and widely lectured and published on issues of economic theory and
public policy before professional and general audiences and in various professional journals and
popular publications in both Europe and the Americas.

Mr. Bruce R. Bartlett is a senior fellow of the National Center for Policy Analysis and a
syndicated columnist with Creators Syndicate. He previously held positions at the Alexis de
Toqueville Institution (1993-1994), the Cato Institute (1993), and the Heritage Foundation
(1985-1987). From 1988-1993, he served as deputy assistant secretary for economic policy
(policy analysis) in the U.S. Treasury Department as well as a number of congressional posts. Mr.
Bartlett earned his B.A. at Rutgers University (1973) and his M.A. at Georgetown University
(1976). He is the author of The Supply-Side Revolution and Reaganomics: Supply-Side
Economics in Action
as well as numerous articles in the Wall Street Journal, The New York
, Fortune, The Public Interest, The National Tax Journal, and other publications.


1Wilhelm Röpke, Jenseits von Angebot und Nachfrage (Erlenbach-Zürich: Eugen Rentsch
Verlag, 1958). English edition: A Humane Economy: The Social Framework of the Free
, trans. Elizabeth Henderson (South Bend: Gateway Editions, 1960). All references are
from the English-language edition.

2 Ibid., 90-91.

3 Wilhelm Röpke, "Liberalism and Christianity," in Modern Age 1 (1957), 130. This essay was
republished in George A. Panichas, ed., Modern Age, The First Twenty-Five Years: A Selection
(Indianapolis: Liberty Press, 1988), 513-519.

4 For a summary review of Catholic social thought, see my essay, "The Splendor of Realism: The
Continuity of Catholic Social Thought in the Papal Magisterium from Leo XIII to John Paul ll," in
Catholic Dossier 4/2 (1998), 34-39.

5 Centesimus Annus, n. 13.

6 Ibid., n. 25.

7 Ibid., n. 42.

8Ibid., n. 32.

9 Ibid.

10 Ibid., n. 48.

11 Ibid., n. 32.

12 Ibid., n. 24.

13 Cf. National Review, 28 September 1998, 20.

14 Centesimus Annus, n. 46.

15 Röpke, A Humane Economy, 124.

16 Wilhelm Röpke, "End of an Era?," in Against the Tide, trans. Elizabeth Henderson (Chicago:
Henry Regnery, 1969), 93.

17 Ibid.

18 Ibid.

John-Peter Pham, a Roman Catholic priest of the Diocese of Peoria, Illinois, is a fellow of
the Acton Institute for the Study of Religion and Liberty. He is the editor of upcoming
"Centesimus Annus": Assessment and Perspectives for the Future of Catholic Social
Doctrine, and served as the co-moderator of the International Congress on Social Doctrine in
Rome (1997),
sponsored by the Acton Institute and the Pontifical Athenaeum "Regina
Apostolorum". He holds advanced ecclesiastical degrees in theology and canon law in
addition to his prior studies in economics at the University of Chicago, where he wrote his
thesis on
The Declining Labor Force Participation of Older Americans since 1970 under the
direction of Dr. D. Gale Johnson and for which he was awarded the Donnelly Prize for 1990.


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