ECONOMICS. – The careful and prudent administration of goods. Etymologically (from the Greek οἰκονομία; οἶκος = house; νέμω = to administer), it originally meant the administration of the household, that is, of goods, property, and family resources. However, its meaning broadened to include not only the notion of the domestic society but also that of the city and the State. Indeed, until quite recently, economics was considered solely in relation to the State and public wealth (political economics); now, however, it is also considered in relation to society and social classes (social economics), to the various fields in which it is exercised (rural, industrial, etc.), and finally in relation to the family (domestic economics).
Economics, therefore, encompasses the totality of useful goods suited to satisfying our needs, with the aim of preserving and improving our existence; it is realized through the voluntary exercise of physical and intellectual forces in the acquisition of these goods. These goods (generally termed wealth) are not only produced but, once produced, circulate, are distributed throughout society, and are applied to satisfy our needs (consumption); hence the four primordial economic phenomena: production, circulation, distribution, and consumption.
Economics will thus be the systematic complex of conditions ensuring order, activity, and economic phenomena; it can be regarded both as a science (the exposition, verification, and systematization of the general laws of the production and consumption of goods) and as an art (the application of these laws to individual, family, social, and national life).
As a human activity, economics cannot claim to be autonomous but must necessarily submit to the normal laws governing human life and relations, lest it produce sad and deplorable consequences.
ECONOMICS AND MORALITY. – The science of economics arose amorally with Adam Smith (*An inquiry into the nature and cause of the wealth of nations*, 1776). Subsequently—thanks to other illustrious masters—it developed fundamentally on the plane of absolute freedom. Descending from the spheres of speculation to the practical field, and further empowered by refined and unrestrained technique, it dominated freely until degenerating into tyranny. Public economics, especially in Great Britain, and, to some extent, private economics—particularly in the industrial sector—greatly favored the development of capital, though at the expense of human labor. Labor, not considered at all as a factor of production for the sake of amassed capital, was reduced to dire poverty and slavery. In the production phase, it was exploited to the maximum, with working days of up to 14 or even 16 hours; in the distribution phase of produced wealth, it was compensated with starvation wages.
These excesses, somewhat generalized and even justified by liberalist doctrine, enraged the proletariat, who, relying solely on their numerical strength, united to rise in revolt. The struggle was opened with C. Marx’s famous manifesto of 1848 and was skillfully pursued under the leadership of socialism; today it is more insidious and bitter than ever. Despite many concessions won, human labor still struggles relentlessly—not merely against capital. Many other obscure elements have insinuated themselves into the conflict. The numerical strength of workers has been exploited by the formidable political machinery of Russian communism, to which they must pay the tribute of yet another form of slavery.
While Catholics have always endeavored in every way to restore capital and labor to their natural position of collaboration, in the scientific sphere they soon recognized economics as a proper science, while maintaining its subordination to morality.
Only a few authors in the second half of the last century, e.g., Fr. M. Liberatore, pushed this subordination to extremes, reducing economics to a mere chapter of ethics. This was perhaps a spontaneous reaction to the tyranny of capitalism, a child of rampant liberalism, combated in all sectors with the intransigence of the early fervor of the scholastic revival. Today, the constant Catholic thesis is expressed in measured terms and sanctioned by supreme authority in *Quadragesimo Anno*: “Although economics and moral discipline each rest on their own principles, it would be erroneous to affirm that the economic order and the moral order are so disparate and foreign to one another that the former in some way depends on the latter.”
On the opposite shore, absolute economic freedom is no longer defended, nor is it entirely renounced. A position is generally accepted that, in the golden age of liberalism, smacked of compromise. That is, a distinction is drawn between speculative economics and practical economics, and it is admitted that the latter must submit to ethical precepts, while the former need not. Thus, forced by the disorders it itself provoked, economic liberalism has been compelled to retreat from the practical field and defend itself at least on the lofty peaks of speculation. Even here, however, its resistance is impossible. This will become clear from what will be said in justification of the Catholic thesis.
Just as economics provides for material needs, so ethics provides for the spiritual needs of man as a conscious and free being, and thus responsible for his actions. In the evident distinction and difference of their aims, the distinction and difference of the two disciplines and their respective principles and procedures are justified. Yet this difference does not break their contact at a common point.
The needs they respectively serve, though different in content, are equally human needs. This is evident. And this human character is essential not only to ethics but also to the science of economics. It is so true that economics is exclusively a human science; there exists no economics for beasts or natural forces. These have their place in economics, but without participating in its final phase, they fulfill their role only in its instrumental phase. It is quite otherwise with man. Even man’s physical and psychic forces, according to the laws governing their productivity, are engaged in the production of wealth; and up to this point, man is on the same instrumental plane as physical and animal forces. But economics is not exhausted in production, which represents only one of its phases—not even the most important. Essential to it is also the other phase of the circulation and distribution of wealth, with a view to its consumption. This second phase constitutes the end of economics, while the first is merely its means. And it is known that means must be proportionate to the end. In economics, therefore, the distributive phase is not only essential but also the principal one, because it is the final phase from which the instrumental phase of production derives its very reason for being, its nature, and its limits.
It is precisely in this final phase of distribution that economics asserts itself as an exclusively human science, because only man participates in it; machines and beasts do not. Certainly, machines are also repaired and beasts are fed, but on what grounds? Not as payment or distribution of the wealth produced in the previous production cycle, but solely to preserve them as efficient means for a subsequent cycle of production. For man, it is different. He participates in the distribution of wealth, for the sake of which the previous production cycle was undertaken, and which now reaches its fulfillment in this distribution: namely, to provide man with the means necessary for his development according to the demands of his nature. Man also repairs the machine of his body, more or less worn out in a production cycle; but he does not do this merely to preserve himself as a valid instrument for further production. For him, preserving physical strength is, in the scale of his human needs, the least noble but the most necessary. Therefore, with the goods produced and made his own through distribution, he immediately repairs his physical strength, so as to proceed to satisfy his higher needs, until he reaches, as far as possible, the complete perfection of his conscious and free nature.
Who can fail to see, then, that economics is essentially and exclusively a science of man, inasmuch as he is distinguished and elevated above other beings?
The following three evident conclusions follow:
1) Since man is a unitary being, despite the duality of his integral parts—body and spirit—it is clear that the needs of the body must be satisfied without conflict, indeed in positive harmony with the needs of the spirit. Consequently, economic science, which provides for material needs, is inferior and subordinate to moral science, which provides for the higher needs of the spirit. Thus, in a negative sense, it must accept the limits imposed by morality; in a positive sense, it must adopt its directives.
2) The distinction between theoretical and practical economics cannot be admitted. The former would be the complex of cause-and-effect relationships concerning the production, circulation, distribution, and consumption of wealth; these relationships, however, would be considered in their absolute value, independently of any relation to man. The same relationships, when seen operating in human life, would constitute practical economics, the only subject subject to morality.
But it has been established above—all economics is a human science, i.e., in relation to man and therefore dependent on morality. Yes, there are in economics parts which, detached from the others and considered in isolation, may dispense with any relation to man: for example, the relationships of production and circulation as such. But considered thus, they are merely mathematical, mechanical, or technical relationships, which economics can exploit without yet being formally economic relationships. Economic science is not in the sum of its parts, but in the harmony of all of them; and this harmony derives from its ultimate purpose, which is certainly to provide man with the material means for his complete development, both material and spiritual.
Therefore, every part of economics, like every sum of its parts, either is considered apart from this purpose—and then it is not economics, but merely a pre-economic element—or is considered in function of this purpose, and then it becomes at the same time economic science, human, and as such, subordinate to morality.
3) The morality to which economics must be subordinate cannot be any morality, but must be true morality. Now the only true morality—after the redemption of Jesus Christ—is that which rises to the heights of theology and is transfigured in II. Today economics must procure the material means by which man can satisfy the needs of body and spirit, both natural and supernatural. And since the supernatural values affirmed by Jesus Christ were entrusted to the infallible guardianship of the Roman Catholic Church, economics—in order to be truly such—must consult and listen to II.
For the history of the development of economics, see ECONOMIC SYSTEMS.