The Clergy and Economists: Two Windows on Common Objectives

Dwight R. Lee

William J. O’Neil Chair of Global Markets and Freedom, Cox School of Business, Southern Methodist University

**The following paper is reprinted with permission of Acton Institute and was originally published in the Journal of Markets & Morality.**

Introduction

There are important differences between the clergy and economists, though not as many as most believe. I shall argue that there is little to distinguish the clergy from economists on humanitarian grounds. Their worldly objectives are similar. The differences between them are in their emphasis on how to achieve their common objectives. These differences in approach are important and should not be understated, but neither should they be overstated as they almost always are. While the clergy and economists emphasize different paths to their common objectives, those paths complement each other. Yet, they are commonly discussed as if they represent morally irreconcilable differences in objectives because of a tendency to confuse means with ends.

My hope is that members of the clergy, in their desire to achieve a better world, will see economists as allies instead of as adversaries. This hope may be dismissed as preposterous by some because I argue that market incentives are the most effective way of achieving many of the social outcomes that most of the clergy favor. Those most opposed to market incentives for achieving desirable objectives have the most to gain by taking a look through the economic window presented here. Much of the skepticism, indeed hostility, toward markets is based on distorted and mistaken views of how markets operate and what they accomplish.

Better Angels vs. Economic Incentives

Religious differences notwithstanding, most people respect the clergy for their noble objectives and effort to achieve those objectives by encouraging and celebrating the better angels of our nature mentioned in Lincoln’s first inaugural address. Most approve of the clergy’s concern with encouraging behavior such as sharing with, and serving the interests of, others; helping the poor; sacrificing for the good of the wider community; acting as good stewards of the earth’s resources; being concerned with protecting the environment; and generally living a life that promotes social cooperation and harmony.

Such a claim on behalf of economists would be met with incredulity and probably derision. The common view is that they are primarily interested in money and financial success; more likely to celebrate economic competition than social cooperation, with little regard for those left behind; prone to see profit and private property as ends in themselves, with little regard for the unfortunate consequences that can result from their pursuit, including the harm imposed on the environment and future generations; and more concerned with how greedy individuals can secure more for themselves than with how they can share with, and promote the general well-being.

This view of economists, and their objectives, is a caricature. Like most caricatures, it may contain an ounce of truth, but it also contains several pounds of distortion. Economists are indeed interested in money, competition, profits, private property, and the influence of self-interest on human action, but they are interested in these things not as ends, but as a means of achieving more social cooperation, service to others, and better stewardship of the environment and our resources. The earthly objectives of economists are quite similar to those of the clergy.

To understand why this similarity in objectives is seldom recognized, we must recognize that the clergy and economists are looking at the world through different windows, and these different windows suggest different ways of reaching common objectives. Instead of the clergy and economists acknowledging that their views yield understandings that are neither completely correct nor completely wrong, they tend to become overly critical of the other’s view and let that obscure many of their common objectives.

It is useful to consider two broad approaches to improving the world. The first is to improve people so that they do the right things out of a sense of moral duty. The second approach is to improve incentives so people are motivated to do the right things because it is in their interest to do so. A reasonable generalization is that the clergy emphasizes the former approach to improving the world, while economists emphasize the second. It is easier to see the connection between improving people and creating a better world than to see the connection between improving incentives and creating a better world. Furthermore, improving people has far greater emotional appeal than improving incentives. The result, I shall argue, is a tendency to confuse means and ends and to conclude that the clergy’s objectives are both different and nobler than those of economists.

Consider Charles Dickens’ A Christmas Carol published in 1843. In Dickens’ story, Ebenezer Scrooge, “a squeezing, wrenching, grasping, scraping, clutching, covetous old sinner” ends up helping the Cratchit family and their crippled son Tiny Tim because Scrooge becomes a better person after being visited on Christmas Eve by the ghost of his former business partner and the three ghosts of Christmas. The emotional impact of A Christmas Carol has sustained its popularity for well over 160 years. Imagine if the story had been written by an economist. Scrooge would have remained the same “covetous old sinner,” but he would have helped the Cratchit family because of an increase in the tax deduction for charitable contributions. What a touching story that would have been! It is easy to see the transformation of Scrooge in A Christmas Carol as a noble objective by itself. An increased tax break for charitable contributions is also easily seen as an objective but hardly as a noble or emotionally satisfying one.

While improving incentives lacks the sense of moral uplift provided by improving people, better incentives can, and often do, lead to a better world. For example, in the late eighteenth century, a large percentage of prisoners being transported from England to Australia on British ships were dying en route. Moral appeals to captains to transport prisoners more humanely had no noticeable effect on the death rate. Finally, a change in incentives was suggested—pay the ship captains on the basis of how many prisoners walked off the ship in Australia, instead of how many walked on in England. Implementing this recommendation resulted in an immediate drop in the death rate of prisoners being shipped to Australia, from as much as 37 percent to less than 1 percent on most trips.1

The point is not that improving the world by improving people is futile. Looking through their window may result in economists being too dismissive of the possibilities and benefits of improving people. Looking through their window may cause the clergy to be too dismissive of better incentives as a sorry substitute for morality improvement. A more reasonable view is that both improving incentives and improving people complement each other. This was recognized by Dennis Robertson, a colleague of John Maynard Keynes at Cambridge University (but not a Keynesian himself), who observed:

 

There exists in every human breast an inevitable state of tension between the aggressive and acquisitive instincts and the instincts of benevolence and self-sacrifice. It is for the preacher, lay or clerical, to inculcate the ultimate duty of subordinating the former to the latter. It is the humbler, and often invidious, role of the economist to help, so far as he can, in reducing the preacher’s task to manageable dimensions.2

 

In addition to Robertson’s recognition that the clergy and economists have, in their different ways, joint responsibilities in working toward a better world, it is important to note that he also recognizes that human nature consists of both the acquisitive and the benevolent. This is an obvious point, noteworthy only because so many people assume that economists believe human behavior is motivated entirely by self-interest, or more pejoratively, greed. That is not true now, and never has been. Economists have always recognized that people are motivated by some mix of the narrow and the noble. Indeed, Adam Smith, who is often mistakenly dismissed as an apostle of greed, begins his first book, The Theory of Moral Sentiments, with the sentence (Smith [1982, 9]), “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.”

Economists do commonly assume that people are motivated solely by self-interest to better understand what social institutions, and the incentives they embody, best motivate widespread cooperation among those who have no direct knowledge of, or concern for, each other. While this “economic man” assumption is useful as an analytical device, few economists believe he is commonly observed or hold him up as an ideal. As the late economist Ken Boulding (1969, 10) said, “No one in his senses would want his daughter to marry an economic man, one who counted every cost and asked for every reward, was never afflicted by mad generosity or uncalculating love.… Economic man is a clod.” Most economists agree with Boulding’s assessment. If ever someone needed improving, it is the economic man.

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