The Free Economy As A Gift From God

For Christians, Christmas is a celebration of God becoming man. And if God himself became man, how immense must be the value of the human person! Free and virtuous societies are those that recognize this value and dignity. Since I began writing these Christmas columns, I have focused on persons and symbols that, while connected with Christianity, provide us with lessons on policy. This time I want to highlight the late Archbishop of Dublin Richard Whately (1787-1863).

For those of us who study and work on economic policy, it is noteworthy that in 1829 Whately was elected to a professorship of political economy at Oxford University. He had been the tutor of Nassau William Senior (1790-1864), who occupied the chair before him. Whately achieved high esteem as a teacher, student, and disseminator of economics, but when appointed archbishop he had to discontinue his career as an economist. However, he continued to pursue his passion for economics as an intellectual entrepreneur. Out of his own pocket he endowed a chair on political economy at Trinity College, founded in 1592 in Dublin.

Whately’s episcopal duties prevented him from writing more about economics. Still, his book Introductory Letters of Political Economy (1831) anticipated many insights that a century later helped economists like F.A. Hayek become darlings of advocates of the free economy.

The long entry on Whately in the Encyclopædia Britannica states that he “stood aloof from all political parties.” He also looked beyond religious divisions. Whately was an Anglican. Despite being close to Catholic convert John Henry Newman (now St. John Henry Newman) and his Oxford Movement, he opposed the theological propositions in Newman’s Tract 90. For a couple of years, 1825-26, Newman was Whately’s Vice Principal at St Alban’s Hall, one of the oldest halls at Oxford. Whately collaborated with Catholics and pushed for an nonsectarian religious instruction course, which worked well until a new Catholic archbishop withdrew his support in 1852.

Whately’s peers saw his approach to Christianity as too businesslike and rationalistic. But this was more due to his emphasis on logic than to weak faith. He always endeavored “to convince the logical faculty, and his Christianity inevitably appears as a thing of the intellect rather than that of the heart.”

He saw the study of economics as distinct from moral philosophy: “It is necessary to study the nature of wealth, its production, the causes that promote or impede its increase, and the laws which regulate its distribution.” The goodness or evil of wealth and its impact on morals, however, is “only obliquely and incidentally connected with Political Economy; whose strict object is inquire only into the nature, production, and distribution of wealth, not its connection with virtue or with happiness.”

Whately earned mentions in two widely respected histories of economic thought. The History of Economic Analysis (1961), the monumental work prepared from the manuscript of Joseph A. Schumpeter (1883-1950), includes a section on Whately’s contributions to economics. Schumpeter treats Whately with the same superficiality as he treats Frederic Bastiat (1801-1850). Although Bastiat and Whately were brilliant, neither passed Schumpeter’s test for knowledge of “the analytic apparatus of economics.”

Schumpeter writes that Archbishop Whately “led quietly without seeming to do so, by the weight of his personality and of his advice which was never more valuable than when it was obvious. For in ecclesiastical politics, as in economics, the obvious is sometimes precisely what people are most reluctant to see. His most important service to economics was, however, that he formed Senior….”

In another widely used textbook, The Growth of Economic Thought (1971), Henry William Spiegel also mentions Whately. He quotes his criticism of the labor theory of value: “It is not that pearls fetch a high price because men have dived for them; but on the contrary, men dive for them because they fetch a high price.” Whately’s teachings on the subjective theory of value and marginal analysis, the basis of economic science, continued through Mountifort Longfield (1802-1884), who was the first holder of the Whately Chair of Political Economy. As Spiegel writes, Longfield “anticipates the later findings of Menger and Jevons.”

Whately stated that subjectivity applies not only to the value of material goods but also to labor. The same action can be considered work for some and consumption for others. Take playing tennis. A tennis professor and a student are doing similar activities but with different perspectives—one preferring the income he receives from teaching, and the other preferring the training he receives. Whately used the example of someone who grows ornamental trees in a nursery for sale and another person who plants them to enjoy a lovelier garden.

In his book Della Economica Pubblica e Delle Sue Attinenze Colla Morale e Col Diritto, about political economy and its connections with morality and law, the late Italian Prime Minister and economist Marco Minghetti (1818-1886) credited Whately for being the first to use the term catallactics or “the science of exchanges” to describe the essence of economics. Ludwig von Mises (1881-1973) also credited Whately and was the most famous economist promoting the term catallactics.

On the similarity of Whately’s views with what F.A. Hayek wrote a century later, look at this example: “Many of the most important objects are accomplished by the joint agency of persons who never think of them, nor have any idea of acting in concert: and that, with a certainty, completeness, and regularity, which probably the most diligent benevolence under the guidance of the greatest human wisdom, could never have attained.”

This Irish bishop saw a Divine design in creation: “In every part of the universe we see marks of wise and benevolent design.” Nothing, though, seemed as awesome for Whately as the economic process. “I know not whether it does not even still more excite our admiration of the beneficent wisdom of Providence, to contemplate rational free agents, cooperating in systems no less manifestly indicating design yet no design of theirs.” He concludes, “Man, considered not merely as an organized Being, but as a rational agent, and as a member of society, is perhaps the most wonderfully contrived, and to us the most interesting, specimen of divine Wisdom that we have any knowledge of.”

Like most good economists, Whately also saw international trade in a good light. “There is much useful exchange between different nations, which we call Commerce. All Countries will not produce the same things; but, by means of Exchanges, each country may enjoy all the produce of the others.” He saw trade as a way to minimize wars. “What a folly it is, as well as a sin, for different nations to be jealous of each other, and to go to war, instead of trading together peaceably; by which both parties would be the richer and the better off. But the best gifts of God are given in vain to those who are perverse.”

The economic order that he championed required a strong respect for private property. In “any country in which property is secure, and the people industrious, the wealth of that country will increase; and those who are the most industrious and frugal, will gain more than such as are idle and extravagant.”

But when private property is ill secured, even “countries that were formerly very productive and populous” under tyrannical governments have become almost deserts. Whately saw this system of private property as entirely consistent with Christianity: “The Apostles did not intend to destroy, among Christians, the security of property which leads to the distinction between the rich and the poor. For, their exhortations to the rich, to be kind and charitable to the poor, would have been absurd, if they had not allowed that any of their people should be rich. And there could be no such thing as charity in giving anything to the poor, if it were not left to each man’s free choice, to give, or spend, what is his own.” He states further, “Scripture forbids us to ‘covet our neighbor’s goods,’ not because he makes a right use of them, but because they are his.” During difficult economic times, Whately was a generous donor to the poor. He concludes: “The very nature of charity implies that it must be voluntary; for no one can be properly said to give anything that he has no power to withhold.” Whately opposed government plans to grant funds to the poor, except those directed at helping people with severe physical or mental handicaps, because such plans, in his words, tended to “increase that evil.” He thought that the best that civil society could do was to encourage industry, frugality and forethought “by whatever means it can be effected.”

It is not common today to find prominent religious figures well trained in economics. This is unfortunate, as many moralists, though with good intentions, come to promote views that, rather than creating wealth and lifting the poor, end up perpetuating misery. Whately wanted to combat the prejudices of those who think political economy is incompatible with religion. He thought political economists of some kind have always governed the world, political economy and theology are not inimical to each other, and there is still much to learn.

Magdalena Richards conducted research for this article