An Input from CST for the Reform of Capitalism

Sr Helen Alford | PASS Academician

An Input from CST for the Reform of Capitalism

Even if “ideas drive history”, changing our ideas will not immediately help us deal with the socio-economic effects of the pandemic and its impact on hyper or de-Globalisation. However, as the position paper for this meeting says, the pandemic could be a “catalyst” for a “fundamental reform of capitalism”, and if we want to reform capitalism, we do need ideas for that. So I want to focus my intervention on an input from CST that could contribute to that reform. I also want to point out two major problems that need to be resolved if these ideas are going to be able to do their job.

Duality: Adding a second dimension to our thinking about the human being in economics

After the financial crisis, a lot of effort was put into understanding what had gone wrong with economic theory in order for us to arrive at that crisis, and many fingers pointed at the individualistic vision of the human being encoded in economic thought. Much has happened since then. Reforms have been proposed regarding the set of preferences that a human being may express. Agent-based economic theory now allows for different kinds of preferences to influence economic behaviour, including other-regarding. The Nobel prize has gone more than once to thinkers on the border between economics and psychology, most recently to Richard Thaler in 2017, indicating a healthy interdisciplinary input into ideas about how human beings operate in the economic sphere. These add to earlier developments, like Sen’s capability approach, or work on we-rationality. No doubt others here could mention other interesting and important developments

However, the individualistic mindset regarding the human being does not seem to have been fundamentally modified by these developments. This is a bit of a surprise. Many empirical results now question this assumption. The happiness research would be the most obvious, but Ostrom’s Noble prizewinning work on the management of common resources does something similar, as do many results from game theory. Mathematically formalised links between ethics and economics have been attempted, such as Lorenzo Sacconi’s work on contractualism. But this ethical theory still treats human beings as individuals. Contractualism accepts a commonality of means (instrumental to individual ends), but not a commonality of ends. Why isn’t the theory changing, in relation to the critique after the crisis or these widely recognised empirical developments?

Formalising our intrinsic relationality in mathematical language maybe difficult to do. But a prior problem may be that it is difficult to imagine what intrinsic relationality is and how it relates to our obviously individuated existence (in time and space). How can we be both individual and intrinsically relational at the same time? Intrinsically important relationality is not unknown to us, but we are used to thinking about it in certain circumstances. At the same time that we have been regarded as individuals in the market place, the family was seen as a place in which relationships really count (Becker’s work on the family as a sphere of contractual engagement between individuals, with trade-offs and intergenerational investments, has never really caught on).

Could CST provide some input on this level? Let’s not forget that important thinkers in the past, like Carl Schmitt, and today, like Giorgio Agamben, have argued that our important social ideas are secularized theological ones. Do we need to do some more “secularising” of other theological ideas to help us make a breakthrough in this impasse?

We may also mention that what we are seeing here is that economics is impregnated with its own philosophy – its own weltanschauung – which was largely fixed in the milieu of the 18th century, and in relation to the problems that 18th century society faced, when it broke off from philosophy to become a subject in its own right. Unlike law, economics has not developed its own branch of philosophical reflection, a few notable thinkers notwithstanding. To change our thinking, we need to change our philosophical presuppositions, allowing us to think in a different way.

The twentieth century philosophical school known as personalism tried to do just that; forged in the 1930s, in a context not too distant from our own, born out of the Aristotelian-Thomistic tradition, and taking into account modern developments, it maintains that we are both individual and “personal”, meaning intrinsically relational (using the idea of the persons of the Trinity as inspiration, and on the basis of the biblical affirmation that we are made “in the image and likeness of God”). This may sound strange initially, but we can make two comments here which make it seem less so. Firstly, we are used to thinking about human beings in two dimensions – we use terms like “matter and spirit” or “mind/soul and body” to describe them. We recognise that human beings have both a material and a non-material component – the innovation in personalism is to see the non-material component as intrinsically relational. Secondly, we have other theories that put together two elements that seem contradictory: think about the wave-particle duality of light.

As individual exemplars of the animal species homo sapiens sapiens, we are survival-oriented; we experience ourselves as needy, and others can be competitors with us for scarce resources (including positions in hierarchies). In relating to others as individuals, we aim to satisfy our individual needs; our relationships with others are functional or instrumental to those objectives (we can model such relationships as contracts). And the same rule applies to us that applies to all animal groups: the good and the survival of the group takes precedence over that of the individuals that make it up. This would seem shocking to the kind of individualism we have in economic theory. But in personalism we find our freedom in a profound sense in our other dimension, in our being persons.

As persons, we are not parts of anything; we are whole and unique (we could say that we are each like our own species in our own right). Since Christianity is monotheistic, the persons of the Trinity become themselves in relation to each other – we know that human beings cannot become themselves without relationships with other human beings either. It is as persons, in relation with others, that we become truly ourselves and truly free. Since the immaterial dimension of the human being is not subject to material limits, as persons we have an abundance to share, overflowing to others. We are curious to know and to understand, and we search for friendships and other kinds of relationship that are valuable in themselves (even if they may also be useful to us as well – that is not excluded, but it is not what motivates us to form this kind of relationship). As persons, we can pursue shared objectives with other persons, developing a shared output or good. Friendships themselves are a kind of shared output or good from being and doing together with our friends. As persons, we have an eternal destiny, and so our personal good is not subject to the common good of this world. Therefore, our knowledge cannot be dictated to us – no “Marxist-Leninist biology”; I cannot be forced to marry this person or that person; I am free to choose the direction of my life (vocation). In war, states protect the lives of their combatants as much as possible; one has to volunteer for a “suicide mission”, meaning that one freely chooses to lay down one’s life.

The crucial thing to recognise in personalism is that we are both individuals and persons at the same time and all the time – so all our relationships are “dual”: we relate to others both as individuals and persons.

Personalism allows us to build on individualistic theories – it does not say they are wrong, only that they are incomplete, partial, reductionist and therefore misleading. We could add that we can now see they are unsustainably misleading in relation to the problems we need to resolve today.

Can this idea of the human being, as individual and person, inspire us to find a way to bring our relationality into our economic theories and models? I am not sure, but I think we might be helped in this by bringing in the next idea.

Duality: Common good and personal good

Let’s think about what happens in a business. According to individualistic thinking, a business is a “nexus of contracts” through which each stakeholder gains what he or she wants. Personalism can think about the business as held in common in the relationships between the people who make it up. The business has a central objective to be achieved (what today is increasingly called its “purpose”) and all those involved in it “participate” in achieving that objective. In doing so, they create a result in which they also share or participate – what classically would be called a “common” good, but which we could also call a “participated” good. Part of that result (such as the financial part) can only be shared between them by “allocation” – cutting it up like a pie and sharing out the pieces - while other parts are “naturally” shared, or shared without diminishment, including policies of various kinds, but especially the human development that takes place as part of business activity. I think we can see the analogy here between personal and individual and participated and allocated goods. We can also see that by sharing in the activity of the business and creating a shared output, held in the relationships (most importantly, the business itself) we can then allocate parts of that output to each participant, recognising their individual needs. Legal systems think of the business as a body, or “corporation”, which fits better with this kind of thinking than the “nexus of contracts” idea. And day to day experience, I think, is better captured by it.

The result created by the business consists of two types of thing: firstly, there are products, services, and profit – objective things that we can see, measure and improve – then there is the development that the participants achieve through their work. We make ourselves in our work, as well as things external to us. Human development is good in itself, whereas the products, services and profit are good as means to something good in itself (we pity someone who lives only to get more money). So here we see another duality – the business is producing both instrumental, or “foundational”, goods, and intrinsic or excellent goods.

The final step in thinking about the goods created by the business is to ask: are they truly good or are they only apparently good? Apparently good may look good at the time, but others outside the business, or over time the businesses themselves, may see that that is not the case. Businesses that grab land from indigenous populations, often with the connivance of governments, do it because they think it’s good for them, but the rest of us can see that this is not so. After a few hundred years of industrialisation, we now see that our carbon-based energy systems are only apparently good. It is pretty easy in an economic system to produce only apparently good things, since we are always looking to innovate, to produce something that is new and therefore untested. The only way we can really deal with this problem is to keep asking ourselves the question – is what I want to do really good? – and to keep developing ourselves (through knowledge, listening to traditions of wisdom and faith, listening to excluded voices) to be able to answer that question more and more profoundly and completely.

So we can see that there is a consistent duality presented here. The human being is seen as both individual and relational. The business is held in the relationships between its participants, a result of their working together for a shared goal, and produces both participated and allocated goods. These goods are also either foundational or excellent. And the “universe” in which we are operating can either be that of true or apparent good, and may well be a mixture of both.

As I say, I am not sure how we move from this kind of philosophical reflection to mathematical modelling, but the point here is that without the way of thinking that a philosophy can give us, we do not know what we are trying to model mathematically.

Two problems

Let me preface a brief discussion of them by saying that we need social theories that will allow us to address the two big sets of problems we have today. These are systemic (like climate change) and social (like exclusion). We are particularly badly placed to deal with these problems because of our individualistic theories. They do not have the capacity to generate the answers we need. So I think we have to face these two problems, if an approach like personalism is going to do as any good, however difficult it may be to do so. 

Firstly, we need to recognize some basic, shared final ends (not just shared means to get there). Otherwise we can get into some real problems. A glance at the 1990 Human Development Report is emblematic. In the executive summary we find: “Human development is a process of enlarging people’s choices. The most critical of these wide-ranging choices are to live a long and healthy life, to be educated and to have access to resources needed for a decent standard of living. Additional choices include political freedom, guaranteed human rights and personal self-respect”. Here we can see a liberal individualistic mindset collide with a mindset that wants to recognise that we do have some recognisable final goals that count for human development and about which we can agree. The result is that I make an “additional choice” to have my human rights guaranteed! We have to be able to do better than that. Working together on the Sustainable Development Goals may well help in that regard.

There will be enormous resistance to doing this, but, given the problems we must resolve, I cannot see any alternative to it. Furthermore, if we do not face it, we will not be able to knock economic growth off its position as the shared way of carrying forward society as a whole. If we continue to only allow commonality of means, without a commonality of ends, we will always default to the position that the only thing that really counts is making more money (i.e. the means to achieve final goals).

Secondly, we need to find a way to protect human freedom within the common good. As we already saw, personalism can do this by recognizing a life beyond this one. Personal good, therefore, is higher than the common good in this life in so far as it relates to the higher good of eternal life. The common good is higher than personal good in so far as it relates to the good of this world. The good of each human being and the common good, therefore, are in a relation of “reciprocal implication and mutual subordination”. Without these “two levels” of human existence and the common good, it is hard to see how we can create this delicate theoretical balance between human freedom and the common good. If both the common good and the good of each one of us is “on the same level”, then the possibility for people to exercise personal freedom becomes a trade-off against the common good. More freedom for me means less chance to build a common good. We cannot accept this trade-off anymore.