But Woods’ defense of scarcity goes farther, it seems.  He observes that “Samuelson is claiming to set forth not an apodictically true praxeological law, but an empirical generalization”?  So what sort of scarcity is Woods defending and how does he defend it?  He writes, “Since man’s time, his resources, and his body itself exist in finite quantities, any expenditure of these things in the pursuit of some end necessarily comes at the expense of a foregone alternative.  He cannot simultaneously perform or enjoy the fruits of all the ends he wishes to pursue.  Time, for example, is an irreversible continuum; an hour, once devoted to a particular task, is never again available in the service of another task.”  Well, yes, one will not deny any of this.  But is this the notion of economic scarcity as Samuelson expounds it?  That we are finite creatures who exist in time is not a discovery of economists.  The examples of constraints on man’s conduct that Woods mentions have nothing particularly to do with economic activity.  They are facts of man’s existence, indeed of any finite thing, as we were created by God and are necessarily presupposed in any consideration of any subject.  To aspire to anything different is to fall victim to the whispering voice of Satan, “You will be as gods.”  But this was not the concept of scarcity that I was speaking of.

Neoclassical economics considers scarcity as one of the fundamental points of its analysis.  But could we not just as easily begin to construct an economic science by noting the bounty of God in providing goods for mankind and making that the beginning of our analysis?  One of the results of the neoclassical understanding of scarcity is that it absolutely prevents us from distinguishing between needs and wants.   God has not seen fit to provide the human race with a superabundance of pleasure boats.  But He has provided food, usually in abundance if we take the elementary trouble to treat the soil and the waters around us with appropriate care.  Of course, if we treat land and water as a gigantic trash heap or a source of quick profits, then we can hardly expect that God will make up for our criminal foolishness.

In my paper I use the term “economic science” more than once, indicating thereby that I consider economics to be a science, but a social science, or as it has been called, a “human science,” one that deals with human beings and their behavior.  But Dr. Woods takes exception to this usage of mine, saying “Storck uses the term 'economic science' favorably, speaking in footnote three of 'the necessity for a non-deductive economic science of the kind offered by some of the “heterodox” schools of economic thought.'  This claim calls into question just how deeply he has understood the institutionalists and the German Historical School, the traditions of thought he recommends.  Members of these traditions, by and large, did not conceive of themselves as developing an economic science, since they did not believe universally valid causal laws existed in the economic order. . . . For consistency’s sake, Storck should give up trying to argue that there is or could be a 'human' or economic science.  He should instead say, as the rest of his paper indirectly argues, that there is no such thing as science in these areas.”

But what do we mean by a science of economics?  I quote in note number 34 the great Jesuit economist Heinrich Pesch to the effect that economics is a science since it is “a knowledge of things traced to their causes and certified by proofs.”  Pesch’s treatment of economics in the Lehrbuch includes discussions of law, economic history and statistics, as well as human behavior and moral philosophy, but he does not hesitate to call economics as he conceives it a science.  John R. Commons, one of the principal American Institutionalist economists, regularly refers to political economy as a science in his 1934 work, Institutional Economics.  Just as we can speak of sociology as a science or of political science, without asserting that we can draw up strict causal laws in these areas, so in probably any attempt to study economic behavior one would make generalizations that could be considered scientific.  Even in history, although the primary data that we deal with are particular and unrepeatable events, one can make certain generalizations such that we often speak of historical sciences.   It is not necessary that we have “universally valid causal laws” in the strict sense, which is what Woods appears to require in a science.

The last part of my paper and of Woods’ reply deals with the so-called Chicago School of economists, whose most well-known representative was Milton Friedman.  Woods suggests that I think that “on methodological grounds Catholics might have prima facie reason to be sympathetic” to this school.  And he helpfully tells us, in a note, that the case is the exact opposite, that “If anything, there may be a prima facie case against Chicago School economics from a Catholic point of view.”  But again, what did I actually say?  I wrote, “It may be objected, however, that the foregoing criticism of mainstream economics does not apply to adherents of the so-called Chicago School” because they claim “a purely empirical basis” for their statements.  Now Woods could not have known that in fact it was one of the peer reviewers who suggested I treat the Chicago School at length, but he might have noticed that my wording “It may be objected” does not imply any sympathy on my part or any suggestion that I find their doctrines even superficially attractive.  In any case, Woods also objects to the Chicago School, and especially to Friedman’s use of abstraction in his famous essay, “The Methodology of Positive Economics,” something which I criticize too.  But Woods goes further and attempts to save the sort of economic deductions which Austrian economists make.  He writes:  “By nonprecisively specifying the existence of these excluded features, as opposed to precisively specifying their nonexistence, such theories need not be 'descriptively false' at all.  Thus when Austrians contend that minimum-wage laws lead to more unemployment than would have existed without them, they are engaged in a nonprecisive abstraction that applies to all cases involving minimum-wage laws, not a precisive abstraction that would apply only to cases in which the minimum wage was a single, isolated factor affecting labor markets.”  Abstraction is the means by which human minds disregard or abstract from non-essential features of things so that they can consider only their essential features, their natures.  So, for example, we need not consider the color of horses when speaking of horses as such, of their nature and essential characteristics.  Any science at all must use abstraction, for otherwise we could speak only of particulars.  But ordinarily when we abstract we don’t mean to exclude the existence of the accidental qualities, simply to ignore them for our present purposes; we know that every horse is of a certain color, but a biologist or even a horse trainer can make general statements about horses without concerning himself with their various colors.  Woods, however, relies upon an article which notes the distinction between nonprecisive abstraction and precisive abstraction.  In precisive abstraction we “cut off or exclude something from a notion” as Armand Maurer explains Aquinas’ use of the term.  In other words, we don’t just ignore its presence, we purposively exclude it, as if we said not only that the color of horses was generally unimportant to a biologist but somehow asserted that horses had no color.   But I don’t entirely understand what this has to do with Wood’s obiter dictum that “when Austrians contend that minimum-wage laws lead to more unemployment” they can make a judgment that is always and everywhere true in contrast to Milton Friedman’s exact same judgment based on his methods.  My discussion of Friedman turned on the question of how those who claim to be pure empiricists can make sweeping statements about any and all cases and how they can as part of their methodology exclude certain data from consideration because it might contradict their preconceived conclusions.  But the essentially deductive nature of Austrian economics again shows up in Woods’ contention that Austrians can make a judgment “that applies to all cases involving minimum-wage laws,” for given the immense effect of cultural and legal institutions on complex human behavior, it is hard to imagine asserting once and for all of the effect of minimum-wage laws on employment.

The purpose of my paper was to show that the popes, in their teaching on economic morality, incidentally make use of a kind of economic analysis very different from that of neoclassical economics, and of Austrian economics to the extent that it shares the former’s deductive nature, and to suggest that there exist other approaches to economics which comport better with the papal statements.  In his reply Woods has chosen to repeat his assertions about the limits of papal teaching as well as to seek to defend Austrian economics.  The former is the more fundamental and important questions, for if the magisterium of the popes must submit to the limits that Woods seeks to impose upon it,  than the popes had better just limit their moral teaching to statements such as “Be Nice” or “Be Good.”  For it is hard to see how moral teaching that concerns itself with the world in which we live can avoid making judgments not only about how we ought to act, but observations about how we in fact do act.  And it is Thomas Woods’ objection to this feature of papal teaching when it impinges upon his understanding of the realm of economics that constitutes his fundamental error.  With regard to Austrian economics, Dr. Woods has to some degree misread my intentions, for as I noted at the beginning of my paper, I was speaking broadly of all deductive kinds of economics, not asserting that the Austrian school was like neoclassical economics in every respect.

With regard to the more fundamental point, the right of the popes to teach in this area and in the manner that they have historically done, there can be no serious debate.  Pius XI’s use of the concept of “social modernism” in his first encyclical, Ubi Arcano, underlies the importance and seriousness of this aspect of their teaching and may fittingly provide the last word.  He wrote,

60. Many believe in or claim that they believe in and hold fast to Catholic doctrine on such questions as social authority, the right of owning private property, on the relations between capital and labor, on the rights of the laboring man . . . In spite of these protestations, they speak, write, and, what is more, act as if it were not necessary any longer to follow, or that they did not remain still in full force, the teachings and solemn pronouncements which may be found in so many documents of the Holy See, and particularly in those written by Leo XIII, Pius X, and Benedict XV.

61. There is a species of moral, legal, and social modernism which We condemn, no less decidedly than We condemn theological modernism.

After several paragraphs in this vein, Woods comes to another point.  He writes: “According to Storck, Catholic social teaching `must necessarily make use of some type of economic analysis.’  Presumably, though, Catholic social teaching could simply instruct the faithful in general moral principles that should guide them in the marketplace: simple honesty and generosity, for instance, and an insistence on mutual consent (i.e., the other partner in your transaction is also a human being with rights, not a resource to be exploited for your selfish benefit).”   In doing so, Woods would reduce Catholic social teaching to mere platitudes.  For example, what is “simple honesty and generosity”?   Must one reveal a hidden defect in an item he is trying to sell?  Does generosity require that one sell an item for less than it is worth?  When does a lack of generosity become a mortal sin?  None of these questions are answered in the type of social teaching that Woods apparently recommends.  And can we imagine what Catholic teaching on sexuality would become if it recommended “simple honesty and generosity . . . and an insistence on mutual consent”?  Make sure you tell your partner whether you’re on the pill or not, be generous in going along, and of course, whatever mutually consenting adults want is ok.  The Catholic Church lives in the real world of men and is not afraid to apply her intellect to the genuine issues and problems that confront us.  That is why her teaching on any moral subject cannot be easily reduced to the simple platitudes that Woods wants.

After this, Woods reverts to the question we have already touched on and asks “how can empirical judgments, which are far removed from faith and morals, be the legitimate province of the popes?”  Of course, true empirical judgments in papal social teaching do not enjoy the same status as their moral judgments.  For example, when Pope Pius XI wrote in Quadragesimo Anno that “'capital' has undoubtedly long been able to appropriate too much to itself,” this statement, as an historical judgment, cannot enjoy the same status as his subsequent dictum that capital ought not to appropriate too much to itself and that workers deserve a living wage.  But if we were to take Woods’ approach to its logical conclusion, we would have to deny the right of popes to make any empirical statement, even about the most obvious things.  When a pope denounces in an encyclical the persecution of the Church in some nation, for example, are we to reply that they have no business making such judgments: that is the province of political scientists and historians—or maybe of journalists!  To Leo XIII, Pius XI, John Paul II and other popes it seemed obvious that in the nineteenth century the worker was oppressed.  I suppose someone could deny that if he really wanted to without being a dissenter.  But what one cannot deny without being a dissenter is that economic oppression is possible and is wrong and cannot be explained away as the inevitable workings of what pose as economic laws.

Then Woods turns to a favorite subject of his, the distinctiveness of Austrian economics and the unfairness of lumping it with mainstream neoclassical economics.  He writes, “Storck never describes his own brand of economics in much detail, but we do learn that it 'does not approximate as much as some might like to the natural sciences.’” And yes, it is true that Austrian economists do not employ mathematics and other methodologies of the natural sciences as do mainstream economists.  But what I was objecting to, and what I continue to object to, is primarily what I call the deductive nature of both schools of economics, i.e., the notion that we can create some kind of model from which we can deduce economic behavior, rather than primarily examining what particular economic behavior has actually occurred.  And Woods, thankfully, provides me with a perfect example of the deductive approach in action in his discussion of CEO salaries.  Incidentally this is another example of Woods’ attempt to snow the reader by his citation of many learned books and articles.

In my paper, then, I criticize Paul Samuelson’s discussion of wage determination solely by the forces of supply and demand, pointing how that in recent years CEOs of failing corporations have received large salaries, bonuses and other rewards even as their companies were going into bankruptcy or otherwise performing poorly.  In support of this I cite among other sources a Business Week article, which explains that the compensation of such CEOs is set by colleagues on the board of directors and has nothing to do with market forces.  Now how does Woods respond to this?  He writes, “Here Storck relies on the old Berle-Means thesis from 1932, which referred to a supposed problem—separation of ownership and control (what we now call a principal-agent problem)—in corporate governance.  The argument is that while the owners, or stockholders, want the firm to be as profitable as possible, management is more interested in posh benefits, perks, and other such rewards that benefit them but hurt the firm. . . . A difficulty for Storck’s argument is that much work has been done on the subject of corporate control since 1932, when Adolph Berle and Gardiner Means articulated Storck’s point in The Modern Corporation and Private Property.  Storck makes no reference to the important work of Henry Manne, whose 1965 article 'Mergers and the Market for Corporate Control' began a sustained reconsideration of the Berle-Means thesis.”  I do indeed plead guilty.  I have not read the important 1965 article by Henry Manne.  But I simply ask the question: can a 1965 article somehow show that certain behavior that occurred in the last ten or fifteen years really did not occur?  The CEOs either behaved in a certain way or they did not.  It is no good to claim that they could not have behaved that way because Henry Manne, thirty or more years ago, made an argument that they couldn’t.  Did Woods really read what I, or rather the news articles I quoted, said?  For example, about Michael Eisner of Disney who “after he failed to clear his bonus hurdle two years running, his board lowered the performance bar, and then . . . he finally cleared it.  An Olympian effort worth $5 million.”  Woods might want to explain this away based on some theory he has read somewhere, but most people look at it and can recognize the truth:  This is nothing but crony capitalism at its worst and puts in question the ability of the law of supply and demand to explain all economic behavior, and in particular the setting of wages and salaries.

But this brings up the larger topic of the place of power in economic relations.  In my article I make the point that Leo XIII and Pius XI assume that those with economic power often oppress those without economic power and that this oppression shows up in particular in determination of wages.  Woods begins, “Storck is correct to observe that what he calls a power relationship in differential bargaining positions can affect the price of something, but he is not saying anything economists do not already know. . . . In the case of bilateral monopoly, for instance, the price is necessarily determined by bargaining, and where the price ultimately comes to rest depends on a variety of factors, including the actors’ respective bargaining skills, the strength of their bargaining positions, and so on.”   But if this is so well-known among economists, then why does their analysis of wages seem to ignore this?  Pope Leo, for example, recognized that if “through necessity or fear of a worse evil the workman accept harder conditions [than a just wage] because an employer or contractor will afford him no better, he is made the victim of force and injustice.”  So does Dr. Woods now accept this?  Does he recognize that unequal bargaining positions can cause outcomes contrary to justice and that someone, either a union or some other kind of subsidiary body or even the state itself (as Pope Leo in some cases allowed) must step in to correct that lack of bargaining balance?  Or is the unequal “strength of their bargaining positions” simply a fact of life that we must live with?  And what about their probably unequal “bargaining skills?”  Such inequality is probably present in most cases of bargaining, given the vast differences among human beings in their intellects and skills.  Were we not exhorted previously to observe “simple honesty and generosity . . . and an insistence on mutual consent”?  But if bargainers are unequal, their consent is not necessarily really mutual, despite appearances.  But no, Thomas Woods does not think workers are exploited.  For he continues.  “Non-economists have often made the more general claim that business, because it is said to be in a stronger bargaining position than labor, can negotiate unjustly low wages, and that wages can be determined anywhere along a lengthy zone of indeterminacy.  Labor economist Charles Baird describes this common view as 'a hoary myth.' For one thing, ever since the introduction of the automobile the average worker has had countless employment choices, and the more choices laborers have, the less 'power' potential employers exercise over them, since the narrower is the zone of indeterminacy.  Second, if business really could bring about abnormally low wages, then labor-intensive businesses, where this wicked exploitation should yield additional profit, should be more profitable than more capital-intensive businesses—but no evidence exists to support this contention.  And if wage determination really were this arbitrary, there would be no reason for skilled workers to earn a premium over unskilled workers.  Firms could pay them both the same pittance.”  Again we have theory over practice and again irrelevancies designed to distract the reader.   Has Woods bothered to check on what wages are actually being paid?   Do the figures largely showing wage stagnation accompanied by productivity increases mean anything to him?  But no, he read an article or a book somewhere that shows how such things are not possible—therefore they are not possible.  There is no exploitation, it is surely an impossibility.  No sensible critic of free-market capitalism, even if he is a “non-economist,” thinks “that wages can be determined anywhere along a lengthy zone of indeterminacy” by businesses.  Of course there are constraints on the behavior of every economic actor.  But to anyone who thinks that businesses do not often succeed in driving wages down, all I can suggest is to spend less time looking at deductive economic arguments and more time looking at wage statistics.

After this Woods looks at one of the historical examples of actual economic activity I discuss in my paper, the efforts of two Catholic priests in Nova Scotia in the 1930's to free the poverty-stricken fishermen from the control of middlemen who were absorbing most of the profits from the sale of the fish and leaving a pittance for the actual fishermen.  Briefly, the priests formed study groups and helped set up cooperatives so that the fishermen themselves learned to send their product directly to market and avoid the middlemen altogether.  This shows, I argued, that those who hold the determining position of economic power reap the rewards and that there is no economic law which dictates who must be in that position of power.  Woods’ response to this is simply bizarre.  “The truth is exactly the opposite.  This is precisely how the market works: such differences in prices are arbitraged away.  This isn’t so much a case of cutting out the middleman as it is an example of people’s natural inclination to arbitrage.”  But there was absolutely nothing of the market in this:  Two priests who had studied and attempted to implement the papal social doctrine that Dr. Woods belittles managed to organize fishermen to take control of their economic situation.  This is not market activity, unless you would want to call things such as union organizing a form of market activity.  This is an example of the solidarity that John Paul II often spoke of and which applies to the realm of economics just as it does in other areas of life and incidentally is a further confirmation of the important role that power plays in determining economic outcomes.  No automatic economic law drove the priests to study papal social teaching or the fishermen to form study groups and cooperatives.  And the laws of economics functioned just as well with the fishermen in control of their product as they had with the middlemen holding the reins of power.  This is how economies work in the real world.

Now my paper was mainly an attack on mainstream economics, and I quote the recently deceased Paul Samuelson more than once as the expositor of its views.  I mention the Austrian school only two or three times and simply as sharing in the generally deductive approach to economic analysis that neoclassical economists take.   My approach is that of Anton Lowenberg, who, writing in the Cato Journal, said “I use the term 'neoclassical’ here very broadly; it includes all theories that are based on the economizing behavior of individual value-maximizing agents.”   By a deductive approach I mean an approach which sets up a model of how an economy works based on a limited examination of actual economic behavior or a cursory examination of human nature and which excludes certain important factors, such as culture or the relative power of different groups in the economy, and thereafter simply deduces how economies are supposed to function based on that model.  Admittedly the Austrian school eschews the attempts of the neoclassical school to use mathematics to make itself seem more scientific, but most observers consider the Austrians to fall under the head of what I call deductive economics and to be closest to the mainstream of all the alternative schools.  Austrians, however, do not seem to like this characterization, and this may explain the tone of Woods’ piece, still more of his strange rant against me, which he delivered last spring at the Mises Institute.

Woods begins his reply by saying that Catholic “supporters and opponents of the market economy often talk past each other.  The difficulty they encounter derives from a confusion over the very nature of economics.  The phenomena that economics touches upon, which include money, banking, exchange, prices, wages, monopoly theory, and many other topics, are themselves replete with moral significance.  But the positive, scientific statements about these phenomena that constitute the discipline of economics are necessarily value neutral.”  This of course is true, but largely beside the point.  For the chief point of my paper was that in the course of their pronouncements about economic morality, the popes necessarily make certain observations about economic phenomena, especially about the behavior of economic actors.   And it would be hard to imagine them doing otherwise.  Thus one of the points of contention is exactly over these “scientific statements.”   Deductive economics claims that economies behave in certain ways and as a result they make certain statements which they suppose to be scientific, while other schools deny this.  The main point of my paper was that the economic analysis which the popes employ in the course of their moral teaching seems to agree more with the latter schools than with the mainstream and Austrian approaches.  So when Woods writes, “Describing the workings of fractional-reserve banking is a positive task, not a normative one.  Discussing whether such a system is desirable is a normative task, and qualitatively separate from explaining the mechanics of that system,” this is true, but only if we are in agreement about how to describe a particular economic phenomenon.  There would probably be little disagreement about his example here, about how fractional-reserve banking operates.  But this is hardly true of all economic behavior or phenomena.

Woods then brings up another irrelevant example.  He writes:  “Frank Knight conceived of capital as a homogeneous unit whose individual processes occurred synchronously. . . . F.A. Hayek . . . conceives of capital as a series of time-consuming stages of higher and lower order. . . . Nothing in the Deposit of Faith even comes close to deciding this and countless other important economic questions one way or the other.”  Fine, but again entirely irrelevant.  Certainly there are points of economics on which no pope would dream of pronouncing—but does it follow that popes can never pronounce on any point of economic phenomena?

After this, Woods makes a statement that goes to the heart of the fundamental question of what competence does the Church have in the area of economics.  “It is of course not 'dissent' merely to observe that the cause-and-effect relationships that constitute the theoretical edifice of economics are not a matter of faith and morals. They simply do not fall within the range of subjects on which a Catholic prelate is endowed with special insight or authority.  Catholic laity cannot head up petition drives against them. They are facts of life. Facts cannot be protested, defied, or lectured to; they can only be learned and acted upon.”  Again Woods is both irrelevant and begs the question.  By definition the popes cannot pronounce outside the area of their competence, nor can they assert something contrary to fact.  I do not dispute that.  But what are the limits of their competence, and who gets to decide?  Thomas Woods?  Orthodox Catholics have protested about attempts to erect a so-called parallel magisterium, e.g., a magisterium of theologians to sit in judgment on the magisterium of pope and bishops.    But here we have a magisterium of economists, competent it seems to pronounce in an area of moral teaching that the popes claim as a legitimate arena for their own teaching.  Woods does not like the fact that I have found what he calls “an obscure paper of mine” in which he wrote:  “The primary difficulty with much of what has fallen under the heading of Catholic social teaching since Pope Leo XIII’s Rerum Novarum (1891) is that it assumes without argument that the force of human will suffices to resolve economic questions, and that reason and the conclusions of economic law can be safely neglected, even scorned.”  But is this not the entire argument in a nutshell?  Who gets to decide about the apparently ironclad “conclusions of economic law”?  Or for that matter, of the conclusions of psychology or of philosophy?

The editors of the Review (with my permission) created a symposium in the journal based on my article, with the chief response by Dr. Woods and four subsidiary replies, Woods and I each selecting two of the respondents.  Although, as I said, my paper mentioned Woods only briefly and hardly adverted to the question of dissent from papal teaching, Woods chose to make that point an important part of his reply.  All this appeared a couple of months ago in the 2009 issue and I was content to let the matter rest there for the time being.  But now Dr. Woods has taken his reply and posted it on LewRockwell.com.  Since he has chosen to widen the conflict, as it were, I am taking advantage of the kindness of the ChroniclesMagazine.org editors to reply to him.

In the first place, before I begin to examine Woods’ article, why is this controversy important?  It is important for two reasons, the more fundamental of which is that if adherents of a certain form of economics are able to relegate certain parts of papal teachings to merely unfortunate expressions of opinion on the part of popes, why stop with economics?  Why cannot adherents of psychology, sociology, philosophy do the same?  Although it is true that the Church has not been given the mission from our Lord of elaborating the principles of any of the sciences that are based on human reason and experimentation, she is in the position of stating when the various human sciences impinge on moral or dogmatic questions.  It is not the business of economics or psychology, at least as conducted by faithful Catholics, to tell the popes that they have strayed beyond their teaching office into other domains.  If the Church cannot say that certain conclusions of the various sciences are sometimes simply wrong, what are we to say to a psychologist who claims that his research shows that sexual promiscuity is necessary for healthy human development?  Or to a philosopher who asserts that it is nonsense to talk of entities such as God or angels and that such words are merely meaningless utterances that refer to nothing real?

The second reason that Woods’ project is so unfortunate is that Catholic social teaching is important, indeed very important.  Although the Church has been teaching in the area of economic and social morality from her beginning, since Leo XIII’s 1891 encyclical Rerum Novarum every pope has seen this explicit attention to the “social question” as a worthy and appropriate exercise of the authority which Jesus Christ entrusted to the Apostle Peter and his successors.  Any Catholic, I would think, who regards the Church as God’s voice in the midst of sinful and fallible mankind would welcome such teaching on the part of the Vicars of Christ.  I am aware, of course, that their exercise of infallibility is limited to the most solemn statements, and that some of their utterances do not even rise to the level of magisterial teaching.  But when we encounter a certain doctrine, the right of the worker to a living wage, for example, repeated over and over again since Leo XIII as the teaching of the moral law, we would be very foolish to look upon this as anything but the exercise of that authority which Pius XII spoke of in his encyclical, Humani Generis.  Pope Pius wrote,

20. Nor must it be thought that what is expounded in Encyclical Letters does not of itself demand consent, since in writing such Letters the Popes do not exercise the supreme power of their Teaching Authority. For these matters are taught with the ordinary teaching authority, of which it is true to say: "He who heareth you, heareth me"; and generally what is expounded and inculcated in Encyclical Letters already for other reasons appertains to Catholic doctrine. But if the Supreme Pontiffs in their official documents purposely pass judgment on a matter up to that time under dispute, it is obvious that that matter, according to the mind and will of the Pontiffs, cannot be any longer considered a question open to discussion among theologians.

So to summarize, a faithful and orthodox Catholic ought to be suspicious of any argument tending to set limits on papal teaching, limits more narrow than those set by the popes themselves, especially when these arguments depend upon some science whose conclusions ultimately rest on man’s fallible reasoning power.  This is not to denigrate reason, but to point out its limits and imperfections and that it is not the final authority for a Catholic on matters of faith or morals.  After this general introduction let me turn my attention to Woods’ article.

The main point I made in my criticism of Woods was that as a Catholic, in fact a Catholic who has made a point of claiming special loyalty to the traditional Magisterium of the Catholic Church, Woods could hardly dissent from the teaching of that Magisterium without creating a contradiction. I refer the reader to my original article for ample citations to the effect that the Popes, whether Thomas Woods likes it or not, have in fact taught authoritatively in the area of economic morality. I find it astounding that Woods can claim they had no right to do so, as they, presumably, were well aware of the issues involved in such teaching, and in fact addressed the very question of the legitimacy of such teaching more than once.

Woods opines that these papal actions are akin to the Popes telling an architect of a church building what materials or building techniques would be best to use, since such an action would involve a judgment about architecture, which is beyond the competence committed by our Lord to his Church. So with economics, Woods asserts, it is beyond the competence of the Magisterium to make the kinds of statements it has made about economic morality. All the Popes can do is to state broad goals—"the workingman and his family to be prosperous"—and then let economists figure out how to achieve that goal. But the two cases are not parallel. Why? Because economic actions are intimately involved with ethics. When Leo XIII teaches in Rerum Novarum that a free agreement between employer and employee is not sufficient to guarantee the justice of a wage, since "there is a dictate of nature more imperious and more ancient than any bargain between man and man, that the remuneration must be enough to support the wage-earner in reasonable and frugal comfort," he is making a moral judgment, although it does indeed touch on economics. It bothers Woods that Pope Leo would say such things. When I pointed out that if a sociologist or a psychologist were to claim that their sciences trumped some teaching of the Church, we would certainly reject their claims, Woods, amazingly, replied, that contrary to a sociologist making a claim on behalf of abortion, "there is nothing intrinsically immoral about a worker and an employer reaching an uncoerced labor agreement." This is amazing, because Woods is assuming the thing he wants to prove. For Pope Leo asserted that there was indeed something "intrinsically immoral" about such an agreement if it did not provide a sufficient wage for the worker to live on. Moreover, and more importantly, notice that Woods says “there is nothing intrinsically immoral” about a totally free wage agreement. Is not this a moral judgment? It is hard to see how economics, whether Austrian or otherwise, could pronounce about the morality of anything. So, perhaps without noticing it, Mr. Woods has strayed into the domain of morals, which is exactly what I claimed from the beginning.

Toward the end of my article I pointed out some economic facts which tended to disprove Woods' doctrinaire attitude toward Austrian economic theory. This part of my argument Woods ignored altogether. But, to take Woods own example, what worker would ever reach an "uncoerced labor agreement" that did not provide him with enough to live on? The fact of the matter is that the supposed freedom provided by free-market capitalism is a pseudo-freedom. Those with economic power will dictate to those without economic power. "Work at this wage or starve." This is the kind of "uncoerced labor agreement" that Woods champions. But in fact, anyone accepting a contract that does not provide for an adequate wage because of "necessity or fear of a worse evil" becomes "the victim of force and injustice"—those are the words of Pope Leo again, not Karl Marx. And there are types of economics which recognize these facts, such as Institutionalism, an economic school which analyzes the economy in terms of legal, social and economic structures and institutions.

But since Woods hardly replied to anything I actually wrote, I will say nothing more and leave my original article as his best refutation. When he replies to my points, both those about ecclesiastical authority and those about economics, then it will be time to say more.

One final note. Mr. Woods, I understand, is a convert. That is all to the good, and I am a convert myself. But perhaps when Mr. Woods was being instructed in the Faith no one thought to tell him that it is the Church Herself which sets the limits to her teaching. Perhaps no one told Mr. Woods that he had to give up his habit of private judgment and simply accept all that the Church believes and teaches. It was formerly the glory of Catholics that upon submission to the See of Peter we accepted the teachings of the Magisterium. No, we did not abandon our intellects, but we recognized in the voice of the Church the voice of One Whose words were always those of eternal life. The logic of a Catholic dissenter, such as Thomas Woods, is impossible. He has conferred the charism of infallibility on Austrian economics, and he himself admits, indeed proclaims, that papal teaching and Austrian economics do not agree. But his difficulty is simply that of many another man who refused to abandon his private judgment. In the past, in the days before the Second Vatican Council, days that Mr. Woods claims he would like to see return, the Magisterium would have made short work of his dissent, if it had ever heard of him. Submit or be excommunicated. The choice has been offered to many another dissenter and heretic throughout the history of the Church. I myself long for those days, for the restoration of authentic and traditional Catholic praxis. But if ever we should be blessed with such a restoration and genuine renewal, I fear that Mr. Woods will have asked for too much. For he would be among the first to feel the healthy discipline of a teaching Church that enforced her doctrines on her members and actually required Catholics to conform their lives and opinions to Catholic teaching.

The latest among those who take this approach is one Thomas Woods, Jr., who argues that Catholic social teaching and economic science are fundamentally at odds, and that it is the former that must yield to the latter. Woods is not shy about stating his position.

The primary difficulty with much of what has fallen under the heading of Catholic social teaching since Pope Leo XIII's Rerum Novarum (1891) is that it assumes without argument that the force of human will suffices to resolve economic questions, and that reason and the conclusions of economic law can be safely neglected, even scorned. . . . This attitude runs directly counter to the entire Catholic intellectual tradition, according to which man is to conform his actions to reality, rather than embarking on the hopeless and foolish task of forcing the world to conform to him and to his desires ["Catholic Social Teaching and Economic Law: An Unresolved Tension," paper delivered at the Austrian Scholars Conference at the Mises Institute, Auburn, Alabama, March 2002, p. 4. The entire paper is available here].

And he dismisses as "perfectly nonsensical" the claim that his position "involves himself in 'dissent' from Church teaching" ("The Trouble with Catholic Social Teaching," lecture delivered at the Austrian Scholars Conference, Mises Institute, Auburn Alabama, March 2004, p. 2.). Why? Because.

In the absence of any attempt to address these issues [i.e., the issues that Woods considers important], it is difficult to see how the economic claims of the social encyclicals can actually constitute authoritative Catholic doctrine binding upon the consciences of all the faithful” ["Catholic Social Teaching and Economic Law: an Unresolved Tension," pp. 33-34].

And he goes on to say:

One hesitates to describe Catholic social teaching as an abuse of papal and ecclesiastical power, but surely the attempt to impose, as moral doctrine binding the entire Catholic world, principles that derive from the popes' intrinsically fallible reasoning within a secular discipline like economics, seems dubious. At the very least, it appears to constitute an indefensible extension of the prerogatives of the Church's legitimate teaching office into areas in which it possesses no inherent competence or divine protection from error [Ibid., p. 35].

This is the question in a nutshell: Thomas Woods believes that certain teachings of Leo XIII, Pius XI, Pius XII, John XXIII, Paul VI and John Paul II, teachings which these pontiffs certainly conceived of as part of their legitimate teaching authority, are wrong because he thinks they contradict the tenets of economics.

Now in the first place, I must agree with Woods, that both cannot be right. If these economic beliefs are correct then the papal teaching is wrong, for truth cannot contradict itself. Otherwise we would be headed toward the notion of a double-truth which was implicit in some of the theories of the medieval Latin Averroists, that is, that the same thing could be true in philosophy and false in theology. But as every loyal Catholic knows, there is not nor can there be any conflict between authentic Catholic teaching and the genuine findings of any human science. Such as thing is not possible.

What can one say in reply to Woods, then? First, that since a whole series of popes has taught certain moral truths connected with economics which they believed was entirely within their competence, it is monstrous for anyone claiming to be a Catholic to argue against this teaching, and second, that what Woods represents as the teaching of economics is in fact simply one economic view among many, and that thus it is not the science of economics that is at odds with Catholic doctrine, but simply one school of thought representing ultimately the fallible reasoning of human beings.

In the first place, then, any instructed and orthodox Catholic will have no difficulty in dismissing Woods' claims at once, even without investigating his arguments. When confronted, for example, with claims by psychologists or sociologists that the findings of their particular disciplines invalidate this or that teaching of the Church, we can know that their claims are not to be taken seriously. Of course, usually it is necessary to refute them in order to show those outside the Church, or those weak in faith, that the teachings of the Church have not been disproven. But in principle, Woods' claims are no different from those made by many another partisan of one pet theory or idea after another. The popes have been quite explicit about their competence to teach in these areas of economic morality. Let us look at just two of their statements.

We approach the subject with confidence, and in the exercise of the rights which belong to Us. For no practical solution of this question will ever be found without the assistance of Religion and the Church. It is We who are the chief guardian of religion, and the chief dispenser of what belongs to the Church, and We must not by silence neglect the duty which lies upon Us [Leo XIII, Rerum Novarum, no. 13].

We lay down the principle long since clearly established by Leo XIII that it is Our right and Our duty to deal authoritatively with social and economic problems. It is not of course for the Church to lead men to transient and perishable happiness only, but to that which is eternal. Indeed "the Church believes that it would be wrong for her to inferfere without just cause in such earthly concerns"; but she never can relinquish her God-given task of interposing her authority, not indeed in technical matters, for which she has neither the equipment nor the mission, but in all those that have a bearing on moral conduct. For the deposit of truth entrusted to Us by God, and Our weighty office of propagating, interpreting and urging in season and out of season the entire moral law, demand that both social and economic questions be brought within Our supreme jurisdiction, in so far as they refer to moral issues [Pius XI, Quadragesimo Anno, no. 41].

Mr. Woods may think that they have overstepped the bounds of moral theology into technical economic questions, but that is not what they thought. When not just one, but even more so many supreme pontiffs teach the same truths and consider that they have a perfect right to do so without this constituting an "abuse of papal and ecclesiastical power," then surely any orthodox and loyal Catholic must accept the popes' own notions of the limits of their teaching authority. As I said above, every dissenter and heretic in the history of the Church elevates some idea of his own, which he feels he has good reason to accept, into a principle higher than Catholic teaching. What makes Woods different from them? If a psychologist or sociologist claimed that his knowledge made it impossible for him to accept Catholic teaching on sexuality, we would dismiss his arguments as worthless, and rightly so. But who is Thomas Woods to set up his own boundaries as to what is and what is not acceptable for the Church to teach? What are his credentials to constitute a parallel magisterium? The Catholic Church has been teaching in the area of economic morality for centuries. Mr. Woods' quarrel is not with a few recent popes but with the entire tradition of Catholic teaching on economic morality.

Lest anyone argue that the Church has never defined infallibly the social doctrines stated in papal encyclicals, we should remember that infallibility extends beyond merely the teachings of the solemn magisterium to the teaching of the ordinary and universal magisterium. (The First Vatican Council, in its Dogmatic Constitution, De Fide, chap. 3, taught: "Further, all those things are to be believed with divine and Catholic faith which are contained in the Word of God, written or handed down, and which the Church, either by a solemn judgment or by her ordinary and universal teaching [magisterium], proposes for belief as having been divinely revealed.") At least some of the contents of the papal social encyclicals, for example, the doctrine of the just wage, would seem to have been repeated enough times so that they qualify as part of the ordinary and universal magisterium. And even those matters which may not rise to the level of the universal magisterium, are by no means optional matters for Catholics. Pius XII authoritatively stated in his encyclical Humani Generis of 1950 the following:

Nor must it be thought that what is expounded in Encyclical Letters does not of itself demand consent, since in writing such Letters the Popes do not exercise the supreme power of their Teaching Authority [Magisterium]. For these matters are taught with the ordinary teaching authority [Magisterio enim ordinario haec docentur], of which it is true to say: "He who heareth you, heareth me"... [No. 20].

And the Second Vatican Council, in its Dogmatic Constitution on the Church, Lumen Gentium of 1964, taught:

[A] loyal submission of the will and intellect must be given, in a special way, to the authentic teaching authority of the Roman Pontiff, even when he does not speak ex cathedra in such wise, indeed, that his supreme teaching authority be acknowledged with respect, and sincere assent be given to decisions made by him, conformably with his manifest mind and intention, which is made known principally either by the character of the documents in question, or by the frequency with which a certain doctrine is proposed, or by the manner in which the doctrine is formulated” [No. 25].

Moreover, when one looks closely at this matter, one will discover that what Woods solemnly proclaims to be the teachings of economics are in fact only the opinions of one particular sect of economists. In fact, the Austrian school, to which Woods adheres, is a minority school of economists. It is true that many neoclassical economists would agree with many of Woods' criticisms, but there are other schools of economic thought whose findings harmonize well with Catholic social thought. Woods himself mentions, and excoriates, the German historical school. There is also the American institutionalist school, and there are others. Woods has no more right to consider his own economic ideas as equivalent to the entire field of economics than a Kantian philosopher has to regard the teachings of Kant as equivalent to the entire field of philosophy. If such a philosopher were to say, "There is a conflict between the teachings of the First Vatican Council and the science of philosophy on the ability of human reason to demonstrate the existence of God," we could easily point out to him that there are other schools of philosophy, such as Thomism, that have no such conflict, and that he is wrong to claim for his own school the mantle of philosophy as a whole. But this is exactly what Woods has done for economics. His own school says this, therefore economics as a whole says this. The faulty reasoning here should be evident. Woods quotes with approval the following statement of Professor William Luckey:

The fact that Catholic economic teaching, put forth as unchanging and required of belief, did not square with what Austrian economists know to be true, has created an agonizing crisis of conscience for such economists ["The Trouble with Catholic Social Teaching," p. 6, my emphasis].

Woods and Luckey have raised the fallible reasoning of a group of economists, a group which does not even command majority opinion within its own discipline, into an infallible voice of truth which they consider to be able to trump the teachings of the supreme pontiffs! Contrary to what Woods continually asserts, to question Austrian economics is not to question the validity of human reason; it is simply to question the validity of certain dubious conclusions reached by one group of men who enjoy no charism of infallibility.

Woods also makes much of the economic teaching of a group of sixteenth and seventeenth-century Spanish theologians who have sometimes been claimed as precursors of Woods's views, or of something like them anyway. There is some reason to question whether this similarity between their views and his own has not been greatly overstated. (I will instance only one example. In his first paper Woods [p. 8] quotes a passage from Juan de Mariana on the folly and evil of a ruler attemping to set a price of a good "in such a way that the legal price should differ from the natural. . . . Men are guided in this matter by common estimation founded on considerations of the quality of things, and their abundance or scarcity." Now "common estimation" was a traditional scholastic way of discovering a just price. Common estimation was the common opinion of men in general as to what was a reasonable price, and though it might in many cases be based in part on factors that included certain market forces, such as the "abundance or scarcity" of the item in question, the important point to recognize is that common estimation and the market price of Austrian or neoclassical economics do not mean the same thing. That is, even if in some cases they might coincide, they do so for different reasons. Moreover, this subject opens up the entire question of what is a market price, since all markets are subject to legal and customary rules, and whether in fact it makes any sense to speak of a market price. Rather, the question is: what market price exists under such and such a legal and social regime.) In addition, I will point out two things. First, if it were the case that these theologians agreed completely with Woods, what would that mean? Absolutely nothing. They have no special status above other theologians, and against the teaching of the popes their views carry no weight whatsoever, any more than the myriad of theologians of today whose views are widely quoted against authentic papal teaching. And secondly, if, as Woods avers, the vicars of Christ have overstepped the bounds of moral theology by their teachings on economic morality, what gives these Spanish scholastics, who were theologians not economists, any particular authority in this field? Is Woods making an argument from authority? If he is it fails, for by his own claims theology has nothing to say on these particular questions. If, on the other hand, he is simply claiming them as intellectual precursors, and appealing to the weight of their arguments, then I do not see any reason why I should specially attend to them, particularly as they (according to Woods) teach contrary to the popes and are no more infallible than any other economic writers.

Woods is especially agitated because he thinks that without his own conception of economics it must cease to be a science. Although I know of nothing in scripture or tradition that guarantees that economics is a science, nevertheless what he says does not necessarily follow. Heinrich Pesch, the great Jesuit economist, whose thought provided the background for the encyclical Quadragesimo Anno, and whom Woods criticizes, strongly defended the status of economics to be a science, but a human and a social science, one that depends at least in part on the free acts of human beings. We are not required to give up the claim that economics is a science if we accept Catholic social teaching.

Although it is not my primary intention to engage in an economic debate with Woods, I must say just a word to show how the economic arguments he makes are far from compelling. The model of an economy which both neoclassical and Austrian economics present, and the economic policies which Austrian economists usually champion, are not the obvious conclusions of economic reasoning as they would have us believe. For economic activity always takes place within a legal, social and technological framework, and the structure of that framework to a great degree conditions and determines the shape which economic activity takes in any particular society. There was no economic reason, for example, why the guilds of the Middle Ages, which controlled the urban economies of Europe and severely limited competition among craftsmen, need have come to an end, and the economy which resulted from the demise of the guilds was largely the creation of a changed intellectual climate, not the result of so-called economic laws. Nor are limited liability corporations, which currently dominate our economy and which were created only in the nineteenth century due to emerging state general incorporation laws, the inevitable products of economic forces, but rather were brought into being by the free acts of legislatures. Market forces always work within a certain framework, and economic outcomes depend more on how these frameworks are structured than on the market forces alone. Thus within broad limits human beings have the ability to structure the way in which they conduct economic activity, and the notion that there is only one way which is sanctioned by so-called economic laws is false. Human beings create their legal and social institutions and can alter them. There is no reason why these institutions cannot be designed or reformed in such a way so as to facilitate the application of Catholic social teaching. (A concrete instance of how market forces always work within an institutional framework is the story of the Nova Scotia fishermen from the 1930s. "Their catch of fish and lobsters was handled by local dealers who in many cases kept the fishermen in a state of peonage. While Maine fishermen were getting about fifteen cents a pound for lobsters, the Nova Scotian fishermen were receiving as little as two cents a pound. All other prices were scaled down in the same ratio. For everything they bought, however, from their scanty food purchases to nets and lines, they paid top prices, with the result that they were invariably bowed down with a load of debts. Appalling poverty, illiteracy, poor health and the worst possible housing conditions existed throughout this section." In order to better their condition, priests from St. Francis College helped the fishermen organize cooperatives. By means of marketing cooperatives they were able to bypass the local middlemen and deal directly with wholesalers in large cities. In their first shipment of lobsters to Boston they received fifteen cents per pound net. The distribution of income before the establishment of the cooperatives was not the result of the operation of economic laws, but rather of the legal and social institutions within which these economic forces operated. These institutions were changed and a new set of institutions was created within which market forces could operate. This is an illustration of the freedom men have to change the framework and thus change the way economic forces operate to bring about a more just distribution of income. See Bertram B. Fowler, The Co-operative Challenge (Boston : Little, Brown, 1947) pp. 128-29.)

Lest any reader be tempted to think that I am too exercised over this topic, and my disagreement with Woods is simply a small matter over different interpretations of Catholic social doctrine, let me quote from Pope Pius XI. In his first encyclical, Ubi Arcano of December 1922, Pius introduced the notion of "social Modernism." He spoke of those Catholics who give lip service to doctrine concerning the social order, including "Catholic teaching concerning . . . the rights and duties of laborers . . . in industry" but who "by their spoken and written word, and the whole tenor of their lives" disregard and belittle this teaching. Pope Pius says of this, "In all this we recognize a kind of moral, judicial, and social Modernism, and We condemn it as strongly as We do dogmatic Modernism." I am sure that Thomas Woods would not like to be placed among the dogmatic modernists, but Pius XI definitely places him among the social modernists. And thus that saintly and traditional pontiff condemns Thomas Woods' views, condemns them "as strongly as We do dogmatic Modernism."