The Economics and Ethics Program, under the direction of EPPC Fellow John D. Mueller, studies the relation of modern economic theory to its Judeo-Christian and Greco-Roman origins, its practical application to personal, family, and political economy, and the interaction of economics, philosophical worldviews, and religious faith. The program aims to foster economic policies—in areas ranging from the tax code to retirement pensions to health care—that recognize and promote the family as the central social institution of American civilization.

History |  Starting in 1972, economics departments at major American universities abolished the requirement that students learn the history of economics before being granted a degree. This accounts for much of the confusion in public discussion of economic policy. Today’s neoclassical economic theory rightly develops three elements that can be traced to Aristotle and Augustine (the theories of utility, production and exchange). But it neglects the most fundamental element (final distribution), and poses models of economic behavior that fail to capture the realities of personal, family, and political life. [Click here to read articles related to the development of economics.]

Personal economy | Modern economic theory inaccurately posits individuals who always act selfishly (even when being “altruistic”) and narrows all economic choice to the means of self-gratification. Though Augustine originated the theory of utility—which describes the choice among scarce means inherent in all economic action—his theory of personal gifts explained that we always begin with the prior choice among persons (whether ourselves, family members, friends, fellow citizens, or other persons) as beneficiaries or “ends” of our actions, which we express by our gifts to those persons. [Click here to read articles related to personal economy.]

Domestic economy | Modern economic theory begins by inaccurately assuming hypothetical sexless adult individuals who interact solely by means of explicit or implicit exchanges. Aristotle’s and Augustine’s analysis of human society begins with the family, which is necessarily the basic social and economic unit because it is the smallest unit capable of maintaining and reproducing itself. “The first natural bond of human society is man and wife,” Augustine noted, from which follows “the connection of fellowship in children.” Each family is founded and sustained by personal gifts, produces human and nonhuman resources, and administers them by its own unique rules of distributive justice. The modern business firm is a relatively recent offshoot of the family that specializes in reproducing, maintaining, and exchanging its property. The modern non-profit foundation specializes in the family’s charitable activities beyond the household. [Click here to read articles related to family economy.]

Political economy | Humans are not only “rational” and “conjugal” but also “political animals,” Aristotle noted; because while the family is necessary for life, human government is necessary for living well. Aristotle’s exploration of the two forms of justice, “justice in exchange” and “distributive justice,” remains the indispensable starting point for addressing basic questions of economic fairness. Their neglect has produced the loud but sterile dispute between individualists (who deny the reality of distributive justice) and collectivists (who deny the reality of justice in exchange). “From each according to his ability, to each according to his needs” is a fairly accurate description of the family—but not the government, to which Karl Marx mistakenly applied it. [Click here to read articles related to political economy.]

Divine economy | While good government is a blessing for saints and sinners alike, Augustine noted, it must not be mistaken for the City of God, whose goal lies beyond this life. Yet from Augustine’s “divine trace of equity stamped on the business transactions of men” to Adam Smith’s famous “invisible hand” of Stoic pantheism, economics has always been essentially a theory of providence, divine as well as human. Such metaphysical and religious questions are unavoidable especially in the United States, whose founding document declares that “all men are created equal and that they are endowed by their Creator with certain inalienable rights.” [Click here to read articles related to divine economy.]

In the realms of personal economy, family economy, political economy, and divine economy, the Economics and Ethics Program will draw on the insights of Aristotle and  Augustine to develop a fuller account of economics in the modern world and to promote policies that serve the family.