Ethics and Economics

Contributions to Economics

Peter R. Haiss Cultural InDuences on Strategic Planning 1990. ISBN 3-7908-0481-9

Manfred KremerlMarion Weber (Eds.) Transforming Economic Systems: The Case of Poland 1992. ISBN 3-7908-0585-8

Marcel F. van Marion Liberal Trade and Japan 1993. ISBN 3-7908-0699-4

Hans SchneeweiBI Klaus F. Zimmermann (Eds.) Studies in Applied Econometrics 1993. ISBN 3-7908-0716-8

Gerhard Gehrig! Wladyslaw Welfe (Eds.) Economies in Transition 1993. ISBN 3-7908-0721-4

Christoph M. Schneider Research and Development Management: From the Soviet Union to Russia 1994. ISBN 3-7908-0757-5

Bernhard Bohml Lionello F. Punzo (Eds.) Economic Perfonnance 1994. ISBN 3-7908-0811-3

Michael Reiter The Dynamics of Business Cycles 1995. ISBN 3-7908-0823-7

Michael Carlberg SustainabUity and Optimality of Public Debt 1995. ISBN 3-7908-0834-2

Lars Olof Persson/Ulf Wiberg Microregional Fragmentation 1995. ISBN 3-7908-0855-5

Andreas Foerster Institutional Analysis of Development Administration 1995. ISBN 3-7908-0853-9

Ernesto Felli/Furio C. Rosati! Giovanni Tria (Eds.) The Service Sector: Productivity and Growth 1995. ISBN 3-7908-0875-X

Giuseppe Munda Multicriteria Evaluation in Fuzzy Environment 1995. ISBN 3-7908-0892-X

Boris Maurer R&D, Innovation and Industrial Structure 1996. ISBN 3-7908-0900-4

Giovanni GalizzilLuciano Venturini (Eds.) Economics of Innovation: The Case of Food Industry 1996. ISBN 3-7908-0911-X

David T. Johnson Poverty, Inequality and Social Welfare in Australia 1996. ISBN 3-7908-0942-X

Rongxing Guo Border-Regional Economics 1996. ISBN 3-7908-0943-8

Oliver Fratzscher The Political Economy of Trade Integration 1996. ISBN 3-7908-0945-4

Ulrich Landwehr Industrial Mobility and Public Policy 1996. ISBN 3-7908-0949-7

Arnold PicotlEkkehard Schlicht (Eds.) Firms, Markets, and Contracts 1996. ISBN 3-7908-0947-0

Karin Peschel (Ed.) Regional Growth and Regional Policy Within the Framework of European Integration 1997. ISBN 3-7908-0957-8

Thorsten Wichmann Agricultural Technical Progress and the Development of a Dual Economy 1997. ISBN 3-7908-0960-8

Ulrich Woitek Business Cycles 1997. ISBN 3-7908-0997-7

Michael Carlberg International Economic Growth 1997. ISBN 3-7908-0995-0

Massimo Filippini Elements of the Swiss Market for Electricity 1997. ISBN 3-7908-0996-9

Giuseppe Gaburro (Ed.)

Ethics and Economics Catholic Thinkers in the 20th Century

With 9 Figures

Physica-Verlag A Springer-Verlag Company

Series Editors Werner A. Milller Peter Schuster

Editor Prof. Dr. Giuseppe Gaburro University of Verona Institute of Economic Sciences Via dell' Artigliere 19 1-37129 Verona, Italy

ISBN-13: 978-3-7908-0986-2

Cataloging-in-Publication Data applied for Die Deutsche Bibliothek - CIP-Einheitsaufnahme Ethics and economics: catholic thinkers in the 20th century / Giuseppe Gaburro (ed.). - Heidelberg: Physica-Verl., 1997

(Contributions to economics) ISBN-13: 978-3-7908-0986-2 e-ISBN-13: 978-3-642-46998-5 DOl: 10.1007/978-3-642-46998-5

This wode is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broad­casting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Physica-Verlag. Violations are liable for prosecution under the German Copyright Law.

© Physica-Verlag Heidelberg 1997

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Softcover Design: Erich Kirchner, Heidelberg

SPIN 10558932 88/2202-5 4 3 2 1 0 - Printed on acid-free paper

To the memory of my aunts Angela, Corinna and Noemi

FOREWORD

The first part of this volume is a collection of six papers presented during the International Conference «Towards an Economic System at the service of MaID>, organised by the Institute of Economic Sciences of the University of Verona in collaboration with the Institut International Jacques Maritain. On that occasion some distinguished European Catholic thinkers discussed the relationship between ethics and economics.

The second part shows has been originated in two World Conferences of Social Economics organised by the "Association for Social Economics" at the Creighton University, Omaha, Nebraska, and at the University of Verona. This part comprises a first attempt to approach the basic assumptions of the political economy in the light of Christian social ethics.

I would like to thank Professor Siro Lombardini, Past President of the Societa !taliana degli Economisti, for writing the preface, and all the authors for their qualified contributions in the realisation of this volume: Professor Paolo Pecorari, University ofUdine, Professor Francesca Duchini, Catholic University of Milan, Dr. Antonio Magliulo, University of Florence, Father Fran~ois Malley o.p. of Economie et Humanisme, Lyon, Professor Gilbert Blardone, PNUD, United Nations, Geneve, and Professor Giovanni Tondini, University of Verona.

Thanks are due also to Giancarlo Cressotti, one of my best students, for his valuable co-operation.

My sincerest gratitude must go to Marilena Garofalo, Laura Susannah Jinadu, Giovanna Paolillo, Helene Poole, Gianna Zuliani Kirtley and my children Cosima, Gabriele, Zeno. I am indebted to Edizioni Dehoniane Roma, for permission to reproduce and translate parts of my prevoiusly published articles.

The financial support by MURST, Italian Ministry for University and Scientific Research, and by Consorzio Studi Universitari di Verona is gratefully acknowledged.

More generally, I am indebted to all my collegues of the Faculty of Economics of the University of Verona and my students, who have collectively taught me whatever I have learned about communicating the fondamentals of ethics and economics, and to my wife, Lisa, whose intelligence and patience have made this undertaking possible.

University o/Verona, January 1997

Giuseppe Gaburro

PREFACE

by Siro Lombardini

The volume edited by Giuseppe Gaburro is comprised of two parts: the first one analyses the importance of some Catholic thinkers and concerns the basic problem of the relation between economics and ethics; the second one, starting from a particularly effective scheme, shows the opinion of the Church about the social problem as stated in some documents. It results in a wide-ranging and up-to-date work. This Preface will explain some controversies as for the relation between ethics and economics; it thus enables the reader to estimate the vitality of the thought of the Church in essential moments, but in a clear and effective continuity.

The first subject regards the assumption which can be found in many currents of neo-classical economics, that is, to consider the ethical problem a personal question; this is important as it concerns the preferences an economist should presume. Already in the 30's Francesco Vito anticipated modern arguments by refusing the prevailing thought of the time. The following three points show the weakness of such an assumption: a. the individual's preferences cannot be referred to as a fact of the single person

because their evolution is influenced by governmental choices, in particular regarding education and information, and by strategies of enterprises Gust think about the influence exerted by advertising).;

b. man cannot always achieve his interests through an atomistic behaviour; in some conditions - e.g. in the case of the so-called prisoner's-dilemma - co-operation is the best and only way to realise one's interests. Facts actually belie the identification of the concept of rationality with that of pursuing personal interests through an independent behaviour. Solidarity contributes to define the rational behaviour in many conditions, as results also from the application of the game theory to the study of the problem of choice. Some steps in economic policy are possible thanks to some kind of solidarity: unfortunately in the United States it was easy to obtain such solidarity on occasion of the Gulf War; it is difficult however to imaging this leading to a solution of the debt problem in third world countries as it would be unlikely to create favourable results for the USA in the long term;

c. economists could not ignore the problem of establishing an assessment criterion of the economic system conditions. The different forms of utilitarianism are the most widespread principles in opposition to the Rawls' model of social justice. All these models require some invention (like some concepts of nature state or some choice procedures of institutions and basic rules by an impartial decider), in order to bring the ethic problem to a matter of choice it is necessary to justify according to a rationality concept that is similar to that accepted by social

x

sciences, in particular by economics. An exception seems to be the statement of Habermas, that aims towards an open behaviour for restoring and preserving the vital world; however, this concept shows similarities to some notions of nature state. It is another falsehood that, together with the impossibility of separating the communicative way of acting from the behaviour for interests, makes Habermas' attempt as weak as the other concepts mentioned above. Habermas has underlined the importance of some mass media - money and power - within the technicalization of the vital world. The problem is clearly more complex, because the social system suffers processes of disintegration, which urge to exercise power so to endanger democratic freedom.

I do not mean to dwell upon the problems that result from the effort to fix the ethic question to a rationality concept similar to that of social sciences, or to an ideal state I thought to be possibly opposed to the present ones, for estimating them. I just want to notice that behaviour is ethically important only when it results from a conscious moral commitment; the moral commitment leads to a rationality that I elsewhere l described as a primary and that is justified only by the choice of considering the others at one's same level. For the Christian this choice represents an important and necessary moment for his religion. It is interesting to point out an aspect of the utilitarian and contract theories, that is significant to found morals. It is often stressed that the essential moment must be seen not in the age of result, but in the action. We talk about economy of well­being, but we actually think about the economy of well-having. As the social encyclicals remind us, in a real economy of well-being, man is Homo Faber before being consumer. The free enterprise is explained as a product of Homo Faber. Evolution is also measured according to the developments of the organising and professional education systems, this also increase the chances even for workers to realise one's creative abilities. This need can even be partly found in some developments of the economic theory, that stress human capital.

The crisis of East economies is thought to have underlined the success of market economies. These can be of many kinds: the Japanese one is characterised by an effective combination of co-operation and competition, on the other hand the American economy is essentially determined by Darwinian theories; China is possibly working out a new form of market economy. However Western economies are in a state of crisis. It will not be possible to overcome the crisis reducing governmental role to currency control and to tax policy thought in macroeconomics terms. In fact history teaches us that every evolution process starts from some market enterprises, which tum out to have been taken by the government or by companies acting on the market. The 80's boom in USA would not have taken place if the federal government had not launched space exploration and rearming projects that enabled a research evolution and the adoption of development strategies in some key sectors.

I In La morale, I'economia e lapolitica, UTET, Torino, 1993.

XI

We cannot ignore the problem of the target for the economic system which the State must set. Today the problem of supportable development is much considered in the light of the danger of an ecology crisis. For the first time mankind is in danger from other irreversible crises: genetic manipulation could represent the crisis of man. The primary rationality requires that humanity inside every man is considered within the universe that Adam received from God for its preservation. The danger of death to mankind should now encourage the acknowledgement of cosmic values. Morals become a challenge to our thought.

Working out an abstract justice is not a sufficient answer to this challenge. It is easy to demonstrate that the poor, or most of them, are responsible for their condition. Calculation is not enough to win the moral challenge. Without love, morals tum out to be a labyrinth we will never fully explore and we could be trapped in. The Gospel shows us a reference point: the poor. The poor cannot pay back, and sometimes he is even unpleasant and often unknown. The reason of this reference point can be understood thinking about the story of the Good Samaritan as Father Davide Turoldo does. The first character of the story is not particularly described. He is just a man walking from Jerusalem to Jericho; he meets the brigands that rob and hit him, leaving him half-naked. Father Davide wonders: «Who was he? He could be a Hebrew or a Samaritan; he could be a German or an African, or a Chinese or a Russian. He could be rich or poor, because also a poor man can be further robbed and bared; it never rains but it pours, as people say. He could be honest or a brigand, because it sometimes happens that a brigand attacks another brigand, that gangs assault and kill each other, like the Mafia bands. He could be a worker, a communist, an anarchist, a terrorist, and so on. All this has no importance, because we want always to see the identity card of a man in need before helping him, and we decide if he is worthy of it or not; but Jesus is not interested in this: the only important thing is that he is a man»2. The forsaken man remembers the poor, that have no power, cannot speak and are abandoned, as Cardinal Pellegrino said. The Gospel doesn't say the name of this man, therefore it can represent «that multitude of poor that is starving somewhere in the world today and others who have their dignity and honour humiliated and hurt, others who are hit, tortured and left dying: no-one helps them, in particular those people who are respected, like religious men or public order officers: men of the res-publica, as no name is givem)3. We can go from the poor back to the meaning of ethics. I will quote the last thought of Italo Mancini in his book L 'ethos dell'Occidente: «Think, weigh and judge. His philosophy is not enough, because the practical judgement is not the result of a syllogism. There is the need for a practical principle and for the ethos as habit and discernment made blood and flesh of society. I would like to mention at least one ofthese judgement rules that seem police-like or related to the "established order", that should rule life with others. Levinas mentions it in

20AVIDEMARIA TuROLDO, Anche Dio e infelice, Piemme, 1991, p. 80. 3Ibid., p. 81.

XII

one of his Talmudic readings, interpreting the text of Rabbi Eleazar that offers a method to find a thief. "Go about at four [ten o'clock a.m.] to a cafe. If you see someone drinking wine half asleep and with a glass in is hand, ask about him! If he is a learned man, it means he woke up early for studying; if he is a day worker, it means he went to work early; ifhe is a night worker, he may have made needles and does not work during the day, but at night; if he is not any of these men it means he is a thief and you can arrest him". It is clear that man has the task to build the universe working and studying; whoever does not fulfil this duty diverts his mind, and this diversion, the divertissement (pascal represents the corruption of human nature in this way) is evil: The torah commentator sees the cafe as the place of evil. I end my book with a remark of Levinas that may sound almost ironic: "The cafe is an open house at the same level of the street, a place of easy sociality without mutual responsibilities. One enters with no need. One sits down with no tiredness, drinks with no thirst. Rather than remaining in one's room. You know that all our misfortunes come from our incapacity to stay alone in our room. The cafe is not a place, but a non-place for a non-society, for a society without solidarity, with no future, with no commitments, with no common interests: the society of game. The cafe, the gaming house, is where game gets into life breaking it up [ ... ]. On the screen of the cinema a common subject is suggested, as well as on the stage of the theatre: in the cafe there is no subject. You stay there, at your own table, in front of your cup or glass, you relax till the point you have nothing to do with anyone or anything; by going to the cafe all the atrocities and injustices of a lifeless world become bearable. A world like a game, from which anyone can withdraw and live just for himself, the place of forgetfulness - the oblivion of the other - that is what cafe is. [ ... ]. Not to build the world means however to destroy it". The futility of the cafe as ontological more than sociological category becomes the name of the non ethos of the future and of the ethos with no future. That is exactly the opposite of what we were looking for» 4.

4 I. MANCINI, L 'ethos dell'Occidente, Marietti 1990, pp. 610-611.

TABLE OF CONTENTS

Preface by Siro Lombardini .................................................................... . page IX

Introduction by Giuseppe Gaburro ......................................................... . 1

PART ONE

CATHOLIC THINKERS AND ECONOMIC SCIENCE:

A RICH RELATIONSHIP FOR THE DEVELOPMENT

OF SOCIAL ECONOMY

CHAPTER I Ethics and Economics in Giuseppe Toniolo

by Paolo Pecorari

1. Introduction....................................................................................... 15

2. Economic Science.............................................................................. 16

3. Ethical Goals ..................................................................................... 16

4. Toniolo's Historicism......................................................................... 17

5. Intrisicalness of Ethical Elements to Economic Laws.......................... 18

6. Capitalism.......................................................................................... 18

7. The Catholic Reformation.................................................................. 19

8. Man, Intermediate Bodies and Profit.................................................. 20

9. Economic Science and Economic Activity.......................................... 21

Giuseppe Toniolo: Biography............................................................ 22

Complete Works................................................... 22

Writings on His Life and Works ........................... 23

CHAPTER II Ethics and Economics in Francesco Vito

by Francesca Duchini

1. Introduction....................................................................................... 25

2. The Crisis of Economic Orthodoxy in the 30's ................................... 26

3. Francesco Vito's Formation ............................................................... 27

4. The Problem of Method ... ..... .... .... ....... ....................... ... ...... ...... ..... ... 27

5. Economic Science.............................................................................. 28

XIV

6. Goals and Means............................................................................... 29

7. Economic Neutrality .......................................................................... 30

8. Economist's Responsability................................................................ 32

9. Conclusions....................................................................................... 33

Francesco Vito: Biography.............................................................. 34 Writings................................................................. 34 Writings on His Life and Works.............................. 36

CHAPTER III Ethics and Economics in Ezio Vanoni

by Antonio Magliulo

1. Introduction....................................................................................... 37

2. The Means-Goals Scheme at the Basis of the Discussion

about Ethics and Economics.............................................................. 38

3. Ezio Vanoni's Approach: Economic Plan and Social Justice............... 42

4. Conclusions ....................................................................................... 49

Ezio Vanoni: Biography.............................................. ..................... 50

Writings...................................................................... 50 Writings on His Life and Works.................................. 51

CHAPTER IV Ethics and Economics in Father L.J. Lebret

by Fram;ois Malley OP

1. Introduction....................................................................................... 53

2. First Step: The Discovery of Unjust ice. The Movement ofSt. Malo.. 54

3. Second Step: The Period after the World War 11............................... 56

4. Third Step: Fight for Development................................................... 60

5. A Carnal Economy... ......... ... ... ... .... .... ............ ......... .... ...... ...... .... ....... 65

Three Texts by Louis Joseph Lebret ................................................... 65

Father L. J. Lebret:Biography........................................................... 69 Writings............................................... ..................... 69

Writings on His Life and Works................................ 70

xv

CHAPTER V Ethics and Economics in Fran~ois Perroux

by Gilbert Blardone

1. Introduction....................................................................................... 71

2. Man Is the Sense of Economy ............................................................ 72

3. The Foundations of the Theory ofFran~ois Perroux........................... 73

4. Culture at the Basis of Economy ........................................................ 74

5. Stop Subordinating Man to Means. .... ..... ... ... ....... ....... ... ... ....... ... .... ... 75

6. Solvency Limits ................................................................................. 75

7. The Invention of a Participation Economy.......................................... 76

8. Market Economy and Its Three Actors............................................... 76

9. Towards the Human Economy of the 21st Century............................. 79

Franr;ois Perroux: Biography............................................................ 80 Writings............................................................... 80 Writings on His Life and Works............................ 81

CHAPTER VI Ethics and Economics in Guido Menegazzi

by Giovanni Tondini

1. Introduction....................................................................................... 83

2. Subjective and Objective Aspects of Man........................................... 83

3. Fantappie and the Method of Dual Experimentation ........................... 84

4. Menegazzi and the Method of "Double Duality" ............................... 85

5. Man's Balance ................................................................................... 85

6. The Objective Functional Circuit of Subjects of Social Life................ 88

7. The Principle of Mutual Strengthening ............................................... 91

8. Scientific Planning.............................................................................. 92

9. Conclusions....................................................................................... 96

Guido Menegazzi: Biography....................... ..................................... 97

Writings............................................................... 97 Writings on His Life and Works............................ 98

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PART TWO

A PERSONALISTIC APPROACH TO POLITICAL ECONOMY

BASED ON CHRISTIAN SOCIAL ETHICS

by Giuseppe Gaburro and Giancarlo Cressotti

CHAPTER I The Social Doctrine of the Church

and the Personalistic Approach to Economics

1. Economics and the Social Doctrine of the Church.............................. 101

2. A Personalistic Approach to Economics............................................. 101

3. Economy between Efficiency and Solidarity....................................... 103

CHAPTER II Limited Resources and Overcoming of Scarcity

1. Economic Science and Limited Resources.......................................... 107

2. Resources Variability and Human Resources...................................... 108

CHAPTER III The Economic System and its Personalistic Goal

1. The Economic System....................................................................... 109

2. Capitalistic and Plan Socialist Economic Systems............................... 109

3. The Economic System Consistent

with the Social Doctrine of the Church............................................... 111

4. The Goal of the Economic System ..................................................... 112

CHAPTER IV Private Property, Trade, Market

and Function of the State

1. Universal Destination of Goods

and Acceptance of Private Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115

2. Development of Economic Relations: Trading.................................... 116

3. The Role of the Market...................................................................... 117

4. Prices Control.................................................................................... 121

5. The Subsidiary Function of the State........... .............. ......................... 122

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CHAPTER V Enterprise and Private Initiative

1. The Importance of Private Initiative................................................... 123

2. The Goal of Private Enterprise ........................................................... 123

3. Nature ofProfit.................................................................................. 124

4. Enterprise as a Community................................................................. 126

5. Enterprise in the "Centesimus Annus" ............................................... 127

CHAPTER VI Labour in the Modern Technological,

Economic and Social Context

1. The Economic and Technological Setting of Enterprise and Worker... 129

2. Personal Aspect of Labour and Technological Innovations ................. 130

CHAPTER VII Unemployment

1. Causes of Unemployment......................................... .......................... 133

2. Unemployment, Efficiency, Solidarity.... ... .... ... ........ ........................... 134

3. New Technologies and the Problem ofEmployment........................... 135

4. Overcoming Unemployment............................................................... 136

5. A New Employment Culture .............................................................. 139

CHAPTER VIII Personalism, Economic Democracy and Freedom

1. Participation and Economic Democracy............................................. 141

2. Overcoming of the Current Organising and Productive Schemes ........ 142

3. Involvement of Workers............................................. ........................ 143

CHAPTER IX Labour and Participation

1. Participation in a Company................................................................ 145

2. Sharing Profit and Loss Outcome and Company Efficiency................ 145

3. Participation in Profit and Loss Outcome: Effects on Employment ..... 147

4. Problems Connected with Participation .............................................. 149

5. Capital Sharing .................................................................................. 153

XVIII

CHAPTER X Consumption and Satisfaction of Needs

1. The Real Meaning of Consumption.................................................... 155

2. Principles of Consumer Sovereignty and Rationality........................... 155

3. Ethics and Consumption.................................................................... 156

4. Consumption as a Cultural Factor...................................................... 157

5. A Really Rational Consumer.............................................................. 160

6. Consumption Sobriety ....................................................................... 160

7. The Decline of Consumerism............................................................. 161

CHAPTER XI A Really Responsible Economy

1. Ethical Thought and Efficiency......................... ................................. 163

2. Public Welfare and Institutions........................................................... 164

REFERENCES ....................... .............................................................. 165