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The Morality of Money, 1: The Problem of Money Production

By Thomas V. Mirus ( bio - articles - email ) | Nov 11, 2016

It is not uncommon to hear of Popes or bishops strongly criticizing the global economic order, and calling for the creation of new institutions to implement financial and monetary reform. Pope Benedict XVI, for example, suggested that a “true world political authority” was needed to oversee the global economy, while a 2011 document by the Pontifical Council for Justice and Peace called for the establishment of a central world bank.

Such prudential recommendations are greeted less than enthusiastically by Catholics who are not so confident in the ability—even theoretical—of centralized institutions to manage economies, much less a world economy, in a way that will serve the common good. It is not that Catholics who favor decentralization would defend the “global economic order” such as it is, or the economic status quo in their own countries. They too believe that the global economic order is unjust and fails to serve the common good; it is their diagnosis that is different.

Typically any problems with the global economic order are blamed on capitalism or an alleged “unfettered market.” But even the most superficial examination shows the inaptitude of such a description; for example, not a single monetary system that currently exists in the West came about as the result of market forces. Money in the modern day is conspicuously not governed by the free choices of people on the market, but is controlled entirely by states and central banks. One might note that since money is a rather central feature of the economy, this would render absurd any complaints that we have an “unfettered market” even if there were no other economic regulations whatsoever.

Thus, when speaking of the global economic order, free market advocates are more likely to criticize institutions like the International Monetary Fund, and, on the national level, central banks—that is, their moral scrutiny extends beyond how money is used to how it is produced in the first place.

Yet the morality of money production has gone almost completely undiscussed in Catholic social documents and in statements by Church officials. The financial crises in which bad monetary policy has played such a large part are all too often blamed vaguely on greed1—a vice culpable enough for economic woes, but which an outside observer might conclude is the only deadly sin which curiously restricts itself to the private sector.

The conspicuous absence of a moral consideration of money production is not just a feature of modern Catholic social teaching, but of modern thought in general. As Jörg Guido Hulsmann points out, other industries have been subjected to ethical analysis, but the production of money has been exempt from this treatment. “Business ethics” is never applied to money production. Modern monetary economics treats money production as a mere technical problem. (Ironically, those who consistently treat monetary policy as a moral, not just a technical, issue are the very ones most often accused of separating morality from economics.)

On the technical side, most economists are government employees, and many monetary economists in particular are employed by or derive income from research projects funded by central banks. It is no surprise that they will be reluctant to bite that hand that feeds them.

Meanwhile, most Christians in the past several decades who have made moral critiques of modern economic structures have done so while taking for granted things like central banking and inflationism. Their embrace of economic fallacies has prevented them from making a truly useful assessment of modern economic institutions. The result is that Christian doctrine on the acquisition and use of money is well-known, but a Christian approach to the production of money has been either undeveloped or forgotten.

But the Catholic tradition as a whole, particularly that of the scholastic theologians and philosophers, is not so silent. The fourteenth-century bishop Nicholas Oresme composed a Treatise on the Alteration of Money—the first treatise on money ever written—containing a trenchant moral critique of the debasement of coinage by rulers. Pope Innocent III condemned the debasement of precious metal coins in 1199’s Quanto. The thinkers of the School of Salamanca, including Saravia de la Calle, Martin Azpilcueta, and Tomas de Mercado, argued for natural money and against inflation. (Incidentally, the scholastics, more than Adam Smith, deserve to be called something like the founders of economic science.) More recently, the Thomist philosopher Bernard Dempsey commented on the morality of money production in his 1943 book Interest and Usury. Dempsey’s economic analysis was in the tradition of the Austrian school of economics, notable among other things for its critique of inflationary monetary policy.

In that same tradition is Hulsmann’s book, The Ethics of Money Production, published in 2008. Hulsmann, a Catholic economist who teaches at Université d’Angers in France, combines a moral analysis rooted in the natural law tradition with the economic-moral analysis of the Scholastics (particularly Nicholas Oresme) and the more fully developed economics of the Austrian school (particularly the work of Ludwig von Mises and Murray Rothbard).

The Austrian school of economics, which adopts a philosophically realist approach while rejecting empiricism among other modern fallacies, dovetails in many respects with a Catholic view of reality. Instead of treating economics like physics, assuming measurable variables and quantitative constraints as though the free-will choices of human beings can be reduced to a predictable mechanism, Austrian theory insists on drawing its conclusions from an analysis of human valuation, human choice and the logical implications thereof.

Given that the Austrians stand virtually alone among economists in rejecting the materialist assumptions which have progressively encroached on the social sciences and which run directly counter to our faith, perhaps Catholics and Catholic leaders might benefit from listening to what they have to say, particularly when the Austrian economist in question is himself a Catholic. In order to foster a greater awareness of the ethical problems of money production, I will in this series of articles summarize some of the most important arguments in Hulsmann’s book.


1. Greed, it may be noted, is but one of at least two deadly sins often directly at work in economic and social policy: the other being pride, manifest in the desire to manipulate men’s destinies from above as though millions of individuals, each with his own hopes and dreams, may be moved about like pawns on a chessboard, and in the very hubris of believing that something as complex as an economy, the matrix of the unpredictable, free-will choices of those millions of individuals, can be comprehended and managed by a few enlightened technocrats. But then, in the words of F. A. Hayek: “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

Next in series: Natural and Forced Money

The Ethics of Money Production may be purchased in hardback from its publisher, the Mises Institute, at a third of the Amazon price, or, like all of the Institute’s publications, downloaded for free as a PDF or ebook.

Thomas V. Mirus is Director of Podcasts for, hosts The Catholic Culture Podcast, and co-hosts Criteria: The Catholic Film Podcast. See full bio.

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  • Posted by: Bronco Pete - Nov. 17, 2016 9:47 AM ET USA

    Good article and great conclusion. I have long held that the Austrian School of Economics is closest to what should pass as good Catholic economics. The free-wheeling central bankers of today are a closed, elitist political class that do not have the interests of the average person in mind.