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Where Do Austrian Economics Fit in a Jesuit Education

Published: Thursday, September 29, 2011

Updated: Thursday, September 29, 2011 10:09

The College of Business is working on a second proposal for a master's program in Austrian economics after the first proposal was denied last spring.

The economics department of the College of Business is addressing the issues with the first proposal after the Standing Council for Academic Planning, an Academic Affairs committee that oversees academic decisions, denied the proposal at their May 3 meeting.

The committee denied the program after several non-committee members made arguments for and against the master's program at the meeting.

"The Austrian economics master's program would in part support the mission of Loyola, but it would undercut the mission at the same time," said Thomas Ryan, director of the Loyola Institute for Ministry.

According to the proposal, the master's program would follow Loyola's mission by adhering to the analysis and importance of individuals within economics. Ryan said that the master's program gets that part of the mission correct but leaves out Loyola's commitment to social justice.

Daniel D'Amico, assistant professor of economics, said that focusing on individual decision making is nothing unique to Austrian economics.

"All economists attempt to adhere to methodological individualism wherein the individual is the central focus of decision making," he said.

The Rev. Fred Kammer, S.J., executive director of the Jesuit Social Research Institute, agreed that the program does not align with Loyola's mission and values.

According to Kammer, Catholic social teaching takes the position of a market framed by justice and not the free market the Austrian economists propose.

There are also specific conflicts, he said, between Catholic social teaching and the Austrian view of government, unions, taxations, human life and the place of Christianity in the public sector.

Kammer said he also found problems in the Austrian economics master's program's funding. He said he believes Loyola would make a mistake by letting the Koch Foundation, the charitable organization derived from Koch Industries, donate such a large sum of money for the master's program. Koch Industries is one of the largest private companies in the United States and owns operations such as pipelines and chemical refineries.

It would be a mistake, Kammer said, because of the Koch brothers' controversial political values, which often conflict with the values of Catholic social teaching.

The Koch Foundation would donate a large portion of the $9 million endowment to fund the program, according to the program's proposal. D'Amico said that the College of Business already accepts money from the Koch Foundation to fund the Economics Club.

Concerns were also raised about the Austrian economics master's program's limitations by teaching only one economic tradition. Kammer said he believes that Austrian economics is a minority view of economics, and it would not be in Loyola's best interest to offer the program.

"It is (Loyola's) duty to economics students that they get the full range of economics in their education," he said.

Ryan agreed that the niche of Austrian economics would not honor all traditions of economics.

"I would like to see a robust economics master's degree that takes seriously the breadth of Catholic social teaching, including its emphasis on social justice and the common good," he said

However, in order to teach Austrian economics, D'Amico said he has to teach all of the other traditions, such as Keynesian and mainstream economics, in order to explain the differences between the two.

D'Amico also said that Austrian economics is the only economic tradition that pays significant attention to Catholic social teaching.

The economics department is not giving up efforts to expand, according to D'Amico. He said that many concerns regarding the master's program are legitimate and the economics department and College of Business is willing to and capable of addressing them.

Jamie Futral can be reached at

jafutral@loyno.edu

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10 comments

Concerned Catholic Businessman
Tue Oct 11 2011 17:16
Economic theory is still theory not scientific fact. Its foundation was built on the work of Aristotle, St Augustine, St Thomas Aquinas and the Scholastics. To this day it continues to evolve. At this point in its development it is basically divided between the Keynesian school with emphasis on complicated mathematical modeling and strong central planning to create demand and the Free Market proponents which include the Austrian School of Frederick Hayek fame and more recently the Chicago School of Milton Friedman fame. The latter two put a much greater emphasis on the basic freedom of individuals to choose without undue influence from a controlling political entity. When these theories are applied to Macroeconomics, it invariably has a political component thereby guaranteeing controversy. At a Catholic University the professors should be committed to helping students find the truth in each theory. In the everyday world of Microeconomics that freedom to choose is the dynamic that drives the marketplace. Businessmen and particularly entrepreneurs operate each day at this level. If their endeavors are successful, that creates wealth for the risk takers and innovators. That created wealth fuels investment in the private sector and preferred charities and institutions like Loyola. Some central planning economists argue that a substantial portion of that created wealth should be assigned to the government so that it could control how it is distributed. How would universities like Loyola fare in that system? Many of those wealth creators are devout Catholics who actively support their local churches and its charitable endeavors and the archdiocesan social ministries. How will they react when they learn that the head of the department of economics in the business school at Loyola is perpetuating the teaching of economic theory that is contrary to the teachings of the Catholic Church? He and his colleagues have been teaching for many years in the business school. Now all of a sudden in the midst of a heated political debate in this country, much of it centered on Macroeconomic theory, Fr. Kammer and his supporters have made this great discovery. In the article he offers only a blanket generalization and lists apparent conflicts with "government, unions, taxation, human life and the place of Christianity in the public sector". His solution is to force the college of business to revamp its economic department thereby putting the primary emphasis on the Keynesian model, which by his analysis must be more aligned with Catholic Social Policy. If he is absolutely convinced of his position, should he not take his complaint to the Archbishop? Who appointed him to the position of the guardian of the Faith? I thought that difficult judgment was the sole province of the Episcopacy in the Catholic Church. Is this simply a squabble among intelligent passionate professors on the campus of a Catholic University? If that is all that it is, than what does it imply about how the principal of "Academic Freedom" is administered on the campus of Loyola? What ever happened to open rigorous debate? Is it to be replaced instead by censorship?
Anonymous
Sat Oct 8 2011 21:11
How do the Pope's thousand dollar a pair shoes fit into Catholic social teaching? I hear he's become quite the fashionisto.
Anonymous
Fri Oct 7 2011 11:09
In other words, Alumni '10 and others, if the government takes by force through taxation some of what belongs to one individual to give it to another to whom it doesn't belong, that is the Christian (Catholic) thing to do? That is, stealing, as long as it is done by government, is alright by Christian dogma. In other words, thou shall not steal does not apply to the government.
Alumni '10
Wed Oct 5 2011 20:04
I don't think you need to be confessing Austrian economics as if it's a sin, but if it causes you to be more interested in pursuing maximum efficiency rather than an economic system that sustainably supports ALL members of a society, then yes, you should recognize your own disconnect from Catholic social teaching. If libertarian/Austrian economic theory can in practice provide a support structure for the disadvantaged, those unable to support themselves, then Catholics have no problem with it. This is not to say that Catholics should be socialists or supporters of our current system, but that no Catholic can advance a theories about the proper distribution of wealth unless it has the well-being of all human life in mind.
Dan Terrill
Tue Oct 4 2011 15:48
I wrote a lengthy letter to the editor on this topic, and I'll avoid reposting. I am curious, though: am I supposed to be reporting my Libertarian outlook when I go to confession? Am I in danger of the fires of Hell for not advocating forcible redistribution of wealth? Are there any other economic or political philosophies I should avoid if I want to go to heaven?
Ralph Hythloday
Tue Oct 4 2011 09:28
In other words, Austrian economics does not condone the use of government force to "redistribute" the money of the citizens. Guess what, neither did Leo XIII in Rerum Novarum, one of the foundational documents that the Catholic social justice movement relies on. I also don't remember Jesus having much to say about what economic theory we investigate or believe in. All Economics is just theory anyway. This controversy demonstrates once again the intellectual bankruptcy of Loyola. I bet they wouldn't have a problem with a masters degree in transgendred economic theory or pre-Columbian Aztec lesbian poets.
Anonymous
Tue Oct 4 2011 04:52
Austrian economics eloquently discusses the spontaneous emergence of order out of seeming chaos like the evolution of life on earth, language, and the Internet .

Lawrence Reed, president of the Foundation for Economic Education, describes spontaneous order as follows:

"Spontaneous order is what happens when you leave people alone���when entrepreneurs ... see the desires of people ... and then provide for them. They respond to market signals, to prices. Prices tell them what's needed and how urgently and where. And it's infinitely better and more productive than relying on a handful of elites in some distant bureaucracy."

Rev. Kammer should also look into the Acton Institute and read ���The Church and the Market��� by Thomas Woods as well as the book ���Catholic Social Teaching and the Market Economy��� .

Anonymous
Mon Oct 3 2011 16:42
So Loyola will not take money from people associated with pipelines oil and other related Industries. Guess some alumni will be shocked to hear that
Anonymous
Mon Oct 3 2011 15:44
It's painful and ironic seeing this: Rev. Fred Kammer, S.J., in such fundamental disagreement with Ignacio de Loyola, S.J. I volunteer to debate Rev. Fred Kammer, S.J., on this point, and make a serious effort to show him the error of his ways. The Austrian School was mostly created by Jesuits. Unless this is like in the story of a Jesuit asking a Franciscan for directions to church, and the Franciscan answering: "I am afraid that if I tell you, you will get lost, because the way to the church in this town is just a straight path."
Anonymous
Fri Sep 30 2011 20:06
Austrian economics is like Intelligent Design. No science, but lots of faith in the invisible hand making things right.






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