Problems of a Catholic Economic Science

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In the papers and proceedings of the first annual convention of the Association we find a discussion by Father Dempsey and Father Shea of the methodological position of a Catholic Eco? nomic science. The discussion centered around the question whether an institutional or an equilibrium approach should be chosen, or whether it is possible to combine the two. This paper is an attempt to reveal what we consider to be the core of that problem. Unfortunately there is no common agreement on economic termin? ology. Werner Sombart tried in Die drei Nationaloekonomien to form? ulate such a terminology which consists (if I remember correctly) of a division of economics into descriptive, explicative and normative eco? nomics. As the question under discussion is definitely one of termin? ology, I shall define a few terms in my own, perhaps un-orthodox, way and then try to solve the problem with the aid of this chosen termin? ology. Economics contains in its subject-matter: (a) Economic Theory and (b) Economic Policy. Economic Theory may be described rather than defined thus: If under assumed conditions this cause is placed that effect will happen. There is no room for ethics, morals or politics in economic theory understood in our sense ? except those which are contained in the assumed conditions. Every economic theory is thus based on ASSUMPTIONS of fact, as, for example, the Man? chester School assumptions of Man, free markets, free trade, full employment, free money, free migration, proportional taxation, limited state intervention. Another economic theory may be based on the fewer assumptions of Gustav Cassel or on a communist organiza? tion of society; another again on imperfect competition (Chamberlin and the two Robinsons), or on Keynes' non-full employment, or on Pigou's Welfare State or on what I call the Interventionist State.1 Institutional Theory then, ought to mean only that the ore-suoDOsitions shall be correctlv stated and consistently respected.