John Horvat II, author of Return to Order, recently interviewed Acton’s Director of Research, Samuel Gregg, about a variety of topics, including: Gregg’s interest in economics, Becoming Europe, Thomas Piketty and his controversial Capital in the Twenty-First Century, St. Thomas Aquinas, and the greatest threat to the American economy.
John Horvat: I have had the great pleasure of reading several of your books on economics. I suppose my first question is: how did you end up in the middle of the “dismal science?”
Dr. Gregg: I did some economic history as an undergraduate and for my graduate study, but it was really through studying natural law philosophy when doing my doctorate that I came to enter into some of the deeper background questions about the strengths and weaknesses of economics and economies. I was also very interested in the relationship between economics and culture – the latter being understood as the choices, beliefs, actions, values, and institutions that shape a society, including its economic arrangements. The mathematical dimension of economics has its place, but also some rather important limits, and shouldn’t be given more significance than it otherwise warrants. In that regard, I found the work of Wilhelm Röpke – the German economist who was one of the architects of the German economic miracle after 1945 – especially instructive. I wrote a book about Röpke in which I tried to describe the type of political economy that Röpke sought to promote in order to try and ensure the growth of forms of economic life undergirded by defensible moral commitments. Not only was he a fierce critic of Keynes, Keynesianism and the welfare state, but Röpke also understood that the critique of such thinkers, thought and forms of political economy had to be as much moral as economic. Röpke was equally comfortable talking about the finer points of monetary theory as he was with discussing theologians like Aquinas or historians such as Thucydides. We need more people like that discussing, thinking and writing about economic subjects.
John Horvat: In your book, Becoming Europe, you make the connection between economics and culture, and also what you call “economic culture.” Why are these connections so important?
Dr. Gregg: Many economists make the mistake of thinking that economics is a more-or-less self-sufficient discipline. But economies are part of a wider set of values and institutions (what I call culture), and can’t be understood outside these realities. Economics that is not attentive to these realities ends up in a type of echo-chamber. Just look at most economics journals: they are full of algebra! It’s part of the scientism mentality – the mistake of thinking that the only way we can know truth is through empirical and positivist methods, and that the only truth that can be known is that which is measurable. Well, reason isn’t measurable, but does anyone doubt it exists?
In any event, the more I studied economic subjects, the more convinced I became that while economic factors such as incentives matter in explaining why some economies prosper and others don’t, it’s culture that drives history, societies and economic life. If you want to know why, for instance, Australia and Argentina started the twentieth century as among the wealthiest nations on the planet (in terms of GDP per capita), and why Australia is still an economic success while Argentina is now an economic disaster, it’s not just the result of good and bad economic policies. It’s also about the differing economic cultures that have prevailed in these societies.