Andrew Yuengert
Professor of Economics, Pepperdine University
I have been in several seminars and informal conversations where someone asks “what is subsidiarity, anyway?” In response, I have heard both knowledgeable lay people, priests, and bishops answer something to this effect: “subsidiarity is the principle that actions, when possible, should be taken at the lowest level,” or “it is basically decentralization.” In this context, subsidiarity sounds like a maxim for efficient institutional design: decisions and production should take place on a local level, closest to those affected by them.
This thumbnail definition is not false, exactly, but it is misleadingly incomplete. The local control and decision making at stake in subsidiarity are not aimed at efficiency primarily, but at the protection of local communities, starting with the family. Families and local communities often are efficient centers of production and distribution, but they are more than that; they are places where people share in friendship and love, receive and transmit wisdom, are formed in virtue, and establish their identities. A narrow focus on the efficiency aspects of subsidiarity obscures the central concern of the Catholic social tradition, to safeguard a social space within which true community can develop and flourish.
The treatment of subsidiarity in Catholic Social Teaching (CST) sometimes contributes to confusion about its meaning, but nevertheless strongly suggests that subsidiarity is more than decentralization. Pius XI, in Quadragesimo Anno (1931), defines subsidiarity as the principle that “the State ought … to let subordinate groups handle matters … of lesser importance…. Thereby the State will more freely, powerfully, and effectively do all those things that belong to it alone.” This sounds a lot like an efficiency principle, to be applied by an optimizing state. However, Pius XI uses very strong language in the introduction of this principle: “it is an injustice and at the same time a grave evil and disturbance of right order to assign a greater and higher association what lesser and subordinate organizations can do” (italics mine). If subsidiarity is no more than a principle of organizational efficiency, it is hard to imagine someone getting so morally worked up about it. There must be something more to subsidiarity than productive efficiency.
The Catechism definition of subsidiarity makes the moral stakes clearer:
“A community of a higher order should not interfere in the internal life of a community of a lower order, depriving the latter of its functions, but rather should support it in case of need and help to co-ordinate its activities with the activities of the rest of society, always with a view to the common good …. [Subsidiarity] aims at harmonizing the relationships between individuals and societies” (paras. 1883-85, italics mine).
The reference point for subsidiarity is “the internal life of a community,” “the common good,” the harmony between individual and society. Consequently, a complete account of subsidiarity must take into account not only efficient function in the production of goods, but the intrinsic value of the communities protected by subsidiarity.
It is not surprising that arguments for subsidiarity are often made in terms of efficient production. Modern accounts of the economy and regulation emphasize traded goods and services, and take an ethically neutral, technical approach to production and evaluation. In this account the primary purpose of the economy (and of regulation) is to secure more efficiently the goods that people demand. Within this framework, the value of decentralization is measured by the expansion of consumption possibilities, allowing everyone to have more of what they happen to want.
Purely functional efficiency arguments for subsidiarity are radically incomplete, since they fail to value the internal goods of local community. If these internal goods do not matter, higher level organizations should produce goods and services whenever they can do so more efficiently than decentralized institutions (by overcoming market failures, for example). If local communities produce internal as well as external goods, however, then decision making and production at a higher level may result in the loss of internal goods, even as it increases efficiency in the production of external goods.
To grasp the full force of the principle of subsidiarity, we must first understand 1) the purpose of communities in CST, 2) the two kinds of goods produced by communities (external and internal), and 3) the close relationship between the two kinds of goods. In developing this last point (that the internal and external goods of community are closely related in production), I am getting ahead of CST a bit, since the relationship between external and internal goods is not fully developed in CST. Nevertheless, closer attention to the connections between the internal and external goods brings into focus the full force of the principle, and explains Pius XI’s sharp condemnation of violations of subsidiarity, quoted above. Here I think economists can help by exploring more carefully the interactions between the good of ‘friendship’ and the institutional challenges of production.
To fully understand the meaning of subsidiarity in CST, we must begin with the social nature of the person. Because human beings are created in the image of God, and God has revealed himself to be a loving community of persons (the Trinity), we are naturally social: “The human person needs to live in society. Society is not for him an extraneous addition but a requirement of his nature” (Catechism of the Catholic Church, para. 1879). Economic analysis which takes individuals and their preferences as given overlooks the social context in which human beings are born and formed as agents. The Vatican II document Gaudium et Spes asserts that human beings cannot understand themselves apart from social relations: “for by his innermost nature man is a social being, and unless he relates himself to others he can neither live nor develop his potential” (para. 12).
The claim that “people are by their nature social” means more than that people want to love and be loved (although it does mean that). People do not simply sit around a circle exchanging abstract love; they want to do things together, and not just any things, but practical things. People are by nature oriented toward common projects. In part this desire to do things with other people is simply a desire for friendship, but it is motivated by practical need as well. We are each deficient in production by ourselves; although we are drawn to the company of others, we are also drawn to their skills and knowledge. Our practical needs and our need for communion reinforce each other: we are spurred to join social ventures by our material needs, our projects foster friendship, and the friendship we find in social ventures makes practical success in those ventures more likely.
When people organize themselves intentionally toward a joint project—a marriage, a local charity, a business—they become what Catholic thought calls a ‘society’ (although I shall use the term ‘community’ here), and the object of social teaching (for a rich treatment of ‘societies’ in CST, see Russell Hittinger’s discussion for the Papal Academy of Social Science). Typically, a joint project generates two kinds of goods: external and internal. External goods are what economists call ‘goods and services’. Even though these goods are usually consumed individually, because they are produced in a joint productive effort, they can be called “common goods.” Because they are usually divisible, and to varying degrees rival and excludable, the rules and institutions by which they are divided among the community members are a potential source of conflict, and may erode the bonds of friendship in a community.
The internal goods of a community are its intentional order and the friendship realized in the joint venture. The second of these internal goods, ‘friendship’, is defined broadly, to cover the wide range of communion possible between people: the love of a married couple, the generation and nurturing of families, friendship as we usually define it, and the good will among neighbors, co-workers, and anyone involved in a joint project (including business). These internal goods are indivisible, since they cannot be divided among the group members (you cannot each take half of the marriage with you after a divorce), and the internal goods persist even when a joint project fails in its purpose to secure external goods (a losing softball team is still a team).
The nature of the internal good of friendship, and its relationship to external goods, is crucial to subsidiarity. If the external goods can be called “common goods,” the friendship which is realized in community is “the common good.” Friendship among community members is intrinsically good (it is a constituent of human flourishing) even while it promotes the production of external goods. The other internal good, the intended order of the community, is valuable for the external goods which it makes possible, but is also intrinsically good to the extent that it is a practical expression of the natural desire of humans to act together.
We should not overly romanticize the good of friendship, or to claim too much for joint projects in creating these human goods. The members of a community orchestra or a school fundraising committee may not enter into these projects seeking profound communion, and the ties of friendship which result may be weak or fleeting. Nevertheless, the goods of friendship should not be dismissed because the friendship falls short of some ideal of passionate, total self-giving. The numerous social connections within local communities, neighborhoods, and families make possible a range of goods, including emotional support, the transmission of identity and character, and a sense of identity.
If the only purpose of joint projects was the production of external goods, then nothing would be lost when a project disbanded, unless the project happened to be a particularly efficient way of procuring external goods. Because our social nature is oriented toward both the spiritual good of friendship and the practical goods of coordinated production, the intrinsic goods of community are closely connected to the external goods around which communities form. Although the external goods should always be placed in the service of the spiritual goods (as explained by Mary Hirschfeld in the previous issue of this newsletter), the spiritual good of friendship will seldom exist without some material expression, as a concomitant of joint production, gift-giving, or joint consumption. Consequently, there will always be some mix of both external and internal goods in most communities.
The close connection between external and internal goods in local communities transforms subsidiarity from a maxim of productive efficiency into a defense of local community (including families). The purposes of external goods production and friendship do not happen to exist side-by-side in communities; they are related in an integral way. Communities are not simply groups of people who come together because they happen to love each other; neither are they groups of people who do not care for each other but find their relations temporarily useful. The two purposes—friendship and external good provision—are intertwined: communities are groups of individuals who are committed together to common projects; these projects can foster friendship, and often rely upon it for success. If responsibility for the production of external goods is taken from a community, the community will be less likely to perpetuate itself, not because the community’s only purpose was the production of the external goods, but because the external and intrinsic goods are jointly produced.
The connections between the intrinsic and the external goods of community are under-researched in both economics and CST. CST emphasizes the intrinsic goods of community, but has been reluctant to emphasize their connections to the external goods of community because of its concerns that the pursuit of external goods undermines the mutual self-giving of friendship. Economists for their part evaluate community in terms of the external goods as far as possible, and since there are almost always external goods at stake in the self-ordering of communities, intrinsic goods are often ignored as an unnecessary theoretically complication.
As higher levels of government take over the production of external goods which used to be provided by local communities (social insurance and education, for example), and treat lower levels of government and local community institutions as centrally-managed service-delivery institutions, local communities (including the family) have been weakened. A full accounting of what is at stake in the loss of local community requires an careful theoretical and empirical account of the interconnections between the internal and external goods of community institutions.
Much of what economists are already doing can be employed to explore the connections between the intrinsic and external goods of community. The role of community institutions in the production of external goods is already well researched in economics, and the importance of community for human well-being is documented in the identity and happiness literatures. More research is needed, however, to explore the connections between trust and friendship on the one hand, and external goods on the other. The connections probably go both ways: trust and friendship foster the production of external goods, and the joint production of external goods in turn calls forth and encourages the development of friendship and trust.
The large literature on the role of the family in human capital development and in the generation of well-being documents the importance of identity and belonging at the most basic level of community, the interconnectedness of the intrinsic and external goods produced in families, and the difficulty of replacing the practical functions of unstable families and communities (for summaries of this research, see The National Marriage Project). The equally large literature on civil society and social capital highlights the ability of local community to overcome the coordination and information problems which drive public policy arguments.
Economists can contribute to a better understanding of the connections between internal and external goods by documenting the existence of greater levels of trust and friendship in local communities, and the role of those communities in overcoming coordination problems. There are other promising lines of inquiry, however. Economists are developing theories and empirical explorations of how joint production and exchange can itself foster the development of friendship and fellow-feeling. The concept of reciprocity (see Joel Sobel’s 2005 review in the Journal of Economic Literature), developed in experimental economics as an alternative hypothesis for cooperation, offers a promising explanation for both the orientation of agents toward mutual benefit, and the generation of friendship and gratitude that result from successful cooperation. The work of Luigino Bruni and Robert Sugden (Economics and Philosophy 2008, Journal of Economic Perspectives 2013) on the development and function of fellow-feeling (fraternity) and the virtues required for market exchange, offers an integrated account of how intrinsic and external goods need not be in tension.
Benedict XVI, in Caritas in Veritate, calls for a more integrated account of human relations, in which the practical, material needs which partially or wholly motivate us to cooperate are integrated with the spiritual goods of community. This is true even in commercial relations: “the Church’s social doctrine holds that authentically human social relationships of friendship, solidarity, and reciprocity can also be conducted within economic activity, and not only outside it or ‘after’ it” (para. 36). Catholic theologians are, I think, hampered in their ability to provide an integrated account by their suspicion of the mixed motives of those who enter into community seeking both external goods for themselves as well as the mutual self-giving of friendship. Economists prefer self-interested explanations, and are methodologically suspicious of other-regarding explanations, but many are already at work blurring the boundary between ‘purely self-interested’ and reciprocal and altruistic accounts of human behavior and institutions. I suspect that economists are also more comfortable with mixed motives in behavior, and are less likely to dismiss all self-interest as corrosive of friendship, or to dismiss other-regarding explanations as a rejection of all self-interested motivations. In short, I think economists have much to offer to an account of community which links the internal goods of friendship and the external goods which communities often produce. Such an account will make it easier to connect subsidiarity as efficiency and subsidiarity as a necessary safeguard of the goods of local community.
Andrew Yuengert is a Professor of Economics at Pepperdine University, and holds the Blanche E. Seaver Chair in Social Science. During academic year 2015-16, he will be a William E. Simon Fellow in Religion and Public Life at the James Madison Program at Princeton University. His research interests span economics, philosophy, and theology, including especially Catholic social thought. His most recent book is Approximating Prudence: Aristotelian Practical Wisdom and Economic Models of Choice (Palgrave Macmillan 2012). Yuengert is a parishioner at Holy Cross Catholic Church in Moorpark, California.
