At Catholic universities such as Notre Dame, there are many efforts to harmonize Catholic doctrine with neoclassical economic theory. However, these efforts are doomed to fail as there are four major reasons that neoclassical economic theory is subversive to Catholicism:
(1) Perfect competition throws ethics out the window. Neoclassical theory assumes perfectly competitive markets are the ideal, but in such markets, ethical considerations disappear. Imagine you are a business owner, and you want to pay your workers a living wage. If you do, other firms that pay lower wages will out-compete you, and you will go out of business. Either you leave the market, or you chuck your ethics out the window.
(2) Property rights redefined. It’s easy to go to the Bible and find many examples of people having private property; for example, from Genesis we know that God gave man dominion over all the land and sea. But the definition of property rights from Biblical times is very different from how we understand them today. Today, owning property means that you may do with it what you wish. In Christian thought, including Aquinas’ philosophy, it was understood that all land belonged to God; humans were only stewards of what belonged to God, and so it had to be used in accordance with God’s will. Needless to say, this attitude led to a very different management of land than we have today.
(3) Unlimited Wants are Disordered. Neoclassical theory assumes that “more is always better,” and so the economic agent has unlimited desires. In econospeak, we assume that you always prefer the larger bundle. But according to Thomas Aquinas, (who is one of the 33 Doctors of the Church, meaning that Catholics must take him seriously), unlimited desires are disordered. Those who desire God will have limited desires for wealth, (and he thinks you should probably desire God).
(4) The Market Has No Telos. Religious thinkers are all about the “end purpose,” or telos. For Aquinas, the end purpose is union with God, and all of his philosophy is derived from this starting point. Neoclassical economic theory has no telos, no discussion of any end purpose. So economists value efficiency, and increasing GDP, but in neoclassical there is never any discussion of WHY. What is the purpose of having the power to purchase all this stuff? Certainly, our end purpose cannot be to make loads of money and then spend our days on the golf course.
For these reasons, I believe that Catholics/Christians need to engage critically with neoclassical economic theory. Many will respond that other schools of economic thought, such as Marxism, are also subversive to Catholicism. And yes, that is true. But it does not mean that we should settle for neoclassical theory. Instead, take up the challenge to build an economics that does reflect your principles. A wonderful example of a similar project is E. F. Schumacher’s “Buddhist Economics.”