Sunday, January 14, 2007

Capitalism and Catholic Economics Part Two

by John Sharpe




After the publication of Part I (The Angelus, Oct. 2002), there remains to address in this Part II the three popular arguments advanced against Distributism by its antagonists. We may classify them as follows: 1) it is anti-competitive; 2) it restricts the use of private property; and 3) it is in some fashion injurious to the profit motive in economic life. These are all, in general, and with room for exception and qualification according to circumstances, admittedly correct notions with regard to Distributism. Because of these, however, Distributism conforms more, rather than less, to the teaching of the Church regarding economic life.


Catholic Doctrine Regarding

1) FREE COMPETITION AND
2) USE OF PRIVATE PROPERTY


Proponents of Capitalism suggest that Capitalism, as an economic system, implies also a regime of free competition between economic enterprises. They surmise that the principal way in which Distributism militates against the notion of "free enterprise" is in the way it understands the notion of private property and its use. In their way of thinking, the institution of private property includes the notion that private property may be used without restriction by the owner of the property. Distributism, they say, destroys that notion by limiting the way in which owners may use their property which eliminates-in an uncomfortable degree-the capitalist scheme of free competition.

Is the Distributist ideal of private property actually antithetical to it because it limits how private property may be used? Does someone who owns property have an unrestricted right to its use? Such an assertion would be surprising. One would not find it upheld in even the most liberal of societies. I am not allowed to commit murder with a knife that I own, simply because I own it, and am therefore entitled also to its use. Human laws and human institutions are limited by any number of considerations, both moral and legal, and sometimes both (as in this example). Any society wisely limits the use of private property: it remains solely to consider whether or not Distributism places such a degree of restriction on the use of private property that-as capitalists maintain-private ownership ceases to exist.

It is unfortunate that not everyone has a copy of Hilaire Belloc's book, The Restoration of Property [available from Angelus Press. Price: $8.95-Ed], because it is impossible in the short space of this article to accurately detail what kind of scheme he proposes. He proposes to defend the small landowner, the family farmer, the small craftsman, the small retailer, from being eaten up by the larger. What he is proposing is the checking of competition to the extent necessary to reverse the current trend: the tendency under a regime of free competition-a tendency which cannot honestly be denied-towards the growth of bigger and bigger economic enterprises at the expense of the smaller ones. Such a proposal by no means implies a stifling restriction on the use of property. Such a restriction does not even imply a limit on the amount of money that one can make through the enterprises and means of production that one already possesses. What it does imply is a restriction of the ability of a businessman to employ amassed wealth in an effort to eliminate his competitors, through outright purchase, or through "free market" competition. Such a businessman is discouraged under Distributism from transforming, without their truly free consent, his neighbors into his employees.

In conjunction with this objection, capitalists may make the heated assertion that traditional Catholic teaching is contrary to Distributism. Is it really? Belloc said "that unchecked competition must ultimately produce the rule of ownership by a few." So did Pope Pius XI:

This concentration of power and might, the characteristic mark, as it were, of contemporary economic life, is the fruit that the unlimited freedom of struggle among competitors has of its own nature produced, which lets only the strongest survive; and this is often the same as saying, those who fight the most violently, those who gave least heed to their conscience (emphasis mine).1


Belloc thought that free competition was not sufficient to regulate economic life in a way that allowed the masses to be secure in their property. He thus refers, in The Restoration of Property, to the historical fact that mankind has instinctively safeguarded itself against the danger of ownership by a few by the setting up of institutions for the protection of small property, and that these institutions have never broken down of themselves, but always and only under the conscious action of a deliberately hostile attack.

The popes also have admitted that competition was not sufficient in regulating economic life. Pope Pius XI said that,

Just as the unity of human society cannot be founded on an opposition of classes, so also the right ordering of economic life cannot be left to a free competition of forces. For from this source, as from a poisoned spring, have originated and spread all the errors of individualist economic teaching. Destroying through forgetfulness or ignorance the social and moral character of economic life, it held that economic life must be considered and treated altogether free and independent of public authority, because in the market, i.e., in the free struggle of competitors, it would have a principle of self-direction which governs it much more perfectly than would the intervention of any created intellect. But free competition, while justified and certainly useful provided it is kept within certain limits, clearly cannot direct economic life-a truth which the outcome of application in practice of the tenets of this evil individualist spirit has more than sufficiently demonstrated.2


And Pope Pius XII observed that "the demands of competition, which is a normal consequence of human liberty and ingenuity, cannot be the final norm for economics."3

Belloc proposed to use the legitimate power of the State to regulate economic life according to the common good. Pius XI, following Leo XIII, also maintained that the role of the State in economic life was to foster the common good.

With regard to civil authority, Pope Leo XIII, boldly breaking through the confines imposed by Liberalism, fearlessly taught that government must not be thought a mere guardian of law and of good order, but rather must put forth every effort so that,

...through the entire scheme of laws and institutions... both public and individual well-being may develop spontaneously out of the very structure and administration of the State [as quoted by Pope Pius XI from Rerum Novarum (§48)].4


It is not only Belloc who saw the widespread ownership of property as an aspect of the common good which the authority of the State not only may but must foster. Leo XIII hoped for a time when working people could "look forward to obtaining a share in the land."5 The Catholic Encyclopedia, under the heading "Agrarianism," refers to not only the "uniform teaching and tradition of the Catholic Church on the lawfulness of private ownership of income-yielding property, whether it be named 'land' or 'capital,'" but also to the fact that Leo XIII "urged the diffusion of property as the mean between Socialism and Individualism, and that where possible each citizen should dwell secure in a homestead which, however humble, was his own." And even more recently, Pius XII has taught:

The dignity of the human person...requires normally as a natural foundation of life the right to the use of the goods of the earth. To this right corresponds the fundamental obligation to grant private ownership of property, if possible, to all...; and...legislation...must prevent the worker, who is or will be a father of a family, from being condemned to an economic dependence and slavery which is irreconcilable with his rights as a person. Whether this slavery arises from the exploitation of private capital or from the power of the state, the result is the same.6


Finally, the Church, in a doctrine which Pius XI called "age-old," has always distinguished between the ownership and the use of private property; the former must be held as inviolable, and the latter as subject to the common good.

It follows from what We have termed the individual and at the same time social character of ownership, that men must consider in this matter not only their own advantage but also the common good. To define these duties in detail when necessity requires and the natural law has not done so is the function of those in charge of the State. Therefore, public authority, under the guiding light always of the natural and divine law, can determine more accurately upon consideration of the true requirements of the common good, what is permitted and what is not permitted to owners in the use of their property.7


Therefore to regulate private property, in a scheme such as that proposed by the Distributists, is not to destroy the institution of private property, but to ensure both that it is implemented in society in a way consistent with the common good, and that the widest possible number can enjoy its fruits. To so regulate that institution is not to destroy it, but to preserve it:

Yet when the State brings private ownership into harmony with the needs of the common good, it does not commit a hostile act against private owners but rather does them a friendly service; for it thereby effectively prevents the private possession of goods, which the Author of nature in His most wise providence ordained for the support of human life, from causing intolerable evils and thus rushing to its own destruction; it does not destroy private possessions, but safeguards them; and it does not weaken private property rights, but strengthens them.8


CATHOLIC ECONOMIC DOCTRINE REGARDING PROFIT

The last objection of capitalists which bears refutation is the accusation that Distributism removes the "profit motive" from economic life, thus bringing it to a halt.

The first problem with such a position is that no where does Distributism condense its scheme to such a neat and tidy proposition. Distributism seeks to protect the small economic enterprise from ruin at the hands of the larger ones. Its purpose is not to restrict the amount of wealth that one can possess, but rather the amount of productive property one can employ when that employment directly affects the ability of the smaller operation to survive. It is crucial to bear in mind the distinction between the simple possession of property and its use in the public sphere ("Part I: Capitalism and Catholic Economics," The Angelus, Oct. 2002).

A second distinction that is ignored at our peril is the one between wealth for consumption, such as food, clothing, luxuries, and "capital" (generally speaking) destined for personal use (such as land, automobiles, etc., which are not rented but used), and the wealth of capital (strictly speaking), which is employed in order to produce more wealth and generate income. It is the "wealth of capital" that is used by the great corporations to "get ahead" and smash the small businessman; it is the "wealth of capital" that must be regulated if a widespread distribution of ownership of income-generating property is to survive. No one is suggesting that it is sinful to be rich in itself (though it may be noted in passing that, compared to warnings and condemnations, praise of the rich is rather scanty in both Scripture and the writings of theologians). What Distributism condemns is a use-intentional or otherwise-of riches which deprives smaller property-owners of their ability to generate income without having to work for a wage. Without understanding this distinction, we would be at a loss to know why Popes Leo XIII and Pius XI (to name just two) denounced so vehemently the "immense power and despotic economic dictatorship [that] is consolidated in the hands of a few."9

Distributism teaches that the "profit motive," as it is imagined by modern economists, is a concept which is hardly acceptable to Catholic theologians.

We do well to glance quickly at the teaching of St. Thomas on the role of material goods in man's life. First, they are ordained to a specific end, which is the upkeep of himself and his family: "Temporal goods are subjected to man that he may use them according to his needs, not that he may place his end in them."10 Furthermore, the fulfillment of man's needs does not serve its own purpose but rather facilitates the practice of virtue, which itself is ordained to the attainment of heaven:

That a man may lead a good life, two things are required. The chief requisite is virtuous action....The other requisite, which is secondary and quasi-instrumental in character, is a sufficiency of material goods, the use of which is necessary for virtuous action.11


Based upon these principles, St. Thomas explains the licit motives for commercial activity as follows:

The other kind of exchange is either that of money for money, or of any commodity for money, not on account of the necessities of life, but for profit...

[This] gain which is the end of trading, though not implying, by its nature, anything virtuous or necessary, does not, in itself, connote anything sinful or contrary to virtue: wherefore nothing prevents gain from being directed to some necessary or even virtuous end, and thus trading becomes lawful. Thus, for instance, a man may intend the moderate gain which he seeks to acquire by trading for the upkeep of his household, or for the assistance of the needy: or again, a man may take to trade for some public advantage, for instance, lest his country lack the necessaries of life, and seek gain, not as an end, but as payment for his labor.12


The "profit motive" is licit, then, only insofar as the motive for the profit is the becoming upkeep of a household, the support and care of the poor, or as a just wage in exchange for a productive service rendered, which is good in itself. Can it be honestly maintained that such a concept is the motive that economists have in mind when they speak of "maximizing profits?"

No doubt the determination of what is necessary and what is excessive in the upkeep of a household is largely a matter of prudence. No doubt that many Catholics are satisfied with a reasonable wage, which they then employ in the upkeep of their households. But the legitimate increase in income and property which results from the practice of an honest trade is not what Distributism seeks to limit. Rather it is the massive concentration of capital and financial wealth that results from unrestricted economic competition13 which Distributism seeks to manage. It is the personal craft, the independent retailer, and the homestead which Distributism seeks to defend by placing Home Depot, Wal-Mart, and agri-business, et al., under reasonable economic control. If such controls militate against the "profit motive" of modern economic man, then perhaps economic man must re-evaluate his motives in light of the teaching of the Church.

Distributism is broadly thought of, by its advocates, as an implementation of the Social Doctrine of the Church. It is so because it is a program that is consistent with the natural law and, because, in the final analysis, it will help man along the path to heaven rather than throw him off it.

The essence of the Social Doctrine is that society is a means to an end. The duty of the State is to protect and foster the moral and material goods of this life (which collectively are known as the "temporal common good") in service of the ultimate end-the eternal salvation of men.14 As a result, every law, custom, and ordinance of the earthly community is salutary insofar as it makes man's journey to heaven easier, and is disordered whenever it makes that journey more difficult.

In light of that most important of all truths of Catholic Social Doctrine, it should be easy to see that Distributism is consistent with the Catholic economic vision insofar as it subordinates economic life to the ultimate purpose of man's life. It does not curtail the right of a man to own and use his private property. Its entire program is designed to safeguard and defend that right and to ensure that most if not all in society are able to benefit from it. But defending private property assumes that there is something to defend it against: which is the notion that private property is an end in itself, to be amassed and multiplied and owned without limit.

"The art of amassing wealth," says St. Thomas Aquinas, "which is solely concerned with money, is infinite."15 Where that art is pursued for its own sake, where it is governed by a "profit motive" which possesses no built-in limit but is rather an end unto itself, it leads simply and directly to yet further desire for wealth: "Hence he that desires riches, may desire to be rich, not up to a certain limit, but to be simply as rich as possible."16 The incarnation of that mentality is the modern economic system which not only encourages in its philosophy the unlimited acquisition of wealth, but sanctions in its practice an expanding field of ownership by a few at the expense of widespread and distributed ownership by many. It is this scheme of things that Distributism opposes and for which it offers a remedy, that by the restoration of property to the non-owning masses it might also effect a restoration of economic life in its proper place, subordinate to the real needs of man and to the just decrees of God.

--------------------------------------------------------------------------------

1. Pope Pius XI, Quadragesima Anno (May 15, 1931), §107.

2. Ibid., §88.

3. Address to International Foundry Congress (Sept. 28, 1954).

4. Quadragesima Anno, §25.

5. Rerum Novarum, §47.

6. Christmas Message, 1942.

7. Quadragesima Anno, §49.

8. Ibid., §49.

9. Ibid., §105.

10. Summa Theologica, II,II, Q.55, Art. 6, ad I.

11. St. Thomas Aquinas, On Kingship, I,xv.

12. ST, II,II, Q.77, Art. 4.

13. Both of which the Church has condemned, as we have seen.

14. "...Hence, civil society, established for the common welfare, should not only safeguard the well-being of the community, but have also at heart the interests of its individual members, in such mode as not in any way to hinder, but in every manner to render as easy as may be, the possession of that highest and unchangeable good for which all should seek..." (Leo XIII, Immortale Dei, Nov. 1, 1885, §6.

15. Commentary on the Politics of Aristotle, v.

16. ST, 11,1, Q.30, Art. 4.

©November 2002
Vol. XXV, Number 11
The Angelus

Interview with Thomas Storck

On Cooperative Ownership

John Médaille Interview in Romania

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