Friday, February 23, 2007

Corporation Christendom Part One

by Dr. Peter Chojnowski

In urging people to listen to the voice of their conscience and to substitute considerations of public welfare for those of private profit, one does not create a working and satisfactory social order [emphasis mine].2

In one sweeping statement, Mises has negated Christendom and every social, economic, and moral teaching of the Catholic Church; this statement also renders "inoperative" the entire Classical moral and philosophical tradition.

Such statements by the hero of contemporary Libertarianism and Neo-Conservatism (read, Neo-Jacobinism) need not disquiet us at all if we understand it exactly as he meant it to be, a statement by one who upheld the modern Liberal, anti-Christendom world-view and denigrated the civilization, overall and in its detail, built by the Catholic Church; this civilization, of course, was constructed in a certain way, on account of the Church's attempt to conform the circumstances and the means of man's life to the Eternal Law, which includes within itself the Providential Plan by which each created being is brought to a state of perfect fulfillment and satisfaction. Christendom, unlike the "market forces," presupposes real freedom; if man was not free and meant to be fulfilled in his freedom, Christendom would not be needed. "Freedom," of course, is meaningless, and soon becomes bizarre (as in our own commercialist culture) if it is not directed towards the true "good" that fulfills human nature. If freedom does not achieve a true satisfaction of human nature, why is freedom "good"? If, however, freedom is "good" because it genuinely fulfills human nature, economic "freedom" or the ability to sell goods made and to purchase goods made by others, must be subordinated to over­arching considerations of the "good." Since we are speaking about a public "good," we must speak about the "common good," in which every private good is included. The common good entails the fulfillment of human nature at large. If all of the above reasoning is valid, economic freedom to buy and sell must be ordered to the achievement of a truly fulfilled human nature, both individually and commonly.

Only those with the most animalistic conception of man would think that the ability to buy and sell things is the pivot around which should turn an individual life, a political ideology, or the efforts of the State. That "man does not live by bread alone" is not only a religious truth, but is also a bit of wisdom testified to by universal human experience. It is the religious devotion of man, his virtuous moral actions, and his aesthetic and emotional appreciation and expression, which are the higher aspects of man's being that mercantile trade is meant to facilitate and sustain. In light of this, it is perfectly rational that the normal and traditional (i.e., non-Liberal) societies and governments of the past have tried to ensure that the buying and selling that went on amongst men truly facilitated the genuine end of all economic relationships, the full and complete good of men, both individually and as, necessarily, living within a civic body. It was for this reason that such notions as "the just price" and the "the just wage" were normative, and limitations on the use and procurement of private property were instituted.

One point in favor of Ludwig von Mises, however, one not shared in by a number his disciples, is that he recognized that the whole bulk, theoretical and practical, of historical Christendom was against his understanding of the proper order of things. He, at least, recognizes that there was a very definite concept of "justice" in "medieval" Christendom. He simply relativizes it. In pure Nietzschean fashion, he insists that claims about the "justice" of this or that social arrangement or economic condition are merely an attempt by some to preserve an arbitrarily adopted "utopia."

They call "just" that mode of conduct that is compatible with the undisturbed preservation of their utopia, and everything else unjust.3

Von Mises, also, does not claim St. Thomas Aquinas as an early advocate of Liberal Capitalism and the "free-market economy." He understands that St. Thomas, as a Catholic philosopher and theologian, held views profoundly at variance with his own, including in matters of economics. With regard to the question of the "just price," Mises writes:

If Thomas Aquinas's doctrine of the just price had been put into practice, the 13th century's economic conditions would still prevail. Population figures would be much smaller than they are today and the standard of living much lower."

The sentence following should, also, be of interest to those who would like to see the sharp distinction between Mises's Liberalism and the great tradition of the Christian World:

Both varieties of the just-price doctrine, the philosophical and the popular, agree in their condemnation of the prices and wage rates as determined on the unhampered market.5

If Aquinas was a capitalistic pre-Liberal, Mises certainly did not see it; in fact, he uses St. Thomas's teachings as the embodiment of the very mentality and outlook which he is rejecting.

De Roover's Libertarian Dreaming

To base one's ideas solely on conceptions prevailing in relatively current times has never been a very attractive option. The American Whigs of 1787 looked to Republican Rome and the French Democrats of 1789 could look to Democratic Athens. Looking back 2,000 years for a political model is a genuine example of antiquarianism. At least Napoleon, with his later emulation of Charlemagne, only had to look back 1,000 years to find an example of a situation in which his newly chosen form of government "worked" (We must keep in mind here that the reason people had not, for so long, adopted these first two old systems of government was because they were historically conscious enough to realize that they had not "worked.") A number of Libertarians have felt the need to trace their ideas back to the established thought of Catholic Christendom. We can only speculate as to their motives. However, what is clear is this, within the second half of the 20th century and even into our own, there have been some Libertarians who identify nascent capitalistic ideas (I simply identify Capitalism here as the economic form of Liberalism—not to be confused with American Leftism) as existing within the corporate organism that was Christendom, prior to the "dawning" of the Enlightenment. There are some more reckless Libertarian thinkers who would even state that, not only are there Liberal anomalies within the paradigm of historical Christendom, but rather, that Liberalism is the Christian civilizational paradigm itself. The recurrent focus of such Libertarian "dreaming" is the late Renaissance Spanish School of Salamanca and Sts. Bernadine of Siena and Antonino of Florence. The main issue, although not the only one, is the one of the "just price." Can it be that the later Scholastics, as represented by the School of Salamanca, along with the two Renaissance saints known for their sermons on economic concerns, should be identified as early advocates of Liberal Capitalism due to their supposed insistence that the "just price" which must be upheld by Church, State, and Society at large, is simply the one which is assigned to a product due to the interplay of producer supply and consumer demand? If economic "justice," at this most basic and essential level, is simply a matter of adhering faithfully to the "laws of supply and demand," we can say that the view of these Catholic thinkers could, indeed, be characterized as an example of Early Economic Liberalism. If there were something more to "justice" than the simple end result of the interplay of the free will of producer and the free choice of the consumer, then their thought could not be denominated as an early form of Misesian Neo-Liberal/Libertarian conceptions.

When looking for an example of a Neo-Liberal who represents this attempt to find roots in the distant past for Liberal doctrines that seem quite modern, we can turn to Raymond de Roover, who published an article entitled, "The Concept of the Just Price: Theory and Economic Policy" in Journal of Economic History (Dec. 1958). Here it is interesting to read De Roover's portrayal of the "typical" view of medieval thought as it relates to the topic of the "just price." In this article, we read,

According to a widespread belief—found in nearly all books dealing with the subject—the just price was linked to the medieval conception of a social hierarchy and corresponded to a reasonable charge which would enable the producer to live and to support his family on a scale suitable to his station in life [emphasis mine]. This doctrine is generally thought to have found its practical application in the guild system. For this purpose the guilds are presented as welfare agencies which prevented unfair competition, protected consumers against deceit and exploitation, created equal opportunities for their members, and secured for them a modest but decent living in keeping with traditional standards.6

I will place in the footnote all the authors who held these universally acknowledged "misconceptions."7 Such was the "idyllic" view of the Middle Ages upheld by the great German economist Max Weber and by the British author, controversialist, and historian Arthur Penty. According to De Roover, another famous German economist, Werner Sombart (1863-1941), went even further: according to him, not only the medieval craftsmen but even the merchants strove only to gain a livelihood befitting their rank in society and did not seek to accumulate wealth or to climb the social ladder. This attitude, Sombart claimed, was rooted in the concept of the just price "which dominated the entire period of the Middle Ages."8

De Roover, however, has a different understanding of the common mind of the Christian Era as regards prices and economic activity in general. Amidst the presence of many non sequiturs, confused and, even, contradictory historical claims, we find De Roover throwing out various red herrings such as, "Thomas Aquinas himself recognizes that the just price cannot be determined with precision, but can vary within a certain range, so that minor deviations do not involve any injustice. This…is not in accord with Marxian dialectics; but it agrees with classical and neoclassical economic analysis" [emphasis mine].9 So an obvious and balanced moral statement about a minor aspect of the just price issue, because it does not agree with the Marxist theory, makes St. Thomas's economic position into one that "agrees with classical and neoclassical analysis."

The bizarre and forced logic present in De Roover's analysis can only be touched upon here. For example, one of the "naive" economists, Werner Sombart cites Heinrich von Langenstein (1325-97) to the effect that "if the public authorities fail to fix a price, the producer may set it himself, but he should not charge more for his labor and expenses than would enable him to maintain his status (per quanto res suas vendendo statum suum continuare posit)." This is fully in accord with the "traditional" understanding of social and economic thinking in the Catholic Middle Ages. Langenstein continues in the same vein, "And if he does charge more in order to enrich himself or to improve his station, he commits the sin of avarice."10 This position of Langenstein was "regarded as a characteristic formulation of the scholastic doctrine of the just price," according to De Roover. Having been cited by Sombart, De Roover insists that it was "copied by one author after another."11 De Roover tries to throw cold water on the enthusiasm of economic historians for the writings of Langenstein, by stating that, "Langenstein was not one of the giants in medieval philosophy but a relatively minor figure."12 This statement is, of course, totally irrelevant to the topic at hand. The question was not whether or not Langenstein was one of the "giants" of medieval philosophy, but whether his statement of economic theory and practice can be seen as "characteristic." Someone need not be a giant in order to be characteristic. "Giants," of course, are not characteristic at all, but that is another point entirely.

When De Roover does treat a giant, St. Thomas Aquinas, we find contradictory statements interwoven with more than questionable deductions. With regard to St. Thomas, he focuses on the topic that he—De Roover—believes will confirm that the "majority of the [Scholastic] doctors" held that the "just price" did not correspond to cost of production as determined by the producer's social status, but was "simply the current market price." Clearly, De Roover understood that if the just price meant something other than the capitalistic "just the price," his attempt to root Neo-Liberal Capitalism in Catholic social tradition and thought would fail. He had to prove that the "justice" of the price charged in the times of Christendom was nothing other than the price that the item could fetch on the open marketplace. The plan was to portray St. Thomas as an early economic liberal, and then indicate how later Scholastic thought followed him, and, thereby, set the stage for Adam Smith and capitalistic Manchester Liberalism.

De Roover starts his analysis of the position of St. Thomas on the question of the "just price" by stating that in the works of Aquinas, "the passages relating to price are so scattered and seemingly so conflicting that they have given rise to varying interpretations."13 He then goes on to state, unambiguously, what St. Thomas definitely meant by the term "the just price." As he goes on "definitively" articulating St. Thomas's position, he proceeds to contradict his own interpretation of and statements about this position. For example, De Roover states, "By selecting only those passages favorable to their thesis, certain writers even reached the conclusion that Albertus Magnus and Thomas Aquinas had a labor theory of value." In a footnote, on the same page, he states, "As a matter of fact, Aquinas comes close to saying that any exchange of two commodities should be based on the ratio between the amounts of labor expended on each." Isn't he affirming here that Aquinas had a "labor theory of value," when he was just one paragraph above, chiding "certain writers" for reaching the conclusion that St. Thomas "had a labor theory of value"?

The Liberal scholar's reasoning becomes somewhat more convoluted when we find him, at the beginning of a paragraph, stating that St. Thomas "nowhere puts the matter [of the just price] so clearly," and by the end of the paragraph states that

this [single] passage [which is only a story addressing a very limited moral question] destroys with a single blow the thesis of those who try to make Aquinas into a Marxist, and proves beyond doubt that he considered the market price to be just.

So, within a single paragraph, made up primarily of an illustrative story about a merchant selling wheat in a town when he knows that more wheat is on the way, we go from Aquinas the Ambiguous to Aquinas the Absolute. When we look for the passage cited by De Roover, in the Secunda Secundae of the Summa Theologica, we find that the article cited has absolutely nothing to do with the topic of the just price. It is from the question dealing with "Cheating" and the specific article is entitled, "Whether the Seller Is Bound to State the Defects of the Thing Sold?" St. Thomas states here that a seller is acting rightly, from the view point of strict justice, if he merely accepts the amount offered for his wheat by the buyer, without informing the buyer of the greater amount of wheat to come. In other words, it is not unjust to fail to provide information that one could provide about the relative short-term worth of one's products. St. Thomas ends by saying, "If however he were to do so, or if he lowered his price, it would be exceedingly virtuous on his part: although he does not seem to be bound to do this as a debt of justice."14 From this short story concerning a very specific moral question having nothing in itself to do with economic systems or the general topic of the just price, De Roover takes it as proven that "Aquinas upheld market valuation instead of cost,"15 thus beginning a pre-Capitalist tradition in moral theology, which bore fruit in the late Renaissance Salamanca School and in the economic-related sermons preached by St. Bernadine of Siena and St. Antoninus of Florence in the 15th century.

Before treating the real attitude of the late Scholastics in Salamanca and the sermons of St. Bernadine of Siena and St. Antoninus of Florence, it is worthwhile to look at a simple reply to an objection, present in Question 77, "On Cheating, Which is Committed in Buying and Selling." In Article 1, the same article from which De Roover draws his conclusions about the "free market" inclinations of St. Thomas, we read, in Reply to Objection 2, a line of reasoning that would certainly put St. Thomas outside the boundaries of any form of Liberal capitalistic sympathies. Here he cites St. Augustine who says,

th[e] jester, either by looking into himself or by his experience of others, thought that all men are inclined to wish to buy for a song and sell at a premium. But since in reality this is wicked, it is in every man's power to acquire that justice whereby he may resist and overcome this inclination.

The example, cited by St. Thomas, which St. Augustine uses to illustrate this idea, is one of a man who gave the just price for a book to a man who through ignorance asked a low price for it. Here we see the virtuous buyer, who knows the real value of the book, ignoring the market value of the book (the one which was being asked by the seller of those wishing freely to buy), and, instead, justly compensating the seller for his loss. St. Thomas concludes from this example that the "capitalistic" drive to buy as cheaply as possible and sell as dearly as possible—expressive, as it is, of an unlimited drive for acquisition and an overriding self-interestedness—can be overcome just like any vice is overcome. He acknowledges, however, that this self-interested attitude—which is, precisely, the attitude assumed by Liberal Capitalism—is "common to many who walk along the broad road of sin."16 Here we see clearly that economic attitude of Christendom contrasted with the economic attitude of Neo-Liberalism. Neither St. Augustine nor St. Thomas Aquinas is anything like Neo-Liberals. Clearly, the "market price" is not necessarily the "just price." To quote a phrase commonly used by Raymond de Roover, "This text…does not lend itself to a different interpretation."17

©The Angelus

Interview with Thomas Storck

On Cooperative Ownership

John Médaille Interview in Romania

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