Why Karl Marx Supported Libertarianism

by K. Bolton

The term “new Right” in New Zealand and other English-speaking countries is a misnomer and contrary to the way it is applied in Continental Europe. While the term is applied invariably to libertarianism in the English speaking world, it is neither “new” nor “right”.

Libertarianism, free trade, call it what you will, is the reanimated corpse of 19th Century Whig liberalism. The latter, far from being of the “right” or conservative, is antithetical to it. Whig liberalism, what we now call libertarianism, is the doctrinal manifestation of the Industrial Revolution. Its antecedents can be traced back to the Cromwellian Revolution of the 17th Century, a revolt by a newly emerging merchant class against the authority of the monarchy and gentry.

While in terms of our Western civilization it was the first such revolt to be undertaken in the name of the masses, but for the covert benefit of business interests, the French Revolution had the same purpose on the Continent. Both unleashed politically the desire of the merchant to be unfettered by the moral impulse of tradition, to pursue their business interests as they saw fit, without regard to any loyalty beyond profit.

Against these early manifestations of libertarianism stood the partisans of tradition. Conservatism stood for the estate and the rural community against the city, the machine, and the power of money. Conservatism upheld the moral authority of religion against humanism and the relegation of the human being to nothing but “matter in motion”. It defended the monarchy as a unifying focus against the destructiveness of class war. The ideals of noblesse oblige, of duty, of the chivalric concept of protection and obedience, were its basis of social relations rather than dog-eat-dog economics. Work as an ethic and a cultural manifestation, rather than as a mechanical function, was reflected in the old guild concepts.

With the rise of the city, the machine, the bank, and the expansion of the merchant class arose also the proletariat – dispossessed artisans and yeomen. The traditionalist forces represented by conservatism stood pressed between the workers’ movement from below and the plutocracy from above. The workers’ movement was a necessary response to the very real grievances of the uprooted urban proletariat under the libertarian regime of the workhouse, child labour, slum dwellings and cholera. Some traditionally minded individuals and institutions championed the workers’ cause.

The Conservatives, led by Joseph Chamberlain formed the Trade Protection League in 1903 to oppose the free market and champion the British worker. (In New Zealand 1930s Labour maverick John A Lee encountered the opposition of his “socialist” colleagues who thought that trade protectionism was contrary to “International brotherhood”, albeit more a “brotherhood of plutocracy”than of the worker).

Alternatives to both plutocratic libertarianism and socialistic nationalisation were proposed, including monetary reform (e.g. social credit). Catholic social doctrine (called ‘solidarism’) as exemplified by the encyclical of Pope Leo XIII (Rerum Novarum), posited a rejection of socialism and capitalism as materialistic, and advocated a wider distribution of property ( whence the Distributist movement of Hilaire Belloc and G. K. Chesterton). The recreation of the medieval guilds was advocated as a basis for organic social harmony. Such doctrines found an influential voice in the Catholic press in Depression era New Zealand, yet today what prelate advances any socio-economic option beyond crypto-Marxism?

Unfortunately, the “alternative” that triumphed was, until recent years, Marxism, and variants of materialistic socialism such as Fabianism. That they did triumph against the alternatives that were gaining mass support should give pause for thought. For example, why did all the socialist movements from Fabianism to communism have such a ready flow of funds? That the so-called proletarian movements were in the pay of “big capital” was a phenomenon that has been commented on by sundry historians from conservative Oswald Spengler to liberal Carroll Quigley.*

Marxism was very much a product of English economics; the mirror image of the free trade school. It arose with the rise of Darwinism, which was taken from the strictly biological field and applied to economics by both the Marxists and the libertarians. Hence, this economic Darwinism posited history as nothing more than economic development along lineal-progressive (i.e. “evolutionary” ) lines. Both doctrines were based upon economic determinism, upon the materialistic conception of history and human social relations. The materialistic conception is antithetical to such organic bonds as family, nation, and culture. To the Marxist these are “bourgeois” concepts. To the libertarian they are expressions of “collectivism,” and stand in the way of the individual who is complete and sovereign unto himself. While today’s libertarians see themselves and are seen by their foes as the antithesis of socialism, they have this materialistic pedigree in common with the Left.

Marx looked favourably upon free trade capitalism, because it did indeed disrupt those organic bonds that had to be buried before Marxism could triumph. Thus Marx saw the subversive potential of libertarianism. The Marxist historical outlook is dialectical. It sees history in terms of a continuing dialectic of thesis, antithesis, synthesis. The basis of Marxist dialectics is class struggle. Hence the thesis was the old order of ‘feudalism”; the antithesis was capitalism, and from the clash of these opposites would arise the new synthesis of communism.

This is why orthodox Marxist theorists hold that socialism can only arise from an industrialised capitalist country with a large proletariat. Hence the first stage in the dialectical march to communism is capitalism, which prepares the ground for communism. (The mainly agrarian nature of the communist revolutions in China and Cuba caused theoretical problems for communists).

Free trade is the crucial element of the Marxist dialectic, without which there can be no clash of opposites, and therefore no communism arising from the “class struggle”. Few Marxists are open about this seemingly paradoxical support for the subversive nature of libertarianism. Trotskyite publications can, however, be seen adhering to this line when they attack trade protectionism as preserving “national capitalism” and therefore delaying the dialectic that will lead to Communist revolution.

Marx wrote of the subversive role of free trade in the dialectical process when he stated in The Communist Manifesto: “National differences and antagonism between peoples are daily more and more vanishing, owing to the development of the bourgeoisie, to the freedom of commerce, to the world market, to uniformity in the mode of production, and in the conditions of life pertaining thereto.”

Previously, in 1847 (Appendix to Elend der Philosophie) Marx had written:

"Generally speaking, the protectionist system today is conservative, whereas the free trade system has a destructive effect. It destroys the former nationalities, and renders the contrasts between proletariat and bourgeoisie more acute. In a word, the free trade system is precipitating the social revolution. And only in this revolutionary sense do I vote for free trade."

We see Marx’s prophecy being fulfilled increasingly in our own time. “Globalism” and a “new world order” is being heralded by the USA and its allies as the hope of mankind, and is being overtly propagated as the “natural development of capitalism” by books written by corporate advisers. People of differing national, cultural and ethnic backgrounds are becoming interchangeable economic units, an undifferentiated mass of producers and consumers. Banking and industrial corporations spanning the world transcend all such differences. The result is the emergence of an international economic system that can bypass national governments. A global consumer culture emerges from the boardrooms of advertising agencies transcending ethnic and national cultures that are hindrances to international mass marketing. What will arise is a new form of internationalised, rootless humanity: we might call Homo Economicus.

Of course what triumphed was not communism, but libertarianism. The plutocrats knew how to play their own dialectical game, and in many instances used the communists in the manner Marx imagined communism would utilise free trade in a dialectical process. Communism and free trade subverted the organic bonds of nationhood, nationality, and family. The communist bloc imploded in a mountain of bankers’ debt. Upon its ruins libertarianism marches largely unchallenged.

If the forces of tradition wish to reclaim anything of value in the world beyond that which reduces life to an economic tread mill, then it ill behoves the champions of traditional values to get hoodwinked into believing they are served by libertarianism. It can be argued that ACT, Libertarianz and the free trade doctrinaires who infest the Labour and National parties do not fundamentally represent anything other than unfettered money making for the benefit of a few predators and parasites in a Darwinian ‘survival of the fittest”.

FOOTNOTE:

*Socialist movements in the pay of big capital.

This seeming paradox has been remarked upon by a number of well placed observers, among the earliest being officers and diplomats in the service of the Czar, whose intelligence network was aware of the nexus between certain plutocrats and Russian revolutionary movements.

Of recent sources, one of the most eminent was Professor Quigley, of the Foreign Service School, Georgetown University, also of Harvard and Princeton. His importance is not so much as an eminent historian and government adviser, but that he himself, as he states it, was close to the agencies of what he described as an “international network” of plutocrats. In his magnum opus Tragedy & Hope (Macmillan, 1966) Quigley describes the workings of this “network” and alludes to it as having “no aversion to co-operating with communists, or any other groups, and frequently does so.”

Plutocrats have funded all shades of socialism, from Fabianism to communism. For example, the Fabian Society established the London School of Economics, with funds from the British branch of the Rothschild dynasty, Sir Julius Wernher, and Sir Ernest Cassel, an influential banker associated with the New York bankers Kuhn, Loeb & Co. This was related by Fabian leader Beatrice Webb in her autobiography, Our Partnership.

The head of Kuhn, Loeb & co. around his time was Jacob Schiff who had a large part to play in financing socialism. The NY Times of 24 March 1917 reported that at a meeting of US revolutionaries celebrating the victory of the first (March) Kerensky Revolution in Russia, a congratulatory telegram was read from Jacob Schiff.

At the time of the March revolution most of the Communist leaders were in exile, Lenin in Switzerland, Trotsky in the USA. Trotsky was able to return to Russia courtesy of the US State department. He left the USA for Russia aboard the SS Kristianiafjord in the company of a large number of fellow revolutionaries and Wall Street businessmen, according to Dr Antony Sutton, research fellow at the Hoover Institute, who has documented the relationship between Communists and plutocrats in Wall Street & the Bolshevik Revolution (Arlington House, 1974).

At the time Russia was still in the war against Germany. The Bolshevik policy was one of separate peace with Germany. Not surprisingly, the Canadians detained Trotsky at Nova Scotia. Lt Col J B MacLean, publisher of MacLean’s Magazine, himself having had a long association with Canadian army intelligence, commented that Trotsky was released, “at the request of the British Embassy in Washington, which acted on the request of the US State Dept., who were acting for someone else.”

With the triumph of communism in Russia, the American business establishment was quick to urge US recognition of the regime. In a letter to Pres. Wilson, for example, William Sanders, chairman of Ingersoll-Rand Corp. a director of the Morgan American International Corp. and deputy chairman of the Federal Reserve Bank, stated (17 Oct 1918): “I am in sympathy with the Soviet form of government as best suited for the Russian people.” The Red Cross Mission to Russia was utilised as a cover by the American business establishment. .

The mission was funded by International Harvester, according to Sutton. The mission’s director was William Thompson , director of the NY Federal Reserve. Sutton states that the majority of the mission comprised lawyers, financiers and their assistants, rather than people from the medical profession.

According to the Washington Post (2 Feb 1918) Thompson gave the Bolsheviks a personal contribution of $1 million for the spreading of propaganda in Germany and Austria. He stated to the media that the Bolshevik cause had been misunderstood. Sutton states that Thompson joined up with Thomas Lamont of J P Morgan and went to London to persuade the British War Cabinet to halt its anti-Bolshevik policy. Thompson then toured the USA campaigning for US recognition of the Soviets.

From Europe the principal channel of funds to the Bolsheviks was Olof Aschberg, of Nya Banken, Stockholm. A message from the US Embassy in Norway, 21 Feb 1918 states that “Bolshevik funds are being deposited in Nya Banken.” In 1922, when the USSR formed its first international bank, Ruskombank, comprised of German, Swedish, American and British bankers, it was headed by Aschberg. The London Evening Standard (6 Sept 1948) noted of Aschberg’s career when visiting Switzerland, that he was known among diplomatic circles as the “Soviet banker” who “advanced large sums of money to Lenin and Trotsky in 1917. At the time of the revolution Mr Aschberg gave Trotsky money to form and equip the first unit of the Red Army.”

The USSR and the rest of the Eastern bloc subsequently became so enmeshed with debt and reliance on Western technology that the supposed “Soviet threat” was largely a fiction, but served a useful purpose in dragooning nations into the American orbit. China has opened up to Western capital, while even North Korea has recently been forced to come to terms with capitalism as the result of a combination of famine and economic blockade.

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Corporation Christendom Part Two

by Dr. Peter Chojnowski

The Spanish Fairs and Renaissance Banking

To offer proof that the Scholastics, early or late, did not adhere to Libertarian principles of economic life, it is best to cite the historical works of the Neo-Liberals themselves. The two which draw our attention are The School of Salamanca: Readings in Spanish Monetary Theory 1544-1605 by Marjorie Grice-Hutchinson18 and Raymond de Roover's San Bernadino of Siena and Saint Antonino of Florence: The Two Great Economic Thinkers of the Middle Ages.19 Our task can also be simplified if we can demonstrate, using the research of the Neo-Liberal scholars themselves, that the later Spanish Scholastics of Salamanca, along with the two above-mentioned saints, were fully within the great intellectual, social, and economic tradition of Catholic Christendom most particularly concerning the question of the "just price." If the "just price" is formulated in a way which allows for many factors other than the exigencies of "supply and demand" (i.e., whether there is a social and moral aspect of the determination of price), and, especially, if there is a role for the "prince" in the determination of "market prices," then we can safely reject the notion that these Catholic scholars of the past accepted a paleo-capitalistic conception of the determination of price and, hence, of the entire economic life of society.

Even though Salamanca University was the most prominent place of higher learning in the European world at the time, it was Spain's position as master of the New World that set the stage for a concentration on the problems of economics by the Scholastics of Salamanca. The gold and silver coming from the mines of the Americas made Seville, the homeport of the treasure fleet, the economic center of and primary money market in Continental Europe during the middle of the 16th century.20 Here we have a place where there was a large circulation of money and a high price level. Tomas de Mercado (d. 1585), a Dominican from Mexico who was present in Seville and preached on commercial morality, portrays the mercantile and financial situation that grew up in these conditions to us. According to Mercado, when the fleet comes in, every merchant puts into the bank all the treasure that is brought to him from the Indies, the bankers having first given a pledge to the city authorities that they will render good account to the owners.21 The bankers served their depositors free of charge and used the money deposited with them to finance their own operations. Most of the gold and silver brought in by the fleet passed in this way through the hands of the bankers and served as a basis for credit. The opening for usury was occasioned, however, by these transactions. As Mercado complained at the time, "money-changers sweep all the money into their own houses, and when a month later the merchants are short of cash they give them back their own money at an exorbitant rate." In Spain, concludes Mercado, "a banker bestrides a whole world and embraces more than the Ocean, though sometimes he does not hold tight enough and all comes crashing to the ground."22

The above stricture, on the part of Mercado (who died on a ship in 1585 on his way back to Mexico), against the financial transactions of bankers and merchants, was an articulation of an idea that was of ancient origin. Interest paid simply for the use of money during a certain period of time was considered usurious and universally condemned. Much of the moral thought about economics coming out of Spain during this period was, specifically, an attempt to grapple with the moral considerations occasioned by certain attempts to avoid the Church and State's condemnation of usury.

The attempted circumventing of the usury laws occurred in a very subtle way. It originated in a seemingly legitimate attempt to deal with two practical difficulties encountered by merchants at the time. First, there was, generally, a lack of cash available at the time, requiring merchants to set debts against one another at the merchant "fairs" held at various times and in various places throughout the year. Second, the merchants of the period, at the various fairs, had to act as money changers since, often, a debt was incurred in one place, say Seville, and paid in another, say Flanders. In this regard, it was generally agreed that the merchant who paid out money in one place and recouped himself in another was entitled to make a reasonable charge for his services. Even with regard to this type of "financial service," to charge a similar fee for bills transferring money from one Spanish fair to another was forbidden by a royal decree in 1551.23 Clearly the Spanish Catholic Crown was even willing to "dislocate the whole business of the fairs" rather than allow merchants to become involved in unnecessary "financial servicing." There also developed situations in which borrowed money was not to be paid back at the next fair but at one year later. Due to the "fees" attached to such "financial services," these became loans camouflaged as fees and involving a high payment of interest. According to Grice-Hutchinson, these met with "fulminations from both Church and State."24

It is when dealing with this question of the transference of funds from one fair to another, that Grice-Hutchinson, as representative of the Neo-Liberal Economic School, focuses on the question of "price" and the factors determining the "prices" of both money and goods.

The Function of Money and the Question of Foreign Exchange

Medieval ideas about the origin and functions of money are largely based on a few short passages in Aristotle's Politics and Nicomachean Ethics. Here, Aristotle insists that the function of money was its use as a medium for the exchange of goods. Money was first invented to overcome the difficulties of transport and need that are bound to arise in a barter economy.25 Money, therefore, is meant to serve as a common denominator that brings into line with each other things diverse in nature: "Making all things commensurable, equalizes them."26 Along with rendering commensurable for the seller and buyer what is, by nature, qualitatively different, money can serve as "capital," or as a store of value to be used at a future time. Aristotle emphasizes the function of money as a man-made instrument by indicating that its value rests on custom and that it, "rests on us to change its value or make it wholly useless."27 Averroes (1126-98), whose commentary on the Ethics was translated into Latin early in the 13th century, follows Aristotle closely on the origin and functions of money.28

Since St. Thomas Aquinas upheld this traditional view that money was invented for purposes of exchange, he held that it was unlawful to take payment for the use of money lent, which payment is known as usury. Here we have a reassertion of Aristotle's own condemnation of usury. St. Thomas himself applies this to our issue under discussion, gain on account of the foreign exchange of money, by condemning this practice outright. Merchants who attempt to make money by lending money where money is plentiful and collecting it where money is scarce for a real financial gain, meet the following statement by St. Thomas, from his Commentary on Aristotle's Politics, I, lvii:

Likewise the art of money or acquisition is natural to all men for the purpose of procuring food, or money with which to buy food, out of natural things such as fruit or animals. But when money is acquired not by means of natural things but out of money itself, this is against nature.

This teaching concerning making money on the basis of the relative "price" of money in one place or another, appears again in 1532 when the Spanish merchants of Antwerp sent their confessor to Paris to get a ruling on the legitimacy of exchange transactions from the learned doctors of the University. They condemned forthright all exchange business.29 The point that the Neo-Liberals, represented by Marjorie Grice-Hutchinson, would like to draw out of this incident is that, in this reply, the rate of exchange fluctuates according to the state of supply and demand and is not derived from the labor and costs incurred by the person in whose favor the bill is drawn. The assumption here being that that which all think should determine the "price" of money, is the same as what all think should determine the price of commodities. This is an arbitrary assumption. Moreover, the doctors of the University of Paris are, apparently, merely speaking of a matter of fact. In itself, it by no means determines what the Scholastic doctors will say about the "just price" of things that ought to be sold, namely commodities. What we are truly left with from this reply is a further verification of a perennial teaching of the Christian Era; money should not be made off money. As St. Thomas states, such activity is justly deserving of blame, because, considered in itself, "it satisfies the greed for gain, which knows no limit and tends to infinity."30

The School of Salamanca and the Just Price

When considering what the purportedly innovative School of Salamanca said about this important question of the "just price," the economic issue extraordinaire in the Middle Ages, I came across a text, included in The School of Salamanca by Grice-Hutchinson, which led me to hesitate for a moment. Here, in a citation from Domingo de Soto's book De justitia et jure published in 1553, we find the following in answer to the question, "Should prices be determined according to the judgment of the merchants themselves?":

Firstly…excluding fraud and malice, we should leave merchants to fix the price of their wares. Secondly...every man is the best judge of his own business. Now, the business of merchants is to understand merchandise. Therefore, we must defer to their opinion in settling prices. Thirdly, that a man may do as he likes with his own property. Consequently, he may ask and receive whatever price he can extort for his wares.

"Now," I said to myself, "we have a big problem. Domingo de Soto is an important figure in the history of the School of Salamanca. He was a Dominican, a contemporary of the School's founder Vitoria, and considered to be one of its best writers on economic subjects. In 1532 De Soto was appointed to a chair of theology at Salamanca. His fame was such that, in 1545, the Holy Roman Emperor and King of Spain Charles V appointed De Soto, now regarded as the most eminent of the Spanish theologians after Vitoria, as his own representative at the Council of Trent. He became Charles's own confessor two years later. Surely if this man held for the 'free market' approach to commodity pricing, such must be a genuine teaching emanating out of Salamanca."

After some uncomfortable consternation, it dawned on me what I was reading. Rather than being De Soto's own position and teaching on the matter, these were the Objections to De Soto's own position, which always, of course, appear first in any properly organized Scholastic article. De Soto's own teaching on the matter of the just and proper price is perfectly in line with what you would expect a Catholic theologian of a still flourishing and faithful civilization to say.

De Soto's first "conclusion" with regards to this issue is to make a distinction that is the common-sense ground work for any discussion of prices: the price of a "good" (or commodity) is not determined by its essence (how the thing fits into the whole hierarchy of creation), but rather, "by the measure in which [it] serve[s] the needs of mankind."31 Here he affirms what was taught during this same period (1554) by another Salamancan scholar, Diego de Covarrubias: "The value of an article does not depend on its essential nature but on the estimation of men, even if that estimation be foolish."32 The "goods" we are citing here are "goods" which are good insofar as they service human needs. These things, therefore, have a price insofar as they are valuable in the eyes of the citizens; these goods or commodities would allow the citizens to satisfy their human needs. De Soto concludes this foundational claim about prices by saying, "We have to admit, then, that want is the basis of price." Things are, therefore, more desirable, and therefore will go for a higher price, insofar as they more perfectly satisfy man's desire for fulfillment and sustenance, irrespective of the place which the thing holds in the hierarchy of Creation. As St. Augustine states (City of God, Bk.II, chap. 16), "a man would rather have corn than mice in his house"; this, even though mice are ontologically more perfect than grains of wheat.

When speaking of the "want" which is at the basis of all economic life and pricing, De Soto recognizes, in a very balanced way, that when we speak of "want" we must not exclude a recognition of the fact that the city needs "adornment"; even though such things are not necessary for human life, it is something which renders life "pleasurable and splendid."

In De Soto's second "conclusion," we find a statement which directly contradicts the Libertarian claims that the later Scholastics of Salamanca thought that nothing should be considered when calculating price, other than "supply and demand." De Soto lists supply and demand as one of the elements that go into determining the just price for an item.

Next, we must bear in mind the labor, trouble, and risk which the transaction involves. Finally, we must consider whether the exchange is, for better or worse, to the advantage or disadvantage of the vendor, whether buyers are scarce or numerous, and all other things which a prudent man may properly take into account.

In other words, much to the consternation of those who would insist that the Salamanca School recognized nothing but the needs of "supply and demand," we find one of its most prominent scholars asserting that the entire process and situation of production and sale must be considered when the just price is calculated. Social and economic prudence is truly queen here.

We find out in the next paragraph who it is, exactly, who is entitled to make a binding judgment, while employing this social and economic prudence. The answer to this question depends upon another Scholastic distinction. This distinction is between the "legal" price and the "natural" price. These are, as De Soto states, the "two-fold" aspect of the "just price." Here we find that "the just legal price" is that which is fixed by the prince. The "discretionary" or "natural price" is that which is current when certain prices are not legally controlled. De Soto states that this distinction is one drawn by Aristotle in his Nicomachean Ethics (V, chap.7). Notice, in this regard, De Soto is not making a "value judgment," saying that the "legal price" is bad and the "natural price" is good. As we will find, the application of these two different types of prices depends upon what type of good or commodity we are speaking of.

The next few paragraphs of the passage we have been citing are very significant and are echoed by other scholars of the Salamanca School. De Soto states:

To understand the [above] Conclusion and to judge its validity, and to see why it is necessary for prices to be controlled, we must realize that the matter is a primary concern of the republic [in the sense of res publicaor the commonweal] and its governors, who, in spite of the arguments repeated above [i.e., those "free market" arguments in the Objections], ought really to fix the price of every article. But since they cannot possibly do so in all cases, the task [of "fixing" the price of those commodities which the prince has not fixed] is left to the discretion of buyers and sellers. The price that results is called the natural price because it reflects the nature of the goods, and the utility and convenience which they bring [emphasis mine].33

In proof that the term "legal price," entails no negative judgment on this form of pricing, we can cite De Soto as stating, "When a price is fixed by law (for instance, when a measure of wheat or wine, or a length of cloth, is sold for a certain sum) it is not lawful to increase this price by even a farthing. If the excess be great, then it is mortal sin and a matter for restitution." Those prices which are not regulated, especially the prices of commodities extraneous to the basic needs of the citizenry, can "enjoy a certain latitude within the bounds of justice." Here we find that even the prices allowed to fluctuate must be kept within the bounds of justice; "justice," in this case, meaning the requirements of the common good.

The Complexity of the Just Price Reaffirmed

De Soto was, as was every Scholastic, an inheritor of a centuries-old tradition of scholarship and learning. His statements concerning the advisability of "fixing" prices had antecedents deep in the heart of the Middle Ages. That characteristic "non-giant," the Viennese scholar Heinrich von Langenstein, was an advocate of a strict system of price controls. He advises the prince, however, to fix prices in accordance with the customary price, which is determined by "the degree of human want." Moreover, Langenstein shows a completely balanced approach to the question of the just price. He acknowledges that there is an objective factor, in the sense that it should be fixed by some authority standing outside the market, and yet subjective as being the product of subjective factors. Some of those subjective factors that Langenstein mentions are: supply and demand, utility, cost of production, remuneration of labor, cost of transport, and risk. All of these are to be taken into account when determining value.34 Just like St. Thomas Aquinas, Langenstein understood "supply and demand" to play a part in determining price. Grice-Hutchinson herself recognizes this to be the generally held position of the Scholastic tradition when she writes, "we have seen that the concepts of utility and rarity were placed high in the traditional list of factors determining value which accompanied scholastic discussions of the 'just price.'" She also admits, "We have seen that our Scholastic writers regarded utility and rarity as the primary, though not the sole, determinants of value [emphasis mine]."35

If we should look specifically for another member of the School of Salamanca who affirms De Soto's teaching on the desirability of fixing prices, especially those of "staple" commodities, we come upon one Pedro de Valencia. In his Discurso sobre el precio del trigo, he states:

[T]hose who allege that a thing is worth the price it will fetch must be understood as referring only to things that are not essential to life, such as diamonds, falcons, horses, swords, and also to other commoner things when there is no fraud, compulsion or monopoly, and when vender and purchaser enjoy equal liberty or suffer equal need [emphasis mine].

Recognizing, however, that in matters of real need the citizenry is at a distinct disadvantage in any exchange, he states, "in the case of bread, in years when it is dear—the vendor always enjoys liberty and plenty, and the purchaser always suffers urgent need and want." Now we come to the question of the just price:

The just price is not whatever a thing will fetch on account of the purchaser's need, nor can such a price in conscience be demanded. No price is just or should be regarded as current if it is against the public interest, which is the first and principal consideration in justifying the price of things.36

Bernadine of Siena and Antonino of Florence: Saints Misconstrued

We ought be very much surprised when we find a Neo-Liberal scholar like Raymond de Roover focusing our attention on two great saints, St. Bernadine of Siena and St. Antonino of Florence.37 It is, first of all, surprising to see that they are termed, "The Two Great Economic Thinkers of the Middle Ages," when they lived their lives square in the heart of the blossoming Italian Renaissance. That these thinkers are acclaimed as far-sighted prophets of the goodness of Liberal Capitalism is also surprising, since their attitude towards economics itself could not be farther away from the mentality of a Ludwig Mises, who would hold the laws of private property and the "free-market" to be adverse to the "heterogeneous" moral claims made by the divine and natural law. Here it would be useful to recall Mises' statement:

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].

The only thing which the two great saints under consideration intended by their preaching and writing on economic issues was to "urg[e] people to listen to the voice of their conscience and to substitute considerations of public welfare for those of private profit." They also held that only if such things were done, would a just and satisfying civil order be attained.

When we consider the moral teachings of St. Bernadine (1380-1444) as these relate to economic issues, what we are analyzing are 14 sermons which are part of a larger collection of sermons entitled De Evangelio aeterno (Concerning the Eternal Gospel). These Latin sermons, as opposed to his Italian ones, were meant to be read rather than preached. Here we can see the continuation of a long tradition, echoed in our own age by men like Heinrich Pesch, S.J., of including economic questions within the larger framework of ethics. In these sermons of St. Bernadine (a Franciscan and the great apostle of devotion to the Holy Name of Jesus), we find the general teachings of the Church as regards economic life repeated anew. As De Roover himself admits, the condemnation of usury was a prominent theme in St. Bernadine's writings.38 Just as was the case with the other Scholastics, St. Bernadine was "preoccupied with another set of problems [as opposed to questions of "how the market operates"]: what is just or unjust, licit or illicit? In other words, the stress was on ethics: everything was subordinated to the main theme."39 Both St. Bernadine and St. Antonino (Archbishop of Florence from 1445-59), both frown upon acquisitiveness as leading to sin and eternal perdition. St. Antonino deals with the whole topic of market transactions in the section of his Summa Moralis that deals with the sin of avarice.40 Moreover, economics was discussed within the framework of contracts, as Roman law understood these. The virtues that regulated the individual and collective economic actions of men were the virtues of distributive and commutative justice (i.e., the State giving to its citizens "their due" and citizens "giving to each other their due"). Let us face it, the only "due" that the Libertarians allow is the absolute claim that each man has to have the government and his fellow citizens respect his already demarcated private property right. They forget what the Distributists remembered quite well, all men have a certain right to private property. Those who uphold the Social Teachings of the Catholic Church, better than their Libertarian antagonists, understand the role of private property in personal and familial fulfillment.

When we study De Roover's book on these two putatively innovative saints, we find ourselves at a loss to find a significant teaching that is not firmly rooted in the wisdom of the Catholic past or one which is not clarified, in a purely traditional way, by the later Scholastics of the School of Salamanca. As De Roover himself recognizes, St. Bernadine, like the Medieval Scholastics before him, understood price determination to be a social process. Price is not set by the arbitrary decision of individuals but collectively by the community as a whole.41 St. Bernadine makes this explicit when he states, "the price of goods and services is set for the common good with due consideration to the common valuation or estimation made collectively by the community of citizens [emphasis mine]."42 According to De Roover, in the writings of St. Bernadine, there was "only minimal analysis of changes in demand or supply as this affects prices."43

With regard to the above question of price, as we found earlier with his analysis of the economic thought of St. Thomas Aquinas, De Roover's portrayal of the intellectual "innovations" of St. Bernadine is very forced and often involves the use of statements that do not at all prove his point, in fact, they often contradict it. One example is his citation of a single sentence from the "sermons" of St. Bernadine which seems to indicate that the saint held to an idea of the "just price" which was convertible with the idea of "market valuation." In support of this view, he cites St. Bernadine as defining the "just price" as, "the one which happens to prevail at a given time according to the estimation of the market, that is, what the commodities for sale are then commonly worth in a certain place."44

As we have seen, however, with regard to this determination of price based upon "supply and demand" and "market conditions," there was a solid moral tradition, passing into late Scholastic times, in which it was considered perfectly reasonable that prices of certain inessential items were allowed to "float" freely, their value being determined by how much someone who did not absolutely need the item was willing to pay. De Roover himself seems to recognize that the language of "just price" as "prevailing market price" refers to just this situation and to these kinds of goods. And yet, that De Roover wants to insinuate that St. Bernadine equated the "just price" with the "one that happens to prevail at a given time according to the estimation of the market" in all cases, is clear. With his usual hesitant definitiveness he says, "This statement [about just price and prevailing market price], it seems to me, is so clear that it does not admit any other construction.”

If, as he seems to say, St. Bernadine equated just price with market price, all prices should, for justice's sake, be subject to the free flow of market forces—any interference would be, according to this view, an interference in the market's setting of the "just price." That this is not St. Bernadine's view is made clear, again by De Roover himself, when he admits that the Franciscan taught "prices may be fixed for the common good." Society, then, is in charge of setting prices. Who does not hear the echo of the entire economic ethos of Christendom in St. Bernadine statement that, prices may be fixed for the common good, "because nothing is more iniquitous than to promote private45 interests at the expense of general welfare."

St. Antonino, the Just Price, and the Just Wage

St. Antonino of Florence was explicitly committed to the position that civil authority had the right and, often, the obligation to fix prices for the sake of the common good. Clearly the "common estimation" by which prices ought to be determined, included the possibility of the State explicitly setting the price of items. According to De Roover:

Sant' Antonino…states that it might be desirable under certain circumstances to have prices of victuals [i.e., food stuffs] and other necessities fixed by the bishop, or even better, by the civil authorities. If there is such regulation, it is binding and victuallers and other tradesmen may not, without sinning, raise the price above the legal minimum.46

Rather than being anything like a "free market" advocate, the Archbishop of Florence reaffirms the traditional condemnation of usury and monopoly. He also insisted upon there being a "just wage." The calculation of what would constitute a "just wage" was a social and a complex process that would involve the consideration of many different elements. To quote De Roover's citation of St. Antonino, "Sant' Antonino states that the purpose of wages was not only to compensate the worker for his labor but also to enable him to provide for himself and his family according to his social situation."47 Moreover, "it was as unfair and sinful to pay less than the just wage because a worker had mouths to feed as it was unfair to pay less than the just price because of the seller's urgent need for cash."48 St. Antonino clearly saw man as a whole, not just as a private property owning (or not owning) unit. The whole talk about a "just wage" (not to mention a "just price") means nothing unless we understand man to be a social creature and all of man's activities and social interactions, including his economic ones, as having an orientation to the higher and more perfect good, at least the true and fulfilling good of human existence. We see this over-arching teleological (from the Greek word telos or goal) understanding of the human good present in the following statement that De Roover makes concerning the teaching of St. Antonino:

The purpose of a fair wage was to enable the worker to earn a decent living, the purpose of a decent living was to enable him to lead a virtuous life, and the purpose of a virtuous life was to enable him to achieve salvation and eternal glory.49

As we might expect, from what we have seen from the various Libertarian writers cited in this article, De Roover "summarizes" St. Antonino's position by overturning everything he had previously stated concerning the saint's teaching: "St. Antonino's own wage theory according to which the just wage was set by common estimation, that is, by market forces without any reference to individual needs."50 Here he is asserting A and not A simultaneously. Here we have the manipulation of a classical Christian moral text by a Libertarian whose views on economics, logic, politics, society, and, even simple human psychology would be completely inexplicable to our saintly Renaissance bishop.

Restoration Economics

Why does all of this matter? Much of "conservative" and "libertarian" thought, in the United States, in the British Commonwealth, and on the Continent of Europe has attempted to find a way to, as Arthur Penty put it, "stabilize the abnormal." What is truly needed is a return to the normal. What we have seen when analyzing the actual statements made by the Medieval and Renaissance moral theologians on economic issues is a balanced portrayal of what the "normal" is. What has been amazing to see is not how innovative they were, in a Liberal direction, but rather, how traditional and deeply Christian they were. That there was room for discussion on such questions as the worth of money as a result of foreign exchange is a perfectly normal manifestation of the Catholic desire for justice and a deep prudence that understands the multiplicity of situations in which human beings act. Such prudence cannot be taken as a revolutionary innovation or for an opening to modern economic liberalism.

The basis of our current "abnormal" is an inflated and unnatural understanding of man as an individual, free to "create" his own "value system," which, to a certain extent, means to "create his own world." Liberalism, in its economic and political manifestations, has created a situation in which the ancient psychological, social, economic, and political tapestry of human societies has been unraveled. By upholding an ethereal concept of "choice," it has robbed us of our honor, our personal security, and our heritage. This entire conception of man and human existence is embedded in the Neo-Liberal equation of the "just price" with the "market price." That Arthur Penty and many others would present the "just price" and its attainment as the primary purpose of the Medieval Guild System is testimony to the fact that the very social life of Christendom, in a very real way, pivoted upon this reality. That "justice" should involve more than mere "freedom of choice," rather including within the very term an idea and concrete historical reality expressive of a higher order and more fundamental and essential obligations, is testimony to the fact that the spiritual psychology of Christendom was profoundly different from the one we find possessed by all those who reject the ancient way, whether they be Socialists, Globalists, or Libertarians. For those who would correctly seek for a life outside of the spiritually suffocating totalitarian Liberalism that we find ourselves immersed in, Penty warns them that any attempt to realize the dream of an independent rural existence without price controls put into place, would result, for most, in economic suicide for families and for individuals. These are sobering words. Our struggle must then take on a more encompassing religious, moral, and even political dimension if our children and our children's children are to live a life richer and, hence, more traditional than our own.


Dr. Peter E. Chojnowski has an undergraduate degree in Political Science and another in Philosophy from Christendom College. He also received his master's degree and doctorate in Philosophy from Fordham University. He and his wife Kathleen are the parents of six children. He teaches at Gonzaga University, Spokane, WA, and for the Society of Saint Pius X at Immaculate Conception Academy, Post Falls, ID.

1. For Neo-Liberalism's understood indebtedness to Ludwig von Mises during the post-World War II period, see Erik von Kuehnelt-Leddihn, Leftism Revisited: From De Sade and Marx to Hitler and Pol Pot in the chapter entitled "Real Liberalism" (Washington, D. C.: Regnery Gateway, 1990), p. 180.

2. Ludwig von Mises, Human Action: A Treatise on Economics (New Haven, CT: Yale University Press, 1949), p.726.

3. Ibid., p.728.

4. Ibid.

5. Ibid., pp.728-729.

6. Raymond de Roover, "The Concept of the Just Price: Theory and Economic Policy" in Journal of Economic History 18 (Dec. 1958), p.418.

7. For a traditional view of Medieval history and economics, rejected as a "fairy tale" by Raymond de Roover, cf. William Ashley, An Introduction to English Economic History and Theory, 4th ed., 2 vols. (London: Longmans, Green, 1920), I, Part II, 391; John M. Clark, The Social Control of Business, 2nd ed. (New York: McGraw-Hill Book Co., 1939), pp.23-24; Shepard B. Clough and Charles W. Cole, Economic History of Europe, rev. ed. (Boston: D.C. Heath, 1946), pp.31, 68; George Clune, The Medieval Guild System (Dublin: Browne and Nolan, 1943), p.55; Alfred de Tarde, L'idee du justeprix (Paris: Felix Alcan, 1907), pp.42-43; Joseph Dorfman, The Economic Mind in American Civilization, 3 vols. (New York: Viking Press, 1946-1949), 1,5; N. S. B. Gras, Business and Capitalism (New York: Crofts, 1939), pp. 122-123; Herbert Heaton, Economic History of Europe, 1st ed. (New York: Harper, 1936), p.204; George O'Brien, An Essay on Medieval Economic Teaching (London: Longmans, Green, 1920), pp. 111-112; Leo S. Schumacher, The Philosophy of the Equitable Distribution of Wealth (Washington, D.C.: The Catholic University of America, 1949), p.47; James Westfall Thompson, An Economic and Social History of the Middle Ages, 300-1300 (New York: Century Co., 1928), p.697. Also, included as a representative of this "erroneous" view of the Middle Ages, Arthur J. Penty, A Guildman's Interpretation of History (New York: Sunrise Turn, n.d.), pp.38-46. De Roover concludes these footnotes by saying, "This list is by no means exhaustive" [emphasis mine].

8. Ibid., p.419. Cf. Werner Sombart, Der moderne Kapitalismus (Munich: Duncker & Humblot, 1916), I, 292-293.

9. De Roover, Just Price, p. 420.

10. As the source of this quotation, de Roover cites Heinrich von Langenstein, Tractatus bipartitus de contractibus emptionis et venditionis, Part I, cap. 12, published in Johannes Gerson, Opera omina, IV (Cologne, 1484), fol. 191. According to de Roover, "No more recent edition is available."

11. De Roover, Just Price, p. 419.

12. Ibid., p.420.

13. Ibid., p.42l.

14. St. Thomas Aquinas, Summa Theologica, II-II, Q. 77, Art. 3, ad 4.

15. De Roover, Just Price, p.423.

16. ST, II-II, Q. 77, Art. I, ad 2.

17. De Roover, Just Price, p.421.

18. Marjorie Grice-Hutchinson, The School of Salamanca: Readings in Spanish Monetary Theory 1544-1605 (Oxford: Clarendon Press, 1952).

19. Raymond de Roover, San Bernadino of Siena and Sant' Antonino of Florence: The Two Great Economic Thinkers of the Middle Ages (Boston: Harvard University Printing Office, 1967).

20. Hutchinson, School of Salamanca, pp. 1-6.

21. Ibid., p8.

22. From Tomas de Mercado's Tratos y contratos de mecaderes published in Salamanca in 1569 cited in Hutchinson, pp.4-8.

23. Ibid., pp.9-11.

24. Ibid., p. l&.

25. The Politics of Aristotle, edited and translated by Ernest Barker (New York: Oxford University Press, 1945), I, 1257a and 1133b.

26. Aristotle, Nicomachean Ethics, trans. Terence Irwin (Indianapolis, Indiana: Hackett Publishing, 1985), V, 1133a.

27. Ibid. Cf. Hutchinson, School of Salamanca, pp.20-21.

28. Hutchinson, School of Salamanca, p. 22.

29. Ibid., p. 38.

30. Ibid., p.35. Cf. ST, II-II, Q. 77, Art. 4.

31. Domingo de Soto, De Justitia et Jure, Book VI, Q. 2, Art. 3, pp.546-549 (Salamanca, 1553). This text is cited in Hutchinson, pp.83-88.

32. Diego de Covarrubias, Variarum ex pontificio, regio et caesareo jure resolutionum, Book 4, 1554, vol. li, lib.2, chap.3 as found in Hutchinson, p.48.

33. See Hutchinson, School of Salamanca, pp.84-85.

34. Ibid., p.28.

35. Ibid., p.64.

36. Pedro de Valencia, Discurso sobre el precio del trigo (reprinted in Pedro de Valencia, Escritos sociales, in Biblioteca de clasicos sociales espanoles [Madrid, 1945]); the text is cited in Hutchinson, pp.118-119.

37. Raymond de Roover, San Bernadino of Siena and Sant'Antonino of Flor­ence: The Two Great Economic Thinkers of the Middle Ages.

38. Ibid., p. 1.

39. Ibid., pp.7-8.

40. Ibid., p. 1.

41. Ibid., p.20.

42. St. Bernadine of Siena, De Evangelic aeterno, sermon 35, art. 2, cap.2 and 3 in Opera omnia, IV, 197-198. This text is cited in de Roover, San Bernadino, p.20.

43. De Roover, San Bernadino, p.21.

44. Ibid., p.20.

45. Ibid., pp.20-21.

46. Ibid., pp.22-23.

47. Ibid., p. 25.

48. St. Antonino of Florence, Summa Theologica, Part II, tit. I, cap. 17, n.8. This text is cited in de Roover, San Bernadino, p. 25.

49. De Roover, San Bernadino, p.27. The citation is a paraphrasing of St. Antonino's Summa Theologica, Part III, tit. 8, cap.l, n.l.

50. Ibid., p.25

©The Angelus

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Catholic Whiggery: The Neo-Conservative Betrayal Of Church Social Teaching

by Dr. Peter Chojnowski

In the past 20 years or so, we have witnessed, especially here in the United States, the emergence of what some authors have termed, "Catholic Whiggery." This movement, best exemplified by such authors as Michael Novak and Fr. Richard John Neuhaus, is but an attempt at a Catholic version of the more encompassing "Neo-Conservative" movement, which has its origins with anti-Stalinist Trotskyites, who came to be considered "conservatives" during their years of opposition to Soviet Communism during the Cold War.

Led by such intellectuals as Irving Kristol, the "Neo-Cons," as they are called, embraced the "Whig Tradition," which found its modern-day expression in the social and economic writings of Friedrich von Hayek. Hayek, a Libertarian and northern European secularist, attempted to revive and promote the Whig tradition, which advances laissez-faire economics, secular democracy, and religious and cultural pluralism. This Whig tradition could be said to have its ideological origin in the writings of the defender of the English Revolution of 1688, John Locke. (This so-called "Glorious Revolution" was the which overthrew the legitimate Catholic Stuart monarch James II and placed James's Protestant daughter Mary and her Dutch husband William of Orange jointly on the British throne.)

To understand the "world vision" of these contemporary Liberals (i.e., Libertarians), we must first remember that they themselves trace their ideological origins to the 18th- century Enlightenment. Michael Novak has described the scheme of these Enlightenment theorists and political leaders as follows:

One of the great achievements of the Whig tradition was its new world experiment, the Novus Ordo Seclorum (the New Order of the Ages). Its American progenitors called that experiment the commercial republic. The Whigs were the first philosophers in history to grasp the importance of basing government of the people upon the foundation of commerce. They underpinned democracy with a capitalist, growing economy.1

That such a Liberal ideology could prevail amongst secularists and non-Catholics groping for an alternative to post-World War II Soviet Communism and Fabian Socialism is not terribly surprising. What is surprising is that such an ideological view could be defended by Catholic thinkers who, subsequently, attempt to "discover" a "Catholic Whig tradition" running back in time to St. Thomas Aquinas. That such Catholic Whigs are claiming to base their circumvention of the entire Catholic Social Teaching on the "Whiggery" of certain "late Spanish Scholastics" is well known. Novak himself attempts to make the Angelic Doctor a precursor of this "tradition" by claiming that St. Thomas's belief in "ordered liberty," mixed government (i.e., several different bodies of the State exercising the various powers of Sovereignty and serving as a hindrance to the emergence of tyranny), and his belief in man's powers of "reflection and choice," puts him firmly in the camp of Democratic Capitalism. The untenable nature of this claim, especially in light of St. Thomas's condemnation of usury, his understanding of the common good, and his unequivocal position that monarchy is the best form of human government, causes Novak, in various places in his writings, to rely on the more standard Whig philosophers like John Locke and Adam Smith to ground his ideological defense of democratic capitalism, American-style. His laudatory rhetoric in praise of these thinkers and the System they spawned often descends to the level of the blasphemous and the absurd. In an article entitled, "A Theology of the Corporation," Novak cites the memorable and moving last words of the young Abbe d'Ambricourt, "Grace is everywhere," to offer "signs of grace in the [multinational] corporation." In this regard, Novak finds seven such "signs," which he states is a "suitably sacramental number."2

In an appendix to this same article, Novak acknowledges that the Capitalist Idea, which is part and parcel of the Whig ideology, owes its origins to the Enlightenment thinkers Locke, Montesquieu, and Adam Smith, and the "economic development," which they uniquely initiated, was brought about first with the "white race and the Anglo-Saxon peoples, and, indeed, of a few philosophers."3

We can fully understand the inflated claims of this advocate of the enlightened Liberal New Age, when we read that, "The notion that poverty could be diminished was born with John Locke and Adam Smith."4

Those who were against these "few" enlightened, poverty-hating thinkers were "many Continental philosophers and theologians-Latins, Germans, Slavs-[who] opposed 'Manchester liberalism' all through the 19th century, disliking it intensely."5

What is heartening for those who seek to uphold the Catholic Church's Social Teachings against this new Capitalist Messianism of the Catholic Whig is Novak's dismissal of those social teachings with his statement that, "The papal encyclicals treat it [meaning Liberal Capitalist theory] as a Protestant heresy."6

What is at the core of this Liberal ideological view, shared in full by the "Catholic Whigs" of our own time, are the ideas of social, political, religious, and economic individualism and the subsequent non-interventionism of the State. It was the task of John Locke to philosophically ground this Whiggish Liberal world-view, while it fell to Montesquieu to formulate the exact nature of the Liberal Commercial Republic of the post-Enlightenment period. The descriptive part was easy. Montesquieu understood the Liberal regime to be a union of fellow citizens, bound together, not so much by ties of friendship, as by contract. This alliance of contracting parties was intent upon maximizing their freedom of choice through a confederation of convenience. In such a socio-political order, men found themselves cut off from one another or, at best, linked through a market mechanism. What would happen if this Liberal Republic was realized, would be a world in which everything had its price and, accordingly, its sellers and buyers. A marketplace of arms' length transactions would replace political community.

As we can surmise, religion is of no importance in such a commercial republic. This is why Locke restricts religion to the private sphere. Couldn't we say that it is exactly this restriction that distinguishes the Liberal regime from the regimes of Old Europe? This Whig view, which understands government to be constituted by contracting individuals and whose sole purpose is to insure the execution of the contracts made between individuals, cannot but alter Christendom's understanding of what the purpose of civil society is. In his first Letter Concerning Toleration, Locke argues for the civic toleration of all religions (except the intolerable anti-liberal Catholic one) by making the following claim about the nature of civil society itself:

The commonwealth seems to me to be a society of men constituted only for the procuring, preserving, and advancing of their own civil interests. Civil interests I call life, liberty, health, and indolency of body; and the possession of outward things, such as money, lands, houses, furniture, and the like.

Locke is even more explicit as regards his understanding of a Liberal political order when he states, in his Second Treatise on Government, that,

The great and chief end, therefore, of men uniting into commonwealths, and putting themselves under government, is the preservation of their property; to which in the state of Nature there are many things wanting.

Any idea of a common end of all the members of society and of society as a whole is completely lacking in this political view. The religion of the people, along with their growth in the virtues of faith, hope, and charity are certainly not the concern of the rulers of such a Liberal State. As Locke states in the same text,

If a heathen doubt of both Testaments, he is not therefore to be punished as a pernicious citizen. The power of the magistrate and the estates of the people may be equally secure whether any man believe these things or no. I readily grant that these opinions are false and absurd. But the business of the laws is not to provide for the truth of opinions, but for the safety and security of the commonwealth and of every particular man's goods and person.

According to this analysis, then, government is only delegated the task of guaranteeing the private relationships and agreements initiated by the individual citizens themselves. Society does not have a corporate task, responsibility, or goal. Any goal which transcends the one of material acquisition and psychophysical contentment is considered beyond the legitimate realm of State interest and concern. "Providing the conditions necessary for the advancement in virtue and the ultimate attainment of Heaven" is out. Christendom is nullified. The past, made up of completely non-Liberal societies, is to be initially vilified and then forgotten. All the Whig theorists advance this same goal, whether Locke, Montesquieu, Adam Smith, Jefferson, Alexander Hamilton, Lord Acton, or Michael Novak. Indeed, this rejection of the idea of socially and economically significant State intervention in the affairs of the commonweal is the very essence of the ideology of the Whigs, whether neo-Catholic or non-Catholic. Novak himself states this when he writes,

The foundational concept of democratic capitalism, then, is not, as Marx thought, private property [which it would be, of course, for Distributism]. It is limited government. Private property, of course, is one limitation on government. What is interesting about private property is not that I own something, that I possess; its heart is not 'possessive individualism'....Quite the opposite. The key is that the state is limited by being forbidden to control all rights and all goods.7

What is little realized by those who attempt to stand up to the steam roller of Whiggery, whether in its Catholic or non-Catholic versions, is the fact that Locke constructed an entire theory of human knowledge for the express purpose of bolstering the Whig theory of government and society. This theory is called "empiricism" and has shaped the minds of most men in the Anglo-American world since that time. It can be understood as the theoretical foundation of all the Liberal claims about man and the world of men. Fundamentally, this theory claims that human knowledge is limited to the external appearances of things in the world. The very "substantial being" of things, the essence of created things and structures in the natural world, cannot be known by the human mind. Substance, according to Locke, is "I know not what." The importance of this basic philosophical stand cannot be overerestimated. If man, and, more importantly, the embodiment of the society of men, the State, cannot know the "what" of things, he certainly cannot know the "why" of things. Locke allowed that individual men could know the "why" of things by blind faith alone. The State, however, has not the authorization or the competence to speculate as to the "why" of things. Therefore, any theological or philosophical teachings that answer the question "why" are strictly beyond the pale of acceptable political discourse. The State is simply relegated to keeping the individual citizens, who come up with their own private "whys," off each other's back and, most importantly, out of each others wallets!


Dr. Peter E. Chojnowski has an undergraduate degree in Political Science and another in Philosophy from Christendom College. He also received his master's degree and doctorate in Philosophy from Fordham University. He and his wife, Kathleen are the parents of five children. He teaches for the Society of Saint Pius X at Immaculate Conception Academy, Post Falls, ID.




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

1. Taken from Thomas Storck, "The Social Order as Community" in Caelum et Terra, Fall 1996.

2. Michael Novak, "A Theology of the Corporation," in The Corporation: A Theological Inquiry (Washington, D.C.: American Enterprise Institute for Public Policy Reseach, 1981), pp.206-207.

3. Ibid.,p.225.

4. Ibid.

5. Ibid.

6. Ibid.

7. Ibid., p. 209. Cf. For a complementary view, see Paul Johnson, "Is There a Moral Basis for Capitalism?" in Democracy and Mediating Structures: A Theological Inquiry, ed. Michael Novak (Washington, D.C.: American Enterprise Institute, 1980), pp.49-58.

©Dr. Peter Chojnowski

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Economic Science and Catholic Social Teaching

by Thomas Storck

Even among otherwise orthodox Catholics in the United States there is generally little knowledge of or interest in Catholic social doctrine, that body of Catholic teachings which concerns man in society, especially with reference to the political and economic orders. Since Leo XIII began vigorously to develop and apply this teaching to the changing conditions of the modern world, especially with his encyclical Rerum Novarum (1891), Catholic social doctrine has seemed to many to constitute an alternative both to free-market capitalism and all forms of socialism and communism. But lately an objection to Catholic social teaching has arisen from an unexpected source, in fact, from some of those who claim to be especially devoted to Catholic life and tradition as it existed before the Second Vatican Council. This is ironic, for during that era Catholic social teaching was championed much more than it is today by the hierarchy, including the papacy, and was, I think, much more in the consciousness of the ecclesiastically literate Catholic. But the objection that has arisen from some who call themselves traditionalists is novel in one respect, yet in another respect not. It is novel in that it bases its explicit rejection of such doctrine on the supposed teachings of the science of economics. But it is not novel in that the hallmark of dissenters and heretics throughout the ages has been precisely to take some human science, theology or philosophy often, elevate it above the teaching magisterium of the Catholic Church and pose the false quandary: If I accept such and such a teaching of the Church I must go against my God-given reason. But since reason is from God, I cannot contradict it. Therefore I must reject this teaching of the Church.

The latest among those who take this approach is one Thomas Woods, Jr., who argues that Catholic social teaching and economic science are fundamentally at odds, and that it is the former that must yield to the latter. Woods is not shy about stating his position.

The primary difficulty with much of what has fallen under the heading of Catholic social teaching since Pope Leo XIII's Rerum Novarum (1891) is that it assumes without argument that the force of human will suffices to resolve economic questions, and that reason and the conclusions of economic law can be safely neglected, even scorned.... This attitude runs directly counter to the entire Catholic intellectual tradition, according to which man is to conform his actions to reality, rather than embarking on the hopeless and foolish task of forcing the world to conform to him and to his desires ["Catholic Social Teaching and Economic Law: An Unresolved Tension," paper delivered at the Austrian Scholars Conference at the Mises Institute, Auburn, Alabama, March 2002, p. 4. The entire paper is available here].

And he dismisses as "perfectly nonsensical" the claim that his position "involves himself in `dissent' from Church teaching" ("The Trouble with Catholic Social Teaching," lecture delivered at the Austrian Scholars Conference, Mises Institute, Auburn Alabama, March 2004, p. 2.). Why? Because

In the absence of any attempt to address these issues [i.e., the issues that Woods considers important], it is difficult to see how the economic claims of the social encyclicals can actually constitute authoritative Catholic doctrine binding upon the consciences of all the faithful” ["Catholic Social Teaching and Economic Law: an Unresolved Tension," pp. 33-34].

And he goes on to say:

One hesitates to describe Catholic social teaching as an abuse of papal and ecclesiastical power, but surely the attempt to impose, as moral doctrine binding the entire Catholic world, principles that derive from the popes' intrinsically fallible reasoning within a secular discipline like economics, seems dubious. At the very least, it appears to constitute an indefensible extension of the prerogatives of the Church's legitimate teaching office into areas in which it possesses no inherent competence or divine protection from error [Ibid., p. 35].

This is the question in a nutshell: Thomas Woods believes that certain teachings of Leo XIII, Pius XI, Pius XII, John XXIII, Paul VI and John Paul II, teachings which these pontiffs certainly conceived of as part of their legitimate teaching authority, are wrong because he thinks they contradict the tenets of economics.

Now in the first place, I must agree with Woods, that both cannot be right. If these economic beliefs are correct then the papal teaching is wrong, for truth cannot contradict itself. Otherwise we would be headed toward the notion of a double-truth which was implicit in some of the theories of the medieval Latin Averroists, that is, that the same thing could be true in philosophy and false in theology. But as every loyal Catholic knows, there is not nor can there be any conflict between authentic Catholic teaching and the genuine findings of any human science. Such a thing is not possible.

What can one say in reply to Woods, then? First, that since a whole series of popes has taught certain moral truths connected with economics which they believed was entirely within their competence, it is monstrous for anyone claiming to be a Catholic to argue against this teaching, and second, that what Woods represents as the teaching of economics is in fact simply one economic view among many, and that thus it is not the science of economics that is at odds with Catholic doctrine, but simply one school of thought representing ultimately the fallible reasoning of human beings.

In the first place, then, any instructed and orthodox Catholic will have no difficulty in dismissing Woods' claims at once, even without investigating his arguments. When confronted, for example, with claims by psychologists or sociologists that the findings of their particular disciplines invalidate this or that teaching of the Church, we can know that their claims are not to be taken seriously. Of course, usually it is necessary to refute them in order to show those outside the Church, or those weak in faith, that the teachings of the Church have not been disproven. But in principle, Woods' claims are no different from those made by many another partisan of one pet theory or idea after another. The popes have been quite explicit about their competence to teach in these areas of economic morality. Let us look at just two of their statements.

We approach the subject with confidence, and in the exercise of the rights which belong to Us. For no practical solution of this question will ever be found without the assistance of Religion and the Church. It is We who are the chief guardian of religion, and the chief dispenser of what belongs to the Church, and We must not by silence neglect the duty which lies upon Us [Leo XIII, Rerum Novarum, no. 13].

We lay down the principle long since clearly established by Leo XIII that it is Our right and Our duty to deal authoritatively with social and economic problems. It is not of course for the Church to lead men to transient and perishable happiness only, but to that which is eternal. Indeed "the Church believes that it would be wrong for her to inferfere without just cause in such earthly concerns"; but she never can relinquish her God-given task of interposing her authority, not indeed in technical matters, for which she has neither the equipment nor the mission, but in all those that have a bearing on moral conduct. For the deposit of truth entrusted to Us by God, and Our weighty office of propagating, interpreting and urging in season and out of season the entire moral law, demand that both social and economic questions be brought within Our supreme jurisdiction, in so far as they refer to moral issues [Pius XI, Quadragesimo Anno, no. 41].

Mr. Woods may think that they have overstepped the bounds of moral theology into technical economic questions, but that is not what they thought. When not just one, but even more so many supreme pontiffs teach the same truths and consider that they have a perfect right to do so without this constituting an "abuse of papal and ecclesiastical power," then surely any orthodox and loyal Catholic must accept the popes' own notions of the limits of their teaching authority. As I said above, every dissenter and heretic in the history of the Church elevates some idea of his own, which he feels he has good reason to accept, into a principle higher than Catholic teaching. What makes Woods different from them? If a psychologist or sociologist claimed that his knowledge made it impossible for him to accept Catholic teaching on sexuality, we would dismiss his arguments as worthless, and rightly so. But who is Thomas Woods to set up his own boundaries as to what is and what is not acceptable for the Church to teach? What are his credentials to constitute a parallel magisterium? The Catholic Church has been teaching in the area of economic morality for centuries. Mr. Woods' quarrel is not with a few recent popes but with the entire tradition of Catholic teaching on economic morality.

Lest anyone argue that the Church has never defined infallibly the social doctrines stated in papal encyclicals, we should remember that infallibility extends beyond merely the teachings of the solemn magisterium to the teaching of the ordinary and universal magisterium. (The First Vatican Council, in its Dogmatic Constitution, De Fide, chap. 3, taught: "Further, all those things are to be believed with divine and Catholic faith which are contained in the Word of God, written or handed down, and which the Church, either by a solemn judgment or by her ordinary and universal teaching [magisterium], proposes for belief as having been divinely revealed.") At least some of the contents of the papal social encyclicals, for example, the doctrine of the just wage, would seem to have been repeated enough times so that they qualify as part of the ordinary and universal magisterium. And even those matters which may not rise to the level of the universal magisterium, are by no means optional matters for Catholics. Pius XII authoritatively stated in his encyclical Humani Generis of 1950 the following:

Nor must it be thought that what is expounded in Encyclical Letters does not of itself demand consent, since in writing such Letters the Popes do not exercise the supreme power of their Teaching Authority [Magisterium]. For these matters are taught with the ordinary teaching authority [Magisterio enim ordinario haec docentur], of which it is true to say: "He who heareth you, heareth me"... [No. 20].

And the Second Vatican Council, in its Dogmatic Constitution on the Church, Lumen Gentium of 1964, taught:

[A] loyal submission of the will and intellect must be given, in a special way, to the authentic teaching authority of the Roman Pontiff, even when he does not speak ex cathedra in such wise, indeed, that his supreme teaching authority be acknowledged with respect, and sincere assent be given to decisions made by him, conformably with his manifest mind and intention, which is made known principally either by the character of the documents in question, or by the frequency with which a certain doctrine is proposed, or by the manner in which the doctrine is formulated” [No. 25].

Moreover, when one looks closely at this matter, one will discover that what Woods solemnly proclaims to be the teachings of economics are in fact only the opinions of one particular sect of economists. In fact, the Austrian school, to which Woods adheres, is a minority school of economists. It is true that many neoclassical economists would agree with many of Woods' criticisms, but there are other schools of economic thought whose findings harmonize well with Catholic social thought. Woods himself mentions, and excoriates, the German historical school. There is also the American institutionalist school, and there are others. Woods has no more right to consider his own economic ideas as equivalent to the entire field of economics than a Kantian philosopher has to regard the teachings of Kant as equivalent to the entire field of philosophy. If such a philosopher were to say, "There is a conflict between the teachings of the First Vatican Council and the science of philosophy on the ability of human reason to demonstrate the existence of God," we could easily point out to him that there are other schools of philosophy, such as Thomism, that have no such conflict, and that he is wrong to claim for his own school the mantle of philosophy as a whole. But this is exactly what Woods has done for economics. His own school says this, therefore economics as a whole says this. The faulty reasoning here should be evident. Woods quotes with approval the following statement of Professor William Luckey:

The fact that Catholic economic teaching, put forth as unchanging and required of belief, did not square with what Austrian economists know to be true, has created an agonizing crisis of conscience for such economists ["The Trouble with Catholic Social Teaching," p. 6, my emphasis].

Woods and Luckey have raised the fallible reasoning of a group of economists, a group which does not even command majority opinion within its own discipline, into an infallible voice of truth which they consider to be able to trump the teachings of the supreme pontiffs! Contrary to what Woods continually asserts, to question Austrian economics is not to question the validity of human reason; it is simply to question the validity of certain dubious conclusions reached by one group of men who enjoy no charism of infallibility.

Woods also makes much of the economic teaching of a group of sixteenth and seventeenth-century Spanish theologians who have sometimes been claimed as precursors of Woods's views, or of something like them anyway. There is some reason to question whether this similarity between their views and his own has not been greatly overstated. (I will instance only one example. In his first paper Woods (p. 8) quotes a passage from Juan de Mariana on the folly and evil of a ruler attemping to set a price of a good "in such a way that the legal price should differ from the natural.... Men are guided in this matter by common estimation founded on considerations of the quality of things, and their abundance or scarcity." Now "common estimation" was a traditional scholastic way of discovering a just price. Common estimation was the common opinion of men in general as to what was a reasonable price, and though it might in many cases be based in part on factors that included certain market forces, such as the "abundance or scarcity" of the item in question, the important point to recognize is that common estimation and the market price of Austrian or neoclassical economics do not mean the same thing. That is, even if in some cases they might coincide, they do so for different reasons. Moreover, this subject opens up the entire question of what is a market price, since all markets are subject to legal and customary rules, and whether in fact it makes any sense to speak of a market price. Rather, the question is: what market price exists under such and such a legal and social regime.) In addition, I will point out two things. First, if it were the case that these theologians agreed completely with Woods, what would that mean? Absolutely nothing. They have no special status above other theologians, and against the teaching of the popes their views carry no weight whatsoever, any more than the myriad of theologians of today whose views are widely quoted against authentic papal teaching. And secondly, if, as Woods avers, the vicars of Christ have overstepped the bounds of moral theology by their teachings on economic morality, what gives these Spanish scholastics, who were theologians not economists, any particular authority in this field? Is Woods making an argument from authority? If he is it fails, for by his own claims theology has nothing to say on these particular questions. If, on the other hand, he is simply claiming them as intellectual precursors, and appealing to the weight of their arguments, then I do not see any reason why I should specially attend to them, particularly as they (according to Woods) teach contrary to the popes and are no more infallible than any other economic writers.

Woods is especially agitated because he thinks that without his own conception of economics it must cease to be a science. Although I know of nothing in scripture or tradition that guarantees that economics is a science, nevertheless what he says does not necessarily follow. Heinrich Pesch, the great Jesuit economist, whose thought provided the background for the encyclical Quadragesimo Anno, and whom Woods criticizes, strongly defended the status of economics to be a science, but a human and a social science, one that depends at least in part on the free acts of human beings. We are not required to give up the claim that economics is a science if we accept Catholic social teaching.

Although it is not my primary intention to engage in an economic debate with Woods, I must say just a word to show how the economic arguments he makes are far from compelling. The model of an economy which both neoclassical and Austrian economics present, and the economic policies which Austrian economists usually champion, are not the obvious conclusions of economic reasoning as they would have us believe. For economic activity always takes place within a legal, social and technological framework, and the structure of that framework to a great degree conditions and determines the shape which economic activity takes in any particular society. There was no economic reason, for example, why the guilds of the Middle Ages, which controlled the urban economies of Europe and severely limited competition among craftsmen, need have come to an end, and the economy which resulted from the demise of the guilds was largely the creation of a changed intellectual climate, not the result of so-called economic laws. Nor are limited liability corporations, which currently dominate our economy and which were created only in the nineteenth century due to emerging state general incorporation laws, the inevitable products of economic forces, but rather were brought into being by the free acts of legislatures. Market forces always work within a certain framework, and economic outcomes depend more on how these frameworks are structured than on the market forces alone. Thus within broad limits human beings have the ability to structure the way in which they conduct economic activity, and the notion that there is only one way which is sanctioned by so-called economic laws is false. Human beings create their legal and social institutions and can alter them. There is no reason why these institutions cannot be designed or reformed in such a way so as to facilitate the application of Catholic social teaching. (A concrete instance of how market forces always work within an institutional framework is the story of the Nova Scotia fishermen from the 1930s. "Their catch of fish and lobsters was handled by local dealers who in many cases kept the fishermen in a state of peonage. While Maine fishermen were getting about fifteen cents a pound for lobsters, the Nova Scotian fishermen were receiving as little as two cents a pound. All other prices were scaled down in the same ratio. For everything they bought, however, from their scanty food purchases to nets and lines, they paid top prices, with the result that they were invariably bowed down with a load of debts. Appalling poverty, illiteracy, poor health and the worst possible housing conditions existed throughout this section." In order to better their condition, priests from St. Francis College helped the fishermen organize cooperatives. By means of marketing cooperatives they were able to bypass the local middlemen and deal directly with wholesalers in large cities. In their first shipment of lobsters to Boston they received fifteen cents per pound net. The distribution of income before the establishment of the cooperatives was not the result of the operation of economic laws, but rather of the legal and social institutions within which these economic forces operated. These institutions were changed and a new set of institutions was created within which market forces could operate. This is an illustration of the freedom men have to change the framework and thus change the way economic forces operate to bring about a more just distribution of income. See Bertram B. Fowler, The Co-operative Challenge (Boston : Little, Brown, 1947) pp. 128-29.)

Lest any reader be tempted to think that I am too exercised over this topic, and my disagreement with Woods is simply a small matter over different interpretations of Catholic social doctrine, let me quote from Pope Pius XI. In his first encyclical, Ubi Arcano of December 1922, Pius introduced the notion of "social Modernism." He spoke of those Catholics who give lip service to doctrine concerning the social order, including "Catholic teaching concerning...the rights and duties of laborers...in industry" but who "by their spoken and written word, and the whole tenor of their lives" disregard and belittle this teaching. Pope Pius says of this, "In all this we recognize a kind of moral, judicial, and social Modernism, and We condemn it as strongly as We do dogmatic Modernism." I am sure that Thomas Woods would not like to be placed among the dogmatic modernists, but Pius XI definitely places him among the social modernists. And thus that saintly and traditional pontiff condemns Thomas Woods' views, condemns them "as strongly as We do dogmatic Modernism."

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