What is "Socialism"?

As regular readers of this blog are aware, the Just Third Way uses definitions of terms consistent with an Aristotelian "natural law" approach, rather than the definitions that popular culture or even academia may currently assign to the terms. Thus, we have had extended (and re-extended) and involved discussions concerning such basic concepts as money and credit, banking, finance, even the natural law and its application within the confines of the common good . . . to which we assign a special meaning that may elude the casual reader.

All of this is no doubt great fun. Nevertheless, despite our inordinate appetite for proving us right and everyone else in the world wrong, it does little to advance the Just Third Way. As you know (or, at least, as we hope you know), we present the Just Third Way as the only viable alternative to both capitalism and socialism, a free market, private property-based approach to economic and social development.

Overall, the Just Third Way is based on the inherent dignity of the human person. In its economic aspect (which also brings in politics in the Aristotelian sense), the Just Third Way integrates the "four pillars of an economically just society." We've listed them countless times before on this blog, but it might be useful to do so again:

1. A limited economic role for the State,

2. Free and open markets within a strict juridical order as the best means of determining just wages, just prices, and just profits,

3. Restoration of the rights of private property, particularly in corporate equity, and

4. Widespread direct ownership of the means of production, individually or in free association with others, especially as it relates to access to money and credit as the chief means by which property is acquired and possessed.

This last, the "fatal omission" from the three mainstream schools of economics (Keynesian, Monetarist/Chicago, and Austrian), as well as pretty much all the others, is what causes the most trouble with acceptance of the principles of the Just Third Way. Not the least of the problems is found in the definitions of socialism and capitalism that we juxtapose with the Just Third Way. Both socialism and capitalism, as defined in the Just Third Way paradigm, concentrate ownership of the means of productions — both of them for reasons that seem good to the adherents of each system, but that render each of the systems fatally flawed. The problem is that the failure to realize the strict definitions used in the Just Third Way inserts a degree of confusion into the discussion.

Let's take capitalism first, for it is the easiest to define. "Capitalism," as that term is used in the Just Third Way, means a system in which ownership of the means of production is concentrated in the hands of a private elite, and the great mass of people subsist solely or predominantly on wages.

Superficially, "socialism" is just as easily defined: a system in which ownership of the means of production is concentrated in the hands of a public elite, i.e., the State, and the great mass of people subsist solely or predominantly on wages.

Problems immediately crop up. Many people, for example, claim that unless the State holds title, the system is not socialist. They fail to take into account that "ownership" and "control" mean the same thing in law. You may hold title, but if you can only exercise your presumed right of control of what you own or enjoy of the fruits thereof at my behest, then I, not you, am the real owner, regardless who has nominal title.

What about where the State permits private owners to both own and control what they possess without undue interference from the State? Is that socialism?

Many people are surprised to learn that the answer is "yes" — such a system is socialist. Why? Because in such a system the State does not recognize the natural right of private property as inhering in the human person. The right of ownership is construed as a grant from the State, not the Creator. The State permits owners to own and exercise their ownership, it does not protect as inalienable a right that is recognized as belonging by nature to each human being. Rights are viewed as coming from the State, not from God. This puts the State in the place of God.

Is it any wonder, then, that while capitalism comes in for some well-deserved castigation from religious authority, such as the heads of the Catholic Church, it is not condemned within an Aristotelian framework. This is because in capitalism natural rights are not alienated, but badly distorted. The result is to deny the effective exercise of inalienable rights, but without denying them outright.

Socialism, however, effectively denies the inalienability of the natural right itself. This overthrows the basis of the natural moral law. As the natural moral law is the foundation of the social teachings of Christianity, Judaism, Islam, and every other ethical system, it comes as no surprise that religious authorities condemn socialism as inherently contrary to a religious worldview. Nowhere is this better seen than in the careful analysis accompanying the condemnation of socialism issued by Pope Pius XI in the 1931 encyclical, Quadragesimo Anno. As the pope explained,

116. Yet let no one think that all the socialist groups or factions that are not communist have, without exception, recovered their senses to this extent either in fact or in name. For the most part they do not reject the class struggle or the abolition of ownership, but only in some degree modify them. Now if these false principles are modified and to some extent erased from the program, the question arises, or rather is raised without warrant by some, whether the principles of Christian truth cannot perhaps be also modified to some degree and be tempered so as to meet Socialism half-way and, as it were, by a middle course, come to agreement with it. There are some allured by the foolish hope that socialists in this way will be drawn to us. A vain hope! Those who want to be apostles among socialists ought to profess Christian truth whole and entire, openly and sincerely, and not connive at error in any way. If they truly wish to be heralds of the Gospel, let them above all strive to show to socialists that socialist claims, so far as they are just, are far more strongly supported by the principles of Christian faith and much more effectively promoted through the power of Christian charity.

117. But what if Socialism has really been so tempered and modified as to the class struggle and private ownership that there is in it no longer anything to be censured on these points? Has it thereby renounced its contradictory nature to the Christian religion? This is the question that holds many minds in suspense. And numerous are the Catholics who, although they clearly understand that Christian principles can never be abandoned or diminished seem to turn their eyes to the Holy See and earnestly beseech Us to decide whether this form of Socialism has so far recovered from false doctrines that it can be accepted without the sacrifice of any Christian principle and in a certain sense be baptized. That We, in keeping with Our fatherly solicitude, may answer their petitions, We make this pronouncement: Whether considered as a doctrine, or an historical fact, or a movement, Socialism, if it remains truly Socialism, even after it has yielded to truth and justice on the points which we have mentioned, cannot be reconciled with the teachings of the Catholic Church because its concept of society itself is utterly foreign to Christian truth.

118. For, according to Christian teaching, man, endowed with a social nature, is placed on this earth so that by leading a life in society and under an authority ordained of God he may fully cultivate and develop all his faculties unto the praise and glory of his Creator; and that by faithfully fulfilling the duties of his craft or other calling he may obtain for himself temporal and at the same time eternal happiness. Socialism, on the other hand, wholly ignoring and indifferent to this sublime end of both man and society, affirms that human association has been instituted for the sake of material advantage alone.

In other words? Socialism is not condemned because it abolishes private ownership — it may or may not do that — but because it abolishes the basis of private ownership.  This makes "private" property a grant from the State, not inherent in human nature as a reflection of God's Nature, self-evident in His Intellect.

Consequently, if the State giveth, the State can also taketh away; only God's gifts are irrevocable. Socialism abolishes private property, even in those instances where it "permits" private ownership of the means of production. As John Locke pointed out in his Second Treatise on Government, you cannot truly be said to own anything if someone else can take it away from you when he wills.

Thus a system like chartalism, in which the State issues money backed by the general wealth of the economy, is a socialist system — even if it "permits" private sector money. Why? Because the right to issue money — that is, to draw a bill on the present value of existing or future wealth — presumes ownership of the wealth on which the bill is drawn. In chartalism, as in Keynesian economics, the State issues money backed by wealth to which the State does not have title, but is presumably in private hands.  It doesn't matter whether the State allows private individuals to issue money; the key is that the State does not recognize this as a natural right.

By issuing money in any amount or to any degree, the State exercises property in what somebody else nominally owns, thereby abolishing private property through control of money and credit, and establishing, as Keynes admitted, an absolutist State. As Meyer Anselm Rothschild is reputed to have said, "Give me control over money and credit, and I care not who makes the laws."

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