"The Market Must Never Neglect Solidarity"

Pope Benedict XVI recently (December 10, 2011) gave a talk to representatives of the Italian Federation of Cooperative Credit Banks, and the Confederation of Italian Cooperatives. Particularly in light of the fact that 2011 marks the 120th anniversary of Rerum Novarum, "On Labor and Capital," the pope's remarks focused on the need to build solidarity in cooperative economic endeavor.

As His Holiness commented in the talk reported by the Vatican Information Service (VIS), "[Rerum Novarum] favored the fruitful presence of Catholics in Italian society through the promotion of cooperative and mutual societies, the development of social enterprises and many other public works characterized by various forms of participation and self-management. The purpose of such activity has always been to provide material support for people and constant attention to families, drawing inspiration from the Magisterium of the Church."

As the pope explained, "The heart of cooperative efforts has always lain in the search for harmony between the individual and community dimensions. This is a concrete expression of the complementarity and subsidiarity which Church social doctrine has always sought to promote between citizens and the State, a balance between safeguarding the rights of the individual and promoting the common good, in order to develop a local economy capable of responding to community needs. Cooperative activities are likewise characterized by their great concern for solidarity, while still respecting the due autonomy of the individual."

Perhaps it is the fault of the writer of the article, but we find no mention in the report of how the great concern for solidarity is to be realized in concrete terms. This is puzzling when we consider the fact that Leo XIII was quite clear on the means to be used to achieve the desired goal: "We have seen that this great labor question cannot be solved save by assuming as a principle that private ownership must be held sacred and inviolable. The law, therefore, should favor ownership, and its policy should be to induce as many as possible of the people to become owners." (Rerum Novarum, § 46) As the pope went on to explain,

"Many excellent results will follow from this; and, first of all, property will certainly become more equitably divided. For, the result of civil change and revolution has been to divide cities into two classes separated by a wide chasm. On the one side there is the party which holds power because it holds wealth; which has in its grasp the whole of labor and trade; which manipulates for its own benefit and its own purposes all the sources of supply, and which is not without influence even in the administration of the commonwealth. On the other side there is the needy and powerless multitude, sick and sore in spirit and ever ready for disturbance. If working people can be encouraged to look forward to obtaining a share in the land, the consequence will be that the gulf between vast wealth and sheer poverty will be bridged over, and the respective classes will be brought nearer to one another. A further consequence will result in the great abundance of the fruits of the earth. Men always work harder and more readily when they work on that which belongs to them; nay, they learn to love the very soil that yields in response to the labor of their hands, not only food to eat, but an abundance of good things for themselves and those that are dear to them. That such a spirit of willing labor would add to the produce of the earth and to the wealth of the community is self evident. And a third advantage would spring from this: men would cling to the country in which they were born, for no one would exchange his country for a foreign land if his own afforded him the means of living a decent and happy life. These three important benefits, however, can be reckoned on only provided that a man's means be not drained and exhausted by excessive taxation. The right to possess private property is derived from nature, not from man; and the State has the right to control its use in the interests of the public good alone, but by no means to absorb it altogether. The State would therefore be unjust and cruel if under the name of taxation it were to deprive the private owner of more than is fair." (Rerum Novarum, § 47.)

This is a critical issue, especially when addressing members of cooperative associations — cooperatives being vehicles for sharing ownership, based on defined and discrete ownership stakes. The question then becomes, "Why is private property, specifically ownership of capital, evidently being ignored?" This is truly baffling. Ownership — control — is essential to building solidarity, and the importance of private property in capital, whether landed, industrial, or commercial, is stressed almost to the point of redundancy in Rerum Novarum.

We can make a guess, however. It may be that the reason for this apparent sidelining of private property in capital is the belief (primarily inculcated by Keynesian economics, but present in Monetarist/Chicago and Austrian as well) that it is (allegedly) impossible to finance new capital formation without first cutting consumption and accumulating money savings.

Given that demonstrably false assumption (see The Formation of Capital, by Harold G. Moulton), the necessary (and equally false) conclusion is drawn that ownership must be concentrated in order to allow the rich or the State (i.e., the capitalists or the socialists) to control — own — with the end of saving to finance new capital. It follows that small ownership must be eliminated from the economy; as Keynes put it, there must be a "euthanasia of the rentier, of the functionless investor" who consumes income from capital instead of reinvesting it. (John Maynard Keynes, The General Theory of Employment, Interest, and Money, 1936, VI,24.ii.)

In this understanding, property may be "permitted" nominally and private individuals still retain formal title, but control — actual title — vested in the State. (General Theory, VI.24.iii; also, Henry George, Progress and Poverty. New York: The Robert Schalkenbach Foundation, 1935, 406; Henry George, The Condition of Labor: An Open Letter to Pope Leo XIII, 1891; "Wunderlich, the National Socialist Conception of Landed Property," 12 Social Research 60 at 61, 66, 72 (1945).) There is no real understanding of the fact that "property" is not the thing owned, but 1) the natural — absolute and unlimited — right each person has to be an owner, and 2) the limited and socially determined exercise of what may be owned and how it may be used.

We have not confirmed this, but we were told that the pope's chief economic adviser is a Keynesian. The orientation is thus away from small ownership — from meaningful ownership at all, in fact — and toward the redefinition of private property to allow effective State ownership by substituting the wrong sort of emphasis on solidarity. The implication is that it is possible to build solidarity without the traditional understanding of private property, or of life and liberty.

On the contrary, property empowers people, "power" being strictly defined as the "ability for doing," vesting the owner with effective social identity. As Daniel Webster pointed out, "power naturally and necessarily follows property." Without property, then (as Aristotle explained, property is essential to leading a life of virtue, "the good life"), it becomes difficult-to-impossible to exercise other natural rights such as life and liberty (freedom of association/contract), and thus build solidarity, an essential component of social virtue and thus a just social order. As William Thomas Thornton (author of A Plea for Peasant Proprietors, 1848, 1874) observed in On Labor, Its Wrongful Claims and Rightful Dues (1869, 1870),

"For mistrust and dislike or indifference on the one side, and for envy and jealousy on the other, would be substituted something of that fellow-feeling which can scarcely help growing up between those who, in serving themselves, are helping each other. With those laborers who had taken shares, some sympathy with capital would tincture the old headlong passion in favor of labor. With those who had not yet become shareholders the possibility of their becoming so subsequently would have a like effect." (William Thomas Thornton, On Labour: Its Wrongful Claims and Rightful Dues, Its Actual Present and Possible Future, Second Edition. London: Macmillan and Company, 1870, 394.)

The pope has clearly been getting some bad advice, but fortunately — being protected, in Catholic belief, by the Holy Spirit from teaching error — has not acted on it. What these "evil counselors" seem to be feeding him (inadvertently, we hope) is, just as clearly, contrary to the natural law on which Catholic social teaching is based. The problem is that, unless he gets some good advice, especially regarding the financing of new capital formation without relying on cutting consumption, the pope can't give property its proper place — as Dorothy Day liked to quote Peter Maurin, "Property is proper to man."

We're getting excellent teachings from the Vatican, but they are incomplete. This gives the modernists and the socialists grounds for claiming that the definition of property has changed, and that it is no longer a natural right . . . if it ever was. It gives the capitalists grounds for maintaining their position as well, although with slightly — and that's a very slight "slightly" — more justification than the socialists.

It is, of course, impossible that the definition of private property can change, regardless of Keynes's theorizing that the absolutist State has the power to "re-edit the dictionary." (John Maynard Keynes, A Treatise on Money, Volume I: The Pure Theory of Money. New York: Harcourt, Brace and Company, 1930, 4.)

It is irrelevant whether Keynes said that the State can alter substantial nature — definition — at will, especially God's Nature, on which the natural law is based. It can't be done. As Benjamin Watkins Leigh explained, "Power and Property can be separated for a time by force or fraud — but divorced, never. For as soon as the pang of separation is felt . . . Property will purchase Power, or Power will take over Property." (Benjamin Watkins Leigh, in the Virginia Convention, quoted by Salvador Aranet in Bayanikasan: The Effective Democracy For All. Manila, Philippines: AIA Press, 1976, 57-58.)

In orthodox Christian, Jewish and Islamic thought, the natural law is based on God's Nature, self-realized in His Intellect, not the will of the State, however powerful. Nor is the natural law based on some atheist's or modernist's private interpretation of God's Will, whether found in the Bible, the encyclicals, the Communist Manifesto, Keynesian economics, or the back of a cereal box. The teachings of the Catholic Church on private property cannot change, or God is not God, and the Catholic Church, contrary to its own claims, is not the true church established by Christ.

It is consequently the duty, not only of faithful Catholics, but all people of good will, to request clarification on this point from the Holy See. It is also the responsibility of each person to provide the pope — or any other leader, whether political, religious, or social — with the information he needs to make an informed decision about these matters, unfiltered through current economic and financial fallacies, especially those of Lord Keynes.

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