Catholic Social Teaching and Economic Justice, VI: The Principles of Economic Justice

Yesterday we noted that when the institutions of society are flawed, it is our responsibility to organize, study the situation, and then restructure our institutions so that they once again function properly for the benefit of everyone.

This brings us to the point of this series. The condition of society today, especially the economy, gives evidence that there is something seriously wrong with our institutions. Having the State try to make up for the lack of a properly functioning system has only resulted in the global debt crisis. Obviously we need to step back for a moment, study the situation, discern the proper principles of economic justice, and apply them effectively.

To make certain that we are doing the right thing, we need to correlate our principles and any proposed actions with fundamental principles of natural law. If we don't do this, we risk going against our own nature, and will thus merely be courting disaster.

We have contended that the principles of economic justice discerned by Louis Kelso and Mortimer Adler are not only fully compatible with the natural law (and thus with Catholic, Jewish and Islamic social teaching based on the natural law), but that the principles themselves are implicit in the social teachings of the Catholic Church, notably in the encyclicals of Leo XIII and Pius XI. This contention we are now prepared to prove.

First, we need to examine the three principles of economic justice detailed in Chapter 5 of The Capitalist Manifesto. These are Participation, Distribution and Limitation. Within the framework of the Just Third Way we have changed "Limitation" to "Harmony," or the "social justice" principle.

Participation refers to the right that every human being has to participate in the economy both as an owner of labor and as an owner of capital. As Kelso and Adler demonstrate, it is a false dichotomy to claim that ownership of one's labor is somehow fundamentally different from ownership of one's capital, at least with respect to the fact that both are ownership.

There is, of course, an inherent connection between a person and his or her labor, so that mistreatment of someone's labor is indistinguishable from mistreatment of that person as a person. Harming someone's capital harms a person by infringing on his or her rights, but does not usually physically harm the owner. Speaking of both labor and capital as things that are owned, however, both labor and capital are as fully owned, and are owned in the same way, as anything else that is owned.

Distribution refers to the right that every human being has to receive the results of production in direct proportion to his or her inputs to production, whether labor or capital. In strict justice, and everything else being equal (for example, the bargaining position of employer and employee), the objective value of a person's inputs compared to similar inputs in a free market determines the relative value of those inputs to each other.

There is no free market today for either labor or capital, so what we just said is the pure theoretical case. In practical terms, many things interfere with the standard "ceteris paribus" economic disclaimer — but we are dealing with pure theory here in order to discern the principle, not come up with an application of the principle (at least, not yet).

Harmony is the "feedback" principle that tells us when the system is broken, we must organize, study the situation, discern the proper principles, and set to work fixing it.

These principles are not stated explicitly anywhere in the social encyclicals. If, however, these principles of economic justice and the social teachings of the Catholic Church are based on natural law (as both Catholic philosophers and theologians, and binary economists claim), then they are necessarily in agreement.

We have, however, made the claim that the three principles of economic justice are not only consistent with Catholic social teaching, the principles of economic justice are implicit in the encyclicals. There is thus a serious need, especially in today's society and its confusion over what is and is not an infallible teaching or principle as opposed to an application of an infallible teaching or principle, for an in-depth clarification of the principles of economic justice by the pope, possibly in an encyclical.

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