By the time Pope Leo XIII issued Rerum Novarum advocating private property in capital for everyone
(§ 46), “private property” had come to mean different things for the rich, and
for the non-rich in America. This was
largely due to two circumstances.
The most serious of these circumstances was the shift away
from the natural law as the basis for understanding the Constitution of the
United States. The U.S. Supreme Court
had employed this shift in rendering its opinion in Scott v. Sandford in 1857.
This was the notorious Dred Scott case that overturned the Missouri
Compromise of 1820 and set the stage for the Civil War.
The Court’s opinion in Scott
effectively announced that the Court, not nature, had the power to decide which
human beings are persons, setting the stage for Roe v. Wade. While the 14th
Amendment overturned Scott, the
Court’s opinion in the Slaughterhouse
Cases in 1873 nullified the 14th Amendment, effectively vesting
the Supreme Court with supreme power over the natural law. The source of rights shifted from human
nature to the State.
The other circumstance was almost as serious. The reform of the financial system that resulted
in the National Banking Act of 1863 restricted the non-rich to the existing
(and diminishing) pool of past savings to finance new capital formation and
economic development, while the rich could create their own money for the same
purpose by issuing bills of exchange.
The National Banks and state banks functioned as banks of deposit for
the non-rich, severely restricting participation in the economic common good,
while they served as banks of issue for the rich, giving them a virtual
monopoly over the ownership of new capital other than homestead land and small
ancillary businesses.
As a result of the opinion in the Slaughterhouse Cases, the careful distinction in natural law theory
between absolute title (dominion or proprietas) and limited exercise or use
(usufruct) was discarded in
favor of competing theories. Before the
Civil War, the economic struggle had been between the industrial and commercial
capitalism of the North, and the agrarian capitalism of the South. Afterwards, the struggle shifted to
capitalism v. socialism.
Both capitalism and socialism fog the distinction between
title and use. The theory of capitalism
asserts that both title and use are absolute. “Ownership” implies not merely inalienability
or absoluteness of title, but absolute or unlimited exercise or use.
Capitalist theory, of course, is contrary to the natural law,
at least in part. Under natural law, title
is held absolutely, just as is the case with any other natural right, such as
life and liberty. No one may rightfully
be deprived of life, liberty, or property without just cause and without due
process. Capitalist theory and the
natural law are in agreement on this point. This is the chief reason why capitalism is
“only” criticized, where socialism is (as we shall see) condemned outright.
The exercise of
property, as well as life and liberty, however, is in natural law theory
circumscribed by the limitations imposed by human positive law, a necessary
adjunct to natural law. The chief problem
with capitalism in this regard is that capitalist theory extends the absolute
character of title under natural law,
to the necessarily limited exercise
or use under human positive law. This appears to be due to the modern (and
modernist) confusion between the Intellect and the Will.
Confusing Intellect, a matter relating to reason, lex ratio, and Will, a matter relating
to faith, lex voluntas, is a serious
matter indeed. Failure to distinguish
between the Intellect as the basis for the natural law, and the Will as the
basis for human positive law as it applies to believers in a particular system
destroys the basis of law as a coherent system.
This is because what we discern through the use of our
reason as right and wrong based on human nature (in Jewish, Christian, and
Islamic belief a reflection of God’s Nature), is not the same thing as God’s
expressed Will in a particular matter.
The validity, interpretation, and application of something that we
believe expresses God’s Will (or something that we have put in the place of
God, such as the State, Hobbes’s “Mortall God”) is based on opinion, not knowledge.
This is disastrous, for while opinion based on faith or even
whim may be true, it may just as easily be false. Knowledge, however, is always true. This is because knowledge is subject to
validation or verification by empirical evidence or logical argument.
This is where the theory of capitalism goes wrong. Capitalist theory asserts — correctly — that
title, the right to be an owner (the right to
property), is absolute. The validity of
this claim is, however, based not on reason, but on faith, that is,
opinion. It is therefore not necessarily true as it would be had it
been proved by reason.
The fact that the theory of capitalism is correct in
asserting the absolute character of title is therefore only by chance. It is not based on empirical evidence or
logical argument. It is, rather, based on
the ability of those with property — and thus power — to impose their will
(consisting of the belief, not argument or evidence, that title is absolute) on those without property, and
who are therefore powerless to resist.
Capitalist theory is, in this instance, right for the wrong
reason. In the next posting in this
series, we will see where the theory of capitalism is wrong for the same
reason.
