As we saw in the previous posting in this series, by the
late 1880s it had become critical that the Catholic Church respond to the rapid
spread of socialism in general, and georgism in particular, especially in the
United States. Civilization itself
seemed to be in danger of falling into the trap prepared by the change in
understanding of the natural law that was undermining the foundation of the
social order.
While modern commentators may hesitate to assign so much
importance to the effect that George’s theories were having on Catholic social
thought and understanding of the natural law, many georgists have no such
doubts. George himself appeared to
believe he was being singled out for criticism and condemnation in Rerum Novarum, as is evident from the
30,000-word “open letter” he fired off to Leo XIII to explain in great detail
precisely why he, George, was right, and the pope was wrong.
The fact was, however, that Catholic teaching itself had,
inadvertently, given massive leverage to those who sought to change fundamental
principles of natural law to suit themselves.
By assuming that “the experts” knew what they were talking about with
respect to the financing of new capital, the Catholic Church found itself in a
seemingly impossible situation. As Leo
XIII explained what had by the 1890s become the “orthodox” financial dogma of
past savings,
“If a
workman's wages be sufficient to enable him comfortably to support himself, his
wife, and his children, he will find it easy, if he be a sensible man, to
practice thrift, and he will not fail, by cutting down expenses, to put by some
little savings and thus secure a modest source of income.” (Rerum Novarum, § 46.)
Of course, any sensible person will instantly understand
that the pope as pope is not an expert in money, credit, banking, or even
finance. Since the pope is not speaking
as pope on matters monetary, it necessarily follows that when he speaks of such
matters, he is giving an opinion, and it cannot be taken as an infallible
declaration . . . however much someone may want their own opinions validated by
papal decree.
Nevertheless, whether you take papal statements on the
presumed necessity of past savings to finance new capital as infallible, or
merely as informed opinion, failing to mention the possibility of other, more
feasible means of financing widespread capital ownership painted those trying to understand Catholic social teaching into a corner.
Without the possibility of using future savings collateralized with
insurance instead of possessed wealth, Catholics (and everybody else) faced
what seemed to be an impossible situation:
• If the traditional understanding of the natural law as
based on reason is to be maintained, particularly with respect to the natural
right of private property, then as technology advances and consequently becomes
far too expensive for ordinary people to purchase out of existing savings, then
only the rich as a rule have the capacity to own new capital. Everyone else must necessarily work for the
rich, who then have a moral obligation under charity to take care of the
material needs of their employees and anyone else in want — as their resources
permit, since most of the income of the rich must presumably go to finance new
capital formation to grow the economy and create jobs. What appears to be a demand for widespread
capital ownership, then, is necessarily only a suggestion, prudential matter
that can safely be ignored in light of the realities of corporate finance.
• Since the rich cannot be trusted to carry out their moral
duty to take care of others, the traditional understanding of the natural law cannot
be what has always been supposed. It
must change from being based on human reason (lex ratio) to being based on God’s Will (lex voluntas) — as interpreted by the speaker, of course. Since this, ultimately, means that “might
makes right,” the mighty — those in charge of the State — have the obligation
to use their coercive power to force the rich to take care of others. What seems to be a moral obligation under charity to take care of others must really
be a legal duty under justice,
enforceable by the State. Because the
demand for widespread capital ownership is necessarily only a suggestion or
prudential matter, it can safely be ignored in light of the realities of
corporate finance.
Incidentally, here in these two presumably exclusive
alternatives (that, nevertheless, come to the same erroneous conclusion
regarding the popes’ insistence on the necessity for widespread capital
ownership), we see why the Catholic Church “only” criticizes capitalism (the
first alternative), but condemns socialism (the second alternative). Capitalism distorts the traditional
understanding of the natural law discerned by reason, especially with respect
to private property, while socialism abolishes it completely, replacing a
concept of the natural law discerned by reason, with one based on faith.
Ironically (a word that gets used far too often when
analyzing what went wrong with the popular and academic interpretations of
Catholic social teaching), the insistence that Leo XIII must have meant
something other than what he clearly meant when he spoke of the need for
widespread capital ownership also undermined the other pillars of a just market
economy. Without widespread capital
ownership to support them, it would be virtually impossible to maintain a
limited economic role for the State, free and open markets, or the restoration
of private property.
Further, these four pillars of a just market economy are
applications of the three principles of economic justice that we discussed in
posting XIII of this series, and that are implicit in Catholic social teaching. Undermining or destroying these pillars (as
capitalism and socialism do, respectively) invalidates the principles of
economic justice by rendering them nullities.
That is why CESJ believes that a clear presentation of the
three principles of economic justice are needed — and that a moral authority of
the stature of the pope is, logically, the one to make the presentation, if
only to validate the teachings of the Church he leads. It is also essential that such an authority
recognize the fact that the use of future savings is not only far more
practical and feasible a source for financing new capital formation, it is
morally superior to restricting the source of financing of new capital
formation to past savings.
Unfortunately, as long as capitalism and socialism are seen
as the only alternatives for structuring an economy, both justice and charity
as traditionally understood are impossible — and as long as justice and charity
are misunderstood, then anything other than capitalism or socialism is equally
impossible.
