Yesterday we looked at what we believe to be the main
problem with offering a course in Keynesian economics to religious leaders:
Keynesian economics is based on unproved — and un-provable — assertion. Keynes built a towering and complex
superstructure on a foundation not merely of sand, but of quicksand.
This is bad enough, even if the assertions are true. There is another problem, however, in that
the assertions on which Keynes based his system are, in some cases,
demonstrably false, as is the case with his assumption that the only way to
finance new capital formation is to restrict consumption below what is
produced, accumulate the surplus as money savings, and then finance new capital
formation. Dr. Harold G. Moulton’s
monograph, The
Formation of Capital (1935) disproved that Keynesian dogma for all
time.
That, however, might be a bit beyond ecclesiastics who want
something a little more obvious on which to base a rejection of the world’s
most widely accepted economic system. This
brings in the second grounds for our believing the course as described is a
serious mistake. That is, the conflict
between the unproved assumptions on which Keynesian economics is built, and the
natural moral law proved by reason and supported by the evidence of our senses.
This is best illustrated by Keynes’s violation of the fourth
pillar of an economically just society.
Keynesian economics violates every one of the four pillars, of course,
as well as each of the three principles of economic justice (participative
justice, distributive justice, and social justice) on which the four pillars
are based. Thus,
A limited economic role for the State. Keynes insisted on as much government control
as possible.
Restoration of the rights of private property. Keynes defined private property out of
existence by giving the State total control over money and credit.
Free and open markets as the best means of determining just wages, just
prices, and just profits. Keynes
declared that the State should set prices, wages, and profits.
We will not give arguments or present evidence to support our
claim that Keynes violated the three pillars we just listed — at least, not
here. We want to get to the key point,
and Keynes’s most obvious violation of a fundamental precept of the natural
law: the right of every human being to own capital. This is the fourth pillar of an economically
just society:
Widespread direct ownership of capital, individually or in free
association with others.
What was Keynes’s position?
We already gave it above:
“The immense accumulations of fixed capital which, to
the great benefit of mankind, were built up during the half century before the
War, could never have come about in a Society where wealth was divided
equitably.”
What is the natural moral law, Catholic social teaching on
this? In our opinion, Pope Leo XIII
stated it best:
“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.)
We could go on at great length, as our readers know, and
prove that Keynesian economics violates every single principle of economic
justice and every one of the four pillars of an economically just society — and
we have, in many other writings. Only the
one is needed to make our point here, however.
So, we agree that it would be greatly beneficial for
ecclesiastics to learn about economics.
It should, however, be an economics consistent with the natural law and
thus with Catholic social teaching.
In our opinion, of course, this would be Louis Kelso’s
binary economics embedded in CESJ’s Just Third Way, especially since it can so
easily be shown to be in conformity with the Aristotelian-Thomist concept of
the natural law discernible by reason alone, not faith in unsupported assertions,
regardless who might make them.
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