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| Leo XIII |
As we saw in the
previous posting on this subject, in his landmark social encyclical Rerum Novarum, Pope Leo XIII managed to
do two things that took the socialists, modernists, and New Agers off
guard. One, he followed up on the series
of social encyclicals that had started with Gregory XVI’s Mirari Vos in 1832 with an unexpected twist. Instead of simply condemning the “new things”
of the modern world, he presented an alternative that could deliver what
socialism, modernism, and the New Age only promised, and that without sacrificing
one iota of the natural law or Catholic doctrine.
Two, Leo XIII
based his solution on the one thing that the socialists had decided was the
problem: capital ownership. Where all
forms of socialism abolish private property as a natural right (at best
claiming it is a human-invented right allowed for expedience under the
principle of double effect), Leo XIII made the following points clear:
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| Ignatius Loyola Donnelly, socialist |
·
The socialists are striving to do away with
private property and contend that individual possessions should become the
common property of all, to be administered by the State or by municipal bodies.
Their contentions are so clearly powerless that were they carried into effect
the working man himself would be among the first to suffer. They are, moreover,
emphatically unjust, for they would rob the lawful possessor, distort the
functions of the State, and create utter confusion in the community. (Rerum
Novarum, § 4.)
·
When a man engages in remunerative labor, the
impelling reason and motive of his work is to obtain property, and thereafter
to hold it as his very own. A working man's little estate thus purchased should
be as completely at his full disposal as are the wages he receives for his
labor. But it is precisely in such power of disposal that ownership obtains,
whether the property consist of land or chattels. Socialists, therefore, by
endeavoring to transfer the possessions of individuals to the community at
large, strike at the interests of every wage-earner, since they would deprive
him of the liberty of disposing of his wages, and thereby of all hope and possibility
of increasing his resources and of bettering his condition in life. (Ibid., § 5.)
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| Henry George, socialist |
·
The remedy [the socialists] propose is
manifestly against justice. For, every man has by nature the right to possess
property as his own. This is one of the chief points of distinction between man
and the animal creation, for the brute has no power of self-direction. It is
the mind, or reason, which is the predominant element in us who are human
creatures; it is this which renders a human being human and distinguishes him
from the brute. And on this very account — that man alone among the animal
creation is endowed with reason — it must be within his right to possess things
not merely for temporary and momentary use, as other living things do, but to
have and to hold them in stable and permanent possession; he must have not only
things that perish in the use, but those also which, though they have been
reduced into use, continue for further use in after time. (Ibid.,
§ 6.)
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| Charles Kingsley, Christian socialist |
·
The fact that God has given the earth for the
use and enjoyment of the whole human race can in no way be a bar to the owning
of private property. (Ibid., § 8.)
·
The first and most fundamental principle if one
would undertake to alleviate the condition of the masses, must be the
inviolability of private property. (Ibid., § 15.)
·
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.
(Ibid., § 46.)
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| Charles Fourier, socialist |
In § 47 Leo XIII
gave a long list of benefits that would accrue from widespread capital
ownership. There was only one
problem. The only suggestion the pope
gave for how a program of expanded capital ownership could be financed was to
increase wages.
This, to all
intents and purposes, was as good as saying that widespread capital ownership
is impossible. Wages cannot be increased
above the market rate for very long without causing serious problems, as the “Fight
for $15” movement has discovered, e.g.,
job flight, replacement with technology, and loss of entry level positions and
part time employment.
First and
foremost, increasing wages adds to the cost of production and thus to a rise in
prices. Profits do not do this, because
profits are what remain after costs are subtracted from revenue. As the late Walter Reuther said,
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| Walter Reuther, labor leader |
The breakdown in
collective bargaining in recent years is due to the difficulty of labor and
management trying to equate the relative equity of the worker and the
stockholder and the consumer in advance of the facts…. If the workers get
too much, then the argument is that that triggers inflationary pressures, and
the counter argument is that if they don’t get their equity, then we have a
recession because of inadequate purchasing power. We believe this approach
(progress sharing) is a rational approach because you cooperate in creating the
abundance that makes the progress possible, and then you share that progress
after the fact, and not before the fact. Profit sharing would resolve the
conflict between management apprehensions and worker expectations on the basis
of solid economic facts as they materialize rather than on the basis of
speculation as to what the future might hold…. If the workers had definite
assurance of equitable shares in the profits of the corporations that employ
them, they would see less need to seek an equitable balance between their gains
and soaring profits through augmented increases in basic wage rates. This would
be a desirable result from the standpoint of stabilization policy because
profit sharing does not increase costs. Since profits are a residual, after all
costs have been met, and since their size is not determinable until after
customers have paid the prices charged for the firm’s products, profit sharing
as such cannot be said to have any inflationary impact upon costs and prices….
Profit sharing in the form of stock distributions to workers would help to
democratize the ownership of America’s vast corporate wealth. (Testimony
before the Joint Economic Committee of Congress, February 20, 1967.)
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| Eliphas Levi, socialist |
Fortunately,
there is such a means. Although the term
is little used today and was not well understood even when it was in relatively
common use, “the Real Bills Doctrine” constitutes the foundation of “the
Banking Principle.” The “doctrine” is that as long as a bill or note represents something
of “real” value (such as existing inventories of goods or a capital project
with a reasonable expectation of paying off) it can be turned into money.
And what about
bills and notes that do not represent something of “real” value? Those are “fictitious bills” and are either
speculative or fraudulent, depending on the specific circumstances of their issue.
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| R.H. Tawney, socialist |
The bank’s
promissory note can then be used to back a new issue of banknotes (almost no
bank does that these days) or a new demand deposit — in other words, creates
money. The borrower uses the money to
finance the new capital formation, puts it into production, makes money, and
repays the loan, thereafter using the flow of income from the capital for
consumption purposes.
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| Henri St.-Simon, socialist |
Thus, instead of
relying on people to finance widespread capital ownership out of wage income by
cutting consumption, it is possible to finance the same thing by making it
possible for people to purchase capital that pays for itself out of its own
future profits by increasing production. The income is still
withheld from consumption, but instead of the saving taking place before production,
the saving takes place after production.
That, in essence, is the proposal called “Capital Homesteading”
that could make every child, woman, and man on Earth a capital owner.
#30#