THE Global Justice Movement Website

THE Global Justice Movement Website
This is the "Global Justice Movement" (dot org) we refer to in the title of this blog.

Tuesday, March 3, 2009

Natural Law and the Principles of Economic Justice

While no doubt the world is agog over the celebration of another ever-popular "Square Root Day" (03/03/09), there are more immediate matters on which we need to focus. We received an e-mail yesterday alerting us to an article on "Catholic News" that an expected encyclical on justice has been delayed due to the economic crisis. That being the case, it would probably be useful for the pope to learn about what the Global Justice Movement has been developing to address the problem. To understand the Just Third Way, however, a little background would be useful.

The chief economic feature of the modern age is the virtually complete alienation of ordinary people from ownership of the means of production. In former days, human labor and direct ownership of productive assets and tools were the predominate means of production. The only way to alienate man from his labor or his possessions was to enslave him, something only valid for criminals who remove themselves from society and require rehabilitation before becoming fit to reenter society.

With the Industrial Revolution, the spread of the wage system, and the development of advanced productive technologies funded by outdated, even anachronistic methods of finance, ownership of the new means of production became concentrated in the hands of a few elite owners. The great mass of people were cut off from the means of becoming owners of the new technologies, and limited to ownership of their labor, something that (in objective terms) was falling in value relative to the new productive technologies.

Industrial capitalism (as opposed to agrarian capitalism or feudalism, which relied on human labor) not only concentrated ownership of the means of production, but power as well. The natural right (that is, absolute, inherent, or inalienable right) that everyone has to be an owner of the means of production was, in capitalism, changed to a limited right that presumably only an elite few possess, while the necessarily limited exercise of private property (that is, what an owner may do with what he possesses) was reinterpreted as absolute for the elite.

Because of the evils of concentrated ownership and the distortion of private property under capitalism, the socialists claimed that private property must be abolished, remaining at best only "prudential matter" for the great mass of people, i.e., not a right at all, but an expedient for the convenience of an all-powerful State. This only succeeded in transforming the superconcentration of ownership of the means of production under capitalism, into the absolute concentration of ownership of the means of production in the hands of an impersonal State. The evils of capitalism are somewhat ameliorated by the fact that capitalism seriously distorts, but does not abolish a natural right.

The abrogation of private property as a natural right under socialism, however, guarantees a non-, even anti-human system, as Pope Pius XI acknowledged in Quadragesimo Anno. This caused the pope to reiterate the Holy See's condemnation of socialism. This condemnation has been largely ignored, primarily as a result of ubiquitous moral relativism, often subtly disguised as concern for humanity, but seemingly inevitably directed at the abolition of private property as a natural right — quickly followed, as we might expect, by abolition of other natural rights, such as life and liberty.

Following the personalism of Pope John Paul II, Pope Benedict XVI has expressed grave concern over this abandonment of the natural law. In response, the "Just Third Way" promoted by CESJ not only counters the trend of modern civilization away from the natural law, but provides a roadmap by means of which society can make its way back and establish a more just and humane future for everyone. The Just Third Way is characterized by reliance on "Four Pillars of an Economically Just Society," which, not coincidentally (due to a common reliance on the natural law), appear to be consistent with Father Heinrich Pesch's "Three Pillars of Economic Society." CESJ's "Four Pillars" are:

1. A limited economic role for the State, securing property and contract rights, but also lifting artificial barriers to ownership of the means of production,

2. Free and open markets within a strong juridical order as the most democratic means of determining just prices, just wages, and just profits,

3. Restoration of the rights of private property, especially within the modern corporation, and

4. Widespread direct ownership of the means of production.
An important application of these principles consists of reconnecting money and production at the individual, local, national, and global levels, a necessary link noted by Jean-Baptiste Say (1767-1832), a French political economist, in his famous "Law of Markets." "Say's Law," rejected by both Karl Marx and John Maynard Keynes, is best stated by Say himself, in a series of open letters Say wrote to the Reverend Thomas Malthus in refutation of the latter's theories on population:
"All those who, since Adam Smith, have turned their attention to Political Economy, agree that in reality we do not buy articles of consumption with money, the circulating medium with which we pay for them. We must in the first instance have bought this money itself by the sale of our produce.

"To a proprietor of a mine, the silver money is a produce with which he buys what he has occasion for. To all those through whose hands this silver afterwards passes, it is only the price of the produce which they themselves have raised by means of their property in land, their capitals, or their industry. In selling them they in the first place exchange them for money, and afterwards they exchange the money for articles of consumption. It is therefore really and absolutely with their produce that they make their purchases: therefore it is impossible for them to purchase any articles whatever, to a greater amount than those they have produced, either by themselves or through the means of their capital or their land.

"From these premises I have drawn a conclusion which appears to me evident, but the consequences of which appear to have alarmed you. I had said — As no one can purchase the produce of another except with his own produce, as the amount for which we can buy is equal to that which we can produce, the more we can produce the more we can purchase. From whence proceeds this other conclusion, which you refuse to admit — That if certain commodities do not sell, it is because others are not produced, and that it is the raising produce alone which opens a market for the sale of produce." (Letters to Malthus, 1821)
Louis Kelso saw the common sense of Say's Law, but noted that there were barriers in place that inhibited or prevented most people from producing by means of anything other than labor; that "the means of their capital or their land" was simply not an option for most people because they lacked access to the means of acquiring and possessing private property in capital or land, which George Mason of Gunston Hall described as a natural right. (George Mason was an American "Founding Father" who, although an Anglican, seems to have been familiar with the work of St. Robert Bellarmine, a "Doctor" of the Catholic Church.)

Consistent with the social doctrine developed by Pope Pius XI, Kelso advocated that people organize and gain access to the means of acquiring and possessing private property in capital, a category in which Kelso lumped together all "non-human" factors of production, including land (usually separated from capital in classical economics). Applying the principles of economic justice that he and Dr. Adler later formalized, Kelso invented the Employee Stock Ownership Plan, or "ESOP," as one means of lifting the seemingly insurmountable barrier preventing access to capital credit, the chief means by which ownership of the means of production is acquired today.

CESJ has continued the work of Kelso and Adler, developing a program called "Capital Homesteading," which embodies institutional reforms necessary to restructuring the social order to conform more closely to the demands of the natural law and economic personalism, beginning with reforms of our financial system. A primary goal of Capital Homesteading is to restore the original function of the central bank, so that it can once again finance private sector growth to increase personal wealth and people's control over their own lives, instead of funding government deficits and increasing the power of the State. Inasmuch as the misuse of the financial system is the principal cause of today's economic crisis, Capital Homesteading presents a sane — and practicable — alternative to the bizarre programs and proposals that are only getting us ever-deeper into a seemingly hopeless situation.