The Framework of Economic Justice: Free and Open Markets

Today’s blog posting is adapted from the book, Economic Personalism, which you can get free from the CESJ website, or from Amazon or Barnes and Noble.

Not too long ago a book came out purporting to instruct people on how to development and implement a truly free market.  Since this posting is not a book review (and we don’t want to give the author of the tome more credit — or blame — than he, she, and, or, it has already garnered) we will refrain from saying any more than the author’s idea of a truly free market sounded a lot like some of the more restrictive forms of socialism.

The Framework of Economic Justice: Widespread Capital Ownership

Today’s blog posting is a selection from the book, Economic Personalism, which you can get free from the CESJ website, or from Amazon or Barnes and Noble.

In the previous posting on this subject, we looked at the necessity of reconnecting people to society and concluded that “persons without power must have the means of obtaining power, and those with power must have the means of securing it.”

Some Economic Specifics for Ukraine

 

 

. . . in a general way, of course.  To paraphrase the military aphorism, no business plan survives contact with reality.  A business plan, like a book outline or a military campaign, must be flexible and readily adaptable to new conditions as they change.  If, on the other hand, a plan, outline, or operation is followed rigidly regardless of reality, only by chance will disaster be averted.

A Suggestion for Zelenskyy

On Sunday, March 27, 2022, President Zelenskyy of Ukraine gave an interview to Russian journalists . . . which the Kremlin has banned from viewing in Russia.  From the Just Third Way point of view, the most interesting part of the interview was when Zelenskyy invited Russians to bring themselves (and their money) to Ukraine to help them rebuild.

The Binary Difference

Discussing the factors of production in economics is one thing.  Discussing them in the field of political economy is quite another.  Common sense, of course, tells us that there is no difference between economics as such, and political economy as such, and in fact some dictionaries use the same definition for both “economics” and “political economy.”

The Four Pillars of a Just Market Economy

In the previous posting on this subject, we looked at the principles of economic justice, 1) Participation, 2) Distribution, and 3) Social Justice.  These, we believe, are the essential building blocks of an economically just society.

Jobs, Training, and the World Economic Forum

The World Economic Forum starts today in Davos, Switzerland, and will go through Friday, January 20, Inauguration Day in the United States.   The Forum, which describes itself as being a unique advocate for public-private partnerships, has been meeting since 1971.

Solidarism and the Just Third Way, I: Three or Four Pillars?

Today we start to look at how well solidarism as understood by Father Heinrich Pesch, S.J. (not Émile Durkheim) and CESJ’s Just Third Way fit together.  Both claim to be based on an Aristotelian-Thomist interpretation of Catholic social teaching — and thus of the natural law — and therefore should come to the same conclusion(s), even if by (slightly) different routes.

The Crisis That Need Not Be, II: Redeeming the Central Bank

Last Thursday we noted how central banking was diverted from its original purpose from the very beginning in 1694, away from providing liquidity and “accommodation” for the private sector, and forced into the role of government finance.  This was done to such good effect that virtually every history book that bothers to mention central banking makes the erroneous claim that central banking was invented to provide banking services for government.

Income Inequality and Capital Homesteading

Two weeks ago in the Washington Post, Kathleen Parker asked for suggestions on terms to replace “income inequality” in her column (“Language Inequality,” 01/07/14, A17).  We suggested “Capital Homesteading.”  Capital Homesteading, after all, embodies “the four pillars of an economically just society,” and the income gap is generally framed as an issue of justice:

The Wall Street Journal (Again)

We figure that the Wall Street Journal either has a black list, or restricts the number of letters from a single individual they even bother to read. Possibly both. In any event, right after the editorial to which we responded on August 14, the Journal had another one on the European debt crisis. Not astonishingly, our analysis was similar. Even less astonishing, the Journal didn't publish this letter, either.

Dear Sir:

The Eurozone's problems are a direct result of being the first currency based on the principles of "Modern Monetary Theory." Per Knapp's "chartalism," the money supply consists entirely of State-emitted bills of credit. A bill of credit is backed solely by the present value of future taxes, i.e., the "faith and credit" of the issuing government. As the productive capacity of the European economy erodes, the present value of future taxes declines.

Paradoxically, transforming the Euro from a debt-backed to an asset-backed currency is simple, although not easy:

• One, phase out central bank open market operations in government securities.

• Two, supply liquidity to the private sector to rebuild the tax base and spur economic growth by discounting and rediscounting qualified bills of exchange.

• Three, implement an aggressive program of expanded capital ownership financed by discounting bills of exchange collateralized with capital credit insurance, thereby increasing consumer demand naturally to sustain the economy and reducing the need for State assistance.

• Four, as tax revenues increase over costs, pay down the debt, eliminating debt-backed money from the economy, stabilizing the currency and providing a foundation for sound economic growth.

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The Global Debt Crisis, XII: Pillars of an Economically Just Society

As we saw yesterday, simply knowing the basic principles does little good if we cannot apply them. Thus, Say's Law of Markets doesn't do anyone any good until and unless we can apply it in the real bills doctrine. We can produce our heads off, and so can our neighbor, but until and unless we can come together and have some shared basis for exchange, we won't be able to strike a bargain and no exchange will take place.

We discovered that the shared basis for engaging in exchange is the offer and acceptance of a contract, a "meeting of the minds," that we call "money." The application of Say's Law by means of which we can offer and accept contracts is called the real bills doctrine. The three principles of economic justice (Participation, Distribution and Harmony) ensure the operation of Say's Law of Markets in the real bills doctrine.

The question now arises as to how to apply the three principles of economic justice. A little reflection allows us to see what is essential to the functioning of the principles. Just as Say's Law of Markets can only be effective when applied in the real bills doctrine, the three principles of economic justice can only function within a system in which the "four pillars of an economically just society" are present. These are:

1. A limited economic role for the State,

2. Free and open markets within a strict juridical framework as the best means of determining just wages, just prices and just profits,

3. Restoration of the rights of private property, especially in corporate equity and other forms of business organization, and

4. Widespread direct ownership of capital.

Limited Economic Role for the State

This one is obvious if we stop to think about it. While the need for the State is built into human nature — as Aristotle said, "man is by nature a political animal" (a possibly unique combination of individual rights and social duties) — the State was made for man, not man for the State.

The primary job of the State is to care for the common good. That does not mean, however, that the State takes care of everybody. That is a matter of individual, not common good. Except in an emergency, the State has no business interfering in how people meet their own goods — their individual wants and needs — through their own efforts.

The common good is not the aggregate of individual goods. That would simply be to say that the State has the responsibility of taking care of everyone. Rather, the common good of all mankind, that is, the good that is common to every human being, is the ability to become more fully human. This is called the capacity to acquire and develop virtue.

Man being political by nature, we acquire and develop virtue within a social context, that is, in association with other human beings within organized bodies or "institutions." We can therefore say that the common good for which the State has responsibility is the vast network of institutions within which humanity acquires and develops virtue, thereby becoming more fully human.

The State has the responsibility of maintaining these institutions in reasonable working order so that everyone is free to participate in them as full members of society, that is, on an equal basis. The State's role is thus to ensure equality of opportunity, not some pre-determined result, and to police abuses of the system so that no one is unjustly prevented from exercising his or her rights.

That's important, because it is by exercising our natural rights (most notably life, liberty [freedom of association/contract] and property) that we normally acquire and develop virtue. If the State does not do its best to guarantee equality of opportunity, it is preventing people from becoming more fully human, and thus isn't doing the only thing that justifies its existence.

Free and Open Markets

If liberty (freedom of association/contract) and property are natural rights — and they are — then people must be free to associate, enter into contracts, and own their own labor and capital in order to acquire and develop virtue. The "free market" is thus a market to which all have equal and equitable access, not a "law of the jungle" situation in which anything goes and the weak are at the mercy of the strong.

On the contrary, for a market to be truly free — a condition that does not appear to exist anywhere on earth at this point — everyone must be free to own both labor and capital. Further, they must be free to enter into contracts and meet their obligations without interference. Finally, the State must provide a set of laws by means of which people know what the rules are and have the ability to comply with them without undue hardship.

Restoration of the Rights of Private Property

The right to own capital as the means of sustaining life is a natural right. It is important to realize that "property" is not the thing owned. It is, rather, the natural right every human being has to be an owner, and the socially determined bundle of rights that define how somehow may use what he or she owns. In general, this means not harming one's self, other individuals, groups, or the common good as a whole.

Today, most shareholders — owners of corporate equity — do not have their rights. "Ownership" includes the right to control, that is, being able to vote one's shares in an election for the board of directors. Ordinary shareholders usually have this.

There is, however, another right of ownership. That is the right to receive the fruits of ownership, the income generated by the capital one owns. In typical corporations today, shareholders do not receive the income attributable to their shares as a matter of course. They only receive a small portion of the income if the board of directors votes a dividend. Rather than justify retaining earnings, under the "business judgment rule," the board of directors can only justify paying dividends if they can show the money isn't needed for business purposes.

Widespread Direct Ownership Of Capital

This is the "fatal omission" from virtually every economy on earth today. The primary means of participation in economic, social and political life, and thus the chief support for human dignity, is direct ownership of capital. Under ordinary circumstances, it is virtually impossible to exist as a moral being without property. Heinrich Rommen, a student of Father Heinrich Pesch, S.J., and member of the Königswinterkreis discussion group, underscored this principle in The State in Catholic Thought (1947):

"Where the institution of property is completely abolished, as in Soviet Russia, man has ceased to be a person and has become a mere tool of the superstate, a mere cog in a non-personal machine. Rightly, therefore, Leo XIII (Rerum novarum) speaks of a slavish yoke that has been imposed on the propertyless modern proletarian.

"It is morally impossible to exist as a free person without property." (p. 189.)

Without property, we do not have power — the ability for doing. Without power, we can neither meet our material needs, nor participate in social life by exercising our natural rights and acquire and develop virtue (pursue happiness), thereby becoming more fully human.

The problem is that most people do not have access to the means of acquiring and possessing property in capital; the institutions of money and credit are closed off to them.

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Social Justice, I: Introduction

Most of the postings on this blog have dealt with the binary economics aspect of the Just Third Way. Having just had our eighth annual rally outside the Federal Reserve and the twenty-eighth CESJ annual celebration, the question came up as to the effectiveness of the effort to implement the Just Third Way, especially a Capital Homestead Act. As one correspondent declared rather forcefully (names have been changed to protect the guilty),

"Why, I ask, are we not part of this national debate on economics? After 40 years, we are not even mentioned as a potential or even possible solution. We do not have the attention of the system! Why can we not see that? We are less than ignored. We are ridiculed! Even the impressive Russell Long victory was really not a victory for democratic economics as it was ultimately perverted by the crooked Congress (funded by the 1%). We cannot beat them without calling them out to the American people.

"WE HAVE TO OUT THE 1% AND CALL THEM WHAT THEY ARE . . . ROBBER BARONS! We should publish a list of them . . . brand them for what they are . . . break down our argument for change into individual elements. See them for what they are, a faceless minority hiding behind even more faceless corporations doing their bidding. We should be working hand in glove with the 99% converting them over from socialism to binary economics. That is where our time should be spent . . . not in trying to get their leaders to pass the litmus test, of ideological purity according to CESJ. We should become a virus in the system and not a flea crawling across its back."

This is a fairly accurate statement of the goal of economic justice and the standard means chosen to reach goals in our society. The problem here, however, is that the strategy and the tactics do not take into account the fact that CESJ is the Center for Economic and Social Justice. People can be up to speed on the Kelsonian principles of binary economics and the necessity of implementing and maintaining the four pillars of an economically just society.

To refresh our memories, the three principles of economic justice are,


  • Participation (the input principle which demands as a fundamental human right, equal opportunity for every person to contribute to the production of society's marketable wealth both as a worker and as an owner of productive assets),

  • Distribution (the outtake principle which holds that the contribution of labor to the economic process should be compensated at the market-determined rate (or "just wage") for each particular type of human contribution to the production of marketable wealth. This principle dictates that the contribution of capital should be compensated by the "just profit" generated by the project or enterprise), and

  • Harmony (the feedback principle that balances and restores participation and distribution within the economic system. This principle was referred to by Louis Kelso and Mortimer Adler as the "principle of limitation" and by others as "social justice," as it calls for the restructuring of the economic system to restore participative and distributive justice),

The four pillars of an economically just society are:

  • A limited economic role for the State,

  • Free and open markets within an understandable and enforceable legal system as the best means for determining just wages, just prices, and just profits,

  • Restoration of the rights of private property, especially in corporate equity and other forms of business organization, and

  • Widespread direct ownership of capital, individually or in free association with others.

So, you say, what's the problem? That is what we'll look at tomorrow.

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The Situation in Greece

Since the last solution, people's attention has shifted away from Greece. This does not, however, mean that things are any better. It just means that the powers-that-be aren't thinking about Greece as the rest of the world implodes economically and the nations of the world try to get out of debt by spending more money. As soon as the next riot breaks out or Greece can't pay the refinanced debt, the media will be full of baffled confusion and amazed consternation that the latest fix didn't work.

Thoughtful ordinary people, however, are still wondering how it is possible to spend your way out of debt. As one Faithful Reader asked last week, "Where does the money that is initially loaned come from? Is it truly the result of capital accumulation? Or is it somehow an accounting trick, an entry in a ledger?

"In other words, are the Greeks being asked to pay back funds which were truly loaned to it from the accumulated capital of other nations and workers, or, is it being asked to pay back funds that were created out of nothing by banking institutions that will be able to create similar amounts again even if Greece defaults? Or is my question a silly one?"

The question is not a silly one. Understanding the Greek (and the U.S.) situation, however, requires a better definition of money than the powers-that-be are using, and a better understanding of banking, both deposit banking and issue banking. Currently, following the "currency school" of finance, "money" is construed almost exclusively as coin, banknotes, demand deposits (checking accounts) and some time deposits (savings accounts), and defined by its function, i.e., medium of exchange, store of value, etc., that is, by whatever is accepted as money does or can be made to do. The legal and accounting definition of money — "anything that can be accepted in settlement of a debt" — is disregarded or ignored.

Viewing money, as Keynes put it, as "a peculiar creation of the State," allows governments to create money at will by emitting bills of credit, and force its acceptance on the economy by fiat (hence "fiat money"). Keynes, however, failed to realize that money is not limited to State-emitted bills of credit, whether in the form of token coinage, banknotes or demand deposits, nor does the mere issuance of a currency or creation of a demand deposit "create money." Money is not created by issuing an instrument, but by accepting it.

This is consistent with the "banking school" understanding money as a promise. All money is a contract, just as (in a sense) all contracts are money. A contract consists, in relevant part, of an offer, an acceptance, and consideration. A government can make offers — issue currency or create demand deposits — and force the public to accept it as money, but the State cannot thereby give consideration (something of value that induces someone to enter into or "accept" a contract), for the State as a State produces nothing in the way of marketable goods and services. The State can only redeem its bills if the citizens grant it taxes and actually pay the taxes.

Further, people cannot pay taxes unless they have something to pay them with, and they will only have the wherewithal if they can produce marketable goods and services with their labor or capital, preferably both. The State's ability to make good on its fiat money is therefore backed only by the present value of future tax collections. If nothing is produced, or if the State isn't granted taxes or lacks the power to collect the taxes, the currency becomes worthless, and no one will accept it.

This is what has been happening in Greece. The government has been spending the present value of future tax collections like a drunken sailor on leave, and, at the same time, discouraging investment in productive activity with a vengeance. It has been bailed out by having other countries pledge the present value of their future tax collections to pay for Greece's past expenditures in the ephemeral hope that Greece will, contrary to its recent history, actually start producing marketable goods and services, the income from which can be taxed and used to redeem the promises that have been made so lavishly.

There is no accounting trick involved, only a serious conceptual problem about where money comes from and how it is created. Greece got into trouble by funding social programs with bills of credit, also known as "anticipation notes" from the fact that they are floated in anticipation of being able to collect taxes in the future to redeem the promises. If an economy is strong and the government secure, a country can get away with this for quite some time, but there must be a growing economy in which the bulk of citizens participate, or the tax base will erode to the point where the State simply cannot collect enough in taxes to pay for its past expenditures. At that point, it either has to devalue its currency (steal from current holders of its obligations) get bailed out (effectively surrender its sovereignty), or declare bankruptcy and refuse to honor all obligations.

Greece has not been loaned existing financial capital, that is, instruments representing the present value of existing marketable goods and services. Instead, it has been loaned the present value of future tax collections of other countries. This gives the illusion that money can be created out of thin air, but that is deceptive. What it's really being created out of is people's faith in the ability of the issuer of the loans to obtain repayment from the borrower, or pick up the tab by expending their own future taxes. Where the borrower — Greece — is going to obtain the funds for repayment is anybody's guess at this point, since the economy is in a shambles. Until, however, people realize that there will probably be no repayment under the current system, and that the countries who backed up the loans with their own faith and credit probably will be very reluctant to guarantee more loans, everything will be fine. When they do realize that Greece probably won't be able to repay as things now stand, the collapse will come.

There is, however, hope. After the Franco-Prussian War, an indemnity was imposed on France that was specifically intended to destroy France economically. By taking advantage of Pasteur's discoveries and the surge in demand for French products, and producing their heads off, however, France repaid the indemnity in less than three years. In some respects, France entered a "golden age" in the latter quarter of the 19th century, thanks in large measure to the rapid expansion of productive capacity and new markets (and the flood of silver on the world market that depressed the price, Bismarck having unwisely agreed to accept silver French Five Franc pieces in payment as well as gold).

Greece could do something similar by reforming its monetary and tax systems, and aggressively promoting a program of expanded capital ownership, financed not with the present value of other countries' tax collections, but by monetizing the present value of future marketable goods and services to be produced in Greece by discounting and rediscounting private sector bills of exchange, not public sector bills of credit. This would increase both production and effective demand, and at the same time rebuild the tax base and lessen the pressure on social welfare expenditures by helping people help themselves, not remaining what Heinrich Rommen called "passive State serfs" and "insolent bureaucrats," trapped by their dependency on the State for their subsistence.

Further, there is no need in the short- to mid-term to rely on increased exports. As Harold Moulton pointed out decades ago, there is enough unrealized demand present in all economies to absorb virtually all new production in the foreseeable future — if, as Kelso and Adler added, ownership of the new capital instruments financed with future increases in production instead of past reductions in consumption is spread out among people who will use the income first to pay for the capital that generated the income, then for consumption instead of reinvestment.

The injustice of the current system is in the maintenance of barriers that inhibit or prevent full participation of everyone in the economy through ownership of both labor and capital. Justice can be restored by acts of social justice directed at reform of our institutions — in this case tax and monetary policies that have concentrated ownership or control in the hands of a private elite or State bureaucracy (Pius XI's "dictators of money") — and in establishing and maintaining the "four pillars of an economically just society":

1. A limited economic role for the State. As Leo XIII observed, "There is no need to bring in the State. Man precedes the State, and possesses, prior to the formation of any State, the right of providing for the substance of his body." (Rerum Novarum, § 7.) The State must be confined to regulation, not ownership or control.

2. Free and open markets within an understandable and fair system of laws as the best means of determining just wages, just prices, and just profits.

3. Restoration of the rights of private property, especially in corporate equity and other forms of business enterprise.

4. Widespread direct ownership of capital, individually or in free association with others.

Adding the three principles of economic justice (Participation, Distribution and Harmony), would mean a quantum leap in how we address the situation in Greece — and in other countries.

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Power to the People, II: The Loss of Virtue

The 1951 film Duck and Cover (starring Bert the Turtle) was intended to present possible survival techniques in the event of a nuclear attack . . . unless, of course, one happened to be at "ground zero." The idea was that, upon seeing the flash of a nuclear explosion, you would immediately seek shelter from the radiation and the shock wave. If adequate shelter could not be found, rolling yourself into a ball would provide some protection and minimize the burn area.

Unfortunately, these days the light of truth seems to be as greatly feared as the flash of a nuclear bomb. When confronted with the verifiable facts and supported arguments of the Just Third Way, the standard reaction is to emulate Bert the Turtle and seek shelter immediately from the shock that you might have made one or two mistakes in your reasoning, thereby undermining your conclusion(s) — especially the one that the only way to finance new capital formation is to cut consumption and save.

Are there flaws in our arguments? Can our proofs be, well, disproved? It's always possible, and we try to be open to reasoned arguments and evidence that points in the other direction. We don't get too much of that, however — or any at all, for that matter. What we get is bare assertions that we're wrong, wrong, wrong, and that's all there is to it . . . usually from people who haven't read or (in many cases) understood what we've written.

As we said, nowhere is this more evident than when we come up against people who adhere to the belief that only existing accumulations of savings can be used to finance new capital formation as if it were religious revelation. As we saw in yesterday's posting, however, the slavery of past savings leads inevitably to the growth of the totalitarian State, which cannot tolerate any competing power, whether it be voluntary associations of citizens, or even the family or organized religion.

Within the past savings framework, the State necessarily takes over more and more of the business of living, intruding into and controlling every aspect of life. Interestingly, as the State takes over more and more of the business of living for everyone and imposes a condition of dependency — slavery to State-guaranteed wages and welfare (Belloc's "Servile State") — on as many people as possible, there is an observable decrease in the acquisition and development of virtue among people generally, even as the State works overtime to try and force people to be virtuous — on its terms, of course.

This makes sense. Confusing cause and effect, Aristotle defined a natural slave as a human-appearing being that completely lacks the capacity to acquire and develop virtue — "human-ness." This is, of course, backwards. It's not that someone is a slave because he or she cannot acquire and develop virtue. Rather, slavery renders someone generally incapable of acquiring and developing virtue. By taking away the exercise of our natural rights, the State renders us unfit for life as free citizens — and then claims that we are slaves by nature, and must be looked after by the State. Aristotle was wrong, but at least he wasn't a hypocrite.

The exercise of our natural rights, especially life, liberty and property, is the chief means by which we as political animals acquire and develop virtue. Being allegedly incapable of acquiring and developing virtue, a slave (as we might expect) has no rights — he doesn't need them. He has a master to take care of him, and provide for his every need. All those whips and chains and shackles (and the occasional salutary crucifixion for saying the wrong thing or looking funny), well, that's just the price you have to pay for the safe and secure life of a slave, and that week of vacation during the Saturnalia.

The problem is that nominally free people who own no capital — capital ownership, the chief support of life and liberty, being ordinarily the means by which people acquire and develop virtue — are, in effect, "masterless slaves." That being the case, they need someone to take care of them. The modern absolutist State is ready and willing (it's ability, especially in light of the current economic crisis, is questionable) to assume this role, and to guarantee everyone's individual good — at a price: ownership of everything, as the totalitarian philosopher Thomas Hobbes made clear in Leviathan.

As socialism is the abolition of private property — private property being the right to control and enjoy the fruits — socialism is the only answer. It is assumed in light of the myth of past savings that the fact that the popes have condemned socialism is either a mistake, or socialism is not really socialism, i.e., is something other than the abolition of private property. As Keynes declared, the State has the right to "re-edit the dictionary," so why not, if it can get you absolute power?

Capital ownership becomes something that would be nice to have if it could be done, say, by a willing redistribution of wealth by private owners, or a program by the State, but the important thing is to guarantee adequate wages, welfare, healthcare, and any other individual good or alleged good that some bureaucrat has decided is desirable, such as abortion on demand, or same sex "marriage."

All of this is in sharp contrast to the Just Third Way, which is based on the three principles of economic justice,

Participation,

Distribution, and

Harmony,

and embodied in the "Four Pillars of an Economically Just Society" . . . all of which, while fully consistent with the natural law, are impossible under the past savings assumption (thereby arguing that the past savings assumption is contrary to the natural law):

1. A limited economic role for the State (past savings requires increasing State control to keep a dying system on life support),

2. Free and open markets as the best means for determining just wages, just prices and just profits (past savings requires State control of wages, prices and profits to guarantee results),

3. Restoration of the rights of private property, especially in corporate equity and other forms of business organization (past savings requires that small and minority owners be deprived of the fruits of ownership — control and income — to ensure the accumulation of sufficient savings), and

4. Widespread direct ownership of capital (small and minority owners would use their income for consumption, not reinvestment as required by the past savings assumption).

The ineffectiveness of the Pro-Life movement is a graphic example of what happens when we are trapped by the slavery of past savings. Seeing no other way to end abortion on demand, they attempt to capture the State and use it to advance the Pro-Life cause, thereby turning the tables on the Culture of Death.  This effort to use the weapons of the Culture of Death against them is (as we might expect) self-defeating.

The end, contrary to what Machiavelli claimed, does not justify the means.  We cannot licitly use the coercive power of the State to force our views on others, however correct we believe those views to be.  Our claim that we are using the power of the State for good instead of evil is the very claim made by the totalitarians . . . the other totalitarians, that is.  By demanding "all or nothing" we become the very thing we are opposing.

There is also the problem that, even in a totalitarian system, an "all or nothing" demand generally results in the latter.

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Raw Judicial Power II: Bad Assumptions Make Bad Law

It is a standard legal aphorism — albeit one typically ignored by legislators — that "hard cases make bad law." As Oliver Wendell Holmes, Jr. commented in his dissenting opinion in Northern Securities Company v. The United States (193 U.S. 197 (1904)), "Great cases like hard cases make bad law. For great cases are called great, not by reason of their importance . . . but because of some accident of immediate overwhelming interest which appeals to the feelings and distorts the judgment." We see this especially in court cases like The State of Tennessee v. John Thomas Scopes (1925) — "the Scopes Monkey Trial" — and Roe v. Wade (410 U.S. 113 (1973)) that were deliberately used as "test cases" to change a law through judicial action rather than the legislative process.

We can expand on Justice Holmes's comment by adding that bad assumptions, like hard cases, make bad law. How it is possible for a court to create law and to understand what happened in the Roe v. Wade decision, we first have to understand the basis of law assumed by the framers of the U.S. Constitution, how that has been changed and then — perhaps a task much harder than most people are willing to undertake — realize that Roe v. Wade was not an isolated instance. Roe v. Wade is, instead, the logical result of the development of a line of thought that has plagued humanity from the beginning of the idea of law itself. Understanding this is of primary importance if the Pro-Life movement is to make any lasting advances that can be sustained on a foundation of the natural law.

The Pro-Life movement has been hamstrung from the very beginning by a number of assumptions. Ironically, many of these assumptions are based on the same flawed understanding of law that led to the decision in Roe v. Wade. These assumptions take for granted the bloated role of the State, distorted concepts of human dignity and sovereignty, even the complete separation of morality and law that the Pro-Choice movement also accepts without question.

These assumptions affect the awareness of man as a political animal. This, in turn, influences our understanding and definition of the exercise of natural rights of life, liberty and property, and the application of those rights within the common good. Our understanding of man as a political animal and the natural law affects especially our acceptance of the "analogously complete" capacity of each human being to acquire and develop virtue — "pursue happiness" — and thereby become more fully human.

Thus, where the Pro-Choice movement bases a large part of its justification for its position on the decision in Roe v. Wade, the Pro-Life movement concentrates on overturning Roe v. Wade and, in part, agitating for the adoption of a constitutional amendment to guarantee the natural right to life. Not considered is the fact that our constitutional history as related by William Crosskey demonstrates the futility of a constitutional amendment to oppose special interests championed by the United States Supreme Court.

There are many reasons why a constitutional amendment would not have the desired effect, especially in the prevailing climate of legal and moral positivism. Some of these have to do with the nature of law itself, others with the nature of politics. In no particular order, some of the major reasons are:

Misguided or Poorly Formed Public Opinion. No law, custom or tradition will be effective unless what constitutional scholar Albert Venn Dicey described as "public opinion" is behind it. Regardless of the justice or injustice of a particular law, custom or tradition, people must accept the law and be prepared to obey it, for whatever reason. Otherwise a law may have no effect, have a different effect than what was intended, or even have the opposite effect of what was intended. If the public as a whole has a poorly formed conscience or moral sense, this will be reflected in the laws that are accepted.

Expanded Role of the State. One of the "four pillars" of a just society in terms of the natural law is a limited economic role for the State. The more a society subordinates anything that is true in order to reach a political goal, the more unjust a society becomes, and the more the coercive power of the State is employed in an effort to maintain the status quo. Paradoxically, the more the State interferes to maintain the status quo or impose a false or superficial solidarity, the more quickly the social order degenerates as a result of violating the fundamental principles of subsidiarity and solidarity. Looking to the State to pass a law in order to impose a desired result is often self-defeating. Even when successful the effort undermines essential human dignity and violates the sovereignty of the human person by unnecessarily or unjustly restricting human liberty.

Rejection of Free Markets. A free market is essential to maintaining individual human sovereignty and thus securing and protecting human dignity through the exercise of liberty and private property, that is, freedom of association and contract involving the free exchange of marketable goods and services. By "free market," however, we do not mean a market in which "anything goes," but a market that all are free to enter and participate in as consumers and producers, and where the rules are clear, understandable, and enforced without prejudice. Misunderstanding this principle or interpreting it as promoting a "law of the jungle" environment sets the stage for what is effectively anarchy and "might makes right," or fascism in a misguided effort to bring order out of chaos.

Misunderstanding of Private Property. Understanding private property is crucial to recognizing and protecting essential human dignity and the sovereignty of the human person. Many people confuse "property" — ownership — with what is owned. On the contrary, property is, one, the natural right that every human being has to be an owner, and, two, the socially determined bundle of rights that define how an owner may use what he or she possesses, and (depending on the needs of the common good) what and how much can be possessed, as long as limitations do not unjustly or unnecessarily infringe on the underlying natural right to be an owner. Distortions of property that assert absolute exercise, or that the right to be an owner is not inherent (absolute) in the human person equally undermine private property as the chief support for the natural rights of life and liberty.

Alleged Economic Necessity. One of the strongest motivators for accepting even an unjust law is the need to make a living. In this respect, it is noteworthy that David Christy, author of Cotton is King (1855), one of the most persuasive defenses of chattel slavery in the American south before the Civil War, was a former abolitionist. While Christy continued to abhor slavery as an institution, he defended it on the grounds of economic necessity. Christy contended that the economic survival of the United States and the British Empire depended absolutely on the continuance of slavery in order to secure adequate supplies of American agricultural products, especially cotton, to support the industrial revolution. The modern wage system and concentrated ownership of capital, whether in private hands (capitalism) or the State (socialism) are justified on similar grounds, predominantly the need to secure adequate financing for new capital formation out of past savings.

All of these reasons — and more — demonstrate the degree to which the idea of the natural law has decayed in our society. Each one represents a more or less successful effort to undermine the natural law by subverting a common sense understanding of one or more natural rights, especially life, liberty, property, and the acquisition and development of virtue (pursuit of happiness), and making something other than truth the justification for changing the law or the social order.

The acquisition and development of virtue, especially, and somewhat paradoxically, is critical. It is a natural right itself to develop more fully as a person by acquiring and developing virtue — "pursuing happiness." The exercise of the right to acquire and develop virtue, however, necessarily implies the right to exercise the other natural rights, especially life, liberty and property. This is because exercising rights is the means by which human beings acquire and develop virtue. Thus, unless the right to develop more fully as a person is recognized and protected as the reason for even having rights at all, the probability is high that the exercise or even existence of life, liberty and property will either be denied or distorted.

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Orestes Brownson and Socialism, VII: The New Nationalism

On August 31, 1910, in Osawatomie, Kansas, Theodore Roosevelt gave a speech titled, "The New Nationalism." To a greater degree than most of Roosevelt's speeches, although all had the theme to some degree, "The New Nationalism" detailed what he meant by progressivism. It was not, as the conservative Republicans feared or the radical Democrats hoped, a version of socialism. It was, instead, a third way based on justice between, even above the two extremes of capitalism and socialism.

Perhaps it was because he spoke with a fire fueled by Taft's betrayal. Maybe it was the realization that the conflict he had fought so hard to avoid appeared to be ready to break out again. Whatever his motivation, Roosevelt had had forced on him the realization that the danger to the country was again imminent. As Herbert Knox Smith summarized the issue,

"The original question, 'Shall the Government control business?' gave place to the ultimate question: 'Shall the citizen control his Government?'" (Herbert Knox Smith, "Introduction," Social Justice and Popular Rule, by Theodore Roosevelt, New York: Charles Scribner's Sons, 1926, xiii.)

This summarizes the essential difference between progressivism as Roosevelt understood it, and populism, even the non-socialist remnants of populism. Roosevelt viewed the State as the last resort for a people with no other recourse. Regulation and control of industry and commerce by the government was necessary only when the institutions of the common good could not do the job adequately, and the exercise of liberty and property by a few infringed on the exercise of those same rights by the many.

Even then, Roosevelt made it abundantly clear that even State control or regulation must be imposed only without prejudice to the underlying natural rights held by every human being. There must be no "tit-for-tat," where those whose rights were previously infringed upon imposed disabilities or denied the rights of their presumed former oppressors:

"[I]n the interest of the working man himself we need to set our faces like flint against mob-violence just as against corporate greed; against violence and injustice and lawlessness by wage-workers just as much as against lawless cunning and greed and selfish arrogance of employers. If I could ask but one thing of my fellow countrymen, my request would be that, whenever they go in for reform, they remember the two sides, and that they always exact justice from one side as much as from the other. (Theodore Roosevelt, "The New Nationalism," Social Justice and Popular Rule, op. cit. 18.)

This appeared to be Roosevelt's chief quarrel with populism. Populism viewed the State as the only effective means for controlling big business, big finance — big anything . . . conveniently forgetting that the specialized tool of the State, when permitted to grow beyond its legitimate sphere, inevitably becomes bigger and more powerful — and less susceptible to control — than even the biggest corporation or trust.

Worse, populism tended to dismiss natural rights such as liberty and property if their exercise interfered with a desired goal. The tendency to see only one side of the issue, and to "throw the baby out with the bath" was anathema to a man who sought to return America to its true roots and ensure that the efforts of Abraham Lincoln were not in vain: "I have small use for the public servant who can always see and denounce the corruption of the capitalist, but who cannot persuade himself, especially before election, to say a word about lawless mob-violence." (Ibid.)

Not that Roosevelt ever forgot that concentrated wealth was itself a danger: "I have equally small use for the man, be he a judge on the bench, or editor of a great paper, or wealthy and influential private citizen, who can see clearly enough and denounce the lawlessness of mob-violence, but whose eyes are closed so that he is blind when the question is one of corruption in business on a gigantic scale." (Ibid.)

The populists tended to put the State before all individual rights in their quest for justice. Roosevelt knew that, unless the people somehow controlled the State, State control of anything was dangerous. The problem was that, without an effective means to control the State, there could be no real resolution of the conflict between capitalism and socialism.

As Roosevelt made clear, however (and which was confirmed in a series of articles by Judge Grosscup), the only effective check on State power is widespread direct ownership of capital. The abolition of private property in capital as the socialists and, increasingly, the populists advocated, would do nothing other than make everyone a permanent dependent on the State. The problem was that there was no effective means whereby ordinary people without sufficient existing savings to purchase capital could afford the increasingly expensive new capital instruments.

This left Roosevelt, in a sense, hanging out to dry. He had the right principles, but no effective way to implement them. In contrast, the individualist/capitalists and the collectivist/socialists had what they believed to be the answer, and the weight of experience and common sense behind them.

As far as the individualists and collectivists knew, it was impossible to finance new capital formation without first cutting consumption and accumulating money savings. For both camps, this meant that only a small elite (the wealthy for the former, the State for the latter) could control capital. This was believed to be essential, for only by concentrating ownership of capital would there be sufficient savings to finance new capital.

This premise would be proved completely false within a generation by Harold G. Moulton, president of the Brookings Institution, in his book, The Formation of Capital (1935). That did not help Roosevelt, however. The capitalists believed that only by maintaining absolute exercise of property could the world advance, or even maintain its position — a position with which the socialists, paradoxically, agreed . . . except that they wanted control in the hands of a State that had become their creature, not a management elite at the beck and call of the upper one percent.

The supreme irony in both the capitalist and the socialist position is that in both cases the instrument by means of which the capitalist or "the people" were to control capital — the management elite of capitalism, the State of socialism — has become itself the master. Property in everyday life, as Louis Kelso pointed out, is control.

Regardless who has legal title, whether capitalist or "the people," it's whoever controls the wealth who can truly be said to "own." Since "power naturally and necessarily follows property," as Daniel Webster reminded us, concentrated control is the same as concentrated ownership, "property" being not the thing owned, but the rights and powers over the thing, as well as the natural right to be an owner. As Roosevelt insisted,

"The true friend of property, the true conservative, is he who insists that property shall be the servant and not the master of the commonwealth; who insists that the creature of man's making shall be the servant and not the master of the man who made it. The citizens of the United States must effectively control the might commercial forces which they have themselves called into being." (Ibid., 11.)

A superficial understanding of this principle gave the socialists their greatest weapon and most persuasive argument. As the socialists argue, if the earth was made for everyone, what right do a few have to monopolize its goods? Yes, control of capital must be concentrated — or there wouldn't be any capital! — but it must be administered so as to benefit everyone. This means State control or outright ownership. This is because private owners, impelled by their own self-interest, cannot be trusted to administer their wealth for the benefit of all. Private property has to be abolished for the good of humanity.

Thus, by being partly right, both the capitalists and the socialists managed to be completely wrong. Roosevelt, at least, by his insistence on maintaining individual natural rights as far as possible as well as what would later be described as the universal destination of the world's goods, managed to be wholly, but (unfortunately) incompletely right. What Roosevelt lacked was some means whereby ordinary people without savings or the ability to cut consumption could become owners of capital.

That being said, however, Roosevelt's principles were sound, and appear to have been fully consistent with the Just Third Way. We see this in the correlation in his speech on the New Nationalism with the three principles of economic justice as well as the four pillars of an economically just society.

The three principles of economic justice are participation, distribution, and harmony. The four pillars of an economically just society are, 1) A limited economic role of the State. 2) Free and open markets as the best means of determining just wages, just prices, and just profits. 3) Restoration of the rights of private property, especially in corporate equity. 4) Widespread direct ownership of capital.

Participation

In a phrase that has become a virtual trademark of Roosevelt's program, he declared, "I stand for the square deal. But when I say that I am for the square deal, I mean not merely that I stand for fair play under the present rules of the game, but that I stand for having those rules changed so as to work for a more substantial equality of opportunity and of reward for equally good service." (Ibid., 10.)

Distribution

Roosevelt was fully aware that full participation in the economy requires ownership of both labor and capital. In a technologically advanced economy, widespread and direct ownership of capital is essential if each individual's economic welfare is to be adequately maintained. Admittedly, Roosevelt had no effective means to recommend whereby people could own capital as well as labor, but that did not stop him from stating the truth without equivocation:

"I believe in shaping the ends of government to protect property as well as human welfare. Normally, and in the long run, the ends are the same; but whenever the alternative must be faced, I am for men and not for property, as you were in the Civil War. [Roosevelt gave "The New Nationalism" speech before the "GAR," the "Grand Army of the Republic," an organization of Union war veterans.] I am far from underestimating the importance of dividends; but I rank dividends below human character. Again, I do not have any sympathy with the reformer who says he does not care for dividends. Of course, economic welfare is necessary, for a man must pull his own weight and be able to support his family." (Ibid., 20.)

Harmony

The principle of "harmony" is that, when flaws are found in our institutions, the proper response is not to destroy the institutions or, worse, people in or who use the institutions. Rather, we are to exercise "social charity," that is, to love our institutions as we love ourselves. This requires that we learn the true nature of our institutions, identify the flaws, and organize and work to correct the flaws.

Theodore Roosevelt appeared to be fully in agreement with this third principle of economic justice. Since the object of our concern is our institutional environment — the common good — we can also call the principle of harmony, "social justice." Institutions must be reformed so that they perform their functions adequately and serve the needs of everyone. As Roosevelt explained,

"National efficiency has many factors. It is a necessary result of the principle of conservation widely applied. In the end it will determine our failure or success as a nation. National efficiency has to do, not only with natural resources and with men, but it is equally concerned with institutions. The State must be made efficient for the work which concerns only the people of the State; and the nation for that which concerns all the people." (Ibid., 18-19.)

A Limited Economic Role for the State

Roosevelt walked a path, a third way, that outraged extremists at both ends of the political spectrum. Both the Old Guard Republicans and the populist Democrats sought to use the State to control others and secure their own positions. While Roosevelt, lacking a feasible program of empowering ordinary people with capital ownership, turned to the State to a degree that we believe to be unjustifiable, he stood firm on his principle that the State should be the servant, not the master. No where was this more true than in his struggle against those who, as is the case today, used the coercive power of the State to secure their own special privileges and wealth. As Roosevelt explained his position,

"One of the fundamental necessities in a representative government such as ours is to make certain that the men to whom the people delegate their power shall serve the people by whom they are elected, and not the special interests. I believe that every national officer, elected or appointed, should be forbidden to perform any service or receive any compensation, directly or indirectly, from interstate corporations; and a similar provision could not fail to be useful within the States." (Ibid., 21.)

Needless to say, Roosevelt was opposed to any and all campaign contributions from corporations: "It is necessary that laws should be passed to prohibit the use of corporate funds directly or indirectly for political purposes; it is still more necessary that such laws should be thoroughly enforced. Corporate expenditures for political purposes, and especially such expenditures by public-service corporations, have supplied one of the principal sources of corruption in our political affairs." (Ibid., 11.)

Free and Open Markets

The conservatives tried to paint Roosevelt as the enemy of property and free enterprise. Nothing could be further from the truth:

"The absence of effective State, and, especially, national restraint upon unfair money-getting has tended to create a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power. The prime need is to change the conditions which enable these men to accumulate power which it is not for the general welfare that they should hold or exercise. We grudge no man a fortune which represents his own power and sagacity, when exercised with entire regard to the welfare of his fellows." (Ibid., 13.)

Restoration of Private Property

Then as now, conservatives insist that the rights of property must be regarded as sacred. There is nothing new in that claim. It is a claim made in justice, as political commentators and religious leaders through the ages have insisted.

The problem is that, within the current flawed social order we inhabit, ownership of capital — the "property" in question — is extremely concentrated, even more so than in Roosevelt's day. It's not a question of maintaining the rights of private property for the few, but of ensuring equal access to the means of acquiring and possessing private property for the many:

"[O]ur government, National and State, must be freed from the sinister influence or control of special interests. Exactly as the special interests of cotton and slavery threatened our political integrity before the Civil War, so now the great special business interests too often control and corrupt the men and methods of government for their own profit. We must drive the special interests out of politics. That is one of our tasks to-day. Every special interest is entitled to justice — full, fair, and complete — and, now, mind you, if there were any attempt by mob-violence to plunder and work harm to the special interest, whatever it may be, that I most dislike, and the wealthy man, whomsoever he may be, for whom I have the greatest contempt, I would fight for him, and you would if you were worth your salt. He should have justice. For every special interest is entitled to justice, but not one is entitled to a vote in Congress, to a voice on the bench, or to representation in any public office. The Constitution guarantees protection to property, and we must make that promise good. But it does not give the right of suffrage to any corporation." (Ibid., 10-11.)

Widespread Capital Ownership

Roosevelt's stand on widespread ownership, while limited to landed capital (for he saw no feasible way to spread out ownership of commercial, industrial and financial capital without violating private property), nevertheless earned him accusations of being a socialist. This is difficult to understand, for socialism, properly defined, is the abolition of private property in capital, not its broad diffusion among the people. As Roosevelt related, in a clear reference to Abraham Lincoln's 1862 Homestead Act,

"I believe that the natural resources must be used for the benefit of all our people, and not monopolized for the benefit of the few, and here again is another case in which I am accused of taking a revolutionary attitude. People forget now that one hundred years ago there were public men of good character who advocated the nation selling its public lands in great quantities, so that the nation could get the most money out of it, and giving it to the men who could cultivate it for their own uses. We took the proper democratic ground that the land should be granted in small sections to the men who were actually to till it and live on it." (Ibid., 15-16.)

In light of his adherence to the three principles of economic justice and the four pillars of an economically just society, it should come as no surprise that, faced with a resurgence of the twin evils of capitalism and socialism, Roosevelt concluded that the country was once again in serious danger — and he was right. The American Republic was again threatened with a deep split along ideological lines, with the supreme irony being that neither camp, the capitalists nor the socialists, were in conformity with the founding principles of the United States. As Herbert Knox Smith related,

"The underlying motive of the man — so deep that it was rather an instinct than a formulated position — was this unity of America, the fabric of the commonwealth. He dealt with a unity, not superficial but profound — not merely between geographic sections, but a unity of spirit and the bases of life. Statesmanlike, he knew that there can be real unity in a democracy only if there is equality of opportunity, easy passage across all class boundaries, no accepted dividing line drawn on inequality of privilege, or any dividing line other than those self-contained in each man's own character and intellect.

"He saw that only such essential unity can be enduring. All the details of his action, the specific policies that he stated, arise from this underlying purpose for the Union. The supremacy of law and government; the destruction of unfair industrial advantage; the conservation of forest, mine, and water power for the common use, were all factors of equality of opportunity, and he established them." (Smith, op. cit., xvii-xviii).

The battle had been joined.

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Orestes Brownson and Socialism, III: The Constitution

What baffles many people who take the "capitalist/individualist" side today is the claim that the Just Third Way is not socialist, even though there is a strong objection to concentrated ownership of capital in private hands. The only people even more puzzled about the Just Third Way are the socialists/collectivists, who believe that any system that appears to subordinate their demand for a guarantee of an adequate material life for all to humanity's natural rights of life, liberty and property is necessarily capitalist.

Consciously or not, both sides take for granted that humanity is either socialist/collectivist, or capitalist/individualist. No other arrangement is possible. Thus, whatever is not socialism must be capitalism, and whatever is not capitalism, must be socialism.

This belief is conditioned primarily by two assumptions. One assumption is the conviction that humanity is either a social creature or an individual. There is no appreciation of what Aristotle meant by his statement in The Politics that "man is by nature a political animal" — a possibly unique combination of individual and social. The politikos bios — the life of the citizen in the State — is an arrangement of the common good by means of which individual rights are only truly realized within a social context. The art of politics involves arranging the institutions of society to optimize the exercise of individual rights within a framework that naturally and necessarily takes into account not only the rights of the individual, but of other individuals, groups, and the common good (that network of institutions within which we exercise rights and so acquire and develop virtue) as a whole.

The other assumption is the idea that the only way to finance new capital formation is to cut consumption, accumulate money savings, then invest. This necessarily restricts ownership of all new capital either to private individuals who have been fortunate enough already to have wealth and can afford to cut consumption, or to the State, that presumably has the power (as John Maynard Keynes put it) to re-edit the dictionary, that is, change what it means for something to be a right, thereby controlling who may "own" and how that "ownership" may be exercised.

In view of these two assumptions, society seems locked into an irreconcilable conflict between individualism/capitalism on one hand, and collectivism/socialism on the other. In the analysis of Orestes Brownson, the American Civil War brought this conflict to its highest pitch.

In Brownson's opinion, the conflict between individualism and collectivism had been present from the beginning of the United States. Both were in contrast to the system embodied in the Constitution. The individualist element had been strong from independence up to the Civil War. The most obvious representation of this was slavery, according to de Tocqueville the only serious problem with democracy in America. The collectivist element had, however, been gaining strength, largely through opposition to slavery. It was to gain ascendancy after the war in reaction against the growing power of the industrial and commercial sectors, the ownership of which was rapidly becoming concentrated at an accelerating rate. While Brownson died in 1876, he would not have been surprised — although possibly profoundly shocked — at the degree to which American society has managed to take on the worst aspects of both capitalism and socialism, the latter not unjustly termed "State capitalism."

Brownson was adamant that slavery was a profound evil, and that the abolitionists were right in opposing it. Where they were wrong, he believed, was in opposing slavery on "humanitarian" or "socialistic" grounds. Slavery was wrong not because it was cruel and inhuman. Life itself, in many respects, is cruel and inhuman. Slavery is wrong because it is contrary to human nature, constituting an unnecessary cruelty, "a barbaric element, . . . in direct antagonism to American civilization."

Even then, slavery was abolished not on humanitarian grounds, but because abolition was an effective weapon in the fight to save the Union. Thus, as far as Brownson was concerned, the right thing was done, but for the wrong reason. Political pragmatism had won out over both socialist humanitarianism and capitalist individualism, as well as the true American spirit and philosophy. Ironically, this led to the belief that capitalist expedience, rather than socialist humanitarianism was the ruling philosophy of America, a conclusion seemingly validated by the rapid commercial and industrial expansion after the war. Paradoxically, this led to the widespread belief that socialism, albeit under many names and in many forms, is the only possible remedy to the horrors of capitalism.

Not that Brownson, despite his condemnation of socialism, was "soft" on capitalism. He viewed them as two sides of a very bad coin. This non-Catholic and thus non-American philosophy imposed actual slavery in the south, and virtual slavery in the north through the wage system. With respect to the material condition of the non-owning worker he believed that chattel slavery was better for the worker than wage slavery — a conclusion with which you are free to disagree, but it illustrates what are, in Brownson's eyes, the chief evils of the wage system. An owner of men has, at least, to keep the people who are his property alive even when they are not working if he hopes to remain profitable. The propertyless free worker, however, is on his own, free to starve, if nothing else, and the employer of nominally free men makes more profit the worse he treats his workers — in the short run. In an analysis that Brownson could have lifted directly from Aristotle, he stated,

"In regard to labor two systems obtain; one that of slave labor, the other that of free labor. Of the two, the first is, in our judgment, except so far as the feelings are concerned, decidedly the least oppressive. If the slave has never been a free man, we think, as a general rule, his sufferings are less than those of the free laborer at wages. As to actual freedom one has just about as much as the other. The laborer at wages has all the disadvantages of freedom and none of its blessings, while the slave, if denied the blessings, is freed from the disadvantages. We are no advocates of slavery, we are as heartily opposed to it as any modern abolitionist can be; but we say frankly that, if there must always be a laboring population distinct from proprietors and employers, we regard the slave system as decidedly preferable to the system at wages." (Orestes Brownson, "The Laboring Classes," The Boston Quarterly Review, July 1840.)

Brownson might as well have added, "own or be owned." As it was, the Civil War created the illusion that the northern version of capitalism had won, but this — at least in Brownson's eyes — was no victory. All it did was give socialism its justification, and provide the basis for the gradual implementation, decades later, of social welfare programs that eventually bankrupt the State in an effort, as Goetz Briefs noted, to save capitalism by having the State guarantee each person's material welfare.

Nevertheless, in 1865 Brownson, while he could see the dangers of the spread of propertylessness among the great mass of people, saw great promise in the Homestead Act.  He likened it to the spread of the benefits of the Roman Republic to every inhabitant in the empire — only on a more just and equitable basis. He continued to hold fast to what he believed to be the true American philosophy found in the Constitution, especially what in the framework of the Just Third Way is called the "Four Pillars of an Economically Just Society":

1. A limited economic role for the State,

2. Free and open markets as the best means of determining just wages, just prices, and just profits,

3. Restoration of the rights of private property, especially in corporate or other business equity, and

4. Widespread direct ownership of capital.

A Limited Economic Role for the State

As far as Brownson was concerned, the State's role is to protect individual rights, but within a strong juridical framework that respects human liberty and dignity. As he explained, "its mission is not so much the realization of liberty as the realization of the true idea of the State, which secures at once the authority of the public and the freedom of the individual — the sovereignty of the people without social despotism, and individual freedom without anarchy. In other words, its mission is to bring out in its life the dialectic union of authority and liberty, of the natural rights of man and those of society. . . . The American republic has been instituted by Providence to realize the freedom of each with advantage to the other."

Free and Open Markets

A free market is not one in which "anything goes," but one to which everyone has equal access and equal rights to participate. Brownson saw a free market — "commerce" — as essential to a government of sovereign people. "[I]t was necessary to place [commerce] under the General government, in order that laws on the subject might be uniform throughout the Union, and that the citizens of all the States, and foreigners trading with them, should be placed on an equal footing, and have the same remedies."

Restoration of Private Property

When Brownson wrote, in 1865, the serious inroads that would be made on private property even as soon as 1873 with the "Slaughterhouse Cases" were far from evident. The war had been fought — in part — to secure natural rights to people who had been deprived of their exercise. Still, Brownson appears to have had an inkling of what could come, for he stressed the importance of protecting natural rights many times, e.g., "Communion with God through Creation and Incarnation is religion, distinctively taken, which binds man to God as his first cause, and carries him onward to God as his final cause; communion through the material world is expressed by the word property; and communion with God through humanity is society. Religion, society, property, are the three terms that embrace the whole of man's life, and express the essential means and conditions of his existence, his development, and his perfection, or the fulfillment of his existence, the attainment of the end for which he is created." This is a concise description of the role and importance of religious society, civil society and domestic society in the politikos bios.

Widespread Capital Ownership

Private property in capital was for Brownson the underpinning of a free and democratic society, providing the foundation for the family, the basic unit of society. In America, the people govern — both implying and requiring widespread ownership of capital. As Brownson explained, "The right to govern rests on ownership or dominion. Where there is no proprietorship, there is no dominion; and where there is no dominion, there is no right to govern. Only he who is sovereign proprietor is sovereign lord."

Interestingly, Brownson's analysis of the U.S. Constitution, even flawed as it is in parts by an incomplete understanding of Catholic political philosophy (a weakness Brownson himself admitted) — except for his evident admiration of James Madison — bears a strong resemblance to that of William Winslow Crosskey (1894-1968) possibly the greatest Constitutional scholar of the 20th century. This is understandable. Both men seemed to have an almost inborn sense of the natural law that necessarily underpins any sound government or State. Applying Aristotelian and Thomist common sense in their respective analyses (even if unconscious of the provenance of the principles they employed), leads to similar, if not identical conclusions.

Crosskey used different words, but he expressed the same sentiments in his monumental Politics and the Constitution in the History of the United States (1953). As Brownson reflected,

"The United States, or the American Republic, has a mission, and is chosen of God for the realization of a great idea. It has been chosen not only to continue the work assigned to Greece and Rome, but to accomplish a greater work than was assigned to either. In art, it will prove false to its mission if it do not rival Greece; and in science and philosophy, if it do not surpass it. In the State, in law, in jurisprudence, it must continue and surpass Rome."

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