Home / Economics / Catholic Social Teaching / The Trouble with Catholic Social Teaching

 

The term “Catholic Social Teaching” produces two opposite and unpleasant effects. It makes some people bare their teeth. And not surprisingly, it makes other people run and hide. However, the contrasting reactions are due to the problem that some folks do not understand what the term means, and some folks do.

There are people who think Catholic Social Teaching has something to do with homosexual rights or abortion rights or contraception rights. It doesn’t. Those things are not rights. They are wrongs. And the Church holds the line against them without compromise.

Other people avoid Catholic Social Teaching because of what it really does mean. It means justice for the poor.

The Church has always emphasized the corporal works of mercy: feeding the hungry, clothing the naked, comforting the afflicted. But justice is distinct from mercy in that it means achieving something more permanent than relieving immediate suffering. It means, as Chesterton says, raising both the political and the economic status of the poor. This makes for a better society as a whole.

However, any time we venture into the realm of economics, we must tread lightly, because, well, we’re talking about money now. We can even see Chesterton tiptoeing when he says, “Let me touch on that terribly delicate matter, the relation between Truth and Trade.” He says we once had the medieval concept of the Just Price. Then the simplistic “laws” of supply and demand. Now things are more complicated: we have a market where suppliers “demand a demand,” a market not based on “necessity and utility and what the people want; but rather the fancies, the moods, the mechanical tricks, the mere absent-mindedness; all the weaker side of man.”

Anything that exploits the weaker side of man is, quite simply, evil. It is one of the reasons why the rich get richer and the poor get poorer.

The old economic models no longer work. In order to have a just society we need to act with principles other than economic profit. This is a theme repeated by Chesterton throughout his writings. It is also a theme repeated in the writings of a small group of men who dealt with the subject before, during, and after the time that Chesterton wrote about it. This group has consisted entirely of Popes. The writings were the encyclicals on Catholic Social Teaching. The latest installment is Caritas in Veritate (“Love in Truth”) from Pope Benedict XVI.

Mammon, the one real alternative to God, has always had a robust following, but never more so than in the modern world, where, as the new encyclical points out, the amount of overall wealth has increased but so has the disparity between the rich and the poor.

The Pope says, “Every economic decision has a moral consequence.He echoes the phrase, “distributive justice,” which was used by his predecessors and gave rise to the social philosophy of Distributism, which was espoused by Chesterton, Hilaire Belloc, Fr. Vincent McNabb, and others. And like these other great thinkers and great men of principle, Benedict does not confine his treatment of social issues to mere economics. He touches upon technology, ecology, and education−the whole human person. He affirms the Church’s teaching on life, which means not only the right to be born, but truly the right to live, to enjoy the wonders of creation, to eat and breathe, to work and play and worship.

The reaction to the latest encyclical? Parts of it were welcomed by some but winced at by others – and vice versa. Political agendas always come up narrower than the ministry of the universal Church.

People of all faiths, in spite of their doctrinal differences, have generally been encouraged when the Catholic Church takes a stand for religious belief. In a skeptical and materialistic age, the social encyclicals seem to garner the widest attention because everyone is interested in seeing how the Church will adjust to the trends of the modern world. However, it is arguable that there has never been a real surprise in any papal encyclical. The Pope simply affirms the truths the Church has always affirmed. The encyclicals are needed only because the world changes, not because the truth changes. The world needs to be refreshed by the truth. For instance, in 1968, the only surprise of Humane Vitae was that the Church was not going to give into the world. Lust is still wrong. Now, in 2009, the only surprise of Caritas in Veritate was that the Church was not going to give into the world. Greed is still wrong.

In both these encyclicals, the family is defended as the basic unit of society. We cannot have sexual arrangements that destroy the family. We cannot have economic arrangements that destroy the family.

Over a hundred years ago, Chesterton wrote, “The mere strain of modern life is unbearable; and in it even the things that men do desire may break down; marriage and fair ownership and worship and the mysterious worth of man.” These normal things that Chesterton prophetically defended are the same things defended by the Catholic Church. It is no secret, of course, that the Church has defended the freedom to worship, the right to life, and traditional marriage. But there is a fourth thing on Chesterton’s list: fair ownership. This fourth thing is found in Catholic Social Teaching. In fact, that’s where Chesterton found it.

 

About the author: Dale Ahlquist

 

Dale Ahlquist is the president of the American Chesterton Society. He is the creator and host of the Eternal Word Television Network series, "G.K. Chesterton: The Apostle of Common Sense" on EWTN. Dale is the author of three books, including Common Sense 101: Lessons From G.K. Chesterton, the publisher of Gilbert Magazine, and co-founder of Chesterton Academy, a new high school in Minneapolis. He and his wife have six children.

 

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50 Comments

  1. Dale, in line with your comments, Caritas in Veritate was a commentary on two encyclicals of Paul VI: Humanae Vitae and Popolorum Progressio; the first angered the left and the second the right, and Caritas angered them both. George Wiegel could barely contain his rage, and alleged a deep Vatican conspiracy behind its writing, while the left has more or less scratched its collective head without knowing quite how to respond. But you know you are about right when you’ve angered the right and confused the left.

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  3. John, do you mean George Weigel?

  4. “Cafeteria Catholicism” abides. We all have our blind spots. That’s not cause to reject the Church’s teaching, but to listen more closely, repent more deeply, and sometimes just shut up when we realize that we “just don’t get it.” (I’m an Orthodox convert who respects Catholic Social Teaching a great deal.)

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  6. Great article, Mr. Ahlquist. The problem of “conservative” and “progressive” Catholicism is one of the major reasons why I tend to avoid most Catholic or Catholic-oriented blogs, (except this one, and a few others, of course!).

  7. “In a skeptical and materialistic age, the social encyclicals seem to garner the widest attention because everyone is interested in seeing how the Church will adjust to the trends of the modern world. […] The encyclicals are needed only because the world changes, not because the truth changes.”

    Has not the Catholic Church’s teaching on usury changed from an outright prohibition on charging interest on loans to a prohibition on “unjust” interest only? I’ve been trying to wrap my head around this for a while; the only justification I’ve seen for this change is that contemporary economic systems rely on interest, so it must be permitted. Surely that can’t be right, can it?

  8. I like you Dale and I love your Chesterton program and I love Chesterton. But I disagree totaly with your interpretation of Catholic Social Teaching and if Chesterton and every Pope who ever lived agrees with you then I disagree with them too. The fact is you cannot have a viable economic or industrial enterprise if you ignore the laws of economics. And while it is true that Capitalism has glaring flaws, mostly caused by people who do not have any moral foundation – who are dishonest. But if you do away with Capitalism what you will have is universal misery. Apparently that is what you, Chesterton, and the Popes ( if they agree with you, which I don’t grant at all) want. That is what President Obama wants too. Well I don’t.

    You have not mentioned the principle of subsidiarity. Why not? I’ll tell you what is wrong with the Popes of this century and the last couple of centuries. For the most part they were raised and educated in socialist cultures or under monarchies in which the masses were not as free to govern their lives as we are under a democratic, capitalist system.

    By the way don’t confuse Capitalism with the ” virtue of selfishness ” of Ayn Rand. That is not what I am talking about at all, nor am I talking about the capitalism of the robber barrons. I have in mind more the capitalism as it existed from say 1950 to about 2000. Capitalism with restraints but not overly so. One that is basically honest and tries to treat their workers and their customers justly and fairly ( however reluctantly.) A Capitalism that has made it possible to provide safety nets for tens of millions for the past fifty years at the cost of trillions of dollars. No socialist system has ever done that and never will. And the current crowd in Washington are bent in destroying the goose that laid the golden eggs. Where will your Catholic Social Teaching be when they achieve their concept of socialism?

  9. Can you explain the concept of subsidiarity and how the Church includes this principle in her teaching of social justice? How do subsidiarity and disribution allign with each other as principles of social justice?

  10. But why do we care if the disparity between rich and poor increase so long as the state of the poor is improved to the point that they are by some objective standard “well off”. In the United States if you are not residing in a family headed by a single parent then your chance of living in poverty are about 1/20. The lower the tax burden and more “free market” the state the lower the risk of poverty (New Hampshire has one of the lowest overall tax burdens as well as low levels of poverty). In the Gospels obviously there is a lot said about the poor, This is irrefutable and almost all of it concerns not the “economic system” but the need for personal charity. The “social gospel” has some relevance when it makes the generic point that our economic and social systems should be just and geared to the general welfare. The real question however is what system is most improving the plight of the poor. This is really not a moral issue at all. It is an empiric one that is decided not by philosophy, or theology but by data. Obviously I do not mean that there are no moral issues in teh economy, moral duties to honor fair contracts, not cheat or defraud etc are of course all binding under the 7th commandment. The larger question over what “system” free market capitalism, socialism, is best for the poor is an empirical question. Free Market capitolism does pretty well over all. ( If you had to be “poor” is there a better place on Earth to be poor? Where would you rather be living below the poverty line in Scranton Pa, or Calcutta India? Quite simply the “social gospel” is really not specific enough to answer any of this.

  11. Chesterton is wonderful generally but on matters economic he’s very bad. An examination of Chesterton’s economic throught in light of, say, Schumpeter’s work on economic development demonstrates Chesterton’s utter senselessness on matters economic. Simply put, Chesterton’s distributism does not provide for the capital formation necessary to economic development. In a world according to Chesterton, we’d be back to the ginding poverty of a no development world.

    As for the Church’s view of loans and interest, see Schumpeter’s “The Theory of Economic Development.” The Church’s doctrine on loans and interest developed during a time of little or no economic development. Under this condition, the Church percieved the only function of lending as a facilitation of consumption beyond means (and the profiting from it). With the rise of capitalism and, consequently, economic development, capital formation through ordered capital markets became fundamental to material welfare. The Church simply clarified its teaching to account for a reality that it did not comprehended previously.

  12. David W. Cooney

    Jan, his link will give take you to articles that touch on subsidiarity. Several of them are specifically about subsidiarity. http://distributistreview.com/mag/?s=subsidiarity

    MRD,
    Strictly speaking, the wealth disparity need not be a problem. However, the means by which the average “non-wealthy” family remains “well-off” these days is to go further and further into debt. In other words, they are not well off, but appear to be so due to the ease with which they can acquire the credit necessary to live beyond their means.
    If the real question is “what system is improving the plight of the poor,” then I would have to answer none of the prevailing systems. Capitalism does not help the plight of the poor at all, because no part of capitalism inherently includes issues of social justice. That is not to say that capitalists are not aware of or respond to these issues, but capitalism itself is not and does not.
    Additionally, while it is true that the poor will always be with us, I believe a system that encourages the widest distribution of ownership goes farther than either capitalism or socialism to address the problem. The old saying about giving a man a fish versus teaching a man to fish comes to mind. The follow-up question to that is that if, having taught the man to fish, he has no rod and tackle, no boat and no nets, what good has the lesson done?

  13. Dear Mr. Linus,

    You say you do not grant the papal position as presented by Mr. Ahqluist, but you have failed to demonstrate otherwise. Indeed, you go so far as to say that even if every pontiff who has ever lived agrees with Chesterton or Mr. Ahlquist’s “interpretation” of CST, you disagree with them as well. Such is the sorry state of the Church in the West. Rather than conform to the Church, people wish the Church to conform to the world.

    I am curious, what “laws” are you speaking of?

    The Church has clearly outlined what is and isn’t permissible within the confines of economics, whether under economic liberalism (capitalism) or socialism.

    Mr. Ahlquist does not have to describe every principle of Catholic Social Teaching in one essay, Mr. Linus. Subsidiarity is covered on this website. Please see the articles I’ve provided Jan.

    Unfortunately perhaps, that capitalism you speak of has never existed without the assistance of socialism, which we both decry.

  14. David W. Cooney

    Warlord, The notion that there was no economic development during the medieval era is laughable. The arguments used to justify usury under capitalism are no different than those put forth and rejected by the Church prior to capitalism. One only has to read a sample of the cases of usury to see the complex financial dealings used to try and avoid the charge of usury.

    Additionally, there was quite a lot of economic and technological development during the period. I do understand that capitalists credit themselves with bringing about the technological developments of the last two centuries, but they never explain why that could not have happened under distributism, they just say it couldn’t. Do you really believe that people would not be innovative if they didn’t have major corporations and banks to back them?

    Development used to occur cooperatively with people of the same craft and monks involved in research periodically meeting to discuss their developments and acquire new ideas from other areas. Even Thomas Woods, no friend to our ideas here, points out in his book, “How the Catholic Church Built Western Civilization” that they were on the verge of developing fairly efficient blast furnaces for producing cast iron in the 16th century until the social and religious upheavals of the era prevented the information from being shared at the time.

    Money is not capital, it merely represents capital or the ability to acquire it. The only use for money is to spend it. When people borrow money, they do so to spend it. In the case of credit cards, they actually borrow money through the act of spending it. It is a medium of exchange so that we don’t have to do direct barter of good for good. This is as true today as it was in the medieval era and the Church’s teaching applies just as much today as it did back then.

  15. On usury — David – “the only justification I’ve seen for this change is that contemporary economic systems rely on interest…”

    Capitalism relies on (see comments here) “economic development” which somehow breeds inflation, risks and opportunities. Given inflation, risk and lost opportunity for acquiring wealth it is reasoned that there must be interest to hedge against it. But why is there inflation? I’m not an economist but it seems that there is inflation whenever demand is perceived to exceed supply (e.g. oil). Therefore, demand is driven by the notion that one may no longer have access to whatever is scarce — a “get it while you can” — mentality, that is, anything from survival to selfishness. But would it not be more realistic and fair to regulate consumption of what is scarce until it can be replaced. Wouldn’t that cure inflation?
    ———————–
    mrd – “Where would you rather be living below the poverty line in Scranton Pa, or Calcutta India?”

    But we now live in a globalized economy where Scranton, PA still enjoys of the US’ past conquests. In 50 years it may not.
    —————————

    How is it useful for society that anyone be permitted to accumulate wealth, whether it be Donald Trump or Fidel Castro?

  16. David,

    Lols, but laugh as you may, the fact is that the pace of economic development up to the early 19th century, compared to the pace of economic development since, was close to nil, and closes enough to nil to justify in substance a claim of “no economic development.”

    As for your point on economic development, people have always had the capacity to innovate; it’s the evolution of capital markets that explains the differential in the pace of development. You ask whether one may reasonably “believe that people would not be innovative if they didn’t have major corporations and banks to back them.” Simply put, the innovations of entrepreneurs don’t translate into economic development unless innovators can access the purchasing power required to develop and farm their innovation. As Schumpeter observed, [t]he essential function of credit [and, by extension, capital markets generally] … consists of enabling the entrepreneur to withdraw [the goods and services he needs] from their [alternative] employments …”. Schumpeter, The Theory of Economic Development. Thus, banks and capital markets, and large accumulations of capital, are as necessary to economic development as the creative spark. While distributism may appeal to some as an apparent via media between socialism and capitalism, it is actually the least preferential option. For at least socialism, like capitalism, in theory if not in practice, provides for the accumulations of capital (purchasing power) necessary for development.

    As for distinctions in credit, your observation that money is borrowed to be spent is right as far as it goes, but the observation either begs or doesn’t comprehend the question. The issue lies in the usage of purchasing power once it’s borrowed. When the Church’s teaching on lending and interest was first developed, consumer and trade credit explained the credit market entirely. Upon the advent of capitalism, however, the third function of credit noted above evolved. Very quickly, this third function came to explain most of the demand in the credit markets. This development explains the apparent inconsistency in the Church’s teaching on lending and interest observed by David above. The point is that the David’s difference isn’t a matter of inconsistency, it a matter of the Church applying reason to refine its teaching on the basis of evolving experience. The credit markets had developed into something essential to material welfare, and the Church took notice and acted.

  17. It’s fascinating how Chesterton and the Popes are so wonderfully wise and right when they agree with the Thing that Used to be Conservatism, and so incredibly stupid and foolish when they don’t. I wonder how we can explain that?

  18. I like you Dale and I love your Chesterton program and I love Chesterton. But I disagree totally with your interpretation of Catholic teaching about birth control and abortion and if Chesterton and every Pope who ever lived agrees with you then I disagree with them too. The fact is you cannot have a viable society if you ignore the laws of biology, human sexuality and economics. And while it is true that our hedonist culture has glaring flaws, mostly caused by people who do not have any moral foundation – who are dishonest. But if you do away with contraception and abortion what you will have is universal misery. Apparently that is what you, Chesterton, and the Popes (if they agree with you, which I don’t grant at all) want.

    We must conform the gospel to the world, not the world to the gospel!

    Hey, nifty! Thanks, Linus! I’ll have to try this with all the other areas where the gospel interferes with the wisdom of the world!

  19. You can’t validate Capitalism according to its own material science. It is the social that renders it a logical system and moral obligation. The modern economy cannot uphold demands on interests rates without objective principles, recently integrated in light of the great recession.
    The current economic debate on cuts is largely influenced by a moral stand ie; healthcare, life, poverty, property, and so on.
    If the modern is progressive and tradition is stablising, it might be going around in circles.

  20. David W. Cooney

    Warlord,
    Still laughing strong. The explosion of technological development didn’t occur until certain technologies developed. You are claiming that capitalism is responsible for that development because individual organizations could accumulate enough capital to do the necessary research. The fact is that multiple organizations could have accomplished the same through cooperatively investing the same amount of capital. The only reason it didn’t take place during the middle ages is that the specific technology that allowed for the exponential increase of speed had not developed. In fact, it didn’t take place for over 300 years after capitalism came to the scene. The point is that it did not occur because of capitalism. What capitalism did accomplish, was to allow single corporations to hoard the benefit of what was developed, thus further consolidating wealth and sending the poor and middle-classes into deeper poverty – despite the fact that greater access to debt has hidden much of this.

    E,
    Inflation has occurred in all periods of economic history. However, capitalism is unique in that many of its proponents have declared it to be a “normal” part of the “economic cycle.” Socialism, of course, declared that it wasn’t happening. It was condemned by all others.

  21. David W. Cooney

    Warlord,
    Another area where you are greatly mistaken is that Distributism offers itself as some sort of middle-ground between Capitalism and Socialism. That is not correct. Capitalism and Socialism are both the same in that the overwhelming majority of productive capital is controlled by a minority of people. The rest of the people work for the controllers. I do not mean to say that there is no difference between Capitalism and Socialism; those differences are both great and important. However, Distributism does not stand between them as some sort of middle ground as you describe. It stands on the opposite end of the field from both of them, advocating for widely distributed ownership of productive capital.
    Note that I do not mean money by “productive capital.” The concentration and control of money is certainly part of both Capitalism and Socialism as well, but money itself is not productive capital.

  22. E, don’t believe that demand exceeding supply is the explanation for inflation, at least not very often. It’s rather the increase in money supply, over and above increased population and increased productivity, that does it. Think of it this way, using your example of petroleum: say that the average person now pays three times as much for it as they did ten years ago, assuming the same amount of average household income and no productivity gains. But if they spend that much more on the same limited budgets, some other things have to be decreased in their expenditures. With demand thus falling for these other expenditures, their prices will go down and this will balance the total market basket of goods. However, if the money supply is growing, then the absolute price for everything can go up, though the relative price for non-oil products will still go down.
    Viking

  23. David, given that China had blast furnaces in the 5th century BC already, and some are still extant from the 1st century BC, your example of “fairly efficient” blast furnaces in the 16th century AD is not particularly impressive, IMO. Incidentally, there may be another source of blast furnaces, stretching back as long as two millenia ago: the Haya people of (now) Tanzania. (I’d never heard of them before either.) The European example might be just another case of borrowing from East Asia.
    Warlord, it’s unclear to me what the third reason for credit is as you conceive it, trade and consumer credit having been mentioned by you. That is, there’s capital formation, but, quantity aside, isn’t that a branch of trade credit? Btw, how did you select the moniker “Warlord”? (I chose “Viking” because both my grade school and Portland State University, whence i graduated, use those folks as their mascots.)
    E, your comment about Scranton vs. Calcutta in 50 years is a fair question. Also in fairness, however, is the possibility that Calcutta may be considerably more prosperous in a half-century than at present.
    John, once again: is it George Weigel to whom you refer? I looked him up under “George Wiegel” but was re-directed to the former spelling.
    Viking

  24. Can you imagine our Lord Jesus conforming to the world by passing out contraception and performing abortions? An abominable interpretation that an imploding culture is thought to be a standard to which the great Church should conform. An American interpretation for sure, but one that is hardly Catholic.

    The term “social justice” has been co-opted by the marxists and by liberal politics so it is timely to re-address the meaning. Cheston thoughts on the subject are bang on with the Church and the Catechism.

  25. Viking,
    My point is that many capitalists credit Capitalism with technological progress – as though the economic environment is necessary for technological development. This is simply not true and your examples help to demonstrate that.

    Acknowledging that I’m not an expert on the subject, my understanding of ancient Chinese societal structure suggests that it was much like the early feudal days of the medieval period where the lord was both land owner and civil authority. Whatever private enterprise might have existed did so at the sufferance of the “lord” who could issue orders governing that enterprise and take away the land and other property of the “serfs” at will. This is much closer to the Corporatism of the Fascist party of Italy and, once Hitler took over, the Nazi party.

    The increase of technological development which started in the West toward the end of the 19th Century was made possible by the ability to efficiently cast iron, which was only possible once the blast furnace was on the scene. That was the lynch-pin that started it all because it enabled producers to make the machines that eventually became part of the assembly line.

    My point is that Capitalism itself was not responsible for this. Comparing the differences between the technological development of Europe and the Orient help to demonstrate this. However in Europe operating under Distributism, technological developments were shared and different developers contributed for the benefit of all. The investment of the necessary money and capital for technological development was also shared by those who would benefit by being able to implement the new technology.

    That ended during the Renaissance and the philosophical shift which led to Capitalism. Capitalism itself is not responsible for the delay of the blast furnaces appearance in the technological development of Europe. Capitalism is also not responsible for its eventual introduction, nor for the subsequent technological developments that it enabled.

  26. Vi King- The function of trade credit relates to the management of timing differences in ordinary course production and marketing. For example, a Pizza shop might purchase sauces on 30 days terms, or a car dealer may purchase cars for sale from the manufacture through the means of short term bank credit. As Schumpeter observed, trade credit “involves only a question of a technical expedient of exchange … which has no further effect on economic development.” The function of this third category of credit—the only category of credit that is significant in terms of economic development—is of an entirely different nature. Such credit provides entrepreneurs the means by which to acquire production goods from previous employments thereby forcing the economic system into new channels or combinations, e.g., as identified by Schumpeter, introduction of a new good or method of production, opening a new market, development of a new source of raw materials or intermediate goods, or establishing a new form of industrial organization. In the context of economic development, such credit, in the words of Schumpeter, provides entrepreneurs “access to the social stream of goods before they have acquired a normal claim to it.” The grant of such credit “operates as an order on the economic system to accommodate itself to the purposes of the entrepreneur. Such credit is what Schumpeter noted as “capital,” or the “sum of the means of payment which is available at any moment for transference to entrepreneurs. When one perceives this connection between capital formation and entrepreneurial function, one comes to understand that capital markets are essential to economic development.

    David – An economic order organized under the principles of distributism would starve the entrepreneurial function of the means by which it carries out development. It just does not provide for the capital accumulation required for economic development, and casts an evil eye on economic profit, which is that ephemerally sweet fruit for which entrepreneurs and capitalist toil to partake. In your description, it seems that “technological progress” results from nothing more than the rearrangement of pots and pans by some vague spirit of cooperation. Empirically, however, the argument is a demonstrable epic fail, for the middle ages, while fruitful in matters spiritual, were desolate in terms of economic development, although I’m not entirely sure that the Middle Ages were an age of distributism, unless what you really mean by distributism is a feudal monasticism.

    In all, David, I think your wish to order a global economy in accord with monastic rules just doesn’t make sense. As a matter of right reason, one should avoid appending to Catholic doctrine unworkable economic fantasims simply because they look and sound Catholic. (That is, because the story has the right aesthetic feel)

    Happy Easter all!

  27. Vi King – Warlord is taken from the movie The Wanderers.

  28. Warlord, you do not know what you’re talking about. Catholic Social Teaching explicitly allows for economic profit, not casting an evil eye on it. Distributism, I repeat, doesn’t cast an evil eye on economic profit, but on usurious profit! And that is what capitalism does! You, sir, don’t really know what Distributism is if you say it equals an economy with monastic rules. All you’re doing is giving gratuitous assertions without an ounce of proof.

  29. Happy Easter to you too, Warlord, and to all. (Probably too late for many, and maybe everyone by the time this is posted.) And thanks too for the explanation. I haven’t seen that movie.
    I believe i now understand what you meant by the third kind of credit. But wasn’t that available, perhaps in fairly rudimentary form, in medieval and previous civilizations? I’m thinking here of the various expeditions of discovery, basically voyages into the unknown. And there was technological innovation prior to capitalism, if that term does indeed refer to a difference of kind rather than degree. Btw, Warlord, believe you meant “phantasms” where you wrote “fantasims”. Unless you meant to type “fantasies”, but the “e” and “m” are far enough apart on the keyboard that it strikes me as unlikely.
    David, agreed that other societies before capitalism were innovative. (With the proviso added above, about degree vs. kind.) But it must be admitted, doesn’t it, that the pace of innovation has gone up immensely? I’m reminded of a remark read once, to the effect that, comparing a boy in Julius Caesar’s time with one in George Washington’s, the only two inventions making much difference in everyday life were the printing press and gunpowder.
    Viking

  30. The real pity is how the terms “Catholic Social Teaching” and “Social Justice” have been somewhat hijacked and corrupted by elements that are not faithful to the theological truths of the Church. The net result has been that many Catholics hear those terms and simply then disregard everything else that follows.

  31. Paul – With respect to the reference to monastic feudalism, the reference was focused more to David’s explanation of development in medieval times than Distributionism generally. With respect to the “evil eye on profit” point, as noted above, the fundamental economic problem with Distributionism is that it does not provide for the aggregation of capital necessary for economic development. Nevertheless, often proponents of Distributionism invoke “profit” as something that presumptively suspicious, along with anything related to it, in distinction to an aesthetically Catholic way, hence Dale prefaces his argument above: “In order to have a just society we need to act with principles other than economic profit.” Sure, Dale’s statement is true in of itself, but it doesn’t add much to the argument except for the reaction it evokes from folks accustomed to a perceived correlation between evil and profit. As for proofs, I offer, as I did above, the correlation between the development of capital markets and economic development. Just compare the pace of economic development (that is, the trajectory of business cycles) before and after the rise of capital markets, or, dare I say, capitalism. Without a doubt, the evidence offered by business cycles is compelling. In comparison, what proofs are offered for the distributionist position? Most of the effort is focused on making the case that distributionism is an extension of catholic doctrine or on attempting an economic argument by reference to “common sense” supported by witty anecdotes, while true as far as they go, don’t really make the economic case. With respect to economics, Schumpeter’s evidence drawn from business cycles is simply more compelling than Chesterton’s anecdotes drawn from his idea of “common sense.”

    Vi King – The pace of development previous to the advent of capitalism (that is, the rise of sophisticated capital markets) was virtually infinitesimal. So much so IMO that it is fair to say that those prior ages were periods of no development. So, while one draw anecdotes of innovation from the medieval story, such activity was so slight that it could be funded from the ordinary means of medievals, most importantly from generous applications of the elbow grease of individuals or small communities. In this sense David’s notes above provide good insight as to the pattern of development in prior ages, but he just goes too far in offering such insight as evidence of the efficacy of distributionism in a modern economy.

    Also, Vi King, good catch on phantasms. Oops

  32. The American Church, especially, is riven between “conservatives” who accept the Church’s Teaching on bioethical and sexual matters while pretending not to know that the economic and foreign policies that they excoriate are in fact the Church’s Teaching on justice and peace, and “liberals” who accept the Church’s Teaching on justice and peace while excoriating that on most biothical and most or all sexual matters.

    Neither is any more orthodox than the other, and both echo the Americanist heresy, itself, since there are new heresies, a manifestation of the same error that, drawing on deep roots in every case, presented itself at Byzantium in the eleventh century, in England in sixteenth and nineteenth, in France and the Nethlerlands in the seventeenth, in German-speaking Europe and the Hapsburg lands in the eighteenth, and among the Croats of Croatia and of Bosnia-Herzegovina from the 1990s onwards.

    The influence of each of these can still be felt, while there were and are several further examples. Both sides of neo-Americanism belong in that category.

  33. Warlord, do you take seriously the Papal teachings concerning morality on economics or are you just another “Austrian” capitalist?

  34. Sounds good in an abstract, theoretical manner. All nice feelings and good sentiments. Then it all comes crashing down like a house of cards when it comes to the details.

    The diverse responses evoked simply indicate a lack of precision in the theory. Key questions are unanswered: Who gets to decide what is fair? Who gets to decide what is just? What are the measures of fairness and justice? Who judges what is a fancy and what is a need?

    On the one hand, there are those who trust the free market, which simply allows people to determine exchange (what is fair and just) in the give-and-take of negotiation. (And a justice system that addresses contract disputes quickly and fairly.)

    The other model — which brings the howls of protest — is the Marxist model in which a small government elite gets to dictate what is fair and just. The parties themselves are slaves to the judgment of elitists in this model. This model appeals to those who expect to be the arbiters of fair and just.

    So it depends to some degree where you see yourself in the power continuum. Do you see yourself as someone who knows better than others and thus should determine what is fair and just or do you believe you should allow the parties themselves to make the decisions?

    Factors that throw things out of whack are collusion and corruption, i.e. the lack of good faith and fair dealing. That is where attention is needed. And where the Church is best prepared to comment.

    One can evaluate both the free market of capitalism and the Marxist system for prevalence of collusion and corruption. Marxism wins the villain prize every time. The free market has a much better track record when it comes to correcting the anomalies caused by corruption.

    Nonetheless, the free market cannot be evaluated properly without also looking at the strength of the justice system in enforcing contract law and the strength of the culture in reinforcing moral guidance.

    Benedict XVI is misinterpreted when his encyclical is used to support Marxist principles, which he soundly rejects. It is interpreted correctly when his words are used to point to the need for moral teaching and a judiciary informed by moral teaching. If parties are trained in moral concerns, they become very able to set fair and just exchange and to enter into contracts that bring satisfaction to all parties.

    The arrogant elite, no matter how much they are trained, will be incapable of acting morally, for sinful pride is present in the arrogance that allows one to dominate and coerce others to accept their determination of fair and just.

  35. Paul, what’s “usorious” profit as opposed to non-usorious profit? Is there a particular rate that crosses the boundary?

    Viking

  36. Vi King — You argue that inflation is not caused by the increase in demand but rather by the increase in money supply w/o an increase in population or productivity.

    But said new money must end up in someone’s hands and thus eventually enter the market to be spent. Purchasing increases and therefore demand increases, which causes inflation.

    Increased demand can also happen without an increment in the money supply.

    Inflation is the end result in either case, don’t you think?

  37. This is the only part of this commentary I found questionable:

    “In a skeptical and materialistic age, the social encyclicals seem to garner the widest attention because everyone is interested in seeing how the Church will adjust to the trends of the modern world. However, it is arguable that there has never been a real surprise in any papal encyclical. The Pope simply affirms the truths the Church has always affirmed. The encyclicals are needed only because the world changes, not because the truth changes.”

    Seems disingenuous to me, especially if we’re talking about social encyclicals. The Church has learned a lot from the world, in terms of its social doctrine. For example, human rights, religious freedom, participation in how one is governed as an element of justice.

    To be sure, the Church today is the most prominent defender of these ideas on the world stage, but we came to them a bit late.

  38. David W. Cooney

    Warlord,
    Distributism is not opposed to profit, it merely states that profit cannot be the primary motive of economic activity in a just society. Therefore, one may still seek profit under a distributist system as long as one does so in a just manner. In regard to the aggregation of capital necessary for economic development, the response has been explained in other articles. Economic development is not dependent on a single business being able to accumulate massive amounts of capital to back research and development. That same capital can be accumulated by multiple businesses who, working toward a common interest, back research and development. The difference between the two scenarios is that the former leaves the benefits of the R&D under the control of a single business while the latter prevents that control by opening up the access from the outset.

  39. What I mean by usurious profit is when some company or someone sells at a much higher price or a much lower price than the just price of a certain product, to the result of driving his competitors out of business.

  40. Sorry, I mean to say usurious profit doesn’t need to have as cause selling very high or low; the product just isn’t sold at the just price. But that what I said concerning the result in the previous post still applies.

  41. First of all, apologies for twice – TWICE!! – misspelling “usurious”. And this right after feeling my oats about my “save” on Warlord’s phantasm too! Well, “pride goeth before a fall”, as our modern re-rendering of Scripture has it.
    More seriously: E, of course the “new money” ends up in someone’s hands and is thereby spent. That is indeed how inflation comes into being. Can there be a general increase in demand? It doesn’t seem so to me. Again, if we want more of something, we likely have to cut somewhere else. However, it’s probably possible to get into an inflationary spiral, where the velocity of money (the speed with which it is spent) can “take off”.
    Viking

  42. David – The gravamen of your argument seems to concede the necessity of capital accumulation to economic development. You rightly argue that such accumulation could be accomplished by through coordinated groups. Yes, in various circumstances the most efficacious economic unit consists of a coherent collection of economic actors, e.g., the NFL and other adventures in profession sports. In other circumstances, the most efficacious economic unit might require a very large economic actor, e.g. energy exploration. Whatever the case, a coherent organization is required to raise capital sufficient for significant contribution to economic development. In a very real sense, you outlined an effective Schumpeterian against trust busters and the substance of antitrust law generally. That said, I don’t think that once we get to this point, that it’s appropriate to argue that Catholic doctrine requires the use of coordinated groups where the operation of a signal economic actor would be more efficacious. The better approach is to leave it up to economic actors to determine the best organization from which the entrepreneurial function should proceed in any particular circumstance. Note, however, that distributionism is usually as suspicious of coherent collections of economic actors as it is of the big economic actor. Unfortunately, the requirements of distributionism would render the collections of economic actors to which you refer too incoherent either (i) to manage the entrepreneurial function from R&D to implementation or (ii) to gather the funding required from modern capital markets.

    Paul – Oh Paul, if all that was needed to establish intrinsic evil was application of the appropriate label. I guess “Austrian” is the new “anathema,” lol. As for your note on price, consider that St. Thomas view draws from Aristotle and does not presume the existence of some metaphysical or objective value to which market prices are to be compared. As Schumpeter noted, St. Thomas’ “quantitas valoris” is simply a concept of market price. Where a market price has yet to be established, for example, though not exclusive, the pricing of a new good or service, the seller subjective assessment suffices. Overall, the Scholastic approach to price seems quite open to the insights of economic analysis. It certainly does not provide a standard by which one may sift the wheat from the chaff on economic matters. You have no basis by which to establish any particular price point as “just.”

    Vi King – An increase in the money supply or the velocity of money need to cause an “inflationary” spiral if the is enough economic development (change in the T in PT, so to say) to soak things up. The goal of monetary policy should be to maintain enough liquidity in an economy to accommodate economic development. I think that many problems in monetary policy derive from monetary authorities attempting to manipulate the money supply as a catalyst to economic development. Economic development is a matter of (currently) unpredictable waves of entrepreneurial activity funded by the capital markets.

  43. Sorry, Warlord, but there is a basis for just price and that is Catholic morality; Fr. Heinrich Pesch shows that quite well, and indicts the liberalistic capitalism for failing to uphold the just price. And it was followed in the Middle Ages.

    Using Schumpeter, one Austrian capitalist, for your proof, when he really didn’t know what St. Thomas and others meant by common estimation (misrepresenting it by saying he meant market price), shows really how flimsy your proof is. Scholastics do not talk in tautologies!

  44. BTW, Warlord, how sad that you make St. Thomas Aquinas into an early Economic liberal!

  45. Paul — Perhaps the basis for “just price” is in “Catholic morality,” but that seems wholly consistent with the proposition that economic principles form the basis for the quantitas valoris. In fact, the best interpretation of “public estimation” is that it is a scientific assessment, and economic principles offer the best science available to analyze price. You, on the other hand, assert that Schumpeter misrepresented St. Thomas idea of “public estimation,” yet offer no alternative formulation, just a reference to the authority of Fr. Pesch. Fr. Pesch may have been a great wit, but the mere invocation of his name carries no authority! Please provide some insight as to Fr. Pesch’s idea of “just price” so that we can form some conclusion as to his proposed standard. My suspicion is that any formulation of “just price” that you might offer, though it would offer apparent authority by copious references to Catholic sources, will be the product of the very subjective aesthetic predilections driven by an undue attachment to some form of labor-intensive feudalism. Rather, perhaps a better approach looks to persuade people to an authentic Catholic morality, striped of feudal ornamentations and aesthetic sensibilities derived therefrom, such that Catholic morality operates through and consistently with economic principles.

  46. Fr. Pesch’s just price is the principle of payment of a product in its true value, such that neither producer nor consumer is cheated. He also said that in the medieval times, the just price was considered to be one which covered costs of production and assured craftsmen profits sufficient to live according to his station in life.

    The problem with liberal capitalism is that they believe the price determination is controlled by the so-called “law” of supply and demand, from unlimited free competition (condemned by Pope Pius XI). In contrast to this, Fr. Pesch says this: “Behind supply there are suppliers, and behind demand there are demanders, causes which operate freely, human deliberation, human ambitions, human passions, and human power relationships. Therefore what is needed is the intervention of regulating factors and protection against speculative falsification, against artificial manipulation of the fluctuation of prices which makes it possible to earn vast amounts of money in a short time.” (p. 8, Ethics and the National Economy)

  47. Paul – As long as the meaning of “cheated” does not extend beyond common law frauds or widely accepted extensions, your (and Fr. Pesch’s) view is not problematic. Schumpeter noted the fact that St. Thomas included his theory of just price in within an overall discussion of frauds in support of the proposition that quantis valoris is nothing more than the normal competitive price. Had St. Thomas intended just price to mean something else, Schumpeter reasoned, he would discussed non-fraudulent but nevertheless morally problematic practices. The view becomes problematic, however, when ne attempts to impose as a moral standard a medieval formulation of just price like the one that you specify. Such a formulation resembles closely Schumpeter’s theory of profit in a competitive market without economic development; a condition Schumpeter called the “circular flow.” The problem is that economic development provides those who carry out the entrepreneurial function with extraordinary profits, a portion which are shared with the “capitalists,” i.e., those people who supplied the capital necessary to execute the entrepreneurial adventure. In this process, entrepreneurs continue to enjoy such extraordinary profits until a new equilibrium is achieved, i.e. a new circular flow condition is achieved. It would be foolish to inhibit economic development with the imposition of just price theories development during period long term circular flow.

    With respect to your second paragraph, if your description fairly states Fr. Pesch view of price theory, then his view is overly mechanistic and deterministic. Price theory does not form some law that imposes price but is merely as an explanation for prices are determined, providing a principle to aid in understanding of how the world works. Pope Pius XI condemnation “liberal capitalism” is incomprehensible, for the idea of unlimited free competition is a straw man. Nobody (especially the liberal capitalist, who understands best the importance of a sound legal order to proper functioning of product, service and capital markets) seriously suggests doing away with “regulatory” principles of common law contract, tort or frauds, and certainly actual price manipulation ought to be condemned. That said, I think, on the basis of your summary, that some hard thought is in order with respect to Fr. Pesch understanding of markets. Consider particularly the critical importance of secondary capital markets to the process of capital formation. With respect to “speculators,” consider the process of information production. Many with hard work and cleverness come to understandings about prices that the rest of the market does not comprehend. Once such people trade on their respective advantages for profit, however, the information is propagated widely, helping the less able not get cheated. This is the arbitrage process by which competitive prices are “enforced.” As for criticism of “noise” speculators who use secondary markets as some sort of sophisticated casino, who is to say that any particular actor is just making notice, rather than acting on special insight? Moreover, the contribution to market liquidity by such people should be appreciated. Sure, sophisticated markets may require some carefully honed and particular regulations. However, such regulation should imposed be in the spirit of common law principles, aimed at enhancing the development of markets, not in the service of some private interest or aesthetic predilection.

  48. Is it really a strawman, Warlord? Is it really? Because that’s what the Austrian school recommends going back to, unlimited free competition. And capitalism before Pope Pius XI’s time (Pope Leo XIII’s time, to be exact) was indeed of the laissez-faire system, the system of unlimited free competition. I realize that most capitalists nowadays don’t want unlimited free competition (only because they want to protect their hard-earned wealth or other reasons, not on principle), but I’m not talking about them, but specifically about the Austrian capitalists. Pope Pius XI already said that the capitalism in his time transformed from free competition to economic domination by a few in QA.

    And I don’t see anything wrong with Fr. Pesch’s explanation of how the just price worked and how it should be determined nowadays. If anything else, I see the problem with your idea that economic development should be furthered by allowing capitalists to have “extraordinary profits,” as you say (in other words, usurious profits). And your view is ultimately materialistic, IMHO; it seems to me you really believe liberal capitalism is working, even though they don’t agree on having morality directing economics. Economic development, at the expense of the family and morality, is a bad thing. And also the Popes had urged everyone, if possible, to acquire productive property, so that they don’t have that uncertainty of living from paycheck to paycheck (salary, etc.).

  49. BTW, I’m done now. You can say all you want, Warlord, extolling the Austrian school of economics and saying that they have a better conception of life than the Distributists and Solidarists, but I take my side on those who make ethics higher than economy, thus ethics directing economy. I reject the erroneous principles of liberal capitalism, and especially of the laissez-faire variety, though I don’t deny they have some principles correct (though that is nothing new).