Home / Economics / Errors of Libertarian Economics

 

PhotobucketThe economic philosophy that has dominated government policies and business practices since the 1970s contains many radical errors. Some of these date from the eighteenth-century origins of “classical” economics. Others developed more recently, with the rise of two distinct “schools” of modern economic thought:

The mainstream or neo-classical school, whose best-known figure is the late Milton Friedman (1912–2006); and the Austrian school, led by Viennese professors Ludwig von Mises (1881–1973) and Friedrich von Hayek (1899–1992).

Despite their differences, these schools have much in common. Both exalt the free market and seek to minimize the role of the state. Both share an exaggerated belief in the autonomy of the individual, as against the claims of society or community. Both can therefore be called “libertarian”. Here we examine five basic errors of libertarian economics.

I. A radical misconception of freedom

Hayek proposed a purely negative conception of individual freedom. For to him, freedom simply means not being subject to the will of other people. This rules out a state that regulates or protects, since the state is run by people (politicians and civil servants). The free market, however, is considered an impersonal force. So, according to Hayek, if we are harassed and oppressed by market forces, as all too clearly we are today, that in no way diminishes our freedom.

So Hayek wanted to shrink the state and hand over most of its duties to the free market. As Friedman put it, “freedom is always freedom from the government”.[1]

Hayek’s notion of freedom also rejects any link between freedom and morality: “freedom is an opportunity to do good, but…only if it is also an opportunity to do wrong.”[2] Or, in Friedman’s words, “freedom has nothing to say about what a man does with its freedom”.[3]

That, I need hardly remind you, directly contradicts Catholic teaching: the Catechism (#1733) tells us that “there is no true freedom except in the service of what is good and just”. We can trace this idea of freedom as goodness and justice back through the history of Christian theology and indeed to the Old Testament.

The Catholic theologian Bernard Häring wrote that “freedom is the power to do good; the power to do evil is not of its essence”.[4] Leo XIII wrote that “the possibility of sinning is not freedom, but slavery”,[5] echoing St Thomas: “not to be able to sin does not diminish our liberty.”[6] In the New Testament we read of the slavery of sin. It is because sin is likened to slavery, the opposite of freedom, that we use the word redemption to mean pardon; its original meaning is buying a slave out of bondage. In Psalm 130 we find the saying, “with the Lord is plenteous redemption… and He shall redeem Israel from all his iniquities”. Thus, in the Jewish and Christian traditions, freedom is firmly tied to justice and righteousness.

Because libertarians hold that freedom includes the power to do wrong, it follows logically that they hate regulation. They do, of course, agree that outright fraud or theft must be prohibited, since for libertarians, private property is absolutely sacred. But they reject the whole idea that governments, or civil associations such as labor unions, should act against cut-throat competition, unjustly low wages, exorbitant inequalities, reckless speculation or grossly imprudent bank lending (a main cause of our current crisis). All these wrongs, they say, must be tolerated, since we cannot restrain them without destroying our own freedom.

II. Unlimited freedom of contract

The doctrine that any person has an inalienable right to enter into any willinglyagreed contract with any other person forms the bedrock of libertarian economics. It dates essentially from the eighteenth century; an early form of it can be found in the original U.S. Constitution (article I, section 10): “no State shall pass any Law impairing the Obligation of Contracts.” In Lochner v. New York (1905), the Supreme Court elevated the principle of freedom of contract to the level of a sacred constitutional principle [7] by striking down a state law limiting hours of work in bakeries. Justice Rufus Peckman condemned this law as an “unreasonable, unnecessary and arbitrary interference with the right and liberty of the individual to contract”.

Libertarians today insist rigidly upon this principle. Friedman explained that, in the ideal market economy, “individuals are effectively free to enter or not to enter into any particular exchange, so that every transaction is strictly voluntary”.[8] Edward Younkins, another ardent free-marketeer, puts it even more strongly. He insists that we must be “free” to make bad contracts: “legislators and judges should refrain from substituting their own judgments in cases where they believe there is unequal bargaining power or where they think that certain contracts are not in the ‘public interest.'”[9]

Thus, you must be allowed to enter into whatsoever contract you please with anybody else, provided you can persuade the other party to accept it (or vice versa); even if the contract is unfair to the person you are dealing with, or unfair to you, or immoral, or annoying to your neighbors, or damaging to the environment.

The basic problem with this doctrine is, of course, the unequal bargaining power that fails to worry Younkins. A contract between a laborer and a big corporation is clearly a bargain between parties of very unequal strength, so it may well be unfair to the laborer; likewise, a deal between a small coffee-planter and a multinational agribusiness, or an individual tenant and a dominant landlord. Libertarians simply assume that a free market will enable bargains like these to be struck on terms that are acceptable to all parties concerned. Indeed, they flatly deny that such bargains may be unjust. For Hayek, the free market is like a game in which “there is no sense in calling the outcome just or unjust”.[10]

Catholic teaching explicitly rejects this theory: “agreement between the parties is not sufficient to justify the amount to be received in wages” (Catechism, #2434). Cardinal Henry Manning argued “that there can be no real free contract between the capitalist and the worker. The capitalist wears golden armor; and the worker, if he remains obstinate, knows that hunger awaits him. Thus the ‘free contract’ has become the employers’ gospel”.[11] The Compendium (#302) states that “natural justice [which requires the payment of a just wage] precedes and is above the freedom of the contract”.

III. Our obsession with competition

In the world of libertarian economics, “competition is always good,”[12] as a leading French free-marketeer, Pascal Salin, has put it. Or, in Friedman’s words, the more unfair competition, the better.[13] Today, in many countries, any attempt to restrain competition is considered a crime and is severely punished. This attitude can be traced back to Adam Smith, who lambasted the anticompetitive craftsmen’s guilds of his day. Without them, he argued, “the wages of the workmen would be much lower…the trades, the crafts, the mysteries, would all be losers. But the public would be a gainer, the work of all artificers coming in this way much cheaper to market”.[14]

His dream was to make everything cheaper, so that we could all (apart from the impoverished workmen) buy and consume more. Though harsh on the workers, that dream was not entirely ridiculous in the 1760s, when world population was around 720 million[15] and there were few worries about exhaustion of the planet’s resources. It makes no sense whatever today.

In reality, competition does not always cut costs; it can inflate them. The exorbitant salaries and bonuses paid by Wall Street banks are the result of unrestrained competition between banks to employ the cleverest traders. In more gentlemanly times, it was “not done” for one bank to poach another’s staff; this informal restraint on competition kept costs down.

The Compendium (#347) acknowledges that healthy competition is necessary for a flourishing economy. However, the role of competition in the economy is like that of certain hormones in the human body, which are vitally necessary, but pathogenic when present in excess.[16] Fierce competition between banks to expand their lending led to the subprime mortgage crisis of 2007. Unrestrained competition can make working life unhealthily stressful.

Although the Bible hardly mentions explicitly the abuses of commercial competition, in several places it condemns the sin of hasagat gevul or “infringement of boundary”, eg: “accursed be he who displaces his neighbor’s boundary mark” (Deut. 27:17). In the rabbinical tradition, this commandment has often been interpreted to cover predatory competition, which can damage a competitor’s livelihood, and is thus equivalent to encroachment upon a neighbor’s land.[17]

Pius XI (Quadragesimo Anno, §88) insisted that “the right ordering of economic life cannot be left to a free competition of forces”. John Paul II (Laborem Exercens, §20) emphasized the need for labor unions, which restrain competition between workers, as well as for professional and employers’ associations: “organizations of this type are an indispensable element of social life, especially in modern industrialized societies”.

IV. Disregard for the human value of labor

In libertarian economics, labor is treated simply as an input, like any raw material, in the process of production; its sole purpose is to serve the market, to produce what consumers want to buy. Smith argued that “the interest of the producer ought to be attended to only insofar as it is necessary for promoting that of the consumers”.[18] Mises insisted that “labor is a means, not an end in itself”.[19] But if the sole reason for work is to serve the market, it follows that there can be no objection to the instant extinction of work at the whim of the market. That is exactly what we see in free-market economies today.

Where labor is regarded as a commodity, its price (wage rate) is determined simply by the balance of supply and demand in the market. Classical economists did indeed recognize that workers need to be paid enough to live on, at least a subsistence wage; but the more recent Austrian economists do not even accept that. According to the Viennese professor Carl Menger (1840–1921), founder of the Austrian school, “neither the means of subsistence, nor the minimum subsistence level, can be the cause or the principal determinant of the price of labor services”.[20]

By contrast, in the Judaeo-Christian tradition, work is considered honorable and beneficial in itself. God Himself is seen as a worker: the firmament showeth his handiwork (Psalm 19:1). The labor of the righteous tendeth to life (Prov. 10:16); idleness leads to unchastity [and] to idiocy.[21] In the Catechism (#2427) we read that human work proceeds directly from persons created in the image of God and called to prolong the work of creation.

Catholic theology refuses to see work merely as a means to an end, a burden we tolerate because we want the money and the goods it produces. “Through work, man… achieves fulfillment as a human being” wrote John Paul II (Laborem Exercens, §9); Adam’s work in the garden before the Fall, as St Thomas tells us, “was not laborious, but was joyful, being the exercise of his natural powers”.[22]

In the nineteenth century, German economists led by Gustav Schmoller (1838–1917) waged a bitter intellectual war against the Austrians. These Germans laid the foundations of the successful modern German economy, where workers have almost equal representation with shareholders on the supervisory boards of large companies. Schmoller’s view of work is far more enlightened than that of Menger or Mises: “man cannot do nothing but eat and make love, he needs other things to occupy his time and his soul… all moral strength has its roots in work.”[23]

This German school of economics had some influence in America at the beginning of the twentieth century, inspiring “institutionalist” economists such as Richard Ely and Thorstein Veblen. But that did not last; the Austrians and neoclassicals have long since eclipsed Schmoller and his colleagues, whose wise words have never been translated into English.

V. Rejection of distributive justice

Today, the human race as a whole is consuming many of the earth’s resources at unsustainable rates, even though much of humanity still lives in severe poverty. We cannot all persist in producing and consuming more and more. It should therefore be obvious that redistribution, combined with reduction in wasteful consumption, is the only possible route to a just overall distribution of the planet’s finite resources.

But libertarians are blind to this fact. They stick to their view that the only way to eliminate penury is to press ahead with economic growth, to provide ever more goods for the infallible free market to distribute. We have seen how Smith’s classical economics called for unrestrained competition to encourage more and cheaper production. But that strategy has run into the buffers of global sustainability. It has ceased to be relevant, yet still it dominates our thinking and practice.

Since libertarian economics became fashionable in the 1970s, replacing more interventionist state policies, inequalities have clearly widened practically everywhere. Thomas Piketty, a French economist who is a noted specialist on this subject, writes that, over the 1980s and 1990s, “American inequalities seem to have reverted to the level at which they stood just before the First World War”.[24]

Most practical methods of reducing inequalities are repugnant to libertarians. Labor unions are hated because they obstruct the worker’s freedom to agree his own contract with his employer. Minimum wage rates are another blasphemy against the divine free market, whose worshippers assert, against much historical evidence, that fixed minima “inevitably” reduce the demand for labor and so cause unemployment. Redistributive taxation (higher tax rates on higher personal incomes) “is a mode of disguised expropriation of successful capitalists and entrepreneurs”[25] according to Mises, while his admirer Murray Rothbard stated that “Taxation is Robbery” and that “the libertarian favors the right to unrestricted private property and free-exchange”.[26]

Hayek rejected outright the principle of distributive justice: “the results of the individual’s efforts are necessarily unpredictable, and the question of whether the resulting distribution of incomes is just or unjust has no meaning.”[27]

Catholic teaching flatly repudiates all that nonsense. Leo XIII (Rerum Novarum, §45) spoke of “a dictate of natural justice more imperious and ancient than any bargain between man and man, namely that wages ought not to be insufficient to support a frugal and well-behaved wage-earner”, and he strongly commended (#49) workers’ associations, of which “the most important of all are workingmen’s unions.” John Paul II (Centesimus Annus, §20) observed that “unions… are indeed a mouthpiece for the struggle for social justice, for the just rights of working people.”

While many libertarians see taxes as immoral attacks on private property, “Christian tradition has never recognized the right to private property as absolute and untouchable” (Compendium,#177). John XIII (Mater et Magistra, §132) insisted that citizens should be taxed according to their ability to pay (ut tributa pro civium facultate imperentur) while Gaudium et Spes (§30) censures those who “resort to various frauds and deceptions in avoiding just taxes and other debts due to society”.

Catholic teaching inherits the Jewish tradition, based on the Mosaic law, that provision for the poor is primarily an obligation in justice (Hebrew tzedakah, a word whose basic meaning is justice), rather than a matter of voluntary charity. This does not, of course, mean that charity is superfluous. But, as Benedict XVI explains in Caritas in Veritate, (§6), “I cannot “give” to the other… without first giving him what pertains to him in justice… charity goes beyond justice and completes it”, echoing St Thomas: “charity does not abrogate justice, but complements it.”[28] This doctrine validates obligatory transfers via the tax system as means of legally administering justice.

In these difficult times, it is worth noting that redistributive taxation offers a means of stimulating economic recovery without swelling our already excessive budget deficits. The very rich seldom spend all their revenue; they tend to accumulate. If the state transfers some of this unspent revenue to the very poor, it will certainly be spent, giving a boost to our morose economies.


Note: Catechism = Catechism of the Catholic Church (Vatican, 1992).

Compendium = Compendium of the Social Doctrine of the Church (Vatican, 2004).

© Angus Sibley 2012. All Rights Reserved.

[1] Milton Friedman, lecture Liberty and Property (Princeton, 1958).

[2] Friedrich von Hayek, The Constitution of Liberty (1960), chap. 3.

[3] Milton Friedman, Capitalism and Freedom (1962), chap. 1.

[4] Bernard Häring CSSR, The Law of Christ (original 1951), trans. Kaiser (1961), vol. I, chap. 4.

[5] Leo XIII, encyclical Libertas Praestantissimum (1888), #6.

[6] St Thomas Aquinas, Summa Thelogica II/II, qu. 88, art. 4.

[7] Lee Boldeman, The Cult of the Market (Australian National University, 2007).

[8] Milton Friedman, Capitalism and Freedom (1962), introduction.

[9] Edward Younkins, Freedom to contract (2000), see Liberty Free Press on www.quebecoislibre.org.

[10] Friedrich von Hayek, The Mirage of Social Justice (1973), chap. 10.

[11] Cardinal Manning, The Labour and Social Question (London, 1891).

[12] Pascal Salin, Le Figaro (Paris), 2 February 2005.

[13] Milton Friedman, quoted by Michael Ignatieff, 20/20 (BBC Radio 4), 5 February 1997.

[14] Adam Smith, The Wealth of Nations (1776), book I, chap. 10, part 2.

[15] See www.worldhistorysite.com.

[16] Angus Sibley, The Hyperthyroid Economy, in Journal of the Royal Society of Medicine (London), June 1995; available at www.equilibrium-economicum.net.

[17] See Baba Bathra (Babylonian Talmud), chap. II, folio 21b, available at www.comeandhear.com; Rabbi Chaim Jachner, Hasagat Gevul in JewishLaw, available at http://jlaw.com.

[18] Adam Smith, The Wealth of Nations (1776), book IV, chap.8.

[19] Ludwig von Mises, Human Action (1949), part I, sect. 7, part 3.

[20] Carl Menger, Principles of Economics (original 1871), trans. Dingwall & Hoselitz (1976), page 171.

[21] Kethuboth (Babylonian Talmud), chap. V, folio 59b, available at www.comeandhear.com.

[22] St Thomas Aquinas, Summa Theologica part I, quest. 102, art. 3.

[23] Gustav Schmoller, Grundriss der allgemeinen Volkswirtschaftslehre (1900/04), vol. I, pages 21 and 39.

[24] Thomas Piketty, Les hauts revenus en France au XX siècle (Paris, 2001), page 548.

[25] Ludwig von Mises, Human Action (1949), part VI, chap. 32, #3.

[26] Murray Rothbard, For a New Liberty (1973) chap. 2.

[27] Friedrich von Hayek, The Constitution of Liberty (1960), page 99.

[28] St Thomas Aquinas, Summa Theologica part I, quest. 21, art. 3.

 

About the author: Angus Sibley

 

Angus Sibley is a retired actuary and former member of the London Stock Exchange. He has written extensively on finance, economics, Catholic theology and other topics. He has a special interest in the question of how orthodox economic theory and practice is in conflict with Catholic economic and social doctrine. He published The Poisoned Spring of Economic Libertarianism with Pax Romana in 2011, and runs a bilingual website, www.equilibrium-economicum.net with regular articles in English and French. Now living in Paris, he follows other interests including literature, opera, travel and the arts. He is an active member of the London-based National Union of Journalists.

 

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18 Comments

  1. I can predict one thing from this article.

    And that is that my fellow Traditional Catholics on the web board “Fisheaters” who are either Neo-Conservative, Libertarian or Anarcho-Capitalist will have a fit over this.

    Further, they will bring up the old lie of “Distributism is Socialism in disguise” and cling to it like Gollum did the Ring of Doom in “Lord of the Rings”.

    Maria, Mater Misericordiae, ora pro nobis. Amen.

  2. I’ll just point out a quick possible response to each of your 5 points:

    1st: A Radical Misconception of Freedom
    Don’t you think that there are distinctions of freedoms. That economic freedom(to spend)is distinct from political freedom(to rule), which is distinct from moral freedom(to act)? I think that all freedom is of course subordinated to the good, because freedom has to do with what is choice, and what is properly choice-worthy is the good. Nobody speaks of having only one choice except in a figurative sense. Every choice is a choice between a plurality of options. Your main argument seems to be that libertarians over emphasize freedom, and therefore tolerate things that should be intolerable; “cut-throat competition, unjustly low wages, exorbitant inequalities, reckless speculation or grossly imprudent bank lending” as you say. The libertarian argument is based not only on principle, but on effects as well. Regulation does lead to higher prices, higher unemployment, and increased poverty in general. You mention the argument that minimum wages contribute to unemployment in the 5th part of your article, but no where else do you mention the word. Is the libertarian valid, or not? You build up a straw man libertarian who sacrifices well-being for freedom, but fail to confront the argument that a libertarian political system would create more well being.

    II: Power to Contract
    I’m going to try to keep this shorter. The main flaw with your argument is that you fail to provide an alternative. Granting your point that the parties of many contracts are unequal; how would you fix it? You provide no answer, saying simply that its unjust. If you force a minimum wage, the employer will hire less people, and there will be more unemployment. This will inevitably lead to more dependence on the state. Allow me to quote from Pius X via the Catholic Encyclopedia: “Private property is under all circumstances, be it the fruit of labour or acquired by conveyance or donation, a natural right, and **everybody may make such reasonable disposal of it as he thinks fit**.” Certainly this principle can be applied not only to actual possessions but one’s own time as well. If you grant me this extension, it seems that Pius is affirming the power to make contracts as a natural right.

    III: Competition
    You misapply your own example. With more competition, there would be more people qualified to be CEOs, and the salary for this position would fall. It is simple supply and demand, the end of competition is to increase supply, and lower the price. Competition increases supply. Applying that word to people fighting over limited resources is a misuse of the word, at least in economics.
    You emphasize the need for **healthy** competition without making clear what distinguishes this from unhealthy competition. Furthermore, competition did not cause the financial crisis, rather it was government trying to control prices, keeping mortgage rates inordinately low for risky borrowers. I contend that the financial crisis would not have happened if banks could set their own prices (rates) for risky loans.

    IV: Value of work.
    You contend that it is unjust to hire someone for less than a living wage. I contend that no one would take a job that they couldn’t live off of, or at least they wouldn’t hold on to it for very long. If the employer really needs the work, he will increase the wage. No one can force him to hire (because of the natural right of private property). If I offer you a job for a dollar a day, you would rightly reject it. Why? Because you can get a better paying job elsewhere. My point is that you can’t consider a closed system. There are always employers looking to hire, and always people wanting to be hired. Your claim about the possibility of demand suddenly drying up for work is technically true, but in the way that shooting a fly with a pistol on horseback, blindfolded from 100ft away is possible. It isn’t going to happen. To finish off this section, I want to say that it seems to me that you start by giving apparently nasty quotes from libertarians, then bringing up quotes from scripture or the catechism that don’t actually refute the libertarians’ quotes.

    V: Distributive Justice
    I’m starting to run out of steam at this point, so I’ll just point out that, while resources are limited, they are also constantly expanding. Furthermore, there actually is enough food on being produced to feed every single person on this planet with more left over. If farmers are allowed to produce food more cheaply, they can more easily cover the cost of transportation and other expense. The problem? Prices as always. I would be eager to hear how free trade and no price controls would cause more people to go hungry, because quite frankly I think that idea is baloney(both puns definitely intended).

    To finish up with taxes. Again the issue comes down to private property. Under what circumstances is it acceptable for a third party to come along and force me to give part of what I own to another?

  3. While it is not true that Catholicism and libertarianism are necessarily incompatible, I think a very strong case can be made, as this article demonstrates, that libertarian theory and policies lack a certain sense of reality with respect to human nature. And as a traditional conservative, in the broad sense, I have always been uncomfortable with the starkness of the libertarian attitude.

    That being said, if libertarian ideals are temper by Christian charity on the personal level, libertarianism is far preferred to the left wing or socialistic alternatives. Libertarians who are Catholic should recognize that freedom must be tempered by charity and virtue on the personal level. This must be in deed, not only in word. This is what the Catechism teaches.

  4. I find it very curious that the German Historical School is lauded over the Austrians. Given that it held such charming people as Weber who have contributed so greatly to the destruction of our culture. But also because the German Historical School simply served as the official brown-nosing branch of the German economists at the beck and call of the Prussians. It was a Nationalist Prussian group which dismissed Menger and his students as mere “Austrians” backwards like the Hapsburgs in the Catholic backwaters of un-converted Germany.

    The Methodenstreit was a battle between the State Socialism of Prussia which leads directly to Nazism with it’s protestant and pagan roots vs the much more philosophical treatment of economic theory of the Austrians. Which methodology is more likely to produce a Catholic economics? Which methodology is more like that of Aquinas or Aristotle? Obviously Menger.

    I also find the criticism of Libertarians on their problems with labor unions to be a bit shallow. It is true that the Church has defended and supported workingmen’s associations since Leo XIII, but these associations are clearly not the labor unions we have in the US today that the (American) Austrians are objecting to on economic grounds. American Unions create a situation of class warfare, which is condemned by the Church. They also do not form the whole man or look to his spiritual needs…not that that is a concern of individualist, secular Austrians, but it is still a flaw.

    One of the main objections of most Austrians to labor unions that I hear is not that they give the worker a better wage, but that they create an internally destructive environment. There is the creation of a zero-sum game between the employer and employee. This is not good for either class, which is why the Church condemns it. It is also extremely inefficient economically. Now, most Austrians are wary of guilds (especially on a national level) because they easily can give rise to the price fixing we see with monopolies, but Aquinas recognized this as well. But the point remains, this area, along with many of the others in this essay may well be true for some Austrian Libertarians, but they are simply a small subset in a big pond.

    This article is a good criticism of some of the points of von Mises-influenced thinking by individualist Austrians. But there is no real attack on those Austrians like Roepke who muddle the waters considerably. And yet how can Roepke not be considered Austrian?

  5. Which methodology is more like that of Aquinas or Aristotle?

    Neither? Why must it be either or?

    Also given Freud and a certain failed painter I would have no problem saying Austria has given us of plenty of backward barbaric thinkers.

  6. Both were wrong, to be sure, but to say that the German Historical School was better than the Austrians (Menger was still an empiricist at the core, so the whole debate was rather muddled as I’ve read it) is an odd position to take. Economics is a subset of moral philosophy, it is not, as the Germans would have us believe best conducted by State Socialism and an application of logical positivism. The later Austrians, in particular, understood this as they saw economics advancing more and more under the “physics envy” banner as well as the logical progression of the Germans to National Socialism.

  7. Joseph,

    Thanks for offering a Libertarian perspective. I think Ron Paul is the best viable presidential candidate at the moment (which is not saying a lot). His foreign policy gets five starts but besides auditing the Fed and legalizing drugs I feel like his domestic policy will be a boon for the rich and increase our already third world levels of inequality. I don’t believe that “government” is the problem. It is what government DOES that is the problem. The real problem lies with the private banksters and corporations that influence the government to undermine the common good.

    The rich exploit their power and wealth to the detriment of the rest of us and I think smaller government will just make it easier for them to continue doing so. In most cases, regulations look out for the public good whether safety, environment, or financial. Again, smaller government and less regulation will in most cases just lead to greater profits for the super rich and socialized debts for the rest of us.

    IMO what we need is smarter more transparent government that can not be corrupted by the lobbiests and campaign contributions from the super rich. I believe that movement towards these ends are possible. Here is a well thought out position paper hits the nails on the head http://www.coffeepartyusa.com/white-paper-1.

    I think I have adequatly summarized my current view which is probably shared by many and I was hoping that perhaps you could explain where I have gone wrong. I have an open mind and would like to hear an explanation of how a smaller government without socail safety nets or safety, environmental, labor, or financial regulations would lead to anything other than greater inequality and a more severe form of plutocracy than we already have. I hope to hear an enlightening response…

  8. TomD,

    Nicely put. I would agree entirely.

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  11. Thank you for this most interesting article, Mr. Sibley.

  12. Billy Bob,

    Smaller government does not lead to more profits to rich. Why? Because smaller government means fewer laws, which means fewer regulations. Fewer regulations mean that its easier and cheaper to enter the market place, to bring new products at competitive prices. Regulation means that you have to pay McDonald’s a buck for a lemonade, because little Susie can’t afford the permits to sell hers for 25 cents. Its a simple example, but almost everywhere you look regulations make the corporations richer and little Susie poorer.

  13. Plus in the Servile State, all those regulations don’t write themselves, so that gives the big companies something else to do (call it charity work) and then when they have management that needs a new job, well there’s your perfect fox, sorry regulator, for the job! After all, they are experts and we need experts to keep us all safe and healthy.

    “Food Safety” regulation has been a boon for centralization in the food industry, which is why they support it. It’s like Br’er Rabbit, please oh please don’t throw me in that brier patch of regulation!

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  15. Roy, it is not necessary to bring up th (Distributism is Socialism in disguise”, because this article does not reflect Distibutism. It does come across as arguing for Socialism, because it seems to call for employing the taxing authority of a centralized government to confiscate and REDISTRIBUTE wealth. I have seen many other articles on this website which specifically reject that proposition. Therefore, in my opinion, this article is inappropriate (at least as written) for this website and does harm.

    Mr. Sibley, your quotes in your first point must be out of context, because they seem to imply we have no free will. We have the freedom to choose to sin; but when we do so, we loose our freedom because we become slaves to sin. If your point is libertarians (as well as liberals and most conservatives) believe government should not legislate morality while the Church teaches just laws should be moral laws, I would agree.

    My biggest problem is with point V, where you seem to imply the only path to distributive justice is through a redistributive system of taxes and social welfare programs. I hope I am misinterpreting your intent.

    Both business and government should be limited. Political and economic power, which go hand and hand should be well distibuted. That is the goal of distributism. There are many paths which can be taken to reach it.

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  17. I would like to reply to Doug Chappell.

    First, I am not suggesting that we have no free will. If that means ‘freedom to choose to sin’, it would clearly be absurd to deny that we have it. All too obviously we have it, whether we like it or not.

    The theological term ‘free will’ is a not very exact translation from the Latin ‘liberum arbitrium’ which more literally means ‘free decision’ or ‘free choice’ (arbitrium meaning basically the decision of a judge or arbiter who chooses which party his decision will favor). Free will does include the possibility of choosing wrong rather than right, but as Leo XIII observed, this is not freedom. The possibility of choosing to sin is like the historical possibility of selling oneself into slavery. Was that a freedom?

    It is clear in the writings of saints Augustine and Thomas that ‘inability to sin does not diminish our freedom’. This inability is of course not fully achievable in this world, but we can work towards it through training in sound moral principles and by establishing good habits.

    The trouble with libertarians is that they reject rules designed to prevent wrongdoing, such as strict controls on bankers and traders. They say that such rules destroy our freedom. That is because they think the ability to do wrong is an essential part of freedom. But I think Fr. Haring is right where he says that the power to do evil is not of the essence of freedom.

    Second, in part V I do not say that the only path to distributive justice is via taxation. I mention two other paths, namely minimum wage rules and trade union solidarity. Another is the avoidance of excessive competition (see part III), which can force businesses to cut their costs (including wages) to the bare minimum; it can also lead them to compete for the services of ‘ace traders’, driving up the earnings of those ‘golden boys’ to absurd levels.

    Angus Sibley

  18. Mr. Sibley, I appreciate your response and clarification. In the United States, as Mr. Moore points out in the very first comment, distributism is often associated with socialism and the use of terms such as “redistributive taxation” tend to confuse the matter. Using the tax code to limit the size of an enterprise is one thing, using the taxes collected to fund “entitlement” programs is another.

    For distributism to move foward, it is necessary to propose specific, practicle policies which can be implemented at local, state, and even national levels. How these policies are put forth and defended will do more to determine whether or not they are adopted than there moral rightousness or positive outcomes.

    For what it is worth, I agree with you on the errors of libertarian economics and the superiority of Distributism. I would only caution you on your rhetoric to avoid misunderstandings. As I am sure you are aware, this can be especially troublesome when communicating internationally.