To try to run an economy by the highest Christian principles is certain to destroy both the economy and the reputation of Christianity - Michael Novak

Since the social teaching of the Church is not in itself an “economic system,” it calls for a faithful response from the laity in order to bring it to life in the world. The content of this response is not dictated in advance but depends on the skill and perceptions of the laity. There is not necessarily one “right” way to realize the teaching in the real world, but human ingenuity and the freedom given by a proper understanding of economics will allow a variety of implementations, as we shall see. This does not mean that all responses are equally effective or equally embody the spirit and content of the teachings; any implementation will start with a certain theoretic approach which will give the boundaries to that implementation.D. Stephen Long has classified the responses to Catholic Social Teaching according to three major traditions. He calls these “the dominant tradition,” “the emergent tradition,” and the “residual tradition.” Long bases these classifications on the relation each tradition has to the dominant marginalist rationality of neoclassical economics. The dominant tradition, whether in its liberal, neo-conservative, or libertarian strains, completely supports the utilitarianianism of the marginalist revolution. In the emergent tradition, identified with “liberation” theology, certain aspects of marginalism are retained, while the residual tradition completely rejects marginalism. Before looking at some practical applications of Catholic Social Teaching, we will look at some of the more important features of both the dominant and residual traditions; our bypassing of the emergent “liberation theology” it is not meant to slight that view, which has important features of its own. But it is less relevant to a study of the relationship between business and the Church’s teaching, which is our main subject.In this chapter, we will examine the dominant tradition through the lens of neo-conservatism. This is not to imply that neo-conservatism is the only strain within the dominant tradition, or even the best or most complete. There are indeed significant differences among the adherents of this tradition, mainly on public policy and economic matters, some being right-wing and some left, some “neoclassical” and some more “Keynesian.” Nevertheless, neoconservatism has come to enjoy overwhelming power and hence it is the strain of the dominant tradition that one is most likely to encounter; it has become the “dominant” strain within the “dominant tradition. Indeed, the success of neo-conservatism is remarkable. Its major intellectual lights (Michael Novak, George Weigel, Alejandro Chafuen, for examples) work for “think tanks” well funded by corporate America and they have produced a large volume of influential works. There are also a number of influential neo-conservative magazines, such as Commentary, National Review, First Things, The Public Interest, and The Weekly Standard. The later is funded by Rupert Murdoch, who also supports neo-conservatism on the airwaves with the Fox News Channel. Neoconservatives occupy powerful positions within the Bush administration and were crucial in the decision to go to war in Iraq, as well as being leaders in the battles over the president’s tax and Social Security policies. Neo-conservative columnists such as David Brooks, George Will, Ann Coulter, and William Kristol are influential in public policy debates. Indeed, the close alliance between neo-conservatism and corporate America is no accident, since neo-conservatism is ideologically committed to supporting corporate capitalism.The influence of the neoconservatives, however, cannot be explained totally by mere marketing or political muscle. Rather, the neoconservatives have tapped a strain in Catholicism that has been present in one form or another since the Enlightenment, namely the attempt to reconcile the Church to Enlightenment thought, a movement that is sometimes called “modernism.” Neo-conservatism is, in a profound way, a right-wing version of the modernist crisis which was the subject of the first Vatican Council (1869-70). The modernists believe that the Church must accommodate itself to the modern world; they assert that a too strong insistence on dogmas is out of place in a pluralistic, multi-cultural and democratic society. As Michael Novak puts it, the "writers of the biblical era did not envisage questions of political economy such as those we face today." Furthermore, the Enlightenment beliefs of individualism, utilitarianism, and the divorce of faith and reason, ideas once considered controversial, have now become so commonplace that they are hardly subjects for debate anymore, but are the presumptions most people use in thinking and regard as “self-evident.” This shift in thinking has allowed the neo-conservatives to make political alliances among a range of former liberals and social conservatives and become a powerful force. Many of the major figures in neo-conservatism are former liberals who were disappointed with the results of the “nanny state,” a circumstance that leads to the joke that a neo-conservative is “a liberal who had been mugged by reality.” But they have retained a basically “liberal” orientation, and that is especially true in regard to the Enlightenment dichotomy between “facts” and “values.” Recall Hume’s “no ought from is” logic. Hume’s disconnect of logic and morals relegated morals to the realm of private choice, while claiming an ability to look at “facts” or “natural law” unaided by authority or faith. This dependence on the so-called fact-value distinction is evident in the work that is often considered to be the founding document of neo-conservatism, Michael Novak’s The Spirit of Democratic Capitalism, a work that is highly indebted to Max Weber’s The Protestant Ethic and the Spirit of Capitalism. And since Novak starts with Weber, so shall we.

Weber’s Question

Max Weber (1864-1920) was a sociologist of religion whose works occupy a pivotal position in the history of sociology; The Protestant Ethic is considered a classic in the field. The question that Weber poses is, “Why do Protestants in general and Calvinists in particular seem to do so much better in a capitalist economy than Catholics?” Weber notes that, “Protestants… have shown a special tendency to develop economic rationalism which cannot be observed to the same extent among Catholics.” Weber takes as his prototypical Capitalist Benjamin Franklin, whose “confession of faith” is that time is money, money begets money, idleness costs money, etc. In considering Franklin, Weber notes,

Let us pause a moment to consider this passage, the philosophy of which Kürnberger sums up with the words,“They make tallow out of cattle and money out of men”. The peculiarity of this philosophy of avarice appears to be the ideal of the honest man of recognized credit, and above all the idea of a duty of the individual toward the increase of his capital, which is assumed to be an end in itself.

The summum bonum of this ethic, “the earning of more and more money, combined with the strict avoidance of all spontaneous enjoyment of life,” is “thought of so purely as an end in itself, that from the point of view of the happiness of, or utility to, the single individual, it appears entirely transcendental and absolutely irrational.”Weber contrasts this attitude with the Catholic one that is more content with a sufficiency of income and a greater leisure and joy in living. The Catholic businessman was more likely to be guided by traditional ideals than the Protestants, even though both were “capitalist.” In speaking of the Catholic businessman, Weber says,

The form of organization was in every respect capitalistic.... But it was traditionalistic business, if one considers the spirit which animated the entrepreneur: the traditional manner of life, the traditional rate of profit, the traditional amount of work, the traditional manner of regulating the relationships with labour, and the essentially traditional circle of customers and the manner of attracting new ones.

Weber rejects the idea that the rationalism of the Enlightenment is sufficient to explain the acquisitiveness of Protestant Capitalism. Rather, he traces the differences in Catholic and Protestant Capitalism to what he calls the “ethical peculiarities of Calvinism.” The most salient peculiarity was the Calvinist version of the doctrine of predestination. In Weber’s view, this doctrine replaced the “Father” God of the New Testament with a transcendental being, “beyond the read of human understanding, who with His quite incomprehensible decrees has decided the fate of every individual.” The individual believer thus experiences an unprecedented inner loneliness: “No priest.... No Sacraments.... No Church....” can help him because none of these things are efficacious for salvation. This doctrine leads, on the one hand, to a negative attitude toward all things sensual and emotional, and on the other “it forms one of the roots of that disillusioned and pessimistically inclined individualism” which is part of Puritanism. The believer is required, however, to attain a certainty of his own election to salvation. How is this to be done? The answer is through “intense worldly activity” and success in the world. It is necessary to “prove” one’s faith in worldly activity and to create a spiritual aristocracy of predestined saints within the world.18 The gaining of wealth is a sign of God’s election, and it is to be combined with an asceticism which precluded idleness or the enjoyment of the wealth. Although the capitalist spirit begins with a religious spirit, that religious spirit dies out and gives way to “utilitarian worldliness.” “What the great religious epoch of the seventeenth century bequeathed to its utilitarian successor was, however, above all an amazingly good, we may even say a pharisaically good, conscience in the acquisition of money…” This brings us back to Benjamin Franklin, who was imbued with this spirit of Capitalism from which the religious element was missing. Victorious Capitalism no longer needed religious support and the freedom bequeathed by the religious spirit became a necessity that fixes man in an “iron cage” of mere acquisitiveness. In the last stage we become, “Specialists without spirit, sensualists without heart; this nullity imagines that it has attained a level of civilization never before achieved.”

The Spirit of Democratic Capitalism

This then is the thesis that Novak uses for his starting point. Weber, he states, discovered a new spirit within Capitalism. But whereas Weber constructed a critique of Capitalism, Novak produces a paean; he specifically rejects Weber’s conclusion that a Capitalism based on the Protestant Ethic leads man into an “iron cage.” Rather, he praises Capitalism and urges the Church to embrace it; he finds an intellectual lacuna in the Church’s rejection of Capitalism and wants the Church to “learn from America.” The overriding theme of his book is that Capitalism and democracy are inseparable, and that the Church ought to embrace both. Capitalism and democracy, Novak believes, spring from the same historical impulses that aimed at limiting the power of the state and liberated the energies of individuals. Weber, for Novak, identifies Capitalism a new spirit in the world, one that depends primarily on sustained growth.

The Fact-Value Distinction

Novak derives from the Weber the “fact-value” distinction. As Weber puts it, “The question of the relative value of the cultures which are compared here will not receive a single word.” For Weber, this distinction is methodological; he merely means that in examining the effects of the Calvinism, he is not addressing its truth or falsity. But for the neo-conservatives, the fact-value distinction is ontological, a part of what “is”; facts are one thing, and values are another, and the two are not connected. For example, in Alejandro Chafuen, we read that there are two kinds of natural law, the “analytic” and the “normative.” The analytic natural law is the law of nature and the normative law, the rules of conduct. The analytic natural law describes a strict unvarying regularity that holds in nature. Economic law, for Chafuen and the neo-conservatives, falls under the “analytic” natural law, and hence “no ethical judgment can invalidate an economic law.” Therefore economics is sovereign and “value-free.” Alejandro A. Chafuen, admits that he cannot find this distinction in the Scholastics, but asserts that it is implicit.Since economics is sovereign and value-free, any attempt to impose an ethical or religious base is counterproductive. At the center of Capitalism there is an “empty shrine” without religious symbols, which each person fills in for himself; social and economic life is no longer covered by a sacred canopy. “The system of democratic capitalism cannot in principle be a Christian system...it cannot even be presumed to be, in an obligatory way, suffused with Christian values and purposes.” Indeed, an attempt “to try to run an economy by the highest Christian principles is certain to destroy both the economy and the reputation of Christianity.”We can easily recognize in Novak’s account of the fact-value distinction the dichotomies of the Enlightenment, the separation of faith and reason, the consignment of morality to the realm of private opinion, and the reduction of moral discussion to the attempt to impose one’s will on others. Recall that this fragmenting of faith and reason left no place for morality to stand, save in the individual will, and especially the will to power. Since he believes that is so, Novak can say that “claims on the part of groups to represent ‘conscience,’‘morality,’ and ‘principle’ must be exposed for what they are: disguises for naked power and raw interest.”

The Ideals of Democratic Capitalism

Novak identifies six ideals from Weber that constitute Capitalism. The first and foremost is the commodification of labor as a condition for its freedom. He believes that the only possibilities for labor are commodification or peonage. The others ideals are reason, continuous enterprise, impersonality through the separation of the workplace from the household, stable networks of law, and an urban base. Novak believes that Weber did not go far enough in his analysis of Capitalism because he did not identify it as the system of economic and political liberty, describing it instead as the system of economic rationalism. Entrepreneurship, Novak believes, depends on practical intelligence and liberty, and these are sufficient to overcome the effects of what Weber calls the “iron cage.”Novak believes that a concept of sin is fundamental to economics and underlies all of its ideals; he believes that Capitalism is the best system to confront the effects of original sin, not by repressing it, but by allowing it to flourish while placing a check on its power.

Every form of political economy necessarily begins (even if it is clear that Weber regards this new-found “freedom” of labor as only a mere formality rather than an actuality.[note]Introduction, 21.[/note] He does not present the dichotomy between the commodification of labor and peonage that Novak credits to him unconsciously with a theory of sin…The system of democratic capitalism, believing itself to be the natural system of liberty and the system which, so far in history, is best designed to meet the premises of original sin, is designed against tyranny. Its chief aim is to fragment and check power, but not to repress sin. Within it every human vice flourishes.

Novak’s exact meaning is not completely clear. He does not explain why allowing “every human vice” to flourish will result in freedom or why the flourishing of vice should be considered praiseworthy. But Novak’s meaning may be related to his view of the “doctrine” of unintended consequences, which he derives from his reading of Weber. Weber noted that the attempt to establish an acquisitive religion ended up destroying the religious base and leaving only the acquisitiveness. Novak seems to be extending this to say that any attempt to accomplish good things is likely to have unintended and disastrous consequences. Therefore, in place of a system that emphasizes the intentionality of acts or their goodness, the “best hopes for a good, free and just society are best reposed in a system that gives high priority to commerce and industry.”In addition, Novak identifies pluralism, community, virtuous self-interest, the communitarian individual, the family, and continuous revolution as the ideals of Capitalism. In all of this, he detects the hand of providence—that is, God—working through a “system of natural liberty.” In this, Novak is echoing the religious rationalism of the 18th and 19th century economists who identified economics with “nature and nature’s god” and who saw in such things as the “iron law of wages” merely the workings of God’s will for the poor.