A Time to Rebuild on Firmer Foundations

Faced with an unprecedented economic crisis, many may be willing to consider ideas and principles which under more prosperous times were ignored. The Catholic philosophical and intellectual tradition offers a comprehensive system of economic thought which provides much material for critiquing the reigning economic philosophy and identifying within it the causes of the current crisis. It also offers the philosophical blueprint for an alternative model for the future. The Catholic philosophical tradition offers insights for understanding the nature of wealth and its acquisition, economic justice in exchange, the nature of property and the lending of money. In essence, it offers a comprehensive alternative economic philosophy to those developed and disseminated in the nineteenth and twentieth centuries. This article has as its aim the reintegration of this system into the ongoing debate about the economic future of our world.

The Church and Economics

I want to anticipate and dispel an often heard objection to this topic. “Economics, the Church has nothing to do with that. It is just business. It is a science.” Even if economics were a science, which it is not, it cannot on its own answer the important questions about what we should do. Leo XIII short cut this line of argument when he said in Rerum Novarum “We approach this subject [economic class warfare] with confidence and surely by our right.” Pius XI echoed this statement more strongly in Quadragesimo Anno when he proclaimed “It is our right and our duty authoritatively to deal with social and economic problems,” and later stating that these issues “must be brought under our supreme jurisdiction.” This was not a new idea. These Pontiffs were not stating a new truth, but they were merely reminding people that this has been the case since the beginning of Christianity. Church history is filled with cases of economic issues being decided on by the Church in councils, papal decretals, and various synods. The very first Ecumenical Council of the Church, in Nicea, issued canons dealing with an economic issue, usury. The papal archives are littered with these questions, from Naviganti, dealing with sea loans, to In Civitate, dealing with credit sales to Vix Pervenit, summarizing the teaching on usury. Thus, this is not something new. The church did not create a social and economic teaching. The teaching Leo XIII and Pius XI speak about is merely the continuation of a long tradition going back to the ancient world. Aristotle had placed economics as a sub discipline of politics which Christians later understood itself to be subordinate to theology.A related false accusation is that the content of Catholic economic thought was a creation of modern times. The principles expounded in Rerum Novarum and its progeny are not part of the perennial teaching of the Catholic intellectual Tradition. To dispel this false accusation, I have purposefully chosen to rely on sources which all pre-date Rerum Novarum. I did this not because Rerum Novarum and its progeny say something different from the sources relied upon. To the contrary, they merely restate and apply the earlier teachings. Thus, to quickly dismiss with this notion that these principles were novel and a product of the particular age of the Encyclicals, by choice I rely exclusively on more ancient texts.

The False Dichotomy

The second preliminary point is that the discussion of Catholic economic teaching has been unduly limited by imposing on it a debate over merely whether the Church’s teaching supports Communism or Capitalism. The Liberation Theologians stand on one side claiming it supports Marxist ideas whereas the Libertarians claim it requires Laissez-faire Capitalism. Essentially, these two ideologies of Communism and capitalism are seeking the same end but with different means. They both propose wealth maximization as the ultimate end of society. They each promise more prosperity through central planning or the free market. Their argument is over how much should the government exercise its monopoly over interference with economic activity, with Capitalists saying not at all and Communists saying all the time. This is essentially an argument over means, not ends. The end is the same, more wealth; the difference lies only in the means and the principle of distribution. Constraining the debate in this way (to discuss only the means of attaining and distributing the ends) prevents us from considering the deeper questions: what is the proper end of economic activity? “Economics” cannot answer that deeper question of ends because as Aristotle recognized, economics is a subordinate discipline. It is subordinate to politics which focuses on the ends of civil society. Economics merely studies the means.Now before we leave this image of communism and Capitalism, I think we should observe that despite their stated principles, the two systems really produce great wealth for a select few. Capitalism purports an equal opportunity for all to gain wealth. Yet, in its Darwinian aspect of survival of the fittest, it really ends up providing great wealth for the “fittest” – the most efficient, the most proficient at playing in the capitalist system. According to capitalism’s definition of justice this result is just. For those who win are meant to win because they are the most able. Thus a result of concentration of wealth in a small group of hands is just; the invisible hand of the free market produced this result therefore it must be just. Communism purports to say that there will be more wealth for everybody. But that end goal is in practice quickly qualified to apply to the long off Utopian day that will succeed the dictatorship of the Proletariat. In the interim period the reality is that it produces more wealth for the Party, the communist officials running this dictatorship of the Proletariat. In their application in the Twentieth Century, Communism and Capitalism thus produced the same result, wealth concentrated in the hands of a small group of people.This limitation of the debate to the most efficient ends to produce wealth enables those advocating Liberal Capitalism to dismiss the Church from the debate. They frame the debate in terms of which system, Communism or Capitalism, works better. The evidence from that system clearly indicates Capitalism. Yet, the Church enters the debate not to argue which system works better but to interject the larger question what do we want to achieve by the system? Thus, the Liberal Capitalist’s position boils down to “It works! and Communism failed.” In light of the emerging economic system collapse, that argument might have to be modified to “it took longer than Communism to collapse or it let the party go on a lot longer than Communism.” Yet, accepting for the sake of argument that this crisis will pass and that Capitalism does work in that it produces more wealth in the aggregate, that does not answer the question. Is that a good thing? How is that wealth used? Proving that a means is effective in no way proves that it should be used. It may well be very efficient to use a machine gun to execute people, but that does not answer the question should you be executing them in the first place. Capitalism does not answer those kinds of questions. It just accepts the proposition that more wealth is an absolute good. We will see that Catholic economic thinking has a better answer than “it seems to work at getting more wealth.”

Sources of Catholic Economic Thought

At looking at how Catholic economic thought answers these big questions, I will not be presenting my opinion or my answers, but the answers of the great thinkers in the Catholic intellectual tradition in their own words. In selecting the words of great Catholics, I placed an emphasis on the thinkers of the twelfth, thirteenth and fourteenth centuries because it was in the twelfth century that Europe saw one of the greatest economic revivals of history. The great economic disasters of the tenth century eventually gave way to a great revival of commerce and economic activity beginning in the twelfth century. We will thus be looking at the writings of those who have experienced the functioning of effective economic revival using Catholic moral principles. We will also look at a variety of sources, philosophy, theology, canon law and literature. Doing so will help us uncover the sensus Catholicus on these matters.

Putting First Things First

The remainder of this article is divided into several subtopics examining a different aspect of Catholic economic thought: the purpose of profit and wealth, the obligations attendant to the private ownership of property, the relationship among charity, justice and alms giving, and the legitimacy of being in business in general and in particular transactions. Following these more detailed considerations, the article alludes to a final significant area of economic thought, usury and finance. In the end, examining the details of the long history of Catholic economic principles, we can see that there are many stark contrasts between its vision of economic life and contemporary economic activity.Our first sub topic is the fundamental issue of wealth and profit. What does Catholicism think about wealth generation and economic activity in relation to ultimate ends? We will start with a quotation from St. Thomas: “Temporal goods are subjected to man that he may use them according to his needs, not that he may place his end in them and be over solicitous about them.” So our first principle of Catholic economic thought is that we have to keep economic matters in their proper place, secondary. Contrary to a famous campaign slogan it is not the economy that maters; it is as we said the Mass that matters. As important as economic concerns are, we cannot let them become an end in and of themselves or become “overly” focused on them. Now we are composed of a spirit and a body and thus temporal goods are important to us. We need temporal goods to enable us to think about spiritual things. They are not, however, an end in and of themselves. This teaching of St. Thomas is thoroughly rooted in the Gospels. There are several biblical passages that thinkers like St. Thomas turned to for guidance. The first one lays out several distinctions very important for this discussion. It is the familiar story of the Rich Young Man: “And behold one came and said to him: Good master, what good shall I do that I may have life everlasting? Who said to him: Why asketh thou me concerning good? One is good, God. But if thou wilt enter into life, keep the commandments. He said to him: Which? And Jesus said: Thou shalt do no murder, Thou shalt not commit adultery, Thou shalt not steal, Thou shalt not bear false witness. Honour thy father and thy mother: and, Thou shalt love thy neighbor as thyself. The young man saith to him: All these I have kept from my youth, what is yet wanting to me? Jesus saith to him: If thou wilt be perfect, go sell what thou hast, and give to the poor, and thou shalt have treasure in heaven: and come follow me. And when the young man had heard this word, he went away sad: for he had great possessions. Then Jesus said to his disciples: Amen, I say to you, that a rich man shall hardly enter into the kingdom of heaven. And again I say to you: It is easier for a camel to pass through the eye of a needle, than for a rich man to enter into the kingdom of heaven.” First the young man asks a real lawyer’s question: what must I do to stay out of jail? What is the minimum I have to do to avoid hell and attain salvation? Asking a lawyer’s question, he receives a lawyer’s answer – what is the law? Summing up the answer is the word justice. We must avoid being unjust to God and our neighbor, as exemplified in the Ten Commandments. Then the Young Man says, I have done all this. Our Lord replies, “if thou wilt be perfect” there is more you can do; sell what you have and give to the poor and follow me. This answer saddened the man (for he was rich) and he thus departed from Our Lord. This exchange presents a critical distinction in this area which will appear throughout the economic teaching of Catholic thought. This is a distinction between acts of justice and acts of perfection. Justice is the law, the minimum required. This category contains principles of economic justice. To violate them is to break the Divine and Natural Law. The second category contains counsels of perfection, things we are encouraged to do but which are not individually required to be done. What is interesting about this passage is that after the rich man, having kept the laws of justice, refuses to follow the counsels of perfection, Our Lord warns that “a rich man shall hardly enter into the kingdom of heaven.” So Our Lord does not say that is ok that you parted company with Me over only an optional counsel of perfection; you did the minimum. He says the opposite. For one merely avoiding economic injustice it will be difficult to be saved. Failure to perform any individual counsel of perfection does not condemn one to hell; yet one’s general attitude towards these higher standards can prevent the attainment of this greatest end. Although we are not required to do all that is encouraged by the higher counsels, our refusal to embrace them demonstrates that one is overly solicitous of earthly things, or an excessive attachment to our temporal riches. This point is overlooked by many who argue against Catholic economic principles on the grounds that many teachings are only “optional” and therefore unnecessary. A Libertarian might argue, he is personally in favor of charity as a good thing, but it has nothing to do with economic principles because it is only optional.One way to think about wealth in light of this passage is that wealth is a necessary occasion of sin. Some amount of wealth is necessary for life, yet having it can be a temptation to sin by becoming too overly attached to it and as a result parting ways with Our Lord, as did the Rich Young Man. This is a nuanced understanding of wealth that critics of Catholic economic thought often over look. The Church does not embrace wealth as an ultimate good, yet it does not condemn it as an intrinsic evil. It embraces wealth and yet holds it at a distance as an occasion of sin. If we recognize wealth as such a necessary occasion of sin, we can deal with it in the proper fashion, with our eyes open and having taken the proper precautions.St. James in his epistle draws our attention to this same point. In this passage he speaks to the rich warning them of the dangers to salvation wealth can produce: “Go to now, ye rich men, weep and howl in your miseries, which shall come upon you. Your riches are corrupted: and your garments are motheaten. Your gold and silver is cankered: and the rust of them shall be for a testimony against you, and shall eat your flesh like fire. You have stored up to yourselves wrath against the last days. Behold the hire of the labourers, who have reaped down your fields, which by fraud has been kept back by you, crieth: and the cry of them hath entered into the ears of the Lord of Sabaoth. You have feasted upon earth: and in riotousness you have nourished your hearts, in the day of slaughter.” Wealth is not corrupt itself; but that of the rich men addressed has become corrupted by the over-attachment to it (it has been horded as seen by it being motheaten). This over-attachment caused these rich people to violate principles of economic justice (defrauding laborers of their just wage for example). Thus our attitude towards wealth affects even our ability to comply with the minimum.Now that we have placed wealth in the category of something to be treated with care, we need to focus more on the main principle of Capitalist economics, that which drives the system, the desire for profit. The maximization of individual wealth preferences is what is seen by Capitalists as what makes the system work. This desire for profit drives the force of the invisible hand of the market. Here is what Henry of Hesse says about the desire for profits: “Whoever has enough for these things [to sustain oneself, to perform pious works, to make reasonable provision for future emergencies, or to support offspring] but still works incessantly to gain riches or a higher social status, or so that later he may live without working, or so that his sons may be rich and great – all such are driven by damnable avarice, physical pleasure and pride.” Having spent ten years in a corporate law practice, the words “works incessantly to gain riches” describes many people in the sphere in which I trod daily. Henry’s point, is that the desire for wealth, much like the desire for other things, is not bad in and of itself but it needs to be constrained. It needs to be proportionate to the ends to which it will be put. The constraints on the desire for wealth are not overly excessive but rather very prudent. One may seek enough wealth to satisfy temporal needs, to save for future uncertainties, to perform pious works (to go on Pilgrimages or even attend conferences like this one!). Yet, there is an outer limit. To possess enough for all this and still desire more exceeds the bounds of prudence. The profit motive in the Capitalist’s philosophy cannot accept this limit. Profit is always good and more profit is always better.Importantly the virtue of restraint in the desire for temporal goods can be seen as the mean between two vices. This concept of the mean in an Aristotelian sense is often misinterpreted in the Post-Hegelian modern age to mean the synthesis of the two vices—a little of this vice and a little of that one. This is not the sense in which the mean is used by Aristotle and Aquinas. The mean for Aristotle is like a virtue sitting at the top of an inverted parabola. If it leans to far to one side it will fall off into one vice. If it leans to the other side it falls into the contrary vice. Thus virtue involves a sort of prudent tension keeping both vices at bay lest we fall into either vice. In this sense the virtue of a restrained desire for wealth lies between the two vices of being overly solicitous for wealth and being irresponsible. Jean de Meun in his great literary work, the Romance of the Rose, summarizes this concept when he says “Wealth and beggary are two extremes. The mean is sufficiency” Sufficiency, the desire for enough wealth (for the enumerated purposes listed above) is virtuous, but being solicitous for more and not caring for sufficiency are the opposite vices. St. Bernard agrees with this conclusion: “In themselves, as regards man’s Spiritual welfare, they [riches] are neither good nor bad, yet the use of them is good, the abuse is bad; anxiety about them is worse; the greed of gain still more disgraceful.” The proper use of wealth is virtuous, its abuse—the greed of gain—is vice. We need to have this balance, not falling into either extreme of not caring about our temporal needs and excessive greed. This balance is contrary to the American notion of Capitalism. For example, the American way encourages work harder and get more in your retirement account so you can buy a luxury villa in Florida and so that you can “live without working.”Finally, St. Thomas uses an image from nature to demonstrate how being properly solicitous for temporal goods means holding such desire in its proper constraint—a befitting time. “The ant is solicitous at a befitting time, and it is this that is proposed for our example. Due foresight of the future belongs to prudence. But it would be an inordinate foresight or solicitude about the future, if a man were to seek temporal things, to which the terms "past" and "future" apply, as ends, or if he were to seek them in excess of the needs of the present life, or if he were to forestall the time for solicitude.” We may seek profit, but doing so in excess is, like being irresponsible about them (forestalling the time for solicitude), a vice.So we have seen that the profit motive cannot be an end in and of itself. Wealth is neither good nor evil in and of itself; the use to which wealth is put needs to be considered. Wealth must not become the focus of all of our ends.