41 Responses to Liberal Capitalism and Catholic Economic Theory

  • Donald R. McClarey says:

    Most clerics are as good at economic theory and practice as economists are at theology. The papal states were usually among the most ill-governed and poorer regions in Italy. Christ commanded us to help the poor. I think any attempt to erect an economic theory on the back of the Bible or theology is as doomed to failure as the Marxist attempt to do so from Das Kapital and the rest of the materialist canon. Economics must rest on a pragmatic observation of what works and what does not work. Once the wealth is created, then the voice of the Church should be heeded for caring for the poor and the rights of worker, but first the wealth must be created.

  • Eric Brown says:

    “Economics must rest on a pragmatic observation of what works and what does not work.”

    Only insofar as the economic theory does not rest upon a false anthropology and that the theory itself is not innately set against the natural law. Such an economic endeavor is precisely what the Popes condemn–though, I don’t necessarily sense that in what you’re saying.

  • Donald R. McClarey says:

    Eric I have been running my law practice for 25 years. I am in business because I provide a service for people at a price they are willing to pay. No amount of theory or natural law will do away with the elementary law of supply and demand. Clerics usually have never been involved in commerce. They are far removed from the gaining of the funds needed to maintain the Church and which allow them the leisure to write on subjects such as economics. This is an area where observation of the market place, and experience in it, is worth, I think, far more than theories about how economies should function which are far removed from reality.

  • Art Deco says:

    I cannot fault you for an excess of concision.

    This perspective, which takes a positive disposition, strikes a chord with the Aristotelian idea that the fundamental role of the State is to create, within the constraints of legitimate political and ethical principles, a society of virtuous citizens. All activities of the State are pre-ordained, as it were, toward this end. It is self-evident that this perspective contradicts the Enlightenment disposition toward negative role of the government, which reduces the role of the State to police and defense functions and to providing categorically necessary social goods, and guaranteeing maximum autonomous freedom via minimal regulation.

    Not much on the Enlightenment and all, but if you expect the clerks at the DMV to be working toward the creation of virtuous citizens, I think you will be disappointed.

  • Dave says:

    Donald,
    Eric is right. To assume that the Church only has something to say after the wealth is created ignores the fact that there are ways of accumulating such wealth which are incompatible with, as you say, “the Bible or Theology.” Based on anthropologies that are at odds with the that of the Christian tradition, many of these ways (including liberal capitalism, if you agree with Eric’s analysis) inevitably contradict the dignity of human persons. So while the Church is not called to preach economic theory, she certainly is called to defend the dignity of human persons, and to oppose any theory that does not cohere with such dignity.

  • Donald R. McClarey says:

    Markets are markets Dave, and attempts by governments and churches to tamper with them based on theories that ignore economic reality usually end in poverty and disaster. If a pope tells me to help the poor, I obediently nod my head. If a pope tells me that high taxes for social welfare programs are better for poor people than a free market low tax society with plenty of jobs, I respectfully request him to prove it.

  • Eric Brown says:

    These are not mere theories, it is definitive moral theology. If something is contrary to the natural law, which we are obligated to without any room for disagreement, then it is incompatible. It is not an either/or — it is not efficiency versus ethics. That’s a false dichotomy.

  • Donald R. McClarey says:

    If a natural law theorist says that 2 plus 2 equals 5 Eric, it makes it no more true. Natural law has had a checkered history in the Church and has often stood for different things at different times. For example, at the time of the Reformation you will find fine natural law arguments against religious tolerance. Of course religious intolerance is now regarded as against the natural law. The natural law, at least as perceived by we mortals, has not proven immutable over time.

  • Eric Brown says:

    The natural law, as is, is not mere theories of natural law or misapplications; many natural law theories are even based on a false understanding of man and even a misapplication of moral norms.

    The Church teaches definitively that economic theories that are contrary, in and of itself, to the natural law is unjust and immoral and that Catholics have an obligation to work to restructure it. Certain forms of socialism is based on an anthropological error — not just ineffiency — and in the same sense is unacceptable.

    Moreover, the Church speaking is not “we mortals” just expressing our theological opinions.

    I don’t see how the Church saying that economics must subordinate itself to the natural law and thus the common good and that unfettered capitalism does not meet this goal is such a stretch of the imagination.

  • Joe Hargrave says:

    Eric,

    Congratulations on a fine post, and thank you for highlighting the Papal critique of capitalism. Some thoughts:

    “The objective order of things, to which, we must conform ourselves is direly in need of rediscovery”

    Absolutely. This is true not only of economics, however, but of morality, in the liturgy, in aesthetics, and other areas of life. This is not to say that there can be absolutely no “pluralism”; rather, there is an objective hierarchy of goods. Type A is superior to type B, form X is superior to form Y, one is in closer accord with absolute standards of beauty or moral perfection, one is in lesser accord.

    Free competition, for instance, is in the hierarchy of goods, according to Pius XI. But it is entirely subordinate to higher goods, such as social stability, the dignity of workers, in short, the common good. Thus it is only acceptable “within limits.”

    You also write,

    “This perspective, which takes a positive disposition, strikes a chord with the Aristotelian idea that the fundamental role of the State is to create, within the constraints of legitimate political and ethical principles, a society of virtuous citizens.”

    Precisely. The state has something more to do than simply prevent force and fraud, which is what a lot of libertarian rhetoric seems to boil down to.

    That said, we must also ask, what kind of state is in power? The secular, increasingly anti-Christian state is not a state I believe is able or willing to shape virtuous citizens, let alone moral ones, let alone even competent ones.

    Thus I’ll bring what we’ve discussed a little bit in private out into the open here (and perhaps I’ll post on it later at length): with respect to a manifestly anti-Christian state, we may have to become practical, though not necessarily philosophical, libertarians.

    This idea was first shown to me by John Zmirak in this article:

    http://www.catholicity.com/commentary/zmirak/05988.html

    Elsewhere, and I think this was in a com-box exchange, he has agreed with positions very similar to the one you put forward here, which in turn is similar to what I have always believed – but has argued that it is only practical or moral to support it when the government is more or less a Christian government, or at the least, not overtly hostile to Christianity.

    Mind you, I’m not saying that I am 100% on board with this idea, but it does make a certain amount of sense to me. How so? Because I don’t necessarily believe that libertarianism and individualism are interchangeable or inseparable. A reduced government would benefit organic communities of Christian solidarity as much as it might benefit unscrupulous individuals. Thus as a communitarian in the true sense, and not the pseudo-Statist sense of some who share that label, I think a sort of “practical libertarianism” would benefit Christians.

    On the economic front it could mean major leaps forward for the Distributist movement, which is entirely accord with Papal economic teaching. The spread of worker ownership in a number of different ways can redress some of the problems created by “free markets.” Distributism is both moral and practical; it incorporates what is morally right with what actually works. There are more worker-owners through ESOPS, profit-sharing, and direct ownership than there are union members in the United States. These are positive trends.

    For more on my own economic thoughts, for everyone else, I’ll leave the following links:

    http://joeahargrave.wordpress.com/2009/10/22/beyond-capitalism-and-socialism/

    http://joeahargrave.wordpress.com/redistribution-of-wealth-a-catholic-perspective/

    Thanks again Eric. Keep up the good work.

  • bonald says:

    I agree with this post entirely. The Church certainly should speak out when it comes to the social preconditions for living a fully moral life, which is what seems to me to be what’s involved here. Society should be organized so that a sense of reverence for God and duty toward the common good can infuse our buying, selling, and creating. The question of what maximizes wealth is important but secondary. It may be that unrestricted usury maximizes wealth, just as it may be that unrestricted contraception and adultery maximize pleasure. Still, the Chuch can never accept practices that reduce human beings to means and fail to treat them as children of God.

    If universal poverty is the price of virtue, then, by God, we should all be poor.

  • bonald says:

    It should also be pointed out that Catholic social teaching is designed to protect goods which there is no guarantee that the market will respect, including

    1) the independence and vitality of the family, primarily by making it possible for the father to be sole economic provider and allowing the mother to devoter herself to the children (via the family wage), but also by encouraging the ownership of productive property by families (e.g. the distributists)
    2) the vitality of local cultures, defended against central government and economic globalization by the doctrine of subsidiarity
    3) the inviolability of the Sabbath

    These are, of course, equally disregarded by materialist capitalism and materialist socialism.

  • Zach says:

    It’s not clear to me that the Founders or even John Locke understood freedom as autonomy. In fact, a Lockean view of freedom is freedom ordered to human excellence according to our nature. The evidence for this is right at the beginning of his Second Treatise in section II.

    Locke’s political philosophy has many deficiencies, but I think a caricature is often made of the enlightenment view of freedom.

    I think that individualism, that is, the tendency to turn in on oneself, is indeed a consequence of liberalism, but I’m not sure it’s so easily traced to it’s philosophical foundation.

  • Donald R. McClarey says:

    “Moreover, the Church speaking is not “we mortals” just expressing our theological opinions.

    I don’t see how the Church saying that economics must subordinate itself to the natural law and thus the common good and that unfettered capitalism does not meet this goal is such a stretch of the imagination.”

    The Church is made up of mortals Eric who have often voiced differing theological opinions. This of course is no new revelation as that hit by Abelard of the Twelfth Century, Sic et Non, demonstrates. The further afield that theologians go from revelation the more their opinions have to be judged on their merits and not as articles of faith. Saint Thomas Aquinas, my favorite theologian, believed that natural law required the death penalty for heretics. We of course today find this view abhorrent, even though it was the accepted policy of the Church for centuries.

    In regard to economics subordinating itself to the natural law, it would be helpful if natural law were not, like beauty, in the eye of the beholder. I am quite familiar with the statutes of the state of Illinois after 28 years at the bar. However, after studying natural law, even as used by the Church, the best that I can say is that X says this is what the natural law says and this is what y says. For example, the Catholic Encyclopedia under its natural law article written in the early part of the 20th Century assures us that polygamy, while immoral, is not against the natural law, while polyandry is against the natural law. Too often a reference to natural law is merely a way of dressing up a “this is what I think would be good social policy” statement. It is a vague concept while economics deals in very hard reality.

  • Donald R. McClarey says:

    “I’m not sure what you understand the natural law to be Donald.”

    I’m not sure anyone understands what the natural law is Eric when it comes to practical application, and that would include Cicero who started the whole concept.

  • Zach says:

    I think I agree with the spirit of this post but I guess I have a different perspective, or I think of the whole picture differently.

    I think it is the case that the Church critiques philosophical extremes. The Church critiques disordered social life and generally in an abstract way.

    Here’s what (I think) I mean : The Church condemns a society that is isolates us from each other. The Church condemns economic life detached from morality. The Church condemns ideas that threaten the authentic and true anthropology. The Church condemns human life that’s ordered to only material concerns (profit, etc). The Church says that the government should play not just a negative role in limiting human activity, but a positive role in promoting human goods, in what capacity is reasonably possible.

    But these social conditions that the Church critiques do not really exist in reality. We do not live in a completely free market, untethered by morality. We do not live in a totally socialist country, yet. We are not completely isolated from each other. We do have a society that cares about the common good, to some extent.

    These things are in fact true. It’s easier to learn this by experience, but I’ll just argue from authority now :)

    And it turns out that morality has a lot to do with business, and businesses are learning that morality actually has something to do with success. In fact, some business can actually cultivate certain human virtues by requiring excellence, even spiritual excellence (be it intelligence, discipline, or even beneficence and humility in working in a team). This is just one example, but I think it is an illustrative one.

    The Church provides a basic outline of the just society based in Gospel truths. It helps us to see where we cannot go and where we ought to go in our common life together. It does not tell us how. It does not give us the specific plan. It guides us and teaches us the principles we need for the flourishing of the common good. It teaches us about justice and about the insufficiency of justice.

    We spend all this time dressing up these complicated theories and I think the takeaway is always very simple. The Gospel is simple and to the extent that social teaching is part of the Gospel, it too is simple.

    Life, even social life, must be lived in love. Love is not “luv” but Love, a love that is simultaneously mercy and justice. We should serve the poor, we should have good laws, we should live in common, we should cherish each other, we should be attentive to our local communities that we know best, and we should have an eye towards the greater social community. We should work against injustice, we should fight against evil. We should also learn to appreciate the wisdom of our elders, including those elders who are outside of the Church who have made great contributions to political philosophy and our knowledge of “how we ought to live our lives together”.

  • Art Deco says:

    The Church teaches definitively that economic theories that are contrary, in and of itself, to the natural law is unjust and immoral and that Catholics have an obligation to work to restructure it.

    Eric, an economic theory is an abstract conception of social reality. A theory itself is neither just nor unjust. It is merely closer or further from what you can verify.

  • Re: natural law, three relevant ‘graphs from the CCC:

    1957 Application of the natural law varies greatly; it can demand reflection that takes account of various conditions of life according to places, times, and circumstances. Nevertheless, in the diversity of cultures, the natural law remains as a rule that binds men among themselves and imposes on them, beyond the inevitable differences, common principles.

    1958 The natural law is immutable and permanent throughout the variations of history;10 it subsists under the flux of ideas and customs and supports their progress. the rules that express it remain substantially valid. Even when it is rejected in its very principles, it cannot be destroyed or removed from the heart of man. It always rises again in the life of individuals and societies.

    1960 The precepts of natural law are not perceived by everyone clearly and immediately. In the present situation sinful man needs grace and revelation so moral and religious truths may be known “by everyone with facility, with firm certainty and with no admixture of error.”12 The natural law provides revealed law and grace with a foundation prepared by God and in accordance with the work of the Spirit.

  • Joe Hargrave says:

    I have to say, I never use the phrase “natural law” for the reasons Donald has brought up.

    In fact, I’m glad Donald brought them up, because I thought I was really missing something important, unable to understand such a key concept, as natural law: to me it always looked vague and imprecise.

    That said, I have full confidence in Eric’s ability to clarify it for us :)

  • The fact that various natural law arguments have been proffered for any number of views doesn’t invalidate the practical use of the NL, as I imagine we all agree. It would seem by that logic that the notion of objective religious truth would be placed into question, given that there are numerous arguments advanced in the name of religion that we’d obviously disagree with.

    I’d also note that our tradition does hold to the objectivity of beauty, noting it as one of the four transcendentals of being along with truth, goodness and unity.

  • As the CCC citations indicate, the natural law is part & parcel of our Catholic faith. The difficulty tends to come from its varied application, as seen in CCC 1957: the *principles* of the NL can vary in their *application* according to the circumstances. And — has Donald has indicated and as I addressed in my previous comment — various and sundry arguments based on the NL for all sorts of things have been made throughout history. Despite that, though, the NL is crucial to Catholicism, as it is the basis for universal and objective morality, regardless of one’s own religious beliefs; it is the reason that we can and do seek dialogue on moral issues with those who are not Christian.

  • As to the larger issues that Eric’s post raises and with which Donald takes exception, I think there are other interesting avenues apart from the NL discussion. What came first to my mind is this: because the Logos took on our human nature in a real and complete manner, every aspect of human nature and the human condition has been impacted by the Incarnation, and therefore every human activity is (or ought to be) somehow restructured from within. The profundity of the mystery of the Incarnation should lead us to see how *everything* we do has been changed.

    This includes all aspects of our society, and in more than just a moralistic manner… somehow, we who are Christians ought to be and do things differently. The difficulty is that exactly what that means cannot be predetermined, given the sheer numbers of unique human beings. Regardless, though, we do know that being Christian ought change everything “from within”.

    What I’m essentially talking about is the concept of worldview, and how the fundamental principles of one’s worldview will shape everything.

    I’m sorry I don’t have it immediately at hand, but there are some citations from the first chapter of Cardinal George’s point which speak to this… I’ll try to type some of them up tomorrow.

  • I’d consider the Noahide Laws specific applications of the NL which tend to have a more “lasting” validity. NL itself tends to be the very basic principles… for instance, Thomas states that the first & foundational precept of (N)L is that good is to be done and pursued, and evil is to be avoided (Summa Theologiae, First Part of the Second Part, Q. 94, Art. 1).

  • An excellent introduction to the moral law is Charles Rice’s 50 Questions on the Natural Law: What It Is & Why We Need It (2nd. ed.) from Ignatius Press. Being a lawyer & a law professor and not a theologian, Rice’s approach is different in structure than other primers on NL, but it is nonetheless an excellent introduction to the topic.

    More substantially and from an explicitly theological perspective, I’d recommend Matthew Levering’s Biblical Natural Law (get it from a library… it’s one of those spendy academic press volumes). Also very interesting is St. Thomas Aquinas & the Natural Law Tradition, a collection of essays which speak to the resurgence of NL thinking in various disciplines: theology, philosophy, legal & political philosophy. Again, these two works are more substantial, but for those interested, I heartily recommend them.

  • I should clarify: I recommend the books in the previous comment for additional reading, not to pass the buck (“just go read those books!”). It appears that this topic might be a good one for ongoing discussion here at TAC, in this combox and additional posts.

  • Donald is confusing technique with necessity; sure, he knows something which works in the system we have now, but that doesn’t mean the system is valid, nor there are not better ways. He is getting very close to the same kind of arguments used by those engaging in population control.

  • Donald R. McClarey says:

    Basic principles of right and wrong I think need to be distinguished from the more exalted claims for natural law. Tommy takes Betty’s doll. She cries and say’s “That’s not fair!” She is right and is appealing to the guide of conscience that God put in us all. That is a far cry from appeals to natural law to tell us how economies and polities should be organized. If one says that basic fairness should be a guiding principle in the affairs of humanity, I agree. If one says that such a principle therefore mandates policy choice A, B or C, you will quickly find that people will have varying views on the application of the principle of fairness. That is one of my major difficulties with natural law as a factor in policy debates. Unless one is arguing from a historical perspective that such an outcome has always been reached by natural law adherents, an appeal to natural law really comes down to a dressed up, “I think this should be our policy for the following reasons” type of argument. Natural law is truly an amorphous concept that people often use to strengthen arguments, but rarely convinces unless people agree with the underlying argument being made.

  • Blackadder says:

    Pope Leo XII in Rerum Novarum criticized liberal capitalism noting the “enormous fortunes of some few individuals, and the utter poverty of the masses.” This statement remains exactly right, particularly given the varying, but similar figures, stating that an incredibly small minority of people own beyond-staggering percentages of global wealth.

    If we are to speak on a global scale, it may be possible to speak of “enormous fortunes of some few individuals, and the utter poverty of the masses.” It would be incorrect, however, to say that this poverty is the result of liberal capitalism. Countries that have adopted some form of liberal capitalism are by and large not countries where the “masses” experience dire poverty (I say “by and large” only because of a few cases of countries that have only recently adopted liberal capitalism, as the term is used here). The vast disparities of wealth and persisting poverty in certain parts of the globe exists not because of the spread of liberal capitalism, but because its spread has been limited. One need only look at something like the Index of Economic Freedom to see that perhaps the problem with the world economic order is not too much liberal capitalism but too little.

  • A note as I’m working through this:

    “If the organization and structure of economic life be such that the human dignity of workers is compromised, of their sense of responsibility is weakened, or their freedom of action is removed, then we judge such an economic order to be unjust, even though it produces a vast amount of goods, whose distribution conforms to the norms of justice and equity.”

    It strikes me that this quote from Mater et Magistra must be taken very different ways by different people. I would read this and immediately think of it as suggesting a need for market freedom and avoidance of the temptation to collectivism — since it is precisely the centrally planned economy and trade off of personal responsibility in return for an ample safety net which I think reduces a worker’s sense of responsibility and removes his freedom to act. Others, I would imagine, think that “the tyranny of the free market” has these ill effects, and that collectivism provides freedom and a sense of responsibility.

    In this regard, Catholics of these differing view points might share the same values while coming to opposite conclusions in regard to Catholic Social Teaching.

  • Something I think is important to keep in mind with:

    Pope Pius XII virtually verbatim makes this precise argument, stating “all economic and political activity of the state is ordered towards the lasting realization of the common good.”

    and

    It is the noble prerogative and function of the State to influence, aid and direct the private and individual activities of national life that they converge harmoniously towards the common good.

    Is a sense of scope. I would certainly agree that the state should restrict itself to these activities, in the sense that that state should strive to influence, aid and direct private activities towards the common good and thus should not be engaged in other contrary activities such as simply gathering power to itself, enriching the rulers, working to benefit one group to the detriment of others, etc.

    However, I’m not sure that one can take from here that it is the task of the state to achieve the common good on its own and through its own actions. So, for instance, I can see how the state should enact policies to encourage an equitable distribution of goods, protect the weak from the strong, etc. I’m not sure, however, that as a Catholic one must conclude it is the job of the state to step in and give people what they lack materially. It might take that duty, if that is the best way to achieve the common good, and if it is able to do more good than harm by doing so. It make seek to assure certain minimum protections, and leave the rest to the virtue of society — encouraging but not dictating.

    There seems often to be an assumption that CST says that if the common good has not yet fully been achieved, then the state had better step in actively and do something about it. And I’m not sure we see justification for that level of direct state activism here. It’s certainly not an activity denied the state, but I don’t think the Church says that the state must seek to be the primary actor in this regard.

  • It is self-evident that this perspective contradicts the Enlightenment disposition toward negative role of the government, which reduces the role of the State to police and defense functions and to providing categorically necessary social goods, and guaranteeing maximum autonomous freedom via minimal regulation.

    I’m not sure this is as starkly the case as is at times imagined. Figures ranging from Rousseau to the American founding fathers all talk about the need to nurture a virtuous citizenry. The thing is that the founders in general (though the degree was a major source of disagreement between Federalists and Republicans in the 1780-1800 era) saw a powerful machinery of state as a corrupting influence on the citizenry, since it tempted people to use the state to their own selfish ends.

  • Phillip says:

    I don’t think the Church endorses any particular philosophical interpretation of what the natural law is (though I suspect they will look at Aquinas as a good example of a philosophical position that is not contrary to the faith.)

    If I understand it, the Church views the natural law as those things that all humans know as basic truths. For example, Aquinas’ formulation of “do good and avoid evil.” Then will be less general precepts. For Aquinas such precepts include the duty to preserve life, another to procreate and another to act rationally.

    But beyond these precepts comes the problem of practical application. What is the good in this particular situation? On this people will be less clear and subject to many varied interpretations.
    Thus one may conclude that more state control is demanded by a given circumstance while another may conclude that more free market solutions are the best solution. One may come up with something completely distinct from either solutionc (Distributism?)

    The bottom line as I understand it is that the Church sees the Natural law as basic precepts that are known by all. The practical application will nonetheless be far from immediately or even remotely clear and men of good will will vary in their application.

  • As St. Ambrose put it: ‘You are not making a gift of what is yours to the poor man, but you are giving him back what is his.’ You have been appropriating things that are meant to be for the common use of everyone. The earth belongs to everyone, not to the rich. These words indicate that the right to private property is not absolute and unconditional.”

    Perhaps another interpretive difference between conservatives and progressives is: I think conservatives would tend to take Ambrose’s quote to refer to our moral duties. As in, “God has allowed you to attain this wealth for a purpose: that you may fulfill your duties to your fellow men.” In this sense, if we refuse to help those in need, we are denying them something owed to them.

    Progressives sometimes (and I’m not clear that Eric is doing this, but it does seem to be the way in which this quote is sometimes used) seem to take the expression much more literally and take it to mean that if someone is wealthy its because he literally took that money from someone else. From an economic point of view, this is clearly false. It’s possible to get wealth by unjustly denying others fair pay for their part in a process, but it’s also entirely possible for a person to simply produce a lot of wealth, and thus become wealthy, without in any sense having “taken” that money from people who are poor because they do not produce much wealth.

  • Phillip says:

    Does anyone know good books that look at the role that Enlightenment philosophy actually influenced the Founding Fathers? I hear alot about the founding of America being steeped in classical Liberalism. But how much was it really?

Follow TAC by Clicking on the Buttons Below
Bookmark and Share
Subscribe by eMail

Enter your email:

Recent Comments
Archives
Our Visitors. . .
Our Subscribers. . .