Catholicism and Capitalism

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memo, sent in May 1960 to the Volker
, was entitled "Readings on Ethics and Capitalism,
Part I: Catholicism."

is, first of all, no official and specific "Catholic position"
on capitalism. There are enormous differences among Catholics
on political and economic questions: and Catholics can be found
who are left-wing anarchists, socialists, middle-of-the-roaders,
fascists, and ardent free-enterprisers and individualists. Even
on such strict dogmatic matters as the immorality of birth control,
Catholics, agreeing on that, differ as to whether birth control
should or should not be illegal.

had, however, been a kind of "central tendency" or drift,
particularly in Europe, where the Church is apt to intervene more
directly in political questions than it does here. Papal pronouncements
on social questions are generally highly vague and take on a consciously
eclectic hue – understandable in the light of the Church's
aim to speak for every member of the flock of varying political
and social tendencies. The effect, however, has been to move into
a "middle-of-the-road" position. It is no accident that,
generally in Europe the specifically "Catholic" parties
are the eclectic, compromising parties of the "Center."
The kind of position which says that both extremes –
of individualism or capitalism, and of socialism are wrong, that
both the individual good and the common good should be considered,
that the State should be active for the common good, and yet not
go beyond a limited sphere – all these homilies, seemingly
innocuous and all-inclusive, permit a very wide interpretation
of specifics, and therefore great diversity among Catholics —
although they do give rise to a middle-of-the-road tendency. (The
inner contradictions and fuzziness of Catholic thought can be
seen in handling political issues; thus, a priest, when queried
about Catholic Presidents of the U.S., how much they are subject
to Catholic rule, etc., will say, in the same interview, that
(a) all Catholics are subject to the same Church law, but that
(b) public officials can get special exemptions by virtue of their
office – or (a) that God must come before the State, but
(b) nothing that an American President could possibly do under
the Constitution could possibly call down official Catholic censure.
And so on. )

Diamant, in describing European Catholic reaction to the Industrial
Revolution, puts the situation as follows:

as Catholics in dealing with the modern state had attempted to
steer a middle course between the unacceptable extremes of political
individualism and totalitarianism, so in dealing with the u2018social
question,' they spoke about a two-front war against Adam Smith
and Karl Marx, against laissez-faire and socialism. Because they
differed on the nature of the u2018middle course,' they held a variety
of views on the social question, ranging from those of u2018Catholic
liberals to Catholic (religious) socialists and corporativists"
(Alfred Diamant, Austrian Catholics and the First Republic,
Democracy, Capitalism, and the Social Order, 1918–1934
(Princeton University Press, 1960), p. 15).


of the specifically "Catholic" social thought has been
Continental European, which, in a way has been unfortunate, since
European Catholicism has been much more anti-capitalist than Catholicism
in the US The Papal Encyclicals, which we will turn to first,
have been strongly influenced by the European "Social"
Catholicism and its various movements. In the United States, Catholics
think politically and economically, much like other Americans,
and they range in the spectrum from the extreme-right wing Brooklyn
Tablet to the highly New Dealish Commonweal, and even
to the left-wing anarchist Catholic Worker. The central
tendency, however, especially among parish priests and rank- and-file,
is often quite conservative and pro-capitalist. As for the Papal
encyclicals, it must also be remembered that Catholics are not
required to take them for gospel; only the Pope speaking "ex
cathedral" on matters of high religious dogma – which
of course is a rare event must be obeyed implicitly.

two famous "social" Encyclicals of modern times are
Pope Leo XIII, Rerum
(1891), and Pius XI, Quadragesimo Anno
(1931). (For convenient full texts, see Father Gerald C. Treacy,
S.J., ed., Five Great Encyclicals [New York: The Paulist
Press, 1939].) I have read these two works carefully, and according
to my reading, there is a great deal of difference between the
two. Rerum Novarum while, to some extent middle-of-the-road
and with a pro-labor bias, is fundamentally libertarian and pro-capitalist.
Quadragesimo Anno, on the other hand, is virulently anti-capitalist
and, in fact, pro-fascist. This fascist tendency is revealed by
the trend of European Catholicism between the wars toward the
adoption of the corporate state as their ideal.

XIII, Rerum Novarum

begins rather badly, asserting that with the medieval guilds destroyed,
"by degrees…. Working Men have been given over, isolated
and defenseless, to the callousness of employers and the greed
of unrestrained competition." Also, the evil of "rapacious
usury… still practiced by avaricious and grasping men."
As a result of free contract, there has been "concentration
of so many branches of trade in the hands of a few individuals,"
so that a small number of very rich have been able to lay a "yoke"
of virtual "slavery" on the masses of the poor.

this initial paragraph, however, RN improves greatly. Socialism
is attacked as making matters worse, with the state encroaching
beyond its proper sphere. There then follows a lengthy section
devoted to a fine praise and the development of the absolute right
of the individual to private property. Furthermore, from this
right of private property stems the right of a man to save, and,
then invest – his return from investment then becomes, in
a sense, another form of wages, which should be completely
his own. Socialism, on the other hand, would "deprive… every
wage earner… of the liberty of disposing of his wages, and thus
of all hope and possibility of increasing his stock and of bettering
his condition in life."

natural right of the individual to possess private property, Leo
goes on, is a chief distinction between man and the animal. The
animal is purely instinctual, determined to act by his senses
and environment; man is different – as the rational animal,
he can act according to reason, can act with foresight, and therefore
has the right to acquire permanent property. Since man is rational
and self-governing, the individual can own the earth itself,
and not just its fruits, since the fertility of the earth is to
meet man's recurring needs. (This is a slap at Henry George.)
Man is older than the State, and therefore has a prior right to
provide for his life. Even if some individuals own the land, others
exchange the fruits of their labor for the products of the land,
and therefore all share in its fruits. Raw material is provided
for man, but man must cultivate it, put on the stamp of
his personality on that portion of nature, and make the barren
soil abundant (much of this is also directed against the Georgists.)
Therefore, the right of private property, private ownership, is
derived from natural law, the nature of man, and this therefore
includes the right to transfer property in inheritance. And if
the State interferes with this private property: "If the
citizens of a State… on entering into association and fellowship,
experienced at the hands of the State hindrance instead of help,
and found their rights attacked instead of being protected, such
association were rather to be repudiated than sought after."

a family is in extreme need, then the government should aid it,
but outside of that the government should not interfere. The Socialist
replacement of the parent by the State is "intolerable slavery."
Further, the "sources of wealth would run dry," and
no one be interested, in developing his talents or industry. And
that "ideal equality of which so much is said would, in reality,
be the leveling down of all to the same condition of misery and
dishonor." Socialism must be "utterly rejected,"
none the least because it injures the inviolability of private

for Socialistic equality, it is "impossible" to reduce
human society to a level…. The socialists may do their utmost,
but all striving against nature is vain." In nature, there
exist innumerable differences between people: in capability, in
diligence, health, strength, and "unequal fortune is a necessary
result of inequality in condition. Such inequality is far from
being disadvantageous either to individuals or to the community;
social and public life can only go on by the help of various kinds
of capacity and the playing of many parts, and each man… chooses
the part which peculiarly suits his case."

is false and irrational to believe that class is naturally hostile
to class: "It is ordained by nature that these two classes
(capital and labor) should exist in harmony and agreement, and
should at it were, fit into one another, so as to maintain the
equilibrium of the body politic… each requires the other; capital
cannot do without labor, nor labor without capital. Mutual agreement
results in pleasantness and good order… there is nothing more
powerful than religion… in drawing rich and poor together….
Thus religion teaches the laboring man and the workman to carry
out honestly and well all equitable agreements freely made, never
to injure capital, nor to outrage the person of an employer; never
to employ violence in representing his own cause, nor to engage
in riot and disorder…. Religion teaches the rich man and the
employer that their work people are not their slaves; that they
must respect in every man his dignity as a man and as a Christian;
that labor is nothing to be ashamed of… but is an honorable
employment, enabling a man to sustain his life in an upright and
creditable way; and that it is shameful and inhuman to treat men
like chattels to make money by…."

the employer is duty-bound to see that his workers have time for
religious piety; that they are not corrupted or neglect home and
family; he should never tax his workers beyond their strength,
or employ them in unsuitable work. "His great and principal
obligation is to give to everyone that which is just." And
rich men and employers should remember that "to exercise
pressure for the sake of gain, upon the indigent and destitute,
and make one's profit out of the need of another, is condemned
by all laws ". It is also a crime to deprive workers of wages
contractually due them. And the rich should refrain from cutting
down workers' earnings by force, fraud; or "usurious dealing."

it is, of course, not enough to have plenty of money; the money
must be used rightly. It is true that "private ownership…
is the natural right of man," and an absolutely necessary
right. This is a matter of justice. But, morally, the rich should
use their property properly by sharing with others in need; no
one is obliged to distribute to others what he and his household
need, or need to "live becomingly" according to their
condition in life. But, out of the surplus, it is one's duty to
give to the indigent. This is a duty, not of justice, but of Christian
charity, and it is therefore "a duty which is not enforced
by human law." In short, man's duty is to himself to perfect
his own divinely-given nature, and to use divine gifts for the
benefit of others. The most important consideration is virtue,
which can be attained by everyone; the rich should be generous,
and the poor tranquil. Christian morality leads to happiness and
temporal prosperity as well as spiritual salvation; it includes
thrift rather than spendthriftiness, and charity. There should
be no social strife because all, rich and poor, are brothers under
God. On charity; "there are many who, like the heathen of
old, blame and condemn the Church for this beautiful charity.
They would substitute in its place a system of State-organized
relief. But no human methods will ever supply for the devotion
and self-sacrifice of Christian charity."

laws are for public well-being and prosperity, for the common
good instead of particular means for relief. Everyone should receive
due in the state, and all should be equal before it. Differences
and inequalities, however, are essential for society. Since the
workingmen are the bulk of the society, their interests should
be promoted. The government should step in to intervene in the
following circumstances: against a strike endangering the public
peace, a lowering of family ties, when hours of work are so long
that the worker has no time to practice religion, or when burdens
on workers are unjust or a danger to morals. The poor and helpless
have a claim to special protection do from the state, and therefore
do workers. The chief duty of the State, however, is
the legal safeguarding of private property: "for if all may
justly strive to better their condition, yet neither justice nor
common good allows anyone to seize that which belongs to another,
or, under the pretext of futile and ridiculous equality, to lay
hands on other people's fortunes." The State should also
restrain revolutionary demagogues, save workmen from their sedition,
and protect the lawful owners of property. A worker's divine dignity
should be inviolate and he should not enter into servitude of
soul, he should not work on Sundays, and be saved from grasping
speculators or excessive or child labor. As a rule, free
contracts between the worker and the employer are fine and legitimate;
nevertheless, the wage must be enough to support the wage-earner
in reasonable and frugal comfort." Even if a worker voluntarily
accepts harder conditions, he is still a victim of force and injustice.
Yet, "private ownership must be held sacred and inviolable."

should have private property in the land, which, among other advantages,
fosters love of country. But these benefits require "that
a man's means be not drained and exhausted by excessive taxation.
The right to possess private property is from nature, not from
man; and the State has only the right to regulate its use in the
interest of the public good, but by no means to abolish it altogether."

and workmen can regulate themselves in moral ways by forming voluntary
societies to draw closer together to each other and to help the
needy: such as societies for mutual help, private foundations
to provide for workers or their dependents in emergencies, orphanages,
etc. Most important are workers' associations. In olden times,
guilds provided important functions of raising quality of products
and aiding workers in need. Private societies should be formed,
either of workers themselves or of workers and employers.
The natural right to form such workers' associations should be
protected by states. Many current workers' associations are "in
the hands of invisible leaders," far from Christian principles,
who "do their best to get into their hands the whole field
of labor and to force workmen to join them or starve" (presumably
the closed shop). Workers should then do their best to join Christian
associations and shake off the yoke of oppression. It is clear
that Leo envisioned as the best type of such associations,
not unions and collective bargaining as we know them today, but
"workers' benefit and insurance societies" -fraternal
groups to aid workers among themselves, and even associations
of workers and employers to mediate labor disputes.

XI: Quadragesimo Anno (1931)

encyclical is a horse of a very different color: anti-capitalist,
and pro-fascist (it was, of course, written during a Papal-fascist
honeymoon, in relations that were always quite friendly, after
the Lateran treaty of 1929 setting up Vatican City).

begins by saying that the end of the 19th century brought a new
industrial development, which led to two classes in society: a
small, wealthy class; and an immense multitude of poverty-stricken
workers. The wealthy of course, liked this state of affairs and
were content to leave its remedy to charity, and continue the
open violation of justice, this radical and unjust inequality.
(It is ironic that Pius XI, while making frequent obeisance to
Rerum Novarum, is obviously taking a stand diametrically
opposed to that of Leo XIII.) Pius then goes on to directly misinterpret
Leo, to say that Leo was boldly anti-liberal (liberal, of course,
in the European sense of being pro-free market and individual
liberty) and that he took up the cause of the workers against
the "hardheartedness of the employers and the greed of unchecked
competition." Leo XIII has been misinterpreted (!!) to be
pro- industrialist.

then went on to say that government should steer a middle course
between Individualism and Collectivism, thus giving just due to
private property, and to the common good. He paid quick respects
to private property, but only fleetingly. Pius then went on again
to attack capital: capital, he charged, claimed all the products
and profits and left the barest minimum to labor to sustain and
reproduce themselves (straight Marxism!!). Capitalism dispossessed
the laboring masses (nonsense!), was unjust and led to inequitable
distribution, to an "immense number of propertyless wage-earners,
on the one hand, superabundant riches of the fortunate few, on
the other."

addition to encouraging partnership or profit-sharing contracts,
Pius continued that every worker should be guaranteed a wage sufficient
for support of him and his family, although wages should not be
so high as to wreck the company.

employees and the employers should join in efforts to overcome
their difficulties, aided and guided by public authority. Wages
should be neither too high nor too low, but should be set so as
to maximize employment opportunities; differentials between wages
should also be "reasonable."

went on then, boldly to advocate "reconstruction of the social
order." On the principle of subsidiarity, there should be
a hierarchical order or organizations, with the higher not doing
what the lowers can themselves do efficiently. The State's role
is to foster harmony between the various ranks. For example, there
now are two classes: employers and employees, combating each other.
This conflict should be eliminated, and the way to do it is to
create new, "well-ordered… vocational groups… binding
men together not according to the position they occupy on the
labor market, but according to the diverse functions which they
exercise in society." These autonomous vocational groups
would have their own vocational "governments." These
organizations would be established by law and binding on members.
(This is the outline of the "corporate state," realized
in Fascism.) Free competition, on the other hand, cannot be the
ruling principle in society; it is dangerous individualism, which
must be subjected to an effective social guiding principle.

there has arisen a new syndic and corporative organization of
society. (Obviously Fascism): here the State grants legal recognition,
and a sort of monopoly, to a syndicate or union. This union or
syndicate bargains and represents all the workers and employers
in a given field. Every member is taxed by the State to support
his syndicate, and bargaining contracts are legally "binding
upon all members" – although technically not all have
to be actual members. Above the syndics and unions stands the
"corporation" in each trade, representing both syndics
and unions. The corporation is an organ of the State to coordinate
and direct the unions and employers. Strikes and lockouts are
forbidden; instead there is compulsory public arbitration.

evaluating Fascism, Pius XI obviously found it good. He particularly
hailed the "peaceful collaboration of the classes and the
repression of Socialist organizations and efforts." His gentle
reproof was indirect: "some fear" that there is a little
too much State as compared to private initiative, and that the
syndicates and "corporations" are a little too bureaucratic;
also the whole system needs a greater infusion of Catholic principles.
Actually, the "old" social order was the best, but was
unfortunately abandoned (By this Pius either means the Middle
Ages or the pre-French Revolution era.)

for capitalism, since the days of Leo XIII, it has spread, its
"immense power and despotic economic domination is concentrated
in the hands of a few." "[I]t violates right order whenever
capital so employs the working or wage-earning classes as to divert
business and economic activity entirely to its own arbitrary will
and advantage without any regard to the human dignity of the workers,
the social character of economic life, social justice and the
common good." Capitalism also exerts irresistible power through
allotment of credit. The "natural result of limitless free
competition […] permits the survival of those only who are the
strongest… who pay least heed to the dictates of conscience."
This concentration of power leads to a struggle for "economic
dictatorship," which in turn leads to a battle to control
the state, which in turn leads to politico-economic wars
between States. (Leninism!) Wars arise from using political power
for economic advantage, or out of economic domination to decide
politics. An economic dictatorship (presumably meaning monopoly)
has arisen on the ruins of free competition, which is now, flatly,
"dead." Economic life is ghastly and cruel. Out of individualism
and free competition have emerged economic imperialism, economic
nationalism, economic internationalism, and international financial

is bad because of its advocacy of class war and abolition of private
ownership; it is cruel and destructive. Socialism on the other
hand, is another matter. For though it is materialistic and elevates
material over higher goals, and out of it stemmed Communism, still,
socialism is less violent, less extreme, and less fond of class
war, and is getting considerably closer, and is often similar,
to Christian social reform.

Pius turned to a denunciation of free competition and capitalism,
attacking "unbridled and sordid greed," "low desires…
(for) transient goods of this world," an "unquenchable
thirst for riches," "prices charged by unchecked speculation…
out of greed for gain"; the "unscrupulous but well-calculated
speculation of men who… appeal to the lowest human passions"
for gain, etc. There should have been "stern insistence on
the moral law, enforced with vigor by civil authority" (note
the difference between this, and Leo XIII's dictum that morality
should not be enforced by government). Instead, "free rein
was given to human avarice, to the selfish interests" crushing
competitors, etc. Workers were treated as "mere tools,"
modern factories bred immorality for women workers, bad housing
for families. The remedy, concluded Pius again, was such Christian
virtues as charity and moderation, and association of workers,
Christians, etc. of each vocational group.

XI, Atheistic Communism (1937)

encyclical, not nearly as important as the previous two, continued
the line of thought expressed by Pope Pius in his Quadragesimo
Anno. Communism was attacked as materialistic, and antithetic
to individual liberty, morality, rights, parental education, etc.
The way for communism, however, was prepared by the "religious
and moral destitution" of the wage earners caused by "liberal
economies." The factories had no thought for the priest.
Communism was again denounced as shrewd, diabolic propaganda,
aided by a "conspiracy of silence" in the press about
Communism due to "various occult forces which for a long
time have been working for the overthrow of the Christian Social
Order." (This is apparently a reference to those twin devils
of the fascist wing of the Catholic Church: world Jewry and international
Freemasonry.) The remedy for our social ills is essentially to
revive the medieval guild system. "A sound prosperity is
to be restored – according to the true principles of a sane
corporative system which respects the proper hierarchic structure
of society," harmonized and coordinated by, public authority
– (again, Fascism).

attacking materialism, and praising charity to the poor, and counseling
resignation and acceptance by the poor, Pius asserted that the
State should concur actively in Church activities, should supply
employment and make the wealthy assume the burdens for this, etc.,
all for the "common good."

further references on Catholic corporatism, see: -Emile Bouvier,
S.J., "Economic Experiences With the Pluralistic Economy,"
Review of Social Economy (March,1956); the Diamant book
referred to above; Francesco Nitti, Catholic Socialism
(London, 1908); Georgiana P. McEntee, The Social Catholic Movement
in Great Britain (New York, 1927), William Schwer, Catholic
Social Theory (St. Louis,1940); Oswald von Nell-Breuning,
The Reorganization of Social Economy (New York and Milwaukee,
1937); Franz Mueller, "Heinrich Pesch and His Theory of Christian
Solidarism," Aquinas Papers (St. Paul, Minn: 1941);
Father John A. Ryan, Distributive Justice (New York, 1916);
Ryan, A Better Economic Order (New York, 1935); Ryan, The
Constitution and Catholic Industrial Teaching (New York, 1937);
R.E. Muleaby, S.J., The Economics of Heinrich Pesch (New
York. 1952). For a critique, see Abram Harris, "The Corporate
State: Catholic Model," in Economics and Social Reform
(New York: Harpers, 1958).

us now turn-to the works of some pro-free market American Catholics.
Probably the best Catholic economist in the US is the German-born
Dr. Melchior Palyi, who is vigorously pro-capitalist, but has
unfortunately never written specifically on the ethics of capitalism.
(His two leading works are: Melchior Palyi, Compulsory
Medical Care and the Welfare State
(Chicago: National
Institute of Professional Services, 1949), and Palyi, Devalued
Money at the Crossroads (University of Notre Dame Press, 1958)).
Some excerpts from the former work will give the flavor of
Palyi's political ethical views:

essential idea of the Welfare State… the systematic dispensing,
through political channels and without regard to productivity,
of domestic wealth — [was] at the very core of the Greco-Latin
city states, of the medieval city…. In the city republics, ancient
and medieval, it meant bloody civil wars. Their constantly recurring
violent quarrels about constitutional issues disguised bitter
class-warfare to seize tae power that was dispensing all benefits.
Most of them went on the rooks of their internal struggles for
economic privileges… that the orgy of paternalism under Emperor
Diocletian resulted in governmental money recipients larger in
number than the taxpayers, might be applicable to many other doomed
civilizations…. The Police State (of Colbert and Frederick the
Great) used the Welfare State as its instrument, facade and justification,
as do modern dictatorships." (Palyi, op. cit., p.1.)

leading political work on the side of free enterprise by a Catholic
is Dean Clarence Manion, The Key to Peace (Chicago: The
Heritage Foundation, 1951).

equality, Dean Manion writes:

over any large or small company of men and women…. Do you
observe a community of u2018equal' human beings? Have you ever found
any two people in the whole world…equally wise, handsome,
powerful… equal in all of these qualities?… these attributes
are distributed with persistent inequality among all individual
persons throughout the world… the Declaration states that
u2018all men are created equal'… [this] signifies that
in their u2018divine' endowments and in their divinely ordained
purpose, men are all the same. Thus the life of any man is just
as sacred as the life of any other, and each man has exactly
the same natural rights and duties as every other person….
Being thus equal before God, they must likewise be equal before
the Constitutions and laws of the land.

equality before their Creator neither contemplates nor calls
for a dead level in the earthly condition of men. On the contrary
each human being is by nature a distinct individual personality
and, is consequently and naturally different in his earthly
characteristics from every other person on earth… inequality
is a natural and inescapable characteristic of the human race….

nature of the individual as well as the nature and continuity
of human society, demands these unfailing differences. Without
the wide diversification of talents, taste, abilities and ambitions
that now and always exist among men, Society could neither feed
nor clothe itself. It is consequently a wise provision of Providence
that causes the perpetuation of endless variety in the desires
and capabilities of human beings. Sparked with personal liberty
and the natural personal incentive to own property and advance
economically this conglomeration of inequality synchronizes
into a great engine for the sustenance and progress of mankind."

the American Revolution:

American Revolution turned directly away from collectivism and
toward the basic integrity of the individual man. In so doing
it generated a centripetal force which destroyed class-consciousness
in the diversified groups of our Revolutionary population….
Far from making a new God out of "Society" (like the
French Revolution), the American Revolution was an official
public acknowledgment of the one true pre-existing God, the
Creator of all men and source of all the rights of men….

because he is a Jew, Gentile, white, black, consumer, producer,
farmer, merchant…. but because he is a man with personal
immortal destiny, each of our citizens is entitled to the equal
protection of American government and to the equal respect of
his fellow Americans…. The United States was born of the conviction
that human rights are worth their price. For the basic all-important
natural right of the individual person against his own government
it was necessary in 1776 to pay the high price of a bloody revolution…
ours is the only country in the whole world in which the individual
man holds substantial, natural, personal rights he can require
everybody, including his government, to respect and observe."

Government and Morality:

any part of this important domain of personal virtue (justice
and charity) is transferred to government, that part is automatically
released from the restraints of morality and put into the area
of conscienceless coercion. The field of personal responsibility
is thus reduced at the same time, and to the same extent that
the boundaries of irresponsibility are enlarged. Expansion of
the governmental domain in this manner is unfortunate for two
reasons. The first is purely practical: Government cannot manage
these fields of human welfare with the justice, economy, and
effectiveness that is possible when these same fields are the
direct responsibility of morally sensitive human beings. This
loss of justice, economy and effectiveness is increased in proportion
that such governmental management is centralized. The second
reason is basic: Any shrinkage in the area of personal responsibility
tends to frustrate the purpose for which man was created. Man
is here to be tested for his free compliance with the moral
law of God. A great part of this law concerns man's relationships
with man.

human being has a God-imposed personal obligation to assist
his neighbor when the latter is in poverty, destitution or distress.
The government cannot excuse any many from this obligation and.
it should not pretend to do so. More and more people now shirk
this moral duty because they are encouraged to believe that
every type of human misery is the exclusive concern of the government….
Government cannot make men good; neither can it make them prosperous
and happy. The evils in society are erectly traceable to the
vices of individual human beings…. In the meet name of u2018human
welfare' a government begins to do things that would be gravely
offensive if done by individual citizens. The government is
urged to follow this course by people who consciously or subconsciously
seek an impersonal outlet for the u2018primaries' of
human weakness. An outlet in other words which will enable them
to escape the moral responsibility that would be involved in.
their personal commission of these sins….

is one example of centralized governmental operation: Paul wants
some of Peter's property. For moral as well as legal reasons,
Paul is unable personally to accomplish this desire. Paul therefore
persuades the government to tax Peter in order to provide funds
with which the government pays Paul a u2018subsidy.' Paul now has
what he wanted. His conscience is clear and he has proceeded u2018according
to law'….

fact that there are millions of Pauls and Peters involved in
such transactions does not change their essential and common
characteristic. The Pauls have simply engaged the government
u2018to do for them that which they were unable to do for themselves.'
Had the Pauls done this individually and directly without the
help of the government each of them would have been subject
to fine and imprisonment. Furthermore, ninety-five percent of
the Paula would have refused to do the job because the moral
conscience of each Paul would have hurt him if he did. However,
where government does it for them, there is no prosecution and
no pain in anybody's conscience. This encourages the unfortunate
impression that by using the ballot instead of a blackjack we
may take whatever we please to take from our neighbors….

centralized government generates a system of moral anarchy for
many of man's common relationships with man. In this manner
the growth and centralization of governmental power gradually
destroys that sense of individual conscientious responsibility
which… is the mainspring of our general welfare. A u2018Welfare
State' is thus a contradiction in terms."

property right:

responsible human being has both a natural right and a natural
duty to acquire and hold private property…. The natural right
of the individual person to acquire and hold property must be
respected and upheld by everybody…. Like all other personal
rights this one must be exercised consistently with the equal
rights of others."

should like to conclude our investigation of Catholicism and the
ethics of capitalism with a discussion of the important article
by a French pro-free market Catholic economist, which appeared,
translated in Modern Age. The reference is: Daniel Villey,
"Catholics and the Market Economy," Modern Age
(Summer and Fall, 1959).

begins his article by noting the paradox that Catholic voters
in Western Europe since the war, have been voting generally pro-capitalist,
whereas Catholic theologians and economists repudiate economic
"liberalism" (in the European sense). Catholic social
philosophers, he notes, have been embracing a variety of economic
systems from corporatism (derived from the papal encyclicals),
to solidarism, and trade unionism, and even Marxism. On the other
hand, there are very few Catholic liberal (pro-capitalist, pro-free
market) economists, and these, in contrast to the statists, never
bring Catholicism into their reasoning.

begins his discussion of this problem with three observations:
(1) "Catholicism is not an economic theory, it is a religion."
Catholicism deals with prayer, the sacraments, etc. "Its
object is the mystery of the relationships of man with God, not
his dealings with society". Moreover, it is a transcendental
religion, which has no specific social laws to impart. "The
object of the Christian message is the salvation of souls, not
the reorganization of society." Jesus came to earth not to
teach us how to amass wealth, but to save us from the world. "There
is not a single word in the New Testament which even inferentially
suggests that society should be organized one way rather tan another.
Social organizations, of whatever kind, appear in the Gospels
as neutral data which the Church must take into account in garnering
her harvest of souls…. Those seeking answers to problems in
the social order will not find them in Christian revelation….
Christianity provides no social recipe." This is the meaning
of the phrase: "render unto Caesar." Therefore, there
is no such thing as a "Christian economic theory." Christianity
and economics exist on completely different levels, therefore
"there is little likelihood that Christianity will be found
to be completely incompatible with any given economic system.

Secondly, the psychological and historical position of the Church
must be realized. The Church was deeply shaken by the Reformation,
and its Counter-Reformation was a great reaction against it, one
which, understandably, went too far. In particular, in closing
ranks against the Reformation, the Church tended also to oppose
those other modern institutions which grew up along with Protestantism
and atheism, e.g.: all the modern institutions going beyond the
stationary, feudal society of the Middle Ages.

a result, "The Church is uneasy in the modern world,"
and its attitude tends to be one of distrust and hostility. Such
was the Church's excessively vehement attack against the "Catholic
liberal" movement of the 19th Century. Deep in Catholic thought
is hostility to all the categories of the modern era: modern science,
modern philosophy, modern economy – e.g. capitalism. As Villey
harshly and. bluntly puts it: "there is an undercurrent of
the Catholic mind which breathes easier each time modern civilization
appears to be in imminent danger…." Insofar as the Church
is susceptible to modern ideas, "it inclines more to socialism
than to free enterprise, for socialism contains elements which
are reminiscent of a pre-capitalist order." (This is a profound
point.) In sum:

nonsensical as this may appear and in truth is, it explains much
of the attraction which communism exercises today for a very large
segment of French Catholic public opinion. But whether Catholic
thought inclines to the feudal past or to some hypothetical collectivist
future, it always appears eager to evade the present, i.e. the
civilization which the Renaissance has bequeathed to us."

then proceeds to the body of his article: there are four sources
of the unsympathetic attitudes that Catholics have taken toward
economic liberalism.

1: ignorance of the market economy and how it works. Quesnay
was the first economist with the great insight to see how the
seemingly chaotic market economy has within itself the laws of
a beautiful, coordinated harmony. The thinking of modern intellectuals,
in their ignorance of this, is really not "modern" but
pre-physiocratic. Not only do Catholics dislike the idea of a
science about human action, but none of the important economists
were Catholic, which makes it easy for Catholics to ignore the
subject. And Catholics have also tended to dismiss economic science
as simply derived from the fallacious philosophies of utilitarianism
and. hedonism.

then tilts a lance at the ignorance of a typical pastor letter
by Cardinal Saliege, Archbishop of Toulouse. Saliege wrote: "I
entreat the leaders of business not to increase the number of
the unemployed. It is not necessary for a business to make profits.
It is necessary that it exist and that provide people with
the wherewithal to live." As Villey points out, this shows
appalling ignorance of economics. What if by not firing people,
business jeopardizes its existence, and thereby adds even further
to unemployment? And what if it is the very essence of an entrepreneur's
job to make profits?

Villey: "Then one could not write u2018it is not necessary for
a business to make profits' no more than one could say u2018it is
not necessary for a professor to give courses'…. In the pursuit
of profit is seen only the guilty desire for gain. Profit is not
seen for what it really is in the competitive market economy:
the barometer of service rendered."

2: Integrism

tend to mistrust the market economy and economic liberalism, because
they associate liberalism with Protestantism, agnosticism, and
atheism, all of which are lumped together in the term "liberalism."
The confusion comes from the fact that it is historically true
that Locke, Hume, Smith, Mill, etc. were emphatically not Catholic.
They tended to be Protestant or agnostic, utilitarian and relativist.
But economic liberalism does not necessarily rest on these bases;
it rests far more on the economic science of the workings the
market economy. "Bricks may be used to build a church or
a brothel – they are neutral as regards the kind of structure
for which they are used." Just so can the same economic principles
be incorporated into many philosophic systems.

Church's hatred of liberalism in general, from which it proceeds
to attack economic liberalism, proceeded from its hatred of "theological
liberalism" (rationalism, naturalism, individual interpretation
of the Scriptures). (Thus, this led to such extreme statements
as this in the magazine Civilta Cattolica in 1865: "All
freedom, not only absolute and unlimited freedom, but all freedom
is of its very nature a… spiritual plague.")

3 : Moralism

moralist criticism of liberalism is twofold: (a) the market is
accused of subjecting all economic activity to the immoral stimulus
of the profit motive, and of creating an immoral society of inequality
and the rule of money; (b) the market economy is accused of being
amoral in principle, because the liberal philosophy excludes ultimate
truth and a universal system of values.

is the answer to these charges? In the first place, it is certainly
true that the purpose of economic activity is to increase wealth
or want-satisfying commodities, to strive for a "profit",
an excess of value received over value expended, i.e., a gain.
u2018This, no doubt, is a goal of an inferior kind, but it is not
on that account bad." In the Catholic tradition, the ego
is not necessarily to be detested. One must love himself in order
to love his neighbor as himself. "The desire to live well
in a material sense and to assure that one's family will have
a decent and even a comfortable standard of living, are obviously
not the ultimate aspiration of a Christian. But to want these
things is nonetheless normal and good."

are such motives as used in Russia as terror and the lure of medals
and promotion, are these more moral than cupidity? It is unfortunate,
that human life is constrained by economic necessities. But given
these necessities, "there can be no cause for regret in the
preponderant rule that the profit motive plays in our economic
lives, for the sample reason that the pursuit of gain is the essence
of economic life."

equality is not obviously a moral ideal, for it leads to stagnation
and mediocrity, (See above the detailed attacks on equality in
the encylicals and in other Catholic writings.)

for the catch phrase of Peguy's, the "rule of money,"
why is this abstract, perfectly liquid form of wealth (money)
somehow morally worse than other forms of wealth? Are we then
to condemn the entire monetary economy, and its great development
instead of barter? As for the "power" of money, this
power always existed, long before the market economy. Further,
on the market these "plutocratic powers" are in competition
with each other. "It is precisely this pluralism which increases
the chances for survival of freedom."

for the alleged amorality of the liberal economy, it is not true
that liberalism excludes ethics: "individuals who are tree
to choose what they shall consume and which occupations they shall
engage in are also free to make their economic decisions in accordance
with ethical principles." Villey here cites the classical
case of the GI's in the American Army in France in 1944, who complained
to the Army about the high price of French prostitutes. In an
official brochure (US Army, 112 Gripes about the French,
1944), the Army answered their complaint with this excellent analysis~
"the prices are the result of supply and demand. The prices
in question are in direct relationship to the virtue of French
women, and in inverse relationship to your own."

only does ethics enter into the data of the market; the market
itself requires the practice of certain ethical virtues: loyalty,
respect for contract, willingness to assume risks, initiative,
effort, foresight. Above all, "a market economy requires
free men, and free men are morally superior men."

concludes this section by saying that these Catholic "moralists"
worry too much about morals, that Christianity is a question of
seeking God, saving souls, etc., rather than a set of moralizing

4: ~ Prophetism

was the source of social Catholicism and corporatism. Since World
War II, a new trend has appeared strongly in European Catholicism,
which Villey calls "prophetism," which is close to Marxism
and Communism. Prophetists are: (a) concerned exclusively with
our own "revolutionary" age; (b) pro-proletariat and
Communist. The idea is to become one with the workers in. order
to win the poor back to the Church (the worker-priest movement,
etc.). A mystical benediction is placed on the "working class"
and its struggle against capital. (c) They glorify work and the
worker, and accept that the

Coming will be achieved through the triumph of the working class!!!
These prophetists reject the very concept of natural laws and
also therefore reject any idea of permanent economic law. To them,
history is everything, the flux of history (a la Marx). And while
economic liberalism rests its source on the integrity and indivisibility
of the individual person, the prophetists are only interested
in the collective, the social class, humanity at large, which
they somehow identify with the Mystical Body of Christ. To Villey,
this emphasis on the collective rather than the individual is
peculiarly anti-Catholic and anti-Christian. The Judeo-Christian
point of view places the great stress on the individual. It is
the individual who prays; "Is it not then but a step to making
the individual the subject of economic choice, of reserving to
him the role of autonomous economic agent?" Further, the
Kingdom of God will not be achieved on earth, through history,
but from the transcendent God.

set forth and criticized the various sources of Catholic hostility
to liberalism, Villey proceeds to inquire what are the possible
links between Catholicism and liberalism. He warns again that
he is not trying to make liberalism "the Catholic economic
doctrine" or of deriving the market from the Bible. But are
there any links, parallels, etc., between liberalism and Catholicism,
common grounds? In the 19th Century, authoritarianism seemed to
correspond to the ideas of transcendence and God, while freedom
coincided with agnosticism and relativism (which is why Pope Pius
IX condemned freedom and liberalism so bitterly in his Syllabus
of Errors.) Nowadays, liberalism is more linked to God and
transcendence, while scientism has been associated with agnosticism
(Nazis, Soviets.) In short, liberalism may stem either from skepticism
or from faith. The Christian view is that since God does transcend
the world, this means that the world exists apart from God, and
therefore nature is governed by its own autonomous natural laws.
Since only God is unitary and transcendent, the Christian must
consider nature as discontinuous and pluralistic, just
as liberalism considers it. Therefore:

Catholic mind is thus prepared to admit the heterogeneity of economic
interests, the multiplicity of centers of economic imitative and
the autonomy of economics in relation to politics. This Catholic
outlook harmonizes easily with the essentially pluralistic concept
of the world which is peculiar to liberals. "

goes on to take the odd position, that this heterogeneity and
competition of economic liberalism is good because it is like
a "game," and that games are suitable to Christians
because it teaches them not to take this world too seriously,
(!) and also that salvation is always a spiritual gamble.

then asserts that when Catholic philosophy was being hammered
out in the Middle Ages, the market economy did not exist, and
the economic thought of modern Catholic-corporativism, trade unionism,
solidarism, etc. – still bears a medieval flavor. Yet, there
is, particularly in the advanced modern economy, no "middle
way" anymore, between the market and the planned economy.
One or the other – the market or the government – must
decide on the allocation of productive resources. There is now
no room for the handicraft or guild way of life, with its direct
adjustment of supply to demand. We cannot – without crisis,
famine, and retrogression – turn the clock back to handicrafts;
we must choose, with no middle way, between the free market economy
and the planned economy. There can be part of the economy devoted
to the market and part to a plan; but there is no "third"
or "middle" system to choose from. And many Catholics
concede that total economic planning requires a totalitarian state,
and therefore must be rejected. Once they realize that there is
really no "middle" or third way out, they will have
to choose the market economy. The Encyclicals have been interpreted
(by Ropke, Baudin) as compatible with capitalism, and further
they certainly both condemned Socialism.

ends his article with a call to Catholics (if not the Church per
se) to join the defense of Western ideals: which include the
free market, along with human rights, dignity, and democracy.
He calls on them to rehabilitate private property, profit, the
market, and even speculation, to abandon nostalgia for the Middle
Ages. He ends by noting that he has called the stock exchange
"the temple of human rights" – a phrase which has
shocked Catholics and others, because they do not understand the
central importance of stock speculation in the market economy.

N. Rothbard (1926–1995), the founder of modern libertarianism
and the dean of the Austrian School of economics, was the author
of The
Ethics of Liberty
and For
a New Liberty
and many
other books and articles
. He was also academic vice president
of the Ludwig von Mises Institute and the Center for Libertarian
Studies, and the editor – with Lew Rockwell – of The
Rothbard-Rockwell Report

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