• Catholicism and Capitalism

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

    There
    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.

    There
    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. )

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

    "Just
    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).

    3

    Most
    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.

    The
    two famous "social" Encyclicals of modern times are
    Pope Leo XIII, Rerum
    Novarum
    (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.

    Leo
    XIII, Rerum Novarum

    R.N.
    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.

    After
    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."

    The
    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."

    If
    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
    property.

    As
    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."

    It
    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…."

    Also,
    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."

    Morally,
    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."

    State
    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."

    Workers
    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."

    Employers
    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.

    Pius
    XI: Quadragesimo Anno (1931)

    This
    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).

    Q.A.
    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.

    Pius
    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."

    In.
    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.

    Specifically,
    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."

    Pius
    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.

    "Recently
    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.

    In
    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.)

    As
    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
    imperialism.

    Communism
    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.

    Again,
    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.

    Pius
    XI, Atheistic Communism (1937)

    This
    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).

    After
    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."

    For
    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).

    Let
    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:

    "The
    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.)

    One
    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).

    On
    equality, Dean Manion writes:

    "Look
    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.

    "This
    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….

    "The
    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."

    On
    the American Revolution:

    "The
    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….

    "Not
    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."

    On
    Government and Morality:

    "When
    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.

    "Every
    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….

    Here
    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'….

    "The
    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….

    "Big
    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."

    On
    property right:

    "[E]ach
    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."

    I
    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).

    Villey
    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.

    Villey
    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.

    (2)
    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.

    As
    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:

    "As
    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."

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

    Source
    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.

    Villey
    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?

    Says
    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."

    Source
    2: Integrism

    Catholics
    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.

    The
    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.")

    Source
    3 : Moralism

    The
    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.

    What
    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."

    Furthermore,
    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."

    Economic
    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.)

    As
    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."

    As
    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."

    Not
    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."

    Villey
    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
    rules.

    Source
    4: ~ Prophetism

    Moralism
    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

    Second
    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.

    Having
    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:

    "The
    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. "

    Villey
    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.

    Villey
    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.

    Villey
    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.

    Murray
    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
    .

    Murray
    Rothbard Archives

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