In an earlier post, I already set out my own attitude of humility before the pope’s encyclical. I recognize the respect due both his office and his tremendous personal learning. There is no question that what the pope has said about the nature of truth is stupendously good.

In that post, I expressed a degree of unease with some of the economic thought, at least as I perceived it, in the encyclical. Looking it over again, here are the parts (more than any others) that cause me the most trouble:

In section 32:

The dignity of the individual and the demands of justice require, particularly today, that economic choices do not cause disparities in wealth to increase in an excessive and morally unacceptable manner and that we continue to prioritize the goal of access to steady employment for everyone (italics original to the document).

And then just a little further:

Lowering the level of protection accorded to the rights of workers, or abandoning mechanisms of wealth distribution in order to increase the country’s international competitiveness, hinder the achievement of lasting development.

Now, when I read those parts of the document, I recognize a type of thinking about the economy that I would typically associate with western Europe and pre-Thatcherite Britain. At least, it is possible to interpret the document in that fashion. When I think about prioritizing “the goal of access to steady employment for everyone” I contemplate the kind of worker security initiatives that slowly bankrupted General Motors or government programs that subsidize anti-productive schemes for workers as a class.

I may be guilty of reading too much into the words I’ve selected because I know the pope is a western European accustomed to exactly the brand of economics which gives rise to my concern.

The great question, of course, is what does the pope mean when he says we must provide access to steady employment? Does he mean that we should educate citizens and provide a culture that gives individuals initiative and the desire to be productive so they will be worth employing? Or does he mean that we should attempt great governmental schemes of guaranteed employment for working age people? Or does he mean both? Or something else entirely? I’m not sure we can know because the pope says the church does not offer technical solutions.

And when he writes about protecting the rights of workers and retaining mechanisms of wealth redistribution it is difficult to imagine he is referring to any action of the free market. But again, it is difficult to say because he is purposefully vague. What I keep thinking is that some of those mechanisms could be exactly the things preventing a nation from attaining greater prosperity. Indeed, that very question is part of why the work of the Acton Institute is important, to make sure that the faithful (particularly seminarians and clergymen) do not assume that collectivist approaches are necessarily better for people.


  • http://reckofthings.blogspot.com/ Jared

    And if you’re right in your interpretation then I daresay I disagree as well, especially if BXVI is talking about some apparent universal right about the guaranteeing of jobs for all (though it’s not the language he uses of course).

    At any rate, I remain optimistic that a sound understanding of subsidiarity is a must in understanding this document.

    When I was in college I worked for a small NH ice company in the summers. When it was hot out and tourism was high then the company did very well. But there were some summers when, for whatever reason, the weather was cooler and tourism not as high, and the company struggled. Instead of laying off workers right and left our boss and the company limped through the summer, keeping the guys on and making sure they had something to do. We didn’t get as much overtime, but it was still worth it. In turn, our boss also took a bit of a hit, but he kept all of us working, responsible, away from the need/temptation to apply for public assistance, and it maintained our dignity as earning/working persons. No government involvement, no encouraging of dependency.

    That’s the kind of “access to steady employment” springing up naturally out of an ethical culture (sadly lacking in so many other examples) that I can embrace. I hope that’s what BXVI had in mind.

  • Hunter Baker

    I’m with you on that, Jared.

  • Roger McKinney

    The more analyses of the encyclical I read the more I think that it is too vague to be of any practical use. It condemns extremes and that’s about it.

  • Roger McKinney

    PS, I think the encyclical needs quite a bit more truth, especially economic truth, to make the love part have any power.

  • http://www.opinionatedcatholic.blogspot.com jh

    After another reading of the document I guess I am not seeing where the angst is coming from

    I find that regardelss of party most people have a goal of steady employment for people

    How is that radical?

    It is vague because the Pope is trying not to implement a ton of specific soultions. As he said Various economic models have a lot to deal with the culture a paerticular people is in. I see no sign that the Pope is adovcating a exact copy of the worst excesses of the European State around the world. He talks about the problems that those systems have and they are ignored.

    The Pope has a radical idea that some “social security” systems are valid. Are people here adovcating getting rid of the safety net or social security, or Medicare totally?

  • http://www.opinionatedcatholic.blogspot.com jh

    “The more analyses of the encyclical I read the more I think that it is too vague to be of any practical use. It condemns extremes and that’s about it.”

    HUnter I think there is alot for pratical use. THe business models the Pope says we sahll explore have been adovcated by leading people of both parties.

    The fact is if the Pope got more specific that would totally overwhelm the meat of the document. We have already seen how the Pope’s comments on so called world political power” have been construed.

  • Roger McKinney

    jh:”most people have a goal of steady employment for people
    How is that radical?”

    I don’t think anyone claims the encyclical is radical. It’s just the opposite. I doesn’t advocate anything but greater morality without saying what that would mean, and it doesn’t oppose anything but the grossest of extremes.

    jh: “THe business models the Pope says we sahll explore have been adovcated by leading people of both parties.”

    What business models? I didn’t read the Pope advocating anything except love, truth and the common good. Who doesn’t think we need more love, truth and the common good? The problem in the world is determining what is truth, how to exhibit love, and how to achieve the common good. There is an ideology that doesn’t believe it has the answer to all of those. And the Pope’s response the we should all abandon ideology and join the church would be fine if he would put some meat on the bones of truth, love and common good.

  • Roger McKinney

    If you tell me that the encyclical is a call to greater truth, love and common good, then I would agree. But as far as pointing the way to achieve those, it falls far short.

  • Neal Lang

    “I don’t think anyone claims the encyclical is radical. It’s just the opposite. I doesn’t advocate anything but greater morality without saying what that would mean, and it doesn’t oppose anything but the grossest of extremes.”

    Only a fool would expect the Free Market to work absent morality. If you don’t understand the meaning of a greater morality, then you completely miss the principles esponsed by this Nation’s Founding Fathers all of which are based on the primary necessity for them to work being a “moral and virtuous people.”

    To them liberty was never license, and property rights never trumped the right of liberty, as liberty never trumped the right to life. If you have to ask “what is morality” it is doubtful that you can be trusted with either liberty or property, or to operate in a “free market.”.

  • Neal Lang

    “If you tell me that the encyclical is a call to greater truth, love and common good, then I would agree. But as far as pointing the way to achieve those, it falls far short.”

    The “way” is neither political nor econmonic. It transcends those arts – it is theological, a field that Pope Benedict excels in.

  • Neal Lang

    “PS, I think the encyclical needs quite a bit more truth, especially economic truth, to make the love part have any power.”

    And just what is the “economic truth,”?

  • Roger McKinney

    Neal:”Only a fool would expect the Free Market to work absent morality.”

    I guess Adam Smith was a fool, then, as were most liberal economists who followed him. In Smith’s application of his Theory of Moral Sentiments (Wealth of Nations) he saw the free market as enforcing morality in the economics sphere. That was also the position of the Late Scholastics.

    Neil: “you completely miss the principles esponsed by this Nation’s Founding Fathers all of which are based on the primary necessity for them to work being a “moral and virtuous people.”

    So are you saying that the three dozen economic crises we have experienced since the founding of the nation were caused by nothing more than periods of extreme immorality?

    Neil: “The “way” is neither political nor econmonic. It transcends those arts – it is theological, a field that Pope Benedict excels in.”

    So what is the “way”? Is it to have greater morals, love and concern for the common good? Because that’s all I got out of the encyclical. How do we go about achieving greater morals and in what area? How do we demonstrate love? What is the best way to achieve the common good? Capitalism and Communism claim to have the best answers to all three. But the Pope says they are extremes that should be avoided. So what do we do?

    Neil: “And just what is the “economic truth,”?

    I think I know what it is, but so do a lot of people who would disagree. Since the Pope is the expert in truth, I was hoping he would toss in his two bits, but he didn’t.

  • mrteachersir

    The Pope doesn’t need to elaborate on this, because much of what he discusses has been discussed in prior pontificates. John Paul II in Centesimus Annus, Paul VI in Quadregisimo Anno and Leo XIII in Rerum Novarum are all relevant to the discussion, in addition to Popularum Progressio. One cannot read Benedict isolated from Leo, John Paul, John XXIII, Paul VI, etc.

    Likewise, the pontiffs are wise enough to realize that as with many things humans do, there is not a one-size fits all solution to all of the problems humans face. We are free to try solutions, as long as we remember that true charity is derived from love of the Truth, and keep in mind the dignity of the human person. Those transcend economic dogma.

  • Roger McKinney

    mrteachersir, Don’t you think we have tried all of the possible combinations of free markets and central planning? To suggest that we haven’t learned anything about economics in the past 250 years since Adam Smith is a little discouraging. Truth is more important than the Pope is willing to admit. Just as there are truths in theology that we must all live by, there are truths in economics. The Pope should be taking the side of truth in economic matters, since his encyclical is about economics and truth, instead of trying to take the middle road as if all truth outside of theology is not really truth, but opinion.

    The Late Scholastics didn’t have any problems taking a stand on economic issues.

  • Terry McCarthy Jr.

    Pope John XXIII in the encyclical “Mater Et Magistra” in section 34 quoted and reemphasized Pope Pius XI clear statement “…. no Catholic could subscribe even to moderate Socialism.”

  • Becky Hahn

    I’ve often wondered over the years if it would be feasible to run a business where the main purpose is to provide good jobs to your employees. You would still need to be competitive, be entrepeneurial, etc. The only difference would be is the reason you are in business. The same would go for running a business where the main goal would be to generate income for charities, such as Paul Newman has done with his company “Newmans Own”. Or both.

    I think what would shed a lot of light on what the Pope means if you could think of instances where what he is talking about is actually happening. Then you could look at it to see the possible solutions he may be suggesting. For instance in section 28, “Moreover, there is reason to suspect that development aid is sometimes linked to specific health-care policies which de facto involve the imposition of strong birth control measures.” Now according to the documentary “Maafa 21″ put out by LifeDynamics it has been an American policy to withhold aid to underdeveloped countries unless those countries promote abortion. The rationale being that the less people there are in that country, the less people there will be using the countries resources, the more resources available to the United States. Now, this is clearly unethical and immoral. So what can be done about it? Does it need government sanctions, or does just need moral people running the goverment?

    So when the Pope writes “Lowering the level of protection accorded to the rights of workers”, then we should look to see where there are examples of this happening before we can figure out what he might be inferring as possible solutions.

  • Roger McKinney

    Becky: “I’ve often wondered over the years if it would be feasible to run a business where the main purpose is to provide good jobs to your employees.”

    Check out the SAS corp. Every few years 60 minutes re-runs a story on the company because it is so fascinating. One employee described working there as being like working at Disney Land. SAS is privately owned and has an annual revenue of more than $1 billion.

    The best companies know that the secret to success is happy employees. Unfortunately, few managers are smart enough to immitate them. That’s why the best companies have no real competition. Most managers think they can do better by brutalizing workers.

    The Pope doesn’t think Christians can be socialists, to which I agree completely, but neither does he think they can be capitalists. But the truth is that nothing has done more for the poor than capitalism, not even charity. No system has lifted more people out of humiliating, starvation poverty. The Pope doesn’t like the inequality that he thinks capitalism causes, but you will find no greater inequality anywhere in the world than in the poorest nations on the planet.

  • Roger McKinney

    What really chaps my hide about all Christians, not just the Catholic Church, is their emphasis on charity. Yes, the Bible commands it as an act of love. Yes, we all should practice it. But if Christians care about the poor as they claim, all Christians would the foremost champions of capitalism. Capitalism is the form of government that protects life, liberty and property through the rule of law with honest courts and police. Free markets are nothing but the instantiation of property rights.

    Capitalist thought began with the Late Scholastics, especially those of the School of Salamanca. But it became a reality only in the Dutch Republic. As a result, the Dutch were the first people in the history of mankind to escape the Malthusian cycles of famine and mass starvation. Capitalism spread throughout Europe, North America, Australia and eventually Japan and everywhere it lifted people from excruciating poverty to amazing wealth.

    In our own generation we have witnessed the Chinese miracle. In the 1970’s and 80’s, the US had to “loan” China billions of dollars to buy grain to fend off mass starvation. Then Deng allowed a tiny, tiny sliver of freedom in agricultural markets and the Chinese suddenly had abundant food. The rise of China has been miraculous for those who don’t understand the power of the free market. India is also experiencing similar reductions in poverty by freeing its markets.

    The West has sent billions of dollars in charity to the poor countries of the world since WWII and we have nothing to show for it. Charity has been an absolute failure any way you want to measure it, while the limited spread of capitalism has created miracles. So why aren’t Christians the main cheerleaders of capitalism? Are they completely brain dead! Or are they lying and don’t really care about the poor as they claim to?

  • Roger McKinney

    PS, I thought of an analogy. The Bible talks about praying over the sick and anointing them with oil. The Good Samaritan used wine and oil to treat the victim’s wounds. Do Christians promote wine, oil and prayer as the only medical tools that Christians should use? Of course not! Christianity views scientific truth as valuable and useful as Biblical truth.

    So why do Christians insist that charity is the only way to help the poor, especially when it has been such a dramatic failure? The science of economics has demonstrated that free markets with the rule of law and property rights can lift billions of people out of poverty. Charity has never done that in the history of mankind.

    Maybe the Pope should consider making Deng Xao Ping a Saint. Who has helped more people out of poverty than him?

  • Becky Hahn

    Mr. McKinney, A couple of things that may help you better understand the Catholic Church (Church). 1) “Charity” is synonomous with “Love”. In contrast, to the narrow way in which, I believe you are using ‘charity’as giving away material goods to those less fortunate then yourself. A couple of examples of acts of Christian charity would be: praying for the recovery of someone that is sick: a husband going out to work everyday to provide food, clothes, etc. for his family; and feeding someone that is hungry. The Church will always preach Charity (Love)because that is what Christianity is based on. 2) While the world measures a man according to his accumulation of wealth, the Christian measure of a person is thier conformity to Christ and his teachings. When we have the same love for God and our fellow man as Christ did then a Christian can say they have “made it”. 3) Unlike the world that thinks by giving away part of their wealth that they are being deprived of something we think that we gain by doing it. We become more like Christ because of it. The greater the love you have for another the more you will be willing to give up for them.

    “Hereby perceive we the love of God, because he laid down his life for us: and we ought to lay down our lives for the brethren. But whoso hath this world’s good, and seeth his brother have need, and shutteth up his bowels of compassion from him, how dwelleth the love of God in him?” 1John 3:16-17

    It seems to me that you think that because someone speaks of charity they are automatically speaking of communism or socialism. I would disagree with that. The United States is capitalist and it is also the most charitable nation in the world. The Pope is not against capitalism: “Charity in truth, in this case, requires that shape and structure be given to those types of economic initiative which, without rejecting profit, aim at a higher goal than the mere logic of the exchange of equivalents, of profit as an end in itself.” He’s saying, what we both spoke of before, that you can have other reasons, besides the accumulation of wealth as a reason for running a business. That wealth is not the end-all and be-all. Especially if that desire for wealth overrides our human decency resulting in the exploitation and/or withholding of those things that another needs to survive. Capitalism is not perfect. You and I can both run companies selling widgets. Now we can compete in a multitude of ways that are ethical, or we can compete in ways that are unethical. Capitalism doesn’t differentiate. Charity (Love), or lack of it, makes that choice for us. So you know why Danny Thomas founded St. Judes’ Children’s Hospital? Because as he was growing up in our capitalistic society he saw so many of his young friends die. He promised God that if he didn’t die that when he grew up he would build a hospital specifically to help children. Now capitalism/charity/God given talents gave him the means to attain this goal, but it was Charity that prompted it. Frankly, I don’t think you will ever hear the Pope promote Communism. It’s way too hard on the Church. The Pope is not calling for an economic system, he is calling for people to freely love and help one another.

    Now in regards to your use of charity “The West has sent billions of dollars in charity to the poor countries of the world since WWII and we have nothing to show for it.” First, The aim of true charity is not to benefit ourselves but to benefit others. Second, is the West any worse for what they have done? Has it been detrimental to us? If not, does not that prove that capitalism and charity are not opposed to one another? Thirdly, if I feed a starving man, so he will not be hungry, then I have not failed. I have accomplished what I set out to do. In addition, If by feeding the man I have kept him from despairing over whether he would eat again, or even live, then have I not done a great and wonderous thing? However, what I think you mean is that the man’s circumstances have not fundamentally changed. He is still without means of providing food for himself. This is true. There are many different reasons why he may be starving in the first place, economics, lack of education, geographics, or personal failings. All of these things would have to be addressed to be truly effectual in the long run. But that they should be addressed is also true.

  • Roger McKinney

    Becky, No, I don’t see charity as socialism. I consider charity to be a very important Christian discipline. I didn’t mean to downplay charity as it is very important for Christians. I was merely comparing the results of charity with those of capitalism.

    I don’t think Christians, Protestant and Catholic, have ever really grasped how capitalism works. For example, the Pope wrote that “Charity in truth, in this case, requires that shape and structure be given to those types of economic initiative which, without rejecting profit, aim at a higher goal than the mere logic of the exchange of equivalents, of profit as an end in itself.”

    However, businesses that don’t give primary emphasis to profits fail. And when businesses fail, workers lose income to support families and give to charity. There isn’t a town in the US that asks for more charity, but every single one is begging for more businesses.

    But when businesses focus on profits exclusively, within the law, the owner gets a profit, but the workers get wages and the consumer (who is also the owner and workers) get better products at lower prices. Some economists have even credited Wal-Mart for doing more to help the poor than all of the programs of the federal government.

    Becky: “Now we can compete in a multitude of ways that are ethical, or we can compete in ways that are unethical. Capitalism doesn’t differentiate.”

    Actually it does. Capitalism requires the rule of law. You are probably thinking of anarchy, not capitalism. And in a truely capitalist society, businesses that abuse their workers will lose to those that treat them well. That’s the main reason that working conditions improved in the West, not because of unions or government, as is popularly believed. The whole point of Adam Smith’s “Wealth of Nations” was to demonstrate that free markets implement a greater morality than does state coercion.

    Becky: “That wealth is not the end-all and be-all.”

    It is when you’re talking about helping the poor. Poverty is the lack of wealth, unless you want to talk about spiritual poverty. If all you care about is alleviating the spiritual poverty of people, then wealth is not important at all. But if you care about lifting people out of physical poverty, the way the Bible uses the term, then wealth is all that matters. Charity is good, but it is only a stop-gap measure.

    Sustainable help for poverty comes only through capitalism. While charity is good, it shouldn’t be the main emphasis of Christians if they really care about helping the poor.

  • mrteachersir

    Economics is the study of the meeting of people’s wants and needs…not the study in how to make money. Capitalism focuses on money…not meeting people’s needs.

    The pope’s encyclical, like Popularum Progressio, is a reflection of the failure of capitalism on the global scale. To be completely frank, capitalism is a failure. It is responsible for the grievous inequalities that exist between the West and the developing nations.

    Adam Smith’s treatise on economics centered around this simple situation: an individual party (person or business) will see a need or a want in their community and seek to fulfill that desire. This will continue in-so-far as the venture is profitable. Profit is not the central focus of the venture…meeting a need is (profit is a by-product of successfully meeting that need). When two or more parties are competing to meet that need, the people benefit. Smith is ultimately concerned with the welfare of the people, not the success of the businesses.

    What Europeans did to Africa and Asia is not what Adam Smith had in mind…what they did was capitalism: the use of capital to make a profit. Central to Smith was the meeting of a need and the well-being of the people, central to capitalism is the desire for profit. Capitalism puts money ahead of the human person…the free market puts the human person first. Capitalism encourages greed…the free market encourages needs to be met.

    What would have happened had the West utilized Smith’s ideas and sought to meet the needs of the African or Asian people in return for something they had? Both groups would have benefited, and rather than having glaring inequalities, everyone would be much better off. Instead, profit was the motive and millions of people were made to suffer. Now, it is only just that we help alleviate the suffering that we helped cause. It is time that people replace money as the motive for economic transactions. This is what the pope is saying. True charity is concerned with the development of the person, not the making of a buck. This is why Christians are called to charity (of the self-giving variety, not government forced variety). It shows that we value people more than money. People are created in God’s own image…money is not.

  • Roger McKinney

    mrteachersir: “Economics is the study of the meeting of people’s wants and needs…not the study in how to make money.”

    No, economics is the study of human action in the sphere of commerce. As such, it’s impossible to separate meeting people’s wants and needs from how to make money.

    mrteachersir: “Profit is not the central focus of the venture…meeting a need is (profit is a by-product of successfully meeting that need).”

    You can’t separate the two. As you noted, the venture will continue only as long at it makes a profit. If it doesn’t make a profit, it becomes charity and the entrepreneur had better be very rich to keep it going.

    mrteachersir: “Adam Smith’s treatise on economics centered around this simple situation: an individual party (person or business) will see a need or a want in their community and seek to fulfill that desire.”

    No, Adam Smith assumed that people would try fill a need because he assumed that people are rational. Trying to convince people they need something they don’t would be irrational. The main point of Wealth of Nations was that free markets will produce the most moral acting society possible, far better than state controls will achieve.

    mrteachersir: “Smith is ultimately concerned with the welfare of the people, not the success of the businesses.”

    How well is Lehman Brothers serving people now? Do you think GM and Chrysler are doing a good job? You can’t separate profits from service. You can’t have one without the other.

    mrteachersir: “What Europeans did to Africa and Asia is not what Adam Smith had in mind…what they did was capitalism”

    You’ve been stewing in Marxism too long. Europeans left Africa far better off than they found it. There’s nothing wrong with Africa except Africans.

    Please learn something about economics, but especially economic history. The poor people of Asia and Africa are today much better off than they were a century ago. In a nutshell, the living standards of people the world over did not change from Adam and Eve to the Dutch Republic of the 16th century. There was no inequality among nations, but enormous inequality within nations.

    Then the Dutch implemented the thinking of the Late Scholastics on economics and created capitalism. (Adam Smith used the Dutch as the best example of his principles.) They didn’t intend to or even understand the consequences. They simply wanted to obey God. As a result, the Dutch became the first nation in the history of mankind to escape the regular Malthusian cycles of famine and mass starvation.

    Dutch capitalism spread to England and its colonies, Northern European countries and eventually Japan. Capitalism made those nations wealthy because they created new wealth and made the entire world richer than it had been. They didn’t steal anything from poor countries as Marxists teach. Marxists cling to the old medieval idea that the wealth of the world is limited and one group can gain only at the expense of others. They refuse to advance their knowledge of science to the 18th century.

    Poor nations today are poor because they refuse to adopt capitalism. I apologize if I seem angry, but I am. Marxism and socialism have kept people near starvation for 150 years and I find it very difficult to tolerate. Look what it did to Russia, China and India. Had the US not fed the people of the USSR and China in the 1970’s and 80’s they would have starved to death! Only when Deng Xao Ping opened farming markets to a tiny sliver of freedom did the suffering of the Chinese begin to abate.

    As the Pope wrote, Christians cannot be Marxists or socialists. They are evil philosophies that have caused the greates suffering in the history of mankind. I will tolerate no thinking that issues from them. I only wish the Pope had given capitalism the credit it deserves for rescuing billions of people from starvation. The Church should saint Adam Smith.

  • Becky Hahn

    Mr. Mckinney, I think you misunderstand me. I never said that profit wasn’t a necessity to stay in business, I meant that it doesn’t have to be the prime motivation for going into a business, that “profit as an end in itself” is not the only reason for going into a business. Again I bring up “Newman’s Own”. The motivation for going into the business was to raise funds for charity. The means to raising the funds was by making a profit, but the profit was a means to an end, and not the “end in itself”. On the flip side, when profit is the only motivation for pursuing a goal, then everything else has the potential of becoming secondary to that goal. Case in point: adult stem cell research vs. embryonic stem cell research.

    Adult Stem Cell Research:
    Ethical
    Legal
    Successful
    Potential for profit – Yes
    Ethics secondary to profit – No

    Embryonic Stem Cell Research:
    Unethical
    Legal
    Unsuccessful
    Potential for profit – enormous (the first human being was patented recently)
    Ethics secondary to profit – Yes

    “Capitalism requires the rule of law”. I would like to point out that if capitalism requires an external control, then it is insufficient of itself to do as you say.

    “And in a truely capitalist society, businesses that abuse their workers will lose to those that treat them well. That’s the main reason that working conditions improved in the West, not because of unions or government, as is popularly believed.” Your assuming that the number of “good” jobs available are equal to the number of people looking for jobs. That is the only way that will work. How well a business treats it’s workers can either be based on Charity, supply and demand, or both. The greater the supply the less I have to treat them well. And you can go to any point in history and find that workers have not always been treated well. That is why laws arose in the first place. Many laws arise when people are treating others unjustly/unCharitably.

    “Now we can compete in a multitude of ways that are ethical, or we can compete in ways that are unethical. Capitalism doesn’t differentiate.” There is nothing to say that I have to behave morally to compete. The only time morality comes into competition is when morality benefits me or immorallity hurts me. For instance, lacing a baby formula I produce with Melamine. Killing my customer base hurts me, therefore it is not in MY, (being strictly profit oriented), best interest to do it. What competition does is guarantee that I deliver a competitve product, but it does not determine how I go about producing that product. In a strictly profit-based mentality, my profits are increased if I can cut my production costs, so it would behoove me to try to get them down as low as I can, any way I can without causing detriment to MY profits. Case in point: Upton Sinclairs “The Jungle”

    “Upton Sinclair originally intended to expose “the inferno of exploitation [of the typical American factory worker at the turn of the 20th Century],” but the reading public instead fixated on food safety as the novel’s most pressing issue. In fact, Sinclair bitterly admitted his celebrity rose, “not because the public cared anything about the workers, but simply because the public did not want to eat tubercular beef”. Sinclair’s account of workers’ falling into rendering tanks and being ground, along with animal parts, into “Durham’s Pure Leaf Lard”, gripped public attention. The morbidity of the working conditions, as well as the exploitation of children and women alike that Sinclair exposed showed the corruption taking place inside the meat packing factories. Foreign sales of American meat fell by one-half. In order to calm public outrage and demonstrate the cleanliness of their meat, the major meat packers lobbied the Federal government to pass legislation paying for additional inspection and certification of meat packaged in the United States. He [Upton] famously noted the limited effect of his book by stating, “I aimed at the public’s heart, and by accident I hit it in the stomach.”

    Please note: That up to the point where the working conditions, “which enabled the workers to fall into rendering tanks and being ground”, corrupted the meat packers product which in turn caused sales to be lost it furthered the companies profits to treat their workers in this way.

    “Becky, No, I don’t see charity as socialism. I consider charity to be a very important Christian discipline. I didn’t mean to downplay charity as it is very important for Christians. I was merely comparing the results of charity with those of capitalism” Again, you are only focusing on little “c” charity and not big “C” Charity. Little “c” charity is a subset of big “C” Charity. Morality/justice/ethics are all subsets of big “C” Charity.

    “Thou shalt love the Lord thy God with all thy heart, and with all thy soul, and with all thy mind. This is the first and great commandment. And the second is like unto it, Thou shalt love thy neighbour as thyself. On these two commandments hang all the law and the prophets.” Matthew 22:37-40

    The Pope is calling everyone to big “C” Charity which may need charity if the situation demands it. But all situations demand Charity.

  • Roger McKinney

    I agree that profit doesn’t have to be the only motive for going into business, and for most of the entrepreneurs I am familiar with it wasn’t. Take Bill Gates and Steve Jobs for examples. Both were far more interested in the value of their product to society than the money they would make. Nevertheless, what would be the differences between a business that was started solely for profit and one that wasn’t? Most people wouldn’t be able to tell the differences, for all companies need to do the same thing to succeed–hire good employees and treat them well, and please their consumers.

    Becky: “I would like to point out that if capitalism requires an external control, then it is insufficient of itself to do as you say.”

    Actually, capitalism is the rule of law. The rule of law didn’t exist in any country in the world before the Dutch Republic. Other countries had laws, but they pertained only to the common people. The nobility and king obeyed no laws. The rule of law was first instituted in the Dutch Republic and that rule made capitalism possible.

    Becky: “And you can go to any point in history and find that workers have not always been treated well. That is why laws arose in the first place. Many laws arise when people are treating others unjustly/unCharitably.”

    I don’t think that will hold up to historical scrutiny. A lot of Marxist nonsense about the treatment of workers has made it into popular history. Most histories compare the treatment of workers from the past with the treatment of today, or of some socialist ideal. The honest thing to do is to compare the treatment of workers with that of contemporary alternatives. For example, a lot of nonsense has been written about the treatment of workers in factories in England during the industrial revolution. But the comparisons were with an idyllic rural life that never existed, or with the lifestyles of the upper classes. And most of the laws about improving working conditions came about after those conditions had already been established as the norm in the workplace and politicians wanted to grab so credit for it.

    As for the number of “good” jobs versus the supply, there will always be a shortage of skilled workers in a free market. If unemployment exists, look to state intervention as the cause, not the market. Unskilled workers will always have to take entry level jobs and earn low wages until their skill and experience justify greater pay.

    Becky: “That up to the point where the working conditions, “which enabled the workers to fall into rendering tanks and being ground”, corrupted the meat packers product which in turn caused sales to be lost it furthered the companies profits to treat their workers in this way.”

    There has been a lot of criticism of Sinclair’s work, including some fabrication and downright dishonesty. Sinclair was a socialist promoting socialism and socialists have never cared much for the truth is a lie will serve their cause better.

    Nevertheless, the rule of law protects workers against murder, fraud and other crimes. Again, capitalism is not lawlessness; it is the protection of life, liberty and property under the rule of law. Socialists have divorced capitalism from the rule of law, not capitalists. In fact, you won’t be able to find any writer promoting laissez-faire capitalism in history that did not include the rule of law as part of the definition of capitalism or assumed it. Under capitalism, the law prevents employers from physically harming workers intentionally, or defrauding them in any way.

    Becky: “Little “c” charity is a subset of big “C” Charity. Morality/justice/ethics are all subsets of big “C” Charity.”

    In that case, then Charity is synonymous with Capitalism. Capitalism is the only societal organization that promotes justice and morality. That was Adam Smith’s main point.

  • DavidW

    HI Roger,
    “Actually, capitalism is the rule of law. The rule of law didn’t exist in any country in the world before the Dutch Republic. Other countries had laws, but they pertained only to the common people. The nobility and king obeyed no laws. The rule of law was first instituted in the Dutch Republic and that rule made capitalism possible.”
    … so you disagree with Rodney Stark “The Victory of Reason. How Christianity…”
    about the early Italian republics? (which actually ignited the Dutch ones …)
    Could you substantiate your point?

  • DavidW

    “I don’t think Christians, Protestant and Catholic, have ever really grasped how capitalism works.”

    I would go as far as: that kind of education belongs to ‘Christian Apologetics’ and needs to be integrated there.

    So many people out there have good intentions but little understanding of some basic concepts.
    So they end up hailing some kind of socialism because it sounds so good to their goodwilling hearts.
    But it comes along with a huge price-tag attached:
    Instead of Rule of Law, which has to be abandoned then, you’ll get the rule of laws: scores of them, highly arbitrary, usually and finally in favor of the “more equal” leading pack.
    All brands of socialism need a strong government, a strong state, otherwise it couldn’t pursue all those coercions which shall bring about paradise (therefore so corrupting for those in power).
    The whole system is a system of state-idolizing, a stupid attempt of human self-redemption. Christianity is deemed as a dangerous competitor and therefore persecuted in different degrees.
    The way to utopia leads usually right into dystopia. In plain English: heaven on earth is was they promise, hell is what you get.

    To
    mrteachersir: “What Europeans did to Africa and Asia is not what Adam Smith had in mind…what they did was capitalism”
    Roger:
    You’ve been stewing in Marxism too long. Europeans left Africa far better off than they found it.

    I want to add: Mrteachersir, You might like to compare the economic data for Africa from the 60ies with those from the 90ies. You will find: It weren’t the Europeans, but it was European thinking which did devastating harm to Africa:
    all those Socialist experiments they bought into and destroyed what they actually already had (from those Europeans).
    (But there is hope, see: http://www.timesonline.co.uk/tol/comment/columnists/matthew_parris/article5400568.ece Matthew Parris:
    “As an atheist, I truly believe Africa needs God”

    [Christianity will bring along 2 crucial 'things': Rule of Law, and a new mentality (work ethics,for instance)]

    further reading
    Who Prospers: How Cultural Values Shape Economic And Political Success by Lawrence Harrison.
    You might also be interested in the research of Lord Peter Bauer.
    Both deal with Third-World-Development.

  • DavidW

    @ mrteachersir and those interested

    another link on Peter Bauer, Third-World-poverty. reasons and ways out:
    http://www.peterleeson.com/Escaping_Poverty.pdf
    (32 pages)

  • Roger McKinney

    David, Interesting posts! You won my heart with your mention of Peter Bauer!

    About the early Italian Republics, especially Venice, I won’t argue too much. They came awfully close in my book and if you want to place the beginnings of capitalism in them I won’t squirm too much. (Maybe Venice could be the midwife?)

    A couple of things influenced my to place the birth in the Dutch Republic. 1) Jan de Vries book “The First Modern Nation” is a big one. 2) Some economic historians I have read, such as Angus Maddison, claim that the Dutch were the first to really protect property. 3) The Italian state relied heavily on the military to force trade through their cities. Monopolies were very important to their survival, whereas the Dutch had a real free market. 4) Mises made the point that capitalism is manufacturing for the masses (it benefits the masses) and that really took hold in the Dutch Republic. Italian manufacturing was done primarily for the wealthy, so the living standard of the masses improved little. 5) Douglass North emphasizes open vs. closed societies as a major distinction, which leds from person markets to impersonal markets. Personal markets are like those in North Africa and the Middle East where you bargain extensively for every purchase. Prices aren’t uniform and the buyer must know the seller personally to be confident that the seller isn’t cheating him. The Dutch developed impersonal markets almost to their current level.

  • DavidW

    Great answer Roger! Something I can work with.
    As for the Pope’s statement, I read some German press releases, and they lumped it together with some German bishops’ critical statements about ‘failing capitalism’ (Lehman, finacial crisis etceteaetceraetceta.)
    It shouldn’t be readable like a Delphi oracle: depending on what you want to get out of it. Well, of course there are some press people out there who would read a 1000000 as a string of zeros…but then you have to emphasize the ‘one’.

  • Neal Lang

    “I guess Adam Smith was a fool, then, as were most liberal economists who followed him. In Smith’s application of his Theory of Moral Sentiments (Wealth of Nations) he saw the free market as enforcing morality in the economics sphere. That was also the position of the Late Scholastics.”

    Pehaps Adam Smith was a fool if he expected a “free market” to properly function without a virtuous and moral people. I don’t believe he did. It would seem that only you would expect that an immoral and nonvirtuous people to behave virtuously and morally when participating in a “free market.”

    “So are you saying that the three dozen economic crises we have experienced since the founding of the nation were caused by nothing more than periods of extreme immorality?”

    No, but immorality certainly contributed to them. Only an idiot would not see that the economic history of the US is rife with shady dealings and speculations, many of which were promoted by government. Unfortunately, our economy is sometime driven by folks who expect to gain something for nothing. That type of motivation is counter to both good economics and good morality.

    “So what is the ‘way’? Is it to have greater morals, love and concern for the common good? Because that’s all I got out of the encyclical. How do we go about achieving greater morals and in what area? How do we demonstrate love? What is the best way to achieve the common good? Capitalism and Communism claim to have the best answers to all three. But the Pope says they are extremes that should be avoided. So what do we do?”

    The “way” is do unto others. So what is it that is wrong with “greater morals, love and concern for the common good?”

    “I think I know what it is, but so do a lot of people who would disagree. Since the Pope is the expert in truth, I was hoping he would toss in his two bits, but he didn’t.”

    Of course, the real truth is that a truly “free market” will not function properly unless the people involved in that market are both virtuous and moral. Only a fool would think otherwise. Lets face it, the “Rule of Law” does work any better for a “lawless’ people, than does a “free market” function in a “den of thieves”!

  • Neal Lang

    “Capitalism is the form of government that protects life, liberty and property through the rule of law with honest courts and police. Free markets are nothing but the instantiation of property rights.”

    First, capitalism is a form of economics and not a form of government. Capitalism is alive and well in Communist China, I suggest that you ask the working class there how will it “protects life, liberty and property” there. Again, capitalism and the free market is not possible without the requisite moral and virtuous people.

  • Neal Lang

    “The Late Scholastics didn’t have any problems taking a stand on economic issues.”

    No, but they based all their stands squarely on “Nature Law” – the “Self-evident truth!”

    The Scholastic tradition of Aquinas, Lessius, Suarez, Soto, Lugo, Molina, Valentia, (the Salamanca theology school and natural law theorists) were further elaborated in the 19th century by Taparelli, Talamo, Cathrein, Cepeda, Costa-Rossetti and others (Late Scholastics?). Of course, there are different traditions of natural law – classic-Scholastic and the modern tradition which produce relevant differences in the interpretation of this concept. The most relevant distinction is that between Classic Natural Law vs. Modern Natural Law, which also entails the Medieval vs. Modern perspective and assigned a prevalence to the ethical vs. the economic-utilitarian judgement. The former affirms the inseparability of ethics and economics, while the latter is in fact based on the separability of these matters.

    Pope Benedict’s take on economics is based solidly on the classic-Scholastic understanding on Natural Law which does not separate ethics from Life, Liberty, and Property Rights. It is the same understanding that underpins all Catholic social justice teaching and those “Self-evident truths” of our Founding Fathers.

  • Neal Lang

    “The best companies know that the secret to success is happy employees. Unfortunately, few managers are smart enough to immitate them. That’s why the best companies have no real competition. Most managers think they can do better by brutalizing workers.”

    Hmmm! Perhaps a little morality and virtue would also help! While an employer should not be coerced by government, or anyone else, into paying more for labor than its economic value, at the same time, an employee should expect to receive a fair compensation for their contribution to the business. Anything more or less would be both immoral and nonvirtuous.

  • Roger McKinney

    Neal: “Pehaps Adam Smith was a fool if he expected a “free market” to properly function without a virtuous and moral people. I don’t believe he did.”

    Then you don’t understand Adam Smith. To understand “Wealth of Nations” you have to read “Moral Sentiments” first. Smith’s whole life was devoted to figuring out how to achieve a moral and virtuous society. “Moral Sentiments” lays the groundwork. “Wealth of Nations” applies “Moral Sentiments” to economics. Smith demonstrated with logic and with history that free markets force immoral people to behave in a moral manner. Smith wasn’t much concerned about turning immoral people into moral ones. He appeared to leave that to God. He didn’t think that men can change human nature. He was far more humble than modern scholars. He was concerned with limiting the damage that immoral men can cause. He found that they do the most damage when the state controls the market and the least when a free market exists.

    Neal: “Only an idiot would not see that the economic history of the US is rife with shady dealings and speculations, many of which were promoted by government.”

    Economies have had booms and busts for centuries, but the moral character of the people has changed very little. To blaim booms and busts on morality is like blaming airplane crashes on gravity. Yes, gravity is the ultimate cause of all crashes, but it’s not the proximate cause.

    So with economics. Morality is a constant. Economic cycles are not. You can’t explain volatility with a constant if you want to be rational.

    Neal: “First, capitalism is a form of economics and not a form of government.”

    That’s what socialists want you to believe. Capitalism is the rule of law that protects life, liberty and property. That requires certain institutions to exist, such as honest courts and police and limited government. Capitalism is a form of government.

    The Chinese do not have anything close to capitalism. They are a socialist state that has allowed a small amount of freedom in certain markets.

    Neal: “Perhaps a little morality and virtue would also help!”

    Of course I would like for people to more virtuous. Don’t put words in my mouth. The world would be so much better if the people in it were better, but with Adam Smith I have to agree that changing human nature is God’s job, not mine and certainly not the state’s. The Church can do nothing but hold up the morality of the Bible as the guide.

    But the only way in which morality plays a role in economic cycles is with the immoral treatment of money by the state.

  • Neal Lang

    “Then you don’t understand Adam Smith. To understand ‘Wealth of Nations’ you have to read “Moral Sentiments” first. Smith’s whole life was devoted to figuring out how to achieve a moral and virtuous society. ‘Moral Sentiments’ lays the groundwork. ‘Wealth of Nations’ applies ‘Moral Sentiments’ to economics. Smith demonstrated with logic and with history that free markets force immoral people to behave in a moral manner. Smith wasn’t much concerned about turning immoral people into moral ones. He appeared to leave that to God. He didn’t think that men can change human nature. He was far more humble than modern scholars. He was concerned with limiting the damage that immoral men can cause. He found that they do the most damage when the state controls the market and the least when a free market exists.”

    So what’s your “beef” with Pope Benedict’s attempt to do the same thing you indicate that Adam Smith did: “figuring out how to achieve a moral and virtuous society?” Again, without a moral and virtuous people there can be no freedom – especially a “free” market.

  • Neal Lang

    “Economies have had booms and busts for centuries, but the moral character of the people has changed very little. To blaim booms and busts on morality is like blaming airplane crashes on gravity. Yes, gravity is the ultimate cause of all crashes, but it’s not the proximate cause.”

    Really? Than please explain so-called “free sex” and the abandonment of parental responsibility! Our Nation once was grounded in morality at its founding, but it has gradually lost this necessary individual trait. We will soon pay the “pay the piper” with our desent into economic and social chaos. We are traveling the same path as every other great society:

    1. from bondage to spiritual faith;
    2. from spiritual faith to great courage;
    3. from courage to liberty;
    4. from liberty to abundance;
    5. from abundance to complacency;
    6. from complacency to apathy;
    7. from apathy to dependence;
    8. from dependence back into bondage (Alexander Tyler, a Scottish history professor at the University of Edinburgh 1787)

    We are now in the apathy to dependence phase, with bondage just around the corner.

    “So with economics. Morality is a constant. Economic cycles are not. You can’t explain volatility with a constant if you want to be rational.”

    Unfortunately it would seem that “immorality” is the only constant, while “morality” ebbs and flows with the fashions of the day.

  • Neal Lang

    “That’s what socialists want you to believe. Capitalism is the rule of law that protects life, liberty and property. That requires certain institutions to exist, such as honest courts and police and limited government. Capitalism is a form of government.”

    Please provide an example of this “Utopian” capitalism of yours. Surely not in the US. After all, how can we be a capitalist society when government controls more 50% of the economy through grants, subsidies, doles, purchases, and regulations?

    “The Chinese do not have anything close to capitalism. They are a socialist state that has allowed a small amount of freedom in certain markets.”

    You mean unlike the Japanese? You must be joking!

  • Neal Lang

    “Of course I would like for people to more virtuous. Don’t put words in my mouth.”

    You were the one that said virtue wasn’t requisite to a free market and society, not I. Perhaps you can point that historic place where a free market existed without a virtuous people?

    “The world would be so much better if the people in it were better, but with Adam Smith I have to agree that changing human nature is God’s job, not mine and certainly not the state’s.”

    Exactly what do you think the “Rule of Law” attempts to do, if not trying to change “human nature.”

    “The Church can do nothing but hold up the morality of the Bible as the guide.”

    And just do propose to “hold up”? The Gospel of the Wealth of Nations, by the prophet Adam Smith?

    “But the only way in which morality plays a role in economic cycles is with the immoral treatment of money by the state.”

    And just who, pray tell, permits governmental currency manipulation if not immoral people? The state is nothing more than the arm of “the people.” The state has not rights, merely authority and power, but that authority and those powers granted it by “the People.” An immoral government is merely the reflection of an immoral people. Nothing more/nothing less.