The discussion under another entry, on Fr. Robert Sirico’s excellent letter to Fr. Jenkin’s of Notre Shame, was being led down a rabbit hole by ad hominem interpolations about Fr. Sirico’s own positions and his work with the Acton Institute.
There was some discussion of this last June, when the Acton University was underway.
In light of what is going on in the world’s economies, and in light of what will be increasing tension between secular governments and the Church, which has her body of teaching on social issues, it is a good idea to have a strong discussion about Acton and the Church’s social teachings.
I am pretty sure this will get heated, so, let me lay down some rules.
1) ad hominem attacks are not welcome
2) irrelevant topics are not welcome
3) knuckle-heads are not welcome
I am the sole interpreter of what is acceptable and, as a capricious benevolent dictator, I don’t care if you think I am fair or not.
Violate these rules or annoy me in the least and I will ban you from the blog.
This’ll be such fun, won’t it!
Here is a starting position to work with.
Under that other entry, commenter Sarsfield opines:
Sirico is a dissenter from the social magisterium of the Church in favor of the decidedly un-Catholic philosophy of economic liberalism. The very purpose of his organization is to "correct" the "mistakes" of all the Popes who have spoken on the social question since Leo XIII. His choice of the organization’s name is telling if anyone bothers to read a little history. It was Acton, after all, who not only opposed Vatican I’s proposed definition of papal infallibility but tried to use his considerable influence with the British government to induce the anti-Catholic European powers to intervene militarily to prevent the Council from meeting.
Some responses were given to this:
- You may or may not agree with Fr. Sirico’s affinity for economic liberalism, but it is a gross overstatement to accuse him of dissenting from the Magisterium of the Church.
- You are incorrect to categorize Fr. Sirico as a dissenter from the Magisterium for his economics. Though, without more information, I’m not sure if it’s because you are wrong about the Acton Institute, or if it’s because you misunderstand Leo XIII.
- I think a better description of Fr. Sirico’s politics/economic theories rather than “economic liberalism,’ which is the term you use, would be “economic libertarianism.” Or “free market capitalism.” Excuse me for coining the first phrase, but certainly, as I read through the Acton maxim’s on their web site, they have much more to do philosophically with the right wing, or modern conservativism’s “less is more” view of the government’s involvement with all things that affect capitalistic economies. So it just as well could read, “economic conservatism,” for those listening with ears primed with the current left vs. right paradigm labeling conventions. So, while you may mean to convey exactly the same idea, the labeling must certainly give the opposite appearance to eyes and ears more conventionally tuned.
Hopefully some articulate and well-informed people can have some back and forth.
If you don’t know what is going on in this discussion, it would be better for you to read and not to comment.
UPDATE: 12:07 GMT Wed 8 April 09
The blog of Action Institute has posted an entry linking to this discussion.
UPDATE: 21:40 GMT Wed 8 April 09
Fr. Sirico posted a comment in response.
Loading ...
If I may humbly suggest a preliminary principle:
St. Thomas famously wrote, “Si quid male dixi, totum relinquo correctioni Romanae Ecclesiae.”
If that sentiment is genuinely present, one cannot be guilty of formal heresy. Material error, yes, but not the pertinacity of formal heresy.
Perhaps it would be opportune for those who criticize Fr. Sirico to clarify whether they [a] are privately opposed to his opinions but recognize them as within the scope of legitimate Catholic diversity, [b] believe that Fr. Sirico contradicts the Magisterium’s social teaching but does so in ignorance, or [ c] believe that Fr. Sirico formally and obstinately rejects the Magisterium’s social teaching.
I hope that clarification of what is being claimed might in turn clarify what evidence is necessary and prevent this discussion degenerating into a flame war. [Anyone who starts or feeds a flame war will be locked out of this blog.]
I think a better description of Fr. Sirico’s economic theories, as they are presented here, would be what political scientists classify as “Classic Liberalism”
I find it helpful in discussions of these matters to recall a few points:
1) The pillars, the tenants, of CST (Catholic Social Teaching) are part of the infallible magisterium.
2) The application of those infallible tenants changes from time to time and place to place.
In other words, two discussions are often taking place on this topic, with individuals talking past each other.
Discussion 1) Is position X contrary to the tenants of CST?
Discussion 2) Is position X the best prudential application of CST to our time and place in history?
You may believe that Fr. Sirico’s position is not the best prudential application of CST to our time, and you may even be able to make a solid case to that effect. BUT, to claim that Fr. Sirico’s position is contrary to the tenants of CST, well, that is a VERY high threshold to meet. And, as the accuser, it rests on you to prove your case using the man’s own words, writings, or actions.
Finally, unless the person has directly contradicted a tenant of CST, I find it almost impossible to make the case that a position on the economic liberalism spectrum is outside the bounds of CST. The principle of subsidiarity in our economic activity is an important one, and groups of individuals should be free to engage in economic activity as they see fit provided it is not exploitative and does not result in them shirking from the duties they owe society.
On the other hand, positions that approach the statist/socialistic spectrum on a mass scale run into serious problems with subsidiarity. If individuals and communities wish to engage those sort of activities, they are free to do so on non-nation-state levels, especially in the form of co-ops, mutual insurance, and local levels of Distributism.
I know a few things about this topic. I work for a think tank that promotes free market principles. Until now, I never saw any conflict between Catholic beliefs and promotion of free market principles. I never bought the argument that the social teachings of the church should push us all to socialism although clearly they pushed a generation in that direction (Christian Socialism). I came of age in the 80s when Socialism had been shown to be (a) economically unsustainable and (b) it’s failure leads to greater and greater power over individuals for the state. The latter is dangerous for the Church as well as to the individual.
The until now part comes in because the Conservative coalition has broken down in the US as is natural after a tenure in power (it was clearly waning in the the last few years of the Bush Administration.) The fragmentation of this coalition has led other versions of free market adherents to push different philosophies like radical libertarianism which I find much to disagree from all sorts of angles, including my Catholic faith. This is a time when parties are redefining themselves. And I find many Christians who should be upholding their role in this discussion vacating the political scene out of fatigue, out of anger or out of despair. Groups like the Acton institute and people like Fr. Sirico are crucial in representing the point of view that free markets rest on an underlying moral framework and that there is such a thing as “society.” Hard core Libertarians aren’t interested in that conversation. It’s also a more tenable (and I think ultimately more politically successful) argument.
Hey David,
Nice post, a lot of good ideas in there. Wish I’d written one like it myself! ;-)
I think Margaret makes an important point. It is easy to slip into the mistake of seeing Fr. Sirico as being some sort of extreme, when in reality there are many positions that go far beyond his.
MargaretMN makes many fine points, but ultimately it boils down to what works vs what makes you feel good. Many Catholics drive their economic philosophy from the vantage point of either American or European citizenship, which affords luxuries unknown throughout much of the underdeveloped world.For all its warts, liberal capitalism was supported by JPII as the single system most likely to raise the poor from their poverty. Michael Novak has written on this subject:
http://www.aei.org/include/pub_print.asp?pubID=11109&url=http://www.aei.org/publications/filter.all,pubID.11109/pub_detail.asp
Consider the words of a self-described atheist:
http://www.timesonline.co.uk/tol/comment/columnists/matthew_parris/article5400568.ece
It’s all too easy to discuss the division of resources (the heart of “social justice”) when there are resources, it’s pure sophistry when you’re standing in most of Africa.
Tertullian,
I would argue that it’s not about what works, it’s about what is moral and what is not. Once that is established, from the moral options, we may make our choices.
And if we had just economic activity, Africa would be a better place.
A truly interesting topic. As with any issue, the proper approach to resolving the issues of social justice have their extremes, but there is a Christian framework that can be applied to the two general approaches that would make either system successful. In the absense of such a framework, recent history shows what can happen when free markets are left too free– due to man’s fallen nature, greed takes over and people are taken advantage of. Where there is a more socialistic approach to the markets, then the power can tend to get concentrated in the hands of a gov’t, and again due to man’s fallen nature, having a lot of power tends to corrupt. I’m not a fan of trying to limit an economic approach though based on pure preference for one approach over another (as it seems sometimes that ones identificion with a certain approach to social justice issues is closely tied to political preferences).
Rather than being an end in itself, “free markets” are simply a tool or means used for just price determination. If a free market (do to particular circumstances of time and place) is not capable of producing just prices or preserving the principle of equivalence then natural justice requires some level of prudential intervention by the legitimate authorities. In this sense, free markets ought to be “guided” by the higher laws of morality and social ethics.
What catches my eye is the term “social magesterium”. I think this term (even if unconsciously put) leans towards separating the magesterium into two separate entities.
We should not forget the “Why” when sorting out the “hows”.
Free markets only work well when governments enforce transparency, contain fraud, and eliminate monopolies, in other words, promoting honest exchange. If governments refrain from playing favorites, seizing or controlling assets or extorting producers the system can work pretty well by justly rewarding the hard worker and providing a meritorious road up from poverty that does not rely on accident of birth or political favor.
However given human nature, some in government and business will break every rule to some degree. Good laws certainly help but without good moral actors they are useless. God gave us the ten commandments , which were perfect. They are only insufficient because mankind is flawed by sin. I don’t expect any human system, no matter how clever, can do any better. Further I expect that even a flawed system with a many moral actors will outperform a system with a superior set of laws if this superior system does not have a sufficient number of moral participants.
I think we need to remember that the Catholic Church does not promote particular forms of government, it promotes justice. If history is any guide, however, free market systems tend to provide more freeddom, justice and equity for all. Government controlled markets generally squelch freedom, justice and equity.
In that world it becomes whatever the State says it is. Since the Catholic Church does not worship the State but God, I think the Church would be more
on the side of free markets than controlled markets. Tom
I would certainly like to agree with Tertullian that “what works” is basic to any answer. However, the problem with such a pragmatism is that one has to define what “works” means. For example, there is no question that a slave economy “works,” that is, that such economies have proven themselves stable over long periods of time and are able to produce vast amounts of wealth. So mere pragmatism cannot be the whole answer. Where should we look for a definition of “working”? I suggest two sources, an internal source and an external one. The former is the definition that the theory sets for itself, the latter is the requirements that come from higher sciences.
The internal standard for Economic Liberalism (that is, capitalism) is that it is able to provide a relatively stable economy without a lot of gov’t interference. So does it “work” under its own standard? The objective answer is no. The National Bureau of Economic Research, which is the organization charged with, among other things, dating recessions, finds that before the Second World War, and going back to 1853 (when their records begin), the economy was in recession or depression an astounding 40% of the time. Since the war, it has been in recession only 15% of the time, including the current troubles. Further, the post war recessions were only, on average, half as deep and half as long as the pre-war depressions.
The difference between the pre- and post war economies is the involvement of the gov’t. Before the war, the Federal Budget would be about 2-4% of GDP; since the war, it has been about 17-23% of GDP. And state and local budgets have also expanded so that gov’t accounts for at least one-third of the economy.
Why is this? Well, the Church has the answer, and it is not surprising that she has the answers. After all, economics is about a certain class of social relations aimed at the material provisioning of society. And like all social relations, it comes under the rule of justice. This is true not merely in the moral sense of the term, but in the practical and pragmatic sense. That is to say, that an economy that lacks justice will not be able to sustain itself in economic terms. In this case, without a just wage, that is, without the worker getting a proper proportion of what he produces, there will always be a failure of aggregate demand, and the gov’t must make up the demand by its own taxing and spending. The Just Wage is not just a moral concern, but an economic one, and without it not economy can right itself apart from gov’t intervention.
This is true of the entire history of Liberalism (capitalism, if you prefer); there is not a single successful example of it that did not lead to instability and thence to gov’t intervention. Capitalists have no history because they do not have a workable system; to the degree it “works” at all, it depends on “non-capitalistic” means. That is why regimes of both the left and right, whether in the Americas, or Europe, or Asia, or wherever, always end up with interventionist systems; the alternative simply doesn’t work and never has.
So long as the wage is unjust, the system will be unstable. Gov’t intervention can give it some stability, but I think that string has been played out. We are facing a grave crises, and as long as our thinking carries us away from the wisdom of the Church, we will not be able to solve these problems. We will not be able to make things “work.”
Good regulation needs to be “negatively proposed”, with penalties assigned for
breaking them. That allows markets to function properly, and is the nexus between
law and economic activity.
By “negatively”, I mean “thou shalt not…”.
This is a consequence of the fact, FACT, that no government (nor the Church’s
hierarchy) can possibly know what is necessary on the material level for humans
to survive. But often, it is possible to know, even with certainty, what humans
should NOT do.
That kind of regulation is not favored by politicians, businessmen, or scientists
today, but it is gnoseologically the only solid way to regulate what is a natural need
or necessity (the means of survival), for which nature does not supply a natural
solution. Most socialistic “solutions” (right or left) prefer to create lots
of programs, projects, initiatives, etc., all of which assume that those in
government actually know more than the rest of society what society needs. That
tends to suck the air out of all private initiative.
This idea of “negative proscription” is also very similar to how St. Thomas
Aquinas describes the proper relationship between “Divine Science” (primarily,
our Faith, but also what we call “theology” today) and all the human sciences.
I am acquainted with the Acton Institute, but not deeply so. From what I know
of them, I do not see any violation of the Church’s Magisterium. In fact, in a
proper legal context, citizens are and should be free to undertake whatever they
think is critical to their own, or other’s, survival. Unless I am mistaken, that
is pretty close to what was originally termed “liberal”, whatever the proper name
for it is today.
LCB: thanks very much for the compliment, for your post, and in particular for filling in distinction between the adherence due to the principles of CST and legitimate questions about their prudential application.
Gordon,
Whether one agrees with them or not, one genuine service the “economic libertarians” or “Austrian economists,” whom I presume the Acton Institute has much in common with, have provided in recent times is demonstrating that our markets are far from “free.” In short, persons and entities of great wealth have harnessed the power of the state and its lapdog known as the “mainstream media” to manipulate the markets to their own benefit. Our system as it currently operates is better described as economic fascism.
The continual bailing out of behemoth bankrupt corporations with money in effect stolen from us lowly taxpayers is just the most recent offense committed by those running this system. The imposition of arbitrary and burdensome regulations which squeeze out all but the largest and wealthiest corporations has been going on for some time. And I’ll not venture into the vast subject of the socially-degrading effects of central banking.
So while I’m not sure yet whether economic libertarians have the right solutions to bringing about a more just society that the Popes envisioned, I am convinced that they are the only ones currently making the right diagnoses. That, at the very least, is something I thank them for.
LCB, what you suggest may have an unintended slippery slope. Was it moral to award bonuses to certain AIG employees? Was it moral to physically confront those employees if you disagreed?
It’s about taking the best available economic system and seeing that it’s constructed with a moral superstructure. Checks and balances. Acton does it’s best to remind us,lest we forget what got us this far.
John Médaille, what works is what raises the poor from their poverty. Just as the Church has it’s foundational liturgy, the TLM, it has provided for the local vernacular. Economic systems should be no different. Except here we run headlong into what is perceived as “just”. We take great pains when discovering daily labor rates throughout the undeveloped world, assuming them to be the handiwork of rapacious capitalists, when it’s simply the product of a society on a different timeline than our own.
John Medaille,
Fine post, but could you clarify what you mean by “the wisdom of the Church” in this context? I’m not sure you spelled out what you mean.
Also, though it is true that “mere pragmatism cannot be the whole answer”, the other side of the coin is that a “moral kind of economic activity” (I never address “systems”) must be feasible, doable, achievable, practicable, or else it is not morally good. That’s the main point about having the freedom to initiate different ways of doing things.
Last post got nailed by a “spam filter”
Thankfully material success is not the be all and end all of things because this topic makes for some strange bedfellows
http://www.traditioninaction.org/bkreviews/A_019br_DistribManifesto.htm
Cuba is a prime example of a government controlled economy that has not raised the standard of living for the poor. One can bash capitalism all they
want, but capitalism, for its faults, has created more wealth, equity and fairness than its alternative. It has lifted far more people out of poverty.Socialism works until you run out of other people’s money. Tom
This is true of the entire history of Liberalism (capitalism, if you prefer); there is not a single successful example of it that did not lead to instability and thence to gov’t intervention. Capitalists have no history because they do not have a workable system; to the degree it “works” at all, it depends on “non-capitalistic” means. That is why regimes of both the left and right, whether in the Americas, or Europe, or Asia, or wherever, always end up with interventionist systems; the alternative simply doesn’t work and never has.
By the yardstick you use in your first sentence above, all economic systems are unsuccessful, since to varying degrees all involve some level of “government intervention.” Moreover, you seem to equate economic liberalism with either anarchy or extreme minimalism, and to presume that any involvement in the economy involves “‘non-capitalistic’ means”; yet most economic liberals, including Fr. Sirico, envision a role for the state to enforce the rule of law, arbitrate disputes, recognize property rights, etc.
On CSPAN, Simon Johnson, of MIT, was the first “expert” I’ve heard of to mention as one of the main problems with the U.S. financial system: over-concentration, that is too many institutions which are thought of, by each other too, as “too big to fail.”
I have long (since the 1970’s) been opposed to the seemingly ever-growing phenomenon of financial institutions merging with, or acquiring, each other. The main reason is that we continually lose what I might call the “diversification effect” since more assets are now controlled, priced and traded, with fewer and fewer insights (by virtue of the way such institutions are operated).
We all have heard (probably) about having a diversified portfolio of assets. Nobel prizes have been given to economists who first formalized the benefits of diversification, etc., etc. But for some reason, it has never occurred to people (until now?) that consolidations in the financial industry create risks that individuals would be unwilling to face in their personal affairs.
MPM, You are certainly correct that I did not spell out “the Wisdom of the Church” in a short post, but that wisdom can be found in her social encyclicals, beginning with Rerum Novarum. One theme unites all of them, and that is the insistence on a just wage. This is not only a moral requirement, but a sound economic one as well; without a just wage, there will always be a failure of aggregate demand, and gov’t action will be required to rebalance the economy. Those who want less gov’t should campaign for the just wage, for the only way to get rid of the former is to establish the later. It is useless to complain about gov’t involvement without looking at the alternative, which was a highly unstable economy. If one wants that, one should say so, or provide a working alternative.
Rich, I am not the one saying their should be no gov’t involvement, it is economic liberalism that sets this standard. But we have been there, and it didn’t work. The laissez-faire capitalists can provide us with no working model of their system. However, we can find working models of alternative systems in the Mondragon Cooperative Corporation, in the Distributive economy of Emilia Romagna, in ESOPs, and in many other places. In fact, these economies, inspired by a reading of the Social Teaching, are closer to the Libertarian ideal of minimal gov’t involvement than anything proposed by the libertarians themselves.
I am suspicious of abstract systems. When someone says “here is what we ought to do” I ask, “When and where did this work?” Neither the libertarians nor the Capitalists can present such an example. The Distributists can, and you can look at it and judge it for yourself.
As something of a student of Austrian economics (which I’m sure some here would classify as “radical libertarianism”) I see no conflict between Christianity (or the Catholic Church) and economic truth. Christianity is really simply the spiritual manifestation of TANSTAAFL, “there ain’t no such thing as a free lunch”, SOMEONE always pays. The question is who? In the material world goods have costs which must be borne and the question is what is the most just way to do this (distribute goods and services). In the spiritual realm we run up spiritual debts which we are unable to cover and Christ paid for them.
Economic truth exists, economics is not simply an art, an endless stream of schemes and “plans” created by men. The degree that we deviate from real economic truth and follow the plans of men is the degree we become enslaved and tyrannized by craftier men. The first step is to define theft. Once we define theft we understand that taxation is theft and a breaking of Gods law.
A great source for basic economics is Mises.org. A basic primer is “Economics in One Lesson” by Henry Hazlitt.
Also recommended:
http://www.mises.org/
http://www.lewrockwell.com/
John Medaille,
Please explain how “Distributionism” works.
Tom
John Medaille,
You are correct that the social encyclicals mention the importance of a just wage. What is a just wage? How do we arrive at it?
Tertullian,
Rereading my previous post, I feel that I did not speak clearly. I’d like to use this to clarify.
When I write that our economics must first be moral, and then practical, I mean on a systemic level. Our economic systems and overall structures must be moral. Economic systems based around, for example, slave labor and exploitation, must be automatically ruled out no matter how effective they may be.
Where do I stand on all this? I am very sympathetic to modified forms of distributism operating at local levels.
40% of our Jobs growth from 2001-2008 was in the housing sector, and a significant part of our GDP growth occured from financial products related to the housing sector. We current system appears to lack the components needed for long-term viability. Economics ought not to be an end unto itself.
“One theme unites all of them, and that is the insistence on a just wage. ”
This is shortsighted. Wages are not the issue. The issue is lack of economic opportunity, barriers to entry into economic activity (erected by governments and their cronies) other than working for someone else for wages and being at their mercy and under their control; the making of earning an independent livlihood illegal.
Kate,
I appreciate and echo your comment above and recommendation of Hazlitt’s work. One of his main points, which I think is crucial especially to the question of Catholic social teaching and the manner in which Church leaders weigh in on economic questions, is that you have to look at how a given economic policy affects not just a certain group over the short term, but rather how it affects all people over the long term. When this lesson is examined it is often discovered that policies championed by so many are often counterproductive (e.g. studies that show raising the minimum wage in certain places has lead to increased unemployment among low-income workers).
Furthermore, I agree that you’re correct in identifying the existence of “economic truth”. Though some schools of thought (e.g. German Historicists) deny this, I think it exists because the basic principles of economics are derived from axioms about human action. The Austrian school of economics does a very good job of laying out how one proceeds from the proposition that “humans act purposefully” to the law of diminishing marginal utility and ultimately the law of demand.
Vincent —
John has many an article on distributism over at http://distributism.blogspot.com. He might recommend a different article to start with, but his recent post, “Distributism and Industrial Policy” may be worth a look. The first part of the article is a critique of the current system; if you’re only interested in distributism itself, you can skip down to “The Distributist Alternative.”
http://distributism.blogspot.com/2009/03/chapter-xvi-distributism-and-industrial.html
Also, I’ve read about problems with minimum wage laws too, but on closer examination, these seem due to flaws within the laws themselves, e.g., having the same rules for 16-year-olds working part-time after school as for adult parents working full time. The necessity of a living wage is insisted on too relentlessly throughout the documents of CST for us to dismiss the whole concept based on past legal failures — at least in a thread devoted to discussion of CST.
Bill,
I’m not dismissing a living wage, I’m simply asking how we know what it is. Does the government establish it? Does the pope? Does the free consent of the two parties involved?
I submit the following in hopes of clarifying why a Catholic like myself may still have profound difficulty with Catholic Social Teaching, while fully and gladly assenting, for example, in the case of condom use, much in the news of late.
In the case of condom use, for example, it is crystal clear: Yes, the Magisterium plainly and fully understands that an innocent, living, breathing person may well die of AIDS, because a condom was not used in a particular case. And here is the nub of it: even knowing this tragic fact, and understanding it fully, knowing that suffering in a particular case will be permitted to go on, the Magisterium still proclaims that the Lord Himself has taught us that even suffering is not the last word, and sets its full moral and sacramental authority against condom use, and hands on the teaching that the use of a condom is wrong in itself, contrary to Our Lord’s will for marriage. And I gladly assent.
But the moral, and particularly, the sacramental, reasoning employed in the case of Catholic Social Teaching may not be exactly the same as has been handed on in the case of the right use of our sexuality. This, to me, is where much honest disagreement remains.
For example, in referring to the “minimum wage”, which is closely related to the “just wage” often referred to by the Sacred Pontiffs, financial analyst and Catholic John D. Mueller writes that “The minimum wage makes it illegal, in effect, to hire unskilled workers at what their skills are currently worth, and thus improve their skills and earn a higher wage. So they remain unemployed and unskilled. By removing the unskilled from the labor market, the minimum wage may raise the wages of skilled workers (which is probably why it is championed by labor unions) but reduces the income of all workers as a group.” [Mueller JD. How does fiscal policy affect the American worker? p. 589]
Yes, Mr. Mueller and these other experts could be mistaken. The point is, the actual effects of a “just wage” are a matter of fact, (eventually) discernible through observation and reason. At present, the least that can be said is that the question of the actual consequences of paying a “just wage” are still open to reasonable debate.
But then, at present, we must ask: is it moral to demand the setting of a ‘minimum wage’ without regard for the possibility that the income of all workers as a group will suffer? And what is the moral weight of such a demand if, through one’s own reason, one can conclude that “the minimum wage makes it illegal, in effect, to hire unskilled workers at what their skills are currently worth”?
Over and over the pontiffs have dismissed “purely economic” argument and said that, in effect, there is a moral obligation to pay workers more than their skills are currently worth, if that is necessary to pay a “just wage.” And they have repeatedly put the full moral and sacramental weight of their pontificates in support of this teaching. Many passages in social encyclicals certainly can be read as saying that a pontifically-defined “just wage” must be paid, even when it results in economic losses.
But the loyal Catholic must still ask, who actually is offending the Seventh Commandment and the cardinal virtue of justice when a “just wage” is paid? Isn’t it in fact the privileged group of workers who are paid this “just” wage at the expense of the wages and the jobs of others? For Mr. Mueller and many other highly competent people argue that these are the actual effects of a “just wage,” when put into practice.
There are only three alternatives. 1) The popes assert a pre-eminent ability to determine a matter of fact plainly outside of their sacramental competence (of course, they don’t). 2) The pontiffs have not fully considered the possibility that paying a “just wage” has the practical effect of taking wages from other workers and giving them to a privileged group of workers. 3) The pontiffs show reasonable men that they fully understand and consider this possibility, and yet instruct us that even though this evil may occur, we are still bound to pay a “just wage.”
(3) represents the level of moral and sacramental weight that attaches to the Magisterium’s teaching on condom use. For me the evidence strongly suggests that the Sacred Pontiffs have not yet done (3) regarding their social teachings. And there would seem to be a heavy moral burden attached to requiring actual poor people to become more poor, so that some other privileged group of workers can be paid more, and all in the interests of justice.
Unless and until, if and only if, the Sacred Pontiffs take full responsibility for the actual result that paying a “just wage” takes wages from other workers and gives them to a privileged group — and even the possibility of that happening — and then solemnly state that, nevertheless, it is the moral responsibility of all men to pay a “just wage,” then I will gladly assent.
But until then, it would appear that the Church’s Social Teaching simply does not have the same moral authority as that plainly enjoyed by her teachings on sexuality (and condom use, in our example).
It then becomes the responsibility of Catholics to take Catholic Social Teaching seriously, but also to use their own judgment to weigh each and every sentence of all of the social encyclicals against the facts, and against the weighty and reasonable opinions of others.
Just my two cents.
Several questions have been raised, all of them valid.
As to how Distributism works, I have one book (The Vocation of Business: Social Justice in the Marketplace) on that subject and a second about to be published, Equity and Equilibrium: The Political Economy of Distributism. Rather than try to explain it in a short post, I refer you to places where it is actually working. See http://distributism.blogspot.com/2008/12/for-profit-organization-that-embodies.html
Also, enter “mondragon” and “emilia-Romagna” in the search box and you will find any number of articles on working distributist systems.
As to what the just wage is, I quote my own book: “The just wage, then, is not so much a number as a criterion of judgment. We can say that the just wage is fulfilled under the following four conditions: One, that working families, as a rule, appear to live in the dignity appropriate for that society; two, that they can do so without putting wives and children to work ; three, that they have some security against periods of enforced unemployment, such as sickness, layoffs, and old age; and, four, that these conditions are accomplished without undue reliance on welfare payments and usury. While it may be difficult to give precision to any of these factors, it is certainly possible to make reasonable judgments and set reasonable standards.”
“But there is in fact a measure of the distance between the just wage and the prevailing wage, at least approximately and in the aggregate. This distance can be measured by the amount of transfer payments necessary to sustain demand. These transfer payments are of two types: welfare payments and consumer credit. Both of these constitute transfers of purchasing power between one group of citizens and another made in order to support demand; without these payments, there would be both a disastrous reduction in demand and a sudden implosion in the standards of society. To the extent that these things are necessary, they may serve as a proxy for the distance between social standards and actual pay. By the same token, to the extent that consumer credit exists merely to continue a cycle of pointless consumerism, it is destructive and needs to be excluded from any calculation of what a dignified life needs.”
LCB, I basically agree, but I would state it differently: an economy has to be moral in order to be practical. The great error of the Austrians and the neoclassicals is to separate the two realms, when in fact they are one (at least when dealing with the social sciences). What is immoral will turn out to be impractical. We have an immoral economy, and therefore it goes the way it has gone. Economics, pacé Mises, cannot be an axiomatic science (like geometry or math), but is a practical science.
Did I miss anything? Just let me know.
My two cents:
The Catechism of the Catholic Church clearly states that extreme free-market idealism (libertarianism) and socialism/communism share the same fundamental heresy: materialism. The libertarian and the socialist place a dollar value on work and humans. This is why both systems fail.
Kate mentions a key point, but I’d like to reverse it. Free-market economics is merely a physical manifestation of God’s Truth: our debts required the ultimate sacrifice of Christ. Thus, as the ultimate end to true Faith is Freedom, so too should the ultimate end for economic activity be true freedom. This cannot be accomplished via government fiat.
On a completely different note, I think encyclicals from Rerum Novarum to Centesimus Annus focus on one particularly poignant Truth: that God became man, and man is made in God’s own image. Thus, we are commanded to look after the dignity of our fellow man. Demeaning a man to a dollar value (or pound value across the pond) violates this. If economic activity does not reflect the dignity of the human person (as libertarianism and socialism do not) then that activity will ultimately fail. We have seen this truth in the 20th Century. This is why reference to a just wage is made (which by the way, is defined in the Catechism as a wage that is agreed on by both parties that reflects the resources available to pay the wage and the needs of the worker to live and support a family).
Fr. Heinrich Pesch, S.J., is an authority in Catholic social teaching and is a trained economist. His “Lehrbuch” is considered the most exhaustive and systematic treatment on the economic science ever written. In my opinion, Fr. Pesch has some very good insights to contribute here:
*****************************************
Markets & Pricing
In summary, we may say the following: the just price will be determined, as a rule, by general consensus wherever there is no legally established price. In order that a general consensus may establish itself in the most concrete and objective terms, it is advisable to set up organizations within which producers, merchants, and buyers can express their views. In normal situations, the general consensus will provide an acceptably accurate approximation to the just price, so long as there is a proper kind of give and take between producers on the one hand and consumers on the other, leading to an appropriate adaptation of supply to demand, which is in keeping with the need to provide for people’s wants. One may assume that if these prerequisites are fulfilled, that the market price generally fulfills the requirements of justice. However, where that prerequisite is lacking, where powerful forces and interests simply dominate the market in a one-sided manner, or where other unusual situations occur which stand in the way of normal price formation, that presumption ceases to apply. Taken by itself, therefore, the fact that a price is actually asked and paid on the market does not yet add up to justice in pricing.
During and after the War normal price determination in Germany was not operational. Misinformation on both sides made it impossible to achieve any decent balance in the competition between buyers and sellers. The competitive ability of sellers suffered from the acute scarcity of goods which increased day-by-day.
(Pesch, LDN, 5.1, 1, 5, 5)
John,
Thanks for your response and the link. I’ve studied distributism a fair amount and remain unconvinced, though I think it raises some important questions.
However, I’m not particularly satisfied by the definition of a just wage. I can accept that the notion of a just wage in papal encyclicals is more a criterion of judgment than a number (necessarily so). However, at some point the just wage does have to become, in fact, a number. And I’m just not clear about how your 4 criteria would help me discover what the just wage is for a person in a given situation.
Your first criterion, “that working families, as a rule, appear to live in the dignity appropriate for that society” strikes me as overly vague. They only have to appear to live in dignity? Who determines what is appropriate? Do you think if we asked 100 Americans what “living in dignity appropriate to American society” means for a person today everyone could agree on an answer? If there’s disagreement, who makes the final decision?
Of course there’s more to this discussion than the just wage, but you’ve indicated above you see it as a central factor. If it is so important, and you are critical of the structure of wages in capitalist systems, I think it is necessary to be able to arrive at a vision for how this would play out in a larger scheme (more than just one corporation).
I know John Mueller, and I quote him extensively in my books; I have a certain admiration for his analysis of “utility” as that term is (mis)used in economics. Nevertheless, John is wrong about the minimum wage; he is stating a theory in place of a fact, when in fact the theory should be tested by the facts. And the facts are otherwise. What data we have on MW indicate that, if anything, they tend to increase employment. This is taken by examining border communities, towns that are near state borders, where one state raises the minimum and the other does not. The evidence seems to indicate that employment rises, not falls, in the state raising the minimum.
It is certainly true that this cannot be arbitrary; you cannot raise it to any old number, say $25/hour. Then you would likely see the effect John talks about. But since that has never been done, we have little in the way of experience to test the theory. But just as certainly, if there is not a just wage, there will be a failure of aggregate demand that will have to be made up by charity, gov’t spending, or usury or by working longer hours. This is what has happened in the last 35 years. Since 1973, the median wage has been stagnant in real terms, yet productivity has exploded. This means that the workers are producing more, but can claim a smaller proportion of that production through their wages.
The “solution” has been manifold. One, more family members have been put to work to maintain the family income. Two, the gov’t has absorbed more of the output. Three, we have simply borrowed more to sustain levels of demand. But now all of these stopgaps are failing, and the economy along with them. Unless we can restore wages, we cannot restore the economy. The structure is unstable and will come tumbling down. Fixing the banks will fix nothing if there is not a group of solvent depositors and borrowers.
Vincent, you want me to say something I will not say because I cannot say it. You want me to say “It is $9.16/hour,” or “$10.25.” I can’t and won’t without knowing the specific place and time. Do you mean in New York or in Des Moines? That’s likely to be two different numbers. But I will give you one practical example, also from my book:
“RPM established a “target wage” for its lowest paid employees based on a rough idea of a reasonable standard of living. In 1996, this target wage was $10.91/hour, or $22,500/year. However, RPM could not simply raise minimum wages to this amount; to do so would simply put the entire company at risk, making everybody worse off. Instead,
Reell redesigned its manufacturing work to include more skill and decision making from employees, thus creating organizational conditions which require less supervision, allow faster set-up times, and reduce the need for quality inspection. Together, these improvements reduce overall costs, allowing Reell to pay its target wage.
By simply redesigning jobs, RPM was able to meet both its moral and its business obligations. That is, they were able to meet both the principle of need and the principle of equity. But in doing so, they also built a better business; that is, they met the principle of economic order. Here, I think, we have a general principle: while a “moral” requirement may seem “extrinsic” to business, that is, something outside its proper realm and concern, it is actually an intrinsic requirement of a sound economy, if the requirement is properly understood. This should not come as a surprise. All proper relations between humans are properly regulated by justice. Business is certainly a set of human relations and is therefore properly regulated by justice.”
JohnK,
I don’t have sources infront of me right now, but if I may:
It may be possible that the phrase “just wage” is misunderstood in our social context.
If we return to the social context of when the phrase emerged, and if we consider how the Church tends to use the word “just”, we are likely to find the following:
1) By the word “just” we reference “justice”, and by “justice” we mean “That by which every man receives his due.”
2) The phrase emerged in an era when exploitation of laborers was a common practice
3) Scripture discuses wages, reserving special condemnations for those who defraud workers what is due to them (which would be an injustice).
When the Church discusses a just wage, it doesn’t mean that everyone should get money even if they don’t deserve it, it means that workers get what they actually deserve. From what I recall, it is usually discussed in the context of having a just relationship between worker and employer, with the employer not defrauding or exploiting the worker.
As an addendum to the above, I did not begin to understand the depth and richness of the Church’s Social Teaching until I stopped placing it in its current liberal cultural understanding (where it is translated by the M.Div in our parish as “Always vote Democrat!”), and began understanding how and why it emerged. Once that was understand, only then could I understand the Holy See’s more recent critiques of society and economics (over the last 50 years).
It is not uncommon for those who view Social Justice as a substitute for orthodoxy to present their particular prudential judgment on certain matters as the Church’s teaching. You may find consulting my first post in this thread helpful, where I briefly discuss the differences between the actual pillars (which are a tenant of the faith), and the prudential determinations about how to apply those pillars.
Vincent,
If you recall that the Pontiffs speak of wages in a context of, “Wages are not an end unto themselves, but a mean to a particular end” it becomes much easier to understand the concept of a just wage prevailing in a market environment.
Rather than being an end in itself, “free markets”..
Is the “market” an idea or a place? Chronicles magazine has been asking, and answering, this question of late.
http://www.chroniclesmagazine.org/index.php/2009/03/25/defining-terms/
Wages tend to be higher when workers have other alternatives. Governments and their owners know this. This is why economic opportunity is managed and controlled through licensing, credentialling, inspection requirements (increasingly meaningless), bonding requirements and the like all presented as for our “protection” when the reality is they protect those who pay government FOR the laws. They are chains for the masses, not protections. Get rid of the laws preventing folks from earning a living without jumping through hoops and wasting half their lives in corporate training. Then wages will naturally rise because their will be fewer job hunters. The issue is NOT wages or jobs, that is simply slaves begging for more cotton to pick. The issue is economic opportunity.
As far as social justice, enslaving folks through taxation and racial/gender preferences to “level the field”, etc. is Machiavellian, the ends justifying means. It is immoral.
There is no way around it. Charity must be personal and voluntary, not forced by men who decide like gods who is worthy and who isn’t.
Spartacus, I think just price determination is the goal and free markets are ought to be viewed as a means (a tool). But, as Fr. Pesch points out in his “summa economica”…we should not be tempted to think that free markets always produce infallible results…
*******************************
Markets & Pricing
In summary, we may say the following: the just price will be determined, as a rule, by general consensus wherever there is no legally established price. In order that a general consensus may establish itself in the most concrete and objective terms, it is advisable to set up organizations within which producers, merchants, and buyers can express their views. In normal situations, the general consensus will provide an acceptably accurate approximation to the just price, so long as there is a proper kind of give and take between producers on the one hand and consumers on the other, leading to an appropriate adaptation of supply to demand, which is in keeping with the need to provide for people’s wants. One may assume that if these prerequisites are fulfilled, that the market price generally fulfills the requirements of justice. However, where that prerequisite is lacking, where powerful forces and interests simply dominate the market in a one-sided manner, or where other unusual situations occur which stand in the way of normal price formation, that presumption ceases to apply. Taken by itself, therefore, the fact that a price is actually asked and paid on the market does not yet add up to justice in pricing.
During and after the War normal price determination in Germany was not operational. Misinformation on both sides made it impossible to achieve any decent balance in the competition between buyers and sellers. The competitive ability of sellers suffered from the acute scarcity of goods which increased day-by-day.
(Pesch, LDN, 5.1, 1, 5, 5)
“Markets & Pricing
In summary, we may say the following: the just price will be determined, as a rule, by general consensus wherever there is no legally established price.”
Prices are either correct or wrong. Prices, goods, the means of production and distribution do not have a morality. The free market sets a correct price through supply and demand. Committees cannot arrive at correct pricing through consensus of what THEY think it should be. There are way too many variables to be considered, only the process of millions of people voting with their money can set the proper price of a good/service. The socialist and communist regimes of the 20th century found this out the hard way. Even the smartest planners with the best intentions are incapable of doing what people freely engaging in buying and selling can do.
” In order that a general consensus may establish itself in the most concrete and objective terms, it is advisable to set up organizations within which producers, merchants, and buyers can express their views. In normal situations, the general consensus will provide an acceptably accurate approximation to the just price, so long as there is a proper kind of give and take between producers on the one hand and consumers on the other, leading to an appropriate adaptation of supply to demand, which is in keeping with the need to provide for people’s wants.”
Wrong, wrong, wrong. They can have all the “views” they want. Reality is reality. Products have costs, people have finite resources, competitors invent products that help lower prices, disasters occur that cause prices to rise, etc. Committees and task forces of humans engineering consensus have nothing to do with economics, they are about control and force and they lead to shortages and starvation….but never of the planners.
” One may assume that if these prerequisites are fulfilled, that the market price generally fulfills the requirements of justice. However, where that prerequisite is lacking, where powerful forces and interests simply dominate the market in a one-sided manner, or where other unusual situations occur which stand in the way of normal price formation, that presumption ceases to apply. Taken by itself, therefore, the fact that a price is actually asked and paid on the market does not yet add up to justice in pricing.”
The “powerful forces” dominate because they use the laws and looting of government to keep control of their wealth and power. The US auto industry is a prime example. Take away the economic barriers to entry, the laws preventing folks from competing, and the powerful are quickly overtaken by new arrivals and entrepreneurs. True meritocracies rise and keep arising. Great wealth is produced.
“During and after the War normal price determination in Germany was not operational. Misinformation on both sides made it impossible to achieve any decent balance in the competition between buyers and sellers. The competitive ability of sellers suffered from the acute scarcity of goods which increased day-by-day.”
They had planners instead of allowing the free market mechanism (that God has provided in His wisdom) to operate. Also see General Smedley Butlers great essay “War is a Racket”.
To those who complain that there is no “working model” of free market capitalism and that it cannot exist:
We HAVE had models of socialism and communism and the massive carnage those economic systems produce. We have never before had opportunity like we do now to educate people in economic truth and reality and to recognize logical lies and fallacies. With the internet, education not just job training) is available to all.
John Médaille
I think you\’ve mistaken Emilia-Romagna for FantasyLand. They are, as a dear Italian friend says, the most ardent Communist-Capitalists on the Italian peninsula (and shockingly anti-clerical).They\’ve established their agri-coop to cater to the lowest common denominator (ie highest cost producer) and gotten state support for it. At least the Swiss are more honest, they pay through the nose for their milk products \’cause they like the look of a few cows in their fields. Was it a coincidence the largest fraud in post-war Italy (Parmalat) happened there? Evidence says otherwise.
The motorcycle industry has lost its base (scooters) to the Asians, and like Ferrari, rely on sales to US,Chinese and Russia buyers.
BTW, the head of FIAT/Ferrari, Luca de Montezemolo (another Communist-Capitalist) , has a cousin in the College of Cardinals.
Finally, the ceramic industry so accustomed to price fixing,has lost most of it\’s market share to the Turks, who are practicing rough-and-tumble liberal economics as they become ever more Islamist.
A more interesting study is Angola,where the Pope recently visited. Twenty five years ago they were a Soviet satellite (there were more Cuban soldiers in Luanda than Havana) and godless.Their currency was worthless and cans of Portugese beer traded as currency. Today,they are carving out the beginnings of a market economy and wildly Roman Catholic.
kate, when Pesch refers to the establishment of “organizations” to capture the “general consensus” of the players, he is referring to market mechanisms. But Pesch also warns that free market mechanisms presuppose conditions that allow for normal price formation.
Where that is not the case he warns that market mechanisms may not support just pricing in accordance with the principle of equivalence. In such cases the markets will not really be “free”.
Two thoughts:
1) A Just wage is defined by the Magesterium as that which allows a single worker to support a family (obviously, not a parish job). Since we have departed from the just wage, we now have two income families making the same amount as one income families of old. Also, part of the current income has to be applied to those that raise the children because the parents are no longer able. A salary was never envisioned as a good method of pay for the average worker. When corporations realized they could get more production for less with a salary, it spread.
2) Huge corporations seem to reduce the individual to a number, either as a producer or as a consumer. When an economic system begins to treat people as less than human it necessarily has become unjust. Just think of the waves of layoffs that are all too common among big businesses. It seems they have no regard for the working man and those who rely on his income. Their concern is the bottom line. Often, entire facilities are closed without so much as a week’s notice. The Church is saying that men are more than producers, more than consumers and for an economic system to be just, it must treat them as such.
Actually, Emila-Romagna does about 40% of its GDP from cooperatives, has a average wage twice that of the rest of Italy, and has a standard of living among the highest in Europe. If you tell me some communists don’t like it, I am more than willing to believe your.
By the way, on the subject of how the Mondragon Cooperatives are handling the current crises, see http://distributism.blogspot.com/2009/03/mondragon-and-current-crises.html
On a comparison of the Emilia production system with ours see http://distributism.blogspot.com/2009/03/chapter-xvi-distributism-and-industrial.html
Here’s something that I would love to throw open to discussion, as I think it has a direct relationship to some of the economic chaos that we are seeing (and will likely further experience):
Has anyone here ever seen anyone discuss the issue of sound money/fiat currencies from a Catholic perspective? Why NOT?!
Have you ever, ever heard a Catholic source talk about sound money?
What does/should the Church say about this?
While there are lots of problems in the world that contribute to our current state, isn’t it an enormous issue to consider that almost every currency in the world is a so-called fiat currency, and that nothing seems to be backed (at least in any sort of significant way) by gold and silver?
Thoughts anyone? Father Z? [I think that this entry has a topic, and it is not a good idea for anyone simply to “throw open” to discussion anything that doesn’t directly pertain.]
Since we have departed from the just wage, we now have two income families making the same amount as one income families of old.
I question this assertion. While it is true that very many families assert they they require two incomes to “get by”, the reality is that the standard of living people seem to expect is much, much higher than that which was expected in the past.
Where I live, the size of houses constructed in the 1945-1965 time frame averages around 1200 sq. ft. New construction is usually 3000+ sq. ft. In the past, one-car families were common. Now they are almost nonexistent.
It is possible to own a home and raise a large family on a single income of $30,000 per year in my area if you accept the average middle-class living conditions of the 1950s, but most people consider that “poverty” these days.
To proceed on this challenging and important matter we must have facts to ensure we make sound decisions. I’d like to put this information out there for consideration in relation to a “Just wage” in America.
For this I turn to the heritage foundation, which does a fine examination of census data to reach a more clear vision of what, precisely, is poverty in America. “How Poor Are America’s Poor? Examining the “Plague” of Poverty in America” can be found here:
http://www.heritage.org/Research/Welfare/bg2064.cfm
A few of the important pieces of information are as follows:
The following are facts about persons defined as “poor” by the Census Bureau, taken from various government reports:
* Forty-three percent of all poor households actually own their own homes. The average home owned by persons classified as poor by the Census Bureau is a three-bedroom house with one-and-a-half baths, a garage, and a porch or patio.
* Eighty percent of poor households have air conditioning. By contrast, in 1970, only 36 percent of the entire U.S. population enjoyed air conditioning.
* Only 6 percent of poor households are overcrowded. More than two-thirds have more than two rooms per person.
* The average poor American has more living space than the average individual living in Paris, London, Vienna, Athens, and other cities throughout Europe. (These comparisons are to the average citizens in foreign countries, not to those classified as poor.)
* Nearly three-quarters of poor households own a car; 31 percent own two or more cars.
* Ninety-seven percent of poor households have a color television; over half own two or more color televisions.
* Seventy-eight percent have a VCR or DVD player; 62 percent have cable or satellite TV reception.
* Eighty-nine percent own microwave ovens, more than half have a stereo, and more than a third have an automatic dishwasher.
As a group, America’s poor are far from being chronically undernourished. The average consumption of protein, vitamins, and minerals is virtually the same for poor and middle-class children and, in most cases, is well above recommended norms. Poor children actually consume more meat than do higher-income children and have average protein intakes 100 percent above recommended levels. Most poor children today are, in fact, supernourished and grow up to be, on average, one inch taller and 10 pounds heavier than the GIs who stormed the beaches of Normandy in World War II.
wsxyz, you raise a very valid point. Material expectations have increased dramatically since WW II and has probably contributed greatly to the meltdown we are now experiencing. Also the cost of the State has increased dramatically over the past 40 years, at both the Federal,State and local level. Feeding the governmental beast contributes greatly to the financial stress we are experiencing. Tom
wsxyz, I agree with your main point, but it doesn’t challenge my assertion, which is simply a statement of fact. Also, I think there may be a problem with the direction of causality here. It is true, and more than true, that a consumerist culture (and economic system) tends to foist on us things we do not need. What the system actually manufactures is landfill, objects that spend as little time as possible in the hands of consumers as useful products while on their journey to the dump as useless garbage. Thus, the current system requires a consumerist model; we must be constantly taught, through expensive, manipulative, and unrelenting propaganda (advertising) that our happiness lies not in persons, but in things, and not merely in things, but in constantly new things. The old is icky; worse, it is unfashionable. Only by constantly buying what we don’t need or already have can the system sustain itself; the size of the garbage dump becomes the true measure of our “wealth.”
However, even by 50’s standards, it would be hard to get by on one income. For one thing, housing prices in real terms have risen. So even the 1200 sf home would cost more in real dollars than it did back then. Further, you didn’t travel as far to work in the 50’s as you do today; industry and jobs are far more dispersed. I don’t say it is impossible to get by on a 50’s–or even a 70’s salary; I do say it would involve near heroic virtue.
And if we did live on 50’s incomes, the economy would collapse. There’s the rub. We produce a lot more than in the 70’s, but receive the same wage. If we did not have two income families, we would have overproduction, which is really another name for underpayment.
When you send two people into the exchange economy, you increase the level of expenses. Two cars are required, which means twice the transportation expenses. Two working wardrobes are required, plus much of the production that took place in the home now gets monetized. At the same time, the borrowing power of the two-family income increases, and their is a tendency to use that instead of wages. This is in fact what happened.
Have you shopped for a car or a house lately? Neither item is available for anywhere near what one was in the 50’s, no matter how thrifty one is. I agree that one can live on far less than most americans think they can, but health care costs, insurance costs, retirement savings, etc. all add up. Plus, food costs are dramtically higher than when many families farmed or had gardens. Now, the farming laws have all but eliminated the little guy.
Thomas Woods has written extensively on the subject of the Church’s social teachings and the free market. Check out his book ‘The Church and the Market: A Catholic Defense of the Free Economy.’
As many of you know, Tom is also author of ‘How the Catholic Church Built Western Civilization’ and host of the EWTN program of the same name.
http://www.thomasewoods.com/articles/
“when Pesch refers to the establishment of “organizations” to capture the “general consensus” of the players, he is referring to market mechanisms. But Pesch also warns that free market mechanisms presuppose conditions that allow for normal price formation.”
Market mechanisms have nothing to do with organizations “allowing” them or anyones “consensus”. Those are methods of regulating market mechanisms, human action. The free market is there, it simply needs left alone. The trading behaviors of people causes prices to be set, and constantly titrated to supply, demand, etc. The “conditions necessary” are the conditions of no conditions, liberty.
“Where that is not the case he warns that market mechanisms may not support just pricing in accordance with the principle of equivalence. In such cases the markets will not really be “free”.”
There is no “principle of equivalence”. That is utopian, socialist propaganda. Attempting to set prices to some kind of “equivalence” invites corruption and simply does not work. Organizations of humans are not smart or moral enough. Stealing from “the rich” by proxy (taxation)..and “rich” is a relative term…is still theft, even if done to try to accomplish “equivalence”. Free markets are simply that…the ability of all individuals to trade with each other without being hampered by regulations, taxation, worthless fiat currency that robs people of the value of their labor and savings.
The poor will always be with us. We are not all created with equivalent gifts or status. The best that can be done is to allow people to live as freely as possible in order to make use of their individual gifts. It is the Churchs job to teach people as Christ taught and to promote the voluntary helping of those less fortunate.
*****
“Has anyone here ever seen anyone discuss the issue of sound money/fiat currencies from a Catholic perspective? Why NOT?!
Have you ever, ever heard a Catholic source talk about sound money?”
Thomas Woods “The Market and the Church”
Lew Rockwell, try Mises.org (search “Catholic” on the site.
kate, apparently you see no need for organized market mechanisms. Do you advocate an unorganized free-for-all? Sounds very inefficient and chaotic to me. In any case, the principle of equivalence is tightly linked to justice. It has nothing to do with what you assume above. Rather it has to do with an exchange of two things of equal value — equality of values in exchange is the principle of equivalence.
kate: “The “conditions necessary” are the conditions of no conditions, liberty.”
Anarchy also has no conditions — and it leads to a false kind of “freedom”. Prudent rules of and organization are not the enemy of true freedom — they help to ensure it! The same is true of free markets.
Scenario: A man is dying of thirst in the middle of the desert. Another passes by on horseback and offers to sell a gallon of water in exchange for the other man’s estate. Both men freely agree to the exchange and the deal is sealed.
Question: Is this a just transaction reflecting a just price?
Please explain your answer.
I know what St. Thomas would say, or rather, did say. The seller of the water is selling its usefulness to the buyer. But the use exists in the buyer, not the seller. Therefore, the seller is selling what he does not own, and the transaction is invalid. Of course, the question of “freedom” in this case is ambiguous. One could say that the transaction is “free” because the buyer had the option of dying. But this would limit freedom to its formal definition and ignore its material definition. Christian philosophy has never considered freedom as a mere formality; it has an object. Freedom is the liberty to persue truth and goodness. Mere choice does not constitute freedom. So, for example, the choice to take one’s cocaine in crystal or powder form is a free choice, but not a choice of freedom, since either choice leads to slavery. The Christian consideration of freedom is therefore far more realistic than the mere formal definition. This is at the root of Woods’ misunderstanding of Christian freedom and free markets. He gets it wrong at the beginning, and has no place to run to after that.
Markets are made by rules, and without rules, no one will trade. If one means by “free market” a market free of rules, then it is a contradiction in terms. Markets are like a game, which are always competitive within the bounds of cooperation. For example, the offense and defense on the field in a football game compete, but also cooperate by agreeing to be bound by the decisions of the referees. Without the cooperation, there can be no competition, there can only be warfare.
So much good food for thought here. I haven’t read the relevant encyclicals recently but when I did I was struck by the fact that they even handed than I expected (from listening to their fans) in their treatment of the two threats (not one). On the one hand the market running roughshod over the individual, on the the other the state doing the same thing. The problem isn’t state or market, it’s the concentration of power in one of these entities.
Just Price: I did quite a bit of research on the concept of just price a long time ago. The idea has classical roots. Aristotle talks about it, I believe, in the Nichomachean Ethics. I can’t remember which Roman philosopher talks about it but the Romans had the concept. For these ancients, it was all about striking bargains where both sides agreed. This is pretty close to our idea of a market. From there it came to the European middle ages, where it became a practical measure. What was the just price? (Usually this referred to to necessities like bread) The highest price that could be charged to the common folk without them rioting. Riots were the one thing that authorities cared about, not about some abstract notion of justice. This pragmatic approach also meant that a just price was a movable concept, dependent upon the general economic and political landscape. Stepping in to decree it was also a short term solution–if the crown declared that bread be sold at a lower price, bakers would go broke and then there would be less bread. Scarcity would put even more pressure on the price. Price controls (which is what just price really is) were used as social controls, to keep order.
Same with “just wage.” And here the context today is tremendously different. People can move with much greater ease today than in the middle ages, where laws actually kept you from moving even to the next town. There are still cases where people are paid “sweatshop” labor rates but unless this is a completely illegal activity (e.g. the workers are basically slaves due to illegal status or fear of reprisals)they are free to move around to find jobs elsewhere if the work, pay or conditions are bad. Competition for labor is better understood today than it once was. The idea that you should pay someone based on their personal need rather than the value they bring to the productive process is a nice idea but it’s unsustainable and will result in the worker losing their job when the company goes broke. If government supports or subsidizes that industry, then you are subsidizing the inefficient and the impractical and denying workers their proper role in making society and the rest of us all better off.
We also understand that people really aren’t “valued” by the wages they command. When people worked 16 hour days, their whole life was work. Now, even the third world countries people no longer have that concept. South African miners will go for a few years to work like dogs to save enough money to then go do something else. Same with Mexican migrants to the US. Nobody thinks of themselves as a cradle to grave worker in a factory or any other enterprise. This is a huge improvement and another way that the world differs from the time when Rerum Novarum was written.
We no longer expect compassion from institutions, which is a good thing because they are ill designed to give it. We can, however, expect individuals to act ethically and not steal from workers, shareholders or mistreat anybody. Obviously there are lots of examples of that. A business that closes without a week’s notice is one that is poorly run. BTW, It’s also illegal to do that under current US law.
I too was fascinated awhile back by successful co-ops which seem to fit what the social encyclicals are talking about. There are serious limitations to them, however. One is that they don’t scale well. The most successful ones seem to be based on some kind of tribal or ethnic identity, which makes them self-limited. Co-ops are often victims of their own success. And the state can be a threat too, if the co-op is successful.
I don’t mean to oversell the benefits of development here but by the same token, we shouldn’t over romanticize the past. “Middle Class” people in the 50s lived worse than many “poor” people today in the US. We have better nutrition, better healthcare, safer buildings and more choices on how to live. We should wish that for everyone. Obviously without a moral framework many people make wrong or selfish choices but this is part of the human condition. It doesn’t have anything to do with abundance.
I have generally been a free-marketeer economist, working to minimize government intervention in markets. I am not a Chicago School grad, but my first boss was one and influenced me. Then I read Friedmans’s “Freedom and Capitalism.” (or is it vice versa?). I later became familiar with the Church’s Rerum Novarum and other social teachings. I am rather frustrated, as it appears some commenters here are, with the idea of a “just wage” and how it is to be implemented. There is nothing in the Church’s teaching that says the govt must regulate the wage. Now, we see that our govt may do just that. What a mess from a practical standpoint. I’ve worked on regulation of telecom prices for 15+ years. It is very difficult to regulate the price and profits of monopoly utilities by the 50 states. I can’t fathom how the federal or state govts could justly regulate wages. [And is it even constitutional from a standpoint of federal v state authority, etc.?] It would seem that some businesses would not be viable if they were required to pay a wage to feed a family, rather than paid a wage suitable for students. I think that to some extent distributism is not necessarily in contradiction to free-market economics–so long as we’re not confiscating private property to redistribute elsewhere (as Obie is doing).
Few economists, even at the Chicago School, would say the govt has nothing to do in the economy: property rights, certainty of contracts, and full/fair information to consumers, shareholders and employees are quite expected and necessary to market functioning. Anti-trust and utility regulation are important fields that anticipate a govt role and examine what is most effective. Few economists would deny any “market failures” which are somewhat similar to the concerns that the Church has. I don’t think there’s any need to fear a return to mercantilism.
The Church advocates neither unfettered markets nor socialism/communism. Yet, we have folks from the progressive wing of the Church clamoring for more wealth redistribution, regulation (not even knowing what kind is needed if any), and high taxes for higher earners. These folks also persist in claiming that abortion rates can be reduced by transfer payments to unwed mothers. Yet, the facts over the past 40 years is that unwed pregnancies and all abortions are up since that time. Such programs, while sounding good and seeming consistent with Catholic social justice ideas, are a flop and do nothing to encourage chastity and abstinence until marriage. How can the Church propose expanding such desctructive policies?
–I had better stop here. I have been thinking about this since I read your post earlier today. I am now at home and had many family duties in the interim.
Schoolman:
Your scenario is a natural monopoly, which are regulated entities in the USA. [Govt-owned in many other countries, which presumes the govt acts more ethically and fairly than the private sector. Ha! ha!] US monopolies’ (mostly power, telecom and water utilities) prices and profits are regulated b/c of the fact that consumers have no where else to go. The precise situation of the company extracting supra-normal profits on the basic service (Ramsey pricing) is that which regulators seek to prevent.
One point I wish to make is that economists do have answers for many/most of the concerns of the Church that do not require massive government regulation or apparatus to address–or those things are already being addressed.
And, I recently read an economist’s speech noting that government institutions, created in the wake of the Great Depression (SEC and Fannie Mae) and the Fed (which largely messed up in the GD) were at the heart of the current unpleasantness. I’ll have to find the link to post here.
Margaret, The Mondragon Cooperative Corporation is one of the biggest corporations in the world. If it were an American company, it would be, I believe, about the 150th in terms of sales. So much for not scaling well.
Peggy makes a critical point – the Church is not saying that government needs to impose a just wage through law, but that those who hire laborers owe them a just wage. I understand Margaret’s point about people being able to move from job to job these days, but that seems to overlook the unjust situation where executives are paid millions or even billions each year and the average employee is paid nowhere near that amount. Take pharmaceutical companies, for instance. It is common for the executives and those in the upper echelons of management to be paid obscene amounts of money while the majority of the employees make very little in comparison. Then, when the company has a quarter that is not as profitable, they lay off a few hundred people. Those that employ have an obligation to their employees; the bottom line is not all that counts. This is what the Church is saying. Our current economic structures reward companies that treat employee’s this way because the market cares only about the short term bottom line. No longer is the market concerned with long term performance because the investors no longer care what type of company they invest in, as long as it earn them a good return. The bottom line is all that matters. The Church is saying that business is done by people for people and that they must be treated like people.
Sorry, more thoughts. The Church enumerates a number of concerns, such as the option for the poor, the just wage and so on. The Church, however, doesn’t say precisely how those concerns are to be met. As other commenters have noted, (predominantly) market economies, coupled with political (religious) freedom have resulted in the highest portion of a population living comfortably, maybe not all at the same level (which the Church is not advocating), but at different levels and all viable. Further, in these predominantly market economies, even the poor do pretty darn well through the charity of the wealthy (and middle class), Churches and other NGOs, and direct government programs. [I question the need for further programs. As you can see, to keep taking and taking from those who work hard will cause some sort of rebellion, ie, protest by working less or by political unrest. The revenue streams will dry up if over-pressed.]
While JP2 and B16 have expressed concern for the wealth imbalances in the world, I think it is a mistake to point the finger at the developed world, except perhaps to critique the businesses and various NGOs that enable the dictators to exploit and keep down the people, keep them poor, uneducated and dependent. The lack of freedom in the undeveloped world is the biggest barrier to economic prosperity. [But B16 said, in Jesus of Nazareth, that economic prosperity was not the end-game, certainly not for the Church.]
John, Mondragon was what I was thinking of when I brought up the tribal element, not so much the scale. Scale is a problem with groups that don’t share the same culture or values. Even the Jews had this problem with kibbutz movement fading out after the early enthusiasm and changes in values among the younger generation. Mondragon does seem to have created a good structure where they’ve actually created a co-op of co-ops which means that it’s actually broken up into smaller units as the worker experiences it. But I still think that the strong Basque identity is what keeps this going. In order for that many people to empathize to that extent with their fellow worker to the point of self-sacrifice, (e.g. they don’t fire people, they’ll take a paycut first) they either have to share the same culture, religion or really be the new socialist men that Marx talked about. (I don’t think it’s the last). Any organization that demands that from people is going to be pretty unique and difficult to replicate in different circumstances. Which it is.
My coop research experience was small savings clubs (pre-cursors to micro-finance) in the Caribbean from the 19th century onward. As long as the participants knew each other everything was great. If it expanded even to the next town, people tried to take advantage of it or even stole from it and the organization was ruined. Church run clubs were also pretty successful because all the members were from the same group.
*Where is Sarsfield?*
I think the essence of the Church’s social teaching, is that property rights must be respected and that the best system is one that allows for the ownership of property to be spread among the greatest number of people.
I believe the Acton Institute advocates for a very limited role for government, while at the same time advocating a culture based on the “natural law” “do unto others” relationship between members of society.
The problem with Distributism, is who gets to do the distributin’? The problem with the Capitalist/Mercantalist system we live under, is that it has led to an oligarchy in which property is held in the hands of the few and individual property rights are not respected.
A sound economy must begin with Charity and be based on the 10 Commandments. That precludes the possibility of a Socialist/Distributist/Democratic one as they in many ways are at odds with the 7th and 10th Commandments.
Wealth redistribution schemes, including progressive taxation, lead to wealth being controlled in fewer and fewer hands. That’s their goal: see Marx.
The American form of capitalism, is really oligarchy. The government is the enforcement arm of big business.
My take: let the worker keep the fruits of his labor. Much Less government. Restore usury laws. End corporate personhood.
It would be interesting to see what businesses survive in an environment without subsidies, government loans, favorable legislation to remove competition, corporate personhood. How many would make it? One thing is certain: property would not be concentrated in so few hands.
I’d like to reiterate another posters recommendation for Hazlitt’s book. I also think a timely book is Garet Garrett’s “The People’s Pottage, available free on the mises.org website.
Thomas Woods’s books are excellent. He had a debate with Scott Richert and Chris Ferrera on the topic of the Church’s social teaching. I think the truth lies in the middle ground.
John M,
Sry for not responding to your question much earlier in the thread. We were in agreement, and I meant to say so but it slipped my mind. It’s been a while since I used my economics sword well, and I’ve been a bit hesitant to weigh in heavily for fear of cutting myself with it ;-)
Concerning regulation of markets,
If we acknowledge that there are eternal laws governing humanity, then we must also acknowledge that some of those laws will govern our economic activity. I’m not sure if anyone is calling for absolutely 0 regulation or laws related to economic activity, but there are positions that lean towards a “fewer is better approach.” It is important to recall that the role of civil and criminal law is justice and the common good– ensuring that every person receives their due (justice), and ensuring that the common good is served.
Concerning co-ops,
Firstly, there are a number of huge co-ops in the United States. Some quick google-fu turned this article up:
http://findarticles.com/p/articles/mi_m0KFU/is_1_74/ai_n18630540/
Secondly, I’m okay with co-ops having difficulty becoming more than regional/ethnic projects, provided they all have relatively equal access to essential markets (since markets reduce risk). Subsidiarity is good. It is good to benefit the common good. It is good for individuals to be engaged in collective economic activity, as it solidifies the bonds of their relationships and ensures both the preservation of rights and the proper attention to duties.
Thirdly, John M is exactly correct when he discusses the problems of consumerism and production we experience in this country. I would strongly encourage folks to re-read that post.
Fourthly, John M’s point about consumerism and production transitions us back into the Church’s role in all this. We are taught in modern day America to view economics as an academic practice that doesn’t involve real people. Economics is a human activity. Because it is a human activity, it involves both the Church and morality. And since humans were created by God, it also means that humans will find a way to do economic activity incorrectly (and yes, there is a correct way to engage in economic activity). For those that are struggling a bit understanding this whole matter, it may be helpful to consider the WRONG ways to engage in economics: materialism, consumerism, exploitation, fraud, radical individualism.
Only when we engage in economic activity in a communal fashion, with the proper means and with the proper end, and with justice towards others as an intent, will we A) Fully engage, to the best of our abilities, the Church’s social teaching on these matters and B) experience enduring economic success. This is the moral dimension of economic activity.
The recent Papal Encyclical “Deus Caritas Est” speaks powerfully to this when it discusses charity, and the individual and personal role of charity. When we de-humanize our economic activity, we will not have authentic charity in our society. The Sabbath was made for man.
I’m a late entrant here, somewhat distressed by contributors who have dismissed systemic effects or not read the relevant encyclicals, and still fairly ignorant of the actual position of Fr Sirico and Acton. What I think I ought to contribute, then, is Pius XI’s position on government responsibility, from “Casti Conubii”, the encyclical which called condoms “intrinsically evil” (without however defining what he meant by evil or referring to 1 Cor 10:23). I would say this is not so much about justice as making good the shortfalls of charity, which as someone else implied tends to occur with folk outside our own circle, i.e. systemically. The issue is that poverty as well as condoms demean humanity. Here goes:
“116. Now since it is no rare thing to find that the perfect observance of God’s commands and conjugal integrity encounter difficulties by reason of the fact that the man and wife are in straitened circumstances, their necessities must be relieved as far as possible.
117. And so, in the first place, every effort must be made to bring about that which Our predecessor Leo Xlll, of happy memory, has already insisted upon,[90] namely, that in the State such economic and social methods should be adopted as will enable every head of a family to earn as much as, according to his station in life, is necessary for himself, his wife, and for the rearing of his children, for “the laborer is worthy of his hire.”[91] To deny this, or to make light of what is equitable, is a grave injustice and is placed among the greatest sins by Holy Writ;[92] nor is it lawful to fix such a scanty wage as will be insufficient for the upkeep of the family in the circumstances in which it is placed.
118. Care, however, must be taken that the parties themselves, for a considerable time before entering upon married life, should strive to dispose of, or at least to diminish, the material obstacles in their way. The manner in which this may be done effectively and honestly must be pointed out by those who are experienced. Provision must be made also, in the case of those who are not self-supporting, for joint aid by private or public guilds.[93]
119. When these means which We have pointed out do not fulfill the needs, particularly of a larger or poorer family, Christian charity towards our neighbor absolutely demands that those things which are lacking to the needy should be provided; hence it is incumbent on the rich to help the poor, so that, having an abundance of this world’s goods, they may not expend them fruitlessly or completely squander them, but employ them for the support and well-being of those who lack the necessities of life. They who give of their substance to Christ in the person of His poor will receive from the Lord a most bountiful reward when He shall come to judge the world; they who act to the contrary will pay the penalty.[94] Not in vain does the Apostle warn us: “He that hath the substance of this world and shall see his brother in need, and shall shut up his bowels from him: how doth the charity of God abide in him?”[95]
120. If, however, for this purpose, private resources do not suffice, it is the duty of the public authority to supply for the insufficient forces of individual effort, particularly in a matter which is of such importance to the common weal, touching as it does the maintenance of the family and married people. If families, particularly those in which there are many children, have not suitable dwellings; if the husband cannot find employment and means of livelihood; if the necessities of life cannot be purchased except at exorbitant prices; if even the mother of the family to the great harm of the home, is compelled to go forth and seek a living by her own labor; if she, too, in the ordinary or even extraordinary labors of childbirth, is deprived of proper food, medicine, and the assistance of a skilled physician, it is patent to all to what an extent married people may lose heart, and how home life and the observance of God’s commands are rendered difficult for them; indeed it is obvious how great a peril can arise to the public security and to the welfare and very life of civil society itself when such men are reduced to that condition of desperation that, having nothing which they fear to lose, they are emboldened to hope for chance advantage from the upheaval of the state and of established order.
121. Wherefore, those who have the care of the State and of the public good cannot neglect the needs of married people and their families, without bringing great harm upon the State and on the common welfare. Hence, in making the laws and in disposing of public funds they must do their utmost to relieve the needs of the poor, considering such a task as one of the most important of their administrative duties.
Dave
Dave Taylor:
You have not demonstrated why Fr. Sirico and Acton are at variance with Church teaching.
If you read Pius XI’s encyclical as an endorsement of the welfare state, you are incorrect. Please clarify.
Heather says “The problem with Distributism, is who gets to do the distributin’?”
Agreed, given the way most people understand property and money. The short answer has to be, “Those who have acquired ownership of more than they need”.
So how are they to be persuaded? They were persuaded by Keynes to accept progressive taxation, but Heather claims “Wealth redistribution schemes, including progressive taxation, lead to wealth being controlled in fewer and fewer hands”. Nonsense! By 1960 Macmillan was rightly saying “We’ve never had it so good”. Decent wages and controlled interest rates were enabling far more people to buy their own homes. A generation later, however, and people had forgotten how bad things had been and how much better they had become.
What makes condoms “intrinsically evil” also makes money so: it is deceptive. These look like a good thing so tempts us (often unwittingly) into idolatry of sex or wealth. Money isn’t actually worth anything; it only REPRESENTS worth, it is merely symbolic. The answer is honest money. Banks create it out of nothing by issuing loans, so the honest interpretation of the symbol is as a measure of our indebtedness – not to the bank which created it out of nothing but to the society which will meet our needs in proportion to it. No interest is justified. The way we really repay loans is by our together working sufficiently to replace or maintain what we have received.
Accept, then, that money and so property bought with it have NEGATIVE worth, and we have a situation where those who have more than they need will be expected to actually earn it. Under such conditions they are likely to give back willingly what they don’t actually need, leaving it available for others.
The point is, Heather, that a naturally well-Distributed society, not a society where ill-gotten wealth is protected by law, is where we want to end up. It is up to us to find ways of achieving that, and having found it, this “Copernican revolution” in the understanding of money seems to me the obvious one. (Copernicus argued that, contrary to appearances, the earth orbited the sun. He didn’t have to do anything else. That explained so much and made navigational astronomy so much simpler that in practice everyone soon took it for granted).
Heather says “If you read Pius XI’s encyclical as an endorsement of the welfare state, you are incorrect. Please clarify.”
I don’t need to clarify what you have said, you make your opinion perfectly clear, Heather.
I suggest you look at what Pius actually says, which is that Governments have a default responsibility. Unlike you, he doesn’t venture to tell governments how to exercise that responsibility. What he does suggest elsewhere is subsidiarity, which is not minimal but LOCAL government, with larger government entities doing what only they can do.
Tertullian wrote: I think you’ve mistaken Emilia-Romagna for FantasyLand. They are, as a dear Italian friend says, the most ardent Communist-Capitalists on the Italian peninsula (and shockingly anti-clerical).They’ve established their agri-coop to cater to the lowest common denominator (ie highest cost producer) and gotten state support for it. At least the Swiss are more honest, they pay through the nose for their milk products ‘cause they like the look of a few cows in their fields. Was it a coincidence the largest fraud in post-war Italy (Parmalat) happened there? Evidence says otherwise.
Bull’s eye Tertullian. This Italian (whose wife is btw from Emilia-R.) can confirm the above and the rest of what you said. The allegedly heavenly conditions of that region were only possible thanks to a strangling fiscal pressure on the rest of the nation and to the almost military control co-ops and the party have had on every single municipality and province of the region for 60 years. You’ll have a hard time selling a screwdriver or a tomato if you don’t belong to a co-op and you don’t carry the former Communist Party’s card in your wallet. That, and a drastic reduction of fertility by way of savage pro-abortion/contraception campaigns. Statist welfare being based on redistribution of wealth produced by productive segments of the population (e.g: young people), the disappearing of children is bringing what Centesimus Annus calls (in a negative way) the Social Assistance State to a collapse. When the social pyramid is made of 4 young people for every elderly person, redistribution seems easy and rational (but it isn’t even in such conditions). When poverty, inefficiency of state-controlled economy and services, abortion and corruption of mores bring the family to a collapse and we have 4 elderly people for every young working citizen, things get a little messy and escalating taxation becomes the default measure that triggers the more taxation to fight poverty-more poverty because of taxation spiral. Add to that the reduction of individual initiative and on family-based enterprise – once a pillar of Italy’s economy – inevitably brought about by the suffocating presence of the Nanny State.
Speaking of Centesimus Annus, and back to the topic of this discussion, I would like to insist on the description of the evils of the Social Assistance State given by John Paul II at the n. 48 and of the definition of “capitalism” (a stupid and deceiving Marxist word) given at the n. 42:
Malfunctions and defects in the Social Assistance State are the result of an inadequate understanding of the tasks proper to the State. Here again the principle of subsidiarity must be respected: a community of a higher order should not interfere in the internal life of a community of a lower order, depriving the latter of its functions, but rather should support it in case of need and help to coordinate its activity with the activities of the rest of society, always with a view to the common good.100 By intervening directly and depriving society of its responsibility, the Social Assistance State leads to a loss of human energies and an inordinate increase of public agencies, which are dominated more by bureaucratic ways of thinking than by concern for serving their clients, and which are accompanied by an enormous increase in spending. In fact, it would appear that needs are best understood and satisfied by people who are closest to them and who act as neighbours to those in need. It should be added that certain kinds of demands often call for a response which is not simply material but which is capable of perceiving the deeper human need. One thinks of the condition of refugees, immigrants, the elderly, the sick, and all those in circumstances which call for assistance, such as drug abusers: all these people can be helped effectively only by those who offer them genuine fraternal support, in addition to the necessary care.
(…)Is this the model which ought to be proposed to the countries of the Third World which are searching for the path to true economic and civil progress? If by “capitalism” is meant an economic system which recognizes the fundamental and positive role of business, the market, private property and the resulting responsibility for the means of production, as well as free human creativity in the economic sector, then the answer is certainly in the affirmative, even though it would perhaps be more appropriate to speak of a “business economy”, “market economy” or simply “free economy”. But if by “capitalism” is meant a system in which freedom in the economic sector is not circumscribed within a strong juridical framework which places it at the service of human freedom in its totality, and which sees it as a particular aspect of that freedom, the core of which is ethical and religious, then the reply is certainly negative.
I fail to see how anything proposed by the Acton Insitute is at variance with the above or even with any binding teaching of the Church since the times when the Ages of Faith begun to shape the foundations of that free enterprise that originated in our theological thinking to lay the foundation of our material wealth as well.
Also, to imply that those who oppose government intrusiveness are ipso facto extremist libertarians or even social darwinists who give institutions no role in the protection of the wellbeing of citizens suggests – at least – a lack of proper information on the basic tenets of free economy.
For a truly “free economy” as described by sound moral theology and sound economics to exist it is imperative – in primis et ante omnia – that a society lays its foundations on authentic freedom, to the extent possible to men after original sin. That means a constitutional/legal system that ensures the observance of the demands of natural law and thus the rule of law. Without which a virtuous society, simply, cannot exist and there cannot be true freedom, and much less free economy. As precisely the case of Italy and other quasi-socialist EU countries demonstrates, no economy can thrive when neither government nor private citizens are likely to abide by the law and comply with contracts.
When the economic initiative is taken at the wrong level of society, abuses inevitably ensue. When government itself is the source of such abuses or fails to repress them, no sound economy is possible and no freedom is guaranteed.
If we judge systems by the ownership of the means of production, then both statist totalitarianism and the so-called “unfettered” capitalism work the same way, in that monopolies often thrive only because big government protects them, while only a truly free market guarantees – as possible after Adam – competiton, good prices and good quality at the same time. Not perchance John Paul II defined socialism also as “state capitalism”.
Free economy and a virtuous society are something else entirely. Something Christian Europe first thought about (and forgot of late…)
For a primer on economic theory I strongly recommend Samuel Gregg’s Economic Thinking for the Theologically Minded, a book that should be mandatory in all seminaries and Catholic colleges. The strenght of the book, beside its readability for the non-nobel prize, is IMHO the way it shows the contacts between natural law and the laws of economy, and how a truly free econommy corresponds to a sound anthropology. It would be a great starting point to drop baseless assumptions about both free market and morals.
I would like to add the following to the quotes in my previous post:
There is no ordering of the State so just that it can eliminate the need for a service of love. Whoever wants to eliminate love is preparing to eliminate man as such. There will always be suffering which cries out for consolation and help. There will always be loneliness. There will always be situations of material need where help in the form of concrete love of neighbour is indispensable.[20] The State which would provide everything, absorbing everything into itself, would ultimately become a mere bureaucracy incapable of guaranteeing the very thing which the suffering person—every person—needs: namely, loving personal concern. We do not need a State which regulates and controls everything, but a State which, in accordance with the principle of subsidiarity, generously acknowledges and supports initiatives arising from the different social forces and combines spontaneity with closeness to those in need. The Church is one of those living forces: she is alive with the love enkindled by the Spirit of Christ. This love does not simply offer people material help, but refreshment and care for their souls, something which often is even more necessary than material support. In the end, the claim that just social structures would make works of charity superfluous masks a materialist conception of man: the mistaken notion that man can live “by bread alone” (Mt 4:4; cf. Dt 8:3)—a conviction that demeans man and ultimately disregards all that is specifically human.
Benedict XVI, Deus Caritas Est, 28
Dave:
“120. If, however, for this purpose, private resources do not suffice, it is the duty of the public authority to supply for the insufficient forces of individual effort, particularly in a matter which is of such importance to the common weal, touching as it does the maintenance of the family and married people.”
That’s an important “If.” Welfare statists would strike everything before “private resources.” There is a correlation between higher taxes and less charitable giving. We don’t know for certain that one causes the other but there is some research out there which suggests a crowding out affect. I once talked to a guy who studied philanthropy in Canada and he said it was pretty clear from his research that philanthropy has suffered since everybody expects their taxes to pay for communal goods of all kinds including the arts and higher ed. What’s happening here is that the government simply takes responsibility off of the individual. Where does the “default” role of government end and the individual’s responsibility begin? Certainly not with attenuated free will produced by massive government intrusion into people’s lives. And I am not talking taxes here, I am talking about that example of the poor couple with lots of kids, the woman in labor with no doctor etc. Those “hard cases” ought to be easy to find private charity for unless there is something else going on, like a place where everybody expects somebody else (the government) to do it. And another point– in extremis, charity should always be provided. However, discounting these people’s own role in how they got to this dire point, painting them as helpless children with no role in creating their own problems isn’t charitable to them either. It’s what governments do to sell the idea that they should be the provider of first, rather than last resort.
And to add to Tertullian and Fabrizio’s point about coops–Yes! Coops can be shockingly authoritarian as far as their internal structure goes. They replace the boss with a profit motive with group psychology, not Christian charity or brotherly love. I think the moral weight ascribed to them due to their structure here is just dead wrong. And the point about them being totally selfish as to their own needs vs. those of the rest of society is also highly problematic. The Eastern Europeans found this to be a problem with the various blends of worker managed enterprises they tried on their way out of socialism. Workers interests differ from the rest of society. The are not essentially in conflict but conflicts arise and they can be serious. The evidence suggests that they will work less, for less pay, keep people from getting fired and basically run a factory into the ground to keep the game going for themselves at pretty much any cost. Without a profit motive to focus somebody’s attention to look at the big picture, at the reason for the factory’s existence at all (production) the workers’ short term interests often derail their own long term interests. Before you say “materialism” think about the consequences when the product is milk, or some other necessity of life. Should children starve because the coop decides that workers need a month’s vacation?
Sorry Father Z,
But I did think that the topic proposed is directly related to what we were talking about…just my 2 pfennigs.
Fabrizio quotes the only sentence in all of the social encyclicals that has a kind word to say about capitalism. But note how the sentence ends: “even though it would perhaps be more appropriate to speak of a “business economy”, “market economy” or simply “free economy”. In other words, what is good about capitalism isn’t capitalism.
As to “who gets to do the distributing,” the libertarians charge that monopolies and vast accumulations can come about only through gov’t interventions, an idea that goes back to Adam Smith. They are largely correct. So it is a case not so much of getting the gov’t to do something as to stop doing certain things. The budget is a vast network of subsidies of the rich at the expense of the poor and middle classes. But there are many ways the government can encourage and enable worker ownership. ESOPs, differential taxation, ending subsidies, and many other methods. Still there will be cases of monopoly power that require actual redistribution. This is the basis of the land to the tiller program that enabled Taiwan and other Asian countries to propel themselves from feudal poverty to modern powerhouse in just one generation. see http://www.cooperativeindividualism.org/medaille-john_taiwan-land-reform.html
Fabrizio says If we judge systems by the ownership of the means of production, then both statist totalitarianism and the so-called “unfettered” capitalism work the same way, in that monopolies often thrive only because big government protects them, while only a truly free market guarantees – as possible after Adam – competiton, good prices and good quality at the same time. Not perchance John Paul II defined socialism also as “state capitalism”.
Exactly. This is what Belloc predicted in The Servile State. Further, internally the mega-corporation lacks an internal market (since a large proportion of its trade is internal) and cannot correctly price its goods. All the critiques of socialist allocation apply to the mega-corporation. They are, as David Friedman pointed out, “indigestible lumps of socialism in a free market system.” see http://distributism.blogspot.com/2009/03/chapter-xvi-distributism-and-industrial.html
Margaret, could you please document this charge that higher taxes reduce charitable giving? The figures seem to show the opposite. But perhaps you have other data. Or maybe its just an ideological judgment. And what evidence do you have about coops paying less? The evidence I have seen is all the opposite. We will get no where if we decide the case before we look at the evidence.
Yes, Heather, where is Sarsfield?
In another thread, he publicly posted a serious allegation, accusing Fr. Sirico of being a “dissenter” and saying he holds out an “un-Catholic philosophy of economic liberalism.”
Fr. Z then set up this thread to discuss, but no one has defended, or even tried to defend (including Sarsfield), what Sarsfield has alleged.
Is Sarsfield or anyone, for that matter, willing to defend the allegations which prompted this discussion?
I realize public figures get heat from all sides, whether warranted or not, but should Catholics accuse fellow Catholics of being dissenters or advancing “un-Catholic” philosophies without supporting the assertion with facts and reasoned argument?
I don’t know about Sirico, but in some cases of Acton allies, the dissent is open. Thomas Woods, for example, makes no secret of his contempt for Church teaching, and states that the Church has no authority in this area.
I don’t know about Sirico, but some Acton allies make no secret of their dissent. Thomas Woods, for example, is openly contemptuous of Church teaching and states that the Church has no authority in these matters.
Is the Acton Institute a Genuine Expression of Catholic Social Thought?, Thomas Storck
Published in Social Justice Review, vol. 93, no. 5-6, May-June 2002
http://distributist.blogspot.com/2008/03/is-acton-institute-genuine-expression.html
(This article quotes Fr. Sirico’s own writings and compares his wrintings to Magisterial documents)
Can Economic Justice Be Achieved Without Law?, Thomas Storck
New Oxford Review, vol. 67,no. 9, October 2000.
http://distributist.blogspot.com/2008/02/can-economic-justice-be-achieved.html
(More direct quotations from Fr. Sirico)
Lord Acton tends to corrupt, Dr. John Rao
The Remnant, December 31st, 2005
http://distributist.blogspot.com/2007/02/lord-acton-tends-to-corrupt-by-dr.html
(An analysis of Lord Acton’s thought)
Opposing the Austrian Heresy, Christopher Ferrara
The Angelus, January 2005
http://distributist.blogspot.com/2007/01/opposing-austrian-heresy.html
Economic Science and Catholic Social Teaching, Thomas Storck
Chronicles Magazine, 2004
http://distributist.blogspot.com/2007/01/economic-science-and-catholic-social.html
(The errors of Thomas Woods)
The Difficulties of Thomas Woods, Thomas Storck
http://distributist.blogspot.com/2008/09/difficulties-of-thomas-woods.html
This has been a very interesting, and respectful, discussion. I agree with Heather; I think it is important to recognize that the system we have in the U.S. is not free market economics. It is a kind of corporatism, in which the goal is to prevent competition (try opening a bank right now) and to protect certain prerogatives of the most powerful corporations (consider the absurd copyright extensions that have been passed in recent years).
The other thing is that the free market is not a system that is easily controlled; economics, after all, is simply the observation of how humans interact and exchange goods and services. When we try to “improve” this interaction, we often cause problems that are worse than the problems we set out to solve.
I further argue that state control of economics eventually has a negative effect on spirituality. The state essentially becomes the church, since it is the ethical arbiter of all human action.
“kate, apparently you see no need for organized market mechanisms. Do you advocate an unorganized free-for-all? Sounds very inefficient and chaotic to me. In any case, the principle of equivalence is tightly linked to justice. It has nothing to do with what you assume above. Rather it has to do with an exchange of two things of equal value—equality of values in exchange is the principle of equivalence.
Comment by schoolman — 7 April 2009 @ 9:44 pm”
The free market is a self correcting mechanism, when all are allowed to participate and there is no human created rules or “organizations” limiting participation and setting conditions. There is nothing chaotic inherent in it. Rather the chaos arises when humans begin to try to harness and direct it to their purposes. Principles of equivalence (either moral or equivalent price values) and justice cannot be arrived at by being unjust to those have more material goods. The re-distributonist then becomes the materialist, and a thief as well. Values change. Water is worth little in the stores, until the water supply is threatened. You can’t have it both ways, you can’t claim that you are being morally neutral with “equivalent values” and then throw “justice” into the mix.
“kate: “The “conditions necessary” are the conditions of no conditions, liberty.”
Anarchy also has no conditions—and it leads to a false kind of “freedom”. Prudent rules of and organization are not the enemy of true freedom—they help to ensure it! The same is true of free markets.
Comment by schoolman — 7 April 2009 @ 9:56 pm ”
So you equate liberty with anarchy. In the interest of defining terms, anarchy is the condition of no government…not necessarily lawlessness and chaos. All that is really needed is the freedom to contract (which the Obammunists are rapidly doing away with) and insurance. The contracts set the rules between traders or intentional communities. The rest of the population is free to trade or set their own conditions of contract. Just as those who join the Catholic Church are expected to adhere to certain rules and accept certain dogmas to BE Catholic, so would other interactions between people, other organizations. The difference is that no group would have a monopoly of aggression to force others to live/trade/worship THEIR way.
“Scenario: A man is dying of thirst in the middle of the desert. Another passes by on horseback and offers to sell a gallon of water in exchange for the other man’s estate. Both men freely agree to the exchange and the deal is sealed.
Question: Is this a just transaction reflecting a just price?
Please explain your answer.
Comment by schoolman — 7 April 2009 @ 10:15 pm ”
Of course not. Remember the story of Jacob and Esau? I see no possibility of improving on Gods creation with my finite capacities. We have Gods law. Ignoring it and setting laws benefitting some at the expense of others is itself unjust in principle and nearly always (I can’t think of an exception but there may be one) corrupt when controlled by men, even “organizations” “dialoguing” at “consensuses”.
Fabrizio, you’ve done a fine job of taking my brief dissent of John M’s position and, combined with your addition of the facts-on-the-ground, you’ve put true Catholic teaching in complete perspective.Bravo.
As MargaretMN relates, I find all-too often people like John write about experiences within incredibly homogeneous groups, and mistaken believe these facts can be extrapolated to large diverse societies. He’s not alone, recently a former Prime Minister of Denmark wrote in the WSJ his obituary for free market capitalism
http://online.wsj.com/article/SB123863093490780727.html
frankly,it’s embarrassing.I have tremendous affection for the Danes, but to believe you can take an economic model from 5.5 million homogeneous Danes (that’s one third of the population of Florida!) and apply it to 300+ million racially/ethnically/religiously diverse Americans, well…
We have monopolies and duopolies that operate in the US with some effectiveness. They’re called utilities, and we govern them with public service corporation boards. Anyone who believes this model offers the poor the economic model to escape poverty is seriously misguided.
It is not, of course, because (a) the first man is in dire and immediate need of the water, and (b) the second man, presumably, is neither in dire need nor must exert any effort to meet the first man’s need. He simply happens to have the gallon of water with him. (Question: what would constitute a just price if the second man believed he would himself need the gallon to get out of the desert alive!)
Now, a more apt scenario and one for which there is ample empirical evidence is the scenario in which a hurricane has just made landfall. There are then many opportunities for entrepreneurially-minded folks to truck in plywood, generators, building supplies, etc., from nearby states. Academic studies have demonstrated that in such cases the affected areas get back on their feet faster where there are no anti-gouging laws to prevent the temporary price spikes of supply and demand. The price spike has a stimulating effect on supply that, if outlawed, results in prolonged misery for the locals. Sometimes an expensive tarpaulin now is more just than a cheap tarpaulin later.
-Tertullian
Nothing like that will ever work if anything is just blanket applied to all of the US, that’s where subsidiarity comes in. More power to the local. I know that Berkshares is working quite well, but it wouldn’t work nation-wide. Then again, a place in the South East tried to go with a local currency, but it failed because everyone shopped too much at Wal-Mart.
It seems that some may be misunderstanding Distributism.
In a super-small nutshell, it isn’t the redistribution of anything. It’s a concept that a community functions best when the means of production (say, a farm) are owned by those who work to produce (say, the farmers). If you have a car-factory, the workers (or perhaps a union representing them, of which they are stakeholders) would have some level of ownership of the factory/company (not necessarily 100%, only that it be at least some level).
The problem with “capitalism” is that, when it works correctly, wealth will pool in the hands of a few powerful individuals depriving the many. The problem with “communism” is that, when it works correctly, wealth will pool in the hands of a few powerful individuals (usurping the mantle of the “people”) depriving the many. Distributism seeks for many individuals to have ownership.
Dave Taylor,
I have a few hesitations about your post. They are:
1) I’m not convinced that money is intrinsically evil. An object can’t be intrinsically evil, since evil is a moral term and only humans are free moral agents.
2) Condom use is intrinsically evil because it violates the intended purpose of our sexuality.
3) The economic value of anything, including money, is whatever we assign to it.
4) Money supplies are a funny thing. In an expanding economy that creates new wealth, you can’t have a “fixed” currency and money supply in the way you seem to propose, you’ll shoot the economy in the foot and ruining people’s savings. As an economy expands, money will de-value. Interest based banking and investing allow people to maintain the value of their savings, and sometimes even expanded it. Fr. Z has made clear he doesn’t want to go down the money supply rabbit hole, so we should respect that.
It may be that homogeneity is required for economic independence. It may be that the Basques are capable of running their own affairs, and the Americans aren\’t. It may be that the Italians can be trusted but the Americans will fail. But I see no reason to believe this, and many reasons not to. ESOPs seem to work well here, even when they are owned by American workers.
The statements about Eastern Europe are the canards that the looters used to take away the control of the factories and turn them over to the oligarchs.
LCB
“The problem with “capitalism” is that, when it works correctly, wealth will pool in the hands of a few powerful individuals depriving the many.”
Last time I looked we’re in the 21st century,not the 19th. In case you’re not up to speed on this, the greatest pool of private capital in the USA resides in the accounts of the public employee pension system. Ever hear of CalPERS? Who do you think capitalizes hedge funds? Ever hear of a 401k?
“The problem with “communism” is that, when it works correctly,”
pls be so kind to point out where this miracle occurred?
The problem with all of these debates on “capitalism” is that the system hasn’t been seen since 1933; I doubt that there is one person on this list with any living memory of capitalism. What we have had between 1933 and 1980 was Keynesianism, and what we have had since then is a kind of reverse Keynesianism.
The system has run its course; it will not be revived, and the efforts to convince people to return to the pre-depression economy are a waste. We will see that economy, for a time, but it will be imposed by force. But it will not last.
Where is Sarsfield? Aside from attending to the corporal work of mercy of burying the dead, he is admiring the outpouring of intelligence and thoughtful discussion his clumsy comment has apparently inspired.
He does notice, however, that no one has commented on the apparent incongruity he observed in naming an organization devoted to promulgating a Catholic view of economics after one of the most famous dissenters of the 19th century; a man who lobbied hard to have the Great Powers of Europe intervene militarily to prevent the convening of an Ecumenical Council of the Catholic Church; a man whose most famous dictum, “Power corrupts, etc.” comes from his highly critical study of the Papacy. I mean, I would be at least wary of claims of orthodoxy by, say, a “Charles Curran Institute for the Promotion of Catholic Sexual Ethics” or a “Hans Kung Institute for the Study of the Papacy” wouldn’t you?
It seems to me that the approach of the Acton Institute is to interpret or reinterpret the traditional Catholic Social Teaching from Leo XIII onward so as to make it fit into the economic libertarian or “democratic capitalist” mold, or whatever term you prefer. This strikes me as suspiciously similar to the the approach of Catholic “progressives” in other areas: “interpret,” “update,” and “explain” Church teachings in order to make it possible to reconcile one’s conscience with the demands of The World, rather than working to change The World in order to make it conform more closely to teachings of the Spirit speaking through the Vicar of Christ.
If anyone can read Quadragesimo Anno and not get the impression that this is something the Acton Institute would find inconsistent with its libertarian approach to economics, God bless you. Really?
Sarsfield speaks!
But doesn’t say much. If Sarsfield truly believes that Fr. Sirico or the Acton Institute dissent from teachings of the Magisterium, including Quadragesimo anno, then where is the demonstration?
It should be a simple exercise: (1) Fr. Sirico or the Acton Institute say X; (2) Church says Y; (3) X contradicts Y.
One could easily do this with Curran and Kung. Can one do it with Fr. Sirico or the Acton Institute? Can you, Sarsfield?
“If anyone can read Quadragesimo Anno and not get the impression that this is something the Acton Institute would find inconsistent with its libertarian approach to economics, God bless you. Really?”
One was promulgated at the beginning of the 20th century,the other commenced at the end of the century. Things happened in between.
Tertullian,
Please don’t be condescending towards me. I will not engage in a rude discussion.
The following by Gregory M. A. Gronbacher on “The Need for Economic Personalism” is taken from the Acton Institute Journal of Markets and Morality:
**********************************************************************
“If Catholic social thought is to be effective, and if the Church’s social message is to be taken seriously, then it must understand basic economic theory. There are foundational market realities that cannot be ignored for any reason, including moral concerns, because in so doing further harm may result to both market mechanisms and morality. A question arises: “What if it can be shown that market principles conflict with moral obligations?” The best reply is that we must always work for moral objectives within the context of market realities. The Church ought to heed the advice of Etienne Gilson who says that “piety is no substitute for technique.”” 48
http://www.acton.org/publications/mandm/publicat_m_and_m_1998_mar_gronbach.php
**********************************************************************
What are we to think of the following: “There are foundational market realities that cannot be ignored for any reason, including moral concerns…”
Does this mean that “the market” must be unrestrained at all costs — even in the face of moral concerns? Does this mean that moral concerns must be subordinated to the “economic realities” of unbridled market forces? Are we to understand that it is a completely unrestrained “free market” that ultimately defines the norm of socio-economic morality — and that the Church and state must obey and submit to its laws?
Would Gronbacher (quoted above) submit to the following Papal teaching concerning markets and morality?
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++
88. Attention must be given also to another matter that is closely connected with the foregoing. Just as the unity of human society cannot be founded on an opposition of classes, so also the right ordering of economic life cannot be left to a free competition of forces. For from this source, as from a poisoned spring, have originated and spread all the errors of individualist economic teaching. Destroying through forgetfulness or ignorance the social and moral character of economic life, it held that economic life must be considered and treated as altogether free from and independent of public authority, because in the market, i.e., in the free struggle of competitors, it would have a principle of self direction which governs it much more perfectly than would the intervention of any created intellect. But free competition, while justified and certainly useful provided it is kept within certain limits, clearly cannot direct economic life — a truth which the outcome of the application in practice of the tenets of this evil individualistic spirit has more than sufficiently demonstrated. Therefore, it is most necessary that economic life be again subjected to and governed by a true and effective directing principle.
http://www.papalencyclicals.net/Pius11/P11QUADR.HTM
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PGB: Apparently you didn’t catch the drift of my first sentence. That being said, it looks like the Acton quote posted by schoolman nicely illustrates the problem. Can anyone imagine Pius XI or any other Pope saying something like that? But is that quote not typical of the Acton Institute’s philosophy?
Tertullian: Sounds like something a Catholic progressive would say to explain why Humanae Vitae may be safely ignored.
Does the completely free interplay of market forces determine the norm morality in the realm of socio-economics as
preached by the likes of Gronbacher? We know what Pius XI had to say in QA (above). But didn’t Pope John Paul II reverse that teaching in CA and with his “personalist” teachings? Here is a cut from CA that follows perfectly in the line of his predecessors concerning markets and morality.
+++++++++++++++++++++++++++++++++++++++++++++
40. It is the task of the State to provide for the defence and preservation of common goods such as the natural and human environments, which cannot be safeguarded simply by market forces. Just as in the time of primitive capitalism the State had the duty of defending the basic rights of workers, so now, with the new capitalism, the State and all of society have the duty of defending those collective goods which, among others, constitute the essential framework for the legitimate pursuit of personal goals on the part of each individual.
Here we find a new limit on the market: there are collective and qualitative needs which cannot be satisfied by market mechanisms. There are important human needs which escape its logic. There are goods which by their very nature cannot and must not be bought or sold. Certainly the mechanisms of the market offer secure advantages: they help to utilize resources better; they promote the exchange of products; above all they give central place to the person’s desires and preferences, which, in a contract, meet the desires and preferences of another person. Nevertheless, these mechanisms carry the risk of an “idolatry” of the market, an idolatry which ignores the existence of goods which by their nature are not and cannot be mere commodities.
http://www.vatican.va/holy_father/john_paul_ii/encyclicals/documents/hf_jp-ii_enc_01051991_centesimus-annus_en.html
+++++++++++++++++++++++++++++++++++++++
Schoolman,
Economic laws are like gravity. Some folks may wish they didn’t exist, but they do, and our activity occurs within it. That is what Gronbacher is referencing in your first quote. What do we do when gravity interferes with our moral obligations? Piety is no substitute for technique in those situations either.
There a lot of folks out there who like to pretend that economic laws don’t exist, or that they are just constructs that can be violated. There is a word to describe such individuals: wrong. Pius XI\’s quote is in no way in opposition to Gronbacher’s quote. Nor is JPII’s.
To give an example:
A committee may meet and decide “For moral concerns, supply and demand shall no longer function. We declare an end to supply and demand, to address moral issue X.”
A committee may meet and decide, “For moral concerns, gravity shall no longer function. We declare an end to gravity, to address moral issue x.”
Each is equally absurd.
LCB, Papal teachings speak about necessary “limits” to market mechanisms — that market forces can’t be left completely
unchecked and unbridled. Are you suggesting that Gronbacher agrees to such “limits”? On the contrary, I think you will find that
he considers such human “interventions” as a violation of the “fundamental laws of economics”. Who is correct? Is it Gronbacher or the Magisterium of the Popes?
It occurs to me that suggesting that Fr. Sirico and the free market ideas that he tends to support constitute “dissent” from the Magisterium is itself judgmental. As I discern things, and I do not pretend to be a particularly deep thinker in these matters, it seems to me more of a different perspective as to how one achieves the same result of loving our neighbor as ourselves. And this is not an “unrestrained” market as some here might suggest, is it? Does not the philosophy which embodies the Acton Institute emphasize that which makes our society “virtuous” and “moral”?
As usual, Fr. Z has incited a spirited and intelligent debate. In that my name and the Institute I founded has been invoked several times here, permit me to make a few clarifications and distinctions which some of the posters, notably David, LCB and MargaretMN have already made so well:
1) As far as my personal stance, let me make it emphatically clear at the outset that I am first and foremost a Roman Catholic priest, which means in terms of the authoritative teaching of the Magisterium, I submit to its definitions, even before knowing its arguments, because in the end it is not the argument of the Magisterium that makes it true, but its very nature, origin and charism: as Newman said somewhere, “The Church does not teach this or that truth; the Church is a truth telling thing.” Further, as Paul VI reminds priests in Humanae Vitae, the Magisterium “… enjoys a special light of the Holy Spirit in teaching the truth. And this, rather than the arguments they put forward, is why you are bound to such obedience.” I joyfully embrace this obedience which has been hard-learned in my own life having lived formally away from the Church and her Sacraments for 13 years in my youth, returning some 30 years ago.
2) As to my favoring economic or classical liberalism, I think it is worth noting that there is no one set of economic dogmas that easily come under the rubric of ‘classical liberalism’. There are actually a variety of ‘liberalisms’ and if one does not pay attention to the details of the specific proposals, the whole matter can become rather confused The liberal tradition (if we need a label I prefer economic personalism to describe what I am speaking about) I believe in holds private property as sacred (see Rerum Novarum); I further believe in the right to free individual initiative as the normative way for people to insure the well-being of their families and society. It seems to me, especially in light of the history of failed attempts at central economic planning that the free economy, by which I mean “an economic system which recognizes the fundamental and positive role of business, the market, private property and the resulting responsibility for the means of production, as well as free human creativity in the economic sector” (see Centesimus Annus, no. 42) is to be affirmed both on moral and practical grounds. Other economic liberals would say that economic liberty should have no legal or cultural proscriptions and is utilitarian at base and that it is the goal of society. I would disagree. Truth is the only proper orientation of our liberty, economic or otherwise.
3) It has been noted in previous postings that the Church has no formal economic model to authoritatively present. Much of our discussion in this area is left to prudential judgments. The principle of subsidiarity gives us a way to concretize the matter and in this, I would argue, is the moral preference for non-State solutions. Subsidiarity does allow for temporary interventions by graduated levels of higher social organization pressing on grave matters. Even here both the duration of such interventions and their depth must be limited so as never to substitute, prevent or disincentivize private, proximate mediating institutions. It is my prudential estimation (which others are free to disagree with me about) that if we took subsidiarity seriously, we could go a very long way to radically limiting the intervention of the State in our lives, at the same time that we could (re)create a moral culture, stabilize families and provide for the needs of the poor by creating the conditions of prosperity.
4) Finally, there are so many tantalizing topics that have been raised in this discussion which I will have to resist entering into here, given my pastoral obligations in the coming Triduum. I would simply like to say that the Acton Institute is not a Catholic organization (fully half of our staff are evangelical and other forms of Protestants and Orthodox– you should hear the ecumenical dialogue that goes on here) and that I do not personally agree with all the positions expressed in the many publications, articles and reviews we publish as well as in the conferences we hold. The precise object of our work is to create an atmosphere where people who take faith, economics and public policy seriously can have a place to engage in respectful, if sometimes vigorous conversation. We seek to bring sound economic to good intentions. Some in conservative Catholic circles seem to think that we at the Institute, in choosing the name of Lord Acton for our endeavor, conspire to somehow undermine the papacy. Anyone who knows me knows how absurd a conjecture this is. It is true Lord Acton opposed the definition of papal infallibility (as did Newman, his friend). But this was before the definition. Once defined, both Acton and Newman submitted to the Church’s authority. I happen to think Newman had clearer thoughts on the matter than did Acton, but I will say no more on that lest the long arm of Fr. Z intervene to excommunicate me from this site for going down a rabbit hole.
May the Lord and his Holy Mother draw each of you closer to their side at the Cross in these coming holy days.
Fr. Robert A. Sirico,
President
The Acton Institute
“What are we to think of the following: “There are foundational market realities that cannot be ignored for any reason, including moral concerns…”
Does this mean that “the market” must be unrestrained at all costs—even in the face of moral concerns? Does this mean that moral concerns must be subordinated to the “economic realities” of unbridled market forces?”
The problem with concern over the moral implications of “unbridled capitalists” causing economic inequalities is that to rob or discriminate against the wealthy is also immoral. Why is one immorality considered more just than the other? The degree of liberty we enjoy is related to the amount of economic freedom we have. We have had governments completely devoted to egalitarianism, socialism/communism and those same states have had the worst standards of living, and the most murder and privation. I ‘m baffled as to how anyone can have any faith whatsoever in mans ability to decide economic matters. If you have a truly free market then those who are kept from competing are not hampered. Innovation and competition keep oligarchies from forming. What you fear is what we have in the US; the marriage of corporation with the state, mercantilism, and the current unprecedented massive wealth transfer from the people to bankers and power to the state.
“” Are we to understand that it is a completely unrestrained “free market” that ultimately defines the norm of socio-economic morality—and that the Church and state must obey and submit to its laws?
Comment by schoolman — 8 April 2009 @ 12:59 pm”
The free market has no inherent morality, it is simply a mechanism, a process, a natural way of trading between people. Morality is the Churchs province, Obama thinks it is HIS province to define morality. It is the Church that needs to teach people what is moral and what is not and then the people will behave in a moral manner. Depending on laws and government to enforce a morality through economic slavery or even anti-abortion laws is short-sighted. Teach the morality and the market and the society will reflect it. Allow government to do it and they will gladly teach THEIR morality. And we will have a continuation of the state sponsored carnage of the 20th century….for the greater good, of course.
“Would Gronbacher (quoted above) submit to the following Papal teaching concerning markets and morality?
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++
88. Attention must be given also to another matter that is closely connected with the foregoing. Just as the unity of human society cannot be founded on an opposition of classes, so also the right ordering of economic life cannot be left to a free competition of forces. For from this source, as from a poisoned spring, have originated and spread all the errors of individualist economic teaching. Destroying through forgetfulness or ignorance the social and moral character of economic life, it held that economic life must be considered and treated as altogether free from and independent of public authority, because in the market, i.e., in the free struggle of competitors, it would have a principle of self direction which governs it much more perfectly than would the intervention of any created intellect. But free competition, while justified and certainly useful provided it is kept within certain limits, clearly cannot direct economic life—a truth which the outcome of the application in practice of the tenets of this evil individualistic spirit has more than sufficiently demonstrated. Therefore, it is most necessary that economic life be again subjected to and governed by a true and effective directing principle.
http://www.papalencyclicals.net/Pius11/P11QUADR.HTM
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Comment by schoolman — 8 April 2009 @ 1:26 pm ”
This applies to ALL activity, not just economic activity! This encyclical does not call for obedience to government guns, it calls for submission to a public authority. The question is begged as to what public authority, I’m assuming a pope would consider himself a public authority and I would accept that. I do not accept the public authority of the Obammunists. The free struggle of competitors is not an evil thing, that struggle is itself a force that limits the power any one can gather…until the state is used to stifle competition by one or an alliance of competitors to shut others out, or the state is used to force entire populations of children into indoctrination, dumbing down and corporate job training, to rob some people at the behest of others or for the greater good (ends justifying means). Then there is no end of “deserving” interest groups, victims, etc. It is the end of charity and the birth of the nanny state.
It is the STATE that causes the worst economic inequalities. Hillaire Belloc blamed the extreme concentration of wealth into the hands of a few on the Reformation and the seizure of Church wealth and its accumulation in the hands of aristocracy. The Church was no longer the buffer between the king and the rising mercantile class. Interesting stuff.
Sarsfield:
I am very sorry for your loss. I immediately went the point of the matter because I figured you yourself were willing to do so. I apologize if you thought I was being unkind.
With this apology in mind, I still await the demonstration which substantiates your accusation that Fr. Sirico and the Acton Institute are dissenters espousing an “un-Catholic” social philosophy. If you are as committed to your position as your rhetoric seems to reflect, then where is your argument; where are your reasons; where is your proof?
Pointing to an article by one writer for the Acton Institute is hardly enough to demonstrate what you alleged in the previous thread, made into the subject of the thread here. Even this article, as LCB points out, does not suggest or imply that economic laws should or do override moral laws. (As for “imagining” what Pius XI would think, I imagine he would prefer arguments to imaginations.)
You brought up Curran and Kung. One can easily point to what they have said, point to what the Church teaches, and readily show the contradiction.
Can you do the same for Fr. Sirico or the Acton Institute?
If not, should you not apologize in the same public fashion that you laid down these accusations in the first place?
Thank you, Fr. Sirico, and may God bless you.
One is undoubtedly free to disagree with you and the Acton Institute, but to throw out some of the accusations we have seen on this thread, without a shred of support, is wholly unbecoming of the good people who peruse and post on these pages.
(Great letter on Notre Dame, by the way!)
Again, thank you.
Fr. Sirico: “Other economic liberals would say that economic liberty should have no legal or cultural proscriptions and is utilitarian at base and that it is the goal of society. I would disagree. Truth is the only proper orientation of our liberty, economic or otherwise.”
**************************************
Thanks Father. If I understand you correctly, you also disagree with the notion of the absolute primacy of unrestricted markets over morality as indicated by Gronbacher: “There are foundational market realities that cannot be ignored for any reason, including moral concerns…” In other words, circumstances and prudence may at times dictate certain limits to free market mechanisms in view of the moral law and the common good.
Fr. Sirico, I also appreciate what you have to say above regarding subsidiarity (#3). Subsidiarity certainly does not reject outright any intervention on the part of higher institutions or bodies. On the contrary, it establishes the principles that help us to understand when such intervention is legitimate or not.
Schoolman,
You may want to consider re-reading Gronbacher’s essay. I suspect you are seriously misunderstanding the point he is making.
Moral reasons do not permit us to ignore the reality of gravity.
Moral reasons do not permit us to ignore the reality of the market.
Pretending they aren’t there does nothing.
LCB: “Moral reasons do not permit us to ignore the reality of the market.”
On the contrary, it is precisely for “moral reasons” that sometimes certain “limits” must be applied to free market mechanisms. That
is the teaching of the Popes (Cf. QA and CE quoted above). The “reality of the market” is a function of the choices made by moral agents (i.e., market participants). While true freedom and free choice is to be respected — such freedom should not be considered unlimited and unqualified. There are natural limits to human freedom in every sphere of activity — including economic activity.
I hope LCB doesn’t mind me jumping in. It seems that LCB’s ultimate point is that we must understand how markets work in order to prescribe the best course of action if we seek to achieve some “moral” outcome that the market will not yield on its own. Invariably, govt jumps in to resolve some “inequity” or an “unjust” outcome. But if govt policymakers do not understand what their actions will cause once entered into the market forces, then their actions are for naught. Typically, their actions do more harm than good. [The TARP & stimulus bill are very good examples of this failure. The govt meddling in the first instance is a huge part of the cause of the current economic problems.] Market forces tend, on balance, to address most problems, in time.
One point about “free markets:” it is not that the market is to be worshiped or is sacred, but it is that the individual (as Fr. Sirico points out) is the actor behind the market force. The market is made up of many individuals/families/businesses making decisions. This individual liberty is rather important in my mind. The Church seems also to be concerned for the individual and the family as caught between the corporation and the state.
—
Gotta get dinner on the table.
Schoolman, you are neither understanding my words nor Gronbacher’s.
Markets, economic exchanges, have laws. Such as supply and demand. These are like the laws of gravity, they are part of the natural condition.
This seems to be the premise you disagree on. Supply and demand isn’t merely a personal choice, but a part of the function of economic activity.
Your train of thought is illustrating precisely what Gronbacher is talking about. We can’t make supply and demand go away because we don’t like it or because it interferes with our theology. Instead, we must understand it and work within it. Just as we use gravity to our advantage (even in moral matters from time to time), so to it is with supply and demand.
In this sense, piety is no substitute for technique. The people may piously desire water, but the technique of building an aquaduct is the solution to the issue of water finding its level. We must work within the natural law to achieve the end of giving drink to the thirsty. So it is with the laws of economics.
Hi Kate,
Thank you for your suggestions regarding sound money — I will look into those!
My entire reason for bringing this subject forth, is that to me it seems that an understanding of something so fundamental to economic exchange must be understood and addressed in the context of speaking of free markets, capitalism, and the social Magisterium. It would be interesting to know of any of the viewpoint(s) propounded by the Acton Institute regarding this.
Ultimately, the issuance of fiat currencies implies an exercise of mighty and extraordinary power by governments, and that this power has a direct correlation with how the “free market,” “capitalism,” “distributism,” etc. can function. Indeed, no one seems even to think about it, or at least address it in any way that is integrated (and proposed with) their approach to economy.
Perhaps if Father Sirico reads this post, he might give us some details as to his thoughts about the subject?
(My continued apologies to Father Z, if my prior post seemed an imposition, and not as closely correlated/integrated to the discussion in which some of the participants were engaged regarding the varieties of ideas about how markets should be organized. I didn’t have lots of time at that moment to even try to express ideas to associate the idea with the discussion, and thought that some more educated souls might chime in to relate the subjects. Truly, even this post does not go into any sort of detailed offerings).
Margaret MN wrote to Dave:
‘“120. If, however, for this purpose, private resources do not suffice, it is the duty of the public authority to supply for the insufficient forces of individual effort, particularly in a matter which is of such importance to the common weal, touching as it does the maintenance of the family and married people.”’
‘That’s an important “If.” Welfare statists would strike everything before “private resources.” There is a correlation between higher taxes and less charitable giving’.
Margaret, I agree with what you say about the side-effects of Keynes’s intentions being misinterpreted by those of the super-rich too uncharitable to pay for social infrastructure through taxation, and those in government seeing an easy way to finance their own projects. Understanding of information and control has moved on since 1945, however, (if not in economics).
That is why I did not simply commend Keynes but moved on to something quite different: a re-interpretation of money as debt which fits the facts, eliminates any need for taxation and pensions (as against saving) and frees communities to borrow what they need for whatever needs doing (writing off the money by spending it and the debt by doing the job). You will appreciate that in a letter I cannot demonstrate all the detailed mechanisms and implications of this: I hope you will try and work them out for yourself.
LCB wrote:
I have a few hesitations about your post. [Good: so you are thinking about it]! They are:
1) I’m not convinced that money is intrinsically evil. An object can’t be intrinsically evil, since evil is a moral term and only humans are free moral agents.
When a boy gives a girl a rose he is also sending a message. That may a lie, which IS intrinsically evil.
2) Condom use is intrinsically evil because it violates the intended purpose of our sexuality.
So what if the intended use of our sexuality has already been achieved: e.g. we have personally filled our house with children; we have together filled the earth to the point where we are overstraining the regenerative resources of the world?
3) The economic value of anything, including money, is whatever we assign to it.
This is where a proper understanding of language comes in. To use one helpful way of expressing it, the message sent by money points to something which does have value. Separate money from the transaction, however, and you no longer know what that is. It is a mistaken convention to assume it is the value of money itself, a better one that it is the value of people willing to honour promises.
4) Money supplies are a funny thing. In an expanding economy that creates new wealth, you can’t have a “fixed” currency and money supply in the way you seem to propose, you’ll shoot the economy in the foot and ruining people’s savings. As an economy expands, money will de-value. Interest based banking and investing allow people to maintain the value of their savings, and sometimes even expanded it. Fr. Z has made clear he doesn’t want to go down the money supply rabbit hole, so we should respect that.
In no way did I suggest a fixed money supply. I envisage the economic system on the analogy of a central heating system with a header tank, this releasing more water as the radiators expand when they heat up, but can be topped up if necessary so its capacity is effectively infinite. What you can have is a planned wage system, what you can’t have is people obtaining their income from unlimited percentage profits. Either you pay financiers a fair wage/living allowance like everybody else, or (demonstrably) the way wage and profit flows interact will cause oscillation between inflation and deflation.[See Bernard Lonergan’s “Macroeconomic Dynamics”].
Savings are a different matter. The money supply as a whole going up and down to keep pace with need (so prices DON’T inflate) wouldn’t affect our individual personal accounts (money still with our name on it)!
If it is disrespectful to Fr Z to be having this discussion (which I have certainly not intended), why did you perpetuate it? What is NOT disrespectful is an attempt to get nearer the truth. I am pleased to see that appears to be the objective of the Acton Institute.
PGB: I still await the demonstration which substantiates your accusation that Fr. Sirico and the Acton Institute are dissenters espousing an “un-Catholic” social philosophy. *If you are as committed to your position as your rhetoric seems to reflect, then where is your argument; where are your reasons; where is your proof?*
Pointing to an article by one writer for the Acton Institute is hardly enough to demonstrate what you alleged in the previous thread, made into the subject of the thread here.
***
I completely agree! I asked Sarsfield to demonstrate his assertion in the other thread.
In light of Fr. Sirico’s excellent post (especially #2) I think Sarsfield is obliged to provide proof, or apologize for his statements.
I too appreciate Fr. Sirico’s thoughtful post. I note that he at least, unlike those who have raked me over the coals for the past two days, recognizes why the choice of Lord Acton as the inspiration and namesake of an organization that is widely thought of as Catholic (more on that below) might raise a Catholic eyebrow or two. I don’t necessarily agree with his explanation — I think he downplays the vehemence of Acton’s opposition to Vatican I and overplays Newman’s opposition — but that is a matter of legitimate historical debate.
LCB’s equating of “market forces” with “gravity” is priceless. Dickens! Thou shouldst be living at this hour, England (and a lot of other places) hath need of thee!
PGB: I did not think you were being unkind. That said, I reject your demand that I apologize for anything or produce the kind of “proof” you demand as a consequence of having expressed an opinion. Remember what it is we are doing here,i.e.posting “comments” on a blog. This isn’t some thesis defense or trial in a law court. My opinions about the Acton Institute have been formed over a period of many years, having read materials from the Institute itself as well as criticisms — pro and con — written by others. The work of David Schindler comes to mind as well as Thomas Storck and John Medaille on the con side of the ledger. It seems to me that the type of sentiment contained in the Gronbach quote — elevating the unfettered operation of “the market” above moral considerations is not uncommon in literature either produced by or cited with approval by the Institute and is, like it or not, contrary to every papal pronouncement from Rerum Novarum to Centesimus Annus.
Reading Fr. Sirico’s post, it is unclear how much of that sort of thing, if any, he would endorse. I welcome that clarification though I don’t think it was entirely unreasonable of me to associate him with the sort of utilitarian economic liberalism that I, and others, associate with his organization. I would note that many of the commenters on this thread, in defending against what they perceived as an unfair attack on the Institute, appear to at least lean toward a laissez-faire-ism that, if I am reading him correctly, Father Sirico himself would not endorse.
Finally, as to the demand for an apology for my use of the term “dissenter,” I reject that demand as unnecessary in light of Fr. Sirico’s post. I use the term “dissenter” to mean someone who purports to express as Church teaching something that is at odds with Church teaching. Fr. Sirico, in his post, has explained that the Acton Institute is not a Catholic organization. I mistakenly believed that it held itself out as such. (And I hasten to point out that not one of the Institute’s defenders raised this either). Since the Institute does not purport to expound Catholic teachings, whatever it or its representatives say cannot be deemed “dissent” however much it may depart from Church teachings. Further, Fr. Sirico has made it clear that he does not necessarily endorse every opinion expressed by every person connected with the Institute. I would, therefore, acquit him of the specific charge of being a “dissenter” based on his explanation.
And with that, Happy Easter to all. (I think I’ll go off to start work on an updated version of Oliver Twist or Hard Times:”Now children, mustn’t complain that you have nothing to eat while millions of other children are fighting obesity. It’s just The Market, don’t you see? You should no more complain about it than you should complain about an apple falling on your wee little heads. The Market. Gravity. It’s all the same you know.”)
Joseph Mary Pius,
Heathers comments and suggestions are spot on as well. Garet Garrett’s “The People’s Pottage” is a fascinating explanation of The New Deal and Roosevelts seizure of the peoples gold and requiring them to use fiat currency. He shortly thereafter raised the price of gold “earning” himself a tidy sum with which to begin his alphabet soup bureaucracy of administrative agencies. That collection of essays is available online, if you don’t mind reading on the computer. The difference between the states social justice and the Churches social justice is aggression, force. What kind of social justice can be forced on people at gunpoint? And what kind of people would do that? What type of people would be drawn to that type of activity? What moral authority does a “secular” state use to determine what is just?
But more importantly why do traditionally religious people expect the “secular” state to dispense justice?
Fabrizio sent us a beautiful quote from Benedict XVI, Deus Caritas Est, 28 which is worth reading again:
“There is no ordering of the State so just that it can eliminate the need for a service of love. Whoever wants to eliminate love is preparing to eliminate man as such. There will always be suffering which cries out for consolation and help. There will always be loneliness. There will always be situations of material need where help in the form of concrete love of neighbour is indispensable.[20] The State which would provide everything, absorbing everything into itself, would ultimately become a mere bureaucracy incapable of guaranteeing the very thing which the suffering person—every person—needs: namely, loving personal concern. We do not need a State which regulates and controls everything, but a State which, in accordance with the principle of subsidiarity, generously acknowledges and supports initiatives arising from the different social forces and combines spontaneity with closeness to those in need. The Church is one of those living forces: she is alive with the love enkindled by the Spirit of Christ. This love does not simply offer people material help, but refreshment and care for their souls, something which often is even more necessary than material support. In the end, the claim that just social structures would make works of charity superfluous masks a materialist conception of man: the mistaken notion that man can live “by bread alone” (Mt 4:4; cf. Dt 8:3)—a conviction that demeans man and ultimately disregards all that is specifically human.”
Benedict’s objection to the “state which would provide everything” was in my quote from Pius XI answered in the form of a State which (like the Church) tries to put things right when they are going wrong.
Let me add to my earlier defence that Distributism (particularly in the hands of G K Chesterton) was and is an attempt to work out a way of getting back to smaller communities in which the need and responsibility for love is more evident. Those who have had contact with small children recently will perhaps appreciate how often love has to take the form of disciplining – or changinging the subject to lead children out of temptations to jealousy. That for me is what ‘government’ should mean: in technical terms, ERROR control. Not doing everything but so arranging matters that WE can provide everything AND put right what will inevitably go wrong. In a “money as debt” system, dealing with those not pulling their weight would be a particularly important function which would necessarily involve knowing the person involved, for some may need encouragement or teaching where others need discipline.
ALL: I found some comments by “John Médaille” in the spam filter.
Please give them attention if they are addressed to you.
LCB: “Markets, economic exchanges, have laws. Such as supply and demand. These are like the laws of gravity, they are part of the natural condition. This seems to be the premise you disagree on. Supply and demand isn’t merely a personal choice, but a part of the function of economic activity…We can’t make supply and demand go away because we don’t like it or because it interferes with our theology. Instead, we must understand it and work within it.”
***************************************
LCB, we have to distinguish economic science from ethics. Take take an example from the abortion industry. The free interplay of market forces determines the supply of abortion clinics and the price points that match demand. The economic science — even in this case — is morally neutral. But the free market is not an absolute or an end in itself — it must be subordinate to higher laws. The mere fact that there are willing suppliers and consumers of goods and services does not touch on the question of morality and the common good. These things are “beyond economics”. In this sense, the free interplay of market forces must sometimes be limited for the sake of higher laws.
God bless you Sarsfield for a well crafted and charitable post. Not all of us find the Acton Institute Catholic but as you and Fr. Sirico have pointed out, it isn’t.
Dave, Much as I adore Chesteron and Belloc the ideas of distributism are difficult to adapt to an industrial society.We do have employee owned businesses, the ones I am familiar with don’t do very well. Business does not lend itself to democratic methods of management. The fairest way to distribute goods and services is for the state to simply get out of the way and let folks work, keep the fruits of their labor and invest in whatever type of property they want (not everyone wants to be a farmer or part owner of a factory). That is the model this country was founded on and it worked very well until we were indoctrinated into the “need” for socialism for the “poor”, the “children”, the “elderly”, etc. All of these victim groups are worse off than they were 60 years ago while the state has grown into a fat leech.
Yes, there have been and will be abuses and poor people, bad folks who rip off others. But the damage done can be no where near what has been done by socialist states intent on reducing humanity to soulless animals to be trained to perform at the whim of the more “fit” alpha animals.
This thread reminds me of an allegorical scene in the film “Contact”. An alien species had sent a radio signal to earth with plans embedded into it for a space travel machine. The machine was built according to specs EXCEPT for the installation of a seat with seatbelts for the astronaut to sit in. The astronaut/scientist objected, pointing out that it was not in the plans sent to them but the bureaucrats insisted she sit in it for the trip. As her trip progressed the machine began to vibrate, rattle, and shake as if it were about to break apart. The astronaut then unbuckled and left the seat to retrieve a small keepsake given her by her boyfriend “minister” (a toy compass). As soon as she left her seat it broke loose and slammed against the ceiling. She would have been killed had she not left the seat. As soon as the seat broke loose the machine stopped vibrating and shaking.
We have been given a plan, a rule book for life, a Spiritual Guide but a practical one as well. When we have weak faith and disbelief and attempt to “improve” on Gods plan by forcing others to live certain ways we are being hubristic. We need to follow Gods laws and directions and help others individually, not collectively through force. We won’t achieve eternal life by attempting to end poverty or inequality by engaging in theft, aggression, or force. God gives us free will, He did not deprive us of it even to save His Son. We have no right to deprive others of it,except in self defense or to defend our families.
Schoolman writes: “LCB, we have to distinguish economic science from ethics. Take take an example from the abortion industry. The free interplay of market forces determines the supply of abortion clinics and the price points that match demand. The economic science—even in this case—is morally neutral. But the free market is not an absolute or an end in itself—it must be subordinate to higher laws. The mere fact that there are willing suppliers and consumers of goods and services does not touch on the question of morality and the common good. These things are “beyond economics”. In this sense, the free interplay of market forces must sometimes be limited for the sake of higher laws.”
I reply: I do not disagree. Just because supply and demand exists does not mean laws can not be put in place to regulate the economy, and does not mean that moral should not prohibit certain activities. Just as gravity can be used in an evil fashion (say, to drop rocks on people from a high window), so too can the economic laws. Just as we regulate the dropping of rocks (in the sense that it is generally a banned activity), so too should there be economic regulations.
My point is, as was the author we were discussing, that we must acknowledge that laws exist in economics (scarcity, supply and demand, diminishing returns, Greshman’s law, and others I can’t think of pre-coffee) and work with those and around those. No amount of wishing them away will work. And there are serious people out there that seriously propose wishing them away.
Dave Taylor,
Concerning point #2: I trust for God to decide when no more humans ought to be conceived or be born. Do you?
Concerning points #3 and #4: Dave, sometimes I just can’t help myself and go down the rabbit hole just a little bit… but money supply discussions are really different from what this thread is more or less dedicated to. When I talked about disrespect towards Fr. Z, I mean it in the sense of not accepting a glass of water when offered so by a host.
John M,
Concerning Thomas Woods, I’ve read a bit of his stuff on economics and Catholic Social Thought, and I honestly just presumed he had no idea what he was talking about and had not researched the topics enough. This was especially true of a critique he wrote of distributism. I read it and thought, “Gosh, has he read anything on the topic?” I’d be interested in hearing your thoughts on his work. Or, if he is reading the thread, his thoughts on his work :-D
Sarsfield,
I am delighted that you decided to lump me in with your rude response to Fr. Sirico and your refusal to apologize for calumniating his good name. Since you chose to use mockery to engage my position instead of reason and responsibility, I can only presume that your understanding of this topic is as baseless as your unwarranted attack on Fr. Sirico. Being lumped in with Fr. Sirico is the highest my blog-stardom has ever been (and probably ever will be), and for that I thank you.
LCB, as you can see I am not wishing away any aspects of economic science. As you say, gravity works by fixed laws, however, we may not set those laws in motion for any purpose whatsoever. There are higher laws at play that must regulate our actions.
Thomas Woods: “What’s Wrong With Distributism”
http://mises.org/story/1062
“As you say, gravity works by fixed laws, however, we may not set those laws in motion for any purpose whatsoever. There are higher laws at play that must regulate our actions.”
Hear, hear! I agree wholeheartedly! And let’s start with the 10 Commandments.
kate, I happen to agree that many so-called “distributists” are misguided in some of their ideas. For example, I think they underestimate the importance of private initiative. Fr. Pesch gives us good summary of its importance:
++++++++++++++++++++++++++++++++++++++++++++++
Private Initiative
It would be a mistake, however, if we were to regard the temporal welfare of the citizens as the purpose of the state without any restrictions of any kind. Instead, what is needed in this regard are certain distinctions to separate in a proper manner the area of legitimate state functions from the sphere of private activity. The direct and positive actualization of the private good of individual citizens, of and by itself, lies beyond the limits of the state’s purpose. That is so because: A) each person is the master of hisown destiny. It is for that purpose that each person has receivedhis capabilities and powers, so that he can achieve his private well-being by his own activity. From the state he looks for what is needed to make up for what he lacks, but not the suppression of his own private endeavor. B) Even if it tried to do so, the state could not accomplish the staggering task of directly seeing to the well-being of each individual citizen in a satisfactory manner. C)Finally, civil liberty would be the victim, because the supervision of all of private life would have to be the inevitable consequenceof such an endeavor by the state.
Now if the state does not have the purpose overall of actualizing the welfare of individual citizens by its own positive and directaction, nevertheless, since the temporal welfare of all of its citizen members represents the goal imposed upon it by nature, the purpose of the state involves the indirect endeavor, i.e., making possible the general welfare by social means and institutions. Inother words: the purpose of the state as a political society consists in providing, preserving, and fulfilling the sum total ofthose public conditions and institutions which would provide, preserve, and enhance the potential of all members, through their combined energies so that they may freely and independently achieve their true temporal welfare according to their own particular capacities and situations, and to preserve what they have achieved in an honest manner.
(Pesch, LDN. 1.1, 3, 2, 6)
Woods’ work is a sane, thorough, and cogent debunking of the romantic nonsense that calls itself Distributism.
For those with a setious interest in economics and Catholic Social Teaching, I recommnend studying Pesch. His greatest work (“summa economica”) is available in English from Mellen Press — in 10 volumes. This from the publisher:
+++++++++++++++++++++++++++++
Description
This is the first English translation of the works of Heinrich Pesch, SJ (1854-1926). Pesch, a German Jesuit scholar and economist, wrote the longest, most exhaustive economics text ever written, one that deserves to be regarded as a kind of Summa Economica. The five-volume Lehrbuch der Nationalökonomie examines all serious economic thinking up until Pesch’s time, culling what was deficient, retaining what was worthwhile, and filling in what its author perceived to be lacking. The result was a design for an economic system that is opposed to both classically liberal capitalism and state socialism, based instead on Aristotelian-Thomistic philosophical premises. Pesch developed many of the basic principles which emerged in the social encyclicals of the Catholic Church.
Read the rest here:
http://www.mellenpress.com/mellenpress.cfm?bookid=5088&pc=9
I am somewhat amused by all of the defenses of “capitalism,” since no one here is old enough to have any memory of it. No one has seen capitalism since 1933. Before that time, the Federal Budget consumed 2-4% of GDP; since then, it has been 17-24%, and higher in wartime, and likely higher now. In total, gov’t accounts for more than a third of the economy. The pre-war capitalism produced an economy that was in recession 40% of the time. Since the war, that is, since heavy gov’t involvement, the economy has been in recession only 15% of the time, and the post-war recessions, until this one, were half as deep and half as long, on average. The dreadful situation we have today was more the rule than the exception. There was a reason for the change, and a reason that even administrations that claimed to be “conservative” have, if anything, expanded gov’t power even faster than their liberal counterparts. Those defending a pure capitalism ought to state their willingness to return to such unstable times.
And indeed, this is the universal history of capitalism. There are no exceptions. In the history of the world, across this vast planet, there is not a single instance of a capitalism which could sustain itself for as much as 15 years without falling into disaster. This is an historical claim that is easy to falsify, if such an example exists, and I invite the defenders of pure capitalism to do so; I am confident they cannot. It is easy, from the safety of the castle, to ridicule the soldiers who guard your gate. Easy, but not particularly wise.
Which brings me to Fr. Sirico. I leave the judgment of heresy to competent authority. But I will say his reading of the social doctrine is selective and tendentious. And dishonest. I encountered him several years ago in Rome, where he gave a 20 minute lecture railing against gov’t involvement and praising pure capitalism. His “proof” was the remarkable success of the capitalist system, which had brought us such wealth as we had. But during the question period, I pointed out that such wealth as we had was produced by the very system he was attacking. He harrumphed and changed the subject. I instantly decided I was dealing with a mind too shallow to worry about. But I do worry about the attempts to subvert the glory of the social encyclicals into an apology for economic liberalism, and to convert Mother Church into the house pet of the capitalists.
Fr. Sirico makes the same mistake that another poster here does: confusing physical laws with human tendencies; confusing gravity with supply and demand. Physical “laws” are simply the way things are; they are not violated because it is not in the nature of things to violate them. Human laws are different. Supply and demand is a useful “law” only to the extent of its proper domain, which is for elastic, reproducible commodities in a market system. And even there, its reign is tenuous, as anyone who has studied marketing can tell you, since marketing is largely an effort to avoid the restraints of marginal pricing by monkeying with the “law” of demand. Further, supply and demand does not cover the most important “commodities” in any economy, namely land, labor, and money. These are the “fictitious commodities” that do not have equilibrium points because their supply is not regulated by price. We do not produce more children, for example, because parents note a shortage in the labor markets. And no man has ever seduced a lady by saying, “Hey babe, want to make a new computer programmer tonight? I hear there’s a shortage in that market.” At least, that line has never worked for me. YMMV.
Which brings us to the Austrian economics that really underlies Sirico’s views. Austrianism is a simple confusion about what kind of science economics is. To Mises et al. it is an axiomatic science, like geometry or logic. That is, it is a set of formal relations requiring no empirical validation. And to compound the error, Mises chooses “axioms of human action” that are flat contradicted by all the other humane sciences and by our common human experience. It is not that there are no truths within Austrianism, but there are no truths in it that cannot be found in other sources, and no truth unique to it which doesn’t turn out to be a falsehood. Economics is not a speculative science of formal relations, but a material, practical (in the technical sense) humane science, and like all such sciences it is governed by the moral law; as a class of human relationships, it is governed, even in a practical sense, by justice, as are all human relationships. Therefore, contra Woods, the Church has the right, the competence, and the duty to address these matters. And as a Catholic, I have the duty to listen to the Church and form my conscience from her wisdom.
Now, I do not like government-run economies, and I think that game is about to run out, just as it ran out for the socialists. But I will not be a hypocrite and attack the sources of my own security without at least asking why things are the way they are. And it was not some socialist conspiracy; it was the capitalists themselves who demanded the system we have to protect themselves, mainly from each other, and from the public. We can no longer afford that protection, but anyone who thinks the answer is to be found ante Roosevelt ought to be very careful about what they wish for; they just might get it.
John Médaille
Given that Distributism is an “on the ground” and working system and working in both light and heavy industries, while capitalism is not and never has been, I wonder at the complaints that it is “romantic” or can’t be scaled to large enterprises. Who is the romantic here? The one who points to working systems, or the one who dreams of something that never existed?
By the way, “John Smith” is “John Médaille.” When I enter my own name, the system refuses to post it.
John,
You *could* have made all the points you did without impugning the character of Fr. Siroco. You could have rebutted each of his statements without accusing him of being dishonest, tendentious and of a shallow mind. In fact, your entire third paragraph was an attempt to discredit a man’s ideas by calling into question his moral character.
We are all guilty of that to a greater or lesser extent, so it should come as no surprise that your very statements call into question you motives which directly affect the credibility of your arguments.
Michael, I don’t think so. This is my direct experience of the man, and I believe I am entitled to recount that experience. Yes, we are all sinners. But it is different if you make a career out of it. Just today, I received another slick mailing from the Acton Institute, where Sirico decried the constant “failure” of Keynesian economics. Failure? 60 years of near constant growth and relative stability is “failure”? Had Sirico never heard of 1929, or worse, 1873? Has he never asked how things got that way? Is he really proposing a return to the pre-war economy. More to the point, are you?
I am not a Keynesian, but I do think we should be forced to follow some facts, even if they are detrimental to our ideology.
John Smith @ 4:23 pm is one the best comments I have read here in a long time.
“No one has seen capitalism since 1933. Before that time, the Federal Budget consumed 2-4% of GDP; since then, it has been 17-24%, and higher in wartime, and likely higher now. In total, gov’t accounts for more than a third of the economy. The pre-war capitalism produced an economy that was in recession 40% of the time. Since the war, that is, since heavy gov’t involvement, the economy has been in recession only 15% of the time, and the post-war recessions, until this one, were half as deep and half as long, on average. The dreadful situation we have today was more the rule than the exception. There was a reason for the change, and a reason that even administrations that claimed to be “conservative” have, if anything, expanded gov’t power even faster than their liberal counterparts. Those defending a pure capitalism ought to state their willingness to return to such unstable times.”
RETURN to unstable times???! Forgive me but we are currently in times so economically unstable (AND caused by government) that it is unprecedented in its scope and this is just the beginning. Are you saying that prior to 1933 we had capitalism? Perhaps you should define “capitalism”…I don’t think we are talking about the same thing. Have you never heard of the broken window fallacy? Wars do not bring economic stability. They simply divert wealth and lives the private sector would have put to constructive use in a free market….but I do admit war is much more visible than what might have been had people not been drug into wars and other government exterminations. First you claim that “heavy government involvement” recessions have decreased then in the same paragraph claims that todays “dreadful situation” is because conservatives have expanded government power faster than the lefties..!!?? Well, which is it? Shouldn’t even more government power bring even more “stability” and less recession?? If not, why not?
“And indeed, this is the universal history of capitalism. There are no exceptions. In the history of the world, across this vast planet, there is not a single instance of a capitalism which could sustain itself for as much as 15 years without falling into disaster. This is an historical claim that is easy to falsify, if such an example exists, and I invite the defenders of pure capitalism to do so; I am confident they cannot. It is easy, from the safety of the castle, to ridicule the soldiers who guard your gate. Easy, but not particularly wise.”
Capitalism is the state in which the means of production and distribution are privately owned rather than state owned. The free market is the state in which individuals are free to buy and sell without restriction. All civilizations start out trading freely and begin a division of labor that results in excess production. The problem arises when a smarter group of people convinces or forces the rest to support them, for whatever reason. Then we see the end of free trade and the beginning of regulated trade, restricted trade, taxation, etc. and the rise of rulers and ruling classes. Much of this is the result of lack of education on the part of the masses…the common people being taught such awful lies as that war brings prosperity. Freer markets bring increased standards of living and prosperity. Socialism, based on covetousness and theft is simply looting some to give to others while taking a hefty skim off the top for the looters. Perhaps you should count the body piles created by freer market societies as opposed to the socialist states. I’ll take the history of capitalism ANY DAY over the history of socialism and communism.
“Which brings me to Fr. Sirico. I leave the judgment of heresy to competent authority. But I will say his reading of the social doctrine is selective and tendentious. And dishonest. I encountered him several years ago in Rome, where he gave a 20 minute lecture railing against gov’t involvement and praising pure capitalism. His “proof” was the remarkable success of the capitalist system, which had brought us such wealth as we had. But during the question period, I pointed out that such wealth as we had was produced by the very system he was attacking. He harrumphed and changed the subject. I instantly decided I was dealing with a mind too shallow to worry about. But I do worry about the attempts to subvert the glory of the social encyclicals into an apology for economic liberalism, and to convert Mother Church into the house pet of the capitalists.”
I don’t know what period in history you are referring to. The FACT is that the state does not produce, does not create. It can only TAKE from producers at gunpoint. I’m sure lefties like him ARE worried that they might be prevented from dragging Mother Church into the Marxist morass.
“Fr. Sirico makes the same mistake that another poster here does: confusing physical laws with human tendencies; confusing gravity with supply and demand.”
Nonsense. That was an excellent analogy. There are economic laws, break them and economic suffering results. These laws are just as absolute as the laws of physics.
” Physical “laws” are simply the way things are; they are not violated because it is not in the nature of things to violate them. Human laws are different. Supply and demand is a useful “law” only to the extent of its proper domain, which is for elastic, reproducible commodities in a market system. And even there, its reign is tenuous, as anyone who has studied marketing can tell you, since marketing is largely an effort to avoid the restraints of marginal pricing by monkeying with the “law” of demand. Further, supply and demand does not cover the most important “commodities” in any economy, namely land, labor, and money. ”
Nor does it cover that frequent addition to the mix, state bureaucrats. Of course there is more to it than supply and demand, and marketing is only part of it, how about the deliberate training of a population of “consumers” in state “schools”? Economic laws are not “human laws”, they are absolutes. There ain’t no such thing as a free lunch, TANSTAAFL, is such an economic law.
“These are the “fictitious commodities” that do not have equilibrium points because their supply is not regulated by price. We do not produce more children, for example, because parents note a shortage in the labor markets. And no man has ever seduced a lady by saying, “Hey babe, want to make a new computer programmer tonight? I hear there’s a shortage in that market.” At least, that line has never worked for me. YMMV.”
And that is the “human action” Mises speaks of, the action that no state bureaucrat can quantify or predict and is why the state can’t “plan an economy”.
“Which brings us to the Austrian economics that really underlies Sirico’s views. Austrianism is a simple confusion about what kind of science economics is. To Mises et al. it is an axiomatic science, like geometry or logic. That is, it is a set of formal relations requiring no empirical validation.”
Actually, I believe the Austrians say it CAN’T be “validated” through mathematical formulas the Keynesians are so fond of. Because of human action, the billions of variables affecting the decisions of market participators that cannot be quantified.
” And to compound the error, Mises chooses “axioms of human action” that are flat contradicted by all the other humane sciences and by our common human experience.”
Such as?
” It is not that there are no truths within Austrianism, but there are no truths in it that cannot be found in other sources, and no truth unique to it which doesn’t turn out to be a falsehood.”
Such as?
” Economics is not a speculative science of formal relations, but a material, practical (in the technical sense) humane science, and like all such sciences it is governed by the moral law; as a class of human relationships, it is governed, even in a practical sense, by justice, as are all human relationships.”
Nonsense. Economics is simply the study of how goods and services are produced, distributed, and consumed. There is nothing inherently moral one way or the other about it. You can say one economic system is more “moral” than another, in your view, however. Economic laws are not governed by “justice”. Spend more than you make and you go broke..period. No morality, no subjective “justice”, you are broke. UNLESS you have buddies in government who will loot taxpayers to bail you out. But that doesn’t change the basic law that if you spend more than you make you will be broke.
” Therefore, contra Woods, the Church has the right, the competence, and the duty to address these matters. And as a Catholic, I have the duty to listen to the Church and form my conscience from her wisdom.”
I don’t think Woods wold disagree with this. You are talking about voluntary behaviors.
“Now, I do not like government-run economies, and I think that game is about to run out, just as it ran out for the socialists.”
Government run economies ARE socialism, just national socialism, fascism.
” But I will not be a hypocrite and attack the sources of my own security without at least asking why things are the way they are. ”
The sources of your security? GOVERNMENT??
“And it was not some socialist conspiracy; it was the capitalists themselves who demanded the system we have to protect themselves, mainly from each other, and from the public. We can no longer afford that protection, but anyone who thinks the answer is to be found ante Roosevelt ought to be very careful about what they wish for; they just might get it.”
The capitalists paid to play. They paid the state for protection. That is what the state is, a legalized mafia, as Rothbard put it, a gang of thieves writ large. But this gang indoctrinates all children in the need for their rule, fear of their neighbors, and herd behaviors. FDR was a socialist, a stooge for Stalin and he stole the peoples gold. It always amazes me when folks shake their fingers at capitalists and give a complete free pass to the state, without whom there could be no capitalist excesses and bullying.
I agree with you, Kate, that the system is coming apart, and may be suffering a fatal wound. Nevertheless, the fact of the matter is that you (and I) have lived our lives in a period of unparalleled economic stability and growth, and we ought to be grateful for that; it was not a privilege our grandparents and great-grandparents had. If you want to know the reason, its because, for the last 20 years, the course of Keynesianism has been reversed; instead of a transfer from high to low, it is now a transfer from low to high. The level of economic equality, which improved from the 40’s through the mid-70’s, has been reversed; we are now at precisely the same level of inequality we were in 1929. Some coincidence, eh? That’s the problem with Keynesianism: it’s too easy to make the system flow backwards.
I don’t quite get your argument about capitalist history. You seem to be saying that we didn’t have it before 1933 and that we have always had it. Which is it? The Austrians like to argue both sides, as you seem to be doing. When you point out the instabilities of the pre-Keynesian capitalism, they say that wasn’t real capitalism either. When you talk about how stable the system is, they say capitalism takes the credit. It’s a clever, if incoherent, method of argument, but only so long as you never let the two halves of the argument appear together in the same sentence; then it just looks silly.
But it leaves them with two further problems. Yes, they can always cop out when confronted with historical failures by saying “it wasn’t REAL capitalism,” but then they are left with no actual examples of their system. Which is true enough, but then nobody can see if it actually works in practice; it is, as you say, “Romantic” rather than actual. But there is a further and deeper problem. It means one has to construct a very complex theory to account for the facts of history. Thus: A small bit of gov’t involvement (2%) greatly destabilizes the economic system, while a large amount of interference brings a higher degree of stability, but a complete diminishment of gov’t (presumably to something less than 2%) would give us…well, whatever it is that Austrianism is supposed to give us. I’ve never seen an Austrian actually attempt this explanation, likely because it can’t be done. But have at it. I suspect that if you can pull it off, you will win the Nobel Prize.
You also seem to be arguing both sides of the science question, claiming that there is no distinction between physical and humane sciences, and then arguing that humane sciences can’t be validated. Interesting argument. You also argue that economics is the science of how we produce things, etc. (I agree) but then argue that it isn’t a material science. Another very interesting argument, to say the least. But is it not fair to ask you if you really understand the distinction between sciences of formal relations and sciences of material relations? It’s a safe bet that Mises did not.
Mostly, you seem to be arguing against straw men, inveighing against arguments I did not make, and ascribing to me positions I do not hold. You charge that any deviation from your system is “socialism”. Very well, but that involves a real danger. Because if our system is socialist, then you have at a stroke rescued socialism from the ashcan of history and held it up as one of the most successful systems in history, or at least the history of the last 60 years. Not a bad run, all in all. But then, I confess to being confused. At one moment we are all capitalists, and the next all socialists, then fascists, then God knows what. The “system” you think we are under seems to be dictated more by the needs of your argument than by the facts of history.
John Medaille asks me to post this. Though it gets personal it is at least not hearsay. “O would that God the giftie’d gie us/ tae see ourselves as ithers see us”.
“I am somewhat amused by all of the defenses of “capitalism,” since no one here is old enough to have any memory of it. No one has seen capitalism since 1933. Before that time, the Federal Budget consumed 2-4% of GDP; since then, it has been 17-24%, and higher in wartime, and likely higher now. In total, gov’t accounts for more than a third of the economy. The pre-war capitalism produced an economy that was in recession 40% of the time. Since the war, that is, since heavy gov’t involvement, the economy has been in recession only 15% of the time, and the post-war recessions, until this one, were half as deep and half as long, on average. The dreadful situation we have today was more the rule than the exception. There was a reason for the change, and a reason that even administrations that claimed to be “conservative” have, if anything, expanded gov’t power even faster than their liberal counterparts. Those defending a pure capitalism ought to state their willingness to return to such unstable times.
“And indeed, this is the universal history of capitalism. There are no exceptions. In the history of the world, across this vast planet, there is not a single instance of a capitalism which could sustain itself for as much as 15 years without falling into disaster. This is an historical claim that is easy to falsify, if such an example exists, and I invite the defenders of pure capitalism to do so; I am confident they cannot. It is easy, from the safety of the castle, to ridicule the soldiers who guard your gate. Easy, but not particularly wise.
“Which brings me to Fr. Sirico. I leave the judgment of heresy to competent authority. But I will say his reading of the social doctrine is selective and tendentious. And dishonest. I encountered him several years ago in Rome, where he gave a 20 minute lecture railing against gov’t involvement and praising pure capitalism. His “proof” was the remarkable success of the capitalist system, which had brought us such wealth as we had. But during the question period, I pointed out that such wealth as we had was produced by the very system he was attacking. He harrumphed and changed the subject. I instantly decided I was dealing with a mind too shallow to worry about. But I do worry about the attempts to subvert the glory of the social encyclicals into an apology for economic liberalism, and to convert Mother Church into the house pet of the capitalists.
“Fr. Sirico makes the same mistake that another poster here does: confusing physical laws with human tendencies; confusing gravity with supply and demand. Physical “laws” are simply the way things are; they are not violated because it is not in the nature of things to violate them. Human laws are different. Supply and demand is a useful “law” only to the extent of its proper domain, which is for elastic, reproducible commodities in a market system. And even there, its reign is tenuous, as anyone who has studied marketing can tell you, since marketing is largely an effort to avoid the restraints of marginal pricing by monkeying with the “law” of demand. Further, supply and demand does not cover the most important “commodities” in any economy, namely land, labor, and money. These are the “fictitious commodities” that do not have equilibrium points because their supply is not regulated by price. We do not produce more children, for example, because parents note a shortage in the labor markets. And no man has ever seduced a lady by saying, “Hey babe, want to make a new computer programmer tonight? I hear there’s a shortage in that market.” At least, that line has never worked for me. YMMV.
“Which brings us to the Austrian economics that really underlies Sirico’s views. Austrianism is a simple confusion about what kind of science economics is. To Mises et al. it is an axiomatic science, like geometry or logic. That is, it is a set of formal relations requiring no empirical validation. And to compound the error, Mises chooses “axioms of human action” that are flat contradicted by all the other humane sciences and by our common human experience. It is not that there are no truths within Austrianism, but there are no truths in it that cannot be found in other sources, and no truth unique to it which doesn’t turn out to be a falsehood. Economics is not a speculative science of formal relations, but a material, practical (in the technical sense) humane science, and like all such sciences it is governed by the moral law; as a class of human relationships, it is governed, even in a practical sense, by justice, as are all human relationships. Therefore, contra Woods, the Church has the right, the competence, and the duty to address these matters. And as a Catholic, I have the duty to listen to the Church and form my conscience from her wisdom.
“Now, I do not like government-run economies, and I think that game is about to run out, just as it ran out for the socialists. But I will not be a hypocrite and attack the sources of my own security without at least asking why things are the way they are. And it was not some socialist conspiracy; it was the capitalists themselves who demanded the system we have to protect themselves, mainly from each other, and from the public. We can no longer afford that protection, but anyone who thinks the answer is to be found ante Roosevelt ought to be very careful about what they wish for; they just might get it”.
John
Apologies. I responded to John’s email after the Good Friday service but have now seen he’d already got his missive posted. The time difference between the US and Oz doesn’t help.
John and I have differed over Keynes, but I must say I wonder what school his critic Kate went to: whether she has even heard of Keynes, never mind understood his background, theories and self-sacrificing public service.
History, I understand, has been sidelined from today’s “autistic” economic curricula. To keep the issue simple then, Kate, how long did the “booms” last after the 1914 war and after 1945, i.e. Keynes? Was it not the “Austrian” theories of Thatcher and Reagan that got them exporting our jobs and turning our countries into rentier economies, not earning their keep but living immorally and increasingly helplessly off the work of others? Was it “the State” or the grandson of one of Hitler’s financiers (a Blair was another one) who led our countries to a condition of infamy? (This last, I admit, is based on hearsay, i.e. gleaned from the internet, but the question needs asking if one is going to have an indiscriminate knee-jerk reaction against all politicians when the alternatives offered are their dishonest or half-baked financiers).
Apologies again. Still pondering her response in bewilderment, I see Kate has at least heard of Keynesians.
“Actually, I believe the Austrians say it CAN’T be “validated” through mathematical formulas the Keynesians are so fond of. Because of human action, the billions of variables affecting the decisions of market participators that cannot be quantified”.
But here she reveals that she doesn’t understand the mathematics of flow. One cannot determine what happens to all the electrons forming an electric current, but one doesn’t need to, as one has ways of measuring the overall effect. There is a nice diagram of the Phillips Machine at http://www.cs.man.ac.uk/CCS/res/res12.htm.
“Economic laws are not “human laws”, they are absolutes.”
I can hardly believe Kate is saying this, but then I have understood for half a century that the economic concept of “law” is not natural law but that of Adam Smith’s mentor, the philosopher of science David Hume, who argued that we cannot know what happens, only what we can sense or measure. His “laws” therefore refer to mathematical laws of the graphs which at one time were plotted from observation, but are now (qua John) largely taken for granted. From the point of view of John Neumann’s game theory approach to economic competition, these have become the traditional rules of the game, the details of which (like the rules of professional soccer) are frequently changed by the “authorities” to try and make them more rewarding for financiers.
John Médaille asked me to post the following:
“I agree with you, Kate, that the system is coming apart, and may be suffering a fatal wound. Nevertheless, the fact of the matter is that you (and I) have lived our lives in a period of unparalleled economic stability and growth, and we ought to be grateful for that; it was not a privilege our grandparents and great-grandparents had. If you want to know the reason, its because, for the last 20 years, the course of Keynesianism has been reversed; instead of a transfer from high to low, it is now a transfer from low to high. The level of economic equality, which improved from the 40’s through the mid-70’s, has been reversed; we are now at precisely the same level of inequality we were in 1929. Some coincidence, eh? That’s the problem with Keynesianism: it’s too easy to make the system flow backwards.
I don’t quite get your argument about capitalist history. You seem to be saying that we didn’t have it before 1933 and that we have always had it. Which is it? The Austrians like to argue both sides, as you seem to be doing. When you point out the instabilities of the pre-Keynesian capitalism, they say that wasn’t real capitalism either. When you talk about how stable the system is, they say capitalism takes the credit. It’s a clever, if incoherent, method of argument, but only so long as you never let the two halves of the argument appear together in the same sentence; then it just looks silly.
But it leaves them with two further problems. Yes, they can always cop out when confronted with historical failures by saying “it wasn’t REAL capitalism,” but then they are left with no actual examples of their system. Which is true enough, but then nobody can see if it actually works in practice; it is, as you say, “Romantic” rather than actual. But there is a further and deeper problem. It means one has to construct a very complex theory to account for the facts of history. Thus: A small bit of gov’t involvement (2%) greatly destabilizes the economic system, while a large amount of interference brings a higher degree of stability, but a complete diminishment of gov’t (presumably to something less than 2%) would give us…well, whatever it is that Austrianism is supposed to give us. I’ve never seen an Austrian actually attempt this explanation, likely because it can’t be done. But have at it. I suspect that if you can pull it off, you will win the Nobel Prize.
You also seem to be arguing both sides of the science question, claiming that there is no distinction between physical and humane sciences, and then arguing that humane sciences can’t be validated. Interesting argument. You also argue that economics is the science of how we produce things, etc. (I agree) but then argue that it isn’t a material science. Another very interesting argument, to say the least. But is it not fair to ask you if you really understand the distinction between sciences of formal relations and sciences of material relations? It’s a safe bet that Mises did not.”
– John Médaille
“John and I have differed over Keynes, but I must say I wonder what school his critic Kate went to: whether she has even heard of Keynes, never mind understood his background, theories and self-sacrificing public service.”
His background? The Bloomsbury group? Not impressed with that at all, how are you squaring THAT with the Magisterium? Neither do I find expounding theories that promote looting and aggression against other peoples property “self-sacrificing”. Keynesian interventionism results in the mess we have today.
“History, I understand, has been sidelined from today’s “autistic” economic curricula. To keep the issue simple then, Kate, how long did the “booms” last after the 1914 war and after 1945, i.e. Keynes? Was it not the “Austrian” theories of Thatcher and Reagan that got them exporting our jobs and turning our countries into rentier economies, not earning their keep but living immorally and increasingly helplessly off the work of others?”
Uh, Reagan was NOT an Austrian, what history book are you reading?? Cutting taxes (if that is what you are referring to), is not all by itself Austrian economics And neither are “free trade agreements” free trade. How on earth can you claim that free trade existed at the same time as the Federal Reserve?? I think you are expecting me to defend Thatcher and Reagan here. They were simply parts of the same ruling class that is busily dismantling Western Civilization. This economic activity is YOUR baby, not mine. You apparently just don’t like it when the looting is done to favor big business, preferring looting be done to benefit “the poor”, ignoring the fact that it is still looting. With the state in charge there is always an elite running things, and that elite envies everything the rest of us has, including our children (Obamas new plan to extend the school year) and our minds, (the govschools, the MSM) or the Rockefellers and their plans to chip us.
“Was it “the State” or the grandson of one of Hitler’s financiers (a Blair was another one) who led our countries to a condition of infamy? (This last, I admit, is based on hearsay, i.e. gleaned from the internet, but the question needs asking if one is going to have an indiscriminate knee-jerk reaction against all politicians when the alternatives offered are their dishonest or half-baked financiers).”
Comment by Dave Taylor — 10 April 2009 @
The alternatives are NOT financiers”, the alternatives are actually things neither you nor I can conceive of but somebody will if they have the freedom to do so. The alternative is liberty. Can you not conceive of living without an overseer other than the Almighty??
“Apologies again. Still pondering her response in bewilderment, I see Kate has at least heard of Keynesians.”
Oh, only because the leftist Time (or was it Newsweek?) has informed me “we are all Keynesians now”. After all, I am a product of public “education”.
“Actually, I believe the Austrians say it CAN’T be “validated” through mathematical formulas the Keynesians are so fond of. Because of human action, the billions of variables affecting the decisions of market participators that cannot be quantified”.
But here she reveals that she doesn’t understand the mathematics of flow. One cannot determine what happens to all the electrons forming an electric current, but one doesn’t need to, as one has ways of measuring the overall effect. There is a nice diagram of the Phillips Machine at http://www.cs.man.ac.uk/CCS/res/“res12.htm.”
You can spout all the mathematical formulas and esoteric calculations you want, that emperor has no clothes. It is a ruse to cow people into thinking they can’t understand economics, that it requires jokers like Keynes to splain it to the rubes, better yet, just “run” their economy for them. All the economic laws we really need are in the Bible, flout them and you will suffer….as we are and will. Your attempts to level the world and end privation is fruitless, Christ told us the poor would always be with us. But then that was before Keynes was born, right? Now “we” know better.
““Economic laws are not “human laws”, they are absolutes.”
I can hardly believe Kate is saying this, but then I have understood for half a century that the economic concept of “law” is not natural law but that of Adam Smith’s mentor, the philosopher of science David Hume, who argued that we cannot know what happens, only what we can sense or measure. His “laws” therefore refer to mathematical laws of the graphs which at one time were plotted from observation, but are now (qua John) largely taken for granted. From the point of view of John Neumann’s game theory approach to economic competition, these have become the traditional rules of the game, the details of which (like the rules of professional soccer) are frequently changed by the “authorities” to try and make them more rewarding for financiers.”
Call it what you want, put your faith in Hume and what you can “sense and measure”, I am not a materialist, empiricism can only go so far. You can plot all the graphs you want but you still have no conception of the variables of simple human action of people free to trade. That is what government school is about; the effort to create conformity, obedience, predictability to minimize the variables of human action on the part of the masses. Do you consider the 10 Commandments to be “laws”??
The Misean case against Keynes
http://mises.org/story/2492
Schumpeter vs Keynes
http://mises.org/story/2492
Kate, let me remind you of Fr Z’s advice at the beginning of this: “If you don’t know what is going on in this discussion, it would be better for you to read and not to comment.”
For the record, I don’t “put my faith in Hume”. Quite the contrary, I see his half-baked philosophy of science, denying the possibility of knowing laws of natural causation which cannot be seen, as the prime reason for the failure of economics. Since his time we have learnt how to see how we see, and everyone but philosophers who want something to argue about can see that the scientific account now contradicts his. What they cannot see is how far his defence of atheism has infected traditional methods which are now taken for granted.
It is interesting that the article you point us to starts with one of the great errors of Austrian economics, namely the contention that all unemployment is voluntary. What they mean is that labor has a market clearing price, so that if anyone is unemployed, it only means that they haven’t lowered their wage demands to the market price. So that if they can’t get a job at $10/hour, then they should ask only $5, and if that doesn’t work, they should ask only $1. But at some point, so the theory goes, the market price is reached and a job is found. Therefore, if you are not employed, you have only yourself to blame.
The theory is contradicted by every empirical test of the market, and is based on bad reasoning. In the first place, labor is not a commodity; its supply is not regulated by price, as I explained in my last post. Further, employers don’t hire because the price is low, they hire because they think they can make more from your labor than what they pay you. This happens when demand for goods is high. But the bulk of demand comes from wages. Thus, as wages contract, so does demand, which leads to more layoffs, which leads to more contraction, etc. Merely lowering the wage does not increase employment, it contracts demand and decreases employment. This is the “vicious cycle” that economists speak of, and it is what is happening now.
Beyond that, if what the Austrians say is true, than what we would expect to see is high employment and labor participation rates in low-wage states, and low employment and low labor participation rates in high-wage states. But what we actually see, always and everywhere, is exactly the opposite: subsistence-wage states suffer from chronically high unemployment even in the face of low labor participation rates; while high-wage states have lower unemployment and higher labor participation rates.
This lack of empirical verification goes to the heart of my complaint against the Austrians. If one refuses to test one’s theories against reality, how does one know the theories are accurate? The Austrians have immunized themselves against any empirical test. But if one is not willing to put one’s ideas to the hazard, one cannot properly be said to be thinking. Thinking requires some test of our ideas. If we exempt our ideas from any test of truth, then they cannot be falsified, but neither can they be verified. They become self-contained and self-referential ideologies that may stray as far from reality as one pleases. It is, no doubt, a pleasant journey, away from this world of messy facts and into a fantasyland of pure and romantic theories. But those who do that should at least respect the opinions of those of us who decline to treat economics as a romantic novel, where reality is not permitted to intrude.
John Médaille:
“It is interesting that the article you point us to starts with one of the great errors of Austrian economics, namely the contention that all unemployment is voluntary. What they mean is that labor has a market clearing price, so that if anyone is unemployed, it only means that they haven’t lowered their wage demands to the market price. So that if they can’t get a job at $10/hour, then they should ask only $5, and if that doesn’t work, they should ask only $1. But at some point, so the theory goes, the market price is reached and a job is found. Therefore, if you are not employed, you have only yourself to blame.
The theory is contradicted by every empirical test of the market, and is based on bad reasoning. In the first place, labor is not a commodity; its supply is not regulated by price, as I explained in my last post. Further, employers don’t hire because the price is low, they hire because they think they can make more from your labor than what they pay you. This happens when demand for goods is high. But the bulk of demand comes from wages. Thus, as wages contract, so does demand, which leads to more layoffs, which leads to more contraction, etc. Merely lowering the wage does not increase employment, it contracts demand and decreases employment. This is the “vicious cycle” that economists speak of, and it is what is happening now.
Beyond that, if what the Austrians say is true, than what we would expect to see is high employment and high labor participation rates in low-wage states, and low employment and low labor participation rates in high-wage states. But what we actually see, always and everywhere, is exactly the opposite: subsistence-wage states suffer from chronically high unemployment even in the face of low labor participation rates; while high-wage states have lower unemployment and higher labor participation rates.
This lack of empirical verification goes to the heart of my complaint against the Austrians. If one refuses to test one’s theories against reality, how does one know the theories are accurate? The Austrians have immunized themselves against any empirical test. But if one is not willing to put one’s ideas to the hazard, one cannot properly be said to be thinking. Thinking requires some test of our ideas. If we exempt our ideas from any test of truth, then they cannot be falsified, but neither can they be verified. They become self-contained and self-referential ideologies that may stray as far from reality as one pleases. It is, no doubt, a pleasant journey, away from this world of messy facts and into a fantasyland of pure and romantic theories. But those who do that should at least respect the opinions of those of us who decline to treat economics as a romantic novel, where reality is not permitted to intrude.”
-John Médaille
John,
You are “entitled”? You honestly cannot advance a contrary opinion without accusing you opponent of lying?
It is becoming increasingly obvious that you have some personal animosity toward Fr. Siroco. Your judgement in this matter is suspect.
John Médaille:
“Tell the truth, Michael. The words “lie” or “lying” do not appear in any of my posts, only in yours. What appears in mine is “intellectual dishonesty,” a reasonable allegation under the circumstances.”
-John Médaille
“Kate, let me remind you of Fr Z’s advice at the beginning of this: “If you don’t know what is going on in this discussion, it would be better for you to read and not to comment.””
From my perspective that is advice you should consider, as well as his admonishment against ad hominem (your attempted smear). Why not stick to the issues and not worry about what I know? If I m so stupid I should be easy to refute. I’m waiting.
“For the record, I don’t “put my faith in Hume”. Quite the contrary, I see his half-baked philosophy of science, denying the possibility of knowing laws of natural causation which cannot be seen, as the prime reason for the failure of economics.”
That is quite a departure from THIS statement, isn’t it?:
Dave Taylor:
“I have understood for half a century that the economic concept of “law” is not natural law but that of Adam Smith’s mentor, the philosopher of science David Hume, who argued that we cannot know what happens, only what we can sense or measure.”
Medaille:
““It is interesting that the article you point us to starts with one of the great errors of Austrian economics, namely the contention that all unemployment is voluntary. ”
IN THE UNHAMPERED MARKET, try including the context.
Quote from the article:
“Employment will ensue whenever the offered wage is valued by the laborer more highly than the satisfactions of leisure or than the returns of self-employment. In the latter case, the laborer faces three choices. He may
1.
work self-sufficiently on his own resources, or homestead previously submarginal resources, and consume his own products;
2.
become a capitalist entrepreneur, engaging in barter with other self-employed entrepreneurs; or
3.
become a capitalist entrepreneur in the market, selling a product for money.
Employment will increase and wages rise so long as entrepreneurs perceive existing wages as lower than the marginal value product (discounted by time preference,[2] which a corresponding increment in the employment of labor can be expected to bring about. On the other hand, unemployment will result and increase so long as a person values the marginal value product attained through self-employment or the satisfactions of leisure more highly than a wage that reflects his labor services’ marginal productivity. In this construction there is no logical room for such a thing as “involuntary unemployment.”
“What they mean is that labor has a market clearing price, so that if anyone is unemployed, it only means that they haven’t lowered their wage demands to the market price. “So that if they can’t get a job at $10/hour, then they should ask only $5, and if that doesn’t work, they should ask only $1. But at some point, so the theory goes, the market price is reached and a job is found. Therefore, if you are not employed, you have only yourself to blame.”
I suggest you read above for “what they mean” by your initial criticism of the article.
“The theory is contradicted by every empirical test of the market, and is based on bad reasoning. In the first place, labor is not a commodity; its supply is not regulated by price, as I explained in my last post. Further, employers don’t hire because the price is low, they hire because they think they can make more from your labor than what they pay you. This happens when demand for goods is high. But the bulk of demand comes from wages. Thus, as wages contract, so does demand, which leads to more layoffs, which leads to more contraction, etc. Merely lowering the wage does not increase employment, it contracts demand and decreases employment. This is the “vicious cycle” that economists speak of, and it is what is happening now.”
Lowering EVERYONES wages could lead to decreased demand, but there are many different sectors and types of goods in the economy. Some folks demand lower priced goods, some demand higher. What is happening now is bankruptcy. We are out of money and “printing” fiat currency backed by nothing but the governments guarantee to jail us if we use other forms of money. Government is taking over business (fascism) and debt is sinking us.
“Beyond that, if what the Austrians say is true, than what we would expect to see is high employment and high labor participation rates in low-wage states, and low employment and low labor participation rates in high-wage states. But what we actually see, always and everywhere, is exactly the opposite: subsistence-wage states suffer from chronically high unemployment even in the face of low labor participation rates; while high-wage states have lower unemployment and higher labor participation rates.”
Tell that one to Detroit. I am at a loss as to how you can make these generalizations in the face of our managed and rigged economy.
“This lack of empirical verification goes to the heart of my complaint against the Austrians. If one refuses to test one’s theories against reality, how does one know the theories are accurate?”
This is a lame argument ESPECIALLY in the face of the collapse of socialist economies. When are you going to prove that socialism “works”? That is what you are advocating.
” The Austrians have immunized themselves against any empirical test. But if one is not willing to put one’s ideas to the hazard, one cannot properly be said to be thinking. Thinking requires some test of our ideas. If we exempt our ideas from any test of truth, then they cannot be falsified, but neither can they be verified. They become self-contained and self-referential ideologies that may stray as far from reality as one pleases. It is, no doubt, a pleasant journey, away from this world of messy facts and into a fantasyland of pure and romantic theories. But those who do that should at least respect the opinions of those of us who decline to treat economics as a romantic novel, where reality is not permitted to intrude.””
You are not getting the point. You demand something be quantified that CANNOT be quantified. You know this. And that is the beauty part, isn’t it? Demand “proof” that billions, perhaps trillions, even COUNTLESS, economic actions on the part of billions of people be quantified and applied to your formulas or else it cannot “work”. I am not saying we need to do something, to “make” something “work”, I (and others far more articulate) are saying “get out of the way. Leave people alone. Let them engage in trade as they desire and keep the fruits of their labor. Your ridiculous demands for a “just wage” begs the question. What IS a “just wage”?? Is what the US autoworkers get for unskilled labor a “just wage”?? Should an unskilled laborer sweeping floors make a “living wage” for that, should ALL jobs be paid a living wage then? Where would you draw the line? Who would bother to work or excel when you would make just as much as the floor sweeper (an actual example, a union rule prohibited the machinists in my husbands shop from “bidding down” because the machinists wanted to be floor sweepers doing much less difficult work for $40.00 less).
Socialism HAS ben “tested” and it failed, miserably. Time for the people pushers to give freedom a chance.
The Church is of course quite right to call for just wages. But the Church is not advocating using state aggression to make it so.
TO THE ONE POSTING FOR “John Médaille”
You do NOT get to to post for other people. That stops now.
If you do this again, I will delete all the comments attributed to him from this discussion.
Again, you do NOT get to chose to post another person’s comments without so much as a by your leave.
If the comments of John Médaille are being pulled into this blog’s spam filter, that’s too bad, but so be it.
When I have a chance to fix that then I will address the problem.
Fr Z, I accept your ruling and basically have already apologised.
Kate, going to the wrong school or having the perspective of a particular type of personality is not to be stupid, and I never intended to suggest that you are. In the following exchange you are quite right.
“For the record, I don’t “put my faith in Hume”. Quite the contrary, I see his half-baked philosophy of science, denying the possibility of knowing laws of natural causation which cannot be seen, as the prime reason for the failure of economics.”
That is quite a departure from THIS statement, isn’t it?:
Dave Taylor:
“I have understood for half a century that the economic concept of “law” is not natural law but that of Adam Smith’s mentor, the philosopher of science David Hume, who argued that we cannot know what happens, only what we can sense or measure.”
My perspective tends to be visual, and finding the right words is hard work for me. In the second statement here I should have said “the ECONOMIST’S concept of law”.
My apologies. [Thanks! Let’s see if this discussion can move along now or if it has run its course.]
This discussion doesn’t need to be rushed. People don’t have to pile on.
It is okay to stop and think and come back to the discussion.
If things are getting pulled into spam, don’t keep posting over and over.
It’ll get sorted out.
ALL: An update.
For some reason I don’t fully understand comments by “John Médaille” were being caught as spam. I was able to de-spam some of his comments when I had time. Then he found a way to post under another name, which was okay, since he was identifying who he was. What was not okay was that someone else started posting for him.
In any event, I thought that was sorted out.
Sadly, “John Médaille” decided to personalize this whole thing and wrote me some pretty insulting e-mail. That is daily bread for me, so it wasn’t that big a problem. But after a couple exchanges, I reviewed the comments. I sensed a pattern of “personalizing” the issues in the comments as well. So, I have banned his IP address.
Discussion is good. Nastiness is not.
As I said at the very top….
1) ad hominem attacks are not welcome
2) irrelevant topics are not welcome
3) knuckle-heads are not welcome
I suspect that when the Triduum is completed and there is a bit more time, people might engage again. Perhaps Fr. Robert Sirico will have some breathing space from his duties and will be able to respond, if it pleases him to do so.
Discussion is welcome, but according to the parameters I set down.
As it is pouring with rain here this holiday Monday, I might as well take up the argument.
First of all, might I ask Fr Z to make his peace with John M, a significant contributor whose legitimate frustration and embarrassment seems to have boiled over after that probably half-humorous but superficially heavy-handed rebuff of his friend. Please reinstate him.
Back on the topic of Acton’s willingness to listen to opinions other than Catholic Social Teaching (always justifiable on the basis of “knowing one’s enemy”), let us remember Good Pope John’s experience of honest Communists, and Chesterton’s tale of “The Man Who Was Thursday”, whose “enemies” turned out after all not to be his enemies, but like himself victims of misapprehension.
Without getting personal at all, can we not redirect this discussion to the problem of “the beam in our own eye”: it being easier to see other people and their failings than ourselves, and to judge them by our own atandards rather than theirs? Chesterton joked seriously in “Orthodoxy” about the insanity of using only half of our brain, but the Myers-Briggs research into the Jungian “shadow” shows that this is what we all tend to do in our different ways, the dominance in us of one talent tending to leave us with blind spots in judgements requiring us to use the opposite talent, as when sympathy needs trained feeling rather than deliberate thought, analogy a well-stocked memory rather than reliable observation.
The conflict between Right and Left views of economics corresponds to the difference between sensory and intuitive minds, the one seeing what is there to be seen (as in Hume), the other patterns in memory, reliable only after long and far-reaching experience (the theme of Newman’s “A Grammar of Assent”). This picture is complicated by about half of us relying on feelings when we make judgements, so tending to go with what was normal in infancy. A majority of those nominally on the Left are so because they were brought up that way. The real radicals are few in number and relatively weak on recognition of feeling, so tending to be instinctively selfish or altruistic, depending on how THEY were brought up.
Perhaps, then, rather passing judgement on Acton or Fr Siroco, we might reflect and comment on what sort of person we are ourselves, and why we are tending to react to Catholic Social Teaching and relativity the way we do?
Dave,
An awful lot of evil is disguised as good, the primary method of the Deceiver. Few people are wrong ALL the time and there is nothing wrong with agreeing with SOME points a person makes and disagreeing with others. But to do that one must have an overall coherent worldview or paradigm. I am certainly not an authority on Church Social Teaching. Of course people should be paid a fair wage for a fair days work, but to claim that that is the Church calling for socialism or fascism is a whole different thing. If societal economic and social structures are managed and controlled by the state or other rulers/ruling classes the Church is right to call for those authorities to treat the powerless with fairness. But that is still not the same thing as endorsing the inequality of power. God gave us free will. To set up governments of men to hamper that through aggression and force is hubristic and always in violation of someones liberty.
Dave:
“The conflict between Right and Left views of economics corresponds to the difference between sensory and intuitive minds, the one seeing what is there to be seen (as in Hume), the other patterns in memory, reliable only after long and far-reaching experience (the theme of Newman’s “A Grammar of Assent”).”
Respectfully, this view does not represent reality. It is a false construct, a “box” most of us are taught to think within in schools and reinforced by the media. Accepting this “Right” vs “Left” construct is a de facto acceptance of SOME form of human government over ALL. It becomes a “given”,ie.: “Of course, “we” must have government or else madness and chaos ensues! The only question is WHO gets to act as god?”. And so then the fight begins, the dialectic trap to gradually proceed to the Total State, endless “polls” and media prompts explaining to a population trained in herd behaviors what MOST people think and do so “we” do not deviate into being loners, stragglers, or into “dangerous” nonconformism. Of course, nonconformism and individualism is where originality and innovation comes from so that must be controlled and aborted by the “experts” and the “educated”. Right and Left, essentially two wings on the same bird give a false illusion of choice but their ends are the same tyranny. I believe what you are calling the “intuitive mind” (correct me if I am wrong) is simply our sense of what is righteous given us by God and the Church and what nonbelieving freedom lovers call “natural law” (of course, this begs the question, where did “natural law” come from?…but that is another issue).
Dave:
” This picture is complicated by about half of us relying on feelings when we make judgements, so tending to go with what was normal in infancy. A majority of those nominally on the Left are so because they were brought up that way. The real radicals are few in number and relatively weak on recognition of feeling, so tending to be instinctively selfish or altruistic, depending on how THEY were brought up.”
I agree with this. People are being taught to FEEL, not THINK, in schools. This is deliberate. It is a short-circuiting of the cognitive process on a massive scale, the OPPOSITE of old fashioned “classical” education. Even math textbooks now emphasize social teaching and feelings over truth and logic. Government schooling is the problem, not to sound like a broken record. They are churches catechizing the absolute authority of human government and the deification of men who advanced the state the most. And many private schools and churches are no better. I cringe at the American flags in my local Churches (one church actually inside, the other outside).
I find it pretty easy to refute socialists BECAUSE of the lack of logic in their position. They are attempting to defend immorality from a moral position. It’s not logical. You can’t end economic injustice with more injustice and consider it righteous. You can’t steal and call it righteous. You can’t covet the property of another and be righteous. And a people deprived of the right to own (and controlling property is the essence of ownership) property are slaves.
(I have noticed that their is another poster here who already signs as “Kate”, so I will post as “LateKate”)
Resurrexit sicut dixit. Alleluia!
I see that the discussion has continued here since the beginning of the Triduum which made me unavailabile to add to the conversation.
I would like to make several observations:
Schoolman, 8 April 2009 @ 4:33 pm: Of course I do not believe in the “absolute primacy of unrestricted markets over morality” but I do not think that the citation from one of our writings was making that argument. Of course there can be no separating markets and morality, inasmuch as markets themselves consist of human choices. There is no machine in operation anywhere we call the market that exists outside human choice. Economic structures should serve people, not the reverse. The point of the text you cite was not to say that we may ever set aside moral absolutes, but that in our moral concerns we do well to recognize and use what we know to be true from the disciple of economics (rightly understood).
Ratzinger put the point better:
“A morality that believes itself able to dispense with the technical knowledge of economic laws is not morality but moralism. As such, it is the antithesis of morality. A scientific approach that believes itself capable of managing without an ethos misunderstands the reality of man. Therefore, it is not scientific. Today, we need a maximum of specialized economic understanding, but also a maximum of ethos so that specialized understanding may enter the service of the right goals.”
I think that John M is right that the free economy is fragile, that it is forever giving away ground to the state to meet the political and social priorities of the moment. But calling this a failure of capitalism is like calling a house break-in and robbery the failure of home and hearth. Freedom is always and everywhere vulnerable to attack by the by coercive forces, state and otherwise. A struggle between the two has virtually defined the history of civilization since the invention of the nation-state in the 16th century.
But to deny that certain economic truths exist or the universality of economic law, is dangerous. And meaningless. Is he saying that we can put price floors in place and not create surpluses? Or that we can impose price ceilings without causing shortages? That we can increase the supply of money while retaining money velocity at the existing level of productivity and not reduce money’s purchasing power? That we can, if “morality” demands it, ignore supply and demand without economic consequence? If this is what is being argued, then I fear it is sheer nonsense. This would be no different from the person who claims he can defy gravity by leaping out a window—or, in an example provided by the Parables, that a person can build a house on sand and not pay the price later. There is in fact a relationship between cause and effect that operates within the human, the economic, sphere. This is not to say that we allow economic truths to dictate everything, for in the end economic truth is only one aspect of the whole truth of who the human person is. Economics only accounts for one dimension of our reality. It is, rather, to say that that because all truth is ultimately one, there is no necessary contradiction between fides and ratio.
Neither can I understand the argument that supply and demand does not cover land, labor, and money. Is there a supply of these? Is there a demand for them? If so, the relationship between supply and demand holds. In saying this, I feel like the person trying to make the case that bowling balls are round. This just part of the structure of reality, something that follows by definition. It is nonsense and embarrassing to claim otherwise.
To say, for example, that “We do not produce more children . . .because parents note a shortage in the labor markets,” is to miss the point. It is not the procreation of children that necessarily increases or decreases the labor market, but whether laborers willing to trade their labor (that is, enter the market) for pay or not.
As for axioms, here some that Austrian theory advances which seem undeniable to me: material resources are scarce and must be allocated according to some system; time is a resource that also must be allocated. Combine the two and we can observe that action constitutes striving within the framework of scarce resources to achieve previously unmet ends, valued according to a hierarchy of preferences revealed through action.
One could go on like this and deduce a pretty rigorous case for the price system, but I won’t simply because you can find it in most any textbook on economics. If you are curious about the epistemological status of deductions based on the axiom of human action, I refer you to Karol Wojtyla’s philosophy of the Acting Person. Rocco Buttiglione, who was a close collaborator with Wojtyla, told me that he sees a parallel on these matters found the first five chapters of Mises’ Human Action and Wojtyla’s The Acton Person
As for “economic liberalism,” I suggest a study of the work of the Late Scholastic philosophers or the 14th century Bishop Nicole Oresmes, and note their opposition to violent intervention in the market process. At times, they make the modern Austrians look like they’ve made their peace with the state.
A PERSONAL NOTE: I have no recollection of the encounter Mr. Médaille describes in Rome. I am not sure what part of his argument he thinks is so weak that he feels the need to resort to a number of personal insults in order to bolster it. If I am a shallow thinker, please educate me. Of course, if I am intellectually dishonest, I suppose his first instinct was the correct one, i.e., to ignore me, which he, of course, has not done. I really want to resist replying in kind, but if he insists on these kinds of personal asides, I will absent myself from the discussion because I find it distracting and frankly insulting as well being an occasion of sin for me.
I was sorry to see that Fr. Z felt it necessary to ban Mr. Médaille from this site because of his own exchanges with him, to which I am not privy. As a believer in private property I defend Fr. Z’s right to do this, of course. I would hope, however in the spirit of new life, Fr. Z might relent and permit him to post, if Mr. Médaille can find it in himself to do so without descending into personal insults. [And since you ask it, Fr. Sirico, I will do it. Should John Médaille jot me a note with some expression of good will, I will lift the IP ban and look into the problem of why his comments were being pulled into the spam filter. And, if I can’t solve that, he could post with a different handle but sign his comments.]
Finally, I think we all do well to heed the admonition of Blessed John XXIII, given precisely with regard to differences on applying the Social Teaching of the Church:
“Differences of opinion in the application of principles can sometimes arise even among sincere Catholics. When this happens, they should be careful not to lose their respect and esteem for each other. Instead, they should strive to find points of agreement for effective and suitable action, and not wear themselves out in interminable arguments, and, under pretext of the better or the best, omit to do the good that is possible and therefore obligatory.”(Mater et Magistra #238)
Fr. Sirico, in your view can a completely free and unrestricted market ever conflict with the natural moral law — or is that considered an impossibility? Put another way, does “intervention” always involve some degree of violation of “ecomonic laws”?
I think this particular discussion can benefit by looking at examples from other disciplines — for example, the “just war doctrine”. The Magisterium of the Popes has something to say about the PRINCIPLES of just war. Yet the Church stops at principles and leaves the APPLICATION to the legitimate authorities within the proper sphere. The proper authorities have a moral duty to APPLY the moral principles to particular circumstances. At the same time, however, they do not have the right to disregard the “just war principles” on the basis that the Church has no particular competence or expertise in the art, science, and “laws” of warfare.
Scarcity is a fact, but not the only fact. Indeed, the whole point of economizing is to turn absolute scarcity into relative abundance. Of course, I endorse Father’s use of the Ratzinger quote, since I use this as the title page quote of my book. But that begs the question of whether a technical knowledge can be divorced from a moral knowledge within a humane science. I do not believe it can be. Humane science and both physical and speculative sciences follow different principles, and the first principle of any humane science is the first principle of practical reason, as St. Thomas states it, and the partial list of goods he gives along with it. Note that this is a principle of practical reason: that is, nothing can be successfully practiced over any period of time without reference to this principle; any interim “successes” will turn out to be ephemeral or merely measuring the wrong things. The attempt to divorce economics from justice fails always and everywhere.
I am somewhat surprised that Fr. Sirico divorces the procreation of children from increases or decreases in the supply of labor. I would think these two are intimately related. But then, as John Mueller of the Ethics and Public Policy Institute notes, modern economics has no way to relate these. He calls it “The Economic Stork” Theory, because according to it, workers arrive in the economy as if brought by a big economic stork. They system is conceived as individualistic, not based on the family. But the purpose of a proper economy is to support the family.
I am also sorry that Fr. Sirico cannot distinguish between a critique and an personal insult. [Not exactly the tone I had hoped for.] “Intellectual Dishonesty” is not a moral fault, but an intellectual one (unless one is doing it maliciously). It involves primarily a reliance on special pleading and the straw man argument, which are hallmarks of both the Austrian system in general and the Acton Institute in particular. In fact, any system of closed axioms is an example of special pleading, because there can be no appeal from the axioms to history. It is impermissible to test the axioms by history, or by any other science. All other humane sciences refuse to confirm and always deny the Austrian axioms. Therefore, they must stand apart from science. They may be true, for all I know, but they cannot be science; they must be accepted sola fide. As a theologian, I am not opposed to faith, but I like my science to have other bases.
As to the attempt to turn the late scholastics into proto-Austrians, I am familiar with argument, especially as it appears Schumpeter and Alejandro Chafuen. Chafuen starts in an absurd place, admitting that his major thesis (the division of the world into realms of “ought” and “is”) cannot be found in the scholastics, but he says it is implicit in their work. Well, he is wrong on all counts. The scholastics do address this question, and reject it as implying a double truth, and they reject out of hand the doctrine of the double truth. Further, the school of Salamanca rejects, over and over again, the mainspring of Austrian theory, which is utility pricing. Molina repeats, nearly word for word, St. Thomas’s objection that utility exists in the buyer, not the seller, and if the seller prices by utility, he is selling what he does not own. Now, one may agree or disagree with Aquinas/Molina on this point; but agree or not, you cannot convert them into Austrians. And there are many other points of disagreement. The scholastics had a bounded view of markets, which is precisely the opposite of the Austrian view.
I am not surprised that Fr. Sirico doesn’t remember this is that encounter. But he cannot both attack and take credit for the same system. Prior to gov’t interventions, the capitalistic system was highly unstable; this is simply an historical fact. The pre-Keynesian system was chaotic and miserable for the mass of men; only after the war was the economy stabilized. Those of us who have lived our whole lives in this system need to ask if we really want to go back to 40% recessions. The question becomes pressing because we have to go somewhere; we cannot stay where we are. Surely, Fr. Sirico will agree that an economy with a 2% of GDP federal budget is less intrusive than an economy with 22%. And yet, the later is, historically, far more stable than the former. The Austrian theory cannot explain this, and indeed makes no attempt to do so. They generally avoid historical questions are irrelevant. And they are right. History is irrelevant to axiomatic systems, just as one does not need to know anything about Pythagoras in order to use the Pythagorean theorem. But a humane science cannot be axiomatic. And even if it could be, it would have to submit its axioms to the judgment of a higher science. Otherwise, it is a closed set.
Finally, a word to Kate. You cite the auto workers. However, wage structures do not vary widely within the auto industry, foreign or domestic (and the low wage providers, like Serbia, failed to establish a presence). What does differ is how the pension, legacy and health-care costs are handled. And in other countries, these costs are socialized; they do not appear on the company’s books. If one had to conclude anything, the most obvious thing is that the country’s that are more “socialist” are beating us up in the auto business. Again, this is simply a fact. In dealing with the situation, one must at least deal with the facts. Axioms won’t wish the facts away.
John M.
Fr. Z, I sent you not one, but three polite posts. [I didn’t see them that way at all.] The first one got no reply, the second one a rude reply, and the third a bizarre and threantenting post on this thread, plus some strange, boldface large-type private email. I did you harm, I said you no harm. I got rudeness in return for politeness. If you suffer a wound, it is self-inflicted, and nothing that I did. You have slandered me, but I let that pass. [HUH!?] And pointing out intellectual dishonesty is part of parcel of the process of critique. If you are placing some thoughts above criticism, so be it; but give us a list of the approved and irreproachable doctrines. The only one’s I know about are in the creed and the catechism. [Simply….incredible…. I will let this pass for the sake of Fr. Sirico’s request that you should participate in the conversion.. If there is anything in any of your comments after this which smacks of the personal or continues in this vein about anyone for whatever reason, I will reimpose the ban.]
Think before post, or at least read the post.
The line should read: I did you no harm; I said you no harm.
John M.,
Sorry, but the legacy costs coming home to roost in the US auto industry ARE part of the bargained for compensation package, your “higher wages”. That is how employer funded health insurance came into existence, an attempt to compensate with something of value other than wages. Unfortunately, due to government interventionism in the healthcare market, healthcare costs have skyrocketed to where this has turned into a bad bargain.
The socializing of healthcare costs of the elderly in the US has led to astronomical increases in costs for all as there is little incentive to conserve finite services and supplies, although I can suspect where the Obammunist push for “national service” slavery is leading.
Do not misunderstand me. I ABSOLUTELY defend YOUR right to live under whatever economic system you choose. It can easily be contracted for those who wish to have healthcare costs (or other costs) socialized to contract with other like minded individuals and cooperate in such an arrangement, voluntarily pooling your resources, etc.
You have NO right to force such a system on others at gunpoint. That is theft, covetousness, enslavement, and idolatry.
ALL: Please stick to the topic of the thread, which is complicated enough as it is. There is no reason to post about other issues. If rabbit holes open up, I will close them.
LateKate. I think you miss my point. I am not arguing for or against socialized medicine. I am merely pointing out that the competitors of the Big Three socialize these costs, and therefore obtain a competitive advantage over their American rivals. As for gov’t involvement, you are correct. As long as the industry is dominated by licenses and patents, that is to say, by government granted monopolies, it will be impossible to control costs; pricing will be monopoly pricing, not market pricing.
However, another problem arises. We have had a system of unlicensed doctors in the 19th century. You became a doctor by attending a “medical college”, a for-profit institution generally run by local doctors who lectured at the college. After one or two years of attending lectures, and without ever having touched a microscope or a cadaver, they could set up as doctors. The problem with this system became evident in the totally inadequate response to the Spanish Flu epidemic. This was the impetus for the “reforms” that created the present system.
Further, health care was not universal in this free market period. It had the same problems we have today in delivering the services. Indeed, the free market will always have a problem delivering a homogeneous product universally. This is because supply and demand curves always cross at substantially less than full demand; in other words, there will always be unsatisfied demand. In delivering necessities, like food, clothing or shelter, the market works by segmenting demand into market niches. So some will live in palaces, some in mansions, some bungalows, some in trailers, some in shelters. But in medical care, this is not so easy, because as between successful and unsuccessful heart surgery, for example, there is no exploitable market niche. There is simply no way to segment the market so as to provide an adequate level of service for all. The free market will not provide a magic wand to solve these problems now anymore than it did in the 19th century.
My own take on this problem, if you are interested, can be found at http://distributism.blogspot.com/2008/12/health-care-system-and-guilds.html
to the Spanish Flu epidemic. This was the impetus for the “reforms” that created the present system.
Further, health care was not universal in this free market period. It had the same problems we have today in delivering the services. Indeed, the free market will always have a problem delivering a homogeneous product universally. This is because supply and demand curves always cross at substantially less than full demand; in other words, there will always be unsatisfied demand. In delivering necessities, like food, clothing or shelter, the market works by segmenting demand into market niches. So some will live in palaces, some in mansions, some bungalows, some in trailers, some in shelters. But in medical care, this is not so easy, because as between successful and unsuccessful heart surgery, for example, there is no exploitable market niche. There is simply no way to segment the market so as to provide an adequate level of service for all. The free market will not provide a magic wand to solve these problems now anymore than it did in the 19th century.
My own take on this problem, if you are interested, can be found at http://distributism.blogspot.com/2008/12/health-care-system-and-guilds.html
Father Z., I’m assuming from your last post that you consider my last post a diversion down a rabbit hole (off topic??). Feel free to delete my post and I will respectfully refrain from further posting on this thread. The only logical worldview of economics is that everything IS related. Our economic system, whether Marxist or free market, underlies and impacts everything: education, religion, work/labor choices, healthcare, etc. Not understanding the holistic nature of economics leads to negative, even if unintended, consequences. [Actually, I didn’t consider it to be entirely off topic. That wasn’t aimed at you. And NOW, let us ALL, get back to the actual topic before I shut the combox down? o{]:¬) ]
Somehow, only half of what I posted got posted, so the post looks a bit strange. But since the moderator has cut off discussion on that stream, I won’t repost it.
It is becoming clear that some folks here are less habituated to discuss issues in this media than others.
Just stick to the topic, which is the Church’s Magisterium, Fr. Sirico and Acton Institute.
Acton Institute Journal of Markets and Morality said (Gronbacher): “If Catholic social thought is to be effective, and if the Church’s social message is to be taken seriously, then it must understand basic economic theory. There are foundational market realities that cannot be ignored for any reason, including moral concerns, because in so doing further harm may result to both market mechanisms and morality. A question arises: “What if it can be shown that market principles conflict with moral obligations?” The best reply is that we must always work for moral objectives within the context of market realities.”
Again, is this an assertion that unrestricted free markets necessarily conform to the requirements of the natural moral law? Is this an assertion that intervention in free markets necessarily violates economic laws and therefore undermines morality itself? Do such assertions conform to the Magisterium of the Popes concerning the necessary “limits” to free markets for the sake of morality and the common good?
++++++++++++++++++++++++++++++++++++++
Pope Pius XI (QA):
88. Attention must be given also to another matter that is closely connected with the foregoing. Just as the unity of human society cannot be founded on an opposition of classes, so also the right ordering of economic life cannot be left to a free competition of forces. For from this source, as from a poisoned spring, have originated and spread all the errors of individualist economic teaching. Destroying through forgetfulness or ignorance the social and moral character of economic life, it held that economic life must be considered and treated as altogether free from and independent of public authority, because in the market, i.e., in the free struggle of competitors, it would have a principle of self direction which governs it much more perfectly than would the intervention of any created intellect. But free competition, while justified and certainly useful provided it is kept within certain limits, clearly cannot direct economic life—a truth which the outcome of the application in practice of the tenets of this evil individualistic spirit has more than sufficiently demonstrated. Therefore, it is most necessary that economic life be again subjected to and governed by a true and effective directing principle.
http://www.papalencyclicals.net/Pius11/P11QUADR.HTM
+++++++++++++++++++++++++++++++
Pope John Paul II (CA):
40. It is the task of the State to provide for the defence and preservation of common goods such as the natural and human environments, which cannot be safeguarded simply by market forces. Just as in the time of primitive capitalism the State had the duty of defending the basic rights of workers, so now, with the new capitalism, the State and all of society have the duty of defending those collective goods which, among others, constitute the essential framework for the legitimate pursuit of personal goals on the part of each individual.
Here we find a new limit on the market: there are collective and qualitative needs which cannot be satisfied by market mechanisms. There are important human needs which escape its logic. There are goods which by their very nature cannot and must not be bought or sold. Certainly the mechanisms of the market offer secure advantages: they help to utilize resources better; they promote the exchange of products; above all they give central place to the person’s desires and preferences, which, in a contract, meet the desires and preferences of another person. Nevertheless, these mechanisms carry the risk of an “idolatry” of the market, an idolatry which ignores the existence of goods which by their nature are not and cannot be mere commodities.
http://www.vatican.va/holy_father/john_paul_ii/encyclicals/documents/hf_jp-ii_enc_01051991_centesimus-annus_en.html
Pope Pius XI (QA):
>>88. Attention must be given also to another matter that is closely connected with the foregoing. Just as the unity of human society cannot be founded on an opposition of classes, so also the right ordering of economic life cannot be left to a free competition of forces. <<>>>For from this source, as from a poisoned spring, have originated and spread all the errors of individualist economic teaching. Destroying through forgetfulness or ignorance the social and moral character of economic life, it held that economic life must be considered and treated as altogether free from and independent of public authority, because in the market, i.e., in the free struggle of competitors, it would have a principle of self direction which governs it much more perfectly than would the intervention of any created intellect. But free competition, while justified and certainly useful provided it is kept within certain limits, clearly cannot direct economic life—a truth which the outcome of the application in practice of the tenets of this evil individualistic spirit has more than sufficiently demonstrated. <<<>>>Therefore, it is most necessary that economic life be again subjected to and governed by a true and effective directing principle.
http://www.papalencyclicals.net/Pius11/P11QUADR.HTM<<>>>>Pope John Paul II (CA):
40. It is the task of the State to provide for the defence and preservation of common goods such as the natural and human environments, which cannot be safeguarded simply by market forces. Just as in the time of primitive capitalism the State had the duty of defending the basic rights of workers, so now, with the new capitalism, the State and all of society have the duty of defending those collective goods which, among others, constitute the essential framework for the legitimate pursuit of personal goals on the part of each individual.<<<>Here we find a new limit on the market: there are collective and qualitative needs which cannot be satisfied by market mechanisms.<<<>>>> There are important human needs which escape its logic. There are goods which by their very nature cannot and must not be bought or sold. Certainly the mechanisms of the market offer secure advantages: they help to utilize resources better; they promote the exchange of products; above all they give central place to the person’s desires and preferences, which, in a contract, meet the desires and preferences of another person. Nevertheless, these mechanisms carry the risk of an “idolatry” of the market, an idolatry which ignores the existence of goods which by their nature are not and cannot be mere commodities.
http://www.vatican.va/holy_father/john_paul_ii/encyclicals/documents/hf_jp-ii_enc_01051991_centesimus-annus_en.html
Comment by schoolman — 15 April 2009 @ 12:49 pm <<<<
I don’t know what JP2 says must not be bought or sold (people comes to mind), but most things can and should be. He is correct about the risk of idolatry but the actual existence of state idolatry is a far greater problem.
Sorry for the above posting, I thought using brackets would make it easier to read. I have used them ith success on other forums but they don’t seem to work here. I replaced the brackets with quotation marks.
Pope Pius XI (QA):
“”88. Attention must be given also to another matter that is closely connected with the foregoing. Just as the unity of human society cannot be founded on an opposition of classes, so also the right ordering of economic life cannot be left to a free competition of forces. “”
If the goal is the “ordering” of economic life then this is true. Free competition of forces imposes no one persons or committees economic order. Prohibiting free competition of forces always results in economic “ordering”, however.
“”For from this source, as from a poisoned spring, have originated and spread all the errors of individualist economic teaching. Destroying through forgetfulness or ignorance the social and moral character of economic life, it held that economic life must be considered and treated as altogether free from and independent of public authority, because in the market, i.e., in the free struggle of competitors, it would have a principle of self direction which governs it much more perfectly than would the intervention of any created intellect. But free competition, while justified and certainly useful provided it is kept within certain limits, clearly cannot direct economic life—a truth which the outcome of the application in practice of the tenets of this evil individualistic spirit has more than sufficiently demonstrated. ”
This is not necessarily contradictory, either. The “outcome of application in practice” which is referred to has obviously been within the context of a state controlled…ordered….economy. Within a state ordered economy free market competition is simply between state sanctioned players. I have read no opinions of free market proponents who think the system could survive without some rules or that the free market economy itself bestows morality. The rules would require basic adherence to contract or to pay damages. People would refuse to do business with known liars and cheats, polluters, thieves, etc. Reputation and insurability would be important, costs would be higher for those considered to be “high risk”. The rise of people behaving in an evil individualistic manner is a result of the rise of Calvinism, materialism, and Darwinism/sciencism. The behavior is a consequence of lack of correct worldview.
“”Therefore, it is most necessary that economic life be again subjected to and governed by a true and effective directing principle.
http://www.papalencyclicals.net/Pius11/P11QUADR.HTM“”
And that true and effective directing principle is the Word of God.
+++++++++++++++++++++++++++++++
“”Pope John Paul II (CA):
40. It is the task of the State to provide for the defence and preservation of common goods such as the natural and human environments, which cannot be safeguarded simply by market forces. Just as in the time of primitive capitalism the State had the duty of defending the basic rights of workers, so now, with the new capitalism, the State and all of society have the duty of defending those collective goods which, among others, constitute the essential framework for the legitimate pursuit of personal goals on the part of each individual.””
In the context of the existence of a state, this is true. The problem is that the state does not live up to these obligations, preferring to expand its own power and scope and ITSELF seize property. But JP2 is quite right that these are the justifications FOR the state. The term “the new capitalism” seems to be referring to the corporate state (I could be wrong here), the term “collective goods” must refer to collectivized resources which are state controlled. He is correct to call for moral behavior on the part of the state toward the individual in the allocation of those collectivized resources. But again, this seems to be all within an assumption of the existence of the state. I see that JP2 makes no reference to the duty of the state to protect the rights of people to NOT BE workers, their rights to keep the fruits of their labor and their rights to economic opportunity. Too bad.
“”Here we find a new limit on the market: there are collective and qualitative needs which cannot be satisfied by market mechanisms.””
I agree with this. For example, health “care”. We can provide health SERVICES but people cannot be paid to “care” in a meaningful way specifically for another person. The notion that we are getting health CARE leads to people feeling justified in abandoning their elderly in institutions and angrily demanding they be “cared” for as their own family would care for them. Love can’t be bought.
“”There are important human needs which escape its logic. There are goods which by their very nature cannot and must not be bought or sold. Certainly the mechanisms of the market offer secure advantages: they help to utilize resources better; they promote the exchange of products; above all they give central place to the person’s desires and preferences, which, in a contract, meet the desires and preferences of another person. Nevertheless, these mechanisms carry the risk of an “idolatry” of the market, an idolatry which ignores the existence of goods which by their nature are not and cannot be mere commodities.
http://www.vatican.va/holy_father/john_paul_ii/encyclicals/documents/hf_jp-ii_enc_01051991_centesimus-annus_en.html
Comment by schoolman — 15 April 2009 @ 12:49 pm “”
I don’t know what JP2 says must not be bought or sold (people comes to mind), but most things can and should be. He is correct about the risk of idolatry but the actual existence of state idolatry is a far greater problem.
ALL: Please be careful with tags. Thanks!
Picking this up again, I find Fr Siricio saying:
“There is in fact a relationship between cause and effect that operates within the human, the economic, sphere. This is not to say that we allow economic truths to dictate everything, for in the end economic truth is only one aspect of the whole truth of who the human person is. Economics only accounts for one dimension of our reality. It is, rather, to say that that because all truth is ultimately one, there is no necessary contradiction between fides and ratio.”
Cause and effect is not about truth. Truth is about representations, and not just about causes and effects but about what comes in between. Forces are directional in a three—dimensional reality, not just the one dimension of opposition that economics has assumed in the aftermath of Adam Smith’s philosophical mentor Hume: the “poisoned well” in that quotation from Pius XI:
“Just as the unity of human society cannot be founded on an opposition of classes, so also the right ordering of economic life cannot be left to a free competition of forces. For from this source, as from a poisoned spring, have originated and spread all the errors of individualist economic teaching.”
“Neither can I [says Fr Siricio] understand the argument that supply and demand does not cover land, labor, and money. Is there a supply of these? Is there a demand for them? If so, the relationship between supply and demand holds. In saying this, I feel like the person trying to make the case that bowling balls are round. This just part of the structure of reality, something that follows by definition. It is nonsense and embarrassing to claim otherwise.”
So economics has got its definitions of the structure of reality wrong, which is why this argument is going on. Of course there is a demand for and a supply of land, labour and money, but people (God’s intended children) are sacred, the land we have inherited needs to be held in trust for our dependents, and money is a deceptive thing, the root of all evil, a piece of paper ultimately recording a debt without saying whether it is the giver or the receiver who is indebted, nor to whom. Should my banker earn his keep? or have the use of money repaid by debtors and twice that amount in interest on debts (savings) other people have not yet repaid? For the truth, Fr Siricio, is that that is the relationship between the parties in today’s money markets. Perhaps he can remember the story in the Acts of the Apostles about [from memory] Annanias and Saphira, who sought to buy their way into the church, but God killed them for it. Some things just shouldn’t be sold. “Monopoly” money is one of them. We need it to play the game, but it costs the banker nothing, so he shouldn’t always win.
“To say, for example, [argues Fr Siricio] that “We do not produce more children . . .because parents note a shortage in the labor markets,” is to miss the point. It is not the procreation of children that necessarily increases or decreases the labor market, but whether laborers willing to trade their labor (that is, enter the market) for pay or not.”
One does not have to pay for what is given willingly. When labour is marketed, children are limited by lack of love, not of willing parents but of economic institutions which put money before people, economics before humanity.
“As for axioms, [says Fr Siricio], here some that Austrian theory advances which seem undeniable to me: material resources are scarce and must be allocated according to some system; time is a resource that also must be allocated. Combine the two and we can observe that action constitutes striving within the framework of scarce resources to achieve previously unmet ends, valued according to a hierarchy of preferences revealed through action”.
The Austrian axioms seem VERY deniable to me! God provided more than enough for everybody, and variety requisite to ensure there are reliably enough alternatives; but the conditions of our continuing to have it is that we continue to help him to produce it, and a control system which directs it to where it is needed. However, the monetary control system produced by Free Traders like Austrians does not do that. It leaves producers and consumers at the mercy of traders (and especially traders in money and equivalent bills of title) dependent for their “living in the manner to which they have become accustomed” on continued sales of that which has been produced, which does not happen when there is temporarily or no longer sufficient need for it. In short, it signals a change of direction not because consumer need has been met but because trader’s ambitions are not being met; it directs money and production not to where it is still needed but to where real goods can be exchanged for worthless money.
Sixty years ago engineers worked out how control actually works. There are two different ways: small forces moving constraints into the way of larger ones, or information generated by effects being recognised independently of the causes and communicated (i.e. fed back) to where the causes are actually operating. The former is specific, the latter can broadcast its information to where it is needed. The former allows the bankers to run the show in their own interests, the latter (when true) can enable everyone to fit in with everyone else. The present economic system is largely a balance of forces, able only to accommodate one objective, which more than three hundred years ago bankers decided should be their own money-making and control of government. If the Austrians are not (as they appeared in the hands of Hayek, Thatcher and her ilk) dishonest, they and their political allies are at least pig ignorant of developments in mathematical, technical and scientific methods and understanding since 1700: in particular (in respect of supply and demand) the difference between two quantitative measures of force and a complex number representing directed motion.
“Review then post” is easier said than done when the review button does nothing! In the above, apologies for lack of a spearator before “The Austrian axions”. More seriously,
“So economics has got its definitions wrong”, but I had intended to leave land in trust for our descendents, not our dependents.
I go from bad to worse: the “spearator” before the Austrian “axions”! It is not so much “My eyes are dim, I cannot see, I have not got my specs with me”. I do have them with me, but I sat on them! (And hadn’t noticed it was going dark). [When writing longer or more complicated comments, it is a good idea to compose using Notepad or a similar simple word processer, do your editing there, and then cut/paste your text into the combox.]
It seems to me the issue is the nature of the human person. Neoclassical economics and Austrian economics is built upon the rational economic man model, BOTH AS A REAL REPRESENTATION NAND AS AN IDEAL (we should give up the pretense of positive, value free economics). Their whole systems flow from this (as all social theories flow from their view of the human person). This is contrary to the facts and it is contrary to Christian Anthropology. Veblen long ago pointed out the fallacy of this view of the human person against how people actually act (as did Gunnar Myrdal, who showed that people rationalize after the fact more than rationally chose.) Behaviorial economics and nano-science have recently confirmed this.)
And John Paul II (See Acting Person and his essay on Thomistic personalism) showed that this is a view no Christian could accept as it is contrary to Imago Dei. (I once heard some give a paper arguing that God was a rational economic man, leaving out that God didn’t face scarcity). There are good reasons to support markets and economic freedom, but Austrain economics is not where a Christian or a serious economist should should look.
Dave Taylor:
“Cause and effect is not about truth. Truth is about representations, and not just about causes and effects but about what comes in between.”
LK: Sorry, Dave. You’ve got it exactly backwards. Cause and effect are much more grounded in reality than “representation” of reality.
DT:” Forces are directional in a three—dimensional reality, not just the one dimension of opposition that economics has assumed in the aftermath of Adam Smith’s philosophical mentor Hume: the “poisoned well” in that quotation from Pius XI:
“Just as the unity of human society cannot be founded on an opposition of classes, so also the right ordering of economic life cannot be left to a free competition of forces. For from this source, as from a poisoned spring, have originated and spread all the errors of individualist economic teaching.”
LK: Can you list the 3 dimensional forces you are referring to?? I addressed the Quote of Pius XI above. When you speak of the “right ordering of economic life” you are speaking of a specific order, whether it is right or not would certainly be in dispute, as it currently is. Ordering economic life is consistent with the Church but it won’t be accepted by all. So the best course is to allow liberty for all to conduct their affairs within the confines (or lack of confines) of their worldview. Catholics would be free to follow Biblical law, atheists would be free to follow their beliefs. All would have to adhere to contracts made or risk being unable to participate in the market as bad risks. People would see that the Christian worldview, especially the Catholic one, is the best worldview.
Dave Taylor:
“So economics has got its definitions of the structure of reality wrong, which is why this argument is going on.”
LK: ?? The Austrians don’t have it wrong.
DT: Of course there is a demand for and a supply of land, labour and money, but people (God’s intended children) are sacred, the land we have inherited needs to be held in trust for our dependents, ”
LK: I m confused here. You are saying you disagree with inheritance taxes on land or property taxes in general?? What do you mean “held in trust”? Why not simply leave it to them in your will outright?
DT:”and money is a deceptive thing, the root of all evil,”
LK: It is the LOVE of money that is the root of evil.
DT: a piece of paper ultimately recording a debt without saying whether it is the giver or the receiver who is indebted, nor to whom. ”
LK: If it were backed by gold or some standard it would be a fair medium of exchange. Fiat currency simply allows people to be fleeced via inflation. It also allows ill advised and unpopular government projects because the paper can simply be printed to pay for wars, etc. and the people stuck with inflated currency. It is not the same thing as a loan note.
DT: Should my banker earn his keep? or have the use of money repaid by debtors and twice that amount in interest on debts (savings) other people have not yet repaid? For the truth, Fr Siricio, is that that is the relationship between the parties in today’s money markets. Perhaps he can remember the story in the Acts of the Apostles about [from memory] Annanias and Saphira, who sought to buy their way into the church, but God killed them for it. Some things just shouldn’t be sold. “Monopoly” money is one of them. We need it to play the game, but it costs the banker nothing, so he shouldn’t always win.””
LK: Your complaint is with the Federal Reserve scam that the government saddled us with at the turn of the century (see “The Creature From Jekyll Island”), not Austrian economics. The Austrians are against central banking.
Dave Taylor:
““To say, for example, [argues Fr Siricio] that “We do not produce more children . . .because parents note a shortage in the labor markets,” is to miss the point. It is not the procreation of children that necessarily increases or decreases the labor market, but whether laborers willing to trade their labor (that is, enter the market) for pay or not.”
One does not have to pay for what is given willingly. When labour is marketed, children are limited by lack of love, not of willing parents but of economic institutions which put money before people, economics before humanity.”
LK: And again, your complaint is with economic institutions, not the free market.
Dave Taylor:
““As for axioms, [says Fr Siricio], here some that Austrian theory advances which seem undeniable to me: material resources are scarce and must be allocated according to some system; time is a resource that also must be allocated. Combine the two and we can observe that action constitutes striving within the framework of scarce resources to achieve previously unmet ends, valued according to a hierarchy of preferences revealed through action”.
The Austrian axioms seem VERY deniable to me! God provided more than enough for everybody, and variety requisite to ensure there are reliably enough alternatives; but the conditions of our continuing to have it is that we continue to help him to produce it, and a control system which directs it to where it is needed.”
LK: You are correct. There is potential for plenty for all. Our standard of living has been vastly improved by the division of labor and technology. The problem is to receive the goods and services we need/want we must work for money to buy them. It is very inefficient to attempt to be self-sustaining in all goods/services. Because of the disparity in wages there is “requisite variety” so the poorer can purchase lower priced goods (thank you, Walmart) and the wealthier can buy higher end goods/services. Frequently, what was considered luxuries becomes available to the poorer folks as well.
DT: However, the monetary control system produced by Free Traders like Austrians does not do that.”
LK: ?? Dave, the Austrians propose NO “monetary control system”!
DT: ” It leaves producers and consumers at the mercy of traders (and especially traders in money and equivalent bills of title)” dependent for their “living in the manner to which they have become accustomed” on continued sales of that which has been produced, which does not happen when there is temporarily or no longer sufficient need for it. In short, it signals a change of direction not because consumer need has been met but because trader’s ambitions are not being met; it directs money and production not to where it is still needed but to where real goods can be exchanged for worthless money.”
LK: Whoa there, Dave! Sorry, but you are talking about the system we have NOW. In a free market system you would have a choice of currency, you would not be at the mercy of ANY trader, you would be free to invest your money wherever you wished and not worry about it being seized or taxed away, your investment in farm land being taxed away to provide a fat retirement for state bureaucrats or stolen by developers bribing government officials, your purchase/selling of a car taxed every time it changed hands. We do not have a free market system, we have a controlled economy, near to actual fascism.
Dave Taylor:”Sixty years ago engineers worked out how control actually works. There are two different ways: small forces moving constraints into the way of larger ones, or information generated by effects being recognised independently of the causes and communicated (i.e. fed back) to where the causes are actually operating. The former is specific, the latter can broadcast its information to where it is needed. The former allows the bankers to run the show in their own interests, the latter (when true) can enable everyone to fit in with everyone else. The present economic system is largely a balance of forces, able only to accommodate one objective, which more than three hundred years ago bankers decided should be their own money-making and control of government. ”
LK: I’m not sure of your engineering info. but I’ll g along with the rest.
DT: If the Austrians are not (as they appeared in the hands of Hayek, Thatcher and her ilk) dishonest,”
LK: I have never heard Thatcher referred to as an Austrian. She is a statist. Can you direct me to where you learned that Thatcher is an Austrian? Hayek is much more Austrian, what is your beef with him?
DT: they and their political allies are at least pig ignorant of developments in mathematical, technical and scientific methods and understanding since 1700: in particular (in respect of supply and demand) the difference between two quantitative measures of force and a complex number representing directed motion.”
LK: I’m not understanding your complaint of Hayek not understanding supply and demand. What is the complex number representing directed motion? If you are referring to the variables caused by human action I’m sure you are aware that THAT number is so complex as to be nonquantifiable.
To follow up on Charles Clark’s comments about the Austrian view of man as contrary to the Imago Dei, Mises “proves” that an omnipotent God cannot exist because his existence would violate the axioms of action. All action, according to Mises, arises from disatisfaction. An omnipotent God cannot be disatisfied. Therefore, he cannot act. Ergo, omnipotence equals impotence. In Mises own words:
“Scholastic philosophers and theologians and likewise Theists and Deists
of the Age of Reason conceived an absolute and perfect being, unchangeable,
omnipotent, and omniscient, and yet planning and acting, aiming at
ends and employing means for the attainment of these ends. But action can
only be imputed to a discontented being, and repeated action only to a being
who lacks the power to remove his uneasiness once and for all at one stroke.
An acting being is discontented and therefore not almighty. If he were
contented, he would not act, and if he were almighty, he would have long
since radically removed his discontent. For an all-powerful being there is no
pressure to choose between various states of uneasiness; he is not under the
necessity of acquiescing in the lesser evil. Omnipotence would mean the
power to achieve everything and to enjoy full satisfaction without being
restrained by any limitations. But this is incompatible with the very concept
of action.”
“The very idea of absolute
perfection is in every way self-contradictory. The state of absolute perfection
must be conceived as complete, final, and not exposed to any change.
Change could only impair its perfection and transform it into a less perfect
state; the mere possibility that a change can occur is incompatible with the
concept of absolute perfection. But the absence of change—i.e., perfect
immutability, rigidity and immobility—is tantamount to the absence of life.”
Mises weighs God in the balance of his axioms and finds him wanting. But Mises gets it wrong about God because he gets it wrong about Man. God acts always out of a superabundance of love. Man also acts out of love (or its dark simulacrum, hate), and only accidentally out of discontent. Love alone makes anything useful, and lack of what is loved is what makes discontent. We buy the CD because we love the music. One could say, “we buy the CD because we are discontented that we do not have it because we love the music,” but I do not know that the second description really adds anything to the first, because we do not have to possess a thing in order to love it or in order to act on that love.
Mises gets God wrong (or rather, doesn’t “get” him at all) because he gets man wrong and hence he gets everything wrong, including economics. The Acton institute holds this philosopher up for our admiration. Mises does not return the favor; he firmly believed that economic order could not be reconciled with the Christian religion. see http://distributism.blogspot.com/2008/11/can-mises-be-baptized_09.html
In light of Mises’ own opinions on the matter, the attempt to reconcile Austrianism with Christianity, much less make it the basis for the interpretation of Catholic Social Teaching, are ludicrous.
By the way, “Hilarie” is really John Médaille. The system still doesn’t accept posts under my name.
CMAC: “It seems to me the issue is the nature of the human person. Neoclassical economics and Austrian economics is built upon the rational economic man model, BOTH AS A REAL REPRESENTATION NAND AS AN IDEAL (we should give up the pretense of positive, value free economics).”
LK: LOL! I suppose “we” could, but “we” are not going to, unless perhaps you have an extremely sentient mouse in your pocket! As far as what “we” “SHOULD” do, your dismissive declaration is hardly persuasive. I don’t consider it “pretense” at all.
CMAC: “Their whole systems flow from this (as all social theories flow from their view of the human person). This is contrary to the facts and it is contrary to Christian Anthropology.”
LK: The relationship of humanity to God? How so?
CMAC: ” Veblen long ago pointed out the fallacy of this view of the human person against how people actually act (as did Gunnar Myrdal, who showed that people rationalize after the fact more than rationally chose.) Behaviorial economics and nano-science have recently confirmed this.)”
LK: You are referencing a Darwinist founder (with John Dewey) of the New School and a socialist promoter of eugenics and compulsory sterilization??? (I do give you credit for wading through Veblen, ugh). Neither of these characters is a credible authority on economics…on socialism maybe. People do have free will. They may not act rationally in the opinion of others but they usually have reasons for their behaviors that are rational to them. People pushers refuse to accept this insisting instead that people who do not think as they do are “irrational”, mentally ill”, “fanatic”, etc. The behaviorist techniques applied to the guinea pigs consigned to government schools (the brainchild of Dewey and his partners in crime from the New School) might account for some “irrational” or animalistic behaviors on the part of some people, don’t you think?
CMAC: “And John Paul II (See Acting Person and his essay on Thomistic personalism) showed that this is a view no Christian could accept as it is contrary to Imago Dei.
LK: Can you please be more specific as to where Austrian/free market economics was disparaged by John Paul II? Excerpts or quotes?
CMAC: ” (I once heard some give a paper arguing that God was a rational economic man, leaving out that God didn’t face scarcity).”
LK: Actually, that is not a bad argument. The Bible, Gods Word, is full of economic advice compatible with Austrian/free market economics. In fact, God Himself PAID A DEBT with His life that was owed by humanity, a pretty good illustration of the law that there is no free lunch, someone always pays. And that payment was not forced from God, He specifically said that he laid down His life, he GAVE it, freely, to pay the debt of mankind. His charity was not forced at gunpoint for the good of all. There is a lesson there.
CMAC: ” There are good reasons to support markets and economic freedom,
but Austrain economics is not where a Christian or a serious economist should should look.”
Absolute nonsense and a smear to boot. Austrian economics is simply liberty and that is what God gave man. Socialism, communism, and fascism are based on theft, lying, covetousness, and usually require the murder of millions. And those things are clearly spelled out in the Bible as wrong. Period. There is nothing preventing a person from being a participant in a free market and still being a Christian and supporting charities and doing good privately. In fact, he will probably have more money to do good with.
I disagree. Ludwig Von Mises was a Jewish agnostic, not a Christian….and Torquemada was a Christian, so? Mises gets God wrong because he limits God with human attributes, a common mistake. That is in no way proof that he gets man wrong. In what way do you see that he gets man wrong anyway? I don’t “love” my toilet paper or my potato masher, they are useful but I don’t love them. Your simplistic notion of the complex motivations of humanity may be the result of your experiences but I don’t know any humans like that. I don’t believe Mises said that one had to possess a thing in order to love it or to act on love.
Below is a blog that addresses the anthropomorphism and mistakes of attributing human limitations to God. I believe they address your specific quote:
http://blog.mises.org/archives/006819.asp
Mises debunks the religious case for the State
http://mises.org/story/1736
Belloc: “In light of Mises’ own opinions on the matter, the attempt to reconcile Austrianism with Christianity, much less make it the basis for the interpretation of Catholic Social Teaching, are ludicrous.”
Austrianism is not just for Christians, it is for all people, that is the beauty of it. It is the fairest way of distributing goods and services, AND it is consistent with Gods law (UNlike socialism/communism/fascism which are based on covetousness, idolatry, theft, and murder) and would foster peace and harmony as people would have to work together and would want to trade together. Mises religious opinions do not affect the value of his economic contribution at all, in fact they show even more plainly how his ideas would work for all. It is the attempt to hijack Christianity and especially Catholicism into the abyss of godless Marxism, state worship, and call it “Christian” and “Catholic” that is ludicrous.
LK: I m confused here.
You can say that again! Let me just try to answer the questions:
LK: … Can you direct me to where you learned that Thatcher is an Austrian? Hayek is much more Austrian, what is your beef with him?
My answer to the first is “In Britain, 1979-84”. My answer to the second is, “The Road to Serfdom”, i.e. his dishonest treatment of Belloc’s argument in “The Servile State”.
Michael Greer just wrote: “After the collapse of the Soviet Union and its client states, the massed failures of bureaucratic socialism are hard to miss. Still, corporate capitalism has demonstrated not once but twice that its results are just as bad. From 1896 to 1929, and then again from 1980 to 2008, corporate capitalism was allowed to take the bit in its teeth and run, and in each case the result was an accelerating cycle of disastrous booms and busts and the emergence of a culture of corporate kleptocracy that, between them, ended up devastating the global economy. Meanwhile the faith that a rising tide would lift all boats turned out, in both cases, to be completely misplaced; the benefits that were supposed to trickle down trickled up instead, beggaring the working classes and driving much of the middle class into relative poverty while funneling most of society’s wealth into the unproductive hands of speculators and financiers”.
That was exactly Belloc’s point during the first period Greer mentioned: socialism and capitalism are just as bad. Hayek picked up Belloc’s theme but re-transmitted it as an argument against socialism which glorified capitalism.
“LK: I m confused here.
“You can say that again! Let me just try to answer the questions:
LK How kind of you!
DT: ” … (LK)”Can you direct me to where you learned that Thatcher is an Austrian? Hayek is much more Austrian, what is your beef with him?”
My answer to the first is “In Britain, 1979-84”. My answer to the second is, “The Road to Serfdom”, i.e. his dishonest treatment of Belloc’s argument in “The Servile State”.”
LK: Then the answer to the first is YOUR OPINION? THATCHER is your idea of an Austrian economist??? Can you explain how a person who is head of a state with a managed economy is applying Austrianism to the degree that she merits this distinction?
Please cite the section, page or quote of “The Road to Serfdom” to which you refer. My copy has him referenced only in a note and that is supportive (quote):
Hayek: “It is not yet 30 years since Hilaire Belloc, in a book which explains more of what happened in Germany than most works written after the event, explained that “the effect of Socialist doctrine on Capitalist society is to produce a third thing different from either of its two begetters- to wit,the Servile State”.
Dave Taylor: Michael Greer just wrote: “After the collapse of the Soviet Union and its client states, the massed failures of bureaucratic socialism are hard to miss. Still, corporate capitalism has demonstrated not once but twice that its results are just as bad. From 1896 to 1929, and then again from 1980 to 2008, corporate capitalism was allowed to take the bit in its teeth and run, and in each case the result was an accelerating cycle of disastrous booms and busts and the emergence of a culture of corporate kleptocracy that, between them, ended up devastating the global economy. Meanwhile the faith that a rising tide would lift all boats turned out, in both cases, to be completely misplaced; the benefits that were supposed to trickle down trickled up instead, beggaring the working classes and driving much of the middle class into relative poverty while funneling most of society’s wealth into the unproductive hands of speculators and financiers”.
LK: Dave, do you not understand that Austrianism, free market economics, ARE NOT corporatism?? I urge you to go to Mises.org for a better understanding of their views.
Dave Taylor: “That was exactly Belloc’s point during the first period Greer mentioned: socialism and capitalism are just as bad. Hayek picked up Belloc’s theme but re-transmitted it as an argument against socialism which glorified capitalism.
LK: I need to see the quote from Belloc on capitalism. You (and perhaps Belloc) have defined capitalism as corporatism, the marriage of state and big business. Capitalism is simply the private ownership of the means of production and distribution. I don’t believe Hayek misrepresented Belloc at all in “Road to Serfdom”. YOU are the one espousing socialist views here. You can’t serve two masters. Either you serve the Lord and obey His law, or you serve the state and their Machiavellian evil. Attempt to wield a sword against those whose rules you dislike will simply find it aimed back at you as Christ taught us. And that is the position we are in. The best thing is to live and let live, win people to Christ by example and persuasion.
Corporatism is the natural outcome of capitalism. Where wealth is allowed to accumulate without end in a few hands, it is natural for the wealth to capture the gov’t and use it for its own self-interested ends. This should not surprise anyone, lest of all those who believe all action is for self-interest.
LK: I m confused here.
DT: You can say that again!
LK: How kind of you!
Sadly, the shot across the bows doesn’t seem to have generated the thought that perhaps you, LK, might be wrong, at least in contradicting whatever thought-provoking remarks others make.
You asked me where I learned that Thatcher is an Austrian. Ignoring the obvious fact that she is an English woman (i.e. kindly allowing for the fact that you didn’t MEAN that), I told you what you asked, being 10000 miles away from any books to which I
[to continue]
might otherwise have referred. That DOESN’T mean it was just my opinion, nor does it mean Thatcher is an economist. Patently she wasn’t enough of one to recognise bad economic advice.
LK: You (and perhaps Belloc) have defined capitalism as corporatism, the marriage of state and big business.
No, LK, YOU have. I would have defined capitalism as commending the investment of primary capital in invention and in tooling up for more efficient production, but I accept that the way it has developed traders invest in both primary and secondary products if they can be sold on at a monetary profit. The snag, though, is that concentrating money in few hands deprives sellers of perishables of a competitive market, and that irrespective of whether the buyer’s market is coincident with the state, global or relatively local. The state enters the picture only in representative democracies, when those with enough money to invest in getting elected were originally landlords and/or employers able to coerce potential voters. These now keep their own heads below the parapet by sponsoring party nominees instead. Some Austrians may want to abolish the state (though without saying how), but that doesn’t solve the problem of economic power being concentrated in too few hands, which is where Belloc started from.
Belloc:
“Corporatism is the natural outcome of capitalism.”
LK: And WHY is that? Because the state wields a monopoly on aggression. Take the fasces (those are the fasces the Romans used to represent state force Abe Lincoln is resting his arms on at the Lincoln Memorial) of the state away and the capitalists who obtain wealth have no weapon, no means of enforcing corporatism.
Belloc: ” Where wealth is allowed to accumulate without end in a few hands, it is natural for the wealth to capture the gov’t and use it for its own self-interested ends. This should not surprise anyone, lest of all those who believe all action is for self-interest.
Comment by Hilarie Belloc — 18 April 2009 @ 2:03 pm””
LK: And you see no obvious issue here with GOVERNMENT? WHY do you se the shortcomings of wealth in the hands of capitalists but not power in the hands of politicians? Hayek put it very well in the “Road to Serfdom”, the worst will always rise to the top in political institutions simply because they will stop at nothing to get there. That is why political leaders tend to be such bad men, such flawed men. Good men simply will not stoop to the depravity required to achieve great political power.
Dave:
LK: I m confused here.
DT: You can say that again!
LK: How kind of you!
Sadly, the shot across the bows doesn’t seem to have generated the thought that perhaps you, LK, might be wrong, at least in contradicting whatever thought-provoking remarks others make.”
LK: You can be thought provoking and still wrong, Dave. There is such a thing as right and wrong. You might not like it, but government does not get a free pass from God to lie, kill, covet, and steal. Just because hallowed “leaders” do a thing in the name of a great collective doesn’t make it righteous…even when done “for the poor”, “for the children”, “for the elderly”, etc.
Dave: “You asked me where I learned that Thatcher is an Austrian. Ignoring the obvious fact that she is an English woman (i.e. kindly allowing for the fact that you didn’t MEAN that), I told you what you asked, being 10000 miles away from any books to which I might otherwise have referred.
Comment by Dave Taylor — 18 April 2009 @ 7:53 pm”
??By Austrian I mean an Austrian economist (see Mises.org) or at least adherent, not from the state of Austria. You have the Internet, surely you can find some incident you can cite where she acted according to free market principles during those years.
Dave: “That DOESN’T mean it was just my opinion, nor does it mean Thatcher is an economist. Patently she wasn’t enough of one to recognise bad economic advice.”
Thatcher, like Reagan, may have provided lip service to free market principles and may have even not proceeded toward totalitarianism at the breakneck pace of Obama/Bush but she was not a free marketer. She was a statist.
Dave: “LK: You (and perhaps Belloc) have defined capitalism as corporatism, the marriage of state and big business.
No, LK, YOU have.”
LK: Sorry, but I have not. I am going by the passage you posted directly above that response.
Dave: ” I would have defined capitalism as commending the investment of primary capital in invention and in tooling up for more efficient production, but I accept that the way it has developed traders invest in both primary and secondary products if they can be sold on at a monetary profit.”
LK: Can you provide a source for this definition of capitalism so I can figure out who is the owner of capital in this scenario? Ownership and control are the issue, not what capital is invested in.
Dave: ” The snag, though, is that concentrating money in few hands deprives sellers of perishables of a competitive market, and that irrespective of whether the buyer’s market is coincident with the state, global or relatively local.”
LK: Such wealth concentration is the result of state protection of the wealthy. Competition redistributes wealth when it is allowed.
Dave: ” The state enters the picture only in representative democracies, when those with enough money to invest in getting elected were originally landlords and/or employers able to coerce potential voters.”
LK: Ever heard of Henry the 8th, his seizure of Church assets and using them to bribe nobles to eradicate Catholicism among the people? Henry was a monarch, monarchies are a form of state, although sometimes a more benign one than “representative democracies”. The basic definition of state is raw aggression, force, controlled by a minority and aimed at and accepted by the majority usually through religion as righteous. It is a no-brainer and pretty much inevitable that positions of power within the state apparatus would be bought by the wealthy/connected. That is one of the problems of statism, the worst rising to the top.
Dave: ” These now keep their own heads below the parapet by sponsoring party nominees instead. Some Austrians may want to abolish the state (though without saying how),”
LK: Simply refuse to bow down to it, recognize and fight it whenever it is asserted. As they say, freedom isn’t free, but recognizing the inherent evil and idolatry in statism as well as respecting the free will and liberty of others (even when we find it sinful, as long as it doesn’t involve aggression against the liberty and free will of others) and refusing to worship it would go a very long way.
Dave: ” but that doesn’t solve the problem of economic power being concentrated in too few hands, which is where Belloc started from.
Comment by Dave Taylor — 18 April 2009 @ ”
Wealth can only be concentrated to the degree it now is through the aggression of the state working to protect itself and its cronies, their laws do not “protect” us, they are chains to enslave us. The state is the force, the club used by the elites to hold the masses in check, to frighten them, to convert them to worshipping men and accepting the dictates of men. It’s time to step out of the boat of the state and put faith in the law of God.
1 Samuel 8
It seems to me that some get angriest over the points of greatest agreement. It might be helpful if, instead of yelling “socialist” at anybody who disagrees, we actually examine the points of disagreement, and note the points of agreement. And so far, I can’t see that anybody disagrees over the evils of state power. What seems to be in dispute is the order of causation. That is, whether vast accumulations of private property lead to vast accumulations of state power to protect it, or whether vast accumulations of state power lead to vast accumulations of property. The answer is “yes, to all of the above.” It is a reiterative process: the more of one leads to more of the other, which leads to more of the first, and it hardly matters where you start.
And that is the problem with Austrian libertarianism, which largely displaced the older libertarianism. Austrianism is largely an apologia for unlimited accumulation and corporate power. I am not a libertarian, but I feel a great empathy with the pre-Austrian libertarians. Both Mises and Marx were of one mind in declaring the older libertarianism “unscientific.” It is one of the many amazing points of coincidence between the two. However, if property can accumulate without limit, then it is natural for it to seek ever-greater protection from the state. The whole history of capitalism bears this out: private power and state power grow hand in hand; the one feeds the other. it is a complete myth to imagine they are things opposed The necessity of a big state is true precisely to the degree that one accepts the Austrian “axioms of action.” If, as the Austrians claim, property has no natural limit, and if all actions are defensive, and if all actions are self-interested, then unlimited property will seek the most efficient means of defending property, which is clearly to externalize the costs of its defense on the state. For which, of course, the state has to be all-powerful. But the Austrian wants unlimited property AND limited government. That will never happen; that has never happened; that can never happen, particularly not under Austrian theory. The theory is therefore incoherent and self-contradictory.
Mises combined the Lockean view of unlimited property with the libertarian view of economics. But it was an oil and water combination, since the older libertarianism was based precisely on property as usufruct only, that is, on widespread ownership of property, limited more or less to what one could actually use. The older view had no use for gov’t, but Locke (and Mises) gave the gov’t the sole job of protecting the new (in Locke’s day) form of unlimited ownership. No less a personage than Adam Smith noted the difficulties of this view of gov’t; government, he concluded, “is in reality instituted for the defense of the rich against the poor, or of those who have some property against those who have none at all.”
Now, if you want to get rid of big gov’t, you must get rid of the big corporations; if you will the ends you must will the means. But it is absolutely pointless to rail against gov’t power while ignoring corporate power, or to campaign for the destruction of the one without the destruction of the other. They go hand in hand, and cannot be disentangled.
Much of this discussion strikes me as rather a-historical. Some critics of the Acton Institute seem to implicitly accept many historical myths about Catholicism and what is commonly called capitalism (which itself is a Marxist word full of ideological supposition and self-deception). It is always perplexing to me that even a good number of very sound and thoroughly orthodox Catholics simply accept Max Weber’s “Protestant Ethic and the Spirit of Capitalism” as the “truth” about this subject, long after Weber’s thesis has been thoroughly discredited by secular and Catholic scholars alike. May I suggest that they read Rodney Stark’s “The Victory of Reason” (Stark, incidentally, is not a Catholic) which explains how Catholic Christianity is largely responsible for the emergence of the world’s first genuinely free economies in the High Middle Ages. Another excellent source is a book by the late Harold Berman (also a non-Catholic) entitled “Law and Revolution”, which, among other things, describes the role of the medieval Papacy and the Catholic Church in helping to establish the conditions in which recognizably free markets first assumed systematic form. Also worth reading in this context is anything by the late Raymond de Roover and the late Majorie Grice-Hutchison – their primary source research is invaluable.
Anyone who is a faithful Catholic knows that one of the major obstacles to bringing people to the Catholic faith is the persistent mythology about Catholicism concerning subjects ranging from the schisms of the sixteenth century, the Inquisition, the Crusades, Pius XII and the Holocaust etc. In presenting its prudential judgments about the economic order, the Acton Institute has devoted considerable time to illustrating that its judgments have ample precedents in the long history of the Church and were shared by many orthodox Catholics throughout the centuries. I can understand why many secularists and some Protestant Christians believe these myths (though I know many Protestants who actually know the Catholic Church’s history far better than some Catholics), but it is difficult to understand why many faithful Catholics do so. The Acton Institute, I believe, has done invaluable work in exposing many of these myths in the realm of economic history and, in doing so, rendered some considerable service for the Church.
I don’t know why you think Weber has been “discredited” or by whom; he is still central to any curriculum in sociology that I am aware of. Weber was highly sympathetic to the Catholic position and highly critical of Calvinism. As for the relation of religion and capitalism, the classic study is R. H. Tawney’s Religion and the Rise of Capitalism, a book I would recommend to anyone interested in the subject.
The Acton theses on capitalism and Catholicism is certainly not validated historically, despite the attempts of Schumpeter, Chafuen, and others to make of the scholastics “proto-Austrians.” But I have already dealt with that in a previous post.
In addition to books by Rodney Stark and Berman mentioned above, may I suggest that interested readers consult the following sources to see how thoroughly discredited both Weber and Tawney are by a range of economic historians and political economists (most of whom were/are not necessarily enamored of free markets or proto-Austrians), and how much Catholicism and Catholics contributed to the rise of market economies:
1. Roover, R. de (1955) “Scholastic Economics: Survival and Lasting Influence from the Sixteenth Century to Adam Smith,” in Quarterly Journal of Economics, Vol.69, pp.152-178.
2. Black, A. (1984) Guilds and Civil Society in European Political Thought from the Twelfth Century to the Present, London, Methuen&Co. Ltd.
3. Collins, R. (1986) Weberian Sociological Theory, Cambridge, Cambridge University Press.
4. Jones, E.L. (1987) The European Miracle: Environments, Economies, and Geopolitics in the History of Europe and Asia, Cambridge, Cambridge University Press.
5. Delacroix, J. (1995) “Religion and Economic Action: The Protestant Ethic, the Rise of Capitalism, and the Abuses of Scholarship,” Journal for the Scientific Study of Religion, Vol.34, pp.126-127.
6. Iannaccone, L.A. (1998) “Introduction to the Economics of Religion,” Journal of Economic Literature, Vol.35, pp.1465-1496.
7. Gregg, S. (2003) “La fin d’un mythe : Max Weber, le capitalisme et l’ordre médiéval,” Journal des Economistes et des Etudes Humaines, Vol.13, No.2/3: 185-196.
SJG. If you merely mean that every writer has his critics, then every writer is “discredited.” But I think “discredited” must mean something more than that, namely that the person is no longer read or respected within his discipline. But Weber is still integral to any sociology degree. To give the counter-example, Freud is no longer taught in graduate psychology schools, and hence we may say, objectively, that he is debunked. But “debunked” has to mean more than “I disagree” or “he has his critics.”
HB: “It seems to me that some get angriest over the points of greatest agreement. It might be helpful if, instead of yelling “socialist” at anybody who disagrees, we actually examine the points of disagreement, and note the points of agreement.”
LK: I have no problem with noting points of agreement/disagreement. Neither do I see anything wrong with pointing out socialist/collectivist arguments when they are put forth. It is not ad hominem if it is true. Agreement is all well and good but it is better to be following a righteous path even if NO ONE agrees with you. “Dialoguing” is a time tested collectivist tool.
HB: “And so far, I can’t see that anybody disagrees over the evils of state power. What seems to be in dispute is the order of causation.”
LK: I disagree. What seems to be in dispute is the righteousness of the degree of state power and on whose behalf the state aggresses.
HB: ” That is, whether vast accumulations of private property lead to vast accumulations of state power to protect it, or whether vast accumulations of state power lead to vast accumulations of property. The answer is “yes, to all of the above.” It is a reiterative process: the more of one leads to more of the other, which leads to more of the first, and it hardly matters where you start.”
LK: The Lord told us the poor would always be with us and the logical flip side of that would be that the rich will always be with us as well. There will be disparities in the level of wealth among people in a free society. But that has been true even in the most Marxist of utopias….”accumulation of wealth” simply becomes control of wealth and the essence of ownership is the control of your property, “some pigs become more equal than others”. The members of the Party lived better than the nonbelievers…as in the US we are seeing members of the government Party living better than the rest, accumulating vast wealth in government jobs. great accumulations of property are not inherently evil, what is evil is stealing property from others. A business owner who grows wealthy through his ideas and hard work is not doing anything wrong. A businessman who maintains his wealth by paying off government thugs to pass laws that keep people from competing against him or chain people into behaving in ways that enhance his wealth is acting in an evil manner. There was nothing wrong with Rockefeller (and Carnegie, JP Morgan and Henry Ford) growing rich off honest competition and business acumen. There was everything wrong with their promotion of the Federal Reserve banking cartel and compulsory government schooling to indoctrinate people into worshipping the state and dumbing them down, turning them into conforming, ignorant, obedient workers for big business.
HB: “And that is the problem with Austrian libertarianism, which largely displaced the older libertarianism. Austrianism is largely an apologia for unlimited accumulation and corporate power.”
LK: No, it is promotion of maximum liberty between actors in the market.
HB: ” I am not a libertarian, but I feel a great empathy with the pre-Austrian libertarians. Both Mises and Marx were of one mind in declaring the older libertarianism “unscientific.””
LK: Interesting. Source?
HB: “It is one of the many amazing points of coincidence between the two. However, if property can accumulate without limit, then it is natural for it to seek ever-greater protection from the state.”
LK: BINGO! And it is natural for human beings in control of state power to seek payment for their protection. It is human nature. As Lord Acton told us about absolute power. There are limits to wealth accumulation. That accumulation is eaten away by competition from those who innovate and build better mousetraps. It is the beauty of the free market. Do you honestly believe we’d still be driving gas fueled internal combustion engines in the absence of government protection of the auto and oil industries? You are correctly perceptive of the sinful nature of men and recognize the evils that greed can do. What you fail to admit is that government officials with absolute power are subject to the same sinful natures and temptations. I’d rather take my chances with a rich man than one with a license to kill me, take my children and property and tax me at his whim.
HB: ” The whole history of capitalism bears this out: private power and state power grow hand in hand; the one feeds the other.”
LK: The history of MAN bears this out. It does not necessarily follow simply from private ownership of the means of production and distribution (capitalism). It DOES always follow when state power is available for sale due to human nature, original sin. Government is simply a legalized mafia.
HB: ” it is a complete myth to imagine they are things opposed The necessity of a big state is true precisely to the degree that one accepts the Austrian “axioms of action.”
LK: Sorry, you are wrong. Greater prosperity and wealth creation occurs in societies that allow the most free market activity, poverty and deprivation always follow command economies. It is one of the reasons for Chinas rise to economic power, they have relaxed the chains on the people and are simply harnessing capitalistic activity of the people (not good, but better than committees and rulers making economic decisions for all). They are allowing people to make money.
HB: ” If, as the Austrians claim, property has no natural limit, and if all actions are defensive, and if all actions are self-interested, then unlimited property will seek the most efficient means of defending property, which is clearly to externalize the costs of its defense on the state. For which, of course, the state has to be all-powerful.”
LK: Unlimited property can only do this when there is a state to buy or control to enforce it’s socializing of costs. Take the state out of the equation.
HB: ” But the Austrian wants unlimited property AND limited government. That will never happen; that has never happened; that can never happen, particularly not under Austrian theory. The theory is therefore incoherent and self-contradictory.”
LK: Not the Austrians I read. Murray Rothbard referred to the state as “a gang of thieves writ large”. Mises was prescient about many things, it took economists like Rothbard to point out the illogic in expecting human beings in control of legalized aggression, absolute power, to behave morally while insisting that capitalists are inherently evil.
HB: “Mises combined the Lockean view of unlimited property with the libertarian view of economics. But it was an oil and water combination, since the older libertarianism was based precisely on property as usufruct only, that is, on widespread ownership of property, limited more or less to what one could actually use. The older view had no use for gov’t, but Locke (and Mises) gave the gov’t the sole job of protecting the new (in Locke’s day) form of unlimited ownership. No less a personage than Adam Smith noted the difficulties of this view of gov’t; government, he concluded, “is in reality instituted for the defense of the rich against the poor, or of those who have some property against those who have none at all.”
LK: Historically (including the Founders) protection of the right to own property has been considered one of the few legitimate function of government . Some free market proponents believe that the state can be harnessed in this manner (as did Jefferson, etc.). History has shown that the reverse occurs, the state, once it obtains a monopoly on aggression, in reality harnesses the people it is supposed to be protecting to the point of conscripting them to die in battle and seizing the equivalent of over half a years wages in taxes. You are correct, I don’t believe Mises himself was as anti-state as those who have built upon his ideas (see Mises.org). Without a state to protect vast accumulations of land the accumulation would be limited by the owners ability to protect his claim.
HB: “Now, if you want to get rid of big gov’t, you must get rid of the big corporations; if you will the ends you must will the means.”
LK: Getting rid of their thugs, the state, will naturally reduce the size of corporations. They will not benefit from tax beaks that socialize their costs, regulatory laws that keep people from competing, IP laws that keep people from building on ideas, eminent domain laws that allow seizure of private property, credentialling laws that force people into indoctrination centers for large portions of their lives and warp their minds into being slaves and worshipping “leaders”.
HB: “But it is absolutely pointless to rail against gov’t power while ignoring corporate power, or to campaign for the destruction of the one without the destruction of the other. They go hand in hand, and cannot be disentangled.”
LK: Wrong. One is private ownership and business, the other is raw power, looting, killing, tyranny enforced by violence or the threat of violence.
HB: “The Acton theses on capitalism and Catholicism is certainly not validated historically, despite the attempts of Schumpeter, Chafuen, and others to make of the scholastics “proto-Austrians.” But I have already dealt with that in a previous post.
LK: Perhaps you have dealt with it to your own satisfaction. In the face of the horrendous aftermath of the collectivist and redistributionist experiments of the 20th century it is obvious that THOSE immoral philosophies HAVE been proven to be failures. To insist that a historical working example of a free market society be put forth or it is not valid thesis is a lame argument. There was a time when there was no “historical” working example of Christianity either.
Hello, I am Gabriel Zanotti, Academic Director of Instituto Acton in Argentina. I have been reading the debate and I would like to make a few points.
First of all I think it’s very useful the traditional distinction between general principles of natural law and “technical” issues that are matter of opinion. In the general principles we have to consider what Saint Thomas Aquinas called first and “secondary and more detailed precepts”. The technical issues, on the other hand, could be divided in: a) general principles of certain social sciences; b) the interpretation of an historical situation given those principles; c) the application of general principles, moral and technical, to a particular situation. This last thing is very important because it implies the virtue of prudence.
Second, and therefore, when we are interpreting the pontifical documents, we have to take in account those distinctions. In this way, I think that many thinkers who are Catholics and, at the same time, are in favor of the free market, are perfectly faithful to the pontifical magisterium, as far as they are accepting and promoting the general principles of the Social Teaching of Catholic Church, such as subsidiarity, the social function of property, and so on, including the general principles of distributive justice. If we are in favor of a free market economy, the reason is because we consider that there are technical reasons in order to demonstrate that a free market economy is a mean in order to obtain the goals of the Social teaching of Church. So, there are technical issues, explained by Austrian Economists, like Mises or Hayek –such as the theory of trade cycle, the functions of prices and markets, the theory of capital, the economic calculation under socialism and so on- that can be coherently accepted by a catholic thinker regardless the philosophical or theological disagreements that those authors had in relation to certain fundamental points of Christian philosophy and the classical thomistic doctrine or natural law.
So (and 3rd) we could say that a priest like F. Sirico is doing the same that Mons. Dupanloup did when he explained the proper meaning of a document like the Syllabus in the 19th Century. Mutatis mutandis, we are in the same situation, in relation to economic liberty, that Catholics had in relation of religious freedom. F. Sirico said it many times. Once the proper distinctions are made, once the proper clarifications are explained, religious liberty is no longer a matter of indifference; on the contrary, is a matter of human dignity. In the same way, economic liberty is, on the one hand, a human right, and, on the other hand, a matter of opinion (in relation to Catholic Faith); as far as economic science teaches us that property is necessary to economic calculation. This is not a matter of faith, nor does an issue of first natural law principles, but a principle of economic science that has its sphere of relative autonomy inasmuch does not contradict the Catholic Faith.
Of course, there are many things to say. We have a long way to go. I was just making the point that there are many things here that are debatable, that belong to a sphere of legitimate disagreements between Catholics, as far as they use different economic theories. Austrian economics can be one of those theories, once the proper distinctions are made. We are working on it. In the meantime, allegations of heterodoxy do not help, especially for Catholics that now, in these difficult times, are defending Catholic Faith with no any contradiction with any of its principles. Do not condemn us because we are just using economic science in order to achieve the common good and help the more hopeless and poor people of the world.
Kate, if you can show me a single instance in the entire history of the world in which the system you say brings the greatest wealth, than I will examine it to see if it is true. But since neither you nor anyone else has ventured to give me one single example, there is no further I can go in verifying your system. The systems that have spread the wealth, here in America, in Europe, in Japan, in Taiwan, Singapore, etc., are precisely the systems that you call “socialist.” We have been were you wanted us to be, and it was always a time of great misery and insecurity. You keep telling me it works, but keep it a big secret as to where and when.
Gabriel, as a theologian, I am somewhat familiar with the Summas. I know where St. Thomas speaks about property, I know where he speaks about the natural law, I know where he speaks about the division of the sciences. But I know of no where where he speaks about what you are speaking about. Perhaps you could give me some citations, and we can compare notes.
Dear Hilarie,
Please sorry, I am sure there was a misunderstanding. I was just quoting Aquinas in relation to the first and secondary principles of natural law, I-II, Q. 94, a. 5c, 5 ad 3rd and a. 6 c. That was all.
Gabriel, thank you for the citations, but they only increase my confusion, since the propositions you are restating are precisely the ones denied outright by Mises and Hayek. Mises has nothing but contempt for the idea of natural law: “[Economics] is not interested in the problem of whether profits are to be approved or
condemned from the point of view of an alleged natural law and of an alleged
eternal and immutable code of morality about which personal intuition or
divine revelation are supposed to convey precise information. (HA 298)”
“There is, however, no such thing as a perennial standard of what is just
and what is unjust. Nature is alien to the idea of right and wrong. “Thou shalt
not kill” is certainly not part of natural law. (HA 720)” He then continues to deny a divine origin (and hence any coherent meaning) to terms like “right” and “wrong”:
“The notion of right and wrong is a human device, a utilitarian precept
designed to make social cooperation under the division of labor possible.
All moral rules and human laws are means for the realization of definite
ends. There is no method available for the appreciation of their goodness or
badness other than to scrutinize their usefulness for the attainment of the
ends chosen and aimed at. (ibid.)” In other words, the ends, and the ends alone, justify the means. This is the essence of utilitarianism, and Mises was a utilitarian.
Mises’s confusion goes deeper: he was confused about the very nature of science. Look at I-II, 94, 4 (which I think is more relevant to your point): “The speculative reason, however, is differently situated in this matter, from the practical reason. For, since the speculative reason is busied chiefly with the necessary things, which cannot be otherwise than they are, its proper conclusions, like the universal principles, contain the truth without fail. The practical reason, on the other hand, is busied with contingent matters, about which human actions are concerned: and consequently, although there is necessity in the general principles, the more we descend to matters of detail, the more frequently we encounter defects. ” Note that Thomas places human action within the realm of the practical reason, but Mises situated it within the realm of the speculative reason: “The a priori sciences-logic, mathematics, and praxeology—aim at a knowledge unconditionally valid for all beings endowed with the logical structure of the human mind. (HA 57)” In other words, Mises makes human action (praxeology) a speculative science, contra Thomas.
This is clearly wrong. Speculative science deals only with formal relations, only with statements such as “1+1=2” or “if A>B, and B>C, then A>C.” But human action, and all material relations, belong to the practical (and therefore contingent) sciences. Why is this so important? Because the practical sciences are all answerable to the natural law, the very law which Mises denies! This confusion of speculative and practical science is sufficient to account for the peculiar a-historical and anti-empirical mode of argumentation that one usually sees in the Austrians.
What is surprising for myself, a theologian who writes on economics, is that a person who hated the Church, hated Christ, despised the scholastics, and considered himself “a man of 1789” is held up as the standard of interpretation for Catholic social theory. Amazing. No wonder that such confusion reigns in the Church.
I am very very impressed by the “infinite” number of folks intrested in Catholic Social Doctrine. I know Fr. Sirico personally and over the years I have learned to greatly admire his stance. But let me add the results of my personal research on the problem.
I have compiled a large number of quotations from the writings of my late professor Ludwig Von Mises, the most outspoken free marketer ever, and compared them with quotation from the Compendium of Catholic Social Doctrine (easiy downloaded from Google) My findings are that they both say just about the same thing. Evident conclusion: Religion and Free Market are definitely allies, not antagonists.
But let me add that the natural law approach of the Compendium is much more complete and satisfying than the utilitarian approach of the proponents of free markets. The Compendium catalogues all the problems of modern human society in a most thorough and satisfying manner. I´ll gladly sent you my results. thanks
Hilarie, I understand your disagreements with Mises. My philosophical background is Aquinas and, at the same time, I have been working on Mises´s economics and epistemology all my life. If you read Spanish, let me know, in order to send to you some of my papers. If you do not, you have at least my humble articles in The Journal of Markets and Morality.
Joseph, I certainly believe that you can reconcile quotations from Mises with quotations from the Compendium, for the simple reason that you can always do that with any two random works of sufficient length; I’ve seen the same thing done with Christ and communism, yet I do not think Christ was a Marxist. A reconciliation requires more that text-proofing and quote matching. I would be more impressed if you could, for example, reconcile the quotes I have given in this discussion with the compendium, or the absolute detestation that Mises expresses for Christ. See http://distributism.blogspot.com/2008/11/can-mises-be-baptized_09.html
Garbriel, in my ignorance, I do not speak Spanish. But do any of your articles address the questions I have raised in my post?
Hilarie Belloc: “Kate, if you can show me a single instance in the entire history of the world in which the system you say brings the greatest wealth, than I will examine it to see if it is true.”
Try Hong Kong, c 1950 – 2000. Possibly the most sustained episode of an almost totally free market complex economy in history. And, as is grudgingly acknowledged even by Communist China itself by its pretty much hands off approach (at least re. the economy) since it took over, an economic miracle.
Sure, the British government built hospitals and roads and some schools there over the years, but history bears out that market can competently supply these as well: in the case of schools and hospitals, even in Hong Kong itself.
Also, consider some of the colonies in America between first settlement to the Revolution. Many of them had decades of little to no substantive government (eg Pennsylvania after Penn returned to England) and they flourished, building complete economies with privately built roads, bridges, and private money etc etc.
Hong Kong was a Georgist state with no private property; all development was done under lease from the gov’t. Singapore, by the way, is the same; the gov’t owns 76% of all the property. The great irony is that the communist gov’t new property law will establish a Lockean view of property that didn’t exist in the British Crown Colony. The state was almost the complete opposite of an Austrian state. But it was, as you say, prosperous beyond belief.
Remind me, was that the same colonies of the witch hunts, of controlled prices in Massechusetts, of the state bank in Pennsylvania, etc.? Markets are made by rules, and without rules, no one will trade.
Concerning Hong Kong: “In fact, of course, the reality was very different from the myth of complete laissez-faire. The government’s programs of public housing, land reclamation, and infrastructure investment were ambitious. New industrial towns were built to house immigrants, provide employment and aid industry. The government subsidized industry indirectly through this public housing, which restrained rises in the cost of living that would have threatened Hong Kong’s labor-cost advantage in manufacturing. The government also pursued an ambitious public education program, creating over 300,000 new primary school places between 1954 and 1961. By 1966, 99.8% of school-age children were attending primary school, although free universal primary school was not provided until 1971. Secondary school provision was expanded in the 1970s, and from 1978 the government offered compulsory free education for all children up to the age of 15. The hand of government was much lighter on international trade and finance. Exchange controls were limited to a few imposed by the U.K., and there were no controls on international flows of capital. Government expenditure even fell from 7.5% of GDP in the 1960s to 6.5% in the 1970s. In the same decades, British government spending as a percent of GDP rose from 17% to 20%.”
http://eh.net/encyclopedia/article/schenk.HongKong
http://eh.net/encyclopedia/article/schenk.HongKong
In fact, of course, the reality was very different from the myth of complete laissez-faire. The government’s programs of public housing, land reclamation, and infrastructure investment were ambitious. New industrial towns were built to house immigrants, provide employment and aid industry. The government subsidized industry indirectly through this public housing, which restrained rises in the cost of living that would have threatened Hong Kong’s labor-cost advantage in manufacturing. The government also pursued an ambitious public education program, creating over 300,000 new primary school places between 1954 and 1961. By 1966, 99.8% of school-age children were attending primary school, although free universal primary school was not provided until 1971. Secondary school provision was expanded in the 1970s, and from 1978 the government offered compulsory free education for all children up to the age of 15. The hand of government was much lighter on international trade and finance. Exchange controls were limited to a few imposed by the U.K., and there were no controls on international flows of capital. Government expenditure even fell from 7.5% of GDP in the 1960s to 6.5% in the 1970s. In the same decades, British government spending as a percent of GDP rose from 17% to 20%.
I think you’ve proved my point, HB. While not completely laissez-faire, Hong Kong went closer than any other modern state by miles, was far more capitalist than it was socialist or interventionist. Yet, in difficult circumstances such as having the highest density of population in the world by far, being flooded with refugees from communist China year upon year for decades, sited on a patch of arid land with no water supply, little Hong Kong emerged as easily the most successful economy in the world in the 20th century, and may even rank as the most successful economic episode in all human history.
All you can come up with are marginal interventions by the benevolent but laissez-faire colonial govenment, interventions which of themselves don’t explain the spectacular growth of the Hong Kong economy.
I mean, when you say “Georgist” you mean that the land was owned by the state and leased. So what? Are you seriously saying that if the government had sold the land to people instead of leasing it, or allowing them to homestead it for free, the Hong Kong miracle never have occurred? The onus is on you to prove it. There are plenty of quasi-Georgist land arrangements around the world (my hometown of Canberra, for example) and no-one to my knowledge has ever proved that such arrangements are more conducive to spectacular wealth creation for their citizens a la Hong Kong than free-title land ownership.
Note too from above that there was no free universal primary schooling till 1971, but that the Hong Kong miracle was well under way by then. And there were plenty of private schools run efficiently and successfully for the broad citizenship: one thinks of the Salesians, etc.
Land reclamation: Well kudos to the British colonial office, but as you are no doubt aware, land reclamation is done by private investors and developers all the time. Can we seriously doubt that Hong Kong entrepreneurs would balk at such a task had it been left to them, given the miles of skyscraper they put up – a much more daunting engineering and managerial enterprise?
Re. America: I’m no expert on its history, but here goes: different pre-revolutionary colonies had different levels of government/non government at different stages. I pointed out that some of them, such as Pennsylvania for a period were very close to laissez-faire communities or even completely laissez-faire for significant periods of time and the evidence is that they flourished under same. The fact that, as you reply, others had varying levels of government intervention, even of an authoritarian nature, over aspects of their community life, does not constitute counter-evidence.
What would constitute such evidence would be information showing that the laissez-faire episodes were characterised by a systemic slide into destitution, and the interventionist by economic prosperity. Do you have any such evidence? I’m not aware of any. Murray Rothbard’s 4 volume “Conceived in Liberty” on the other hand, references copious examples of communities flourishing under anarchy, only to be reduced to destitution when government regulations and interventions increased.
Your point about the need for rules is a good one. But private individuals and organisations are able to come up with their own rules quite successfully if allowed to, as the need arises. Thus the Law Merchant originated as entirely private law, and, all the sophisticated standards in engineering and (eg) computer software today are private creations. Even the property rights in the newly-created electromagnetic spectrum (radio broadcast frequencies) were being successfully and happily rationalised by private agreements among station operators in the early 20th century until the state sniffed money and, pretending it needed to “order” what was already an order, waded in.
“”Kate, if you can show me a single instance in the entire history of the world in which the system you say brings the greatest wealth, than I will examine it to see if it is true. But since neither you nor anyone else has ventured to give me one single example, there is no further I can go in verifying your system.””
How about an example where state seizure of wealth (the theft of taxation) has not devolved into tyranny against some segment of the population?
“” The systems that have spread the wealth, here in America, in Europe, in Japan, in Taiwan, Singapore, etc., are precisely the systems that you call “socialist.” We have been were you wanted us to be, and it was always a time of great misery and insecurity. You keep telling me it works, but keep it a big secret as to where and when.””
I hadn’t noticed that Europe was particularly financially secure. The level of financial security enjoyed by some “socialist” countries is precisely BECAUSE they ARE socialist and fairly homogeneous in population as well; their wealth is not from SOCIALISM, which is simply state seizure and distribution of the wealth and property of others, but because of the Capitalist behaviors of those whose wealth they COVET and STEAL. Socialism is simply the HARNESSING of capitalist behaviors, the CONTROL of people by other PEOPLE who presume to know best how to distribute goods and services while taking a fat cut for themselves and their cronies first. This is THEFT and TYRANNY. The state cannot CREATE wealth, it can only steal it.
Attempting to promote this theft and tyranny as somehow “Christian” is downright wrong. Maybe you find socialism and Marxism all touchy feely and kind for the “people” but the endpoint of those philosophies is theft, murder, covetousness, and tyranny by “leaders” who are attracted to government where some “pigs are more equal than others”.
To insist that a thing cannot exist because it has not existed before, especially in light of the inequality of education and information available to the masses throughout the history of man, is simply nonsense. There was a time we didn’t have electricity, planes, microwaves, cars, etc., etc. There was a time when massive corporate states didn’t exist but, guess what, they exist now.
Marxist collectivist philosophies are anti-Christian to the degree they are enforced by aggression. I can go no further in justifying a system that YOU are unable to show is not based on theft, covetousness, and idolatry.
“Garbriel, in my ignorance, I do not speak Spanish. But do any of your articles address the questions I have raised in my post?
Comment by Hilarie Belloc — 23 April 2009 @ 9:35 pm ”
————–
Yes Hilarie, they do. In fact, I have a book that treats many of the points that concern you (Market Economy and Social Doctrine of Church) written in 1985 and republished in 2004, and my dissertation was on Mises´s praxeology and its relations with Saint Thomas Aquinas philosophical anthropology. It’s me who is very sorry that they are all in Spanish. I can send them to you anyway, on line, may be there is someone who could read them.
Gabriel Zanotti,
From my Roman years I have some very good Argentinian friends, among whom: Bp Eduardo Taussig (I received an invitation to his episcopal consecration), Frs. Gabriel Delgado and Francisco Rostom, and Prof Ruben Pereto (now at ND on a grant). Do you know any of them?
Hugh, let me start by saying that at least we are talking about history, about something real, and that is a far more interesting conversation. Abstractions are easy enough, and every system works “in theory.” Practice is a bit harder. It is true that one needs a theory to see a thing, but it is also true that one needs a thing to test a theory.
As for colonial America, I think you have to exclude an economy based on “free” (stolen) land, indentured servitude, and slavery from your Austrian constellation. Or at least I hope you do. As for Hong Kong, that is quite a different matter. You are attributing its wealth to its low rate of gov’t involvement. But that leaves you a problem in comparing it to the American and European experience. While I agree that low gov’t involvement is a factor, it is insufficient to explain what happened. Rather, there is another cause: the lack of corporate involvement and the prevalence of small and medium enterprises. From the article cited:
“The economic development of Hong Kong is unusual in a variety of respects. First, industrialization was accompanied by increasing numbers of small and medium-sized enterprises (SME) rather than consolidation. In 1955, 91 percent of manufacturing establishments employed fewer than one hundred workers, a proportion that increased to 96.5 percent by 1975. Factories employing fewer than one hundred workers accounted for 42 percent of Hong Kong’s domestic exports to the U.K. in 1968, amounting to HK$1.2 billion. At the end of 2002, SMEs still amounted to 98 percent of enterprises, providing 60 percent of total private employment. ”
In other words, it would seem to fit more the distributist model than the Austrian one. And this is the problem with Austrianism (or one of them): it recognizes only gov’t limitations on the market, not privatized ones. But monopolies and corporate power limit entrepreneurship as much as regulation does, if not more so. (By the way, this same path of development fits Taiwan, Singapore, and every other place that has been successfully developed.)
John Médaille
If you attribute the whole thing to the low rate of gov’t expenditures, you have another problem. The rate of gov’t involvement in the economy was even lower in the United States, yet the economy was extremely unstable. Pre-1929 federal expenditures where in the 2-4% range. Yet in the years from 1853 to WWII, the economy was in recession an astounding 40% of the time. Since the war, it has been in recession only 15% of the time. Further, the post war recessions were on average half as long and half as deep as the pre-war recessions.
So here is the distributist thesis, which more closely fits the facts: it is not big gov’t that destabilizes the economy, it is big anything. And in fact, once you have big business, you need big gov’t to redistribute the output, or you will have a failure of aggregate demand. That is what happened, and it explains why we have the gov’t we have. Further, it explains we everybody has the gov’t we have, at least to the degree that they have a stable economy. Now, I do not think that the “big business/big gov’t” combination will work any more. It has reached its logical limits and is about to fall. But that does not obviate the fact that we have lived through an incredible period of economic prosperity. We have had blessing upon blessing heaped upon us, precisely from a system that the Austrians say won’t work at all! It seems to me to be the height of ingratitude to rail against a system that has provided us with such unprecedented bounty.
Further, such ingratitude will corrupt the discussion (and I hope it is just a discussion) of what comes next. Without an accurate description of what went right and what went wrong, there can be no meaningful (that is, non-ideological) discussion of where to go next. And there will be a “next,” because what we have we won’t have for long.
As for the importance of Georgism, it means that (in theory) incomes and capital are not taxed, and that is important. Taxes fall entirely on economic rent. Of course, the theory never works out entirely because the practice is very difficult. Nevertheless, the Georgist states tend to have lower rates of income tax, and that is crucial.
As far as rules go, rules are only rules to the extent that they are enforceable. The have to rest on the eventual threat of police power. But rules are best when they are close to home and not remote. Your neighbors can be oppressive (as anybody familiar with a homeowner’s association can tell you) but at their worst they do less damage then the same scheme nationalized.
Gabriel, there is something I don’t understand. Since you have done so much work on Thomas and Ludwig, answering the quotes I gave from Thomas should be a trivial matter. But you just refer me to your books. Fine, but then you read my books.
Let’s start with a simple question in reconciling these thinkers. Mises (and most modern economic theory) bases prices on marginal utility, but Thomas condemns utility pricing as a violation of the 7th commandment. So how does your work treat this issue?
John Médaille
Dear Hilaire,
I see your point. Let me tell you first that I have always thought that a blog has its limits in order to treat certain delicate issues. Perhaps you think different. Anyway, I will try to do my best.
I am sure you know that many people establish a relation between Thomas Aquinas, the last scholastics thinkers and the present Austrian School of Economics. My research program is another one. My research program is to establish a philosophical (not historical) relation between Thomas Aquinas theory of purposeful human action and the foundation of praxeology. Following this point of view, if marginal utility is deduced from subjective value and subjective value is deduced from human action, that is founded in intelligence and free will as Thomas Aquinas understands it, then the present Austrian price theory, based on subjective value, is compatible with the philosophy of Thomas Aquinas.
As you can see, my research program is not to link Mises´s economics with the vision that Thomas Aquinas could have had of prices in the Middle Ages, but to establish a philosophical relation between Mises´s praxeology and Thomas Aquinas philosophical anthropology.
Gabriel, a combox is difficult for difficult issues if you have to go back and explain the basics to each poster. But I am quite conversant with both Mises and Aquinas. A conversation beyond “read the book” should be possible.
I am quite familiar with all the efforts, from Schumpeter to Chafuen, to turn Thomas into a proto-Austrian. But as impossible as that task is, it seems trivial compared to the task of reconciling Thomistic anthropology with Misean “praxeology.” For starters, I don’t see how you can maintain the imago dei when all action is reduced to selfishness and discontent. Mises is at least consistent when he denies the existence of God based on praxeological constraints on action; he is far more consistent in this than most of his supporters, just as he is consistent in denying that a Christian social order is compatible with Austrian economics. I don’t think it is my objections that have to be overcome, so much as Mises. It seems to me that before you can talk about how Mises is right, you must first address the issue of how Mises is wrong. After all, both you and Mises cannot be right; one of you, and perhaps both, have made a mistake. That much is clear.
John Médaille
I am quite familiar with all the efforts, from Schumpeter to Chafuen, to turn Thomas into a proto-Austrian. But as impossible as that task is, it seems trivial compared to the task of reconciling Thomistic anthropology with Misean “praxeology.” For starters, I don’t see how you can maintain the imago dei when all action is reduced to selfishness and discontent. Mises is at least consistent when he denies the existence of God based on praxeological constraints on action; he is far more consistent in this than most of his supporters, just as he is consistent in denying that a Christian social order is compatible with Austrian economics. I don’t think it is my objections that have to be overcome, so much as Mises. It seems to me that before you can talk about how Mises is right, you must first address the issue of how Mises is wrong. After all, both you and Mises cannot be right; one of you, and perhaps both, have made a mistake. That much is clear.
John Médaille
Hilaire, reading Rothbard’s account of Pennsylvania, one sees that the land was not stolen and that there was remarkably peaceful co-existence with the Indian population and the largely Quaker settling community (http://mises.org/story/1865). But the issue is irrelevant anyway, unless it could be proven that there was a causal link between the manner in which the land was acquired and the enduring success of the economy of the supplanting society, compared with other economies. Likewise we must treat the factors of indentured servitude and slavery. Unless it can be shown that these factors, to the extent they were present in any degree, were somehow essential to the success of the economy under discussion, then they can be ignored for the purposes of this debate and we may consider the economy as substantially an instance of laissez-faire.
As for the profile of businesses in Hong Kong – again I ask, “so what?”. It’s entirely compatible with Austrian theory that a substantially laissez-faire economy might have a different mix of small and big business than more regulated economies. Indeed, free marketeers have long pointed out that the state is often a key agent in squashing competition and helping out sectional interests such as big businesses, that will keep it in power in return for regulatory and financial favours it bestows on them. One cannot read the economic history of the United States without being struck at how the so-called anti-monopolistic regulations of the late nineteenth and early twentieth century actually assisted the concentration of the economy in to the hands of a few favoured corporation. Thanks to Austrian economist/historians, other free market historians and even some left wing historians, this process is now well documented.
Re. the US GDP history 1853-1945: are you factoring in that most, if not all the recessions of this period originated in various forms of state manipulations of the market – most notoriously (but by no means exclusively), the Great Depression and its aftermath? Take out all of these negative impacts by the state on economic activity (oh, and don’t forget the small matter of the War Between The States and its aftermath, WWI and WWII) and what is left?
Hong Kong’s “Georgism”?: it is largely responsible for the very high land prices: the state chokes off land releases in order to raise the value of existing land and thereby increase revenue therefrom, which in turn meant higher prices of housing for the poor and the creation of the lauded public housing. So in one of the very few ways in which Hong Kong is NOT a free economy, the state causes problems…for the poor!
In any case, you still have to prove that the “Georgism” of the Hong Kong land system explains the incredible success of its economy, given that ceteris paribis other Georgist regimes don’t come within a bull’s roar. Unless you can, the observation is, again, irrelevant, and the thesis that Hong Kong’s outstanding success is attributable to its chief point of difference with other economies in the world, namely its relative economic freedom, still stands.
Rules have to “rest on the eventual threat of police power”. Well, some of them do – many rest successfully on other forms of disincentive such as economic sanctions and boycotts, and other voluntary forms of social control. I have no problems with having police, though private police forces have proven to be viable entities. Don’t forget though that the topic of this discussion is the Acton Institute, which is not anarcho-capitalist, but defends limited government, including the provision of police and defence forces. The debate between distributists and Austrian/free market economists doesn’t turn on the private production of security, just as the assessment of whether this or that American colony was laissez faire or not shouldn’t turn on whether Jack Goodtree stole a plough from Isaac Walton in 1647 and thus forbids the description of the colony’s economy in these terms.
Wow, Hugh. It is a revelation to me to learn that Austrianism is indifferent to the question of whether or not land is stolen. I’ll file that away. And indentures and slavery, are you cool with that as well? And a gov’t that is running less than half of what Hong Kong’s is in terms of percent of GDP is manipulating the economy? Okay, but that leaves you in a worse position, does it not? You have to construct a theory whereby relatively small interventions (2-4%) totally distort an economy into chronic recession, whereas much larger interventions (17-24% in the US and 7% in Hong Kong) bring relative stability, but having no involvement will do…well, whatever it is that Austrianism is supposed to do. Since they deny the possibility or even desirability of equilibrium, it is never clear just what the point of Austrianism is, even in its own terms. But in any case, the resulting theory will be quite complex, will it not? Maybe that’s why Austrians never attempt it. Further, if you cite the fact that in 100 years there were 3 wars as an excuse for the constant failure of Austrian policies, then the best you can claim is that “Austrianism works, except if you need self-defense.” Okay.
As for Georgist states that grew as fast as Hong Kong, try Taiwan and Singapore. In Taiwan, they leveraged themselves from a nation of feudal sharecroppers to an industrial powerhouse in just one generation. Of course, they began with a distributist program that distributed the land from 20 families to 466,000 families, and the resulting increase in purchasing power at the bottom fueled a tremendous about of growth. See how well justice works? Georgism spread throughout the East because Sun-yat Sen was a Georgist, and distributist policies were used in Korea, Japan, and Taiwan after the war because Douglas MacArthur was a distributist. See http://www.cooperativeindividualism.org/medaille-john_taiwan-land-reform.html
In any case, these states were at least as successful, and in both of them the gov’t took a strong hand in directing the economy. So the laissez-faire argument fails once again.
As far as Austrianism and big business, they get the order of causation wrong, and usually turn out to be mere apologists for the reigning monopolists. They blame big business on big gov’t, which is only partially true: big business is responsible for big gov’t is responsible for big business. It is a reiterative process, as Adam Smith noted.
Further, you are wrong that land tax raises prices. Only the tax on improvements can do that. ground rent already equalizes the returns to all parcels over time and consumes the full amount over the margin of production; you cannot collect more than what the margin of production allows, and land rent already takes that; taxing the land rent cannot raise prices, and doesn’t. That is fairly well established in both economic theory and real estate practice. I can’t think of any major school of economics that would dispute that.
As far as private police forces go, I know of none that work in absence of the state police. Could you cite an example? Unless you are a warlord, private protection agencies presume the existence of public police, courts, and prisons, and won’t work without them. What do they do if they catch a crook? Shoot him?
John Médaille
[If you are posting under a pseudonym because you had trouble getting your comments through the spam filter, then please add your own name in each comment. I did that for your on this and some other comments, above. Clearly you are not “Hillaire Belloc”, though that would be an interesting development in this thread.]
Dear Hilarie, or John:
I understand your disagreement. I know it seems to be impossible or wrong to establish the ultimate foundation of Mises´s praxeology in Thomas Aquinas philosophy. Of course I may be wrong. But it was my PhD dissertation in 1990 and, as I said, I can not make a summary in a blog. I may be wrong, I repeat, but until now nobody has shown to me a clear mistake. I am very sorry it’s in Spanish, I have no the time nor the resources to translate it. But I would say that nobody could disagree with a thesis that has not been read. The text is available on line. I can send it to anybody who wants to read it. Just write to me to gabrielmises@yahoo.com
I think this is all I can say.
Well, Gabriel, if that’s all you can say, then that’s all there is to say. Thank you for your kind offer to send me your thesis, but my research schedule is rather full right now, as I am working on two books and some European projects. Thanks anyway. I will only close by noting the difficulties of reconciling to Thomas a thinker like Mises who did not believe in God, did not belief in objective right and wrong, thought all action arose from selfishness and discontent, denied charity as a motive for human action, and reduced all social relations to methodological individualism. My only question at this point would be, “At what institution did you earn your doctorate, and was it in philosophy or economics?”
John Médaille
Dear John,
I did my PhD dissertation in the Catholic University of Argentina, in Buenos Aires, in the Philosophy Department (that is called here “faculty”). It was considered as a philosophical thesis.
Thank you for your kind conversation.
From my Roman years I have some very good Argentinian friends, among whom: Bp Eduardo Taussig (I received an invitation to his Episcopal consecration), Frs. Gabriel Delgado and Francisco Rostom, and Prof Ruben Pereto (now at ND on a grant). Do you know any of them?
Comment by RBrown
RBrown, sorry, I hadn’t seen your post before. I know Eduardo Taussig, he’s one of the best bishops we have.
HB (or whoever you are): thanks for your reply.
To repeat: I dispute your contention that relatively laissez-faire America (mid 19th to mid 20th c) was in chronic recession. I’m not sure how you arrive at the figure of 40% recessions for that period anyway: I’m guessing you must be including the so-called “Long Depression” from 1873 to the early 1890’s, during which GDP grew throughout (industrial output grew by a spectacular 400% (i.e. about 14% per annum)), and which many economists now refuse to call a recession at all, since the main reason for dubbing it such was a sustained falling in prices, which is perfectly consistent with expanding productivity eclipsing any monetary expansions. Put it another way: if the US were to repeat the economic performance of “Long Depression” today, there would be dancing in the streets. Also in that period (as I’ve noted) is the Great Depression – the mother of all Depressions – which was caused and aggravated and prolonged by the activities of the state. Factor out these two (at least) for the diverging reasons (one wasn’t a recession and the other was manifestly state caused) and the earlier period of 1853 to 1945, to the extent that it was free of government interference, has not 40% but a low low 9% of time affected by recessions (v. 15% post 1945) – and I hasten to add that that’s conceding arguendo that the 9% consist of bona fide ‘laissez-faire’ recessions.
Moreover, it is also a mistake to use mere state expenditures as the one and only gauge of the level of state intervention in the economy. There are all sorts of ways the government influences economic activity beyond mere taxation and expenditure: tariffs protection and the legal regime governing banks, to name but two, have shaped the U.S. economy (and most other advanced economies as well) for hundreds of years in significant ways that don’t show up in the bottom line of the national accounts.
I’m not quite sure what your point is re. distributism in Taiwan, Japan and Korea. Hong Kong, not a distributist state, went stroke for stroke with these economies. And I continue to fail to see how Georgism in real estate is a key explanation of the economic dynamism of any of the Asian Tigers. What distinguishes them over the long term is a very significant degree of economic freedom, relative to other economies in the world. Arguably these economies would travel even better than they have if their governments eliminated the relatively low amounts of taxation they impose, however they impose them. Why, to take an obvious example, does the state need to run and fund schools?
A clarifying note, and I apologise for any ambiguity: I didn’t say that land tax raises prices. I said that the Hong Kong authorities under the guise of their “Georgist” land regime, choke off the supply of land and that this raises its price (compared to what it would otherwise have been). The use of inverted commas is to indicate that of course these activities don’t stem from the doctrines of Henry George himself. But before you start singing the praises of the Georgist land tax scheme in Hong Kong as an engine of its wealth, you, so solicitous as you insist on being for pure examples of laissez faire, would have to qualify this by noting that it’s not pure Georgism (just as I have already granted that Hong Kong is not “pure” laissez faire), in that 1) it exists along side an income tax (albeit a low one by the standards of other developed economies) and 2) the state manipulates the scheme (arguably in collusion with favoured business interests) with the result that the poor are deprived of the opportunity to purchase cheaper land/housing (and thus the housing subsidies to the poor, which those who are anxious to deny Hong Kong’s laissez-faire tendencies often seize upon, can be seen as an instance of unnecessary and inefficient “churning”.)
You’ll be no doubt heartened to know that Austrians and other free market economists would entirely agree with your big-business-leads-to-big-government-leads-to-big-business scenario. Actually they’re even more cynical (i.e., realistic), and would say that many other sectional interests are also tempted to initiate the same virtuous (to them) cycle, including cliques of small businesses, ethnic groups, environmentalists, anti-environmentalists, and so on. But Austrians would also argue that a big business which exists purely as a result of superior products and competitiveness, and not as a result of manipulating the state, is not a drain on economic welfare on account of its size.
As I’ve said, we could have a stimulating discussion about the production of security. But what has it to do with our topic: the Catholicity (as it were) of the Acton Institute, which advocates limited government? Be careful not to let your enthusiasms overrun your obvious logical powers, here and also where you attribute to me (and Austrians by extension) an indifference to slavery, indentured labour, and the forcible seizure of land (that didn’t happen anyway) when I quite clearly stated that it was their relevance to the topic at hand that needs to be justified. But I see progress here: you’ve come a long way from your earlier reply, when you seemed to be suggesting that witch trials in Salem, Massachusetts in 1691/2 somehow accounted for the flourishing of communities in de facto anarchist Pennsylvania in an earlier decade.
Hugh, My figures are from the National Bureau of Economic Research, the independent organization that is charged with the task of dating recessions. As far as I know, their figures are accepted by nearly all economists and are not regarded as controversial. Even those who quibble with the methodology come out with roughly similar numbers. See http://www.nber.org/cycles.html. If you have an alternate source of data, that’s fine, but share it with us so that we can all make a judgment as to its validity. I must say, the claim of a 9% recession rate strains credulity to anybody familiar with the political and economic history of America and Europe. I am more than willing to look at your sources on this, if you are willing to share them. I am particularly interested in your claim that there was no recession during the long depression; this will come as a complete surprise to economists and historians alike.
As far as gauging the level of gov’t interference in an economy, I think the level of gov’t expenditure stands as good proxy for this. But if you have another measure, please share it with us. Without knowing what measures you are using, it is impossible to come to a judgment about what you are saying. One thing is for sure, however, a high level of gov’t expense indicates a high level of intervention. Yet, you and I have lived in an unprecedented period of relative peace, economic stability, and growth, something that would be impossible if the Austrians were correct. IN any case, there seems to be contradictory claims here. When talking about the recessions, you say, “government interference.” When talking about the growth, you say “lack of gov’t interference.” Are we talking about the same period of history or not?
You asked me, “In any case, you still have to prove that the “Georgism” of the Hong Kong land system explains the incredible success of its economy, given that ceteris paribis other Georgist regimes don’t come within a bull’s roar. the thesis that Hong Kong’s outstanding success is attributable to its chief point of difference with other economies in the world, namely its relative economic freedom, still stands.” But when I show you that the other states grew as fast–or faster–without laissez-faire, you say you don’t understand the point. What am I to do here? I give you the evidence you demand, and then you say you are not interested.
I am glad we agree that Georism doesn’t raise land prices–only zoning or holding land for speculation can do that. But as far as HK goes, the gov’t spent an immense amount of money in land reclamation (thereby violating laissez-faire) which makes more land available, not less.
This statement is self-contradictory: “here and also where you attribute to me (and Austrians by extension) an indifference to slavery, indentured labour, and the forcible seizure of land (that didn’t happen anyway) when I quite clearly stated that it was their relevance to the topic at hand that needs to be justified.” IF you think that slavery, etc., is irrelevant to economics, then you are indifferent to them, at least economically, which is the subject of this conversation. If you can claim that a society is “laissez-faire” and yet permits these, then what can laissez-faire actually mean? I also note that you still don’t think the land was seized. I think the Indians have a different opinion.
As to the relevance, it is central to the discussion. The Acton Institute pushes these ideas not merely as a matter of economics, but as a valid interpretation of Catholic Social Teaching. They are neither one nor the other.
John Médaille
Curious, John-Hilarie, how you seem to take issue with Mises’ agnosticism and individualism yet have no problem with applying atheist Marx’ statist collectivism to Christian Social Teaching. I’m not seeing your logic. Complain about libertarianism and free market economics all you want, the fact remains that managed economies do not work, CANNOT work and depend upon enslaving people by other people who consider themselves “leaders” and so qualified to rob and enslave. And, BTW, there are other Austrian economists besides Mises, if you have such antipathy toward him. Lew Rockwell is a Catholic.
LateKate, you attack rather than defend, and your attack seems to be that everything that is not Austrianism is communism. Very well, but as I have pointed out, that leaves you with a big problem. If you are correct, then we live in a socialist system, one that has brought you one of the longest periods of relative peace, stability, and growth in history. Therefore, you have rescued socialism from the ash-can of history and made it into one of the more successful systems in history. Congratulations. That’s quite an achievement, and I hope you are proud of it.
As you say, there are many Austrians who are Catholics. But I don’t see how they do it, and that is the subject of this discussion. I have read them for years, but I still do not understand how you can root Catholic Social Teaching in an atheistic, relativistic world-view. They do this through a Kantian trick long ago rejected by the Church, namely separating all being into ontological and deontological realms, into to the world of “is” and the world of “ought.” You can be as atheist and relativistic as you like in the ontological realm, and whatever you do in the deontological realm is irrelevant. The Scholastics rejected this view as the “doctrine of the double truth”; there is only one truth.
I read Rockwell and Rothbard and Woods, but they cannot answer this question, anymore than you can. In fact, there answer is pretty the same as yours: “you’re an Austrian or a socialist!” They may dress it up in academic language and load it with footnotes, but it really doesn’t get any deeper than that. And it is totally unconvincing.
Kate, you attack, but you do not defend. And your attack is always the same, namely, that which is not Austrianism is socialism. Very well, but that leaves you with a great problem. For if it is true, than you live under socialism, and live very well. Indeed, what is now ending is one of the longest periods of relative peace and prosperity in the history of the modern world. Hence, you have rescued socialism from the ash-can of history, and elevated it to the heights of success. I shouldn’t be surprised to find that you are in line to receive the Karl Marx Medal For Outstanding Services to the Socialist Cause.
There are indeed Catholic Austrians, just as there are Catholic Socialists. My question to both is the same: “How can you reconcile such anti-human and anti-Catholic views with Catholic Social Theory? How can you reconcile views strongly rooted in atheism (not agnosticism, as you claim), utilitarianism, and a misanthropic anthropology with the Gospel of Christ? If Mises is right, must the imago dei be banned?” I do not think that yelling “Socialist!” at anybody who asks this question is an appropriate response.
Mises was at least an honest thinker, which is why I admire him. If his premises meant that there could be no God, then he stuck to his guns. He did not, like some of his followers, try the fudge the whole thing. Forced by his own logic to abandon either God or his premises, he choose to jettison God. The wrong decision, to be sure, but the honest one. I would that his followers, especially his Catholic followers, were as forthright. At least I wish they would take up the task. But all I get is evasions. So in taking Mises seriously, as I do, I must reject either Mises or God. Oddly enough, I have chosen to reject Mises. Given the situation, what else can I do? No one will share with me their secret reconciliation. Gabriel, who claims to know the answer, will only say “read my books” and you will only say “Socialist!” Is this supposed to persuade me?
John Médaille
>>>Kate, you attack, but you do not defend.<>>> And your attack is always the same, namely, that which is not Austrianism is socialism. Very well, but that leaves you with a great problem. For if it is true, than you live under socialism, and live very well.<<<>> Indeed, what is now ending is one of the longest periods of relative peace and prosperity in the history of the modern world. <<<>>>Hence, you have rescued socialism from the ash-can of history, and elevated it to the heights of success. I shouldn’t be surprised to find that you are in line to receive the Karl Marx Medal For Outstanding Services to the Socialist Cause.<<<>>There are indeed Catholic Austrians, just as there are Catholic Socialists. My question to both is the same: “How can you reconcile such anti-human and anti-Catholic views with Catholic Social Theory? How can you reconcile views strongly rooted in atheism (not agnosticism, as you claim), utilitarianism, and a misanthropic anthropology with the Gospel of Christ? If Mises is right, must the imago dei be banned?” I do not think that yelling “Socialist!” at anybody who asks this question is an appropriate response.<<<>>>Mises was at least an honest thinker, which is why I admire him. If his premises meant that there could be no God, then he stuck to his guns. He did not, like some of his followers, try the fudge the whole thing. Forced by his own logic to abandon either God or his premises, he choose to jettison God. The wrong decision, to be sure, but the honest one.<<<<>>> I would that his followers, especially his Catholic followers, were as forthright. At least I wish they would take up the task.<<<>> But all I get is evasions. So in taking Mises seriously, as I do, I must reject either Mises or God. Oddly enough, I have chosen to reject Mises. Given the situation, what else can I do? No one will share with me their secret reconciliation. Gabriel, who claims to know the answer, will only say “read my books” and you will only say “Socialist!” Is this supposed to persuade me?<<<<<
You are the one evading. You want to cloud the issue by dragging Mises’ agnostism/atheism into it, insinuating that a great man who has contributed immeasurably to the understanding of economics is a misanthrope. You are the one who has yet to explain how the theft, covetousness, and idolatry on which socialism is based are in any way Christian, much less Catholic. I understand WHY you do not, socialists never want the immorality of their faith considered, they prefer to promote the lie that they are somehow more caring, more humane, more generous because they are in favor of looting, slavery, covetousness and idolatry by government proxy…for the “common good”, of course. Socialists love to opine from their “moral high ground” that “we” “should” “all” have to do this or that because it is righteous and that that somehow makes the immoral deeds they promote A-OK, Machiavelli is their god. It is very easy to be generous with other peoples money, we see some of the most egalitarian socialist politicians not paying taxes and insisting that tax money is “theirs”, not the peoples.
Sorry, John. The poor will always be with us; the greedy, the lying, the adulterous, the smart and the stupid will always be with us. The evil and the little foxes will always get into government where they can legally pillage and tyrannize and then be worshipped as gods for “serving” the public they have brainwashed and reduced to animals in “schools”.
(sorry about the brackets again, I forgot they don’t work here)
John: “Kate, you attack, but you do not defend.”
I have to defend the exercise of God-given liberty? I have to defend that socialism obviously violates at least 3 of the 10 Commandments?
John: “And your attack is always the same, namely, that which is not Austrianism is socialism. Very well, but that leaves you with a great problem. For if it is true, than you live under socialism, and live very well.”
Socialism is the harnessing of capitalism. This harnessing is done through laws that steal and regulat the use of private property and redistribute it in an effort to create socialist utopias. Socialism, government, cannot create wealth, it can only steal it and redistribute it. Your insinuation that socialism has created prosperity under which I live well is untrue. Any degree of prosperity I enjoy is in SPITE of the theft of socialism. You also insinuate that I am somehow complicit in the theft because, in your view, I “live very well”. Since the political system, both local and central is rigged and crooked there is no way to work within the system to change it. In fact, we are encouraged to “work within the system” to change it, “dialogue”, “make our voices heard”, blah, blah, because this legitimizes the rigged system, feeds the dialectic, ID’s you as a “resistor” and wastes energy that could be used promoting alternatives. Claiming that someone forced to live within an economic system has endorsed it by living there is ridiculous.
JOHN: ” Indeed, what is now ending is one of the longest periods of relative peace and prosperity in the history of the modern world. ”
Do the people of the Middle East agree with this assessment? How about the Branch Davidians or those people whose children were abducted by the government in Texas a couple of years ago? How about the New Yorkers who died in the Twin Towers? We have had a PERCEPTION of prosperity, an illusion that debt fueled consumption was wealth creation and prosperity, that a “service economy” was equal to an industrial one. The country was bankrupt even before Bush and Obama started the bailout of cronies and European banks by saddling the US taxpayer with debt.
John: “Hence, you have rescued socialism from the ash-can of history, and elevated it to the heights of success. I shouldn’t be surprised to find that you are in line to receive the Karl Marx Medal For Outstanding Services to the Socialist Cause.”
You will have to explain this further. I haven’t elevated socialism to anything, YOU have.
John: “There are indeed Catholic Austrians, just as there are Catholic Socialists. My question to both is the same: “How can you reconcile such anti-human and anti-Catholic views with Catholic Social Theory? How can you reconcile views strongly rooted in atheism (not agnosticism, as you claim), utilitarianism, and a misanthropic anthropology with the Gospel of Christ? If Mises is right, must the imago dei be banned?” I do not think that yelling “Socialist!” at anybody who asks this question is an appropriate response.”
You can’t BE Catholic (or Christian) and a socialist. That is saying that theft, idolatry, and covetousness are righteous according to Catholicism and they are not. Mises was wrong only to the degree that he put his faith in the state to force heaven on earth. He believed in minimal government so he sinned to that degree in theft, covetousness and idolatry….but at least he did not pretend to believe in the 10 Commandments. You actually call people wanting to be left alone to work as they wish and keep the fruits of their labor “misanthropic”..and theft, covetousness, and idolatry as righteous! Christ never said to point guns at people and take half their income! He never said to force children into indoctrination centers to teach them to worship men and governments of men. He never said that His followers were to try to create heaven on earth or end poverty, smoking, drinking, doping, etc. by pointing guns at people and aggressing against them! The Catholic Church is collectivist, but it is a VOLUNTARY collectivism and THAT is where you become an idolator of the state. You have no faith in the Lord to work in His time and according to His plan, you want to FORCE people to finance your notions of righteousness, and think the ends justify your means. Socialism is aggression, force, and usually requires quite a bit of murder and imprisonment to enforce. And THAT is what is anti-human.
JOHN: “Mises was at least an honest thinker, which is why I admire him. If his premises meant that there could be no God, then he stuck to his guns. He did not, like some of his followers, try the fudge the whole thing. Forced by his own logic to abandon either God or his premises, he choose to jettison God. The wrong decision, to be sure, but the honest one.”
Yes. Mises was honest to admit he had no faith. That was hardly his fault, faith is a gift.
JOHN: ” I would that his followers, especially his Catholic followers, were as forthright. At least I wish they would take up the task.”
Oh?? Like you admit you have no faith in the teaching and ways of the Lord? That you put your faith in the state to force “equality” “fairness”, “social justice” and all of that garbage on people at gunpoint because you have such LOVE for them?? I think it is plain YOU are the dishonest one here.
JOHN: ” But all I get is evasions. So in taking Mises seriously, as I do, I must reject either Mises or God. Oddly enough, I have chosen to reject Mises. Given the situation, what else can I do? No one will share with me their secret reconciliation. Gabriel, who claims to know the answer, will only say “read my books” and you will only say “Socialist!” Is this supposed to persuade me?”
You are the one evading. You want to cloud the issue by dragging Mises’ agnostism/atheism into it, insinuating that a great man who has contributed immeasurably to the understanding of economics is a misanthrope. You are the one who has yet to explain how the theft, covetousness, and idolatry on which socialism is based are in any way Christian, much less Catholic. I understand WHY you do not, socialists never want the immorality of their faith considered, they prefer to promote the lie that they are somehow more caring, more human, more generous because they are in favor of looting, slavery, covetousness and idolatry by government proxy…for the “common good”, of course. Socialists love to opine from their “moral high ground” that “we” “should” “all” have to do this or that because it is righteous and that that somehow makes the immoral deeds they promote A-OK, Machiavelli is their god. It is very easy to be generous with other peoples money, we see some of the most egalitarian socialist politicians not paying taxes and insisting that tax money is “theirs”, not the peoples.
Sorry, John. The poor will always be with us; the greedy, the lying, the adulterous, the smart and the stupid will always be with us. The evil and the little foxes will always get into government where they can legally pillage and tyrannize and then be worshipped as gods for “serving” the public they have brainwashed and reduced to animals in “schools”.
John,
May I ask you for a re-interpretation of my position? You said “…Gabriel, who claims to know the answer, will only say “read my books””. I would say, “Gabriel, who has written a thesis attempting the answer, is just saying that a thesis is not possible to summarize in a blog”.
Kind regards,
Gabriel.
Gabriel, I can’t see any difference between what you said and what I said. It is a distinction without a difference. In any case, you cannot defend your position in a conversation, or are unwilling to. I am willing to claim that I am as familiar with both authors as you are, and I see no foothold for your theory.
Kate, you continue to scream socialist without bothering to show how anything I have said is anything of the sort. As for the poor being with us always, it was uttered as an accusation, not a commendation. God provides a world with plenty for all. If all do not have it, it is not God’s doing, but ours. And the Universal Destination of Goods is both the natural law and the law of the Church. As a Misean, you may do as you wish; as Catholic, I must do what is right.
But like Gabriel, you refuse the question. If a philosophy with excludes both God and the imago dei can be a true philosophy, then the Church is wasting her time and ours, and we should run to the pagans.
John Médaille
John, I do not refuse the question. On the contrary, I have already answered it.
I have just remembered that there is a kind of short version of my answer in English. You have it in number 1 of The Journal of Markets and Morality, pp. 60-66.
John: “Kate, you continue to scream socialist without bothering to show how anything I have said is anything of the sort.”
LOL. Not even a nice try. You favor wealth confiscation and redistribution, have posted slanderous nonsense about libertarians and the motives of libertarians and now accuse me of name calling because I am pointing out some truths about your philosophy. This is really not a complicated issue.
John: ” As for the poor being with us always, it was uttered as an accusation, not a commendation. ”
That is absolute nonsense. You are claiming Matthew 26: 6-13 means exactly the opposite of what it does. Your position is actually that of the disciples who objected to the expensive oil being “wasted” when it could have been sold and the money obtained distributed among the poor. Christ admonished them and told them the poor would always be among them but that they would only have Him for a short time. It was neither “accusation” nor “commendation”, it was a statement of fact. In fact, in view of this statement it is hubristic to even think of seizing private property and redistributing it to “end poverty”, EVEN if it could be done in a fair manner. Doing so robs people of the opportunity to be charitable and to be humble while sinning in an attempt to be as God.
John: “God provides a world with plenty for all. If all do not have it, it is not God’s doing, but ours.”
Unfortunately, since the Fall (man’s doing), most of the plenty requires the input of labor, division of labor and materials to access. This labor and material comes at the expense of SOMEONE, someone has to pay to produce and distribute the “plenty”. Simply seizing it and passing it around as the thieves see fit does not result in the end of want. Moreover it provides disincentive to the productive to continue producing, results in an entitlement mentality, laziness,and wealth depletion. And it is against God’s Law. God did not redistribute Jobs wealth or Solomans wealth to the masses.
John:” And the Universal Destination of Goods is both the natural law and the law of the Church.
There is nothing in the CCC that REQUIRES the theft of private property by politicians, it merely states that political authority has the right and duty to regulate the LEGITIMATE exercise of the right to ownership for the common good. This means that the political authorities are to support rightful ownership. It does not say that the political authority ITSELF becomes the rightful owner or controller of property. I do grant you that CCC 2409 refers to paying taxes (seizure of private property under threat of violence) as morally licit and tax evasion as illicit when tax collectors were clearly considered sinners in the Bible, even by Christ, and this is confusing. BUT, the operative principle is really the context. Of course when there exists rulers the rulers are to rule justly. They WON’T, of course, as we are instructed in 1 Samuel 8, but they are under obligation to do so. The fact remains that socialism destroys the incentive of the individual to produce wealth leading to scarcity,it is based on coveting, theft, idolatry, aggression, and the reduction of the individual to a cog in a borg. It hampers the ability and the drive to be charitable and creates an entitlement mentality among the “victim” class that they have the right to enslave the more wealthy for their keep. Socialism will destroy to Catholic Church and has tried to do so wherever it has been instituted. Government will not tithe to its competition.
Your attempt to use Church teaching to justify socialism is absolutely Machiavellian, no matter that Church Teaching may conveniently lend itself to such interpretation by socialists or even if that teaching reveals a certain level of ignorance of basic economic laws. The morality of socialism is anti-Christ.
John:”As a Misean, you may do as you wish; as Catholic, I must do what is right.”
But you do nothing but demand that others be robbed for your pet causes. Socialism is state worship, idolatry, not Catholicism; the demand that others be robbed by proxy to benefit those you find deserving and requires no personal cost. You (and others) can try to morph Catholicism into being the handmaid of socialistic state worship but you will fail. And as far as the imago dei goes, Marx was atheist and Plato was a pagan and you have no problem embracing their philosophies.
Well, Kate, you are doing a good job of carrying on both halves of a conversation. You make up positions for the other side (without bothering to show a single quote)and then knock them down. This is called the “straw man fallacy” in logic, and it is a game for those too weak to battle with real men and real ideas. But I am not surprised; it is typical of Austrian debate technique.
Gabriel, I see you have down-sized from “read my book” to “read my article.” Not exactly a great conversational strategy, but an improvement. After glancing at the argument, I think you are attempting something even more doubtful: Reconciling Kant with Thomas. But Mises is where Kant leads. Nobody can start with Thomas and get to Mises without taking a detour through Kant, and Christian philosophy will never take that detour, in my opinion.
Dear John,
No, I did not attempt to reconciliate Kant with Thomas. This was not my argument. My argument was precisely that Kant´s philosophy is not necessary related with praxeology. By the way, I do not have strategies. Dialogic reason has no strategies.
John: “Well, Kate, you are doing a good job of carrying on both halves of a conversation. You make up positions for the other side (without bothering to show a single quote)and then knock them down.”
I have made nothing up. I have responded to your specific statements, one by one. It is not my fault you post nonsense and pronouncements that YOU can’t back up, most hilariously that bit about Jesus statement on the poor being an “accusation”. Since you are apparently unable to stand by posts you have made, which specific rebuttal of mine do you claim I have invented your position on?
John: ” This is called the “straw man fallacy” in logic, and it is a game for those too weak to battle with real men and real ideas. But I am not surprised; it is typical of Austrian debate technique.”
More nonsense. Actually, THIS last posting is typical Leninist debate…refusing to defend your position, the merits of the argument, and descending into ad hominem hoping no one notices. I do sympathize, it is difficult to “defend the undefendable”, even for “real men”.
PS: Real men don’t brag about being real men, nor do they weasel out of defending what they advocate. If you are uncomfortable with the logical implications and origins of your ideas of “social justice” I suggest you rethink them.
Gabriel, I do understand what you attempted to do, but you have to allow the critique that you may not have accomplished your end. In fact, you merely asserted that it wasn’t Kantian because it was Thomistic. That’s a less than convincing proof, especially since you get Thomas all wrong. Participated being is not a “theorem” in any possible sense of that term. It is the result of continuing judgment applied to human experience, precisely the method excluded by praxeology. And it is certainly tested by experience, another violation of praxeology.
But aside from getting Thomas wrong, you get Mises wrong. You leave out two central points from your description of Mises axioms: that all action arises from discontent and that all actions are selfish. These are not accidental to Mises’s thought, but essential. The bonum aimed at does not have to be a selfish good, nor is discontent an essential (rather than accidental) aspect of all actions. Thomas would not ascribe to either principle, or if he would, you ought to show it from his rather extensive works.
So what you end up with is a philosophical parlor trick: you make Mises look like Thomas by making Mises look less like Mises and Thomas look less like Thomas. This is not convincing. And you assert that it is not Kantian, without giving us any reason within the article to believe this; it remains a one-line assertion.
What is even more astounding is that you have a single line that blows Mises out of the water better than I could. “In my judgment, praxeology is completely a priori, but economics is
not.” Mises must be completely spinning in his grave, since his whole thesis is that economics is a priori. You don’t have to read past the title to get to that: “Human Action: A Treatise on Economics.” Again, Mises is more consistent than the Miseans; if all human action is praxeological, then economics (and everything else) is praxeological.
Nor is the statement that “profit maximizing behavior is morally neutral” correct. I might be correct in any given situation, but raised to a standard of action, for all actions, it is not morally neutral, but prejudices the moral conversation in ways that make such a conversation pointless.
John Médaille
Dear John,
Thank you for reading my little article. I would say that now we have re-established our conversation. I will try to respond to your important criticism as soon as possible. In the meantime, thank you again.
Dear John,
As I said, thank you for your kind answer. Let me order it in numbers.
1. “Gabriel, I do understand what you attempted to do, but you have to allow the critique that you may not have accomplished your end”.
Of course. I always do.
2. “In fact, you merely asserted that it wasn’t Kantian because it was Thomistic. That’s a less than convincing proof, especially since you get Thomas all wrong. Participated being is not a “theorem” in any possible sense of that term”.
This is strange. There must be a misunderstanding. I do not say that participated being is a “theorem”. I say “…the ultimate foundations of Aquina´s philosophy is the evidence of participated being…”. So, I am sure there was a misunderstanding.
3. “It is the result of continuing judgment applied to human experience, precisely the method excluded by praxeology. And it is certainly tested by experience, another violation of praxeology”.
Well, I said “…It is not, however, beyond any kind of experience”. So, we think pretty much alike.
4. “But aside from getting Thomas wrong, you get Mises wrong. You leave out two central points from your description of Mises axioms: that all action arises from discontent and that all actions are selfish. These are not accidental to Mises’s thought, but essential”.
Well John, we disagree about what’s essential in Mises´s thought. My interpretation is that he established a scientific research program where prexeology is a previous philosophical foundation to economic science.
5. “The bonum aimed at does not have to be a selfish good, nor is discontent an essential (rather than accidental) aspect of all actions. Thomas would not ascribe to either principle”,
Of course he would not.
or if he would, you ought to show it from his rather extensive works.
6. “So what you end up with is a philosophical parlor trick: you make Mises look like Thomas by making Mises look less like Mises and Thomas look less like Thomas. This is not convincing”.
I did not want to do any trick. I am just setting what’s the hard core (in a Lakatos way) of the scientific research program of Mises.
7. “And you assert that it is not Kantian, without giving us any reason within the article to believe this; it remains a one-line assertion”.
Well, I believed my entire article was the reason to explain a better foundation to praxeology.
8. “What is even more astounding is that you have a single line that blows Mises out of the water better than I could. “In my judgment, praxeology is completely a priori, but economics is
not.” Mises must be completely spinning in his grave, since his whole thesis is that economics is a priori”.
Well John, I am not repeating Mises; I am just putting a little order in his scientific research program from an epistemological and philosophical point of view.
9. “You don’t have to read past the title to get to that: “Human Action: A Treatise on Economics.” Again, Mises is more consistent than the Miseans; if all human action is praxeological, then economics (and everything else) is praxeological. Nor is the statement that “profit maximizing behaviour is morally neutral” correct”.
I wanted to say: profit maximizing behaviour is morally neutral setting aside the end, the objective and circumstance of the action. We both know that.
10. “I might be correct in any given situation, but raised to a standard of action, for all actions, it is not morally neutral, but prejudices the moral conversation in ways that make such a conversation pointless”.
I did not understand the point about prejudices and moral conversation. Sorry, I miss something. Would you be so kind to clarify it to me? Thanks.
Gabriel, you say “There must be a misunderstanding. I do not say that participated being is a “theorem”. I say “…the ultimate foundations of Aquina´s philosophy is the evidence of participated being…”.”
There may be a misunderstanding, but you discuss it within the context of theorems (the subject of the paragraph) and you seem to imply that it results from a central axiom, just like a theorem. If this is not the meaning of the paragraph, then I can’t think what the purpose of bringing it up is. Participated being does not result from and Thomistic “axiom.” If it does, then the burden is on you to show it. But beyond that, I think the whole discussion of axioms, lemmas, theorems, etc., is out of place, because these terms only apply to sciences of formal relations, not to material and practical sciences. You can say that the the Pythagorean relationship between an hypotenuse and the adjacent sides is a theorem, but you would not say that of the law of gravity. This is simply an inappropriate mixing of different kinds of science. Indeed, this failure to understand the division of the sciences is at the root of praxeology. Mises had only contempt for Aristotle and the Scholastics, the very thinkers who could have corrected his errors.
As far as leaving out Mises own definition of action, selfishness and discontent are central by Mises’s own definitions. Indeed, discontent is so central that he uses it to “prove” that God cannot exist. If you have to leave those two out to make your “reconciliation,” there’s nothing left. I don’t think your argument here is with me, but with Mises.
Even if you allowed praxeology to function as a “theorem” within Thomism–modifying Thomism to allow theorems in practical science–its derivation would still be Kantian. In other words, IF you allow the Kantian within the Scholastic, you can “reconcile” Kant and Thomas, and hence Mises. But that’s a big IF. I do not believe the procedure would be acceptable to Kant, Thomas, or Mises.
You say, “Well John, I am not repeating Mises;” Exactly my point. Hence it is not Mises that you reconcile, but some simulacrum. BUT, if economics is not praxeological, the entire thesis of “Human Action” collapses. What’s left?
We can also agree that the statement of “profit maximization” was incomplete at best. However, not even modifying it with ends and means really changes the description. In fact, very few human actions are described under the rubrics of profit. For example, a mother does not have children, and commit herself to a life of changing diapers, working for them, attending to their education, etc., for reasons of profit but for reasons of love. Yet love is the factor that Mises insists cannot be part of the calculation of action. It is a utilitarianism stripped of the one thing that could make things useful to us. It is an elaborate form of moral nihilism, but not as interesting as Nietzsche.
Nor is this mere philosophical hair-splitting. It is an error with consequences in the real world. For example, the Acton Institutes film “The Call of the Entrepreneur” exhibits this error, and indeed attempts to popularize it. It flunks Moral Theology 101. I bring this up not only to relate this to the topic at hand, but to show that these debates have real effects in the real world, and that a small error in thought leads to large errors in practice.
John Médaille
1. Gabriel, you say “There must be a misunderstanding. I do not say that participated being is a “theorem”. I say “…the ultimate foundations of Aquina´s philosophy is the evidence of participated being…”.” There may be a misunderstanding, but you discuss it within the context of theorems (the subject of the paragraph) and you seem to imply that it results from a central axiom, just like a theorem. If this is not the meaning of the paragraph, then I can’t think what the purpose of bringing it up is.
The purpose was to show that Aquinas philosophy could be a very good foundation of praxeology.
2. Participated being does not result from and Thomistic “axiom.”
Of course it doesn’t. We agree on that point.
3. If it does, then the burden is on you to show it. But beyond that, I think the whole discussion of axioms, lemmas, theorems, etc., is out of place, because these terms only apply to sciences of formal relations, not to material and practical sciences. You can say that the the Pythagorean relationship between a hypotenuse and the adjacent sides is a theorem, but you would not say that of the law of gravity. This is simply an inappropriate mixing of different kinds of science.
Ok, good point. I had clarified in my dissertation that there could be a wider meaning of “axioms and theorems”, as premises and conclusions in a good philosophical reasoning. In this sense, you could say that subjective value, for instance, is a deductive conclusion of human action as a premise. It was part of my “rational reconstruction” (in a Lakatos way) of Mises´s praxeology.
4. Indeed, this failure to understand the division of the sciences is at the root of praxeology. Mises had only contempt for Aristotle and the Scholastics, the very thinkers who could have corrected his errors.
Well, so, we agree. The study of human action, following Aquinas in his Summa, I-II, Q. 6-17, could be the best foundation of praxeology as the science of the logical implications of human actions as purposeful behaviour.
5. As far as leaving out Mises own definition of action, selfishness and discontent are central by Mises’s own definitions. Indeed, discontent is so central that he uses it to “prove” that God cannot exist. If you have to leave those two out to make your “reconciliation,” there’s nothing left. I don’t think your argument here is with me, but with Mises.
On the contrary, praxeology remains as the hard core of scientific research program of economic science, regardless the obvious errors of Mises when he talks about natural theology and many other metaphysical issues.
6.Even if you allowed praxeology to function as a “theorem” within Thomism—modifying Thomism to allow theorems in practical science—its derivation would still be Kantian.
I do not see the point. Why should to be Kantian deducing subjective value and so on from human action as a free and purposeful behaviour?
7. In other words, IF you allow the Kantian within the Scholastic, you can “reconcile” Kant and Thomas, and hence Mises. But that’s a big IF. I do not believe the procedure would be acceptable to Kant, Thomas, or Mises.
John, to merge Kant with Aquinas is not my point, nor I need it at all.
8. You say, “Well John, I am not repeating Mises;” Exactly my point. Hence it is not Mises that you reconcile, but some simulacrum.
John, ordering a scientific research program is not a simulacrum.
9. BUT, if economics is not praxeological, the entire thesis of “Human Action” collapses. What’s left?
As I already told you, the entire thesis of Human Action not only does not collapse, but it has instead its best foundation in my rational reconstruction of Mises.
10. We can also agree that the statement of “profit maximization” was incomplete at best. However, not even modifying it with ends and means really changes the description. In fact, very few human actions are described under the rubrics of profit. For example, a mother does not have children, and commit herself to a life of changing diapers, working for them, attending to their education, etc., for reasons of profit but for reasons of love. Yet love is the factor that Mises insists cannot be part of the calculation of action. It is a utilitarianism stripped of the one thing that could make things useful to us. It is an elaborate form of moral nihilism, but not as interesting as Nietzsche.
John, the Austrians no longer talk about profit maximization in the neoclassical sense. They, and me too, are talking about alertness, discovery, and so on. Again, the best foundation for it is the scholastic meaning of human action, open to creativity.
11. Nor is this mere philosophical hair-splitting. It is an error with consequences in the real world.
John, we are both concerned about errors with consequences in the real world. That’s the reason I defend Mises´s theory of trade cycle. The terrible crisis we are all suffering right now is because very few people listened to Mises and Hayek’s warnings about the “Keynesian episode”.
12. For example, the Acton Institutes film “The Call of the Entrepreneur” exhibits this error, and indeed attempts to popularize it. It flunks Moral Theology 101. I bring this up not only to relate this to the topic at hand, but to show that these debates have real effects in the real world, and that a small error in thought leads to large errors in practice.
As you see, I agree, setting aside the film you are talking about: that’s another topic.
JM, thanks for your reply.
1. Laissez-faire and Economic (In)Stability
Re. the alleged ‘Long Depression’, which the NBIR logs as 1873-1893:
1870s – Rothbard: (History of Money and Banking ) : “It should be clear, then, that the “Great Depression” of the 1870s is merely a myth—a myth brought about by misinterpretation of the fact that prices in general fell sharply during the entire period. Indeed they fell from the end of the Civil War until 1879. Friedman and Schwartz (Monetary History of the US) estimated that prices in general fell from 1869 to 1879 by 3.8 percent per annum. Unfortunately, most historians and economists are conditioned to believe that steadily and sharply falling prices must result in depression: hence their amazement at the obvious prosperity and economic growth during this era.” And financial analyst Charles Morris: : “… recent detailed reconstructions of 19th-century data by economic historians show that there was no 1870s depression…”
And the 1880s? The Encyclopaedia of American Economic History describes it as: “one of the most expansive in American history. Capital investment was high; . . . there was little unemployment; and the real costs of production declined rapidly.” And among other data, Rothbard adds (agreeing with the Friedman and Schwartz assessment) : “Gross domestic product almost doubled from the decade before, a far larger percentage jump decade-on-decade than any time since.”
As I said, factoring out the decades of the mythical “Long Depression” and the very real Great Depression (manifestly caused and prolonged by the state, not laissez-faire) there is little to associate the relatively laissez-faire conditions of the period with recessions. And as to the 9% of recession period left (arrived at by so deducing) I would go further and argue that that, too, is disputable as a product of laissez-faire: if we examine the particular panics and recessions that did occur in this time (eg the panic surrounding the passage of the Coinage Act of 1873), the relation between them and the influences on the banking system and the money supply attributable to government is obvious on even the most superficial inspection. But space is short and I refer readers to Rothbard’s History and other relevant material available free online at http://www.mises.org.
2. Government interventions can cause serious economic disruptions even in relatively free economies.
I agree that it is, generally speaking, legitimate to infer high levels of government intervention from high levels of government expenditure.
But it’s not logical to conclude from this that therefore low levels of government expenditure necessarily mean low levels of intervention. Indeed, as you yourself have pointed out in another context (but misunderstanding the point – see below): Pennsylvania, in the 1680s, to the extent that slavery was present, was not quite a fully fledged laissez-faire, rights-observing society even though in that time government expenditure was non-existent, since there was in effect no central government at all for several years. And, as I’ve already stated, there are many ways the government can intervene without it showing up through the expenditure records. Tariffs are a good example. So is interference in the strategically vital money supply and banking system of an economy. These three types of intervention did in fact occur in the relatively laissez-faire late 19th century US economy (as at other times of course) – the latter giving rise to the banking and monetary panics that did occur.
3. Hong Kong’s extremely free market economy compares favourably even with other very liberal economies.
My query which perplexes you was as to the relevance of distributist actions to economic growth. I agree it was present in Taiwan’s history, but Hong Kong’s own remarkable growth occurred in the absence of distributist policies. As I mentioned, all the Asian tigers did very well over a long period of time, and if we are looking at a common element that explains their excellent performances, it can’t be distributism.
I’ve been arguing that the common element is the high degree of economic freedom of these states, a freedom which Hong Kong seems to possess to a greater degree that even her two close cousins. I further submit that, while Hong Kong slightly underperforms Singapore and Taiwan 1980-2007 on raw GDP growth figures (HK 5.59, S 6.8, T 6.28), it is actually ahead of its fellow tigers in certain important respects related to economic productivity. (Note too that the 3 tigers are close rivals even on the raw growth comparison, and the lead changes fairly frequently: on a straight GDP growth average comparison, for example, Hong Kong (5.19) has bettered Taiwan (3.80) and Singapore (4.96) since 2000.)
Thus on GDP per capita, Hong Kong is well ahead of Taiwan every year 1980-2007 and has bettered Singapore in 19 of those 27 years. Moreover on the PPP-evaluated-GDP-per-capita measurement, it easily eclipses both Singapore and Taiwan every year over the whole period 1980-2007. (IMF figures, World Economic Outlook database: http://www.imf.org).
To put these parameters in perspective: due to its liberalising economic reforms, Communist China’s annual GDP growth rate for the period 1980-2007 averages a huge 9.5%, which easily exceeds those of all 3 tigers. Nevertheless its underlying PPP-GDP/capita ratio, while improving over the era of market-oriented reform, is still way below that of all 3, and not improving as rapidly, reflecting a giant and persisting gap in the economic dynamism of the respective economies.
4. Not all government actions are complete “violations” of laissez-faire.
Government land reclamation, as I argued before, is not a violation of laissez-faire to the extent that it mimics (albeit crudely) the same activity which that government has forcibly prohibited or restricted. Take another example: suppose a government outlawed all private schooling and mandated state schooling. Would this state schooling regime violate laissez-faire? Not, I submit, to the extent that the state, which by its forcible behaviour is preventing schooling being supplied by the free market, then attempts to mimic that market: that is, to meet the extant demand for education with its own version of this good.
Now, are you contending that, were the Hong Kong government to allow private sector land reclamation, especially in this situation in which land is at a premium and real estate development is carried on by private enterprise at such a sophisticated level, no entrepreneurs would step in to invest in private land reclamation schemes?
If not, then you are tacitly admitting that the government is, at least to some extent, not “violating” laissez-faire, but on the contrary, imitating it, by engaging in land reclamation.
5. “Shades of grey for me, but not for you”
Allow me to share my own perplexity at your own analysis: why are you so insistent that a regime can be termed “laissez faire” only if it is 100% laissez-faire? As I’ve said before, there is an inconsistency in your ‘no shades of grey’ line at this point. You are quite happy to apply the term “Georgist” to states such as Hong Kong. Yet, it is estimated that only about 35% of Hong Kong’s government revenue is derived from taxes compatible with Georgist principles. So, strictly speaking – on scrupulous criteria you apply elsewhere – its taxation regime is more anti – Georgist (65%) than Georgist (35%)!
Of course, you may point out that even so, this proportion 35%/65% makes Hong Kong more Georgist than any other regime. But so too it is more laissez-faire in the overall level of economic freedom – in fact arguably it is much more laissez-faire overall than it is Georgist in its tax policy. Note too that if Hong Kong took a further step to strict Georgism, cut its current budget by 65%, slashed all other taxes and governed off land revenues only, reducing its already small sphere of activities accordingly, it would also be advancing further towards complete laissez-faire. For in many respects, apart from taxation, Georgist policies and strict laissez-faire overlap.
You ask: “If you can claim that a society is “laissez-faire” and yet permits these (slavery, etc), then what can laissez-faire actually mean?” I am therefore prompted to ask in turn: “If you can claim that a state is “Georgist” which permits the bulk of its taxes to be anti-Georgist, then what can “Georgist” actually mean?”
I do hope we can both admit that we are working with shades of grey between black and white – which of course gives rise to much of the problem in these debates of attributing causes.
6. Common features can’t sufficiently explain different outcomes.
Did I write that “slavery, etc., is irrelevant to economics”? Of course not. I wrote that I couldn’t see how slavery is relevant to an adequate explanation of Pennsylvania’s economic success in the 1690s compared to the other – slaveholding – American colonies, in the same period. I’m also discounting rape, armed robbery, arson, murder, and cross-dressing as likely explanations, though I’m sure there are worthy journals devoted to exploring the economic aspects of all these acts, too.
Pennsylvania was a virtually anarchist community that flourished as such for a substantial period of time. There was undoubtedly some slavery in the 1680s, – which of course prevents us from declaring that Pennsylvania was 100% anarchist – but the proposition that this element of injustice accounts for the community’s fine economic record without a strong central state is inadequate: for it did much better than other colonies that also tolerated slavery. By 1690, for example, Philadelphia had in 14 years come from nowhere to rival New York “in trade and riches”, as Governor Fletcher of New York conceded at the time.
The point of difference is that other colonies such as New York had strong central states that in various ways imposed themselves on the economic life of the community.
To repeat: I am interested here in accounting for different degrees of economic flourishing between varying eco-political regimes in Colonial America, all of which may – regrettably – have tolerated slavery. Since slavery is a common element, then it can’t be the factor which explains their different rates of flourishing. In that sense, it will not form part of the explanation, and, at least in that sense, is “irrelevant” to the same.
6. Is there a solid historical basis for saying Pennsylvanian settlers stole their land from the Indians?
I will persist in my opinion that history indicates the stealing of Indian land didn’t happen in the founding of Penn’s colony, unless historians, Indian or otherwise (I think it important to discriminate between scholars based on the quality of their work, not their racial profile- do you agree?) can show me where it did. I’m happy to be pointed to any revisionist scholarship on this topic. But of course, what relevance – if any – that that (hypothetical) stealing had on the relative performance of the Pennsylvanian economy of a later period, would also be another topic: Here in Australia, stealing of aboriginal lands in fact went on in the colonies now occupied by the states of Victoria and New South Wales (among others). I know of no Australian economic historian who attempts to account for the relative economic performance of these two colonies over the years by pointing to a series of unjust expropriations which went on pretty much equally in both.
7. Does the Acton Institute support the Slave Trade?
Please be specific: what are “these ideas” you speak of that the Acton Institute (or the Austrian School, for that matter) is “pushing”? Slavery? Indentured labour? Stealing land from Indians? I do hope you’re not serious.
Gabriel, I have somewhat of an interpretive problem with your essay. You bring up participated being in the context of axioms. When I point out that it is not an axiom, you say you didn’t mean that. Then you say it can be the foundation of a axiomatic science (without being an axiom?) Then you agree that the use of axioms confuses speculative and practical science, and further agree that this is what Mises did, and then tell me you what to extend the mistake by making premises and conclusions “axioms”, without giving any reason why. There is a reason that 2,500 years of Western philosophy has declined to do this. You may be right and the bulk of philosophy wrong, but I would think you have to advance some pretty strong reasons to overturn this. I just do see any reason to do this, and you don’t offer any. I can’t discuss Lakotos with you, since I am not familiar with him, but I dimly remember that he cast doubts even on mathematical axioms (I may be wrong here–it’s just an impression I have.) In any case, this all seems very confused to me.
You admit that you truncate Mises’s anthropology, but it seems to me that you truncate Thomas as well. You want I-II 6-17 to function as the axioms of action, but it seems to me that Thomistic Anthropology begins in the Prima pars 75 and continues the prima secundae 89. Why such a tiny sample? And why especially exclude the treatise on Habits and Virtues, not to mention the discussions of happiness and man’s last end? To take a truncated Thomas and run it up against a truncated Mises doesn’t seem to accomplish much; that same trick can be done with any two randomly selected authors if their works are extensive enough.
You seem to be repudiating your own use of the term “profit maximization” and claim that the Austrians have repudiated the term as well. Okay, that’s progress. But you are also repudiating Mises as well, are you not, and substituting “my rational reconstruction of Mises.” But what is the point of all of this? What does the “reconstructed Mises” add to Thomas? Especially is you have to subtract most of Thomas. All this to justify the Austrian Business Cycle theory? But such theories, and a thousand like them, can be rationalized in a 1,000 ways. I think I have every reason to suspect that Thomas is being subverted to serve an ideological purpose. I cannot get over the impression that you are taking somebody who is not Mises and comparing him to somebody who is not Thomas and saying “See, Mises and Thomas are the same!”
John Médaille
Hugh, If you are going to dispute what the NBER says, it is at least necessary to correctly state what they say. They do not state that the long depression ran from 1873 to 1893, but from 1873 to 1879. At 65 months it was the longest depression in our history. Hence your discussion of the 1880’s is irrelevant, no? Not that the 1880’s were that much fun; of the 120 months they experienced recession 58 months, or about the average for the pre-war period. As for the quotation, you do not cite the article, so I cannot look at it in context, but if the author is just averaging the booms with the busts, he is on shaky methodological grounds to say there were no recessions in this period. As to the claim that it never happened, the vast bulk of scholarship disagrees with you, and your sources seem to be mainly Austrian. Now, it may be that the Austrians are right and everybody else wrong, but a time of 14% unemployment might strike some as depressing. In any case, given that most scholars of whatever persuasion–save some of the Austrians–acknowledge the depth and length of the long depression, I suspect the heavy hand of ideology in Rothbard’s history.
As far as Hong Kong goes, I have never claimed that any state was completely Georgist, because I do not think a pure Georgism possible under modern conditions. Nevertheless, the idea of HK as a pure laissez-faire state is, shall we say, open to question. HK does have significant Georgist features which hold down its need to tax incomes. In 1997 44% of the population paid nothing in income tax, there were generous depreciation allowances for the financial industry and gov’t support of other selected industries. Further, over half the population lived in gov’t housing, which was done deliberately to dampen the effects of such a large population in such a small space. And since the gov’t owns ALL the land, they did not have to purchase land to build public housing. All this is laissez-faire?
But then, you will not share your secret standards for judging when a society is an isn’t laissez-faire. You won’t allow gov’t expenditures as a proxy, but won’t offer an alternative standard of judgment. One society with twice the gov’t expenditure as another can be laissez-faire, while the one with lower expenditures can be an intolerable example of gov’t interference. And the definition of laissez faire expands to include slavery and indentures and stolen land, even as your indignation rises when I point this out. Your definition even allows gov’t to expand to displace private industry in land development or any other area. Under these expansions, is there any society that isn’t laissez-faire? It seems to me that the standard is one of special pleading: if the situation suits your argument, then it is laissez; if it don’t, it ain’t. I may be wrong here, but until you share your secret criteria, there is simply no way to evaluate what you are saying.
John Médaille
John,
I am answering to you in a few days.
Hi John, it’s me again. Let me try again to explain my position. See below.
Gabriel, I have somewhat of an interpretive problem with your essay. You bring up participated being in the context of axioms. When I point out that it is not an axiom, you say you didn’t mean that. Then you say it can be the foundation of an axiomatic science (without being an axiom?)
Ok, I see your point. As I said, I was talking of axioms and theorems in a more simple way: an ordered reasoning where premises and conclusions are clearly distinguished. Then you can say that certain praxeological laws, deduced from free and purposeful behaviour, are “theorems”.
Then you agree that the use of axioms confuses speculative and practical science, and further agree that this is what Mises did, and then tell me you what to extend the mistake by making premises and conclusions “axioms”, without giving any reason why.
As I told you, I did it in because I wanted to order the premises and the conclusions in praxeology.
There is a reason that 2,500 years of Western philosophy has declined to do this.
I do not understand what you mean.
You may be right and the bulk of philosophy wrong, but I would think you have to advance some pretty strong reasons to overturn this.
I did not want to overturn anything; on the contrary, I am taking the classical and thomistic tradition in order to clarify Mises´s praxeology.
I just do see any reason to do this, and you don’t offer any.
Well, I did it, but it seems we have an incommensurability problem.
I can’t discuss Lakotos with you, since I am not familiar with him, but I dimly remember that he cast doubts even on mathematical axioms (I may be wrong here—it’s just an impression I have.)
You remember it very well.
In any case, this all seems very confused to me.
I hope I have already clarified it.
You admit that you truncate Mises’s anthropology, but it seems to me that you truncate Thomas as well. You want I-II 6-17 to function as the axioms of action, but it seems to me that Thomistic Anthropology begins in the Prima pars 75 and continues the prima secundae 89. Why such a tiny sample?
I was not saying that I was using “only” I-II 6-17.
And why especially exclude the treatise on Habits and Virtues, not to mention the discussions of happiness and man’s last end?
You are right, all those items are very important and I discussed some of them in my dissertation.
To take a truncated Thomas and run it up against a truncated Mises doesn’t seem to accomplish much;
Well, as you can see, I did not.
that same trick can be done with any two randomly selected authors if their works are extensive enough.
I am not doing any trick. We may disagree with me, but do not accuse me of intellectual dishonesty.
You seem to be repudiating your own use
My own?
of the term “profit maximization” and claim that the Austrians have repudiated the term as well. Okay, that’s progress. But you are also repudiating Mises as well, are you not, and substituting “my rational reconstruction of Mises.”
To establish a rational reconstruction of an author is not “repudiate” him.
But what is the point of all of this?
The point is, of course, to establish a better foundation of praxeology.
What does the “reconstructed Mises” add to Thomas?
To Thomas, nothing. On the contrary, Thomas adds Mises a right foundation of his praxeology.
Especially is you have to subtract most of Thomas.
As I told you, I did not.
All this to justify the Austrian Business Cycle theory?
No, that was not the intention of my article.
But such theories, and a thousand like them, can be rationalized in a 1,000 ways. I think I have every reason to suspect that Thomas is being subverted to serve an ideological purpose.
John, I have had discussions all my life with thomistic thinkers who think that Thomas is the foundation of their own political positions. On the contrary, I never said that Thomas is the foundation of the free market economics. My way was different. Mises believed that only a neokantian approach was the proper foundation of praxeology. Therefore, is Mises was right; praxeology is in contradiction with Christian philosophy. And I said: on the contrary, praxeology has its best foundation in Aquinas thought. The conclusion is not that you “have to be” a free market economist if you are a thomistic thinker, the conclusion is that you can be in favour of Mises´s praxeology with no contradiction with your catholic faith.
I cannot get over the impression that you are taking somebody who is not Mises and comparing him to somebody who is not Thomas and saying “See, Mises and Thomas are the same!”
Well, I hope I have explained myself in a better way this time.
Correction:
“…Therefore, if Mises is right, praxeology is in contradiction with Christian philosophy…………”.
Gabriel,
Premises and conclusions are already well-distinguished in logic; there is simply no need to confuse them with axioms and theorems. To say that you are using them “in a more simple way” is merely to say you are misusing them. The terms have well defined meanings already, and it is mere confusion to use them in this Humpty-Dumpty way. Axioms apply to formal relations; they cannot be used in a practical and material science. There is a reason not to treat practical premises as axioms: it destroys the humility necessary for real thought. Axioms, as intuitively obvious formal relations, admit of no exceptions and no challenges. But we can never be that sure of our premises, and shouldn’t be. We should always be putting them to the test and holding fast to what is good. But we never reach that good absolutely (as in formal sciences) but only relatively. We are always open to new ideas because we always willing to submit ourselves to the facts and to new interpretations. Humility is the very condition of discipleship, and hence the condition of scientific discipline. But “axiomatizing” thought converts this humility into arrogance, an arrogance that pretends to know all the answers in advance of the questions being asked. It just won’t do.
But I am further from the point of all of this then when you started. At first I thought that you were trying to harmonize Aquinas and Mises. I don’t think that can be done, but at least I understand the reason for the attempt. But you say that Mises adds nothing to Aquinas, so I don’t see any point to this exercise at all. If Aquinas doesn’t need “praxeology,” why are you messing with it? If Thomistic anthropology is fine as it stands, or at least if it isn’t enlightened by the “[pseudo]science of action,” what is the point of this study?
It seems to me that you concede the main point: Mises as he is cannot be baptized, cannot be harmonized with a Christian civilization. And if that is the case (as we seem to agree) than the work of the Acton Institute is subversive of Christian morals and orderly markets to the degree that it depends on praxeological principles. Can your work save the Acton Institute from itself? Well, already you corrupt the established scientific language. This is a bad start. And after such a start, I can only ask, why go further down that path? What is to be gained? Why take a Kantian philosopher (and a second-rate one at that) and try to convert him into a metaphysical realist? I just don’t see the point. The whole point of praxeology is to convert the richness of human action into a set of formalisms while placing an impenetrable veil over human intentionality, which Mises locks up in an absolute incommunicability. (This however, is the one place where Mises is self-contradictory; after drawing this veil over any human action, he claims to know the motive for every human action. Both statements cannot be right, although both may be wrong.)
I should imagine that there is a lot more to your work that can be expressed in a combox, and that it is very fine work. But this strikes me as a dead-end, a sterile and unfruitful branch. Even if you get to where you are going, where would you be?
John Médaille
Gabriel,Premises and conclusions are already well-distinguished in logic; there is simply no need to confuse them with axioms and theorems. To say that you are using them “in a more simple way” is merely to say you are misusing them. The terms have well defined meanings already, and it is mere confusion to use them in this Humpty-Dumpty way. Axioms apply to formal relations;
John, as I said, I am using these terms in a broadest sense, and I have clarified that I am not using them in the strict sense of the formal sciences.
They cannot be used in a practical and material science. There is a reason not to treat practical premises as axioms: it destroys the humility necessary for real thought. Axioms, as intuitively obvious formal relations, admit of no exceptions and no challenges. But we can never be that sure of our premises, and shouldn’t be. We should always be putting them to the test and holding fast to what is good. But we never reach that good absolutely (as in formal sciences) but only relatively. We are always open to new ideas because we always willing to submit ourselves to the facts and to new interpretations. Humility is the very condition of discipleship, and hence the condition of scientific discipline. But “axiomatizing” thought converts this humility into arrogance, an arrogance that pretends to know all the answers in advance of the questions being asked. It just won’t do.
Well, I had already explained it to you. I am not attempting an axiomatization in the strict sense of formal sciences.
But I am further from the point of all of this then when you started. At first I thought that you were trying to harmonize Aquinas and Mises. I don’t think that can be done, but at least I understand the reason for the attempt. But you say that Mises adds nothing to Aquinas, so I don’t see any point to this exercise at all. If Aquinas doesn’t need “praxeology,” why are you messing with it? If Thomistic anthropology is fine as it stands, or at least if it isn’t enlightened by the “[pseudo]science of action,” what is the point of this study?
John, I have already explained it to you. It seems we have an incommensurability problem.
It seems to me that you concede the main point: Mises as he is cannot be baptized, cannot be harmonized with a Christian civilization.
I do not need to “baptized” Mises, I have just demonstrated that his praxelogy is able to have a thomistic foundation, in the same way Edith Stein used Aquinas for a better foundation of Husserl´s phenomenology.
And if that is the case (as we seem to agree) than the work of the Acton Institute is subversive of Christian morals and orderly markets to the degree that it depends on praxeological principles. Can your work save the Acton Institute from itself? Well, already you corrupt the established scientific language.
I have already explained this point to you. Again, another incommensurability problem.
This is a bad start.
I do not see any bad start, but ok, what I see is that we do not understand each other. The incommensurability problem. It could be solved, but in a personal conversation. Not in a blog.
And after such a start, I can only ask, why go further down that path? What is to be gained?
I have already explained it……
Why take a Kantian philosopher (and a second-rate one at that) and try to convert him into a metaphysical realist? I just don’t see the point.
I have already explained it……
The whole point of praxeology is to convert the richness of human action into a set of formalisms while placing an impenetrable veil over human intentionality, which Mises locks up in an absolute incommunicability.
No, this is not the whole point of praxeology. I have already explained it….
.(This however, is the one place where Mises is self-contradictory; after drawing this veil over any human action, he claims to know the motive for every human action. Both statements cannot be right, although both may be wrong.)I should imagine that there is a lot more to your work that can be expressed in a combox,
Yes, I told you so from the beginning of our discussion.
And that it is very fine work. But this strikes me as a dead-end, a sterile and unfruitful branch. Even if you get to where you are going, where would you be?
Again, a thomistic foundation of praxeology…… John, it seems we have an incommensurability problem, not only about theories, but also in attitudes. It seems that, for you, Aquinas is a weapon against the non Christian thinkers. For me, on the contrary, Aquinas is a way of giving metaphysical foundation to research programs of extraordinary thinkers. I have done the same with Popper, Kuhn, Feyerabend, Hayek, Gadamer, Husserl and Wittgenstein. So, our general attitude in relation to philosophy and modern and contemporary world is very different. It could be solved, not in a blog, but in a personal conversation. I wish we could have it some day. In the meantime, nice talking to you.
Gabriel, I am in the midst of grading finals and term papers, so I haven’t got much time. But briefly, I don’t agree that you have explained these things. You merely say you are doing them. But you haven’t given us a reason for supplementing Thomas with Mises; you admit that Mises can add nothing, so what is the point?
John Médaille
Hello,
This is a fascinating and illuminating series of comments. Thank you all for your comments, many of which have frequently propelled me to the library and internet.
I believe this series began in part as reactions to a charge that Acton Institute and Father Robert Sirico were not in line with Catholic Social Doctrine. And this charge, in turn, was expressed in reaction to Father Sirico’s strong letter of protest to Father Jenkins and Notre Dame University over the decision to award an honorary law degree to President Obama this month. In the course of the comments exchanged among the fine minds of John Medaille, Father Sirico, and many others, questions relating to economics and justice have emerged. If it is not too late, or judged inappropriate by Father Z, I would like to raise a general question on the proper role of the state.
There is some tension among Austrians, libertarians, distributivists, and advocates of what Pope John Paul II has called the free economy over the proper role of the state in the economic realm. The Church’s emphasis on the promotion of human dignity in both the political and economic spheres raises a basic question of what kind of government is most appropriate for the purpose of promoting the dignity of the person.
Consider this from Johannes Messner’s “Social Ethics: Natural Law in the Western World” (1965 ed.): “Individualistic thinking, with its laissez-faire state, restrict[s] the competence of the state to the legal order, to the exclusion of welfare functions…. the new conception [of the state] is that of the “provider state.” The latter regards it as its function to provide directly, by central planning and controlling of social cooperation, for all the material and cultural needs of the citizens to supply them with everything necessary for every eventuality of life…. [This provider state] does not allow for the full development of personality, which is dependent on man’s self-responsibility in fulfilling the tasks bound up with his existential ends, leaving to the state only subsidiary functions; and it is inconsistent with the common good, whose optimum development depends on the development, by all members of the community, of their own powers and their own responsibility.” (p. 558)
When I didn’t complete my math homework in grade school, the good sisters would make it clear this was not acceptable practice. I learned about math and the value of good work habits under their consistent, sometimes stern guidance. I thank God for them and their guidance. Where, in what institutions, is the location of the guidance, the self-responsibility offered by “the good sisters” in today’s society?
It seems John Medaille and distributivism believes it is located in cooperatives that pay just wages. Should the state then promote formation of such cooperatives beyond preferential tax treatment? The wonderful Henrich Pesch quote offered by schoolman on April 7th implies with qualifications these forces of guidance are located in the disciplined consensus of decentralized markets. Is this Smith’s invisible hand?
In observing the recent dispute between the non-TARP receiving Chrysler bond holders and the Obama administration over its preferred Chrysler restructing plan that offers 33 cents on the dollar, I lament the diminishment of the market’s disciplined consensus and ability to communicate self-responsibility. I am disturbed by the government’s disregard of the Contract Clause of the US Constitution and strong arming intimidation of Chrysler secured bond holders. I see that today, the Obama administration has won this dispute with the holdout bond holders. The bond holders gave up. The political and social costs were not deemed higher than the monetary benefits. The Obama administration’s stated intentions were certainly noble and included protection of workers and their families. But is this the kind of government policy that promotes development of all? Chrysler, and by comparison, General Motors clearly failed to “hand in their math homework” for at least two decades, but are now being provided for by a government doing bad things for the best possible reasons. What are the lessons of Chrysler, and the US auto industry? Were those high wages and benefits just? How will other companies learn good work habits and self-responsiblity? What has the United Auto Workers Union learned from this? Who ought to teach lessons of self-responsiblity and development? Government, consumers, suppliers, managers, bond holders?
I’m not convinced that distributivism as described in The Vocation of Business is achieveable on a large, systemic, countrywide scale, mainly because of government’s tendency toward overreaching centrality, as in the Chrysler case. Based on my reading of Acton’s publications I am convinced that Father Sirico and the Acton Institute in general care deeply about human flourishing, and that they believe the greatest threat to human freedom to self-develop is the provider state.
I remember being very moved the first time I read Dignitatis Humanae, Declaration on Religious Freedom. The Church is really serious about respecting and promoting human freedom. I guess my question is, what kind of state, eschewing the “laissez faire” and “provider state” extremes, best promotes freedom in the economic realm?
>>>>>There is some tension among Austrians, libertarians, distributivists, and advocates of what Pope John Paul II has called the free economy over the proper role of the state in the economic realm. The Church’s emphasis on the promotion of human dignity in both the political and economic spheres raises a basic question of what kind of government is most appropriate for the purpose of promoting the dignity of the person.<<<>Consider this from Johannes Messner’s “Social Ethics: Natural Law in the Western World” (1965 ed.): “Individualistic thinking, with its laissez-faire state, restrict[s] the competence of the state to the legal order, to the exclusion of welfare functions…. the new conception [of the state] is that of the “provider state.” The latter regards it as its function to provide directly, by central planning and controlling of social cooperation, for all the material and cultural needs of the citizens to supply them with everything necessary for every eventuality of life…. [This provider state] does not allow for the full development of personality, which is dependent on man’s self-responsibility in fulfilling the tasks bound up with his existential ends, leaving to the state only subsidiary functions; and it is inconsistent with the common good, whose optimum development depends on the development, by all members of the community, of their own powers and their own responsibility.” (p. 558)<<>>When I didn’t complete my math homework in grade school, the good sisters would make it clear this was not acceptable practice. I learned about math and the value of good work habits under their consistent, sometimes stern guidance. I thank God for them and their guidance. Where, in what institutions, is the location of the guidance, the self-responsibility offered by “the good sisters” in today’s society?<<>>>It seems John Medaille and distributivism believes it is located in cooperatives that pay just wages.<<>>> Should the state then promote formation of such cooperatives beyond preferential tax treatment? The wonderful Henrich Pesch quote offered by schoolman on April 7th implies with qualifications these forces of guidance are located in the disciplined consensus of decentralized markets. Is this Smith’s invisible hand?<<>>>>In observing the recent dispute between the non-TARP receiving Chrysler bond holders and the Obama administration over its preferred Chrysler restructing plan that offers 33 cents on the dollar, I lament the diminishment of the market’s disciplined consensus and ability to communicate self-responsibility. I am disturbed by the government’s disregard of the Contract Clause of the US Constitution and strong arming intimidation of Chrysler secured bond holders.<<<>>> I see that today, the Obama administration has won this dispute with the holdout bond holders. The bond holders gave up. The political and social costs were not deemed higher than the monetary benefits. The Obama administration’s stated intentions were certainly noble and included protection of workers and their families. But is this the kind of government policy that promotes development of all?<<<>>>>> Chrysler, and by comparison, General Motors clearly failed to “hand in their math homework” for at least two decades, but are now being provided for by a government doing bad things for the best possible reasons. What are the lessons of Chrysler, and the US auto industry? Were those high wages and benefits just? How will other companies learn good work habits and self-responsiblity? What has the United Auto Workers Union learned from this? Who ought to teach lessons of self-responsiblity and development? Government, consumers, suppliers, managers, bond holders?<>>>>I’m not convinced that distributivism as described in The Vocation of Business is achieveable on a large, systemic, countrywide scale, mainly because of government’s tendency toward overreaching centrality, as in the Chrysler case. Based on my reading of Acton’s publications I am convinced that Father Sirico and the Acton Institute in general care deeply about human flourishing, and that they believe the greatest threat to human freedom to self-develop is the provider state.<<<>>>>I remember being very moved the first time I read Dignitatis Humanae, Declaration on Religious Freedom. The Church is really serious about respecting and promoting human freedom. I guess my question is, what kind of state, eschewing the “laissez faire” and “provider state” extremes, best promotes freedom in the economic realm?<<<<
None, ideally. Individual contracts can cover most needs with private companies providing superior service than the state. The rich already have private security and education. Insurance bonds can protect against losses incurred by contract breach, people can refuse to trade with those of poor reputation or the uninsured. Personal responsibility and reputation would be important. How we treat each other would be important. Competition unhampered by government protectionism would prevent the rise of concentrated wealth, at least for very long. Small communities of like minded folks contracting to live together under certain rules would be an option, they could form their own mini-state, pool their resources and live communally…they just couldn’t force everyone to live that way, as Medaille wishes to do. At any rate, there would be a far greater diversity of communities than our homogenized corporate planned centralized united state.
Go to Mises.org.
I keep forgetting the brackets! So sorry!
Stephen: There is some tension among Austrians, libertarians, distributivists, and advocates of what Pope John Paul II has called the free economy over the proper role of the state in the economic realm. The Church’s emphasis on the promotion of human dignity in both the political and economic spheres raises a basic question of what kind of government is most appropriate for the purpose of promoting the dignity of the person.
This does not necessarily assume that political government, a monopoly on aggression by a segment of society to wield as they see fit, is an absolute given.
Stephen: Consider this from Johannes Messner’s “Social Ethics: Natural Law in the Western World” (1965 ed.): “Individualistic thinking, with its laissez-faire state, restrict[s] the competence of the state to the legal order, to the exclusion of welfare functions…. the new conception [of the state] is that of the “provider state.” The latter regards it as its function to provide directly, by central planning and controlling of social cooperation, for all the material and cultural needs of the citizens to supply them with everything necessary for every eventuality of life…. [This provider state] does not allow for the full development of personality, which is dependent on man’s self-responsibility in fulfilling the tasks bound up with his existential ends, leaving to the state only subsidiary functions; and it is inconsistent with the common good, whose optimum development depends on the development, by all members of the community, of their own powers and their own responsibility.” (p. 558
Actually, “individualist thinking” becomes more pronounced with a welfare state. People have no need to cooperate with one another, they become litigious and selfish. Charity is seen as unnecessary as they state provides for the poor through taxation. Education, both definition and provision, is viewed as the purview of the state and “education” has come to even include socialization of the young by parents who want no part of what has historically been the role of parents and family. This socialization consists of the young rearing the young, forming “Lord of the Flies” type peer group hierarchies and pecking orders resulting in children trained to behave like herd animals. Women deliberately have children without support or husbands because they have no reason to be responsible, they think only of themselves and their wants. The elderly are seen as burdens and are institutionalized. People do not interact with neighbors because they feel no need to and are afraid of having to be sociable. In the absence of state control the people work and live together, interact together, trade amongst themselves, have no legal recourse if someone calls them a name or looks at them nasty.
Stephen: When I didn’t complete my math homework in grade school, the good sisters would make it clear this was not acceptable practice. I learned about math and the value of good work habits under their consistent, sometimes stern guidance. I thank God for them and their guidance. Where, in what institutions, is the location of the guidance, the self-responsibility offered by “the good sisters” in today’s society?
Hopefully some private schools offer it, but increasingly the private schools are as bad as the government ones.
Stephen: It seems John Medaille and distributivism believes it is located in cooperatives that pay just wages.
Medaille ignores basic economic truths in his zeal to rationalize the theft of taxation and evils of government protectionism (regulations, private property seizures, etc.) for the “greater good”. Planners arbitrarily asserting what are “just wages” do not reflect the costs of production or the skill levels required by the job. Not all jobs deserve pay capable of supporting anyone. Pretending they do and forcing employers to pay minimum wages results in less people being hired. The UAW is a prime example. These unskilled laborers are being paid beyond what the jobs should resulting in the bankruptcy of the companies, or rather, the government bailing them out in a political payoff by Obama to the unions. People with no retirements will be forced to pony up for the retirements of the UAW.
Stephen: Should the state then promote formation of such cooperatives beyond preferential tax treatment? The wonderful Henrich Pesch quote offered by schoolman on April 7th implies with qualifications these forces of guidance are located in the disciplined consensus of decentralized markets. Is this Smith’s invisible hand?
I think so, in a sense. The market has no morality, it is simply a mechanism, a process by which goods and services are produced and distributed. It works when the factors of production are in private hands and people are free to trade and work as they see fit. It does not work when government plans and decides these things as we saw with the commie regimes, and as we are seeing with increased governmental control in the US. Prosperity declines, debt and social chaos ensures. This suits the state just fine, chaos allows them to increase their control because the people do not understand that the state has CAUSED the chaos, oftentimes deliberately (as they are now deliberately destroying the dollar and selling the people into debt slavery). Hitlers rise to power is a good example of this. The market has inequalities but these generally even out over time with expensive products being made available to poorer people, if even in lesser quality varieties. High prices of goods also causes them to be naturally rationed. When gov’t interferes and subsidizes we get “bubbles”, like the housing bubble where people who couldn’t afford them were sold homes.
Stephen: In observing the recent dispute between the non-TARP receiving Chrysler bond holders and the Obama administration over its preferred Chrysler restructing plan that offers 33 cents on the dollar, I lament the diminishment of the market’s disciplined consensus and ability to communicate self-responsibility. I am disturbed by the government’s disregard of the Contract Clause of the US Constitution and strong arming intimidation of Chrysler secured bond holders.
What you are describing is NOT market failure. It is state interventionism. Word is coming out that Obama forced banks to take money as well, apparently in pursuit of control of them. Scary stuff.
Stephen: I see that today, the Obama administration has won this dispute with the holdout bond holders. The bond holders gave up. The political and social costs were not deemed higher than the monetary benefits. The Obama administration’s stated intentions were certainly noble and included protection of workers and their families. But is this the kind of government policy that promotes development of all?
Of course not. We are seeing the corruption of absolute power, Obamas rhetoric notwithstanding. Judge the fruit.
Stephen: Chrysler, and by comparison, General Motors clearly failed to “hand in their math homework” for at least two decades, but are now being provided for by a government doing bad things for the best possible reasons. What are the lessons of Chrysler, and the US auto industry? Were those high wages and benefits just? How will other companies learn good work habits and self-responsiblity? What has the United Auto Workers Union learned from this? Who ought to teach lessons of self-responsiblity and development? Government, consumers, suppliers, managers, bond holders?
The UAW has controlled the automakers for a very long time because the unions are powerful and pay off politicians. They should have gone bankrupt and renegotiated their union contracts. Their benefits are outrageous. There would certainly be no shortage of replacement workers. The unions are simply preferred citizens. They are players, as in paying to play.
Stephen: I’m not convinced that distributivism as described in The Vocation of Business is achieveable on a large, systemic, countrywide scale, mainly because of government’s tendency toward overreaching centrality, as in the Chrysler case. Based on my reading of Acton’s publications I am convinced that Father Sirico and the Acton Institute in general care deeply about human flourishing, and that they believe the greatest threat to human freedom to self-develop is the provider state.
Good for you! God gave us liberty and not for us to hand that freedom over to bureaucrats and legalized mafiosi. They could never have done this without government schools. The Catholics were very smart to start their own schools.
Stephen: I remember being very moved the first time I read Dignitatis Humanae, Declaration on Religious Freedom. The Church is really serious about respecting and promoting human freedom. I guess my question is, what kind of state, eschewing the “laissez faire” and “provider state” extremes, best promotes freedom in the economic realm?<<<<
None, ideally. Individual contracts can cover most needs with private companies providing superior service than the state. The rich already have private security and education. Insurance bonds can protect against losses incurred by contract breach, people can refuse to trade with those of poor reputation or the uninsured. Personal responsibility and reputation would be important. How we treat each other would be important. Competition unhampered by government protectionism would prevent the rise of concentrated wealth, at least for very long. Small communities of like minded folks contracting to live together under certain rules would be an option, they could form their own mini-state, pool their resources and live communally…they just couldn’t force everyone to live that way, as Medaille wishes to do. At any rate, there would be a far greater diversity of communities than our homogenized corporate planned centralized united state.
Go to Mises.org.
“Medaille ignores basic economic truths in his zeal to rationalize the theft of taxation and evils of government protectionism (regulations, private property seizures, etc.) for the “greater good”. ”
It would be nice if this “Stephen” (who ever he is) could find one single quote of mine to justify this slander. My writings are widely available on the internet for free if he doesn’t want to purchase the book. But such minds can never justify slanders, knowing that there will always be other “minds” easily moved by slander.
John Médaille
John, given you are asking me a question, I am answering, but, I repeat, I do not have any hope that we could have an agreement in a blog (I repeat: in a blog). I said that Mises adds nothing to Thomas in relation to Thomas´s metaphysical synthesis. In relation to economics, Mises adds to Thomas as much as Einstein adds in Physics. And the point is –I repeat- offering Mises a correct foundation of praxeology.
Gabriel, let me make a suggestion. If you really want an economics studied as formal relations, I would suggest looking at Bernard Lonergan’s “Towards a New Political Economy” or his “Essays in Circulation Analysis.” Of course, Lonergan is one of the great theologians of the 20th century, but he also did work in economics. Mostly these were not available until the 1990’s, long after his death. You might find it fruitful for your approach to these issues. At least, that is where my research is taking me right now.
John Médaille
Thank you for your suggestion. And thank you also for your kind message. I will try to take it in account, not immediately, but I will check it in internet. But, above all, your message is a hope for a future understanding.
Mr. Medaille,
A gentle correction. A person signing as “Latekate” responded to my post of 8 May 2009 by pasting my words preceded by “Stephen:”, [as in Stephen J. Haessler] and then commented on things I had written. In re-reading my post, not Latekate’s response to it, I see no evidence of slander toward you or anyone else. I read your book on the Vocation of Business and found it to be an interesting, though unconvincing critique of the free economy.
Medaille, I have gone to your blog and am sorry to say that I have seen just more of the same utopianism on the way things SHOULD be done.
A couple of quotes from your blog:
Medaille: “How about this: how about we try to set up our society so that we don’t end up requiring every citizen to purchase a monstrously expensive piece of equipment to perform the normal functions of civic life?”
The collectivist assumption that there exists a “we” borg who must have their world “set up” by planners who think they know better how the rest should live is the curse of civilization. I’m certain your obsession on the evils of cars seems quite logical to you, as probably do your other comments on the need for “habitable dwellings” grouped in such a way that cars are not necessary and the ominous notions of the “civic life” that presumably all normal folks should engage in. The problem is that, like it or not, and whether or not you find it immoral, some folks like to travel, and like to have private cars to do it in. Not all folks like to live communally or in close proximity to other people or within walking distance of the necessities of “civic life” functions, whatever those are. Your issue is really with the regulatory control of the economy that does not allow innovation and competition in car manufacturing. You have a valid point when you complain of government subsidizing the auto industry and the retail sector by building highways, and I have no issue with toll roads, provided we aren’t taxed as well. But your complaint about the subsidizing of roads is simply a matter of WHERE you find it comfortable to loot and subsidize and cars and roads just aren’t on your list of SHOULDS.
Medaille: “What’s wrong with limiting the choices of individuals? Absolutely nothing, in itself; the question is whether the limitation is reasonable, not whether it exists.”
Again, WHO gets to decide what is “reasonable”?? I guarantee I am not going to agree with your assessments on what choices should be limited. Frankly, I’ll take my instruction on limiting my choices from God, not utopian planners scheming and looting for the greater good.
Your devotion to medical credentialling is misplaced as well, there is no reason that people cannot study independently and pass certification tests that are themselves monitored by some independent entity, a consumer guide type of organization. The institutional educational paradigm is dead. Your assertion that information is not available is no longer true.
I don’t see distributism as a bad thing, voluntarily arrived at through free market participation and competition. I do see it as inevitably unjust forced through a distributive STATE. The state would soon distribute to itself and its cronies as they do now. Your crowing that “capitalism had its chance”, etc. reveals that you are simply defining non-capitalist corporate STATES as capitalist. Capitalism produces wealth, hamper it and there is less prosperity.
I have seen nothing in your postings renouncing the theft of property by the state or the advocating the elimination of regulatory chains imposed by the state. I only see you advocating for your interpretation of what is the righteous application of these aggressions. Taxation is theft. Relying on the state to impose fairness and end poverty is idolatry. Coveting the wealth accumulated by others is wrong. I have not slandered you.
Stephen, If you have read my book, you should be able to find a single quote to support your charge. I would be particularly interested in what part of my book you found a critique of the Free economy, since the book was a defense of the free economy, if not of the rather peculiar Austrian version, a version that in practice destroys freedom. If you find this critique, do let me know; as the author I would be interested in that sort of thing.
Kate, in the first place, your “quotes” are not from me, but from other posters. Nevertheless, your interpretation is completely wrong. The prevalence of the automobile was not a matter of free choice, but a commercial conspiracy which enlisted the aid of gov’t, among other things, to destroy the 1200 prosperous street car companies that provided most urban transportation in this country. It was not choice, but the lack of choice, that made the car “popular.” The proof of this is easy: in cities where the choice remains, car ownership is much lower than in cities where choice has been removed. In New York, for example, it is only half what it is in other cities. Further, the car itself is the recepient of vast gov’t subsidies that dictate the very shape of our cities. See http://distributism.blogspot.com/2007/08/free-markets-free-ways-and-falling.html.
And every law limits the choice of individuals. That’s what laws do. The question is to determine when such limits are justified.
Your comments on medical licensing are tendentious, at best, since the context was a post calling for the loosening of licenses into at least five levels, rather than the just the current MD. It may be that you think that no one should be licensed, and that’s fine, but we have been there. Licensing didn’t become the norm until the 20th century. Before then, anyone with a year or two at a local, for-profit “medical collage” could call themselves a doctor. It was an age of quackery whose shortcomings were evident in the Great Influenza. Unfortunately, there was an over reaction to an overly restrictive licensing regime. I put in the address of the post so that people can judge for themselves http://distributism.blogspot.com/2009/04/chapter-xvii-distributism-and-health.html
You say that “capitalism produces wealth” and I respond, “where? When?” The facts are against you. Pure Capitalism has always produced wealth for the few and misery for the many, and even the few wealthy rejected it because it made their wealth precarious. We didn’t get to statism by revolution but by evolution; we started with capitalism, went to corporatism because that is where capitalism must go, and proceeded to statism, because that is the only way corporatism can be profitable. It has never been otherwise, and there are no exceptions.
Finally you say (I love this one) “I have seen nothing in your postings renouncing theft of property…” Okay. Fair enough. But let’s take that logic to the next level. I see nothing in your posts that renounce triple axe-murders, therefore, we may conclude that you support axe murderers.
See? Two can play that game.
John Médaille
Mr. Medaille,
Words matter. I hope I did not write a “charge”, as in an accusation, about your book. That was not my intention. I intended to express an opinion, which was that I was unconvinced by the thesis expressed in the book. But my opinion is much less important than the thesis of your book, and I would like to invite you to write a brief synopsis of the argument as a guest post for my blog at http://www.apostlesandmarkets.com. I have some fine guest posts from Catholic economists expressing neo-classical, Austrian, and other viewpoints, but none from the distributivist perspective. The intended audience of the blog is high school students and teachers of religion and economics at religiously affiliated high schools. I hope you will consider the invitation. Take care, and God bless.
Stephen, regardless of your “hope,” you did indeed make a charge, several in fact, none of which are true. One concerned a defense of theft and the other concerned some supposed “attack” on free markets. Let us distinguish between an opinion and a slander. “I don’t like this book” is an opinion, and nobody can say the opinionator nay, since he merely testifies to his subjective reaction, a subject about which he is the only authority. But if a person says, “Médaille supports theft,” that would be a charge, and in charity such charges can only be based on sufficient evidence. I doubt if you could support such a charge from anything I have ever written in my entire life, much less anything in the aforementioned book or blog.
Kate, at least, stated her evidence. It seems that wanting to loosen the license requirements for medical personnel is a clear example, in her mind, of supporting theft. A thin reed upon which to base such a broad charge, but at least people can look at her evidence and make up their own minds.
As far as your students go, you may direct them to my blog, where I have a whole book-in-progress on the topic, almost complete, or you may direct them to the Front Porch Republic (http://www.frontporchrepublic.com), where I have a four-part series on Distributism, with part 1 posted and part 2 coming in a day or two.
John Médaille
Medaille: “Kate, in the first place, your “quotes” are not from me, but from other posters. ”
I sincerely apologize for this mistake and am delighted that you apparently do not agree with these postings.
Medaille: “Nevertheless, your interpretation is completely wrong. The prevalence of the automobile was not a matter of free choice, but a commercial conspiracy which enlisted the aid of gov’t, among other things, to destroy the 1200 prosperous street car companies that provided most urban transportation in this country. It was not choice, but the lack of choice, that made the car “popular.””
But not all of us are urbanites nor want to be urbanites. The massive urban areas require massive inputs to exist, produce massive amounts of waste, ship their criminals to rural prisons, are ecological nightmares, and the dependent populations are easily managed and manipulated. Those of us who are not living like rats in a maze like private cars. And some people simply DO like cars, even such as we have, as distasteful as you find that.
Medaille: ” The proof of this is easy: in cities where the choice remains, car ownership is much lower than in cities where choice has been removed. In New York, for example, it is only half what it is in other cities. Further, the car itself is the recepient of vast gov’t subsidies that dictate the very shape of our cities. See http://distributism.blogspot.com/2007/08/free-markets-free-ways-and-falling.html.”
I have no issue with your complaints of government interventionism in the car industry. I agree with that. But I would like to point out that car ownership in a city is a very expensive luxury. Paying for parking and finding parking is very difficult. I wouldn’t bother owning a car at all if I lived in a city. I would simply live within walking distance of work (which I did). It is possible that an auto industry could exist and produce cars free of government intervention and could run on toll roads. Besides, in cities where there are fewer cars the government is no doubt financing public transport that could be provided privately.
Medaille: “And every law limits the choice of individuals. That’s what laws do. The question is to determine when such limits are justified.”
Yes. That is the million dollar question. And I can assure you that I would disagree with your notions of what choices should be limited and you would disagree with mine leading to one of us oppressing the other. And that is what government does. It is raw aggression. That is why maximum liberty for all is the best option.
Medaille: “Your comments on medical licensing are tendentious, at best, since the context was a post calling for the loosening of licenses into at least five levels, rather than the just the current MD. It may be that you think that no one should be licensed, and that’s fine, but we have been there. Licensing didn’t become the norm until the 20th century. Before then, anyone with a year or two at a local, for-profit “medical collage” could call themselves a doctor. It was an age of quackery whose shortcomings were evident in the Great Influenza. Unfortunately, there was an over reaction to an overly restrictive licensing regime. I put in the address of the post so that people can judge for themselves http://distributism.blogspot.com/2009/04/chapter-xvii-distributism-and-health.html”
LOL! Well, I am glad that you have such faith in the medical system and believe there is no “quackery” going on! Having actually worked with a man who passed himself off as an MD who also worked closely with other specialists who did not suspect him (oddly, some nurses DID!) I don’t share your faith in credentials. They are too easily faked. Even when real they are no guarantee of quality at all! I know nurses who are smarter and better than some doctors and I know aides who are better than some nurses. During the great influenza we did not have the availability of drugs, knowledge and sanitation that we have now. I didn’t really say we shouldn’t have licenses anyway, I said that certifications could be obtained after independent study. These certifications (med school is simply vo-ed, after all) could be privately administered taking the state and educational establishment out of the gatekeeping of occupations.
Medaille: “You say that “capitalism produces wealth” and I respond, “where? When?” The facts are against you. Pure Capitalism has always produced wealth for the few and misery for the many, and even the few wealthy rejected it because it made their wealth precarious. We didn’t get to statism by revolution but by evolution; we started with capitalism, went to corporatism because that is where capitalism must go, and proceeded to statism, because that is the only way corporatism can be profitable. It has never been otherwise, and there are no exceptions.”
And corporatism cannot exist without the state to buy aggression from. Capitalists would soon be overcome by new capitalists, entrepreneurs who would innovate and leave the old in the dust, EXCEPT for the state to run interference for the old, to set up protectionist tariffs and regulations, start wars, seize property for them, force people into “schools” to be trained to be obedient employees (Public school was pushed by Rockefeller, Carnegie, JP Morgan, and others). Everywhere the state exists tyranny eventually results. Capitalists innovate, get wealthy and proceed to buy politicians and newspapers to protect their wealth and gain power and more wealth. It is the state that is the problem, not capitalism. We are all capitalists. If you work for a living or trade hoping to turn a profit, if you shop for bargains hoping to save money to spend elsewhere thereby improving your material condition you are a capitalist. Private ownership of the means of production and distribution are spread most equally when people are free to trade and innovate, when they are not hampered by the state regulating and looting for their cronies. What you blame on capitalism is really the states doing. Capitalists are limited until they buy state aggression, it is statism that is the evil. Statism is not an evolved version of capitalism. It is a separate entity, a legalized mafia, a protection racket, a “gang of theives writ large (Murray Rothbard) the masses have been indoctrinated into believing is necessary.
Medaille: “Finally you say (I love this one) “I have seen nothing in your postings renouncing theft of property…” Okay. Fair enough. But let’s take that logic to the next level. I see nothing in your posts that renounce triple axe-murders, therefore, we may conclude that you support axe murderers.” See? Two can play that game.
Uh, no. You DO advocate state seizure of private property (taxation) for your pet causes. You do fuss and worry that wealth is not spread around equally, casting covetous eyes on those who have more. You do put your faith in the state to create your distributionist utopia (against all past history of state activity) and not in the providence of the Lord. I haven’t posted in favor of axe murderers.
The sad thing is you have so little understanding of economics. You do not understand that if wealth is seized and redistributed there will be little incentive to engage in wealth creating activities leading to decreased living standards for all and hurting the poor the most. The state cannot produce wealth, it can only seize and give to its favorites and cronies. That is what the state…MEN..DO (remember original sin??). I will never understand the motivations of people like you who want to RUN things, plan and manage and make other people bend to YOUR will and notions of the perfect society and how people should behave. The laws God handed down to us aren’t good enough for you, you are going to improve on them, make the world better by controlling economic opportunity through the sword, raw aggression. It will probably come to pass. People pushers, always full of intellectual bluster, have more energy to meddle than the average joe who simply wants left alone to enjoy his few simple comforts. It will come to a bloodshed, live by the sword, die by the sword. And the poor will always be with us.
Mr. Medaille,
Words still matter, and the operative one here is misunderstanding. A final attempt to clarify. If one reviews my post of 8 May 2009, which begins with the word “Hello” and which is signed with the name Stephen J. Haessler, you will not find any charges leveled at your or any one else’s book or ideas. I raised a question about the proper role of the state. I try to practice civility at all times in exchanging ideas about Catholic Social Doctrine and economics. I think you are conflating my words with those in Latekate’s posts. Latekate has been cutting and pasting and responding to your posts and mine. I would invite you, or anyone, to find an accusation in my original post. Take this sentence for example:
“It seems John Medaille and distributivism believes it is located in cooperatives that pay just wages. Should the state then promote formation of such cooperatives beyond preferential tax treatment? The wonderful Henrich Pesch quote offered by schoolman on April 7th implies with qualifications these forces of guidance are located in the disciplined consensus of decentralized markets. Is this Smith’s invisible hand?”
Where is the accusation, let alone slander, in my (not Latekate’s) post?
Your quarrel is clearly with Latekate, and you are confusing my words with Latekate’s. Let me just get out of your and Latekate’s way, and you two have at it all you like. Finally, I will assume you are declining my invitation posted earlier today in a post signed Stephen J. Haessler.
Stephen, You are correct, I was quoting kate and not you. I apologize.
John Médaille
Mr. Medaille,
Apology humbly accepted. All is forgiven. Now, on to consideration of these important issues. Good luck with your work. Though I don’t agree with distributivism, I think its critique is intriguing.
[Have tried to post this several times without success.]
JM: “Hugh, If you are going to dispute what the NBER says, it is at least necessary to correctly state what they say. They do not state that the long depression ran from 1873 to 1893, but from 1873 to 1879.”
JM, if we want to be really precise about this, then it’s strictly speaking an error for either of us to imply that the NBER refers in its data to a “Long Depression” at all in its technical releases: it simply logs months of waves, peaks and troughs over the whole period and seeks to determine recessions therefrom. As it says “The NBER does not separately identify depressions. The NBER business cycle chronology identifies the dates of peaks and troughs in economic activity. We refer to the period between a peak and a trough as a contraction or a recession, and the period between the trough and the peak as an expansion.” [http://www.nber.org/cycles/dec2008.html]
Some scholars, (a portion of these utilising NBER data) have used the term “Long Depression”, etc and some of these (see Fels, “The Long-Wave Depression 1873-97 ‘The review of Economics and Statistics’ Vol 31 No 1, 1949) have stated that the economic downturn that began in 1873 lasted till into the 1890s, which was the point of departure for my discussion.
But I am grateful for your correction as incorrect definitions do confuse things unnecessarily.
So much for semantics: now to the substantial debate …
1. The Myth of the “Long Depression” and chonic recessions in the pre-1915 US economy: Recent Scholarship
I have been referring to recent scholarship which challenges the NBER-derived data you rely on for both the 1870s and 1880s – however one characterises those episodes economically. If there is any “vast bulk of scholarship” of recent times which argues in support of the NBER defined recession dates it’s not something I am aware of: much of the recent scholarship I am aware of from both Austrians (eg Rothbard), and other economic historians I can’t classify in terms of theoretical allegiance, challenges the old NBER recession chronologies.
1.1 Thus, in terms of available non-Austrian peer-reviewed articles that support Rothbard’s line re. the 1870-1880s AND the more general thesis that smaller government 19th century U.S. was not more prone to recessions, there is (inter alia) Joseph Davis: “An Improved Annual Chronology Of US Business Cycles Since The 1790s,” Journal of Economic History, 2006, v66(1,Mar), 103-121.
Here is the abstract:
“The NBER’s pre-WWI chronology of annual peaks and troughs has the remarkable implication that the U.S. economy spent nearly every other year in recession, although previous research has argued that the post-Civil War dates are flawed. This paper extends that research by redating annual peaks and troughs for the entire 1796-1914 period using a single metric: Davis’ (2004) annual industrial production index. The new pre-WWI chronology alters more than 40% of the peak and troughs, and removes cycles long considered the most questionable. An important implication of the new chronology is the lack of discernible differences in the frequency and duration of industrial cycles among the pre-Civil War, Civil War to WWI, and post-WWII periods.” (One can access the abstract at http://www.nber.org/papers/w11157.pdf)
For the purpose of our particular focus, Davis,(in his earlier “An Annual Index of U.S. Industrial Production, 1790-1915” QJE Nov 2004, Issue 4 p1177,) in contrast to the old NBER series, shortens the 1873 recession to just two years, the same for 1883, with no recessions in 1869, 1887, 1890, and 1899.
But more importantly, Davis shows that in the 125 years between 1790 and 1915, there were only 25 years which recorded negative growth – in other words, only 20% of the years.
Now even as it stands, this compares favourably with the post-WWII period when according to the NBER stats, from 1945 till 2008, 19% of the years saw a drop in growth from one year to the next. But if we exclude from the Davis pre-WWI stats the recessions that were manifestly caused by government activity: 1808 (The Jefferson Embargo Act) 1861 &1865 (Civil War) 1837 (paper money) and 1908 (following the 2 year inflationary policy of Treasury Secretary Shaw) and leave in (just for argument argument’s sake) the others I’d like to debate should be omitted(eg the Coinage Act influenced 1873/4 years etc, the 1797/8 years influenced by the Anglo-French war, etc) , then only 16% of the earlier era saw year-on-year negative growth.
1.2 Re. the alleged “Long Depression” of the 1870s, the research of Davis is supported by the work of Jeremy Horpedahl of GMU who used the Historical Statistics to compile re-estimates of economic growth for the 1870s. His summary: “So we have a 4.3% decline from 1873 to 1874, recovery in 1875, by 1876 GNP is above 1873, and in 1879 GNP is 30% above 1873 (approximately 5% growth annually!)”. In other words, evidence for just a one year recession (1873 to 1874).
Interested readers can view Jeremy H’s results in the comments on the post (and an interesting exchange with the ranking JMU economist J Barkley Rosser Jr) at: http://www.marginalrevolution.com/marginalrevolution/2009/04/new-deal-revisionism.html.
1.3 And re. the quality of the NBER’s pre-1929 data, see Jeremy H’s comment at http://blog.mises.org/archives/009790.asp:
“The reconstruction of pre-1929 GNP data is quite interesting. The original recession/expansion dates were created by Burns and Mitchell for the NBER back in 1946. The pre-1929 GNP data originally came from estimates by Kuznets, also in 1946, though he fully acknowledged the fuzziness of this data, so much so that he only published decade-long measures.”
1.4 In a series of articles beginning in the 1980’s, Christy Romer (Berkeley and, yes, the NBER itself) raised critical questions about the NBER characterization of the 19th century US economy (1869-1916) as volatile and prone to deep recessions compared to the post WWII economy. See her “Is the Stabilization of the Postwar Economy a Figment of the Data?: (AER, 1986 June, 76, pp. 314-34) and “Changes in Business Cycles: Evidence and Explanations” (Journal of Economic Perspectives -Vol 13, No 2, Spring 1999 pp 23-44). In the latter Romer concludes “The postwar era has not been, on average, dramatically, more stable than the prewar era” (p.27) and that while recessions in the post war economy are “less frequent” they are only “slightly less severe” (32) and are in fact longer (30) in the post WWII era.
1.5 True, there is debate on some issues: Romer’s conclusion as to evenness of volatility is challenged by Balke and Gordon (B&G) who find there was more volatility in the pre-WWI US economy (1869-1916) compared to the post-WWII years. (“The Estimation of Prewar Gross National Product: Methodology and New Evidence.”” Journal of Political Economy. February97, pp. 38-92). Nevertheless, even B&G still find that only 17.5% of the years between 1869 and 1915 were in recession, and the average annual growth rate (real GNP) was 7.4% – which is more than double the growth rate in the US economy (3.03%) 1980-2007 (IMF World Outlook)
Needless to say, the B&G/Romer debate is arguably superseded by Davis’ even more recent and more thorough analysis cited earlier which finds that the pre-war economy in terms of stability and performance compares very favourably to the post-WWII situation.
All in all, far from there being a “vast bulk of scholarship” pointing to a pre-WWI economy prone to deep recessions, the recent scholarship points tells very much against this scenario.
I can’t comment on the 14% unemployment figure you cite as I’m not aware of its context. Is there a primary source you’re aware of? Is it a local artefact or a well-established national figure for the 1880s? I’ve seen references to local unemployment as wide as 25% (NY) and 8.9% (Mass.) without any indication that either of these is a good proxy for a national figure. As far as I know, national unemployment series of any reliability have been constructed only for the 1890s and after.
2. [JM] : “As far as Hong Kong goes, I have never claimed that any state was completely Georgist …”
… and, as you must be perfectly aware if you’ve been reading my posts, I never said that you did.…
[JM] “Nevertheless, the idea of HK as a pure laissez-faire state is, shall we say, open to question.”
… because, you see, I’m not in the habit of putting words into other peoples mouths as you have just done with this statement.
Readers can scroll up easily check from my and verify that I refer to HK in the following way: “an almost totally free market”, “While not completely laissez-faire”, etc – not, in other words, as “pure” laissez faire.
Why you persist in this distortion when it can be so easily exposed as such is beyond me.
[JM]: “HK does have significant Georgist features …”
So what? You know my argument is about your blatant inconsistency whereby you insist on being allowed to call HK a ‘Georgist’ state, notwithstanding the existence of non-Georgist features (35% Georgist land taxes, 65% revenue from anti-Georgist taxes, etc) but refuse to allow me to call it almost ‘laissez-faire’, notwithstanding the existence of some non-laissez-faire features.
So how does it resolve this inconsistency – this reiterating that parts of the Hong Kong regime are Georgist-influenced – which I don’t dispute?
[JM] “In 1997 44% of the population paid nothing in income tax, there were generous depreciation allowances for the financial industry… and gov’t support of other selected industries. …All this is laissez-faire?”
JM, this is very odd. As a matter of fact several instances of the government activity you cite above ARE unquestionably compatible with laissez faire! Given laissez-faire is about government non-intervention in the peaceful choices of individuals, how can a choice of a government NOT TO TAX – viz, depreciation allowances, and not to impose a tax on 44% of the population, be construed as anything but a laissez-faire move???!! Or are we to conclude that, if the government acted to abolish taxation in ALL its forms, you would be so focused on the fact that it is the government so acting as to deny that as a laissez faire move as well?
[JM] “But then, you will not share your secret standards for judging when a society is an isn’t laissez-faire. You won’t allow gov’t expenditures as a proxy, but won’t offer an alternative standard of judgment. One society with twice the gov’t expenditure as another can be laissez-faire, while the one with lower expenditures can be an intolerable example of gov’t interference.”
This is even more odd. I said that high government expenditures were an indication of high levels of government intervention, but that government can intervene in society in other ways not reflected in expenditure. You simply reject this without bothering to go through my arguments, and insist on gov’t expenditure as THE proxy. Yet, bizarrely, when I bring up 1680s Pennsylvania, which had NO central government and, a fortiori, NO government expenditure, you, who if consistent would abide by your insisted-upon lone government-expenditure-proxy and declare it therefore totally laissez-faire, are instead are hotly denying that Pennsylvania was laissez-faire because some of its colonists (might have) had slaves, which is nothing to do with government expenditure of a government that…wasn’t there!!
To quote your immortal words: “What am I to do here?” It’s in the basket with your argument that Pennsylvania was not near-anarchist because in another of the colonies there were witch hunts (10 years later!) and price controls.
[JM] “And the definition of laissez faire expands to include slavery and indentures and stolen land, even as your indignation rises when I point this out.”
And I suppose you would be perfectly happy if I on the very same ground accused you of expanding the definition of “Georgism” to include 65% non-land derived taxation, a la Hong Kong?
No? Well explain why you alone should be allowed to get away with such gross distortions.
[P.S. I see in other posts you refer critically to alleged “pure” laissez-faire economies in history. I’m curious: where are these examples you cite, and why haven’t you cited them before in this debate here? References please.]
[JM] “Your definition even allows gov’t to expand to displace private industry in land development or any other area.”
I’m not going to bother with this point- I can see it’s a bit subtle for you: I’ll leave it to other readers to evaluate what my real argument is in the previous posts and form a judgement themselves as to what I was saying.
(Other readers: check my scenarios, first re. gov.t vs. private schools , and then an application to the HK government’s activities re. land reclamation: see my post 4 May 2009 @ 12.13 pm, paragraph 4)
Cheers,