M. Novak on liberal trembling over upcoming encyclical

From the site of First Things, Michael Novak has a comment about the anticipation felt by liberals over the Holy Father’s upcoming encyclical.

My emphases and comments.

Economic Heresies of the Left
Jun 29, 2009
Michael Novak

What exactly is in Benedict XVI’s new encyclical on the economy and labor issues is not yet known. Catholic leftists and progressives, though, are already trembling with excitement. Three glaring errors have already appeared in these heavily panting anticipations.

An accurate presentation of real existing capitalism requires at least three modest affirmations:

1)
Markets work well only within a system of law, and only according to well-marked-out rules of the game; unregulated markets are a figment of imagination.

2) In actual capitalist practice, the love of creativity, invention, and groundbreaking enterprise are far more powerful than motives of greed.

3) The fundamental systemic motive infusing the spirit of capitalism is the imperative to liberate the world’s poor from the premodern ubiquity of grinding poverty. This motive lay at the heart of Adam Smith’s important victory over Thomas Malthus concerning the coming affluence—rather than starvation—of the poor.

Since the origins of modern capitalism around 1780, more than two-thirds of the world’s population has moved out of poverty. In China and India alone, more than 500 million have been raised out of poverty just in the last forty years. In almost every nation the average age of mortality has risen dramatically, causing populations to expand accordingly. Health in almost every dimension has been improved, and literacy has been carried to remote places it never reached before.

Whatever the motives of individuals, the system has improved the plight of the poor as none ever has before. The contemporary left systematically refuses to face these undeniable facts.

Fr. Thomas Reese, S.J., one of our most reliable leftist bellwethers, [how one tires of him] has recently opined that Benedict XVI’s new encyclical will cry out for more regulation, rather than unregulated markets. Further, the pope will denounce greed and cry out for more attention to the urgent need to aid the world’s poor.  [Woiw… the Pope an advocate for the poor.  Such insight.]

Reese thinks these are anticapitalist positions. That is ridiculous. They lie at the heart of why capitalism has worked as well as it has to liberate the poor—first in the United States and Europe, then in one continent after another, as it is now doing in almost all areas of Asia.

Fr. Reese says that the pope will blame the greed of U.S. bankers for the current global financial crisis. [What do you want to bet that the Pope won’t get so specific.  It is Reese himself who is pushing his agenda into a fantasy about the Pope’s encyclical.] While many institutions, including banks, failed in their basic duties, government action was the principal villain in the 2009 debacle. It was the federal government that forced banks to make sub-prime loans to poor families (who were known to be unable to pay their mortgages on a regular basis). It threatened banks that did not invest in poisonous packages of mortgages, vitiated by the bad ones.

The federal government even guaranteed the work of two huge quasigovernment mortgage companies—Fanny Mae and Freddy Mac—that wrote more than half of all mortgages during the fateful years. Of course, when the house of cards fell, government was not there to make good on its guarantees—or even to accept responsibility for its own heavy-handed actions.

For at least ten years before the disaster finally occurred, my colleagues at the American Enterprise Institute had been warning of the government abuses that were heading toward this calamity. Partisans of big government refused to listen.

For moralists, it is essential to see how often (not always) government itself sins grievously against the common good, out of a lust for power and domination over others. Furthermore, government often (not always) generates foolish and destructive regulations, and often dispenses justice that winks rather than justice that is blind. [Wait until we see more and more federal judges with "empathy".] Government is more frequently the agent of injuring the common good than the ordinary lawful actions of free citizens. During the twentieth century, governments too often destroyed the common good of their citizens for years to come.

In the United States, the existing code of federal regulations for businesses is enormous. Title 12 covering “Banks and Banking” runs to 4,786 pages; Title 15 on “commerce and Foreign Trade” is 1,941 pages; Title 16 on “Commercial Practices,” 1,600 pages; Title 17 on the “Securities and Exchange Commission,” 2,708 pages; and Title 31 on “Money and Finance: Treasury,” 1,917 pages.

The total number of pages in this code is 12,592. Laid out end to end, the volumes of the code extend for 2.35 miles. If you count the pages in feet (30 inches per linear foot is the standard measure) the code runs for six linear miles.

An unregulated market indeed! The real world of American capitalism is more like Gulliver bound down by thousands of threads. Many of the regulations are out of date, obsolete, costly, destructive, and—in their actual effects—counter to the very intentions that gave them birth. But regulation there is, and regulation there must be. Without rules, American capitalism cannot function.

As for greed, Max Weber pointed out that greed is present in every age and every system of human history. [Darn Adam anyway!] Yet greed was rather more socially central in ancient times than today, and played a much more decisive role. And nowadays, greed flourishes most wherever government power is concentrated.

By contrast, in enterprise societies such as the United States, it is possible to become rich—even very rich—by methods that focus on innovation rather than greed. The great universities of the Middle West and Far West, were founded expressly to give spur to new inventions in mining, agriculture, and other technical fields. Texas A & M, Iowa State, Wisconsin State, Oklahoma State, and scores of others have been the hothouses of ideas in agriculture, engineering and electronics, geology, mining and drilling—ideas rendered practical by the makers of many fortunes. They have mightily served the common good of Americans and the entire human race.

As John Paul II wisely commented in Centesimus Annus, practical knowledge is the main cause of wealth today. Ideas rather than great landholdings are the main form of wealth in our time. As both Caesar and Cicero long ago observed, although it seems as though community ownership ought to serve the common good best, in practice private property does. The right to private property has long been justified by virtue of its superior service to the common good.  [Beware of those who speak badly about "self-interest" and do not specify that what they mean.]

And in the United States, scores of entrepreneurs are ready to risk losing everything they have in order to create something new, create something that will make life better for their fellow men. Henry Ford failed repeatedly in several businesses before he finally made the Ford Motor Company the great model for business that it once was. (It was the first establishment in history to pay its laborers a handsome wage of five dollars per day. At the time, ordinary lawyers averaged about $1500 per year. Ford’s motives, of course, were not altruistic; he wanted his workers to purchase the cars they helped build.)  [A kind of "self-interest" which includes and expands benefits for others.]

As Oscar Handlin once noted, almost every industrialist who built a new railroad North and South in the United States in the nineteenth century prospered. Nearly every tycoon who tried to build an East–West railroad lost money. What spurred men to keep trying had less to do with greed that with the sheer romance of conquering the deserts and the Rockies. The element of romance in business is simply not grasped by dialectical materialists. [Interesting observation.]

In brief, nearly all the leftish critiques of American and other forms of capitalism are empirically false. They do not fit the actual facts. [Liberals will always ask you to deny the evidence of your senses and of common sense.  They don’t like facts or distinctions and will accuse you of being uncivil if you counter their positions with reason and facts.] But these three—greed, unregulated markets, and the idea that capitalism makes the poor of the world worse off—are especially tiresome, and very far from reality.

Will all those good Catholic leftists who announce their own enthusiastic preference for the poor actually help to liberate the poor, even by a little? Will their anticapitalist policies help alleviate poverty? The historical record offers very little evidence for that contention.

And yet wherever a healthy, inventive capitalism goes, the poor soon rise by the millions out of poverty, come to better physical health, and advance into higher education.

You can look up the record.

Michael Novak, a member of the editorial board of First Things, holds the George Frederick Jewett Chair in Religion and Public Policy at the American Enterprise Institute. His most recent book is No One Sees God (Doubleday, 2008).

Great article!  Kudos to Novak!

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242 Comments

  1. Veritas says:

    Excellent!

    I am 100% for regulation… regulation by PROFIT AND LOSS!

    I am 100% for free enterprise… freely run charities exist alongside freely run business!

    I am 100% for parents… as the primary breadwinners and educators of their children!

    I am 100% for dignity… the widow deserves charity, not a hand out.

    I am 100% for responsibility… the absentee father should provide for his family, not let them wallow under welfare.

    Statists on the left and right- both want tyranny, both want to concentrate power.

    Both want to treat us like children, like infants.

    There is no dignity under the nanny state.

  2. Lux says:

    A businessman cannot force you to hand over your dollar.

    He must offer you something you desire- a good, a service.

    Only through the heavy hand of government can he compel you to hand over the dollar without your free consent.

  3. Flamma says:

    Scarcity!

    As a Catholic businessman, father, husband and friend: I have limited time, energy, wealth, etc.

    The pricing system sends me infinite amounts of information that allows me to best coordinate my choices on how to use my time, energy, wealth, etc.

    Part of this time is spent at my job and investing my own wealth.

    The stock market lets me use my idle and excess money to support worthy businesses- businesses which provide essential services and goods that enrich the lives of other.

    The return on these investments gives me more money for my material choices of giving to charity, paying to send my children to Catholic schools, supporting my parish, buying books to enrich my own faith, etc.

    I also have more leisure time, which I use to attend Mass, to pray, to talk with my children, etc.

    Without capitalism, I would be much poorer. In many ways.

  4. Christopher Sarsfield says:

    Novak is living in a dream world, just as much as the communists and socialists. The current crisis was not brought on by the sub-prime mortgage lending scandal. Did that play a small role … yes, but that was not the main factor. Novak talks a good game, but so do the communists, and if it is was not for original sin both systems could probably work. But unfortunately man has a fallen nature, and indeed is motivated by greed, and self interest that will take the priority over the common good. Businesses emerge everyday with the goal of taking market share from another company, and putting others out of business, but no this is not greed. Read any capitalist about running a business and they will advocate only one goal of the business and that is maximizing profits. Anything legal (not necessarily moral) that does that must be done. When what you do hurts others, remember this is business not personal. And if people are just motivated by the entrepreneurial spirit, why, once the get an advantage, do they work so hard to rig the system in their favor. This man is an ideologue, that has no interest in listening to Church. I sure that after the encyclical is released, he will go to Rome and have a conference undermining the encyclical and pointing out why no one has to listen to it, the same way he went to Rome to withstand “Peter” to his face on the justice of the Iraq war. Reese and Novak, two peas in pod, who have no docility to the Church teaching.

    Obviously, there is nothing wrong with wanting to be your own man, and step out of wage slavery. That is a wonderful goal. But corporations are not entrepreneurs, and our system gives the advantage to the corporations. In the current system the would be entrepreneur (baker, butcher, computer programer, etc.) more likely will become a wage slave for a corporation, instead of owning his own small business. This is reality, as opposed to the Utopia of Novak. In the real world, with fallen men, the system will always be rigged. We have to decide, should it be rigged to favor many people being entrepreneurs and small business owners, or should it be rigged to favor multi-national corporations. Should it be rigged to favor people making moral decisions or immoral ones. Novak wants another option, but that option does not exist in the real world.

  5. Jason says:

    Only through the heavy hand of government can he compel you to hand over the dollar without your free consent.

    That is not necessarily true. For example, Novak mentions “higher education.” Why is it a sign of development that the poor are entering higher education? Because education has been made into a social necessity, and the poor are required to go through the education system to get ahead. This does not help the majority of the poor, however, because it sets many others up for failure. Those who cannot afford “higher education” are “underdeveloped” because they haven’t payed to be “educated.” By this model of development, they are forced to pay for “higher education.” Learning is thus transformed from a personal pursuit to an institutional certification that can be bought. It is not the government that forces people to pay for education; rather, it is the way society has defined development. Another example is cars. The car system is about speed and luxury. In the name of “development,” the third world aspires to build roads and highways that accommodate the personal vehicle. This transportation system indirectly forces the poor to buy modern cars. Those who want to walk or travel some other way (the way the poor used to travel, ways that fostered independence) are left out. They have to enter the system of production and consumption. We turn commodities into necessities, and development thus becomes an endless chase after the carrot at the end of the stick. Modern society does not foster independence and self-support. It constantly creates new “needs” that require more consumption, which in turn require us to depend more and more on social institutions (education systems, car companies, etc.). We need to redefine how society is working, so that “development” is about fostering independence, not about endless production and consumption. Even in the “first world,” we have become a dependent society. The third world values an institutional education system precisely because the first world is so dependent on it.

  6. Flamma says:

    Chris,

    The system does not need “rigging”. Because then power is only concentrated in those who do the “rigging.” Politicians.

    As powerful as ExxonMobil and Walmart and Microsoft are… they cannot steal from me. They must give me something to entice my dollar away.

    Only with the government’s help can my dollar be forced from my wallet.

    Also, I find your deterministic view of business to be false.

    My coworkers and I refuse to act unethically because it would be immoral, not because we simply follow ethics regulations.

    Corporations are made of people. People with consciences. Some act right; some act wrong.

  7. Christopher Sarsfield says:

    Flamma,

    I am glad the system works for you. But I have lived in more than a few areas, and always attended the TLM, and from what I have seen the system does not work for most of the young families with large numbers of children. In NH the men would get up at 5 am drive 2 hrs to where they could make a high enough wage to support their families, They would end up getting home at 7 or 8 just in time to say good night to their kids. Forget about daily Mass and other devotions. And even doing this, they were only just able to make it. This is the reality in most Traditional Catholic communities. It is the reality at the local SSPX chapel, and Indult chapel in my area, and it has been the reality at every chapel I lived near.

    Just out of curiosity, how many children do you have?

  8. Christopher Sarsfield says:

    Flamma,

    You do not think walmart and GM and Chrysler steal from you? GM and Chrysler are easy to see, no wonder you did not mention any of the corporations getting bailed out. But who do you think pays for the health insurance of Walmart employees? You do, because they are medicaid or other similar government program. Who do you think pays for their food, because Walmart does not pay a just wage? You do because they are on food stamps and WIC. At some Walmarts part of the orientation process, is helping the employees sign up for government assistance. In their business plan they take into account the money the government will kick, so they can lower the wage, and still keep employees. We already have redistribution of wealth in this country and it taking from the working middle class and giving to the rich corporations. And why does the government do this, because they have been bought by these corporations.

  9. Jason says:

    In my previous post, I wrote:

    We turn commodities into necessities

    I’m not sure if “commodities” is the most precise word for what I meant. “Products” is probably a better word. Society turns not only actual products (e.g., cars) into necessities, but also services (e.g., teaching). A person who wants to teach themselves or walk has no place in modern society, because society has built itself around these so-called “necessities.”

  10. Tim Ferguson says:

    I am loathe to enter the combox on this one, because any time economics becomes a topic on this blog, it seems that Mr. Sarsfield comes on to dominate the conversation and tell everyone that they have no idea about what they are talking.

    To forestall that, let me say it first – I have no idea what I’m talking about. I am not an economist, nor am I a theologian who’s studied the Church’s social teaching in great depth. I have studied it, taken collegiate classes, read the social encyclicals, and have a reasonable grasp of some of the issues, but I am far from an expert, and therefore my two cents is worth…well, two cents (at least until hyperinflation kicks in).

    Whatever one thinks of Mr. Novak, it seems that he makes some pretty undeniable points. Capitalism has been a great boon to humanity in many ways. The poor in most capitalist countries are so much better off than any other segment of society in human history. That ought not make us complacent about their plight, but surely even someone who thinks that capitalism is nothing but pure, unrestrained evil has to recognize that some good has come from it.

    As for the liberals like Fr. Reese, it seems they’re up to their old tricks. Put out a bunch orf press releases and interviews before the encyclical is published, saying what it should say (in their mind at least), and then when it is released they can either take the tack “Pope Benedict wanted to condemn capitalism as a system of unrestrained evil, but was prevented by his handlers, or proof text quotes out of context that seem to indicate that Pope Benedict considers capitalism a system of unrestrained evil.

  11. jamie says:

    Is it really the case that love of innovation is more of a motive than greed? Sure, desire for innovation is important, but there are three problems with that claim:

    (1) What did Warren Buffet innovate? Did Andrew Carnegie invent the smelting process? Innovation doesn’t reward nearly as much as consolidation, conglomeration, etc. What was Bill Gates’ innovation? He came up with Windows itself, and has been toying with that idea, and making it more needlessly complex and less reliable with every new iteration. Is Bill Gates really a great innovator, or is he something else?

    (2) Innovation isn’t a per se good. If there’s any group who shouldn’t have to be told that, it’s Catholics.

    (3) Even if we grant that innovation plays more of a role than avarice (which perhaps isn’t the case), and that innovation is good (which Catholics shouldn’t think is the case), we’re still left with avarice being a fundamental part of capitalism, which Novak admits to be the case. Perhaps it is not the greatest part, but capitalism is structurally dependent on avarice. Perhaps, as Novak cites a Lutheran as saying, avarice in pre-Protestant cultures created more poverty, whereas modern, Protestant avarice is good, at the end of the day, in endorsing capitalism, Novak is endorsing innovation and one of the 7 deadly sins. Can Catholics really support one of the seven deadly sins?

    Before the Reformation, liturgy, society, and economy weren’t separated. The people you went to mass with were the people you lived with and traded with. The Church was frequently your landlord, and the market happened either inside or outside the parish. It is the reformation that severs these things from each other. If you embrace an economic and a social system that values innovation (or avarice) over anything else, how can you keep that out of your liturgy, unless you somehow think that what you do in your office and in the divine office have nothing to do with each other. The popes of the 19th and early 20th centuries knew this, as did anti-clericalists all over Europe. Nothign undermines the social fabric that ought be around the Catholic liturgy like avarice.

  12. Christopher Sarsfield says:

    Mr. Ferguson,

    Having a bad day today? Pretty harsh statements, that I would not have expected from you. [I can’t say I disagree with Tim Ferguson.]

    With regard to acknowledging nothing good about the system, yes in these comboxes, I probably do not. When I argue with socialists or communists about economics I probably err in the other direction, by not acknowledging the good in them. (Here I am a marxist, there I am capitalist pig.) But as I said, I have no problem with Mr. Novak’s system per se, it just can not and does not work. Are more people better off materially, and have more possessions under capitalism, yes. But are those people really better off? I do not think so. Is the average American happier, and healthier (spiritually as well as physically)? Do they have leisure time? Are families stronger under this system? I do not think so. Yes the poor have more material possessions, but they are also much more dependent on the system. In reality they are less free.

    Hope your day gets better, may our Lady keep you and loved ones forever in the blue shadow of her mantle.

  13. Flamma says:

    Chris,

    1- Companies cannot steal from me without the government’s heavy hand reaching into my pocket. Additionally, even the largest companies and monopolies do not last forever. Look at how many behemoths have entered and exited the Dow in the past 100 years.

    2- The family you describe is infinitely more wealthy than you give them credit. They have clean water and good food. They have electricity and heat. They have shelter. They are free from daily violence. They live in one of the most beautiful areas in the world.

    If they are not satisfied with that, they can pursue other employment in other places. The beauty of specialized labor makes them infinitely more productive and useful to many different employers.

    I fail to see what you want. You say the government and corporations are colluding. And your answer is what? More government power? More favors for corporations? The third way is to let consumers vote with their dollars. To let innovators and inventors freely create new paths to prosperity. Government is not needed for that.

  14. Flamma says:

    Jamie,

    How does capitalism require avarice?

    Surely you can see that working to buy your daily bread is different from an inordinate desire for wealth?

  15. Memphis Aggie says:

    Great article thanks Father

  16. Peggy says:

    I’m with Mr. Ferguson today.
    —-
    Empirical evidence be dammned. We don’t have to worship this mere system, but for gosh sake, let’s acknowledge that it works on balance to achieve the most good for the most people. Greed is not compulsory in capitalism. I also was frustrated by reader Mark’s evading the point of the corruption and dysfunctional, despotic governments in the developing world which hold those nations back from prosperity, usually to line their leaders’ own pockets. That’s not capitalism.

  17. Banjo Pickin' Girl says:

    flamma makes sense. I vote with my bux all the time. I am not forced to do anything, except by the government.

  18. Tim Ferguson says:

    Actually Mr. Sarsfield, I’m having quite a good day, but thank you for the prayers. If my statements came across as harsh, I apologize for the tone, but not the content. You do have a way of dominating the conversation when it comes to economics, and I’ve never seen you praise another commenter for his or her insight, except in a backhanded and apodictic manner.

    It may well be true that those on the extreme left fault you for criticizing their system, as capitalists fault you for criticizing theirs. I’m not certain that economic theory is one of those sciences where virtue stands in the middle.

    I think that capitalism has provided many people with great benefits – and not only material benefits. I think we do have more leisure time than those under communist regimes had/have. I think that the freedoms and liberties we enjoy in our society are not accidental to a capitalistic economy. That we use our leisure time poorly, or that we squander our liberty is, as you say, the clear result of the fall of man, it is not part and parcel of the capitalist economic system.

  19. Alfred says:

    To Jamie and Mr. Sarsfield,

    While you both level attacks against the negative impact of capitalism on people and society, isn\’t it just as conceivable that these are the result of political, and not economic, changes? This, of course, is setting aside for the moment the question of whether or not people are worse off now than before.

  20. Christopher Sarsfield says:

    First I do not say things like “great post” or “ditto” because I thought that was against the rules of combox etiquette. If I had known it was allowed I would have done so on numerous occasions, in order to give encouragement to people defending my views, which are usually in the minority.

    I never said no one knows anything but me, however, I do say/write things in a matter of fact style, as if there could be no other answers. Sometimes that is the case, and there really is no other answer, other times it is my opinion and perhaps I should make that more clear. I do wonder though if our esteemed moderator and others on the list would have such an unfavorable opinion of me, if I was arguing for their position. With regard to dominating the conversation, it is usually because I feel obliged to respond, when someone has taken the time to respond to me. I like disagreements, because I feel that is the time when people can learn. I would much rather have someone point out the weaknesses in my case, than give me a “ditto” post. As St. Thomas says “contrasts clarify.”

    Finally, I do think that the vast majority of people that disagree with me on economics, did not get their views by studying the teachings of the Church. I was a conservative Republican/neoliberal economic thinker, until I study the Catholic Social Teachings. And I do get frustrated when Catholic lawyers, historians, politicians, economists, political scientists, etc. never for a moment consider what the Church has to say about these topics, and instead turn to non-Catholics, or the prevalent opinions of their nation. As my wife constantly reminds me, I have changed almost all positions on most topics from the time I married her (she thinks I became more like her), but I can honestly say that I changed my position, because I tried to submit my mind with docility to the Church. If I made a mistake, at least my intentions were high. I do not think Mr. Novak’s writings or actions reflects the same docility.

  21. EDG says:

    I must admit that I’m a little apprehensive about this encyclical; I read that it’s the only one not written by the Pope himself, for one thing, and I don’t know who his advisors were on this one.

    I expect it may reflect some European soft socialist ideas, although at the same time, I can’t see the Pope complaining about “corporate greed” and offering statism or Islamic-style dictatorship as the solution, which is what leftists here are hoping for. In addition, he has always seemed to appreciate human freedom, so I also can’t imagine that he’s going to call for the suppression of economic freedom (which is, at heart, creative freedom).

    I guess we’ll find out in a couple of weeks.

  22. mpm says:

    “I’m not certain that economic theory is one of those sciences where virtue stands in the middle.”
    –Tim Ferguson

    Excellent, and absolutely true. Only the moral sciences deal with virtue. Virtue (or vice) is evident from how we moral beings use economic theory, or put it into practice, including the ends to which we put it.

    The Church teaches (even in social teachings) on the moral aspects of this, not on the “science” involved. That is how the Church has asked that these teachings be received.

    Excellent.

  23. Alfred says:

    Sorry, looking back at my post it seemed a little cryptic and unrelated.

    All I meant was that, while the spiritual effects of an economic system are certainly of interest, that issue seems to be more of a philosophical question, dependent on one’s understanding and interpretation of the interrelation between economic systems, political systems, social tendencies, etc., and the issue here is whether or not capitalism has improved the material life of man. It seems straightforward to me that it has.

  24. symeon says:

    “For the love of money is the root of all evils; it is through this craving that some have wandered away from the faith and pierced their hearts with many pangs.” (1 Tim 6:10)

    Sounds like capitalism (capital = money).

    I’ll take St. Paul over Adam Smith, kthx.

  25. thomas says:

    Please remember that the very fact that Novak is American means that noone in the Vatican will take him seriously.

  26. Mark says:

    “Whatever one thinks of Mr. Novak, it seems that he makes some pretty undeniable points. Capitalism has been a great boon to humanity in many ways. The poor in most capitalist countries are so much better off than any other segment of society in human history.”

    This perception is an illusion.

    The real issue is not the internal economies of nations so much, it is the position of the nation in the world economy, the world division of labor.

    Countries at the core can be whatever they want, really. America happens to be internally capitalist and democratic, but Scandinavian countries are socialistic and doing fine, and Dubai is authoritarian and so is it.

    It is not capitalism or democracy, internally, that have brought prosperity to these nations (and, by extension, even to their poor). It is wealth, period. Democracy and freedom are luxuries of the rich nations, not the cause of their wealth. Wealth obtained through exploitative EXTERNAL relations with the poorer countries, who could be capitalist and democratic internally until the cows come home but it wont get any better for them as long as we make them remain in the same exploited role.

    Of course, poverty causes democracy and freedom to collapse usually anyway, and when it doesnt, we try to make it through war, debt-slavery, etc. Only every so often, to perpetuate the illusion, and when it can be done without us losing money, does the core welcome a new nation into its club to “prove” that adopting certain systems is beneficial (though really they want the other nations to pursue them exactly so that they can continue being exploited).

    “As for the liberals like Fr. Reese, it seems they’re up to their old tricks. Put out a bunch of press releases and interviews before the encyclical is published, saying what it should say”

    Uh…seems to me that Mr Novak is doing the exact same thing, just disguising it as a “response” to Fr Reese. But he too is speaking authoritatively about things before he has even read the encyclical. I say we should all wait until we actually read it to discuss the specific contents of the encyclical.

  27. Maureen says:

    Hm. I don’t know enough about my German peasant ancestors, but let’s consider my Irish peasant ancestors. They had reasonably good law under the old Gaelic system, but there was also slavery and a strong caste system. They had the clan system of distributed land, but it didn’t usually do the slaves any good. The only way to really get ahead was to do well as a sharecroper of cows and thus rise in the stock market, or to join a monastery. And without capitalism, there was no way to feed animals if the weather turned cold and killed the grass, or to feed people if the grass and the crops failed. Even a well born child of wealthy parents might own only two outfits. The climate was such that food storage was difficult and rot easy; hay was never used. So most of the time everybody was fed okay, but reasonably often, the vast majority starved. Monks went to universities in curriculum, but could only go to class certain days of the week. The rest of the week, they were out begging food from the surrounding countryside, or if lucky, being treated to dinner by a wealthy person at his/her home. Bathing was valued, but you did it in tiny sod bathhouses for the most part. Cooking was usually boiling meat or making flatbread or porridge.

    Water had to be boiled for drinking or cooking. Open hearths polluted lungs
    and burned down houses in a trice because of the necessary materials. Art was valued, yes, but only because there wasn’t much else to do in the winter besides talk or listen, and wonder if this was the winter when the beasts would starve.

    Our lives are the stuff of descriptions of Tir na nOg, where there’s always plenty of food and drink and good raiment, where entertainment is cheap and good, where travel is swift, and people live long while always seeming young and strong.

    It would be easier for us to insert their virtues and advantages into our lives, than for use to insert our advantages into theirs. They couldn’t afford education for most, as much as they respected it, because work had to be done — except in the winter.

  28. Maureen says:

    Oh, and let’s not forget wergild. I know today’s legal system often resembles wergild in practice, with the rich’s testimony and lives worth more than those of the poor. But in the widespread wergild system that was in force pretty much everywhere across Europe, including Ireland, that was true in theory and point of law as well.

  29. Alfred says:

    Not to be flippant, Mark, but is your position really that wealth brings prosperity?

    Because I think we could all agree to that.

  30. Liam says:

    The sub-prime mortgage villain is one of those very partial ideological orthodoxies that fails as a sufficient explanation.

    The government did not have any role in the use of CDSs in the leveraging of the much smaller problem of sub-prime mortgages, other than by omission, for example, (1) Senator Gramm’s successful but fateful effort (in a GOP-controlled Congress at the end of a lame-duck Democratic president with a relatively pro-market Treasury department) to prevent regulation of derivatives, (2) the GOP-dominated SEC’s relaxation of net capital requirements, and (3) the much earlier de-regulation of interstate banking limitations and Glass-Steagall that allowed over-leveraged financial institutions to become too big to fail. Possibly the major government action in the popping of the bubble was the rescue of Bear Stearns that reinforced illusory expectations of market makers – had BS been allowed to fail, it would probably have just accelerated the panic, though.

    Without CDSs, we’d be facing a fairly contained asset bubble collapse.

    Another huge factor in the timing and form of the bubble burst was the speculative bubble in fuel commodities markets.

    Too many people in the past generation have come to read Adam Smith as more prescriptive and ideological on capitalism than he in fact was: Adam Smith is better appreciated when read as primarily descriptive – his thought describes how people will tend to act under certain conditions of freedom. The ideological use to which he has been put would likely have appalled him. Ideological capitalism, like all ideologies, is a conclusion in search of an explanation.

  31. Flamma says:

    I feel a lot of straw man arguments arising so I invite Christopher Sarsfield to BRIEFLY outline his preferred economic system.

  32. jamie says:

    Flamma,

    Working for your daily bread is part of being human and has nothing to do with avarice. It also has very little to do with capitalism. Why do you assume that when I criticize capitalistic avarice, I\’m criticizing work? Working a reasonable number of hours in a week to support oneself and one\’s family is clearly not avarice.

    But there\’s a certain line. I\’m reluctant to say specifically where that line is, but capitalism tends to encourage going beyond that line. Why do people work in a capitalist system? Is it to support themselves and their families? Or is it to \’generate wealth\’? If you have a system aimed at not being indigent, and at the support of families, then you don\’t have a system centered around avarice. If your whole economic system is aimed at \’generating wealth,\’ I think it\’s safe to say that avarice is a part of it.

    Alfred,

    If you improve material culture, while treating avarice as a virtue, is that an improvement of life? The philosophical question is, hopefully, the one with which his Holiness will deal (and his previous two encyclicals seem to suggest that he will). In fact, capitalism\’s success at improving material life seems to be its biggest liability; defenders of capitalism point to its material success to answer why capitalism is good, without considering the negative effects of avarice on the person, on society, and on the Church. People like Novak tell us that capitalism is okay because the avarice is paired with innovation and it makes money — does the fact that it\’s successful, innovative avarice change that it\’s avarice? Doesn\’t that just make the avarice worse?

  33. georgeaquinas says:

    Mr. Novak may be right in that “leftists” are anticipating with glee what His Holiness may say.

    But, I think it is equally obvious that “rightist” are manning the baragades to defend any criticism of capitalism.

    Perhaps we just wait and see what is said.

  34. Flamma says:

    Jamie,

    Thank you for making that distinction. But I am a bit concerned about the arbitray nature of the line you draw.

    When does a reasonable number of hours become unreasonable?

    I can work 20 hours per week to support myself.

    I can work 30 hours per week to support myself, my wife and my children.

    I can work 40 hours per week to support myself, my wife, my children, my charitable giving, my leisure activities, and my early retirement.

    I can work 50 hours per week to support myself, my wife, my children, my charitable giving, my leisure activities, my early retirement AND to leave an inheritance to my children and grand children so that they can at least afford a decent house, and Catholic schooling.

    Are you saying that there is an AMOUNT of wealth that becomes greedy?

    Or is avarice related to the USE or PURSUIT of wealth?

  35. TJM says:

    Show me an economic system that has raised more people out of poverty than capitalism than I will listen. Demonizing wealth is absurb. After all, did
    anyone ever get a job from a poor person? But for wealth, there would be no St Peter’s Basilica.Tom

  36. Flamma says:

    John Allen reporting on the encyclical:

    Although Veritas in Caritate will be Benedict’s first comprehensive social encyclical, he’s repeatedly addressed social themes elsewhere, often striking three interrelated notes:

    1- Concern for social justice must not replace individual charity;
    2- Preaching the Gospel is essential to building a better world, because a world without God is destined to be inhuman;
    3- Systemic reform, though urgent, will not succeed without individual conversion.

    I hope we can ALL agree on those 3 points.

    Any economic or political system must be aware of thenatural and the supernatural. It must be aware and directed towards man’s ultimate end.

    I hope and pray that my own economic actions always uphold this goal.

  37. Mark says:

    “Not to be flippant, Mark, but is your position really that wealth brings prosperity?”

    Lol. No, my position is that wealth brings freedom from political oppression within a nation, not the other way around. That democracy and freedom are a luxury that rich nations can afford to provide their citizens, to buy their complacency. So they are indeed correlated with prosperity, but they are not the cause of that wealth, which has to do with the nations position in international trade.

    One should really say that it is the poor in RICH countries that are better off (regardless of how they run things internally), not the poor in “free” countries (whose life still sucks if they are a POOR democracy). It just so happens that most of the rich countries can afford to give their citizens freedom, and most of the poor countries tend towards social unrest and thus political instability.

  38. Mark says:

    “Show me an economic system that has raised more people out of poverty than capitalism than I will listen.”

    But it raised them out of poverty EXACTLY by causing others to move farther down into a level of poverty never seen before in human history. Yes, the core has provided a pretty tolerable life for even it’s poorest citizens, but only by creating a vast poverty at the periphery to fund it. And if they were to “become like us” we wouldnt like that, because someone has to lose in Unequal Exchange. All it’s done is widen a gap. Sure, it’s raised billions of people to a better life, but only by pushing billions down into a worse.

  39. Lindsay says:

    “but Scandinavian countries are socialistic and doing fine”

    I suppose this gets back to the philosophical question of “are we really better off?” In spite of material success, these countries are culturally bankrupt. They suffer from high abortion rates and practically non-existent church attendance. Can one really categorize this as a success?

    Is one poor if they don’t have leisure? I can’t really see that giving leisure to more people has done a lot to improve culture in the Western world. Are more people getting to heaven now than before? Don’t get me wrong, I love my leisure, but I’m not sure that there isn’t some sort of spiritual element, much like the intangible “spirit of romance” Mr. Novak alludes to that must be a factor in determining the success of an economic system.

  40. Alfred says:

    Lol, Mark. Yea, I kinda figured your position was what you explained. I guess because I disagree I couldn’t help teasing. I’m sure I’ve written something far less clear here.

    I think that georgeaquinas’s point that we should just wait and see what the Pope says is absurd. What kind of rational, temperate position is that for a blog-poster to take?! Obviously, the only way to correctly interpret His Holiness is to read our own positions into his work, hopefully from the safe distance of not having access to it for clarification and correction!

    Jamie, I certainly agree that the improvement of man’s spiritual life is of paramount import, although I would blame “modernity”, understood as the worldview stemming from a radical change in philosophical outlook that allowed for the Scientific revolution, and not “capitalism”, for the excessive and exclusive focus on material well being. And I think that it is debatable whether or not “capitalism” as an economic system has treated avarice as a virtue to a greater extent than other systems. Avarice’s ever present nature is why it is one of the big sins man cannot escape.

    All that said, I acknowledge the danger inherent in any method that produces material prosperity to deny, or at least denigrate, the spiritual. I just think that material prosperity is a good thing, in its proper bounds, and if something contributes to it, that is also good.

    The Apostles’ preaching is their most important task, but their tending to the material needs of the poor, the widow, the orphan were powerful testimonies to the Faith, and the material consummation of the commandment to love their neighbors.

    In sum, I guess I would say that capitalism, in itself, seems to me to be amoral, and it is up to us to imbue it with morality. To be fair, though, I would also say that communism, at least as propagated by Marx, was in itself immoral. I’ll have to think more on the exact reasons why I think this, but of the top of my head, to take Liam’s point, I think a kind of capitalism is less of a planned system and more of the natural order of things, and as such avoids the temptation to understand itself as the be-all end of the world-historical movement.

    In short, it’s not a conscious attempt to play God. The danger remains, though, that it go the other direction and degenerate to the point where men are playing beasts.

  41. Michael J says:

    “But it raised them out of poverty EXACTLY by causing others to move farther down into a level of poverty never seen before in human history”

    Mark,

    Are you really suggesting that economics is a zero sum game? That the *only* way for one individual to bdig out of poverty is to bury another in it?

  42. Allan says:

    Question: How is First Things doing since the good Father’s passing? Is it still worth the $$$?

    Thanks,

  43. Mark says:

    “I suppose this gets back to the philosophical question of “are we really better off?” In spite of material success, these countries are culturally bankrupt. They suffer from high abortion rates and practically non-existent church attendance. Can one really categorize this as a success?”

    No. And neither can we categorize America’s hypocritical religiosity or decadence, though there is certainly a difference between us, and one that only appears positive towards us.

    The European nations are jaded because they are core nations, and yet not the hegemon itself. As such, they have leisure and luxury, but also a purposelessness.

    They’re like the younger son, the brother of the king; guaranteed to remain pampered because of their family, but also drifting and listless. Consigned to remain in their brother’s shadow, having to sit down the table from him at state banquets, representing him sometimes at ribbon cuttings and charity benefits, but also having a lot more time to engage in decadent frivolities, ultimately seething because he is not his own man.

    America indeed has the “romance” and “meaningfulness” that you speak of, but only because we have the prestige and power as well as the money. Europe has the money too, but only as the Duke of Whatever, not the King. They’re like the other baldwin brothers…

  44. Lindsay says:

    “I think that georgeaquinas’s point that we should just wait and see what the Pope says is absurd. What kind of rational, temperate position is that for a blog-poster to take?! Obviously, the only way to correctly interpret His Holiness is to read our own positions into his work, hopefully from the safe distance of not having access to it for clarification and correction!”

    ROFL!

    Thank you, Alfred, for your other thoughts as well. They helped me frame some of the other ideas running loose in my head:)

  45. Mark says:

    “Are you really suggesting that economics is a zero sum game? That the only way for one individual to bdig out of poverty is to bury another in it?”

    No. No, that’s not the only way at all! I know that the “pie” isnt of a limited size. That the pie is growing and so theoretically everyone could get more and more better off.

    And yet that is not how our CURRENT system works, bafflingly, even as total production ever increases. Yet the gap keeps widening, the rich are made rich through structures that make the poor poorer. The pie is getting bigger and yet the poor are getting less of it, and less of it absolutely even, not just proportionally. The rising tide isnt raising all ships, and that is a grave scandal.

    But gI know there are systems where it could, ideoloical capitalism just isnt one of them.

  46. Christopher Sarsfield says:

    Flamma,

    First, I want to post this from Pius IX, so everyone can see why I am adamant about economics:

    “41. Yet before proceeding to explain these matters, that principle which Leo XIII so clearly established must be laid down at the outset here, namely, that there resides in Us the right and duty to pronounce with supreme authority upon social and economic matters.[27] …

    “42. Even though economics and moral science employs each its own principles in its own sphere, it is, nevertheless, an error to say that the economic and moral orders are so distinct from and alien to each other that the former depends in no way on the latter. Certainly the laws of economics, as they are termed, being based on the very nature of material things and on the capacities of the human body and mind, determine the limits of what productive human effort cannot, and of what it can attain in the economic field and by what means. Yet it is reason itself that clearly shows, on the basis of the individual and social nature of things and of men, the purpose which God ordained for all economic life.

    “43. But it is only the moral law which, just as it commands us to seek our supreme and last end in the whole scheme of our activity, so likewise commands us to seek directly in each kind of activity those purposes which we know that nature, or rather God the Author of nature, established for that kind of action, and in orderly relationship to subordinate such immediate purposes to our supreme and last end. If we faithfully observe this law, then it will follow that the particular purposes, both individual and social, that are sought in the economic field will fall in their proper place in the universal order of purposes, and We, in ascending through them, as it were by steps, shall attain the final end of all things, that is God, to Himself and to us, the supreme and inexhaustible Good.’ (QUADRAGESIMO ANNO, Pius XI, 1931)

    I would recommend everyone read the entire encyclical remembering liberalism in economics is capitalism. Unfortunately, many Catholics reject the notion of the Church teaching on economics because it is a science. Pius XI was clearly familiar with this argument and dismissed it.

    As to my ideal economic system, a have no particular attachment to any, I only want the system to take into account the principles of Catholic Social Teaching and the fallen nature of man. My system would attempt to deal with the following areas:

    1. Man has a fallen nature, and disordered passions, therefore the system should be designed with this in mind.
    2. The system should encourage virtue by rewarding virtue. If the system rewards greed, and other sinful things it should be rethought.
    3. There must be some limits to competition. Unlimited competition ends in monopoly.
    4. The tax code should favor large families, small business, and workers. It should not favor big corporations.(today we have the opposite)
    5. Business laws should encourage small business and discourage big business. (today we have the opposite)
    6. Law should discourage consumerism, which has been preached against by all the recent Popes.
    7. Business and Tax laws should encourage the wide distribution of productive wealth
    8. Usury, interest on non-productive loans (mortgages, credit-cards, consumer loans) would be forbidden.
    9. Taxes on all non-productive assets would cease (on property tax, unless the property is a business)
    10. A stable monetary system, that does not punish savings, and fixed incomes through inflation
    11. Associations to regulate industries, overseen by the government but not run by the government
    12. Subsidiarity, obviously the Federal Government needs to be much smaller
    13. No Federal/State welfare programs for business or individuals. As you can see by reading the blog, it only encourages animosity from the overtaxed workers not on welfare
    14. Local welfare programs need to encourage marriage/family, and give real help to make them self sufficient

    I know I am leaving a ton out like encourage coops, and employee owned business, discouraging stock corporations where the owners have no real interest in the business or operations of the business (but you requested a short list). Basically I would take Pius XI’s QUADRAGESIMO ANNO and implement it in practical terms, and I would head his warnings and condemnations of economic liberalism, which is capitalism. I know the list is general, if you would like my ideas on how to bring that about I would answer them, but remember they would just be ideas and I would be open to better ones.

  47. dymphna says:

    Here we all are typing away on comuters, in air
    conditioned homes. Your children have no fear
    of whooping cough or polio. They do not work in
    the fields, nor do they have to go into to town
    to work. They are actually free to be children.
    You have books to read, cozy beds to sleep in and you
    can go to the grocery store or a restaurant.
    We live in a country where poor people are fat and
    can afford to have multiple children because
    someone else picks up the bill. All brought to you
    by capitalism.

  48. Lindsay says:

    “America indeed has the “romance” and “meaningfulness” that you speak of, but only because we have the prestige and power as well as the money.”

    I don’t think so. In looking at our founding, it seems we had more such “romance” before we had so much prestige and power. It also seems a classic chicken or the egg question, but it seems we’ve lost those spiritual elements as our government has grown and become more socialistic in the past century.

  49. Lindsay says:

    And if you give me a chance, I’ll see if I can use the word seems a couple more times in a post just to see how many I can fit in.

  50. Karen W. says:

    Thomas:

    You are correct.

    His book “On Two Wings” was a hand wringing farce. He was a desenter from Humanae Vitae and desperately tried to get the Holy See to see his way on Iraq.

    Spare of from his execrable scribblings

  51. jamie says:

    Flamma,

    As I said, I don’t know where exactly the line would be. However, there is a certain amount of wealth which I doubt someone who isn’t greedy would have. That is, I think one can take an inordinate amount of wealth as evidence of inordinate desire for wealth. If you working 80 hours a week, or thought you supporting your family meant having a 2 million dollar house, then I’d begin to suspect that there may be a little of avarice.

    Those three points, and your summary, of course are true. Folks like Novak probably wouldn’t agree. Hinted at in this thread, and more so in the last thread on the impending encyclical, the point is repeatedly made that economics is a science, and that the only question you can ask of an economic system is whether it produces wealth. We should remember that though economics is a science, it is no more than a handmaiden, and that if it treats a vice as a virtue, it fails to be a true science.

    Alfred,

    Is capitalism separable from modernity? The same enlightenment thinkers who pushed for capitalism pushed for plundering the Church’s wealth. The same bourgeoisie who killed the French king put up the altar to pure reason in Notre Dame. Communism is worse, but it follows from a capitalistic view of the labor-capital relationship.

  52. Jordanes says:

    Mark claimed: But it raised them out of poverty EXACTLY by causing others to move farther down into a level of poverty never seen before in human history.

    No, it didn’t. Speaking generally, even those still in poverty around the world are nowhere near as bad off as they used to be. You simply don’t know what you’re talking about . . . and don’t think people here didn’t notice your failure to mention the economic system that has raised more people out of poverty than capitalism. You know there isn’t any better system on the table, so you’re changing the subject. Whether or not a better system may someday come along is another subject.

    Your claims that freedom and democracy are luxuries that wealthy nations can afford to toss their people also bear no resemblance to anything that has actually happened in human history. Just check U.S. history, and you’ll notice that freedom and democracy PRECEDED America’s dramatic and unprecedented rise to wealth and international status. If your beliefs were true, it should have been the other way around.

    As I said, you simply haven’t the slightest idea what you’re talking about.

  53. Lindsay says:

    dymphna, I don’t think anyone is complaining about their own situation, but the question of whether our being able to enjoy all the luxuries you list at the expense of someone else doing without is the crux of the debate. It is valid to question whether others are living in greater poverty than they otherwise would because of the system that allows me to live in such comfort.

    I personally feel woefully inadequate to be discussing economics, but it is something I desperately want to understand better. These discussions always suck me in!

  54. Mark says:

    Thank you, dymphna. Exactly.

    We should feel troubled to occupy an evil, exploitative function in the world economy, even if we “personally” are good people.

    Being rich isnt wrong in itself. But most of us live rich, not because we work harder (I challenge anyone of us to live a day in the life of an African manual laborer) or even invented something (most of us are not entrepreneurs), but merely because we were born (or somehow found our way into) the advantages of an evil system, a dominating network of power…that should at least trouble us, even though we didnt choose to be born in the core.

    The radical individualism promoted by ideological capitalism, however, wishes to avoid those feelings of troubledness and responsibility. At best, it pays lip service to individual donation. It suggests that as long as one is personally blameless, one doesnt need to be concerned by unjust systematic structures. “Hey, I’ve never murdered anyone, and I put money in the pots at Christmas”.

    When really, individual donation help a few people and are at best treating the symptoms, while structural changes could help hundreds of millions. “Feed the man dying of hunger, because if you are not feeding him, you are killing him. It is a case of murder by omission.” Just because he is half-way across the globe and it is impersonal “governments” or “corporations” resulting, in a complicated way, in his starvation…doesnt mean you dont have a responsibility or that his problem is his country not just “acting more like us”.

  55. LCB says:

    I just want to weigh in briefly.

    So often the canard “The rich get richer and the poor get poorer” gets trotted out, as if the phrase is somehow true.

    It’s not, and any analysis of the current economic realities will reveal that.

    Over the last 50 years the rich have gotten richer, and the poor have gotten richer. This is true in America and worldwide.

    Wealth is not a finite good, it is created. What matters is not the concentration of wealth as a percentage, but rather the wealth held by the poor in relationship to the cost of the good they need and want.

    For example, there has been a greater concentration of wealth in the hands of the richest Americans, and yet there are now over 9 million millionaires in the US, the face of poverty in America is radically different than it was 50 years ago.

    Where once poverty in America meant 3rd world conditions, now it means owning a vehicle, having multiple rooms, and having cable TV.

    People can debate about the relative merits of any number of things, but please at least debate about those merits in relationship to the reality of the situation.

    “The rich get richer and the poor get poorer” is simply false. Just ask India, China, and South East Asia.

  56. Jordanes says:

    Karen W., what proof is there that Novak has ever publicly dissented from Humanae Vitae?

  57. Mark says:

    “No, it didn’t. Speaking generally, even those still in poverty around the world are nowhere near as bad off as they used to be.”

    Billions of people live in slums. I do not think they are better off than, say, medieval serfs. And especially when considered relative to the Gap between rich and poor.

    “don’t think people here didn’t notice your failure to mention the economic system that has raised more people out of poverty than capitalism. You know there isn’t any better system on the table, so you’re changing the subject. Whether or not a better system may someday come along is another subject.”

    The question is framed manipulatively. Name a system that “has” raised people out of poverty? I couldnt do that, as since it’s existence capitalism hasnt given alternatives a chance to ever really be tried. Even communist nations have had to function externally as capitalists in the world market. Also, as I said, the raising from poverty of some has entailed the pushing deeper into poverty of others, so compared to something like medieval feudalism, it might cancel out as a wash.

    But as for systems proposed or on the table, though they have never been really tried to I can say they “have” raised people out of poverty (though they WOULD)…my main favorite idea is Social Credit, which I believe would solve most of the problems, and tend toward a distributism in society (ie, the means of production owned by the workers, individually and specifically, not collectively). Other ideas from Pius IX would also be implemented.

    “Just check U.S. history, and you’ll notice that freedom and democracy PRECEDED America’s dramatic and unprecedented rise to wealth and international status. If your beliefs were true, it should have been the other way around.”

    As a British colony, America was ALREADY bourgeois. It rose to power so dramatically because it represents, in a nation, the rise of the capitalistic middle class. It’s bourgeois nature made it perfectly positioned, but it was ALREADY prosperous even before the Revolution etc, because of the middle class nature of its economy and founders.

  58. Justin B. says:

    I do not possess the wherewithal or expertise on the subject to make an intelligent or useful contribution, however I am familiar with a few of the recent statements of this pope and his predecessor on matters of economic justice. I do hope that the faithful Catholic will humbly incline his or her ear to listen to the successor of Peter’s comments on these issues.

    First, section IV of John Paul II’s Centesimus Annus, and in particular, paragraph 42, which I’ll copy and paste here:

    “42. Returning now to the initial question: can it perhaps be said that, after the failure of Communism, capitalism is the victorious social system, and that capitalism should be the goal of the countries now making efforts to rebuild their economy and society? 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?

    The answer is obviously complex. 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.

    The Marxist solution has failed, but the realities of marginalization and exploitation remain in the world, especially the Third World, as does the reality of human alienation, especially in the more advanced countries. Against these phenomena the Church strongly raises her voice. Vast multitudes are still living in conditions of great material and moral poverty. The collapse of the Communist system in so many countries certainly removes an obstacle to facing these problems in an appropriate and realistic way, but it is not enough to bring about their solution. Indeed, there is a risk that a radical capitalistic ideology could spread which refuses even to consider these problems, in the a priori belief that any attempt to solve them is doomed to failure, and which blindly entrusts their solution to the free development of market forces.”

    http://www.vatican.va/holy_father/john_paul_ii/encyclicals/documents/hf_jp-ii_enc_01051991_centesimus-annus_en.html

    Also useful, and very recent, is Pope Benedict’s address for World Day of Peace, 2009. Parragraphs 9-11 seem to be the most prescient in my view.

    http://www.vatican.va/holy_father/benedict_xvi/messages/peace/documents/hf_ben-xvi_mes_20081208_xlii-world-day-peace_en.html

  59. Mark says:

    ““The rich get richer and the poor get poorer” is simply false. Just ask India, China, and South East Asia.”

    The Second World has made marginal gains, at the expense of the Third. The Semi-periphery is indeed expected to raise itself gradually, but not as fast the core, and only at the expense of the periphery.

    Africa, namely, is the main great black hole of increasing entropy, against which the decreasing entropy of other nations is mortgaged.

  60. Alfred says:

    Jamie, I’m not quite sure which thinkers you are thinking of (sorry, couldn’t think of a better way to say that)who pushed for capitalism. Unlike communism, which certainly stems from an odd mix of capitalism and Hegel, capitalism doesn’t seem to be a system created or advocated by anyone. Not to say that there aren’t those who are now advocates of capitalism, just that it seems that its advocates are pushing for what they think is true.

    There’s an interesting tendancy there in capitalism. The thought process is– here’s how the world works (Smith)– here’s how the world should work (capitalist advocates). Sort of like the is–to–ought move so beloved by freshman philosophy students the world over. Of course, is–to–ought-not is equally invalid.

    The more I think about this, the more I’m unsure what we mean by the word “capitalism”. It’s not really the opposite of “communism”, which has at its core a whole worldview, of which the economics is but a part. It’s been too long since I’ve read Smith. If economics is a science, is “capitalism” a theory/framework through which we explain our observations, analogous to “quantum field theory”? We’re all talking about it as if it’s a method, one among many with which we administor the economy, as if the issue was, “Are we going to direct this horse with the reigns or with commands? Should we spur it or put a carrot in front of it?”

    And yes, the horse is the economy. Feel free to quote me. Or, more likely, laugh and chalk this up to the Metaphor that got away.

    Oh, and Lindsay– I am totally addicted the word “seems.” It’s my “like”. I can’t get away from it.

  61. Flamma says:

    Chris,

    Thank you for the effort of responding. Unfortunately, you listed a number of errors:

    1. The system should not be “designed”. That concentrates power too much.
    2. Hasn’t the crisis shown that if we didn’t bail out banks, then the greedy would have been punished by their own bankrupcty?
    3. Absent government interference, there are NO permanent monopolies.
    4. The tax code should be minimal and neutral.
    5. Big business is owned by millions of small investors. If you hurt big business, you hurt the retirement and savings of many poorer investors.
    6. Is the seller the cause of consumerism or is the buyer? You seem to blame only the seller.
    7. Business and Tax laws should be neutral and locally written.
    8. Man is owed a just wage for the use of his labor capital. Why is he not owed a just interest rate on the use of his monetary capital?
    9. Taxes on all non-productive assets would cease- okay, but I don’t see where your “productive” definition comes from.
    10. A stable monetary system- I agree!
    11. Associations to regulate industries- the gov’t will only damage these efforts
    12. Subsidiarity, obviously the Federal Government needs to be much smaller- Agreed!
    13. No Federal/State welfare programs for business or individuals. Agreed! they are contrary to true charity and dignity
    14. Local welfare programs- not gov’t run. The Church and other charities can handle it.

  62. Flamma says:

    Jamie,

    “I think one can take an inordinate amount of wealth as evidence of inordinate desire for wealth.”

    But what if you have a scalable job? That is, a job where the amount of money you make is independent of the hours you work.

    A derivatives trader at UBS can make $5 or $5,000,000 in one day.

    Doesn’t he owe a responsibility to his clients to maximize the return? (yes, without theft, or fraud or violent or pollutive means)

  63. Mark says:

    “A derivatives trader at UBS can make $5 or $5,000,000 in one day.

    Doesn’t he owe a responsibility to his clients to maximize the return? (yes, without theft, or fraud or violent or pollutive means)”

    Derivatives trading IS fraud, though, in itself, for the most part.

    When truly done between actual produces (like a farmer and a miller making a contract over the future price of wheat), fine enough.

    But today there are all sorts of gamblers, professional derivatives traders, who are totally disconnected from anything real.

    Tell me, what product is he producing except pure abstract demand in itself, what is he trading except “risk”?

    Turning ideas and emotions into abstract financial commodities like that is unnatural and bound to fail, and the only reason the populace hasnt demand that they be outlawed is because they are two abstract and complex for most people to understand.

  64. Liam says:

    Alfred

    Thank you for capturing the logical lacuna of ideological capitalism better than I did!

  65. Alfred says:

    Ok, Mark, I think your analysis is a little off the mark.

    I don’t think there’s any reason to belittle the man who puts money in the pots at Christmas or the woman who feeds an individual. In railing against the “evil system” that has “created” all this poverty, we’d all do well to remember that “The poor will be with us always.” Statement of fact.

    Why didn’t Christ work more against the destructive heirarchichal nature of Society that created the poor? Because He didn’t care about the “nature of Society”. He cared about men. This one, that one, each one, but always as individuals.

    I’ll take direct, personal action to the needy over vague, impersonal attacks against all the “core nations” and those terrible “bourgeouise” who have the gall to not buy into the idea that they’re wicked. We shouldn’t be “troubled” by the fact that we have and others have not– we should give, and in direct ways.

    At the end of the day, I’d have to agree that capitalism didn’t “raise” people out of poverty. That sentence is so vague and philosophically empty as to be meaningless. What’s the subject? “Capitalism”? How does this “system” act? On what is it acting? “People”? Which people? Etc. But this is a complaint that’s equally valid agains all de-personalized “systems”.

    Capitalism doesn’t help people. “Systems” don’t help or hurt. Individuals help other individuals, or they hurt them. That’s how we can help our neighbors. That’s how Christ, and the Church as the Mystical Body of Christ, can help us.

  66. mpm says:

    Comment by Liam — 30 June 2009 @ 12:20 pm

    Liam,

    I agree with pretty much all the specifics you mention. I would only say that the political pressure placed on banks to “liberalize” their underwriting criterion to avoid red-lining was important. Whenever financial institutions have done that, we have been close to a collapse (1988-1992 is a good example) in the housing sector.

    And, I would add about the repeal of Glass-Steagall the following. When G-S was legislated (1933) and, for example, the House of Morgan split up into Morgan-Guaranty and Morgan-Stanley, the former was a bank proper, and MS was an investment bank or broker-dealer. All the latter sorts of companies were, at that time, partnerships. That form of organization means that if the partners (mostly very well-heeled individuals) want to take more risk, they bear the brunt of it personally. If they go broke, a few individuals are in trouble not the whole system.

    When the G-S law was repealed recently, all investment banks of any size were publicly-traded corporations. The attitude on Wall Street had become, take risk: if we lose, the stockholders bear the brunt of the losses, if we win we take home the bonuses. In other words, the interests of risk-takers were skewed relative to the interests of the shareholders, and the latter were skewed (too big to fail) relative to the economy.

    It’s interesting that no private-equity firms required being bailed out.

  67. Alfred says:

    Liam,

    I don’t think I was any clearer than you. I just threw in some dashes and called it a day. :-)

    Also, Logical Lacuna would be an awesome band name.

  68. Christopher Sarsfield says:

    Flamma,

    1. All systems are designed, if they just existed in capitalism Lew Rockwell, Novak, and the Acton Institute would need new jobs.
    2. No, because the system does reward greed in many areas. If you are greedy and wiling to be immoral you will have an advantage in our system.
    3. Unlimited competition, ensures that whichever person has the economic advantage will use his advantage to consolidate and expand his market share until he has a monopoly. Contrary to the old saying the world will not beat the path to your door for the better mousetrap. Through unlimited advertising, special purchasing agreements with suppliers (If you sell to the little guy, I will find some one else to supply me) and the purchasing of special legislation, and other means the person develops a monopoly.
    4. So the state should encourage people to have no children, by eliminating the per child tax credit. See there is no neutrality. Neutrality means making it easier and monetarily advantageous to commit vice. No Catholic Pope has ever spoken out in favor of such a system, quite the opposite.
    5. Big business is not owned by small investors, small investors are their pawns. When things go bad it is always the small investor that gets hurt, and the big investor that makes a fortune.
    6. I do not blame the seller or the buyer. I blame the system. Both are acting in their own perceived best natural interest, unfortunately, they are being deceived by the system. And the common good is suffering for it.
    7. Again neutrality is a myth. If they are not written in favor of the small guy that can not afford lobbyists they will eventually be written in favor of the big guy who can.
    8. Usury has been condemned often, and the condemnations fit the requirements of infallibility as put down at Vatican I. Loans that are not productive can not be charged interest.
    11. Perhaps, but if the system is designed from the beginning, with the nature of man considered, this could be limited. It certainly would be no worse then the current system.
    14. Government run, only if every other method fails.

    Where we disagree, I am going straight from the encyclicals of the Popes on these questions and Popes are telling me that their teaching on these matters is binding (see the quote from Pius IX above). You might want to read QUADRAGESIMO ANNO, I do not know if it will change your mind, but at least you will know what is at stake:

    http://www.vatican.va/holy_father/pius_xi/encyclicals/documents/hf_p-xi_enc_19310515_quadragesimo-anno_en.html

    May our Lady keep you forever in the blue shadow of her mantle.

  69. jamie says:

    Flamma,

    Unless he makes $5,000,000 in a day by accident, then that derivatives trader is absolutely guilty of avarice.

    Alfred,

    I think you may have hit the nail head. Capitalists describe the supply-demand and the labor-capital relationships as if they were natural laws which must be obeyed, and then make the move to say that they ought be obeyed. Avarice ceases to condemned as a sin and and becomes accepted as something that is in any economic arrangement. Whether we ought treat avarice (without which the ‘law’ of supply and demand probably doesn’t work) as a law of nature is never asked.

  70. NeoCarlist says:

    It would be interesting in this sort of discussion to find out what the folks taking various sides do for a living. For example, Flamma (who I agree with) owns a business. I work in productive, private sector job where I not only support my own family but help keep over 250 other people employed supporting their families. What do you folks who are so critical of capitalism do? Are you government employees? Academics? Unemployed graduates of Catholic liberal arts colleges?
    Since man’s fallen nature is used as a club to beat capitalism with, shouldn’t it also be a caution against the government types “designing” a system? Are you arguing that they are exempt from fallen nature?
    And to a post way up the list: Shall I really be upset about capitalism because a bunch of Pius X types have to commute a long way to their jobs?

  71. Lindsay says:

    “If you are greedy and wiling to be immoral you will have an advantage in our system.”

    How is that not an advantage in any system?

  72. Alfred says:

    Jamie,

    Hate to hit and run, I know it’s not fair, but I do have to split and I just wanted to say that it’s unclear to me that Avarice is condemned less under Capitalism than under Feudalism, Imperialism, Mercantilism, etc.,as it was never the system that was condemning any sin but God and the Church, and maybe it’s just that it becomes a more obvious and therefore apparently problematic vice when more people have money.

    Also, I think supply and demand functions fine without avarice, as people always needs goods, and, allowing a progression beyond the neolithic, goods that they can’t exclusively provide for themselves.

    Take care all,

    In Christ,

    Alfred

  73. Liam says:

    MPM

    I agree that the encouragement of subprime mortgages and discouragement of redlining themselves would have, without the other factors, likely have resulted in a greater crest and therefore greater corrective in the housing market than if they had not occurred. But (1) the other factors swamp that factor in scale and scope, and (2) bank redlining was hardly always the purely economic calculus some banker lobbyists have tried to portray it but itself could be riddled with irrationality. Anyone who thinks all activities of private enterprise are efficient has not spent enough time in them – efficiency is much more a macro than micro reality.

    I also agree with your observation about the context in which GS was adopted and repealed.

    I would also add that the bubble demonstrated there was an investment glut – too many investment dollars seeking better-than-average returns produces bubbles. The Bush tax cuts should have been sunsetted after 3-5 years, not 9, as they did not help in this regard, pace the likes of Larry Kudlow.

  74. When Government fails to take care of the poor, it leads to pure forms of socialism.

  75. Liam says:

    I should add that a good, 1986-style tax reform would be to phase out the home mortgage interest deduction – perhaps over 20 years (consumer credit interest deductions were phased out over 4 years, for those old enough to remember).

  76. mpm says:

    Jaime,

    Greed is not essential to the laws of supply and demand. The upward-sloping supply curve is based on the insight that people would rather have a high price at which to sell than a low price. The downward-sloping demand curve is based on the insight that a buyer would rather pay a low price rather than a high price. Given all the other assumptions (perfect information, no friction, etc., which one can argue about) the theory simply says that where the two curves intersect, will be where the average price is.

    That goes back to Adam Smith, and I agree with Liam that he is being more descriptive than presecriptive in the Wealth of Nations. He was a Professor of Ethics, and he was concerned about the callousness of the British government’s policies in the face of the needs of the poor.

    Perhaps the ideology with which you ought to be gnawing away is what used to be
    called economic Darwinism, which is truly an aberration.

  77. mpm says:

    Liam,

    I would agree about the housing deduction also, and I take your point about the
    Bush tax cuts.

    Larry Kudlow! Had a quick chuckle when you mentioned him.

  78. Alfred says:

    NeoCarlist,

    Last shout out. Private Sector employee here. Loved the bit about “designing” and all. Seriously, if man is fallen, has anyone ever looked at a whole bunch of people together? Like, at a mob?

    Makes you think that there might be something to “total depravity,” but only when a whole group is together. Man’s moral and intellectual tendencies seem to go down as his number in a collective grows. It’s exactly man’s fallen nature that makes me nervous about grand plans to fix everything. No way that could go wrong, right?

  79. Liam says:

    NeoCarlist

    I have been self-employed for 3 years, before that in investment management (legal and regulatory compliance) for over 15 years. Having been paid to be an ethicist within the beast (within my limited purview) I have to say that I find the more ideological approach of Novak to be rather untethered from reality.

    Anyway, this is not very relevant from a logical perspective. The individual context of our arguments does not validate them or invalidate them per se, else we have one of the most common of logical fallacies….

  80. Mark says:

    “I don’t think there’s any reason to belittle the man who puts money in the pots at Christmas or the woman who feeds an individual.”

    No, of course those things are good in themselves.

    But if they just serve as pat-yourself-on-the-back “okay, now I’ve done my part and can go on living my luxurious life” salves to induce complacency and quiet conscience in the face of systematic and structural injustice impoverishing millions of people in a way that throwing money at them is never going to help…then they can be just token actions to escape feelings of responsibility.

    “In railing against the “evil system” that has “created” all this poverty, we’d all do well to remember that “The poor will be with us always.” Statement of fact.”

    The poor will, but who is “poor” is very relative and things could be much more objectively better for everyone.

    A gap where the US average income is $30000 a year and in some third world countries it is $400 a year is not necessary. Discrepancies are always going to exist, there have to be gradients for any work to be done at all, and the people on the lower end of the spectrum are always going to exist and constitute “the poor”…but they’d be a lot better off if their income was $5000 a year and ours was only $15000 instead of the $400 vs $30000 dichotomy.

    They’d still be the poor, who are always with us, but that does not mean that the spectrum has to be so wide or that there always have to be some examples of the current extremes. “The poor” does not have to mean the starving-to-death.

    “Why didn’t Christ work more against the destructive heirarchichal nature of Society that created the poor? Because He didn’t care about the “nature of Society”. He cared about men. This one, that one, each one, but always as individuals.”

    And because Christ WAS of the poor. He came from a peripheral region of the Empire, so (besides the fact that He was God and had salvation of the world to worry about) it really wouldnt have been his responsibility. If he had been a Roman Senator or rich merchant, I might indeed have expected him to act differently. But the poor arent responsible for ending poverty (what the capitalists seem to think), they are the victims.

    “I’ll take direct, personal action to the needy over vague, impersonal attacks against all the “core nations” and those terrible “bourgeouise” who have the gall to not buy into the idea that they’re wicked. We shouldn’t be “troubled” by the fact that we have and others have not—we should give, and in direct ways.”

    Direct giving should be done locally, domestically. It can be a great tool for fighting domestic poverty under the current system and is of course a virtuous act.

    But when it comes to international structures and relations and efforts that are impersonal and unjust to billions of people systematically, “direct personal giving” sadly often just perpetuates cycles of dependency, or at best treats the symptoms without treating the disease. I saw a video once about how donating old clothing actually keeps Zimbabwe in poverty, I wish I could find it online. We do live in a democracy, [First, if you live in the USA, that is not – strictly speaking – what “we” live in. Second, not everyone who participates in discussions here lives in the USA.] so we DO have a responsibility and the possibility of changing such systematic structures.

  81. Matt K says:

    Distributism! Pope Leo XIII(Rerum Novarum) and Pope Pius XI(Quadragesimo Anno). I would love to read this holy fathers thoughts here. Also it seems unlikely he would break from the thoughts of his predecessors.

    “Too much capitalism does not mean too many capitalists, but too few capitalists” – GK Chesterton

  82. Matt K says:

    Pope Leo XIII(Rerum Novarum)

  83. Mark says:

    And Social Credit. Reforming the monetary system (seeing as money is the means of distribution) is the best way to effect better distribution.

  84. Christopher Sarsfield says:

    NeoCarlist,

    I am a nurse. I save lives for a living, I ensure the dying are offered a priest. I try to ensure that those dying do not die alone. I know this is probably not as economically productive as being a derivatives trader, but I guess I will just have to drag the economy down.

    BTW you should care about the family above, because the Popes and your Faith tell you to.

    And since I answered your question, perhaps you will answer mine, have you ever read Quadragesimo Anno? That is a much more relative point to the discussion than your occupation.

  85. Flamma says:

    Jamie,

    But what if $5,000,000 is part of a multi-billion business?

    I don’t understand how a few extra zeros makes something evil.

    You are running with some very emotional arguments. think then post.

  86. Flamma says:

    Christopher,

    It is a rather un-Catholic way of thinking that one cannot live a vocation in finance.

    BTW: Derivatives reduce volatility. They help stop famines and shortages.

    A derivative trader can be just as holy and ethical in his/her vocation as a nurse.

  87. Liam says:

    Derivatives MAY reduce volatility. Or may not. The may help stop famines and shortages. Or may help trigger them or worsen them. One thing we do know now is that a lot of derivatives traders thought they understood derivatives better than they actually did. Ignorance is not necessarily sinful, but it’s not necessarily free from responsibility, either.

    A derivatives trader may be more holy than a nurse. Or may not.

  88. Christopher Sarsfield says:

    Flamma,

    I was responding to his post implying that if you are not a business owner or wage slave for a productive corporation, your opinion about Catholic economics should be ignored, or at least somehow your occupation should come into play.

  89. Veritas says:

    Some fallacies I’ve noticed in the comments (especially by Jamie and Chirstopher Sarsfield)

    1- Big Business is bad… So let’s use Big Government to beat up Big Business!

    2- Someone should only make enough money before crossing some magical line into inherent greed. The mere accumulation of wealth = avarice.

    3- People are incapable of acting virtuously without government tax credits.

    4- Business are capable of acting ethically without government taxes and penalties.

    5- The way the world is RIGHT NOW, is how it always will be. Monopolies never break up, new inventions never displace old gadgets. The poor have zero mobility. Some unethical people means that the entire system they operate in is unethical.

    Catholics should embrace both truth and the Truth. I see some truly awful arguments on many posts. I don’t doubt your faith. I doubt your intellect and comprehension.

  90. Flamma says:

    I think part of the problem is many of us see the recent crisis and the damage it has caused.

    It is easy to attribute that to “capitalism” and “free markets”.

    But be honest: Is our system capitalism? Do we truly have free enterprise?

    No way. For decades our global economy has been pushed and pulled by a variety of political forces- in peaceful ways (supposed regulation) and more violent methods (warlords, dictators)

    I am 100% willing to critize the way things are right now. I am 100% willing to say that our current system is not in line with Catholic social teaching.

    Our market is broken. But our market isn’t free. We aren’t capitalists and maybe we haven’t ever been so.

  91. Clara says:

    There is no way to devise blanket, government-managed entitlement programs that does not attack this element of human dignity. Government programs don’t have the ability to distinguish who is “blamelessly” needy, and who is poor through some fault or failing of their own. And in truth, it is contrary to the very ideology of such programs to try to make such distinctions. All needy people are addressed in exactly the same way — with a handout. For some, this might be the appropriate response. For others, this should rightly be viewed as a personal disgrace. But the implicit message behind such a program is “don’t worry about it. All that matters is that you’re fed.” A parish priest or a small, private neighborhood organization could exercise discernment, giving generously to the widow with six children who has no other means for support, and chastising the young able-bodied father who just needs to stop drinking so he can hold down a job. A government program glosses over all these distinctions. Responsibility doesn’t matter. Respect doesn’t matter. All that matters is earthly bread.

    In a way, everyone is degraded by such a system, even the widows or orphans or others whom we might think deserving of aid. When the parish provides for them, this can be seen as an act of love, and an acknowledgement that their needs are legitimate and not a cause for shame. A check from the welfare office provides no such reassurance — it is an acknowledgement only of poverty. And when that status as “welfare recipient” is shared with drunkards and fornicators and people who are simply too lazy to look for work, it would be difficult for the virtuous person not to feel some shame, even if his misfortunes are genuinely not any fault of his own.

  92. NeoCarlist says:

    “I am a nurse. I save lives for a living, I ensure the dying are offered a priest. I try to ensure that those dying do not die alone. I know this is probably not as economically productive as being a derivatives trader, but I guess I will just have to drag the economy down.”
    Excellent. A worthy profession. And apparently an increasingly lucrative one because of supply and demand. When I signed up for the military (many years ago) I too made far less than the derivatives trader, or the guy who did what I do now. I didn’t envy him his salary though.

    “BTW you should care about the family above, because the Popes and your Faith tell you to.”
    Depends on what you mean by “care about them”. Having done the long commute for many (15) years I don\’t find it particularly shocking or upsetting that other folks do it too. Now I can telecommute (thanks to the technological advances made possible via capitalism) but that effort was well worth it to me so that I could raise my children in the place I want to raise them.

    “And since I answered your question, perhaps you will answer mine, have you ever read Quadragesimo Anno? That is a much more relative point to the discussion than your occupation.”
    Yes, I have. And the Compendium. And Rerum Novarum. Many people who have read the social documents will not come to the same view of the best way to apply them. And we can legitimately differ on that. My question is relevant to the discussion only so far as it determines how seriously I should take the viewpoint of a specific party. I’ve spent way too much time over the years listening to the jawboning of well educated layabouts telling me the best way my resources should be allocated, usually to benefit their layabout status.

    And to my question, are you assuming that the “designers” and “regulators” of your wondrous new system are free of original sin? Or are you just advocating a change in which specific group of sinful men hold power over us?

  93. LCB says:

    Veritas,

    Excellent post.

    I find often that those who don’t understand economic realities are the ones who shout the loudest about them.

  94. Christopher Sarsfield says:

    Veritas,

    First, have you ever read any of the Social encyclicals? [Make your case whether they have read them or not.] And if so do you accept their teaching:

    1. Read my posts I am clearly against big government.
    2. Avarice definition from Catholic Encyclopedia:

    Avarice

    Avarice (from Latin avarus, “greedy”; “to crave”) is the inordinate love for riches. Its special malice, broadly speaking, lies in that it makes the getting and keeping of money, possessions, and the like, a purpose in itself to live for. It does not see that these things are valuable only as instruments for the conduct of a rational and harmonious life, due regard being paid of course to the special social condition in which one is placed. It is called a capital vice because it has as its object that for the gaining or holding of which many other sins are committed. It is more to be dreaded in that it often cloaks itself as a virtue, or insinuates itself under the pretext of making a decent provision for the future. In so far as avarice is an incentive to injustice in acquiring and retaining of wealth, it is frequently a grievous sin. In itself, however, and in so far as it implies simply an excessive desire of, or pleasure in, riches, it is commonly not a mortal sin.

    Do you accept that definition.

    3. Again you misunderstand me. Men are more likely to sin, if there is a natural punishment for not sinning and a natural reward to sin. This is common Catholic teaching, concerning how we can participate in another’s sin.

    4. Again businesses are capable of acting ethically, but if the system is going to punish them for doing so, and reward them for not doing so, guess what percentage of business will act ethically. This is common sense.

    5. The system we have now was predicted by Belloc and Chesterton years ago. They were right and your intellectual forefathers were wrong.

    I will wait to reply to rest until you answer me about your acceptance of QUADRAGESIMO ANNO.

  95. Mark says:

    “It is easy to attribute that to “capitalism” and “free markets”.”

    Capitalism and free markets are two totally different things.

    “But be honest: Is our system capitalism?”

    Yes, because the means of production (the “capital”) is concentrated in the hands of a few (the “capitalists”).

    THAT is capitalism. And the capitalists have won your support by conflating that with the (basically good) concept of free markets in themselves and making “Capitalism” the good guy in a “cold war” against communism. It’s a trick!

    “No way. For decades our global economy has been pushed and pulled by a variety of political forces- in peaceful ways (supposed regulation) and more violent methods (warlords, dictators)”

    Political manipulation and interference BY the capitalists, by the controllers of the means of production and money.

    But, hey, it’s their money, right? If they want to spend it on manipulating the market and the politicians are willing to accept such payment in exchange for helping them…isnt that their right? Wouldnt using State mechanisms to forbid such manipulation be just as much interference as using them to carry it out?

  96. Mark says:

    Clara,

    Your concerns are true, but they only make sense when still thinking inside the box.

    If the social dividend had to be paid out of other people’s money through taxes or whatever, this welfare would definitely be parasitic and bad.

    But the fact is, the country could issue a citizen dividend to all people without taking anything earned from wages or salaries, based on the national credit.

    Even the drunken father has a right to life, doesnt need to “earn” his right to exist. God has given natural resources to all humanity, and we are all heirs to the progress of past generations. In the past 90% of people needed to work the fields to feed everyone. Now, less than 10% do. There is no particular need to create superfluous employment for the other 80% just for the sake of working them.

    What such a dividend says is not that responsibility and respect dont matter, but that society takes responsibility for its role (and it is perhaps the greater part) of creating the person and who they are in the first place. We believe in free will, but the radically individualistic view of self-creation and internal agency that we have in America today is NOT Catholic. We have a very much communitarian view of the individual. They are in large part a product of society. Not totally, but in large part. Society has a responsibility for that.

  97. Christopher Sarsfield says:

    NeoCarlist,

    So when Pius XI attacks the principles of liberalism ie captialism, is it your opinion that he did not know what those principles were, or he did not understand their compatibility with Catholicism? For example:

    ” 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. This function is one that the economic dictatorship which has recently displaced free competition can still less perform, since it is a headstrong power and a violent energy that, to benefit people, needs to be strongly curbed and wisely ruled. But it cannot curb and rule itself. Loftier and nobler principles – social justice and social charity – must, therefore, be sought whereby this dictatorship may be governed firmly and fully. Hence, the institutions themselves of peoples and, particularly those of all social life, ought to be penetrated with this justice, and it is most necessary that it be truly effective, that is, establish a juridical and social order which will, as it were, give form and shape to all economic life. Social charity, moreover, ought to be as the soul of this order, an order which public authority ought to be ever ready effectively to protect and defend.” QUADRAGESIMO ANNO

    Many on this list seem to be doing exactly the opposite of this. As a Catholic should I listen to Novak or Pius? I know my answer.

  98. Veritas says:

    Christopher,

    You write as though 2 + 2 = 5 makes perfect sense to you.

    1- Your posts do not indicate a distaste for big government. They invite it!

    2- You quoted a splendid definition of avarice. But your own writing seems to use a different definition that is far too broad and encompasses many legitimate pursuits.

    3- I work in finance. You are correct that there are temptations to greed. But I don’t seek big government incentives and laws to help me act in virtue. I turn to the Eucharist for that.

    You are continuously shouting at straw men and then you hide behind your supposed mastery of Catholic Social Teaching.

    Repeatedly saying you accept “QUADRAGESIMO ANNO” doesn’t convince me that you have anything other than your own little interpretation of that enlightening encyclical.

  99. Flamma says:

    Christopher,

    Your last quote from your favorite encyclical :-) does not seem to read as you think it does.

    “[the market] cannot curb and rule itself. Loftier and nobler principles – social justice and social charity – must, therefore, be sought whereby this dictatorship may be governed firmly and fully.”

    I AGREE!

    Men do not need the nanny state, they have their Father in heaven.

    I am capable of resisting greed without the government prying into my business.

    I suspect Veritas is capable of practicing finance in accordance with Catholic morality without the government.

    Are you unaware of the billions of dollars corporations give to charity every year?

    Are you under the impression that business causes all men to instantly forsake their faith?

  100. Christopher Sarsfield says:

    Veritas,

    You obviously have no more read my posts, than the Social Encyclicals. I have repeated decried big government and taxes. Unfortunately you like most Americans are not able to think beyond the American politics of liberals and conservatives/Democrats and Republicans. Anyone who disagrees with you must be a big government liberal, which is ironic because it is you that is the liberal, at least on economics. So you go about misrepresenting those who disagree with, and ascribing views to them they do not hold. Americanism is alive and well, unfortunately.

  101. jamie says:

    Alfred,

    Feudalism is a less-centralized economy, and it doesn’t rely very much on money. Even if you accumulate a lot of property, it’s nearly worthless to you unless people live on it and unless you can protect it (and them) from vikings, rebellions, neighbors, etc. That is, as a system, feudalism doesn’t promote the mere accumulation or generation of wealth. Not that it was perfect, but there were more saints in the middle ages than today. People attended mass all the time, nearly all literate lay people kept at least part of the office. The medievals were more pious than we are, and I don’t think that economics, together with the rest of modernity, is blameless for our descent into the post Vatican II Church.

    Flamma,

    I presume you meant that the derivatives trader made $5,000,000 for the trader. Unless I’m mistaken, that’s a lot of wealth. If you desire that much wealth, even if there’s a multi-billion dollar corporation involved, that’s avarice.

    Veritas,

    “2- Someone should only make enough money before crossing some magical line into inherent greed. The mere accumulation of wealth = avarice.”

    No, the inordinate desire for wealth is avarice. The accumulation of wealth isn’t avarice, unless you desire it in some ordinate way. If you accumulate a lot of wealth that is, as I said prior, probably good evidence of an inordinate desire for wealth. If the arrangement of an economic system encourages having an inordinate desire for wealth, then it’s promoting avarice.

    Come on, why can’t you adequate your mind to the thing and realize that the issue is the inordinate desire of wealth?

  102. Bob says:

    In our current system, the dignity of man is slammed on both ends, being a slave to either the big business (capitalists) or the big government. Purely free markets, as pointed out by many prominent Catholics, reduces human beings down to a commodity while, on the other hand, the poor are enslaved to the check writing government so to become complaisant and grow to have little to no dignity because of the dependence on government.

    Needless to say, a stronger, more robust Church is the cure for maybe all economic problems. As opposed to secular powers running the enslaving welfare program, the Church should be strong enough to take up that task to ensure that the needy are getting the monetary and spiritual development that is needed. It might be dreaming, but I would guess that if there truly was a need by a member in the Church, the local parish, diocese or greater community would come through to help while the helpee would do everything to repay the Church in the long-run. This way people wouldn’t have to be worried about being taken to task by big business either.

    Secularist capitalists do not give a hoot about the spiritual welfare of man. They only care that people get off welfare, whether it be opening strip clubs, porn shops, selling drugs, whatever. This mentality is helping to breed a very strong sub-culture of self-glorifying hedonists that take pleasure in making money but detest the pleasure of work that goes into making it.

    Another thing, capitalism, IMHO, hasn’t given the world any new uniqueness in culture. The great personalities, architecture and music of the world has yielded to modern things like rap music, office buildings and Bill Maher! (And of course His Pragmaticism Barack Obama) Free markets breed these lower forms because people will pay for their services. Hail the almighty dollar!

    What we need is a strong identitied Church that is efficient at communicating its message so that it can grow in strength.

    So in short, if we bring back the tridentine mass as the rule the economy would be much better off! (I’m only mildly kidding).

  103. jamie says:

    Exactly Bob.

  104. Jack says:

    I think Mr. Novak is precisely right. Bjorn Lomborg also does a nice job describing the overall upward trend in his massively-footnoted Skeptical Environmentalist.

    Mr. Sarsfield

    You brought up the point of large Catholic families in stagnant local economies, and I see their problems, too. So far, my family is five. We’re doing well. Some of my friends’ families are seven, some eight. They struggle, but the fault isn’t “the system’s.” The fault is that they’ve made the decision to live somewhere that makes it really hard to maintain the same material standard as their friends’. Some small towns just don’t have the population to support a culture of local small businesses when the likes of Wal-Mart come in and offer the same goods at lower prices. Where will people go? Duh. But the problem isn’t elephantine Wal-Mart capitalism — it’s the failure of local economies to adapt to an environment full of elephants like Wal-Mart.

    What’s the solution? More capitalism, not less. Declare Wal-Mart the winner in, say, canned goods and general hardware. They can realize economies of scale that mom and pop places just can’t. However, Wal-Mart can’t provide a whole range of services that moms and pops can, and Wal-Marts also aren’t very good at specializing even in a retail market. The stagnation we see is partly just a kind of stolid rebelliousness (fed by leftist class-envy crap) against something — instead of *creative adaptation.* Heck, wireless internet has made a cottage industry boom.

    I don’t have time to engage in this thread, but I think the whole animus against “capitalism” comes in large part from a failure of people to think creatively for themselves. Economic conditions change. You have to stop being so docile and learn to *adapt*. Don’t be afraid!

  105. Christopher Sarsfield says:

    LCB,

    Yes, everything I said is an ad hominem, and I clearly no nothing about the topic because I get my opinion from the Church. /sarcasm off/ I notice no one has quoted any Popes in support of the Capitalist opinion, I wonder why. Perhaps their too busy trying to defend their “poison spring” as Pius XI calls it. But I suppose he just used that language to hide his lack of understanding of the topic. As for Veritas putting his faith in his country instead of his Church on this matter I stand by it. [Settle down or this gets shut off.]

  106. Peggy says:

    So much to respond to. I’ve been out with my kids all day.
    In any case, on one point, I’ll note that economic growth is NOT a zero sum game. Mark is still concerned that the poor remain poor while wealthy folks get wealthier, allegedly, anyway. Let’s assume it’s true. If the poor are simply relying upon government transfer payments, which increase only minimally each year, then yes, their income will not rise as quickly as one who is working and achieving something, whether that working person be a janitor or a CEO. As for international disparities, as I (and others) said yesterday, one has to examine the conditions of the government and legal system as well as workers’ and property rights, plus the presence of expertise (ie, human capital) needed to move forward, in the developing nations. If the conditions in such a nation are unstable, unreliable or absent, then the poor nation will remain poor while the productive nations with the assets and stability to move forward will continue to do so. It’s not that complicated. Is it fair? I dunno. Much aid, private and public, go to developing nations from the developed world. [But I often read about bureaucratic complications which keep the help from reaching the people in need.]
    –My background is an economist by training and practice (not PhD, however). I’ve worked to reduce govt regulation of telecoms in the US and other nations, as well as assisted developing nations in establishing open telecom markets and independent regulators. These nations often have some great intellectual capital ready to take on the tasks at hand. The political will is an issue. I’ve been home with our children for the past few years, doing some contractual work from home here and there. I look forward to reading this encyclical for further understanding of the Church’s view toward markets, business, labor, families, and the government’s role.

  107. Christopher Sarsfield says:

    Need to proof posts better.
    no=Know as in “I clearly know nothing about the topic..”
    their = they’re as in “Perhaps they’re too busy”

    Sorry for the lack of editing.

  108. I am not Spartacus says:

    While many institutions, including banks, failed in their basic duties, government action was the principal villain in the 2009 debacle.

    It was The Banksters, mainly from Goldman Sachs, manipulating the government, that caused the Bubble and the bursting of that bubble and Goldman Sachs profited. Big time.

    The reality is the Banks own our govt and they, with the acquiescence of our elected officials, run The Fed as La Cosa Nostra (Our thing) and we no longer have a Res Publica.

    http://forums.somethingawful.com/showthread.php?threadid=3159732&pagenumber=1

    describes what Goldman Sachs has accomplished. WARNING. There are some vulgar comments but this is one of the best recapitulations of how The Banksters socialise loss and privatise profit.

    Mr. Novak keeps referring to “The Market” without identifying it.

    Is a market a place where identified goods and services may be viewed, examined, exchanged, and bartered, etc or is the “market” this miraculous and numinous non-place-space where some unidentified force ensures us that the assets have real objective value and that everything is Jake?

    As for the Encyclicals themselves, how many have we had these past forty years? I am sure I am in the minority when I write that I feel as though we are being buried under paper.

    Speaking just for myself, I wish the USCCB and The Pope would focus on cleaning-out the Augean Stable of internal Church problems, beginning with The Mass, instead of writing Encyclicals that nine Americans will read and then, after a fortnight of argument, ignore.

  109. I am not Spartacus says:

    Show me an economic system that has raised more people out of poverty than capitalism than I will listen.

    http://maritain.nd.edu/jmc/etext/walsh.htm

  110. Labyrinthus says:

    Flamma asked Cristopher for his position on a preferred economic system.

    From what I saw, Chris made some sort of reply… but it contained nothing remotely relevant in any way that would constitute an ‘answer’.

    I think Flamma’s comments here are logical and well informed.

    …and right.
    ;)

    Seriously folks… historically speaking, real world…what works better than capitalism?

  111. Liam says:

    “What works better than capitalism?” is a question with equivocal terms. What is meant by “capitalism”? Is it Smith’s description of fact, or Friedman et al.’s prescriptive ideology? And, if the latter, during what period did the US qualify as capitalist? And, further, even answering that question does not address the flaws in Novak’s argument.

    But, it’s a nice diversion….

  112. LCB says:

    Chris,

    The sole reason I have not responded to you is because of your liberal use of ad hominem attacks against those who dare to disagree with you.

    This post is a prime example: https://wdtprs.com/2009/06/m-novak-on-liberal-trembling-over-upcoming-encyclical/#comment-151860

    Even if you had the truth on this topic doesn’t mean you are justified bashing those that don’t.

  113. Christopher Sarsfield says:

    LCB,

    I do not expect you to respond to this, but I think you have slightly exaggerated with your post. You accuse me of “liberal use of ad hominem”, yet the only post you point to is directed at someone who consistently misrepresented me (and it is the only post you could possibly point to on this thread). And your post after that was beyond snarky. However, I think you are correct in not responding to me. I base my economic arguments on authority, and my authority is the Church through the Popes. In order to convince me I am wrong you would have to find Papal statements supporting your economic theories, and if we are being honest, you have no chance at that. You get your economic ideas from a bunch of non-Catholic/heretic/atheist people, I get my ideas from the Popes and people that the Popes have praised for their work defending Catholic Social Teaching against the people you get your economic ideas from. In eternity will see which one of us placed our trust in the correct authority.

  114. Joe says:

    “We live in a country where poor people are fat and
    can afford to have multiple children because
    someone else picks up the bill.” …Dymphna
    You sound a little annoyed at those poor women who bring so many children into the world.

    And this is precisely why white women abort. There is NO ONE to pick up the bill.Changes things a bit, doesn’t it, Dymphna?

  115. Latekate says:

    Novak: “An accurate presentation of real existing capitalism requires at least three modest affirmations:
    1) Markets work well only within a system of law, and only according to well-marked-out rules of the game; unregulated markets are a figment of imagination.”

    Saying a thing is a figment of the imagination is beside the point, an attempt to paint it as ludicrous. Lots of everyday things were once figments of the imagination. The idea that markets work well only with regulation is simply what we had before Obama started actually taking over companies, a fascist regulatory control of privately owned businesses. Yes, rules of the game should be understood by all parties but they can be agreed upon on an individual basis and contracted for by the parties involved, the same with a “system of law”. It is now the case that our system of law has little to do with justice and fair play and is more about redistributing wealth to various special interests and voting blocs and who has “deep pockets” to pick. It’s time to take politics out of it and let folks decide who they want to deal with and agree upon their own rules of trade. The “system of law” seizes private property for special interests and does not even enforce contracts any longer, especially their own obligations. This “point” seems to me to be an attempt to make capitalism appear unworkable except when controlled by politicians, which is pretty much the same old government tyranny and looting.

    Novak: “2) In actual capitalist practice, the love of creativity, invention, and groundbreaking enterprise are far more powerful than motives of greed.”

    I’m not sure how Novak manages to look into the hearts of men and know their motivations but I’d have to disagree on this one. People usually have their own interests at heart. Even if they do claim unselfish motivations much evil is done by those with good intentions. Far better to remember the fallen nature of men, assume their motivations are to make a profit and they are acting in their own self interest. But that is the beauty of capitalism. Selfish motivations end up benefitting other people…unless they are able to pay off the state to bully for them.

    Novak: “3) The fundamental systemic motive infusing the spirit of capitalism is the imperative to liberate the world’s poor from the premodern ubiquity of grinding poverty. This motive lay at the heart of Adam Smith’s important victory over Thomas Malthus concerning the coming affluence—rather than starvation—of the poor.”

    Again, you can’t make a blanket generalization about the motives of people engaging in capitalist behavior. It is assumed they are trying to make a profit. I’m not sure why Novak feels the need to try to infuse capitalism with noble motivations. I’m sure there are some who want to help their fellow men by building a better mousetrap and that is great. But it’s naive to assume that all capitalists are, they are only human. Capitalists work to provide a product or service as cheaply as possible and innovators and competitors are constantly at work trying to do it better or differently in a free market. And that activity is what has the side benefits to the rest of the people. The capitalists can be profit seeking and this very behavior will benefit consumers.

  116. Labyrinthus says:

    “Again, you can’t make a blanket generalization about the motives of people…”

    I don’t think anyone was doing that.

    Some are just pointing out the fact that capitalism works best.

    Plain and simple 20/20 hindsight.

    (“capitalism” in the colloquial, regular usage sense… so we can hopefully dispense with the silly, semantic obfuscation from other quarters)

    For those socialists hoping to claim Papal Authority… Pope Benedict as Cardinal Ratzinger clearly dissed Liberation Theology/Marxism…so give it up.

  117. Athelstane says:

    3) The fundamental systemic motive infusing the spirit of capitalism is the imperative to liberate the world’s poor from the premodern ubiquity of grinding poverty.

    I know Novak, a little, and I respect him and a lot of the work he has done. But I think this is a poorly considered phrase.

    The fundamental systemic motive infusing capitalism is, in fact, the desire to profit. The effect, however, may well be/frequently has been, to liberate the world’s poor from grinding poverty.

    It is hard to get a read on what line the new encyclical will take. It will not likely depart greatly from Centessimus Annus, but it may temper some of its praise for markets. Rocco Buttiglione will not be on the drafting committee this time around.

  118. TJM says:

    Father Z, by posting this article you have exposed the intellectual rot indemic in the Catholic Church today as evidenced by many of the posts here. These left-wingers actually are state-worshippers who dress up their personal beliefs in religious terms. Thanks. It’s been very enlightening. I guess they never heard of the cardinal sin of “envy.” Tom

  119. TJM says:

    Liam, you should be far more concerned with socialism and communism which definitely place the Church at the “back of the bus.” Capitalism doesn’t attempt to suppress the Church’s message like these “isms” do. In socialism and communism the State is supreme. Have you ever read “Quanta Cura?”
    Tom

  120. Peggy says:

    I read some of the concerns of the prior social/economic encyclicals as having great concern with completely unfettered markets. I understand that. The study of economics includes consideration of “market failures.” The professional field may not use the same language as the Church, but there is a recognition by many/most economists that some government role is necessary when there are market failures. The professional field also examines poverty, incomplete information for consumers/producers/other economic agents. It considers “unfair” business practices and anti-trust concerns. In practice, we are far afield from unfettered markets. Frankly there is too much regulation in some sectors, which if reduced would produce greater benefits for society. I don’t think we’ll be getting back there soon. So, don’t worry those who fear the unregulated market.

    The basic study of economics is to describe simply what happens in a market. How various actions cause other responses in the market by players in the market. That is “positive” economics. To discuss what should be and place value judgments on an economic action/response is “normative” economics.

    I thought I read a comment which asserted that people not working but receiving welfare checks were a product of capitalism. No, that’s a product of government intervention. Perhaps if the transfer payment were not available, the person would work.

  121. Christopher Sarsfield says:

    Peggy,
    As Belloc pointed out years ago, Capitalism always leads to a welfare state, because they can not let the have nots die of starvation. If they did the system would come down when the people rioted in the streets. Belloc predicted this, and he was right. You also know that in the US full employment is I think around 5% unemployment (is that still the ball park figure?). Once you get below that the economy suffers. If you are going to have a 5% perpetual unemployment in the best of times, you are going to have to come up with some system to assist them. That is what I meant by the welfare system being a product of capitalism. I do not know of any capitalist nation, that did not fulfill Belloc’s prediction.

  122. Labyrinthus says:

    “If you are going to have a 5% perpetual unemployment in the best of times, you are going to have to come up with some system to assist them”

    No you don’t.

    There was a time when folks thought that might be the business of the Church.

    all your other ‘systems’ be damned….

    since that is basically what they are, right?

    ?

  123. Peggy says:

    Labyrinthus is right that private charity and the Church can tend to this matter. Didn’t the early mutual societies of laymen go toward that goal in the US early 20C about?

    Further, 5% unemployment measures those who are seeking jobs and unemployment benefits. There is separately a now permanent dependent class that receives from one generation to the next subsistence from the government. They are not counted in the numbers of those who seek employment and receive unemployment benefits. But, private charity could tend to these folks as well and encourage them to become self-supporting as well. It’s such a deep problem now, however, that it would be an arduous undertaking that would be better for all in society in the long run.

  124. Hey alfred!

    Good to see you on here again. I’m pretty much staying out of this one as I never had a great desire to study economics and, sadly, I never got the opportunity to study Philosophy.

    But you bring a fresh approach to this conversation. You seem to side with capitalism more because it seems to work better than, say, communism. I tend to agree although I don’t favour unrestricted capitalism and I strongly believe that any economic system is meant to serve man. Man is not meant to serve the economy. If the system doesn’t respect the dignity of every human being without exception it is to be corrected or, if necessary, replaced.

    You have questioned yourself once or twice and had second thoughts as well. This you can afford to do because you are basing your points not on an ideology but on a good Christian value system.

    I believe that the Holy Father is going to take a similar approach. I can’t see him getting into a socialist vs capitalist arguement. I expect him rather, to go for what works best and try to improve it according to Catholic principles. I expect a rebuke against greed is a given but will he be speaking about purely greed on the part of individuals or also of a systemic greed?

    The one place in which I would be cautious about what you said is in your quoting the Gospel words, “The poor you will always have with you.” I hope you were not thinkng of that in any exegetical sense because it really doesn’t have anything to do with the poor at all.

  125. On the 5% unemployment thing … how is it possible not to have some unemployment? Even in the best possible distributist economy businesses will fail, businesses will downsize, employees will quit, employees will get fired, technology will make some jobs obsolete, etc.. I’m not a fan of “capitalism” as presently understood, but I don’t think 5% unemployment is a bad thing.

    No, the problem with capitalism is not unemployment, but underemployment, where men cannot find honest, meaningful work with decent pay that suits their talents and abilities, because so much of that work just doesn’t exist anymore. How do we bring these jobs back without creating even bigger problems? That’s the real question.