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What is the purpose of our economic activity?

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

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Based on a talk given at
The American Chesterton Society Conference
5 August, 2016
When we look at the economic conduct of mankind and ask ourselves why the human race engages in such activities, I suppose that everyone would admit that we do so in order to produce goods and services for our use. So far, so good. But I submit there are two contrasting ways of looking at this activity and the products that result from it. This contrast can become clear if I juxtapose two quotations that exhibit two very different attitudes toward the economic activity of mankind. The first is from St. Thomas Aquinas, who wrote that “…the appetite of natural riches is not infinite, because according to a set measure they satisfy nature; but the appetite of artificial riches is infinite, because it serves inordinate concupiscence….” (1) St. Thomas was here contrasting real economic goods – “natural riches” – with “artificial riches” – money and other surrogates for real wealth. The former serve us, they “satisfy nature,” and we desire only enough of them as we can reasonably use, for there is only so much stuff which any person can actually use, and if we acquire more than that, we must resort to devices such as renting storage bins in order to keep our extra and unnecessary possessions, something which in St. Thomas’ time happily did not exist. But even in the thirteenth century it was easier to store up money than actual physical things, and today this is incomparably easier, since bank statements and stock certificates take up very little space. But these sorts of goods can serve “inordinate concupiscence,” for there is a constant temptation to acquire and retain more than we really need or that can possibly serve any genuine human need.

My second quote is from the late Paul Samuelson, winner of a Nobel prize in economics, who wrote

An objective observer would have to agree that, even after two centuries of rapid economic growth, production in the United States is simply not high enough to meet everyone’s desires. If you add up all the wants, you quickly find that there are simply not enough goods and services to satisfy even a small fraction of everyone’s consumption desires. Our national output would have to be many times larger before the average American could live at the level of the average doctor or big-league baseball player. (2)

Here we have two opposed conceptions of the purpose of economic activity, one which is focused primarily on what is natural to humanity, which fulfills human needs, and the second which deliberately abstains from any moral consideration of human desires. If someone wants something, that’s all that matters. The economy exists to satisfy any and all desires.

Now I should note that Aquinas is not asserting that it’s only our basic needs for food or shelter or clothing that are natural. The purposes for which we need material goods can be broadly divided into two parts: first, the absolutely necessary goods, sufficient food, water, shelter, to keep the human race alive. But if we stopped there we would be like ants or bees. They also engage in work to provide for themselves these necessities of life. Human beings, however, are rational animals, that is, our capacities surpass the merely material level, and hence for us a proper human life is not limited simply to survival. We need objects of beauty, music, books, even, in some measure, devices and inventions that make life easier or save time and effort. Without these a properly human life is impossible or difficult. But all the same, St. Thomas sets up human nature as the standard against which man’s economic activity must be measured, whereas Samuelson simply takes each and every demand for a good or service as a given.

I trust I don’t need to belabor which of these two attitudes toward economic activity and material things ought to characterize a Christian, whether Catholic, Protestant or Orthodox. Holy Scripture itself is quite clear on this point:

…if we have food and clothing, with these we shall be content. But those who desire to be rich fall into temptation, into a snare, into many senseless and hurtful desires that plunge men into ruin and destruction. 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. (I Tim. 6:8-10)

In Centesimus Annus St. John Paul II speaks of “the right to possess the things necessary for one’s personal development and the development of one’s family” (no. 6). And in the same encyclical he writes in another passage (no. 36),

It is not wrong to want to live better; what is wrong is a style of life which is presumed to be better when it is directed toward “having” rather than “being,” which wants to have more, not in order to be more but in order to spend life in enjoyment as an end in itself.

Now I realize that it’s not always easy to say how much is “necessary for one’s personal development and the development of one’s family.” In fact, there is apt to be disagreement about what is a reasonable standard that satisfies nature. And to some extent such disagreement is to be expected, for it’s impossible to calculate such a standard with mathematical exactness. But the important thing, and certainly the first thing to do, is to recognize that mankind’s economic activity and the products that result therefrom do have a purpose, to “satisfy nature,” and not to satisfy simply any and every desire prompted by the wish “to spend life in enjoyment as an end in itself,” so that everyone can live in the manner of a major-league baseball player. At some point, any sensible person will have to admit that the needs of nature have been satisfied, and that anything beyond that is simply excess.

Now, If we accept what I have said so far, what logically follows? We can apply the teaching of St. Paul and St. Thomas and St. John Paul not only to individuals and families, but also to societies.  I am aware that many individuals and families do seek in some degree to acquire and use material goods according to these stipulations and warnings. In a society such as ours this is not easy to do, and, as I just said, it’s often very difficult to decide what is a reasonable standard of living that will satisfy nature, especially since American society can make it difficult to live a countercultural life. In this regard I will note only two things.

First, as Benedict XVI wrote in his encyclical Caritas in Veritate (no. 37), “every economic decision has a moral consequence.” Since the kinds of stores we patronize, the kinds of products we buy and use, have consequences that are both economic and environmental, therefore they have both moral and spiritual consequences for each of us. Someone who desires to “live at the level of the average doctor or big-league baseball player” is making decisions which not only have moral consequences but unavoidably shape that person’s soul according to a particular pattern. A lifetime of our economic decisions will determine whether we have shaped ourselves according to the image of Samuelson’s economic man or to the opposite pattern suggested by Holy Scripture and the writings of the saints.

Secondly, just as it’s very difficult for someone raised in a society saturated by pornography and sexual promiscuity to realize what a sane and healthy sexuality is, so it’s hard for us who were raised in a commercial society, a society which more or less makes riches and material goods an idol, to realize what a sane attitude toward work and material goods is. In both cases we have to strive, using all the means of grace available, to form sound judgments. But now I want to turn our attention to the question of society as a whole, that is, about how a society that seeks to orient its productive activity toward satisfying nature might conduct itself.

The following is a description, from Richard Tawney’s seminal book, Religion and the Rise of Capitalism, of the outlook of Medieval Europe toward work and material goods.

Material riches are necessary; they have a secondary importance, since without them men cannot support themselves and help one another; the wise ruler, as St. Thomas said, will consider in founding his State the natural resources of the country. But economic motives are suspect. Because they are powerful appetites, men fear them, but they are not mean enough to applaud them. Like other strong passions, what they need, it is thought, is not a clear field, but repression. There is no place in medieval theory for economic activity which is not related to a moral end, and to found a science of society upon the assumption that the appetite for economic gain is a constant and measurable force, to be accepted, like other natural forces, as an inevitable and self-evident datum would have appeared to the medieval thinker as hardly less irrational or less immoral than to make the premise of social philosophy the unrestrained operation of such necessary human attributes as pugnacity or the sexual instinct.

And he continues with his description of medieval economic ethics:

At every turn, therefore, there are limits, restrictions, warnings, against allowing economic interests to interfere with serious affairs. It is right for a man to seek such wealth as is necessary for a livelihood in his station. To seek more is not enterprise, but avarice, and avarice is a deadly sin. Trade is legitimate; the different resources of different countries show that it was intended by Providence. But it is a dangerous business. A man must be sure that he carries it on for the public benefit, and that the profits which he takes are no more than the wages of his labor. (3)

And another historian wrote along similar lines,

We can, therefore, lay down as the first principle of mediaeval economics that there was a limit to money-making imposed by the purpose for which the money was made. Each worker had to keep in front of himself the aim of his life and consider the acquiring of money as a means only to an end, which at one and the same time justified and limited him. When, therefore, sufficiency had been obtained there could be no reason for continuing further efforts at getting rich,…except in order to help others. (4)

The questions I’d like to consider now concern how a truly Christian society would implement these ideals. Many people, certainly most Americans, would think that adherence to such standards must be something purely voluntary. At most, the Church would seek to persuade people of its desirability via her preaching and catechesis. And certainly that is the first thing to be done, to create a social consciousness that the pursuit of riches beyond what one needs is both criminal and stupid. Criminal because it helps create a society that upholds false ideals and corrupts all of our souls, stupid because it detracts from what life in this world is about, and above all, because it makes more difficult our attainment of eternal life. I am not asserting that it is a sin simply to be rich, but I do assert that riches are almost always a near occasion of sin, and therefore we’d better be pretty sure we have a genuine justification for our riches. And especially do we need a very good justification for seeking more riches if we already have enough so that the demands of nature are satisfied.

But there is more. You’ll notice what Tawney said in the passage I just quoted, “At every turn, therefore, there are limits, restrictions, warnings, against allowing economic interests to interfere with serious affairs.” A Christian society will not be content to simply use moral persuasion in order to correctly orient out attitude toward work and material goods. If nothing else, such a society will make it rather hard for someone to get rich. It will certainly do nothing to facilitate such acquisition of riches, and it will try to structure its laws, tax code and general economic arrangements so that it is easy to earn enough to support one’s family, but hard to do more.

Many are familiar with the taxation scheme suggested by Hilaire Belloc in his 1936 book, The Restoration of Property, according to which any enterprise which exceeded a certain size would be taxed at such a high rate that no one would expand his business beyond a modest size. I know that many people have an instinctive violent reaction against such proposals, but those who do should ask themselves a couple questions. How is this an unjust restriction? How is anyone’s true good harmed by such laws? Until recently we as a society in the United States saw this clearly with regard to that other great human appetite, sexual satisfaction. Within the lifetime of many of us divorce was in most states difficult to obtain, pornography was strictly regulated or even prohibited, homosexual activity illegal. And laws on the books even forbade adultery, even if they were rarely enforced. Even today prostitution is illegal in nearly every state.  We justified these restrictions by saying that such activity was contrary to both the natural law and the revealed law of God, harmful to individuals and to the social order, and that therefore the free choices and desires of individuals could justly be limited in such matters.

If we are serious about conforming our lives to the norms of morality with regard to money and property, the same argument applies: “those who desire to be rich fall into temptation, into a snare, into many senseless and hurtful desires that plunge men into ruin and destruction.” The disordered striving after riches is as hurtful to the common good as is the disordered striving after sexual pleasure.  Both material wealth and sexual pleasure are true goods, but they are goods only in their rightful places. No one’s genuine freedom or legitimate rights are infringed upon if the pursuit of wealth is hindered and directed toward legitimate channels, even by use of state power, just as no one’s genuine freedom or legitimate rights are infringed upon by legal restrictions on disordered sexual behavior.

There is a wonderful quote from G. K. Chesterton in What’s Wrong With the World that juxtaposes so well these two areas of human behavior.

I am well aware that the word “property” has been defiled in our time by the corruption of the great capitalists. One would think, to hear people talk that the Rothchilds and the Rockefellers were on the side of property. But obviously they are the enemies of property; because they are enemies of their own limitations. They do not want their own land; but other people’s…. It is the negation of property that the Duke of Sutherland should have all the farms in one estate; just as it would be the negation of marriage if he had all our wives in one harem. (5)

If it is proper to prevent the Duke of Sutherland from obtaining all of our women as his wives, why is it not proper to prevent him from obtaining all the property as his own?

Let me go one step further, or one level deeper, in our exploration of this topic. Most people who would object to what I just said about the use of social or legal power to restrict our acquisitive appetites, would object, I think, because, usually unknowingly, they hold an idea about social or political authority which is grounded not in classical philosophy or Holy Scripture, but in the Enlightenment of the 18th century, most notably in the writings of John Locke. Government, according to this notion, is merely a necessary evil, necessary because of mankind’s tendencies toward anti-social conduct. “If men were angels,” wrote James Madison in Federalist no. 51, “no government would be necessary.” Implicit in such a notion is the idea that man’s natural state is a-social, and that every restriction we accept as part of living in society is a restriction on our natural freedom, justified usually by the benefits which sociey brings, but still, something essentially unnatural, something which inhibits our natural freedom. Most political discourse in the United States, of both liberals and conservatives, simply assumes such an understanding of freedom and society.

Here again, though, we find Thomas Aquinas teaching a different view. In the Summa Theologiae (I, q 96, art 4) he asks whether there would have been subordination of man to man in the state of innocence, i.e., without Adam’s fall into sin. And he answers his question clearly, saying Yes.  Although there would not have been the domination (dominium) characteristic of the slave (servus), who is “ordered to another,” there would still have been the kind of subjection proper to the free man, when someone directs him to his own good or to the common good. And the primary reason given by Aquinas for this is because man is “naturally a social animal” and “social life cannot exist unless someone presides who aims at the common good.” In other words, according to Aquinas, even if our first parents had never sinned and lost the state of original justice, we still would have required a sort of government, a government that would not have needed to punish anyone, but was still there to coordinate and direct our efforts toward the common good.

I submit that this difference between St. Thomas and Locke manifests the fundamental error of almost all political discourse in the Anglo-Saxon world, especially the United States. But Locke is simply wrong: man is by nature a political animal, our natural state is one of community, with all the necessary restrictions that such community requires and implies. This is not to justify tyranny or to deny that personal political freedom is a good, but it is to insist that such political freedom is far from the highest political virtue.  Justice is more important than freedom, and in fact, any understanding of freedom which regards it as primarily the right to do anything which one pleases, is a disordered understanding. Just as marriage vows do not limit our true sexual freedom, but actually allow for human sexuality to flourish in proper freedom, so society, including government, is not a restriction on man’s legitimate freedom, but the precondition for a true flourishing of such freedom. We do not trade a certain amount of freedom for a certain amount of security, as in the Lockean myth of the social contract, but we are placed by God and nature into society, without which freedom would be a meaningless exercise in randomness.

As a result, then, if a society attempts to channel its economic activity toward the common good, it in no way infringes on real economic freedom. Rather it provides the necessary means by which economic activity can attain its true end: not the goods and services that satisfy everyone’s consumption desires, but the appetite for natural riches which according to a set measure satisfy nature. This is true Christian wisdom, this is the teaching of the Church, the command of Holy Scripture, and the sure way toward our eternal salvation.

Notes:
(1) Summa Theologiae, I-II, q. 2, a. 1 ad 3.

(2) Microeconomics, 17th ed., 2001 p. 4.

(3) Richard H. Tawney, Religion and the Rise of Capitalism, New York, 1926, pp. 31-32.

(4) Bede Jarrett, Social Theories of the Middle Ages, pp. 157-158.

(5) Part I, chapter 6.

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Reasoned Voting

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

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Keeping in mind that this site does not engage in party politics, I still feel prompted to share something in the context of the up-coming election in the U.S. Although most of this will discuss the political climate in the U.S. I also send this out to any readers “across the pond” in the U.K. as they approach the very important vote on whether or not to remain in the E.U. Distributism is based on certain philosophical principles which originate in a scientific view of philosophy. It has become all too common in our political environments to use fear tactics to try and convince people to vote a certain way. These tactics can sound reasonable, but are truly an attempt to get you to abandon reason. Therefore, I want to present certain principles of reason as I think they apply to deciding how to vote.

The philosophical principles of reason which come down to us from the great minds of the past like Aristotle and Saint Thomas Aquinas are those precepts which we must follow when applying reason to anything. The failure to do so will ultimately lead us to accepting absurd things. They are employed by all of our natural sciences. They are employed by all of our ethical reasoning. They are crucial to fulfilling our capabilities as rational beings. Unfortunately, some people throw around some of these principles in an incorrect or incomplete manner. Because we no longer learn true philosophy (even philosophy students seem to spend more time learning about philosophers – both good and bad – than about the actual science of philosophy) many people are ill equipped to see that these are false applications.

“Choosing the lesser of two evils”

This is a frequent claim used as an election draws near. In the U.S. It has long been used by pundits for the Republican party and has recently been used more by those of the Democrat party. The failure to nominate a candidate their voting base can really support has forced them to use this claim. They essentially say, “we know you think our candidate is bad, but he’s not as bad as their candidate.” This call to choose the “lesser” of two evils is usually followed by the next claim.

“A vote for x is really a vote for y”

This is a double-attack on your reason. Not only is your decision not to vote for their candidate or policy wrong, but you will somehow be guilty for the fact that the other candidate or policy won. In essence, the claim is that by voting other than the way they want, you are actually choosing what (presumably) neither of you want. This is used by both of the major parties in the U.S. as an attack against anyone who considers a third party option. It is based on the premise that the candidate or policy you want has no chance of winning, which leads us to the next claim.

“Don’t let the best be the enemy of the good”

Politics is the art of compromise, so why don’t you just compromise and vote for us? Since your position or candidate has no chance of actually winning, you should back down a little and vote for us. By doing so, you’ll get at least some of what you want instead of “wasting your vote.”

All of these arguments sound reasonable, but are actually not so, and a serious look at the principles of reason will reveal why.

When people use variants of the “lesser of two evils” argument, keep in mind that this is only a partial statement of the actual principle of reason. The actual principle is, “If one cannot avoid doing one of two acts, from both of which will follow an evil effect, one is obligated to choose the lesser of the two evils.”  Note that the premise here, which is fundamental to the entire principle, is that you cannot avoid doing one of the two acts. For this to apply in the context of an election, you would have to be constrained to only choose one of two candidates and have no other option – you must vote and you must vote for one of the only two candidates presented to you. Is this the actual case in our elections? Do you really only have two choices? I am not speaking of the so-called “practical” choices, by which is meant those choices generally accepted as having a chance to win. If there is in fact another option, then you are not limited by the constraint of the principle, so it simply doesn’t apply. Actually, if one were to insist on applying it to the case of an election, a reasoned expansion of this principle would be that, in the case of more than two choices, you must choose the one from which will follow the least evil effect. Don’t forget that, when electing candidates in the U.S., there is usually a blank line where you can write in the name of a better choice than the ones being presented.

This leads us to the next claim. Is it true that choosing something other than the two “practical” choices is equivalent to choosing one of them? The answer is obviously no. They say that the only choices are A and B because C has no chance of winning. Therefore, if you vote for C, you are effectively giving the election to whichever option they don’t want from the choices of A and B. This is nonsense. They are trying to shift the blame to you for the fact that they didn’t present a candidate you would want to support. They are trying to blame you for all the others who also didn’t want to support their view. This seems to be a mangling of the principle which states, “Things that are identical with a third are identical with each other.”Your actual responsibility in an election is to vote for the candidate or position you think should win. What you vote for represents what you choose regardless of the outcome. You are not to blame for the votes of others.

This leaves us with the only argument that actually deserves any consideration. “Don’t let the best become the enemy of the good” is inherently incorrect, but it can actually be applied in a way that doesn’t compromise the principles of reason. However, this argument must be properly understood in the light of those principles to determine if it actually applies to the current choices.

First of all, using the terms employed, the “good” must always be directed toward the “best” or it fails to be good. (“Every agent acts for the sake of an end.”) Therefore, one can accept the merely “good” for now, but only on the condition that is a movement toward the “best.” If this is not the case, then you would be violating the principle which states, “It is never lawful to reject a greater good for a lesser one.” The lesser good can only be accepted as a means to achieving the greater good, and never as an end itself. This is the essence of political compromise. Realizing that achieving the “best” may not currently be politically possible, achieving the “good” at this time with the intention of continuing to work for the “best” may be prudent.

Another consideration for this argument must be kept in mind. At what point does continual compromise from the “best” end up being an acceptance of the merely “good?” If you keep voting for an inadequate candidate on the grounds that “we can’t let the other party win,” what incentive will your party ever have to stop presenting inadequate candidates? If you continue to agree to legislation that falls short of what you really want, what are your chances of ever getting the legislation you really want? The pundits accuse those who choose to make a stand with their vote of wasting it, but the purpose of voting is to try and get the change you want. What vote could be more wasted than when you vote for something you don’t want?

At what point do we wake up to the realization that the political machines of these parties are actively engaged in saying what their base wants to hear just to secure votes, but don’t actually mean those things? How many times to we have to see them fail to even try to accomplish what they tell us they will before we accept the fact that it really isn’t all the fault of the other party? Remember that this sort of compromise is only acceptable if it is both prudential and will actually help to move from the “good” to the “best.”

A final consideration on this kind of compromise is that we have to examine the risks of the other side of the compromise. It is not enough to look at what we’ve gained, we need to look at what we’ve potentially lost through the compromise.“It is never lawful to take a risk with the right of another.” “It is never lawful to do an evil act to accomplish a good end.” “A good intention does not justify the use of an evil means for the end in view.” If your side of the compromise would fall into any of these categories, then the compromise cannot be made. Remember that your vote represents you. Your beliefs and values. “All human acts must tend towards the good of man.”

I am also reminded of something posted by Ryan Grant. There is another claim that says that you have no right to complain if you don’t vote. Of course, this is also nonsense. The officials of government have a moral responsibility in the exercise of their office. This is true even if those officials are not democratically elected. Citizens always have the right to complain about injustices regardless of how those officials came to hold their offices. In some election campaigns, there were movements of people who wanted a ballot option for “none of the above” as a way of indicating their dissatisfaction with all of the candidates. However, if you believe that elections are useless, because of the corruption of the political parties, the media, the voting process, or the ballot counting process, then why should you bother to vote even to say “none of the above?” Justice in government is a human right, not one just for those who engage in the system of voting.

Finally, I would like to point out how ironic it is when I hear Republican pundits heap scorn on those who would even consider a third party candidate. They seem to forget that their party was once the upstart third party in a political climate dominated by two other parties. The “Grand Old Party” is significantly younger than its chief rival. Why is it that they don’t address the growing popularity of third party candidates among their voter base? The Republican party was propelled to electoral victory because the voting public got sick and tired of the fact that neither of the major parties of the time were putting forth candidates and positions that truly reflected their views. Well, the same thing is happening today in both of the major parties. It is common for pundits of both parties to lay the blame for an electoral loss on the votes “stolen” by a third party candidate. The truth is that these votes were not stolen because they didn’t “belong” to any candidate or party. They never “owned” our votes and they shouldn’t take them for granted. If they want our votes, then they should present candidates and positions we want to support. If they want to keep our votes, then those candidates better use their time in office actually trying to accomplish what they were elected to accomplish. In other words, voters need to remember that parties and individual candidates need to earn our votes, and need to keep doing so. If they fail to do this, then why shouldn’t we look elsewhere and be proud of doing so?

In their attempts to convince others to vote for a particular candidate, many people are using arguments that invoke the fundamental principles of reason from the philosophical sciences. Unfortunately, many of these invocations use these arguments in an improper way. I addressed some of the most common in a recent article titled Reasoned Voting. I recently came across another use of a principle of reason in support of voting for a particular candidate which, in the interest clear reasoning, I would like to address in this follow-up to that article. The principle is known as “Double-Effect.”

The main goal of these articles is not to convince or dissuade people about voting for a particular candidate or party. It is to foster a better understanding of the principles being invoked because an improper use of these principles can have bad results.

“A small error in principle can lead to a big error in conclusion.”

Doing something, even something good, for a bad reason is not something we should be willing to accept because that would be acting contrary to our nature as rational beings. Therefore, even if you continue to support a given candidate, it should not be because of a faulty application of the principles of reason.

Where the principle commonly called “the lesser of two evils” is used to decide between two choices, the principle of double-effect only applies to a single choice. It is the method used to determine if a particular choice can or cannot be made. Thus, we have seen questions like “can a Catholic vote for Trump/Hillary?” Some commentators have attempted to answer these types of questions pertaining to the upcoming election using the principle of double-effect, but I believe these attempts are a misapplication of the principle.

The principle of double-effect answers the question of whether or not a specific single act is permissible when it is known that the act will produce not only a good, but also a bad effect. In the context of the political election it is proposed that, because we know a candidate will do both good and bad things, double-effect applies to the question of whether or not we may vote for a specific candidate. However, I believe that this is a misunderstanding of the principle as it applies to the question at hand.

The principle of double-effect addresses the following question.

Given an act that that produces two effects, one good and one bad, can we do the act?

 

To determine whether or not a particular act is permissible, the principle of double-effect applies four conditions to the act and its effects to arrive at an answer. If all of the conditions are met, then the principle of double-effect applies and the act may be done. The conditions which must be met for double-effect to apply are these.

 

The act itself must be good, or at least indifferent.
Both effects must proceed immediately from the act.
Only the good effect may be intended.
There must be due proportion between the good and bad effects.

The first two conditions determine whether or not double-effect applies to a particular act. If not, the act must be examined in light of other principles of reason. The second two conditions answer the question of whether or not an act to which double-effect does apply may or may not be done.

A fairly common example of how the principle is legitimately applied is the question amputating a limb infected with gangrene. Amputating the infected limb will remove the threat to life, but it will also result in the loss of the limb. Can we amputate the limb?

First: The act is amputation of the limb. This act is indifferent because the goodness or badness of it depends on the end toward which it is directed.
Second: Both effects will proceed immediately from the act. The moment the act is performed, both the threat to life and the limb will be removed.
Third: We only desire the good effect. If we could remove the gangrene without doing harm, or with less harm, we would do so.
Fourth: The good of preserving life is greater than the evil of losing a limb.

From this we can see that the principle of double-effect applies to this case, and that the reasonable conclusion is that we may amputate the limb.

Those who attempt to apply this principle as an argument for casting your vote for candidate X seem to do so on the basis of campaign promises. Even though it is likely that X will do some things we consider bad, X has promised to do other things we believe are good. We believe there is due proportion between the good and the bad that X will likely do while in office. Therefore, they conclude, the principle of double-effect shows that we can vote for candidate X. I will explain two reasons why I believe double-effect just doesn’t apply to the question of your vote. Note that I am only addressing the question of whether or not double-effect applies to the question of your vote, there are certainly other factors that do.

Double-effect applies specifically to “an act that produces two effects, one good and one bad.” We are examining the effects of specific individual act, so the act in question must clearly be the cause of those effects. In the case of amputation, both effects are produced by the act of amputation – they are both unavoidable effects of the act and the act is clearly the cause of those effects. Can we say the same thing about your vote? Is your vote the cause of both the good and the bad that candidate X will do while in office? The answer is obviously no. You cast your vote based on various things like campaign promises and position statements, but your vote does not actually cause any of those things to actually occur. Whether candidate X keeps or breaks every campaign promise, whether X does exactly what you expect or the opposite of what you expect can not reasonably be attributed as an effect of your vote. It is an effect of the free will of the candidate while in office.

I know that some will argue that your vote is the cause of the candidate getting elected and therefore, by extension, it is the cause of what the candidate does in office. I maintain that double-effect still doesn’t apply even if we accept the argument. The principle of double-effect states that both effects must proceed immediatelyfrom the act. This is clear in the case of amputation. Both effects are immediate. They happen simultaneously and there is no delay between the act as the cause and its effects. In regard to your vote, none of the effects can be considered to proceed immediately from your vote. Even if we were to say that the effects in question will take place over a period of time, they don’t even start to happen when you cast your vote. The candidate won’t even get sworn in for two months after you cast your vote. X could refuse to be sworn in or die before doing so. Amputation guarantees that both the limb and the disease will be removed. Your vote does not even guarantee that candidate X will win the election. Clearly, double-effect does not apply to the question of your vote.

In the end, as stated in the previous article, you must exercise your prudential judgement. Faced with the fact that the candidate is not ideal, is it prudential to vote for X rather than one of the several other available candidates? Is it prudential to (once again) compromise on what you really want and vote for X as a step toward a greater good to be more fully achieved in the future? There are many factors to consider for this important decision. I hope that these articles will help clarify the good and bad points some are making on the subject. These decisions are unfortunately difficult and complex. The principles of reason exist to assist us in understanding the factors that go into making a good decision. It does not help if our thinking gets muddled by the improper application of these principles, even if those doing it have the best intentions.

Originally posted on June 16, 2016 (part one: see here) and August 18, 2016 (part two: see here).

The Process of Subsidiarity

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

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Many critics of distributism claim that what we want to achieve would require the expansion of state power and that we really want an all powerful state. What we actually advocate is the decentralization of government power. We want to distribute the various powers of government as close to the local level as can be practically achieved. This is because we promote the principle known as “subsidiarity.” Subsidiarity states that,

“A community of a higher order should not interfere in the internal life of a community of a lower order, depriving the latter of its functions, but rather should support it in case of need and help to coordinate its activity with the activities of the rest of society, always with a view of the common good.”                                      – Pope St. John Paul II

That sounds great, but how would it work?

Subsidiarity goes beyond the typical “states’ rights” argument put forward by the political conservatives of the United States of America. While some in the USA who argue for states’ rights might regard it as a necessary first step to further decentralization of government authority, others voice a “let the states decide” attitude which seems to indicate that their only real objection to certain government laws is the fact that it is the federal government imposing them. Their statements suggest that the same laws would be fine if imposed at the state level without any further decentralization of authority. Listening to some of their arguments seems to give the impression that they don’t really recognize that the centralization of power, even to the state government, makes government less democratic. The more power gets centralized, the more undemocratic the government becomes. They only seem to be concerned when the exercise of power crosses the line from state to federal authority. In reality, however, it is only at the local level that the average citizen really has a voice. Therefore, the more localized the authority, the more democratic the society.

The sad truth is that so many of us have become too accustomed to the idea that the higher levels of government is where problems really get solved. We pay more attention to state and federal elections than to local ones precisely because the authority which naturally belongs at the local level has been usurped by state and federal governments. “I will write my congressman,” and “I’ll take this all the way to the Supreme Court” became the reaction, and the reality, of how we view the political process. While we in the USA believe ourselves to be a bastion of democracy, we have allowed (and assisted) the gradual stripping of our democratic voice. This has gone beyond the making of our laws and the defending of our rights, but even to how we assist those in need. As a society, we have gotten to the point that we automatically look to higher and higher levels of government to resolve even local issues. It is sad, but it seems that most people believe that the higher the level of government, the broader its scope of authority.

Distributism, on the other hand, argues that the higher the level of government, the narrower its scope of authority. The question is how this can be applied in a practical and workable way. While there may be variations in application due to cultural differences in different regions, a basic outline can be presented as a starting point. The foundation of this outline is to understand the “orders of society” and their relationship to each other.

The “lowest” order of society is the family, not because it is the least important but because it is the most. It is the very foundation of society. Above that are religious, occupational and social groups which are free institutions for the mutual support and benefit of their members. The remaining “orders of society” would refer to the different levels of government starting with the local community and moving up from there, each fulfilling only those functions that, by their nature, cannot be fulfilled by the level immediately below it. From the distributist perspective, local issues should be handled as locally as possible. Even if an issue exists across a larger region, each locality should be left to direct how to handle it within its jurisdictional boundary to the greatest extent possible, even if assistance is needed from higher levels of society. This is a fundamental concept to understand about subsidiarity.

When an issue arises that needs to be addressed, the level of society where that issue arises is the natural point where the issue should be addressed. In cases where it cannot be addressed there, the members of that level would petition the next higher level of the orders of society for assistance. Therefore, if a family is in financial need and needs immediate assistance, they should naturally turn to those societal organizations like church, work association (guild) or other social organizations for assistance. If a particular vocation needs a school to provide training in the skills it needs, it should first look to the members of that vocational guild. If it cannot provide for itself, it can look to other guilds of the same vocation, or even discuss combining resources with other guilds to establish schools to meet their combined needs.

It is only if these first attempts cannot resolve the issue that governmental bodies should get involved, and then only by petition of the immediate lower level. If, for example, a lot of families in the community needed assistance and churches and other local associations found themselves unable to adequately provide that assistance, they could raise the issue to the city or to related organizations in other areas. If a city was not able to address an issue, it could ask nearby cities for assistance or raise the issue to the county. In this way, each level of society would render assistance based on the need asserted by the level immediately below it, and that assistance would not usurp any functions of the lower orders of society even if the higher order needs to coordinate the activities of the lower orders due to the nature of the situation at hand, like a natural disaster.

This process keeps as much authority as possible at the local level and, by doing so, preserves the ability of citizens to effectively curtail the usurpation of authority by higher levels of government. Because the greatest level of influence is the most local level, and because the individual citizen’s vote has its greatest influence at the most local level, this process preserves the greatest level of democracy for all.

Distributism vs. Globalism

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

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There has been a tendency over the last several decades toward globalism. This goes beyond the so-called “global economy,” with its free trade deals favoring international banks and corporations. This trend has resulted in the formation of international bureaucracies imposing standards, if not laws, on otherwise sovereign states. While there was always some resistance to this tendency, it has nevertheless progressed to the point that there is now a growing movement of outright rejection. What was initially presented as a path toward peace and harmony is increasingly viewed by common citizens as a growing threat to their freedom and way of life. What is the position of distributism in relation to the idea of globalism?

Globalism is the idea of those who believe they should help direct the development of social, cultural, technological, or economic networks around the world through political influence, and who desire the establishment of international political bodies to govern on an international level. The idea is that, by having multiple people of various cultural and economic backgrounds come together to discuss issues, problems can be resolved effectively and peacefully. Since the resolutions of these bodies can only be effective if they are actually binding, these organizations have to acquire legally recognized legislative authority. This is gladly accepted by the promoters of these organizations who seem to assume that those who run these international legislatures will always see things the same way they do. They hardly ever seem to consider what happens if they don’t. They also don’t seem to care if the policies and laws they desire to establish are actually wanted by the people who will end up being subject to them.

The problem with placing such a wide-ranging authority in the hands of a political body with no political or cultural attachment to the people is that people from different countries have different cultures and customs. They are rightfully proud of them and reject efforts by “those who know better” to toss them aside in the wake of the globalist view of how things should be. They want their own way of doing business, of farming and manufacture, of protecting public health and the environment, of securing civil liberties, of running their schools, of deciding what should be taught in those schools and of deciding how to integrate immigrants into their society. They do not want people who do not share their views of culture and custom to make such decisions for them, and this is precisely what the globalists want to do.

The globalists “negotiate” a one-size-fits-all agreement which actually only appeals to those whose views have a majority representation in the international political organization. In other words, only the globalists really get to decide. This was a significant part of the movement in Great Britain to leave the European Union. The European Union started as a “common market” to work together to help the economies of the separate European countries. It has evolved into an international authority with its own flag, its own anthem, and its legislature makes laws that override the national and local laws of its member states. Even when the decisions of globalist organizations are not legislatively binding, their existence creates a great political pressure for states to comply even if the citizens of the state oppose them. For example, the United Nations not only told Ireland, a sovereign state, that it should change its abortion laws. The politicians in Ireland’s government, led by the U.N. instead of their own people, put it up for a vote. It was resoundingly defeated because the people of Ireland don’t want it. The United Nations even told the Catholic Church to change its religious doctrines according to its view of “child welfare.” There have been cases where globalist organizations have used economic pressure, like denying aide, to try and coerce countries to adopt unwanted policies. By moving the decision-making power further and further away from the people, the political process ultimately becomes less democratic as individual voices become less able to influence decisions that impact their daily lives.

Distributists, on the other hand, would not only promote a country’s sovereign right to direct its own affairs, we also promote that right for political regions and local communities within a country in accordance with the principle of subsidiarity.

“A community of a higher order should not interfere in the internal life of a community of a lower order, depriving the latter of its functions, but rather should support it in case of need and help to coordinate its activity with the activities of the rest of society, always with a view of the common good.”

This view provides a foundation for people to preserve their culture and customs and to direct their own lives, and does so while still making room for national assistance when and where needed. It is not an “isolationist” position. It is a view that does not exclude the idea of international cooperation in addressing wider issues, but it does not include relinquishing of sovereignty to permanent international organizations as part of the process.

The world is filled with various cultures and customs, and the people from those cultures who share those customs either love them or will change them on their own. There isn’t a one-size-fits-all way of life and of doing things. The purveyors of globalism, even if they don’t start out to do so, ultimately trample on the rights of the people they claim to be helping. The people who say we should “celebrate diversity” are the ones who end up trying to force everyone to be the same. The people who shout the loudest about tolerance end up being the most intolerant of all. They believe they are going to do good, but they end up establishing the very kind of repressive government they claim to hate, using the very tactics they villify. In the end, even though they want peace, they will cause rebellion because the people they claim to be helping will resent them for being oppressive overlords.

Futures Markets and the Absurdity of Capitalism

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

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Capitalism is often celebrated by its supporters as the only economic system that can really deliver the goods, the only way of arranging our economic activity that has or that can lift mankind out of its supposedly otherwise inevitable poverty. And it is the case, one must admit, that capitalism does act as a remarkable spur to the manufacture of stuff, all kinds of stuff, sometimes useful, but just as equally useless or even harmful – anything, in fact, that the producer thinks can be marketed. But production of goods, even useless goods, is not the hallmark of capitalism. Rather capitalism, understood as the separation of ownership and work, has as its unique attribute not production, but selling, even, as we are about to see, selling of things that really do not exist.

The human race has always grown or otherwise gathered food, and there has probably always existed some kinds of exchange. But the growing or obtaining of food and the exchange of one desired object for another was always seen as a subordinate part of the life of the human race. Obtaining food was for the sake of living, exchange was for the sake of living better. But with capitalism this common-sense relationship of means and ends is very often perverted. Now all production is for the sake of exchange, social life becomes subordinated to the processes of production and exchange, and they in turn become subordinated to more exotic economic practices. This is because the capitalist imperative is always more sales, more profit, more speculative ways of making money, without any inherent limit or even a notion of what all this activity is for, except for the enrichment of those who own or control the economic processes. Capitalism as the separation of ownership from work creates a class of individuals who are removed from the production of useful objects and who regard the objects produced as primarily commodities to be sold, rather than useful goods to be consumed. Hence the imperative for more sales, ever increasing profits and market share, regardless of demand, because there is no natural limit, no end for which one is striving and with which, when obtained, one is satisfied. Let us look at the interesting example of the futures market in grain and see what we can learn from it as to the nature of the capitalist approach to organizing an economy.

In his book, Nature’s Metropolis: Chicago and the Great West, William Cronon discusses among other topics how the grain trade gave rise to the futures’ market in agricultural products. This account shows the absurdity of economic activity divorced from any rational end, and eventually even from a real product, the purposeless kind of economics fostered by capitalism. As long as something makes money for those who own or control it, capitalism cares nothing for whether the activity actually contributes anything toward meeting mankind’s real needs for goods and services.

Originally, as has generally been the case with mankind, grain grown on the prairies of Illinois and neighboring states was a means of feeding the farmer, his family and his near neighbors. But as it became an item to be shipped and sold, and eventually turned into a commodity future at the Chicago Board of Trade, we can see the transformation of a human and natural object into the abstraction of a commodity, something regarded as merely a means of profit.

A certain amount of grain trading and shipping existed from the early 19th century using water transportation. But this was slow and awkward and did not reach every place. Before there could be a transformation in the understanding of grain, there had to be a more efficient means of transportation. This was provided by the railroads, which were built mostly to facilitate the capitalist imperative to totally commercialize every aspect of life. If people had thought of grain as primarily a food to be consumed pretty much where it was grown, then the huge railroad network of the Mid-West would probably never have come into existence, since the existing modest means of transportation would have sufficed. Thus to extend and fully implement the capitalist transformation of wheat from a food into a commodity, the railway system first had to exist. The building of the railroad network transformed not only food exchange, but the environment, both natural and cultural of the region and the nation. Capitalism, then, both building upon and transforming the human vice of greed, powerfully shaped the entire culture and violently captured such pre-capitalist aspects of society as food production and local exchange and bent them to its purposes.

The existence of the railroad network enabled farmers to conceive of themselves not as growers of food for consumption but as producers of a commodity. Grain was shipped via the railroads to Chicago where it was held in large grain elevators for eventual shipment to the East coast. Originally the ownership of any particular sack of grain was retained by the farmer who harvested it. But naturally sacks of grain differed from each other significantly in quality. The storage of these sacks in grain elevators created a problem: “elevator operators began objecting to keeping small quantities of different owners’ grain in separate bins that were only partially filled…. To avoid that…, they sought to mix grain in common bins.” To do this required some system of grain standardization or grading. After such a system was created it became possible for the elevator owners to contract for sale of a certain quantity of a certain grade of wheat, with no reference to any particular sack of wheat actually existing anywhere. But because of the ever-changing price of grain, sellers and buyers soon realized that they could essentially bet against the future price by contracting in the present for sale or purchase of a definite quantity of grain at some future date, hoping that the price would increase or decrease to their benefit by the time of the actual sale. Ultimately this created the final absurdity:

…futures contracts [which] were essentially interchangeable and could be bought and sold quite independently of the physical grain… Moreover, the seller…did not necessarily even have to deliver grain on the day it fell due. As long as the buyer was willing, the two could settle their transaction by simply exchanging the difference between the grain’s contracted price and its market price when the contract expired. [They] could complete their transaction without any grain ever changing hands…. The futures market was a market not in grain but in the price of grain…one bought and sold not wheat or corn or oats but the prices of those goods as they would exist at a future time. Speculators made and lost money by selling each other legally binding forecasts of how much grain prices would rise or fall.

Grain went from being a means for feeding the population of farmers and others who lived nearby, to being centrally stored in bins in Chicago and shipped throughout the Northeast United States and into Canada, into being merely a symbol, but nevertheless a symbol that enabled speculators to engage in exchange. The contracts themselves have become a commodity to be bought and sold, but the contracts now have no necessary connection with any object of real economic value.

Despite its claim to be the only economic system that can produce sufficient goods to satisfy mankind’s needs, capitalism is really not interested in production at all, except as that can serve sales. It is interested in moneymaking, to be sure, but moneymaking by nearly any means that one can concoct. It might seem obvious, for example, that the financial sector would be a modest adjunct of the more primary economic activities of production or even exchange, sometimes necessary, often helpful, but always subordinate. But frequently someone can make more money by a merger or buyout, which often results in a decrease in real economic activity, than by actual production.

It should be obvious that mankind’s economic activity exists to serve our need for external goods and services. Thus economic activity must always be subordinate to the genuine needs and interests of humanity. But when economic activity is seen as basically a means of getting rich by almost any method, it is apt to become entirely divorced from meeting our real economic needs. The economy becomes essentially a private playground for those with enough skill or money to manipulate it in their favor. Pope Pius XI wrote with regard to such types of economic manipulation, “A stern insistence on the moral law, enforced with vigor by civil authority, could have dispelled or perhaps averted these enormous evils” (Quadragesimo Anno, no. 133). But this is too rarely the case in a capitalist, commercial society, where indeed as Karl Polanyi noted, “society itself becomes an `adjunct’ of the market.”

You can learn more about this issue here.

Distributism and Large-Scale Industry

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

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Thomas Storck’s recent article about the antagonistic relationship between owners and workers prevalent in capitalist enterprises included the following statement. “The activity of the Mondragon cooperatives in Spain proves that there is no reason why large-scale and highly technical industrial operations cannot be worker owned.” This sentence prompted a reader to respond with a request.

“Please provide a follow up article showing how this system works for Mondragon, their profit, employee take home, growth, etc…”

This response to that request will address two things. I will first provide the information requested, then I will address the case of Mondragon and how it does, and does not, relate to distributism.

Mondragon started as a technical college, founded by Father José María Arizmendiarrieta in 1943. Its first cooperative was established with 5 workers making paraffin heaters in 1955. Today, Mondragon is a cooperative federation comprised of over 250 companies and 74,000 workers operating in the finance, industrial, retail and knowledge sectors. Mondragon’s sales in 2014 were €10,985 million (US $12.48 billion). They put €145 million (US $164 million)  in research and invested €345 million (US $392 million). They have 15 technology centers, 1,676 researchers and have filed 479 patent families.

I don’t have specific information on employee take-home, but each company agrees to set its own wage ratio within an agreed upon range of 3:1 to 9:1. The average is 5:1, meaning that the highest paid person in a given company typically makes no more than five times what the lowest paid person in the same company does. The result of this is that the workers doing non-management jobs at Mondragon typically make 13% more than similar local jobs outside of its structure. Most workers make well above the minimum wage since they are employed in jobs requiring high levels of skill and technical training, Mondragon’s managers do earn less than those outside of its structure, but this is because they agree that Mondragon’s model is better than the typical corporate model.

Only 103 of Mondragon’s 260 companies are cooperatives. This in itself does not make it incompatible with distributism. I don’t have any details about the other 157 companies, like whether they are small, independently owned businesses. The ideal of distributism is that everyone own the capital used to earn his living, but we accept that this ideal may never be fully achieved. Some people may just prefer prefer to be employees, or may have to work as employees for some time before they can become owners. Distributism does not require that every shop be a worker owned cooperative, but those that are not would tend to be small local shops, and I don’t know the extent to which this is the case for those Mondragon companies that are not cooperatives.

The original cooperative established with five members back in 1955 grew to become Fagor Electrodomestics, the largest company in Mondragon’s federation. The Fagor brand is currently present in 100 countries, employs more than 12,000 people in 17 countries and operates 16 factories in 3 continents. Due to mismanagement, it had to declare bankruptcy in October 2013. The economic articles from capitalist pundits seemed to hardly contain their glee at what they perceived as the fall of the greatest example that methods other than their own could work. The Economist declared that “one of the group’s key principles—of solidarity among its 110 constituent co-ops—has found its limit.” Actually, what had reached its limit was the federation’s willingness to extend another loan to prop up Fagor when it had no plans which would resolve its problems.

Before crowing so loudly, capitalist economists should have waited to see the reality of this commitment and how it compares to what happens when the typical capitalist enterprise goes bankrupt. The reality of Mondragon’s commitment to worker solidarity is revealed by what the federation actually did regarding the workers of Fagor. Mondragon’s social mutual, Lagun Aro, proposed a 1.5% raise in contributions from all members at the next General Assembly so it could provide needed unemployment benefits to displaced Fagor worker-owners. They received 80 percent of their salary while Mondragon identified new positions for these workers. Compare this to the layoffs we’ve all seen reported when large capitalist employers go bankrupt or have to restructure to avoid bankruptcy.

This clearly shows the dynamic vibrancy and resilience of the cooperative model even when operating with large-scale, multi-national, highly technical industrial operations. This is why various cooperative organizations, the p2p economic movement and distributists all can validly point to Mondragon as an example of how well the cooperative model truly works.

When it comes to distributism, however, my opinion is that we need to be more carefully nuanced when using Mondragon as an example. It has grown to a size and scale of operation beyond that which distributists actually promote and which goes against the preference for local or even regional economics to the international model touted today. We are not in any way against international trade, but individual corporations employing thousands in multiple countries seems to me to go against our economic model, and Fagor is an example of why. The description of how Mondragon handled the bankruptcy of Fagor should not be taken as a claim that it wasn’t an issue for the federation. The mismanagement of Fagor not only impacted its thousands of employees, but the entire Mondragon organization. The fact that it was able to come up with a solution that maintained its commitment to worker solidarity does not mean that this was an easy solution or that it did not put significant strain on the people or the finances of Mondragon as a whole.

In the past, Fagor might have been held by some to be the shining example of Mondragon’s success because it was the largest company with the most employees, but that is looking at the organization from a strictly capitalist perspective. What happened in the wake of Fagor’s bankruptcy shows that the many smaller cooperatives and the overall commitment to worker solidarity are the mark of Mondragon’s success. They helped to support Fagor with the loans it received before the final straw that resulted in its bankruptcy. They supported the workers displaced when Fagor failed. Democratically based worker solidarity is at the very heart of the cooperative movement, and also at the very heart of the guild structure distributists promote.

It is clear that the cooperative model works and this is why distributists propose this model for large scale operations, particularly those which only make sense at a more regional rather than local level. Of course, cooperatives also work at a local level and we promote that as well. 

I hope this article fulfills the request of our reader.

You can learn more about this issue here.

The Planned Dependent Community

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

“”Walmart didn’t kill the once-vibrant cluster of shops next to a railroad and a creek in the faded old coal town of Kimball, W. Va. — the disappearance of the mines had pretty well taken care of that already. But now that Walmart’s leaving, too, as one of 154 U.S. stores the company closed in January, the town might be snuffed out for good.”

This quote is from a Washington Post article on the circumstances some small towns were facing when Walmart recently decided to close 269 stores and lay off more than 16,000 employees. This prompted one reader of ours to ask how we can reach these types of communities. How can we present the idea of distributism to the people living in these situations as solution to their economic problems?”

You can learn more about this issue here.

Owners vs. Workers: An Eternal Law of Nature?

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

“A few years ago (November 2, 2013) The Economist magazine, that reliable organ of neo-liberalism that makes few bones about its idolization of material growth as the summum bonum of human existence and its consequent dismissal of anything, such as family life or cultural traditions, that might get in the way of such material growth, ran some articles about labor’s diminishing share of national income.

Over the past 30 years, the workers’ take from the [economic] pie has shrunk across the globe. In America, their wages used to make up almost 70% of GDP; now the figure is 64%, according to the OECD. Some of the biggest declines have been egalitarian societies such as Norway (where labour’s share has fallen from 64% in 1980 to 55% now) and Sweden (down from 74% in 1980 to 65% now). A drop has also occurred in many emerging markets, particularly in Asia.

Even these figures of 70% to 65% for the U.S. are misleading, for as the magazine notes in another article in the same issue, “among wage-earners the rich have done vastly better than the rest; the share of income earned by the top 1% of workers has increased since the 1990s even as the overall labour share has fallen.” So that, “the share of national income going to the bottom 99% of workers has fallen from 60% before the 1980s to 50%.” That is to say, the workers whose job title is CEO are gobbling up not just more money but a greater percentage of it.

All this is bad, opines The Economist, it’s politically dangerous “and it is producing a lot of predictably polarised debate.” Perhaps The Economist is concerned that such instability might derail the engine of wealth redistribution for the rich that doubtless is working well for so many of its readers. So what’s the cause and what can be done? The Economist calmly discusses certain explanations that have been offered – the “weakness of unions” for example – and rejects them, and suggests that “the likeliest culprit is technology” although “[s]ome economists also emphasize the role of globalization….” As for the remedy, well, let’s be sure that we “strengthen workers without ham-stringing firms. Growth, rather than employment protection is the priority.” Of course, “education and training” – that’s needed too. And don’t forget, a “cut in corporate tax rates” and “pension reform” [read: privatizing pensions and turning them over to the good people on Wall St.] and “more privatisation” generally. To its credit, The Economist does note that “income from capital…is often more heavily taxed” than labor income, and suggests that this difference be narrowed.

So here you have it, the world according to The Economist. What can a distributist say in response? In the first place, the fact that since about 1980 it’s been precisely the kind of neo-liberal policies which this magazine generally champions that have suspiciously coincided with the decline in labor’s share of income – this is never so much as suggested as a possible cause. Lower the corporate tax rate, lower taxes on the rich – these are still the neo-liberal catchwords and constitute nearly the entire economic program of many American politicians, despite the fact that doing so has produced exactly this kind of income inequality and been in part responsible for numerous broader social problems. Apparently it’s all because the rates haven’t been lowered enough. Eliminate corporate taxes, make the rich pay the same percentage of their income in taxation as the middle class – the flat tax – and, according to them, voilà, all our problems will be solved.

While no distributist I have ever heard of favors perfect equality of income or wealth, it is a fact that too great disparities of either not only lead to social problems, but are probable signs of injustice. The best way of eliminating such disparities is not via government transfer payments, necessary as those sometimes are, but through better access to well-paying jobs and the possibility of ownership of productive property.

Actually, for a distributist these two points, good jobs and property ownership, are not two separate issues, but the same thing – or at least should be. The defining note of capitalism is that some people will own the means of production and will hire others to work for them. (See Pius XI’s encyclical Quadragesimo Anno, no. 100.) Even if such a division can in theory be just, a distributist wants to ask, Why must this be so? Why must there be this divide between owners and workers? Why cannot workers and owners be the same persons, either individually or collectively?

Under the capitalist model labor is always an expense for the owner. Even if an owner has the best of intentions to pay just wages (and one can wonder how often this is the case), there is always subtle pressure to reduce labor costs. Especially in an economic downturn, this is often considered the obvious thing to do. But consider an alternative model. A firm that is owned cooperatively by its workers will naturally face the same difficulties in a recession that other firms face. But instead of looking upon its workers as a expense to be lessened, the workers are themselves the owners, the ones who will decide the fate of the company, which is also the fate of themselves, their families, their children’s futures, and their communities. Whatever hard choices such a firm must make will be made with an entirely different set of priorities from a firm in which workers are simply an expense to be eliminated as much as possible.

There is no eternal law written in the nature of things that mandates the structural opposition of owners and workers. There is absolutely no reason why policies cannot be devised to promote widely dispersed ownership of productive property. It is doubtless true that not everyone is capable of managing even a small business well, but surely everyone is capable of being part of a cooperatively-owned enterprise. Today’s laws often favor concentrations of ownership in corporate hands. But there is no reason why these laws cannot be changed to promote producer-owned cooperatives and other types of small businesses. The activity of the Mondragon cooperatives in Spain proves that there is no reason why large-scale and highly technical industrial operations cannot be worker owned. Can an economy in which cooperatives and small businesses predominate be achieved overnight? Certainly not, but over time there is no reason why such an economy cannot be created. The obstacles to distributism are neither theoretical nor practical – they rather consist in the stubborn conservatism of those afraid to risk any change or, even worse, in the vested opposition of those who stand to lose their opportunities to exploit both their employees and their customers for their own gain. These are the chief reasons why more progress has never been made toward an economically just society.

There is no better way of ending than by quoting Leo XIII in Rerum Novarum, “The law, therefore, should favor ownership, and its policy should be to induce as many people as possible to become owners” (no. 46).”

You can learn more about this issue here.

Catholic Social Teaching and Conventional Economics

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

Anyone who has spent much time trying to promote Catholic social teaching has probably met with a response something like this. “What you say is very fine and certainly evidence of good will.  But, you see, most of what you are asking for is simply impossible. Society would break down.  For there are economic laws which it is as foolish to try to circumvent as those of gravity.  We certainly ought to try to eliminate poverty and all that.  But this can only be done if we obey the laws of economics.  If you study economics a bit, you’ll soon see why you’re barking up the wrong tree.”

And it is easy to understand why economists or those who have studied economics say this.  For mainstream economics does teach a simple yet powerful approach to all of the multifarious questions arising from man’s relations of producing, buying and selling, lending and borrowing, and so on.  Everyone wants to maximize his welfare, the desire to produce and sell can be matched against the desire to buy and consume since there are market forces which balance these two exactly, and even if they do not always result in what Christians would call justice, to interfere in their workings is to bring about (ultimately) inefficiency, waste and poverty.

According to this conception, then, economic activity works more or less according to a few simple principles, which can be applied over and over again with great sophistication to analyze a wide variety of behavior.  And to try to escape from the inexorable working of these economic principles is to court disaster.  For example, one might think that some workers are underpaid, and that this problem could be easily solved by passing a law requiring that all workers be paid a minimum wage.  But, no, that would result only in more unemployment.  It may be a shame that some get paid so little, but there is nothing that can be directly done about it.  Certainly passing minimum wage laws is the last thing we would want to do.

Economics, therefore, describes what will happen if you do a certain thing.  It is a predictive science, able to tell you that if you do A, B will result.  It is thus reduced to something like mechanics, a sort of mechanics of human behavior.  This approach is well illustrated by Milton Friedman in his famous 1953 essay, “The Methodology of Positive Economics.”

I venture the judgment, however, that currently in the Western world, and especially in the United States, differences about economic policy among disinterested citizens derive predominantly from different predictions about the economic consequences of taking action – differences that in principle can be eliminated by the progress of positive economics – rather than from fundamental differences in basic values…. An obvious and not unimportant example is minimum-wage legislation.  Underneath the welter of arguments offered for and against such legislation there is an underlying consensus on the objective of achieving a “living wage” for all, to use the ambiguous phrase so common in such discussions.  The difference of opinion is largely grounded on an implicit or explicit difference in predictions about the efficacy of this particular means in furthering the agreed-on end.  Proponents believe (predict) that legal minimum wages diminish poverty by raising the wages of those receiving less than the minimum wage as well as of some receiving more than the minimum wage without any counterbalancing increase in the number of people entirely unemployed or employed less advantageously than they otherwise would be.  Opponents believe (predict) that legal minimum wages increase poverty by increasing the number of people who are unemployed or employed less advantageously and that this more than offsets any favorable effect on the wages of those who remain employed.

According to this conception of economics, economists must chiefly engage in manipulating graphs, mathematical formulas and the like to predict the results of actions.  Things either happen or they do not. Though it may be more difficult to discover what will happen because of the multiplicity of variables, in principle there is no more room for discussion then if it were a matter of asking what happens when we drop a ball of a certain height and weight or project something with a certain force against some obstacle.

Friedman’s discussion of the minimum wage that I just cited is a good entry point to begin to unravel such economic dogmas.  It is easy to understand the logic behind Friedman’s argument.  Like most arguments in the economic tradition descending from Adam Smith, the notion that “minimum wages increase poverty by increasing the number of people who are unemployed or employed less advantageously” by increasing employers’ costs has an obvious plausibility.  But yet one may question it on several grounds.  Aside from the fact that there is little recognition here that in something as complicated as human affairs it is unlikely that one can pronounce once and for all about something such as the minimum wage, more importantly there is an assumption of a certain legal structure which is simply accepted as given.  For whatever side of this question mainstream “positive economics” may eventually take, such a judgment presupposes a specific legal and social framework.  The distribution of income and economic power that mainstream economics apparently accepts as a given depends more on human law and custom than on any immutable laws of economics.  What I mean can be illustrated by the well-known story of the Antigonish cooperatives in Nova Scotia in the 1930s, as recounted in B. B. Fowler’s 1947 book, The Co-operative Challenge.

But the most forlorn picture lay in northeastern Nova Scotia and the island of Cape Breton.  Along the coast lived the fishermen.  Their catch of fish and lobsters was handled by local dealers who in many cases kept the fishermen in a state of peonage.  While Maine fishermen were getting about fifteen cents a pound for lobsters, the Nova Scotian fishermen were receiving as little as two cents a pound.  All other prices were scaled down in the same ratio.  For everything they bought, however, from their scanty food purchases to nets and lines, they paid top prices, with the result that they were invariably bowed down with a load of debts.  Appalling poverty, illiteracy, poor health and the worst possible housing conditions existed throughout this section.

After priests from St. Francis Xavier College had begun to educate the fishermen and others in the philosophy of cooperatives, a

few lobster fishermen got together and made up a crate of lobsters which they shipped express to a commission agent in Boston.  When the mail brought a check the group sat around, afraid to open it.  So much depended upon that check; upon its size rested their hopes for better prices and better living. Probably there had never been a more momentous moment in all their lives than that moment when one of the boys finally opened the envelope and took out the check.  After all shipping charges and commissions had been paid, there remained fifteen cents a pound for their shipment.

The point of this story is that the distribution of income follows the distribution of economic power, which in turn depends in large part upon the legal and social structure.  Doubtless one could have found economists who would have said that the penury of the fishermen while they were at the mercy of the middlemen of their province simply reflected the inevitable laws of economics and that the price they received for their lobsters faithfully reflected the economic contribution they made and therefore the two cents per pound was simply the equilibrium toward which they were forced as if “by an invisible hand.”  But this obviously was not the case.  Rather, it faithfully reflected certain economic and legal arrangements and structures, which, as it turns out, could be changed.

This same argument can be made about the question of minimum wages.  As long as the employer/employee relationship, the essential note of capitalism,[1] is the common method by which labor is engaged, then the desire of employers to reduce costs can and probably sometimes will conflict with their ability to hire more workers at a statutory minimum wage.  But this reflects not unchanging laws of economics drawn from the nature of reality or human society, but rather certain legal, social and cultural arrangements which are by no means immutable.

The unequal power of employer and employees, especially of unorganized employees, our societal ideals which deny that there is any just or reasonable amount of profits with which an employer or firm should be satisfied, our general incorporation and limited liability laws – all these create a situation where Friedman’s dilemma, or rather the dilemma he sets up for society, has some plausibility.  But how if some or all of these legal and cultural norms were changed?  How if, as in the case of the Antigonish fishermen, the framework in which these economic transactions occur were changed?  For example, how if employees themselves became owners, as so often recommended by the Popes?[2]

These types of considerations should lead us to see that perhaps the framework that conventional economics presupposes is not the only possible framework.  That is, with a different legal system, different cultural and societal norms, different personal goals and expectations, many of the so-called laws of economics would appear not as universal laws of human behavior, but as limited by place and time, as taking for granted certain institutions, incentives and motives which are far from being universal principles of human society or action.

My thesis is that Catholic social principles will often seem at odds with economic facts as long as we accept mainstream neoclassical economics as descriptive of how the world actually operates.  But as soon as we begin to question orthodox economics, then all this can be looked at in a new light.  And there are in fact many reasons to suppose that orthodox economics is not descriptive of how the real world operates.  Let us look at a few more examples.

The notion that economics can be based on market forces, such as a more or less constant tendency toward equilibrium, etc. seems to depend on the prior notion that people are motivated primarily by economic motives, that is, by the desire to buy cheap and sell dear, to increase their material wealth as much as possible.  But it seems to me that history, as well as our own experience, tells us that reality is much more complex.  Often people or firms do not strive to maximize their profits or income, as even such conventional economists as Laurence Miners and Kathryn Nantz, associates of the late Paul Samuelson in preparing introductory economics texts, admitted in their 2001 Study Guide to accompany Samuelson’s textbook.  Sometimes this is because it is too irksome to do so, other times because people prefer leisure to increased wealth and are content with simply a sufficiency.  Sometimes habit and custom dictate a standard with which people are satisfied. They may shop in the same store even though it is more expensive because they are accustomed to do so.  To say, as Samuelson might, that this is an example of imperfect competition because the two stores differ in some way, is to try to prove too much, because then everything becomes a matter of economics.  Certainly people are always motivated by a desire for their happiness, but to say that this human striving for happiness is always an example of economic behavior and ought to be analyzed according to economic criteria, would be to make economics, rather than ethics, the architectonic science of human behavior.

One example of the way that habit often makes us satisfied with customary gain is mentioned by Max Weber in his classic work, The Protestant Ethic and the Spirit of Capitalism.

Until about the middle of the past [i.e. nineteenth] century, the life of a putter-out was, at least in many of the branches of the Continental textile industry, what we should to-day consider very comfortable.  We may imagine its routine somewhat as follows:  The peasants came with their cloth, often…principally or entirely made from raw material which the peasant himself had produced, to the town in which the putter-out lived, and after a careful, often official, appraisal of the quality, received the customary price for it. The putter-out’s customers, for markets any appreciable distance away, were middlemen, who also came to him, generally not yet following samples, but seeking traditional qualities, and bought from his warehouse, or, long before delivery, placed orders which were probably in turn passed on to the peasants.  Personal canvassing of customers took place, if at all, only at long intervals.  Otherwise correspondence sufficed, though the sending of samples slowly gained ground. The number of business hours was very moderate, perhaps five to six a day, sometimes considerably less; in the rush season, where there was one, more.  Earnings were moderate; enough to lead a respectable life and in good times to put away a little.  On the whole, relations among competitors were relatively good, with a large degree of agreement on the fundamentals of business.  A long daily visit to the tavern, with often plenty to drink, and a congenial circle of friends, made life comfortable and leisurely.

It would seem that the constant desire to maximize income or output simply does not exist without a cultural imperative to that effect.

Another area in which we may question the descriptive nature of conventional economics concerns the role of market forces in allocating income.  The allocation of economic rewards does not always come about because of market forces, rather, whoever holds economic power generally receives more economic rewards, as in the conspicuous example of CEO compensation.  The remarkable fact about CEO compensation in the United States in recent years is that certain CEOs have received large compensation packages even though the companies they headed were losing money or going into bankruptcy.  Why then did they receive these salaries and benefits?  Because of market forces?  Hardly.  It was because they were able to appoint their cronies to the compensation committees of their boards of directors.  Their salaries and other compensation were almost entirely insulated from the market forces of supply and demand for executives.  Let us look at a few specifics.

As described in The Washington Post, April 22, 2003, while Apple Computer’s “shareholders’ return declined by 34 percent” CEO Steve Jobs received $78 million, and while Lucent’s “shareholder return declined by more than 75 percent” Pat Russo received $38 million (Carlson 2003:C1).  Even more striking is the case of Disney’s Michael Eisner.  Eisner, “after he failed to clear his bonus hurdle two years running, his board lowered the performance bar, and then…he finally cleared it.  An Olympian effort worth $5 million”

An April 2003 article in Fortune magazine explained another method by which much CEO compensation is hidden from shareholders, the legal owners of the corporation.  Delta Air Line’s CEO, Lee Mullin, after the company lost $1.3 billion and laid off thousands of workers, in response to criticism, grandly announced that he was going to give up 25% of his salary and other compensation.  But what he did not mention was his pension plan.

You see, Mullin has been employed by the airline for only five years and eight months.  But a special pension plan that Delta’s board created for top executives has credited him…with another 22 years of service.  Thanks to those phantom years, the 60-year-old CEO could walk away from the airline today and be entitled to receive a payout of about $ 1 million a year, starting at age 65, for the rest of his life.  And if the airline goes bankrupt, no problem:  Special Delta-funded trusts protect the pensions of Mullin and 32 fellow executives from creditors.

(This by the way while Delta’s workers’ pensions were being cut.) This same article details many more examples of CEO’s receiving exorbitant pensions while their companies went bankrupt, lost stockholder value or cut workers’ pensions.  And the article goes on to ask the reasonable question:

So why, you may wonder, aren’t investors up in arms over these jaw-dropping retirement giveaways?  The answer is that hardly anybody knows about them.  The complex details surrounding executive pensions are typically buried deep within a company’s SEC filings, far removed from the salaries, bonuses, and stock options that dominate the headlines.

Both the example of Disney’s Michael Eisner, whose board kindly made it easier for him to get (I will not say “earn”) an extra $5 million, and the fact that boards hide the details of CEO retirement so that shareholders will have trouble finding out about them, illustrate my point:  Market forces are not the only or even the most powerful forces operating in the economy, and moreover market forces always work within a legal, socio-cultural and technological framework.  It is a CEO’s cronies on the compensation committee of the board of directors that determine his compensation, not impersonal market forces.  If we changed the law so that CEO salaries were decided by a free vote of the stockholders, not many of them would get these huge salaries and retirement packages, especially when their companies were failing and stockholders were losing the value of their investments.

This principle of the importance of non-market factors is true throughout the economy.  Without labor unions workers received low pay and had poor working conditions and benefits.  Unions helped them to achieve gains in all these areas.  This was because it helped to give the workers power to offset that of their bosses, not because the law of supply and demand had been changed.

All of these instances of economic behavior presuppose certain norms, generally both cultural and legal.  Without limited liability laws, for example, corporations could not exist, at least in their present form.  Without patent, trademark and copyright laws, the provision of inventions and other kinds of intellectual property would doubtless be very different.  Moreover, the kind and degree of taxation, technology, the physical infrastructure – all these affect to a great degree the workings of the economy.

Markets and market forces, then, are always embedded in social, legal and cultural systems.  Economic forces, such as the equilibrium of supply and demand, are certainly real, but seldom if ever the most important forces operating in an economy.  Thus the objection to Catholic social teaching based on the notion that it violates the assured findings of economic science is not valid.  Rather, economic outcomes depend on power, cultural and legal institutions, and other factors.  Since laws and institutions can be changed, there is in fact ample room in economics for a consideration of ethics.  Thus those who seek to promote Catholic social doctrine should acquaint themselves with those economic schools, chiefly the German historical school and the institutionalists, whose conception of the economy recognizes that it does not operate like clockwork, but is chiefly determined by who holds economic power, which in turn is chiefly determined by law and custom.  Clarence Ayres wrote with regard to institutionalism in a discussion in 1957 in The American Economic Review:

…the object of dissent is the conception of the market as the guiding mechanism of the economy or, more broadly, the conception of the economy as organized and guided by the market.  It simply is not true that scarce resources are allocated among alternative uses by the market.  The real determinant of whatever allocation occurs in any society is the organizational structure of that society – in short, its institutions.  At most, the market only gives effect to prevailing institutions.  By focusing attention on the market mechanism, economists have ignored the real allocational mechanism.

As soon as one considers this, its truth should be obvious:  the human desire for happiness certainly very often includes the desire to maximize material gain and minimize loss, but this desire is channeled through existing customs and institutions, and to a great extent even shaped by them.  So that a conception of “economic man” which isolates him and posits certain things about him which are then universalized, is erroneous.

Similar criticisms were made by the German historical school.  As described in the well-known reference source, The New Palgrave: a Dictionary of Economics, this school of thought faulted the

classical school’s deductive method…as being too abstract [and] puts the emphasis on the inductive method.  Historians point out that economic development is unique, so there can be no `natural laws’ in economics…. Instead of searching for generally applicable laws, the historical school therefore tried to describe the particulars of each era, society and economy.

Since the human institutions within which economic activity occur undoubtedly vary widely over time and place, and to some extent, even the human desire for gain takes on different forms according to custom, it would seem rational to include such historical factors in economic analysis, and further, that any economic analysis that omits or downplays them is not dealing with the real world.  Conventional neo-classical economics, however, largely does just that.  If its defenders regard it as the only acceptable scientific form of economics, we must point out to them that any economic science that strives more for mathematical precision and consistency than conformity with the real world has deeply misunderstood its task. Thus there is a simple way out of the intellectual trap that is set for Catholic social teaching.  We do not have to abandon our intellectual rigor or scientific orientation.  Rather we can retort that it is our critics who are unscientific.  But above all we should begin to bring the insights of heterodox economics into the debates over social doctrine.  Without them, the critics of Catholic social teaching will always claim that they alone understand economics.  For to attempt to defend Catholic social teaching while explicitly or implicitly accepting conventional neo-classical economics is not only to allow one’s adversaries to set the terms of the debate, but it is to adhere to an economic methodology which distorts facts and attempts to compress reality into a straitjacket.

Notes:

[1] This way of characterizing capitalism comes from the encyclical of Pope Pius XI, Quadragesimo Anno (1931).  Pius speaks of “that economic system in which were provided by different people the capital and labor jointly needed for production” (no. 100, Paulist translation).

[2] Those papal documents which recommend widespread property ownership include Rerum Novarum, nos. 4, 10, 26, 35; Quadragesimo Anno, nos. 59-62, 65; Mater et Magistra, nos. 85-89, 91-93, 111-115; Laborem Exercens, no. 14. ”

You can learn more about this issue here.

An America I Do Not Know

Ken Kastle is a parishioner with me at our church St. John the Evangelist Anglican Church in Abington, PA. He writes a blog called “Looking at Things Through My Eyes.” Mr. Kastle has had a long career in education and often views his politics as I do, so I often find his blog posts compelling. Below is one of the posts to his blog, enjoy!

Looking At Things Thru My Eyes

November 9, 2016

I awoke this morning to an America I do not know—an America that just elected as its next president a man whose only qualification for this high position is that he conducted a campaign that appealed to the basest instincts of our many of our citizens.

I believe it is universally agreed that Donald Trump has no other qualifications for the presidency. He has absolutely no experience in governing. He says he is extremely rich, a claim that could not be verified because he refused to release his tax returns. He is best known by the public as a reality TV star. Many of his statements lead many to believe he is a racist and an anti-Semite. He is a misogynist, as demonstrated by his vulgar comments about a variety of women during his campaign. To some, he is a failed businessman, capitalizing on three bankruptcies that…

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