The Church on Capitalism
by Joseph Torma
(Catholic Worker, June-July, 2014; Vol. LXXXI, No. 4)
" . . . the social economic system is unjust at its root.: - Evangelii Gaudium
These words of Pope Francis in reference to capitalism tell us it is time again for the Catholic Worker to theologically reflect on why capitalism, as a type of economics, is a practical heresy. It is a continuation of our responsibility to "blow the dynamite" of Catholic Social Teaching, as called for by Peter Maurin in his first Easy Essay.
Economics can be described as simply as the science of how society produces, distributes, and consumes goods and services. The task, in this case, is to develop a way of evaluating economics from the perspective of Catholic Social Teaching, a tradition that extends over more than one hundred years. I use a unique method of interpretation that can be called the competitist/cooperatist frame of reference.
Economically, society can be (and has been) structured in two different ways. "Competitism" represents the choice to structure society in a conflictive manner so as to provide for the elimination of the weakest individuals and the survival of the fittest individuals whom the race would depend (winners and losers). In contrast, "Cooperatism" represents a choice to fit all individuals into a society in such a way that the strengths of each person offset the weaknesses of the others to assure survival.
The dictionary defines competition as "a rivalry between individuals or groups or nations; it arises whenever two or more parties strive for something that all cannot obtain." Any system which distributes resources or power this way reflects the competitist option. Capitalism does this by definition: " . . . an economic system characterized by private or corporate ownership of capital goods . . . and by prices, production, and the distribution of goods mainly by competition in a free market." Because a free market is unrestricted by government regulations on behalf of the common good, its systemically produces winners and loses. The only way that capitalism can be reformed into a system compatible with Christianity is if it were no longer structured to produce losers. In which case it would no longer be a competitive system and therefore would not be capitalism.
To overcome ignorance or denial of the realities involved in capitalism, it is helpful for people to be able to recognize the categories of winners and loses in our competitist system. Most simply put, a competitist enterprise consists of concern for capital costs, labor costs and profit margin. As long as the market is expanding, the enterprise can increase the share of each of these categories. But when a market is saturated (as is inevitable in a competitive free market), choices have to be made. Capital costs can be reduced just so far, and the product cheapened just so much, before people stop purchasing the product. Profit margins must be maintained, and even increased, because the enterprise is competing for investment dollars. That leaves labor costs. The enterprise has no choice but reduce these costs. This leads to reducing wages and benefits, increasing workloads, and, eventually outsourcing jobs or moving the enterprise itself to a cheaper labor market. The workers become poor then, not because they are not productive - as is often claimed - but because much of their productivity has been delivered as unearned income to investors so that the corporations can continue in existence.
A practical example of this is a utilities company that has monopoly in a certain city. Activists noted that the company had no competition for its utilities service and, therefore, should be able to reduce their rates for the sake of the common good. The company answered, in a newspaper advertisement, that it still had competitors - the competitors of the investment dollar.
In 1931 Pope Pius XI pointed out in Quadrageismo Anno that economic competition leads to the concentration of wealth in the hands of a few, which ultimately results in war. This is especially important to remember when we encounter references to a market economy in the writings of of recent popes. In 1991 in Centesiums Annus, in defending his reference to "socialization" in his 1981 encyclical Laborem Excerens (On Human Work) Pope John Paul II referred positively to a "market economy". However, he explicitly said he did not want to call it capitalism and praised the "producers', consumers', and credit cooperatives."
This means that the private ownership of the means of production is not restricted to capitalism and can also exist in the context of a cooperative economic system (a cooperative market). Joint planning by private owners in the interest of the community is, in fact, "a middle way" between a command economy such as socialism, which involves state control of the means of production on behalf of the community, and a free market economy (capitalism) in which private control is structured, through competition, to benefit a relative few.
Most people are aware that Pius XI condemned "atheistic communism" in 1937, but much less known is the equivalent condemnation of capitalism by Pope Pius XII in 1950: "The harmful effects of both capitalism and communism should prompt all, but especially priests, to embrace the Church's social teaching wholeheartedly, to make it known to others and to take every opportunity of carrying it into effect. It is in fact the only teaching capable of remedying our widespread evils. It combines justice and charity in a perfect synthesis, and calls for an order of society divided from one another by barriers of self-interest, but all closely bound together in unanimity of purpose and brotherly love" (Menti Nostrae). This reflects the cooperatist not competitist, option.
Cooperatism accepts entrepreneurship as an expression of human creativity, but it can and must exist within a network of cooperative institutions democratically controlled by the worker-owners. This disconnecting of entrepreneurship from competitive planning makes individual creativity still good (although bounded by the common good as understood by the community as a whole) while minimizing risk and avoiding the 80-90% long-term failure built into the competitive arrangement.
This middle way reflects the radical emphasis found in Vatican II that "everybody should look upon his or her neighbor (without any exception) as another self (Gaudium et Spes). We must consider every act intended to benefit ourselves in light of its effect on others. Likewise, we must consider everything that happens to others as really affecting us. This seems to call into question all competitive economic arrangements wherein joint activity leading to benefit some (winners) depends on lack of benefit to others (losers). In contrast to this, as pointed out by Gaudium et Spes, there is the need for the careful structuring of society as a family, reflecting that God is Father (the Lord's Prayer), and thus we are all brothers and sisters.
Probably what is most significant about family is that it is a structure in which rights and duties come from membership in the family itself and do not depend on what a person can accomplish. This is reflected in Pope John XXIII's statement in Pacem in Terris that "Any human society if it is to be well-ordered and productive, must lay down as a foundation principle: that every human person . . . has rights and duties of his own flowing directly and simultaneously from his very nature, which are therefore universal, inviolable, and inalienable".
This means that society is responsible for the structural reality which Vatican II calls "the common good" - "the total sum of social conditions which allow people, either as groups or as individuals, to reach their fulfillment more fully and more easily . . . They ought, therefore, to have a ready access to all that is necessary for living a genuinely human life: for example: food, clothing, housing, the right to freely choose their state of life and set up a family, the right to education, to work, to their good name, to respect to proper knowledge, to the right to act according to the dictates of conscience and to safeguard their privacy, and rightful freedom, including freedom of religion." (Gaudium et Spes)
This situation in which there is a ready and thorough access to fulfillment must be part of the legal social structure and not dependant on charity. As Pope Pius XI said "no vicarious charity can substitute for justice which is due as an obligation and is wrongfully denied." All of these statements clearly reflect the coopertist option in regard to property, work and government.
The right of everyone to privately owned goods is a consistent opinion of the Church and this constitutes a constraint on the amount of private property that can be accumulated by an individual. According to Pope Paul VI in Populorum Progressio, "All other rights whatsoever, including those of property and of free commerce, are to subordinated to this principle" [of the universal right]. In other words, an economic system designed to produce inequality, as competition is, is an invalid system.
As regards work, in 1891 Pope Leo XIII taught that "It must . . . be specifically provided that the worker at no time be without sufficient work" (Rerum Novarum). In other words, availablity of adequate work cannot depened on the competitive market which will "supply" only what the controllers of wealth "demand" and not on what is needed or desired by the needy.
The second aspect of work to be considered is the "just wage", which is extremely important because, according to Pope John Paull II, "a just wage is the concrete means of verifying the justice of the whole socio-economic system." Pope Pius XI had already described the just wage: "In the first place the worker must be paid a wage sufficient to support him and his family. . . adjusting the pay for work to family burdens in such a way that, as these increase, the former may be raised and, indeed, if the contingency arises, there may be enough to meet extraordinary needs." What may surprise many people about this teaching is that the primary basis for assigning the amount of remuneration for work is not the kind of work being done, but, rather, the needs of the worker since, as pointed out by Pope John Paul II, the subject (the producer) is more important than the object (the product).
What this does is call into question an entire competitive economic system in which individual enterprises can survive only by denying workers their basic rights. Pope Pius XI wrote "Just as the unity of human society cannot be founded on a opposition of classes, so also the right ordering of economic life cannot be left to a free competition of forces . . . and so then, only will true cooperation be possible for a single common good when the constituent parts of society feel themselves members of one great family." In an economic system this would require "associating labor with the ownership of capital, as far as possible" according to Pope John Paul II.
Since the Church believes that decision-making should not be left to free competition, who is responsible for it? The Church has made it clear from the beginning that the responsibility for the common good is a key responsibility of government. According to Pius XI, the state is to "define these duties [of the common good] in detail when necessity requires" and "make all human society conform to the needs of the common good; that is to the norm of social justice." John Paul II confirms that "provision for all planning . . . weighs on the shoulder of the State." (Laborem Exercens).
The Church's preference for the cooperatist option is clear and had been for years. In 1945, a Jesuit theologian, Rev. William Smith stated: "Present-day capitalism in practice . . . runs counter to the social doctrines of the Church principles . . . The Catholic Attitude condemns it and looks forward to a renewed organic society, the activities of which will be conducted on the principle of cooperation." Even today, because competition by its nature intend inequality Pope Francis has tweeted that "inequality is the root of social evil." If the Catholic Worker doesn't blow the dynamite by exposing the heresy of competitist economics to light who will?
