Catholic Capitalism

[aball1035]

How did Capitalism differ from (very broadly) when Europe was most Catholic (1200 or so) to now?

 

[Rete]

There was no capitalism then. Capitalism is a new system that emerged in the late 17th century (after the Protestant revolt).

I think you might find an answer to what our system would look like if it were Catholic by reading some of Chesterton’s works on distributism. Distributism offers a Catholic alternative to the false choice between socialism and capitalism.

en.wikipedia.org/wiki/Distributism

 

[aball1035]

There was no capitalism then. Capitalism is a new system that emerged in the late 17th century (after the Protestant revolt).

I think you might find an answer to what our system would look like if it were Catholic by reading some of Chesterton’s works on distributism. Distributism offers a Catholic alternative to the false choice between socialism and capitalism.

en.wikipedia.org/wiki/Distributism

What was the economic system in the middle ages?

 

[Tarpeian]

The question is how do we implement or apply Distributism in protestant America? Especially when so many Catholics have fallen prey to the wage slave system. Distributism presupposes a society that can produce goods to help facilitate widespread ownership. Our economy is now almost exclusively based on banking, retail and consumerism. To be brief we can thank President Clinton for NAFTA. Then under President Bush (W) we lost 1 in 7 manufacturing jobs, about 6-7 million workers now working at your local Walmart and the like. Fifty to sixty thousand factories gone, replaced with strip malls to sell us our “stuff” made in China. What’s left of our gutted manufacturing base is being finished of by “The Amateur,” President Obama.

At the end of WWII we produced close to 80% of all the worlds goods and paid our workers a living wage, not a slave wage. Alexander Hamilton once said, “Not only the wealth, but the independence and security of a country, appear to be materially connected with the prosperity of manufactures. Every nation … ought to endeavor to possess within itself all the essentials of a national supply. These comprise the means of subsistence, habitation, clothing and defense.” One of the few things Hamilton said worth quoting. (IMO)

You can google IHS press in Virginia. If you really want to understand capitalism, and the history of money, economies, etc. from The Catholic perspective, rooted in the Church’s social doctrine you won’t be disappointed. I have almost all of their books, and you can read some of them in a few hours. They have a very nice selection.

I highly recommend “Small is Beautiful” by E.F. Schumacher, and “Small is Still Beautiful” by Joseph Pearce.

Pax,
Tarpeian

 

[markomalley]

There was no capitalism then. Capitalism is a new system that emerged in the late 17th century (after the Protestant revolt).

I think you might find an answer to what our system would look like if it were Catholic by reading some of Chesterton’s works on distributism. Distributism offers a Catholic alternative to the false choice between socialism and capitalism.

en.wikipedia.org/wiki/Distributism

The Protestant Revolt had nothing to do with capitalism. The industrial revolution marked the beginning of what we call capitalism.

“Trade” – where they use a medium of exchange for products and/or services has been around since Old Testament times.

The inequality of rights and of power proceeds from the very Author of nature, “from whom all paternity in heaven and earth is named.” But the minds of princes and their subjects are, according to Catholic doctrine and precepts, bound up one with the other in such a manner, by mutual duties and rights, that the thirst for power is restrained and the rational ground of obedience made easy, firm, and noble

From Leo XIII, Quod Apostolici Muneris​

It is surely undeniable that, when a man engages in remunerative labor, the impelling reason and motive of his work is to obtain property, and thereafter to hold it as his very own.

…

There naturally exist among mankind manifold differences of the most important kind; people differ in capacity, skill, health, strength; and unequal fortune is a necessary result of unequal condition. Such inequality is far from being disadvantageous either to individuals or to the community

…

He has given us this world as a place of exile, and not as our abiding place. As for riches and the other things which men call good and desirable, whether we have them in abundance, or are lacking in them-so far as eternal happiness is concerned - it makes no difference; the only important thing is to use them aright.

Most of all it is essential, where the passion of greed is so strong, to keep the populace within the line of duty; for, if all may justly strive to better their condition, neither justice nor the common good allows any individual to seize upon that which belongs to another, or, under the futile and shallow pretext of equality, to lay violent hands on other people’s possessions.

From Leo XIII, Rerum Novarum​

The point being that voluntary distributism is a good thing. But most whom I see advocate for distributism as a State economic system talk about a massive State-sponsored property grab for the purpose of forced redistribution.

The important thing is for each of us to treat the other with the dignity to which we are entitled as ones created in the image and likeness of God. For those who are managers and business owners, that means to treat our employees with dignity and to pay them, as best our business allows, with the appropriate amount for their position, keeping in mind that there is a moral minimum…that which is required for maintenance of his family. And for employees, that means putting in an honest day’s labor and not being slothful and cheating one’s employer.

It’s funny, though, that this has been ruled essentially illegal. Pope John Paul II had a great idea about 30 or so years ago, as expressed in his Encyclical Laborem Exercens:

Just remuneration for the work of an adult who is responsible for a family means remuneration which will suffice for establishing and properly maintaining a family and for providing security for its future. Such remuneration can be given either through what is called a family wage-that is, a single salary given to the head of the family fot his work, sufficient for the needs of the family without the other spouse having to take up gainful employment outside the home…

Pay based upon marital status or family size would be viewed in any court in the US (or, to my knowledge, throughout the “Western World”) as discriminatory. If not, such a scheme would be most beneficial in providing Leo XIII’s idea (which is distributist in nature): If a workman’s wages be sufficient to enable him comfortably to support himself, his wife, and his children, he will find it easy, if he be a sensible man, to practice thrift, and he will not fail, by cutting down expenses, to put by some little savings and thus secure a modest source of income. But that is basically against the law these days: if you give a person a raise when his family size increases … so to put Leo XIII’s / John Paul II’s idea into practice, you would be hauled into court in a heartbeat.

 

[Ridgerunner]

How did Capitalism differ from (very broadly) when Europe was most Catholic (1200 or so) to now?

It was less complex, to be sure, but I am not persuaded it was greatly different in its basic nature. There were massive producers of basic commodities like wool in England, cod in the Baltic, honey and wax from Russia and Ukraine, wine in France and Italy. They were bought, shipped, and sold by traders much like today. They had shipping insurance. Foreign luxuries were imported at various centers like Venice and Constantinople, and shipped everywhere. Significant manufactories existed for mass production of all sorts of things; glass and weaponry in Italy, leather and steel in Spain, textiles in what are now the “Low countries”. Various governmental entities taxed trade. Banking was very big. Banks issued loans, letters of credit, drawing rights, etc. There was considerable cross-border freedom in trade and lending. All sorts of nationalities were represented in the great trading and shipping centers.

The guilds were something like a cross between labor unions and trade organizations. Peasants were tied to the land more by circumstance than by force, and a talented and plucky peasant lad could, with luck, find his fortune in one of the great enterprises, or perhaps as an “international” mercenary.

So I’m not so sure there was all that much difference in what “capitalism” was then and what it is now, other than in speed and complexity.

 

[Othmar]

Max Weber’s The Protestant Ethic and the Spirit of Capitalism can be of interest here. Also note that the Catholic Church prohibited usury, and interpreted charging interest as usury. Thomas Aquinas defended this view, but Hostiensis was critical. Both lived in the 13th century.

 

[Rete]

What was the economic system in the middle ages?

Feudalism.

 

[Ridgerunner]

Feudalism.

If I could add to this just a little, perhaps. I think it’s reasonable to say feudalism was PART of the economic system in the Middle Ages. But depending on how one defines the Middle Ages, it was rather short-lived as a pervasive institution, though its minimal history was quite long, dating from Roman times into the 20th Century. The term itself was coined only in the 17th century.

By the 13th century, it was already breaking down. It became unnecessary when lords and kings could afford to pay soldiery with cash instead of land tenure. By the 14th century, it was almost gone in Western Europe.

One could, without fear of being too far wrong, assert that while “capitalism” in terms of a manufacturing and trading economy was always there alongside the land tenure system, “feudalism” really broke down wholesale when, in the later middle ages the wealth of towns and the multiplication of moveable wealth proliferated.

The Black Death accelerated feudalism’s already-progressing demise by creating a situation in which capital became much cheaper than before and labor more expensive.

 

[Rete]

I think capitalism is going to have a shorter lifespan than feudalism. It’s already rolling over in our own time and is far less stable than feudalism.

I would also add that there is no such thing as a perfect state for an economic system. There was no one state of feudalism any more than there is one state of capitalism. These things evolve over time. Then some equilibrium breaks, there is an economic upset, and a new system emerges. It grows and evolves over some period of time, and then it too is replaced.

 

[Ridgerunner]

I think capitalism is going to have a shorter lifespan than feudalism. It’s already rolling over in our own time and is far less stable than feudalism.

I would also add that there is no such thing as a perfect state for an economic system. There was no one state of feudalism any more than there is one state of capitalism. These things evolve over time. Then some equilibrium breaks, there is an economic upset, and a new system emerges. It grows and evolves over some period of time, and then it too is replaced.

Capitalism, broadly speaking, will last until Gabriel blows his horn, because it’s simply what people do to the extent they are allowed to do it. People will exert effort for the material benefit of themselves and at least attempt to control the transfers of their wealth. At the core, it may be expressed as IL + IP=C +T. (Income from labor + Income from Property = Consumption + Transfers) Any one of those factors can be interfered with in some manner, particularly “T” (transfers). We naturally want to transfer to our spouses, our children, our Church, additional “P”, various charities and neighbors we know. Government wants more transfers to it, so it can choose the transferees instead, and for the reasons it chooses. But no matter what, the formula remains the same and always has. Understanding that, the Social Encyclicals encourage growth of IP on the individual and family level, and a great deal of freedom of “T”. It also encourages reasonable “IL” and modest “C”.

Presently, unfortunately, IL is not improving for many, IP is suppressed to a large extent by Fed action and over-regulation. “C” is encouraged mightily, and the government is getting more and more of “T”.

It isn’t “capitalism” per se that the Church teaches against, but the warping of the formulation.

Freedom of action in an economy to act in natural ways (“capitalism”) is always circumscribed in some manner; sometimes in better ways and sometimes in worse ways. Right now, it’s hard to think it is not heading in a bad direction, largely due to governmental rapacity and ideological rejection of the principles of the Social Encyclicals.

 

[Rete]

Read the newspapers some more. It’s definitely not going to last until then unless Gabriel is polishing his trumpet off right now.

You also seem to confuse markets with capitalism. There have always been markets. Capitalism does not own the concept of market.

 

[manualman]

The definitions are vague and people use them differently.

IMO, the problem we have today in modern capitalism is that technology and laissez faire government policy have combined to enable dehumanizing systems to be constructed for purpose of extracting maximum short term profits without adequate consideration of all the long term costs.

In simpler terms, a community of 50 pig farmers, that each own 100 acres and live and raise their families there is far more likely to care about the long term viability of his farming techniques than is the MBA consultant advising MegaFarm Intl, Inc that operates a 5,000 acre swine factory farm. Not to mention the commitment of overall community quality, schools, etc.

Distributism is the idea that tax and policy should be set to offset the dehumanizing tendencies of capitalism. Companies with a larger total revenue should pay higher tax rates than those with lower total revenue. Dividend income should be taxed the same as wages. There should be an estate tax. Property taxes should be levied on a stepped scale that increases the rate by the total value of land owned (in aggregate, not by parcel).

Things like this would tend to offset the advantages currently enjoyed by the Walmarts of the world and allow Joe’s pharmacy to actually compete on an even basis. Then there would be far less need for confiscatory redistribution schemes (welfare, food stamps, public housing, etc).

 

[Cirdan_XII]

There was no capitalism then. Capitalism is a new system that emerged in the late 17th century (after the Protestant revolt).

Capitalism is newer than that even.

In the 17th Century, the protestant countries such as Britain and the Netherlands engaged in a system called Corporatism. Traders and crafrtsmen had protective monopolies that the state would grant or remove to reward or punish those they liked or didn’t like, or those that did favours for the state. There was thus one British company, the East India Company, who had a monopoly on trading with India and this company effectively owned all of India and treated it as their private property. If any ship that was not owned by or licensed by the company sailed to Indiua with the purpose of trading there, they were deemed smugglers or pirates. That was the reason there were so many smugglers and pirates in those days. Trading without license was thus a form of theft. That is why we today have words such as software piracy. If caught, these pirates would be put to death. But the rewards for undercutting the monopoly were sufficient that many young men took on the risks and went into that trade.

Similarly, there would be monoplies on say, setting up a butcher’s shop. To be a butcher you had to join the butcher’s guild, and there was only one butcher’s guild in every town. The guild would pay money to the state to keep that monopoly, and in turn collected that money from its members. The guild could drive up prices by refusing to allow new members to join the guild, so reducing supply as the old generation died out. Price fixing was also legal. It wasn’t until the Industrial Revolution that this system broke down as goods could be more easily shipped between cities and the guilds lost their influence.

Capitalism as we know it didn’t really emerge until the 19th Century.

 

[Cirdan_XII]

The definitions are vague and people use them differently.

IMO, the problem we have today in modern capitalism is that technology and laissez faire government policy have combined to enable dehumanizing systems to be constructed for purpose of extracting maximum short term profits without adequate consideration of all the long term costs.

In simpler terms, a community of 50 pig farmers, that each own 100 acres and live and raise their families there is far more likely to care about the long term viability of his farming techniques than is the MBA consultant advising MegaFarm Intl, Inc that operates a 5,000 acre swine factory farm. Not to mention the commitment of overall community quality, schools, etc.

Distributism is the idea that tax and policy should be set to offset the dehumanizing tendencies of capitalism. Companies with a larger total revenue should pay higher tax rates than those with lower total revenue. Dividend income should be taxed the same as wages. There should be an estate tax. Property taxes should be levied on a stepped scale that increases the rate by the total value of land owned (in aggregate, not by parcel).

Things like this would tend to offset the advantages currently enjoyed by the Walmarts of the world and allow Joe’s pharmacy to actually compete on an even basis. Then there would be far less need for confiscatory redistribution schemes (welfare, food stamps, public housing, etc).

Before Henry VIII dissolved the monasteries, the Church actually fulfilled a huge role in terms of charity, education and healthcare. Some orders of monks owned land which they either cultivated themselves, or collected rent on, and used this money or produce to support the poor, run schools and the like. The dissolution of the monasteries led to an immediate increase in homeless and destitute people. At the same time, it created many new super-rich people, as the land was sold off, frequently below value, and bought by new merchant landowners who were not interested in continuing the charitable work of the previous owners. The evolution of today’s libertarianism, with its calls for curtialing healthcare and social projects so the rich pay fewer taxes, can be seen in a straight line from that.

 

[Ridgerunner]

Before Henry VIII dissolved the monasteries, the Church actually fulfilled a huge role in terms of charity, education and healthcare. Some orders of monks owned land which they either cultivated themselves, or collected rent on, and used this money or produce to support the poor, run schools and the like. The dissolution of the monasteries led to an immediate increase in homeless and destitute people. At the same time, it created many new super-rich people, as the land was sold off, frequently below value, and bought by new merchant landowners who were not interested in continuing the charitable work of the previous owners. The evolution of today’s libertarianism, with its calls for curtialing healthcare and social projects so the rich pay fewer taxes, can be seen in a straight line from that.

The usurpation of charitable endeavors by government and those it favors, to the disadvantage of the poor, is what we saw then, and what we’re seeing now. Henry VIII took a lot of that wealth himself and, yes, sold a lot of it to his supporters at bargain basement prices. We saw the ultimate of that in the Soviet era, when the government strictly forbade churches from doing charitable works because “it is the government’s function” to do that. Ultimately, the Bolsheviks wouldn’t even allow churches to sell valuables to aid the starving, again under the same pretext, and simply confiscated the valuables. The proceeds didn’t go to feed the starving, however.

It is not only the libertarians who deprive the poor to help the well-off. This administration did the very same thing with “cash for clunkers”, giving subsidies to those who could afford new cars anyway, and depriving the poor of the “clunkers” they depend on for transportation by destroying them. Utterly heartless. This administration has raised a lot of taxes, and has instituted a lot of middle-class and corporate welfare schemes, but has done absolutely nothing for the poorest of the poor.

I will say one thing in the libertarians’ favor, though. They have no objection to private and faith-based charity. This administration and its party in the states, has done everything in its power (so far) to impede the operations of Catholic institutions, including charities.

But morally, both are bankrupt.

 

[CrossofChrist]

How did Capitalism differ from (very broadly) when Europe was most Catholic (1200 or so) to now?

Capitalism was in its infancy ca. 1500. There was just feudalism back then.

 

[StudentMI]

But morally, both are bankrupt.

Very true.

Real existing capitalism has always featured a massive amount of state assistance to the powerful at the expense of real competition. A market based way to reach distributist goals would be to end the corporate welfare system we have in place now, which would reduce the size of corporate oligopoly and allow for more, decentralized competition. I’ve never seen distributists advocate state-based seizure and redistribution of property (as mark mentioned) but I suppose it’s possible. I’ve seen some Catholic libertarians say while abortion is wrong the state can’t legitimately prohibit it. Hypocrisy and non-Catholic ideas are prevalent in our culture.

Catholic social teaching, of which the principle of subsidiarity is a key idea, does not forbid state involvement in the economy in certain contexts, and is not against, for instance, welfare for the needy or even public health care systems (brief passage in Laborem Exercens on that). That is why I lean toward distributism: it keeps in place the legitimacy of private property which the Church teaches, while also pointing out that Catholicism doesn’t mean economic anarchism.

 

[Ridgerunner]

Very true.

Real existing capitalism has always featured a massive amount of state assistance to the powerful at the expense of real competition. A market based way to reach distributist goals would be to end the corporate welfare system we have in place now, which would reduce the size of corporate oligopoly and allow for more, decentralized competition. I’ve never seen distributists advocate state-based seizure and redistribution of property (as mark mentioned) but I suppose it’s possible. I’ve seen some Catholic libertarians say while abortion is wrong the state can’t legitimately prohibit it. Hypocrisy and non-Catholic ideas are prevalent in our culture.

Catholic social teaching, of which the principle of subsidiarity is a key idea, does not forbid state involvement in the economy in certain contexts, and is not against, for instance, welfare for the needy or even public health care systems (brief passage in Laborem Exercens on that). That is why I lean toward distributism: it keeps in place the legitimacy of private property which the Church teaches, while also pointing out that Catholicism doesn’t mean economic anarchism.

I think you and I would completely agree, with perhaps a shading here and there. Capitalism as we know it presently does, indeed, have a lot of corporate welfare in it. But it isn’t necessary or inherent to capitalism. Socialism is, if anything, even worse in that regard. One of the things that aids oligopoly in this country is the drive to the “regulatory state” espoused by the left. It aids oligopoly because the big corporations, by and large, write the rules, and they write them in their favor. The government then enforces those rules. Both left and right permit this because both depend on the money contributed by the “bigs” to keep them in power. However, it is my belief that the left is worse in that regard because it has high-octane regulatory inclinations as part of its fundamental totalitarian instincts. It is also more shameless, as misuse of “stimulus” money and some of the recent scandals appear to demonstrate.

Distributism has gotten a bad rap because of the odd offshoot generated by Dorothy Day and her followers. (Though I think she would, if alive now, disavow her current followers.)
It is also often confused with “redistributionism”.

In my mind, true Distributism is as much in the mind of the individual as it is in government action; likely more so. What did Pope Leo XIII and subsequent popes warn about in talking about the excesses our age faces? The precise evils they warned about were not so much organizational defects as moral defects. When people look to the government for everything, they tend to follow the government’s “line” of thought. (and we know what that is today; grotesquely immoral) When people fall into an attitude of “wage slavery” (which does not necessarily mean poor) they look to business for both their entire support and for the attitudes business espouses; consumerism. “Wage slavery” exists when I buy into the corporate thought process and spend everything I get on consumer goods, never thinking to depart from that pattern.

Both patterns of thought are destructive of family life, family teaching, family virtues and thoughts turned toward faith. Some independent means aid in allowing individuals and families to escape the pervasive influence of both the socialist and the corporate thought patterns.

Acquisition of productive, inheritable assets that can give a family at least some degree of independence is difficult. But it must be tried, and must be tried with different thought patterns in mind. Why am I working? Is it because of a corporate culture that rewards it psychologically and materially so I can get the better car, house, vacations, clothing? Or is it because I want to have my own thoughts; thoughts that every fiber of my being (and that of every human, in truth) yearns for the transcendent and for the charity that, as the old saying goes “begins at home”?

Am I working for a government that (as we see in the IRS scandal for instance) demands an adherence that takes me outside the moral realm; that asks for more than a human being ought to be asked to give for that paycheck, that bonus, that GS rating, that promotion to a position as a Department Head? Do I have to leave my morality at the portal of the GS building because the government is radically abortionist or bound and determined to degrade marriage, and obliges me to go to “training sessions” to which I must respond with affirmations I do not, in my heart, mean?

I am not saying it’s easy, but the very first place to start is to live below one’s means.

 

[StudentMI]

I think you and I would completely agree, with perhaps a shading here and there. (edited for space)

I think you and I agree a lot. The corporate leanings of the Democrats (and other left or near-left parties elsewhere) bother me as well. I remember an article I read some years ago about the then friendly attitudes of some big business leaders towards public health care because it would reduce private business spending. And what you said about big business writing the rules in their favor is something I have gone on about at length to friends of mine for years. The “pagan worship of the state” that Pius XI spoke of is definitely aided and abetted by the left more so than the right.

I think the problem arises when the word capitalism is applied loosely. Capitalism, to some, means simply private ownership of the means of production and a free or near-free market. Others apply it in a more historical sense to mean the state-assisted monopolistic system that has existed for centuries. Chesterton, for instance, seems to have used it in the latter sense and so he may seem like a statist to some.

The only thing that will fix the system, in my opinion, is a change of heart, and it will come from the Church.