Catholic views on Economics

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Socrates92 said:
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Arkansan:
A person being able to effectively collateralize their own personal productivity (i.e. income that they’ll hopefully earn in the future), is an injustice because it gives the creditor a right to tax the future labor of the debtor in excess of what was actually loaned to the person.
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No it is not. The creditor is simply demanding his share due to his capital investment (which is simply the saved fruits of his past labour). Without the infused capital, the fruits of labour would be smaller - Presuming the investment is successful, the net of profit-interest > what it would have been without the infusion of capital. Taxing the future labor of the debtor would the be case if he were charging a rate on profits/wages in which he had no productive part (aka income taxes).
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“One cannot condone the sin of usury by arguing that the gain is not great or excessive, but rather moderate or small; neither can it be condoned by arguing that the borrower is rich; nor even by arguing that the money borrowed is not left idle, but is spent usefully, either to increase one’s fortune, to purchase new estates, or to engage in business transactions.” - Vix Pervenit
Socrates92 said:
The nature of money used by humans can, and has changed. Money is more valuable than before, and in justice can therefore command a higher price.
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Also rejected by the Magisterium:

“In the fourth place We exhort you not to listen to those who say that today the issue of usury is present in name only, since gain is almost always obtained from money given to another. How false is this opinion and how far removed from the truth! We can easily understand this if we consider that the nature of one contract differs from the nature of another.” - Vix Pervenit

You (like most defenders of usury) keep trying to avoid the point. It doesn’t matter whether the interest is excessive, nor does it matter what one could have hypothetically done had one not made the loan. Whether or not an interest-bearing loan is usury depends on the kind of contract.
 
I mainly meant education and providing minimum living standards. I would suggest a negative income tax, but there are other ways this could be done.
 
You’re citing a reference that no longer applies. The Catholic Church itself engages in modern banking practices.
 
Here’s my understanding:

An unproductive loan is something that is simply consumed. To use a lighter, non-monetary example–it would be manifestly unjust for me to give you one Oreo cookie and require two Oreo cookies in return. I could only demand one for it to be a just exchange. In times where there were not many real investment opportunities, it was similarly unjust for me to lend you one dollar and require two in return.

A productive loan is something that is used to produce something else. So, for example, I could lend you an apple seed and require not just an apple seed in return, but some of the fruit that the resulting apple tree produced. With money, that could be like lending money to a start-up business and receiving some of the profits in return as well as the principle of the loan.
 
There’s also a distinction between lending a friend or family member money and business lending or consumer lending.

If I loan my brother $100 it’s unjust for me to expect more than $100 back.

If I own a bank and loan someone $40k for a new car it’s perfectly reasonable and just for me to expect 4% interest to be paid on that loan.
 
LeafByNiggle said:
Therefore if all schools were private, many more people would not go at all. Without universal primary education it will be Americans that are trying to sneak over the wall as illegal immigrants into Mexico, and not the other way around.
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Not really. There is a significant number of kids who are just babysat by schools. They graduate illiterate or close to it.
LeafByNiggle said:
Bring out the tin hats.
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It isn’t tin hats. It is the documented purpose of the people who pushed for public education. Read about the factory model. Read what the people pushing universal education actually said.
 
To my mind it isn’t manifestly unjust to repay an Oreo today with two later. That is the time value of money. It seems very just to me that someone who wants something immediately pays for the privilege in some way.

I don’t believe in some imaginary time when investments didn’t exist. If money existed then you certainly had the opportunity to invest that in capital. You don’t even need money to have capital.
 
exnihilo said:
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LeafByNiggle:
Therefore if all schools were private, many more people would not go at all. Without universal primary education it will be Americans that are trying to sneak over the wall as illegal immigrants into Mexico, and not the other way around.
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Not really. There is a significant number of kids who are just babysat by schools. They graduate illiterate or close to it.
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Are you claiming that illiteracy is worse in the US than in Mexico? Of course it isn’t. Thanks to our great public school system.
LeafByNiggle said:
Bring out the tin hats.
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It isn’t tin hats. It is the documented purpose of the people who pushed for public education. Read about the factory model. Read what the people pushing universal education actually said.
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If you mean they wanted to prepare people to be able to work in factories, there is nothing wrong with that. It just gives the people more options. They can be farmers or work in factories. Of course nowadays you can’t even be a farmer without a substantial education.

As for public education as a tool to make “compliant citizens who obey corporate business…”, that is tin hat territory. Public education was designed for the same purpose as private education.
 
The Holy Office, in a decree approved by Pope Bl. Innocent XI condemning various moral errors, condemned the following (from Denzinger (old numbering)):
1191 41. Since ready cash is more valuable than that to be paid, and since there is no one who does not consider ready cash of greater worth than future cash, a creditor can demand something beyond the principal from the borrower, and for this reason be excused from usury.
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It doesn’t seem that “time value” is considered real value by the Church for the purposes of usury (there’s always a time component with regard to every loan, and yet interest on the basis of time seems to never have been approved as far as I can tell, without there being some other real loss tied to the change in time).
 
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LeafByNiggle said:
As for public education as a tool to make “compliant citizens who obey corporate business…”, that is tin hat territory. Public education was designed for the same purpose as private education.
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Right, so Francis Bellamy wasn’t promoting compliance when he had children stand at attention, give a Nazi salute, and pledge allegiance to a piece of cloth representing the state. He was, it turns out, a free thought advocate.
 
exnihilo said:
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LeafByNiggle:
As for public education as a tool to make “compliant citizens who obey corporate business…”, that is tin hat territory. Public education was designed for the same purpose as private education.
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Right, so Francis Bellamy wasn’t promoting compliance when he had children stand at attention, give a Nazi salute, and pledge allegiance to a piece of cloth representing the state. He was, it turns out, a free thought advocate.
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The mandate to recite the Pledge of Allegiance in schools was short-lived and was challenged almost as soon as it was adopted. Universal primary education came first, and was not motivated by a desire to instill loyalty to a flag. The fact remains that public school education was founded for all the right reasons.
 


“Our thicker understanding of money simply leads us to recognize that most ordinary bank loans exact a cost on the lender and have value to the borrower, and so are not usurious.”


“As far as dogma in the technical Catholic sense is concerned, there is only one dogma at stake. Dogma is not to be loosely used as synonymous with every papal rule or theological verdict. Dogma is a defined, revealed doctrine taught by the Church at all times and places. Nothing here meets the test of dogma except this assertion: that usury, the act of taking profit on a loan without a just title, is sinful. . . . This dogmatic teaching remains unchanged. What is a just title, what is technically to be treated as a loan, are matters of debate, positive law, and changing evolution. The development of these points is great. But the pure and narrow dogma is the same today as in 1200. (Noonan, 399–400)”
 
Jesus really taught that there is no difference between the temporal and spiritual. Attachment to material things can hurt us spiritually, but that does not mean we must exist in abject poverty.

“Poor” in temporal terms can be a very relative value; those we consider poor in the U.S. may be considered rich in many other countries. When Jesus said we would always have poor among us, that is relative. But it does not mean the poor must live in squalor and insufficiency to advance in life.

Christ’s words should not be used–as I often see done–to justify advancing poverty for personal enrichment, or leaving the poor to fend for themselves. Subsidiarity does not mean that local communities or regions should be left to solve their own problems. It means that broader society has a responsibility to help them.
 
Socrates92 said:
Another way of putting it is that religion/philosophy addresses the final end of human action, whereas economics addresses the efficient end. Saying that money should not be the main goal sheds no light on whether capitalism, socialism, or something in between should be preferred.
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But economics is very much a part of moral or immoral actions according to church teachings. In the case of unbridled capitalism, which no country has at this time, the only intrinsic “morality” was the market place, and this is why the Church was very reluctant to endorse it in the past and only endorses capitalism in the present if there are safety nets and consideration for some other important factors.

In cultural anthropology, we have it that economics is one of the “five basic institutions” that all societies have and have had as far back as we can take them, with the other four being family, political, educational, and religious/philosophical. One simply cannot divorce one from the rest.
 
There is nothing inherently wrong with wealth provided that you aid the poor and it was not achieved through immoral means. Regarding capitalism I think that it should be treated as democracy. That is to say that so long as the participants in the system always put morality and people above efficiency and success, it is the most just system currently on the earth and will remain so until Christ returns to rule us. The problem with capitalism and why it is condemned by the Church is that the participants, us, are by our very nature imperfect morally speaking. We do not put people above profit because of how we have been stained by sin. In conclusion, capitalism is an imperfect system but it is the closest to a perfect system we can get.
 
Somewhat true. I would put it more precisely and say that economic action is a moral question. The discipline of economics itself, like the study of psychology, is morally neutral. To use a silly analogy, psychology might show that hot weather leads to bad tempers, poorer judgement, and a higher incidence of violent crime. A rational person might take this information and decide to act more diplomatically in a petty dispute with his neighbor. He would thus be exercising the (moral) virtue of prudence, acting on his knowledge from the (morally neutral) study of psychology. Psychology sheds light on how people are likely to react; morality tells us how we should act based on principles, given any information at our disposal.

Economics, is the study of how humans, and collective markets, act within the material sphere. Granting the people generally work to maximize monetary wealth, sound economics would show the best way to do this. That is its purpose/end. Most of us have a moral obligation to function economically to some extent (exception might be a mendicant monk). In so far as that is proper to one’s life, he should do so to the best of his ability. You probably wouldn’t turn down a raise simply because “money is not the main goal.” You might turn it down to pursue another goal. Or you might accept it, retire earlier, and devote more time to whatever those other goals might be.

Maximizing wealth is the proper end of economics in the same way that growing in holiness and worshipping God is the proper end of Religion. An economic system which facilitates this is therefore a virtuous economic system, whether or not the ends to which the accumulated wealth happen to be virtuous.
 
Hi, nitpicker here again. Every time I come across a quote like this I always think, “profit? Accounting profit, or economic profit?” Not the same thing. In terms of usury being “demanding more than you gave” it makes some sense to condemn economic profit - as you could argue in this case that it is a form of extortion as there is no external market justification for the rate charged. Accounting profit, on the other hand, doesn’t factor out the opportunity cost of providing the loan. If my $1000 could earn 10% elsewhere, it is costing me $100 to loan it to you. Should I loan to you at 8% and earn $80 accounting profit, I’m not actually coming out ahead.
 
The oreo situation is a poor example. The argument would be stronger if we talked about some good necessary for sustenance, like bread. On the other hand, I consider not starving to death to be a very productive thing. (I’m being a bit tongue-in-cheek)

I understand the difference in theory. My question is more about distinguishing in practise. There are so many things that could blur the lines. What if the borrower judges the loan to be productive, but the loaner judges it otherwise? Or visa versa? Why should the onus of judgement be on the loaner? Many “unproductive loans” are probably irresponsible things that should never happen (I’d argue this is the case in most car financing). Should the borrower get a pass simply because he’s being irresponsible in his willingness to squander someone else’s savings? Shouldn’t the lender generally just assume that the borrower knows his own business?
 
Socrates92 said:
What if the borrower judges the loan to be productive, but the loaner judges it otherwise? Or visa versa?
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Which is precisely why the Church expressly rejects (citations in my earlier posts) the productive/unproductive distinction. Whether or not interest constitutes usury depends on the nature of the contract, vis a vis whether it is tied to specified assets or is full-recourse.
 
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