Is Capitalism God-Ordained?

[magnet]

If pure capitalism operated as a steady-state system in a steady-state human society, theoretically the law of supply-and-demand would automatically manifest itself and cause adjustments in the marketplace. Suppliers would supply what consumers want, and consumers would offer to pay the price both are comfortable with. If people were rational and planned ahead, assuming a steady-state, they could adjust their lifestyle so as to be comfortable in this type of economy.

Unfortunately, cataclysms upset the steady state. Crop failures reduce the supply and the demand for scarce food causes prices to rise. Those that can afford to pay for the scarce food survive and those that cannot afford it are force to scavenge or scrounge in hopes that they can survive. If the government tweaks capitalism in order to give relief, some distortion of the marketplace results. How much tweaking the government does determines the health of capitalism.

There is also the element of emotions, ranging from fear to “irrational exuberance”. If there is an equilibrium in the supply-demand equation, but fear starts panicking people, then the demand outstrips the supply and prices rise. If people are encouraged to live the “American Dream” even though they may not be able to afford it, irrational exuberance sets in. “Buy now before prices rise!” is the prevalent attitude.

Either way you look at it, these ups and downs in the economy are what makes idealists unhappy with capitalism.

 

[ThomasJMullally]

OK brothers and sisters, let’s conclude with an article from the International Business Tribune 8/15/14, quoting our Holy Father during his visits to Korea and Spain:

Pope Francis has aimed yet another barb at capitalism warning 45,000 South Koreans who gathered at a mass on his first visit to the country to reject “inhuman economic models which create new forms of poverty”.

In the first trip of a pontiff to Asia in 15 years, the Argentinian pope chose strong words to address not only an affluent South Korean society, but also other emerging Asian nations facing difficult social challenges.

The crowd at the World Cup stadium in Daejeon, 100 miles south of Seoul, rose when the Pope entered, waved white handkerchiefs and shouted “Viva Papa” and “Mansei” (Long Live) according to AFP.

In his homily, the 77-year-old pontiff urged South Korean Christians to fight “the spirit of unbridled competition which generates selfishness and strife”. He also spoke of the “cancer” of despair and a “culture of death” that affects emerging societies which are superficially wealthy but hide at their core sadness and poverty.

Around 30% of South Koreans are Christians, Catholics being the fastest-growing group, with 5.3 million adherents.

The head of the Catholic Church has sent shockwaves to conservative Christians around the world with his uninhibited criticism of capitalism, with some even labelling him a Marxist. In an interview with La Vanguardia, a Spanish newspaper, Francis made an impassioned condemnation of the causes of the global economic crisis.

"We are discarding an entire generation to maintain an economic system that can’t hold up any more, a system that to survive, must make war, as all great empires have done. But as a third world war can’t be waged, they make regional wars…they produce and sell weapons, and with this, the balance sheets of the idolatrous economies, the great world economies that sacrifice man at the feet of the idol of money, are resolved…"

In its Erasmus column, the Economist magazine argued that the Pope seemed to be taking “an ultra-radical line: one that consciously or unconsciously follows Vladimir Lenin”.
In response, the pontiff said that Communists were closet Christians who “have stolen our [Christians] flag”. **“Poverty is at the centre of the Gospel,” **he claimed.

 

[Arandur]

Thomas, those excerpts don’t sound like condemnations of capitalism, just specific excesses and abuses in societies.

What, after all, is the alternative?

Smithian (as in Adam Smith) capitalism is natural freedom. To the extent that we try to curb and control it, we tend to impose upon and limit that freedom, which is an evil and also serves to damage its effectiveness and create social ills. To the extent that we attempt to preserve it (such as by fighting fraud, protecting property rights, informing consumers, keeping markets and competition open, enabling opportunity without promoting dependency, etc), we find that natural freedom produces the most goods in the fairest conditions.

Consider government (or society) involvement here similarly to how you might with other essential rights. To the extent that a government infringes upon rights to life (i.e., euthanasia, abortion, death penalties) and liberties (think Bill of Rights), we find innumerable social ills follow. To the extent that a government or society curbs the human tendency to evil (infringing upon each other’s rights) with a sound justice system and laws and policies which discourage crime and immorality and promote morality, strong families and communities, we have a “good society” (as in, one that “makes it easy to be good,” according to Chesterton, IIRC).

Thus it is when capitalism is broken, natural freedom is infringed upon, human excesses (greed, exploitation, materialism, etc) allowed to run rampant and drive economic decisions, that we find such ill effects as the Pope warns against.

 

[meme1961]

Either way you look at it, these ups and downs in the economy are what makes idealists unhappy with capitalism.

Yes. Their belief that there is a perfect economic system pretty much flies in the face of Church teaching.

This isn’t heaven. The best we can do is seek God, and act accordingly. The systems that gives us the least constraint on that first, all-important priority are not God-ordained, but they do permit us to seek that which God has ordained.

 

[meme1961]

Pope Francis has aimed yet another barb at capitalism warning 45,000 South Koreans who gathered at a mass on his first visit to the country to reject “inhuman economic models which create new forms of poverty”.

That first part is not what the Pope said, but someone’s interpretation of his words. Those are two different things.

This part:

warning 45,000 South Koreans who gathered at a mass on his first visit to the country to reject “inhuman economic models which create new forms of poverty”.

Refers not to a free market system, which is very human, but the leftist political-economic systems of socialism, facism and communism, which truly are “inhuman” and that “create new forms of poverty.”

As always, the proper interpretation of the Pope’s words are not through a political or economic lens, but through his office and the duties of that office. The Pope is giving moral guidance, not policy prescriptions nor marching orders as to what particular governmental or economic system we should invest in.
ThomasJMullally;12274303:

In his homily, the 77-year-old pontiff urged South Korean Christians to fight “the spirit of unbridled competition which generates selfishness and strife”. He also spoke of the “cancer” of despair and a “culture of death” that affects emerging societies which are superficially wealthy but hide at their core sadness and poverty.

Yes, of course! That’s simply a warning against greed and envy. These sins can devastate any economic system, though a free market is the most strongly defended against such.

In a leftist system, the “unbridled competition” is one of striving for government position in order to amass huge amounts of wealth. Think of the Supreme Soviet, that body which controlled the USSR: the members of that body had nearly uncontested power over the Russian economy, and as such, they could line their pockets at will. And did.

In every leftist economy, the result was a small body of super-rich, a slightly larger group of middle class who were the functionaries and clerks, and a vast body of the very poor.

A leftist system has almost no defenses against greed and envy. In general terms, any political-economic model is unstable, due to the greed of the politicians. Thus monarchies become mercantilist systems, democracies lapse into a type of fascism (crony capitalism) and of course the leftist systems, which make no attempt to separate the political and the economic, lapse into a kind of oligarchy.

The head of the Catholic Church has sent shock waves to conservative Christians around the world with his uninhibited criticism of capitalism,

Which simply demonstrates that the author of the piece does not understand that the Pope’s words are moral guidance, not policy prescriptions, nor an attack on capitalism.

"We are discarding an entire generation to maintain an economic system that can’t hold up any more, a system that to survive, must make war, as all great empires have done. But as a third world war can’t be waged, they make regional wars…they produce and sell weapons, and with this, the balance sheets of the idolatrous economies, the great world economies that sacrifice man at the feet of the idol of money, are resolved…"

Again, not one single mention of “capitalism” at all. More to the point, his critique is more applicable to those economies that are leftist in nature. “A socialist system can only survive so long as it has new sources of money to confiscate.” Socialism is an economic system that “can’t hold up any more”, and the long term application of it has indeed sacrificed generations of our brothers and sisters.

The article is attributed to The Economist. If so, that explains the deep, almost nonsensical errors in interpretation.

 

[meme1961]

So I imagine, you don’t think there are problems, with our consumerism?

If by consumerism, you mean secular humanism, then yes, there is a problem. Worship of anything else but God is never a good thing.

Our lack of independent media?

While the main stream media leans so far left that they have, in general, nearly fallen over, that is not a problem in a free market economy, precisely because more objective and unbiased sources can be created to compete with the propagandists.

Things like the so called “fairness doctrine” are an attempt to damage the free market, and should be fought.

If property rights are not exalted above superior rights under the existing system, why does the US have the most police and the most incarcerated people in the civilized world?

Leftist political-economic systems always have a super-abundance of police. A moral people prevent themselves from committing crimes and sins, but a system that replaces God with “government” has no such protection.

In the USA, the high rates of incarceration are due to too little freedom, and the destruction of the power of the Protestant Churches in America, with the attendant rise in secular humanism . . . kind of “replacing God with government”.

While the self-immolation of the Protestant Churches was inevitable (God promised to protect his Church from error, not those who rebelled against it), for a long while, their power kept the USA closer to God’s plan we are now.

Property rights are so weakened in most of the Western world as to be nearly non-existent, so I consider your assertion the equivalent of “begging the question.”

It is not good from the standpoint of our faith.

Destroying freedom is never good for our faith. One need merely look at those political-economic systems that were the most destructive of the Church: Communist and Socialist systems head the list.

Of course, economic freedom is simply one of the freedoms.

The proper model for a free civil society is that of multiple separate, independent, co-equal institutions, of which government is just one. When government is placed in control over and above all the other systems, freedom wanes.

 

[Zoltan_Cobalt]

OK brothers and sisters, let’s conclude with an article from the International Business Tribune 8/15/14, quoting our Holy Father during his visits to Korea and Spain:

Pope Francis has aimed yet another barb at capitalism warning 45,000 South Koreans who gathered at a mass on his first visit to the country to reject “inhuman economic models which create new forms of poverty”.

In the first trip of a pontiff to Asia in 15 years, the Argentinian pope chose strong words to address not only an affluent South Korean society, but also other emerging Asian nations facing difficult social challenges.

The crowd at the World Cup stadium in Daejeon, 100 miles south of Seoul, rose when the Pope entered, waved white handkerchiefs and shouted “Viva Papa” and “Mansei” (Long Live) according to AFP.

In his homily, the 77-year-old pontiff urged South Korean Christians to fight “the spirit of unbridled competition which generates selfishness and strife”. He also spoke of the “cancer” of despair and a “culture of death” that affects emerging societies which are superficially wealthy but hide at their core sadness and poverty.

Around 30% of South Koreans are Christians, Catholics being the fastest-growing group, with 5.3 million adherents.

The head of the Catholic Church has sent shockwaves to conservative Christians around the world with his uninhibited criticism of capitalism, with some even labelling him a Marxist. In an interview with La Vanguardia, a Spanish newspaper, Francis made an impassioned condemnation of the causes of the global economic crisis.

"We are discarding an entire generation to maintain an economic system that can’t hold up any more, a system that to survive, must make war, as all great empires have done. But as a third world war can’t be waged, they make regional wars…they produce and sell weapons, and with this, the balance sheets of the idolatrous economies, the great world economies that sacrifice man at the feet of the idol of money, are resolved…"

In its Erasmus column, the Economist magazine argued that the Pope seemed to be taking “an ultra-radical line: one that consciously or unconsciously follows Vladimir Lenin”.
In response, the pontiff said that Communists were closet Christians who “have stolen our [Christians] flag”. **“Poverty is at the centre of the Gospel,” **he claimed.

I actually have no idea what the Holy father is talking about…and I don’t think he does either.

Now if he were speaking about Faith and Morals I would take his every word to heart.
Economics and politics are not his strong points.

Example: South Korea has a Capitalist economy. North Korea does not. Has anyone noticed any differences in standards of living between the two?
Is the Holy father suggesting that South Korea become like North Korea?
Which part is threatening war? North or South.

 

[Arandur]

I actually have no idea what the Holy father is talking about…and I don’t think he does either.

Now if he were speaking about Faith and Morals I would take his every word to heart.
Economics and politics are not his strong points.

Example: South Korea has a Capitalist economy. North Korea does not. Has anyone noticed any differences in standards of living between the two?
Is the Holy father suggesting that South Korea become like North Korea?
Which part is threatening war? North or South.

I actually tend to agree. I find the cited quotations lacking context, but I’m not sure there is enough context to understand just what he’s talking about.

I do to think meme1961 has a point about the Pope warning about general moral failings and such, and certainly a strong point that the things mentioned are more heavily represented in Leftist political-economic models, but the words used in the last quote do seem to indicate targeting of predominant “capitalist” economies.

I say “capitalist” in quotes because I think these systems and countries are suffering because they’re NOT very capitalist, but are instead statist corruptions of it (whether crony capitalist societies, oligarchies, socialist/fascist political economies, etc).

At least three questions, IMO, must immediately be asked in any discussion criticizing “capitalism:”

1. What do you mean by “capitalism?” (I will always espouse Adam Smith’s “natural freedom”)
2. If you don’t like it, what do you consider as an alternative?
3. What does history have to say about the relative results of “capitalism” vs. whatever alternative system is being proposed?

Same thing for government systems.

 

[Zoltan_Cobalt]

I actually tend to agree. I find the cited quotations lacking context, but I’m not sure there is enough context to understand just what he’s talking about.

I do to think meme1961 has a point about the Pope warning about general moral failings and such, and certainly a strong point that the things mentioned are more heavily represented in Leftist political-economic models, but the words used in the last quote do seem to indicate targeting of predominant “capitalist” economies.

I say “capitalist” in quotes because I think these systems and countries are suffering because they’re NOT very capitalist, but are instead statist corruptions of it (whether crony capitalist societies, oligarchies, socialist/fascist political economies, etc).

At least three questions, IMO, must immediately be asked in any discussion criticizing “capitalism:”

1. What do you mean by “capitalism?” (I will always espouse Adam Smith’s “natural freedom”)
2. If you don’t like it, what do you consider as an alternative?
3. What does history have to say about the relative results of “capitalism” vs. whatever alternative system is being proposed?

Same thing for government systems.

Excellent points, Arandur and good questions also.

It is true that we have not had real Capitalism since William Bradford relieved the Pilgrims of socialism.

If a detailed, factual study were made of all those instances in the history of American industry which have been used by the statists as an indictment against Capitalism and as an argument in favor of a government-controlled economy, it would be found that the actions blamed on Capitalism were caused, necessitated, and made possible only by government intervention in business.

 

[Paleocon]

Peace be with you,

In my experience, Catholics and other Christians are unanimously in favor of capitalism and view all alternatives as anti-Christian. I was wondering if anyone could explain this to me? What is Christ-like about capitalism? Is it the only Church-approved economic system? Why do you think is there so much greed, corruption, poverty and social inequality in capitalist societies? I’m just looking for some explanations, because I’ve never had a fellow Catholic explain why they believe capitalism is ideal. Scripture and catechism citations in support of capitalism would be great! Thank you and blessings.

Distributism is a more Catholic system.

 

[magnet]

Distributism is a more Catholic system.

I don’t think that there is any perfect solution to a smoothly operating economic system. As long as mismanagement is probable because error prone humans are trying to tweak the system, all kinds of malfunctions are likely to creep in. It matters little whether Socialism, Distributism, Communism, or Capitalism is the theoretical basis for an economy, nothing is perfect. The fact is that, in history, Capitalism has resulted in the best allocation of economic resources makes it the favored system. It has distortions just like all the other economic systems tried. Capitalism is the economic system of the Roman Empire and was in place when Jesus did his ministry. It has proved itself over and over and no other system has ever succeeded as much as Capitalism.

 

[Paleocon]

I don’t think that there is any perfect solution to a smoothly operating economic system. As long as mismanagement is probable because error prone humans are trying to tweak the system, all kinds of malfunctions are likely to creep in. It matters little whether Socialism, Distributism, Communism, or Capitalism is the theoretical basis for an economy, nothing is perfect. The fact is that, in history, Capitalism has resulted in the best allocation of economic resources makes it the favored system. It has distortions just like all the other economic systems tried. Capitalism is the economic system of the Roman Empire and was in place when Jesus did his ministry. It has proved itself over and over and no other system has ever succeeded as much as Capitalism.

Saying that Distributism is not perfect is true but irrelevant. The point of any human system is not to be perfect but to best ensure the common good.

Distributism would prevent the accumulation of wealth in the hands of a few, and would protect local economies against being overwhelmed by larger units. Moreover, most models of capitalism (and all models of socialism and communism) are immoral in one way or another.

Also, Capitalism is not an ancient system.

 

[Zoltan_Cobalt]

Distributism is a more Catholic system.

It may be, but it is destined to failure.

The “Showboat” of Distributism is the Mondragon Corporation in Spain. It controls 147 companies and employs 80,000 workers. It bills itself as a cooperative but employees who are not owners have increased more rapidly than worker-owners. This defeats the concept of distributism and is one of the causes of the failure of the largest subsidiary of Mondragon…Fagor Electrodomesticos. Fagor had a workforce of 6,074 people and factories located in three continents: Europe, America, and Africa with 13 subsidiaries throughout the world as well as a major sales network present in 80 countries in 5 continents.

Facing competition and growth, Fagor tried to become a modern corporation. It hired more workers rather than owners. That created a two-tier system that affected labor relations. Those who did not become owners did so because they either could not afford to become owners or chose not to. Fagor could not survive as a distributist company in a modern corporate world. It went bankrupt. The parent company, Mondragon, relocated 600 of Fagor’s worker-owners to other companies belonging to Mondragon but left the employees unemployed.

Distributism may have worked well in a feudal agricultural society but has no place in today’s global economy.

 

[Paleocon]

It may be, but it is destined to failure.

The “Showboat” of Distributism is the Mondragon Corporation in Spain. It controls 147 companies and employs 80,000 workers. It bills itself as a cooperative but employees who are not owners have increased more rapidly than worker-owners. This defeats the concept of distributism and is one of the causes of the failure of the largest subsidiary of Mondragon…Fagor Electrodomesticos. Fagor had a workforce of 6,074 people and factories located in three continents: Europe, America, and Africa with 13 subsidiaries throughout the world as well as a major sales network present in 80 countries in 5 continents.

Facing competition and growth, Fagor tried to become a modern corporation. It hired more workers rather than owners. That created a two-tier system that affected labor relations. Those who did not become owners did so because they either could not afford to become owners or chose not to. Fagor could not survive as a distributist company in a modern corporate world. It went bankrupt. The parent company, Mondragon, relocated 600 of Fagor’s worker-owners to other companies belonging to Mondragon but left the employees unemployed.

Distributism may have worked well in a feudal agricultural society but has no place in today’s global economy.

Which shows only that Distributism cannot work in the midst of a capitalist system.

A state which decided to embrace Distributism could successfully do so, because it could protect itself from domination by capitalism, whereas a private company could not.

 

[ThomasJMullally]

Saying that Distributism is not perfect is true but irrelevant. The point of any human system is not to be perfect but to best ensure the common good.

Distributism would prevent the accumulation of wealth in the hands of a few, and would protect local economies against being overwhelmed by larger units. Moreover, most models of capitalism (and all models of socialism and communism) are immoral in one way or another.

Also, Capitalism is not an ancient system.

Thanks. Yes the goal should be to reverse the divergences in wealth since the deregulations of Reagan era. As Thomas Piketty showed in his book, this divergence into the super-rich and the fully dispossessed is the natural outcome of the “perfect” capitalism espoused by Cobalt and his libertarian crowd.

Here’s what I wish to contribute to this topic: Life, Liberty and Property, that is the specific order of rights assigned by the Founding Fathers, and incidentally the one proscribed by the current Catechism of the Church, and Pope Francis too. Today we have it backwards, it is: Property, Liberty, and Life.

 

[Zoltan_Cobalt]

Which shows only that Distributism cannot work in the midst of a capitalist system.

A state which decided to embrace Distributism could successfully do so, because it could protect itself from domination by capitalism, whereas a private company could not.

In order for a state to embrace Distributism the state would have to take the private property (the means of production) from certain individuals and redistribute it to others…And if that little exercize went well…without a revolution…it would fail anyway.

 

[magnet]

In order for a state to embrace Distributism the state would have to take the private property (the means of production) from certain individuals and redistribute it to others…And if that little exercize went well…without a revolution…it would fail anyway.

As I recall, Fidel Castro nationalized the means of production, forcefully taking it away to be managed by the state. Today, Cuba is vastly poorer per capita than neighboring Puerto Rico. Castro instituted statism and Puerto Rico remained capitalist. In which country would you prefer to live?

 

[ThomasJMullally]

I don’t think that there is any perfect solution to a smoothly operating economic system. As long as mismanagement is probable because error prone humans are trying to tweak the system, all kinds of malfunctions are likely to creep in. It matters little whether Socialism, Distributism, Communism, or Capitalism is the theoretical basis for an economy, nothing is perfect. The fact is that, in history, Capitalism has resulted in the best allocation of economic resources makes it the favored system. It has distortions just like all the other economic systems tried. Capitalism is the economic system of the Roman Empire and was in place when Jesus did his ministry. It has proved itself over and over and no other system has ever succeeded as much as Capitalism.

You are correct, I agree it was capitalism in place during Roman Empire too. Jesus was aghast at the inequities of the Roman system. To live His way, we need to do better.

 

[Paleocon]

In order for a state to embrace Distributism the state would have to take the private property (the means of production) from certain individuals and redistribute it to others…And if that little exercize went well…without a revolution…it would fail anyway.

It doesn’t strictly require that. It could simply require business owners to be residents of the locality in which they did business. This would naturally and peacefully lead to a diffusion of large concentrations of assets.

 

[Zoltan_Cobalt]

Thanks. Yes the goal should be to reverse the divergences in wealth since the deregulations of Reagan era. As Thomas Piketty showed in his book, this divergence into the super-rich and the fully dispossessed is the natural outcome of the “perfect” capitalism espoused by Cobalt and his libertarian crowd.

Here’s what I wish to contribute to this topic: Life, Liberty and Property, that is the specific order of rights assigned by the Founding Fathers, and incidentally the one proscribed by the current Catechism of the Church, and Pope Francis too. Today we have it backwards, it is: Property, Liberty, and Life.

If you want to contribute, be accurate. It is Life, Liberty and the Pursuit of Happiness.

But let’s take your version and discuss the right to Property…or Property Rights.

The right to life is the source of all rights and the right to property is their only implementation. Without property rights, no other rights are possible.

Since we have to sustain our life by our own efforts, those who have no right to the products of their efforts have no means to sustain their lives. The one who produces while others dispose of his product, is a slave.

PS…I am not a libertarian.