Jesus said, “Watch out! Be on your guard against all kinds of greed.” Luke 12:15
Capitalism may simply be defined as the economic system that emphasizes the production of profits, and the investment of those profits (capital) into new business ventures. Capitalism was practiced in the 19th century without fear of being opposed or regulated by the various branches of government. As a result of the invention of efficient machines and the creation of the factory system, many of the old trades were abolished and great increases in unemployment resulted as the surplus of farm workers moved into the cities and poverty became more common than ever. The excesses of capitalism are well known to anyone who has studied the era. Sweatshops and child labor prevailed everywhere. On the other hand, perhaps never before in human history had the rich bragged and showed off so much excess wealth beyond imagining.
As the situation worsened, the rise of the unions began. Aesop’s fable of the Bundle of Sticks took hold among the underpaid as the unions organized, resulting in the hiring by corporations of private police agencies paid to suppress the unions. One of the first great union successes was in Lawrence, Massachusetts in 1912. The 25,000 textile industry workers there succeeded in forcing a contract to their liking. It was a brief victory. The textile industry moved to a southern state where unions did not exist, thus vacating the union’s victory. This pattern has been repeated ever since, with American industries going abroad to establish work opportunities for workers in foreign countries where the salaries are less and profits greater, leaving American workers jobless. American greed, it may well be said, is not patriotic.
In his book The Thing: Why I Am a Catholic, G. K. Chesterton offers an interesting contrast between the values of Capitalism and Catholicism.
“We must remember that even to talk of the corruption of the monasteries is a compliment to the monasteries. For we do not talk of the corruption of the corrupt. Nobody pretends that the medieval institutions began in mere greed and pride. But the modern institutions did. Nobody says that St. Benedict drew up his rule of labor in order to make his monks lazy. Nobody says that the first Franciscans practiced poverty to obtain wealth; but only that later fraternities did obtain wealth. But it is quite certain that the Cecils and the Russells and the rest did from the first want to obtain wealth. That which was death to Catholicism was actually the birth of Capitalism.”
In his 1891 encyclical Rerum Novarum, Pope Leo XIII pointed to the excesses of capitalism and remarked, “It is neither just nor human so to grind men down with excessive labor as to stupefy their minds and wear out their bodies.” In his 1931 encyclical Quadragesimo Anno, Pope Pius XI also complained about the excesses of capitalism. While it is fair enough that profits should be made, he said, the family also has a right to just wages commensurate with the profits of the employer and the current standard of living.
Today there are new elements of capitalism that we do not see in early capitalism. Today the charging of excessive interest on credit card loans is a problem that impoverishes many families. Also, the constant need to sell products results in reducing prices to lure the buyer. But this also results in products being made with cheaper materials and shoddier workmanship, thus promoting the principle that it is easier to throw away a product than to repair it.
Perhaps worst of all, modern capitalism has enabled an individualism of the masses that is self-serving and obsessed with material goods rather than the life of the spirit. The distractions of greatly accumulated wealth are self-destructive. The admonition of Christ is worth remembering. “It is easier for a camel to pass through the eye of a needle than for a rich man to enter the kingdom of God.”
Communism/Socialism and the Catholic Church
Communist/Socialism may be defined as an economic system that heavily involves government control over the economy, but that, like capitalism, concentrates wealth in fewer and fewer hands. In the effort to level the playing field of wealth distribution, socialism requires that the State take a major role in regulating the creation and distribution of wealth. Sometimes called the welfare state, socialism is loved by some and hated by others, depending largely upon the degree to which the State (through the agencies of government) polices the creation and distribution of wealth.
That communist/socialists say they are dedicated to the elimination of poverty there can be no doubt. But that they succeed in achieving that goal is very problematic. The problem with locating regulatory power in the hands of the State is that greed, being a universal human failing, will manifest itself in the governing class as well as among the capitalists. Government agencies tend to grow through time, with layer upon layer of unnecessary bureaucracies that must be paid for out of the public treasury (taxes), not to mention the plundering of the treasury by thieving bureaucrats. That these bureaucracies grow fat is one thing; that they grow counter-productive is yet another. The more regulation there is, the less efficient and more expensive can be the operation of the private sector. As businesses have less capital to spend because they are taxed, there is less money to invest in creative and innovative enterprises. Also, this tendency toward taxation multiplies exponentially until the taxpayer has considerably less to spend, and the consumption of goods is reduced to the point that the producers of goods are loaded up with goods they cannot sell.
In 1991 Pope John Paul II, who lived in Poland during a harshly communist era when it was under the control of the Soviet Union, released an encyclical, Centesimus Annus, advocating for as much freedom and creativity as is reasonable in the private sector. Going much farther back to the golden age of capitalism, we find Pope Leo XIII defending the fundamental right to private property. As Catholic historian Thomas Woods has pointed out, John Paul II and Benedict XVI have both viewed the welfare state as a threat to human productivity in that it leads many to believe they have no responsibility toward others since the State is the supreme regulator of the distribution of wealth. Even the principle of voluntary charity, which Christ preached, is diminished if it is achieved by forced taxation rather than voluntary giving.
As the private sector is diminished due to government control, its failures come to be regarded as something to be paid for by the taxpayers. Enormous government loans to every failing branch of the private sector (including the banks) will result in near totalitarian power of the State. Also, the consequences of failure in the private sector will no longer exist if the taxpayer can be counted on to bail out failed enterprises. This will lead to more corrupt risk-taking and failure in the private sector, and possibly as a result the collapse of the entire economic system. It is one thing to rob the golden eggs. It is quite another thing to kill the goose that lays them. The incredible extent of the national debt in the United States today ($34 trillion) which politicians seem determined to increase as much as possible, is a sign that an increasingly communist/socialist economy could be nearing death’s door.
Thus we see approaching opportunities for social revolt and militant insurrection. Riots in the street were common in the heydays of Capitalism, and could be as common again in the heydays of Communism/Socialism. The juggernaut of State bureaucracy, by hook or by crook, is dead set against every effort to stop its ascendancy. Fortunately, the Founders created a system for reform rather than revolution. Even today, as the juggernaut begins to dictate to the Catholic Church how it must abandon its moral principles to satisfy the dictates of an increasingly godless governing class, the Supreme court remains, at least for the present, a forum in which to assert and protect those rights of religion guaranteed by the First Amendment.
The Distributist Alternative
Distributism as an economic system was conceived by a number of Catholic writers in the early 20th century. Some of the major promoters of distributism in England were G.K. Chesterton and his brother Cecil Chesterton, Hilaire Belloc, Eric Gill, and Vincent McNabb; in the United States, Peter Maurin and Dorothy Day championed the cause. Distributism emerged as an economic school when it became apparent to many Catholic writers that the evils of capitalism and socialism were so manifest, there had to be a more rational and less dangerous way to produce economic prosperity.
In Come to Think of It, Chesterton neatly sums up the initial motive that drove the early distributist movement. “There is less difference than many suppose between the ideal socialist system, in which the big business are run by the State, and the present Capitalist system, in which the State is run by the big businesses. They are much nearer to each other than either is to my own ideal; of breaking up the big businesses into a multitude of small businesses.” At the heart of this economic system is the view that small is beautiful. Chesterton’s motto for distributism was “Three acres and a cow.”
The problematic aspect of distributist economics is that it does not propose a method by which the largeness of the State or the largeness of Capital can be reduced to the extent that small businesses become prevalent everywhere. The only existing system we know of where smallness succeeds on an admirable scale is in the small farm communities designed for that purpose, as for example the Mennonites of Pennsylvania. It’s true they are a self-sufficient and perhaps happier society than most, satisfied with the creation and consumption of modest wealth. Perhaps their work ethic too is so well entrenched that hardly any need exists for a welfare state among them. Certainly they do not plot the economic exploitation of each other and require neither corporations to produce their goods nor unions to war with management. They require neither prisons nor pensions. They seek neither to dominate world markets nor to wage world wars. The life span of the average Mennonite is 72, the same as the average American. Yes, smallness can be beautiful, and those who are attracted to it are welcome to it.
But the world at large seems antagonistic to the smaller worlds of men. It’s true that small businesses exist, but they are increasingly tied to corporate structures and menaced by government bureaucracies. It is difficult to imagine how the world at large could dismantle its vast corporate and political structures to accommodate a return to smaller economic structures. The corporate (Wall Street) and political (Washington) mega-structures would not permit it, certainly not without a profound economic crisis that would enable a break in the momentum toward bigness that has been building up for two centuries. Should such a national or worldwide crisis occur, as seems increasingly possible at the present time, the world may indeed welcome a return to Smallville.
Distributism, which is essentially a Catholic notion, champions the cause of family solidarity. In a distributist world society will encourage family solidarity and the work ethic. There will be little exploitation of the weak, because with united families there will be fewer weak people to exploit; there will be less need of a welfare system, and more reliance on charitable giving when needed. Enormous accumulation of debt will be discouraged and interest rates on loans would be within reason. This hearkens back to the way life was before the ease and frequency of divorce, but it is surely more Christian than the present selfish system that relies heavily on greed, competition, trickery, exploitation and class warfare, not to mention inching our way toward the threat of international Armageddon.