About twenty years ago, a local mother heard God asking her to do something to help. She knew that many women facing unexpected pregnancies sought an abortion because they felt they had no better options. With the support of her husband and children, she began helping pregnant mothers with whatever they needed, up to and including letting them stay in a spare bedroom in her home during pregnancy and beyond. A few years later, the outreach organized legally as a nonprofit and it is today a thriving charity receiving five to ten calls per day for assistance with everything from diapers to transportation to adoption.
The same kind of story has repeated itself throughout history countless times. In the vast majority of cases, the people whose initiative created charitable institutions had no relevant expertise, financial resources, or organizational experience. Often, they didn’t even envision an institution at all. A government clerk, Clara Barton, saw wounded Civil War soldiers in Washington, D.C., helped them, and the Red Cross was born. A university student, Frederic Ozanam, saw beggars on the streets of Paris, helped them, and the St. Vincent de Paul Society was born. What they had was attentiveness to an unmet need and a willingness to address it. In other words, they cared.
During the late nineteenth and early twentieth centuries, industrialization and modernization in the world’s advanced economies gave rise to the professionalization of welfare provision. In fields such as nursing, mental health, and social work, the emergence of university programs, professional associations, and legal certification requirements gradually crowded out the amateur, spontaneous charity that had been the norm. This development brought some advantages. To make full use of scientific and technological progress in medicine, for example, it was necessary for certain kinds of treatments to be managed by highly trained professionals.
But there were also drawbacks. The very rules and norms that provide order and standards to the professions can also stultify and prevent innovation. Where care for the suffering ill or destitute is the duty of paid staff rather than the passion of a volunteer caregiver, there is the danger that routine will replace attentiveness to need, and that financial reward will replace charity as the primary motivation.
In our massive, modern, complex economy, largescale provision of poverty-relief and healthcare, delivered by trained professionals, has its place. But the need for small-scale, spontaneous provision has not disappeared—and never will. In the same vein, obligations to help those in need can never be completely discharged by transferring those responsibilities to government agencies. “There is no ordering of the State so just that it can eliminate the need for a service of love,” Pope Benedict XVI wrote. “We do not need a State which regulates and controls everything, but a State which, in accordance with the principle of subsidiarity, generously acknowledges and supports initiatives arising from the different social forces and combines spontaneity with closeness to those in need.”
So let’s make sure that we always preserve a culture in which the caring and entrepreneurial mother who sees a need is able to respond. Let’s make sure that the legal and policy environment does not preclude the activity of the noninstitutional or the nonprofessional. And let’s consider how we can act personally, as volunteers and donors, to encourage such initiative. Caring doesn’t depend on a government program, nor does it require a degree. It only requires caritas—a commitment to the good of another.
The end of this week, October 3, marks the thirtieth anniversary of German reunification following the fall of Communism. It’s known as German Unity Day, but it might as well be called German Freedom Day, for it marked the rebirth of freedom for millions of East Germans who had suffered under the oppression of the Soviet bloc.
I was in Germany in the fall of 1991, just a year after reunification. The wounds of Communism still marred the landscape. As my brother and I crossed what had been the border between West and East Germany, the contrast between the two nations—and the two political and economic systems—was clear, even on superficial observation from a train-car window. The prosperity and orderliness of West Germany gave way to the bleakness of the East.
In Berlin, we stood and gazed at the Brandenburg Gate. This was the city where John F. Kennedy had affirmed American solidarity with a free Germany by declaring, “Ich bin ein Berliner.” It was the very spot where Ronald Reagan had grabbed and shaken the tottering Soviet Empire with his command, “Mr. Gorbachev, tear down this wall!” It was the place where, in the recent past, jubilant crowds had celebrated the destruction of the Berlin Wall—and, a while later, cheered again as Germany was reunited.
The Berlin Wall, the monumental symbol of the divide between West and East, between freedom and tyranny, was gone by 1991. But “no man’s land,” was still there, a haunting testament to the division that generated a 45-year-long Cold War. As we looked across the hundred-yard wasteland between the two halves of the city, we reflected on the lives lost in the quest for freedom. “Give me liberty or give me death,” was the famous cry of the American patriot Patrick Henry. Here, hundreds of East Germans had put that binary into stark relief, risking death by scrambling over barbed wire and across the neutral zone patrolled by snipers and machine gunners. Many of them never made it.
Famous Brandenburger Tor (Brandenburg Gate), one of the best-known landmarks and national symbols of Germany, in beautiful golden morning light at sunrise, Berlin, Germany
At the Checkpoint Charlie Museum, we learned about the myriad methods devised by East German refugees to attempt escape from government oppression. We marveled at the desperation that would drive people to such reckless enterprise. We pondered the human thirst for freedom. The aspiration voiced by Patrick Henry was not a peculiar, late-eighteenth century American phenomenon. It was a universal longing.
The professor of German at the university where we were studying was a witness to that longing. She had snuck out of East Germany in the engine compartment of an automobile many years before. The burn scars she bore seemed a small price to pay for freedom.
Unfortunately, totalitarianism is never without its defenders. The state’s oppressive hold over its citizens has a silver lining: the abdication of responsibility. German chancellor Angela Merkel, who grew up in East Germany, explained why many East Germans had trouble adjusting to life in the new Germany: “The efforts of freedom, to have to decide everything, have to be learned.” For some, the old way was easier, she noted: “Life in the GDR was sometimes almost comfortable in a certain way, because there were some things one simply couldn’t influence.”
Perhaps this explains why a poll of East Germans twenty years after the opening of the Berlin Wall found a majority saying life was better under Communism. In part, this was due to the abuses of the East German regime already fading from memory for a younger generation; in part it was nostalgia for a system that promised greater equality in return for diminished freedom. “The people who live on the poverty line today also lack the freedom to travel,” one young German observed, equating lack of financial means for some within a market system with the legal restrictions that Communist governments imposed.
Yes, freedom does entail responsibility, and that can be uncomfortable, disconcerting, even burdensome. But the alternative—subservience and dependency—is dehumanizing. The American ex-slave and abolitionist Frederick Douglass understood this. “To enslave men, successfully and safely,” he said, “it is necessary to have their minds occupied with thoughts and aspirations short of the liberty of which they are deprived. A certain degree of attainable good must be kept before them.” Germans who look back on Communism with admiration are focused on a minimal “attainable good” and fail to appreciate the cramping of the human spirit—the stunting of “thoughts and aspirations”—that the deprivation of liberty causes.
“The totalitarian world produces backwardness because it does such violence to the spirit,” Reagan said during his 1987 Berlin speech, “thwarting the human impulse to create, to enjoy, to worship.” That truth is at the heart of the difference between freedom and tyranny. May the German people—and all of us—ever remember it.
Taken at face value, the expression that something needs to be redistributed implies an initial distribution. For redistribution of wealth to obtain there must have been an initial distribution of wealth. Now, how to understand the redistribution of wealth when wealth and income are mostly earned? Earning implies just deserts and a putative understanding that prevents others from taking my property and giving it to others. In fact, the distribution would begin with the confiscation of earned wealth. Those who call for redistribution are the ones wanting to substitute earned success with distribution.
The concept of redistribution can only be understood within Marxist economic thought. As all wealth is created by the labor of workers, those who did not work in the production of commodities or services have confiscated or stolen wealth from their rightful owners. The economic process starts with earning through labor, but the fruit of that labor is immediately stolen or distributed to non-earners. Redistribution now can be justified, as there was an initial distribution away from the hands of the proletariat and into the hands of the capitalists.
Moreover, as that economic structure brings about a superstructure, there exists an institutional arrangement that perpetuates the system of continuous theft. The capitalists own the means of production and have created a number of oppressive institutions such as religion, the banks, corporations, laws, justice systems, police systems, and cultural assumptions, which serve to perpetuate over time the hegemony of the capitalist class. These also need redistribution in the form of replacing them with institutions that serve the purposes of the working class. The Leninist tactic of “united front” reflects the reality that the forces of capital produce a series of epiphenomena, a sea of variegated oppressions which at first seem unrelated to economics or capital but in reality, are integral to the entire economic structure.
Of course, that entire system of thought ignores what really happens in the economy: how value arises, the importance of the entrepreneurial vocation, and the primacy of the individual person who stands de jure as unique and unrepeatable. It begins with a false understanding of the nature and value of capital. From there, the chain of reasoning moves forward as an illusion.
Moreover, redistribution as understood by Marxism transfers decisions to the state, away from the individual. The state must serve as proxy for the working class, as individual transfers imply the expectation that the receiver of benefits will surrender them voluntarily. Centralization is inevitable, even though Marxists often insist that it is not necessary. The state must take ever increasing responsibilities over activities that cease to exist under an ethic of redistribution. The entrepreneurial spirit suffers, the motivation to risk wanes, the loss of capital ensues, and society is torn among competing interests. The more the fate of a group depends on confiscating the wealth of another, the more the receiving group demands and the less it engages in productive activity. After all, the receiving group has been convinced that their labor is always being extracted by “them.” This system, in short, creates disincentives for production at both ends of the chain of productivity.
These transfers, however, often target the middle class, as transfers exclusively from the ever-shrinking upper classes will not be enough. It ought to be obvious that redistribution, of necessity, implies stealing from some proletarians to benefit others—the very process that Marxist ideology aims to eliminate. This is why the logic of redistribution necessitates, sooner rather than later, a revolution to attempt to abolish the private ownership of the means of production and the eventual erasure of the concept of class with the concomitant creation of a “new man.” As long as there are classes, there are competing interests and oppression.
There is no doubt that we have already stepped onto such a slippery slope. The demands of radicals are filled with anger because they see themselves as abused and they perceive that their plight can be alleviated only collectively, as a class. Redistribution is only the beginning of the revolution.
For centuries, the main issue that occupied thinkers delving into economics was the question of justice. They wanted to create a just system of economic life and that is a question that comes often in the thought of classical thinkers until the 1500s.
Aristotle might be one of the earliest thinkers who offered answers to the question of just economic exchange. The Socratic writers admired the Spartan society structured along military lines, with communal property, and dependent on conquest for survival. Plato associated the occurrence of war with private property. Aristotle, however, saw it in the opposite way. Private property brings about peace, but when everything is everybody’s there is strife, jealousy, distribution problems, scarcity, and war.
For long, the question of just exchange remained the great preoccupation and the main response was that the economy is a zero-sum game—if I win, you lose. This response remains common among socialists who tell us things such as “The United States is rich because the third world is poor.” Aristotle was correct on private property, but his view of the value of exchange was another story. He believed that economic exchange was just only if the objective value of the items exchanged was the same. But that never happens. When I pay one dollar for a piece of candy, it is because I value the candy more than my dollar. If not, I’d keep my money. It is my own valuation of the item in question, not some objective, predetermined value, that matters. Aristotle—as Marx and many socialists throughout history—missed the subjective value of commodities.
Aristotle saw commerce in two ways. One was natural. Natural exchange is akin to bartering for what we need. If I need bananas and you need rice, we trade to meet those needs—the value of the exchange is exhausted by the need. The other is commerce for gain or chrematistic exchange. I buy something at a low price where it is abundant to sell it at a higher price and make a profit where the item is scarce. Another question entertained by Aristotle and the ancients were usury—charging interest on loans. Aristotle, and many thinkers after him, found it unjust precisely because they saw value as objective and exhausted in the exchange. They had not yet discovered what Hernando de Soto calls the “mystery of capital.”
As important as the question of justice is exchange was, and is, we can see that the economic thinking arising from the classical responses was weak, even if the principles of justice based on that weak economic thinking might have been accurate. Scarcity, poverty, want, and misery dominated the thousands of years during which economic thought saw exchange in such a narrow and collectivist fashion. If that is the way the economy is conceived, then individual dreams and hopes remain unfulfilled and risk and entrepreneurial drive disappear.
For hundreds of years after Aristotle, there was not much change in the views of the economy and a steady-state of poverty around the world. Even when we go all the way to St. Thomas Aquinas in the thirteenth century, we see no meaningful progress. Aquinas re-examines the questions raised by Aristotle and the Socratic writers and arrives at more or less the same answers.
However, research on certain scholastic authors has shown that some late medieval thinkers began to offer new answers. A good friend of mine, Alex Chafuen, is one of the scholars who taught us that the scholastic School of Salamanca in Spain began to give us important insights. The theory of subjective value was presented by Diego de Covarrubias hundreds of years before Jevons and Menger. Luis Saravia denied that the price of commodities is established by the costs of production. Other important authors were Juan de Lugo, Juan de Mariana, Castillo de Bobadilla, Luís de Molina, Martín de Azpilcueta, and others.[1] The early stages of free-market ideas were first developed in the sixteenth and seventeenth century by a group of Catholic theologians and philosophers, and not in the eighteenth century by figures such as Adam Smith and David Ricardo.
From the sixteenth to the eighteenth centuries, in addition to the School of Salamanca, we see some authors gaining interest in the economic question. No major authors arise but a number of pamphlets show two schools: the mercantilist school supporting greater state intervention in the economy, and the Physiocrats, wanting less. There was much debate but not a sophisticated and systematic theoretical framework. Nation-states and monarchies develop and they see the accumulation of gold and other precious metals as the way to make the kingdom wealthy. Kings such as Henry VIII in Great Britain and Louis the XI in France are counseled to reduce imports and favor enterprises that can sell products to others in exchange for gold. Notice how the economic question is shifting from questions of justice to practical questions of policy and politics.
Amid monarchical protectionism and interventionism rises a group of people who challenge the mercantilist economic system, the Physiocrats. Men like François Quesnay, Richard Cantillon, and the Marquis de Mirabeau. The Physiocrats were a group of mostly French economists who believed that the wealth of nations was derived solely from agriculture. The term Physiocracy itself translates as “the rule of nature.” The Physiocrats offered the first well developed theory of economics and preceded the first modern school we refer to as classical economics, which began with Adam Smith’s The Wealth of Nations in 1776. They compared the economy to the free flow of blood in a human circulatory system and proposed to dismantle the protectionist policies of mercantilism in favor of laissez faire.
Adam Smith references Cantillon often in his Wealth of Nations. We can say that this book separates economic thought as an independent science. Smith saw the economy as a spontaneous order, a reality that is not a social construct but is manifested through the action of individuals in areas such as language, the family, money, law, prices, and the economy itself. He is not the only one to hold such views; other major spokesmen were John Stewart Mill, Jean-Baptiste Say, Frédéric Bastiat, and David Ricardo.
Probably the greatest contribution of these authors is that of analyzing the economy as a distinct phenomenon and changing the question from a moral question of justice to a practical question of efficiency by developing an optimistic theory of human progress. Men are not destined to abject poverty, and human creativity and human labor can expand the possibilities of a better economic life for everyone to unimagined heights.
I believe that these men, with all their faults and mistakes, redeemed the idea of competition and profit. There is nothing wrong with competing with others to beat them in the task of meeting human needs and wants. There is nothing wrong with being greatly remunerated for that effort. Through trial and error and the right incentives, men learn what works best and, in the process, become more efficient—and everyone becomes more prosperous. Aristotle was mistaken in thinking that profit was unjust. The great Aquinas was mistaken in thinking that if any profit was brought about from economic exchange, the only moral destination for it was the church.
Now, the classical thinkers were still captive to an erroneous theory of labor. Their Theory of the Value of Labor still saw prices as arising from the costs of production, just as Aristotle and many others for centuries seemed to have taken for granted. If the price of making a chair, for example, is determined by the costs of production, then it is objective. But the costs of production are also prices. For example, the wood to make the chair has a cost, the tree has a cost, the seeds have costs, and so on. They could not fully explain prices and seemed to be engaged in circular reasoning. It is this theory of labor that Karl Marx utilizes and criticizes in his first volume of Das Kapital.
It took a while, but in 1871 three authors finally developed the idea of marginal utility. Carl Menger in Austria, Stanley Jevons in England, and Leon Walras in Switzerland discovered the principle of subjective value and marginal utility.[2]For something to be an economic good, it must be scarce and of utility to people. A businessman is going to try to sell something at the highest price possible but that will depend on whether people are willing to pay the price the seller asks for. If his price is too high, he might not sell it and competitors might use the occasion to offer the item at a lower cost, taking him out of business.
This extremely short look at history misses more than what it captures, but it might give us a glimpse at the history of the economy and the importance of ideas. We interpret the facts of history in view of a theoretical framework, a prism through which we filter reality. If the theoretical framework is incorrect—as it was with Karl Marx’s—we will read the empirical facts incorrectly. But it was the change of the questions regarding economic life that caused men to look at the same empirical facts with renewed interest and caused great advancement in the economic affairs of men.
[1] Chafuen, Alex, Faith and Liberty: The Economic Thought of the Great Scholastics (MD: Lexington Books, 2003).
[2] A number of schools or currents of marginalism developed from these three thinkers, one being the Austrian school, another the mathematical school of Alfred Marshall, and from that school other currents such as Monetarism and Keynesianism.
“The right of property is the guardian of every other right, and to deprive a people of this is, in fact, to deprive them of their liberty.” The Virginian Arthur Lee wrote that in 1775. It’s a quote I’ve used before, and I’ll keep using it because it captures a too-often-neglected truth. As the debate continues about how best to deal with the coronavirus pandemic, it’s being neglected again.
Besides the fact that all of these regulations have been applied in the cause of public health, there is another common thread: they are infringements on property rights. It’s not incorrect to think about public worship as a First Amendment, religious freedom issue, but it’s also a property-rights issue. Churches are pieces of property, privately owned by individuals or organizations. As such, their owners ought to be able to control their use.
Landlords are, it should be obvious, landowners. If tenants are able to occupy landowners’ property without paying the agreed-to fee, the owners’ property rights are violated. Similarly, a restaurant is a privately owned building. The freedom to use that property for the purpose of generating income is a basic right attending to that ownership.
There are limitations to these rights, to be sure. All legal and religious traditions—including American civil law and Christian social thought—recognize that property rights are not absolute. Private property exists in the context of the political community and its use is subordinate to the common good. Thus property rights can be constrained by the government when necessary to prevent grave harm to the community. During emergencies, the government enjoys even greater latitude to enforce such limitations.
But it’s also true that robust private property rights are a necessary element of the common good. Remember Arthur Lee’s words: “the guardian of every other right.” Property rights are not ultimately about property if by that is meant a pile of material goods. They are about human freedom and welfare. Throughout the world and throughout history, wherever the fundamental freedom of religious belief and practice has been respected, so have the property rights of religious institutions. Wherever human individuality and dignity have been respected, so have the rights of property in housing, commerce, and agriculture. The holding of property furnishes persons with the capacity to act in freedom for the good of themselves and others. Believers who worship in a church-owned by the state worship at the whim of the state.
As the pandemic stretches past the six-month mark, the issue of the emergency powers of the state grows more urgent. In an environment of fear and insecurity, it is doubly important to be attentive to government overreach. In the words of a federal judge’s recent ruling against some of Pennsylvania’s pandemic-control measures, “The liberties protected by the Constitution are not fair-weather freedoms—in place when times are good but able to be cast aside in times of trouble.” If in the rush to destroy a common enemy, we trample individual rights, any victory is Pyrrhic.
“The solution to a national crisis,” the judge continued, “can never be permitted to supersede the commitment to individual liberty that stands as the foundation of the American experiment. The Constitution cannot accept the concept of a ‘new normal’ where the basic liberties of the people can be subordinated to open-ended emergency mitigation measures.”
Our country has always prided itself on the protection of these “basic liberties,” including property rights. As we continue efforts to limit the damage of disease, we must not lose sight of that. Property rights are not a luxury that can be afforded only during times of tranquility; they’re a necessity that must be preserved, even and especially during times of crisis.
The dreaded word “Capitalism” is still with us and still the cause of much debate. Capitalism is hated by many, embraced by others, and misunderstood by most—even by those who benefit lavishly from it. For example, some of the more bestial attacks on capitalism come from extremely wealthy capitalists. Socialists hear the word and it conveys to them images of selfishness, greed, exploitation, inequality, war, and imperialism—a scourge on the face of the earth.
The intellectual classes resort to envy. Why should I, they wonder, make less than that uneducated Rotarian making millions by selling soap? Envy motivates their hatred. The pulpit-pounding religionists lament the lowering of morals, greed, and the corruption of affluence. Some of them long for the days when their dictates were law and their privileges secure, and others hold to their ideology, now sprinkled with Bible verses. Paul Tillich called capitalism “demonic,” R. H. Tawney spoke of the evil of acquisitiveness, and Max Weber told us that capitalism “crushes the human spirit.”
My own life is a witness to how misunderstandings of capitalism can lead one to attack it, until one’s eyes are opened and suddenly the unbearable thought arises: maybe, just maybe, I have been wrong. I remember examining the poverty that surrounded my life and finding an easy culprit: the forces of capital. Today, I salute capitalism and I embrace it. It is the economic system that better maximizes both growth and individual liberty. Capitalism succeeds because it is adaptive, not rigid, whereas so much regulation often fails despite good intentions. It is superior because it takes account of human fallibility, instead of attempting to eliminate it. Its anthropology is sound: The human person is creative and productive and in unleashing these potentialities we can create unimaginable wealth for most human beings.
It is superior because, believe it or not, it is humble. It is not a comprehensive system with a ready answer for all the mysteries of life. It is narrow in its pretensions. If you want greater production, do this—and that is it. Capitalism succeeds because it has proven to be effective in creating a steady rise in wage earners’ standard of living. Through trial and error, and often through periods of struggle and want, capitalism allows for experiential learning as the better alternative to ideological dreams. Don’t tell me how society ought to be, tell me how I can make lemonade with the lemon!
As the late, great Michael Novak tells us in his masterly The Spirit of Democratic Capitalism (a book you must read if you aspire to complete your learning on economic freedom), “Of all the systems of political economy which have shaped our history, none has so revolutionized ordinary expectations of human life—lengthened the life span, made the elimination of poverty and famine thinkable, enlarged the range of human choice—as democratic capitalism.”
For most of human history, the economy remained static—a steady state of poverty and low production, with subsistence as the aim and trade mostly local. Growth is a relatively recent phenomenon.
In the year 1500, global production was about $250 billion. Today, it’s around $60 trillion.
People were less mobile, they traded for what they needed from those closest to them or bartered for supplies. Wealth was concentrated on the land and major landowners were few. Either through chattel slavery or through the enslaving of peasants to the land, production remained meager, society was irremediably stratified, and privilege was destiny—as was dependency.
With capitalism came an optimism that was new. The despised merchant could aspire to a quality of life that rivaled or even surpassed that of the aristocratic and ecclesiastical classes. Optimism about progress in the future is what began to drive our economic system and without it, there would be no growth. This is an important piece of the history and origin of capitalism. Until relatively recently, this trust in the future didn’t exist, and this limited the growth of the economy. We can romanticize the slow pace of a past with its eyes on the heavens. But that is all it is: romantic drivel.
In the past, money could convert almost anything into almost anything else, but those things had to exist. We could acquire things, but what value did acquisition have if production was scarce? Money had a different nature, lacking the character of capital—its mystery, to use Hernando de Soto’s excellent description. It couldn’t represent the resources one could hope to have in the future, once an enterprise started making a profit.
In an economy without trust in the future, banks wouldn’t loan people money. For what would they lend? The only way one could build an enterprise would be to find a contractor willing to wait to be paid until after the business was built and making a profit. As this wouldn’t be likely, the enterprise never existed. As many people faced this deficiency of resources, the economy remained stagnant.
Credit is founded on the optimistic assumption that the future will have more abundant resources than the present. Because money could only represent things that actually existed, wealth was limited.
In other words, there was only so much money to go around. If one candy store was prospering, that meant the other down the street had to be starving. A set amount of wealth meant that if you had it, it was because you were taking it away from someone else. Who had it? A few. Why? Because they were born in privilege. The only system in history that has eliminated privilege is capitalism, so spare me your soupy ideology about rich privilege or white privilege.
If resources were fixed and scant that meant a zero-sum game that had to be sinful. Many people thought that being rich was either a blessing from the heavens that could not be challenged or a nearly unreachable status that could only be achieved by vicious avarice.
Little by little, with small merchants leading the way, people started to see that their wealth was independent of the poverty of others. In fact, creating wealth and benefiting from it was a public good, a good for the whole of society. Adam Smith, in his Wealth of Nations, contended that an employer’s profits benefit society because the employer reinvests his profits in hiring more employees.
By hiring more employees, the employer more widely spreads the business’s profits. In the past, rulers and the wealthy had spent their wealth on tournaments, palaces, banquets, wars, and charities. Now, they were expected to reinvest their profits in production, which would increase profits, which could then be reinvested, continuing the cycle. Amazing! This reinvested money is called capital.
Capital is the term for money and resources that are invested in the production of a product or service.
Consider the world that existed as Smith was writing his magnum opus. Mercantilism was king. Once a generation, famines wiped out great portions of the civilized world. Plagues killed throngs of people. Sizable numbers of people devoted their whole income to acquire a little bread to survive. Life expectancy in France was 27.3 years for women and 23.4 years for men. Those who journeyed afar came back feeling sorry for the conditions they found in Africa and Asia, far worse than dilapidated Europe. Illiteracy was virtually universal and great swaths of the world did not know about the wheel. Medicine was more like witchcraft.
After a steady state of pain, suffering, and want, after five millennia of dry existence, something rained on the face of humanity. Men finally figured out the key to the sustainable and systematic creation of wealth. In Great Britain large industrial cities emerged and throngs of people escaped the rural lands to try at a better life in the factories. Life was better there, in spite of the lore now fed to impressionable youngsters about how corrupt and evil early capitalism was—a lie! It was simply the painful emergence of a wondrous system that, even in the midst of its real struggles, doubled real wages between 1800 and 1850, and doubled them again by 1900. Since the population improved its lot, the British population quadrupled, meaning that the total wage increase was 1600 percent in one century.
Capitalism unflaggingly aims at improvement. A mark of capitalism is the facilitation of production by allowing human intelligence to be applied to the “stuff” of the earth to recreate it. Its wonderful instrument is the profit motive, which means that my efforts will be rewarded. More, better, and cheaper things are produced for more and more people and in the process I can better my life, the lives of my family, and the community where I live. Some Christians despise the profit motive but in point of fact we all want to receive compensation.
An excess of profits over losses signals that in an economy—even if sin intervenes and some misuse the system—the masses’ standard of living improves. In other systems sin will also intervene, as they all necessarily fail in changing human nature. But as the system is controlled, the standard of living suffers. The many benefit even if I don’t care about them in capitalism. The socialist fails to capture this truth.
As Bertrand de Jouvenel tells us in his Ethics of Redistribution, “If more goods are the goal to which society’s efforts are to be addressed, why should more goods be a disreputable objective for the individual? Socialism suffers from ambiguity in its judgment of values: if the good of society lies in greater riches, why not the good of the individual? … If this appetite for riches is bad in the individual, why not in society?”[1]
The rise in the standard of living under capitalism was nothing less than miraculous, a truth that even Karl Marx recognized in hisCommunist Manifesto. In the merry days of old, even the wealthiest people would envy the lifestyle of today’s hoi polloi. Compared with the average standard of the American or Australian worker of our age, the wealthy in yonder years lived a brutish life. We speak of the threat of consumerism because we have much to consume. I prefer that threat to starvation, a short life, and the boredom of emptiness in the pocket.
It is a falsity that it was socialists who pressured the industrialists to offer certain benefits that otherwise would not have ensued. It was not labor legislation and labor-union pressure that shortened hours of work and withdrew children from the factories; it was capitalism, which made the wage earner so prosperous that he was able to aspire to and buy more leisure time for himself and his dependents. The nineteenth and early twentieth century’s labor legislation achieved legal ratification for changes that the interplay of market factors had brought about previously.
I admire much in capitalism but if anything stands out, it is its pluralism. That pluralism does not exist either in traditional or socialist economies. In socialism, the emphasis was on conformity to a collective plan and the monopoly of an elite over truth and goodness. Similarly, in traditional economies prior to capitalism, the emphasis was on the land or the localized subsistence economy or the aims of the lords at the top and again their monopoly over truth and goodness. Capitalism rejects the unitary order where everything is fixed beforehand—follow the rules, stick to the national plan.
In his great book, The Logic of Liberty,[2] Michael Polanyi tells us of the disaster that resulted in the early Soviet state with its centralized economy when everything was directed by its Supreme Economic Council. Then came the centralization of banks, which discouraged the use of money. Wages were often paid in food. Legal trade almost disappeared, substituted by the distributive organs of Soviet power. Everything collapsed. The peasants revolted. Leningrad was racked by strikes. Famine killed millions. Dressed as a temporary measure on the way to socialism, they reintroduced markets momentarily to avoid complete catastrophe and the left in the West bought the lie of the advances of the Soviet way. And you, Democratic socialists, try the same failed centralization aims at the distribution of certain social services. Disaster still awaits.
I actually think that capitalism ought to glory in its amorality. It imposes no moral order one way or the other, however, the production of wealth might incline people. As it is not a vision led by the angels nor by the vanguard, some think it is purposeless, brute, leading to alienation and anomie. I strongly disagree, In fact, it’s amorality and pluralism can be seen from a different perspective.
Its refusal to impose an order frees us to pursue the good, which must be achieved by convincing free men. It is a necessary prerequisite to authentic freedom. Our capacity to raise questions, and the space to pursue our interests, is the very exercise of our Imago Dei, the expression of our reality as beings who transcend. Yes, truly free persons at times will experience unease and alienation! Conformity is not necessarily a virtue. The system is intentionally open to risk, exploration, questioning, experimentation, and progress. Thanks be to God!
Capitalism also glories in its anarchy. Economist Wilhelm Röpke, in his Economics of the Free Society, describes the “ordered anarchy” of capitalism, stating that political anarchy invariably leads to chaos but anarchy in economics, strangely, produces an opposite, an orderly cosmos.
Of course, there are sins and errors and problems under capitalism. Capitalism is an instrument that can be misused. But it is the best instrument available. Often, however, capitalism is blamed for sins that are not it’s own. Capitalism is like an efficient meat grinder. We have not seen one like it. But then the culture feeds rotten meat into the grinder. The grinder grinds the meat for sausages but the sausages stink. Of course, they do! They are filled with rotten meat. Here comes the cook, and he expected the meat grinder to make the meat whole, fresh. So, he takes a hammer and starts banging on the grinder to “fix it.”
We can see rather easily that the products coming out of the grinder will not improve however expertly you bang on the grinder. The problem is elsewhere. In effect, the more you hit the grinder the less efficient it becomes—you have introduced distortions into the wrong culprit! You expected an outcome not promised by the instrument. You will then hammer more and more, still trying to fix what is not broken until you break it—cursing the hammer all the way to not having any more sausages.
Here is where we need to go back to what Michael Novak called “democratic capitalism.” What is that? It means that there are three systems in one, three necessary components that form a truly free and virtuous society: a market economy; a polity respectful of the rights to life, liberty, and the pursuit of happiness; and a system of cultural institutions moved by ideals of liberty and justice, or in other words a healthy moral-cultural system.
The convergence of these three aspects is not merely accidental. In fact, I maintain that a truly free society is not compatible with a society that offends individual freedom and justice nor with a society whose moral-cultural system does not incentivize and uphold the virtues necessary for enterprise and a healthy moral ecology. We need a political system that distrusts and limits the power of the state, liberates the powers of individuals to pursue their interests, protects the private ownership of individual property, including the means of production, and, in a subsidiary fashion, promotes virtue.Bastard forms of capitalism seem to work for a moment, but they are antithetical to the good society and eventually disintegrate. If you feed the meat grinder rotten meat, don’t expect its sausages to smell like roses. You will have a great grinder but an unhealthy meal
There were widespread calls for action. Mass shootings, rising suicide rates, and an opioid epidemic were just a few of the signs that the United States had a mental health crisis on its hands. The use of psychotropic medication was increasingly common. Suicide rates among all Americans had risen 30 percent from the beginning of the millennium, and among teens, the increase was even steeper.
Paired with racially charged police killings, protests, and riots, the coronavirus pandemic exacerbated America’s already fragile psychological state. Economic woes and medical concerns have been piled on top of existing worries and political tensions. Personal interaction and religious practice—two important antidotes to loneliness and depression—have plummeted. Fear and anxiety have become dominant forces in American culture and politics.
How can we escape?
“There is no fear in love, but perfect love casts out fear. For fear has to do with punishment, and whoever fears has not been perfected in love”.
Fear feeds on obsession with self. When we are consumed by the desire for self-preservation, self-vindication, and self-aggrandizement, we inordinately fear the things that threaten those goals. Illness, job loss, social disapproval, and political defeat become the greatest evils, to be avoided at all costs.
It is possible to live a better way, even in the face of enormous challenges. Nazi concentration camps were intensely anti-human environments. People struggled to maintain the moral standards that distinguished animal from human life. Fear pervaded existence as the struggle for survival crowded out every other concern.
But there were some who retained humanity, even in the midst of such degradation. They did so by placing love above fear. Heroic figures such as Dietrich Bonhoeffer, Edith Stein, and Maximilian Kolbe were not victims but victors in the struggle between good and evil. They prevailed because they managed to put even the most primordial of human fears—death—in its rightful place. It was subservient to love—love of goodness, love of fellow man, love of God.
This kind of love may seem superhuman, and perhaps it was. All three were devout Christians. Christ is the supreme example of “laying down one’s life” for others. When Maximilian volunteered to take the place of a fellow prisoner condemned to death by starvation, he did so in conscious imitation of his Savior.
Yet all of us—Christian or not, heroically virtuous or not—have the capacity to choose others over self, love over fear. There are many training grounds for this orientation to others: civic organizations that better communities through volunteer work; athletic programs that put the welfare of the team ahead of individual preference; business enterprises that achieve profit by providing goods and services that are valued by consumers; and of course families, in which care for others above self is modeled by parents and inculcated in children.
“Perfect love casts out fear.” Perhaps if we focus less on stamping out the objects of our fears and pay more attention to contributing to the good of others, we’ll find that fear and anxiety and its attendant pathologies—alcohol and drug abuse, poor mental health, social discord—will abate. C. S. Lewis wrote that joy “is a by-product. Its very existence presupposes that you desire not it but something other and outer.” Lewis was expressing a fact well-established in theory but oft-neglected in practice: The more we pursue joy, happiness, contentment, the more they elude us. But if we turn out of ourselves to pursue the good of others—to love—then joy and peace will find us.
Labor Day celebrations are coming. We celebrate the worker and the creations of his hands. This wonderful celebration, however, has for long been informed by serious economic errors. The day evokes in me memories of marches I attended as a child, and the slogan we chanted, “Workers of the world, unite!” The famous rallying cry comes from The Communist Manifesto and was popularized in English as “Workers of the world, unite! You have nothing to lose but your chains!” The essence of the slogan is that members of the working classes throughout the world should cooperate to defeat capitalism and achieve victory in the class conflict. Karl Marx made the worker a hero. But who was Marx?
The man was born in 1818 in the city of Trier, Germany, during the period of the Restoration in Europe—the attempt at turning back the clock from the changes emanating from the French Revolution. His father was a secularized German Jew. When Marx was six years old, his father, for purely socio-economic reasons, converted to Lutheranism. Marx was then baptized as a Lutheran but by his fourteenth birthday declared himself an atheist. Over time, he became quite anti-Semitic. Eventually, he studied law at the University of Bonn, though he preferred history and philosophy. From Bonn, he moved to the prestigious university in Berlin around the year 1834, just a few years after the death of the great philosopher Georg Wilhelm Hegel. Eventually, Marx married a Prussian aristocrat, Jennifer von Westphalen.
Hegel’s influence at the University of Berlin was considerable even after his death. At the university, there were two competing groups of young Hegelians who differed in their interpretation of the philosopher. One group was on the left, (Linkshegelianers), and the other on the right. Those on the right were Christian idealists philosophically and the ones on the left were agnostic materialists. Those on the right defended the Prussian state but those on the left rejected it. Marx joined those on the left. This period of his life is characterized by his attempt at offering a response to the various interpretations of Hegel.
There are three important intellectual currents that influenced Marx during these and coming formative years, which Marx mentions in his writings that historians have characterized as “The Young Marx.” The first current was the thought of another great German Hegelian, Ludwig Andreas von Feuerbach, a philosopher and anthropologist who interpreted Hegel’s metaphysics and provided a critique of Hegel’s doctrine of religion and the state. Marx read Feuerbach’s The Essence of Christianity, which portrays religion in general and Christianity specifically as false, a great error based on the human desire to create a god after man’s own image. The concept of God is where men deposit their hopes, fears, and unfulfilled expectations for eternal life, happiness, good health, and freedom. Man imagines a being after man’s expectations. What is important is mater, not spirit. After reading Feuerbach, Marx was still a liberal but now also a serious materialist.
In the first, Hegel develops his dialectic. He says that all men are in conflict with other men to gain power and control over nature. In turn, men want other men to respect their ownership over nature, transformed into property through their work. Those who take greater risks initially win over the less motivated in the competition to control nature and possess it. From that competition emerge owners (risk-takers) and slaves (the losers). The owners are saved from the dangers of struggling with nature and end up living in comfort out of the labor of the workers, the slaves who continue to struggle with nature. The slaves work and the owners enjoy the fruit of that labor.
However, the slave, having to tangle with nature, learns its secrets and places his ideas (his rational order) in nature. What the slave produces remains, but the owner only destroys, consuming the fruits of the labor of the slave. All of this seems to have a profound grain of truth. Easy riches are a curse, not a blessing!
A second concept that Marx takes from Hegel is the idea of alienation. Marx was attracted to the concept due to his own life as a Jew in a Christian world, later a Lutheran in a Catholic region, an atheist in a theistic world, and a bourgeois who wanted to be a proletarian. In the competition between owner and slave there arises, over time, a set of norms and institutions—credit, contracts, money, justice systems, social mores, banks, family life—that gain a life of their own and become in a sense foreign to man’s existence. As these are foreign, they oppress men and detach men from each other and from society—that is alienation. Thus, Hegel contributes to Marx the concepts of the dialectic and of alienation, both crucial to his theories.
After Marx was expelled from Germany in 1845 due to his political activities, he went to Paris. An important event in his life while in France was meeting the man who would become his best friend and collaborator until his death, Friedrich Engels. In France we can find another influence on Marx, which is the Parisian socialism of men such as Proudhon and Saint-Simon. This might be his first serious exploration of socialism. During this period, Marx was developing his theories. The year of his explusion, Marx published The German Ideology, co-written with Engels, where we see Marx beginning to develop his theory of history.
Marx got into political trouble again and was expelled one more time, landing in Brussels, Belgium. There, Marx, now joined by Engels, came into contact with the labor movement. One group of workers, known as the League of the Just, asked him to write a manifesto about his ideals, which he did in February of 1848. This is what we all know today as The Communist Manifesto. The manifesto was profoundly influential among Belgian workers, and Marx was expelled yet again.
London was his next destination and the setting for another great influence. The capitalist system was forming there and that movement, with its practical and theoretical influences, has a massive impact on Marx. England was then the only truly industrialized country in the world, a place with a booming economy, full of possibilities, and seeming contradictions and tensions.
Another often forgotten influence on Marx was the historical interpretation of the French Revolution by Jules Michelet, who in 1867 finished the great work of his life, Histoire de France, in nineteen volumes. There Michelet emphasized that one of the crucial outcomes of the Revolution was that a social class, that of the nobles and clergy, had been displaced by a new class, the bourgeoisie. The concept of social class as the key economic grouping in the dialectic was an influence coming from Michelet.
The third important intellectual current was the English contribution in the economics of men like Adam Smith, David Ricardo, James Mill and his son John Stewart, and others. What could these classical liberals possibly contribute to Marx? Probably the most important element is the value of human work, but he also learned about the other two factors of production: land and capital. Specifically, for example, from David Ricardo Marx took the subsistence theory of wages, also known as the “iron law” of wages. According to the “iron law” theory, wage levels tend to fluctuate around the minimum necessary for providing the means of existence. (The classical liberals made their mistakes and these were later corrected by other contributions, such as the role of the entrepreneur and the concept of marginal utility.)
These are the three great influences on Marx: German philosophy, French socialism, and English economics. A fourth might be said to be the Belgian workers movement. These influences converged in him, a genius of his time who was able to synthesize these currents of thought into a powerful, although ultimately destructive and evil, political ideology and revolutionary world movement.
Marx was however seriously wrong in his historiography and his economics. It is possible, as Hayek points out, that, being intellectually honest, Marx delayed the publication of the second and third volumes of Das Kapital because he was unable to offer a serious response to the classical theory of marginal value developed by Menger and others. The marginal theory of value is the subjective theory of value which is basic to all the theories of the Austrian School of Economics. It can be argued that as a serious school of economics, Marxism died by 1870—and yet, its effects remain with us. The story of how Marginalism destroyed Marxism will be for another time.
As is well known, for Karl Marx work was a source of alienation. In the Christian tradition, too, the Genesis account teaches that the hardship of toil is a result of sin. Everyone has some experience with work as drudgery, indignity, or burden.
But there is another side of labor. It can also be fruitful, rewarding—even healing. As Pope John Paul II explained in his 1981 letter on human labor, “Work is a good thing for man—a good thing for his humanity—because through work man not only transforms nature, adapting it to his own needs, but he also achieves fulfillment as a human being and indeed, in a sense, becomes ‘more a human being.’” We can see this dimension of work—its dignity and benefit—in the story of Constance from South Sudan.
A middle-aged, married woman with four children, Constance is no stranger to hard work. Besides managing her own household, she has provided care for more than twenty orphans in her extended family. Outside the home, she oversees a trauma healing organization that assists women in Protection of Civilian (POC) camps, refuges for those suffering from the country’s civil conflict. It is thought that almost all women in these camps have been victims of sexual abuse of some kind.
“increase the common good developed together with his compatriots, thus realizing that in this way work serves to add to the heritage of the whole human family, of all the people living in the world.”
The healing groups meet regularly and provide a time for sharing and prayer. They also provide an opportunity for remunerative work. The organization runs a micro-loan program, whereby women can obtain small loans to start businesses such as bakeries or clothing shops. Like many such programs, the micro-loan operation is highly personal—and highly effective. Everyone knows who is getting what, and everyone cares about keeping the fund solvent. In the several years that Constance has managed it, there has been only one default.
Constance previously worked for a government agency and criticizes the dominant mentality there: “a myth that women couldn’t do anything for themselves.” Instead, she found that “they had a deep strength. They brought order out of disorder.”
This experience spurred Constance to empower the downtrodden women of South Sudan to better themselves. As women begin providing for themselves and succeeding in the marketplace, their confidence in themselves and their abilities grows. They contribute not only to their own wellbeing but also to that of their community, highlighting yet another important dimension of work: its social impact. Through work, John Paul wrote, the person seeks to “increase the common good developed together with his compatriots, thus realizing that in this way work serves to add to the heritage of the whole human family, of all the people living in the world.”
In South Sudan, all of this is accomplished in the face of manifold challenges, but such obstacles are not insurmountable when confronted with determination. “We can make a difference,” Constance says. “We can learn to work.”
For Constance and the women in her ministry, labor is not cursed or alienating but healing. It does not rob dignity but restores it. It is something to celebrate.
The author acknowledges and thanks to Gabe Hurrish of Maryknoll Lay Missioners for sharing Constance’s story.
Racialism—not racism—is engulfing our civilization. Racism is a special case of racialism, one that was fading slowly from our society but has been given renewed vivification by the racialism infecting our public life. Racism is not, strictly speaking, the abused term often propagated, which is so expansive in its definition that it encompasses anything a given person dislikes in a member of a different racial group. Racism is a form of racialism, and as such must be condemned like all racialist thinking. Those of us who care about the future of our nation and all those who are in the greatest need have a duty to oppose the false anthropology at the heart of the racialist ideology.
Therefore, I cannot remain silent about the issues of our day concerning race and the turmoil and havoc that false understandings of the racial question are inflicting, especially to minority neighborhoods. The countless souls trapped in communities where incivility, anger, and violence reign are not often covered by the news. Pursuit of justice does not have to be this way, but this push for racial justice has become what seems to be an inevitably destructive movement. It is especially destructive precisely because it camouflages as a fight for justice.
Racialism refers to the inordinate attention given to and the demarcation of the social construct of race by placing it at the center of human identity. I call it a social construct because the idea of separating the human species into distinct groups based on physical characteristics is not based on any scientific evidence that there are biogenetically distinct races. What we call “races” reflect specific attitudes and beliefs that were imposed on different populations beginning in the 17th century.
In our present social context, this centering of race has been informed by the anthropology of revisionist Marxism. In classic Marxist theory, the concept of social class determines identity by collectivizing it. If one is a worker, one is a proletarian, and that collective classification exhausts any meaningful content of individual identity. Once, some Communist Party members approached Vladimir Ulyanov (Lenin) complaining about the killing of many Russian Kulaks—those peasants wealthy enough to own a farm and hire labor. “They are treating their employees well and are decent people!”, the party officers explained. Lenin, without missing a beat, responded, “We are not killing them for being bad people, we are killing them for being Kulaks.”
In other words, their class identity displaced any other meaningful aspect of their being; individual characteristics were irrelevant. In exterminating them, Lenin was being consistent. Their existence as a class was detrimental to the advancement of a revolution that, although bloody and even unjust for some individuals, was supposedly destined to bring about the victory of the proletariat and the eventual hoped-for classless society.
However, after the predictions of Marx concerning the coming revolution did not pan out, it was left to his intellectual supporters to revise it. A number of theorists offered varied revisions of Marxian theory: Lenin, Trotsky, Bakunin and the Anarchists, and many others. This revisionism continues unabated until the present time. Some neo-Marxists distinguish themselves by their emphasis on race.
A number of neo-Marxists posit that social class is not the element (or the only element) at the base of individual and social identity. Race is an irreducible reality that cannot be subsumed within any other concept. In other words, they use the basic dialectical analysis of Marx but employ race as the dividing line, the battleground for revolution. Other neo-Marxists see race as important only in the context of their critique of capitalism. Blacks are seen as the quintessential victims of capitalism, but the race question is still an epiphenomenon or manifestation of class. Among classic Marxists the slogan remains intact: “The issue is never the issue. The issue is always the revolution.”
For these classic Marxists, race is reducible to class. A good example of the link between class and race is the work of the American of Russian descent, Noel Ignatiev, a founder of the magazine Race Traitor and the one who coined the concept of “white privilege.” Ignatiev taught that the term “white” refers to anyone of any race who embraces capitalism, limited government, and American traditional values. The concept of “white privilege” was not ultimately about race but about the privileges he saw embedded in a capitalist economy. The task was to eradicate capitalism, not merely to fight racism. As Ignitiev states, “The greatest ideological barrier to the achievement of proletarian class consciousness, solidarity and political action is now, and has been historically, white chauvinism. White chauvinism is the ideological bulwark of the practice of white supremacy, the general oppression of blacks by whites.”
Racialism is also expressed through the what has been termed as Critical Race Theory (CRT). The theory started in the early 1980s at Harvard Law school out of an alternative course using Professor Derrick Bell’s book Race, Racism, and American Law. It is an offspring of a post-civil rights radical activism brought into academe to analyze the law through the lens of victimization and the theory of systemic racism. Critical Race Theory (CRT) scholars focus on the relationship between race, racism, and power by questioning the liberal order in American constitutional law, legal reasoning, and the entire social framework of American life.
In any of its multiple expressions, racialism places race at the heart of both each person’s identity and social life. At its root, it offers a Marxist analysis of race and rejects the type of incrementalist understanding of progress and reform at the heart of the vision of the early Civil Rights Movement. We are today suffering from such a devastatingly alienating movement.
