The Political Economy: What’s a Catholic Got to Do?

So we’re still experiencing the Global Financial Crisis and it does not seem to show any signs of dissipating. As a matter of fact, as I’ve written in the Distributist League of the Philippines blog, we’re expecting another global recession to land in our shores. To put it bluntly, we’re in deep trouble and we’re not getting out of hot water anytime soon if this were to continue.

Before we get to all the technical modern-day issues which plague the global economy, let’s first look at how we as Catholic-Christians are to view economics itself. Let’s rid ourselves of the misconceptions of how Christians ought to support the Marxist-like ideals (which seem to plague the Philippines) like those of Fr. Gustavo Gutiérrez or how we should support laissez-faire or libertarian capitalism like Ludwig von Mises or Ayn Rand—no, let’s look at what orthodox Catholics had in mind.

We first look at what the esteemed Pope Leo XIII wrote in his papal encyclical letter, Rerum Novarum. During the height of industrialization, all sorts of ideologies rose up concerning the aspects of labor and capital. A certain Karl Marx also had his own take on capital and labor, yet Leo XIII did not share Marx’s views.

True that Leo XIII spoke on the unjust treatment of workers but rejected the utter nonsense that there is a perpetual struggle between the rich and the poor.[1] The Holy Father did not like the idea of doing away with individual rights to property. He also believed that when man works—when he labors, he labors to obtain property of his own.[2] Doing away the concept of private property for the sake of the workers was a grave error for Pope Leo XIII.

About four decades later, Pope Pius XI released his own papal encyclical entitled Quadragesimo Anno, which not only reiterated Pope Leo XIII’s position on private property but implied that property has a sacred purpose.

Let us first state an example: Whenever we dine, we may have fun chatting with friends. We may enjoy the taste of the food we are consuming. We may enjoy the taste of wine paired with food. But the true purpose of dining is to satisfy our hunger. Not everyone eats for enjoyment; they need food as they need to survive. They eat food that they may not go hungry. Food is meant to address the problem of hunger.

The sacred purpose of property, as Pius XI implied, is that it ought to be subordinated for the common good.[3] Pius XI was not saying that property ought to be confiscated and be made public for everyone’s use. For all we care, we can enjoy the privilege of being owners of something; but our ownership has a social purpose. The question of how we can reconcile private property with social justice would be left unanswered if we are to stop here.

Enter G.K. Chesterton and Hilaire Belloc, the proponents of early distributism. In case many of you don’t know, distributism is the economic philosophy which advocates the widespread distribution of property and an ownership society based on the principles of subsidiarity & solidarity. Taking the writings of Pope Leo XIII and Pope Pius XI, Chesterton and Belloc founded a new economic school of thought which would have been a strong contender against capitalism and socialism during those times.[4]

The problem was that both of them never had any formal training in economics, although their arguments were very much compelling. The legacy that they left was not really that great. The dissolution of the Distributist League in Britain followed the death of G.K. Chesterton. Distributists that followed after Chester-Belloc argued on moral grounds, but not on economic terms. Distributism—except for great economic thinkers like E.F. Schumacher—was long forgotten and was dismissed as a mere specter which had been exorcised by modern economists; distributism had become a thing of the past, overshadowed by Keynesian economics.

To move on to the present day; are there any distributists left? Have they been wiped out following the mass purging by the Keynesian army after the Great Depression? Is there any hope for Catholic Social Teaching to win its place in the political economy?

Now, it seems as if the “free-market” system has failed once again. America, Greece, Spain and most of the EU countries are in deep debt. The reliance of people on having jobs has taken its toll, as unemployment rates are rising all over the world. This was what Hilaire Belloc predicted: The state, due to the natural instability of capitalism, has become servile.

The economic recession which has hit the global market seems to be a signal for neo-distributists to emerge. Debt apparently being the consequence of the Keynesian “free-market” concept and the liquidation of many firms caused by the over-reliance of the usurious credit system, distributism has to be a very plausible solution according to the new breed of distributists.

Let me stray from the topic a bit and focus once again on the issue of property. By the principle of building an ownership society, neo-distributists not only want workers to work to obtain property; [we] also want workers to be the owners of where they work.

Sounds absurd? Well isn’t that the system which cooperatives are adopting? Isn’t that the system which the Mondragón Cooperatives Corporation—started by Fr. José María Arizmendi based on Catholic Social Teaching—in the Basque country of Spain and the cooperative economy of the region of Emilia-Romagna in Italy is based on? Isn’t Mondragón the seventh largest company in Spain in terms of turnovers and the stronghold of the Basque economy? Aren’t the wages in Emilia-Romagna higher than the rest of Italy’s?[5] What?

See here, a cooperative/ownership economy is the dream of every distributist. Banks would be shunned in favor of credit unions and industries would be localized based on subsidiarity; but would also have a certain networking institution as that with the economy of Emilia-Romagna. Usurious practices would then be a thing of the past—we would be able to pay our debts without suffering from the high interest rates.

To look at the global financial meltdown from a distributist perspective, people would be able to enjoy the benefits of being a worker and an owner at the same time if we adopt the distributist system, or something like it. By loaning from credit unions owned by its workers/members instead of banks that impose high interest rates, repayment would not be very difficult. As such, we wouldn’t have the problem of stock prices going down and the government wouldn’t have to provide bailouts for firms on the brink of bankruptcy or liquidation. (In other words, the government would not have to borrow money and increase its debt.)

Ownership would not be concentrated on a few firms but among a lot of people, may they work for a cooperative/distributist firm or may they form one. A society of worker-owners would be able to provide genuine social justice and wages would be evenly distributed. There, the problem of unemployment would not only be addressed, but employment per se would be elevated into something much more profound—employment and ownership at the same time.

By decentralizing industries (subsidiarity), inefficiencies caused by the central authority would not affect local ones. If there are inefficiencies, a networking institution between certain firms would then be able to reach out by invoking the other firms. Unlike in Keynesian economics, these institutions would allow for cooperation between firms and industries instead of doling out monetary aid. This is solidarity.

I know, the distributist take on the global financial crisis which I have presented may be superficial and somewhat naïve. I’m not quite sure if I did justice to the economic philosophy here, as I am not a scholar who can discuss distributism and argue on purely economic terms; I merely consider myself a student and I am still learning. But I’m hoping that what I’ve presented may be a stepping stone for what Catholics ought to do with regards to the political economy.

The popes have presented their views in the papal encyclicals. These views did not only stop with Pius XI’s Quadragesimo Anno, but continued on with Bl. John XXIII’s Mater et Magistra, Paul VI’s Populorum Progressio, Bl. John Paul II’s Centesimus Annus and more recently, Benedict XVI’s Caritas in Veritate.

There are also those whom I’d like to call the masters of neo-distributism like John Médaille and Christopher Ferrara, who are very much strong advocates of the economic philosophy as started by Chester-Belloc. These people have written good books and articles and have debated objectors to distributism, including libertarian capitalists.

So let’s go back to the title of this article: What’s a Catholic got to do with the political economy?

The answer: A Catholic plays a vital role in reshaping society and to mold economics as something which ought not to be treated as a physical science, but as a humane science. The popes and Catholic thinkers have built the foundation on how justice and progress can be made to exist in society and the economy from Christendom’s perspective.

As Catholics, let us treat property with high regard, ownership as sacred and the economy as God’s gift to mankind. And let us take into consideration the teachings of the Church—especially by the popes in the mentioned encyclicals—as well the ideas of the proponents of distributism and Catholic Social Teaching.

Jared blogs regularly at Verum Nocet, The Distributist League of the Philippines and his personal blog, The Secular Catholic.

Tags: Catholic Social Teaching, Distributism, Economics

Category: Jobs, Life, Money & Finance