13. The Bottom Line

Number thirteen from Michael D. Greaney.

From The Just Third Way

One of Pope John Paul I’s expressed concerns as Patriarch of Venice was the plight of the poor.  His first “letter” in Illustrissimi, in fact, is to Charles Dickens, and at first glance seems to be a standard semi- or full-socialist condemnation of the evils and greed of capitalism, the free market, the dictators of money, and so on, so forth.

The letter to Dickens is, however, much more profound than the usual socialist interpretation would have us believe.  As we saw in the previous posting in this series, many (if not most) people think that Catholic social teaching is about garnering more and more material benefits for the poor.

Daniel Webster

That is correct in a sense, but the material benefits sought as the results of effective application of Catholic social teaching are not increases in wages, benefits, and welfare, but the very material and beneficial power over one’s own life.  For that reason, widespread private property in capital is essential, because (as Daniel Webster noted) “Power naturally and necessarily follows property.”

That being said, however, pay close attention to what was written above: we did not say that Catholic social teaching means securing material benefits of any kind.  Very much the contrary!  Catholic social teaching has as its goal institutional reform to make it possible for people to secure material, social, and even spiritual benefits through their own efforts, not to have such things simply distributed to them because they need them.

Individual goods such as private property and even wages, benefits, and welfare, regardless how many people receive them, are, have always been, and will always be individual.  As Pope Pius XI explained in § 76 of Quadragesimo Anno,

What We have thus far stated regarding an equitable distribution of property and regarding just wages concerns individual persons and only indirectly touches social order, to the restoration of which according to the principles of sound philosophy and to its perfection according to the sublime precepts of the law of the Gospel, Our Predecessor, Leo XIII, devoted all his thought and care.

Still, at first glance the letter to Dickens strikes the reader as very socialist, indeed!  It also sounds very much as if John Paul I was strongly in favor of what is variously known as syndicalism or guild socialism, i.e., some kind of diffused socialism with the economy controlled at the local rather than the national level.  As he wrote,

Pope John Paul I

You must be curious to know if and how some remedy has been found for the situations of poverty and injustice that you reported.

I will tell you at once.  In your own England, and in industrialized Europe, the workers have greatly improved their position.  The only power they could command was their numerical strength.  They exploited it. . . .

The workers, at first separate and scattered grains of sand, have become a compact cloud, in their unions and in the various forms of socialism, which have the undeniable merit of having been, almost everywhere, the chief cause of the workers’ upward rise.

Since your day, they have advanced and achieved much in the areas of economy, social security, culture.  And today, through the unions, they often manage to make their voice heard still higher, in the upper ranks of the government where, actually, their fate is decided. (Luciani, Illustrissimi, op. cit., 5-6.)

This apparent paean in praise of socialism sounds pretty good.  Many people would conclude from it that John Paul I was crediting socialism with greatly improving the lot of the workers.  They would also feel justified in assuming that the future pope was going even further and actually advocating socialism as the solution to the problems of the modern world.

Charles Dickens

That is, many people would assume that is what John Paul I was saying if they did not realize the import of the subsequent paragraphs.  Having apparently praised socialism and the labor movement to the skies, he suddenly changes tone and begins listing the problems of the modern world that, somehow (and a little unfairly) he made sound as if they were worse than those of the nineteenth century.

And what of now? Alas!  In your time social injustices were all in one direction: against workers, who could point their fingers at the boss.  Today, a vast array of people are pointing their fingers. . . . Many workers are unemployed or fear for their jobs.  They . . . feel treated as mere tools of production and not as human protagonists. . . . Fear and concern are great.  For many the desert animal to be attacked and buried is no longer only capitalism, but also the present “system,” to be overturned with a total revolution.  For others the process of overturning the system has already begun.  (Ibid., 6-7.)

Far from uniting people, then, the race to establish and maintain the goal of religious or democratic socialism — the Kingdom of God on Earth — has only led to greater alienation and anger.  Where once the poor felt powerless against the capitalist, they now feel powerless against “the system” that is failing in the attempt to take care of everything.  The spiritual malaise that called socialism into being in the first place is now worse than ever before.

Ironically (for it is clear that John Paul I was familiar with Rerum Novarum), he had the theoretical answer to the problem of social alienation: widespread capital ownership.  What he did not have was a practical means of attaining the very remedy that Leo XIII advocated.

Saint Bernard of Clairvaux

What he did have was a realization that obsessing about applications to the exclusion or even contradiction of the underlying principles was virtually a guarantee of ineffectiveness, especially in the area of social justice.  Calling to mind Pope Benedict XV’s reminder at the beginning of World War I that we must always do “old things, but in a new way” (Ad Beatissimi Apostolorum, § 25), John Paul I chastised those who latch on to a single application or assumption without regard to anything else in his letter to Saint Bernard of Clairvaux by condemning —

. . . the attitude of those who stubbornly refuse to face evident realities and fall into excessive rigidity and integralism, becoming more monarchist than the king, more papist than the pope.

This happens.  There are those who, having mastered an idea, bury it and continue to preserve it, to defend it jealously for their whole lives, never reexamining it, never checking to see what it has become after so much rain and wind, after the storms of events and changes.

Those who travel in the stratosphere run the risk of not being prudent, and, crammed with purely bookish learning, they cannot once move away from what is written, real nitpickers always intent on analyzing, taking to pieces, always in search of hairs to split. (Ibid., 36.)

Note that John Paul I was not condemning integralism per se, “integralism” being the integration of all aspects of life into the precepts of the Gospel and the Magisterium (teaching authority of the Catholic Church).  Rather, he was commenting on excessiveintegralism, the exaggeration of one aspect of Catholic teaching to the exclusion of all else, making everything subordinate to one thing.

Pope John Paul II

Not surprisingly, John Paul II also commented on this tendency in 1999 when he chastised the bishops of North and South America for driving people out of the Church by exaggerating one part of Catholic social teaching.  As he declared, pointing out that enthusiasm for one thing to the exclusion of others is contrary to the very Gospel they were supposed to be spreading,

As I have already noted, love for the poor must be preferential, but not exclusive. The Synod Fathers observed that it was in part because of an approach to the pastoral care of the poor marked by a certain exclusiveness that the pastoral care for the leading sectors of society has been neglected and many people have thus been estranged from the Church. The damage done by the spread of secularism in these sectors — political or economic, union-related, military, social or cultural — shows how urgent it is that they be evangelized, with the encouragement and guidance of the Church's Pastors, who are called by God to care for everyone. They will be able to count on the help of those who — fortunately still numerous — have remained faithful to Christian values. In this regard the Synod Fathers have recognized “the commitment of many leaders to building a just and fraternal society”. With their support, Pastors will face the not easy task of evangelizing these sectors of society. With renewed fervor and updated methods, they will announce Christ to leaders, men and women alike, insisting especially on the formation of consciences on the basis of the Church's social doctrine. This formation will act as the best antidote to the not infrequent cases of inconsistency and even corruption marking socio-political structures. Conversely, if this evangelization of the leadership sector is neglected, it should not come as a surprise that many who are a part of it will be guided by criteria alien to the Gospel and at times openly contrary to it. (Ecclesia in America, § 67.)

Still, John Paul I had no effective means of going beyond the usual expedients of wages, benefits, and welfare.  Wisely or unwisely, therefore, he said nothing, merely limited himself to calling for more solidarity and unity.  These are good, even great words, but hollow and empty without the power needed to make them meaningful.

The problem is that within the wage system, the presumed solution is to raise wages in order to distribute sufficient income to clear production.  This raises the costs of production, giving more incentive to capital owners to replace even more human labor with technology, thereby requiring more increases in wages just to keep up.

John Maynard Keynes

(There is an added problem with Keynesian economics.  Within the Keynesian paradigm, new capital formation requires that production exceed consumption in order to “save.”  This means that more goods must be produced than can be consumed . . . thereby setting up a “paradox of savings,” viz., that more must be produced than can be consumed, but it cannot be turned into financing for new capital unless it is consumed!

(Keynes’s solution was to inflate the currency, shifting purchasing power from one group of people to another group of people; the idea that inflating the currency “creates” purchasing power is, obviously, nonsense.  Inflation “robs Peter to pay Paul,” decreases the costs of production by cheapening money, and raises prices, thereby increasing profits to owners of capital and causing additional demands for more inflation and redistribution.)

What is needed is a way to increase consumption income without raising prices — and thereby benefit everyone instead of just those who profit from inflation.  Not just materially, but by bringing “labor” and “management” together in a common cause, laying the foundation for genuine solidarity.

And that is what Walter Reuther realized he had found in Louis Kelso’s economic theories.  As he said in his testimony before the Joint Economic Committee of Congress, February 20, 1967, a few years before John Paul I wrote his letter to Dickens,

Walter Reuther

The breakdown in collective bargaining in recent years is due to the difficulty of labor and management trying to equate the relative equity of the worker and the stockholder and the consumer in advance of the facts….  If the workers get too much, then the argument is that that triggers inflationary pressures, and the counter argument is that if they don’t get their equity, then we have a recession because of inadequate purchasing power. We believe this approach (progress sharing) is a rational approach because you cooperate in creating the abundance that makes the progress possible, and then you share that progress after the fact, and not before the fact.  Profit sharing would resolve the conflict between management apprehensions and worker expectations on the basis of solid economic facts as they materialize rather than on the basis of speculation as to what the future might hold…. If the workers had definite assurance of equitable shares in the profits of the corporations that employ them, they would see less need to seek an equitable balance between their gains and soaring profits through augmented increases in basic wage rates. This would be a desirable result from the standpoint of stabilization policy because profit sharing does not increase costs. Since profits are a residual, after all costs have been met, and since their size is not determinable until after customers have paid the prices charged for the firm’s products, profit sharing as such cannot be said to have any inflationary impact upon costs and prices.

That addresses the income question — but what about the power issue?  Reuther was prepared for that as well.  Power follows property, therefore —

Louis O. Kelso

Profit sharing in the form of stock distributions to workers would help to democratize the ownership of America’s vast corporate wealth which is today appallingly undemocratic and unhealthy.  The Federal Reserve Board recently published data from which it is possible to estimate the degree of concentration in the ownership of publicly traded stock held by individuals and families as of December 1962. Preliminary analysis of these data indicates that, despite all the talk of a “people’s capitalism” in the United States, little more than one percent of all consumer units owned approximately 70 percent of all such stock.  Fewer than 8 percent of all consumer units owned approximately 97 percent—which means, conversely, that the total direct ownership interest of more than 92 percent of America’s consumer units in the corporation-operated productive wealth of this country was approximately 3 percent.  Profit sharing in a form that would help to correct this shocking maldistribution would be highly desirable for that reason alone.… If workers had definite assurance of equitable shares in the profits of the corporations that employ them, they would see less need to seek an equitable balance between their gains and soaring profits through augmented increases in basic wage rates. This would be a desirable result from the standpoint of stabilization policy because profit sharing does not increase costs. Since profits are a residual, after all costs have been met, and since their size is not determinable until after customers have paid the prices charged for the firm’s products, profit sharing as such cannot be said to have any inflationary impact upon costs and prices. (Ibid.)

Unfortunately, John Paul I was not aware of what Reuther said, nor of Kelso’s theories.  What he said about the need to develop solidarity and Christian values and so on was and remains important, of course.  Regardless of one’s faith or philosophy, the whole meaning and purpose of life is to become more fully human, which means acquiring and developing virtue — “human-ness” — as long as that is consistent with basic human nature, of course.

Acquiring and developing virtue, or doing anything else, however, requires power, and the only legitimate, effective, and lasting power comes from private property in capital.  And how to get capital ownership into as many people’s hands as possible is what was missing in the thought of John Paul I, as well as other popes.