The Popes and Democracy - Part III. On the Effects of Modern Ideas 28. Freedom of Action and Capitalism

The practical consequences of freedom of action are so varied and numerous that it is impossible to discuss them all in a single paragraph. Let us take, as an example the story of Capitalism, which is based on "laissez-faire", (let act). Money is essentially a means of exchange; as such it is a necessary and legitimate human device, the possession of which, or of what it secures, being not immoral in itself (private ownership). "Private ownership, including that of productive goods, is a natural right which the State cannot suppress." (e.g. through arbitrary nationalisations). (John XXIII "Mater et Magistra") But Capitalism changes the use of money to make it a means to produce more money. In normal circumstances, money is the result of work. In Capitalism money is the result of money and, therefore, replaces work. This perversion of money has led to many abuses, and these abuses, in turn, have been responsible for the emergence of Socialism and Communism. Capitalism is based on Freedom of action, and on the humanistic assumption that happiness can be achieved on earth through better and greater production of material goods. It is the child of both Liberalism and Rationalism. As such, it is the- twin brother of Modern Democracy and cannot be separated from it. Capitalism artificially boosts production with a complete disregard for the people's real needs. Capitalism sets up an "economy of the manufacturer", to the detriment of the "economy of the consumer", which is the only sound form of economy. Production takes precedence over all considerations; and instead of serving man, it eventually makes man a slave. "A system has been constructed which considers profit as the key motive for economic progress, competition as the supreme law of economics, and private ownership of the means of production as an absolute right that has no limits and carries no corresponding social obligation. This unchecked liberalism leads to dictatorship rightly denounced by Pius Xl as producing 'the international imperialism of money'. One cannot condemn such abuses too strongly by solemnly recalling once again that the economy is at the service of man". (Paul VI "Populorum Progressio") This passage has been misunderstood by some contemporary commentators; Pope Paul did not condemn the use of Capital, but Liberal Capitalism. He did not condemn the profit motive, but the absolute precedence given to it with no regard for the real needs of the people. He did not condemn private ownership, but the unlimited and exclusive claim of the owners. Still less did the Pope advocate State Ownership - even by implication. State ownership, indeed, is not the only possible alternative to private ownership of the means of Production. Public ownership, as advocated by John XXIII in "Mater et Magistra" is a third alternative in which "the wage-earners are made sharers in some way in the ownership, or the management or the profits". It is clear, therefore, that Pope Paul did not contradict in this passage the teaching of his predecessors. The unlimited claim of the owners is indeed scandalous when an oil magnate can earn up to $300,000 a day thanks to his investments, whilst a family man working in a factory starves on $80 a week. Production being regarded as the supreme good, it is an imperative necessity to produce always more and more, and, therefore, to sell more and more. Advertising then comes into play, invading the life of the people, warping their judgment and creating non-existent "needs", in order to sell the ever-increasing production. This is what could be called the "productive" aspect of Capitalism; its evil nature is evident, even if we refrain from considering here the fact that it instills into the minds of the people a false set of values.

But there is another very important aspect, the "speculative" aspect, so to speak. Capitalism can work only because credit is granted by the Banks. Originally, Banks lent the money that was deposited in their safes because it had become evident that a large proportion of these deposits were never Withdrawn all at the same time. Perhaps 10% only of the deposits would be withdrawn. The Banks were therefore in a position to lend up to 90% of the existing deposits. But the loans themselves were often transferred from Bank to Bank without being in circulation in cash. On a $1,000 deposit, it becomes therefore possible to lend Up to $10,000 (by book entries), since only 10%, $1,000, will be in actual circulation, and since this figure is precisely what was deposited in the first place in cash. Needless to say, this is a very sketchy outline of banking procedures, but it does show that credits are actually non-existent money, and, what is more, interest is charged on this non-existent money! Loans are granted to the government in the same manner, with the effect that the National Debt in some countries is continually rising, and that a large proportion of Income Tax money is issued - not to repay the National Debt, but to serve the interest on it! To put it bluntly, the sweat and toil of the people is used to fatten the anonymous wire-pullers of International Finance. Income Tax, by the way, is a relatively recent invention, and some economists say it could easily be suppressed. It is noteworthy too, that the cost of the goods produced must include the interest paid to the Banks, and is therefore higher than the purchasing power of the working force, with the effect that there is scarcity in plenty, and people are held in economic subjection. "Laws must prevent the worker from being condemned to an economic dependence or slavery irreconcilable with his rights as a person." (Pius XII - Christmas 1942) This economic slavery is at the root of strikes and social unrest. Likewise, the ever increasing National Debt makes devaluation a recurrent necessity which governments cannot evade, but which discourages thrift and brings misery to old people, reducing them to "the most abject poverty after a life of hard saving and hard work." (Pius XII - Christmas 1952) Space does not permit speaking of the stock and share business, but the conclusions drawn would be the same as above, namely, that Capitalism is truly a tyranny. Socialism and Communism are bent on the destruction of Capitalism, but what they put forward is worse than the evil they want to cure: the tyranny of the State instead of the tyranny of capital. "Whether this slavery arises from the tyranny of private capital or from the power of the State makes no difference to its effects." (Pius XII - Christmas 1942)