Saturday, June 6, 2009

Why Capitalism is Wrong, Socialism is No Better and Christianity is the Only Answer

Good counter-cultural thinking often takes place at the Front Porch Republic. Here is an exerpt from an interesting article by Lew Daly.

"Many involved in Front Porch Republic embrace the idea of a smallholder economy based on family production under conditions of widespread ownership of productive resources. This was the vision of a moral economy held by the more radical republicans among America’s founders and revived in the 1790s by Thomas Jefferson, George Logan, John Taylor and other leaders of what would become the Democratic Party. Even John Adams had thought this way in the revolutionary fervor of 1776. “The only possible Way then of preserving the Ballance of Power on the side of equal Liberty and public Virtue,” he wrote in a letter that year to James Sullivan, “is to make the Acquisition of Land easy to every Member of Society: to make a Division of the Land into Small Quantities, So that the Multitude may be possessed of landed Estates.”

Catholic distributism, also important at FPR (see John Médaille’s several recent posts on the subject), helps us to ground the American smallholder ethic in a Christian anthropology and a natural-law understanding of the common good. As in all Catholic thought, this religious understanding includes a strong presumption of political responsibility for securing a cohesive, stable social order. Thus it is important today both for the political necessity it entails (given the existing pattern of wealth concentration) and for the particular kind of order it envisions. By the end of the Reagan Administration, Glenn Hubbard found, less than 9 percent of households had active business assets worth more than $5,000, but those few that did controlled about 40 percent of total household wealth. The bottom half of American households now controls less than 5 percent of our total net worth. Our republican founders could not have imagined a distribution of wealth so concentrated, nor a democracy so threatened by the rule of property.

James Matthew Wilson recently reflected here on the smallholder vision as embodying “the need for autarchy.” Property right, in this view, is designed to secure a moderate economic competence for one family and the next, but instead, Wilson argues, it has become a tool of unlimited accumulation. Of course we have social laws that restrain even “rightful” accumulation in a few minimal ways. But underlying this, it seems to me that “autarchy,” an essentially Stoical construal of the idea of a household economy—complete self-rule based on ownership of productive resources–cannot be the basis of a stable society or the ideal moral condition of its members. Most obviously, it goes too far (potentially) in opposing the household to the common good. The very architect of the idea of self-rule based on ownership of property, John Locke, already predicted the grim proletarian future of this idea in the famous passage in his Second Treatise describing the “turfs my servant has cut” as part of the landowner’s “labor” entitlement. The fruits of the labor of those without property were instantly assimilated to the justice of proprietary autarchy. Thus modern capitalism was born in contravention of the fundamental laws of God and nature, which provide for a wide distribution of productive resources and political responsibility to secure as much. Locke’s liberal seduction of Christian thought in philosophically sanctifying private property as a necessary and virtually limitless extension of inviolable God-given personhood penetrated to the core of Western culture almost without resistance until the nineteenth century. Standing athwart the anti-human extremes of liberalism and socialism, Catholic social thought, beginning with the Jesuit neo-Thomists who laid the intellectual groundwork for Rerum novarum, devised a theory of individual or household property balanced by public responsibility for securing conditions of widespread ownership or self-sufficiency by other means. Leaving much room for technical debate on the proper means for securing these ends, I ask if we can rebuild a republican-Christian synthesis in American politics today, and if we can, what kind of common action, duly justified, can dismantle the existing pattern of wealth concentration and restore the sovereignty of families and communities."

The bolded section contains the thought I want to reflect on for a moment. To own something, from a Christian perspective, is surely different than what it means to own something from a secularized liberal perspective. Christians "own" property in the sense of being stewards of that property and, since the property really belongs to God, Christians have a responsibility to use that property for the common good. It is in this sense that private property is not an absolute in Christian thought. To accumulate endlessly and use property selfishly is unChristian. Property should be distributed as widely as possible, which means that all should be taught to accumulate some property but not become greedy and turn the acquisition of property into a vice. This, of course, is difficult because of original sin; yet it is the essence of responsible stewardship.

Locke's liberal seduction consisted of telling men that they are like God and can own as much as they can acquire absolutely and with no responsibility to anyone else; this is the whitewhashing of the vice of extreme acquisitiveness combined with an unqualified or absolute right to private property. This is part of the modern project of making man into God. It is in this sense that capitalism is a contravention of the laws of nature and of God.

The Christian answer is not to remove the temptation by abolishing private property or by removing the possibility of entrepreneurship and initiative. It is to teach men to strive to resist the vice of acquisitiveness by means of God's grace and to recognize their social responsibility to use property for the common good. Socialism has no room for grace; it is a religion of pure law. In the socialist solution, private property is taken from the rich by coercion and redistributed according to the will of an elite group - either the Party or some sort of ruling class, perhaps a professional class of civil servants who manage wealth distribution. Socialism leaves the individual as vicious as it finds him and therefore is able to achieve its goals only with regard to external and superficial equality without addressing the heart. The potential for cynicism and alienation, not to mention on-going institutionalized violence, is ominous.

Now, it seems to me that in both Capitalism and Socialism, the common thread is the control of power and wealth in society by a small group which is supposedly more virtuous than the common herd. In Capitalism this is the small group of rich people who control the means of production and they are seen as more virtuous because Providence has smiled on them and made them rich. In Socialism this group is usually the hardened, revolutionary leadership whose virtue is proven by their willingness to sacrifice for the sake of the revolution or a profession managerial class of civil servants with a politically correct ideological vision. In both cases, the common citizen is reduced to a beast of burden, someone who must be "managed" or "employed" by those with power.

Christianity stands for the dignity of the common person, who is called by God to exercise responsible freedom and choose to share, to be a good steward and to provide well for his family. This way of life, embodied in the free peasantry of much of Europe in the Medieval period and which has continued into modernity - though much assulted by industrialism, Capitalism and urbanization - is the best way of life from a moral perspective. I realize that that sounds categorical, but one needs to say it strongly because this view is so strongly hated and rejected by so many today. The independent, but interdependent, family farm or business enterprise embedded in a local community that functions as an economy is the heart and soul of democracy. It is the vision of the American founders and was rightly percieved as well-suited to a vast, unsettled continent. But under the pressures of urbanization, industrialization, commercialism, urbanism, consumerism, globalization, we see an increasing gap between rich and poor, an increasingly artificial and hedonistic way of life and an increase in depression, suicide and low-level violence.

Neither Capitalism or Socialism has the power to repair the torn social fabric. Only a revival of Christianity can do that - and even then massive social reform will be necessary, the shape of which is difficult to percieve in advance. But only Christianity has what Capitalism and Socialism lack - a God who loves all people equally and who gives grace to those who strive to be responsible stewards.


Peter Dunn said...

Thanks Craig for another great post. I like a lot of what you've written, especially: Everything belongs to God, we are stewards, and the selfish acquisition of property is a vice. This is very true.

Some issues:
I am not convinced that the concentration of wealth into the large corporations is all bad. Take TD Bank as just an example. It is a huge bank, but I feel a certain comfort in placing my assets there and running my portfolio from the TD group. They hire a lot of people, giving out really good jobs (not MacJobs at all); and my experience has found the TD employees customer friendly and professional (though not perfect). TD is owned by shareholders who receive a great dividend. I think it is something that works for the benefit of a lot of people, myself included--and all the people that we help too. TD gives sound advice on their website for investors--who would include the small business owners and the people who work for them. TD extends loans to all kinds of businesses, and while credit shrank in recent months, I was able to obtain a line which helped me to increase my wealth and my income.

These points could be applied to a lot of large corporations--which don't fit into the distributist's ideal of small businesses and family farms. Besides, many of the large corporations are owned by shareholders, who include teachers, plumbers, and anyone else who has assets in a pension fund or mutual fund. So may be the gap is getting larger in the states, but many millions of people are wealthier than ever before too (at least until the bubble collapsed, but that's another story).

Another point is that business owners must take risks that workers do not. My wife's family company provide 25-30 good jobs to people with benefits. While the current recession has many people worried, the workers don't have the worry about the business debt that keep my wife and her brothers from sleeping at night. Owning a business is not for everyone: it requires skills, knowledge and willingness to take risks that not everyone has. So yes, working for large companies is beneficial to many millions of people in Canada and America who don't have these talents. And they shouldn't turn around and complain to the owners that they don't get paid as much, when often the reason they are poor is because they blow their money on cigarettes, lottery tickets and consumer debt. Greed and lack of Christian principles with regard to money is a sickness that attacks both the rich and the poor.

Finally, the generosity that is needed in the Christian system is a product of a truly Spirit-filled community, as we see in Acts 2-4. In other words, it may be helpful and necessary to teach proper stewardship regarding wealth, but it seems to me that in order for Christians to be charitable, they must have been filled with and renewed by the Holy Spirit, and it is truly God's love flowing out of them to others. In a sense, the selfish person is not Spirit-filled and therefore unredeemed. As you say, "only Christianity has what Capitalism and Socialism lack," -- I only add that this is Spirit-filled Christianity. Thanks again.

Craig Carter said...

In Canada we have only a few, very large banks. That this is not the only possible way to structure the financial services industry is demonstrated by the US, where there are thousands of small, regional (local) banks and by the credit union movement.

The TD Bank may not do anything evil today or tomorrow, but here is the problem I have with such a large institution. When the US and Canadian governments decided to prop up the banks, what was the reason given? That such institutions were too large to be allowed to fail. And the reason the Canadian and Ontario governments gave 10.4 billion dollars to GM weeks before it went bankrupt (with the PM openly stating that it was highly unlikely the loans would ever be paid back) what was the real reason? That Ontario (where the next Federal election will be won or lost) cannot afford to lose thousands of high paid car manufacturing and related jobs. So basically GM is too big to be allowed to fail. So the taxpayer is over a barrel.

If financial institutions were smaller, then ones that make bad business decisions could be allowed to fail and be replaced by start ups (often run by employees of the former companies) that take a different approach.

The present system encourages inefficiency, short term thinking and irresponsibility (except to current shareholders maybe).

Obviously not every large corporation is going to go bankrupt at the same time, but surely the lessons learned in this downturn are significant. If we allow too few and too large corporations in each sector of the economy, we place in their hands the ability to blackmail the taxpayers - especially in a free trade, global capitalist environment.

What is the argument for letting banks get so big? So they can maximize profits. I'd prefer they made less than the maximum profit and stayed in business longer - both as a taxpayer and as a shareholder. (Have you seen GM's share price lately?)

Peter Dunn said...

Thanks for your response; it is very helpful. I am not trying to do a commercial for TD. But compare my recent experience with TD with the treatment that I got from my local sports club which is a single proprietor, local business. I felt ill-used for over 4 months while they settled an accounting issue; the owner uses his superior knowledge of contract law to abuse his clients--this caused a great deal of grief that has only recently been resolved. I feel much warmer to TD than to that local business (at this point my wife is not happy with TD though). The same with a local corner store video rental where the clerk insisted on an exceptionally high late fee, even though they have no after hours deposit and I had never been late returning a video before. I'd much rather deal with the young people working at Rogers Video than some small business man who thinks $8 is more important than my continued patronage (I told him I'd never be back and I've kept my promise).

The laws should prevent monopolies in order to assure competition. With GM, Chrysler, and Ford, however, I understand that the playing field greatly favored them and they used legislation to eliminate all other competitions, dozens of small automobile companies that used to exist. GM was not too big to fail, as we are seeing. So the bailout should never have occurred. It is a failed political policy to take over a dying company just before it goes bankrupt then let it go bankrupt anyways. I don't think you can really blame any of the nationalization of American companies on capitalism; it is an unprecedented seizure of the private sector which is a shock to many in the business community.

I'm not sure that it helps to limit the growth or success of companies, as long as they play fair, provide good customer service, and their goods are fairly obtained and affordable. But you certainly have a point about the banks in Canada. There are not that many banks (RY, TD, CIBC, BMO, Scotia and a few others), and I suppose that is because of regulation. You are right that in the US, there are still many local banks.

I guess that I can see some of the advantages of capitalism and some of the disadvantages of distributism. Nevertheless, we agree that Christianity, if correctly understood, challenges the obsessions of our times.

Nathan Smith said...

Thanks for the heads up on this article!