Is Thomas Woods a Dissenter? A Further Reply, Pt. 2
Dr. Woods’ article, “Catholic Social Teaching and the Market Economy Revisited: A Reply to Thomas Storck,” is, I must admit, superficially attractive. It appears to crush opposition under a weight of impressive learning. But, I would suggest, when his assertions are examined, Woods’ citation of authorities, like his argument in general, fails. I begin with one example because it gives me the opportunity to note another feature of Dr. Woods' piece, his frequent misrepresentation of what I actually say. Let’s look at what Woods says about the German historical school, a school of 19-century German economists who stood in opposition to many of the teachings of economists in the tradition of Adam Smith. Dr. Woods writes, “And if the scarcely mourned German Historical School is declared the winner, as Storck seems to wish, are adherents of all other schools thenceforth outside Catholic communion?" But did I say that the German Historical School is the “winner"? Hardly. In fact I said that “something like the original American Institutionalism, or the German historical school, or economic sociology, seems to be required if we are to examine the actual workings of economies in the manner that the popes have done.” And later I add, “Although I am not arguing that any of these alternative economic schools is by itself necessarily sufficient to ground a complete economic analysis, taken together they suggest an approach which Catholic social philosophers and economists should find fruitful, and which gives a wide field for further development.” But Woods seizes upon my supposed selection of the German historical school and this allows him to speak with an authoritative voice on the differences among adherents of the German historical school, their relations to Austrian economics and so forth. But none of this, I would suggest, is very relevant, since I was painting with broad strokes here, and merely pointing to those schools of economists whose methodology differs from that of the mainstream neoclassical school and Woods’ own Austrian school.
Now my paper was mainly an attack on mainstream economics, and I quote the recently deceased Paul Samuelson more than once as the expositor of its views. I mention the Austrian school only two or three times and simply as sharing in the generally deductive approach to economic analysis that neoclassical economists take. My approach is that of Anton Lowenberg, who, writing in the Cato Journal, said “I use the term 'neoclassical’ here very broadly; it includes all theories that are based on the economizing behavior of individual value-maximizing agents.” By a deductive approach I mean an approach which sets up a model of how an economy works based on a limited examination of actual economic behavior or a cursory examination of human nature and which excludes certain important factors, such as culture or the relative power of different groups in the economy, and thereafter simply deduces how economies are supposed to function based on that model. Admittedly the Austrian school eschews the attempts of the neoclassical school to use mathematics to make itself seem more scientific, but most observers consider the Austrians to fall under the head of what I call deductive economics and to be closest to the mainstream of all the alternative schools. Austrians, however, do not seem to like this characterization, and this may explain the tone of Woods’ piece, still more of his strange rant against me, which he delivered last spring at the Mises Institute.
Woods begins his reply by saying that Catholic “supporters and opponents of the market economy often talk past each other. The difficulty they encounter derives from a confusion over the very nature of economics. The phenomena that economics touches upon, which include money, banking, exchange, prices, wages, monopoly theory, and many other topics, are themselves replete with moral significance. But the positive, scientific statements about these phenomena that constitute the discipline of economics are necessarily value neutral.” This of course is true, but largely beside the point. For the chief point of my paper was that in the course of their pronouncements about economic morality, the popes necessarily make certain observations about economic phenomena, especially about the behavior of economic actors. And it would be hard to imagine them doing otherwise. Thus one of the points of contention is exactly over these “scientific statements.” Deductive economics claims that economies behave in certain ways and as a result they make certain statements which they suppose to be scientific, while other schools deny this. The main point of my paper was that the economic analysis which the popes employ in the course of their moral teaching seems to agree more with the latter schools than with the mainstream and Austrian approaches. So when Woods writes, “Describing the workings of fractional-reserve banking is a positive task, not a normative one. Discussing whether such a system is desirable is a normative task, and qualitatively separate from explaining the mechanics of that system,” this is true, but only if we are in agreement about how to describe a particular economic phenomenon. There would probably be little disagreement about his example here, about how fractional-reserve banking operates. But this is hardly true of all economic behavior or phenomena.
Woods then brings up another irrelevant example. He writes: “Frank Knight conceived of capital as a homogeneous unit whose individual processes occurred synchronously. . . . F.A. Hayek . . . conceives of capital as a series of time-consuming stages of higher and lower order. . . . Nothing in the Deposit of Faith even comes close to deciding this and countless other important economic questions one way or the other.” Fine, but again entirely irrelevant. Certainly there are points of economics on which no pope would dream of pronouncing—but does it follow that popes can never pronounce on any point of economic phenomena?
After this, Woods makes a statement that goes to the heart of the fundamental question of what competence does the Church have in the area of economics. “It is of course not 'dissent' merely to observe that the cause-and-effect relationships that constitute the theoretical edifice of economics are not a matter of faith and morals. They simply do not fall within the range of subjects on which a Catholic prelate is endowed with special insight or authority. Catholic laity cannot head up petition drives against them. They are facts of life. Facts cannot be protested, defied, or lectured to; they can only be learned and acted upon.” Again Woods is both irrelevant and begs the question. By definition the popes cannot pronounce outside the area of their competence, nor can they assert something contrary to fact. I do not dispute that. But what are the limits of their competence, and who gets to decide? Thomas Woods? Orthodox Catholics have protested about attempts to erect a so-called parallel magisterium, e.g., a magisterium of theologians to sit in judgment on the magisterium of pope and bishops. But here we have a magisterium of economists, competent it seems to pronounce in an area of moral teaching that the popes claim as a legitimate arena for their own teaching. Woods does not like the fact that I have found what he calls “an obscure paper of mine” in which he wrote: “The primary difficulty with much of what has fallen under the heading of Catholic social teaching since Pope Leo XIII’s Rerum Novarum (1891) is that it assumes without argument that the force of human will suffices to resolve economic questions, and that reason and the conclusions of economic law can be safely neglected, even scorned.” But is this not the entire argument in a nutshell? Who gets to decide about the apparently ironclad “conclusions of economic law”? Or for that matter, of the conclusions of psychology or of philosophy?
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Mr. Maxwell, I'm not following your logic. Mr. Kirkwood writes for the Remnant, so therefore . . . so therefore what? Mr. Kirkwood has also written for LewRockwell.com—should we therefore be attacking Mr. Kirkwood as a hypocrite, since, by your logic, he must support the very people he is criticizing?
Mr. Woods used to write for the Remnant, too. What does that tell us?
Mr Richert, my point was is that several of the posters here dissent regularly about various statements from the Catholic Church, so to me it seems hypocritical to be practically accusing Woods of being a heretic for the same reason. To be fair Mr. Kirkwood writes often more about history for the Remnant (of which I am a regular reader).
I want to stress though, that I dont agree with Woods on all of his points either; but I do agree with him that there are certain laws of economics that dont become less true because various Popes or certain Catholic Bishop Conferences wish them to be. And yes, Mr Richert I remember Woods writing for the Remnant, where he regularly dissented - along with the Remnant staff - about then Cardinal Ratzinger's various give ins to the Church progressives who are destroying Her, and among other areas.
Mr. Maxwell, your answer hasn't made your previous statement any more clear. You write "several of the posters here dissent regularly about various statements from the Catholic Church, so to me it seems hypocritical to be practically accusing Woods of being a heretic for the same reason," but you still haven't identified such a poster and the dissent he has published. You accused Mr. Chan of positions held by someone else, and you have now twice mentioned Mr. Kirkwood without once pointing to a single instance of what you regard as his dissent.
In fact, in this latest comment, the only person you have actually identified as a dissenter is Mr. Woods—which makes it awfully odd that you are accusing others (without providing any evidence) of being dissenters, and calling them hypocrites for doing what you have just done.
In case my point still isn't clear, Mr. Maxwell, why don't we simply stick to those things which various people—Mr. Woods, Mr. Storck, Mr. Kirkwood, and any others you'd like—have actually written, and stop muddying the argument through attempts at guilt by association?
Otherwise, the next thing you know, someone will accuse all of us at Chronicles of being dissenters because Chronicles has published both Mr. Woods and Mr. Kirkwood. And then I suppose Mr. Storck would be implicated as well, because we have published him. It's enough to make my head spin.
You're right Mr Richert, I admit my argument was a weak one. I should have my memory checked; Mr Chan does not equal 'J Meng' - and Mr Kirkwood as I said mainly writes about history for The Remnant and I was unable to find any real dissent on his part. I withdraw what I said about both posters and I apologize again.
But setting aside the repliers here for a moment, my point still stands that there are few of us who dont dissent on at least a few points with the Catholic Church. You yourself have been very vocal about the Church promoting amnesty, for example. At what point in your mind, does dissent go too far? Am I out of line for saying I disagree quite strongly not only with the Church on its promotion of Herself in the US as an 'immigrant church' but with other topics such as capital punishment, the Novus Ordo and universal health care (not to mention economics)?
Thank you, Mr. Maxwell.
As to your other point, you write, "there are few of us who dont dissent on at least a few points with the Catholic Church." I don't, in fact, know that to be true of the Catholic commenters (not to mention the writers) here. To speak only of myself, I try always to understand not only the official teaching of the Church but to take seriously any discussion by popes of the issues of the day. If I am a dissenter, even on "a few points," it is unintentional dissent, because I cannot think of any question on which I have intentionally written a single word in dissent.
You write that I "have been very vocal about the Church promoting amnesty, for example." I'm wondering where I might find such writings of mine, because I have clearly forgotten producing them. I have written about the Church and immigration, but nothing that I recall writing could be characterized as you have characterized my views.
At what point does dissent from the teachings of the Church go too far? In my mind, when it becomes dissent. As others have discussed, that may well be something short of heresy or of any offense that would incur de jure or de facto excommunication.
The problem in this particular case is not (as many of Mr. Woods defenders, including, I think, yourself, would have it) that Mr. Woods disagrees with particular policy proposals and solutions. The problem is that Mr. Woods has stated, in so many words, that the Church has no competence to teach in the area of economics, while a series of popes have claimed otherwise.
Those of us who take seriously the teaching authority of the Church must take seriously the Church's claims about the limits of that authority. Mr. Woods does not.
On my last comment, about taking seriously the Church's claims about the limits of Her teaching authority, I'm reminded of an exchange from earlier in this comment thread. Mr. Stove wrote:
And Mr. Marino replied:
Setting aside Mr. Marino's non sequitur—Mr. Stove didn't say that he knows no one who objects to Quadragesimo anno—the exchange is still enlightening. Like Mr. Stove, I can think of "no Catholic writer in the English language" who "objected to Rerum Novarum and Quadragesimo Anno before Bill Buckley’s emergence."
Yet today, there are plenty of American Catholics (including, presumably, Mr. Marino, though I note that he has yet to answer Mr. Storck's direct question) who object not only to Rerum novarum and Quadragesimo anno but indeed, as one prominent libertarian who is Catholic (my phrasing is intentional) told me regarding himself six years ago, to the entire tradition of Catholic social teaching.
The question, obviously, is why? But that why has many different levels. What happened historically in the United States that brought about this change? Why hasn't it happened in Europe, not even in England (at least to the extent it has happened here)?
The why I'm most interested in, though, is why Catholics in the United States today simply assume—one might say, as a matter of faith—that economic morality somehow lies outside of "faith and morals."
I realize now that, growing up, that was my understanding as well. But this is the heart of Mr. Stove's point: That wasn't always the understanding of Catholic writers in the English language. There was, as Mr. Stove writes of F.J. Sheed, "not the smallest suggestion there that the Church’s economic teachings are any less binding on the Catholic faithful than are the Church’s specifically sexual teachings."
Yet at some point, for "conservative" Catholics in the United States, that changed. It became a proof of Catholic orthodoxy to point out that Catholics could not dissent from Humanae vitae, but proof of one's "conservatism" to declare one's open dissent from Catholic social teaching.
But on what basis is this justified? Where in Catholic tradition do we find warrant for removing economic morality from the realm of the Church's teaching on morals?
Mr. Stove:
Shame on you. Are we down to stessing a couple of spelling and typing mistakes as proof of your argument? I type by looking at the keys because I never learned any other way. I also was never the best speller. I have to edit everything I write and make a few mistakes. That doesn't make your argument any better.
You sound like my old sociology teacher in high school Sister Mary Agnes SSND in 1960-61. God rest her soul. She used the Papel letters of Leo and Pius the 11th as the main focus of her course. She was quite adamant that the only place in the world where the social doctrine of the church was being applied properly was in Salazar's Portugal. Now Salazar had some good points. He was for sound money and gold. He had strict balanced budgets and kept the country under orderly rule. He also was for a colonial empire that was keeping his country in poverty and which led to the downfall of his regime, after his death, and the installation of a communist- socialist state.
His rule was marked by an elite cabral of the rich and the army. The poor were not well provided for. There also wasn't a lot of opportunity for advancement and many were forced to emmigrate. He ruled far too long for any good he did. He also had no real plan for sucession. Most of what he did ended in ruins. How can we see anything for our future in such history?
I object to nothing in these letters or any other Papel statements about our responsiblity to the poor and those under our economic control. That also stands for those of the bisops, and my parish priest. These responsibilities go back to the Gospel itself. I have the right to object to political or economic remedies put forth by fallible priests from the Pope on down. If I think that they are wrong and may do more harm than good. In fact, I think it is my duty to do so in a respectful and charitable way.
The Catholic Church which gave the world the University, the scientific method, and such great scholars as Paul, Augutine, Aquinas, and Catherine of Sienna, can stand a little intellectual argument about economics and how to properly respond to our Gospel call on charity to the poor.
The Catholic Church over 2000 years has survived many thousands of civil governments and many, many,economic models. The Church goes on the best it can under all circumstances. There will never be a perfect civil government or economic model here on earth. All we can do is to try do right every day ourselves.
Mr. Richert,
Re Comment 58 - I am not an American, so my qualifications for commenting upon American history are limited; but could the conflation between Catholicism and what might be described as the reactionary and very primitive form of economic liberalism espoused by John Marino, apparently stuck somewhere in time before 1931, be a testament to the success of anti-Soviet Communist teaching - albeit an inverted one?
Presumably both the Catholic Church in the USA and the American State railed against Soviet Communism after 1945. In this struggle, perhaps the necessity of defeating Soviet Communism became, for some, more important than leading orthodox and devout lives - after all, the State and the Church are saying the same things, so that message must be the really important one. However, and unlike the Church, the State never had any real beef with Communism per se - indeed it was quite willing to court it as and when required, as shown in 1972. The Soviet version was, however, a direct challenge to the State's influence in parts of the world deemed important.
The overly close identification of State with Church, allied to the overtly anti-Catholic direction in which public culture was turned from, say, 1965 onwards (and one which Catholics willingly fostered by letting their children watch television and buy music), perhaps led many Catholics to identify more with the State than the Church. The Church was still preaching 'Love your neighbour as you do yourself' - from 1980 onwards, the State was preaching, 'And you love your neighbour by eliminating regulation and helping the rich make more money so that your neighbour's lot can be improved through the operation of trickledown'. Presumably, this may have caused something of a localised collapse in confidence amongst the hierarchy, leading them to actively embrace or merely suffer that which they should have all have immediately condemned with one voice; one thinks of liturgical dance and shudders. It also left some Catholics without any kind of defence mechanism against State diktat, no prism through which the State's demands could be viewed.
It was the breaking down of this firewall that has ultimately led to the abomination of Catholics endorsing torture because the State and its cheerleaders say it's necessary for security - a concept to which the early Church seemed to pay no heed. In the economic sphere, 1980's era neoliberalism has been shown to be one of the most reactionary doctrines ever devised by Man. Wherever it has been applied, common public goods have been turned into private hands for a pittance, workers' rights have been severely restricted, and the gap between rich and poor has widened significantly. One would hope that Mr. Marino and those who cheerlead for deregulation reflect upon whether these developments are compatible with Christianity. Personally, I doubt it.
Regarding the reading of encyclicals, 'Caritas in Veritate' is an extremely challenging document; its enunciation of the importance of migrants' rights is a direct challenge to Catholics who believe in the restriction of immigration. This causes this writer to do some soul searching - for no matter how much one might be attracted to immigration restrictionism for cultural and economic reasons (in my case, writing for VDare), orthodoxy and the promise of eternal life are more important than anything else.
Further to Scott Richert's remarks, perhaps a brief allusion to secular political history is in order.
In Australia during my 1960s and 1970s childhood - scarcely among the most theocratic of cultures - it was taken for granted by everyone, whether Catholic or Protestant or Jew or atheist (we had extremely few Buddhists or Muslims in our midst), that (a) Catholics believed specific teachings about the economy, and (b) these teachings were different from what the WASP mainstream (whether Right or Left) believed. I say this as one who grew up in a household not only atheist but quite militantly atheist.
In fact it was precisely because of both (a) and (b), especially (b), that the Catholic position was so bitterly unpopular in the Australian secularist establishment at the time. This position was derided by its opponents as consisting of "three acres and a cow".
The late Clyde Cameron - a Left-wing Australian cabinet minister of formidable talent and invective during the 1970s - publicly warned that if Catholics got powerful enough to act on Chesterbellocian notions, the whole Australian population would be made to "eat grass." (He later relented.) Nonetheless, neither Cameron nor anyone else in Australian public life ever supposed that Catholic economic teaching wasn't de fide.
Promoting the notion that Rerum Novarum and other economics encyclicals were purely optional was, as far as I can determine, an imaginative leap confined to upholders of Americanist heresy in its various forms (and Dr. Woods's attitudes on economics surely constitute nothing more, or less, than merely one branch among others of Americanism). Of course Dr. Woods has his Australian Catholic soul-mates now. But my point is, he had no such soul-mates then. His current antipodean imitators are simply importing his doctrines.
Gentlemen all,
It appears to me that, if I can assume good will on the part of those who raise objections to papal social teaching, some of their difficulty comes from the great number of papal/episcopal statements, and that these people lack any means for sorting out the level of authority in these various utterances. Some people, when challenged about Quadragesimo Anno, immediately begin to talk about bishops' statements or papal statements about global warming, etc. This is only to muddy the waters. Let me attempt a clarification, although I already said some of this in one of my comments after part I of this series.
An encyclical is a formal statement of a pope. Thus it carries with it a presumption of some authority. However, we can often see that there are different levels of authority in the same document just by looking at the wording of statements. But when something is stated as the teaching of the Church, and especially when it is repeated by numerous popes, I think it is more than rash (in the theological sense) to dispute it. It's also important to note that in their economic teaching the popes speak directly only to the moral aspects of economics (as Pius XI makes clear). But as I argued at length in my original article (in the CSSR), it's impossible to make any statements about the morality of economic matters without occasionally at least touching on how economies actually work. And that the popes have done, although their specific competence does not reach technical matters. (See my reply to Wood's reply for more on this - I think it's in part 3.)
Other statements by popes, speeches, audiences, etc., clearly carry less weight. On global warming for example, the popes have no competence in meteorology, physics, earth science, etc. as such.
So we must understand that their moral teaching, which does have weight, assumes the fact of global warming and man's contribution to it. So essentially it seems to me, those of you who dispute global warming must agree that IF global warming were occurring, then the papal moral statements about it would carry authority. If you don't think there is global warming or that man's contribution to it is nil or small, then I suppose you can regard the papal statements as simply good morals but misapplied to the factual situation. (BTW, I fail to see why so many take as an article of their (conservative) faith that global warming is a myth. It appears to me that some global warming is obviously occurring and that almost certainly we are contributing to it. But this is merely an obiter dictum - let's not get involved in arguing this point here please.) And I hope everyone can see that it's really necessary, despite what Thomas Woods says, for popes to make comments about actual economic facts, even if the thrust of their teaching is moral. Consider the parallel case: Can the popes denounce a persecution of the Church that is occurring somewhere? What is the government involved denies it is persecuting? Does the pope have specific competence in reporting the news? Clearly no, but it would be pretty silly if the popes always had to preface their statements with a disclaimer such as, "Well if in fact such and such a government is killing Catholics...," or "Well, if in fact capitalists are exploiting workers..." We have to live in the real world here and not invent some ivory tower for the popes to dwell in, making comments that have no relevance for the life of the faithful.
But for those who make sweeping references to encyclicals, papal addresses, speeches, etc. and throw up their hands in dismay, and
conclude that because not all of this carries doctrinal weight, then none of it does - this is a failure to think. It seems to me that those who want to speak about these issues, even in the informal method of responses, have a responsibility to learn something about the subject and about the correct methodology for understanding it. I would be a fool were I to speak about a subject on which I knew little or nothing and simply point to the variety of phenomena and exclaim, "Look at all that! How can anyone make sense of it. I can't and therefore no one else can either!"
There is enough nonsense spoken today, and everyone who speaks or writes has a duty, it seems to me, to try to help in the discovery of truth and clarification of issues, not to simply repeat slogans.
I wrote a long answer to Mr. Stove last night that took me over and hour to do. When I submitted it the whole thing was blocked. I get the point. Only the choir gets to sing in this church.
Mr. Marino, please pause for a moment and think about what you have just written. This comment made it through; the other did not. Do you honestly think that there is someone sitting here, monitoring every comment and preventing one—but only one!—of your many comments from appearing?
Of course not. The system that we use (WordPress) is largely automated. Comments are automatically thrown into moderation for certain reasons (I am not going to list them all here, because that would help spammers figure out how to prevent their comments from being placed into moderation); and other comments are caught by our spam filter.
Your response to Mr. Stove was caught by the latter. I'm not sure why, but I have found it there and approved it.
Again, some patience and charity might be called for here. "Only the choir gets to sing in this church"—and yet your comments, with the exception of one, have all appeared, and that one was caught apparently by a fluke.
I did not expect the comment to make it through Scott. I was just testing the system. You can see how frustrated I was by putting all that work in and it not getting through. Believe me I just thought my comments had been blocked by your computers. I am off to see a sick elderly aunt so I can't put anymore time in now. I used to spar with you in a very friendly way over at Taki's a while back. Thanks for the response.
After reading the article and the posts, I have difficulty agreeing with either Mr. Woods or Mr. Storck. Mr. Marino keeps the ball rolling throughout the discussion and it is very helpful in examining both sides. As far as Mr. Storck, I have trouble with the whole notion of deductive economics in explaining preferences. SOmehow it is supposed to support his argument, but I don't think that the concept of deductive economics can be used correctly to describe any school of thought as its main characteristic. In addition, methodology alone plays a very minor part when discussing different schools of thought.
As far as Mr. Woods, even if the pronouncement he criticizes can be interpreted as anticapitalist (and assuming that this is why he has a problem with it), why take it out of context as if it is being used as a rallying cry against capitalism and in favor of socialism? Perhaps there is more behind all this that I am not aware of and there is an attempt to marginalize Mr. Woods, but isn't this really much ado about nothing? The Pope has a moral authority that he has, he has a duty to guide and any of his pronouncements should be welcomed as such. At the same time if this Pope believes in global warming and has problems with capitalism, it does not mean that the next Pope will see things differently. In closing, the question Whether the science of global warming or economics is honest is a separate but equally interesting issue which is not being discussed here.
Mr. Bailey,
I appreciate your attempt to sum up this dispute, but I'm not sure I would agree with you. For example, I think Pope Benedict's name has hardly been mentioned in all this discussion, so I don't understand your reference to the "next Pope" We're talking about teaching repeated since Leo XIII in 1891, if not before. This teaching is not socialist, nor need it even be understood as anti-capitalist (Please see the definition of capitalism from Pius XI and my discussion of that in my comment #45 under part 1.) It is definitely against the abuses of capitalism, and it recognizes that the free market is not an adequate way of regulating an economy. My CSSR article was mainly dedicated to showing that papal moral teaching on the economy presupposed a type of economic analysis that differs from what I call deductive economics, the kind of economics that says, `Well, such and such can never happen because the market doesn't work that way' or something like that. In other words, instead of looking at economic facts this kind of economic analysis tends to look to its theories and interpret facts in their light.
Secondly, I touched on the question, and Dr. Woods discussed this at more length, of the authoritative nature of papal teaching on economic morality. This has been pretty thoroughly thrashed out above, as I'm sure you've read. If, as you admit, papal teaching has moral authority as coming from the Vicar of Christ, then I don't understand why some such as Mr. Marino or Dr. Woods object to that teaching when it touches upon economic morality.
Thank you for your kind answer. I was attempting to make a minor point that in the future a Pope may come with a view that evolves in a different way. In any case, the Pope should be heeded without a doubt. But that is where the problems arise. If the free market is not adequate to regulate the economy, then who is? Furthermore for those who are supposed to regualate it, how much regulation is enough? I am not sure that Mr. Marino or Mr Woods object to the papal teachings as much as they are worried about the answers to these two questions above.
'If the free market is not adequate to regulate the economy, then who is?'
In a democracy, I would have thought the people were sovereign, in the sense that they are the final authority on everything in the civil sphere. Their right to govern themselves supercedes any economic right.
'Furthermore for those who are supposed to regulate it, how much regulation is enough?'
Enough as is required. As has been seen over the past two years, the need for regulation is often seen only at the same time as the consequences of non-regulation become apparent. The price of freedom being eternal vigilance and all that, the need for regulation outweighs the preference for non-regulation.
Michael Ezzo,
Though you gave a shock, putting my name and wisdom in the same sentence, I thank you for the kind words.
Martin Kelly@69 writes:
"In a democracy, I would have thought the people were sovereign, in the sense that they are the final authority on everything in the civil sphere."
If it were that easy, this article wouldn't have been necessary, and in fact, Chronicles Magazine probably wouldn't exist.
When you put together the power of the transnational financial and business interests and the power of America's inept, corrupt, cowardly political duopoly, "the people" are reduced to the status of children. Like children, their only weapon is the tantrum. Tantrums get attention and palliatives; once the children have been soothed and had their attention redirected, the power balance, though momentarily disturbed, remains unchanged. As Clyde Wilson says, "The bankers will always get their cut", and as the economy worsens and money becomes harder to extract from its remaining producers, and the people's tantrums become more troublesome, finance and government become ever more ruthless in their methods.
As for the answer "Enough as is required" to the question of "how much regulation is enough?": even determining, to say nothing of implementing, this optimum level would require everybody to behave in a Christian manner, with no other interest but the common good in mind. Just in saying that it becomes obvious that all we can expect, barring a catastrophic event, is more lurching from crisis to crisis.
Since the sin of Adam, nothing human works perfectly. As we know all too well, even within the Church of Christ there are horrible abuses. So it's impossible to set up a merely human government, whether for political or economic matters, that will work perfectly. So yes, under the medieval guilds for example, there were abuses and injustices, no question about that. Capitalism, however, perceives greed and inordinate production and consumption as mainsprings of its working, and thus requires extraordinary regulation and supervision. That's why capitalism, even when it isn't per se unjust, is unstable, and why distributism is superior to capitalism.
But if we are to have regulation, then regulation by whom? I've been urging readers here to read Quadragesimo Anno, which contains the most extended treatment of these questions from a pope. But as I've said, the best kind of regulation would be done by intermediate groups, akin to the guilds. Would these be perfect? Of course not, but show me any authority, even within families, that always works perfectly. The question is not whether something will work perfectly, but whether something is well designed to promote the common good and has a fair chance of doing so most of the time.
There is a tremendous literature on the Catholic approach to economics much of it written in the 1930s, 40s, plus the papal encyclicals. I urge everyone to read this material.
Mr. Jacobi,
Perhaps I'm too much of an idealist - but I disagree. The picture you paint seems to be a common one among paleoconservatives; yet one must always have hope. A lot of people seem to assume that the world of '1984' is just around the corner, but we could be just be starting to ride a giant Kondratiev Long Wave which will see a regrowth of interest in religious belief and rejection of the materialism which is the root cause of financial involvement in the political sphere. We aren't done yet.
Mr. Storck: Mr. Richert in a post yesterday reminded me of the virtue of charity. I think what got me involved in this whole fight was the title of this essay. It threw a stink bomb in the whole converation. You used the word dissenter against Dr. Woods when, in my opinion, you were losing an argument. I think you could have been more temperate in your language and put forth a postive defense of your position. Heaven knows I am no saint in the matter of temperate response. For much of my life my motto was " I would rather kick them in the teeth than kiss their behind." I am still an old barroom brawling construction man.
Let us remember that Dr. Woods is a practicing Catholic who has written a couple of popular history books that are very lauditory of the Catholic position on issues. I believe Mr. Rockwell his associate is also a practicing Catholic, as are many of the people who work at this webbsite. The main theorists of Austrian economics are Ludwig Von Mises, and Fredrich Hayek. The popularizer in this country of their ideas was Dr Murray Rothbard. Hayek was a fallen away Catholic who I believe returned to the church at the end. Dr. Rothbard and Dr. Von Mises were agnostic Jews. That doesn't mean that they didn't have some respect fot the Church. Von Mises and Hayek looked back at the Catholic Austrian Empire that they grew up in with some fondness. They liked it's open markets with free trade within a large area and the intellectual vigor of Austria at that time. Dr. Rothbard, an economic historian, found what he believed to be the origins of free market economics in the writings and theories of Spanish scholastics of the 13th and 14th centuries. He also had a great respect fot the Church as an institution that advanced human freedom and knowledge.
Mr. Belloc and Chesterton were fine historians and writers. They saw the problems of there era with a unique vision. These great defenders of the Catholic position, thought that a return to a more Catholic solution on economics. would be of some help to the modern world. They were both formally untrained, [ but were well read on the subject], in economic theory and practice. They both dispised Communism and Socialism. Von Mises, Rothbard, and Hayek all felt the same way about Communism and Socialism.
All of these men had one thing in common they never ran much of an enterprise that supported a lot of people. They were mainly writers, researchers, and theorists. I have run an enterprise, for a fair number of years, which employed hundreds of people at one time and thousands over many years. I had union contracts with eight or nine trade unions at one time. When you include geographical jurisdictions it was up to about 30 different contracts that I had to manage. I did about eight hundred contracts with dozens of govenment agencies local, state, and federal.
The main point of all this is I have a healthy respect for the Austrian aproach to economic reality. I think it would do the most to materially adavance the world's peoples. I think it's emphasis on free markets, free will, free contracts, peaceful free trade, free exchange of labor, and free exchange of ideas, most meets the universal mission of the Church. All this must be tempered by he Gospel for a Catholic to accept. In the Church I grew up in we were taught that we are responsible for our own actions and we are responsible to for brothers welfare as well. The rich, as I well know from my own experiece, have a problem with the sins of greed and avarice and those under them may have problems with the sin of envy and covetedness. We as fallible humans have to work on these problems every day.
The main weakness with the Austrians are, I believe, their failure to be more dutiful in expressing the need for charity and just treatment of workers. The main problem of old fashioned Catholic social thought is that it is still stuck in the thirties and forties. The New Deal, Corporate State, and Christian Democracy have been tried and have not been successful as economic models for the long haul. I understand the problems and displacements of mass immigration, worker displacemeet, losses of industries, unemployment, loss of foreign markets and sympathize with them.
I place myself in both camps. Dr. Woods has feet in both camps as well. My final thought is this Belloc, Chesterton, Von Mises, Hayek, and Rothbard were all people who were unafraid to debate and defend their ideas in a hostile enviroment with both vigor and civility. The 2 leading spokesmen of both sides Ron Paul and Pat Buchanan do the same. There is so much that we agree on can't we have a more civil discussion. I notice both sides have got the hair on the back of their necks standing up. Can't we follow Dr. Paul and Mr. Buchanan and have a more civil discussion.
(70) My pleasure, Mr. Jacobi. I'm the dunce in the corner with the conehead hat on, as few of the topics discussed here (especially economics) are my field of experience. But I have learned a lot, so it is about time for me to show some gratitude to those who clear up things I cannot possibly figure out for myself.
Mr. Marino,
I suppose that no one that a right to claim that his statements are models of charity, and I won't either. But I fail to see the problem with my calling Dr. Woods a dissenter. If you look back at my original pieces from 2004 I provide what seem to me sufficient documentation for that charge. Likewise, I hardly think I pulled the word out of my hat because I was losing the argument. I don't think I was losing it. And have you viewed or listened to Dr. Woods' little speech against me that he gave last spring, the one that ends, "Down with Thomas Storck!"? You might want to view it before you begin to throw around charges of intemperance against one side only.
As for your substantive statements on the dispute, I won't repeat my arguments again, as I'm sure you've already read them and rejected them.
Mr. Storck: I said both sides need to review their commitment to charity and have a more fruitful and Christian way of discussing things. Peace and love to you. I think we are all commited to the Gospels but have different visions of the best way to achieve their message.
@ Mr. Marino: (#74)
The core of Austrian libertarianism, Mr. Marino, is the concept of "self-ownership." That is the font from which all of its theory emanates. Indeed, it is the font of all libertarianism.
I pointed out in another thread on this matter that one cannot be a good libertarian and good Catholic. They are mutually exclusive.
The theory of self-ownership and "free markets" is such that at least one of the prominent "practicing Catholics" affiliated with Rockwell-Mises believes that gay adoption is acceptable and that mother's have "property rights" over their children: that is, the right to sell them (using the word "adoption" to whitewash the sale, of course).
I've tangled with these folks before, and they are intolerant and staunchly opposed of any sort of authority because of their craziness on idea of "self-ownership." Over the years, I learned from these "practicing Catholics" that it is morally acceptable, for instance, to cut off your own arm because you "own yourself," and presumably, that it is perfectly acceptable to pay a doctor to mutilate you because, again, "own yourself" and we all believe in "free markets" anyway, even "free markets" in mutilation.
You observed that Chesterton, Belloc, et all were all theorists, while men such as yourself operated in the real world. That is true. But so are the libertarian eggheads.
Now that American manufactuing has been destroyed by "free trade," what would the libertarian tell the Americans who are out of work? Just one thing: "We have low prices! Our shoes are cheaper!"
The assumption there is that low prices are everything. Are they?
What do they tell the small hardware store wiped out by Wal Mart? "The hammers are cheaper!" Yes, indeed. That doesn't help the man and woman who made their own way in the world but now work for Wal Mart because Wal Mart wiped out their little store.
Belloc, by the way, discusses this very problem in one of this books that I cannot recall. Yes, "big-box stores" have been crushing small businessmen for some time.
Chesterton asked something important about modern capitalism: What kind of society do we have when a man spends more time taking of another's man's property than his own? Answer? Wage slavery.
It's all well and good for the theorists at Mises Institute to prattle on about how great "the market" is. They live on donations from others. They do not meet a payroll dependent upon a sale or two. Their kids' college education do not depend upon the success or failure of a small, local restaurant that could be wiped out by the enrance of Outback Steakhouse, Chili's, Applebees, and Lonestar Steakhouse in their "market."
I agree with John Marino on the importance of practical experience, and applaud his role in running a business and meeting a payroll for years. But Cort Kirkwood's observation is correct: the libertarian theorists by and large lack such practical experience, and many of them work or have worked for the government, making their praise of the "market" from which they have insulated themselves especially hard to take.
Some Austrians ended up finding exotic labels for themselves like anarcholibertarians etc. Putting some of the more nutty beliefs aside, their theoretical work in economics is sound for the most part like the analysis of the Great Depression, the Fed, business cycle etc. and we should welcome them as an alternative for various fraudulent economic schools that determine economic policy right now. I am learning from discussion that the Austrians are flawed from the point of view of a Catholic economist. However against the Marxist driven deficit spending policies of the Obvama administration there is hardly a better method of rebuttal than the Austrian concept of wealth illusion or Fed inspired bubbles.
Mr. Storck, in your CSSR article you write, "There is no one form of property rights which can be called more natural than other forms." It seems then law (or custom) define property rights, rather then the other way around. Distrbutists have often been accused of being "redistributionists." While the redistribution of common goods such as land and other natural resources by the government may not be prudent in a particular society, is it accurate to say that there is nothing within distributism, or Catholic Social Teaching for that matter, to hold that such a method of redistribution is intrinsically unjust? That is to say, when such common goods are concerned, distributive justice may take priority over commutative justice (which governs property rights, as it they are exercised between individuals)?
Also, what do you make of the claim made by Fr. Ernest Fortin and others that Leo XIII was too influenced by modern conceptions of property rights in his encyclicals?
To Mr. Piatak and Mr. Kirkwood:
I believe you may be misunderstanding of my position. I clearly stated that all the people I listed had little practical experience. That includes Belloc, Chesterton, Von Mises, Hayek, and Rothbard. The difference between the Austrians and Chesterbelloc is that they were highly skilled economists who worked at their trade for many long years. They used their skills and observations to get their ideas down on paper. Chesterton and Belloc were fine sincere men but were dilatants in economics without the skills to adequatly explore their ideas.
I saw everyday in my work the great value of free markets and competition. I was a union contractor in industry that was protected from real competition by my union status and a law called the Davis Bacon Act, which set wages for construction workers on government jobs. None the less there was tremendous price competition because of competitive bidding. The more contractors that bid the job the lower the price for the government. The more subcontractors bid to me the lower my final price would be. That is the beauty of the competitive system and free markets. Why would we want to pay more for a product if we can get it for less? Don't our families deserve to not have their resourses wasted? Doesn't this leave us with more money for charity and other worthy causes? Why should we subsidize inefficiancy and high prices? I use family run businesses all the time but these people have learned how to keep up with the times and compete on some level. It may be service not price. It may just be the personality of the merchant and his willingness to offer exotic products and services.
In regards to the unions I dealt with. These unions did me a favor by restricting my competition. Their political pull still was able to keep most non union contractors away from public work. The non union contractors have learned how to get around this however by just paying the rates in the government wage book. This still gives them a big advantage because they don't have to follow the union work rules and put up with the interference of union stewards and business agents. The vast majority of construction work in this country is done by non union contractors. This keeps prices lower on almost all construction. Non union workers are usually well paid and recieve a living wage if there is enough work to go around. How can it benfit the average man if he has to pay a large premium for his home just to support a lot of featherbedding constuction work rules? At one time painters refused to use rollers and spray guns, for example. There are many other instances I could cite. How do such luddite practices benefit anyone?
Mr. Piatak and I went around this at Taki's in regards to the auto business. I felt that the main problem with the American auto business was it's lack of internal competition for decades and it's willingness to cave into union demands because it didn't really matter. They just would soak the customer. George Romney as head of American Motors in the 1960's had the right idea. Break up both GM and the UAW. Restricting a union to one company would make for a more harmonious less confrontational union system in my opinion. I believe big bloated concerns should be allowed to fail. If GM for example had been put into bankruptcy it would have been reorganized and sold by now. The union contracts would be gone but the workers would remain in a new concern. The money wasted by the government could have been used to pay off the workers pensions. Auto Workers in the South are non union, make living wages, and still have viable companies. The reason the foreigners have taken over the American market was because we did not have enough internal competition.
Now back to the main point. How should a Catholic view all this? I belive the Austrian School best explains the way the world really works. It is the best way for the most people of the world. It depends on free will, free right of contract, free markets, a freer and more efficient movement of labor etc. I stated before that it is the best model for the universal mission of the Church. We as Catholics must harness these ideas in a way that respondes to the calling of Christ in repect to wealth and the poor. We must call on the rich to voluntarily share their bounty and to be fair in their business practices and not to cheat their customers. To the poor we must exhort them to work hard and honestly and lead decent moral lives. I think the free market gives the most oppurtunity for advancment. I also want to specify that that what has been going on in this country is not real free market capitalism. It is a bunch of political and economic gangsters who wouldn't know a free market if they saw it. Austrians are just a small group just like paleoconservatives.
I think it would be better if we tried to forge our swords into plowshares. Nobody has all the right answers here. Two small groups Paleoconservatives and Austrian Free Market people believe in many mutual things in regards to foreign policy and subsidiarity. I ask as Christians can't we just have more civil discussion of our mutual problems. the problems of mass immigration, unemployement. monatary policy, Christian business practice, the role of the government in our lives and many other vital issues all need vigorus and civil debate.
Actually this is about as civil as I think it can get, given the potential conflict of the issue. We have had only one bomb-throwing gate-crasher, who quickly tucked tail and escaped. The fact that we haven't been shut down by the moderator is a good sign, and I'm glad to see, as well, that so far nobody has shouted hyperbolic slogans. Truly, this has been a model of civility considering what passes for discussion on the internet (or anywhere) these days.
Thomas Storck@72,
I think my pessimism springs from a more practical, less idealistic source than having been disappointed in the search for perfection, though I'll admit to having spent some time on that in my youth. My characterization of our plight at #71 above comes from my belief that those with evil, or purely materialistic, intent (perhaps a distinction without a meaning) have the upper hand, and are getting more sophisticated and brazen all the time in achieving their ends. The recent CIA bomber, who tricked two intelligence agencies, had nothing on these financial and corporate criminals. They can co-opt or destroy any movement that threatens to crimp their style, before a new regulatory scheme can even be brought to voters' attention. Or find loopholes if the new regs do make it into law.
I'll read those encyclicals, though, and perhaps some of Persch's Lehrbuch. Perhaps I should know better by now, but I'm not ready to give up all hope just yet.
Martin Kelly@73
I agree, one must always have hope; at least, until things get hopeless.
FYI: Rothbard thought the Kondratieff cycle "a myth and a chimera".
@ Mr. Marino (#82)
I think we are all being civil, as far as I can tell, and I cannot say that Austrian economics is never right. But Karl Marx was sometimes correct, as well. Even a broken clock is right twice a day.
The point some of us want to emphasize concerns determining society's highest priorities.
Example:
As I understand them, the Austrians say a just wage is whatever the market determines it to be, and whatever a man freely agrees upon with an employer, even if the wage clearly cannot support that man and his family.
Freedom to arrive at that wage, unfettered by any regulation at all, is the highest priority, and if an employwer can get away with paying an employee $4 an hour and he is willing to accept it, so be it. That is summum bonum for Austrians.
Catholic social teaching, as I understand it, objects. It says that is not the case, as I myself explained before, quoting Rev. Francis Fernandez: Workers "have an inalienable natural right to sufficient means for the support of themselves and their families, which takes precedence over the right of free contract."
Of course, there are those who will ask what does "sufficient means" mean. I answer like the Supreme Court justice who said he could not define pornography, but knew he it when he saw it. In New York, it is a different figure than in Macon, Ga. But there is certainly a wage in each place below which a man cannot comfortably support family.
This does not necessarily mandate a federal minimum wage law; but it might mandate state and local wage laws, apropos of the principle of subsidiarty. It could mandate state and local laws requiring employers to negotiate reasonably with guilds or unions formed to protect workers.
I think it's about time for the free market types on the right to stop denying that employers cannot exploit workers in an ideal world. Of course they can. And they do.
Anyway, Austrian economics, as Mr. Storck observes, has no charism of infallibilty. The magisterium of the Church does.
To Mr Kirkwood (#78):
I have nothing but sympathy for the owners of small businesses and mom-and-pop stores who have to close down because their customers dumped them for chain stores like WalMart, Taco Bell, etc.
But what's the solution? Using legislation to limit competition?
Mr. Marino@82,
You get to the root of the matter when you write 'The vast majority of construction work in this country is done by non union contractors. This keeps prices lower on almost all construction. Non union workers are usually well paid and recieve a living wage if there is enough work to go around. How can it benfit the average man if he has to pay a large premium for his home just to support a lot of featherbedding constuction work rules? At one time painters refused to use rollers and spray guns, for example. There are many other instances I could cite. How do such luddite practices benefit anyone?'
One could also ask how anyone benefits from that 'benign neglect' of immigration policy which has seen a vast increase in the volume of unskilled immigration, some of which may have found its way on to building sites, or by the financial manipulations which resulted in the property boom of the past decade. It is against that backdrop that Austrian theory must be viewed. All theories advocating free trade must be viewed not as being pro-consumer, but anti-labour. In his wonderful wee book 'Victorian Cities', Professor Lord Asa Briggs recorded how the Anti Corn Law League went so far as to silence one of its Manchester members who said quite bluntly that the reason free trade was should be pursued was that it would drive wages down to the continental level. What does silencing people who clearly want more freedom than their fellows can bear have to do with free markets? Nothing. What does it have to do with trying to steal from people? Everything.
There is no such thing as free trade, and there never has been. There cannot be; as the Anglo-Spanish historian Felipe Fernandez-Armesto succintly put it in his book 'Civilisations', 'man is not an economic animal' - if he were, the Mayans would not have devoted years to hauling stones through the jungle to erect temples for no conceivable economic purpose. In my view, and hopefully clinging to the shreds of a sometimes timelocked, sometimes deadlocked sense Christian charity while saying so, to think that any one school of economic thinking has all the answers is a mistake. The reason for this is that economics is not a science, but a religion.
As enunciated by Adam Smith, economics proceeds on the assumption that human beings always act in their own self-interest. This is a direct affront to the Gospels, a direct denial of Our Lord's teaching and a direct challenge to the magisterium of the Catholic Church; one which, in my view, has never been adequately challenged. It proceeds from one man's interpretation of the nature of human relationships and motives; and it has been divinely ordained, indeed is revealed truth, that this analysis is wrong; indeed, may be a paving stone on the road to perdition. All Catholic commentary on economics should, in my view, proceed from the assumption that Smith was a teacher of false doctrines. It was something of a pity to see that the English translation of 'Caritas in Veritate' uses that hateful expression 'human resources', as if human beings were just another tool, like a chainsaw or a jackhammer - yet such language is the natural consequence of Smith's teaching, for if you're only in it for yourself then why bother thinking that your fellow should be treated with any dignity?
Its one saving grace is that, like all other false doctrines, economics is prone to sectarianism and factionalism. Let us hope it chews itself up sooner rather than later.
Mr. Kelly: In economics like in any other subject there must be wide dicusssion and thought. Adam Smith had a lot of wisdom to give us. We have to sift and winnow, as Christians, to see which most respondes to our gospel responsibilities. God gave us free will and a brain to think with. Don't be afraid to use these great gifts. In the end we have to each do our best for our families and our fellow man. That responsibility is best done by a properly formed concience. The trouble today is that most people don't get a proper formation.
Mr. Kirkwood: I think you properly discribe Austrian wage theory. A wage freely arrived at between employer and employee. Then you add what about if a man can't live on that wage? If a man can't feed himself on such a job why would he take it? You will say he can't get another job. This is the only one availible. I would say is it my duty to pay more for a job than it is worth? What is a living wage?
The employer has a duty to his family and employees to keep an business on a sound financial footing. If he over pays his help that will put the business at jeopardy. Many mom and pop businesses can only pay the minimum wage, if even that. Many owners of such enterprizes work long hard hours at not very high wages themselves. A living wage does not include money for a car, tv, computer, cable tv, phone, rich food, booze, drugs ciggarets, etc. Why should I over pay my help to provide these luxuries? If someone wants all this stuff he has to work for it. That is the way the world should work anyhow. In this country with massive government programs many of the poor have these luxuries without honest labor.
In order for an employer to have a successful long term business, he needs good employees. He can't keep them if he doesn't pay them well. They will go down the street to his competitor. The Christian employer should go as far as he can to give his employees good wages and safe working conditions. I always tried to do that. In depression times, like this, both business and labor are suffering. It is hard to meet your moral commitments if the business can't stand the expense.
This is a reply to Mr. Chan's comment #81.
You asked, citing what I said about property, "While the redistribution of common goods such as land and other natural resources by the government may not be prudent in a particular society, is it accurate to say that there is nothing within distributism, or Catholic Social Teaching for that matter, to hold that such a method of redistribution is intrinsically unjust? That is to say, when such common goods are concerned, distributive justice may take priority over commutative justice (which governs property rights, as it they are exercised between individuals)?"
There is a discussion of this in Msgr. John A. Ryan's Distributive Justice. He holds that there is nothing intrinsically unjust in the state setting a limit to the amount of property (including cash) a person can possess, provided that it is set at a reasonably high level. In the Middle Ages some of the guilds set limits on how much property or money a member could hold, the surplus being turned over to the guild treasury. Before anyone of you attacks me for being a socialist, please remember that Msgr. Ryan's book was written in the 1940s and had an imprimatur from Cardinal Spellman, and the guilds who acted in this fashion obviously were not influenced by socialism which did not yet exist. As Mr. Chan hinted, it is probably not wise to institute such a policy very often, but I don't think it is unjust. Off the top of my head, I can't remember if either Chesterton or Belloc ever discussed this point directly.
The medieval open field village was an excellent example of cooperative property in action and gives a good example of how property rights can be variously exercised. There was an interesting article in the late 90s in the Yale Law Journal entitled "Property in Land," which had a section on the medieval English open field.
It's funny, I expect many who've posted here to violently disagree with this. Fifty and more years ago Catholic were united in defending the teaching of the Church and the glories of medieval Catholic civilization. If you look at Fulton Sheen's book on communism, written in the late 1940s, he makes the statement that the Church is as critical of capitalism as the communists are! Now, at least here in the U.S., so many of them who claim orthodoxy have capitulated to various ideologies that are ultimately anti-Catholic, including the kinds of economics that can't stomach Catholic social teaching.
Then Mr. Chan asked, "Also, what do you make of the claim made by Fr. Ernest Fortin and others that Leo XIII was too influenced by modern conceptions of property rights in his encyclicals?"
Yes, I'm familiar with that claim. If Leo was to any extent influenced by Locke, then he was corrected by the later popes. Remember that I said much earlier in this discussion that we have to look for continuity and repetition in papal social teaching. It is for the most part statements and teachings that we can find repeated by successive popes that have the most authority. If we can't trust the Holy Spirit to prevent the Church from teaching error, then we're not really Catholics. This doesn't mean, of course, that any casual or even semi-casual statement by a pope partakes of much authority. The matter is more nuanced than that, and I've already touched on it more than once in this discussion.
Thank you Mr. Storck! I will have to locate a copy of Msgr. Ryan's book.
@90. Valid points, Mr. Marino. But we should distinguish between a proprietary capitalist system, which is the only kind Adam Smith knew, and corporate (or "managerial") capitalism, which is potentially--and in historical fact, actually--predatory and manipulative with respect to workers, for the simple reason that it has the sytematic and institutional means to be that way. Human nature ensures that corporate capitalism will, if given the chance, take advantage of relatively powerless workers. The living-wage idea could not have arisen (as far as I understand it) in a pre-industrial society. It is in that kind of society that corporate capitalism is a sort of unsavory culmination.
To amend an old saw: The problem with proprietary capitalism is capitalists; the problem with corporate capitalism is capitalism.
#86. An employer can pay a certain wage only if he can receive a certain price. He has no control of the wage or the product price himself, that is why he has to pay in wages what he pays and no more and no less. In cases were it is tried otherwise (oligopolies) we have the GM type of situation, it works for a while and then we go broke. This is the problem with any theorist that attempts to tinker with who gets what and wonders if it wouldn't be better if we could pay more and if we could charge more and give more for taxes or charity etc . When everyone makes a hefty sum of money, it is always by some accident because the equillibrium was disturbed to begin with. The rest of the time everybody just gets by. I believe this is why Mr. Woods is having so much trouble with all this.
Mr Zaretke: Most jobs in the private sector are in smaller enterprises. Many corporate jobs pay very well. I don't think that there is a better system than free market capitalism for meeting the material needs of mankind, for all it's flaws. I think the main problem with modern society is the the way government has taken over most of our lives. This makes business people grovel, and bribe to get an advantage. Thus the worst elements of business get the upper hand.