Michelle Klein P. 6
Throughout history, there has always been some controversy about the separation of church and state. Many economists believe that the two should never mix. Pope Leo XIII states the rights and duties of capital labor in his encyclical Rerum Novarum. This clearly defies the idea of separation between church and state. Catholics are torn when deciphering what type of economy is right for them. Today, when people think of types of economies, they automatically think of the two extremes: capitalism and communism. As Americans, we are almost trained to think communism equals evil. As Catholics, we are urged by Pope Leo XIII in the Rerum Novarum to have justice injected into our economic order. If we are to live the Catholic understanding of a good life, and with communism and capitalism not cutting it, what is the Plan C for our economy? Can an economy exist without being communist or capitalist?
According to the Merriam Webster dictionary the definition of communism is “a theory advocating elimination of private property or a system in which goods are owned in common and are available to all as needed.” You would think Catholics would support communism based solely on the definition, but this description of communism does not accurately describe the problems connected with it. In Karl Marx’s Communist Manifesto, he discusses the constant class struggles throughout history. Marx speaks about the proletariat rising up and overtaking the bourgeois and henceforth creating an economy in which all property and goods are communal. Based on the facts thus far, communism seems like the good, Catholic economy to choose. In the ideal communist economy everyone is equal, so what could be so bad about it? Almost always, with communism comes dictatorship. Joseph Stalin, Vladimir Lenin, Ho Chi Minh, and Kim Jong II are the names of dictators who controlled, or still control countries under a communist dictatorship (History’s Greatest Monsters). They are considered some of the world’s most heinous leaders, because, due to their oppression of the country they control[ed], over twenty million people have died (History’s Greatest Monsters). There is no definite way to ensure equality among all people in a country. Someone will always be in charge and have more than others. In addition, because all things in communist economies are “communal” and all people receive the same necessities, citizens will be tempted to not work. It is human nature to “consume exceeding the commitment to produce” (Koecke). Communist countries are either forced “to imprison/eliminate those who will not contribute, or (2) to rely upon human nature changing from living on a conscious level to living on a conscience level” (Koecke). Communist economies face corruption and do not take in account human nature. Due to these ethical and economical problems, communism proves not to be a Catholic way of living.
Capitalism is one of today’s most popular types of economies. Capitalism allows private ownership of means of production and of services, but, with capitalism comes Laissez Faire (Mises). This economic policy limits the amount of governmental interference within the economy. Over the last three centuries, capitalism has allowed the largest “material leveling of society” in history (Miller). It has lifted hundreds of millions of people out of poverty (Miller). With all its benefits, capitalism sounds like the fair economic path for Catholics to support, but the problem with this economic policy is more than just skin deep. Although capitalism appears to be benefitting the economy, in reality it actually causes multiple problems. Because the government does not interfere with businesses to an extent, businesses have the power to create their own contracts for their workers. John C. Médaille states “as long as negotiations are about power…the negotiation cannot properly reward productivity, but only power.” People in dire need of work do not attempt to renegotiate the terms of the contracts, which results in the manipulation of the workers. According to Médaille, due to unjust wages set in these agreements, workers are forced to “clear larger markets on the same wage,” meaning that as productivity in labor increases, wages remains the same. This unbalance in the market leads to three alternative means used to balance the market. The first method is to add more family members in the work force, as an attempt to increase family income. Although this has the illusion that it could potentially help, family income has been in a decline since 1998(Médaille). The second method attempting to balance the markets is increasing government spending. The debt of the United States “tripled under Regan and doubled under Bush” (Médaille). Because no government is willing to allow their country to go under, it will inflate the market and cause a larger unbalance. The first two methods lead to an essential third method: large organizations with excess funds lend it to small organizations with a shortage in funds. This method fails as well because, eventually due to the inflation, the dollar the small organization borrowed will be worth less once they finally pay the large organization back. In addition, the small organization will have to pay the larger organization interest. Ultimately, the “whole system collapses of its own weight” (Médaille). Capitalism’s neglect to give workers just wages is the cause of its failure, and also exempts it from being the Catholic understanding of good living.
Due to the failures of communism and capitalism, the new economic theory of distributism was born. Médaille defines distributism as a “system [that] seeks to restore distributive justice to its proper place in the economic order.” G.K. Chesterson and Hillaire Belloc based the theory of distributism off Pope Leo XIII’s Rerum Novarum and Pope Pius XI’s Quadragesimo Anno. Both popes state that all men should have the right to property, in order to allow men to be free enough to negotiate just terms to their working contracts. Pope Leo XIII’s demand for “just wages” and a wider distribution of property is easier said than done. When published in 1891, the encyclical was considered scandalous. His lack of separation between church and state was mocked. Economists believed economics was a “real science” and “divorced [it] from any actual social situation.” The question of justice in economics was reduced to a question freedom,” claims Médaille. As long as the worker freely entered into the labor contract, it was considered just. As seen in capitalism, many workers are forced into unjust labor contracts due to helpless situations. The owners take advantage of the laborers in dire need of work by creating unfair contracts. The Distributist League defines distributism’s goal as “liberty of the individual and the family against interference by busybodies, monopolies or the state” .The league claims the best way to reach their goal is the “better distribution of property”. Médaille states “power follows property…and when property is dispersed then power is dispersed.” Once men receive property, they will not be so weak as to agree to wages that are unjust. Workers will not be in dire situations because they can depend upon their property. Distributism is the only economic plan that ensures a fair wage for the common man.
Communism and capitalism do not think about the common good of man. Both economic systems result in the destruction of the economy one way or another. Neither system benefits the common man. Just as Pope Leo XIII and Pope Pius XI “refused to divide the world into separate realms of ethics and economics,” so should we (Médaille). Distributism is not only the best economic choice for us to live the Catholic understanding of a good life, but also the best solution for all of the economy. The problem is not separation between church and state; the problem is current economies now. If we push to reintroduce ethics into economics, we may be able to salvage what is left of our ever-dwindling, ever-failing, “powerhouse economy” of the United States of America.
Koecke, Tom. “The Problems with Communism.” Helium. Helium, 02 Aug. 2007. Web. 13 Dec. 2012.
Aparicio, Bernardo, John C. Medaille, and Robert T. Miller. “On Truth and Trade: Economics and the Catholic Vision of the Good Life.” Dappled Things. N.p., May 2011. Web. 13 Dec. 2012.
Stork, Thomas. “What Is Distributism?” Scribd. N.p., n.d. Web. 13 Dec. 2012.
Leo VIII. Encyclical Letter, Rerum Novarum: On Capital and Labor. 1891.
Pius XI. Encyclical Letter, Quadragesimo Anno. 1931.
“Distributism Defined.” Scribd. The League of Distributists, n.d. Web. 13 Dec. 2012.
“History’s Worst Dictators.” History’s Worst Dictators. Adult Learning, n.d. Web. 13 Dec. 2012.
Von, Mises Ludwig. Liberty and Property. Auburn, Ala.: Ludwig Von Mises Institute, Auburn University, 1988. Print.
Marx, Karl, Friedrich Engels, Friedrich Engels, and Paul M. Sweezy. The Communist Manifesto. New York: Monthly Review, 1964. Print.