An blog by a member of the Catholic peace movement, Pax Christi, to explore the nexus between contemplation and resistance. "The Christian must discover in contemplation, and in the giving of his life, those symbolic actions which will ignite the people's faith to resist injustice with their whole lives, lives coming together as a united force of truth and thus releasing the liberating power of the God within them." - James Douglass, Contemplation and Resistance.

Friday, October 31, 2008

The Golden Voice of Hope




The current financial crisis represents a stellar opportunity for the renewed growth of the Holy Spirit in our hearts and in our minds. But first, a few hard truths.

The current downturn is probably not just another recession, but may well represent a new phase in economic history, the beginning of the end for the “savage capitalism” which John Paul II contrasted with Catholic social teachings in passages such as this, “… there are collective and qualitative needs which cannot be satisfied by market mechanisms. There are important human needs which escape its logic. There are goods which by their very nature cannot and must not be bought or sold… these mechanisms carry the risk of an ‘idolatry’ of the market, an idolatry which ignores the existence of goods which by their nature are not and cannot be mere commodities.” – Centesimus Annus, 40

Before we consider the nature of the economic healing that must take place, we should pause and consider the origin of the breakdown. The basic factors behind the current crisis are stagnant wages for workers accompanied by large increases in productivity enabled by those same workers. The resulting increased profits were not shared with the workers, but directed entirely to the owners and shareholders of the profitable enterprises. In response, in order to maintain the lifestyle promoted by marketing campaigns, workers borrowed against their houses. Wall Street, in turn, bought up these mortgages and packaged them as securities to be sold to big investors. The scheme imploded when housing prices stopped climbing. At that point, many workers could no longer pay off their mortgages and the value of the mortgage-based securities declined drastically. This set off a chain reaction among the major banks that were gradually forced to expose the extent of their reliance on bad mortgage debt. Unable to meet their financial obligations, the bankers had no alternative but to run to the federal government for relief.

The Christian principle which this arrangement has violated is well stated by the Pope Paul VI, “… private property does not constitute for anyone an absolute and unconditioned right. No one is justified in keeping for his exclusive use what he does not need, when others lack necessities. In a word, according to the traditional doctrine as found in the Fathers of the Church and the great theologians, the right to property must never be exercised to the detriment of the common good.” – “On the Development of Peoples”, 13. q.66. The financial system of which we are a part has consistently and blindly violated the common good for the past thirty years. The judgement that is currently being rendered on it by events will hopefully be permanent.

The immediate cause of the crisis is the unbridled growth of speculation that produces no real economic value, but profits by sophisticated forms of gambling on price movements. Michael Hudson describes it as follows, "A hedge fund does not make money by producing goods and services. It does not advance funds to buy real assets or even lend money. It borrows huge sums to leverage its bet with nearly free credit. Its managers are not industrial engineers but mathematicians who program computers to make cross-bets or ‘straddles’ on which way interest rates, currency exchange rates, stock or bond prices may move – or the prices for packaged bank mortgages. The packaged loans may be sound or they may be junk. It doesn’t matter. All that matters is making money in a marketplace where most trades last only a few seconds. What creates the gains is the price fibrillation – volatility." – Michael Hudson, “America’s Own Kleptocracy”, CounterPunch, Sept. 20, 2008. In other words, this “wealth” was based not on real economic value, but is a kind of mathematical illusion based on price fibrillations. Clearly, it was a blatant instance of the “idolatry” John Paul so presciently condemned. Like all idolatries, it was doomed by its own arrogance.

Perhaps now it is time to turn back to the great Fathers of the Church and use their wisdom to re-imagine a completely different type of economics. St. John Chrysostom, patriarch of Constantinople, (born at Antioch in 347, died in exile in Armenia in 407), preached a vision of Christian economics which can still inspire us today. Here is a section from his 11th Homily on the "Acts of the Apostles":

"And there was a great charity among them (the Apostles): none was poor among them. None considered as being as being his what belonged to him, all their riches were in common…a great charity was in all of them. This charity consisted in that there were no poor among them, so much did those who had possessions hasten to strip themselves of them. They not divide their fortunes into two parts, giving one and keeping the other back: they gave what they had. So there was no inequality between them; they all lived in great abundance. Everything was done with the greatest reverence. What they gave was not passed from the hand of the giver to that of the recipient; their gifts were without ostentation; they brought their goods to the feet of the apostles who became the controllers and masters of them and who used them from then on as the goods of the community and no longer as the property of individuals. By that means they cut short any attempt to get vain glory.
Ah! Why have these traditions been lost? Rich and poor, we should all profit from these pious usages and we should both feel the same pleasure from conforming to them. The rich would not impoverish themselves when laying down their possessions and the poor would be enriched…But let us try to give an exact idea of what should be done.

Now, let us suppose - and neither rich nor poor need be alarmed, for I am just supposing - let us suppose that we sell all that belongs to us to put the proceeds into a common pool. What sums of gold would be piled up! I cannot say exactly how much that would make: but if all among us, without distinction between the sexes were to bring here their treasures, if they were to sell their fields, their properties, their houses - I do not speak of slaves for there were none in the Christian community, and those who were there became free - perhaps, I say if everyone did the same, we would reach hundreds of thousands of pounds of gold, millions, enormous values.

Well! How many people do you think there are living in this city? How many Christians? Would you agree that there are a hundred thousand? The rest being made up of Jews and Gentiles. How many should we not unite together? Now, if you count up the poor, what do you find? Fifty thousand needy people at the most. What would be needed to feed them each day? I estimate that the expense would not be excessive, if the supply and the eating of the food were organized in common.
"You will say, perhaps, 'But what will become of us when these goods are used up?' So what! Would that ever happen? Would not the grace of God be a thousand times abundant? Would we not be making a heaven on earth?”

Thus speaks the “golden voice” of the economics of compassion, which acts as a channel for true wealth to flow into communities. It is long past the time for priests, bishops, and theologians to start promoting an economic vision based on satisfying real human needs, rather than silently accepting savage capitalism based on orgiastic and unsustainable consumption by the many and obscene profits hoarded by the few. These golden voices from Catholic tradition offer hope as the thunder deepens while idols crash.

Saturday, October 25, 2008

The Spirit of Christian Communism: Rosa Luxemburg and Heaven on Earth




The first Christians were the banished, the persecuted, the oppressed, the enslaved, and the damned of Roman society. If a member of an American megachurch were somehow transported to the Roman Empire of the first century, the Christians thus encountered would have appalled him. They were not the prosperous elite whose oppression we now sanctify through magical religion, but the wretched of the earth.

Rosa Luxemburg characterized them in this way, "In this crumbling society, where there existed no way out of their tragic situation for the people, no hope of a better life, the wretched turned to Heaven to seek salvation there. The Christian religion appeared to these unhappy beings as a life-belt, a consolation and an encouragement, and became, right from the beginning, the religion of the Roman proletarians. In conformity with the material position of the men belonging to this class, the first Christians put forward the demand for property in common - communism. What could be more natural? The people lacked means of subsistence and were dying of poverty. A religion which defended the people demanded that the rich should share with the poor the riches which ought to belong to all and not to a handful of privileged people; a religion which preached the equality of all men would have great success.” – Rosa Luxemburg, “Socialism and the Churches”, 1905

Recent studies by John Dominic Crossan and Joerg Rieger establish that early Christianity was not simply a religion as we think of the term today, but equally a social and political challenge to the empire. The proclamation of the Lordship of Christ was intended as a direct subversion of the imperial concept of Lordship. “God in Christ is a different kind of lord who is not in solidarity with the powerful but in solidarity with the lowly. To be more precise, Christ’s way of being in solidarity with the powerful is by being in solidarity with the lowly; the powerful are not outside the reach of Christ’s lordship, but their notions of what it means to be lord are radically reversed. This position – at the heart of the new world proclaimed by Paul – directly contradicts the logic of the Roman Empire. “- Joerg Rieger, Christ and Empire, 2007. Here we see inextricably merged a longing for freedom from material oppression along with a lordship that has reversed the power relations of empire. In the inimitable words of Crossan, “What better deserves the title of a new creation than the abnormality of a share-world replacing the normalcy of the greed-world.” - Crossan and Reed, In Search of Paul, 2004.

But the insight penetrates more deeply, and reverberates in the current economic crisis. “Greed may be one symptom of empire, but what we are up against are not moral failures (like greed) but a logic according to which the structures of empire are endorsed as the ones that are ontologically superior and will bring happiness and peace to the world. The fundamental problem with empires, including the Roman one, is not that they happen to endorse morally reprehensible behavior but that they pursue their own logic of top-down power and thus are built on the back of the weakest; what Crossan and Reed reject as ‘greed’ the empire would endorse as economic common sense that leads to improvements for everyone.” - Joerg Rieger, Christ and Empire, 2007. This is the sense in which the lordship of Jesus Christ was proclaimed. Christ represents the joy and hope of the marginalized that empire cannot permanently repress. In this way, Rieger extends Luxemburg’s insight into the social position of the early Christians by illuminating the spiritual dimension of their longing for relief.

The spiritual dimension of Christian communism is the elevation of the community above the individual and their private possessions. While the lords of empire invest their security in financial instruments and military force, Christians no longer needed possessions to give their lives security. The Resurrection had overcome their fear of death and thus the insatiable greed for life which imperial materialism breeds. The early Christian community became a refuge from the competitive struggle which isolates and atomizes society into lonely individuals, “the social chill of the heartless world”, in the words of Jurgen Moltmann in his essay, “The Trinitarian Experience of Fellowship” in Experiences in Theology.

This portrait of Christian economics reverberates down the centuries, “A contemporary wrote, ‘these [Christians] do not believe in fortunes, but they preach collective property and no one among them possesses more than the others. He who wishes to enter their order is obliged to put his fortune into their common property. That is why there is among them neither poverty nor luxury - all possessing all in common like brothers. They do not live in a city apart, but in each they have houses for themselves. If any strangers belonging to their religion come there, they share their property with them, and they can benefit from it as if it their own. Those people, even if previously unknown to each other, welcome one another, and their relations are very friendly. When travelling they carry nothing but a weapon for defense against robbers. In each city they have their steward, who distributes clothing and food to the travelers. Trade does not exist among them. However, if one of the members offers to another some object which he needs, he receives some other objects in exchange. But each can demand what he needs even if he can give nothing in exchange." – Rosa Luxemburg, “Socialism and the Churches”, 1905

Note that property relations were subordinate to the obligations of solidarity. Rather than reverencing private property as the bastion of freedom, the early Christian had no reverence for private property as such at all, but treated it as a subordinate and instrumental value. Clearly the first Christians treated community as the center of Christian life, not the isolated individual exulting in the freedom granted by his possessions. Such a creature would have been seen as one who had lost the way.

As Luxemburg expressed it, “Thus the Christians of the First and Second Centuries were fervent supporters of communism.” But what the early Christians lacked and ultimately undermined their primitive communism was the concept of productive as opposed to distributive communism. “We have been able to observe that the Roman proletarians did not live by working, but from the alms which the government doled out. So the demand of the Christians for collective property did not relate to the means of production, but the means of consumption. They did not demand that the land, the workshops and the instruments of work should become collective property, but only that everything should be divided up among them, houses, clothing, food and finished products most necessary to life. The Christian communists took good care not to enquire into the origin of these riches. The work of production always fell upon the slaves. The Christian people desired only that those who possessed the wealth should embrace the Christian religion and should make their riches common property, in order that all might enjoy these good things in equality and fraternity.” – Rosa Luxemburg, “Socialism and the Churches”, 1905.

What is necessary for Christians today is to extend the building of the “share-world” into the realm of productive communism. Charity conceived of as a spiritual act which distributes the goods of this world to the needy falls short of our calling. Instead we must criticize the economic relations which underlie the production of those goods. Charity can no longer be removed from its social context and idealized as the meritorious act of an individual. The conscience of a Christian today demands that we delve into the origin of riches, that we penetrate the heart of the heartless world (Karl Marx) and thus lay the economic groundwork for the kingdom of heaven.

Today we see that the wealth generated by the laborers of the world is more and more concentrated in the hands of a few superrich. As in the Roman Empire, wealth flows continually back to those who own the means of production. This was the economic situation in which the concept of “almsgiving” – the idea that charity denotes economic superfluity granted to the poor – became dominant.

Rosa Luxemburg analyzes the decline of Christian communism in this way, “At the beginning, when the followers of the new Savior constituted only a small group in Roman society, the sharing of the common stock, the meals in common and the living under the same roof were practicable. But as the number of Christians spread over the territory of the Empire, this communal life of its adherents became more difficult. Soon there disappeared the custom of common meals and the division of goods took on a different aspect. The Christians no longer lived like one family; each took charge of his own property, and they no longer offered the whole of their goods to the community, but only the superfluity. The gifts of the richer of them to the general body, losing their character of participation in a common life, soon became simple almsgiving, since the rich Christians no longer made any use of the common property, and put at the service of the others only a part of what they had, while this part might be greater or smaller according to the good will of the donor. Thus in the very heart of Christian communism appeared the difference between the rich and the poor, a difference analogous to that which reigned in the Roman Empire and against which the early Christians had fought. Soon it was only the poor Christians - and the proletarian ones - who took part in the communal meals; the rich having offered a part of their plenty, held themselves apart. The poor lived from the alms tossed to them by the rich, and society again became what it had been. The Christians had changed nothing.” – Rosa Luxemburg, “Socialism and the Churches”, 1905.

The same paradox endures today. Christians, along with everyone else, depend on the productive capacity of modern industry to supply the commodities necessary for life. Distributing the surplus of these capacities in the form of “charity” fails to question the mechanism by which these goods are produced, but justifies them as a means of supporting the poor. The original Christian impulse was to share the goods of the earth and is still enshrined as a fundamental Christian principle in the Catholic Catechism which states, “In the beginning God entrusted the earth and its resources to the common stewardship of mankind to take care of them, master them by labor, and enjoy their fruits. The goods of creation are destined for the whole human race. “– Catholic Catechism, 2402. The basic paradox is that once the surplus wealth is distributed to the poor, charities must return again to the wealth producers to obtain more “charity”, thus perpetuating the cycle of dependency. Since the Churches do not possess the means of production, but must depend on the compassion of the wealthy, they are obligated to justify the mechanisms by which the powerful create the wealth they depend on.

Eventually Christian communism was destroyed by the very mechanism that has so thoroughly repressed this fundamental Christian value today. The division between rich and poor became enshrined as an aspect of the cosmic order willed by God. Economically, Christianity has become the worship of the status quo. Submission to “what exists” economically has become the key virtue, while rebellion against authority is for many ecclesiastics the very definition of sin. To make charity a function of the generosity of the wealthy sanctifies both wealth and the means by which it is produced. A careful examination of the economic exploitation practiced by Christian churches must lead to a deep repentance. This repentance can be achieved by returning to the ideal and practice of the first Christians which can now be extended beyond the distributive communism of the Apostles to the productive communism of liberationist Christianity.

The Christian communist task is to question the current Christian definition of charity and the economic foundation on which it rests. We will examine this in more detail in the next article on Christian Communism.
I give the final word to St. John Chrysostom:
“And there was a great charity among them [the Apostles]: none was poor among them. None considered as being as being his what belonged to him, all their riches were in common…a great charity was in all of them. This charity consisted in that there were no poor among them, so much did those who had possessions hasten to strip themselves of them. They not divide their fortunes into two parts, giving one and keeping the other back: they gave what they had. So there was no inequality between them; they all lived in great abundance. Everything was done with the greatest reverence. What they gave was not passed from the hand of the giver to that of the recipient; their gifts were without ostentation; they brought their goods to the feet of the apostles who became the controllers and masters of them and who used them from then on as the goods of the community and no longer as the property of individuals. By that means they cut short any attempt to get vain glory. Ah! Why have these traditions been lost? Rich and poor, we should all profit from these pious usages and we should both feel the same pleasure from conforming to them. The rich would not impoverish themselves when laying down their possessions and the poor would be enriched.
Now, let us suppose - and neither rich nor poor need be alarmed, for I am just supposing - let us suppose that we sell all that belongs to us to put the proceeds into a common pool. What sums of gold would be piled up! I cannot say exactly how much that would make: but if all among us, without distinction between the sexes were to bring here their treasures, if they were to sell their fields, their properties, their houses - I do not speak of slaves for there were none in the Christian community, and those who were there became free - perhaps, I say if everyone did the same, we would reach hundreds of thousands of pounds of gold, millions, enormous values.

‘Well! How many people do you think there are living in this city? How many Christians? Would you agree that there are a hundred thousand? The rest being made up of Jews and Gentiles. How many should we not unite together? Now, if you count up the poor, what do you find? Fifty thousand needy people at the most. What would be needed to feed them each day? I estimate that the expense would not be excessive, if the supply and the eating of the food were organized in common.
You will say, perhaps, 'But what will become of us when these goods are used up?' So what! Would that ever happen? Would not the grace of God be a thousand times abundant? Would we not be making a heaven on earth?”- St. John Chrysostom.

Friday, October 24, 2008

Reply to a Critic




Recently, I received the following reply to my posting "Why the Bailout Will Fail According to St. Thomas Aquinas":

In reviewing your thesis, I am bothered by a statement that you made in response to 'butterfly'. You stated:

'In other words, rather than bailing out the billionaires, which Christian principles show to be an immoral act, we should remove the property that they have abused and redistribute it to the poor and those who have been harmed by their actions.'

My question to you is, what actual, pragmatic steps do you propose that Christians implement to 'remove the property that they the (wealthy) have abused and redistribute it to the poor and those who have been harmed.' What steps do you propose knowing the results and sad lessons of the:

1) French and Russian Revolution which stripped the wealthy of their possessions;

2) Knowing that the wealthy have friends in government who would do all in their
power to block and obfuscate any attempts of Christians to use legal means
to achieve this end;

3) If nothing else works, the wealthy are capable of hiring mercenary troops to
guard their property and possessions. If you have never seen mercenaries at
work,go to the country of Columbia (for just one example), and observe
mercenaries working for drug lords out-gun and out-manuever the national armed
forces handily.

4) And finally as I am typing this out, I am listening to political ads on the
TV. One candidate for the presidency accuses his opponent of trying to do
exactly what you are stating that Christians should do "re-distribute wealth
all around." But this candidate states that this concept is wrong because it
removes any incentive to work; removes any initiative to create new industry or
technology; removes any impetus to propel the nation to growth.

Since most people have not been gifted with Aquinas' lofty intellect nor do they all possess his profound virtue---what concrete steps are you proposing to initiate in America to achieve Aquinas' vision?" Comment in National Catholic Reporter.

I replied as follows:

"Rather than advocating the methods of the French or Russian revolutionaries, I advocate the principles of St. Thomas Aquinas and his major commentators. Consider the recommendation of Cajetan, St. Thomas Aquinas' greatest commentator: "Now what a ruler can do in virtue of his office, so that justice may be served in the matter of riches, is to take from someone who is unwilling to dispense from what is superfluous for life or state, and to distribute it to the poor. In this way he just takes away the dispensation power of the rich man to whom the wealth has been entrusted because he is not worthy. For according to the teaching of the saints, the riches that are superfluous do not belong to the rich man as his own but rather to the one appointed by God as dispenser, so that he can have the merit of a good dispensation." - Cardinal Tommaso Cajetan, St. Thomae...Summa Theologica cum commentariis Thomae de Vio Cajetani. In other words, our goods are owned by God and given to us so that we can share in His goodness and mercy by freely sharing them with others.

In other words, the confiscation of the property of the wealthy is sometimes required so that justice may be served. Those who violate the common good, whether they be Communists or Wall Street bankers have abrogated the right to their superfluous property. This property should be expropriated and distributed to those whose rights have been violated so that the rich might have the merit of a good dispensation. Note that this expropriation contributes to the spiritual good of both rich and poor.

You make a valid practical point in item 2. I agree wholeheartedly that the wealthy would use their friends in government to prevent such expropriation. What we must ask ourselves as Christians is whether we should submit to the machinations of unjust wealth because we may not be able to successfully resist their conspiracies.

This reply also applies to point 3. I am quite aware of the effectiveness of the U.S.-supported Columbian mercenary troops. My point above however remains. Should Christians submit to superior firepower and efficient political repression? Is this the example of Jesus?

As to point number 4, redistributing the wealth according to the principles of justice sounds like an excellent idea to me. The fact that Mr. Obama renounces this idea diminishes his stature in my eyes.

Catholic social teaching does not depend on universal attainment of the gifts of St. Thomas, but they do respect his principles. Concretely, I advocate four specific actions:

1) The fortunes accumulated fraudulently by the CEOs and financial speculators of Wall Street should be immediately confiscated and placed in public fund to compensate victims of predatory lending practices.

2) The 850 billion dollar bailout fund should be immediately redirected to public works programs to rebuild the country's crumbling infrastructure, provide decent housing and schools, universal health care, and provide well-paid, full-time jobs for the unemployed.

3) Dismantle the U.S. war machine beginning with the occupations of Iraq and Afghanistan, both because of their intrinsic injustice and to contribute to the funds needed to rebuild U.S. infrastructure.

4) Markedly increase the progressive taxation of the wealthiest five percent in order to help pay for the shift to an economy based on alternative energy sources.

In my posting, I presented Christian principles, validated by the Catechism. Most of the replies have been based on political practicalities. I would treasure a reply based on scripture, the Catechism, or the teaching of the Fathers and Doctors of the Church. Where are your Catholic principles, sir?"

Let Sin Die




Recently, a member responded to my commentary on the financial crisis as follows:

"Although as an Anglo-Catholic/Episcopalian and not a Roman Catholic, I'm not prepared for "a serious discussion of Catholic principles" beyond saying that I like your selection of texts, I do have a couple of comments.

Your point about the necessary abrogation of (some) property rights in times like these is made more clearly justifiable if we first put the necessary emphasis on the "if" in the phrase "even if the promotion of the common good requires respect for the right to private property and its exercise." Respect for property rights is always contingent.

Also -- we need to emphasize that it's a bundle of rights, not a unitary right. The common acceptance of the principle of zoning, even if sometimes it's done badly, shows how some of the rights associated with property ownership can justly be overridden.

About the current bailout: as a dedicated critic of our economic system, I still have to concede that the "bailout" is not primarily on behalf of capital vs. the common good. Capital has messed up so badly that the common good requires a bailout of some kind. (The credit freeze, as shown in international inter-bank lending interest rates, was/is real. As I write, it's been thawing rather slowly and the economic fallout may last a long time.)

The inadequacies of the (evolving) bailout are the issue. The common good requires that we move on from the necessary first steps of shoring up the financial system and proceed to start paying attention to human priorities, including the need for some basic as yet undefined and unagreed-upon 'systemic change' in our current corporate "structures of sin".

Universal sharing and solidarity are not possible when corporations rule. The sin which you describe doesn't merely "lurk" in the (mainly corporate) property system: it's the basic structural component.

I agree that the bailout will ultimately fail if we don't address the deep spiritual failures embodied in our current non-negotiable American Way.

Thanks for bringing so many apt and powerful quotes to my attention."

My reply is as follows:

Respect for the common good clearly takes precedence over the "if" of the Catechism. I'm attempting to contend that the "absolute" demand of property rights is neither Christian or human. Christianity is not worship of the status quo, unquestioning acceptance of current property relations. Respect for property rights is contingent on many factors. In fact it is far down on the Biblical priority list.

It is indeed a bundle of rights, all based on human as opposed to natural law, as Aquinas explicates. My key point turns on this distinction. The universal destination of goods negates individual rights to possession when they violate the common good.

As to your third point, I regret to say I disagree. The common good does not require the preservation of the current economic system. I believe the bailout is precisely about the preference for the current financial system over the birth of a new system. The current system must die for many reasons, one of which is its inherent prioritizing of capital requirements over human needs. Such a system will collapse from its own contradictions, and Christians should rejoice in the possibilities unleashed in that collapse.

I consider the current capitalist system a form of sin and like all sin, it will eventually destroy itself because it is based on a lie. Attempting to preserve it because of the evil a collapse might cause is temptation. I want to see a completely new system based on the priority of human development over monetary considerations. I have no interest in bailing out the current system.

So I would continue my disagreement by asserting that the inadequacies of the current bailout are not the issue. The issue is, as you state, to start paying attention to human priorities. That is the first step, not 'shoring up the current financial system' which inherently contains the same priorization of capital over those needs.

Far from being "undefined", systemic change can be adequately envisioned by those who see beyond the current system of injustice, whether that system is "agreed upon" or not. Agreement can only come by demonstration.

I firmly endorse your insight into the basic structural components of the corporate property system. Indeed, they do not "lurk", but dominate.

The bailout will fail precisely because it is a bailout, not a response to the American spiritual failure. In the words of Paulo Friere, "The church [or country in this case] that is not reborn through suffering, but merely rearranged in its domestic life, only succeeds in becoming more efficiently fascist."

Saturday, October 18, 2008

The Priority of Humanity over Capital




The first of the Christian economic principles, for which St. Thomas served as the mouthpiece of the Fathers of the Church, is what the current Catechism calls the "universal destination of goods", which he described as follows, "Now according to the natural law all things are common property and the possession of property is contrary to this community of goods." - Thomas Aquinas, Summa Theologiae, IIa, IIae, q. 66. This was not a Communist or a monastic principle, but a Christian principle, reaffirmed by the current Catechism in the following section, "The right to private property, acquired or received in a just way, does not do away with the original gift of the earth to the whole of mankind. The universal destination of goods remains primordial, even if the promotion of the common good requires respect for the right to private property and its exercise." Catechism, 2402. While the neoconservative economics advocated by Michael Novak and his cohorts have led to the current fiscal meltdown, the economics of sharing advocated by St. Thomas and the Fathers of the Church have been the persistent source of spiritual and economic renewal throughout the centuries.

The Church has long taught the priority of labor over capital, well summarized in the following passage from John Paul II, "...we must first of all recall a principle that has always been taught by the Church: the principle of the priority of labor over capital. This principle directly concerns the process of production: in this process labor is always a primary efficient cause, while capital, the whole collection of means of production, remains a mere instrument or instrumental cause. This principle is an evident truth that emerges from the whole of man's historical experience." - Laborum Exercens, 12.

During the 1970s, workers won both higher wages and social services while refusing to increase the pace of work. Thus corporations found their profits under pressure as the increasing quality of life of workers clashed with profit-making. In response governments began to attack the wage and social services gains made by workers.

John Paul II spoke with eloquence and perspicuity against these trends: "We must emphasize and give prominence to the primacy of man in the production process, the primacy of man over things. Everything contained in the concept of capital in the strict sense is only a collection of things. Man, as the subject of work, and independently of the work that he does-man alone is a person." - Laborum Exercens, 12. While we are currently bailing out capital at the expense of the common good, the Church persistently directs us to the priority of humanity over the "collection of things" which the financial system represents.

My thesis rests on Christian tradition concerning private property, which "... has never upheld this right as absolute and untouchable. On the contrary, it has always understood this right within the broader context of the right common to all to use the goods of the whole of creation: the right to private property is subordinated to the right to common use, to the fact that goods are meant for everyone." - Laborum Exercens, 14. This principle implies that in times such as these, when the right to private property has been used to destroy the common good, property rights are abrogated. In such circumstances, it is the right and the duty of the state to expropriate the resources of the wealthy, in this case the banks, and reallocate those resources for the good of the common people.

John Paul II points to the inherent sinfulness of the dominance of capital over the good of the person, "This concerns in a special way ownership of the means of production...They cannot be possessed against labour, they cannot even be possessed for possession's sake, because the only legitimate title to their possession - whether in the form of private ownerhip or in the form of public or collective ownership-is that they should serve labour, and thus, by serving labour, that they should make possible the achievement of the first principle of this order, namely, the universal destination of goods and the right to common use of them." - Laborum Exercens, 14.

In other words, the only legitimate reason for the ownership of capital is to serve the needs of labor, with the goal of promoting universal sharing and solidarity. The sin which constantly lurks in the property system is that of indiscriminately excluding others from using the property which God intended for common usage.

Statistics show clearly that corporations have been spectacularly successful in keeping wages low. Real wages with inflation factored in are at the same level today as in the early 1970s. But low wages raise a major problem for corporate profits. Low wages mean workers cannot afford to buy the proliferation of superfluous goods. If goods cannot be sold then profits cannot be made. This is the classic problem of overproduction. Thus is the low-wage model inherently unsustainable.

To compensate for this, wide availability of cheap credit has allowed workers to borrow large sums of money and consume way past their means. Low mortgage interest rates, zero-percent car financing, thick decks of credit cards and loan shops at every street corner have allowed high levels of consumption to continue. In effect, this allows corporations to profit twice: once from the low wages of increasingly productive workers, and twice from interest on loans to those same workers.

Yet, according to the Catechism, "'Not to enable the poor to share in our goods is to steal from them and deprive them of life. The goods we possess are not ours, but theirs.' When we attend to the needs of those in want, we give them what is theirs, not ours. More than performing works of mercy, we are paying a debt of justice." - Catechism, 2446. Making deceitful loans to workers rather than paying them just wages is an immoral violation of the remuneration due to workers for their increasing productivity and a grave sin against the common good.

The current bailout will fail because it is the result of deep spiritual failure, a catastrophic denial of Gospel principles. Hopefully, the passages from John Paul II show that my article had nothing to do with defending the economic philosophy of medieval monasticism, but with a very modern Christian vision of economic justice. I would welcome a serious discussion of Catholic principles related to these issues.

Saturday, October 11, 2008

The Nature of the Crisis




American finance is a sorcerer no longer able to control the powers of the nether world which he has called up by his spells. For the past two decades, the history of American economics is the history of the revolt of productive forces against the conditions of production, against the property relations that are the conditions for the existence of the American finance and its rule. We have been confronted with a culminating series of financial crises that, by their periodic return, put the existence of the entire banking system in jeopardy, each time more threateningly than before. In each crisis, existing productivity, as well as what was previously achieved, is destroyed. An epidemic has broken out that in earlier periods would have seemed absurd - an epidemic of over-production. Society suddenly finds itself in a state of momentary barbarism; it appears as if a famine or a war had cut off our subsistence; industry and commerce seem to be destroyed. Why? Because there is too much finance, too much productivity, too much leverage.

The financial forces in our society no longer support the development of productive growth. Instead, they have become too powerful to be constrained by productivity, by which they are fettered, and as soon as they overcome these fetters, they bring disorder into the whole order of global capital, even endangering the property of Wall Street investment bankers. The conditions of the American economic order are too narrow to constrain the wealth created by neoliberalism. And how can the neoliberal order confront this crisis? On one hand, through the destruction of productive forces by outsourcing manufacturing; on the other, by the more thorough exploitation of the endlessly gullible American public, who now believes that they must give up their life savings to save Wall Street bankers. Thus is the way paved for more extensive and more destructive crises - by diminishing the means whereby they can be prevented.

In order to continue the oppression of the American middle and lower classes, certain conditions must be assured under which the middle class can continue its slavish existence. The serf, in the period of serfdom, raised himself to membership in the commune, just as the American middle class worker, under the yoke of the global finance, managed to achieve middle class status. The modern worker, on the contrary, instead of achieving wage increases corresponding to his or her increased productivity, sinks deeper and deeper into stagnation and eventual poverty. And here it becomes evident that American capital is unfit to be the ruling elite, and to impose its conditions of existence upon society as a whole. It is unfit to rule because it is incompetent to assure an existence to its slave within his slavery, because it cannot help letting him sink into a state of depravity. It has to feed him, instead of being fed by him. Global society can no longer exist under American capital, in other words, its existence is no longer compatible with human existence.

What Wall Street has produced, above all, is its own grave-diggers. Its fall and the victory of the American worker are equally inevitable.

Saturday, October 04, 2008

Why the Bailout Will Fail According to St. Thomas Aquinas




“The earth is the Lord's and the fullness thereof: the world, and all they that dwell therein.” Psalm 23:1

Establishing Basic Principles

Christians must begin with Christ’s teachings when considering economic policy. So let’s start with first principles. According to St. Thomas Aquinas, “God has sovereign dominion over all things: and He, according to His providence, directed certain things to the sustenance of man's body. For this reason man has a natural dominion over things, as regards the power to make use of them.” - Thomas Aquinas, Summa Theologiae, IIa, IIae, q. 66. We are not the owners, but the stewards of creation. We owe our being to God, yet this is not disempowering. Property can never actually be private because it is bounty of the earth in which all share. This definition of private property is far different than the one that currently reigns in the U.S. According to this definition, man has the power of use, but God is the ultimate owner. As with the Fathers of the Church, St. Thomas chides the wealthy for acquiescing in the illusion of absolute ownership, which is the source of false freedom, “The rich man is reproved for deeming external things to belong to him principally, as though he had not received them from another, namely from God.” - Thomas Aquinas, Summa Theologiae, IIa, IIae, q. 66. Everything that we “own” is a loan from God meant to help bring about the Kingdom of God on earth.

According to the U.S. bishops, “Only active love of God and neighbor makes the fullness of community happen. Christians look forward in hope to a true communion among all persons with each other and with God. The Spirit of Christ labors in history to build up the bonds of solidarity among all persons until that day on which their union is brought to perfection in the Kingdom of God.” – “Economic Justice for All”. This principle needs to be kept carefully in mind as we examine the whether taxpayer money should be used to keep alive a system that does not respect or even acknowledge the common good.

However, before moving on to financial crisis, I want to spend more time building a solid Christian underpinning for economic issues. St. Thomas establishes the principle that according to natural law all things are owned in common, “Now according to the natural law all things are common property and the possession of property is contrary to this community of goods.” - Thomas Aquinas, Summa Theologiae, IIa, IIae, q. 66. He then justifies private ownership in the following reply, “Community of goods is ascribed to the natural law, not that the natural law dictates that all things should be possessed in common and that nothing should be possessed as one's own: but because the division of possessions is not according to the natural law, but rather arose from human agreement which belongs to positive law…” In other words, property rights are not primordial, but the result of human agreement. Therefore, the common ownership of goods has priority over property laws. God made the world to be shared, not divided up according to the dictates of greed and concupiscence.

St. Basil said, “The rich who deem as their own property the common goods they have seized upon, are like to those who by going beforehand to the play prevent others from coming, and appropriate to themselves what is intended for common use." - Thomas Aquinas, Summa Theologiae, IIa, IIae, q. 66. The play in this case is the struggle for a sufficiency of goods to allow us to achieve a life of virtue. St. Thomas’ reply targets the sin in appropriating for private enjoyment the goods that are meant for common use, but defines the corresponding responsibility this way: “A man would not act unlawfully if by going beforehand to the play he prepared the way for others: but he acts unlawfully if by so doing he hinders others from going. In like manner a rich man does not act unlawfully if he anticipates someone in taking possession of something which at first was common property, and gives others a share: but he sins if he excludes others indiscriminately from using it.” - Thomas Aquinas, Summa Theologiae, IIa, IIae, q. 66. So the sin which constantly lurks in the property system is that of indiscriminately excluding others from using the that which God intended for common usage. The justification of wealth is that it allows the wealthy to “prepare the way for others” to enjoy the goods of this world and so gain merit through the virtue of solidarity.

St. Thomas defines theft as follows: “Ambrose says [Serm. lxiv, de temp., 2, Objection 3, Can. Sicut hi.]: …‘It is no less a crime to take from him that has, than to refuse to succor the needy when you can and are well off.’ His reply to this objection is actually an affirmation, “To keep back what is due to another, inflicts the same kind of injury as taking a thing unjustly: wherefore an unjust detention is included in an unjust taking.” - Thomas Aquinas, Summa Theologiae, IIa, IIae, q. 66. Note that to refuse the just due of those who have been defrauded by unscrupulous mortgage companies is considered theft as much as taking the goods of another unjustly. Far from being merely “the cost of doing business”, such theft is mortal sin: “But theft is a means of doing harm to our neighbor in his belongings; and if men were to rob one another habitually, human society would be undone. Therefore theft, as being opposed to charity, is a mortal sin.” - Thomas Aquinas, Summa Theologiae, IIa, IIae, q. 66

The Nature of the Crime: The Refusal of the Common Good

The basic factor behind the current crisis is stagnant wages for workers accompanied by remarkable increases in productivity enabled by those same workers. In turn, the consequent increased profits were redirected to the owners of the enterprises rather than to the workers who actually produced them. Next, in order to maintain the lifestyle promoted by advertising campaigns, workers borrowed against their houses. Wall Street, in turn, bought up these mortgages and packaged them as securities to be sold to big investors. The scheme imploded when housing prices stopped climbing. At that point, many workers could no longer pay off their mortgages and the value of the mortgage-based securities declined drastically. This set off a chain reaction among the major banks that were gradually forced to expose the extent of their reliance on bad mortgage debt. Unable to meet their financial obligations, the bankers have no choice but to run to the federal government for relief.

The principle which this arrangement has violated is well stated by the U.S. Bishops, “Business and finance have the duty to be faithful trustees of the resources at their disposal. No one can ever own capital resources absolutely or control their use without regard for others and society as a whole” - “Economic Justice for All”. The major corporations disregarded the good of the workers who actually produced the wealth, preferring to gain illusory riches by creating financial instruments which encapsulated leveraged gains. Again, the bishops, “Resources created by human industry are also held in trust. Owners and managers have not created this capital on their own. They have benefited from the work of many others and from the local communities that support their endeavors. They are accountable to these workers and communities when making decisions” - “Economic Justice for All”.

Standing behind this is the universal belief of the Fathers of the Church, as summarized by St. Basil, “The rich who deem as their own property the common goods they have seized upon, are like to those who by going beforehand to the play prevent others from coming, and appropriate to themselves what is intended for common use”, as quoted by St. Thomas above. Justice would seem to dictate that the workers whose increased productivity led to the increased profits should share in those profits. If that had been the case, then the unsustainable borrowing that brought on the crisis would not have been necessary and the housing bubble, based largely on fraudulent claims by mortgage lenders, would not have taken place. The investment bankers will no doubt argue that according to U.S. law they can dispose of their property in whatever way seems best to them. If they choose to invest increased profits in derivative investments or casinos in Bermuda rather than raising wages, that is their right.

But what does St. Thomas say about such rights? “Things which are of human right cannot derogate from natural right or Divine right. Now according to the natural order established by Divine Providence, inferior things are ordained for the purpose of succoring man's needs by their means. Wherefore the division and appropriation of things which are based on human law do not preclude the fact that man's needs have to be remedied by means of these very things. ” - Thomas Aquinas, Summa Theologiae, IIa, IIae, q. 66.

According to Pope Paul VI, “… private property does not constitute for anyone an absolute and unconditioned right. No one is justified in keeping for his exclusive use what he does not need, when others lack necessities. In a word, according to the traditional doctrine as found in the Fathers of the Church and the great theologians, the right to property must never be exercised to the detriment of the common good’” – “On the Development of Peoples”, 13. Be that as it may, the investment bankers were simply obeying the laws of their world when they tried to grasp as much profit for themselves as possible since that is the condition for success in the current economic system. But, as the wisdom of the Church demonstrates forcefully, this behavior contains the seeds of its own destruction.

If the investment bankers had chosen to share the rewards of increased productivity with working people, even to a small extent, rather than retaining all the profits for themselves, the resulting wealth distribution would have seeded much economic growth and avoided the crisis in which we now find ourselves. “The second thing that is competent to man with regard to external things is their use. On this respect man ought to possess external things, not as his own, but as common, so that, to wit, he is ready to communicate them to others in their need. “- Thomas Aquinas, Summa Theologiae, IIa, IIae, q. 66.

Finally, we must face the fact that what these bankers and other investors have done is mortally sinful. Therefore the issue of how to restructure this economic system is of the gravest possible importance. According to St. Thomas, “…a mortal sin is one that is contrary to charity as the spiritual life of the soul. Now charity consists principally in the love of God, and secondarily in the love of our neighbor, which is shown in our wishing and doing him well…Therefore theft, as being opposed to charity, is a mortal sin.” - Thomas Aquinas, Summa Theologiae, IIa, IIae, q. 66. The life of our souls is charity. What I have tried to do above is demonstrate that what the Wall Street elite have done is a grave violation of charity towards the working people of this country. They have severely damaged the life of their souls and we are obligated, on pain of mortal sin if we perceive the truth of this argument, not to further participate in their sin by providing funds to continue their depredations.

Why the Bailout Will Fail

Simply put, the bailout can’t succeed because it doesn’t address the root of the problem. Thus the conditions that led to current crisis will be repeated in another form a few years from now requiring yet another bailout. The root of the problem is an economic system that does not respect or even recognize the common good, but instead rewards those who most flagrantly violate it.

If no thought is given to a fundamental economic restructuring towards promoting solidarity and the common good, we will endlessly repeat the scenario in which the few use whatever means are necessary to create massive concentrations of wealth and power. Since such concentrations can’t be made without gross violations of charity, the habit of inflicting massive violations on the economic rights of the majority will become ingrained. Such violations will become the unquestioned norm to such an extent that we will no longer be capable of envisioning realistic alternatives. Thus the process becomes a self-perpetuating cycle.

The fundamental economic argument against the bailout is well described by Michael Hudson, “For the government to even begin to recover some of the value of the $700 billion in junk mortgages it has bought would force new homebuyers to pay even more of their income to the banks. And if they do that, they will have less income to spend on goods and services. The domestic market will shrink, and tax revenues will fall at the state, local and federal levels. The debt overhead will deflate the economy, causing shrinkage all down the line.” – Michael Hudson, “The Insanity of the $700 Billion Giveaway”, Sept. 25, 2008. This analysis points to the fundamental cause identified previously – the failure to share the prosperity resulting from productivity increases and spread the wealth among a wider share of the population. The bailout plan fails because it depends on even more pressure on the most exploited for its success.

In fact, the bailout will prevent the necessary debt write down that the economy needs in order to recover. To put it in religious terms, the investment bankers should accept repentance and punishment in order to regain moral balance. By artificially inflating the value of worthless investments, the necessary healing which would result from failure will be averted. Rather than preventing crisis, this guarantees that the crisis will be deeper and longer lasting, but with additional pain transferred from the investors to taxpayers, who play the sacrificial lamb in this drama.

Conclusion and a Look Ahead

Rather than simply indulging in Wall Street bashing, I prefer to point to a vision of human solidarity. Hopefully, I can be indulged one more quote from St. Thomas, where he lays the foundation of Christian economics: “For the well-being of the individual two things are necessary: the first and most essential is to act virtuously (it is through virtue, in fact, that we live a good life); the other, and secondary, requirement is rather a means, and lies in a sufficiency of material goods, such as are necessary to virtuous action." St. Thomas Aquinas, De Regimine Principum, chap. XV. Thus economic activity should contribute to a world where each has sufficient material goods to ensure the groundwork for a life of virtue. In a Christian economy, the production of goods and services aims not at accumulating the greatest amount possible, but finding ways in which mutual interests and empathy can be promoted. Economic structures must be found which enhance ties among people, rather than proliferating destructive competition. Thus, we can achieve a mutually beneficial economy in which all advance in concert with one another. Put simply, for me to do well, I have to be concerned with others doing well.

What must happen in order to bring this vision about? First, we must challenge the absolute right to property. As I illustrated above, property rights must cede to the universal destination of goods which God intended so that we can more easily grow in charity. Property is a conditional, not an absolute right, allowed only to the extent that its holders respect the common good. When a tiny minority owns the means of livelihood for the vast majority, solidarity becomes impossible because the interests of the minority and majority inherently conflict. The lower the wages of workers, the more the profit can be kept by the owners. The fewer the benefits owed to workers, the greater the slice of the pie for stockholders. The more intensely and longer workers work, the higher the rate of accumulation. These facts are built into the current economic system and cannot be reformed away.

I end with Hildegard of Bingen who said, "Greed says: 'I snatch all things to myself. I hug all things to my breast; the more I have gathered the more I have … When I have whatever I need, I have no worries about needing anything from someone else.' Simple sufficiency replies: 'You are harsh and devoid of mercy because you do not care for the advancement of others. Nothing is sufficient to satisfy you. I, however, sit above the stars, for all of God's good things are sufficient for me … Why should I desire more than I need?'" - Hildegard of Bingen.