waters-cg1sm
"From Slavery to Economic Freedom" is a
previously unpublished work from Dr.
Raphael Waters (above) that bears
careful consideration. Completed in 2005,
it approaches the economic question from
a Thomistic understanding of the body
politic and the common good.

From Economic
Slavery to Freedom


By Raphael T. Waters, D. Ph., L. Ph., Ph.C.

“…leisure is necessary both for the development of virtue and the performance of political duties.”
-
Aristotle, Polit. VII, ch. 9, 1329a, 1-2


see also: Popular Thomistic Philosophy Courses from Aquinas School of Philosophy

PHASE A: THE PROBLEM

I: The nature of capitalism

The term `capitalism’ is one of the most confusing terms in the English language. For this reason, it has been remarked that Pope Pius XI, in his encyclical ‘“The Social Order”, avoided the use of the term altogether.

While some have explained it as the use of money, goods, or services in order to gain a monetary return, others explain it as an economic order wherein the workers are employed by wealthy owners who enjoy the fruits of worker’s labor. Hence, they conclude, it is a system of exploitation and great injustice.[1]

However, in order to throw some light on this subject, we first need to have some understanding of the nature of the body economic. The measure in the practical order is the end,[2] and in the case of the social order, the end is the common good.[3] Thus:

There is a certain resemblance between the human body and the body economic inasmuch as they are both the underpinning or basic structure of the life of man and society. For, just as the healthy state of the human body is a condition that allows higher functions to operate, so if the body economic does not function well, then time for man’s higher pursuits is not readily available. On the other hand, if the economic order is in good health, we will be able to save time and effort--leisure-- allowing man time to attend to higher goods in the body cultural.[4]

II. The common good of the body economic

Men work in groups for the sake of a common good, which is defined as the good of the whole and the good of the parts. It is then an immaterial good since it has to be shared by each and all. In the economic order, the good sought by the cooperation of men exchanging goods and services, is leisure, that is, saving time and effort. For example, Jones (potato grower) exchanges two bags with Smith (boot-maker) one pair of boots. Each gets out of the act of exchange exactly what he puts into it, it seems. However, they provide a free gift for each other, having saved time and effort by producing the others merchandise.

Man has a strong natural desire to save himself time and effort. For example, if there is a vacant lot on a street corner, pedestrians will take a short cut by walking diagonally across the lot.
Although the term “competition” signifies “seeking together,” it is currently used to mean “opposition,” thus ignoring the true economic process. For, what we are seeking together, by cooperative activity, is the common good, leisure.[5] We save effort for each other.

Moreover, the more people there are to do acts of exchange, the more effort we should save. If some made trousers, others refrigerators, calculators, battleships, skyscrapers, or grow food there will be a tremendous saving of effort as acts of exchange take place in the marketplace, that is, in the banks.

III: Man is by nature an owner [6]

Since “there can be no coordination without subordination,” someone has to be responsible as owner or, at least, take charge of each enterprise.[7] However, there are different kinds of ownership, which may be reduced to private (including share ownership) and state ownership.[8]

It is quite clear that men and women, either individually or as share owners, should be the true owners of property. However, just as every man, because he is rational, laughs, talks, is a social, political, scientific, economic, artistic and religious animal, so likewise, he is naturally inclined to be an owner of private property, for ownership is necessary for man, either

1) individually, because of his natural tendencies, desire for liberty, and his dignity as a person, or,
2) socially, because of peace, order, to avoid animosity, and for efficiency.[9]

IV. The pathological state of the body economic

If leisure should be more available with increase of population, why are so many dispossessed of private property and have little freedom from drudgery, both of which were exploited by Karl Marx?

Research into the history of mankind can be very revealing. We find, for example, that in fifteenth century England, a man
had to work only 2 1/2 days a week to earn his living. I use Great Britain as an example, for the best records are kept there. In other places, wars and various upheavals have allowed destruction of early records of human affairs.

It should be noted that, in the past, men had a lot more leisure comparatively than we have today. Roman de Fauvel explains that,

“Activity occupying one-third of a lifetime must be culturally significant. While conditions varied with the country and the century, the medieval Christian calendar generally mandated fifty-two Sundays of enforced leisure plus, from the twelfth century on, at least forty saints’ days. To these holidays could be added unlimited local church feasts averaging more than thirty, creating an astonishing 126 or more days per year in which work was not allowed. Englishmen added celebrations of St. Swithin’s Day… Canterbury townsfolk honored by holiday, not only St. Thomas Becket but also Sts. Alban, Dunstan, Ethelreda, and Edward the Confessor. Universities had their own holidays; fourteenth-century Montpellier’s seventy-seven, plus Sundays, totaled 133 yearly festivals. Moreover, many holidays were not limited to twenty-four hours.”[10]

It is significant to learn that,

“Cobbett, in his
History of the Protestant Reformation, has made an exhaustive study of just this question of the material and economic condition of the people of England before and since the reformation. He says: everything shows that England was then a country abounding in men of real wealth… They are fed in great abundance… Every one, according to his Rank hath all things which conduce to make mind and life easy and happy.”[11]

Pearce makes a comparison:

“There are no natural sinecures. Rent is the natural source of communal revenues. In this sense, the Feudal system was more of an exchange economy than ours is. In these days, before the modern centralized state had arisen, government was largely local government and the rent receivers rendered to the people services of a public or common nature, e.g., public defense, education, worship, care of the sick, legal administration, schools, universities, pensions for the aged and the widowed, bursaries for the young, endowments for marriage, etc. But, we have changed all that medieval nonsense. Now rent is the perfect sinecure, i.e., command over exertion (value), without any rendering of exertion (cost), capitalizable usury. It is a right without any duties, property without responsibility, that contradiction called a valuable income—an income that can be bought and sold.”[12]

In case one should suppose that other human needs are neglected, consider the following:

“Their attention to hygiene can be best shown by a consideration of the hospitals….These generations gave us a precious lesson by eradicating leprosy, which was as general as tuberculosis is now [at the time of writing]….”the hospital erected at Tanierre, in France, in 1293…the sister of St. Louis. [A] modern architect, says

‘It was an admirable hospital in every way, and it is doubtful if we today surpass it. It was isolated, the ward was separated from the other buildings; it had the advantage we often lose, of being but one story high, and more space was given to each patient than we now afford.

"The ventilation by the great windows and ventilators in the ceiling was excellent; it was cheerfully lighted, and the arrangement of the gallery shielded the patients from dazzling light and from draughts from the windows, and afforded an easy means of supervision, while the division of the roofless, low partitions isolated the sick and obviated the depression that comes from the sight of others in pain.

“It was, moreover, in great contrast to the cheerless white wards of today. The vaulted ceiling was very beautiful; the woodwork was richly craved, and the great windows over the altars were filled with colored glass. Altogether, it was one of the best examples of the best period of Gothic architecture.”[13]

It is startling to learn that although the year 1495 is considered to be the peak of economic development in England, yet within a hundred years or so, they had to introduce the poor laws. This happened with the upheavals caused by ruthless men throwing off religious restraint, and the arrival of the black plague, which killed off the fittest men.

You might claim that at that time, men had far fewer needs and wants whereas today these have increased considerably, for example, television, automobiles, computers, microwave ovens and so on.
Let us say that the goods we want have increased 100 times. But, our capacity for production has increased 1000 times. If this is true, then why don’t we have a greater saving of time and effort?
Many people today have to have more than one job to support a family. Husband and wife are forced to go out to work whereas, even if only for the proper use of the division of labor, it would be better for the wife to be able to stay at home, instead of being forced out of the home as many are now.

PHASE B: THE CAUSE OF THE PROBLEM

V. Two capitalisms


Let us return to our concept of capitalism whereby men invest money, goods, or services to get a return or profit for their outlay. I have noticed that authors, lecturers or teachers don’t seem to question what is done with the money. In other words, what is the end of the act of investment?

There are two ways one can invest money or two ends which can be sought:
production, or, anti-production. Consider the following examples:

First: Suppose that I want to start a taxi service. First, I require:
--a car which costs, say, $20,000; I should expect interest on this.
--then I require a license which, I quickly find out, are issued on a limited basis at a cost of about $25. On the other hand, here are some figures showing the actual market cost of a taxi license:

In the 70’s, the average in American cities: $70,000

In the late 80’s, $140,000 in Toronto.

In New York, it was recently reported that a license costs about $200,000.
Taxi owners naturally expect interest on this amount also. In effect, owners would be buying into a monopoly.

Second: Nutmegs during World War II. A simple item was monopolized.

Third: Glass manufacturers in Australia; ten organizations were reduced to one.

Fourth: Suppose I wanted to make three-headed Teddy Bears. If no one else wants to make them, I can become a monopolist! But what is wrong with that? Surely, if no one else wants to make them, I should not be obliged to stop production. It is not an anti-social act for me to keep supplying them.

But, if I invest money to stop someone else from producing them, that is an anti-social act and therefore an immoral act. The government, guardian of the common good, has a grave obligation to outlaw such investments.

Men are producing goods and services every day; farm goods and manufactured goods are pouring onto markets. This deserves the name of normal capitalism. But the minute I invest to stop another so that I can corner a market, this should be called spurious or morbid capitalism.

This practice was known in the ancient world. It has been explained brilliantly by Henry Pearce within the past 60 years.[14]
Note the cases recorded by Aristotle:

Thales[15] was being ridiculed for being a philosopher. Being quite clever at reading the stars to predict future weather, he discovered that the next summer would bring a bumper crop of olives. He then put deposits on all the local olive presses. Aristotle wrote that Thales made a lot of money because the olive growers had to come to him after he had raised the price for using the presses. Thus, he taught the people a lesson.

Aristotle also noted that,

There was a man of Sicily, who, having money deposited with him, bought up all the iron from the iron mines; afterwards, when the merchants from their various markets came to buy, he was the only seller, and without much increasing the price he gained 200 per cent.”[16]

Later, St. Thomas Aquinas in the thirteenth century explains the principle informing us that a man could go ahead to a play to prepare the way for his friends coming after him. But if he goes ahead to hinder their way, he commits a grave anti-social act. Therefore, it is an evil act. It is quite clear from the context that St. Thomas is referring to property matters and business affairs.[17]

Thus, there are two ways of investing money:

- one way which is for the sake of production of goods and services and another which is anti-productive.

If I invest to stop someone else from producing, it is an anti-productive investment for I am interfering with the exchange process, and therefore stealing the time and effort of others who have to work harder to obtain the same leisure.

Some examples of cornering a commodity in a modern society are:
In Ottawa, Canada, I was informed when I lived there, that all the
land around the city was owned by six companies. I was also informed by the secretary of the taxi drivers union, that all the taxis were owned by three companies and one of these had spent a lot of money trying to take over the other two companies.

Again, in Canada three different researches have shown that Canada is owned by about 350 families. I suspect from some casual reading, that the USA is owned by about 2,000 families.

No wonder Henry George entitled one of his works
Progress and Poverty in which he shows that with progress comes poverty. Marshall McLuhan said that affluence creates poverty. For the rich get richer and the poor get poorer. It seems that the main underlying cause is anti-productive investment. Couple this with the economic imbalance developing in our populations, and one can see that we are in for much trouble.

The following can be used for anti-productive purposes: takeovers and mergers; deliberate creation of shortages; advertising; kickbacks; calendar marketing agreements; loss leaders and so on.
In sum, there is no reason why one shouldn’t earn his living—even with a monopoly--but he cannot perform an immoral act in order to establish a monopoly, that is, by preventing another from earning his living.[18]

VI: Results of anti-productive investment

These are some of the effects of that pernicious practice:

First, unjust distribution of wealth. The means of production become concentrated in the hands of fewer and fewer citizens.

Second, more and more so-called social programs are established by the government under pressure from the people. Thus, more and more control is put into the hands of government as we develop the welfare state; this is a step closer to the absolute state, the socialist society. Needless to say, these institutions are contrary to the natural moral law.

Third, men lose their freedom a little at a time.

Fourth, inflation.

Fifth, taxation runs wild.

Sixth, finally, some powerful government has to take control in order to sort out the mess. Germany was an example of this following WWI. This is a chance for the ruthless, the strong, and the cunning to take over the whole social order.

There is no doubt that the consequences of this evil practice-- spurious capitalism-- must carry the blame for many of our economic and other social ills. We see the rich getting richer and the poor getting poorer. But you might argue that the poor are far better off today than people were, say, of the nineteenth century. Yes, but if proper comparisons were made, they should be far better off than they are now.

PHASE C: IS THERE A SOLUTION

VII: Is there a solution?
[19]

The welfare state, no doubt, has saved many from dire poverty. But that doesn’t seem to be working very well. Many, for example, receive food, medicine, housing, and schooling from government sources now-- and at what a price-- loss of freedom! Here we might consider some solutions:

First solution, socialism:

Some have claimed that, since men cannot be trusted to own property, the obvious solution is to take property away from the people and make the government the only owner.

Aristotle did a splendid analysis of this solution and so have others, exposing its erroneous nature.[20] Three principal arguments against socialism are:

1. The function of a government is to govern, not replace its citizens.

2. What can be done by the lower ought not to be done by the higher (principle of subsidiarity).

3. A step towards dependence is a step away from independence, that is, from freedom.

While we argue against the idea of state ownership, we should realize that the government ought to own certain property, for example, the public goods, which serve the common good. These are the instruments of the common good; such are government buildings, parks, police cars, military schools, warships and so on. BUT, we see that these are exceptional cases—public goods which subserve the common good-- and that socialism is not a true solution. Socialism can only take away our freedom.

Second solution:

We ought to have education concerning the true nature of man, society and the common good. For, it should be carefully noted that the function of a government is principally educative, that is, to point out to the people what we are doing wrong if we stray from seeking the common good. Citizens should be told what they are missing by failing to preserve that social end.

It is the function of a government to remove impediments to the common good. Compare this with the following:

• a
physician does not heal the patient. He removes whatever is preventing the patient from healing himself;

• a
teacher does not cause the understanding in the mind of the pupil. The teacher removes obstacles so that the student can grasp what is being taught.

• an
orchestra leader does not produce the harmony. This is achieved by the players working collectively while the conductor removes the obstacles to harmony.

• the
manager does not build cars; he coordinates etc.

In a similar manner, the government, using its appropriate instruments, should remove obstacles so that the citizenry can work towards the common good — leisure, the saving of time and effort.

The government can make laws to help it in its task of guiding the people while it can use its power of taxation wisely. Remember: our freedom is at stake.

If the impediments were removed, men and women could earn their living without fear of losing what they have built up; and the great gap we see today between those who possess property and those who do not, could be drastically reduced.[21] Then, there would not be the burden on society of having to look after poor people. Everyone would be able to look after themselves.

Moreover, it is my own opinion that a one-day working week would be possible. Absurd taxation would be removed and we could reduce top-heavy government departments. Thus, we would be able to abolish the cost of an army of accountants, extra taxes, and other burdens on society.

Why shouldn’t we levy tax on what society has produced, namely, land values? What has been created by society should go back to society.[22] If this was done fairly, perhaps we could quickly abolish tax on our personal efforts.

Then, if we give free reign to true capitalism, that is, productive capitalism, there could be peace and prosperity and a great surge in the pursuit of happiness. Men could give their energies to exploration of the world of plants, insects, animals, diseases, the arts, music, and better understanding of the nature of the human person and its social implications.


A Final Word:

This is an age of anti-intellectualism in which we tend to solve many issues with our hearts and not our heads. For example,

For venereal diseases: We wrongly recommend condoms, not chastity.

For crime: We wrongly recommend more police, not the Ten Commandments.

So,
for poverty: We wrongly recommend welfare dispensed by the state, not curing the diseased state of the body economic. Many moderns try to force immoral solutions on us since they cannot solve economic problems facing governments. They resort, for example, to abortion and euthanasia in various guises, such as “Do not resuscitate” orders.

If we ignore the basic error in the economic order, namely, that through man’s individual efforts, true ownership by every human person is extremely difficult to obtain for some, and we allow even the abuse of the ruthless, the strong and the cunning to acquire wealth in any manner they choose, we have nothing to lose--except perhaps, only our life, liberty, and the pursuit of happiness. “.”The remedy for [the evils (?) of] capitalism lies in the recognition and practice of the social obligations which attach to ownership. Both the individual and society have a positive part to play in order that the remedy be effective.”[23]

Therefore, we must conclude that the system we call ‘capitalism’ is in itself not a doctrine of greed but becomes so only when some citizens, imbued with a poor sense of values and acting with great ignorance, perform unnatural economic acts, seeking illegitimate ends, which activities run counter to the common good.




Notes:

1. Cf. Thomas Higgins,
Man as Man. The Science and Art of Ethics,261;cf. Ayn Rand, Capitalism, The Unknown Ideal, New York, New American Library, 1946 (Signet Book), 18-19: a useless definition from material causes; Johannes Messner, Social Ethics. Natural Law in the Western World.
2. D. Q. McInerny, Metaphysics, ch.14.
3. Aristotle,
Nicomachean Ethics I, ch.1; Politics, I, ch.1; St. Thomas Aquinas, Summa Contra Gentiles, III,ch.1,2
4. Aristotle,
Nic. Ethics
5. Aristotle, Polit. VII, ch. 14, 1333a, 36-1333b, 2; 1334a, 5-6; 1334a-ch.15, 1334a, 18; VIII, ch3, 1338a
6. Higgins, op. cit., 287
7. Aristotle, Pol. II, ch.5; St. Thomas,
Summa Theologica II-II, q.66.
8. Thomas Higgins,
Man as Man: The Science and Art of Ethics,283ff.; Johannes Messner, Social Ethics
9. II-II, 66, 1; Higgins, 287-288; Messner, 821-824.
10. Lynn Thorndike,
The History of Medieval Europe, 333
11. James Walsh,
The Thirteenth, The Greatest of Centuries, 481, cf.479.
12. Henry G. Pearce,
Value, Normal and Morbid, Sydney, The Standard, Daking House, 1946, 186.
13. Walsh, op. cit.
14. H. Pearce, ibid, passim.
15.
Politics I, ch.11, 1259a, 5-23.
16. Ibid, 1259a, 1, 23-27
17. II-II, q.66, a.2, ad 2.
18. Higgins, op. cit., 315-316
19. Higgins seems to miss all the above in his attempt to offer a solution to the problems of capitalism: thus, op. cit., 288-290.
20. Politics II,ch.2ff.
21. Higgins,op.cit., 288-290.
22. Henry George,
Progress and Poverty.
23. Higgins, op. cit., 288.

see also: Popular Thomistic Philosophy Courses from Aquinas School of Philosophy