Wednesday, February 23, 2011

Socialism vs. Capitalism, Part 2

So if socialism is illegitimate, what about capitalism?

Capitalism is based on private ownership of goods, property, and most importantly capital goods or equipment. It relies on the free market and private initiative for production and distribution. There is no central planning authority in a purely free market. The free market encounters problems with things like public goods (roads, utilities, etc) and monopolies, but on the whole has shown great or at least better efficiency and productivity than any other form of social/economic organization. It also creates/enables social problems such as exploitation of the weak, income inequality, “economic dictators,” and a consumerist/individualist attitude.

Many of the Popes have criticized Capitalism and here are a few of their arguments.

A major criticism of capitalism by the Popes and others outside the Church is the exploitation of the laborers by the capital owners. This is experienced through unjust wages and working conditions among other things:
With all his energy Leo XIII sought to adjust [capitalism] according to the norms of right order; hence, it is evident that [capitalism] is not to be condemned in itself. And surely it is not of its own nature vicious. But it does violate right order when capital hires workers, that is, the non-owning working class, with a view to and under such terms that it directs business and even the whole economic system according to its own will and advantage, scorning the human dignity of the workers, the social character of economic activity and social justice itself, and the common good. –Quadragesimo Anno 101

The poor, or losers of the market system, are often unprotected or uncared for because they have less resources and less opportunities to better their condition:
When there is question of defending the rights of individuals, the defenseless and the poor have a claim to special consideration. The richer class has many ways of shielding itself, and stands less in need of help from the State; whereas the mass of the poor have no resources of their own to fall back on, and must chiefly depend on the assistance of the State. It is for this reason that wage-earners, since they mostly belong to the latter class, should be specially cared for and protected by the Government. – QA 10

Pope Pius XI continues by criticizing the concentration of wealth into the hands of a few allowing them to control government and society as “dictators” (note that he is writing in 1931 when income inequality was reaching all-time highs, which has just been surpassed in the past few years):
The "capitalist" economic regime has spread everywhere to such a degree, particularly since the publication of Leo XIII's Encyclical, that it has invaded and pervaded the economic and social life of even those outside its orbit and is unquestionably impressing on it its advantages, disadvantages and vices, and, in a sense, is giving it its own shape and form. – QA 103

It is obvious that not only is wealth concentrated in our times but an immense power and despotic economic dictatorship is consolidated in the hands of a few. – QA 105

Those who control the banks have exceptional control of the system:
This dictatorship is being most forcibly exercised by those who, since they hold the money and completely control it, control credit also and rule the lending of money. Hence they regulate the flow, so to speak, of the life-blood whereby the entire economic system lives. – QA 106

This concentration of power and might, the characteristic mark, as it were, of contemporary economic life, is the fruit that the unlimited freedom of struggle among competitors has of its own nature produced, and which lets only the strongest survive; and this is often the same as saying, those who fight the most violently, those who give least heed to their conscience. – QA 107

First, there is the struggle for economic supremacy itself; then there is the bitter fight to gain supremacy over the State in order to use in economic struggles its resources and authority; finally there is conflict between States themselves, (states here meaning countries or nations). – QA 108

Another effect of Capitalism is a tendency toward materialism or consumerism. Advances in the economy enable enough people to accumulate more and more stuff. Gain or more stuff becomes the aim of work, rather than development of the person and/or the obtainment of necessary provisions.
This super-development, which consists in an excessive availability of every kind of material goods for the benefit of certain social groups, easily makes people slaves of "possession" and of immediate gratification, with no other horizon than the multiplication or continual replacement of the things already owned with others still better. This is the so-called civilization of "consumption" or " consumerism ," which involves so much "throwing-away" and "waste." An object already owned but now superseded by something better is discarded, with no thought of its possible lasting value in itself, nor of some other human being who is poorer. – Sollicitudo Rei Socialis 28

All of us experience firsthand the sad effects of this blind submission to pure consumerism: in the first place a crass materialism, and at the same time a radical dissatisfaction, because one quickly learns - unless one is shielded from the flood of publicity and the ceaseless and tempting offers of products - that the more one possesses the more one wants, while deeper aspirations remain unsatisfied and perhaps even stifled. – SRS 28

It is not wrong to want to live better; what is wrong is a style of life which is presumed to be better when it is directed towards "having" rather than "being", and which wants to have more, not in order to be more but in order to spend life in enjoyment as an end in itself. – Centesimus Annus 36

“Structures of sin” emerge because the system is organized in such a way to reward greed:
[Of the structures of sin] two are very typical: on the one hand, the all-consuming desire for profit, and on the other, the thirst for power, with the intention of imposing one's will upon others. In order to characterize better each of these attitudes, one can add the expression: "at any price." – SRS 37

A final criticism of the free market is its overt individualist attitude. It stresses that agents pursue self-interest believing that this will bring about the good for everyone. The free market can do this to some degree, but no one would say that pursuing one’s own self-interest is a Christian theme and what one does in the field of economics is not isolated from morality or society, for economics is a social science subject to the rules of morality. This individualistic spirit has harsh consequences as Pope Pius XI observed in 1931:
The ultimate consequences of the individualist spirit in economic life are those which you yourselves, Venerable Brethren and Beloved Children, see and deplore: Free competition has destroyed itself; economic dictatorship has supplanted the free market; unbridled ambition for power has likewise succeeded greed for gain; all economic life has become tragically hard, inexorable, and cruel. To these are to be added the grave evils that have resulted from an intermingling and shameful confusion of the functions and duties of public authority with those of the economic sphere - such as, one of the worst, the virtual degradation of the majesty of the State, which although it ought to sit on high like a queen and supreme arbitress, free from all partiality and intent upon the one common good and justice, is become a slave, surrendered and delivered to the passions and greed of men. – QA 109

In summary, Capitalism is not of its own nature vicious, nor does it violate the natural rights of private property, initiative, freedom to work and human development. However, it does allow for and even encourages ill effects such as:

1) Concentration of wealth and power often in the hands of big businesses and banks who limit and impinge on our freedoms
2) Greater income inequality within nations and across nations, causing the many problems of poverty, including a class of laborers that cannot shield itself from economic hardships, not escape their plight
3) Tendency toward materialism/consumerism where having become more important than being
4) Individualism also become a prevalent attitude with private material and immaterial charity waning
5) Enabling/encouraging the structure of sin we know as greed or an all-consuming drive for profit

To be sure, our capitalist system is somewhat removed from the free market of the 1920s and 30s that was judged so harshly by Pope Pius XI. Yet, many still argue in favor of a return to the days when economic instability was common, greed was widespread, markets were dominated by monopolies, and those with wealth used it to gain power or in other selfish ways. Free market capitalism is not illegitimate like socialism, because it does not deny key natural rights and freedoms, but it must not be allowed to win the day simply because it brings about the greatest advance in material gain. It is important to recognize these ills of capitalism and do our part to correct them, which will be the topic of part 3 of this series.

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