According to a report from the Zenit News Service, Cardinal Renato Martino, president of the Pontifical Council of Justice and Peace, recently insisted that the “logic” of the market be changed. He said that the logic “was till (sic) now that of maximum gain, and therefore the most investments possible directed toward obtaining maximum benefit. And this, according to the social doctrine of the Church, is immoral.” This is because, according to the Cardinal, the market “should be able to benefit not just those who invest capital, but those who participate in the step of making it grow, that is, those who work.”
Aside for the fact that some of the terms he used are too vague to make any judgment about, like “maximum benefit,” the economics in his statement would be more appropriate of a kid, rather than a Cardinal. So, let’s learn some economics.
Firstly, money has alternative uses. If I have some excess wealth, I am going to invest it in the things which give me the highest return. Why would I do this? Because, those projects which promise the highest return, taking risk into account, will produce the things that people want most, and hence will give me more “bang for the buck.” For example, would you invest your money in a carpentry business run by me? I wouldn’t—because I can’t hammer a nail. No wants a carpenter who does not know what he is doing. But would you invest in McDonald’s? Sure. Most everyone eats at McDonald’s, and kids especially love the place. And what do the people who patronize McDonald’s get out of it? They get a food for which they willingly and freely exchange money, and feel the better off for doing so, or they would not do it. And who supplies the food? The workers, in exchange for their discounted marginal revenue product. In other words, they exchange their time for the money equivalent of what they produce. Why are people paid different wages? They get different wages because their output is different. The work of the person who sweeps up, while necessary or he would not have been hired, is worth less than the work of the person who puts the burgers together. The burger guy’s work is not worth as much as the trained manager who is responsible for coordinating the whole operation. None of this would be possible without the people who ponied up the money in the first place expecting a high return for the money the usage of which they were willing to forego. If this is immoral and against the social doctrine of the Church, then I am Santa Claus. If fact, to have an economy worthy of the name at all without this investment process would be worthy only of a figure like Santa Claus.
I have long argued in my writings that churchmen who have no real economic training or understanding prescind from making remarks like this which mislead the faithful, and portray the sui generis (self-generating) free market economy as an operation run from the top by a few greedy people constantly plotting to withhold wealth from the ordinary folks.
Lastly, the Cardinal remarks, “All of us should collaborate in the good of all.” This is exactly what the market does, except for those who are not able or refuse to participate in it, much of which is caused by political interference with the process, such as governments who punish provinces in Africa which are in rebellion and refuse to allow food supplies to reach the people in those provinces, or Western politicians who, in exchange for votes, have created generations of people addicted to government checks, rather than productive work and advancement.
I wonder what His Eminence thinks of government-imposed protective tariffs the purpose of which is to keep the goods of foreign workers from competing with domestic goods, in return for support from corporations and unions in the domestic industry. This prevents globalization—it prevents the wealth of the United States and other well-off countries from going to them for the products they work to produce.
Gee, Cardinal Martino, get a clue.
The famous Austrian economist, Joseph Schumpeter, despaired for the future of the free market system. The reason for this despair was that the excess wealth of the system would create educated folks who would turn on the very system that created them. Their education would make them into anti-capitalist ideologues, who would then kill the goose that laid the golden egg. He did not think that those who participated in the creation of such enormous wealth would be in any position to fight back, and this for two reasons: firstly, business people do not tend to be men of letters, so they are unable to mount arguments defending the system; secondly, the job of the business executive is the survival of the company, and thus, he will concentrate on those things required to weather the storm, not be controversial.
The man who is probably the most famous Austrian economist, Ludwig von Mises, despaired for the future of the free market system due to envy. Various sectors of society, academic, non-productive, uneducated, etc., would envy the wealth of the producers in society, and end up by finding means to take away that wealth and give it to the lesser productive people, despite the fact that they did not earn it, and therefore, are not entitled to it.
Our present political situation has a combination of both of these views. Both presidential candidates are in favor of redistribution of wealth, albeit one is more open about it. And very few business people are saying “no!” to any of it with a few exceptions, such as the president of BB&T Bank, who wrote an open letter to Congress asking why his totally solvent bank should be punished for the stupidity of the others.
But there is another culprit in this maelstrom. This culprit is the business person. Why? With tongue-in-cheek apologies to neo-classical (mathematical) economic theory, the purpose of a company is not to make a profit. As John Paul II said in Centesimus Annus, a profit is a sign of the health of a company, and therefore is good and necessary. But anyone who has taken a management course knows that the purpose of the company, aside from producing what the customers want, is to increase the wealth of the stockholders. This is different than making a profit, although profit is an integral part of it. Wealth is different than profit. Profit is a short run measurement of the short run health of the company. Wealth by its very nature is long run. Profit appears on the financial statements of a company in mere money terms, and the accountants who produce those statements do not even take inflation into account. So a company could have an increase in profit, but not an increase in items sold, merely because they had to raise prices to accommodate the fall in the value of the dollar. But executives today are a slave to the profit line in the financial statements. They have a need to impress their boards and stockholders now by sacrificing the long term growth of the enterprise.
In order to avoid this misguided notion that one can sacrifice long run growth for short term profits, the executive must have something that is very lacking in our society—moral courage—the courage to do what the executive learned in business school, as opposed to going for short term profits and the ever-popular golden parachute when the guy takes too much risk and trashes the company, or makes a short run profit, but neglects product development and retires early, takes his millions, before it hits the fan.
What effect does this have on the free market? The other night, a news crew found the recently dismissed CEO of what used to be a great firm, Merrill-Lynch, walking down the street in a baseball cap with a cup of coffee. This dude bought risky mortgages from Fannie and Freddie, the company got in trouble, but he walked away with millions. When the news crew asked him if he could justify himself—he said nothing; he just kept walking as if they were not even there.
Let’s analyze this. If the former CEO thought that what he did was right, one would think he would try to explain the whole thing. But he did not utter one peep. Of course, we cannot read his mind or judge the state of his soul. But take myself, for instance. [Take my wife—please!] I have a reason for everything I do. Even if I misjudge the situation, I can explain what my thinking was. This is called taking responsibility for one’s actions. As the last few articles on this blog demonstrated, one’s actions reveal one’s character—one’s words do not. Talk is cheap. We see the actions of these CEO’s, but they can’t or won’t explain them. Could this imply that their character flaws are showing? Could this mean that they did not have the moral courage to reject the short-term profit that might have been produced if these risky mortgages actually paid off, in favor of saving the company, the wealth of the investors? Did they trade this fiduciary responsibility for a cut and run golden parachute?
The outrage over all this might end up producing the socialism predicted by Schumpeter. I appeal to all executives—your actions affect not only yourselves and your firms, but the whole way ordinary people look at the economy. Lenin once said, “We [communists] will sell the capitalists the rope with which they will hang themselves!” Every time one of you reneges on his moral responsibility, you are putting a down-payment on that rope! Remember, under socialism everyone is equal—equally poor! Is that what you want?
So far, Karol Wojtyla has shown that human beings should have self-possession and self-governance. Without self-possession, a person is prey to every emotion, event or person coming his way. Without self-governance, he can not control his own actions and responses. If one has self-possession and self-governance, he then has self-determination. The individual can control his choices and there fore his destiny. The proper use of the will is decisive here. The person says, “I will do this or refrain from that. . . ,” or can distinguish among things the he “might or might not do” and those he “need not do.” The decisions made by the person are rational; they are related to the end he has in view, and the person is required to think about the hierarchy of ends, thus distinguishing between the necessary and important and arranging his choices according to the hierarchy. The self-possessed, self-governed decision maker does not confuse the lower ends, like food, clothing and shelter with higher ones like development of the intellect, and personal relations or real love (αγαπε—agape).
The other side of this coin, however, is that people are then responsible for their actions, and the development of their character. A person without these characteristics, i. e., self-possession, self-governance, determines his life and character in a helter-skelter way. The things he chooses are not linked to any particular hierarchy of ends, so his life is confused. When we perform actions, we reveal our inner character, and the world is objectively changed, for good or ill, by what we do. So the person is objectified by each of his actions. So, in economic actions, the person chooses from his subjective valuation of the good in question. Over time, the person reveals his values, and hence his character, in his choices.
The same is true with a society. This is why those who blame the free market system for the materialism of the west miss Wojtyla’s point. The market will not provide what the people generally won’t choose. It provides these things because people are demanding (thus the law of demand) the good or service be available in sufficient numbers that it is worthwhile for someone to provide it. In a materialistic society, the problem is not always what people demand be produced, it is really the amount they want to possess. So much of what we buy does not show self-possession or self-governance, but is controlled by emotion, desire to have and not to be, and a spiritual vacuum in the life of the person who tries to fill it with “stuff.” As so many of us allow our lives to be determined by mere emoting, we determine ourselves away from our higher ends. We replace the important with the necessary, and give the society that character, because the individuals in the society reveal their character in that way—by the choices they make, by the actions they take.
The lowest level to which this sinks is, according to Wojtyla, is when we not only focus on things instead of persons and relations with them, but we actually begin treating people as things. All things are meant for our usage to accomplish higher existential ends. People, however, must be valued for themselves. Now before the reader points out that we legitimately use people all the time, look closer. We do not use the medical doctor when we are sick—we use his services. The actual doctor must be loved and appreciated for himself. In business it is the same. If we call up the supplier of some part we are using to make a machine, we are not using him; we are using his offer to sell us the parts. This is also the same with employees. But it is in our interpersonal relations that the problem occurs. To mistreat the physician or the supplier of parts is different than using their services that they freely supply. We must always remember that all human beings are created in the image of God, and thus are ontologically equal to us, regardless of the difference of skills among us. Hence, there is never a reason for berating anyone, even a criminal, beyond what might be necessary to subdue such criminal, or get his attention.
Examine the so-called sexual revolution. So many men and women are saying to each other, “It’s OK for me to use you for gratification and for you to use me for the same.” If we look at this on a smaller scale, we can see the devastating consequences of such usage of persons. Suppose I had a friend. The friend was very nice to me but all of a sudden he grew cold. Then I found out that he was just pretending to be my friend in order to get introduced to another friend of mine who was rich. Once the introduction was made, this so-called friend no longer needed me and dropped me. The reader would say that that was horrible behavior and would sympathize with the pain I felt when this fellow ripped himself from my heart. Well, the same is true in sexual relations, but to a greater degree. There is nothing greater that one can give to another than the intimacy of the sexual act. This is why the Church and natural law clearly teach that it is for use in a permanent relationship that is marriage. But if I give myself in this way to someone on a date, or to many people on many dates, I am creating a special bond with those folks, due to the special thing that sex is. This bond is immediately broken, and therefore intimacy has no meaning. Thought of in this way, illicit sexual relations are barbaric acts. Is it any wonder that the character of the whole of western society has slipped? Reflect on how this shows up in what we buy, in our politics and in our growing crime rates. We have refused to be self-determining because we no longer have self-possession or self governance. The decisions of so many are based on whim, emotion and pleasure. The economy reflects this as our actions become history.
Listen to me being interviewed on the Drew Mariani Show on Relevant Radio
, October 3, 2008. The focus is on the bailout issue. It's 28 minutes in length.
To download onto your computer, right click on the audio player and save it.
The other day I had what I consider a disturbing conversation with another man regarding a passage of Scripture. It was about the passage in St. Matthew’s Gospel where Jesus calls Matthew. Jesus saw Matthew at the tax collector’s table and said to him, “Follow me.” He did. In the next scene, Jesus is eating dinner with the much hated Matthew and his other despised cronies. The subject came up in our conversation as to where these people came from. My interlocutor felt that Jesus’ reputation was so great that Matthew probably invited him to come and invited his friends to a special dinner for the purpose of hearing Jesus’ words. While we really do not know how this dinner came about, I felt that this was highly unlikely. Folks like Matthew were despised by the Jewish authorities, and it shows when the Pharisees asked Jesus’ disciples why He was associating with these people. Matthew probably lived a less than admirable life and was not enthusiastic right away about Jesus, impressive as He was.
At this juncture I made the point that too often we Catholics have a “prissy Catholicism.” We don’t want to get soiled by “hanging around” with those who need us most, i. e., the crude, dirty, low-class, uneducated people because we either might be influenced by them, or we secretly look down on them. In either case, we really do not care about their salvation, when we might be the one who would need to get close to them to bring them to God. I suggested that this was what Jesus was doing in going to Matthew’s house, and probably Matthew was not enthusiastic in the beginning, hence, he might not have invited these people to his house merely to listen to Jesus.
My conversationalist then revealed his notion of Jesus. He, despite repeated denials by myself that this was what I meant by “hanging around,” kept asserting that Jesus did not “hang around” with these types which he interpreted as co-operating in their sinful activities. He said that Jesus probably taught 16 hours a day, and getting to know, being a true friend and being kind to one, was just not done. Jesus was so focused, he said, that he would not care to do this.
I find this vision very disturbing, and I think conservative Catholics are prone to this error. Does this man’s view of Our Lord sound to you, dear reader, like the same man who told the parable of the Prodigal Son, where the father waits day after day on the road looking for his son, and when he sees him, runs out to him, puts his arms around him and kisses him, gets a fancy robe and shoes and holds a big party; the father who did not give the son a big lecture on how horrible he was? Does this sound like the same Jesus who looked at the rich young man and “loved him?” Does this sound like the same Son of God who we worship in the form of His Sacred Heart—the symbol of his burning and very inexplicable love for us; the same Savior who told St. Margaret Mary that he would gladly suffer his passion and death again, were it possible, for only one bit of return of love from men? Does this sound like the same second member of the blessed Trinity the very nature of the persons of which the famous Richard of St. Victor says is total, self-giving love, and who commanded us to love each other as he has loved us.
Or does this Jesus sound more like a person trying to get you to sign up for his organization; a person who has no particular care for you or me; who is finds principles more important than people; who when he went through His passion and death, did so as a Stoic, but without love?
This type of Catholicism feeds on “the right thing to do” and breeds a legalism and a certain snootiness which forestalls bringing the Gospel to the outcasts of society. The Jesus I pray to is deeply in love with me with a real, personal love that cannot be fathomed by me. It is a love greater than that of my wonderful parents, my lovely wife or my wonderful children have for me combined. He is the One, who if I was Him in person, would look into my eyes and soul with a glance of such love, that I could not help but follow him, and in that glance I would see an abyss of love.
True, Jesus came to teach, but he came for much more, and anyone who attempts to portray him like a type of guru does not know him. One of the Church fathers, I believe, said that no one will die for a mere conclusion. They die for love. Jesus came above all to show us the limitless love of the Father for each and every one of us. The teaching is there because if we do not become like Christ we can never be allowed in to this presence, but Jesus did everything He could to make sure that if we wanted this, we could have it. He is the one “Who stands at the door and knocks, and if anyone opens to him, we will come and sup with him,” not give a theology lecture. This is the God “whose delight is to be with the children of men.”
This is why we are called to go to the less desirable to society—to love them as God loves them. Not just to give them the Faith, but to be a true friend to them; to show that you love themselves, not just to fill pews. It is this that fires the missionary spirit that the Church has insisted since Vatican II that ALL members of the Church should have.
At the end of the evening, after the friars sang the office of Compline, they went off to their cells. A few stayed behind to see what St. Dominic did, who did not go to bed. They would see him leaning on the tabernacle moaning and crying to Jesus, “What is to become to these poor souls.” Here, one of the most learned men of his time still loved with his heart!
Praised be the Sacred Heart of Jesus, burning furnace of love!
In the last entry, we wrote of self-possession, which meant that the fully human person expresses his character through his own actions, and that these actions ought to proceed from the authority he has over himself. Hence, the person is responsible for his own actions. It was also pointed out that talk, as opposed to action, does not reveal the person’s character, because many people say one thing and do another.
Now let us consider the quality of self-governance. If a person has self possession, they have self-governance. Not only are they responsible for their own actions, but they are responsible for the quality of their own actions. It is destructive to the person merely to take responsibility for robbing a bank. While that is a good thing after-the-fact, self-governance means that the person controls his actions. And refuses to rob the bank. To what end? To the end of human flourishing. Self-governance is the quality that directs our free acts to the existential ends that God placed in our nature, so that we can live a truly human life as the imago Dei.
Each of these existential ends has an end or purpose, and can be divided into the least necessary all the way up to the more important. The necessary are those things which make life possible, but can never be desired just for themselves, for the very reason that the are not important to our full flourishing, but are only basic to it. So, food, clothing, shelter and the like are necessary, but the person who desires them for their own sake stunts his development. These make it possible for us to go to higher and higher levels, or from the necessary to the important. So Karol Wojtyla considers the relations between persons, especially from the heart, as the most important feature in developing full humanity. We can say that the persons of the Trinity itself are known by their relations among each other, where each person is completely self-giving to the other two.
Other important existential ends are the desire to know people and things outside of ones own geographic area; the desire to learn, the desire for love and family; the desire to contribute something to society. Lastly is the desire to be on good terms with the Creator.
But these ends cannot be reached unless and until the self-possessed person is self-governing, that is, until he controls and directs his actions to the ends. Every day one is confronted with a myriad of choices. Not all of those choices are moral/immoral or life and death choices. But they are choices which either enhance human flourishing or detract from it. People who live impulsively are not self-governing. They allow their emotions, their mere likes and dislikes, to control what actions they take. Self-governance means that they have control over their passions and desires. They consciously choose the better path; they accept grace and the good because the have a notion about how the existential ends can be accomplished and reject those things which lead away from them.
Take marriage for example. Think of the person who goes to Las Vegas, meets someone, and after one day heads to the Elvis Chapel to get married—heads to the Elvis Chapel to promise a person they just met that they are ready to commit to love this person in sickness and health, for richer or poorer, for better or worse, until the end of life. These are two people who have no self-governance. They have thrown away an opportunity to make a choice to develop their character to accomplish an important existential end. Is it any wonder that the divorce rate is so high. This is an extreme example, but is it not true that many, if not most, people live their lives this way, doing things on impulse, spur-of-the-moment, no thought required?
Now we should ask ourselves what life would be like if the famous people in the past or even the present lived like this. Thomas Edison would have never invented the light bulb, because he might have enjoyed fishing instead. Great authors would have never written their books, because it was too hard, required too much thinking or research. No one would have ever set up a business because the risk was too much to handle. And why should emergency room physicians and paramedics put up with so much blood, gore and suffering in others, when they could be doing something less stressful? All these people do this because they are self-possessed and self-governing. The overcome their aversion to the difficult and their natural desire to pleasure and relaxation to accomplish a good, both for themselves and for the flourishing of society.
Therefore, we can conclude that the less self-possession and self-governance the people in a society have, the more the society will languish, and the more the individuals in that society will fail to reach their full potential.