A noble vocation

‘Business activity is essentially “a noble vocation, directed to producing wealth and improving our world”. God encourages us to develop the talents he gave us, and he has made our universe one of immense potential. In God’s plan, each individual is called to promote his or her own development,and this includes finding the best economic and technological means of multiplying goods and increasing wealth. Business abilities, which are a gift from God, should always be clearly directed to the development of others and to eliminating poverty, especially through the creation of diversified work opportunities. The right to private property is always accompanied by the primary and prior principle of the subordination of all private property to the universal destination of the earth’s goods, and thus the right of all to their use.’

Pope Francis, Fratelli Tutti n. 123

I don’t think anyone really told me, growing up, just how good work itself is. I thought that some work is good, like charity work or teaching, some is bad, like selling drugs or spreading lies, and the rest (and the large majority) is morally neutral, and basically selfish. It was mainly working itself that corrected me.

In work, we add something to the world. We take our capabilities and materials, and make the world a better place, for ourselves and for others. There is a very deep moral value in that.

The fact that private businesses organise work in exchange for payment in no way detracts from this. Working for money is just a way of cooperating with another for mutual benefit. It is even a moral good to cooperate in such a way.

But we do need to make sure business is done right. Businesses are too often exploitative, taking advantage of their customers, their employees, or both. As Pope Francis puts it, they ‘should always be clearly directed to the development of others and to eliminating poverty, especially through the creation of diversified work opportunities.‘ Whenever we are working with someone else, as a customer or an employee, we should always be looking out for their good as well as our own. If we don’t, we are con artists and robbers, taking advantage of others in their need, and it will also sour what could have been a fruitful relationship.

‘The right to private property is always accompanied by the primary and prior principle of the subordination of all private property to the universal destination of the earth’s goods, and thus the right of all to their use.‘ This is a hard teaching. Property rights always imply property responsibilities. We can and should use our resources for our own good and others’, but must never use or withhold resources to the harm of others.

We tend to think of property rights as something absolute, but the truth is they are a human creation, created and governed by society for the good of society. To make them absolute and deny the universal destination of goods is, in the words of the Church Fathers, nothing less than theft. This means there is no right to monopolise resources, to deny others the necessities of life, or to damage the natural environment.

This takes virtue, to insist upon working with and never against others, and for the good of all, but it’s a virtue that will pay off hugely, increasing the happiness and prosperity of everyone involved (and helps us avoid going to hell too).

God bless

Leo XIII: How must one’s possessions be used?

‘Private ownership, as we have seen, is the natural right of man, and to exercise that right, especially as members of society, is not only lawful, but absolutely necessary. “It is lawful,” says St. Thomas Aquinas, “for a man to hold private property; and it is also necessary for the carrying on of human existence.”” But if the question be asked: How must one’s possessions be used? – the Church replies without hesitation in the words of the same holy Doctor: “Man should not consider his material possessions as his own, but as common to all, so as to share them without hesitation when others are in need.”`
-Pope Leo XIII, Rerum Novarum No.22

Laudato Si n.189 and a “New Economy”

‘Politics must not be subject to the economy, nor should the economy be subject to the dictates of an efficiency-driven paradigm of technocracy. Today, in view of the common good, there is urgent need for politics and economics to enter into a frank dialogue in the service of life, especially human life.

‘Saving banks at any cost, making the public pay the price, foregoing a firm commitment to reviewing and reforming the entire system, only reaffirms the absolute power of a financial system, a power which has no future and will only give rise to new crises after a slow, costly and only apparent recovery.

‘The financial crisis of 2007-08 provided an opportunity to develop a new economy, more attentive to ethical principles, and new ways of regulating speculative financial practices and virtual wealth. But the response to the crisis did not include rethinking the outdated criteria which continue to rule the world. Production is not always rational, and is usually tied to economic variables which assign to products a value that does not necessarily correspond to their real worth. This frequently leads to an overproduction of some commodities, with unnecessary impact on the environment and with negative results on regional economies. The financial bubble also tends to be a productive bubble. The problem of the real economy is not confronted with vigour, yet it is the real economy which makes diversification and improvement in production possible, helps companies to function well, and enables small and medium businesses to develop and create employment.’

–Laudato Si n.183 (Paragraph breaks mine)

“The financial crisis of 2007-08 provided an opportunity to develop a NEW ECONOMY”. That’s what he said!

What’s the problem? Our whole world is run on the grounds of something which doesn’t really exist: an absolute concept of ownership separated from reality. We have a global system that can cause widespread starvation and loss of other basic rights, without any real famine or lack of necessary resources at all. Even in richer countries, with all our wealth and modern technology, people are made to struggle for their livelihoods as if we were still living with the scarcity of past centuries. It used to be widely assumed that by the 21st Century, no one would have to work more than 4 hours each day, since production would be so incredibly high. And production is higher than ever before in history, however this primarily benefits an extremely privileged few.

Speculation

The means of production are not directed towards production, but private profit. Sometimes the capitalists suddenly become afraid they will lose money, and so they shut down production and stop lending (making others shut down and stop lending also, creating a recession). Workers would happily go on producing for no more than the fruit of their own labour, but this is illegal (it’s trespassing at the least). Instead, workers pay the price to recover from these imaginary future losses by their unemployment, lower wages, higher interest on consumer debts, reduced social security and degradation of their living conditions.

At other times, capitalists will buy up a productive resource, such as land, and keep it entirely unused, merely as a speculative investment–that is, they buy up land and do nothing with it, thereby raising the price of land and reducing the amount of available land (for people who actually need land for various projects), for the sole reason of making money off of it– or another way of looking at it: they purchase the land, just so that they can make money off of people who would actually use it, by keeping the land out of their reach until they are desperate enough to pay extortionate prices for it. This is a particular problem with land today, but it is also a problem with many other resources. This financial speculation distorts the working of the price mechanism for efficiently allocating resources.

Inequality

Allowing money to make money, with little to no real work involved, is an obvious recipe for increasing inequality. And inequality means that, for example, more money is invested into cures for baldness than malaria. The things produced, are produced for the rich. And as much as we might hope for some magical “trickle-down” from this, this labour is being exploited just as much. It is not just the incomes of the rich that increase, but their wealth, and therefore what they can charge usury on (making money merely by being wealthy, in the form of unjust rents, interest, and profits/wages). The rich become richer, and the poor become poorer. And with speculation distorting markets, and maddening inequality, we are all poorer as a society.

These problems are mitigated or exacerbated by government policies, but these are at best a patch for the more fundamental issue of our warped concept of private property. Property must not be considered absolute, but must be made subject to just principles, for the good of all affected. Ownership, production and consumption have become separate, if related, concepts, when in reality they should be three sides of a single coin (including the edge). This encourages disharmonies and imbalances in the economy, resulting in poorer product quality, worse allocation of resources, and more unstable production and markets across the entire economy.

A New Economy

We need to create an economy centred on humans, where resources are allocated and production decisions made for the sake of actual use and actual people, rather than speculative profit. To this end, I suggest we make sure that every business recognise the human capital its workers provide, either by granting them some degree of ownership, or by recognising (formally) that the company owes a very real debt to each of its workers, regardless of their market value. When workers are integrated into production decisions, they will not be considered disposable, and the whole economy will be more stable as well as more just.

To stop speculation, we need to banish the idea that my property is simply mine, to do with however I see fit. We need to recall the universal destination of goods: that all things exist to serve all people, and private property is only valid in this service. The first thing for this purpose is to cultivate a spirituality that views all things as gifts, blessings from Our Father for His children. The second thing is to create laws considering various goods as part of the commonwealth of all humanity. An example of such a law would be a land tax, considering land as being the inheritance of the whole nation, which each business venture merely borrows for a time; this would help prevent the speculative and unproductive buying up of land.

‘You are not making a gift of what is yours to the poor man, but you are giving him back what is his. You have been appropriating things that are meant to be for the common use of everyone. The earth belongs to everyone, not to the rich.’
St. Ambrose

‘Wherever there is great property there is great inequality.’
Adam Smith

 

God bless you!

Earth Day Thoughts

The Earth is my home and my favourite place in the universe. I can’t imagine a better place to live. Astronomy has found some wonders, but nothing to rival the Earth. The Earth has allowed us to live for billions of years, to get to our modern human life today. She deserves our love and gratitude.

Maybe you roll your eyes at me personifying a planet. But when science considers people/life as material, spirituality must consider all matter as personal/living.

For too long, we’ve viewed the earth as a dead object to be exploited for private profit. For too long, some (our rich and powerful) have thought they have a right to damage our common home.

‘You are not making a gift of what is yours to the poor man, but you are giving him back what is his. You have been appropriating things that are meant to be for the common use of everyone. The earth belongs to everyone, not to the rich.’
-St. Ambrose of Milan (4th Century Bishop and Doctor of the Church)

God bless you

 

Laudato Si n.82 and thoughts

82. Yet it would also be mistaken to view other living beings as mere objects subjected to arbitrary human domination. When nature is viewed solely as a source of profit and gain, this has serious consequences for society. This vision of “might is right” has engendered immense inequality, injustice and acts of violence against the majority of humanity, since resources end up in the hands of the first comer or the most powerful: the winner takes all. Completely at odds with this model are the ideals of harmony, justice, fraternity and peace as proposed by Jesus. As he said of the powers of his own age: “You know that the rulers of the Gentiles lord it over them, and their great men exercise authority over them. It shall not be so among you; but whoever would be great among you must be your servant” (Mt 20:25-26).

–Laudato Si n.82

The way we view and treat creation is inextricably tied up with the way we view and treat humanity, because we are a part of creation, completely dependent upon the whole, and because we were made to be connected to, working with, all of creation, almost as the brain/mind/soul is to work with the body, training and directing it. When we treat any part of nature ‘solely as a source of profit and gain’, subjecting it to ‘arbitrary human domination’, we are simultaneously doing the same to every human dependent upon that part of nature. And we are also refusing others, especially those who depend upon it, the opportunity and the dignity to work as stewards of creation, and so maintain the life of humanity also, in a spirit of service rather than domination.

As far as we treat nature as property, we treat humans as property too. I’ve argued previously that we need to move away from our oppressive concept of private property towards a more human idea of belonging, grounded in the reality of relationships and shared life, and it seems to me Pope Francis is advocating something similar. The best expression of this idea is in voluntary poverty, having nothing and yet possessing all things, as exemplified by St Francis of Assisi, with his love for Brother Sun and Sister Moon, and our Sister, Mother Earth, along with the whole family of creation. As Pope Francis says in n.11,

‘The poverty and austerity of Saint Francis were no mere veneer of asceticism, but something much more radical: a refusal to turn reality into an object simply to be used and controlled.’

God bless you, and God bless Pope Francis

Sainsbury’s Christmas Advert

Hmmmmm… They are using a war that killed millions of people, in order to sell chocolate… They are using the terrible tragedy of the first world war, and the incredibly beautiful and profound Christmas day peace, to increase their own profits… They are trying to connect which rich people receive our money, with our deepest longings for peace and humanity… But they do it so well!

Is there nothing that can’t be capitalised? Is nothing sacred! Well, no, not really. This is capitalism: The religion without any dogmas.

If the production costs are high, the only way it will ever happen is if its profitable in some way. Beautiful and tragic films are also made for the monies. The best modern architecture is for offices (offices!).

G.K. Chesterton understood the matter quite perfectly when he wrote,

‘But the improvement of advertisements is the degradation of artists. It is their degradation for this clear and vital reason: that the artist will work, not only to please the rich, but only to increase their riches; which is a considerable step lower. After all, it was as a human being that a pope took pleasure in a cartoon of Raphael or a prince took pleasure in a statuette of Cellini. The prince paid for the statuette; but he did not expect the statuette to pay him.’
-from Utopia of Usurers

The Sainsbury’s advert is beautiful and profound. Even the chocolate bar at the end, reminds us that it’s not just a chocolate bar. The right use of the most base material goods is for them to be used as more than material goods. It testifies beautifully, that our lowest material goods are destined to embody the highest spiritual goods. But here lies the real perversion of this advert: the advert itself, is using the most profound spiritual goods as just a tool, at the service of the very lowest material good: profit.

It is both beautiful and ugly. Its beauty lies in its lowliness and horror being exalted by love. Its ugliness lies in its glory being chopped down and processed into another product at the service of mammon.

Usury

I’ve been thinking about the sin of usury lately, and decided to read Pope Benedict XIV’s encyclical, Vix Pervenit, dealing with usury (I recommend reading it, it’s short, easy, and, best of all, authoritative).

Very basically, usury is when a lender demands in repayment for the loan, more than they themselves gave in the loan. That is, giving a loan should not be an occasion for profit.

The reason usury is a sin, is that it consists of gaining the money of others, not from any real exchange, but only from possessing the ability to refuse them use of the object of the loan, regardless of the common good. It is demanding more than you are justly owed, and so is stealing. It is using the dependency of others on a good, to extort profit from them. It is giving, only in order to claim the good belonging to another as your own. The Natural Law, Scriptures, Church Fathers, Church Councils, and Bishops of Rome have all condemned this sin.

And it is arguably the foundation of modern economies… Think of the billions of pounds of profit, made by the banks and financial institutions. Think of the levels of the debts of nations and their governments. The UK is spending about 7% of its annual budget paying interest on the national debt. I don’t need to elaborate, everyone knows the finances are abysmal.

I should mention, of course, that not all charges on a loan are usury. There are various legitimate costs, such as administration costs, the cost of inflation, or the loss of the personal use of the object loaned (arguably including likely profits from investment, if that was actually prevented by the loan).

I think we would be short-sighted to limit ourselves to focusing on monetary loans. What about rent, the loaning of a property? It’s not difficult to see, that some compensation is due insofar as the owner gives up living in or using a property desirable to their purposes, and allows the property to be worn down by use. But honestly, the use of a second (and for that matter, third, fourth, fifth, and so on…) home cannot be so valuable to an individual, and even less to a corporation. The more properties owned, the less valuable the use of each one is to the owner. Rent today is generally unjust and exploitative, making a profit from exploiting a basic human right.

Since usury is based upon refusing another the use of a good, and claiming what rightly belongs to another, it is inherently inefficient. How could a system based upon refusing a good’s use be more productive? How could the widespread demanding and living off of another’s goods improve the economy? It is inherently unproductive and unjust. And, as I suggested a while back, I believe that usury actually lowers wages (within the indebted classes) and raises house prices.

Could you imagine, how much more egalitarian society would be? Not only would costs of many products decrease (most businesses are subject to usury also, and their suppliers too), wages rise, and house prices fall (which is only really a problem to owners who wish to downgrade their houses), but it would no longer be profitable to own so many properties, and so many properties would enter the market, allowing more people to own their home, or to start their own business (nicely helping employment also). Owning your means of living and being independent and free: isn’t that the American dream? Yet look at America today… Further, this would enable significant decreases in government spending, from debt interest to welfare to police to healthcare to education (it’s long been established that it’s easier to look after/watch over people who don’t feel oppressed), and so significant decreases in taxation. And don’t forget the benefits to family life, of removing the stress and pressure of debts and mortgages, giving parents more free time to spend with their children. In short: usury is a terrible plague on all of society.

What would happen to business investment without usurious loans? It’s a good question. Perhaps investment would more commonly take the form of joint ownership (perhaps with agreements of when the investor’s share might be sold back). The important thing here, is that rather than the relationship of debtor-creditor (a slave-master relationship), there would be a partnership (however unequal it might be).

What about businesses, renting their places of business? There is a possibility that owners will hire businessmen to manage their properties on their behalf, kicking out previous tenants. That said, I don’t expect this option would be popular, because it isn’t as efficient. E.g. for a rich man owning much land, hiring and managing many farmers in many places would prove a nightmare, and, including management costs, would be more costly than for farmers to manage themselves. It would therefore be more profitable, for the farmer’s to own the land, and so a good deal could be struck, selling the fields. If the owners could use a property more profitably than its tenants, this would also be more profitable than renting it to them, and so they already would be.

At this point, I should admit that I’m no economist or expert, and what I’ve said might well be wrong, or profoundly incomplete. So, as always, I invite your correction. These ideas need discussion. The usual solutions being offered (generally more spending vs less tax, fiddling interest rates, etc) haven’t worked, and won’t work. The gap between rich and poor is still increasing. The economy is rotten at its roots, and we require a radical solution. I believe this is part of it.

God bless you.

P.S. Please make sure to read Vix Pervenit. Don’t let the Latin name scare you off, it’s extremely clear and helpful. And if you want more here’s a link to an article in The Distributist Review on whether or not usury is still a sin.

Household debt lowers wages

This is something I recently realised, that I haven’t seen before, and, based on a quick google search, doesn’t seem to be common knowledge on the web.

Debts must be repayed: Failing to repay debts has bad consequences, such as repossessions and higher debt; Debt repayments are a cost to individuals, and, as there is nothing in return, lower standards of living; Because there is a higher cost of living including the repayments, work is needed more, increasing the supply of labour, which increases competition over jobs and over-time, and therefore lowers wages.

I don’t know why this isn’t more well established economic knowledge. There is very little difference between the notion that lowering unemployment benefit will increase work and decrease wages and, what is the same, increasing a cost such as paying off debts will do the same.
I suspect it may be that the wealthy, who set policy, don’t wish to reveal their advantage. It wouldn’t be popular to tell people they will have higher debt and lower income. And the economists are generally in love with the rich, and wish to present them as kind and helpful in all they do. Ultimately, they will see this as an increase in productivity.

Student debt (in many countries) is different, as it doesn’t last forever and is only paid by those on relatively high earnings. This is paid in proportion to earnings over a threshold, and so works as a tax. It should, therefore, disincentivise work over the threshold, and so increase wages (before tax & debt repayments).

Mortgages can be particularly bad, as the cost of missing repayments is extremely high, even if just a short period is missed.

Interest is the key problem here, as receiving a loan would initially improve cash-flow and help absorb falls in income. But as more will have to be paid back due to interest, the dependence on wage-slavery is increased, overall, rather than decreased.

Basically, the important thing about capitalism is that the more needy a person is, the less they are given and the more is demanded of them. And the capitalists still dare to refer to themselves as kind benefactors (however, occasionally one genuinely is).

God bless you.