Catholic Economics for the 21st Century

The Cold War (and even the Global War on Terror) American Catholic consensus regarding the objective goods of capitalism now seems a relic of the past. Gone are the days, it would appear, of Catholic thinker Michael Novak’s The Spirit of Democratic Capitalism, which during the pontificate of John Paul II sought to place the Church squarely in the camp of unfettered free markets. Publications such as New Polity and Postliberal Order, popular among younger, intellectual traditionalist Catholics, express contempt for both capitalism and liberalism.

One proposed alternative to this once seemingly universally championed economic order is distributism, a theory promoted by such Catholic luminaries as Hilaire Belloc and G.K. Chesterton. Others, like Republican senator Marco Rubio, speak of “common good capitalism,” by which they mean circumscribing markets to protect the inherent dignity of individuals and communities. A new, important book by Alexander William Salter, The Political Economy of Distributism: Property, Liberty, and the Common Good offers some much needed practical clarity and prudential wisdom.

If only all critics could take such a balanced, gracious view of their sparring opponents as Salter does in this book, which offers both a minor and major claim in regard to distributism. The former is that distributists are often poor economic reasoners. Indeed, as Salter explains, in many cases distributist proposals simply will not achieve their state objectives and would often even yield results opposite of those distributist goals. The latter claim is that the distributists’ economic errors “do not invalidate their most important argument: societies cannot remain politically free unless they are economically secure and independent.”

Economists usually evaluate economic outcomes solely in terms of efficiency and distribution. Common-good capitalism, in contrast, “shifts the evaluative standards to the rights and duties that flow from human dignity.” Salter hopes his book will serve as a foundational text for future conversations to further the cause of that common-good capitalism.

Though not a Catholic, Salter appreciates the Catholic understanding of the common good— which recognizes people have rights because they are created in the image of God and requires authorities to steward the community and maintain peace and order. He also knows Catholic moral teaching well enough to know the Church does not endorse a single economic system for the production and distribution of goods, nor a political system for governing citizens.

Belloc, for example, argued that bargaining between labor and capital was little more than a bilateral monopoly in which capital has all the power. Though that might be the case in some examples (think of old factory towns), market conditions often enable other capitalists eager to profit from their short-sighted, foolish, exploitative competitors. Moreover, Belloc’s prediction of compulsory labor has never materialized and, given current conditions, seems unlikely.

Nevertheless, Salter can appreciate Belloc’s observation that the economy is not an autonomous sphere of human conduct that operates without reference to other areas of human behavior. The rules defining property ownership, for example, are governed not by market forces but law. Belloc is then right that capitalism is not solely an economic system but a political one as well, and thus it needs to be informed by just laws. Belloc’s concerns about property are also relevant: a society of free and responsible individuals requires more than sufficient wages but also property, which gives them a more immediate stake in the polis.

Salter offers a similar balanced perspective on G.K. Chesterton. He notes that the great English (and distributist) writer’s What’s Wrong With the World and The Outline of Sanity make many valuable judgments, but they also err when it comes to basic economics. For example, Chesterton is vehemently opposed to “big shops.” He argues that shopping at such establishments is both a “bad action” and a “bad bargain” and that such businesses decrease efficiency. Salter writes: “If big shops are profiting, and they are not legally protected, the simplest explanation is that they make things people want to buy and sell them those things at prices they can afford.”

Even more egregious is Chesterton’s perspective on the division of labor and resource allocation: “The quickest and cheapest thing for a man who has pulled a fruit from a tree is to put it in his mouth. He is the supreme economist who wastes no money on railway journeys.” The problem with this, notes Salter, is that there exist competing claims over how goods such as apples are used: juice, cider, sauce, pies, etc. Does the man with the apple tree have no interest in profiting from his property? We thus require a system—such as widespread voluntary exchange in a free market—to adjudicate those interests.

Nevertheless, Salter appreciates Chesterton’s higher-order qualms with our contemporary politics and economy, namely, that the concentration of productive property can undermine human freedom. Like Belloc, Chesterton is right to see the relationship between economic security and political liberty. And he correctly perceives the threat to liberty posed by the collusion of big business and big government. Says Salter: “When society gives men their due, they have a stake in the social and political infrastructure by which they secure their rights.”

Salter takes the best from distributists, agreeing that states do indeed play a crucial and even necessary role in aiding citizens to realize economic prosperity. He calls for “a circumscribed state with a specific mandate to advance the common good. Provided the state remains within its legitimate bounds, state capacity and human flourishing are complementary.” His economic exemplar is Wilhelm Röpke, a twentieth-century economist sympathetic to free markets and a political order oriented toward objective goods. Thus, Röpke promoted market economies, price mechanism, and competition but also laws that encourage ethical traditions and practices. 

Efficiency must be tempered by the protection of communities and human dignity. Public policies should encourage institutions that facilitate human flourishing. Salter, by his own acknowledgment, doesn’t get into too many specifics. But others, such as Oren Cass at American Compass do. Cass suggests, for example, offering a subsidy for low-wage work that is funded by higher tax rates and reduced transfer payments rather than imposing those costs on business owners themselves. People would be rewarded for joining (or staying in) the economy, and generating an income to provide for themselves and their families, rather than being passive recipients of handouts.  Efficiency must be tempered by the protection of communities and human dignity. Public policies should encourage institutions that facilitate human flourishing.Tweet This

Catholics in the United States need an economic alternative for the twenty-first century that recognizes the weaknesses of unfettered global capitalism but also appreciates the benefits of free markets. Salter, Röpke, and Cass, who in various ways marry shrewd, cold, data-driven analysis with principles that find their origin in Catholic social teaching, offer us an option that avoid the naivety of those who, overeager to repudiate an obviously flawed economic model, would impetuously dismantle a system that has brought prosperity to generations of Americans.