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Economics in the Catholic World

Up to recent times, the Catholic nations and regions were considered the poorest part of Christendom, “underdeveloped” not only financially but also materially. Lately, this has changed considerably, and today France and even Italy are economically stronger than predominantly Protestant countries such as Great Britain whose GNP they have overshadowed. In Europe, generally, industry is shifting its weight from the North to the South and East.

Furthermore, the Institute for Sociology at the University of Chicago has made the sensational discovery that in the United States, the socio-religious group with the highest earnings happens to be the Catholic Irish, followed by Catholic Germans. Third are Hebrews and only fourth WASPs (White Anglo-Saxon Protestants). Italians are not far behind.

All this, however, does not eliminate the fact that, for generations, Catholics lagged behind Protestants in regard to earthly goods, and still have some catching up to do in Latin America. But it would be a mistake to claim that in the period following the Reformation up to the late eighteenth century, Catholics were more devout, less worldly, Christians; at that time Protestants were still strong and faithful in their belief. With the Reformation, however, the center of gravity of European wealth drifted from the Mediterranean countries toward the mostly Protestant North.

The main reason for this drift was certainly not the Catholic ban on usury, which was gradually falling into oblivion, but, rather, the rise of what Max Weber called the “Protestant work ethic.” The Middle Ages, and especially Thomas Aquinas, had taken over the ban on usury from the Old Testament, as well as from Aristotle, who had declared that money does not generate offspring. Christ’s parable of the talents, in which the unenterprising servant does not use the money entrusted to him profitably, and did not at least invest it with bankers (Matt. 25:27), was disregarded by most Catholics. (At the time of Christ, bankers in the Holy Land were men from Syria, Aram in Hebrew, who, together with merchants, spread the Aramei language.)

In De Regimine Principum (II.3) of St. Thomas, we find a pronounced antipathy toward traders whose profession he considered immoral. In the period between the two World Wars, the old ban on usury, officially lifted only in 1918, was propagandized in certain Catholic circles by “anti-capitalist” enthusiasts, including myself. Today I am thoroughly ashamed of my immature presumption, but, like many among us, I was then honestly convinced that there simply must be a third way. Of course, there is none. The means of production belong either to individuals, to groups of individuals, or to the state which simply conducts state capitalism. (“Publicly” owned enterprises exist on paper only, and “society” always remains an abstraction. It cannot own anything.)

What really brought about the higher living standards in Northern Europe was the higher work ethic of laborers and managers. Whereas Malanchthon’s firmness prevented Luther’s concept of predestination from inclusion into the Augsburg Confession, Calvin’s thesis on the same subject played a decisive role not only in Reformed Churches, but also in no small manner among Anglicans whose official theology is rooted in Calvinism. In this, there is not only a radical Augustinianism, but also an Old Testament concept of wealth and a good life as signs of Divine favor and a proof of a man’s election for all eternity. In order for a man to convince himself and his friends that he belonged to the elect, he had to become well-off or rich, and that was to be achieved only through hard work and an ascetic, puritanical lifestyle–certainly not through the dolce vita favored by Catholic Christians who enjoyed wine, women, the arts, a good cuisine, humor and leisure. (Asceticism–yes, but only in monasteries; Sebastian Franck, a Lutheran convert at the time of the Reformation, complained that the whole world seemed to have become a monastery.)

For profound political and sociological reasons, certain anti-capitalist Catholic Christians saw in socialism merely the other side of the capitalist coin. In the nineteenth century–and today as well–the North European countries (from England to Finland) had parties that called themselves “conservative,” and so did certain Catholic countries. (The latter, however, abandoned this label for a good reason: the Catholic Church is not conservative in the etymological sense of that term–it is, as Newman pointed out, “additive.”) These conservative parties, usually replaced by “Christian-Social” parties, often had as leaders members of the aristocracy who considered Reformed and Jewish bankers, newly rich merchants and manufacturers “uncongenial” to their political ideals. They objected to the Hebrews’ non-Christian outlook, to the merchants’ commercialism, and to the industrialists’ apparent indifference to their workers’ welfare.

Many tears have been shed over the misery of workers in the early nineteenth century. Productivity, however, was very low due to the primitive machinery, and higher wages would have made the products unsalable. The typical manufacturer reinvested his earning in his enterprise while living austerely in a truly Calvinist manner. His sons were not allowed to study, but had to enter the parental firm as accountants standing behind their desks. Only through constant reinvestments, iron discipline, frugality, and precise planning could the living standard of workers be raised to the middle-class levels of today. There was no exploitation of labor and this applies also to the colonies which were mostly in the red. (Of the German colonies only little Togo was profitable. It was the loss of the colonies that largely contributed to Europe’s wealth and, after World War II, created the “Third World.” And it was the legacy of Karl Marx that reduced the “Second World” to the level of the Third and led to the bankruptcy of 1989.)

In the orbis catolicus, economic theory and research were often neglected. The renowned Austrian School constitutes an exception. As a result, the concept of social justice based on redistribution found a vast echo. Not a few Catholics were openly or secretly convinced that many poor existed because others were so rich, and that therefore wealth must be “justly” distributed all over the globe. People very rarely ask themselves the interesting question of why certain populations, or even whole nations, are so much better off than others.

The widespread economic ignorance in Catholic countries, as well as the theologically based tendency to moralize, has in the past led large Catholic circles to look for the causes of poverty in ethical principles, and to make “redistribution” the slogan for their reform programs. But neither in developed countries, nor the Third World, can redistribution achieve anything.

It is evident, of course, that in the Third World the social pyramid has a very broad base which rapidly shrinks and ends in a very thin, very high needle which is visible from afar. However, if one breaks this needle, pulverizes it, and scatters it over the broad base, the beneficial effect will be nil. The masses remain poor, and the elite, including the intelligentsia, is ruined and emigrates. (The natty guerrilla-priest Camilo Torres Restrepo demanded not only the dispossession of all landlords, but also the lowering of the wages of foreign specialists to local levels–whereupon they would immediately abandon their jobs and depart.)

I once tried to explain the uselessness of redistribution to a famous theologian. He did not contradict me, but pointed out that the wealth of the few causes envy, a sin, and thus, as a Christian, he was in favor of removing the “needle.” I countered with an analogy: there is an ugly, unpopular girl who cries every night because her beautiful sister is surrounded by admirers. Should one disfigure the beauty to make the ugly duckling happy? The good theologian only threw up his hands in silence.

From the statistical data, it is evident that even confiscatory taxation of higher incomes does not bring about financial improvements for the normal social pyramid. And this is true of the Third World as well. There, small, foreign contingents of people with a higher work ethic (and often with a higher intelligence) attain economic success which arouses envy among the masses and causes political upheavals.

For example, in Mexico we have the red Spanish refugees who rapidly became successful capitalists. (Spaniards allegedly own one third of Mexico’s national wealth.) Successful Anglo-Saxons, Germans and Lebanese are to be found all over Latin America. And don’t forget the Chinese in Indonesia or the Japanese in Peru and Brazil. Some time before the leftist military dictatorship in Peru, whose radical agrarian reform had disastrous consequences, I had a memorable discussion with the secretary of the Peruvian Christian Democratic Party. He told me that 78 percent of the land was in the hands of rich haciendados. I argued that the remaining 22 percent seemed quite adequate for a relatively small population in a country of nearly 500,000 square miles. Upon his highly indignant reaction, I pointed out that the Japanese immigrants, who had come to Peru penniless and ignorant of the local language, had managed to achieve great economic success. The telephone directory of Lima is a better indication of their standard of affluence, more so than the possession of expensive cars; a telephone is a hard to get status symbol. Upon their arrival these people had taken on the dirtiest jobs, the hardest work. With their savings they bought more and more farmland on which they grew vegetables. Today they have a monopoly on vegetables. (The current Peruvian President is of Japanese descent.) All of this, however, made the secretary even more indignant. “You don’t really believe,” he bellowed, “that our noble Peruvian people should submit to the kind of backbreaking work done by those miserable Japs!” I congratulated him on his candor.

At this point we should also remember that what we hastily referred to as “conditions compatible with human dignity” are to be found only in the last 5000 of the one and a half million years since the first appearance of a man, and this only for an infinitesimal minority. And we must not forget that a German qualified worker today leads a far better life than Louis XIV, the roi soleil. Consider modern medicine, modern dentistry, modern plumbing, modern travel. In the summer the palace of Versailles reeked so strongly that walkers avoided it, and the king never got rid of the lice in his full-bottomed wigs. Traveling was an ordeal for him, whereas today German workers fly to the Caribbean in great comfort.

The present pope has clearly envisioned the alternative for our globe. A free-market economy not only conforms to human dignity, it also helps an individual acquire a maximum of material goods. But the free market must not renounce gain, nor make it a fetish. It, too, falls under divine law and is not subject to purely human regulations. It is evident that business has a genuine interest in the highest possible wages for the workers, who are customers as well. However, what are badly needed are not only Christian entrepreneurs but also Christian unions carrying equal responsibility for a healthy economy. Their leaders must be morally as well as economically educated. We must bear in mind that the working class in Europe was not “lost to the Church”–in large areas it had never belonged to it. Having crystallized outside the Christian orbit at the time of the Industrial Revolution, it has, nevertheless, certain “natural” Christian qualities other social groups lack. Good, intelligently led, and morally motivated unions can be pillars of society, whereas base ones can ruin entire nations.

Although economics has been the Achilles Heel of the Catholic orbit, Rome did have thinkers who, resisting the trend of the times, recognized the fundamental problems. The Church, as mentioned above, is not static but ever growing and constantly enriched through new experiences and new knowledge–she is a societas perfecta. At times her progress is slow, but it would have been disastrous for the Church to be materially successful and spiritually sterile. Perhaps the times of Catholic economic sterility are over: John Paul II’s Encyclical Centesimus Annus may prove to be a sign in that direction.