Capitalism is Not Sacred Tradition

Capitalism is Not Sacred Tradition July 2, 2013

…and original sin affects all the works of man, including his invention, the giant corporation:

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  • John Schaefer

    That’s great.

  • Michael

    I’m not sure exactly what the point is. Capitalism make it possible for me to refuse to shop at Walmart and the Gap if I don’t like how they treat their workers. I get the impression that the characters in the comic really like Walmart and the Gap. They also don’t want to seem like they don’t care about workers in Bangladesh. But for some reason they can’t make the next logical step. This is the same type of thinking that leads to the rise of the welfare state. People want the poor to be taken care of, but not if it means going to their neighbor and writing a check to cover their mortgage for the month or buying them a week’s worth of groceries.

    • Stu

      For instance, Capitalism is really a very unpleasant word. It is also a very unpleasant thing. Yet the thing I have in mind, when I say so, is quite definite and definable; only the name is a very unworkable word for it. But obviously we must have some word for it. When I say “Capitalism,” I commonly mean something that may be stated thus: “That economic condition in which there is a class of capitalists, roughly recognizable and relatively small, in whose possession so much of the capital is concentrated as to necessitate a very large majority of the citizens serving those capitalists for a wage.” This particular state of things can and does exist, and we must have some word for it, and some way of discussing it. But this is undoubtedly a very bad word, because it is used by other people to mean quite other things. Some people seem to mean merely private property. Others suppose that capitalism must mean anything involving the use of capital. But if that use is too literal, it is also too loose and even too large. If the use of capital is capitalism, then everything is capitalism. Bolshevism is capitalism and anarchist communism is capitalism; and every revolutionary scheme, however wild, is still capitalism. Lenin and Trotsky believe as much as Lloyd George and Thomas that the economic operations of to-day must leave something over for the economic operations of to-morrow. And that is all that capital means in its economic sense. In that case, the word is useless. My use of it may be arbitrary, but it is not useless. If capitalism means private property, I am capitalist. If capitalism means capital, everybody is capitalist. But if capitalism means this particular condition of capital, only paid out to the mass in the form of wages, then it does mean something, even if it ought to mean something else.

      The truth is that what we call Capitalism ought to be called Proletarianism. The point of it is not that some people have capital, but that most people only have wages because they do not have capital. I have made an heroic effort in my time to walk about the world always saying Proletarianism instead of Capitalism. But my path has been a thorny one of troubles and misunderstandings. I find that when I criticize the Duke of Northumberland for his Proletarianism, my meaning does not get home. When I say I should often agree with the Morning Post if it were not so deplorably Proletarian, there seems to be some strange momentary impediment to the complete communion of mind with mind. Yet that would be strictly accurate; for what I complain of, in the current defence of existing capitalism, is that it is a defence of keeping most men in wage dependence; that is, keeping most men without capital. I am not the sort of precision who prefers conveying correctly what he doesn’t mean, rather than conveying incorrectly what he does. I am totally indifferent to the term as compared to the meaning. I do not care whether I call one thing or the other by this mere printed word beginning with a “C,” so long as it is applied to one thing and not the other. I do not mind using a term as arbitrary as a mathematical sign, if it is accepted like a mathematical sign. I do not mind calling Property x and Capitalism y, so long as nobody thinks it necessary to say that x=y. I do not mind saying “cat” for capitalism and “dog” for distributism, so long as people understand that the things are different enough to fight like cat and dog. The proposal of the wider distribution of capital remains the same, whatever we call it, or whatever we call the present glaring contradiction of it. It is the same whether we state it by saying that there is too much capitalism in the one sense or too little capitalism in the other. And it is really quite pedantic to say that the use of capital must be capitalist. We might as fairly say that anything social must be Socialist; that Socialism can be identified with a social evening or a social glass. Which, I grieve to say, is not the case.

      Nevertheless, there is enough verbal vagueness about Socialism to call for a word of definition. Socialism is a system which makes the corporate unity of society responsible for all its economic processes, or all those affecting life and essential living. If anything important is sold, the Government has sold it; if anything important is given, the Government has given it; if anything important is even tolerated, the Government is responsible for tolerating it. This is the very reverse of anarchy; it is an extreme enthusiasm for authority. It is in many ways worthy of the moral dignity of the mind; it is a collective acceptance of a very complete responsibility. But it is silly of Socialists to complain of our saying that it must be a destruction of liberty. It is almost equally silly of Anti-Socialists to complain of the unnatural and unbalanced brutality of the Bolshevist Government in crushing a political opposition. A Socialist Government is one which in its nature does not tolerate any true and real opposition. For there the Government provides everything; and it is absurd to ask a Government to provide an opposition.

      -G.K. Chesterton

      • Wage dependence is generally something that one chooses. You take a look at the alternatives and choose the safety of being part of predictable payroll that must be met every period as opposed to the risk or only being paid after production is done and the product/service is actually sold and paid for.

        100% commission salesman is a job that is open to almost anybody. If you do it well, it is very well paid. It does not require very much capital to start off with.

        • chezami

          “Wage dependence is generally something that one chooses.”
          Like those people who chose to be crushed to death working in a shoddy building for shit wages?

          • Newp Ort

            Guess they should’ve chose to be some kinda sales dude instead. OOPS

            • Mark was unjust when he made up what I believed in in contradiction to my explicit statements on this thread and my longstanding positions that I’ve written about repeatedly in these comments.

              You, on the other hand, are not only unjust, but derivatively so. In short you are boring, get no points even as entertainment value. You are the weakest link. Goodbye.

              • Newp Ort

                (OUCH! oh well, these is the jokes, folks)

                Goodbye? You leaving?

                If you’re that butthurt over being unjustly mischaracterized by Mark you might want to consider not posting on his blog; it’s par for the course.

                Seriously though, stick around. I’m not familiar enough with your “longstanding positions” (eesh, and I’the boring one) to know your economic sensibilities in detail, but you seem to be a pretty good guy.

                • I am smilie dependent to detect sarcasm over the Internet. It’s something of a disability. If that’s what’s going on, I apologize.

                  Let’s back up and I’ll lay out the summary of what’s going on.

                  I think that every word of what Mark said himself is absolutely true and both consistent with Catholic doctrine and reality. Tom Tomorrow’s treatment of the subject is a disingenuous bit of tripe that omits a serious, material fact about the Bangladesh crime (the evil owner of the building got his inspection immunity from his political position) and is in support of political greed heads who want Apple to move money around in a way that increases their corporate income taxes without benefitting Apple shareholders in any way.

          • I did not say that, and elsewhere in this very thread explicitly disclaimed that. The political juice that the building owner got as being the head of the ruling party youth league meant that he got a pass on building inspections and nobody dared call him on it for fear of the mobs he could arrange. That’s an evil, improper thing. It is not, however, capitalism. To imply that I am actually in favor of this evil profoundly misstates what I have already published in this very thread and my own long record in your comment boxes.

            I would guess that by the nature of your own working arrangements you yourself know how scary it is to run without the safety of a regular paycheck. We need more people willing to do this in order to create the businesses so that the 2 billion plus people China and India have dumped into the world labor market have decent jobs with the dignity that the Popes have rightly said they should.

            So wages drop and income for more risky positions on the pay line increase in a classic supply/demand shift. Those who read the signs correctly and move to fill the need clean up economically until enough people move over to that type of work that the economic advantage is arbitraged away. And at the end we have a much bigger economy and a billion plus new jobs. This is not a bad thing in itself. In fact, the Popes would be the first to admit that a billion more jobs would be quite good.

            I’m open to hearing ways we can quickly create those billion plus jobs in a more humane fashion. What I am not interested in is “solutions” which implicitly involve not creating the jobs and leaving 2 billion people in the lurch economically. That is neither Catholic, humane, or decent and if that is your solution, you will own that.

    • Barfly_Kokhba

      I sifted painfully through a couple dozen messages on the nature of fractional reserve banking (“It’s usury!” “No, you idiot, it’s fraud!” “Guys, guys, it’s just a nutritious part of this balanced breakfast!” *cut to camera shot of banquet table spread with bran muffin, eggs over easy, fresh-squeezed orange juice, avocado, multi-vitamin, and one bunch of bananas, all next to a cold bowl of Froot Loops© brand Fractional Reserve Banking*) and was just about to leave the page in disgust before I saw this, the most incisive message so far in this thread, and I’m glad I endured. I can’t believe I’m the only one who gave this a thumbs up.

      Michael is correct.

  • Mark S. (not for Shea)

    In my experience, most people who will go to the mat defend capitalism (especially on the internet) don’t really understand what capitalism is. They think a market economy with private ownership is the sum total of capitalism, which is a lot like thinking that wheat and salt are the sum total of a good pizza.

    • Imp the Vladaler

      By the same token, some people who attack capitalism (or who hear John Paul or Benedict or Francis criticize capitalism) make no distinction between a market economy with private ownership and slave-labor conditions in unsafe third-world factories.

      If you’re getting paid minimum wage to fold jeans at the Gap in an American suburb, you’re not a wage slave and you’re not the victim of rapacious capitalists.

    • The Deuce

      Part of the problem is that the very term “capitalism,” as referring to an economic system or ideology, was invented by Marx and Engels themselves, as a foil for the communistic system they were proposing. So the term was pejorative and loaded from the get-go, and literally defined as being exploitative by the people coining the term.

      In reality, Marx and Engels were the ones proposing an ideology and a system. “Capitalism” wasn’t really an ideology or system at all, unless you can call “not believing that the laws of economics and logic can be rewritten by political fiat” an ideology or system.

      • Mark S. (not for Shea)

        Modern capitalism, at least as it is practiced in the West, has usury as its basic foundation, which all the Law and the Prophets and the Saints condemned as sin.
        “Maximum profits for shareholder value” is the A#1 operating principal of most corporations. It’s just fancy new words for “greed.”
        Profit in and of itself is not sin. But maximum profits by any means necessary most certainly is.

        • The Deuce

          “Greed” and “maximum profits” are not an economic system or an ideology. They’re things that people in all times and places and economic situations (including socialist ones) have had, as a result of the condition of original sin.

          But you are joining Marx and Engels in taking negative human traits and simply assigning them to an economic system.

        • The Deuce

          As for usury, that really has become a basic foundation of the modern economic system specifically, at least if by “usury” you mean the charging of interest, and you aren’t just using it as a vague term for “greedy bad things” in general (which isn’t unique to our system at all). Are you arguing against the charging of interest itself? If that’s the case, I might agree with you.

          • Imp the Vladaler

            Interest is a rental fee for the use of money. Is it immoral for me to rent land to you for you to farm, or a tractor to you so that you can work that land? If not, what difference does it make whether I rent the land/tractor to you directly, or allow you to rent my money to buy your own land/tractor?

            The prohibition on usury makes sense where there is no capital to speak of, and no meaningful returns on capital investment. Returning to the farm: if there’s no such thing as a tractor or other farming technology – which would increase your productivity – you’re probably borrowing because you’re in distress. Maybe there was some sort of pestilence and your crops died. Whatever you’re borrowing isn’t increasing your productivity; it’s enabling you to survive through the winter. It would be unjust to profit from such a loan.

            • Carolyn Schuster

              That is when it becomes a government write-off and the farmer is encouraged to go further into debt the next season as well. It is when government creates unholy alliances with lenders that “capitalism” becomes even more perverted in it’s modern definition and results. A “free market” is free only in so long as it is a moral agent for prosperity and growth. Greed is fatal to a true free market capitalism. Human potential and the ability to use gifts and talents to achieve success is the ideal benefit of an honest system, but it absolutely has to be an honest system for better or worse.

        • Spectrall

          Modern capitalism, at least as it is practiced in the West, has usury as its basic foundation…

          I don’t understand this statement. Would you mind elaborating?

          • Stu

            Look into Fractional Reserve Banking.

            The short answer. Banks create money, almost entirely out of thin air, and then charge you interest for using this newly “made” money.

            • Spectrall

              That’s a bit of a misleading description, but even if it were entirely accurate, I’m not clear how that would be usury.

              • Stu

                Charging interest on money you create out of thin air? I think that is usury.

                • The Deuce

                  Indeed. And not only that, but by arbitrarily increasing the money supply, the banks in a fractional reserve system devalue the savings of everyone else, while redistributing that lost value to themselves.

                  …and then they screw everyone over even harder again when they inevitably overleverage themselves, blow up the economy, and get bailed out, taking directly by taxation what they previously took by inflation.

                  • Stu

                    You have to admit…it’s a great racket. Proven and repeatable.

                    • The Deuce

                      What’s really frustrating is how few people who complain about the increasing concentration of wealth among “the 1%” understand that this is the whole explanation for that phenomenon.

                      The more banks are allowed to leverage up, and the more loans they make, the more they exchange something for nothing, and transfer the value of everyone else’s savings to themselves.

                      If you look at the details, the increased concentration of wealth among the 1% is actually taking place almost entirely within the financial sector. The increased borrowing in our society, among both private citizens and the government, is the whole reason our wealth is being concentrated among the hands of a few.

                      And yet, almost everyone who complains about that fact provides stupid solutions along the lines of “tax the greedy corporations and give the money to the poor.” It doesn’t occur to them that taxing the income of actual wealth-producers will force people to borrow more, which will result in the banks getting even MORE of our money. Every government program we create to “help the poor” causes the government to go deeper into debt, which causes it to borrow more, which causes the banks to get even MORE money, which concentrates the wealth in the upper 1% even MORE!

                      When that department at the Vatican came out with that idiotic idea a couple years ago to create a central world bank with global authority in the name of helping “the common good” by “regulating the flow” of capital through loan-making, I wanted to drive nails into my forehead until the hurting stopped.

                • Spectrall

                  This seems tautological. I’m asking why it’s usury, and you’re just saying that it is.

                • Stu

                  Okay. Let me attempt to be a bit more clear. Having a return on an investment is completely justified. By investment I mean putting legitimate capital (saved up labor) into some endeavor that is actually going to producing something of more value (hopefully).

                  Fractional Reserve Banking allows banks to create money out of thin air (no real wealth added to the economy) and then charging interest on that supposed “wealth.” It’s making money (not wealth) off of money (not wealth).

                  • The Deuce

                    To put it into simpler terms, Fractional Reserve Banking allows certain individuals to trade something for nothing – to take other peoples’ wealth without providing anything in return.

                    Let’s break it down. Let’s say a fractional reserve bank “lends” someone $100,000, essentially creating that $100,000 out of thin air. Where does the value of that $100,000 come from? The bank didn’t produce any wealth itself to create that value, and yet the person to whom it is lent is able to spend it in exchange for real wealth.

                    The answer is that the value of that $100,000 comes from you and me and everyone else. By adding that currency to the economy, the bank diminishes the value of everyone’s savings slightly through inflation, and transfers that value to the borrower.

                    The borrower then pays the bank back the loan, plus interest, with real earned wealth. In other words, once all is said and done, the bank has exchanged value they took from the savings of other people for actual wealth for themselves, without contributing actual wealth of their own to the transaction. They’ve exchanged something for nothing, the very essence of usury.

                    • Rose

                      The 100,000 is the depositor’s money (who agreed to put the money in the bank knowing it would get loaned out). But it is not out of thin air. The bank makes money for performing a service. They connect capital with projects. The depositors get part of that money.

                      A person with some money could do this on their own also – but a bank collates a lot of small deposits and helps people create wealth through investing in their projects.

                • Martial_Artist

                  You are in error, irrespective of what you “think.” Printing money which is not redeemable for a defined quantity of a commodity is not usury, it is a variety of theft ordinarily referred to as “fraud.”

                  • Stu

                    I’m not speaking of “printing” money.

            • Banks are permitted by government to loan out customer deposits to those who seek loans. The customer is guaranteed his money back, plus a rental fee for his money (interest), in exchange the bank manages the loan, and charges a rental fee for the money. To ensure that there is enough money left in the till to handle day-to-day cash demands, a reserve percentage is not permitted to be lent out.

              I am curious which feature(s) cause you to declare this arrangement usurious.

              1. Are you saying that the guarantee that the customer gets his money back is illegitimate?

              2. Are you saying that the interest paid to the customer is illegitimate?

              3. Are you saying that the loan made by the bank is illegitimate?

              4. Are you saying that the interest paid to the bank is illegitimate?

              5. Are you saying that the reserve requirement is illegitimate?

              I do not see the sin in the time value of money.

              • Stu

                Pray tell, what is the reserve requirement? And how much of everyday loans are actually from the deposits of other bank customers? When you charge to your credit card? Where is that money coming from?

                Fact remain, that when you take out a loan from the bank the OVERWHELMING percentage of that money is created right there out thin air. It’s not based on anything.

                As I said, it’s a great racket.

                • If you are going to critique a system this big, pervasive, and influential it’s probably a good idea to understand it. Unless you are a prime broker in the UK and doing unlimited rehypothecation (which is one of those open secret scandals where everybody is currently waiting for the house of cards to come down), there are limits to monetary creation. In most countries, banks are allowed to loan a certain percentage of their assets. The remainder must be kept at the bank in cash or cash equivalent instruments. The amount they are not allowed to loan out on pain of losing their charter and being forced to close down is the reserve requirement.

                  Here is a practical example of how it would work. So you get $100 busking on the streetcorner and deposit that money in the bank. The bank has a liability towards you of $100 dollars. It also has an asset of $100 on the books. Let us say that the reserve requirement is 10%. That means that they have the ability to loan out $90, which they do. Voila, money is created, but only to a limited extent, regulated by law. There is risk of loss if the number of loan defaults exceeds the sum of the interest they have to pay on the deposited funds and their operating expenses. They have to carefully pick among loan applications to minimize defaults. Now those borrowers then spend that loaned money. Following the $90 onwards, it gets spent on office equipment and is deposited in the bank again, creating a new paired liability and asset, this time with $81 being loanable and the cycle continues.

                  Reserve requirements are adjusted up or down so that the bulk of money creation (a legitimate service) no longer has to be done via currency printing. It’s done by this loaning process. Fine tuning around the edges is done in open market operations (which is another story in itself) and actual currency printing.

                  I don’t see how your objection really works in an economically accurate way without also birthing to a religious objection to fiat currencies per se. Now that’s fine if you were making up your own religion but I am not sure that you can legitimately make the case that God meant to condemn fiat currency.

                  • Stu

                    “Let us say that the reserve requirement is 10%. ”

                    Yes, let’s say that because that is the number that often applies but it can be 3% or even 0% here in the States depending on the total assets in question and/or vehicles being employed.

                    That means when the bank loans out the remaining portion, say 90%, that money ultimately goes into other banks and then is double, triple, etc counted thus creating money out of thin air as you have admitted above. Legal for them to do most certainly. (If you did such things, you would be jailed.) Far worse, they create this money by means of issuing credit to someone else. So now they also get to charge to interest on something that they created out of thin air. To me the kick in the pants is that in many instance if the person taking out the loan can’t repay, the bank takes possession of that which has been hypothecated as well. All with bank “money” that they made.

                    And when the system collapses from time-to-time…we bail them out at times with our tax money.

                    But I do agree with your opening statement. It is a good thing to understand the system. As Henry Ford famously said, that if the public understood how money was created, “there would be a revolution before breakfast.”

                    • The dog that isn’t barking in your exposition is the alternative, which is the politicians just declare money and create it out of thin air unilaterally and immediately begin to spend it themselves. In this system, if loan demand is low, banks won’t lend even if they have authority to do so. In fact, I believe that to be the case right now (take a look at the collapse in money velocity to see it in the economic stats). This gives the real economy much more of a say than the major alternative of Treasury printing where the spender and the money creator are the same person. My point is not that any of this is sacred Tradition or scripture but that critiques need to be accurate for them to do any good and so far, you’ve not been accurate.

                      We’re arguing on the financial equivalent of how many keys it should take to launch a nuclear missile. You’re criticizing the present two key system. I’m horrified because at that point we default back to a one key system. Go and propose a three key system and you’ll get a much more respectful hearing from me.

                    • Stu

                      I’m not sure why you just can’t be respectful.

                      My critique of the current system is just that and mine alone. What you infer from that critique and then apply to my point is yours alone.

                      As to accuracy, I have been completely accurate in how the system works. FRB does in fact create more money than is initially put into the system and those that are in controls of that are the banks. Sure, there might be a “two key system” as you set forth, but fact remains that one part knows exactly where the other party keeps his key. And they are both “good with that.”

                    • You are advocating a dangerous public policy that hurts the poor especially badly. The air of moral superiority while you’re advocating this destructive policy kind of set me off. Advocating a policy that hurts the poor earns my opposition. The side order of smug earns my ire. No, I’m not a saint and I’d probably be a better christian without the ire. Sue me.

                      The two key system are not the FRB and the banks. The banks are the puppets of the FRB in this case. The second key is held by the solvent business community that can qualify for loans. That community is not looking to take on new debt in the expected amounts even though it is ridiculously cheap to borrow at present.

                      This is not up for serious discussion. The political class is regularly complaining that banks aren’t loaning enough and the banks are flat out saying that they’d love to give out more loans but people who qualify simply aren’t applying. The velocity numbers collapse is the key statistic to measure the phenomenon and it’s startling what’s happening to that number.

                      The political class is trying to inflate us out of our economic doldrums and the business class is vetoing the expansion as not sustainable. The two key system is working, albeit imperfectly because the political class is doubling down on stupid and pouring more and more money into the system (increasing the monetary base) in the hopes that if they just do it enough, then enough money will be created to overcome the smart people who don’t want to take on debt when there’s another economic down leg waiting to wreck their businesses.

                      Back to the subject matter at hand which is God, Christ, and sin with regards to economics. You can condemn this 2 key system but unless you’re also claiming that fiat currencies are inherently sinful under the usury prohibition, the end result is worse, direct inflation without the need to create loans. I don’t think a magisterial condemnation of fiat currencies is in the cards but if you think I’m wrong I’d love to hear the case for it. It would really help my evangelization efforts among the Austrian economics set.

                      The political class would have already wrecked the economy in a Weimar/Zimbabwe sort of way had we not had the check of fractional reserve banking on their activity. We have so far dodged that bullet. I’d like to keep it that way. You seem to differ.

                    • Stu

                      I haven’t advocated any specific public policy so your assertions that I am hurting the poor is…well…odd. And any tone you have read into my comments is your own creation. I see no reason to continue down this road.

                      Maybe we will get off on a better footing next time.

                    • No, you just categorized a major improvement over flat out money printing as a sin. There’s no particular public policy advocacy there.


                      Inflation really does a number on the elderly, who tend to have fixed incomes, and the poor, who tend not to be financially sophisticated and unable to dodge the impact. By making money creation hinge on the supply of money and the willingness of people (mostly businesses) to borrow it, the likelihood of runaway inflation is significantly reduced. We’re right in the middle of a so far successful test of this system to contain idiot politicians from inflating the currency to ruin.

                      That you are randomly waving around a big, loaded policy gun and are surprised at the strong reaction does not mean that what you were doing was responsible. It was not responsible.

          • Mark S. (not for Shea)

            The foundation of modern capitalism is a superior return on investment. Modern capitalists expect to invest in Company A, then receive a large return, even though they themselves put in no labor nor produce any wealth.

            Wisdom says the laborer is worthy of his wages.

            Modern capitalism asserts that investors are worthy of everyone’s wages.

            • Spectrall

              I’m not clear how this is usury in any meaningful sense. Individuals expect return on investment and make investments. Other individuals expect compensation for labor and engage in labor. Who’s being treated immorally by that arrangement?

            • The Deuce

              I don’t think a superior return on investment is the problem. Everyone who invests wants to get the best return they can. Actual investment implies that you’re putting something of yourself into a venture – that you *have* put in labor and produced wealth, and now you’re risking that wealth while trying to put it to good use that gets a return on it.

              The problem is, as Stu pointed out below, that a lot of the “investment” in the modern economy isn’t actual investment of real earned wealth at all, but rather the collection of interest from “lending” of currency that was created out of thin air (It’s actually worse than that, because if it were created *completely* out of thin air, at least it wouldn’t carry the risk of getting overleveraged and catastrophically wrecking the economy).

              • If it were created completely out of thin air, the politicians would just print more money every time they ran short. Hyperinflation is worse than overleveraging.

            • Rose

              Not exactly. The whole point of capitalism is some people have ideas and some people have capital. The capital goes to fund the good ideas. The people who have the capital get paid for loaning the money. It’s all about good ideas getting funded.

            • When production happens, there is a line of people who wish to get paid. Their position in line, according to the capitalist, determines the safety and the amount of their profit. The laborer is first in line. He gets paid whether or not production actually happens and whether or not it is sold. Every pay period, he gets his fixed pay. This is the safest form of income. So long as the company hasn’t completely gone belly up and there is no theft, the workers get paid first. After the workers get paid, the vendors and the bondholders are next. They have loaned money to the company and get paid next (which loans get paid in which order is the subject of a lot of grousing come bankruptcy time). Their payment is on a fixed interest basis. Next comes the preferred stockholder. At this point, we’ve gone from wages to debt payments and on to equity. A preferred stockholder gets paid first among the stockholders. Their bargain is that they’re paid before the common stockholders with a preferred dividend but they have no voting control and they do not have unlimited upside if things go really well. Last is the common stockholder. They are the most likely to go bust, to not get paid at all. But if things go well, after everybody else is paid off, the workers, the debt holders, the skittish preferred stockholders and some other exotica that I haven’t bothered mentioning, they get the rest.

              Without understanding the payment priority line and how people trade off safety and security for greater rewards, you end up making ineffective critiques that ignore the reality of what is going on.

              Is it a sin to ask for a larger reward if you take a larger risk with your money?

              Modern capitalism is screaming out to people to diversify their sources of income and to take some investment risk. We are suffering a capital shortage and a labor surplus. Until those two forces get back into balance, wages will be under continual downward pressure.

              Translated into something you might understand better, there are a lot of poor people who can’t get access to funds to buy tools and business inputs like bricks, cement, seeds, or plows and build a dignified life because of this capital shortage. The money is trapped as dead capital, or being otherwise held out of the system that has done the best job in the history of the world in creating wealth, capitalism.

        • Martial_Artist

          I am not quite sure how to break the news to you Mark S. (not for Shea), but someone has to try.

          In starting with the clause “Modern capitalism, at least as it is practiced in the West” you demonstrate that you do not actually understand what either of the two identifiable economic archetypes (socialism & capitalism) are. I say this because there is almost no modern nation in the world today which has anything even closely resembling a truly capitalist economy.

          To paraphrase the authoritative work on the subject: “There are only two possible archetypes in economic affairs: socialism and capitalism. All systems are combinations of those two types. The capitalist model is defined as pure protection of private property, free association, and exchange – no exceptions. All deviations from that ideal are species of socialism, with public ownership and interference with trade.
          Ergo, what you see in the non-Marxian nations are hybrids between the two archtypical forms. You will search high and low without success to find a truly capitalist economy in the industrialized world of today. If you want to understand this better, I would recommend you read the book A Theory of Socialism & Capitalism by Hans-Hermann Hoppe.

          Pax et bonum,
          Keith Töpfer

    • I’d agree so long as you accept the corollary that the critics of capitalism are overwhelmingly even more ignorant of the reality of capitalism.

  • Elmwood

    Where’s the Acton Institute when you need them? This is an outrageous attack of liberty and freedom.

    • Stu

      I know where they are.

      But I don’t think I need them.

      Here is a better alternative.

      • Elmwood

        My guess is that because the Acton Institute promotes Gudge, it’s rewarded with large donations from Gudge whereas distributism has no such wealthy beneficiaries–which makes sense. Distributism has everything going against it by simultaneously attacking Hudge and Gudge and therefore will not find many friends in government or academia. Unfortunately, Gudge has been very successful in promoting itself within certain “conservative” catholic circles.

        • Will

          Since the Acton Institute is based in Grand Rapids, it probably gets money from De Voss and Van Andle (Amway). They pretty much have run Michigan politics for the past 2 1/2 years.

    • Stu

      Now I’m tracking your sarcasm with the edit!

  • ivan_the_mad

    This, I think, nicely sums up several articles in the Catechism: “Getting and spending are not the chief aims of human existence; but a sound economic basis for the person, the family, and the commonwealth is much to be desired.” — Russell Kirk, Ten Conservative Principles

    You know what does not constitute a sound economic basis? Treating economics as an iron-bound law of nature and fobbing off this tragedy on everyone but ourselves, since I am rather certain that the question of whether or not I am my brother’s keeper has been definitively answered. For the Catholic, the end can never be profit, and people can never be anything but ends in themselves. Whether you call it capitalism or liberal economy or free market or simply “our economic arrangement” and advocate the same, the efficient allocation of resources is always subject to morality and is bound to serve the common good, not individual interests. Greed will never be good.

    • merkn

      While we are enjoined to love our neighbor as ourselves, we are NOT our brother’s keeper. Show me anywhere in the catechism or Scripture it says that we are.

      No one is fobbing off this tragedy. Nor do those of us who favor limited government involvement favor no goverment involvement. We believe in a rule of law which often is not followed in the third world.

      • ivan_the_mad

        Evangelium Vitae, 19: “It is precisely in this sense that Cain’s answer to the Lord’s question: “Where is Abel your brother?” can be
        interpreted: “I do not know; am I my brother’s keeper?” (Gen 4:9).
        Yes, every man is his “brother’s keeper”, because God entrusts us to one another. And it is also in view of this entrusting that God gives everyone freedom, a freedom which possesses an inherently relational dimension. This is a great gift of the Creator, placed as it is at the service of the person and of his fulfilment through the gift of self and openness to others; but when freedom is made absolute in an individualistic way, it is emptied of its original content, and its very meaning and dignity are contradicted.”

        The more common term for this is solidarity, of which there is plenty said in the Catechism.

        • Andy

          Except for the rapacious capitalists the key word is subsidiarily – that solidarity stuff just doesn’t sill well with profit before all else. I guess it makes it easier to forget the second greatest commandment as well.

        • Stu

          Man, that was a fat pitch to swing at.

  • Mark, you had me right up to the point you tossed in Tom Tomorrow’s puerile comic. Your own words were entirely correct. You would have done better to stick to them.

    The reason that thousands of factory workers died in Bangladesh is that the politically connected owner of the building had the inspectors cowed so that the perfectly proper government inspection regime of businesses was subverted. The reason that Apple is not paying those taxes is that the US has the highest rates of corporate taxation in the 1st world outside of Japan and it’s arguable whether we’re #1 or #2. That money comes into Apple’s coffers from foreign purchasers of Apple’s products and goes right back out to pay their foreign workers, buy their foreign components, pay their foreign rents, and pay their foreign taxes, which everybody agrees Apple does. What the critics of Apple are saying is that because Apple has an HQ in the US, it is obligated to move all its money through the US and incur US corporate taxes even though it is perfectly legal to leave its foreign earnings in its foreign sub-units accounts.

    The first is not a failure of capitalism, but of government while the second, well, I’m not entirely sure how to categorize it other than as greed by the US political class that they’re not getting their cut. One of the reasons that the US isn’t an actual empire is that we do not play these games mandating that goods or money must pass through the imperial center. This attempt to impose imperial economic patterns in the name of some sort of inchoate social justice are a sick joke. Imperial economic patterns usually indicate a lessening of social justice.

    • Will

      So it is all our government’s fault?

      • Sin is distributed inside and outside government pretty evenly. The bad consequences of sin are not only because of government. The problem with sin in the government is that they have most of the force available so their sins can hurt so much more.

        The Apple thing is not really clear why their behavior is a sin at all. If you make money in a jurisdiction, what is your moral obligation to move that money out of the jurisdiction it was earned and send it to the jurisdiction of your corporate headquarters, thus triggering a taxable event?

        Apple pays the taxes it owes where it makes its money. That is rendering unto Caesar what is his. If they do not have any internal need for more money in the US (to make payroll, fund production, etc), why do they have an obligation to repatriate money here?

        The Bangladesh thing is clearly sinful. This was a tragedy that did not have to happen. There were warnings the day before. If the building owner was not a big shot in the ruling party, it is quite likely that the situation would have played out differently and fewer lives would have been lost. Nobody has yet been able to tell me why this is a problem of capitalism and not a problem of political corruption and cronyism.

    • Barfly_Kokhba

      I know what you mean. Similarly, you had me with your first couple messages here, until you started defending Fractional Reserve Banking© further down the page. I hereby unofficially rescind my heretofore upward-pointed thumbs, although you are 117% correct (I’m using Fractional Reserve© math here) about the Apple tax thingy.

      • My ‘druthers is a hard money standard or money competition and may the best currency win but neither is happening any time soon in the US. I’m not a Leninist. I don’t think that worse is better is something I should support in the normal course of things so if we’re stuck with fiat (which we are right now), then we need the least dangerous way to print up money. FRB seems to be it and I will defend it on that basis right to the point where something better comes along that will serve as a superior store of value. Currently I’m taking a look at the synthetic currency alternatives. They intrigue me but are not yet big enough to be practical.

  • TomD

    While unbridled freedom, in the form of unrestricted capitalism, is indeed a threat to society (only in theory, as true capitalism doesn’t exist and never has), it is the collusion between big government and big business that is the real, current threat to us.

    For the most part, big business gave up fighting big government some decades ago, realizing where the ultimate power in our society is, and now we have a conglomeration of big government and big business working together . . . to consolidate power . . . not through the excesses of big business, but through the excesses of big government. Businesses that fail to get on board are punished, those that do are given special access and privileges. This collusion is the real threat.

  • Martial_Artist


    Your assertion that “capitalism doesn’t exist and never has” is patently incorrect. There were instance of essentially true capitalism in the U.S. in the period when Commodore Vanderbilt and John D. Rockefeller were alive and amassed their wealth, although I do not assert that those were the only years that capitalism might have existed in the developed world. I think you perhaps need to read more history (and economics, especially of the Austrian School).