Reading Quadragesimo Anno, Part II

Reading Quadragesimo Anno, Part II July 19, 2020

In this post I continue my ruminations on Quadragesimo Anno (QA), by Pope Pius XI.  You can read the first part here.  This past week we read paragraphs 40-75.  (Actually, we also read 31-39, but those paragraphs, about workers associations in Rerum Novarum (RN) link more naturally to the material discussed previously.)  This is the beginning of a very dense section where Pius XI begins to expand and update the basic argument from RN.  He first begins in paragraphs 40-43 with a firm defense on why the Church can authoritatively teach on social and economic matters.   I found this interesting that Pius XI no longer takes it for granted that the Church can teach on these matters, which Leo XIII did in RN, writing

in the present letter, the responsibility of the apostolic office urges Us to treat the question of set purpose and in detail, in order that no misapprehension may exist as to the principles which truth and justice dictate for its settlement. (RN 2)

This marks a change in the relationship between the Church and the world.  One member of the reading group suggested that this is in part due to WW I:  the collapse of the European empires and the rise of nation states has driven home to the Church that the alliance of “throne and altar” is gone and the Church may no longer assume that its voice will be heard in the councils of state.  (Whether it was ever really heard previously is a matter for another discussion.)

In any event, Pius XI, while in the earlier part of the encyclical praising the reception of RN among non-Catholics, now admits (at least implicitly) that its teaching has not been received and accepted by Catholics:

in the course of these same years, certain doubts have arisen concerning either the correct meaning of some parts of Leo’s Encyclical or conclusions to be deduced therefrom, which doubts in turn have even among Catholics given rise to controversies that are not always peaceful. (QA 40)

This failure to accept Church teaching on social questions is an ongoing problem which has come up in our discussions.  But I was also reminded of it by a satirical post that appeared in Vox Nova 11 years ago.  It was written in response to George Weigel’s attempt to parse Benedict XVI’s encyclical Caritas in Veritate into “good” and “bad” parts.  The good parts, supposedly written by the Pope, defend free market capitalism, the bad parts, written by untrustworthy advisors, are rejected as a muddled defense of socialism.

Pius XI is clear that the Church cannot proposed detailed solutions to specific questions.  Rather, the Church can and should determine the moral ends of economic systems, “the purpose which God ordained for all economic life” (QA 42), and can judge whether such systems support or detract from these goals: i.e., whether they “the particular purposes, both individual and social, that are sought in the economic field will fall in their proper place in the universal order of purposes” (QA 43).

Following this, Pius XI turns to the question of private property in paragraphs 44-52.  This accepts and builds upon Leo XIII’s defense of private property in RN, and is clearly speaking to the challenges that have arisen to it.  Though not mentioned in this section, an underlying concern is the communist ideal that all private property should be abolished:  he later makes this explicit in par. 112, saying that they wanted the “absolute extermination of private ownership” (QA 112).  (Indeed, though rarely mentioned, the Bolshevik revolution and the fear of its spread through Europe haunts the encyclical, echoing Marx’s claim in the Communist Manifesto: “A spectre is haunting Europe — the spectre of communism.”)

There are three “modes” of property ownership, but Pius XI only addresses two:  private ownership, a good which is treated in detail; state ownership, which is implicitly regarded as bad, but is never treated in any detail; and communal ownership, which does not seem to be treated at all (unless references to “collectivism” cover this as well as state ownership).   This is an important point since by this time there are many examples of state or communal ownership of property:  in the US there are national parks and other federal lands, regional and municipality owned utilities, and even the roads.  (Railroads are private in the US, though they were or are state owned in Europe, but roads are almost universally owned by the community or the state.)

Rather than address these questions of property ownership, the encyclical instead discusses the distinction between the right of ownership of property, and the right to use property, where it reinforces a classical distinction between individual and social “character” of ownership.   Moreover, it seems to expand upon the social character of ownership and grants to the state a great deal of authority to regulate the use of property.  In doing so it actually seems to contradict RN, which it quotes:

the duty of owners to use their property only in a right way does not come under this type of justice, but under other virtues, obligations of which “cannot be enforced by legal action“.  (QA 47, emphasis added)

But two paragraphs later, Pius XI makes it clear that, while there are some limits, the state has the right and duty to regulate the use of private property to ensure that it is used to advance, or at least not detract from, the common good.  This ties into the justification discussed above, that the Church has the authority to teach about the proper ends of economic activity–now he says that the state needs to insure this happens, and it cannot be left to the good will or moral conscience of the owners.  This strikes me as quite different from the argument in RN, which restricted itself to appealing to the owners, but (as the above quote makes clear) was loathe to have the state legislate on these questions.  Pius XI, however, makes it clear that this is actually done to preserve private property itself from the evils which come from its abuse:

Yet when the State brings private ownership into harmony with the needs of the common good, it does not commit a hostile act against private owners but rather does them a friendly service; for it thereby effectively prevents the private possession of goods, which the Author of nature in His most wise providence ordained for the support of human life, from causing intolerable evils and thus rushing to its own destruction; it does not destroy private possessions, but safeguards them; and it does not weaken private property rights, but strengthens them. (QA 49)

This discussion of the social character of ownership leads directly into a discussion of just wages, a long and detailed argument (par. 53-75) that we really did not do full justice to in our discussion.   He begins with a discussion of the connection between ownership, wages and capital.  He criticizes what might be called the “labor theory of value“, that only the labor of workers creates wealth, and that their wages should consist of the entire value of what they have produced and that capitalists should only receive what is required to “repair and renew capital”.  (par. 55)  This is argued out more clearly in par. 53, where he says that labor “would have been idle and vain” without “natural riches and resources”, which, by the theory of private property, belong to the capitalists, individually or collectively.

But, while accepting that wage earners do not, a priori, have an ownership right in what they produce, and can indeed legitimately sell their labor in a “contract of hiring” which is less than the value of what they produce, he makes the sudden and (to me) surprising argument that this kind of contract should be replaced by one which grants some ownership rights to the workers:

We consider it more advisable, however, in the present condition of human society that, so far as is possible, the work-contract be somewhat modified by a partnership-contract, as is already being done in various ways and with no small advantage to workers and owners. Workers and other employees thus become sharers in ownership or management or participate in some fashion in the profits received. (par 65)

He makes it clear that this is a prudential consideration, not an intrinsic right, but he also stresses that he believes that this is an important solution to the wealth gap between workers and owners, which is an abiding point of concern in the encyclical.  (cf. par. 60)   This is an idea which deserved to be developed further, as doing so would have helped to address another question which is important one he addresses later:  what is the just distribution of the profits of an enterprise between workers and owners?   This idea also has parallels with the one of the ideas that emerged from anarchist theory of worker’s syndicates and worker’s cooperatives–businesses in which the workers themselves jointly own the business (the difference being whether they are to exist within a capitalist system or are to become the basis for a reorganization of the economy on non-capitalist lines).   Worker’s cooperatives have never gained much traction in the US, though there are a number of smaller ones.  I buy all my coffee from Equal Exchange, a worker’s cooperative dedicated to just dealings with small coffee farmers.   From my reading, a lot of democratic socialist thought has gone into examining the idea of worker ownership as a natural way to cap private ownership.  The basic idea is that at some point an enterprise or company becomes so large that it no longer just to regard it as private property, and that the ownership of it must be vested in either workers or the community (who are sometimes collectively referred to as the corporate “stakeholders” as opposed to shareholders).  This approach (which does not abolish private ownership but regulates it in order to broader ownership) seems in conformity with the principles laid out in QA, and I think would be an area ripe for further development.

But, instead, the encyclical turns from this short paragraph to a long discussion on the principles which should underlie a just wage.  This seems pragmatic:  while Pius XI might favor workers cooperatives in the long run, in the short run, it is most important to see that “the abundant fruits of production will accrue equitably to those who are rich and will be distributed in ample sufficiency among the [non-owner] workers” (par. 61).   He stresses that there are multiple factors which come into play in determining wages.  I think these can be summarized as threefold:  a just wage must

  1.  Provide for the livelihood of workers and their families (par. 71).  This is of such importance that low wages must be raised immediately:  “if this cannot always be done under existing circumstances, social justice demands that changes be introduced as soon as possible whereby such a wage will be assured to every adult workingman.”
  2. Not overburden the employer so that the industry might continue (par. 72).   If the industry is unable to pay just wages because of unfair competition, then a grave wrong is being done, not just to the employer, but to the worker
  3. Promote “the public economic good”.  Wages should not just provide sustenance but allow workers “to attain gradually to the possession of a moderate amount of wealth.”  Moreover, these riches are not solely for existing workers:  wages must be such that there remain to employers sufficient funds  to create new jobs that are also well paying (par. 74).

This schema for determining just wages is general enough that there is room for a lot of flexibility.  As one member of the reading group put it, QA tells us enough that we know when we, as a society, have gotten it wrong, but it is less specific about how to fix it.  Nevertheless, it remains firmly focused on the goal, which is an economy which satisfies the ends of creation and is in accord with God’s justice.  In language that is almost utopian, Pius XI describes the goal as follows:

For then only will the social economy be rightly established and attain its purposes when all and each are supplied with all the goods that the wealth and resources of nature, technical achievement, and the social organization of economic life can furnish. And these goods ought indeed to be enough both to meet the demands of necessity and decent comfort and to advance people to that happier and fuller condition of life which, when it is wisely cared for, is not only no hindrance to virtue but helps it greatly.  (par. 75)

At this point we were forced wrap it up, but the big question which we finished with was this:  what are the implications of this encyclical for our current economic situation?  Certainly the pandemic has brought about grave economic dislocation and state interventions:  we have massive unemployment, looming crises of evictions and foreclosures, the demand for wage supports, loans and outright payments to threatened private companies, questions about taxation. But even before this crisis  there were concerns about rising inequality and the concentration of ownership into a smaller and smaller group of people, and there were demands for increased wages, particularly for those working in service industries.  In all of these, the encyclical calls on us to recognize the disproportionate impact on the poor and the workers, and asks us to determine solutions that address their condition and fairly share the pain.  The role of private charity and mutual aid (one of the goals that Leo XIII laid out) needs to be reassessed, both to encourage these subsidiary actions while at the same time addressing their limitations.

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