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Reading Mater et Magistra, Part II

Reading Mater et Magistra, Part II August 23, 2020

This is the second post on my thoughts on Mater et Magistra, based on the discussions of my reading group.  You can find Part I here.   This week we read a bit less, paragraphs 70-121, but this was a very rich selection.  This section continued the discussion of the fundamental principles of Catholic social teaching as laid out in RN and QA, but reinterpreted and expanded for the current time.

Following up on a point raised in our previous meeting, we began our discussion asking whether the encyclical was utopian, and if it was, whether this was a bad thing.   The concern about whether the encyclical was utopian had two grounds.  First, that it was unobtainable, and second, that the 20th century had shown the real dangers of utopian thinking:  the quest to create a material paradise on Earth had been used to justify every imaginable cruelty, since the ends were held to justify the means. He pointed in particular to the vision laid out in paragraphs 79-80, wherein John XXIII laid out the “demands of the common good”.  This particular passage is concerned with the principles which should be used to balance wages and profits, but they clearly point to a particular vision of a just social order:

employment of the greatest possible number of workers; care lest privileged classes arise….maintenance of equilibrium between wages and prices; the need to make goods and services accessible to the greatest number; elimination, or at least the restriction, of inequalities in the various branches of the economy….creation of a proper balance between economic expansion and the development of social services…the best possible adjustment of the means of production to the progress of science and technology; seeing to it that the benefits which make possible a more human way of life will be available not merely to the present generation but to the coming generations as well….the avoidance of all forms of unfair competition between the economies of different countries; the fostering of mutual collaboration and good will; and effective co- operation in the development of economically less advanced communities. (par. 79-80)

One problem with the word “utopian” is that it is often used as a pejorative for something that is unattainable and not worth striving for.   It suggests a lack of realism or pragmatism, and often has the connotation of a waste of time.   One of our members did point out that the word utopia was coined by St. Thomas More for his eponymous book, and the word is a pun in the underlying Greek, where (roughly) “outopia” means “no place” but “eutopia” means “good place”.   So there is a sense that while utopia may not exist, and may never exist, it is still an ideal we can look to.  This was a point we tossed back and forth, and it tied in with a point which had been raised previously:  that Catholic social teaching tells us less about what to strive for, and more about how to identify what is wrong.  Here MM does seem to go further in laying out a positive vision for what a just social order should look like.

The problem of the means to attain these ends is a real one, but, unlike QA which did seem in places to flirt with authoritarian government as a solution, MM, as we noted in our previous discussion, has moved away from that and has repeated warnings about governmental overreach that threatens human dignity in any way.  (For instance, see par. 55.)  The State will play a role, but violent revolution (state-led or not) is not a just option for attaining these goals.   I think this parallels the evolution in socialist thought noted in QA, wherein Pius XI praised “moderate socialism” for moving away from revolution and the abolition of private property. (par. 113)

As an aside, in thinking about the aspirations for the common good on the international level, I wonder if John XXIII had in mind the European Common Market, which represented a bold attempt to foster “mutual collaboration and good will” among the nations of Europe.   In 1961, would the current European Union have seemed an impossible utopian fantasy?  It is by no means perfect, but it seems to represent the sort of social evolution that MM is calling for.

One feature of the encyclical that shows that, while it may have lofty aspirations for human society, it is grounded in practical reality, is the identification of competing interests and demand which must be reconciled in practice to move forward.  For instance, in determining a just wage, the needs of workers, employers and society as a whole must be considered.  One of our members, who for many years owned a small business, had practical experience in these issues, and wondered how to balance the demand of workers for a just wage, and the further principle, first raised in QA and reinforced here, that “workers gradually come to share in the ownership of their company.”  (par. 77)  He pointed out that as a small business owner, he often sacrificed his own wages to invest in the business and thereby expanded what he owned.  Should he be required to pay good wages and give workers an equity share as well?

This is an important question, one which I have seen discussed in the theoretical literature of socialism. (I read this a while ago and I am not able to find a reference; if anyone can point me to such a discussion, I would be grateful.)  Most moderate socialist thought accepts the right to own private property, including the means of production, but wants to set limits on them of some kind.  So, it is right and just that someone could own a small business and hire people just for wages.  But at what point does the enterprise grow so large that ownership by one person is no longer just and workers should be given an equity stake as part of the renumeration for their labor?   The “gradually” mentioned by John XXIII above is ambiguous: does this refer to gradually in time–i.e., a worker gets an increasing share in the company the longer s/he works there–or does it refer to size–i.e., as a company grows, so should the share which is worker owned increase?   We returned to this point from another direction (see below).

We also noticed that the encyclical made a point of stressing that government had a positive obligation to help small businesses:

It is equally important that the government take the proper steps regarding their [i.e. workers in cooperatives and small businesses] training, taxation, credit, social security and insurance. (par. 88)

Certainly, in the US, one problem faced by small business owners is the difficulties they have in providing quality benefits, such as health insurance, to their workers.  A more robust social safety net (such as universal health insurance of some kind) would make it easier for small companies to attract and retain workers.  It would also make it easier for artisans and entrepreneurs to leave jobs at big companies to start their own businesses.   Such an expansion in small business is specifically identified as an important component of a just society.  (See par. 84-90.)

We continued talking about wages, with the problem of the minimum wage and in particular balancing the needs of individual workers versus the needs of the country as a whole for expanded employment opportunities.  (See par. 71.)  As someone pointed out, this can complicate any discussion about a minimum wage, particularly when there are other  (developing) nations which can provide goods produced by workers for whom good wages are much lower than in a developed nation.   The problems associated with outsourcing jobs to Mexico and China comes to mind.  I pointed out that it depends on where the jobs are being sent, and what role corporations play in depressing wages.  In my experience in Western Europe, I have noticed that many consumer goods that in the US would be imported from China or southeast Asia, for instances low-priced clothing, come from countries in Eastern Europe or other countries on the periphery of the European Union.  (For instance, Legos are made in Hungary, Playmobil is manufactured in Malta.)  These are countries with lower wages and lower standard of living than the leading economies of the EU (e.g., France, Germany) but still have credible social safety nets and worker protections.

I contrasted this with something I referred to as the “Nike fund” that I had read about:  an investment fund that tracked where Nike was building factories, and used this to guide other investment, since Nike had a reputation for seeking out low wage countries and insuring that government regulation was kept to a minimum.  (Again, I saw this a while ago, and cannot find a reference.)    Currently, large corporations pursue investment in low wage countries not to benefit the local economy but rather to increase their own profits, to the detriment of workers both here and abroad.   This has a distorting effect on wages here in the US, which in turn affects discussions of minimum wages.   It was suggested that under the principles outlined in MM, the state has a positive role to play in ensuring that corporations do not use their economic power to distort the market in this way.

Our discussion next turned to private property.  The encyclical upholds the defense of private property begun in RN and continued in QA.  It does, however, add some interesting developments.  One addresses a point I raised when reading RN, which is that state or public ownership was never addressed.  Now, however, it is, in par. 116-118.   The key point is the reiteration in par. 116 of a passage from QA which we overlooked at the time:

For certain kinds of property, it is rightly contended, ought to be reserved to the State since they carry with them a dominating power so great that cannot without danger to the general welfare be entrusted to private individuals. (QA par. 114)

Here we see the explicit endorsement of municipal socialism (sometimes derided as “gas and water socialism” by more radical socialists) by the Church.   This endorsement is hedged around with several precautionary principles:  ownership should be at the lowest practical level (par. 117, i.e., by the city or regional government, and not necessarily by the nation), and control of these resources need to be monitored

so as to avoid any possibility of the concentration of undue economic power in the hands of a few State officials, to the detriment of the best interests of the community. (par. 118)

This warning immediately brought to mind the corruption in union pension funds in the mid 20th century, most notably among the Teamsters.  Similarly, there are problems with corruption in sovereign wealth funds.  Such corruption does not negate the principle of public ownership, but it does point to the need for transparency and safe-guards.

One point I raised in connection with this discussion of private property is that it is important to distinguish between ownership and control.  I first became aware of this distinction reading Robert Heinlein’s juvenile novel, Citizen of the Galaxy.   The hero of the story about midway through, learns that he is the long lost heir of a great fortune built on the ownership of a large investment fund.  As he tries to understand the intricacies of the family business, he learned he

 owned stock in other companies—and here it got complicated. Galactic Enterprises, Galactic Acceptance Corporation, Galactic Transport, Interstellar Metals, Three Planets Fiscal (which operated on twenty-seven planets), Havermeyer Laboratories (which ran barge lines and bakeries as well as research stations)—the list looked endless. These corporations, trusts, cartels, and banking houses seemed as tangled as spaghetti. Thorby learned that he owned (through his parents) an interest in a company called “Honace Bros., Pty.” through a chain of six companies—18% of 31% of 43% of 19% of 44% of 27%, a share so microscopic that he lost track. But his parents owned directly seven per cent of Honace Brothers—with the result that his indirect interest of one-twentieth of one per cent controlled it utterly but paid little return, whereas seven per cent owned directly did not control—but paid one hundred and forty times as much.

It began to dawn on him that control and ownership were only slightly related; he had always thought of “ownership” and “control” as being the same thing; you owned a thing, a begging bowl, or a uniform jacket—of course you controlled it!

In my own small way I have a similar problem.   My retirement funds (beyond social security) are invested in a variety of mutual funds, which means, indirectly, that I “own” stock in many companies.  But I exercise no control over these companies.  In fact, even though I attempt to invest in socially responsible mutual funds, which attempt to leverage the joint ownership of the investors towards the common good, they themselves often have only a limited impact on corporate policies.

This distinction, and the problems that created was first raised in QA, and reinforced in MM:

It is well-known that in recent years in the larger industrial concerns distinction has been growing between the ownership of productive goods and the responsibility of company managers. It is well-known that in recent years in the larger industrial concerns distinction has been growing between the ownership of productive goods and the responsibility of company managers. This has created considerable problems for public authorities… (par. 104)

Here we circle back to the aspirational goals outlined by MM that we discussed above.  We are getting further details on what a just society must look like.  Earlier, John XXIII had made clear that the economic system must be organized for the common good.  In particular,

if the whole structure and organization of an economic system is such as to compromise human dignity, to lessen a man’s sense of responsibility or rob him of opportunity for exercising personal initiative, then such a system, We maintain, is altogether unjust—no matter how much wealth it produces, or how justly and equitably such wealth is distributed. (par. 83, emphasis added)

The emphasis on personal responsibility suggests that the ownership of wealth must also include control of the wealth.  (I am perhaps reading to much into this, but it suggests that workers must have some control, though not necessarily ownership, of the means of production.)  This is reiterated in the discussion on small businesses and workers cooperatives, where MM discusses the “true human values” (par. 89) that the State and workers should uphold in the economy:

to keep alive in their own community a true sense of responsibility, a spirit of co-operation, and the constant desire to create new and original work of outstanding merit. (par. 90, emphasis added)

One person in our group noted that these values are often associated in the US with the ideal of the “hard worker”; while these are often treated as individual virtues in the US (perhaps a consequence of the over-emphasis on the individual in American thought), these passages show that they are social virtues which should be cultivated collectively, and which the State has some role in protecting and encouraging (cf. par. 89).  Another person, in connection with this, noted that workers are to be given assistance in cultivating other virtues not directly connected with work, but part of the formation as human beings and citizens.  The workers have not only a role in controlling the economy, but also in managing the affairs of the state, and they need to exercise their economic and political duties responsibly:

[Workers] must be given more assistance, and more free time in which to complete their vocational training as well as to carry out more fittingly their cultural, moral and religious education…All this serves to create an environment in which workers are encouraged to assume greater responsibility in their own sphere of employment. In politics, too, it is of no small consequence that citizens are becoming daily more aware of their responsibility for furthering the common good in all spheres of life. (par. 94, 96)

This is a very forward looking vision of social organization.  One member noted that it has a certain affinity for the guild structure of medieval towns, but it is not a nostalgic desire to turn back the clock.  John XXIII is laying out a vision for the future, one which takes into account the massive changes in science and technology, and their impact on every aspect of the web of social relations.

Our discussion concluded on this positive note, looking at the social function of property (par. 119), the continued important role for private charity (par. 120), and the call of the gospel to subordinate private ownership and our desire for private property to the goal of laying up “treasure in heaven, where neither rust nor moth doth consume, and where thieves do not break through or steal.” (par. 121, quoting Mt 6:19-20)

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