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A Sane Critique of Modern Capitalism

 

IN contrast to Jorge Bergoglio’s criticism of the economy in his apostolic exhortation, in which he suggests that inequality is inherently evil, I offer the balanced insights of Plinio Corrêa de Oliveira:

I believe that a primary fault in modern Capitalism is the practice of using the money someone saved and deposited in a bank to produce price fluctuations in the market, enabling a small group of persons to profit from it.

There is no link whatsoever between this profit and any organic source of production or service for society. It is merely money speculation to produce more money. This game only benefits those who have the know-how about such fluctuations. Today’s Capitalism, in a large measure, feeds on this bad practice. I believe it is completely wrong and should be prohibited in a Catholic society.

However, he doesn’t call for a state solution, but a “change in mentality.” He also wrote:

There is a defect in the modern mentality that creates the need for the bank. The modern man has a wrong ideal of life. Instead of striving to have a stable house nicely arranged with good furniture and pieces of art and engaging in leisure pursuits appropriate to the development of his personality, he thinks that the only thing that counts in life is to have money. When he has enough money, then he may momentarily enjoy part of it just for himself. For example, he goes to the Bahamas to enjoy some days of vacation, his only future reminder of the event being the many pictures he took. A consequence of this mentality is that he feels the need to accumulate his money in secure places until the moment comes to enjoy it or multiply it through speculation. So, the bank becomes indispensable. As we pointed out before, the real solution involves a change in mentality.

– Comments –

Jane S. writes:

The problem with socialism is this in a nutshell: socialism does not provide a way of creating wealth. It presupposes wealth that has already been created which the government decides how it should be redistributed.

The Occupy Wall Street idiots do not understand that, the pope does not understand that and even the economic illiterate Plinio Corrêa de Oliveira does not understand that. He also presupposes wealth that has already been created, which the Church will decide how it should be redistributed. [Laura writes: Nowhere in this article does Oliveira say or suggest that the Church should be in charge of the economy or decide how wealth should be distributed. He writes:  "As we pointed out before, the real solution involves a change in mentality. "]

Underneath the picture of the aristocrat landowner at the top of his ridiculous treatise it reads, “Instead of seeking a stable property proportionate to his personality, the capitalist mentality only wants an impressive bank account.” Oops. Blooper right there. The aristocratic landowner did not create his wealth. He is not a capitalist. The aristos of Europe were vehemently opposed to capitalism. Still are, now that they’re the ones running the European Union.

Creating wealth involves risk. There has to be an incentive to take risks, or nobody does it.

Let’s suppose someone like Bill Gates grows up in a society where, no matter what, he gets property proportionate to his personality, which isn’t much, as far as I can tell. Why should he bother to invent technology that makes using a computer accessible to the average person? He’s going to get the same no matter what he contributes.

That sounds fair, doesn’t it? Bill Gates doesn’t get to acquire an obscenely large fortune. The rest of us don’t get PCs. No Internet, no blogs like The Thinking Housewife, no way for traditionalists to connect since we’re all so scattered. And no way for intellectuals like Plinio Corrêa de Oliveira, and other people without calluses on their hands, to spread their ignorance.

Laura writes:

I believe you have fundamentally misread what Corrêa de Oliveira wrote.

When he talks about someone getting wealth in proportion to his personality, he is not talking about some authority, whether state or Church, deciding what each man is worth. He is referring to what the individual seeks. Please read his words: “There is a defect in the modern mentality that creates the need for the bank. The modern man has a wrong ideal of life.”

Nowhere does he say that people should not compete for wealth and should not freely sell their products. In fact, he specifically states that these things should happen freely and are legitimate economic activities.

He was writing of the banking economy and money speculation, which none of your comments address. Bill Gates made his wealth by creating something and selling it, not by playing the financial market, at least not initially.

Oliveira did not write the caption to the photo. He was presumably dead when it was written as this is a posthumous reprint of his essay. So if you object to what he has said, please quote from the text.

I don’t see what’s so ridiculous about his thesis. Perhaps you could explain why money speculation is necessary to the health of an economy. Perhaps you can also find one sentence where he suggests that the Church should itself manage or oversee financial markets.

I also think his comments about big corporations strangling small businesses and exerting undue power to be not ridiculous, but very true. How do so many large corporations enhance economic freedom?

Roger G. writes:

Perhaps you could explain why money speculation is necessary to the health of an economy.

Currency speculation provides liquidity, accelerates market adjustments, and mitigates risk.  It increases market efficiency.

In an earlier thread I argued that you were disregarding the principle of opportunity cost.  I maintain that here again, you are not recognizing relevant economic principles.

…big corporations strangling small businesses and exerting undue power…

How do so many large corporations enhance economic freedom?

How big is too big?  How due is undue?  How many is too many?  How do we answer these questions, and then what do we do to implement our answers?

How do you yourself enhance economic freedom? How do I?  Rather, I contend that if you, and I, and big corporations, must all (whether we like it or not) rely on others being willing to do business with us voluntarily, then none of us is either enhancing or diminishing economic freedom.  What we all are doing is operating under its constraints, and realizing its benefits and liabilities.

Perhaps you can also find one sentence where he suggests that the Church should itself manage or oversee financial markets.

It’s worse.  From Oliveira: “What can the State do to prevent such action? What can the Church do?”

Given a choice, I’ll take the Church.  We’ve seen Stalin, Mao, and Pol Pot at work.

More from Oliveira:

“Observing some macro-enterprises, one realizes that, in practice, they operate like socialist units inside the State. They are socialist in their system of mass-production, with employees surrounded by machines 8 hours a day, 11 months a year.”

Socialism has nothing to do with the presence or absence of mass production.  Socialism is the provision of goods and services by the state.  Under Democratic socialism, the state provides goods and services by stealing property from private enterprise, and redistributing it to preferred clients.  Under Marxist socialism, the state does so by itself owning the means of production, and originally distributing the goods and services to preferred clients.

So much else in his article is wrong.  If Oliviera had tried debating economics with either sissyboy autistic Jew David Friedman or observant Catholic Thomas Woods, he would not have fared well.

Laura writes:

Currency speculation provides liquidity, accelerates market adjustments, and mitigates risk.  It increases market efficiency.

And the question is whether market efficiency, when elevated to the highest economic goal, destroys nations and dehumanizes society.

How big is too big?  How due is undue?  How many is too many?  How do we answer these questions, and then what do we do to implement our answers?

These are questions that can be answered by functioning communities. They are already answered all the time. Non-functioning communities allow big corporations to take over the marketplace and hamper free enterprise.

It’s worse.  From Oliveira: “What can the State do to prevent such action? What can the Church do?”

Given a choice, I’ll take the Church.  We’ve seen Stalin, Mao, and Pol Pot at work.

It seems you did not finish reading what he said:

What can the State do to prevent such action? What can the Church do? It is a topic that needs more study.

I think that the more profound solution to this problem would involve a change of mentality.

He also says:

I  believe the Church must teach guidelines to keep businesses within certain limits so that the organic characteristics of a people do not disappear. As a point of reference, it is my opinion that what is normally called a limited company has a human size; what is called an anonymous corporation already surpasses the limits and leads to massification.

And in addition:

Another point I would like to address, related to Capitalism and Organic Society, is a wrong mentality of many persons that provides the basis for the excessive growth of banks and financial institutions and their inorganic practices. Here I refer not to an intrinsic defect of the banks themselves, but to the mentality of persons accustomed to borrowing money from them.

Your equating any attempts by a community to restrict the power of large corporations and financial speculators with Stalin and Pol Pot is free market radicalism. Oliveira is referring to a change in outlook not rules and regulations or a state-enforced tyranny.

Socialism has nothing to do with the presence or absence of mass production.  Socialism is the provision of goods and services by the state. 

He knows perfectly well what socialism is. His point here is that the power and size of large, nation-less corporations is comparable to the power of the socialist state.

Art writes:

Jane writes:

“The aristos of Europe were vehemently opposed to capitalism. Still are, now that they’re the ones running the European Union.”

This is plainly not true. The people currently running Europe are a supposed meritocracy. Indeed, does Taubira show a trace of European aristocracy in anything she does? She is leftist, openly claims to despise inequality, and support nearly every leftist cause. No, no, there are few to no aristocrats running the European Union today. 

Laura writes:

Here and here are two additional articles by Corrêa de Oliveira that will further put you free market radicals in a fit. Now don’t come back to me and tell me he’s a socialist because he clearly is not. I don’t necessarily agree with everything he says, I haven’t given it enough thought, but I agree with his basic point that the free market is not free. It favors large corporations that stifle competition and destroys organic communities.

John G. writes:

Thank you for taking on both the socialists like Bergoglio and the capitalists such as your correspondents. Please continue to stick to your guns. You are entirely correct, and your position is the only truly Catholic one. The libertarian advocates of free markets can — and will — argue until they are blue in the face. But nothing they can say will make the sins of usury and financial speculation into virtues.

Both Socialism and Capitalism equally destroy all vestiges of organic society and the life of the soul. Socialism is like the blast of an atomic bomb dropped upon organic, Christian society, while Capitalism is like a neutron bomb, eventually achieving the same or worse destruction with silent radiation.

When we see the spiritual revival, accompanied by a demographic revival, that is occurring in Russia, and we compare it to the accelerating death spiral both spiritual and demographic in the capitalist countries of Europe, America and Japan, it does make one stop and wonder just which of the two “isms” ultimately is the most pernicious.

Thanks again for all your hard work.

Roger G. writes:

Non-functioning communities allow big corporations to take over the marketplace and hamper free enterprise.

If a corporation is taking over the marketplace because of people’s voluntary action, then it is not hampering free enterprise, but rather practicing it.

You repeatedly call us radical.  But our position is based upon what we believe to be human limitations that are inherent, and therefore can’t be overcome by human effort;   We have concluded that man is not smart enough, and that man can’t acquire enough knowledge, and that the economy is too complicated.  Whether our acceptance of such conditions as immutable is right or wrong, it is conservative, not radical.

It seems you did not finish reading what he said:

I was able to finish.  And if the sentence you highlighted meant that he considered the possibility of state coercion but subsequently rejected it, then I’d agree with his conclusion.  In fact that is not what I think he meant, but maybe I’m wrong.

His point here is that the power and size of large, nation-less corporations is comparable to the power of the socialist state.

No offense, but you are wrong; that’s not his point.  His point is that macroenterprises operate like socialist units because they employ certain conditions that he specifies – mass production, 8 hour days, and so forth.   However, his specified conditions are employable under either free enterprise or socialism.  In fact, I think they actually came about under free enterprise.

Roger adds:

Your equating any attempts by a community to restrict the power of large corporations and financial speculators with Stalin and Pol Pot is free market radicalism. Oliveira is referring to a change in outlook not rules and regulations or a state-enforced tyranny.

On that one I admit you’ve got me.  I was engaging in poetic license, and I’m not even a poet.

There certainly are degrees of state coercion, and some are much much much worse than others.  Given a choice between Stalin/Pol Pot and Wood/Oliveira, Woods/Friedman/Roger  G. would definitely pick the latter.  Our reeducation camp appointments would be tasteful and elegant, the food would be excellent and plentiful, and church and synagogue would be available (for Woods and me; Friedman is an atheist).

I’ll bet you’d even let Friedman have his armored combat, and me my rugby.

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