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Catholics and Capitalism

Friday, 12th November 2004

I mirror this article so that it may not fall down the memory hole.

Catholics and Capitalism

by Thomas E. Woods, Jr.

Catholics are permitted a very substantial latitude of discussion on economic matters, as anyone who has surveyed the history of Catholic economic thought can see perfectly well for himself. Yes, there is the heavily interventionist Wilhelm von Ketteler of the late nineteenth century, but there are also the much more market-friendly sixteenth-century Scholastics, whose views are ably recounted in Alejandro Chafuen’s brilliant book Faith and Liberty: The Economics of the Late Scholastics (2003). The late Scholastics are not mere flukes, for the two greatest economic thinkers of the late Middle Ages, Sant’Antonio of Florence and San Bernardino of Siena, were largely in agreement with them on questions ranging from prices and wages to money and entrepreneurship.

Now I have no objection to vigorous and spirited debate on economic questions or on most any topic for that matter. What I do object to is the suggestion advanced by some writers that there is only one kind of economic system to which Catholics may lend their support. It does not seem to me that someone familiar with the broad expanse of Catholic economic thought over the centuries could draw such a conclusion, so diverse have Catholic perspectives been.

The system most commonly advanced by Catholic opponents of the market is distributism, in which people withdraw from the division of labor of a market society and retreat instead into a kind of autarky, in which they produce much of what they need themselves and trade with a few others for whatever additional goods they may require. The emphasis here is on having as many people as possible be owners of their own land and of whatever means of production they employ. Some forms of distributism are more frankly primitivist than others; the website of one of my recent critics calls for a society in which most roads are inaccessible to engine-driven vehicles. I hope no one there is ever in a rush to get to a hospital.

Now if a family, a group of families, or a whole town wishes to live in this manner, they will encounter no objection from me; their economic choices are not really any of my business anyway. My point is that there are perfectly good reasons for not wishing to live this way and for appreciating the benefits that accrue to us from taking part in the large-scale division of labor that comprises the market economy. My copy of the Nicene Creed says nothing about testing someone’s fidelity to the Magisterium by whether he milks his own cow.

It is an open secret that I myself am a supporter and student of the free market. I used to be one of the right-wing skeptics of capitalism who can be found in the pages of many a traditional publication, so I am as familiar with the objections to the market as those who would raise them against me, but over time my study of economics as practiced by the Austrian School convinced me that my objections to the market were simply fallacious.

At the end of next month, Lexington Books will publish my book The Church and the Market, which offers a vigorous defense of Austrian free-market economics from a traditional Catholic perspective. From the Federal Reserve System (I’m against it) to prices and wages, from business cycles to antitrust legislation, from foreign aid to the welfare state, it’s all in there. In my opinion the book amounts to some of the best work I have ever done, and I am hopeful that people who have appreciated what I have had to say in other areas will give it the fair hearing that I believe it merits. It has already been endorsed by the chairmen of the departments of economics at Christendom College and the University of Dallas.

It is neither possible nor desirable to attempt to defend all the particulars of my economic opinions here. I am more than familiar with the arguments against them, but in my judgment these arguments misfire, and if the correspondence I get is any indication, traditionalist objections to market economics apply much more to the Chicago School of economics, which I critique in my book, than to the Austrian School. My aim here is much more modest: to offer a few thoughts to show that Catholics can have good reasons for being skeptical of schemes like distributism. The convinced distributist will not think they are good reasons. My point is that they are at least debatable reasons. Let’s not forget that some topics are open to debate among Catholics, and on matters such as these we should be able to disagree without resorting to accusations of heresy or perversity.

In the traditionalist press I have heard it argued that pre-industrial society is to be preferred over the society that emerged from the Industrial Revolution. Community life was vibrant, people were independent, and no one had to degrade himself by becoming a "wage slave" (a derisive term used to describe someone who agrees to work for someone else in exchange for a regular wage). This opinion is generally advanced as if it were Catholic truth, apart from which there is no salvation.

One traditionalist, for example, has written that people in modern economies (which, it should be noted, are mixed economies rather than pure market economies) live in a state of "hand-to-mouth uncertainty," and lack the security that was the lot of most people in the pre-industrial era. As a historian I am at a loss when faced with claims like these. Were peasants in pre-industrial France — who were among the freest, most independent peasantry in Europe — free of "hand-to-mouth uncertainty"? Try telling that to a fourteenth-century mother who has just lost her fourth child before his first birthday, lives one bad harvest away from starvation, and resides in intolerable squalor. As late as the eighteenth century, travelers consistently spoke of the appalling conditions of the French peasantry and the shockingly dilapidated state of rural housing. The same held true for many who sought employment in a trade. A Norman parish priest described the situation in 1774:

Day laborers, workmen, journeymen and all those whose occupation does not provide for much more than food and clothing are the ones who make beggars. As young men they work, and when by their work they have got themselves decent clothing and something to pay their wedding costs, they marry, raise a first child, have much trouble in raising two, and if a third comes along their work is no longer enough for food, and the expense. At such a time they do not hesitate to take up the beggar’s staff and take to the road.

Taking up the beggar’s staff and taking to the road: that is what was left to them. To say that the free market led to the destruction of some previously existing, harmonious community life is simply to defy historical testimony. How could "community" exist when people were starving and forced to take to the road for sustenance? These appalling conditions applied at times to as much as one third of the French population — some eight million people. Prior to industrialization, there was no place for them in the economy. Period.

Fewer and fewer historians, Marxists included, can be found any longer who still accept the propaganda about the dreadfulness of the Industrial Revolution that all of us learned about in school. In a major 1985 study, economist Nicholas F.R. Crafts estimated that real income per capita doubled in England between 1760 and 1860. Oxford University’s R.M. Hartwell devoted much of his career to this debate, and by 1970 he could proclaim, "Is the controversy over? As regards the standard of living — the bundle of goods — it should be, and, indeed, appears to be. Even [Marxist] E.P. Thompson, the most convinced pessimist, now agrees that ‘no serious scholar is willing to argue that everything got worse.’"

[N]one of the suggested immiseration models fit the facts of history. On the contrary, the historical facts were: average per capita real income increased…after 1815 prices fell more than money wages; per capita consumption of food and other consumer goods increased…. To these facts should be added evidence about population. Population was rising rapidly after 1780, the result almost certainly of a rising birth rate and, more important, of a falling death rate, the consequence not of improved medicine but of environmental and nutritional improvements. As living standards rose with industrialization parents had more children and more survived.

Naturally, for reasons I explain in my book, the conditions of the workers in eighteenth- and nineteenth-century England were extremely poor compared to the conditions of workers today (whose improved living standards are themselves the logical result of the capital accumulation that occurs in a free market). The point is that prior to the Industrial Revolution conditions had been far worse. With the advent of industrialization it appeared that for the first time greater and greater numbers of people would be able not only to survive but also to enjoy a rising standard of living.

On the eve of the Industrial Revolution the economy was hopelessly static, and possessed no outlet whatever for the increasingly sizable number of people for whom a living in agriculture or domestic manufacture was impossible. Professor Hartwell makes quick work of the mythology surrounding an allegedly idyllic pre-industrial society:

Thus much misunderstanding has arisen because of assumptions — mainly misconceptions — about England before the industrial revolution; assumptions, for example, that rural life was naturally better than town life, that working for oneself was better and more secure than working for an employer, that child and female labor was something new, that the domestic system (even though it often involved a house crammed with industrial equipment) was preferable to the factory system, that slums and food adulteration were peculiar products of industrialization, and so on; in other words, the perennial myth of the golden age, the belief that since conditions were bad, and since one did not approve of them, they could not have been worse, and, indeed, must once have been better! But, as Alfred Marshall pointed out, "Popular history under-rates the hardships of the people before the age of factories."

The fact is, such views as Hartwell identifies among opponents of industrialism are nothing but myth. Rural life was no better than urban life, as eyewitness testimony amply reveals. Conditions in the countryside were described by contemporaries as "a violation of all decency" and "altogether filthy and disgusting." As many as twelve people were packed into a single room. Insecurity was as prevalent in the eighteenth century, when agricultural work was the norm, as in the nineteenth, when "wage slavery" was becoming more common.

"The factory owners," writes Ludwig von Mises, "did not have the power to compel anybody to take a factory job. They could only hire people who were ready to work for the wages offered to them. Low as these wage rates were, they were nonetheless much more than these paupers could earn in any other field open to them. It is a distortion of facts to say that the factories carried off the housewives from the nurseries and the kitchens and the children from their play. These women had nothing to cook with and to feed their children. These children were destitute and starving. Their only refuge was the factory. It saved them, in the strict sense of the term, from death by starvation." (To those who argue that the enclosure movement, which transformed the lands known as "commons" into private property, was responsible for the agricultural sector’s distress, I reply by pointing out that no serious historian believes that the enclosure movement had anything but the most marginal effects on English agriculture.)

Europe witnessed an explosion in population from the mid-to-late-eighteenth century through the nineteenth century that was without precedent in world history. Population doubled in England during the eighteenth century. The University of London’s T.S. Ashton, among the greatest twentieth-century historians of the Industrial Revolution, observed that the central problem of the first half of the nineteenth century therefore involved "how to feed and clothe and employ generations of children outnumbering by far those of any earlier time." His own work on industrialization, which focused on England, showed that industrialization, far from being a problem, was the solution to the pressing question of how to deal with this population explosion.

England, of course, was not alone in facing this problem. Ireland faced it, too. But Ireland faced it without industrializing. In that country no one’s aesthetic sensibilities would have been disturbed by the presence of factories and smokestacks. But I hope they would have been troubled by the fact that during the 1840s the population of Ireland actually declined by 20 percent, either by emigration (of the lucky ones) or starvation and disease resulting from the great famine. A similar outcome would certainly have befallen England as well had there been no Industrial Revolution and the alleged ideal of small farmers and shops had remained as before. According to Professor Ashton:

If England had remained a nation of cultivators and craftsmen, she could hardly have escaped the same fate, and, at best, the weight of a growing population must have pressed down the spring of her spirit. She was delivered, not by her rulers, but by those who, seeking no doubt their own narrow ends, had the wit and resource to devise new instruments of production and new methods of administering industry. There are today on the plains of India and China men and women, plague-ridden and hungry, living lives little better, to outward appearance, than those of the cattle that toil with them by day and share their places of sleep at night. Such Asiatic standards, and such unmechanized horrors, are the lot of those who increase their numbers without passing through an industrial revolution [emphasis added].

Likewise, the eminent British historian Eric Evans invites us to consider the terrible alternative to industrialization: "In judging the Industrial Revolution it is relevant to mention a counterfactual point. What would have happened to Britain’s teeming population had industrial growth not rescued it from a Malthusian poverty trap? It is difficult to see how a check on an even more catastrophic scale than the Irish famine of 1845—47 could have been avoided…. [T]he Industrial Revolution brought the benefit of permitting a much larger population to survive and in the long term thrive."

Before we wax rhapsodic about the beauties of rural self-sufficiency, therefore, we need to bear these cautionary facts in mind. Such a system would not be able to support anything like the number of people who inhabit the world today. Russell Kirk (1918—1994), a great conservative thinker who had distributist sympathies, nevertheless pointed out that "once in an industrial society, we cannot get out of it without starving half the world’s population."

It seems to me that we ought to be able to find room in our moral calculus to appreciate a system that has made possible the sheer survival of countless millions of people who, as the contrary examples above amply reveal, would surely have perished were it not for industrialization. A few issues ago I was rather shocked to see a Remnant writer flippantly dismiss the dramatic reduction in infant mortality that the market has made possible, implying that since this earth is not our permanent abode, anyone who gives it too much care is obviously too attached to this world for his own spiritual good. I do not consider that a particularly useful way of thinking about parents who grieve for a lost child.

St. Augustine is said to have remarked, "In fide, unitas; in dubiis, libertas; in omnibus, caritas" (in faith, unity; in doubtful matters, liberty; in all things, charity). We are all traditionalists, and the demands of charity urge us not to ascribe base motives or dumb obstinacy to those with whom we disagree on economics. If someone wishes to dismantle much of industrial society, I believe he must address himself to the arguments I have raised here and that I raise in my book, arguments that seem fully in accord with Catholicism as I understand it. He owes it to his fellow traditionalists not simply to assume that those with whom he disagrees are of bad will, are merely materialistic, or are spiritually disordered if they do not support distributism or whatever his social blueprint happens to be. There are perfectly good, non-diabolical reasons for being skeptical of such proposals, and those who put them forth need in all fairness to acknowledge that fact before they can expect their fellow Catholics to give them the hearing that I am sure they desire.

And after all, I don’t even know how to milk a cow.

November 12, 2004

Professor Thomas E. Woods, Jr. [send him mail]
holds an AB from Harvard and a PhD from Columbia. He teaches history, is associate editor of The Latin Mass Magazine, and is author, most recently, of The Church Confronts Modernity: Catholic Intellectuals and the Progressive Era (Columbia), The Politically Incorrect Guide to American History (Regnery) and The Church and the Market: A Catholic Defense of the Free Economy (Lexington).

A version of this article first appeared in The Remnant.

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