Letters to the Editor: June 1984
Ignorance & Pettifoggery on Economics
The New Oxford Review is so luminously right and inspiring about most matters of God and man that it is distressing to encounter often in your pages a grim spirit of ignorance and pettifoggery on economics. Whatever may be said about the coherence or eloquence of the NOR’s writings on the subject, there is no sign of the slightest comprehension of the way that the wealth which sustains us all is created.
In “A Christian View of Economic Virtue” (March), for example, Stuart Gudowitz clearly depicts the ineptitude of the usual defenses of capitalism. He is completely right to dismiss the view that greed produces prosperity by some invisible hand, that economies can thrive through some Faustian pact whereby we gain riches by giving in to avarice. But he shows little notion of the nature of capitalism in a society with 40 million business stockholders and some 16 million small businesses — ventures of unfathomable variety, in a constant frenzy of creation and change, that already fulfills incomparably better than any other system in history Gudowitz’s mandate for decentralized service of the public.
Because Gudowitz is offended by Pepsi ads in a nation where “some people lack adequate housing,” he would destroy the system that has provided incomparably more housing per family by any standard than any other and in which some 60 percent of the people own their own homes. His solution to the problem of economic virtue, moreover, would stifle the entrepreneurial inventiveness, knowledge, generosity, labor, and sacrifice that is indispensable to feeding, sheltering, clothing, and fueling the world. Thus he illustrates the ignorant idealism whereby organized Christian organizations have become an important force in promoting famine, disease, tyranny, greed, and vice around the globe — by supporting the evil of socialism in the name of charity and compassion.
Although Gudowitz makes a number of points, his fundamental assumption is that the human enterprise can continue successfully without the struggles, sacrifices, and investments of entrepreneurs, that there is some simple way to create and distribute wealth that avoids the uncertainties and inequalities of all existing economies. He proposes that somehow industries resemble professions, and their profits are automatic and can be distributed to labor and capital by some formula imposed from above. But in such an economy there would be no profits and very little progress.
Profits are residual returns beyond the predictable gains. Profits are in a sense always a surprise. If gains are surely predictable, they are bid away and the capitalist will merely earn interest, which for the last 15 years in the U.S. has rarely exceeded inflation and taxes. In fact, the owners of most of the large companies in America have gained no net profits at all, adjusted for inflation, on their stock holdings over the last decade. That is why labor unions almost uniformly oppose profit-sharing plans in the kinds of large companies that Gudowitz sees as representative of capitalism.
Instead unions invest their pension funds, which incidentally own some 40 percent of the shares in U.S. companies, in a variety of stocks, bonds, and real estate. Workers, contrary to Gudowitz’s assumption, usually prefer contractual returns to the risk and frequent losses of direct equity holdings in the firms where they work. If they want equity, most of the time, they buy stocks or start small businesses.
In Western Europe’s most advanced socialist countries, huge firms, devoid of real profits, but with nominally collective ownership or sharing of returns, dominate the national economy and political order. Such countries, and such firms, have created no net new jobs in the world over the last 10 years or more. They have contributed virtually nothing to the development of the technologies that give the world for the first time in human history the capacity to feed, clothe, and shelter the human race. Some four million jobs have been lost, mostly in companies with labor representation on boards of directors and political governance through union-dominated socialist governments. Such companies are a net burden on the world economy and largely subsist on the innovations launched by capitalist entrepreneur-laborers in the United States.
Large bureaucratic companies represent the sclerotic form often assumed by capitalist institutions when they can no longer perform creatively. But some firms, particularly vendors of commodity items, such as foods and fuels to masses of people, are large because their product has become routine and can benefit from large economies of scale in production and advertising. A great advantage of capitalism is that when such leviathans grow stagnant or inefficient, their owners and workers cannot so easily pass on their losses to the public. Under capitalism, these companies cannot so easily keep operating inefficiently, gorging capital and consumer income, and thus prevent the emergence of companies that respond more truly and efficiently to the needs of the public. The problem epitomized by the Chrysler loan is an epidemic elsewhere in the world. The socialist regimes of Western Europe have spent some $100 billion in the last decade propping up collectively owned companies in the name of “saving jobs,” while in fact destroying employment and sending millions of immigrants home.
The U.S., meanwhile, has created some 19 million new jobs while accepting some 10 million immigrants (many of them illegal). During the current recovery, the U.S. has created 4 million net new jobs. Nearly all the net new jobs have come from relatively small companies or companies that were small until recently.
Absolutely essential to this job-creating process was the accumulation of profits. The firms could grow fast and create employment only because they could retain their profits and reinvest them productively rather than remit them to haggling committees of workers and experts, or pay them to government bodies to be channeled to sterile leviathans and their unions with political clout and all too often with denimed priests in tow.
In Silicon Valley, for example, the source of much of the new value being created in the economy in this era, most of the workers do own and create their means of production. In their firms, though many of them generate huge profits, the vast bulk of the money is reinvested in the process of growth. The profits to the world economy, however, are vastly greater than are ever captured and reinvested by the entrepreneurs themselves. Even the economy of Russia, for example, largely subsists on the uncaptured profits of American high technology firms — on intellectual capital stolen by spies from Santa Clara County.
In such firms, which by their ingenuity support much of the world economy, the capitalists are nearly always deeply engaged in running the company and many of the workers have equity shares in it. The real value in these companies consists in the ideas of the owner-entrepreneurs, developed through years of often obsessive labor. What Gudowitz calls labor — 40-hour weeks of routine work — already gains compensation beyond its real contributions in most capitalist companies. To the extent that laborers in fact play a unique or indispensable part in the success of the firm, though, they will earn stock options or other equity participation if they wish to assume the risks it entails (many, for good reasons, do not).
Contrary to the Gudowitz assumption, ownership in a world of change often entails more work than workers often want to perform. Capitalists need profits not because they “deserve” them but because only they collectively are willing and able to do this work of investment. Only they, through the very process that earned the profits in the first place, know how to apply the money effectively among the millions of possibilities in a capitalist system. When passed on to the state or to prodigal heirs — or given away through excessive welfare — the profits of capitalists rapidly waste away, in a process that smothers the human spirit and spreads poverty.
Many of the most creative and successful new companies emerge from the ideas and sacrifices of unlettered men, very often penniless immigrants without personal charm or even mastery of English, and without high school diplomas, who work 16 hours a day, and eventually excel all the credentialed powers and principalities of the world. Because leading entrepreneurs are rarely elegant, tall, well-spoken, or well-educated, they do not often impress academics or aristocrats and do not always spend their money in fashionable pursuits. Capitalism is the only economic system in which the last regularly become first by serving others in humble ways. Intellectuals and others certified as “first” by schools and professional societies rebel at a system that rewards such a motley and improbable crew as America’s entrepreneurs with wealth undreamed by the kings of old. But to abandon the surprising glory and providential grace of an open economy in the name of some labyrinthine system of “professions” organized by “function” — “vocational associations whose rules are recognized by the state to be binding on all those within the industry,” setting “standards for prices and quality, distribution, and a host of other things in order better to serve the public” — is a perfect prescription better to serve the public with stagnation and paralysis. It would bring a return to the dark ages of stratified and immobile societies, palsied by guilds and syndicates that obstruct the redemptive new ideas and industries and thwart the rise of immigrants and other uncredentialed challengers to established wealth or privilege.
It is also foolish for Christian intellectuals — in their understandable frustration at the prevalence of vice in Vanity Fair — to attack capitalism rather than secular hedonism. To the extent capitalists produce depraved goods, they destroy the moral preconditions of capitalist progress. It is a largely anti-capitalist liberal culture that refuses to ban pornography or effectively suppress vice. The values of a nation’s goods are largely shaped by the values of its people. If the churches more confidently and effectively evangelized for their own moral and religious values — rather than for socialist and materialist fantasies — depraved capitalists could not easily make money off the vices of others and the society would become more righteously prosperous. If churches supported the enforcement of the laws, the capitalists who perpetrated crimes could be thrown into jail. In any case, profits from vice are spurious in capitalist society, because they undermine the faith and trust, hope and charity on which growth and progress necessarily depend.
Though extraordinary in its creativity and productivity, Silicon Valley can serve as a valuable metaphor of all capitalist growth. Its crucial resource is not gold or oil but entrepreneurial innovation, turning the most common substance on earth, the silicon in sand, into industrial treasures. The resulting industrial revolution has the clear potential to transform the material conditions of human life, eliminating most pollution, ending shortages of food and fuel, and opening new time and opportunity for lives devoted to worship and faith, love and beauty rather than routine and essentially subhuman forms of labor. But this development was anticipated by none of the regnant experts and professionals who believe that the source of wealth is oil or gold or land and believe even today that the Gulf of Hormuz is “the jugular of the West” worth a war to defend. Because these experts and professionals, in the condition to which Gudowitz would consign the entire economy, cannot create new wealth themselves, they cannot imagine its emergence and are fated to struggle over the empty tokens of the wealth created by entrepreneurs in the past.
Real wealth, however, springs from the infinite reach of the human mind in correspondence with the divine. The wealth of nations, like their happiness and salvation, emerges from behavior according with the laws of God. “Give and you will be given unto,” the golden rule, the beatitudes, the’ necessity of service and humility, the miracles of servant leadership, beginning at the bottom and sharing with others — all these point to the sources of wealth far better than the feckless mandates of “looking out for number one,” game theory, winning by intimidation, and other chapters in the canon of greed.
Like Adam Smith, however, Gudowitz believes that capitalist wealth springs largely from greed, if not, as Marx would have it, from theft. Intellectuals have long displayed bigoted disdain for men who devote their lives not to self-indulgent introspection and self-expression but to humble, dogged, and extroverted effort to advance the work of the world and meet its practical challenges. The lives of useful toil and service, thrift and sacrifice, led by most businessmen have almost nothing to do with avarice. I believe that greed leads as by an invisible hand to an ever growing welfare state — and the welfare state in its excesses stifles the very generous and creative activity that fosters wealth. Truly greedy or selfish workers eschew the risks and burdens of creating value in the world and instead demand comfort and security as their prime goals. To achieve these unearned ends, they turn to the state and try to steal the profits from the capitalists. But unlike the capitalists, who usually save and reinvest their profits, the state instead wastes the money on consumptionist programs that create dependency and despair.
Once the bureaucrats of the unions and the state take over the so-called means of production, moreover, all these coveted buildings, machines, and “resources” quickly become so much ruined concrete, scrap metal, and wilderness. The union leaders and bureaucrats rapidly discover that the physical means of production are impotent to generate wealth without the minds and men of production, the capitalist entrepreneurs.
The real means of production that the entrepreneurs command turn out not to be physical at all, but rather such metaphysical capital as faith, hope, charity, diligence, loyalty, trust, self-sacrifice. Entrepreneurs succeed to the extent they share with their collaborators and humbly listen to others and to the extent that they respond imaginatively to the needs of others. Profit, in fact, is the index of altruism for a firm, measuring the degree that the product is valued more by others than by the producer of it. Entrepreneurs must sacrifice their own interests to the interests of the public in order to earn profits. It is materialist idolatry for intelligent Christians to assert that buildings and machines, informed by greed, comprise the means of production in the world, or to contend that wealth derives not from human creativity, unleashed by faith, but from “irreplaceable fuels,” and other material tokens managed in the “public interest” as defined by the people most persistent in political meetings or most successful in gaining professional credentials.
In an economy according to Gudowitz there would indeed be many meetings but not much meat. The continual crises and pressures of population and entropic change would lead to ever grimmer cycles of famine and conflict. Indeed, the Soviet Union, despite all its industrial espionage in the West and double the American number of scientists and engineers, has suffered a decline in male life expectancy of over seven percent in the last 15 years. Without the entrepreneurial creativity and profits of capitalism, the world would quickly sink into a slough of famine, tyranny, and plague. To extinguish the profits of capitalists is quite simply to extinguish the economic hopes of billions of people, consigning them to lives nasty, brutish, and short.
The capitalist must be first of all an altruist: he must save (suppress his greed) in order to serve others and he must hope that others succeed. Gudowitz assumes that it is easy to serve others and that personal savings are unnecessary and can be safely taxed away. Good intentions and professed compassion will suffice. But good intentions and compassionate posturing have ravaged even the American poor in recent years, virtually destroyed the ghetto family, and spread tyranny and oppression around the globe. At a certain point, such innocent good intentions should be recognized as the evil of socialist materialism: the ultimate source of the demoralization and despair on earth, the estrangement from God which for men of faith was ended by the Gospel.
Economics Is Morally Neutral
Stuart Gudowitz, in his patiently argued piece (“A Christian View of Economic Virtue,” March), is both correct and incorrect at all points. He is correct, for instance, to oppose the statement that the pursuit of wealth is an absolute good; but incorrect to attribute that statement to the body of economic doctrine as developed, say, by Ludwig von Mises in Human Action.
Not one position that comes under attack by Gudowitz is identified with the most thoroughly excogitated economic theory yet known: the so-called “Austrian School.”
The Austrian School develops economics as a system of understanding human choice-making, and studies the consequences of human actions just as engineering deals with inanimate things and studies the results of their combinings. Economics — like engineering, like arithmetic — is an instrument to be used for a purpose, and is morally neutral. There is no “Christian View of Engineering Virtue,” nor a Christian version of the multiplication table. Is there?
William F. Rickenbacker
West Boxford, Massachusetts
“Out of Proportion”
I have a response to John F. Maguire’s letter (March). Regarding Jacques Ellul and our prayers for irrelevancies, I’m reminded of my youngest daughter’s prayer, on our way to town, that the family dog not be “lonesome.” At the time I wondered at the plausibility of the Deity offering solace to an abandoned dachshund. But God is indeed so large that our merest charity is at least noted and not lost.
On TV a most distinguished and disdainful astrophysicist referred to the insignificance of planet Earth when compared to the vastness of the universe: “How could God, the supposed creator of it all, deign to visit, much less assume the life form, of such an obscurity! It’s completely out of proportion!”
How often the truly gifted mind overlooks the most humble of facts. The God of Judeo-Christian revelation is not only the God of galaxies, but of atoms as well — the God who rejoices in His knowledge of the orbit of each electron, and of the slightest movement of human and angelic love. Thus, only a certain appreciation of God’s capacity for love will enable one to admit of the reality of the Eucharist. The Eucharist is “completely out of proportion.”
Martinsburg, West Virginia
Gregory F. Aloia’s article on the treatment of handicapped infants (March) was generally sound and perceptive. However, Aloia misstates one legal point and stops short of full legal story on another.
First, Roe v. Wade did not legalize abortion “practically on demand” prior to viability. If “abortion on demand” means legal abortion regardless of motive (rather than abortion by whatever doctor and under whatever unsanitary circumstances the mother might choose), then Roe v. Wade legalized abortion completely on demand prior to viability, and practically on demand after viability. The legalization of abortion after viability was disguised by the Court’s sham insistence that there must be some “health” reason for abortion after viability, but “health” was defined so broadly within Roe v. Wade and its companion case, Doe v. Bolton, that the term was substantially stripped of any meaning.
In the other matter — the California case of Phillip Becker — the readers of the NOR may be pleased to learn that, eventually, a loving couple was appointed guardian of Phillip as his “psychological parents” (the couple frequently visited Phillip in his institutional setting), and the decision was upheld in the California Court of Appeals on the basis of the emotional harm and potential physical harm which threatened Phillip if his natural parents continued passively neglecting his needs. In addition, the U.S. Supreme Court did not uphold the earlier California Appellate Court decision, but, instead, denied certiorari, which is quite a different matter and sets no precedent.
Roger Wm. Bennett
Bennett, Boehning, Poynter & Clary
In his article on “The Treatment of Handicapped Infants” (March), Gregory F. Aloia speaks of the Infant Doe, who not only had Down’s Syndrome but had a congenital defect, remedial by surgery, that kept him from swallowing. Not being given the surgery, Infant Doe perished of starvation in less than a week, as similar infants, despite the anxious offering of the breast, must have perished by the hundred through the centuries before modern surgery was available. Aloia calls Infant Doe’s death a “blatant act of homicide.” Later he speaks of “basic medical rights,” which may include such surgery and perhaps all life-support systems if needed.
This raises some questions in my mind. I do not doubt that abortion is murder, as is a fatal injection or a pillow over the face. An act of homicide. And included as an act of homicide is the refusal to give our helpless infant the breast or the bottle according to our obligation. But if the infant cannot take the breast or bottle, I question whether its death is murder. I question whether in all cases we as faithful Christians are obliged to give extraordinary treatment — surgery or life-support systems — in order to keep alive.
An illustration: If I had a dearly beloved daughter in hospital who for whatever reason went into coma and suffered brain-death but was kept alive by extraordinary measures — intravenous feeding and breathing machines — I should have no hesitation in announcing that I was taking her home. There, whilst she lived, I should offer her soup and milk; but she would not live of course. And I should regard her death as in harmony with God’s will. Certainly not murder.
We must distinguish between murder and allowing to die. Murder is an act, including the willful withholding of food that the infant (or patient) could eat. But allowing the dying to die is something else. Infant Doe who could not eat was dying at birth. I think his death was not murder, and I’m certain that my hypothetical daughter’s death would not be. The question is, are we morally obliged to prolong life by extraordinary means — surgery and life-support systems?
Clough’s bitter lines in “The Modern Decalogue” about lack of charity — “Thou shalt not kill but need not strive/ Officiously to keep alive” — may have in another context a modicum of truth.
Be More Civil, More Holy
Please urge your contributors to be more civil and more holy. Too many of the articles and letters in the NOR make strong statements on nonbinding issues (like unilateral disarmament vs. deterrence or capitalism vs. socialism) and then suggest that anyone who does not agree with the author has a deficient faith. The Church clearly teaches that (within limits) both unilateral disarmament and deterrence can be held by good Christians, as can capitalism and socialism. Why can’t those who differ on these things recognize Christ in their opponents, exchange a sign of peace, and take their gifts to the altar?
What I, at least, hope for from a Christian magazine is help in growing closer to God. Articles on economics and weapons are not as effective in this regard as articles on saints past and present, on prayer and fasting, or on the sacraments. If we are open to the Holy Spirit, He will guide our thoughts. But if we close our ears to God and listen only to ourselves, we will have gained nothing by being right on economics or weapons.
Dr. Paul D. Soper
I have been unemployed for a year and a half, and was about to let my subscription lapse, but your special renewal rate for the unemployed caught my eye, and I felt grateful for the little reduction in price.
So, I’m with you for another year — and very happily.
West Chester, Pennsylvania
Waugh’s Failed Faith
I must respond to James J. Thompson Jr.’s column (March) on Evelyn Waugh’s Brideshead Revisited. Since viewing the televised PBS series, I’ve been attempting to clarify my response to this drama as one of failed faith, both on the part of our Brideshead friends, and on the part of Evelyn Waugh: Brideshead is depressing. We never see the characters experience a joy in their Lord, or the peace that passes all human understanding. The faith depicted in Brideshead is desolate.
Waugh thought of himself as a Christian, but failed to practice the very spiritual actions through which God could have deeply transformed his life. Waugh’s amusing comment about how much nastier he would have been if he were not a Catholic may illustrate a “perspicacious recognition of the relationship between nature and grace,” as Thompson suggests; however, receiving God’s grace into our human natures is quite clearly dependent upon the habits we cultivate. Had Waugh attempted to practice what Christ unequivocally preached (Forsake the world and follow me; Humble thyself; When I was hungry you fed me…), is there any doubt he would have become a kinder, less nasty man? Waugh’s style of life, as described by Thompson, appears so prideful and vainglorious that I cannot avoid embarrassment for the faith Waugh felt ruled his life. If “they will know us by our love,” will believers recognize Christ in the Waugh who preferred to consort with the rich and well-born, who disdained the riffraff, and who scathed even his closest friends with his malicious comments?
Thompson believes the spiritual power of Waugh’s art is not vitiated by Waugh’s culpability. This seems clearly false. Brideshead is artistically powerful, but is not spiritually powerful, that is, powerful in leading us to the Father. Spiritually powerful art, like the life of our Lord, will draw us to the Father in love and humility. Brideshead illustrates a desolate faith, and one can’t help but believe this is a reflection of Waugh’s own impoverished spiritual life.
You May Also Enjoy
Homosexuals regard the outlawing of same-sex "marriage" as a violation of political and cultural freedom - a soft despotism.
Is "theoconservativism" the revolutionary religious idea that is transforming the political and cultural landscape of our time?
An intense debate, which shows no sign of subsiding, has been ongoing for some years…