Volume > Issue > Letters to the Editor: June 1984

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.

George Gilder

Tyringham, Massachusetts

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.”

Anthony Atkinson

Martinsburg, West Virginia

Handicapped Infants

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

Lafayette, Indiana

Not Murder

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.

Sheldon Vanauken

Lynchburg, Virginia

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

Martinez, Georgia


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.

Ruth Frey

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.

Helen Garrity

Belmont, Massachusetts

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