Saturday, April 5, 2014

Papal Economics, the Encyclical I never Knew About

I missed an encyclical in my reading, Laborem Exercens published by soon to be Saint Pope John Paul the Great on the 90th anniversary of Rerum Novarum. I've updated the list of the history of Papal Encyclicals on Economics..
Fr. Zieba glosses over it in one line in his praise of how Centesimus Annus celebrates capitalism, and almost misses the idea that the right to private property is limited to the use of the public good. But it is his light treatment, and my utter lack of knowledge of Laborem Exercens, that I'm more interested in.

For Laborem Exercens deals with the correct relationship between labor and capital- not a materialist one, not a economist one, but a community rightly ordered towards the common good. Profit becomes not a sign of sin, but Profit becomes instead a sign that business is being conducted properly, accruing not just to capital, but also to Labor.
I've always wondered about the value of management and how in a disordered business, quite often management is disproportionately rewarded for their input to the business. Laborem Exercens attempts to answer this:
In the present document, which has human work as its main theme, it is right to confirm all the effort with which the Church's teaching has striven and continues to strive always to ensure the priority of work and, thereby, man's character as a subject in social life and, especially, in the dynamic structure of the whole economic process. From this point of view the position of "rigid" capitalism continues to remain unacceptable, namely the position that defends the exclusive right to private ownership of the means of production as an untouchable "dogma" of economic life. The principle of respect for work demands that this right should undergo a constructive revision, both in theory and in practice. If it is true that capital, as the whole of the means of production, is at the same time the product of the work of generations, it is equally true that capital is being unceasingly created through the work done with the help of all these means of production, and these means can be seen as a great workbench at which the present generation of workers is working day after day. Obviously we are dealing here with different kinds of work, not only so-called manual labour but also the many forms of intellectual work, including white-collar work and management.
In the light of the above, the many proposals put forward by experts in Catholic social teaching and by the highest Magisterium of the Church take on special significance23: proposals for joint ownership of the means of work, sharing by the workers in the management and/or profits of businesses, so-called shareholding by labour, etc. Whether these various proposals can or cannot be applied concretely, it is clear that recognition of the proper position of labour and the worker in the production process demands various adaptations in the sphere of the right to ownership of the means of production. This is so not only in view of older situations but also, first and foremost, in view of the whole of the situation and the problems in the second half of the present century with regard to the so-called Third World and the various new independent countries that have arisen, especially in Africa but elsewhere as well, in place of the colonial territories of the past.
Therefore, while the position of "rigid" capitalism must undergo continual revision, in order to be reformed from the point of view of human rights, both human rights in the widest sense and those linked with man's work, it must be stated that, from the same point of view, these many deeply desired reforms cannot be achieved by an a priori elimination of private ownership of the means of production. For it must be noted that merely taking these means of production (capital) out of the hands of their private owners is not enough to ensure their satisfactory socialization. They cease to be the property of a certain social group, namely the private owners, and become the property of organized society, coming under the administration and direct control of another group of people, namely those who, though not owning them, from the fact of exercising power in society manage them on the level of the whole national or the local economy.
This group in authority may carry out its task satisfactorily from the point of view of the priority of labour; but it may also carry it out badly by claiming for itself a monopoly of the administration and disposal of the means of production and not refraining even from offending basic human rights. Thus, merely converting the means of production into State property in the collectivist system is by no means equivalent to "socializing" that property. We can speak of socializing only when the subject character of society is ensured, that is to say, when on the basis of his work each person is fully entitled to consider himself a part-owner of the great workbench at which he is working with every one else. A way towards that goal could be found by associating labour with the ownership of capital, as far as possible, and by producing a wide range of intermediate bodies with economic, social and cultural purposes; they would be bodies enjoying real autonomy with regard to the public powers, pursuing their specific aims in honest collaboration with each other and in subordination to the demands of the common good, and they would be living communities both in form and in substance, in the sense that the members of each body would be looked upon and treated as persons and encouraged to take an active part in the life of the body24.

This seems to indicate Employee Stock Ownership schemes, in which the worker, as part of his wages, gains ownership in the business. I know some of the businesses I admire most, such as Bob's Red Mill and Les Schwab have organized themselves along these lines, and it has worked out to be extremely profitable for all involved, hundreds or in the case of Les Schwab, thousands of workers learning skills and earning ownership.

4 comments:

Theodore Seeber said...

- So, should the Church hold non-employee stock ownership schemes as wrong? I think it can be a great thing, but it shouldn't be a moral imperative. But maybe I don't really get the point?

- WHat the heck is "rigid capitalism"??

-Isn't capitalism is the oldest and original form of commerce, barter, trade etc? Wasn't it cast as the villain by Marx et. al. Doesn't accepting that paradigm seems well, kinda silly? Or is he using that term just because it is commonly understood?

-The system that has gradually developed & metastasized over the last few centuries, a sort of gov't-crony-socialist-capitalism is the real problem in my view. But as far as I know we don't have a clear and simple term for that as of yet.

Honestly I distrust the whole paradigm of gov't enforced social justice, including as it has been encouraged by many in the Church. It implies a faith and trust in gov't that I can't help but see as anything but foolishly naive. The lesson of abortion alone should make that obvious to anyone who believes in the supreme value of human life.

Theodore Seeber said...

Your point at the beginning about profit and a well run business is an excellent one.

Theodore Seeber said...

I think you have some of that backwards. The church praises employee ownership as a model of community that joins a business together, subsidiarity.

Rigid capitalism in this case would be an absolute guarantee of a right to private property- in the extreme, you own a gun so you're allowed to kill people because you have an absolute right of ownership. Or another way, Planned Parenthood owns abortion clinics, and thus should be allowed to perform abortions, by mere right of private property alone.


Crony capitalism is the form of rigid capitalism where those with the most wealth, purchase the government outright. Crony capitalism protects the absolute right to private property to the point of excluding (to use Pope Francis's term) certain classes of people from participating in the market- and yes, the unborn is a very good example.

Theodore Seeber said...

Not my point. More Pope John Paul The Great's point. Was a bit of a surprise to me, as I'm still in the unionist/Marxist "Profit is unpaid wages" camp- but if that profit is correctly reinvested and/or issued as bonuses and dividends to the people whose hard work created the profit, it is certainly is a good point.

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