The downsides of capitalism
by Regina Schmiedicke
I feel I should respond to Martha Blandford’s thoughtful remarks on the benefits of capitalism, in Vol.II, Issue 1. While I agree with many of her ideas—such as that the truth about the human person must be the basis of all thinking about economics—I take issue most emphatically with some of her conclusions, and especially with such assertions as: “the only economic system offering such freedom [of self-determination and free will to mankind] is laissez-faire capitalism.”
It is true that the person—whom the Pope calls “the acting person”—must be independent in his actions, and clearly an “environment ... that ensures his liberty” is a necessary prerequisite for sound economics as well as moral economics. However, it is not true that the only system which allows such freedom is capitalism. If it were, how could we explain the Church’s sustained critique of capitalism throughout its development (which took place in Protestant countries after the Reformation, incidentally)? How could we explain such harsh statements by popes as recent as John Paul II as “the Church ... has always distanced herself from capitalist ideology, holding it responsible for grave social injustices”?1 And although the neo-conservatives such as Michael Novak (whom Mrs. Blandford cites) might claim that capitalism is the only model of economic organization, it is not.
Furthermore, while I would agree with Mrs. Blandford that freedom of the human person is an essential thing, I would point out (and I’m sure she would concede) that true freedom is not the ability of a person to do whatever he desires, without restraint of moral or civil laws. Indeed, such lawless “freedom” destroys true freedom.
Unfortunately, laissez-faire capitalism results in such turbulence.
Although it is true that capitalism can allow some persons to exercise their “self-determination and free will,” the fact remains that it will not freely allow every person that ability. Why? Because capitalism without restraints is essentially competitive. The “free market,” which originates with everyone having the freedom to buy and sell as they choose soon degenerates into the strong prospering and squeezing out the inferior or the weak. The strong entities get larger, forcing their competition to get larger. Eventually, all that remains are giants slugging it out with each other, the smaller businesses and workers falling by the wayside.
The free market in practice is not “the vehicle which ensures that our liberties will be protected,” as Mrs. Blandford claims. While the owners of corporations successful enough to weather the competition might indeed have their liberties protected by such a market, the workers for such companies are often reduced to “wage slaves” who might (for instance) become the victims of corporate downsizing at a moment’s notice. This was brought home to our family recently when my father was notified of his probable discharge from the engineering company where he has worked for the past twenty-plus years. College students are well aware that the possibilities of getting hired for their professional skills in their fields—not to mention the possibilities of their remaining employed—are somewhat chancy these days.
In its present form as well as in a more “ideal” form, capitalism does not (and I would say cannot) fully allow the majority of men to experience the “power of self-determination.” The hard, cold realities of working life in America (blue-collar or white-collar) speak for themselves.
Now, I am in full agreement with Mrs. Blandford that the emergence of what is termed “the welfare state” will not solve the problems inherent in a free market. It will not allow for the self-determination and free exercise of liberty of the individual worker and owner. It will bring about a form of communism which will be as deadening to the working person as it will be unsuccessful in helping society. But, unfortunately, it does seem to be our fate as a nation unless there is a radical change in our thinking about economics.
Like most people in America, I like capitalism for its most beneficient attributes: the protection of private ownership, the opportunites which it promises for people who are willing to work hard and work well. However, the downsides of capitalism, which I have mentioned and which the popes have perenially criticized, should make us pause before canonizing it as the only economic system for a free people to live under. I believe there are economic systems which “fit” better with Catholic social teaching than capitalism, which can accomplish these beneficial ends while avoiding the pitfalls of championing individual freedom as the highest good. One of these, which was developed in response to the land-mark papal encyclical of Leo XIII,
Rerum Novarum, has been called “distributism” or “The Third Way.” (Some Concourse readers may recognize the term if they are familiar with the writings of Catholic writers G.K. Chesterton and Hillaire Belloc.)
Like capitalism, distributism places a priority on private ownership. This sharply, once-and-for-all distinguishes it from communism, where private property is considered evil and is thus put into the hands of the state. However, distributism favors not just private ownership but individual ownership. It operates under two main interlocking principles—subsidiarity and solidarity.
Subsidiarity means that when there is a need, society should first look to the smallest possible unit to meet it. If the individual worker (or family) cannot meet it adequately, the small business is allowed to handle it; needs that are beyond the abilities of the small business are given to the larger businesses, and so on up. It’s obvious that this principal operates in many areas in a healthy society. The Pope heads the Church, but he doesn’t pick out the hymns for noon Mass (to paraphrase Jim Hannink). The state government maintains highways, but it should not discipline our children for not doing their homework. In fact, a sign of an unhealthy society is one where big entities try to meet social needs that could and should be met by smaller social units or individuals. That is one reason why the growth of the welfare state is so abhorrent to most Americans. It offends our sense of balance in a primary way. Subsidiarity keeps a society in balance. And when the principles of subsidiarity are respected in economics, the economy is stable.
When subsidiarity is respected, solidarity occurs. Solidarity is a unity among members of society which makes sure that no individual “falls through the cracks.” Solidarity ensures that the widow of a worker who dies is provided for. It watches out for the physically and mentally handicapped, the newly-arrived immigrant, the elderly or retired individual, to make sure that their needs are met. Today the government and corporations regularly promise to meet the needs of everyone, but it is a promise every thinking person can recognize as patently unrealistic. Why? Because of a lack of subsidiarity. Governments are too big and unwieldy to be humane. Corporations are too large to adequately care for all their workers. When things are small—when local governments and local businesses are strong—the individual person is more valued and more likely to be noticed and accomodated.
Now, while many of us may perceive this clearly in the realm of politics and ethics, we are blind to it in economics. Think about it. Why do we take our business to malls and chain stores, when we could patronize businesses owned by members of our community (often members of our parish) whom we know by name? McDonald’s has served billions and billions—they don’t need our money. The diner near your home owned by a local man may desperately need your business to survive. Why do we immediately drive to Kmart or Pharmor to pick up a hammer or fill a perscription, when local hardware stores and drug stores downtown are struggling to keep their doors open?
The exercise of capitalism is now erasing the opportunities that made America the nation it is. The Hispanic immigrant who comes here dreaming of opening his own restaurant will most likely lose his customers to Taco Bell. Ask any small business owner you know if the current market encourages small ownership. An entrepreneur recently told me that most small business owners marketing a new product actually plan on getting bought out by a major corporation after a few years, because they know that otherwise they won’t survive in the cut-throat market of today.
In embracing laissez-faire capitalism, America’s economic freedom has developed into the right of the strong to call the shots, unless stopped by the even bigger strongman of a bloated federal government.
Regina (Doman) Schmiedicke (‘92) writes from Front Royal, Virginia.
- Interview, Sept. 9, 1993, quoted in Caelum et Terra, Fall 1994, Vol 4, No. 4, p. 3. Readers interested in the papal critique of the Catholic ‘neo-conservatives’ should see the article by Dan Nichols in the same. ↑