Monday, March 26, 2012


Is income inequality really a problem? Economists say yes; a depressed economy is
the result of income inequality. Purchasing power is limited to the extent that trade – exchange - does not function to satisfy the population’s needs and desires. A massive amount of money is floating above the real economy in the equity markets producing nothing but token wealth for the rich, inflationary pressure and anxiety. Morally it is wrong. Some have massive wealth while others have nothing. Also, the few rich who control financial markets have the money power to dominate politics at the expense of the middle class and the poor. This is a situation ripe for violence. Where is occupy Wall Street going? What if we consider it a global question?

Simply letting the economy collapse and starting over is not the answer. The
bail-outs were necessary, but, Where Do We Go From Here: Chaos: Or Community? (Martin Luther King) The solution will be political; that is, include the opinions of the rich and poor; also there must be compromise and experimentation. A defined goal – final cause, is needed; e.g. “the common good with preferential option for the poor,” and respect for the environment. Establishing reasons for the goal will be necessary. The remnants of those that still advocate for the realism and practicality of traditional Catholic Social Teaching need to be included in the conversation. The idealistic and existentialist approach of the current Roman Catholic hierarchy and their “liberal” critics is more a distraction than a help to alter the current destructive path of economic theory, but even their ideas should be considered.

In this posting let us look at some ideas from a little before, during, and after the epoch of Pope Pius XII (1939 - 1958). We will consider C. H. Douglas, the Distributists, and John Ryan, labor priest of the 1920’s and 1930’s, along with Pius XII. A comment from a pending book by C. F. Hinze of Fordham University will
give us a new insight on Father John Ryan. The temptation to allow Martin Luther King and John Paul II some space will not be resisted. The effect of U.S. economic policy outside the country will be considered with information from a new book on Bolivia, They Make Us Dangerous, by former Racine Dominican sister Dr. Frances Payne who spent 16 years in the Andean country.

The commentators on economics that we will consider were not generally accepted at the time they wrote, but did get some respect in that they pointed to serious problems that still exist such as income inequality and worker alienation.
The solutions they offer need to be looked at once more.


Douglas showed that wages were not sufficient to buy the goods produced because the price of goods included not only the cost of labor but the cost of raw materials, profit and credit. He proposed a system whereby workers would get a monthly stipend to make up the deficiency in wages so that the goods produced could be purchased. This is called a “Social Credit.” For Douglas, the people, not the banks, were the inheritors of natural resources, and future labor was the potential of workers not the financial system. The seeming infinite capacity of production coupled with the capitalistic system’s needs for profits and purchasing power, require overproduction and the necessity for war to conquer new markets, raw materials and cheaper labor. Such needs provide a stimulus for inflation and trigger a need for contradictory austerity programs to control inflation. Creditors don’t like to be paid back with cheap money. Douglas is credited with influencing J.M Keynes on the importance of purchasing power.

Douglas’ analysis shows that the established final cause – purpose of the capitalist system - is the financial markets (properly, an instrumental cause) and not the common good. This distortion is at the root of the problem. Let’s look at a quote from John Paul II placed in an insightful article about Douglas. John Paul II is quoted from a 1984 homily he preached in Switzerland, a premier financial capitol of the world:

“As a democratic society, I would ask you to look carefully at all that is happening in this powerful world of money! The world of finances is also a human world,our world, subjected to the conscience of all of us; it too is subject to
ethical principles. Thus you should take care that the financial world brings a contribution to world peace through its banking and economic policies and not bring war and injustice - even in an indirect manner.” (San Miguel: Por El Triunfo de la Inmaculada, “Orientaciones Para la Aplicacion de la Doctrina Social de la Iglesia,” por Alain Pilote,

Let us jump ahead in history; Martin Luther King, Jr. had a similar proposal with an important added dimension in 1967. He wrote:

“I am now convinced that the simplest approach will prove to be the most effective - the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.” “We must create full employment or we must create incomes. People must be made consumers by one method or the other.
Once they are placed in this position, we need to be concerned that the potential of the individual is not wasted. New forms of work that enhance the social good will have to be devised for those whom traditional jobs are not available.” (Martin Luther King Jr., Where Do We Go From Here: Chaos Or Community: Harper & Row, 1967, p. 190& 191.) Is it time to look again at Leisure the Basis of Culture by Josef Pieper? Maybe salvation will come from the unemployed, e.g. art work in the jails and immigrant detention centers, discussion groups at Catholic Worker houses, community action by immigrant worker centers (Voces de la Frontera) and Faith based worker groups such as Interfaith Worker Justice.

(Oops – I just tripped over something - F.D.R. Fireside Chat 1934, “…no country, however rich can afford the waste of its human resource. Demoralization caused by
vast unemployment is our greatest extravagance.Morally, it is the greatest menace to our social order.” Cited in: Benjamin M. Friedman, The Moral Consequences of Economic Growth, Alfred A. Knopf. New York, 2005, p. 178.)

Robert Reich wrote in 2010:

“A reverse income tax. The most immediate way to reestablish shared prosperity is through a ‘reverse income tax’ that supplements the wages of the middle class. Instead of money being withheld from their paychecks to pay taxes to the government, money would be added to their paychecks by the government.” (Robert B. Reich, After Shock: The Next Economy And America’s Future, Alfred A. Knopf, New York, 2010, P.129.)


The Distributist movement started in the 1920’s and continues to function. Among the founders were: Hilaire Belloc, G.K. Chesterton, and Rev. Vincent McNabb,
O.P. They preached and wrote in England,but had international awareness. Dorothy
Day and Peter Maurin, who initiated the Catholic Worker Movement in the U.S.,are considered distributists. For the Roman Catholics, the Encyclicals Rerum Novarum and Quadragesimo Anno are referred to as the base of their theories.

“Distributism may be described as a social disposition held by those who emphasize life as lived out in a local community.”

… “Distributism encourages the orderly desire for ownership (in particular, the
ownership of the means of production) among individuals, free families, and
independent worker cooperatives.” (Vincent McNabb, O.P. The Church and the Land. Definition provided in the Introduction by William Fahey, IHS Press, Norfolk, VA, 2003, P. 12)

If you’re interested in: freedom through land ownership, organic food, urban gardening, micro loans, income inequality etc., look to the distributists for ideas and reinforcement. Let us sample the works of some of the Distributists – McNabb & Belloc and Dorothy Day – Peter Maurin.

HILAIRE BELLOC 1870 – 1973

Belloc was a well known British writer who was also a political activist and devout Roman Catholic. He opposed Capitalism and Communism.

“There is a third form of society, and is the only one in which sufficiency and security can be combined with freedom, and that form is a society in which property is well distributed and so large a proportion of the families in the State severally OWN and therefore control the means of production as to determine the general tone of society making it neither Capitalist nor Communist, but Proprietary.”
(Hilaire Belloc, An Essay On The Restoration Of Property, p, 29,IHS Press, Norfolk, VA, 2002)

According to Belloc, the C. H. Douglas “Social Credit” plan (see above) did not address the problem of property, only income,and therefore the Douglas analysis was not adequate. Economic freedom could only be secured by the ownership of property – the means of producing wealth. Ownership means control and the ability to choose – a basic human right. Wage slavery and the necessary subsidies for the unemployed are dictated by the few under Capitalism (The Plutocracy) and by the State under Communism.

Change can be brought about incrementally by various political thrusts such as differential taxation to favor ownership and small business (the opposite of a flat tax) and reestablishment of the Guilds. (cf. The Mexican independent labor union F.A.T. Frente Autentico de Trabajadores that advocates for workers as in a factory labor union, cooperative businesses, as well as credit unions.)

VINCENT McNABB, O.P. 1868 - 1943

You probably think that the Dominican Gustavo Gutierrez, O.P. was the founder of
Liberation Theology, but no; it was Vincent McNabb, O.P. Sorry – just kidding of course, but McNabb did write an essay on the Book of Exodus where he relates the Pharaoh to modern oppressors of the poor. McNabb saw Moses as leading the people back to the land and freedom. “The very poor are everywhere a city-fungus of the very rich. No agricultural civilization has ever produced them. But city life, with its unstable industrialism not only produces and fosters them for its self- existence, but keeps them within the city by unfitting them for life on the land.” (Is this a reason why at the present time central city workers cannot do the work on farms like the undocumented migrants?) (Vincent McNabb,O.P., The Church and the Land, “The Economics of the Exodus” op. cit. p. 78)

McNabb also questioned the Douglas scheme. “Now a dearth of things cannot be met by the creation or redistribution of tokens. A dearth of things can be met only by a creation or redistribution of things.” (The Church and the Land, “Introduction, ibid., p. 19) However, McNabb was well aware of the problem presented by financial institutions.

“Give no heed to the buyers and sellers who would make Whitehall(political power) seek its ultimate measures from Lombard Street (The London equivalent of Wall Street). (“Nazareth Measures,” ibid., p. 103)

Although the founders were advocates of private property, the Distributists rejected the individualism of the “Enlightenment.” Individuals do not form the state; it develops from families. Rev. McNabb wrote, “Not only in idea but in fact, families must have preceded States. The primitive political organization presupposes
a group of families.” (ibid. pp. 120 -121)

“No programme of good intentions will undo the mischief caused by interference with family life.” (“Nazareth Measures,” ibid. p.103) Agreed! For example, the Obama administration’s “Secure Communities” program has ripped apart families. The legal principle was established by the Roman Emperor Nero in his attempt to rid Rome of Christians. In Latin it is stated, as “non licet esse vos” – your existence is not legal. (ibid. p. 49, “The Voice of The Irish,” McNabb uses the phrase to describe the post W.W. I attitude toward starving Irish children.)

PETER MAURIN (1877 – 1949) AND DOROTHY DAY (1897– 1980)

The Catholic Worker Movement - opened hospitality houses in the U.S. and were uncompromising peace advocates. Catholic Worker staffers are an example of the
lived Christian Gospel. If you want to know what “preferential option for the poor” – respect for the environment, peace advocacy, and open discussion mean; visit a Catholic Worker hospitality house.Dorothy Day distinguished The Catholic Worker Movement from similar organizations by noting the Catholic Worker advocated distributism and passivism.  “We wish that they all felt as we do, that we had that basic unity which would make us Agree on Pacifism and Distributism.”  (Dorothy Day, On Pilgrimage, William B. Eerdmans Publishing Company, Grand Rapids, Michigan, 1999, p. 151.)

Rt. Rev. Msgr. JOHN RYAN, D. D., LL.D., Litt.D. (1869 – 1945)

In the U.S. Roman Catholic Social Teaching was strongly recognized in the Catholic Church as well as in the country at large from 1900 through the 1940’s. 1938 was a high point. A meeting of the National Catholic Welfare Conference was held in Milwaukee and was attended by 35 bishops, 750 priests and thousands of lay people. A document issued listed collective bargaining as a basic right.

As director of the Washington branch of the National Catholic Welfare Conference, John Ryan was a key leader in the movement. In 1937 then Secretary of State for the Vatican, Eugenio Cardinal Pacelli, the future Pius XII, announced that Pius XI had conferred on Ryan the honor of Domestic Prelate in the Papal Household. (John A. yan, DD., LL.D., Litt.D.,Social Doctrine in Action, p.263, Harper & Brothers Publishers, New York and London, 1941.)

Distributist Vincent McNabb, O.P. recognized the U.S., Ryan’s, contribution to Roman Catholic Social Teaching. McNabb commented concerning the 1919 U.S. Bishop’s National War Board pronouncement , “Social Reconstruction,” The document was written by John Ryan, (Ibid. pp. 145 -147 ) McNabb wrote: “This (that workers should move from being wage earners to being owners) and the kindred pronouncement that where the Wage system obtains the Living Wage is the first moral charge upon industry, make
the words of these American Bishops one of the most important events of the century.” (op. cit., “The End of the Wage System,” p. 82)In 1929 a committee of the New York State Senate on Sedition found the Bishop’s Document to have a “socialistic
tendency.” (Ryan, op. cit., p. 147)

But unlike the Distributists, Ryan did not condemn Capitalism as such. His answer
to income inequality was – a living wage. But a living wage was not the whole story for Ryan. Like the Distributists, Ryan was concerned about the dignity of the person not just comfortable survival. His answer to worker alienation - freedom of
choice, was the re-establishment of worker “status.” (from the Latin, sto, stare, steti, status –to stand) The Distributists noted that with the industrial evolution workers became wage slaves – replaceable parts and beggars for subsidies. Just adding survival money or ownership without a significant say won’t solve the problem, and has the potential to make the situation worse. What was Msgr. Ryan’s answer?

Dr. Christine Firer Hinze, in a forthcoming book, emphasizes the importance of Ryan’s concept of worker “status.” Dr. Hinze states, “But the capstone of wage-earner justice envisaged by Ryan was a new, vastly improved status for labor in the form of “industrial democracy,” wherein workers would have a reasonable share in “management profits and ownership.”

But I ask, is willing cooperation in the goals of capitalism a humanizing activity? As a factory worker I remember being asked how jobs could be done so as
to eliminate workers. In 1917 John Ryan supported Benedict XV’s peace plan and was disappointed in both sides when it was rejected. In contrast to Father Charles Coughlin, Ryan supported Franklin Roosevelt and wrote a strong article supporting the Jews and denouncing the Nazis. Ryan was a strong advocate of women’s rights in the work place.

PIUS XII (1876 – 1958)

The purpose of considering those concerned with Catholic Social Teaching from a bygone era is to point out the moral aspect of economics. A comprehensive analysis
is not intended, only sketches to encourage interest at a time when we are desperate for answers.

Pius XII enunciated a basic tenant of Catholic Social Teaching by stating that, in the nature of social relations, there was no irreconcilable conflict between labor and capital. “Employers and workers are not irreconcilable enemies.” (Six
Social Documents of Pius XII, “Discourse to the Representatives of the International Union of Catholic Employers Associations,” 1949, p. 7, Our Sunday Visitor Press, Huntington, Indiana)

For Pius XII, both management and labor should look naturally to the same social goal. (But in fact they don’t.) This is the “corporate” plan of Catholic Social Teaching. The economy should function like a body (corpus) coordinated by the head –the director - or the naturally agreed upon goal. Pius XII stated in 1952:

“Meanwhile they pass over, more or less in silence, the principal part of the Encyclical, Quadragesimo Anno, which contains the Church’s real program: viz., the idea of a CORPORATE, occupational order of the entire economy. Whoever sets about to treat problems relative to the reform of industry, without taking into account that every single business is, by its very purpose, closely bound up with the whole of national economy, runs the risk of positing erroneous and false premises, endangering the entire economic and social order.” (Ibid., “Address of Pius XII, to the Italian Catholic Association of Owner – Managers,” p. 19, 1952)

If necessary, nationalization is acceptable. Pius XII approved Franco’s fascist regime in Spain. Let us look at the application of the principle of “Susidiarity” established in Q.A. and “Solidarity” first articulated by Pius XII. It would seem
that Pius XII would put severe limitations on John Ryan’s “Participatory Management.” Pius XII stated in 1949: “The proprietor of the means of production … must always remain the master of his economic decisions.” (Ibid., p. 8, “To Catholic Employers,” 1949) This is an example of “Corporate”“Solidarity.”

But Pius XII also wrote in a letter to the Thirty-Ninth “Social Week,” at Dijon, France, 1952: “Furthermore, if both owners and workers have a common interest in the healthy prosperity of the national economy, why would it not be legitimate to give to the workers a just share of responsibility in the organization and development of the economy.” (Ibid., p. 25,) This is “Corporate” “Subsidiarity.” See the opinion of John Ryan on this issue: Rev. John A. Ryan, Social Doctrine in Action, p. 244.


“Imperialist solutions such as Roosevelt’s New Deal, or Kennedy’s New Frontier, and even the Church’s ‘Corporate’ Economics, won’t work in Bolivia.” If that was your claim from 1964 – 1980 you were in serious trouble. The title of Dr. Frances Payne’s new book about her experience in Bolivia in the struggle for justice, from ’64 – ‘80 is entitled: They Make Us Dangerous,

Deeply enmeshed in the story are the dramatic changes to religious life after Vatican II.

Dr. Payne’s book sets us up to move to consider Catholic Social Teaching beyond Pius XII.