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The Scale of the Problem

September 1, 2012

My purpose in writing this blog is to let Catholics know that Catholicism is not compatible with socialism, but neither with capitalism. I looked for websites that provided information on “Catholic” economics, but couldn’t find any. So, on the principle that qui docet, discit I decided to start one. After years working the City I have a head full of applied economics and while I continue to study theology, an amateur can expect to master only a tiny portion of the Church’s two thousand years of inspired wisdom.


Catholicism in the UK, especially in the Celtic fringes, is synonymous with socialism. Given the baleful history of socialism – it is never a popular movement; it is always imposed through force by radicals who need to sanctify the revolution with a bloodbath. And it inevitably ends with a famine, blamed on “the enemies of the people”. From my youth I have been puzzled by Catholics’ default support of socialist parties. There is a world of information about the Church’s condemnation of socialism, but to quote the first one I ever saw in print,

“No one can be at the same time a good Catholic and a true socialist” Pope Pius XI, Quadragesimo Anno para.120 (1931).

The love affair with socialism was bad enough when the Labour Party was socially conservative, but now that it is a vector for cultural deracination, I find it astounding that any Catholic could touch it with a barge pole.


A thousand Catholic economics bloggers would struggle to reverse the harm done by decades of close ties between the Church and Labour. The average pew-warmer has been too thoroughly propagandised into thinking the heirs of Trotsky and Lenin are somehow a wing of the Church Militant. In the words of a former KGB agent who did propaganda for a living, “Their demoralisation is complete and irreversible”. But misplaced Labour-love is a symptom of the woeful lack of a Catholic appreciation of economics. I see three mental obstacles to people even starting to think about economics in a Catholic way, before they can take the right decisions:


1)                  Economics is morality-free

There has been a centuries-long conspiracy (yes, it is a conspiracy) to convince people that morality is one thing and economics another. They did this by promulgating the deception that economics has its own self-contained “laws of economic motion”, just like Newtonian physics. Consequently, adding a moral element to economic decisions is akin to putting angels back into planetary elipses. The promoters of the “invisible hand” and their successors have convinced people that what happens in economics happens like gravity. The consequences of economics, like gravity, can be unfortunate or even tragic, but there’s no wishing gravity away and there’s no wishing away the pitiless laws of economics either. “Nothing personal, it’s just business”.


Well, as the AustrianSchool of Economics* showed, everything that happens in economics happens because someone made a choice. And the choices we make are a function of our morality. For example, socialism was a malignant reaction to proto-industrialists failure to acknowledge that there are “Dishonest Profits” and “the labourer is worthy of his reward”. Only when there is sufficient understanding of what is against the natural law can electorates reject those politicians who are in thrall to the globalists and elect representatives who see that shutting a business in the UK to export the jobs to China is immoral. Of course, the businessman can relocate his factory if he wishes, but China, a godless dictatorship with forced labour (and forced abortions at 8½ months), should not be offered the same terms of trade as a liberal democracy with income per head parity. With morality dictating economic choices, voters will loosen their loyalty to a party and vote based on their conscience. Ultimately, Catholics are going to have to reject the false dichotomy of the Tory/Labour non-choice we are offered.


*I can travel a long way with the AustrianSchool, and will cite its members frequently, but there’s a lot of information about its theories on the web if you want to get the gist.


2)                 Debt-based money

All our money is created as debt. In other words, the economy can only expand (through money growth) if there are more borrowers than savers. The idea that we can reduce total borrowing (of individuals, corporations and government) and still have an expanding economy shows that people have not even grasped the cause of our problems.


Debt-based money appears benign when there are more loans being created than repaid because the money supply expands. However, the mathematics of debt-based money is the maths of exponential growth, and boom is always followed by bust because debt expands faster than the real economy’s ability to repay it. This is why there is no prospect of permanent improvement in the global economy because no mainstream commentator mentions the millstone that debt-based money represents. Instead, they parrot the “paradox of thrift”, which would not apply if we had sound money.


Until Catholics understand and promulgate the Church’s tenets on usury all attempts at economic reform, whether originating from the right or the left, are doomed to failure. The history of the world is the history of usurers expropriating other people’s wealth, so the task is almost pointless.


3)                 Planners Can Help

Tories and Labour compete with one another on who has the best plan for growth, oblivious to the fact that government can create wealth in a very narrow range of goods and services. Once government starts to spend taxpayers money outside its sphere of value-added, the economy is handicapped by that spending. Not that the fortunate bureaucrats on sinecures aren’t pleased with the result, but their gain is a loss to everyone else. The more government encroaches illegitimately on the private sector, the greater the loss to the economy.


How many different goods and services are there in a modern economy? One million, two million? Who could possibly know what the right price is for every item, or any item? Only the market, signaling through price changes can tell producers that they should make more or less, or even quit.


The government can legitimately claim a monopoly on protecting the country’s physical borders from invasion or unwanted immigration; it should provide a system of justice so that criminals are punished for their crimes; it can set minimum standards for a police force, although the implementation of policing is regionalised for very good reasons. The government can provide a means of governing through the consent of the people and it should protect the nation’s cultural heritage. Government’s activity in the economic sphere should be confined to the prevention of monopolies and oligopolies by ensuring competition can enter every market. Where competition is not feasible, e.g. transport networks and utilities, the state must provide the social goods, but since there can be no competition by definition, the compensation schemes will be different from the private sector, i.e. lower wages and benefits because of lower unemployment risk.


The government has no business being a monopoly supplier in consumer goods and services, e.g. health care, education and unemployment insurance. All of these industries suffer from low productivity and moral hazard. They have a deal of popular support because they employ large numbers of people (NHS employs 1.4 million) who do not want the risks associated with the private sector. However, the share of national spending being absorbed by these and other state-directed services has risen beyond its sustainable limits. There are now more people taking out than putting in, so the system’s days are numbered, but the collapse will impact us all for the worse.


Only when the electorate have disabused themselves of these three fallacies will voters be in a position to apply the Church’s natural law teaching to economics.


From → Chapter 1

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