Does the Church Favor Capitalism and Democracy?

Although the recent book by Fr. Maciej Zieba is titled Papal Economics: The Catholic Church on Democratic Capitalism, from Rerum Novarum to Caritas in Veritate, it is really not so much about papal economics as it is about papal political philosophy. Further, it is not about the Catholic Church’s teaching on democratic capitalism broadly speaking but about Pope Saint John Paul II’s teaching on democratic capitalism in Centesimus Annus.

Zieba, a Polish Dominican priest, seeks to give Centesimus Annus pride of place amongst all social encyclicals. He devotes only one chapter of six to seven prior social encyclicals, mainly to show continuity between them and Centesimus Annus. He even admits as much at the end of chapter one: “At the threshold of a new millennium, Centesimus Annus would introduce important new elements in the Church’s social teaching and assume the role of flagship of Catholic social doctrine. Any consideration of the Church’s teaching on democratic capitalism must pay special attention to Centesimus Annus, which is why this comprehensive encyclical is the subject of the chapters that follow.”

Incidentally, I believe that the position of pride of place amongst social encyclicals belongs to Leo XIII’s Rerum Novarum. It is so important that it is often seen as the beginning of the social teaching of the Church, with many thinkers showing a level of ignorance or neglect of the vast literature written on the subject by the Church before 1891.

Be that as it may, Zieba’s book is not about the Church’s social teaching in general but specifically about the Church’s teaching on democratic capitalism. And Centesimus Annus, having been written right after the fall of communism, is certainly the encyclical that most deeply delves into the subject of democratic capitalism.

Papal Economics reads as if it were written largely in the 1990s (and this is confirmed by the fact that most of the footnotes date from that period) and operates like a coup de grace in favor of democratic capitalism against communism. It would have been a more timely book had the author written in light of more recent events like the economic crash of 2008, rather than the historical period that began with the fall of the Soviet Empire up to the tragedy of September 11, 2001.

The book basically summarizes papal teaching within the framework of capitalism versus socialism and rejects

socialism as wrong at its core—as “proposing a remedy far worse than the evil” it was designed to cure, in the words of Quadragesimo Anno. Moreover, it is clear, especially from Centesimus Annus, that a democratic state characterized by the rule of law and endowed with a market economy deserves praise and respect as a place in which human freedom can find expression.

The popes did consistently reject socialism and give better remarks for what is often called democratic capitalism. But we need to look more specifically at what the popes really praised. Zieba nicely divides the core of his book into two chapters, one devoted to democracy and the other to capitalism, and we will discuss each in turn here.

Capitalism
Zieba sticks very close to JPII’s analysis of capitalism in Centesimus Annus. Like JPII, he draws a distinction between the unbridled de-humanized capitalism of the early industrial revolution and a capitalism “that recognizes the fundamental and positive role of business, the market, private property and the resulting responsibility for the means of production, as well as free human creativity in the economic sector.” Like JPII, he recognizes that the critique of early capitalism also applies to today’s Western economies, although to a lesser degree than a century ago.

Papal EconomicsThe author then draws a distinction between libertarian/liberal capitalism, which is materialistic and has no concern for justice in wages, and the Ordoliberalism of post WWII Germany. The former, he says, suffers from Economism, which led to “three fundamental errors of liberalism: (1) an underappreciation of the importance of the ethical, legal, and institutional cornerstones of social life; (2) the failure to take human nature into account; and (3) the lack of critical reflection and the ability to make corrections.” On the other hand, the Christian Ordoliberals—Roepke, Eucken, and Chancellor Erhard, among others—believed that an economy must be based on God’s order, hence the term “Ordo.” That Order included a Christian understanding of human nature. The economic order, for it to be truly order, must conform to human nature. Roepke wanted a humane economy based on “widespread property ownership and distribution of income … balanced (for example, between industry and agriculture), and supports small and medium-sized companies, not just massive firms.” Zieba’s discussion of Ordoliberalism and his recognition of a more just form of capitalism in Germany, with its wider distribution of wealth, than that which exists in the United States and even other Western countries, is likely the strongest contribution of this book. In light of the current contrast between the growing German economy and the stagnant economies of the rest of Western Europe, these differences need to be studied further.

That being said, any book on capitalism written post 2008 must address the crash and Great Recession, and the silence of this book on these subjects (only briefly mentioned in the Afterword of the paperback edition but not the hardback version published a year earlier in 2013) is a major drawback that makes it seem out of date. Zieba seems to prefer to stick to what JPII said in 1991 as if the history of stagnant wages since then, and the recent economic collapse, say nothing new about modern capitalism. Flat and falling wages (and the high personal debt that was built up to sustain a standard of living), excessive leverage, ever increasing government debt, and usury lie at the root of the crisis. How capitalism can be modified to alleviate those problems—something that various papal encyclicals address—is a necessary discussion that this book lacks.

The German Ordoliberals, by developing a system of trade schools and an economy heavily based on solidarity including a much lower ratio between CEO salaries and those at the bottom, went far towards addressing unjust wages and from which the US can learn. Nevertheless, even the Ordoliberals neglected to address usury and excessive leverage, among other things, and so their order was incomplete.

Zieba concludes his Afterword with the hope that purely scientific economics will be replaced with a more human economy. I heartily agree, but we must understand that a humane economy means employment for all who desire it, and at a just wage. Capitalist economies are going to have to become much more solidaristic in order for that to happen. I don’t see that on the near horizon, but Zieba is right in indicating that Papal encyclicals provide a major contribution towards that end. They need to be a part of any public discussion or a truly humane economy will not be achieved.

Democracy
This book’s discussion of democracy reads like that of a man seeking solid political roots but is honest enough with himself that he knows he hasn’t really found it. Coming out of Communist Poland, Zieba wants to love democracy. Further, he wants to say that John Paul II offers a more explicit affirmation of democracy than his predecessors when the Polish pope says:

The Church values the democratic system inasmuch as it ensures the participation of citizens in making political choices, guarantees to the governed the possibility both of electing and holding accountable those who govern them, and of replacing them through peaceful means when appropriate. Thus she cannot encourage the formation of narrow ruling groups which usurp the power of the State for individual interests or for ideological ends (CA 46).

But during the crash of 2008, didn’t a narrow ruling elite related to Wall Street banks usurp the power of the state and receive a multi-trillion dollar bailout? Main Street was forced to bailout Wall Street, literally by having the taxpayer make good on lost bets of bankrupt entities like AIG. So, democracy, as it is currently practiced, is not supported by Pope John Paul II. Zieba admits as much: “In the same paragraph, the pope addresses ‘the principle of the rule of law, in which the law is sovereign, and not the arbitrary will of individuals.” John Paul II continues:

If there is no ultimate truth to guide and direct political activity, then ideas and convictions can easily be manipulated for reasons of power. As history demonstrates, a democracy without values easily turns into open or thinly disguised totalitarianism…. Totalitarianism arises out of a denial of truth in the objective sense. If there is no transcendent truth … then the force of power takes over (CA 46,44).

Yet, Zieba wants to say that the words of JPII

mark an advance in Catholic social teaching. George Weigel aptly describes the evolution of “the Church’s encounter with democracy” as a “process of transition from hostility (Gregory XVI and Pius IX) to toleration (Leo XIII and Pius XI) to admiration (Pius XII and John XXIII) to endorsement (Vatican II and John Paul II), and now to internal critique.

But the age-old Catholic hostility to democracy is still present if by democracy we mean that whatever the majority votes for defines what is right. The rule of law that JPII is referring to is objective truth rooted in human nature, not whatever laws the majority votes for and enacts.

What is going on here is that since the word “democracy” connotes good things to the vast majority of people in today’s world, Zieba (and his fellow democratic capitalist advocates) do not want to lose the marketing game by condemning, or too harshly critiquing, something that the world perceives as good; so, instead, they say that democracy could be good, but only if it conforms to objective truth. Agreed. But then they try to say that it typically is based on that truth, or at least that it can be, given Christian cultural roots. But democracy does not guarantee that—as Zieba well explains—and so we must conclude that democracy is really at best an agnostic political system. It could be good or bad depending on whether the majority understand what is true and votes for what is in the common good, or whether they vote the treasury into their own pockets. Zieba realizes this, and says as much in his last chapter, but he seems to want to have his cake and eat it too.

At the same time, since the term”confessional state” connotes something bad to anyone who isn’t a Catholic (and even to many who are), Zieba wants to separate the system that he advocates from what is called a “confessional state”: “This democracy is miles away from the ideological or confessional state.” Perhaps I have a major disagreement over definitions with Zieba because I would say that an ideological state is miles away from a confessional state, yet he equates the two. I think he sets up a straw man of a confessional state to be an ideological one because it is politically incorrect to favor a confessional state.

But what is a belief in objective truth, Christian anthropological truth as he calls it, if it is not a confession of faith? Basing a political system upon these objective truths of Christian anthropology—as he wants to do—is confessional whether he wants to use that word or not. Furthermore, it is disingenuous, and disrespectful to all the great Catholic leaders of history prior to the French Revolution, to say that they were imposing an ideology upon people against their will. The confessional state, properly understood, is not the imposition of the Catholic faith upon unbelievers by force of the state; it is simply a political economy whose laws are rooted in the objective truths of the faith. A confessional state is still just a state. And if it is truly confessional, then it must conform to the principle of subsidiarity, meaning that it must not impose anything as law that can be better dealt with by other social institutions, like the family, businesses, charitable institutions, and the Church. In other words, if it is truly a confessional state then it will recognize the legitimate limits of the functions of a state as we confess them to be: respecting the principles of subsidiarity and solidarity, limiting itself to only what is in the common good, and respecting the dignity of all human persons including their freedom to practice a different religion. A state cannot be totalitarian/socialistic if it is confessional. Yet, Zieba equates the two.

A confessional state need not be a democracy, and that is why the idea of a confessional state troubles people who advocate a liberal capitalist democracy. Yet, they admit that a democracy that isn’t rooted in Christian anthropological truths—truths that respect the dignity of all human persons—will become totalitarian, as history has shown.

Using this logic then, we must conclude that a democracy is only good to the extent that it is confessional, and that a confessional state is legitimate whether or not it is a democracy. As Catholics, we recognize that the laws, rights, rules, and regulations of all political economies should respect the four pillars of Catholic social thought: the dignity of all human persons, the principle of subsidiarity, the principle of solidarity, and the common good. Whether or not the political economy is democratic is less relevant.

Zieba, having come from Communist Poland and recognizing that liberal democracy is better than communism, wants to say that the popes have approved of liberal democracy more than they actually have. However, he recognizes that JPII “does not go so far as to conclude that democracy is the best, or even the closest to Christianity, or all existing political systems. His approval of democracy is rather reserved…. He also draws attention to the inherent instability of democracy and the problems that result from depending on the will of the majority.” Yet, Zieba still concludes, erroneously in my opinion, that “it is possible to affirm that a democratic system supplies the desirable anthropological minimum—that it corresponds to a realist vision of the human person.”

In reality, democracy offers no vision of the human person. We think it does only because Western democratic systems continue to live off the accumulated capital of their Christian past. Zieba admits this when he says that the foundation of liberal democracy is something that liberal democracy itself cannot guarantee, and quotes Christopher Dawson: “The Liberal faith [in democracy] owed its strength to the elements that it had derived from the religious tradition it attempted to replace. Thus, in so far as it succeeded in secularizing European culture, it undermined the foundations on which its own existence depended.” Zieba concludes his book by saying that Christianity can exist without democracy but democracy needs the moral foundations of Christianity or it will tumble into totalitarianism. He seems to be optimistic that that foundation will be retained; the headlines we read these days would lead one to conclude otherwise.

Editor’s note: The image above titled “Stump Speaking” was painted by George Caleb Bingham in 1886.

Anthony Santelli

By

Anthony Santelli II is the CEO of AES Capital, co-Founder of the Catholic Finance Association, and a long-time member of the Society of Catholic Social Scientists. He earned his Ph.D. in Economics from George Mason University.

  • Vinny

    “Roepke wanted a humane economy based on “widespread property ownership and distribution of income … balanced (for example, between industry and agriculture), and supports small and medium-sized companies, not just massive firms.”
    Doesn’t sound like the current distribution of income of Obama and the “progressives.” Sounds more like trickle-down which works if the government is more hands-off.

  • Vinny

    “The rule of law that JPII is referring to is objective truth rooted in human nature, not whatever laws the majority votes for and enacts.” That’s why we’re not a democracy but a democratic republic. That founding principle however has been badly skewed by power grabbers who have been allowed to grab power.

  • s;vbkr0boc,klos;

    Too many Godless billionaires. Too much ‘noblesse’ and not enough ‘oblige’.

    • St JD George

      Is there a correlation between wealth and liberalism? I don’t know, but when I look at the world’s wealthiest and see how they spend their money trying to influence and control people, it seems like a lot in one column and not so much in the other. I’m sure it must be a liberating and powerful feeling to have all that resource at your control to use to get others to do your will.

  • St JD George

    To me that’s like saying is the church republican or democrat, of course it’s neither. And besides, situations and names are temporal changing with the times, the church does not on fundamental doctrinal matters (we hope, ha). I think it’s not so black and white because there are societies where maybe a “benevolent” leader could be more appropriate over a largely undeveloped and ill informed electorate. The problem with benevolence is that if it really ever exists at all it is fleeting as humans become corrupted with power. Ultimately human nature is such that as people develop and become enlightened it’s natural to shed that for representative rule. I’m always reminded of Samuel’s wisdom in admonishing those who wanted a strong kingdom and reminding them of the undesirable consequences for their lust. Strong contrast with our King whose kingdom, and ours, is in heaven. What does that have to do with economics – I think there is a strong relationship. Too often we get caught up in the extremes of position realizing that in the spirit of human endeavor on earth the answer won’t be found in either. Capitalization has been the greatest force for good ever lifting more people out of poverty than any other system, but if as it happens for some the quest for mammon becomes the obsession … well then the first will indeed be last. The same goes for people who sit in positions of power in governments playing favorites picking winners and losers, they become corrupted which is why as little power as is absolutely necessary should be granted them lest we become their subjects. Free trade between two men who can shake hands and agree on a contract is man’s economic essence, and a system that takes from one to give favors to another is not.

    Related, I’ve read that 6 or 7 of the top 10 wealthiest counties in the country are in the surrounding DC area. I find that revolting for a geographic area that produces virtually no commerce but a lot of regulations for the rest of us.

    • CR89

      Last night’s Vespers included Psalm 49 which is one of the best arguments against the false idol of mammon and entirely apt for this conversation. Highly recommended reading.

      • St JD George

        Indeed, amen – I just read. I can’t go to Mass everyday but I read the liturgy and reflections. It’s always amazing to me to read the timeless passages, particularly from the NT, that leap off the pages with relevance today.

    • Mike

      When you say capatilism  has helped “lift people out of poverty” what you really mean is that the IMF and globalist institutions have looted all the resources of third world countries in order to create a cheap pool of slave labor. But instead of calling it what it is-theft and slavery, we justify it by saying that we are helping to “lift people out of poverty”. It’s a form of orwellian doublespeak intended to make us feel good about our obvious exploitation of third world labor

      • msmischief

        Yes, they’re living longer, yes, their babies are more likely to survive, yes, their health is better, — but they are exploited.

        So much better to die young and unexploited?

  • David Kenny

    It wasn’t the greed of the wall street banks that caused the collapse 0f 2008. It was the policy of Jimmy Carter and Bill Clinton to force local US banks to issue mortgages to local inhabitants totalling the cumulative value of the deposits in these banks. This meant that the banks issued mortgages to holders who were quite incapable of ever maintaining the payments; all to meet the legislated requirement to match the total deposits. As a result these unstable mortgages were packaged up and sold as financial instruments, many to foreign buyers, and when the economy reached the point where the mortgagees could no longer meet the payments the whole system imploded. The banks were complicit in spreading this risk so widely but they are not responsible for creating it. The socialist politicians were responsible and still are.

    • St JD George

      In fairness, were also not curtailed under the Bush’s. It’s kind of like the next bomb in the Unaffordable Care Act of our day. It was supposed to drive down costs and create more access but it’s doing neither. People are so confused by the complicated and botched roll out that the same groups that were prone to use the ER for every ailment are doing so in even larger numbers today, and many who see that there is little incentive chose to pay the penalty and ignore. The dark side of me believes that this is exactly as intended to point to the failure as the means to totally take over the entire industry and put under central politburo control.

      • Mike

        The way to solve the healthcare problem is simple. BAN insurance companies and have all transactions take place between the patient and doctor. (i.e. you pay a doctor directly for his services) This cuts out the middlemen. Therefore we can have a “free market” for healthcare as “conservatives” desire, and because healthcare would be so cheap, there would be little need for welfare in this regard. Of course, since so much money is saved by cutting out the middle men, we could afford to subsidize poor people, which would make the “liberals” happy. 

        The Obamacare scam is yet another way to make people debt slaves. “Orthodox” medicine is a joke. Doctors are just shills for the petrochemical industry. Their treatments are overly expensive and cause more harm then good, and in my opinion a way to covertly reduce the population. 

        If our society BANNED genetically modified foods and chemicals, people wouldn’t be sick, which would result in no need for expensive “healthcare” based on disease management rather then prevention. Of course, this idea does not create jobs or make money, so you will never see it applied. 

        If we simply cut out all the middlemen; bankers, lawyers, government buercrats, insurance companies and other third parties, it would be very easy for “liberals” and “conservatives” could come to a common consensus, as there would be so much left over money that we could both reduce taxes dramatically and provide basic social services for our citizensM

        • St JD George

          Once again I was singing your praise up until the GM food statement then I stumbled. I haven’t found any proof of that statement and it seems to me there’s been a lot of good come out. But let’s leave that aside. Have you heard of the Christian Healthcare Ministries? I have and it intrigues me though I can’t honestly say I’ve followed up on it. It may be time to sing it’s praise a little louder – though not having researched I hope it’s not a case of another disappointment hiding under a promising pledge.
          http://www.chministries.org/

          BTW, I get your point about money in politics. It is pretty revolting and nobody is immune. They seem like they are all on a treadmill chasing dollars for their next campaign, ever being reminded of favors to be repaid.
          Now, don’t bring up Mohamed.

        • Chris Cloutier

          “Doctors are just shills for the petrochemical industry. Their treatments are overly expensive and cause more harm then good, and in my opinion a way to covertly reduce the population.”

          This is an outrageous comment. You just slammed a whole category of people for nothing more than their occupation, which I might add is a highly honorable one. A gross overgeneralization to say the least. I believe most doctors are honorable and trying to do a good job. I know from personal experience that I’ve been mighty happy to have a doctor and his treatment on many occasions. The next time you get a serious infection, maybe you should forgo calling one of these shills.

          • Mike

            I don’t think most doctors don’t intend to do evil. However, they are very defensive because they went to school (ie brainwashing by petrochemical company propaganda) for many years, and spent a lot of money. It takes quite a bit of courage to give up your lucrative career and ruin your reputation, which is why most doctors just toe the party line, and delude themselves into believing they are doing good. 

            But yes, all of “orthodox medicine” is nothing more then a Rockefeller Standard Oil operation which monopolized the AMA in order to make mainstream medicine subservient to the interests of petroleum companies. This of course substitutes for cheap, natural solutions that have worked for thousands of years. 

            Also, it is well known that the world elite aim to reduce the worlds population, and the medical monopoly certainly  serves as a means to help accomplish this agenda. I don’t think that most doctors are aware of the sinister forces at the top of the pyramid, they just do their job and go home. M

    • Mike

      The banks enslave us through both inflation and deflation. The act of the banks giving out easy mortgages was deliberate. They knew what they were doing. They flood the market with cheap credit and easy loans, and then they refuse to lend, causing a credit crunch where people can’t pay back their debts. This allows them to buy up assets for pennies on the dollar. 

      “If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered.” -Thomas Jefferson

      The financial crisis was the result of businesses, households and government unable to pay back principal and interest, and it is this way BY DESIGN. 

      • St JD George

        Responding with a little levity, what are we to do and where are we to go? There are Catholic Credit Unions, should I join or put my money under the mattress. I don’t think there is an Amish-Catholic sect to belong to, but even they have some debt to the outside world. Even if I were to escape to my own private island I don’t think I’d survive without connection to the outside world. Levity aside, your points have been made by many including the illegality of our own “Federal Reserve” which everyone knows is ironically neither Federal nor a Reserve. Deeply troubling, I know that the banking system supports atheistic progressive ideals and when I buy a car or mortgage a home I’m part of it, but I’m not quite able to live off the grid either as idealistic as that may sound. I hope I’m not doomed for eternity.

        • jay

          There are Catholic credit unions? Are they any good?

          • Since when does the adjective Catholic necessarily imply quality and honesty and holiness? I am a Catholic and for one am a terrible sinner.

        • Mike

          You hit the nail on the head. If Christian patriots got together an formed interest-free credit unions, it would go along way. The JAK bank in Sweeden, and mutual credit facilities serve as examples that should be looked into. And where is the church in all of this? 
          (hint: Its  because the bishops are more concerned with their investments, and besides they know very well if they started preaching against usury, they would lose their tax free status, and the media would release all sorts of dirt on church officials. It would be the sex abuse crisis all over again) 

          As I have said, our lord is merciful. H’ikowever, it is up to us to realize the nature of our sins and work towards creating a society free of usury, by researching and advocating for interest-free solutions.  It’s not going to happen overnight.

          No, you can’t eliminate sin , but we still have a obligation to do gods will “on earth as it is in heaven”. To say we should put our head in the sand and do nothing is like saying we shouldn’t fight abortion or the culture of death, because after all isn’t that just a product of free will and original sin? M

          • Why should the Church do anything about it? We are the Church, some are clergy, most are lay. The laity does not need the clergy to start any enterprise of a Christian bent. On the contrary, this is the mission of the laity!

            BTW, JAK does charge member and loan fees. They don’t call that interest… yet a rose is a rose is a rose.

      • This defies logic. How does encouraging default on loans benefit the banks which originated the loans? As a matter of fact, as modern banks operate on very thin reserve ratios, if 5 or 10% of its loans are in default it is enough to wipe out all the capital of a bank. This is what happened to Lehman and Morgan and why the Fed pumped money into banks teetering on collapse. Of course, it didn’t work and will happen again, only worse.

        • slainte

          Many mortgage loans were insured by the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac) which incentivized originating banks to do deals and assume risks they otherwise would not have done in the ordinary course.

          The guarantee of these quasi governmental agencies (FNMA and FHLMC) dramatically reduced the Risk to the originating banks. At or shortly after the closing, the mortgage loans were assigned by the originating banks, pooled as securities, and traded internationally. Some originating banks retained loan servicing arrangements for agreed upon additional fees.

          Additional insurance in the form of derivatives was acquired by end users of pooled securitized mortgage loans.

          • From this scenario it’s the banks who are the culprit, but the federal government which created the incentives to socialize failure and privatize profit. Shocked, I say!

            • slainte

              The ability to minimize and transfer risk made these mortgage loan transactions a win-win for many parties.

              I believe that TARP funds paid out 100 percent on the dollar for technical defaults on derivatives to some very lucky institutional players in the aftermath of the 2008 financial debacle. A loss to some was a substantial gain to others.

      • Chris Cloutier

        The banks were forced to do that by the gov’t through the community Reinvestment Act signed into law by James Carter I believe and wielded with effectiveness by William Clinton. This law under threat of fines and prosecution forced banks to lend to “subprime” customers-read people who banks wouldn’t normally lend to because of the risk they represented. Thus the banks and Wall Street packaged the bad loans with good loans as marketable securities. As always, a meddling and incompetent gov’t stuck it’s fingers into where they didn’t belong and once again screwed things up.
        “My reading of history convinces me that most bad government results from too much government.”
        Thomas Jefferson

    • Anthony Santelli

      David,
      I didn’t say that the greed of bankers was the root cause the crisis; it was usury. I said that they received a bailout against the will of the majority. I didn’t have the space to get into all the rest of the details of the economic bust. That wasn’t the main point of the article.

      • It was not usury at all. As a matter of fact, the problem is that there was so little of it. The Fed had lowered interest rates for a decade and encouraged all kinds of economic misalocation of capital, in particular speculation by the banks which are part of the Fed system.

        • Anthony Santelli

          Yes, speculation played a big part. But speculation wouldn’t have been there had it not been for usury.
          This is a long discussion, but basically the very existence of interest leads to all prices being higher than they otherwise would be because every company that borrows money has to have prices sufficiently high to cover all their costs plus the interest. Higher prices means wages don’t go as far. This means people need to borrow more money against the same home as compared to what they would have in a non-usury world.
          At the same time, had banks not been allowed to lend money at interest they wouldn’t have lent as much as they had. Or, more specifically, they would have no incentive to lend 100% against the price of a home because the only way they would be insured against loss (in a non-interest bearing world) is if the price of the home was a lot higher than the amount lent offering them protection from possible price declines.
          In Texas, it is my understanding that homeowners must put 20% down. The housing bubble was very small in Texas because people didn’t have the opportunity to bid up prices with only the bank’s money.
          The non-existence of usury would basically force banks to adopt a lending model similar (or even more stringent) to the one in Texas or risk going out of business.
          That’s all I have time to reply here.

          • You got that the other way around. Interest rates are the mechanism to convey the information about risk to capital. Interest rates were artificially low, which caused misallocation of limited resources. All the materials used in houses whose construction stopped because capital was too cheap to bother with risk were wasted.

            You have a poorly informed understanding of usury. Interest is not usury. Usury is exploitative interest, according to St. Thomas Aquinas, akin to loansharking nowadays.

            And, as someone who lives in Texas, I put only 5% down on my home. Later on, when 20% was required, people just put down the same 5%, borrowed 15% from one lender and 80% from another. The reason why the housing bubble wasn’t so large in Texas was because of the unemployment that followed the dotcom bubble popping.

            But I agree that bidding prices up with bank’s money inflates prices. But it does because the bank’s money was cheap at the artificially low interest rates promoted by an over indebted federal government. Were the interest rates in their historic levels, the borrower would expose more skin to risk.

            Stop obsessing about interest, it is not usury to St. Thomas Aquinas and it shouldn’t be to us either.

            • Anthony Santelli

              Dear Augustine,

              As I said, this is a lengthy discussion, and I do not want to engage in it here.

              One simple point. It is you who are misinformed about the definition of usury, although the vast majority of people alive today are similarly misinformed. Aquinas makes it quite clear that all interest is usury. You can read it here: http://www.newadvent.org/summa/3078.htm The Old Testament also condemns all interest as usury in Deut 23:20 among other places. It is also defined as such by the Council of Trent, and the encyclical Vix Pervenit. No less than 5 separate ecumenical councils including Vienne and Trent have condemned usury.
              Of course, we need to distinguish between usury and extrinsic titles. But I don’t have the time to do that here. I have probably written more on the subject than anyone alive with the exceptions of Noonan and possibly McCall.

              • Fair enough. However, St. Thomas did not have the knowledge of money that other scholastics developed after his time (e.g., time preference and storage of value). Yet, Pope Benedict XIV himself in Vix Pervenit introduced exceptions to usury and allowed extrinsic interest (v. #9 in http://bit.ly/1zg3txz ).

                But I agree with you in general that “it is clearly invalid to suggest that the issue of usury is irrelevant in our times.” (PP Benedict XIV) Usury is indeed sinful, but not all interest is usurious.

                • It’s wonderful that the topic of usury and interest can find a forum, for these related parasitic attributes of central-bank issued currency (and its use in an economy) are indeed at the heart of the problem – along with our concupiscence.

                  Let’s find a way to re-establish the true (or agree upon a new?) meaning of the evil known as “usury” (a charge for the use of money, at its birth, as well as a weapon to be used against foreigners), and “interest” (dating back to the Church’s 15th Century concept of interesse, a permitted (though not embraced) valid cost for repayment to the “lender” of issued currency, for the lender’s legitimate loss, be it opportunity loss, or loss from the impact of usury in the system from which the currency was borne.

                  There is a subtle but important difference that must be grasped.

                  Vix Pervenit did not actually allow exceptions to usury, either, it merely allowed for the charge of fees in certain circumstances. As with interesse, the Church prefers that interest NOT be charged, though it has done little to exercise its influence to banish usury from the spawning of debt-based central bank issued currency. It is now “in the system,” and we need to beat it out of the system.

                  • Chris Cloutier

                    It is my understanding that usury is defined as the illegal action of lending money at unreasonably high interest rates as opposed to rates that are normalized within the current business environment. With interest rates manipulated to unreasonably low levels for so long by the federal reserve, how was anyone used usuriously in the mortgage debacle of 2008, and subsequently?

                    • Usury has been redefined so as to lose our understanding of what it is, and why it was forbidden for so long by the Church – indeed, to this day. “Excessive interest” is usury indeed, but this all ties back to the concept of a just and fair profit. Interest as we know today it is the usury of yesterday, by many standards.

                      As I stated earlier, this topic deserves more thoughtful review than a blog response can possibly provide.

                    • Chris Cloutier

                      Who has redefined it? When I look it up in the dictionary it is still defined as excessive interest.
                      “Interest as we know today it is the usury of yesterday, by many standards.”

                      In todays world interest rates are manipulated to be artificially low by the federal reserve. How is anyone who takes out a loan at artificially low interest rates being treated usuriously? And by whose standards?

                    • The dictionary is the same “source” that defines marriage as “the legally or formally recognized union of a man and a woman (or, in some jurisdictions, two people of the same sex) as partners in a relationship.”

                      This topic deserves serious historical perspective. The dictionary will do nothing but reinforce modern (mis)understanding, as bastardized by those who gain by losing that perspective. Usury laws actually reinforce interest’s false legitimacy. I’m not trying to be pithy on this, sincerely. It is such an urgent topic and many esteemed and thoughtful writers of today are coming to acknowledge that the hidden toxin of usury is turning us into wolves, by creating scarcity of currency (and the illusion of plenty).

                    • Mike

                      Thank you Frank and Anthony for explaining this topic better then I could. 

                      As I have said the idea that the scholastics did not understand the “nature of money” or “economic science” is pure modernism. Might as well say they didn’t understand “human sexuality” either. 

                      Either way, the results speak for themselves. People worked significantly less to provide for their large families in the Middle Ages. People can barely provide for their small families under usury. 

                      The most important issue for Catholics is to find ways to apply Medieval economic principles to a modern economy. This is the single issue that can unite people from all sides of the political spectrum. With the middlemen financers gone, it would be much easier to reach a common consensus between “liberals” and “conservatives”. You don’t have to be a Catholic to understand that usury is pure evil. 

                      The problem is not fiat money. The issue is who issues the currency as Frank has said. The question is not to pay interest in gold or paper, but rather to pay or not to pay interest. There is absolutely no reason for a sovereign nation to pay interest on its own money supply. 

                      Ben Franklin on the successful colonial script system of the colonies, comparing the prosperity of the colonies with the impoverishment of England, which was on gold standard money issued by private bankers. 

                      “That is simple. In the colonies, we issue our own paper money. It is called ‘Colonial Script’. We issue it in proper proportion to make the goods pass easily from the producers to the consumers. In this manner, creating ourselves our own paper money, we control it’s purchasing power and we have no interest to pay to no one.” — Benjamin Franklin

                      The Revolutionary war was not instigated by the tea tax, but rather due to the fact that the Satanic Bank of England tried to force their debt-bearing gold money on the colonies, instead of the script that made them prosperous and free. 

                      “In one year, the conditions were so reversed that the era of prosperity ended, and a depression set in, to such an extent that the streets of the Colonies were filled with unemployed.” — Benjamin Franklin

                    • Amen. This topic is as important as religious liberty – our mortal lives and our ability to enjoy them fully require that we prayerfully pursue this, with humility and an openness to cast off the partisan backbiting that has been enflamed specifically so that we ignore the elephant in the room.

                      Usury is that elephant, hiding in plain sight. We must be bold elephant hunters…

                    • Anthony Santelli

                      Frank and Mike, you guys get it. Usury is the elephant in the living room. The economic system will not be repaired unless usury is dealt with. This single issue is almost as important as all other economic issues combined.

                    • Mike

                      The question is, why isn’t there a large movement of anti-usury advocates within Christian circles, when it is such an obvious problem. I mean if it wasn’t for the church, there would not be a large pro-life movement. Why cant the same be done with usury, which could appeal to a much wider range of people, uniting both  “social justice liberals” and “small government conservatives”. This issue alone has the ability to sow the seeds of Christian renaissance. Everybody knows something is wrong, sadly the medias divide and conquer game has served to distract everyone from the real problem that is right in front of our faces. 

                      I once met a economics major from a local Catholic college. He didn’t even know what usury was. 

                      99% of Catholics dont even know the church has a teaching on usury, even though in this teaching lies the solution to essentially every one of our economic problems. 

                  • Well put. This debt-based economy is no economy. Yet, it wouldn’t be possible without dishonest money (fiat money) and fractional banking, both are usury in steroids to serve Caesar.

                    • If I might clarify a bit more, the “fiat” of a sovereign, be it a Caeser, king, nation, or church, to declare that a currency shall be currency “by fiat,” is not truly the issue. The problem lies in sovereign nations allowing commercial enterprises (central banks) to displace the sovereigns’ right to coin and mint currency (to be SPENT into existence,) with a toxin debt-based currency LENT into existence, out of thin air and at interest (usury) – to the exclusion of the sovereign and its people. They’ve essentially acquired a monopoly right to counterfeit AND inject usury.

                      It doesn’t serve Caeser… It serves the king of this world.

                    • Money is a store of excess labor; currency is a means of accounting and exchange. If currency is created out of thin air, whether by a sovereign printing colored paper or by a central bank (which may (Fed) or may not (ECB) be private) issuing currency to purchase treasury notes, it is dishonest currency, a counterfeit that debases human labor. The only honest currency is that which requires labor to come into existence. Historically, most cultures gravitated towards precious metals as honest money, even when states tried to monopolize its issuance with the intent of debasing it with non-precious metals. There, back to Caesar or the prince of this world, the same thing.

                    • So, we now delve into the concept of commodity currencies like “precious” metals. Currency, money, loans, interest, usury, profit, fiat… Each with their own historic and current definitions, all woven into a Gordian knot of truly epic proportions. We certainly need our Church’s guidance to add clarity and common language, though with their ties to modern central banks for the safekeeping of their own assets, one must ask if there can be lucid insights and leadership.

                      Perhaps a Novena to Mary Undoer of Knots is in order?

                    • No, we don’t need the Church to define the economy, if by Church you mean clergy. The economy is the realm proper to the laity.

                    • michael susce

                      So true. What can God, His Son, the Holy Spirit and the Church contribute to and inform human economy? Father Lemaitre had no business discovering and developing the theory of the beginning of Universe. Sheesh.

                    • No, he didn’t. He was performing a function that is proper to the laity, not to the clergy. Priests are not the only members of the Church imbued with the Trinity. All the baptize are. Actually, while the mission of the clergy is to form us in the faith, it is our duty to exercise it in the world. The laity does not need a priest to spear the way, this is clericalism.

                    • Mike

                      Except that history shows that the gold standard has led to depression every time its been implemented. The gold standard is not an honest currency at all as it is controlled by those who own the mines.  The gold market is completely rigged by international speculators. They can create the boom/bust cycle with it by simply pulling gold out of circulation. 

                      Explain to me exactly why we need scarce money? Money is nothing more then a means of exchange, not a store of value, and it is the role of any sovereign nation to issue it in proportion to the economic production of the economy. There is no where near enough precious metals to back current economic production. Of course, scarce money and deflation is good for financers, because it creates a nation of debt slaves forced to sell their labor for cheap, and sell their assets for pennies on the dollar. 

                      What is so special about a shiny yellow rock anyway? Anything that the people agree to as a means of exchange can function as money, as long as taxes can be paid with it. As, I said there would be no inflation or deflation if it was issued in proportion to economic production. 

                    • Currency is a means of exchange. Money is a store of excess labor.

                      Gold has been used as money for thousands of years. Attempts to use a proxy for it, a gold-based currency or gold standard, have nothing but been attempts at inflating value out of the currency. Another term for inflating the value out of the currency is robbing the value of your labor.

                      The boom and bust cycle is created by such attempts, invariably to finance profligate states which use its power of imprisonment to steal the value from people’s savings.

                      How can deflation be bad for the worker, whose salary is capable of buying ever more products whose prices are declining?

                      BTW, the high-tech industry is a deflationary sector is the most innovating and dynamic sector of the world economy with good pay. Or aren’t you glad that you didn’t have to pay $30000 for a computer with 1/100th the power of the one you’re using right now?

                      There is always enough currency in any economy. Whether you need to deal with milligrams of gold or pounds of silver for a loaf of bread, you still have always enough money as the smallest unit is arbitrary.

                      As I said, historically is about the yellow metal. Other things were tried, but only gold reached practically universal consensus.

                    • Mike

                      You don’t know history. The early Roman Republic was successful under fiat copper currency, it was only once it implemented the gold standard that it started to become indebted, leading to its eventual decline. 

                      What about Tally sticks during the Middle Ages? Colonial Scrip during the prosperous colonial era, compared to England where people were toiling in misery under the gold standard of the bank of England.

                      The gold standard has led to nothing but debt and misery every time it’s been applied. Thats because the majority of people are debtors and deflation makes debt worth more. It makes labor cheap, which forces people to work long hours to pay their bogus debts (ie industrial revolution, gilded age)  You can’t name one period in history that it has ever been effective. Gold has never led to a stable economy over a long period of time. (the beloved 19th century  of gold bugs was full of long depressions and panics, also the great depression was the result of deflation)

                      So what if the average person saves money on usless consumer goods, like I said 99% of people are debtors, and under a gold standard debts and taxes are worth more, and labor is worth less. Most people have no assets and therefore only have their labor to offer, making deflation only really beneficial to the rich. Even if you are “responsible” with your money, you still have to pay for a home. 

                      Gold is the money of internationalist financier satanist monopolists that you seem to love so much. There is no reason for any nation to have to go in debt to provide a money supply. Sovereignty entails the right to issue money, and it dosent matter what it is made of as long as it is issued in proportion to economic production of the nation. 

                      The problem with our current money system is that it is issued as a form of debt, instead of being issued interest-free. Inflation solves depressions. However, if you issue money as debt, eventually you have to pay the interest on the printed money back. This wouldn’t be an issue if the money was issued interest-free. 

                      In America right now we are in deflation. High prices are due not to too much money chasing too few goods but rather monopoly pricing.  “Quanatitive easing” and the like do not solve the purchasing power crisis, but rather go to the rich, who then proceed to invest that money in foreign nations, or take it out of circulation to squeeze the people of America even further. So what happens we are hit with the effects on inflation and deflation at the same time. We have so much debt, but no ability to pay it back, because there is not enough money in circulation, and this is all due to deliberate  scheming by international financier monopolists who indeed constitute the “whore of babylon” and are of their father the devil

                    • Mike

                      Part of the problem is that you seem to be an internationalist, wanting to live a luxurious lifestyle on the backs of cheap third world labor, opposed to a more localized system based on the principles of subsidarity and solidarity.

                    • If it’s a commodity money, copper, it is not fiat money. Fiat currency is created out of thin air, not through labor. Copper requires labor to be extracted from the earth.

                      All the rest of your comment defies logic. Inflation is your enemy. How do you feel about paying many times over for the price of your house thanks to the anticipated inflation? Were the currency stable or deflationary, you’d pay just a little more than its upfront price. With deflation people’s savings would actually retain its value and we the people wouldn’t have to get in debt to purchase durable goods.

                      You complain about the current state of things and praise its causes at the same time. Bewildering. Carry on.

                    • Mike

                      Except that’s not how it has worked historically. As, I have said gold makes debts worth more, and every time a gold standard was implemented, it created a nation of paupers who slaved away long hours.

                      Gold creates scarce money, and it is completely controlled  by those who own the mines, who pull gold from circulation and create the bogus boom/bust cycle, just like they do with fiat. Gold has never been a “stable” currency at all for this very reason. You cant name one period in history where it was, out of the many times it’s been implemented. Scarce money allows the gold monopolists to employ people for very cheap, and makes it impossible for people to pay their debts, allowing for monopolists to take control of peoples assets for pennies on the dollar, forcing people to toil away in austerity to serve the interests of the international super rich. 

                      Who in America actually has any savings? Like I said the overwhelming majority of people are debtors. All deflation does is benefit those with money. 

                      If we simply BANNED ALL INTEREST ON LOANS WITHOUT EXCEPTION which is THEFT according to divine law, people would not need to pay many times over for a house.  Not the “anticipated inflation” nonsense you speak of, which is caused by the existence of usury in the first place. What is your problem with this simple solution to ending the debt based economy? Is it because it defies your beloved  “economic science” idolatry that was invented by the money power to hide this simple solution that worked during the Medieval era? 

                      You act like bankers do not scheme in order to increase their power. Everything you speak of is Austrian School propaganda (funded by the likes of Rockefeller as a tool to subvert the Populist movement) that has no basis in history or human nature. It gives monopolists diety like status, assuming that they are all good and all knowing, rather then what they really are, sick, cunning manupliators  who want to play god and enslave others due to their greed. 

                    • Whenever the emperors debased the gold coins, Rome went bust. Had they left the gold in the coins, no bust would happen. But you hate gold, the time tried money, and love colored pieces of paper. Try to explain that to the Chinese and Indians. Well, how has that worked for you so far? Since the US left the gold standard in 1971, it took $35 to buy an ounce of gold; now it takes $1200. But you seem to love the inflation of the last 15 years, when the general prices in the economy doubled while income remained flat. And you call this a boom for the little man.

                      And since you don’t even know the difference between gold money and gold standard, it explains why you consider Austrian economics the fruit of the loins of Rockefeller, the only Aristotelian school of economics, unlike the Keynesian school that justifies socialist control of the economy and enjoys all the funding that it can get.

                      One thing however is ignorance, quite another the resolution to remain ignorant. I’ll leave you in it.

                    • Mike

                      Your post proves that gold is just as easy to manipulate as fiat, and you still don’t have any response to my claim that gold money has always led to depression as history has shown. Also you don’t mention that the early Roman Republic BANNED usury and had plentiful money, unlike imperial Rome with its high interest rates and scarce gold standard money.

                      The Kensynians are right that INFLATION and SPENDING solves depressions, where they are WRONG is they believe that the government should go into debt to provide a money supply, when the government can simply print that money interest free.

                      DEFLATION caused the great depression and INFLATION brought us out of it, as the Federal Reserve overprinted US notes after Brenton woods leading to the prosperity of the 50s and 60s. However when it came time we had to pay all the debt back, we didn’t have the money, which is why we went off the gold standard and started backing our dollars with oil. INFLATION and SPENDING was behind the prosperity of the late Reagan and Clinton era, the issue came later when the banks DELIBERATELY cut off the credit, and we had to pay all the debt on the created money back, which is NOT NESSESSARY with a debt free system. As you know This is called the boom bust cycle, which gold (which is MONOPOLIZED and always has been) does nothing to solve, unlike sovereign debt free money. 

                      We don’t need to back our money with anything but the production of the economy, and there is no reason for the government to go into debt to provide a money supply.  Money by debt always creates more debt then could ever be paid back, which is why money must be printed interest free in proportion to economic activity, which unlike gold money has worked successfully many times in history. How does gold money change the fact that we still need to go into debt to have a money supply? It in fact makes it worse, as gold makes debt worth MORE and history has proven me right. 

                      We are in a DEFLATION right now. The reason you think we are in an inflation is because of monopoly pricing and USURY amounting to 40% of all prices. There is not enough money in the economy for everyone to pay their debts, which has lead to foreclosures, and defaults of small businesses. They can’t pay their interest payments, they they can’t pay their taxes  (to pay phony govt debt), and they can’t compete with monopolies. This is all BY DESIGN, as this system allows international fianncers to seize all sorts of assets for low prices and further consolidate their comtrol. Before you argue “Quanatitive easing”, keep in mind that this money was not given to the people , but rather to the super rich, who then proceeded to PULL the money from circulation (or invest it overseas), to further strangle the economy, still leaving us with debts and a lack of purchacing powe,  but also the higher taxes on the printed money. It must be said again, that this is a DELIBERATE SCAM by bankers. 

                      What exactly is your issue with debt free money (NOT Kensyian debt Bering fiat) and simply banning interest on loans to END the debt based economy? 

                      Before you say it’s the government not the banks,remember it is the banks who control the government, as they are the ones who create the money. Austrians get this backwards.  “Let me control a countries money supply and I care not who writes its laws”- Meyer Amshel Rothchild.  Indeed Rothschild controls not only the Fed, but the gold market as well, and the only way to free ourselves from his control is sovereign money printed without interest. 
                      Mike

                • Anthony Santelli

                  Let’s be clear: no interest is moral, intrinsic or extrinsic. The extrinsic titles are never interest, and that’s not just semantics.
                  All extrinsic titles conform to one principle: the lender has the right to be made whole. All they do is compensate the lender to prevent loss, never for gain.

                  • OK, this is something to think about. Thanks.

    • Chris Cloutier

      This article is written as though what we are living in is a capitalist system. I suppose it was at one time, but that time is long past. What we are living in is a crony capitalist system whereby businesses have to curry the favor of socialist politicians who have created a system that is so complex, and intrusive that almost no one can navigate it with any degree of assurance that they will not come under gov’t scrutiny. Regulations beyond belief, meddling by untold alphabet soup gov’t agencies, manipulation of interest rates and money supplies by the federal reserve, so that true price discovery is impossible, a tax system that is so Orwellian, it is an embarrassment, and empire meddling in war after war across the planet are not representative of a capitalist system. What it represents is an empire in decay.

    • Benjamin Warren

      That was part of it, but the bubble the Federal Reserve blew was a much more important cause. It is blowing another bubble, which will pop and devastate the globe. The Austrian School of Economics isn’t right on everything, but its theory of the business cycle deserves to be famous. No man in the modern world can be free, but without knowing the Austrian Theory, no one can be close.

  • Mike

    Catholic teaching bans interest on loans with out exception. If you try to argue otherwise, you are a heretic according to the council of Vienne.   The idea of the “free market” works only so far as it is subservient to the laws of god. 

    The correct model is the Medieval economic model, where usury was banned, and concepts like a just price and living wage were enforced, which resulted in the average laborer working 14 weeks a year to feed their large family. Under capitalism, we have an abundance of goods built on the backs of third world slave labor. We have created a society where both husband and wife are forced work around the clock to pay their bogus debts. This has lead to abortion, contraception and the decline of the family. “Conservatives” fail to understand the direct connection between economic and sexual immorality. Belief that we can ignore gods economic laws is pure relativism. 

    Of course, the money power slanders the Middle Ages in our controlled schools and media, because they fear nothing more then a bible based economy.  If you allow for usury in a society, it will eventually collapse as history shows us. The problem with usury is that it creates more debt then can mathematically be paid back, which ends up resulting in wars, the destruction of the environment and corruption and manupliation of all kinds as people have to pay back their debts . There is a reason St. Paul called the love of money the root of all evil.

    Capitalism  is simply the stage before communism, as Karl Marx correctly prophesied. Both centralize power in the hands of a monied elite.  As long as you allow usury, the welfare state is the inevidible conclusion, as history has shown.  Population control is another result.  People forget that capatilsim is inherently a social darwinist, atheist ideology, as is communism.

    We can have capitalism, or we can have Christian society, but we can’t have both. You can’t serve god and mammon. 

    “What is to be said of making profit by usury?” Cato replied “What do I think about making profit by murder” – a wise man once said. 

    That is, he even eats at the mountain shrines, and defiles his neighbor’s wife, oppresses the poor and needy, commits robbery, does not restore a pledge, but lifts up his eyes to the idols and commits abomination, he lends money on interest and takes increase; will he live? He will not live! He has committed all these abominations, he will surely be put to death; his blood will be on his own head. (Ezekiel 18:10-13)

    • St JD George

      I guess then Mike only the Amish have a place in heaven in your world. My reading of ursury is more in line with that of a loan shark, one who makes a loan using it as a means to “lord over” another who is unwise and unable to pay like in Exodus. It has a useful roll in modern economics for those who are responsible. There are quite a few churches that would have never been built without it, but maybe you think that’s a good thing. Money is a tool that allows for the just contracting of services and labor among honest men. Worshiping it would be graven idol, and hoarding it … well Jesus has many passages describing the folly in that, including Psalm 49 which CR89 just shared with us.

      • I see very few people who can be “responsible” with debt in a world where income can be interrupted at a whim.

      • Mike

        Yes, it seems that the only way one can avoid soul damning mortal sins in this accursed modern society is to live on an island like the Amish. Thank god our lord is merciful. 

        The great cathedrals of the middle ages were built without interest on loans, putting to rest the myth that usury is necessary to finance big projects. 

        Money is simply a means of exchange. It does not have any intrinsic value. This is what Aquinas and Aristotle said. The problem lies when money is allowed to breed money. 

        And before you give me the being “responsible” and not getting into debt crap, you still need to buy a house and or pay for rent .  Almost everyone (at least here on the east coast) is tricked into the “you have to go to college to get a good job” nonsense. Also, a car is for the most part a necessity of the modern economy. Please explain to me what the bank has done to have the right do determine who and who dosen’t get a house, and also how on earth do they deserve over double the amount of the cost of the home in interest simply by pressing a few buttons in a computer program?  

    • Like that medieval scholar, St. Thomas Aquinas, who defended interest on loans for commercial enterprise?

      • Mike

        That is modern economic “science”, not Catholic teaching. 

        From Catechism of Trent, chapter on seventh commandment 

        “To this class also belongs usurers, the most cruel and relentless extortioners, who, by usuries plunder and destroy the miserable people. Now, whatever is recieved above the principal, be it money, or anything else that may be purchased or estimated by money, is usury; for it is written thus in Ezechiel: “He hath not lent upon usury, nor taken an increase” (Ez. xviii, 17) ; and in Luke our lord says: “Lend, hoping for nothing thereby” (Luke, vi, 35) . Even amongst the Gentiles this was always considered a most grievous and most odious crime; and hence the question,  “What is usury?”  which was answered by asking, “What is murder?”  For they who lend at usury sell the same thing twice, or sell that which has no existence.

        One resulted in a Christian society with a 14 week work year, while the other resulted in the culture of death where people work around the clock to make ends meet. Take your pick. 

        At least a half dozen church councils condemn usury under penalty of excommunication and denial of a Christian burial. Not because the Chruch fathers were ignorant of “economic science”, but rather because they learned from the mistakes that led to the fall of Rome. The same exact mistakes our usurious society is making right now. 

    • Chris Cloutier

      “…which resulted in the average laborer working 14 weeks a year to feed their large family.”
      What did they do the rest of the time-vacation on the Riviera? Ridiculous.

      “We can have capitalism, or we can have Christian society, but we can’t have both.

      True capitalism is private ownership vs gov’t ownership whereby individuals decide with whom and what they want to do with their money. I’ll take my chances with private ownership every time. I don’t believe that Jesus Christ ever spoke out against private ownership.

      • Mike

        The Medieval ban on usury freed the people to spend time with their families, build the great cathedrals of europe, develop themselves in other ways, pray, and go on pilgrimages. There is a reason the Catholic liturgical year has so many feast days! 

        I never said I was against private ownership. People in the Middle Ages owned their property outright (not in the form of “mortgages”)  Laws against usury, fixed prices, anti-trust laws ect. ensure that private ownership is widespread and protected. The guild system ensured that men had direct ownership over what they produced, not government bueracrats (communism)  or shareholders (capitalism).  This creates a society where both the laws of subsidarity and solidarity are respected, unlike capatilisim and communism which result in nothing of the sort. If the “free market” is not subservient to the laws of god, what happens is that thieves and rascals end up taking over the entire market , with the ultimate end being a communist state, as we can see playing out in front of our very eyes. 

        Usury is theft plain and simple. It is making money without production. 

        • slainte

          Interest compensates for risk and makes possible growth through acquisition.

          Reasonable parties can negotiate fair terms which yield an agreeable transaction.

  • CR89

    “Thus she cannot encourage the formation of narrow ruling groups which usurp the power of the State for individual interests or for ideological ends (CA 46).”

    “If there is no ultimate truth to guide and direct political activity, then ideas and convictions can easily be manipulated for reasons of power. As history demonstrates, a democracy without values easily turns into open or thinly disguised totalitarianism…. Totalitarianism arises out of a denial of truth in the objective sense. If there is no transcendent truth … then the force of power takes over (CA 46,44).”

    These two quotes from St. JPII are quite depressing when I realize that they describe exactly what has become of our country.

  • CadaveraVeroInnumero

    The only active confessional state gaining notice – and territory – is the Islamic State Caliphate.

    The article does not lay out a program on how to reestablish a Catholic Confessional State. Or am I misreading the author’s effort?

    The alarming submission, by the West, to Sharia Law is telling us something. What is it?

    We can argue the merits of the article till the beheaders arrive – what good that will do.

    • St JD George

      Oh no, who may have just unintendedly invited Mike to jump in that conversation.

    • Anthony Santelli

      One article doesn’t offer the space to explain how to reestablish a Catholic confessional state. That requires two things: first, a deeper explanation of what that would constitute; and second, the willingness of the people to bring it forth. We don’t live in a Catholic country, and so it would be impossible to establish one here at the moment; there simply isn’t the willingness to do it. Sadly, I think we have to let things run their course. The more people perceive the fundamental injustice of the current system the greater the likelihood that we will be able to change it. We haven’t reached bottom yet.

      • CadaveraVeroInnumero

        And the Islamic State Caliphate will get us to bottom more quickly, with all its slaughter, annihilation of ancient communities, and beheadings? Is there a silver lining in all that.

        Young Catholic men are taking a sly sideways glance at the certainties and sacrifices of ISIS and find it strangely alluring. Why is that? Why isn’t a call to reestablish a Catholic Confessi9onal State just as attractive?

        • Anthony Santelli

          I don’t know of any young Catholic men who are looking favorably of ISIS. That would be crazy.
          I think a call to reestablish a Catholic Confessional State would be very attractive; no one has adequately presented it yet to the young.

          • CadaveraVeroInnumero

            Catholics, young men or not, are generally ill-formed regarding the doctrine and worldview of Catholicism. Yet, they do attend faithfully – with weak analytical skills – to the messaging of the popular culture (of i social media is both the engine and the vehicle).

            The Islamic State (ISIS) is a past master in their use of social media. Their recent “Jihadi with Kittens” campaign is a first order example. ISIS , within a matter of months, has performed an historic event; they have pulled Islam from its (perceived) Aab/Paki ghettos made positioned it into a universal ideology. We have not seen this since the international conflict between Fascism and Communism in the 1930’s. But, then, that is what Islam is, a global religion.

            This *is* getting the attention of young Western Catholic males. Fundamentalist Islam is doing what Catholicism has long abandoned: calling believers to a full, uncompromising dedication and sacrifice. ISIS is offering young men (Catholic or not) with a cause larger than themselves. ISISis offering Islam as a *total*( religion which demands the complete submission of heart, mind, and body. Young men crave this. The reasons why are perennial.

            This will only turn around when the Catholic Church de-feminize and de-homosexalize its institutions and culture.

            Why should a red-blooded heterosexual male join (or stay) with the Catholic Church? There is a silent withdraw occurring.

  • Soon2Split

    Ask the German Catholic Church how they make their money. Follow their numbers. They are drunk with the wine of their fornication with the powers that be. Now they also want us to go homo… the whole thing is enough to make a decent man vomit.

    • Mike

      Yes, the church has been in bed with the devil for quite a long time, but then again ancient Israel was far from perfect, so it would make sence for this login to apply to the new Israel.

  • Given that Quadragesimo Anno was an apology of Fascism by Pius XI, so fond he was of Mussolini, I guess that what popes think of economic or political systems is balderdash, be it Rerum Novarum or Centesimus Annus. They then speak as anyone on the street, often as someone who didn’t really study the subject with any depth to pontificate about it.

    • St JD George

      I know we had this conversation recently and DE said it well (also) about our Pope’s speaking without deep knowledge or understanding of economics, but rather only reactionary based on their own limited experiences – ah, that was bad, so don’t do that. I guess the perfect system would be for Christ to be our NWO President, but until then we’re stuck with us. Yes crony capitalism is bad, but it’s far, far better than the other extreme, and capitalism has the ability to make corrections over time. Maybe better to focus on the current threat of IS in the wold and the contrast with the hope of Christianity.

      • There was no economics in the garden of Eden. On this side of the Fall, we’ll always have economics, as imperfect as everything is now. Until Our Lord comes again and restores the world to its original state as in Paradise.

        • Is it? Is what we need truly scarce, or have we made extremely bad decisions with production to make food, clothing, shelter and water artificially scarce?

          For instance, why doesn’t every city have a greenhouse roof regulation for local food production?

          And no, I don’t buy into Thomas Malthus’s mathematics either. It is perfectly feasible to build houses under gardens.

          • Since it’s so easy, do you have a garden on your roof? Or could roofs be scarce too, since they don’t come spontaneously into existence?

            • The only reason anything is scarce is because of greed, and yes, I do have a roof garden.

              • Really, greed? You wouldn’t have to plant any food if it were abundant. Instead, it requires land, lots of it, and much labor. I wager that you still go to the groceries, lest you starve to death on your garden roof.

                • The need of the modern human being is approximately one quarter of an acre of agriculture. But you need a lot of technology to support that.

                  • And technology is not scarce? Look around, yes right now. Everything you see was made by human hands. Everything you see required human labor. Humans are limited and free, therefore their labor is scarce and so are everything you see around you. This is not greed, just the fact of life on this side of Eden.

                    • Technology is no longer scarce, and with 7 billion human beings on the planet, human labor is no longer limited either. In fact there’s about 2 billion human beings who are completely locked out of the right to labor, in a major effort to pretend that labor is scarce.

                      This guy is building land out of garbage:
                      https://www.youtube.com/watch?v=GnLhWpy_nqI

                    • If labor is not scarce, then make me a sandwich. No, why? Can I leave in your house while you and your family find another plentiful house to live in? And why are you going to sleep and not providing plentiful labor to rest of us? Where’s my sandwich?

                    • Sure, come meet me under the bridges.

                      http://bridgetowninc.org/

                      I make sandwiches for the hungry all the time.

                      The reason houses are not plentiful, the reason land isn’t plentiful, is due to greed.

                      Why aren’t YOU providing jobs for the 2 billion people currently living on under $1.25/day, if labor is so scarce?

                    • Do you make sandwiches everyday for all of their meals or do you actually use your scarce time for your own interests, you greedy one?

                      Have you ever flewn? Have you noticed that only so much land is good for planting or for living? That’s scarcity.

                      This is not paradise. It once was, but now “creation awaits with eager expectation the revelation of the children of God; for creation was made subject to futility.”

                      Do you really believe that a gallon of milk costs $4 where people live with $1.25 a day? Such conceit…

                    • Fiat currency is fungible, and you are living in a luxurious paradise the likes of which even the hedonist never imagined. It is time to stop lying. If labor is so scarce, why is there unemployment? If labor was scarce, every human being on the planet would be equally rich as you, because they would all be employed fully.

                    • Have your company never had any difficulty finding the right employee? Thousands of foreigners pour into the border to perform work in hitech because there aren’t enough people graduating sciences degrees. Engineers are scarce. Even field workers are scarce, since agriculture in this country depends on them leaving their own country to pick fruits and vegetables here.

                      This is a world of scarcity and it’s biblical. In Eden, everything was provided for Adam and Eve. After the fall, only the sweat of our brows do we eat, toiling away.

                    • “Have your company never had any difficulty finding the right employee? ”

                      Only when the higher management refuses to provide training.

                      “Thousands of foreigners pour into the border to perform work in hitech because there aren’t enough people graduating sciences degrees. ”

                      You don’t need a science degree to work in high tech. You do need training, and it should be the responsibility of the employer to provide that training.

                      “Engineers are scarce.”

                      Only because the greedy don’t want to help anybody else or themselves.

                      “Even field workers are scarce, since agriculture in this country depends on them leaving their own country to pick fruits and vegetables here.”

                      Farmers that find a way to pay a living wage, have no shortage of workers. This is a problem directly caused by greed.

                      “This is a world of scarcity and it’s biblical. In Eden, everything was provided for Adam and Eve. After the fall, only the sweat of our brows do we eat, toiling away.”

                      Today, we live in Eden again- we live in a world of abundance, not scarcity. So we find artificial ways to create scarcity- we don’t provide training so that there is a shortage of engineers. We don’t treat agricultural workers like people, so there’s a shortage of people willing to degrade themselves and go into debt to work. It is 100% artificial, it isn’t real.

                    • Mike

                      No it’s not. It’s because we have believed the lies of the serpent (creditor) that we live in a world of “scarcity”.

                      God promised us a world big enough to provide, contrary to the lies of the serpent.  We live in a world with more natural resources then we would ever know what to do with.

                      The issue is how our economy is designed and how resources are distributed, not scarcity. 

                      “Scarcity” is the inevitable result of a society which allows for interest on loans, because it creates more debt then can mathematically be paid back. (avenged sevenfold, avenged seventy seven fold)  Bankers and monopolists create artificial “scarcity” because it allows them to control others and play the role of god . Sons of the serpent indeed. 

                      I remember the first thing I learned in economics class was that economics was about solving the issue of “scarcity”. I knew then and there that economics was a bunch of nonsense. 

                      If resources are scarce, then population control and abortion is inevitable is it not? If the world isn’t big enough to feed everyone, then this means god has failed.  Why exactly Augustine trusts the “science” invented by social darwinist atheists is beyond me.

                    • Mike

                      Remember that the reason employers can not afford to pay for training/living wage is largely because they owe money to the banks.

                      We must remember the banking middlemen are the main issue, not private enterprise or government.

                      Other then that you are right on the money. The comment below is directed towards Augustine, not you.

                    • Since you are so innocent of any greed, I bet that you pay more for your groceries than the total in the cash register. Surely you send extra tax dollars on April 15 too. How do you sleep thinking how generous you are, unlike those greedy people out there? Then again, you think that the Fall didn’t happen and that this is Paradise. Well, I stick with Our Lord, Who had a lot to say about this fallen world. Carry on.

                    • Yes, I give tips at the grocery store to clerks, who need to pay to live too. I often choose to send in extra tax dollars, doing so prevents audits. And I didn’t say the fall didn’t happen, I said in this day and age we have the technology to correct for it, and we live in a world of abundance if we’d only stop hampering the technology with mortal sin.

                    • I just showed you that it is possible now to manufacture arable land. That is no longer a limit either.

                    • And the resources to manufacture it are plentiful and freely available? Where do you think that trash comes if not from scarce resources?

                    • Watch that video. I don’t see trash as “scarce”, in fact, we’ve got a floating heap of it the size of Texas in the Pacific Gyre. Fertile soil is slightly harder- but once again if you watch that video, you’ll find out human beings actually manufacture the raw materials for it out of our own bodies *as a condition of life*.

                      Perhaps the problem is that you are using the word scarcity in a way that is not synonymous with rare.

        • Mike

          Augustine, please explain to me (not in bogus “economic science” terms) what exactly a bank has done to deserve more twice the amount on the house in interest? Press a few buttons?  And what has the bank done to deserve the right to decided who or who docent get a home? Its almost like you believe rich people have “earned” the right to play god, when what they have really done is made a ton of money by playing the same crooked game over and over. (not by means of honest labor like naive “conservatives” believe) 

           I have no idea why anyone in their right mind would ever defend interest on loans. Those that do must work for the financial institutions, or pheraps they are money junkies addicted to wall st gambling looking for an excuse to justify their sick habit.  Or they just have Stockholm syndrome. 

          Consider all the interest paid over the lifetime on mortgages, rents, 40% of prices which are usury passed on, college loans, car loans, credit cards, business loans, taxes on bogus state and national debts (wouldn’t exist if the state printed its own money), the welfare state which only exists to administer to victims of usury, the cost of wars that are really fought for economic reasons. I could go on and on. A simple ban on usury would end all speculation, funny money, derivatives and all other scams of this nature. 

          Who exactly benefits from this practice, and why is anyone who is not part of the elite super rich it try to defend it? Why don’t we just make things simple and ban interest on loans, repudiate all debts and issue new interest free money in proportion to economic production, with anti-trust laws that break up all monopolies that have been created by usurers? This would create a society where we could actually have the small government, widespread private property ownership ideals of so called “conservatives”. The welfare state would practically cease to exist as debtors are paid reparations for all the money that has been stolen by financiers throughout the years. Taxes could be cut by 90%. People wouldn’t have to pay interest to own their own home. The economy would be on its way to recovery, as there would be no debts and people would be free to spend the new money. 

          Why exactly does Augustine have a problem with this? 

      • Soon2Split

        Any Argentine should stay absolutely MUTE about economics. Considering that the Church in Germany has been living out of the abortion tax and worse all I want to hear from that Argentine-Italian Pope is WHEN they are all of them going to dress in sackcloth and go into a lifetime of penance and fasting. Instead I get pseudo-platitudes about finding “value” in the lifestyle and company of sodomites. I would not stand close to the Vatican for a long while, fire from Heaven may strike any time.

      • Christ is not a President- Christ is the King. Viva Christo Rey! Viva la Virgen Guadalupe!

    • Mike

      Yes, because we all know “economic science” is a complicated affair.

      “Economic science” is a lie, designed to make things more complicated then then they really are, as an attempt to justify this satanic economy.

      No, we can’t ban usury and fix prices, it would make the market (ie the intermational super rich) upset because of so and so bogus theory (lies about “scarcity” and the “time value of money” invented by the money power of course)

      Capatilists commit idolatry by worshiping the “invisible hand” and the “laws” of the market, not from god, but made up by men.

  • michael susce

    This article is similar philosophically with Father Rutler’s most recent article. The words, liberal, capitalism, democracy, secular, tolerance, freedom and the like are worthless without a philosophical (the author uses the word confessional) and religious framework that is Christian. Many years ago I heard an old protestant pastor say that the only thing worse than atheistic communism was atheistic capitalism. And further inquiries led me to ask why did socialism and communism become a world wide phenomena. Even some of my Christian friends appeal to secularism as some neutral political philosophy (separation of Church and State you know!). But in reality, there is atheistic, Buddhist, Christian, and Islamic types of secularism, capitalism, democracy etc.
    This article will be copied and pasted for further study. Thank you.

  • slainte

    “….We live in a curious time in which most people on the Left—liberal Catholics included (starting with Mario Cuomo) – argue that politics should not be in the business of “legislating morality”; while those on the Right—many conservative Catholics included—argue that markets run best purely on motivation of individual self-interest. That is, Catholics follow the American political division that treat one sphere as morally autonomous. Both of these positions are rightly rejected by the comprehensive Catholic understanding that all dimensions and spheres of life ought rightly to be governed by an Aristotelian-Thomist understanding of the Good.” Patrick J. Deneen, PhD

    Link: http://ethikapolitika.org/2014/07/25/neo-conservative-imagination-interview-patrick-deneen/

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