Small Business Saturday: Remembering Quadragesimo Anno.
It is a fundamental principle of social philosophy, fixed and unchangeable, that one should not withdraw from individuals and commit to the community what they can accomplish by their own enterprise and industry.
Just as it is gravely wrong to take from individuals what they can accomplish by their own initiative and industry and give it to the community, so also it is an injustice and at the same time a grave evil and disturbance of right order to assign to a greater and higher association what lesser and subordinate organizations can do. For every social activity ought of its very nature to furnish help to the members of the body social, and never destroy and absorb them.
Pope Pius XI, Quadragesimo Anno, 1931
I suppose this entry here is mistitled in that not only do most people not remember Quadragesimo Anno, most have no clue what it is.
It was a Papal Encyclical issued in 1931 on economic matters and the social order.
Because I write, of course, from the United States, the land of "rugged individualism" which has, curiously, turned the economy completely over to government sponsored and therefore, quasi state created economic entities, I can't expect that anyone will actually think of the Pope and economics, let alone as sort of a radical economic theorist. But perhaps they should. After all, the focus of the Faith isn't on economic profit, but on the wellbeing of body and soul.
This too, of course, will be a bit radical in the US. The US is a Protestant country still, and to an enormous degree, the "Protestant work ethic" defines how economic matters are viewed, even among Catholics and the fully secular. That early heritage, which relied to a degree on a Calvinistic world view in which wealth was regarded as a sign of God's favor, remains even in an era in which liberalism has made major societal inroads. And those inroads interestingly have not taken the view that the Catholic teaching of Subsidiarity would have taken us, which would seemingly be more natural for our society in which individualism is nearly worshiped, but rather into a morphed version of the American System, in which the government simply takes over certain areas of the economy, but in a hidden background fashion.
This may be why economic debates in the US are so fundamentally weird. It's much like arriving late at an extended family dinner, in which two cousins are in a raging debate over whether the 1968 or 1969 Mets are the better team, and then turn to you to demand your opinion just as you find the little crackers with salami and cheese on them, you aren't going to come out well in this debate, no matter what.
So let's turn to the encyclical, in much reduced part:
QUADRAGESIMO ANNO
ENCYCLICAL OF POPE PIUS XI ON RECONSTRUCTION OF THE SOCIAL ORDER TO OUR VENERABLE BRETHREN, THE PATRIARCHS, PRIMATES, ARCHBISHOPS, BISHOPS, AND OTHER ORDINARIES IN PEACE AND COMMUNION WITH THE APOSTOLIC SEE, AND LIKEWISE TO ALL THE FAITHFUL OF THE CATHOLIC WORLD.
Venerable Brethren and Beloved Children, Health and Apostolic Benediction.
Forty years have passed since Leo XIII's peerless Encyclical, On the Condition of Workers, first saw the light, and the whole Catholic world, filled with grateful recollection, is undertaking to commemorate it with befitting solemnity.
2. Other Encyclicals of Our Predecessor had in a way prepared the path for that outstanding document and proof of pastoral care: namely, those on the family and the Holy Sacrament of Matrimony as the source of human society,[1] on the origin of civil authority[2] and its proper relations with the Church,[3] on the chief duties of Christian citizens,[4] against the tenets of Socialism[5] against false teachings on human liberty,[6] and others of the same nature fully expressing the mind of Leo XIII. Yet the Encyclical, On the Condition of Workers, compared with the rest had this special distinction that at a time when it was most opportune and actually necessary to do so, it laid down for all mankind the surest rules to solve aright that difficult problem of human relations called "the social question."
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49. It follows from what We have termed the individual and at the same time social character of ownership, that men must consider in this matter not only their own advantage but also the common good. To define these duties in detail when necessity requires and the natural law has not done so, is the function of those in charge of the State. Therefore, public authority, under the guiding light always of the natural and divine law, can determine more accurately upon consideration of the true requirements of the common good, what is permitted and what is not permitted to owners in the use of their property. Moreover, Leo XIII wisely taught "that God has left the limits of private possessions to be fixed by the industry of men and institutions of peoples."[32] That history proves ownership, like other elements of social life, to be not absolutely unchanging, We once declared as follows: "What divers forms has property had, from that primitive form among rude and savage peoples, which may be observed in some places even in our time, to the form of possession in the patriarchal age; and so further to the various forms under tyranny (We are using the word tyranny in its classical sense); and then through the feudal and monarchial forms down to the various types which are to be found in more recent times."[33] That the State is not permitted to discharge its duty arbitrarily is, however, clear. The natural right itself both of owning goods privately and of passing them on by inheritance ought always to remain intact and inviolate, since this indeed is a right that the State cannot take away: "For man is older than the State,"[34] and also "domestic living together is prior both in thought and in fact to uniting into a polity."[35] Wherefore the wise Pontiff declared that it is grossly unjust for a State to exhaust private wealth through the weight of imposts and taxes. "For since the right of possessing goods privately has been conferred not by man's law, but by nature, public authority cannot abolish it, but can only control its exercise and bring it into conformity with the common weal."[36] Yet when the State brings private ownership into harmony with the needs of the common good, it does not commit a hostile act against private owners but rather does them a friendly service; for it thereby effectively prevents the private possession of goods, which the Author of nature in His most wise providence ordained for the support of human life, from causing intolerable evils and thus rushing to its own destruction; it does not destroy private possessions, but safeguards them; and it does not weaken private property rights, but strengthens them.
50. Furthermore, a person's superfluous income, that is, income which he does not need to sustain life fittingly and with dignity, is not left wholly to his own free determination. Rather the Sacred Scriptures and the Fathers of the Church constantly declare in the most explicit language that the rich are bound by a very grave precept to practice almsgiving, beneficence, and munificence.
51. Expending larger incomes so that opportunity for gainful work may be abundant, provided, however, that this work is applied to producing really useful goods, ought to be considered, as We deduce from the principles of the Angelic Doctor,[37] an outstanding exemplification of the virtue of munificence and one particularly suited to the needs of the times.
52. That ownership is originally acquired both by occupancy of a thing not owned by any one and by labor, or, as is said, by specification, the tradition of all ages as well as the teaching of Our Predecessor Leo clearly testifies. For, whatever some idly say to the contrary, no injury is done to any person when a thing is occupied that is available to all but belongs to no one; however, only that labor which a man performs in his own name and by virtue of which a new form or increase has been given to a thing grants him title to these fruits.
53. Far different is the nature of work that is hired out to others and expended on the property of others. To this indeed especially applies what Leo XIII says is "incontestible," namely, that "the wealth of nations originates from no other source than from the labor of workers."[38] For is it not plain that the enormous volume of goods that makes up human wealth is produced by and issues from the hands of the workers that either toil unaided or have their efficiency marvelously increased by being equipped with tools or machines? Every one knows, too, that no nation has ever risen out of want and poverty to a better and nobler condition save by the enormous and combined toil of all the people, both those who manage work and those who carry out directions. But it is no less evident that, had not God the Creator of all things, in keeping with His goodness, first generously bestowed natural riches and resources - the wealth and forces of nature - such supreme efforts would have been idle and vain, indeed could never even have begun. For what else is work but to use or exercise the energies of mind and body on or through these very things? And in the application of natural resources to human use the law of nature, or rather God's will promulgated by it, demands that right order be observed. This order consists in this: that each thing have its proper owner. Hence it follows that unless a man is expending labor on his own property, the labor of one person and the property of another must be associated, for neither can produce anything without the other. Leo XIII certainly had this in mind when he wrote: "Neither capital can do without labor, nor labor without capital."[39] Wherefore it is wholly false to ascribe to property alone or to labor alone whatever has been obtained through the combined effort of both, and it is wholly unjust for either, denying the efficacy of the other, to arrogate to itself whatever has been produced.
54. Property, that is, "capital," has undoubtedly long been able to appropriate too much to itself. Whatever was produced, whatever returns accrued, capital claimed for itself, hardly leaving to the worker enough to restore and renew his strength. For the doctrine was preached that all accumulation of capital falls by an absolutely insuperable economic law to the rich, and that by the same law the workers are given over and bound to perpetual want, to the scantiest of livelihoods. It is true, indeed, that things have not always and everywhere corresponded with this sort of teaching of the so-called Manchesterian Liberals; yet it cannot be denied that economic social institutions have moved steadily in that direction. That these false ideas, these erroneous suppositions, have been vigorously assailed, and not by those alone who through them were being deprived of their innate right to obtain better conditions, will surprise no one.
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57. But not every distribution among human beings of property and wealth is of a character to attain either completely or to a satisfactory degree of perfection the end which God intends. Therefore, the riches that economic-social developments constantly increase ought to be so distributed among individual persons and classes that the common advantage of all, which Leo XIII had praised, will be safeguarded; in other words, that the common good of all society will be kept inviolate. By this law of social justice, one class is forbidden to exclude the other from sharing in the benefits. Hence the class of the wealthy violates this law no less, when, as if free from care on account of its wealth, it thinks it the right order of things for it to get everything and the worker nothing, than does the non-owning working class when, angered deeply at outraged justice and too ready to assert wrongly the one right it is conscious of, it demands for itself everything as if produced by its own hands, and attacks and seeks to abolish, therefore, all property and returns or incomes, of whatever kind they are or whatever the function they perform in human society, that have not been obtained by labor, and for no other reason save that they are of such a nature. And in this connection We must not pass over the unwarranted and unmerited appeal made by some to the Apostle when he said: "If any man will not work neither let him eat."[41] For the Apostle is passing judgment on those who are unwilling to work, although they can and ought to, and he admonishes us that we ought diligently to use our time and energies of body, and mind and not be a burden to others when we can provide for ourselves. But the Apostle in no wise teaches that labor is the sole title to a living or an income.[42]
58. To each, therefore, must be given his own share of goods, and the distribution of created goods, which, as every discerning person knows, is laboring today under the gravest evils due to the huge disparity between the few exceedingly rich and the unnumbered propertyless, must be effectively called back to and brought into conformity with the norms of the common good, that is, social justice.
59. The redemption of the non-owning workers - this is the goal that Our Predecessor declared must necessarily be sought. And the point is the more emphatically to be asserted and more insistently repeated because the commands of the Pontiff, salutary as they are, have not infrequently been consigned to oblivion either because they were deliberately suppressed by silence or thought impracticable although they both can and ought to be put into effect. And these commands have not lost their force and wisdom for our time because that "pauperism" which Leo XIII beheld in all its horror is less widespread. Certainly the condition of the workers has been improved and made more equitable especially in the more civilized and wealthy countries where the workers can no longer be considered universally overwhelmed with misery and lacking the necessities of life. But since manufacturing and industry have so rapidly pervaded and occupied countless regions, not only in the countries called new, but also in the realms of the Far East that have been civilized from antiquity, the number of the non-owning working poor has increased enormously and their groans cry to God from the earth. Added to them is the huge army of rural wage workers, pushed to the lowest level of existence and deprived of all hope of ever acquiring "some property in land,"[43] and, therefore, permanently bound to the status of non-owning worker unless suitable and effective remedies are applied.
60. Yet while it is true that the status of non owning worker is to be carefully distinguished from pauperism, nevertheless the immense multitude of the non-owning workers on the one hand and the enormous riches of certain very wealthy men on the other establish an unanswerable argument that the riches which are so abundantly produced in our age of "industrialism," as it is called, are not rightly distributed and equitably made available to the various classes of the people.
61. Therefore, with all our strength and effort we must strive that at least in the future the abundant fruits of production will accrue equitably to those who are rich and will be distributed in ample sufficiency among the workers - not that these may become remiss in work, for man is born to labor as the bird to fly - but that they may increase their property by thrift, that they may bear, by wise management of this increase in property, the burdens of family life with greater ease and security, and that, emerging from the insecure lot in life in whose uncertainties non-owning workers are cast, they may be able not only to endure the vicissitudes of earthly existence but have also assurance that when their lives are ended they will provide in some measure for those they leave after them.
62. All these things which Our Predecessor has not only suggested but clearly and openly proclaimed, We emphasize with renewed insistence in our present Encyclical; and unless utmost efforts are made without delay to put them into effect, let no one persuade himself that public order, peace, and the tranquillity of human society can be effectively defended against agitators of revolution.
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64. First of all, those who declare that a contract of hiring and being hired is unjust of its own nature, and hence a partnership-contract must take its place, are certainly in error and gravely misrepresent Our Predecessor whose Encyclical not only accepts working for wages or salaries but deals at some length with it regulation in accordance with the rules of justice.
65. We consider it more advisable, however, in the present condition of human society that, so far as is possible, the work-contract be somewhat modified by a partnership-contract, as is already being done in various ways and with no small advantage to workers and owners. Workers and other employees thus become sharers in ownership or management or participate in some fashion in the profits received.
66. The just amount of pay, however, must be calculated not on a single basis but on several, as Leo XIII already wisely declared in these words: "To establish a rule of pay in accord with justice, many factors must be taken into account."[45]
67. By this statement he plainly condemned the shallowness of those who think that this most difficult matter is easily solved by the application of a single rule or measure - and one quite false.
68. For they are greatly in error who do not hesitate to spread the principle that labor is worth and must be paid as much as its products are worth, and that consequently the one who hires out his labor has the right to demand all that is produced through his labor. How far this is from the truth is evident from that We have already explained in treating of property and labor.
69. It is obvious that, as in the case of ownership, so in the case of work, especially work hired out to others, there is a social aspect also to be considered in addition to the personal or individual aspect. For man's productive effort cannot yield its fruits unless a truly social and organic body exists, unless a social and juridical order watches over the exercise of work, unless the various occupations, being interdependent, cooperate with and mutually complete one another, and, what is still more important, unless mind, material things, and work combine and form as it were a single whole. Therefore, where the social and individual nature of work is neglected, it will be impossible to evaluate work justly and pay it according to justice.
70. Conclusions of the greatest importance follow from this twofold character which nature has impressed on human work, and it is in accordance with these that wages ought to be regulated and established.
71. In the first place, the worker must be paid a wage sufficient to support him and his family.[46] That the rest of the family should also contribute to the common support, according to the capacity of each, is certainly right, as can be observed especially in the families of farmers, but also in the families of many craftsmen and small shopkeepers. But to abuse the years of childhood and the limited strength of women is grossly wrong. Mothers, concentrating on household duties, should work primarily in the home or in its immediate vicinity. It is an intolerable abuse, and to be abolished at all cost, for mothers on account of the father's low wage to be forced to engage in gainful occupations outside the home to the neglect of their proper cares and duties, especially the training of children. Every effort must therefore be made that fathers of families receive a wage large enough to meet ordinary family needs adequately. But if this cannot always be done under existing circumstances, social justice demands that changes be introduced as soon as possible whereby such a wage will be assured to every adult workingman. It will not be out of place here to render merited praise to all, who with a wise and useful purpose, have tried and tested various ways of adjusting the pay for work to family burdens in such a way that, as these increase, the former may be raised and indeed, if the contingency arises, there may be enough to meet extraordinary needs.
72. In determining the amount of the wage, the condition of a business and of the one carrying it on must also be taken into account; for it would be unjust to demand excessive wages which a business cannot stand without its ruin and consequent calamity to the workers. If, however, a business makes too little money, because of lack of energy or lack of initiative or because of indifference to technical and economic progress, that must not be regarded a just reason for reducing the compensation of the workers. But if the business in question is not making enough money to pay the workers an equitable wage because it is being crushed by unjust burdens or forced to sell its product at less than a just price, those who are thus the cause of the injury are guilty of grave wrong, for they deprive workers of their just wage and force them under the pinch of necessity to accept a wage less than fair.
73. Let, then, both workers and employers strive with united strength and counsel to overcome the difficulties and obstacles and let a wise provision on the part of public authority aid them in so salutary a work. If, however, matters come to an extreme crisis, it must be finally considered whether the business can continue or the workers are to be cared for in some other way. In such a situation, certainly most serious, a feeling of close relationship and a Christian concord of minds ought to prevail and function effectively among employers and workers.
74. Lastly, the amount of the pay must be adjusted to the public economic good. We have shown above how much it helps the common good for workers and other employees, by setting aside some part of their income which remains after necessary expenditures, to attain gradually to the possession of a moderate amount of wealth. But another point, scarcely less important, and especially vital in our times, must not be overlooked: namely, that the opportunity to work be provided to those who are able and willing to work. This opportunity depends largely on the wage and salary rate, which can help as long as it is kept within proper limits, but which on the other hand can be an obstacle if it exceeds these limits. For everyone knows that an excessive lowering of wages, or their increase beyond due measure, causes unemployment. This evil, indeed, especially as we see it prolonged and injuring so many during the years of Our Pontificate, has plunged workers into misery and temptations, ruined the prosperity of nations, and put in jeopardy the public order, peace, and tranquillity of the whole world. Hence it is contrary to social justice when, for the sake of personal gain and without regard for the common good, wages and salaries are excessively lowered or raised; and this same social justice demands that wages and salaries be so managed, through agreement of plans and wills, in so far as can be done, as to offer to the greatest possible number the opportunity of getting work and obtaining suitable means of livelihood.
75. A right proportion among wages and salaries also contributes directly to the same result; and with this is closely connected a right proportion in the prices at which the goods are sold that are produced by the various occupations, such as agriculture, manufacturing, and others. If all these relations are properly maintained, the various occupations will combine and coalesce into, as it were, a single body and like members of the body mutually aid and complete one another. For then only will the social economy be rightly established and attain its purposes when all and each are supplied with all the goods that the wealth and resources of nature, technical achievement, and the social organization of economic life can furnish. And these goods ought indeed to be enough both to meet the demands of necessity and decent comfort and to advance people to that happier and fuller condition of life which, when it is wisely cared for, is not only no hindrance to virtue but helps it greatly.[47]
76. What We have thus far stated regarding an equitable distribution of property and regarding just wages concerns individual persons and only indirectly touches social order, to the restoration of which according to the principles of sound philosophy and to its perfection according to the sublime precepts of the law of the Gospel, Our Predecessor, Leo XIII, devoted all his thought and care.
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79. As history abundantly proves, it is true that on account of changed conditions many things which were done by small associations in former times cannot be done now save by large associations. Still, that most weighty principle, which cannot be set aside or changed, remains fixed and unshaken in social philosophy: Just as it is gravely wrong to take from individuals what they can accomplish by their own initiative and industry and give it to the community, so also it is an injustice and at the same time a grave evil and disturbance of right order to assign to a greater and higher association what lesser and subordinate organizations can do. For every social activity ought of its very nature to furnish help to the members of the body social, and never destroy and absorb them.
80. The supreme authority of the State ought, therefore, to let subordinate groups handle matters and concerns of lesser importance, which would otherwise dissipate its efforts greatly. Thereby the State will more freely, powerfully, and effectively do all those things that belong to it alone because it alone can do them: directing, watching, urging, restraining, as occasion requires and necessity demands. Therefore, those in power should be sure that the more perfectly a graduated order is kept among the various associations, in observance of the principle of "subsidiary function," the stronger social authority and effectiveness will be the happier and more prosperous the condition of the State.
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Given at Rome, at Saint Peter's, the fifteenth day of May, in the year 1931, the tenth year of Our Pontificate.
PIUS XI
And hence the irony. Pope Pius XI was pointing towards a more democratic, more distributist and more free market economy than any economist or politician in the American mainstream today. Robert Reich may rail against corporate profits, but he's not going to go there. Harriet Hageman may note that "she grew up on a ranch", but she's not going to work towards an economy that would remove corporate interests from the agricultural picture. President Biden isn't going there either, and neither will candidate Trump.
So today we have Small Business Saturday.
At least there's this day in the year. But it's worth pondering that, in spite of what Americans like to claim, we do not have a truly free market economy, but a capitalistic corpratized one. This is so much the case, that most Americans aren't capable of realizing that this is a government created and supported structure, or the reasons therefore. Indeed, ironically the same people who run around erroneously claiming that "we're a republic, not a democracy", apparently not knowing that we're a democratic republic, will note the glories of the free market system in contrast with what they deem "socialism", apparently not realizing at all that our economy is a capitalistic economic system with heavy doses of the old American System.
Small business provide a huge amount of the national employment. They suffer the most in the economy even when it's good, and suffer more yet when the economy is bad.
Give them a chance. If you are shopping today, visit a small business.
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