Catholic Economics for Dummies


It seems like there are Dummies Guides for everything these days. Browse any book store or library and you’ll find them. There is “Religion for Dummies,” and “Auto-Repair for Dummies,” and “The Internet for Dummies,” and “Football for Dummies.” The list goes on and on. The point of Dummies Guides is to just simplify seemingly complex subjects into everyday language, and systematic steps, that anyone can read and apply. Dummies Guides are not really meant to insult people’s intelligence, but simply convey a level of simplicity, so the reader doesn’t have to work too hard or apply a lot of effort. The idea here is to say, “you need not take a long course on a subject when you can learn everything you need to know in one simple black-and-yellow book!”

Dummies BooksSo I decided what is needed for the Internet is a simple, one-page article that explained economics, from a Catholic perspective that anyone can read and learn pretty-much everything you need to know, without having to read a whole book, or take some sort of course on the subject. If you find this article helpful, I encourage you to share it with others by any means available. Social-media icons are provided below this article for convenience. Feel free to email it to whomever you like. Also, you have my permission here to print this article and share it at your discretion. So with that, let’s dig down into the subject matter of Catholic Economics for Dummies.

There are basically five economic models in the world. Everything else is just a variation, or blend, of these five models. They are represented by the star diagram at the top of this article. Each star represents a different economic model, and the colors of these stars were based on their relation to communism. Communism adopted the color of bright red to symbolize itself early in the last century. I’ve arranged each star in order from left to right, from red-hot to cool blue, based on their relation to personal freedom and individual liberty for the most people. The reddish stars closer to the left side have less freedom and liberty, culminating in communism, which is the least free of all economic systems. The blueish stars closer to the right side have more freedom, culminating in distributed-capitalism (or “distributism”), which is the most free of economic systems.

Now, before I go on, I should point out that the Church does not teach economics. That is not within her faculties. She can no more teach economics than she can teach science. However, in both cases (science and economics) she sits in judgement of everything they produce, comparing their fruits to the teachings of Christ and his Gospel. This is the one and only area the Church has faculties in — the Gospel — which encompasses both religion and morality.

Economics is just morality by another name. It’s the sort of morality that applies to how people trade with each other, what people can own, what they can trade, how they can trade, and what role the government has in all of this. Anarchy is not an option. It never was. I’ve lived under anarchy. I know first-hand what it’s all about. The anarchy I lived under was called the Los Angeles Riots which lasted for six days in 1992. I’ll never forget it, and I never want to live under that again. It was horrible. Whatever anarchists tell you they want, they’re fools if they think anarchy will produce anything less than riots. The word “anarchy” means “no government” and that is exactly what we had for six days in Los Angeles a quarter-century ago. It was a time when the strong brutalized the weak, normal people coward in their homes while criminals ruled the streets, the police were unable to stop it, and the economy came to a crashing halt. Outside of basic bartering between neighbors, there was no real economy in Los Angeles for six days in 1992. Anarchy is simply not an option. There must be a government of some kind, and that government does have a role to play in economics. The question is, what is that role?

The last two-centuries have produced five possible roles the government can take in an economy. They are represented by the stars in the diagram above…

  1. Communism — Invented by Karl Marx in the 19th century, this is a system of economics wherein the government owns all property and controls all economic activity. Literally, everything is owned by the government, and the government distributes to people what the government thinks they need. Private individuals are not allowed to own private property. Nobody owns their own houses under communism. Nobody owns their own cars. Nobody owns the clothes on their backs, or their own televisions, radios, computers, phones, make-up, hairspray or soap! All of it is owned by the government alone, and distributed to people as the government deems best. Under this system, nobody owns their own business, and everybody works for the government. Not only does the government decide where you work, but it also decides what you do. Communist regimes are known to be very anti-religious because they view religion as a threat to their communist system. Under communism, nothing is higher than the government. The government is — essentially — God.
  2. Socialism — Also invented by Karl Marx in the 19th century, this is communism lite. Under communism, the government owns all things, even the clothes on your back! However, under socialism, government ownership is limited to business only. So regular little-people can own houses, cars, televisions, computers, phones, clothing, make-up, hairspray and soap. That is, if they can afford them. It’s just that all of these things were produced by the government, and everybody who has a job works for the government. So under socialism, you get to keep some of your own stuff, whatever you can afford, but everything you own has a government label on it, and you are yourself a government employee. Under socialism, the government assumes the role of a massive super-corporation, which has many sub-divisions or franchises into all sectors of the economy. Each sector might have a different name, and different management, but all of it is under the umbrella of government ownership. Socialism is the ultimate in corporatism, because it makes the government into a massive corporation (a monopoly) that owns all levels of business in all sectors of the economy. Competition with the government is illegal. So it’s not like you can start your own business somewhere if you don’t like what the government has to offer.
  3. Corporate Capitalism — Invented in ages past, this system of economics was really developed into what it is today by the English in the 16th through 19th centuries. Capitalism puts control of property directly into the hands of individuals, families and corporations. It often likes to tout itself as the most free with the least government involvement. However, the last couple-hundred years has proved this to be untrue. Capitalism can start off small, and it often does, with small economies, people trading money and property freely, and overall very little government involvement. However, over time, our historical experience has demonstrated that as capitalism grows, it tends to consolidate into corporate capitalism (or “corporatism”). As businesses get larger, they start to gobble up smaller businesses, exercising their ability to push smaller and weaker businesses (usually family owned) out of the marketplace. These larger businesses become corporations and eventually take over entire market sectors. In the 20th century, some of these corporations got so large that they had to be broken-up by the government, namely for making it impossible for anyone to compete with them. The problem with capitalism is that in pursuing the ideal of little to no government control of the market, the government effectively surrenders that control over to private corporations which are more than happy to take it up. This forces government to step back in later, break up monopolies, and then allow the process to repeat itself. Under corporate capitalism, little-people must look for employment from corporations, wherein they become dependent upon them not only for money, but also for medical benefits, vacation time and retirement options. As you may know, corporations are usually not democracies, and are more often run like dictatorships. So the little-people who work for them are literally at a corporation’s mercy most of the time. The early 21st century proved that corporations think nothing of cutting pay and benefits (even defrauding people of hard-earned retirement pensions) in the name of preserving the bottom-line. It is possible to start your own business under capitalism, and capitalism encourages it. However, making that business work is often very difficult, if not impossible. Often times, when small businesses fail, the owner is blamed for incompetence, when the exact same business would have thrived in less developed countries. Incompetence is rarely the actual problem. Usually, small businesses fail because they must first overcome the mountain of government regulation that’s established to protect large corporations, and if they manage to get past that, those same large corporations will snuff them out with unfair competition if they’re deemed to be a threat to the larger corporation’s bottom line. Or, if the small businessman is deemed “smart” he will simply sell his small business to a large corporation, so it can proceed to either absorb it, or shut it down. Capitalist economies don’t usually live up to the “little government” propaganda they put out. Most capitalist countries are heavily intertwined in the politics of big business. Laws and regulations are structured in a way to protect big corporations and cut them enormous tax breaks. Corporations and corporate banks are deemed “too big to fail” when the economy collapses, and are often bailed out with tax dollars taken from the little-people. Lastly, capitalism has never been totally free of government ownership of some things. Military, police, fire departments, parks, roads and rail services are almost always owned and operated by government entities. Attempts at privatizing these things usually leads to disaster. So even in a capitalist system, the government employs some socialist solutions over essential sectors of the market that are deemed too sensitive to turn over to private business. Usually, however, it leaves those socialist solutions to smaller entities of government (such as city and county), leaving military and some police work to larger government (state and federal).
  4. Social-Market Capitalism — Invented in West Germany during the 20th century, following the end of the Second World War, social-market capitalism (sometimes called “Rhine capitalism”) is actually the product of American and British influence on post-war Germany. The idea was to create an economy in West Germany that the communist East Germans couldn’t overcome with calls of “unfairness” or “cruelty toward the poor.” The solution was put large sectors of the economy, wherein making a profit was either difficult and/or hazardous to the welfare of the public, under government control while leaving the rest of the economy to private business. The result was a universal healthcare system and a robust government pension program for everyone. This allowed private business to make things like automobiles, televisions, computers, clothing, make-up, hairspray and soap, while letting the government control such things as military, police, fire department, parks, roads, rail, healthcare and pension services. It can best be described as a shared-responsibility system, wherein the government takes over areas of business that serve the people’s basic needs, while private business addresses everything else. Overall, the system has worked well where it’s been tried, but it does have some problems. The first is the same problem capitalism has with corporations becoming “too big to fail” monopolies that are favored by government regulation, and crush smaller family-owned businesses. The other problem is the cost of dealing with large numbers of retired pensioners and medical patients. Governments have attempted to deal with these problems by raising the retirement age and rationing medical services, with much consternation from the little-people. The one thing the little-people have going for them under this system is that they’re not at the mercy of dictatorial corporations for medical and pension benefits. They can now make redress for their grievances through the democratic processes of the government. In other words: “If you politicians cut my pension or medical benefits, I’ll vote against your re-election!” Sadly, social-market capitalism is frequently characterized as “socialism” by many people in the United States. This has caused some Americans to viscerally reject social-market solutions as “socialism,” and simultaneously caused some Americans (particularly younger Americans) to embrace socialism, because they think it’s the same thing as social-market capitalism. We need to keep terms straight here. Social-market capitalism is not socialism. Under social-market capitalism, people can still start their own businesses, or at least try, and own their own things. They don’t have to work for the government if they don’t want to, and they don’t have to buy poorly-made (crappy) government products. They do rely on the government for things like the military, police, fire department, parks, roads and rail services, but additionally, they also rely on the government for their retirement pensions and healthcare services. This is NOT socialism! This is social-market capitalism.
  5. Distributed Capitalism — Sometimes called “micro-capitalism,” or “distributism,” this system has existed since the dawn of civilization, but in recent centuries has been lost in the rise of English capitalism (corporate capitalism) and the industrial revolution. In the wake of capitalism’s rise under the English model, and the horrendous abuses of the little-people who subsequently developed, Karl Marx put forward his theories of socialism and communism as purely atheistic and materialist solutions (which don’t work). So, in the late 19th century and on to the present, the Catholic popes responded with a series of criticisms that encouraged a return to a system of economics that mirrored the micro-capitalism of ancient times, when anyone could start a business and have a reasonable chance at success without worrying about crippling government regulations that favor big corporations, and unfair competitive practices by those same corporations designed to snuff out small businesses that manage to get by the crippling government regulations. The popes simply outlined the principles of morality facing economics, but never named or endorsed a particular economic system. In response to this, some faithful Catholic laymen modeled an economic system that they named “distributism” or “distributed capitalism.” The reason behind the name is simple enough. Under distributism, productive property (meaning business) should be distributed far and wide, to the ownership of little-people, starting little businesses, to serve their immediate areas. So for example, instead of having one corporate-owned superstore that serves a small city, there should be dozens of family-owned general stores, each that service all the neighborhoods within that small city. So instead of driving across town to go shopping at a Wal-Mart or Costco superstore, you could just as easily walk down to your neighborhood general store, completely owned and operated by your friend down the street. Stop and think about the implications of that for a moment. Think about the social implications, civic implications, economic implications, family implications, health implications and environmental implications. What would walking to a general store do for society, instead of driving? In areas of industry where large factories are required, such as mass-production of automobiles, bicycles, or pedal-powered grocery carts for example, the little-people could again participate in ownership of the business. Distributed capitalism encourages the creation of worker-owned cooperative corporations, wherein each worker participates as a co-owner of the corporation and has voting rights in how it’s run. Since the creation of the idea, over a century ago, hundreds of worker-owned cooperative corporations have developed around the world, and they’ve proved to be just as stable, if not more so, than traditional investor-owned corporations. To date, there has been no case of worker-owned cooperatives exporting jobs overseas, cutting pensions or eliminating medical benefits. Lay-offs are rare in such operations, with most employee-owners voting to work fewer hours and/or take pay cuts to prevent lay-offs during economic recessions. When we say “distributism” what we mean is “distributed ownership” of business to the people who work there.

Now that you understand the five systems of economics, you can see that they all hinge on one thing — property ownership. Who owns the property under each system?

  1. Distributed Capitalism — The little-people own most of the productive property, either individually, or as families, or as part of a larger group of employee-owners.
  2. Social-Market Capitalism — The little-people own some productive property, but much of it is owned by large corporations. Meanwhile, the government insures that nobody is in want for military, police, fire protection, parks, roads, rail, medical services, or pensions.
  3. Corporate Capitalism — The little-people own some productive property, but much of it is owned by large corporations that also control the medical and pension benefits of the little-people. Meanwhile, the government insures that nobody is in want for military, police, fire protection, parks, roads and rail services.
  4. Socialism — The little-people own only personal property such as houses, cars, televisions, radios, computers, clothing, make-up, hairspray and soap, insofar as they can afford them, but they don’t own any productive property (business) at all, and they are all employed by the government. The government, in turn, owns all military, police, fire protection, parks, roads, rail services, in addition to all hospitals, clinics, factories, retail stores, restaurants, and businesses of all types.
  5. Communism — The little-people own nothing, not even the clothes on their backs. Everything is owned and operated by the government. Everyone works for the government, and the government owns and controls everything. The government then distributes things (on loan) to the little-people as the government sees fit.

The Catholic Church, through the social encyclicals of the popes going back over a hundred years, has definitively taught that the little-people have a God-given right to own and operate private property, both personal and productive. That means little-people not only have a God-given right to own their own houses, clothing, and means of transportation, but they also have a God-given right to own their own business as well. This might be in the form of individual ownership of a family business, or cooperative ownership of a business corporation with other like-minded workers. The Catholic Church has definitively taught, through the social encyclicals of the popes, that it is immoral to deprive the little-people of property ownership in any way. Little-people should be allowed to start their own businesses if they are so inclined. Or they should be allowed to sign on to joint-ownership of a cooperative corporation with similar workers having similar skills or training. To deprive the little-people of property ownership is THEFT! It’s a case of the powerful dominating the weak by stealing what is rightfully theirs, sometimes through “legal” means, and effectively making them wage-slaves or wards to larger entities (corporations and/or governments) which they have little to no control over.

This explains why the popes have, historically, condemned Marxism in all its forms (communism and socialism), while at the same time they have been highly critical of corporate capitalism in seemingly the next breath. This has led to confusion for many Americans, who are unaware of the difference between socialism and social-market capitalism, and at the same time, they have never even heard of distributed capitalism or “distributism.” To the average American mind, the popes appear to be contradicting themselves, but in reality they’re encouraging society to move away from government and corporate control of productive property.

In short, the position of the Catholic Church is one of empowerment to the little-people, not through revolution or uprising, but through justice by simply allowing them the opportunity to own what God intended them to own all along — that is to say, the means to take care of themselves. Likewise, the Church teaches that we all have social responsibilities toward each other (solidarity) but these are tempered by allowing the little-people all the resources they need to take care of themselves (subsidiarity). It’s a balancing act really, between solidarity and subsidiarity. That’s Catholic social justice. This is what has led many to believe that the ideal economic system, from a Catholic point of view, would be something between (or some combination of) social-market capitalism and distributed capitalism, or to combine the terms “social-market distributism.”

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