I’m used to being told I am wrong, but in an internet discussion I’m not used to my critics being respectful and actually reading what I’ve written. Perhaps Dan’s recent post is a forerunner of a wave of combox civility and reason; huzzah! It’s also beyond question that Dan, Bishop Blaire, and Catholic social theorists throughout history have the noblest of intentions: seeking the good of workers in economic relationships. For that they have my deep respect.
Dan takes issue with my critique of Bishop Blaire’s Labor Day Statment and with what I perceive as the Church’s misunderstanding of labor versus other factors of production. He believes I “elevates conservative economic doctrine higher than Catholic social doctrine;” he later recognizes consistency between Marxist and Catholic views on just wages, not because the Church agrees with Marxism but because Marx agreed with the Church. I might adopt the same approach and suggest that economists don’t necessarily agree with conservatives but conservatives tend to agree with basic economic principles more so than liberals, progressives, populists, greens, etc. There are certainly conservative economic positions that virtually all economists would reject: trade and immigration restrictions, massive subsidies to domestic industries, and other xenophobic policies that (don’t really) help American companies at the expense of foreign companies.
I said nothing in my previous post that would be considered outside of mainstream economic thought. It is all standard microeconomic theory and can be easily verified by looking at, say, the textbook we use in my micro principles class (whose authors can hardly be characterized as hard-core conservatives).
I certainly support and defend Catholic dogma, but I’m unaware that the Church’s teaching on a living wage requires the same degree of assent as Her teaching on the Real Presence, the Trinity, or the Assumption. Indeed, some of our Bishops recognize the limitations of their economic expertise.
As to Dan’s two key points:
- “Labor has primacy over capital.” We think of capital as impersonal machinery, and would rightly fault a business that chose to replace all of its two-year old but perfectly functional and efficient computers with brand new (and unnecessary) ones instead of using those funds to augment salaries. But recall that capital equipment itself is produced by laborers, and its purchase by companies is typically financed by savers being frugal, so reducing the reliance on capital will itself harm laborers and other people who make capital available. Capital makes labor more productive; the reason a backhoe operator gets paid more than a guy with a shovel is precisely because of the capital. I.e., if we want to increase the chances that people will get paid at or above a living wage, we need more capital, not less.
- “It is appropriate and just to pay someone based on their needs, not merely their production.” It may be appropriate and just, but as I argued earlier, it is unrealistic in certain circumstances and may in fact be unjust. In my earlier post, see the examples of the two teenagers, Alan and Bob. As another (extreme) example, say that my brother opens a business that sells mud pies and he hires me, a lazy guy who just sits around at work all day blogging. Should he pay me based on my needs (main breadwinner to my wife and two sons)? It would be wonderful if he could, but realistically he won’t be able to because no one wants to buy mud pies (so the company gets no revenue to pay wages), and I am not contributing anything to the production of the business (so whatever he would pay me would come out of his or other hardworking employees’ pockets, an injustice to them).
Dan asks later “do you believe that revenue and price considerations are all that matter?” No, but it’s hard to pay a living wage if you have no revenue. Avoiding financial realities is a surefire way to doom a company, leaving its employees without jobs. “[D]oes work…have a subjective dimension that goes beyond that?” Yes, aside from the productivity of an employee, an employer certainly should consider that employee’s work ethic, loyalty, ability to get along with others, creativity, and lots of other subjective characteristics in determining their salary.
“[D]o you back a doctrine developed over better than a century by an array of popes, or one pieced together by a slew of intellectuals at conservative think tanks?” This neglects the largely free-market economic thinking of the medieval scholastics at Salamanca, but even if we consider 1891 to be the beginning of Catholic social thought, Rerum Novarum is still preceded by the Wealth of Nations and thinkers like J.B. Say, David Ricardo, and Bastiat. The economics Dan criticizes is not a modern ultraconservative offshoot devised by cigar-smoking intellectuals in dimly-lit offices of the Heritage Foundation or Cato Institute; it is mainstream economics. (Most economists, by the way, lean Democrat, and the premier international association, the AEA, certainly is left of center).
The main point in my previous post was to demonstrate that all factors of production (land, labor, capital, entrepreneurship) essentially relate to persons, and therefore all of these persons have a right to justice in economic relationships. Land is owned by landowners, who deserve justice in being compensated for their contributions in production. Capital is made by laborers and financed by savers, so if you rage against the machine at least don’t rage against the people who make the machine and the laborers who are more productive because of the machine. Entrepreneurship involves people who use their creativity and foresight, while taking considerable risk and usually delaying any compensation for themselves for years, to produce goods and services that make customers’ lives better.
Catholic social teaching develops, as it has since 1891. My hope is that, going forward, it gets away from the antiquated notion of a constant struggle between laborers and rich capitalists with their machines, and recognizes the reality that economic relationships are relationships between persons, all of whom deserve justice and respect no matter their role.