If you push someone out the window to his death…

Cover of "Money, Greed, and God: Why Capi...

Cover via Amazon

…is the law of gravity an accomplice?

Recently I caused a small dust-up at my Facebook page by citing (approvingly) Pope Francis in this recent Business Insider story, “Not paying fairly … [and] only looking at how to make a profit … goes against God!” and then adding, “I do wonder what, technically and practically, he means by ‘not paying fairly’. What wage would he set up in Bangladesh, exactly? My question is of the ‘Yes, and then…?’ kind. Remove all those low-paying jobs in the name of dignity! Yes! And then replace them with what? And by whom?”

Here are some of the responses I got:

A: $50 a month is not a fair wage in any country. … The bottom line, especially among so-called Christian companies should not be profit, but what is right and just before God.

B: A living one…

C: No easy answers. Everyone should be worthy of work that gives them a sense of dignity and purpose.

D: If a business cannot afford to pay its bread and butter employees a fair wage, it does not have a solvent business model.

This led me to ruminate a few days later:

There’s a twofold reason economics is called the dismal science: either because its best conclusions are sentimentally unappealing, or because its more aesthetically appealing claims are also its most vague and impractical. I sometimes joke with students who ask me, “What’s the answer to X?” by saying, “The correct answer.” Unfortunately, when I ask what the “moral” or “religious” solution to labor injustice is, I hear that it’s a living wage, a matter of equity/dignity, complex but obviously not Y, etc. That kind of reply, however, is a case of the second mode of how economics is dismal: it’s sentimentally attractive precisely because it’s so vague and protean. It allows one to say the right things without providing any clear, real-world measures for actually solving the problem. Blame the bankers! Blame the businessmen! Blame The Man! (Err, did someone say “Blame The Jew!”?) Yawn. So I find my choices as a socially minded Catholic, frankly, extremely gloomy. I can reject capitalist reasoning on theological and moral grounds, but be rationally unconvinced of the economic coherence of “moral” economics, or reject ephemeral rhetoric about “social justice”, but be labeled a Heartless White Male Oppressor™. Hrmph. Now I’ll get back to reconciling myself to the economic equivalent of Young Earth Creationism.

I’m currently of the belief that there are objective laws of economic transaction, whether they be located in evolved human biology or in the parameters of information exchange. As Henry Hazlitt defined it in Economics in One Lesson (1946), “The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.” Competence in any art requires acknowledging and ‘cooperating’ with the objective features and limitations of the medium. The responses I got from A, B, C, and D dodge this objectiveness. Moralizing about the market without respecting its objectivity is like feigning outrage at how cruelly gravity pulled the man down from the window when you pushed him out.

As Jay Richards writes in Money, Greed, and God: Why Capitalism is the Solution Not the Problem (p. 5):

No serious Christian writing about natural science would ignore the the basic facts of chemistry or astronomy. But too many Christian leaders feel free to ignore the basic facts of economics. This is a serious mistake, because economics is not just a bunch of baseless opinions. The twentieth century was one big lab experiment for the economic theories of the eighteenth and nineteenth centuries. The results … are in … [and it’s] time for Christians to take an honest look at the economic facts and get acquainted with capitalism.

Richards continues (pp. 7–8):

Economic truths are truths. But they don’t stand outside God’s dominion. … We suspect [a contradiction between capitalism and Christianity] because many of capitalism’s champions and critics miss the subtleties of the capitalist system: to prosper, a market economy needs not just competition, but rule of law and virtues like cooperation, stable families, self-sacrifice, a commitment to delayed gratification, and a willingness to risk based on future hope. These all fit nicely with the Christian worldview.

Moreover, … the essence of capitalism is not greed. It’s not even competition, private property, or the pursuit of rational self-interest. These last three items … are key ingredient in a market economy … but the heart of capitalism lies in [allowing] wealth to be created…. And only the creation of wealth will reduce poverty in the long run.

Richards then sharpens the paradox (emphases mine):

Paradoxically, the key source of material wealth in a modern market economy is immaterial. It’s spiritual. Wealth is created when our creative freedom is allowed to prosper in a free-market environment undergirded by the rule of law and suffused with a rich moral culture. … Our creative freedom [à la capitalism] reflects [our being created in God’s image]. This is one of the least appreciated truths of economics.

(I’m finally getting around to reading Richards’ book in order to keep my spirits up about these matters and find some measure of intellectual solace.)

How many jobs have my anti-capitalist friends or Pope Francis given to the Bangladeshis (other than those, I mean, subsidized by their own transactions in the global market)? In his refutation of what he calls “the Nirvana Myth,” Richards reminds us (p. 31), “When we ask whether we can build a just society, we need to keep the question nailed to solid ground: just compared with what?” My liberal friends A, B, C, D, et al. want there to be “good businesspeople” in the world––but what do they mean by “good”? Good as in morally righteous or good as in fiscally competent? It is economically wrong––or bad––to tell an entrepreneur that he can be a “good” business owner by avoiding profits. You can’t review his 2012 earnings and tell him that $60,000 of it should have gone to the local homeless shelter, since he only has a surplus of at least $60,000 because he sought ample profits in the first place. Nor can you scold him into steering this year’s profits into charity in order to be a “good” businessman by 2014, since by then, his aversion to profits will reduce what he could give to charity. And on it goes. As Richards notes (p. 3), “We hear about ‘business ethics,’ as if business had unique moral hazards not encountered in the law or medicine or education or the ministry. Few have ever heard a sermon that dignifies business as a calling” (emphasis mine). That is a scandal against the sovereignty of God, as if He could not sanctify the humans He loves in the entire sphere of business.

The root of the problem is that it is a fallacy to say that businesspeople cannot practice charity while also practicing sound business policies. He does have a moral duty to give what he pledges to his workers; withholding their wages would indeed be unjust (cf. James 5:1–6). Slave labour, as Pope Francis hyperbolically called conditions in Bangladesh, is the absence of payment for labor. Precisely because workers there have made a pledge to work for the capital their employer is offering up front, sometimes years before long-term profits start rolling in, means they agree to the terms of their labor, which is the antithesis of slavery.

About The Codgitator (a cadgertator)

Catholic convert. Quasi-Zorbatic. Freelance interpreter, translator, and web marketer. Former ESL teacher in Taiwan (2003-2012) and former public high school teacher (2012-2014). Married father of three. Multilingual, would-be scholar, and fairly consistent fitness monkey. My research interests include: the interface of religion and science, the history and philosophy of science and technology, ancient and medieval philosophy, and cognitive neuroscience. Please pray for me.
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12 Responses to If you push someone out the window to his death…

  1. theofloinn says:

    A great many things that are acceptable when practiced by virtuous people become wicked when practiced by the venal. A hammer is indifferent. One man uses it to drive a nail, another to bash someone’s head in. Likewise, one may desire to pay Bangladeshis a living wage for their country (vs. say, Switzerland) or may do so with the intention merely of exploiting them. Paying Bangladeshis a high salary might well destroy other Bangladeshi businesses, when then cannot find workers willing to accept their salaries. There ain’t nothing like sawing off the bottom rung of the economic ladder.

  2. Crude says:

    I think the problem here is that people want to have a very strong opinion about economics, while at the same time feeling absolutely no need to really understand the salient questions and factors.

  3. Agreed. It’s a proof of one’s bona fides to be economically liberal, even if that means harming the objects of “compassionate capitalism”. I’ve rarely been as conflicted about an issue as I am about these matters, but at least I’m up front about my non-dogmatism. A, B, C, D et al. can rest in their pious dogmatism, since their answers are firmest when they are most vague. Sigh.

  4. Gian says:

    I agree that “The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy”
    And there is the fact that that 20C wealth creation has gone with a social decay. Just to take one example, abortion is sometimes justified on the grounds of self-ownership. It is not the Left that makes this justification. It is made by pro-capitalism Right. The arrow of causality is liberal economic theories of 18C to self-ownership to abortion.
    More such examples may be given.

  5. Gian, there are numerous fallacies in your comment, so I’ll either briefly address them or hide them under my facepalm.

    G: “…20C wealth creation has gone with a social decay.”

    Me: C20 science and engineering have ‘gone with’ cancer and vastly more deaths. So what? Fallacy of post hoc ergo propter hoc. Happily enough, a friend of mine left this quotation on my Facebook just today:

    “Theologian Michael Novak has written about what he calls the ‘three-legged stool’ that makes democratic capitalism possible: economic freedom, political freedom, and moral restraint. Take away any of these three and the system collapses.”

    You’re assuming capitalism = philistinism, but this is wrong. Read either OFloinn’s comment, above, or Jay Richards’ _Money, Greed, and God_ for a reply to this very myth. Capitalism *includes* rule of law (“government”) and moral prudence (“rationality”).

    G: “…abortion is sometimes justified on the grounds of self-ownership.”

    Me: The key word here is “sometimes”.

    G: “It is not the Left that makes this justification. It is made by pro-capitalism Right.”

    Me: While it may not be the Left that justifies abortion in terms of self-ownership, Leftists plainly have their own rationales for defending that evil. If *every* defense of abortion rights were from a libertarian perspective, your point would hold But it is just an observation, rather than an argument.

    G: “The arrow of causality is liberal economic theories of 18C to self-ownership to abortion.”

    Me: Wrong. Again, not only are there more than one such arrow of causality, but there are also pro-life capitalists and libertarians. E.g. https://www.mises.org/journals/jls/18_3/18_3_5.pdf and http://www.l4l.org/library/thomviol.html . Your argument is invalid.
    More such examples may be given.

  6. Gian says:

    This idea that “The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not
    merely for one group but for all groups”

    is very odd. It seems to repudiate the socialist calculation problem that Hayek and Mises said would plague and derail any socialist economy.

    For, this statement asserts that it is possible to calculate the long-term effect of any act or policy and for all groups. Surely a most ambititous claim!.
    Do you think economics has been able to realize this claim?

  7. Durable says:

    Thought provoking article that tackles a tough question. So rare and appreciated.

    Now for my two cents;
    By framing the debate in terms of jobs and workers, we are limiting the debate unjustly. Within that framework there is an employer, who has the power to terminate employment at will, and an employee, who has not means of production and is thus dependent on the employer.

    As scripture teaches us to be the head, not the tail, and to drink water from our own well, and to not be dependent on anyone (I can dig up the references if you need me to), this question is within a fundamentally flawed framework.

    To ensure dignity to every individual requires private property, right of self defense against aggression and theft, and the ability to profit from one’s labor. The urbanization of the world and the employer / employee relationship that comes with that is closer to the root of the issue than the ethics of the employers. Some employers will be ethical, some will not, the issue here is that governments have power over employers and employers have power over employees and the cold hard truth is that power corrupts.

    To work in a direction of resolving the root issue, requires a return to self determination and this a return to rural living where one produces more than one consumes and trades items of value among neighbors at mutually acceptable terms.

  8. It’s been a minute since our last interaction, but I wanted to let you that I appreciate your comments (in terms of both tone and content), I’m sorry if I come across as an asshole or a bore. God’s working on me.

    Now, since I don’t seem to be able to reply to your comment at May 16, 2013 at 16:56, I’ll reproduce it here and reply:

    “This idea that ‘The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not
    merely for one group but for all groups’ is very odd. It seems to repudiate the socialist calculation problem that Hayek and Mises said would plague and derail any socialist economy. For, this statement asserts that it is possible to calculate the long-term effect of any act or policy and for all groups. Surely a most ambitious claim! Do you think economics has been able to realize this claim?”

    One of my “mottoes in life” is this: “There’s always a wrong way to do something.” Note that this does not mean that there is always a (different) right way to do something. For example, while there is never a right way to be a bank robber––since theft is wrong––, there is always a wrong way to be one, say by choosing lousy partners, or picking an idiotic escape route, or by forgetting to bring your guns to the job, etc.

    How does this relate to economics? While there is never a right way to plan an economy, as Hayek and Mises argue, there is always a wrong way to promote free exchange. Hazlitt would not say that policy X, because it is devised as a free-market policy, will invariably and infallibly lead to the desired result (clearing the market, upping productivity, raising wages, etc.), but he would say that policy Z, because it only considers a narrow range of agents and benefits COMPARED TO POLICY X, is inherently worse than policy X. He can’t guarantee that X will always or perfectly work––that, after all, is the point of the FREE market––, but he can recognize that policy Z is at least more biased and myopic than X. There may not be a right way to plan perfect economic policy––as Hayek and Mises argue––but surely there are a number of wrong ways to achieve a sound economy––which is Hazlitt’s point.

  9. I’m familiar with the canard, but I’m not clear on how employers (or “business”) IN FACT have an unfair advantage over employees (or “labor”). For, if company A lowers wages W so far that its employees B go on strike, A effectively explodes its own productivity––and thus all its profits––so it is actually in A’s interest to keep its W high enough to retain a happy and productive B. So where is their advantage?

    If, however, A simply will not budge, there are still other employees B* in other firms A* who earn less -W than B’s W, and thus who would be inclined to take up the jobs that B no longer wants (viz. in order at least to raise their earnings from -W to W). In turn, as A* sees its own B* leaving in favor of A, it will be forced, in terms of sheer economic self-interest, to raise its wages -W to a level attractive enough to win over B against some other firm, namely +W. As a result, not only will B* end up earning more under A (since W > -W), but B will also find better work under A* (since +W > W).

    Then again, if it’s simply not possible (given their limited capital) for A* to win over B with +W, they will at least retain their own B*, by raising -W to W. As a result, A will see that there are no workers on the market who can (or who are willing to) achieve its productive goals, and thus A will be forced to raise its W in order to win over and keep its disaffected B. Again, where is A’s advantage?

    The business-labor disparity argument assumes an extremely abstract and simplified market (“a toy model”, as they say), but given the fact that workers are mobile and that, in the real world, there are always at least some competing firms, A never has a monopoly on all possible wages, and thus only has an advantage over its employees IF they maintain a COMPARATIVE advantage over other firms.

  10. Durable says:

    The scenario you describe leaves out the concepts of a) regulations which benefit certain employers and b) the means of production. The US neo-fascist oligarchy is a prime example of A and China’s abusive labor market practices illustrate B.

    If there are no other jobs and the worker is prevented from forming a competitive enterprise in terms of regulatory hurdles or capital availability, then workers have no leverage to exert and the abuse and collapse of quality of life continues unabated.

  11. That is bad. It’s always those lobby-biased regulations that cause this trouble. And I think fascism is not too strong a word to describe our system. My fear is that the same regulation-bias will work to undermine even homesteaders’, for example, if it becomes a condition of getting a land grant (for those lacking the capital to buy their own land) that the homestead contribute a certain portion of its revenue to the government, or that it will get subsidies if it develops government-favored goods (say algae or tofu).

  12. Durable says:

    Codgitator, you should check out the use of imminent domain in seizing existing farmland to get a sense of just how at risk homesteaders are to be managed out of existence. Agenda 21 is quickly advancing under the monicker of sustainable development and it advocates elimination of privately owned real estate…which makes homesteading tough if not impossible.

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