by Michael D. Greaney, Director of Research
Center for Economic and Social Justice, (www.cesj.org)
Keynote Address delivered at the Conference of the Catholic Central Union of America, St. Frances de Sales Oratory, St. Louis, Missouri
Saturday, August 9, 2008
Good evening ladies, gentlemen, reverend fathers, honored guests.
What is CESJ?
The interfaith Center for Economic and Social Justice (“CESJ”) is an organization dedicated to the study and application of the principles of economic and social justice found in the natural law, and presented in the social encyclicals, the Capitalist Manifesto, and other writings. Other sources include Aristotle, St. Thomas Aquinas, St. Robert Bellarmine, George Mason, Alexis de Tocqueville, Henry George, G.K. Chesterton and Hilaire Belloc (the “Chesterbelloc” of Distributism), R. Buckminster Fuller, and, notably, CESJ’s co-founder, Father William Ferree, S.M., Ph.D., referred to at his death in 1985 as “America’s greatest social philosopher.” Father Ferree’s pamphlet, Introduction to Social Justice (1948) is available as a free download from the CESJ web site.
CESJ’s particular focus is how to establish and maintain the Just Third Way — an economically just society — through acts of social charity and social justice, the particular social virtues identified by Pope Pius XI.
CESJ’s goal is to infuse people with love for their institutions — social charity — and inspire them to organize and carry out acts of social justice. Social charity is the particular virtue that commands us to love our institutions as we love ourselves. Social justice is the particular virtue directed to the common good, the network of institutions within which the human person exercises those natural rights by means of which he acquires and develops virtue. Acts of social justice are intended to reform our institutions so that acts of individual virtue can take place, building habits of doing good, and so assisting human persons in their full development as human beings.
Social justice is not a replacement for acts of individual justice or charity. Social justice works directly on our institutions to bring about equality of opportunity, not equality of results. When individual acts of virtue cannot be carried out, or carried out only with great difficulty, then acts of social justice are required to restructure our institutions so that individual virtue once again becomes the optimal choice for anyone seeking the good.
Restructuring of the Social Order
Pius XI’s goal was the restructuring of the social order to establish and maintain the “Reign of Christ the King.” That is, the social order is to be reorganized in conformity with the precepts of the natural law discernible through the use of reason. The basic precept of the natural law is that “good is to be done.”
As is clear from Quas Primas, the “Reign of Christ the King” doesn’t mean that a theocracy is established with the pope as king of the world, or that there is an established church under the control of the State, but that the natural law, based on Christ’s Nature (as it is on that of the Holy Spirit and God the Father) is embodied in our social structures, laws, and institutions. This is so that our institutions, principally human positive laws, help us to seek the good and avoid evil, thereby acquiring and developing virtue, the “habit of doing good,” within the framework of the common good.
The Common Good
The common good is that network of laws, customs, traditions and so on, within which we as human beings (and thus natural persons) acquire and develop virtue, and thus develop more fully as human beings. The “common good,” therefore, exists to assist individuals to acquire and develop virtue, that is, to seek the good. Each human being at whatever stage of development, status, physical or mental ability, has an equal (in philosophical language, “analogically complete”) capacity to acquire and develop virtue. This means that every human being is as fully human as every other human being.
Each human being therefore has the full spectrum of natural rights by means of which he acquires and develops virtue. If any natural right is limited beyond what is necessary for the protection of individuals, groups, or society as a whole, the common good of that society is badly structured and in need of reform.
This is CESJ’s mission, to restructure the social order in conformity with the precepts of the natural law to establish and maintain an economically just society and a just social order, that we call the Just Third Way.
This is not to say that the common good consists solely of economic activity, as some have asserted. Economics is, however, a very important area. It is concerned with the study of the production and allocation of scarce (in economic terms) resources, that is, how people produce goods and services, and how they thereby gain an adequate and secure income to meet common domestic needs adequately.
The Four Pillars
The natural law is embodied in what CESJ calls, “The Four Pillars of the Just Third Way.” These are:
Limited economic role for the State,
Free and open markets,
Restoration of the rights of private property, and (what we call “the fatal omission”)
Widespread direct ownership of the means of production.
Limited Economic Role for the State
Despite socialism’s and (increasingly) capitalism’s demand for economic planning and control by the central government, the human person is primarily responsible for his own welfare. In accordance with the principle of subsidiarity, when the individual is helpless to help himself, social justice demands that he organize in solidarity with others in his “milieu” (that is, within those groups and networks within which he carries out the business of living his life, his “natural medium,” as Father Ferree put it) to restructure the relevant institutions so that he (and others) can once again meet his material and spiritual needs adequately through his own efforts, individually or in free association with others.
Only if all else fails should the next “highest” level of the common good step in to assist those within the badly structured milieu in organizing to help themselves. Ultimately, when the situation is bad enough, this can work all the way up to the State, the “court of last resort” for care of the common good. As Father Ferree pointed out, the common good is the personal direct particular responsibility of each of us as members of groups, and only generally the responsibility of the State. Organizing to carry out acts of social justice give us the necessary power to restructure our institutions in most cases, so that State intervention should, in an ordinarily well-structured society, be rare, as de Tocqueville pointed out, and Pius XI reiterated.
Subsidiarity is thus not a demand that the State act whenever an individual is helpless, nor a requirement that the State never act, but that the most appropriate level of the common good — the level closest to the problem — act first in solidarity, bringing in help only as necessary from the next “highest” level of the common good, up to the level of the State, if necessary.
Free and Open Markets
By “free and open markets” we do not mean the Ayn Randian, “anything goes” free-for-all of the laissez faire capitalists. We mean a market within a strong juridical order that protects the natural rights of all participants and provides a “level playing field” so that equality of opportunity is established and maintained.
The free and open market accepts the laws of economics as being in conformity with the natural law, as Pius XI noted in Paragraph 42 of Quadragesimo Anno:
The laws of economics, as they are termed, being based on the very nature of material things and on the capacities of the human body and mind, determine the limits of what productive human effort cannot, and of what it can attain in the economic field and by what means. [Emphasis added.]
Restoration of the Rights of Private Property
The third “pillar” of an economically and politically just society is the restoration of the rights of private property — to say nothing of the natural right to property, that is, the right to be an owner at all.
The right to private property is a natural right, as the popes have been repeating for centuries, most notably in the excommunication of Michael of Cessena, Minister-General of the Franciscans, in 1329 with the Bull Quia Vir Reprobus (“That Evil Man”) by Pope John XXII. Michael of Cessena had insisted (using rather intemperate language) that private property was a human institution that post-dated the Fall of Man, and was thus merely an expedient — prudential matter — allowed by God until man could be reformed and enlightened by the message of the Gospel.
John XXII said, no, the grant of dominion over the earth was given before the Fall, and consisted of the generic right of dominion embedded in human nature itself (the right to property), and the specific rights of private property to be exercised by every human being. Further, the universal prohibition against theft found in the Ten Commandments and every moral and legal code since the dawn of time implies the validity of private property as pertaining to the content of the natural law.
The right to be an owner — the right to property — is therefore a part of human nature itself, reflected from God, and thus divinely instituted. Being a natural right, the right to private property is absolute in the human person, inalienable by any human agency.
The rights of property, on the other hand, are not a part of the natural law. They are socially-determined definitions of how an owner may use his possessions within a specific social context. The rights of property, however, while not a part of the natural law, may never be defined in any way that effectively negates the right to be an owner at all, that is, remove any benefit of being an owner, as Pius XII reminded us in his 1942 Christmas Broadcast, “The Rights of Man,” later embodied in Paragraph 52 of the encyclical, Evangelii Praecones (“On the Promotion of Catholic Missions”), 1951:
The dignity of the human person then, speaking generally, requires as a natural foundation of life the right to the use of the goods of the earth. To this right corresponds the fundamental obligation to grant private ownership of property, if possible, to all. Positive legislation, regulating private ownership may change and more or less restrict its use. But if legislation is to play its part in the pacification of the community, it must see to it that the worker, who is or will be the father of a family, is not condemned to an economic dependence and servitude which is irreconcilable with his rights as a person.
This is, in fact, the nature of private property. Property is not the thing that is owned, but the social relationships that define how we relate to the things we own, and how others relate to us with respect to what we and they own. The entire social order is in large measure built on these relationships (so much so that some thinkers like John Locke believed that property was the only social relationship), so that disrupting them by redefining them or abolishing them in any other way undermines the stability of the entire social order. Being with respect to the right to property a part of the natural law, and with respect to the rights of property in conformity with the natural law, an attack on private property is, essentially, an attack on the social order, and is frequently based on an unrealistic concept of human society, as Pius XI pointed out in Paragraph 120 of Quadragesimo Anno:
120. If Socialism, like all errors, contains some truth (which, moreover, the Supreme Pontiffs have never denied), it is based nevertheless on a theory of human society peculiar to itself and irreconcilable with true Christianity. Religious socialism, Christian socialism, are contradictory terms; no one can be at the same time a good Catholic and a true socialist.
As Marx said in the Communist Manifesto in 1848, “the theory of the communists may be summed up in a single sentence: abolition of private property.” However much it is disguised or renamed, that simple dictum remains true to this day.
Widespread Direct Ownership of the Means of Production
Some years ago Michael Novak made the remark in an op-ed piece in the Wall Street Journal to the effect that all Americans were rich because private pension plans and the federal government owned so much wealth.
Ownership being control in all codes of law, Mr. Novak’s claim evaporates rather rapidly when examined more closely. I cannot be said to own that which you control, regardless who holds legal title.
The main problem with what Mr. Novak said, however, is that few people seem to see any problem in it. As long as they are paid an adequate and fair wage, or the State doles out sufficient welfare payments, they are happy. It doesn’t seem to occur to them that as human persons we are primarily responsible for our own welfare. We are not to be dependent on others, except in specific circumstances of demonstrated incompetence, such as being a minor child, insane, or a criminal.
Independence requires that we have power over our own lives. The usual and normal means of gaining this power is through direct ownership of the means of production. As Daniel Webster declared in the Massachusetts Constitutional Convention of 1820, “power naturally and necessarily follows property.” Benjamin Watkins Leigh of Virginia echoed this sentiment in that state’s Constitutional Convention that same year:
Power and Property can be separated for a time by force or fraud — but divorced, never. For as soon as the pang of separation is felt . . . Property will purchase Power, or Power will take over Property.
This was reiterated by “the apostle of distributism,” William Cobbett in his 1827 book, A History of the Protestant Reformation in England and Ireland:
Freedom is not an empty sound; it is not an abstract idea; it is not a thing that nobody can feel. It means, — and it means nothing else, — the full and quiet enjoyment of your own property. If you have not this, if this be not well secured to you, you may call yourself what you will, but you are a slave. . . . You may twist the word freedom as long as you please, but at last it comes to quiet enjoyment of your own property, or it comes to nothing.
How to Implement the Four Pillars
The problem then becomes how CESJ proposes to establish and maintain the Just Third Way. CESJ has developed a program called, “Capital Homesteading,” outlined in the book Capital Homesteading for Every Citizen.
Briefly, Capital Homesteading is an analogue of the nineteenth century American programs enacted to bring about a broad distribution of the ownership of land. Capital Homesteading expands the concept to include ownership of advanced technologies, including management, marketing and distribution systems, through equity shares in enterprises capable of competing without special protections within a free and just global economy.
CESJ therefore advocates the passage of a Capital Homestead Act. A Capital Homestead Act is a national economic policy based on the binary growth model, designed to lift barriers in the present financial and economic system and universalize access to the means of acquiring and possessing capital assets. A Capital Homestead Act would allow every man, woman and child to accumulate in a tax-sheltered Capital Homestead Account, a target level of assets sufficient to generate an adequate and secure income for that person without requiring the use of existing pools of savings or reductions in current levels of consumption.
Vehicles Consistent with Capital Homesteading
The ESOP (not invented by CESJ, but by Louis Kelso, co-author of the Capitalist Manifesto) is the best known and, to date, the most effective vehicle to spread ownership of the means of production broadly. CESJ has, however, developed a number of additional vehicles, some of which are being studied for implementation across the river in East St. Louis.
The Community Investment Corporation (CIC)
The Community Investment Corporation is an expanded ownership mechanism designed as a for-profit, professionally managed real estate planning and development corporation that can borrow on behalf of its shareholders (the citizens of a local or regional area) to purchase land, plan its use, and develop the land for productive purposes. The citizen-shareholders thus gain a definable ownership interest in local real estate, sharing in appreciated land values, and profits from leases, etc., as well as have a voice in future land development. The CIC is a currently feasible means to achieve the desired goal of Henry George: universal access to the ownership of land and other natural resources.
The Homeowners’ Equity Corporation (HEC)
CESJ has developed a strategy to solve the home mortgage crisis — a crisis with serious repercussions throughout the world — an innovative “rent to own” vehicle called the “Homeowners’ Equity Corporation” or “HEC.”
A HEC is a for-profit stock corporation whose shareholders would be homeowners in danger of foreclosure. HECs — and there should be many, to provide redundancy, lower risk, and ensure competition in a community — would purchase distressed properties at the current market value. HECs would obtain acquisition loans from commercial banks, which in turn would discount the loans at the local Federal Reserve at a rate reflecting transaction costs and a revised risk premium. The homes could then be leased at a realistic market rate to their former owners or new tenants.
The tenant would earn shares in the HEC as lease payments sufficient to cover debt service, maintenance, and taxes were made. When the acquisition loan for a particular property was fully paid, the tenant could exchange his or her HEC shares for title, or continue as a tenant/shareholder at a reduced lease payment, sufficient to cover maintenance and property taxes. Financing the purchase of properties through the Federal Reserve System and its member banks would cost the taxpayer nothing and be the first step in restoring a currency backed by hard assets instead of government debt.
This pioneering alternative may require some enabling legislation from Congress to give it powers similar to those currently enjoyed by leveraged ESOPs. Thereby empowered, private citizens can solve the crisis by having their HECs take over the situation in a way that delivers the greatest good to the greatest number of people at no cost to the taxpayer.
Universal Health Care Proposal
The sheer magnitude and complexity of today’s health care crisis requires a holistic, not a piecemeal, solution. Temporary measures or expedients won’t save the ailing system. The health system and the economic system supporting it need fundamental reforms to address the basic needs of all citizens in a just and economically viable way. The solution must restore, not sever, the sacred doctor-patient relationship. Finally, the solution must be one that keeps power spread democratically, not monopolistically concentrated in the State or a private elite.
Financing the system is a primary consideration, but fortunately is well within reach. First, through a sufficient level of tax exemptions and deferrals (we estimate that a typical family of four would pay no taxes until aggregate family income exceeds $120,000), this program would leave enough money in the hands of individuals and families so they can afford to purchase a high quality package of health coverage through the private sector. For those who cannot afford to purchase this coverage — even with generous personal exemptions and deductions — health care vouchers would be provided. Second, to cover the budgetary requirements of universal health care coverage, this program calls for tax reforms that would ensure that there is sufficient revenue to cover all costs, while creating a more simple and fair tax system to balance the Federal budget.
Sustainability is also an issue. The health care system is part of a larger economic and social system. Thus we need to create a system that reduces the burden on the tax system to redistribute incomes, stimulates private sector growth (upon which the tax system depends for paying the costs of government and social programs) and creates widespread purchasing power among citizens so that they are freed from dependency on employers, government, or charity.
We can now look at some specific applications of these concepts.
Abraham Federation and Iraq Oil
First proposed in 1978, the “Abraham Federation” strategy was originally focused on the conflict between the Palestinian and Israeli people. This has been inflaming Muslim extremism and spreading hatred of America and Jews throughout the world for decades. Today, given the deteriorating situation in Iraq, serious consideration must be given to this proposed strategy for offering the people of Iraq, the Middle East, and the world a unifying, “peace through justice” based model for nation-building.
The oil fields of Iraq should be denationalized and every citizen of Iraq became a shareholder in the oil company by being given a single, non-transferable, participating voting share with full rights of ownership.
By promoting such a “preemptive moral strike,” America would prove before all nations of the world its commitment to working with others to deliver real justice to the Iraqi people and, by example, to the poor and oppressed of the world. Such ideological and moral weaponry could offer a far more powerful force than all of America’s overwhelming military weaponry. At the same time, America could provide a highly innovative and humanizing solution to the practical problem of stabilizing the world’s supply of oil, as the world continues to seek Hydrogen Age alternatives to meet the future energy needs of civilization.
The Abraham Federation model could be launched as a concurrent, two-front ideological and economic development offensive in both Iraq and the occupied territories on the West Bank and Gaza. The new model of nation-building would harness the untapped power of internally generated money, credit and other infrastructural reforms to provide the resources for nation-building.
JBM Garments, Ltd.
An international collaborative project is being designed for the country of Bangladesh to demonstrate that a Justice-Based Management (JBM) model can replace the sweatshop model now prevalent worldwide. The Institute of Integrated Rural Development (IIRD), working with the Center for Economic and Social Justice (CESJ) — both the founding CESJ in the USA and its branch in Bangladesh — the Marianist Social Justice Collaborative (MSJC) also in the USA and the Global Justice Movement, is initiating the establishment of a worker-owned readymade garment factory to be located in Dhaka, Bangladesh. Key elements of the project include:
- Majority ownership by the employees, both producers and management, with shares for groups providing start-up funding and profit-sharing by an international worker-owned marketing company dealing with JBM products.
- Development of a culture of ownership and participation among the initial 350 workers of the factory through Justice-Based Management (JBM), which promotes the dignity, development and empowerment of all workers, who will be fully involved in planning and decision-making for their venture.
- Production of quality items for international markets, bringing high levels of value to customers.
- Financially fully competitive in the national and international arenas.
- Establishment of a patented JBM-label and a marketing company to be used by this factory and others which meet similar standards, with a board to establish and promote JBM licensing criteria and a licensing association to award JBM licenses and to audit, at least annually, all licensees.
East St. Louis
The Metro East (St. Louis) Citizens Land Cooperative (MECLC) and the Fuller Kelso Design Science Center (the “Center”) demonstrate the affordability, reliability and attractiveness of stand-alone, emissions-free, advanced renewable energy system (ARES) technologies using Thermal Composite Materials (TCM) to model resource-scarce building solutions.
The project evolved out of an earlier concept known as “Old Man River City” developed by R. Buckminster Fuller during his work with East St. Louis. The project broadly spreads all of the technologies proposed by Fuller for the original project. MECLC will design, construct, and undertake community education for a $60 million project to redevelop Metro East St. Louis communities. The project includes 90,000 square feet of industrial space for manufacturing components of the “E-Macrosystem” power plant that coverts waste to energy.
The project will involve constructing and demonstrating two innovations of national significance: 1) integration of two proven advanced renewable energy systems into one stand alone emission-free power plant, the E- Macrosystem, and 2) for-profit community investment corporations (citizen land cooperative) for the benefit of citizen owners, citizen-shareholders.
The proposed models will enrich every household while meeting the needs of East St. Louis communities to demonstrate an integrated means of (1) converting the area’s toxic medical, biomass and sewerage waste into renewable energy, operate without releasing carbon dioxide into the atmosphere and (2) distributing ownership shares and governance rights in land, basic infrastructure and infrastructure profits into every household in the demonstration area as a fundamental right of citizenship.
Conclusion
These are just some of the things that CESJ is doing to promote the restructuring of the social order and establish and maintain the Just Third Way. In closing, if any of these projects or proposals interests you, I urge you to go to our web site, www.cesj.org, and explore them further. We are always happy to answer questions, and I hope that this talk has presented you with some possibilities to address the critical situation in the world today.
Thank you, and good night.