I’ll have to go to Las Vegas or Monaco

A little while back, at The Paraphasic, Elliot Milco had a lengthy post on the definition of capitalism. One may be excused for missing the discussions in various places over the last eighteen months, but the question of capitalism is one of the most vexing questions for serious Catholic thinkers. (It should be, anyway.) In the American Church, doctrinal conservatives are usually (not always, but usually) political conservatives. Consequently, Catholic doctrinal conservatives tend to favor the sort of robust—unrestrained?—free-market capitalism favored on the American political right. However, the Church has long been suspicious—since Rerum novarum, in fact—of the sort of robust free-market capitalism that is so popular among conservative American Catholics. This creates tensions, especially since many traditionally minded Catholics reject the conservative political consensus that capitalism is hugely virtuous.

Last month, we noted that the lack of a workable definition of economic liberalism created issues for traditionally minded Catholics in arguing against the robust-free-market positions taken by doctrinally conservative Catholics who have thrown in with American political conservatives. We proposed a definition articulated by the great Canadian Thomist Henri Grenier in his Thomistic Philosophy. Elliot Milco identifies a similar problem with respect to the definition of capitalism, and he sets out to work out a good, functional definition.

It seems clear that the “obvious” definition of Capitalism in the air (i.e. the one which occurs most readily) is something like this: Capitalism is a model of commercial activity in which the maximization of profits is pursued as the primary (or even exclusive) end of business.

(Emphasis in original.) He then examines some of the limitations of this definition and comes up with a slightly restated definition:

Capitalism is a model of commercial activity in which we attempt, through labor, exchange, and other means, to maximize our assets, considered in terms of their exchange value, and pursue this maximization as the primary or even exclusive end of commerce.

(Emphasis in original.) This definition seems to us to be very workable, at least as a starting place when discussing capitalism in the context of the Church’s traditional social teaching.

To understand why Milco’s definition works, even if one thinks that it could be improved, perhaps we had better look at an older definition. Which, of course, means turning to Henri Grenier’s Thomistic Philosophy again. Grenier first gives the definition of capital:

Capital, according to its strict meaning in Economics, is defined: the part of produced wealth reserved or in actual use for new production; v.g., instruments and machines of every kind, the various kinds of primary products required for production, and the whole gamut of economic operations.

In modern usage, any kind of wealth is called capital; and capital is divided into social capital and juridical capital.

Under the heading of social capital come all wealth and material goods of all kinds.

Under the heading of juridical capital come money and things of pecuniary value.

(3 Thomistic Philosophy § 1145, 1º) (italics in original and emphasis supplied). With that in place, Grenier proceeds to define capitalism, though it will be seen that the definition of capitalism follows trivially from the definition of capital.

But before we get there, Grenier distinguishes between a general definition and a pejorative definition of capitalism. This is an interesting move, though how much of a move it actually is remains to be seen. The general definition he gives as:

Capitalism in itself signifies capitalistic production, i.e., production in which all agencies distinct from capital are more or less under the sway of capital. It is an economic system, then, in which capital plays a preponderant role, and in which the function of capital is separate from the function of labor.

(3 Thomistic Philosophy § 1145, 2º) (emphasis supplied). In other words, the general definition of capitalism is an economic system in which either material goods or money (i.e., social or juridical capital) is the key player and separate from labor.

Grenier then gives the pejorative definition:

Capitalism, in its pejorative meaning, may be described: systems of economic and social relations, born of capitalistic production, in which the holders of economic and social capital, and especially of juridical capital, i.e., of money, in their eagerness for excessive profits, play not only a preponderant but an unlawful and abusive role.

(Id.) (emphasis in original). The difference between the pejorative definition and the general definition is not particularly clear; or, to put it less controversially, it is a matter of degree. That is, in the general definition, capitalism is the mode of production in which wealth or money (i.e., social or juridical capital) plays a preponderant role. In the pejorative definition, the holders of wealth or money, “especially” money, exceed their preponderant role and play an unlawful and abusive role. This definition admits of shades of gray, to say the least.

We see that Milco’s definition is more practical. While Grenier is undoubtedly correct in strict terms, he is also undoubtedly abstract. One of the favored accusations of the Actonistas and the other Catholics who uphold the robust free market as a good in and of itself is that the Catholics who hold and follow the Church’s traditional social teaching do not understand economics. (As though that makes a difference.) Grenier’s definition plays into that problem: capitalism is “an economic system . . . in which capital plays a preponderant role, and in which the function of capital is separate from the function of labor.” This definition, while undeniably correct in a strict sense, points toward other, more complicated concepts. At some point, you’ll have to grapple with economic concepts if you want to use Grenier’s definition, just as the political conservatives allege. Milco’s definition, on the other hand, is couched in more practical terms. When people talk about capitalism, they undoubtedly mean more or less what Milco sets forth in his definition.

To put it another way, when people talk about capitalism, they probably do not mean the system in which capital, which is to say wealth of various forms, plays the central role in production. That definition is a little opaque. Certainly, Grenier’s predicate definitions can clear things up, and distinguishing a general and a pejorative definition helps, but, even at that, the definition is still going to be a little stilted. What people talk about when they talk about capitalism is probably more or less what Milco says: “a model of commercial activity in which we attempt, through labor, exchange, and other means, to maximize our assets, considered in terms of their exchange value, and pursue this maximization as the primary or even exclusive end of commerce.” (Emphasis omitted.) So, as we have noted before, when traditionally minded Catholics try to engage with Actonistas or other Catholics who think that the free market is per se good, there’s bound to be trouble.

One interesting aspect of Milco’s definition, which deserves special mention, is that it points out the extent to which modern thinking about capitalism is morally questionable from the get-go. This is to say, the unrestrained profit motive is the primary moral problem with capitalism. Recall that Aquinas addresses the profit motive in IIa IIae q.77 a.4, where he takes up the question, utrum liceat negotiando aliquid charius vendere quam emere, cf. IIa IIae q.77 pr., or whether it is lawful in trading to sell something at a higher price than paid for it. Aquinas draws a careful distinction:

Respondeo dicendum quod ad negotiatores pertinet commutationibus rerum insistere. Ut autem philosophus dicit, in I Polit., duplex est rerum commutatio. Una quidem quasi naturalis et necessaria, per quam scilicet fit commutatio rei ad rem, vel rerum et denariorum, propter necessitatem vitae. Et talis commutatio non proprie pertinet ad negotiatores, sed magis ad oeconomicos vel politicos, qui habent providere vel domui vel civitati de rebus necessariis ad vitam. Alia vero commutationis species est vel denariorum ad denarios, vel quarumcumque rerum ad denarios, non propter res necessarias vitae, sed propter lucrum quaerendum. Et haec quidem negotiatio proprie videtur ad negotiatores pertinere. Secundum philosophum autem, prima commutatio laudabilis est, quia deservit naturali necessitati. Secunda autem iuste vituperatur, quia, quantum est de se, deservit cupiditati lucri, quae terminum nescit sed in infinitum tendit. Et ideo negotiatio, secundum se considerata, quandam turpitudinem habet, inquantum non importat de sui ratione finem honestum vel necessarium. Lucrum tamen, quod est negotiationis finis, etsi in sui ratione non importet aliquid honestum vel necessarium, nihil tamen importat in sui ratione vitiosum vel virtuti contrarium. Unde nihil prohibet lucrum ordinari ad aliquem finem necessarium, vel etiam honestum. Et sic negotiatio licita reddetur. Sicut cum aliquis lucrum moderatum, quod negotiando quaerit, ordinat ad domus suae sustentationem, vel etiam ad subveniendum indigentibus, vel etiam cum aliquis negotiationi intendit propter publicam utilitatem, ne scilicet res necessariae ad vitam patriae desint, et lucrum expetit non quasi finem, sed quasi stipendium laboris.

This translation is the English Dominican translation made available by the Dominican House of Studies website:

 I answer that, A tradesman is one whose business consists in the exchange of things. According to the Philosopher (Polit. i, 3), exchange of things is twofold; one, natural as it were, and necessary, whereby one commodity is exchanged for another, or money taken in exchange for a commodity, in order to satisfy the needs of life. Such like trading, properly speaking, does not belong to tradesmen, but rather to housekeepers or civil servants who have to provide the household or the state with the necessaries of life. The other kind of exchange is either that of money for money, or of any commodity for money, not on account of the necessities of life, but for profit, and this kind of exchange, properly speaking, regards tradesmen, according to the Philosopher (Polit. i, 3). The former kind of exchange is commendable because it supplies a natural need: but the latter is justly deserving of blame, because, considered in itself, it satisfies the greed for gain, which knows no limit and tends to infinity. Hence trading, considered in itself, has a certain debasement attaching thereto, in so far as, by its very nature, it does not imply a virtuous or necessary end. Nevertheless gain which is the end of trading, though not implying, by its nature, anything virtuous or necessary, does not, in itself, connote anything sinful or contrary to virtue: wherefore nothing prevents gain from being directed to some necessary or even virtuous end, and thus trading becomes lawful. Thus, for instance, a man may intend the moderate gain which he seeks to acquire by trading for the upkeep of his household, or for the assistance of the needy: or again, a man may take to trade for some public advantage, for instance, lest his country lack the necessaries of life, and seek gain, not as an end, but as payment for his labor.

It may be worth noting, given the Common Doctor’s repeated citation to Aristotle here, that in his volume of the Blackfriars Summa, Marcus Lefébure, O.P., argued that Aquinas’s position represents a “discreet[] but definite[]” break with Aristotle regarding commercial activity for profit (vol. 38, p. 228, cmt. b). It’s an interesting point that turns on Aristotle’s Politics I, 3, and it seems to us that it is entirely possible that Aquinas softens a hard-line Aristotelian injunction against commerce for profit. On the other hand, Aquinas’s fundamental argument—profit is in se morally neutral, and the morality of profit seeking is determined by its end—is not wholly alien to Aristotle’s point in the Politics. At any rate, one ought to recognize that, while Aquinas brings Aristotle into the debate, it is not at all clear that Aristotle would have reached the same answer as Aquinas.

That aside, without getting too deeply into Aquinas’s argument (or Aristotle’s, for that matter), we think—though we could probably convinced otherwise—that Aquinas intends to separate the small businessman, to use common parlance, from speculators or traders more generally. It is, perhaps, the difference between the proprietor of the corner grocery store and the commodity trader. Aquinas would likely say that the grocer, who is likely supporting his family, probably does not have a moral problem when he makes his modest profit. And, since his modest profit is intended to support his family, he probably could not be blamed for taking that profit seriously and attempting to increase it modestly. But the commodity trader may well have a moral problem when he makes a killing shorting frozen concentrated orange juice based upon a crop forecast. But that’s because the commodity trader views the maximization of profits as his sole (or preeminent) end. If the commodity trader needed millions of dollars to support his family or if he labored mightily and perilously to obtain FCOJ for a grateful nation, then the story might be different.

But what if the grocer runs his store like the commodity trader? What if he sets out to maximize his assets through trading? Certainly, he’s not likely to corner the FCOJ market with Mortimer and Randolph Duke, but he could very well have a fundamentally capitalistic outlook on his business. He could well want gain for gain’s sake, which Aquinas tells us is morally troublesome. This is what we mean when we say that the unrestrained profit motive is the primary moral problem with capitalism.

And Milco’s proposed definition brings this problem to the front of the debate. The definition he proposes certainly captures some essential element of the current, popular thinking on what capitalism means. It just so happens that that current, popular thinking has problems.

Postscript: Elliot Milco had some very kind things to say about Semiduplex very recently. For the most part, we note, this post was written before he made his very generous statements. We do, however, appreciate very much his notice.