The Definition of Capitalism

It is very important to understand what “capitalism” really means because it is the system which defines our political and cultural lives. Everything about the modern world has been shaped by capitalism.

The most common definitions of capitalism are extremely unhelpful. Many describe capitalism as “an economic system with private ownership of goods” or “a system where the distribution of goods is determined by the free market.” These definitions are misleading because they use phrases like “private ownership” and “free market” in the modern sense, without realizing that liberalism has fundamentally changed the definition of these words.

Pope Saint John Paul II taught that “everybody knows that capitalism has a definite historical meaning as a system, an economic and social system” (Laborem Exercens § 7). Historically, capitalism does not refer to the existence of private property. Rather, it means the existence of a particular form of private property owned by a generally very small class of people. Those who own the capital are called “capitalists,” and they make the vast majority of their money by employing workers, either as forced laborers (slaves) or wage laborers (“proletarians”). Instead of producing goods to serve human needs, workers must do so for the sake of profit. This is a different type of value which a good (or “commodity”) can have. This is means that in capitalism use-value is subordinate to exchange-value. It is a system of continuous circulation, constantly in search of accumulation by any means. The simplest definition of capitalism might be an economic system devoted to the infinite accumulation of exchange-value or a system in which labor is subordinate to capital. Ultimately, like the word implies, it is a society dominated by Capital.

Capitalism is not just a system of exchange, like the village markets of the Middle Ages and other premodern societies. Nor is it a system of ancient self-sufficiency where the farmers plowed the land collectively for themselves and their community. Capitalism is a system in which the workers do not have control over the things they produce or their tools (the means of production).

Capitalism has not always been around. It is a particular economic system which only began in the 16th century. In the last 500 years, capitalism has accelerated and expanded. It began with a limited network of merchants trading in the Mediterranean and the Atlantic and now dominates the entire globe. The pace of trading and accumulation has sped up from month-long sea voyages to microseconds of electronic trading.

Furthermore, capitalism did not happen naturally. It was built with sweat and blood. For five centuries, usury, exploitation, and state violence were used with growing intensity to build a new era, which historians call modernity. We still live in this terrible age. Integralism, distributism, subsidiarity, family, tradition, and many other aspects of premodern society had to be steadily worn away to remove every limitation to the growth of Capital.

Use-Value Versus Exchange-Value

We often talk about what things are “worth” or how much their “value” is. To talk truthfully about economics, we need to use the right definitions.

Ever since Aristotle, it has been acknowledged that there are two kinds of value: use-value and exchange-value.

The first kind of value is use-value. This refers to the ability of goods to satisfy a human need or desire. “[Aristotle] recognized that material things possessed by human beings could be used in two different ways. The first and original way that they could be used, the reason why people first begin to take or to make things in the first place, was to fulfill some human need” (“Use Values and Corn Laws, Aristotelian Marxists and High Tories”, Edmund Waldstein, O’Cist.). For example, a shoe fulfills the need to protect your feet when walking. A sandwich satisfies the need to eat. The use-value of a bed is that it provides a good night’s rest.

The second kind of value is exchange-value. This refers to how much a good can be exchanged for, in other words, how much it can be traded for in a market. Exchange-value is what capitalists are describing when they talk about “market growth” and “GDP.” Aristotle describes the difference between use-value and exchange-value:

A shoe is used for wear, and is used for exchange; both are uses of the shoe. He who gives a shoe in exchange for money or food to him who wants one, does indeed use the shoe as a shoe, but this is not its proper use, for a shoe is not made to be an object of barter. (Politics, Book I, Chapter 9, 1257a)

Notice that it is the same shoe which has both use-value and exchange-value. The value is not somehow transformed from one to the other: the different values exist in different contexts. Use-value is about the qualities of value: what can it be used for? The use-value of a sponge is cleaning. The use-value of a hammer is building. Its value can be found in the context of human life. Use-value is concerned with the telos, or, the ultimate purpose of a material thing.

Exchange-value, on the other hand, is only about the quantity of value: how much can it be sold for? The exchange-value of everything—whether a sponge, a hammer, or a shoe—is a certain number of barter goods, coins, or another currency. Its value can only be found in a market of some kind. 

It is clear that use-value should be at the foundation of a just economy, because it is concerned with serving human persons. Exchange-value is disdained by Aristotle as not the “proper use” of a shoe, because a focus on this kind of value can lead to greed. Capitalism is the ultimate example of a system of greed because it is dedicated to the “infinite accumulation of exchange-value.” It is fundamentally different than premodern society because it prioritizes exchange-value over use-value and has radically transformed economic life.

Society Before Capitalism: The Premodern World

Modernity (beginning at around 1500 A.D.) is the era we live in today, but the world wasn’t always like this. Here, we offer a description of the premodern world which will seem alien or mythical compared to the present.

Integralism

For Catholics, integralism refers to the traditional teaching that the “temporal power” must be subordinate to the “spiritual power.” By analogy, this also describes the political philosophy of all other premodern societies. Sometimes, for example in Rome or Egypt, the role of the Emperor or Pharaoh was fused with the role of High Priest. Sometimes there was a priestly class, such as Celtic Druids or Hindu Brahmins. In smaller premodern states, spiritual leaders were often elected or appointed by the community, like the Iroquois Faithkeepers or the Dogon Hogon.

No matter where you look, religion was an essential part of human life. Kings of every era, whether in China, Ghana, or Peru, ruled by the mandate of heaven or in the name of the gods. Custom, tradition, and community were at the center of society. Modern secularism would be baffling.

Subsidiarity

Subsidiarity is the sacred principle that “a community of a higher order should not interfere in the internal life of a community of a lower order, depriving the latter of its functions, but rather should support it in case of need and help to coordinate its activity with the activities of the rest of society, always with a view to the common good.” (St. John Paul II, Centesimus Annus § 48)

Subsidiary was widespread in premodern society. Kings who crushed the communities beneath them were seen as illegitimate tyrants. Their power was limited by custom, moral law, and subsidiary institutions. Subsidiarity is likewise evident in the smaller states of premodern Africans or Native Americans. But even in the Mali or Inka Empires, we do not find a modern state. Family, village, and clan networks acted as intermediary institutions between the individual and the imperial power; local custom had the force of law.

The transformation to the State we know today would only be accomplished over centuries, fueled by a radical and destructive economics.

Distributive Economics

Capitalism did not exist before modernity. The most powerful force of distribution was not the invisible hand of the “free market”, but the very visible hand of the king (or the priest), whether the Sapa Inka (the supreme emperor in the Andes), the feudal lord, or the dougou-tigui (a “village-master” in the Mali Empire). The “market” in these days referred to a local community center; beyond this, much of the economy was determined by the planning and redistribution of various hierarchies (some royal, some classless).

Almost all advanced premodern societies did have a merchant class, but their influence was extremely limited by the power of integralist religion, subsidiary states, and a rich social life of customs and traditions which were hostile to the economics of exchange-value. Capital was kept subordinated.

Pope Leo XIII’s Condemnation of Americanism

More than a century ago, in 1899, Pope Leo XIII issued his encyclical Testem Benevolentiae about the dangers of “Americanism.”

The United States of America was founded on classical liberalism. The Founding Fathers—despite many debates on the details—preached a system of liberal neutrality, free markets, and “liberty.” This system is a radical departure from premodern and Christian values and is based on fundamental errors about the purpose of law and the meaning of freedom.

Pope Leo XIII clarifies the confusion around “freedom.” True freedom is the freedom for the Common Good. Those who seek virtue, “far from having suffered loss of liberty, enjoy that fuller and freer kind—that liberty, namely, by which Christ hath made us free” (Testem § 15).

In another encyclical, he reminds us that the purpose of law is to lead people to virtue: “In a free State, unless justice be generally cultivated, unless the people be repeatedly and diligently urged to observe the precepts and laws of the Gospel, liberty itself may be pernicious” (Longinqua Oceani § 15).

In the days of Pope Leo XIII, some Catholics in America were actively preaching these errors of Americanism. But his encyclical was sent to all the American bishops, warning that even a passive acceptance of Americanism was a dangerous departure from the Gospel.

We cannot consider as altogether blameless the silence which purposely leads to the omission or neglect of some of the principles of Christian doctrine, for all the principles come from the same Author and Master, ‘the Only-begotten Son, Who is in the bosom of the Father.’ They are adapted to all times and all nations, as is clearly seen from the words of our Lord to His apostles: ‘Going therefore, teach all nations; teaching them to observe all things whatsoever I have commanded you, and behold, I am with you all days, even to the end of the world.’ (Testem § 4)

He concludes: “From the foregoing it is manifest, beloved son, that we are not able to give approval to those views which, in their collective sense, are called by some ‘Americanism’” (Testem § 18).

Elsewhere he notes that despite the growth of the Church in America at that time, “it would be very erroneous to draw the conclusion that in America is to be sought the type of the most desirable status of the Church, or that it would be universally lawful or expedient for State and Church to be, as in America, dissevered and divorced” (Longinqua § 6).

This brings us to the ultimate error of Americanism: an acceptance—and often a full embrace—of capitalism.

In Peter Maurin’s Easy Essays, he says that the Church must not play “a waiting game” but will “have to use some of the dynamite inherent in her message.” He notes that “Modern society has separated Church and State but it did not separate the State from business. The State is no longer a Church’s State. The State is now a Business Men’s State.”

The Common Good Is Good for All of Us

Distinctions on the common good, based on Pater Edmund Waldstein’s 37 Theses:

Private goods diminish when shared. Common goods do not diminish when shared. 

Bread is a good, because it serves the human need for food. But if two people share one loaf of bread, they each only get half.

On the other hand, a joke is a common good which serves the human need for fellowship and social life. But when someone tells a joke, the enjoyment of the joke doesn’t diminish. It can be spread to many without being divided into smaller pieces.

Common goods are better than private goods.

A joke, however, is only a pleasant good. True common goods are honorable goods, things like peace, justice, and truth. When the truth is shared, it does not become less true. When peace is shared, it doesn’t get divided into pieces—every individual who shares in the common good enjoys total peace.

Because of this, common goods are obviously better than private goods. “It is honorable to attain a good for one man, but it is better and more godlike to attain a good in which many can share (cf. Nicomachean Ethics 1094b)” (Waldstein). Another difference is while private goods exist for our sake, we exist for the sake of the common good. Peace, truth, beauty, and goodness exist for their own sake.

The good of the individual is contained in the common good.

Some people worry that a politics of the common good will mean enslaving and abusing individuals for the “greater good.” This is the error of utilitarianism. The ends do not justify the means. It has often happened that “totalitarian regimes recognize the common good as a pretext for subjugating persons in the most ignoble way” (Charles De Koninck, On the Primacy of the Common Good, page 16). But this is a deceitful vision of the common good. 

Rather, a true common good (peace, justice, etc) is good for each of the persons who partake of it—it is part of our individual good to serve the common good. This cannot be emphasized enough: the common good is a personal good. The subordination of persons to the common good is not slavery, but liberation.

As people become more virtuous, they seek more and more universal common goods.

Above we said that “it is part of our individual good to serve the common good.” This means that we cannot habitually act on our selfish desires if we want to serve the common good. Thus, the politics of the common good is also the politics of virtue. The common good will always be good for us, even though we might not enjoy it. Opulent wealth can be delightful for a greedy man. But it serves the common good for such wealth to be given to those in need. Peace and justice are objectively good for all, whether poor or rich. Only the politics of the common good can fulfill the purpose of law: to lead people to virtue.

The Myth of Liberal Neutrality

Liberals preach that liberalism is good because it is neutral. But no political philosophy is ever neutral. Liberalism is built on a lie.

Liberal neutrality relies on a false distinction between the public and the private spheres of life. Many beliefs, especially religious teachings, are supposed to stay in the private sphere. Then, in the public sphere, beliefs must be justified by appealing to “law and order” or “logic and facts.” Liberalism ignores appeals to religion and tradition, because these are just private preferences. It also begins with the assumption that people are independent individuals, so appeals to the common good are always less important than “individual rights.”

This is supposed to be good, because it creates a society where everybody can hold their own private convictions and communicate in what Rawls, a liberal philosopher, calls “the language of public reason.”

Adrian Vermeule offers an insightful description of this supposedly neutral language: “Instead of pursuing substantive excellence and justice, we have circuitous conversations about statistical properties like ‘diversity’; instead of deciding what ought to be permitted, what condemned, we debate ‘civility’; instead of discerning truth, we quarrel over ‘religious liberty’; instead of protecting the most vulnerable, we conceal our vices and crimes under the rubric of ‘choice,’ in both market and non-market spheres (although to be fair there are almost no non-market spheres left any more). When we ask about Truth, liberalism answers: What is ‘Truth’? Your truth is not someone else’s truth, and it is no more legitimate to make your truth into public policy than it would be to force your taste in ice cream upon everyone else. All this is solely of private concern.” (“According to Truth”)

Looking deeper, we find that liberalism is hiding something. The “neutrality” of liberalism demands their own definitions of words (like “freedom”) and assumptions about human nature which never existed before modernity. People who believe in virtue and the common good can never win, because the legal principles and procedures are built to protect negative freedom and individualism.

Those who seek political change are forced to speak the language of liberal neutrality. Liberalism is not a polite or charitable tolerance of diversity; it is civic nihilism, civilly enforced.

Liberalism also has an indirect effect on religion and culture. The law is a teacher: people tend to assume that things which are legal are good. Liberalism undermines Truth by reducing faith to personal opinion within a private sphere. In culture, it promotes individualism, isolating people from their communities.

Most importantly, liberalism provides a cover for the endless growth of capitalism. Preventing any vision of the Good in politics allows Capital to seek only its own profit. The liberal form of private property is the only acceptable legal tradition, which forces out premodern, communitarian, and integralist ideals.

But as Vermeule point out, this is the reason that liberal politics is incredibly dissatisfying to many. “The Achilles’ heel of liberalism is the hunger to come to grips with the substance of the common good.”

What is Liberalism?

Liberalism is a political philosophy which came to power in the 18th century. It is radically different than all which came before it in the premodern world. Instead of basing government on the Divine, it is a system of secular government which bases its authority on “the will of the people.” Instead of serving the common good, it promises “liberty,” and has succeeded in redefining what freedom means in modernity. Liberal politics prioritizes the “rights” of the individual at the expense of the community. Finally, by loosening social customs and traditions, liberalism justifies the expansion and acceleration of capitalism.

There are many different strains of liberalism. The early thinkers of the Protestant Reformation, especially Luther and Calvin, were important for laying the foundations of “Christian liberalism,” which served as a transition between medieval Christendom and secular liberalism. Christian liberalism was more fully developed in England by thinkers like Algernon Sidney and John Milton who worked in Cromwell’s Commonwealth (which lasted from 1649-1660).

The first roots of secular liberal thought can be seen in Machiavelli, Hobbes, and Spinoza, who wrote in the 16th and 17th centuries. Though not initially popular, they laid the groundwork for the Enlightenment of the 18th century. This age of political and philosophic thought was led by thinkers like Locke, Voltaire, Rosseau, Smith, Jefferson, Hamilton, and so on. Their thought justified the French and American Revolutions. This strain of liberalism led to the creation of the first fully secular governments in human history. Now, it is known as “classical liberalism” and its principles still define our politics today.

Today, liberalism has divided into “conservative” and “progressive” strains. In many countries, especially the United States, the bitter debate between these two sides makes it seem like they are the only options to choose from. The conservative liberals destroy constraints on Capital by promoting the Free Market and the progressive liberals destroy the constraints of tradition by promoting individualism in matters of religion, family, and sexuality. In the words of Patrick Deneen, “the project of advancing the liberal order takes the superficial form of a battle between seemingly intractable foes, and the energy and acrimony of that contest shrouds a deeper cooperation that ends up advancing liberalism as a whole.” (Why Liberalism Failed, 2018, page 45) The two sides are not that different from eachother, they only disagree about how to advance liberalism. Centrist politicians disagree on a small number of policies.

Liberalism is ultimately an ideology built by capitalism, to justify itself. All throughout its history, its political movements have been funded and supported by the bourgeois, who gained more and more power through the English Civil War of the 1640s, the Revolution of 1688, the American Revolution in 1776, and the French Revolution in 1789. This is why these conflicts are called the “Bourgeois Revolutions.”

Liberalism has historically been opposed by the reactionary (fascist) tradition and the revolutionary (communist) tradition. Integralism is no less radical, but it follows the Church’s guidance in rejecting both these failed traditions.

What is The Good?

Integralists often talk about The Good. You might hear them calling for “a politics with a robust conception of the Good.” What does that mean?

(For a complete and thorough description, we recommend Pater Edmund Waldstein’s “The Good, the Highest Good, and the Common Good.” His 37 theses provide a basic overview of Aristotelian-Thomist thought.)

The basic meaning of “The Good” is the “end” or “purpose” (telos in Greek) of a particular thing. So if we talk about the Good of a knife, we are talking about its ability to cut. If we talk about the Good of a plant, we are talking about its ability to grow and blossom. If we are talking about the Good of human life, we mean virtue.

Virtue, though, is very difficult. That’s why we need help to live a virtuous life. God (Who is the source of all Goodness) gives His grace to help us, but while we are meant to have a personal relationship, we are also meant to have a community which leads us to God. The perfect community of God is His Church, but we also have to live in another political community. This worldly community shouldn’t be abandoned, but it should be perfected by the grace of God.

That’s where integralism comes in. Most integralists talk about politics having a real conception of the Good, because the purpose of law is to lead people to virtue. Political systems, rulers, and laws need to recognize their purpose. A knife expected to clean dishes, or a flower expected to catch mice, will fail. A human who doesn’t live a virtuous life will be unhappy. And a politics which doesn’t lead people to virtue will fail, just as liberalism has for centuries.

In liberalism, there is no real conception of the Good. Sure, the liberals say that “freedom” is the good of human life and of politics, but this isn’t a real conception of the Good. The “freedom” of liberals is negative freedom, not positive freedom. Their idea of the good isn’t objective; it’s defined by every individual differently. Because of this, liberal politics is just a compromise between many different versions of individuals who define their own “good.” Liberalism is civil nihilism, civilly enforced. The results are catastrophic.

Positive Freedom versus Negative Freedom

Positive freedom is “freedom for.” It is the possibility of living out your fundamental purpose. It means freedom for the Good.

Negative freedom is “freedom from.” It is the absence of barriers to do whatever you want. It means freedom from any restraints.

Positive freedom is the traditional understanding of liberty for Christians, Greeks, and Muslims. Practically every premodern religion, from the Buddhists to the Aztecs, had the idea that human desires had to be constrained, so that man could be free. Freedom meant participating in a virtuous community. In the words of Patrick Deneen, “Liberty had long been believed to be a condition of self-rule that forestalled tyranny, within both the polity and the individual soul. Liberty was thus thought to involve discipline and training in self-limitation of desires, and corresponding social and political arrangements that sought to inculcate corresponding virtues that fostered the arts of self-government.” (Why Liberalism Failed, 2018, pg 23)

But in modernity, “liberty was fundamentally reconceived, even if the word was retained.”  Modern philosophers like Descartes, Hobbes, and Locke helped slowly redefine the words “freedom” and “liberty” to refer to negative freedom.

Pater Edmund Waldstein, in his essay “Contrasting Concepts of Freedom,” analyzes these different definitions on three different levels:

Christian/Classical Definition Modern/Liberal Definition
External Freedom “Not being subordinated to another’s good, not being a slave. Politically such freedom is realized by a political rule that orders people to their own true common good—a good that is truly good for them. It is realized by the participation of all citizens in political rule—so that everyone can claim to be ‘self-ruled.’” “Not being commanded by another to act in one way rather than another. This kind of freedom is realized by limiting the scope of government to the preservation of external peace, leaving each citizen free to seek whatever he thinks is the good.”
Interior/Natural Freedom “The ability of man to understand what is good, deliberate about how it is to be attained, and choose means suitable to attaining it. Unlike the animals, man is not determined by instinct, but is able to deliberate about his actions.” “A completely undetermined self-movement of will. Man is free not only to deliberate about how to attain the good, but to decide for himself what the good is.
Moral Freedom “Being liberated from bad habits and disordered passions that lead us away from what we know is the good. To be morally free is to live in accordance with the nature that God has given us—it is to be virtuous and wise.” “Not being determined by cultural pressures, rejecting conformity for the sake of ‘authenticity’ and ‘originality’ deciding on one’s own peculiar way of living human life, based on one’s own ‘freely chosen’ (i.e. arbitrarily chosen) ‘values.’”

These distinctions must be remembered when we talk about ideas such as free love, freedom of religion, or the free market. These phrases, like many others, take the liberal definition of liberty for granted.

 

 

 

The Myth of Modern Progress

There is a growing awareness that scientific and technological progress cannot be equated with the progress of humanity and history, a growing sense that the way to a better future lies elsewhere. This is not to reject the possibilities which technology continues to offer us…

—Pope Francis, Laudato Si’ § 113

Technological progress is not the same as moral progress.

Because many do not know the difference between the two, they think that the modern world must be fundamentally better than everything that came before. Defenders of liberalism and capitalism will say that these things are what led to “the unprecedented growth of science, industry, and markets.” Whenever anyone objects to the politics of liberalism or the economics of capitalism, they say: “Well do you want to go back to the Middle Ages? Back then half your family would die as children, you would all starve whenever there was bad weather, and if you survived all that you would probably die of plague.”

This mystification tricks many people into thinking that liberal and/or capitalist social arrangements are what have led to the lowest infant mortality rates and the highest life expectancy in human history. In fact, all of these changes are the result of technological and scientific progress. The use of new farming techniques, fertilizers, and machines have produced unprecedented amounts of food. New discoveries in biology, physics, and chemistry have produced medicines and knowledge needed to improve human health.

The use of empirical study to understand the natural world goes back to Aristotle (384-322 B.C.). Roger Bacon, a medieval monk, and St. Albert the Great, a Doctor of the Church, both employed the exact principles of the scientific method to better understand God’s Creation. The basis of most human science was developed in medieval Christendom and many other premodern societies.

On the backs of these thinkers and their experiments, modernity has witnessed great technological progress. But due to capitalism and many other evils, the modern world has seen centuries of radical moral decline. Historically, the beginning of capitalism around 1500 involved massive increases in working time, but did not improve the amount of food people had to eat for centuries (Broadberry et al., 2010, Table 23). The First Industrial Revolution, from roughly 1760-1850, actually lowered the standard of living for workers (Szreter and Mooney, 1998, pg 110). Today, the incredible inefficiencies of capitalism have created a world where our surpluses of food and medicines are denied to those who need them. A 2012 paper from the Food and Agriculture Organization of the United Nations states:

In principle, there is sufficient global aggregate food consumption for nearly everyone to be well-fed. Yet this has not happened: some 2.3 billion people live in countries with under 2,500 kcal, and some 0.5 billion in countries with less than 2,000 kcal, while at the other extreme some 1.9 billion are in countries consuming more than 3,000 kcal.”

Additionally, instead of serving the common good many capitalist technologies, in consumption and warfare alike, have been used to create a world of atomization, atrocity, and climate catastrophe.

Our technological progress is the reason for the improved health and prosperity of the modern world; our moral decline is the reason why these blessings are bestowed on far too few.