[These two letters written to me are part of the Little Letter Republic, a project whose purpose is to build community in St. Louis and beyond. I did not write them, and thus do not necessarily agree with everything said. I post it because them because they worth engaging with. I am always accepting letters. These are in response to “Contra ‘New Polity’ on Capitalism”.]

Hi Sebastian,

I did take a look at your letter.  It was a few days ago, but I do have a few general thoughts.  You are absolutely right to question this imagination of medieval Catholic ideas on exchange.  Virtually all serious research in this area presents a very different understanding, but the idealization persists.  On the other hand, while you cite real texts in support of your counter position, I think you go too far in the direction of imagining an understanding that can be labeled “pro-capitalist.”   I’m afraid your position comes off looking tendentious as well.  There are texts in both Albert and Thomas (and others) that indicate their real concern for a personalized ethics, and in Thomas, a real understanding that relying simply on market price relieves the exchanger of taking the necessary moral responsibility for his actions.  (I believe I make this point in E&N).  I think you need to bring this side out as well.  What I find most interesting is that even if scholastic authors question the simple assent to market price, they all recognize that there is such a thing, and they all recognize that even if not the perfect personal solution, it provides the best guide to the question of economic value.  That’s to say that at least from the time of Albert (and evidence has been found that takes this back to the 12th century), there is a clear understanding of the existence of “market price” and the elements contributing to everyday price formation, and that this price can be seen as “just” (but see below).  I’ve only found one who speaks of economic value in everyday exchange as properly determined by primarily personal decision based on the needs of the other.

Two other points I think important. 

The value that  Catholic thinkers in this period allow to the Common Good is exceptional.  I stress this even more in my following book, A History of Balance, and I think you might like to take a look at my first 2 chapters.   This informs their “economic” thinking in a way that has surface similarities with the capitalist imagination, but is different in important respects as well.

I think both the authors you critique and you yourself should have a clearer understanding of Thomas’ attitudes toward “justice” with a small j, i.e. what is permissible by law.  I discuss this, too, in E&N.  I think you’ll find that it is a relatively low bar: designed to facilitate the functioning of the community, and thus many things are permitted by the “justice” of human law that are far below what divine law and justice require.  So it would be good, I think, to point to this distinction.

I commend your desire to bring scholarship into this discussion.

Cheers,

Joel

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Dear Sebastian,

What a feisty, pugnacious essay! I enjoyed it immensely, even if it took up my whole lunch hour. I wrote down some notes in agreement or disagreement with each of your 6 points. I have to say, though, I agree with the general tone of your essay. Granted, the burden of proof is on New Polity, so your objections can be sound without the implicit foundations of your arguments correct. In general, ironically, I found your arguments in need of more empirical data and less generalization–just like your beef with New Polity, right! I think the moral argument needs to be more nuanced. 

1) Alienation and Mechanization: First, what you say about mechanisms of economy is spot on. They’ve always existed, and having more intricate ones with more moving parts in the digital world is not bad, nor is it different. But you’re too dismissive of this point: where do you draw the line? How much alienation is too much, or at what point does a mechanism produce alienation that is definitively immoral?

For instance, the mechanisms of a global economy, if not immoral themselves, can certainly lead to immoral behavior, can certainly encourage it. People would be a lot less likely to buy Nike shoes, for instance, if their factories were in our own cities instead of Indonesia. That’s not at all a denunciation of this mechanism per se; I’m just pointing out that not all mechanisms are equal. Just because they’ve been around since time immemorial doesn’t mean some don’t encourage things like alienation. Of course NP’s attitude needs to be more nuanced, but it shouldn’t be dismissed outright. Some alienation is perhaps necessary, but at a certain point I think it’s reasonable to say that certain mechanisms lead to a level of alienation that is unacceptable.

2) Argument of Arbitrage: again, I agree completely that arbitrage is not only not immoral, but a good to be fostered, and a way of creating equilibrium. That’s fair. I especially appreciate the pre-Revolutionary France example. But again, just because arbitrage as a concept is praiseworthy doesn’t mean that it is in all its instances. Again, your refutation is legit: but I would be more interested in a positive argument for how to have ethical arbitrage. Surely at some point my buying and reselling of goods ceases to be itself good and praiseworthy. The crux of the question, I would argue (and NP seems to agree) is the common good. 

Take the crash of the housing market for example (based entirely from my watching of The Big Short). Those investors were gaining capital by purchasing bad debt, and in gaining a prophet in this way, they ended up devaluing the market and causing an economic collapse. Granted, this problem can be solved by tweaking the mechanisms of buying and selling; you don’t have to overhaul the system and eliminate the value of debt. But again, your guiding star has to be the common good, which you don’t seem to acknowledge.

3) The theorist-phenomenon fallacy (love the name!). Once again, I find myself in complete agreement that we, self righteous academic Catholics tend to way overvalue abstract ideas. I usually commit the fallacy three or four times before breakfast. But don’t go to the opposite extreme! Don’t you think that ideas, ideologies, philosophical principles gradually inform the way a people will think, act, consider? De Tocqueville makes an entire thesis of this in his visit to America. Nobody here has read Descartes, he writes, but nowhere in the world are his ideas more implemented. Accordingly, I don’t think it’s unreasonable to say, quite simply: self-interest is the guiding principle of this economy, therefore people tend to act in this way first, before considering service to others secondarily. Is the basis of our economy not self interest? I would need to see this demonstrated.

4) Monopolists: you are very dismissive of the cries against big corporations destroying local businesses, etc. A year or two ago Amazon informed in a commercial that they really aren’t against the little guy. They showed a video clip of a small business owner smiling because he worked with Amazon, so it must be true! Your argument feels a little like this also. Again, I would like to see empirical evidence that either a) these monopolies are not, in fact, destructive to local business, or b) local business and economy is not in itself a good worth preserving. 

5) Index funds: I enjoyed this section most of all. I agree with you that the fact that they’re impersonal is not bad (a sentence which I hope I’ll never utter again in any context!!). But the lack of autonomy is a serious problem. I tried to do a quick search to see what percentage of an average portfolio is going into the porn industry, but I couldn’t find good numbers. But I would like that kind of statistical info before giving my approval. That’s why we’ve been investing with Ave Maria Funds. Again, I agree with you that index funds are not inherently immoral, but that doesn’t make them inherently good either.

Which leads to my next point. Albert and Aquinas, writing 800 years ago, are pro market price. That’s fine, but you fail to acknowledge the ways the market is different now than it was in their time. The index funds are a prime example: capital is considerably more fungible now than it was in their time, leading to issues that they did not anticipate. Should an item be sold at market price if the sellers have established total control of the market? Didn’t that hedge fund this winter try to pull this, and artificially lower the market price of Game Stock, before they were foiled by Reditters? But the point is, the market price cannot remain the only consideration regarding morality when investors have gained so much more control over how these things are set. All the ways capital is different from medieval times would have to be considered before we can accept Aquinas and Albert’s teachings out of hand. 

John