God or Mammon?
by Father Peter Coffey
in Philosophy, professor at Maynooth College, Ireland
in front of plenty
the ills of society, economic and political, are obvious and menacing,
their real causation must be discovered by accurate diagnosis before
they can be remedied...
is the purpose of the industrial and economic organization of society?
Is it to provide employment work for all? Or is it to produce,
and make available, material goods and services with the least possible
amount of work (employment)?
process of increasing the productive efficiency of human labour, and of
gradually diminishing the amount of it required and of supplementing
it by labour-saving machinery during the past 150 years, has now reached
the stage at which society, so organized, can make available an ample
sufficiency of the material necessities of life for all with a steadily
diminishing amount of human labour.
this organization has been working so defectively has so deplorably
failed to deliver for use any more than a mere fraction of the wealth
which it is equipped to produce that
the public does not yet realize the enormous productive capacity of the
industrial system, and
it still believes that a sufficiency of wealth can be produced only by
the whole population labouring as long and as hard as people had to work
ages ago, before modern labour-saving machinery was invented.
machinery is blamed as a curse instead of seeking to discover why
machinery is being more and more held up idle, and what is preventing
the distribution and enjoyment of its products.
generally are just beginning to realize that the world, under the
capitalist industrial and economic regime, has reached the age of
potential plenty. They hear of millions of tons of wheat and coffee
being destroyed; crops being deliberately reduced; wealth in a variety
of forms being destroyed instead of being distributed for consumption;
men willing to work being kept idle; machines and factories running
short time in all countries; while at the same time millions of the
world's population are in destitution, and their natural right to
marriage frustrated because the system is failing to distribute the
ample and increasing wealth which it could produce if it were permitted.
while they rightly cry out for a reform of the system, they are mostly
ignorant and in error as to what is really wrong, and hence espouse
futile and unlawful schemes of reform.
schemes are Communism and Socialism unlawful because they deny
natural human rights; futile, because they wrongly diagnose, and would
therefore fail to cure, the economic evils from which society is
suffering. The Popes have condemned them, and that is enough for
purpose of an economic system
find the right remedy, we must diagnose the disease aright. The obvious
and natural purpose of all economic and industrial association is to
provide material goods and services for use and consumption. To serve
this end, there are two processes:
production (including transport) and
distribution of products among consumers by exchange (trade, commerce).
former is becoming ever more and more efficient. Therefore, the defect
lies in the latter; it is the distribution that has broken down.
the medium of distribution is money. The monetary system is not
discharging its natural function: i.e. is not delivering the goods.
defective monetary system
is essentially a system of exchange tickets, the value or validity of
which is based on men's belief (credit) in the wealth-producing capacity
of the community using them. Its sole right function is to ensure that
all the wealth which the community is capable of producing be
continuously produced and exchanged among consumers for use.
is the duty of the State to so control the system of issuing money
tickets for wealth-production, and cancelling them through
wealth-consumption, that the system effectively discharge the
above-mentioned function. But all modern governments have neglected that
duty by committing the whole money system to the unfettered control of
groups of private citizens, who have ignored that essential purpose of
the system, and have made it subserve an opposite and anti-social
purpose: which is nothing less than monopoly and consolidation of all
economic and even political power, and domination of society in their
Pius XI, in his encyclical letter Quadragesimo
Anno, has explicitly called attention to this international
world-monopoly of finance, and indicated some of its disastrous
controllers of this financing or banking system issue the community's
money tickets (for wealth-production and distribution) to the community
as a debt to themselves (at interest), and recall and cancel these
tickets (through prices for a portion of the wealth produced) before the
total wealth thus produced is exchanged for use by consumers: thus
causing an ever-widening chasm between the community's purchasing power
as consumers, and the total of accounted prices (which is the total
money due to the banking system) for the wealth which the community has
Hence forced export and competitive struggles of nations for foreign markets: hence the piling up of international debts: hence economic conflicts, leading to wars: hence the progressive mortgaging of the whole industrial plant and capital and wealth-sources of society to the world-monopoly of banking.
State has become a slave
disastrous consequence, indicated by the Pope, is the effective
enslavement of the State (i.e., of all modern governments of all
political organizations and authority in the modern world) to a
superstate plutocracy in which supreme political power is usurped and
wielded by the monopolistic controllers of the very lifeblood of
economics and industry, which is finance.
this utter perversion of right order for the industrial and economic
organization, and the authority of this latter ought to be (in the
temporal domain) supreme. This authority derives rightly from God, and
not from the superior might or craft of those who have usurped economic
domination and who are swayed by greed for power.
as a consequence of this growing financial impoverishment of the masses,
and of progressive mortgaging of the community's productive plant and
capital and wealth-sources to the finance-controllers, the State had
perforce to take over and administer many of the economic organs within
Pius XI, in Quadragesimo
Anno, has indicated some of those cooperative organizations
guilds or corporations of wealth-producers, the purpose of which
would be to secure a better-planned and more efficient production of
they can accomplish this purpose only if the State first makes the money
system subserve industry by legally directing this money system to keep
the products of the community's industry (as producers) distributed for
use to the community (as consumers).
is the duty of those commissioned to teach and to rule, whether in
Church or in State, not only to formulate sound practical principles for
the guidance of men in their social, political, and economic relations,
but also to study the actual conditions prevailing in those relations,
so as to be able rightly to apply the principles to the facts, for the
elimination of abuses and the amelioration of conditions.
has been robbed of its credit
banking system alone has and exercises de facto the power of creating
and cancelling money.
value, validity, purchasing power of this money rests ultimately not on
gold, but on the National Credit, i.e., the community's potential rate
of real wealth production compared with consumption.
the community should not be forced to pay a perpetual money levy to
private creators and issuers of money on its creation and issue. The
community is forced to pay such a levy, and this in money which not the
community, but only the bankers can create.
payment of interest by the community to the banking system for money
newly created (and costless) is on a wholly different footing from
interest charged on already circulating money by individuals who have
earned and saved this money, and invested it in (or lent it to)
consequences of this failure of money to discharge its essential
function are disastrous and cumulative:
Cut-throat competition to recover proportionately the greatest sum in
prices in return for the least volume of goods sold;
A steady stream of bankruptcies (of the weaker and less ruthless
producers) as an inevitable result of the mathematical impossibility of
recovering for the banks more money than exists in the community;
The replacing of competition by monopolistic rings to raise prices;
The growing accumulation of an unsaleable surplus in each capitalist
The forced export of this surplus and consequent struggle for foreign
markets, ending in international economic and military conflicts;
The development of the banking policy of financing capital equipment to
provide consumers with money to purchase some of the otherwise
unsaleable surplus of consumers' goods;
The gradual breakdown of this device, owing partly to substitution of
machinery for human and wage-paid employment, and partly through the
capital equipment becoming excessive and lying idle (through lack of
consumer's incomes which would purchase its ultimate products).
governments wanted to remedy these situations through various
palliatives, through public works, or direct aid to the most destitute.
the governments can get the money necessary for these remedies only by
Through taxes, taken on the already insufficient incomes of the
Through loans from the banks, new money created by the banks, but which
must be repaid with the interest.
failure of these remedies is obvious. They will leave the consumers with
a bigger debt and less purchasing power...
solve the problem, it is clear that the governments must:
Take back their prerogative, and exercise themselves the control over
the volume of money required for the population;
Base the money on the productive capacity of the country;
Issue new money, no longer as an interest-bearing debt to the bankers,
Give a national dividend to each citizen.
the same time, in order to prevent automatically any inflation or
deflation of prices, and to maintain a perfect and constant balance
between prices and purchasing power, prices must be subjected to a
national discount, set in accordance with the statistics of production
and consumption. This discount will be calculated so as to fill the gap
between prices and collective purchasing power.