Capitalism versus Communism

"Communism is intrinsically evil"

— Pope Pius XI

Capitalism responds to the aspirations of the human person, but it has been vitiated by the current financial system

Adam Smith, considered as the father of capitalism

Karl Marx, thought of as the father of communism

One hears often: "Capitalism is not better than Communism. The Church has condemned both with the same vigour. So the capitalist system deserves no more consideration than the communist system."

This is completely false. To say so is to attribute to the capitalist system evils that come not from the system itself, but from the abuse of individuals who behave more like tyrants (like leaders of Communist countries) than like citizens of a country that is genuinely capitalist.

Pope Pius XI wrote this about Communism: "Communism is intrinsically evil, and no one who would save Christian civilization may collaborate with it in any undertaking whatsoever" (Encyclical letter Divini Redemptoris, n. 58).

However in another encyclical letter (Quadragesimo Anno) Pope Pius XI wrote: "Capitalism itself is not to be condemned. And surely it is not vicious of its very nature, but it has been vitiated." One will see how it happened in this article.

Communism is intrinsically wrong, not only because it divides man from God, but also because of the little importance it attaches to the individual, even in the temporal area. Communism degrades the human person. It does not take into consideration the nature of man, created by God. It tramples on the individual's freedom of choice. For Communism, man is nothing but a tool that can be used for the goals of the Party, a tool that must abide by those goals or be crushed ruthlessly.

Communism is tyrannical to the highest degree. Once in power, the Communist Party allows nothing that could jeopardize its ideal. It exercises absolute control over everything and everybody. It orders what to do or not to do: you must accept what the State decides for you or it will make your life miserable.

The capitalist system has not reached this point. The flaws for which it is blamed are not inherent to capitalism itself and do not come from its nature but from the financial system it utilizes. It is a financial system that dominates instead of serves. It is the financial system that vitiates capitalism.

The fall of Marxism in Eastern Europe does not necessarily mean the triumph of capitalism, which has to be corrected of its financial flaws.

The capitalist system is, by definition, a system that answers to the aspirations of human nature. In fact, capitalism can be defined as a system that recognizes and protects private property, free enterprise, freedom of choice for the human person, the sovereignty of consumers over the objectives of production through free markets — the products: chosen or ordered by the consumers, guide the programs of production.

Some will object: "Things do not exactly happen like that in our capitalist countries. Private property is being given a rough time, especially in the means of production, which is being enjoyed by an increasingly small minority of people. The majority must enter the service of the minority, for fear of starvation through lack of purchasing power. The lack of purchasing power kills or reduces the freedom of the choice of goods and therefore suppresses the sovereignty of the consumers over the objectives of production. Do not conflicts between employers, who constitute a minority, and employees, who constitute the majority, show that the present system has difficulties in answering the aspirations of people and that even capitalism attaches little importance to the freedom of choice of the majority?"

The answer to this objection is precisely in the fact that capitalism is restricted to the minority and is not distributed to be enjoyed by the majority. One cannot say that a country lives under a capitalist system when capitalism concerns only 5 percent of the population and that 95 percent of the people only live thanks to the permission or goodwill of the other five. Such a system is therefore only five percent capitalist and 95 percent slavery. It is getting closer to Communism, as the power to dominate the lives of others is being concentrated into fewer hands.

It is therefore not the capitalist economy in itself that must be blamed. One must not wish for the destruction of capitalism, but for its widespread diffusion. If there is only 5 percent of the population of a nation that enjoys the status of a capitalist, one must strive to increase this percentage to 100 percent, instead of wishing to bring it down to zero percent.

Through Social Credit

This is exactly what a Social Credit financial system would do, in replacement of the present financial system that dominates, intoxicates and slowly destroys, genuine capitalism. Social Credit would turn every citizen into a capitalist by right. In the economic field, man would be re-established in his liberty and be given the right to organize his life according to his own choice, provided he respects this same right for other people.

Also economically speaking, the greatest benefit of being a capitalist, when man knows how to put a limit to the pursuit of ever increasing material wealth, is his freedom of choice. Insofar as his capitalist income allows him to live decently, he is free to accept or refuse any project that is being proposed to him. His income is not conditioned by personal participation in production, so he can use his free time as he wishes. He may certainly still accept a job, but he may also do activities of his own choosing — and these activities may well contribute to the enrichment of society, with wealth that is not necessarily material. Free labour is generally more creative and fruitful than hard labour.

This capitalist income is called a dividend. This dividend brings unconditional economic security or "absolute economic security", to use the words of Douglas, the founder of the Social Credit school of thought. As for the wages and salaries, even though they are sufficient for a decent living, they can only offer a limited and conditioned economic security, a security conditioned by a job, employment or a type of bondage.

Those who praise wages and discredit dividends are praising bondage and discrediting freedom. Trade unions and other groups who advocate full-employment policies associate the right to live with bondage. As for the Social Crediters, they advocate the distribution of a social dividend to each and every individual. They want an economic system of freedom for everyone, the right to live tied to the human person and not to the fact that this person is hired in production or not. This social dividend would be given to all, to those who are employed as well as those who are not. Therefore, it would not prevent appropriate remuneration for those who are employed in production in any way.

All capitalists

What basis has Social Credit for saying that every human being is a capitalist by right? This has been explained several times in back issues of "Michael", so we will only summarize it here.

Today's production is the result of several factors: first, the existence of raw material, natural resources which have been created by God, without which nothing would be possible; second, from knowledge that has been acquired and passed on from generation to generation, inventions and discoveries of new sources of energy and the improvement of production processes; third, human labour (even though this would decrease) and fourth, investments and financial capital, which consists of mere figures that allow the mobilization of material and manpower.

Among these four factors, the most important ones are obviously the first two. The natural resources are not earned but given by God, they are real capital created for all people of all generations to be used for their normal needs and to be maintained (if it is inert goods like ore) and not foolishly wasted as it is done on a world scale today.

Then there is ever-increasing progress in the means and methods of production; progress realized by past generations as well as the present generation; a progress of which the growth and transmission are due to life in society and of which no individual or group can pretend to be the exclusive heir. It is this common heritage, a real capital of great value that allows society to produce even more, even with less people employed in production.

Suppress this community heritage and today's production will not reach one-hundredth of what it is at present, even if you would hire all available manpower and invest a lot of money.

This is why we say that each and every member of society is born an heir and the owner of real capital, the preponderant factor in today's production. Everyone must have capitalist rights over a growing part of the fruits of production, without eliminating wages and salaries for those who personally take part in this community capital.

And we add that, according to Douglas'teaching, the increase in productivity should be translated into an increasing percentage of the purchasing power.

This would be due to the growth of the community heritage and not to the personal contribution of producers. Then it could be distributed in the form of dividends to all and a (slowly decreasing) percentage in the form of wages for jobs that are becoming unnecessary.

In keeping with God's plan

This method of distribution for continually growing production would kill any communist or socialist propaganda at its base. It would also be the most effective way to recognize what Pope Pius XII called the fundamental right of every human being to the goods of the earth in his famous radio address of June 1, 1941:

"Material goods have been created by God to meet the needs of all men, and must be put at the disposal of all of them, as justice and charity require.

"Every man indeed, as a reasonable gifted being, has, from nature, the fundamental right to make use of the material goods of the earth, though it is reserved to human will and the juridical forms of the peoples to regulate, with more detail, the practical realization of that right."

What juridical forms or laws have ever proposed a method as effective as a dividend to each and every person, a basic income to apply in practice the right of every man to make use of the material goods of the earth? This could be done so easily, at least in developed countries where the most serious economic problems are not about production but about the sale of goods.

The Pope added: "Such an individual right cannot, by any means, be suppressed, even by the exercise of other unquestionable and recognized rights over natural goods."

These other unquestionable and recognized rights obviously include the right to property — property of land, production concerns, means of transportation, stores, etc. All these goods are legitimately managed by their owners,` who can legitimately draw profit from them, which is for them what wages are for the employees. However, the fact remains that only God is the absolute owner of everything. He is the first author of any possibility of production and He wants every human being — all of His children — to enjoy the fruits of His work. This is why His Church reminds us that any private property has a social function to fulfill. In other words, it must not be used for the sole profit of its owner but be useful for all, and to be used for the common good of all.

Today, this social function has become difficult to fulfill because many private owners must fight to save their properties from ruin, in a world of unrestrained competition, of financial privileges for the powerful and the ever-growing taxes levied by all levels of government.

The social function of private property would be wonderfully and automatically fulfilled through a social dividend which would give a claim to the fruit of all production to each person. And this would happen without impoverishing the owners, instead it would do them a service, since their products (if they are necessary) will be easily sold on a market where consumers have enough purchasing power to provide for their basic needs.

An answer to two accusations

One accuses the concentration of wealth in the hands of a few as leading to Communism. This is true, because this concentration leaves the mass of have-nots easily open to communist or socialist propaganda. Or because the State intervenes with the goal to break the monopoly and nationalize big industry and this leads to State Socialism. But one should not conclude from this that sound capitalism is wrong. Indeed, it is the present financial system that leads to the concentration of capital in the hands of a few, thus vitiating capitalism and opening up the way to Communism.

One also accuses the present capitalist system of creating new artificial needs in order to sell its abundant production and thus leading to consumerism and materialism, just as efficiently as the atheistic and materialistic laws of Communist countries would do.

Here again, one must not accuse the capitalist economy in itself, but the financial system, of which the controllers refuse to distribute purchasing power in other ways than employment in production: no job, no money. Progress, which should be a blessing by freeing man from the need for employment becomes on the contrary, a curse, a problem, when the income disappears along with employment. Then one will look for solutions in the production of new material goods. Yet, these new goods have to be sold and to this end, artificial needs must also be created. People must be convinced that they need these new products, which contributes to outright materialism. The dignity of man is ruthlessly sacrificed to the necessity of keeping production going, even though the production already made is more than sufficient to meet the basic needs of all. It is certainly a drive towards materialism. (Editor's note: And it also contributes to the unnecessary waste of resources and destruction of the environment.)

In a Social Credit financial system, human greed — one of the consequences of original sin — would still exist, but it would not be stimulated or imposed by the necessity of purchasing power tied to employment. The social dividend to all would dissociate — in an ever-growing part — purchasing power from employment in production and would lead society in the way opposite of materialism.

Pope Paul VI, in his encyclical letter Populorum Progressio on the development of peoples, wrote that the pursuit of development called for, "the deep thought and reflection of wise men in search of a new humanism, one which will enable our contemporaries to enjoy the higher values of love and friendship, of prayer and contemplation."

This reminds us of the remark of a French Christian philosopher named Maritain, who said that progress that is used wisely, should not lead to a civilization of work, but to a civilization of contemplation.

Would not this new humanism, wished for by the Pope, allow man to free himself from materialism and to "enjoy the higher values of love and friendship, of prayer and contemplation?" Would it not be well served by the adoption of the Social Credit financial proposals? These proposals were conceived in 1917 by a genius, Scottish engineer Clifford Hugh Douglas, but were persistently refused and fought, even by university professors and other members of the elite.

Catholic and Social Crediter

The Catholic who is also a Social Crediter has all the tools needed to face the communist and socialist propaganda on both spiritual and temporal fields.

A Catholic who, out of ignorance, complicity or abdication, only knows or admits the present financial system in economics, may possess solid spiritual arguments against Communism. However, he will be pitifully empty-handed when the time comes to present a Christian solution to the scandal of an abundance of goods being destroyed in front of human needs that are never satisfied.

How can a Catholic condone the submission of real possibilities of public or private production to the conditions of a financial system that has become an end instead of a means, a master instead of a servant; a financial system that consents to function only by dictatorship and debt? How can a Catholic not prefer to this tyranny, a flexible financial system that fits the physical possibilities of production with a guarantee to cover the basic needs of each and every human person without humiliating inquiries, conditions, or debt?

Father Thomas Landry 0.P. said to a group of Social Crediters in a homily on March 7, 1937: "How good it is to be a Catholic when one is a Social Crediter and how good it is to be a Social Crediter when one is a Catholic." Yes, Father, the Pilgrims of Saint Michael are convinced of it, through personal experience.