Michael Novak on the Pope’s Forthcoming Encyclical

It was only a matter of time before someone at First Things responded to Thomas Reece’s prediction about Benedict XVI’s forthcoming encyclical, “Charity in Truth.” For this debate, FT brought out the heavy artillery in the form of Michael Novak, author of The Catholic Ethic and the Spirit of Capitalism (among many other books) and one of the most prominent Christian defenders of free-market capitalism. Here is Novak in a piece on the First Things website entitled “Economic Heresies of the Left.”

What exactly is in Benedict XVI’s new encyclical on the economy and labor issues is not yet known. Catholic leftists and progressives, though, are already trembling with excitement. Three glaring errors have already appeared in these heavily panting anticipations.
An accurate presentation of real existing capitalism requires at least three modest affirmations:

1) Markets work well only within a system of law, and only according to well-marked-out rules of the game; unregulated markets are a figment of imagination.

2) In actual capitalist practice, the love of creativity, invention, and groundbreaking enterprise are far more powerful than motives of greed.

3) The fundamental systemic motive infusing the spirit of capitalism is the imperative to liberate the world’s poor from the premodern ubiquity of grinding poverty. This motive lay at the heart of Adam Smith’s important victory over Thomas Malthus concerning the coming affluence—rather than starvation—of the poor.

I think I agree with #1. I could also agree with #3 if Novak would be willing to concede some of the negative consequences of capitalism in poor countries.

#2 is a hard sell for me. Novak elaborates a bit on what he means by the notion that “in actual capitalist practice,” creativity and invention is a more powerful motive than greed. He writes:

And in the United States, scores of entrepreneurs are ready to risk losing everything they have in order to create something new, create something that will make life better for their fellow men. Henry Ford failed repeatedly in several businesses before he finally made the Ford Motor Company the great model for business that it once was. (It was the first establishment in history to pay its laborers a handsome wage of five dollars per day. At the time, ordinary lawyers averaged about $1500 per year. Ford’s motives, of course, were not altruistic; he wanted his workers to purchase the cars they helped build.)

As Oscar Handlin once noted, almost every industrialist who built a new railroad North and South in the United States in the nineteenth century prospered. Nearly every tycoon who tried to build an East–West railroad lost money. What spurred men to keep trying had less to do with greed that with the sheer romance of conquering the deserts and the Rockies. The element of romance in business is simply not grasped by dialectical materialists.

I guess I tend to lean a bit more on what Novak calls the “dialectical materialist” side. My understanding of human nature makes it difficult to believe that the PRIMARY reason why Ford did what he did was to better humankind. I find it even harder to believe that the early railroad tycoons did what they did for the “sheer romance of conquering the deserts and the Rockies.” (This argument completely ignores the race dimension of this romantic conquest. Was God pleased with this kind of “conquering?”) Any student of history would have a hard time accepting such interpretations of American progress.

I like what “Chris,” one of the commentators on the blog, has to say about the piece. (He borrows from Stephen Marglin and William Cavanaugh):

1) The issue with greed is not whether it exists or not, but whether the structure itself encourages or even glorifies what ought to be understood as a sin on par with lust and wrath. There is good evidence (and I have yet to see a satisfying critique of it) that capitalism’s rise was a direct result of a move by protestant theologians to repackage greed as self-interest, in the hopes that excess in what they saw as the least deadly of the seven sins would curb excess in the others.

2) What about the fundamental premises of Capitalism: The radically self interested individual, rationally seeking his own material comfort; scarcity; unlimited desire for consumption. None of these are things that Catholics can believe in if we take seriously the church’s teachings, and yet every economic model is premised on their being true as a matter of fact. I know there are attempts by economists to fit those things into traditional economic models; Marglin explains very well why every attempt to do so ends up at best problematic.

3) Finally, is our only duty to the poor to make them materially wealthier? If so, at what cost? Having traveled abroad to third world countries, generally, what the introduction of capitalism means is access to fast food chains and the destruction of the things that made them unique in terms of place, culture, the things that made them a people. Capitalism tends to homogenize peoples, to take away their distinctiveness. How do we measure this cost against the efficiencies inherent in easy access to McDonalds and Walmart?

I do not have the time or space here to develop all of Novak’s argument, but the piece includes the usual shots at big government and Catholic progressives. Read it for yourself and decide.