CST Economics: Swedes Proving What?

There's nothing like a post from Steve to rouse me from my administrator's doldrums, particularly when he starts to channel his (self-described) "hero," Michael Novak, on Catholicism and economics. I always hesitate to take Steve on because he is so smart (the exercise of prudentia) and because he is such a nice guy (the exercise of caritas), but, as he knows, he's pushing my buttons with this one -- I knew I'd pay for that "outlier" remark. In any event, here's my response to a couple of his recent posts.

First, a "Swedish" study? I'm instantly suspicious: remember the old right wing syllogism: Sweden leads the world in suicide; Sweden is socialist; therefore socialism stinks. I always thought it was the weather and the diet of pickled herring.

Second (and more seriously). I'm trying to figure out what this study proves about: (i) the comparative merits of American-style capitalist economics and European-style social democracy; (ii) what style of economics CST should favor. With respect to the first question, the study (which I have not looked at closely) seems to suggest that Americans in general have more stuff than Europeans, and that there is more equality in the US because American poor people have more stuff than European poor people. I'm no welfare economist, but my impression is that this is a very rose-colored picture. First of all, it fails to take into account the social costs of consumption that Rob pointed out. This has been a great theme of JPII. His problem with western capitalism is not that it is crushing labor (the 19th c. Catholic concern), but that it is promoting an idolatry of the material, an endless, soul destroying lust for more stuff. So maybe having more stuff is not so good! The Pope certainly has recognized the virtues of capitalist entrepreneurship, but he is distinctly aware that the creation of wealth can have very perverse spiritual effects. Second, I don't know about those equality figures -- certainly the picture is at best much more uneven. In the last 15 years or so wealth has become more concentrated at the top; the bottom is poorer and the middle and lower classes are more and more vulnerable to increasing debt burdens and slippage of social and economic status with little safety net (See Sullivan, Warren & Westbrook, "The Fragile Middle Class: Americans in Debt"). Third, is the "quality" of poverty really better here? Sure, lots of poor people in the US have (relatively cheap) TVs, (maybe) bigger apartments and crummy old beaters, but they lack health insurance, access to decent child care, schools and housing. The working poor--forget welfare--can barely sustain a living. For anecdotal evidence of that, take a look at Barbara Ehrenreich's "Nickel and Dimed," to get a sense of the desperate condition of people who actually have jobs and try to work for a living. I'm sure if we looked at things such as infant mortality, literacy, and other quantifiable factors, (not to mention racial disparities!) we would find that the life of the poor in the US can be genuinely brutal, and worse than that of the poor in Western Europe. I don't think there is really all that much to be complacent about when we talk about US capitalism and the amelioration of poverty. We are still talking about some pretty "savage inequalities", as one commentator whose name I've forgotten has put it.

Leaving aside the question of whether the Swedish study fully reflects both the social costs (Rob's point) or the level of inequality in the US (my point), there is a larger question about the reassurance Steve seems to draw from it. This study (as well as Steve and Novak) seems preoccupied with an old battle. Their old battle is the one against "socialism" or "European-style social democracy", sometimes referred to more generically as "statism" as a kind of omnibus category. And the argument seems to be that capitalism has created more wealth for EVERYBODY, and not just the capitalists, than any form of state organization of the economy that ever existed (most notably, Soviet communism and the different types of socialism.) From a Catholic perspective, Novak and Steve would argue, capitalism is much better because it preserves liberty (essential to the dignity of the human person) and, because of its wealth-creative force, it is much better for the poor than any state-sponsored attempts to redistribute wealth or restrain entrepreneurial energies. Steve apparently is claiming that the Swedish study vindicates both claims: American-style capitalism produces both more wealth and less inequality. Having addressed the question of whether the study actually does prove the latter point, I want to address more broadly the way Steve has framed the question.

First, forget socialism and social democracy as betes noirs. To a large extent, they are yesterday's news. It's also not news that American style capitalism produces more wealth than socialism and most social democratic regimes. The question is how uncritically we should embrace American-style capitalism. How should we should think about what the process of capitalist creative destruction costs in human terms, and whether there is any way --governmental or private -- that the costs can be mitigated? European social democracy was an attempt to take those human costs into account, and was often inspired by the CST tradition. Can that experiment suvive in the face of brutal global competition? Maybe not, but that is no reason to assume that the struggle to ameliorate the inequalities still produced by capitalism in its global form should be abandoned. Whether that struggle will gravitate toward European-style social democracy I don't know, I don't think the Swedish study establishes that the wealth creative effects of capitalism are significant enough to eliminate the need to deal with the profound inequalities that capitalism can generate.

Second, the "Leviathan" that Novak inveighs against is the state. But, today, the state looks weaker than ever. Besides the disintegration of states in what used to be called the third world, and the vulnerability of great nation states to terrorist NGOs, we see the massive power of multinationals -- particularly international finance -- to influence world affairs and the fate of the most impoverished peoples on earth. I suppose the old difference between left and right remains: Which Leviathan do you fear most -- the State or Capital?

Third, it is the note of triumphalism in Novak (and, I fear, in Steve's post on this topic) that troubles me the most, and which I find does not resonate with the CST tradition. To look at capitalism as a relatively unmixed blessing ignores its character as a human institution which, as Steve has pointed out, must be "fallen." It creates wealth and destroys wealth. It enriches the poor but creates more poverty. Capitalist economies are richer than command economies and (maybe) their poor are better off than other poor, but they still generate inequalities deeply inimical to human dignity. Statist solutions are not necessarily any better -- in the effort to redistribute wealth they may reduce aggregate wealth and simply enrich powerful interest groups. But CST does not tell us that the "preferential option for the poor" and the positive rights needed to preserve human dignity can be established simply by letting corporations do what they do best. Yes, the "poor will always be with us." The question is what we as Catholic Christians should do about it.

I'll conclude by countering Steve's Swedes with a couple of Italian economists, Stefano Zamagni and Luigino Biondi, economists whose Catholic-inspired thinking about the "economy of communion" offers an interesting alternative to our usual sharp antitheses.