Labor's Victims

Economic law cannot possibly be contradicted by moral law. The moral law tells us what we ought to do. Economic law, on the other hand, is purely descriptive and necessarily amoral, having nothing to do with morality one way or another.Thomas E Woods Jr. The Church and the Market A Catholic Defense of the Free Economy pp 29-30

If you skim through this book and read Woods arguments (for example) about why child labor laws are bad, why there is no such thing as price gauging, and why there should be no workplace safety laws you may be tempted to put it down, perhaps violently. But there is a solid argument in this book in support of neoconservative economics. When Woods says that Catholic Social teaching is incorrect and that all popes since Leo XIII have been wrong about how the market works and mistaken in their idea that there exists something called a living wage, Woods statements (wrong or not) are rational. And being rational, they will appear to many intelligent people as reasonable. Lets look at how he arrives at the conclusion that the minimum wage in particular and unionism in general are bad for workers and massively destructive to the economy.

To Woods, there is no living wage in the sense used in Catholic social thought. Wages are what they are and whatever wage the market sets is a fair wage, whether it can support the worker or not. If some outside entity like the government or a union artificially raises the fair market wage, they reduce the amount of money that capitalists have to spend on wages and therefore capitalists will not be able to hire as many people as they otherwise would. Wages are therefore a zero sum game where people who demand wage increases outside of what the free market will bear are taking the bread out of the mouth of other workers.In fact, wage increases are not really necessary. It is not wage increases that increase the standard of living. Its improvements in productivity (produced exclusively by capitalists either through capital expenditure or their management skills). When productivity is improved, prices fall. It follows that the workers (static) wages buy more and from that the workers standard of living rises.Paying workers beyond what the free market dictates (and the market is an amoral dictator) decreases the available capital that capitalist can use to increase productivity. Fewer workers also means less productivity. So unions and the minimum wage, by lowering the productivity of a country, lower its overall wealth, which affects everyone. Lowering wages, on the other hand, unleashes productivity and makes things better for everyone. If Pius XIs encyclical Quadragessimo Anno, which says

...that all men must be paid a wage sufficient to support their families in reasonable comfort, and that where this is not possible social justice demands that changes be introduced as soon as possible whereby such a wage will be assured to every adult workingman pg 67

is correct, it follows to Woods that

...we should remove as many obstacles to investment as possible, and eliminate taxes on capital, excess profits, and the like.

He points out that this is the opposite of what Catholic social theorists usually address and in fact the entire book is a contradiction of Catholic Social Teaching.However, he argues that his position is entirely consistent with Catholicism as such because of the objective nature of economic analysis. Objects have use values (utility) and exchange values. Use values are idiosyncratic and subjective. Exchange values, convertible to money, are universal and objective. The free market, which Woods sees as stemming from Natural Law, both promotes social wealth and social welfare in part because it is part of Gods order of things. The world of use values (utility), on the other hand, is the world of moral rules, since things have morally appropriate and inappropriate uses. According to Woods, the popes can be forgiven for not understanding the (radical) difference between the two. In a perfect world, they would stick to the moral order where they have expertise and authority and leave the economic world to the (neo-conservative) economists.From Woods argument we can see all of the assumptions of Republican economic theory. Supply side economics says that the stimulator of the economy is capital. Lower taxes on capital and the One Percent is the way to promote growth. Taxes take away from the national pool of capital and therefore are bad for the economy. In fact, if the goal is for people to accumulate more exchange values in order to have more utility (and thereby increase their standard of living), taxes take away part of peoples (potential) utility and therefore taxes and government intervention become a problem for liberty itself, since more wealth means more potential utility which in turn means more liberty. If wages are a zero sum game, then it truly follows that it is people who receive special outside support, like people receiving government welfare or union benefits, who are actually responsible for the other people being out of work. Because capital is the author of all value, it become entirely consistent to demand the privatization if not the abolition of things like Social Security, unemployment benefits, Medicare and Medicaid, welfare, etc. (since these things reduce the supply of capital) and yet to still be able to say that one is a good Catholic, respectful of Catholic moral teaching.Lets give Woods the last word:

Pius (XI) concludes (that) it was (Leo XIIIs) Rerum Novarum to which great credit must be given for whatever improvement has been achieved in the workers condition.To the casual observer this statement is innocuous enough. But there is a hidden assumption here, which is central to the rest of the document as well as to nearly all of late-nineteenth and early twentieth-century Catholic criticism of the market order, and upon which practically the entire edifice of recent Catholic social thought is built. Thus if this assumption, rarely if ever stated implicitly, should turn out to be erroneous, the entire structure on which it rests must be considered a legitimate matter for honest debate among Catholics of good will. pg 55

unagidon is the pen name of a former dotCommonweal blogger.  

Also by this author
Snakes and Ladders, Part 3

Please email comments to [email protected] and join the conversation on our Facebook page.

Must Reads