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Equality versus Feeding the Hungry

The recently released Vatican document on finance and economics, Oeconomicae et pecuniariae quaestiones, seems as much calculated to balance some of Pope Francis’ statements on the topic as to contribute a Catholic voice to discussion of the role of finance in the 2008 crisis. The document’s tone is notable, as is whom the document addresses, not simply governments and how they might respond, but also individuals pursuing vocations in finance and business.

Yet the document’s analysis also has weaknesses. Most notably, while the document nods at the stunning decline in extreme poverty in recent decades – around 1 billion souls moved out of extreme poverty – the document quickly moves past this development to focus on inequality as something that is, in itself, “harmful to human society.”

The document avers:

Although global economic well-being appears to have increased in the second half of the twentieth century with an unprecedented magnitude and speed, at the same time inequalities proliferate between various countries and within them. Moreover, the number of people who live in conditions of extreme poverty continues to be enormous.

The next paragraph decries limp responses to the financial crisis of 2008, “the response seems at times like a return to the heights of myopic egoism, limited by an inadequate framework that, excluding the common good, also excludes from its horizons the concern to create and spread wealth, and to eliminate the inequality so pronounced today.”

I accept commentators often use “inequality” as a synonym for “poverty.” But this document, as do others more generally, both Catholic and not, glosses beyond this, presenting bare inequality as something illicit in principle. To be sure, inequality can result from illicit actions. But economic inequality need not result from injustice.

Rapping inequality as inherently unjust means the document glosses over an important aspect of today’s economies: The document discusses inter- and intra-national economic inequality as phenomena unconnected to the global decrease in extreme poverty. Yet the same engine that generated the huge reduction in global poverty almost certainly generated rising (relative) inequality. Failing to recognize this possibility means the document talks past not-so-subtle subtleties in the global economy, and fails to recognize tradeoffs inherent in its analysis, particularly the need to trade off further decreases in poverty if we heed the call to reduce bare economic inequality.

Are we really to think, or does Catholic social thought really hold, that a world in which perfect equality holds and every family subsists on, say, $15,000 a year is preferable to a world in which 90 percent of families live on $30,000 a year while ten percent of families enjoy $150,000 a year, or even $1.5 million a year? Is it really worse for everyone to eat more in a world with economic inequality than for everyone to eat less, but equal in their hunger?

To be sure, Catholic social teaching affirms, along with many natural rights philosophers, the “universal destination of goods.” This is the idea that the world, and all the world’s goods, are for the use of all of humanity. Affirming this does not run counter to a strong belief in private property in Catholic social thought or elsewhere. Quite the opposite. Private property provides an incentive compatible means of distributing the world’s goods to all, or at least distributing the world’s goods to more people than alternative systems.

To be sure, there is a limitation of title in case of extreme need, but that, too, is consistent with a strong commitment to private property. John Locke, for example, in his First Treatise, appeals implicitly to the idea of the universal destination of goods: “God, the Lord and Father of all, has given no one of his children such a property in his peculiar portion of the things of this world, but that he has given his needy brother a right to the surplusage of his goods; so that it cannot justly be denied him, when his pressing wants call for it.”

The universal destination of goods is often taken to imply once some folks have gotten rich enough then that’s enough and the surplus needs to be redistributed. But that’s too static a notion of the use and generation of wealth. After all, we want talented entrepreneurs to accumulate and use capital. While inequality increases with entrepreneurial success, society gains by growing the size of the pie. Everyone gets to eat more as a result of the activity, even if the proportion of the pie they receive is less in relative terms.

Catholic social thought articulated this possibility in the past. Pius XI, for example, included this passage in his 1931 social encyclical, Quadragesimo Anno:

The grave obligations of charity, beneficence and liberality which rest upon the wealth are constantly insisted upon in telling words by Holy Scripture and the Fathers of the Church.

However, the investment of superfluous income in developing favorable opportunities for employment, provided the labor employed produces results which are really useful, is to be considered according to the teachings of the Angelic Doctor an act of real liberality particularly appropriate to the needs of our time.

It is a good thing for a talented entrepreneur to employ his or her capital and thereby profitably to provide employment to people. That said, to the extent that the entrepreneur profitably employs people, which is the only means by which a going concern can be sustained, then he or she will also make a profit. This, however, leads to increasing the entrepreneur’s capital stock, which funds yet new entrepreneurial projects and employ even more people, but also, necessarily, leads to increasing economic inequality. Any apt concern for the “least of these” counsels, at least in part, that capital accumulation can be socially valuable, even if economic inequality results as an incident to increased prosperity. That is, if what concerns us most is that the hungry actually get fed.

This is not to go to the opposite extreme in suggesting that inequality, in itself, is necessarily a good thing. The issue is from where the inequality derives, from unjust activities or from permissible activities. But if inequality results from injustice, what is of concern is the injustice itself, not the inegalitarian symptom.

This is not to wave away the issue of underlying causes as an unimportant sidelight to the issue of economic inequality. Quite the opposite. Indeed, conservatives in the U.S. today are beginning to grapple with the question of the role crony capitalism (that is, factious state intervention on the side of capital), might play in creating, sustaining, and exacerbating patterns of economic inequality in the U.S. and elsewhere.

Nonetheless, it is simply too pat to point to bare economic inequality and decry it as necessarily unjust. Pius XI’s discussion in Quadragesimo Anno is more careful. Adam Smith could put it no better than Pius XI does in his encyclical. Indeed, if anything, Smith writes of the rich more cynically, suggesting in The Theory of Moral Sentiments we leave them to their “baubles and trinkets” because, in doing so, they provide the rest of us “that share of the necessaries of life, which [we] would in vain have expected from [their] humanity or [] justice.”

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