Solidarist economics: the legacy of Heinrich Pesch.

Abstract

Heinrich Pesch, a German economist and Jesuit priest, can be considered the father of Catholic Economics. This paper presents the essential elements of his solidarist economics, as a premise to rebuild the foundations of political economy. The deep intellectual basis for Pesch's

Introduction

The central question of economics is what to produce, for whom, and how to produce it. The matter is, of course, central to human affairs. As corporeal beings we must win our way in the world by provisioning for ourselves as any organism does. We are not just another material object in nature, however. Human beings live not just by instinct but by rationality. We think ourselves through the question of political economy, as it were, and our enterprises, those institutions we charge with the "solving" of the provisioning problem, rest on or originate from these thoughts, whether we acknowledge this most basic of realities or not. The point was forcefully and eloquently made by John Maynard Keynes at the midpoint of the 20th Century:

  The ideas of economists and political philosophers, both when they are
  right and when they are wrong, are more powerful than is commonly
  understood. Indeed the world is run by little else. Practical men, who
  believe themselves to be quite exempt from any intellectual influences
  are usually the slaves of some defunct economist ... It is ideas, not
  vested interests, which are dangerous for good or evil [5:383-84].

This also suggests that if we find ourselves in an economic or cultural crisis, then we need to re-examine the foundational ideas of political economy as the source of our problems. Could it be that the luminaries, Smith and Marx, who have taken center stage for so long, got it at least partly wrong and as a result have left us in the darkness? Even then we are still left wondering to whom we can turn for the light we need to guide us. This paper examines the thoughts of a much less well known figure of the 20th Century, Heinrich Pesch, Jesuit priest and humble scholar, for just this purpose. Can the ideas he offers, referred to as solidarist economics, illuminate a sustainable path for our civilization and yield a model for enterprise to run as it ought to?

Solidarist Economics: The Foundations

There is a proper hierarchy of intellectual disciplines. This structure, Platonic in its inspiration, has been revived by Azar [2,3]. I have, in turn, used Azar's philosophical insight to develop a classroom model for inquiring with integrity into ethical issues [12]. Fundamental in this is the idea that all proximate disciplines that purport to be studying human behavior rest on more foundational or ultimate disciplines. Specifically economics is grounded in the more encompassing discipline of ethics and philosophical psychology (or anthropology). All areas of inquiry come to rest in metaphysics or ontology, the most universal branch of philosophy investigating the nature of being or the kinds of things that exist. Diagramatically, the relationships can be pictured as the structure of a house.

Pesch clearly understood this structure, clearly understood that intellectual commitments had to be made in the disciplines upholding economics. He was also fully cognizant that these commitments would serve to establish the soundness or lack thereof of any economic thinking that was subsequently done.

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  The will of God, the lex aeterna--which establishes order in the world
  and which speaks to us through our human reason as well as through the
  Christian moral law--is the law that must serve, along with the social
  philosophy and the social ethic that stem from it, as the guidepost in
  our endeavor to discover genuine economic knowledge, and in the
  process of constructing and developing economic theory [10:168].

Since a deeper understanding of his solidarist economic system can be gained from a better grasp of its foundations, it will be valuable to go into the worldview informing Pesch's economic theory in more detail.

Metaphysics: Philosophy, it is said, begins in wonder. When confronted with ultimate reality this seeking after truth takes the form of two central questions:

Why is there something rather than nothing?

Why is what exists as it is and not somehow else?

Writing as a Catholic, the tenets of the Christian worldview formed the basis or foundation of Pesch's thought. In response to the question of the existence of being itself, then, Pesch's understanding was theistic.

  The Christian hopes in God. He has an unshakable trust in God who is
  almighty and all-loving, whose power is as infinite as His goodness
  and His love [10:112].

In regards to the second question, Pesch accepted the commonly held common sense conception of reality as a Great Chain of Being of at least four levels--matter, plant, animal, and human.

Philosophical Psychology: Having set out the structure of all being in metaphysics, the question here is what is the nature of the human being? Holy Scripture, one source of authority for those inquiring from a Catholic perspective, presents this as: "God created man in his own image, in the image of God he created him: male and female he created them" [Gen. 1:27]. Pesch accepted this inscripted truth and elaborated upon it through philosophical reflection.

It is by the proper care and cultivation and the inner ordering of his own nature, of his intellectual faculties and of his will, by controlling his baser instincts and passions and subordinating them to reason and conscience, and by directing these toward their proper object and moderating them, that man becomes a human being in the full sense of the term. It is in this way that ... he thus becomes capable of social relations with other human beings [10:39-40].

What is concisely disclosed in these quotes can be summarized:

* The human person, a unity of a body (generated physically) and a soul (created immediately by God), has been loved into existence by God.

* The vocation of being human is to come to the fullest development of the distinctive powers of intellect and will by knowing truth and loving goodness.

* The end for which we have been created confers an unsurpassable and inalienable dignity on us. As a child of God, made by God and for God, the human person is a sacred or holy being and, as such, is in possession of inherent and inviolable rights and has an infinite worth.

* Human beings are inherently social. This innate social dimension or aspect of our makeup is deep within our nature.

Any honest observation of humanity's social relations reveals that this picture is marred, a fact acknowledged by Pesch.

  [Man] is in a fallen state. Animal instincts well up in him in
  conflict with his higher spiritual nature and also in opposition to
  God's law; accordingly, these cast a dark shadow over his life both
  internally and externally [10:114].

God created man to share his own blessed life. When man rebelled, God sent his Son as Redeemer and Savior. In Jesus and through him, God invites us to become, in the Holy Spirit, his adopted children in possession of nothing less than the very life of the Trinity. This paramount truth compels Pesch to conclude his summary presentation of solidarism with a joyful acknowledgement of "Jesus Christ, the Son of the living God, who is not only the Savior of Souls, but also of human society, of states, and of nations" [10:177, emphasis in original].

Ethics: Pesch made it abundantly clear that a sound explanation of economic actions could only emerge if the discipline of economics itself would recognize its subordination to ethics.

  What violates the moral law will never, under any circumstances, be
  proven by reason to be correct. What is immoral can never end up being
  economically correct. Therefore, ethics serves as a test of the
  propriety of economics theses and as a kind of beacon-light for
  economic research. Anyone who disregards this beacon-light will end up
  ship-wrecked in the vast, rocky sea of error [10:65].

What was Pesch's understanding of ethics? What was he referring to when he speaks of the moral law?

As stated, Pesch wrote as a Catholic. While not ignoring the revealed truth of his religion, he did make stronger use of reason to broaden the appeal of his economic proposals. The philosophical system shaping his rationality was the metaphysical and moral realism of Thomas Aquinas. What this means is that the starting point in thinking about human life and the world we find ourselves in is with things in reality, not with things imagined. Reflection is on the world of real existence, which men have not made or constructed, with the idea that the knowledge gained of this reality is the only reliable guide to human conduct. That is, sanity, and thus the possibility of sanctity, depends on adapting one's self to ultimate reality. Metaphysics uncovers this reality. Morality is the right response to the discovery. What one ought to be and to do is based on what metaphysically is. "What ought-to-be is nested in man's actual being" [8:6]. The perspective then is one of natural law. Morality is not invented but is discovered in the very nature of things, as it were, and guaranteed by "the authority of God who is the supreme law-giver" [10:141].

What are some of the characteristics of the natural moral law identified by Aquinas and brought forward by Pesch? Since we act purposefully as human beings, the right and proper ends to seek must be the first and primary concern of ethics. But there is a hierarchy of purposes. Some goals or objectives we set for ourselves serve higher aims. The most important question of our moral lives is: what is the summum bonum, the greatest good or ultimate end? What are our lives for, in an ultimate sense? Another way to ask this is what end or purpose perfects our being? The answer Pesch gives: "the purpose of human life, in the final analysis, is union with God" [10:111]. Teleologically, to aim for the joy of the Trinitarian life is to point the compass of our being to true north.

If the telos of the human person is God, then the Ten Commandments describe the path that leads a person home to this destination. Since God is love and human beings are made by love and for love, the Commandments have to do with the right ordering of love. The Commandments of the first tablet (#1-3) have to do with loving God. Jesus summed up how we ought to love God: "with all your heart and with all your soul and with all your mind" [Matt. 22:37]. God deserves such total love because he is the infinitely good Creator of our existence. The Commandments of the second tablet (#4-10) have to do with loving others. Jesus again encapsulated how we ought to love others: "love your neighbor as yourself" [Mark 12:31]. This means we are to will the good of others since this is what we always will for ourselves in loving ourselves. People deserve this love because they too are persons made in God's image. In sum, the unifying bond with God and others is love and therefore,

  Perfection, according to the teachings of St. Thomas Aquinas (1) also,
  is to be found essentially in the love of God and of one's neighbor as
  expressed in the main commandments found in the Gospel [10:111].

Thomistic moral theology or ethics is also completed from a virtue theory perspective, and Pesch makes full use of what Aquinas proposes here as well. What Aquinas does offer in this regard is the theory of the four cardinal (from the Latin, cardine, meaning hinge) virtues, where virtue is understood to be a firm and habitual disposition to do good. Virtues form a person's character, i.e. in possession of them, not only does a person do good acts but he becomes good. Prudence, justice, fortitude, and temperance are pivotal human virtues because they perfect the distinctly human powers and protect against the destruction our desires or appetites can cause to our being if they are not restrained within proper limits. Prudence, or practical wisdom, perfects the intellect and serves as a guide for every other virtue "like the coachman on the driver's seat" [10:119]. Temperance is needed to moderate the concupiscible appetite lest our wants for pleasurable things tyrannize us [10:121]. Fortitude similarly restrains the irascible appetite allowing us to face our difficulties directly rather than fleeing from them. Justice perfects the will and allows us to shoulder the responsibilities of social life.

This concise survey of the basic elements of the worldview underlying solidarist economics should serve to illuminate each of the principles of this economic system. I will now move on to disclose these principles as Heinrich Pesch developed them.

Solidarist Principles of Political Economy

When moving to the study of economics proper, Pesch adopts a method that is consistent with his understanding of philosophical psychology or anthropology. The rational nature of the human person makes him or her capable of purposeful action. Therefore, the science that seeks to understand the essence of the economic phenomenon generated by human beings will have to be teleological. Goals, purposes, normative values are not rejected because to do so would be to reduce the human person and make it impossible to derive any genuine economic laws [8:59]. Thus the first step in economic theorizing is to identify the right and proper end of the economy. Pesch gives this aim as providing for the material welfare of people. (2) Even though this work of material provisioning represents a "completely legitimate and, in fact, necessary kind of progress" [9:1,1,4], Pesch, ever vigilant to not betray the premises of his analysis, always on guard for human dignity, insists that the material must be subordinated to the immaterial. "Everything earthly and temporal ... merely serves as an aid, a means, and as support for the eventual sanctification of the individual" [9:1,2,229]. For the human person life on earth is a brief preparatory step for eternity, and for Pesch, "without eternity, all human life remains an insoluble enigma" [10:73].

* Solidarity: This is the principle underlying the whole of the economic system Pesch provides as the moral alternative to the ideologies of capitalism and state socialism (communism). The notion needs to be rigorously comprehended. This can best be achieved by seeing how it flows from and is deeply rooted in the social nature of the human person.

The position that we are social beings by nature is a conclusion that is arrived at by careful observation of human development--the method of philosophical realism. Human beings start in a state of utter dependence and must be fed, nurtured, clothed, educated over an extended period of time. A full human life requires material necessities and moral, social, intellectual, and spiritual progress that cannot be achieved in isolation.

Social life is necessary for our perfection. As persons, as subjects of responsibility and love, our lives are always lives-in-community. Thus, associations of greater to lesser intimacy are demanded metaphysically, by the very order of ultimate reality, as it were.

The first form of communion between persons, instituted by God by design, is the partnership of man and woman. Pesch upholds the traditional Catholic understanding of God being the author of marriage, the indissoluble union of a man and a woman, ordered to the good of the spouses and the procreation and education of children [9:1, 1, 193-207]. The human family, then, is a part, the central element, of the divine plan from the time of creation. It is the original cell of social life, existing prior to and above all other levels of social organization and deserving of recognition as such. The family constitutes nothing less than the foundation of society.

Beyond the family is the local or civic community. This encompasses all the associations or groups intermediary between the family and the state. The political community overarches all, ideally providing a stability that allows for harmonious living between citizens of the polis. There exists a series of natural nested communities, with the highest natural form of society being the state [9:1, 1,207-244].

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From this, it can be seen that our own good, our own development as persons, is linked to the good of our family, our community, and the political society we live in. But these communities are moral units which achieve their unity by the voluntary union of the many persons who comprise the community. Thus the formation of community is not a technical problem to be solved (once and for all, like building a bridge) but a moral struggle to be faced with as much equanimity as possible. Human community is only established if it is desired, generated, and nourished by the people who form the community. Said another way, community can only thrive if the people of the community value it and are disposed morally to make it work. Human society, the moral union of all wills aiming at the same end, is the result of love. "Without love, any society remains merely a torso" [8:60].

With this basis laid, we are now in a position to entertain Pesch's definition of solidarity.

  The idea of solidarity as it is applied to a social community, in its
  double role of shaping and nurturing the community, means the orderly
  amalgamation of all efforts by forces which are supposed to, or do in
  fact, bind society together with reference to a morally permissible or
  morally required goal [8:43].

What is this goal? In a teleogical perspective, something is good if it fulfills its purpose. For example, a good watch keeps time accurately. The good of the human person as a citizen is the common good of the society in which he lives where the common good is understood to be the social order that empowers or facilitates every individual in it to attain, as closely as possible, his or her perfection. (3) Such a social order can only be secured by the moral perfection of the individual persons of that society.

Thus it can be seen that the common good is not in opposition to any individual person's good, for it is precisely in the social order that the individual develops. That is, virtue is not achieved in isolation but only through participation in the ordered social whole. Far from there being an inherent incompatibility between the individual person and the society, they can be seen to be complementary, i.e., they exist for each other. The individual person develops in society or by contributing to society, and society exists for the development of its members. Self-sacrifice for the common good is not the denial of self but self-fulfillment. We transcend ourselves, or develop as we ought to, by self-giving love.

The unity that solidarity develops is found at the level of the family, the occupational group, the state, and the entire human race. The human race forms a unity because of its common origin (created by God), its common nature (each person is an ensouled body), its common dwelling place (life on earth), its common mission (salvation of souls), and supernatural end (God himself) and the common means for attaining this end (Christ's redemption was for all men). The ultimate and unshakable basis for human solidarity, the reason that all men are truly brothers, is the Fatherhood of God made incarnate in the Body of Christ.

  Nowhere does this unity of the human race find its expression more
  clearly than in the life of the Christian Church. There, those of high
  and low estate have the same origin, the same goal, the same common
  Father in heaven, the same Redeemer, the same natural and supernatural
  status as a child of God [10:41, emphasis in original].

* Subsidiarity (The Role of the State): This component of Pesch's economic system follows directly upon his presentation of solidarity as the moral-organic bond providing unity to the communities naturally formed by human beings. The key idea of subsidiarity is that the internal life of each community should be respected, i.e., a community or social body of a higher order should not do for a community of a lower order what it should do for itself. Reflection upon the principle brings out Pesch's position on the role of the state in economic life and the place of Christian charity or almsgiving.

As put forward earlier, Pesch's position is that the state is a natural community, i.e., it is formed as people naturally move beyond the family to realize goals which, if it weren't for the state, would be unattainable. This basic reason for its coming into existence designates its purpose and sets limits to its functioning. The state does not exist for its own sake but for its citizens. The natural purpose of the political community is to defend and promote the common good of the whole society. The justification of the state is that it serves the temporal welfare of the entire community.

Pesch lists the primary duties of the state in fulfilling its purpose as two: protection and assistance. The first is obvious. We must have the security of our personhood if we are to develop. Protection must be offered against external enemies but then Pesch points out that the threats to the citizenry may come from within, from "egotistical endeavors which cannot be reconciled with the civil common good" [10:53]. The help the state is to offer is to be strictly limited by the principle of subsidiarity.

  All that individuals, families, and other lower social organs are able
  to accomplish of and by themselves lies beyond the purpose of the
  state [8:145].

The necessity of the principle goes back to philosophical psychology. Each human person possesses unique capabilities and powers and each person can only come to the full realization of his or her integral well being by exercising those powers. If the state is to will the good of its citizens, then it must not impede the use these people make of their distinctly human faculties or diminish the human initiative they exhibit unless human rights must be protected. Of course, the state must help those who can't help themselves but even here Pesch insists that public care should only be complementary to private charity and be offered only after such charity proves to be inadequate [8:25]. Subsidiarity must be observed in charitable activity as well. A hand-up is to be extended not just a handout given.

  For the endangered child, one provides sound training ... for the
  responsible person in need, one provides what money he needs to get
  back on his feet and which he can then repay. One should not take
  responsibility away from relatives or damage the sense of family; nor
  should one spoil the poor by too high a level of support, thereby
  depriving the worker who is willing to provide for himself of the
  desire to work [10:125].

Pesch explicitly rejects laissez faire. The state is no mere night watchman. But he is also clear that there is no place for an omnicompetent state in the solidaristic system. What political authority is to do is oversee the exercise of economic freedom for the common good.

* Dominion: As a proximate discipline, economics must accept certain truths from other disciplines. It relies on metaphysics for insight into ultimate reality, on philosophical psychology for understanding of the human constitution, and on ethics for answers to the normative aspects of our being. It then takes these as its starting point in deriving its own principles. What will also be brought out is some position on man's relationship to the environment-what it ought to be, why this is the form it must take, and what it means for the study of economics. Pesch takes man's dominion over the world of nature as a fact and explains the basis for it. First of all, it has been assigned by God. It was God's will to create the world and it was His ordinance to make man the lord of it [Gen. 1:28]. Secondly, man's rational nature elevates him above the inanimate world and over plants and animals. Human beings are compelled by their nature and the nature of the environment to use the world to preserve and develop their lives.

  The preservation and development of life, the development of physical
  and intellectual capacities occurs with the help of things which are
  roundabout us. The world is our domicile, our garden, our work place.
  It serves the intellect as the object of its investigation, and it
  leads to the knowledge and love of the Creator. From it we can and
  ought to fulfill our lives and our potential, and derive those objects
  which we need for our livelihood [8:4].

Nature stands in the service of mankind, the natural world is destined for the good of humanity, but this dominion brings obligations. Firstly, prudence is to be exhibited. Since we have to make our home here, wisdom dictates that the environment should be cared for. Human beings should maintain the material world in its integrity and protect it. Appropriate limits to our mastery and possession of nature should be observed. An arbitrary and destructive dominion, using things in a disordered way, can never be morally justified. [Man] "cannot wheel and deal as he pleases with the world of creation" [8:7].

Secondly, our dominion is never absolute. The natural world is God's masterpiece. The Artist has let us use the work but He has not surrendered ownership of it to us.

  The world will always be God's property. Nobody and nothing can alter
  that essential subordination to God, since it is based on the title of
  original creation and on the fact that God continues to sustain it.
  God would have to stop being God if he wanted to surrender what is His
  most most exalted possession--his ultimate dominion over the world
  which He created [8:7].

The premise of Pesch's work in economics is that human beings are made in the image of God and have a supernatural destiny. "Why was man created and placed on this earth? To know God, to love Him, and to serve Him so as to attain eternal happiness" [10:106]. All our activity on earth is a preparation of the soul for that destination, "all worldly endeavor is to be directed toward the final and highest goal" [10:107]. All life, including economic life, is part of a service to God. "Service to God ... embraces, permeates, and elevates the whole of man's temporal life in all of its aspects" [10:107]. The great privilege of being stewards of God's creation is accompanied by the onerous responsibility of emulating God's providence.

* Work: Dominion is accomplished by work, "the systematic application and expenditure of human energy to produce or acquire a good or utility" [8:5]. Since dominion was assigned by God, work is both a duty and a gift. Pesch's universal law of work: All persons must work. Everyone has an obligation to the basic human communities they are members of to work, very hard if necessary, to contribute to the provisioning for the needs of those communities. One ought to direct one's energies to completing the work that one's family, one's professional or occupational group, one's society, and all of humanity needs done. Pesch condemns those who violate the law of work by living off the labor of others without attempting to do something useful [8:6] or by habitually and as a way of life striving for gain without effort [9:1, 1,43]. The reason for this disapproval is that the idle person has turned his back on the position (responsibility) God has assigned to all human beings and on his personal social obligations.

Work is also an extraordinary gift of God. Human beings have been called by God to the task of completing the work of creation, of perfecting its own harmony for their good and for the good of their neighbors. This makes work man's "honor and joy" [8:6].

Work has dignity because it is human work. It is work done by human persons, by men and women made in the image of God, subjective beings capable of acting in a planned and rational way and in doing so realizing their potential. Work "elevates man's soul" and "can lead him to exalted virtue" [10:72].

The law of work is God-ordained. In working with diligence and enthusiasm we honor God and imitate Christ, the highest moral ideal presented in the Christian worldview. Pesch remarks that such efforts do not go unnoticed.

  The eye of God watches over the work of His hand, and His love weighs
  the manner in which man applies his energies. Inasmuch as Christ
  directs the glance of the working person toward heaven by promising a
  divine blessing on his labor, He makes less burdensome the obligation
  to work, sets free the spirit of endeavor, and enhances the desire to
  undertake and perform. Arms and hands are the tools of labor, and a
  joyous heart and a firm trust constitute its soul [10:114].

* Priority of Labor over Capital: Economic production is accomplished by human beings using material means. The question is, which takes precedence? Is capital to serve labor or is labor to serve capital? Pesch affirms the primordial value of labor on the basis of human dignity.

In the economic order man ranks as master, not just as another economic good. He is never merely an object or a tool, but always the subject of the economic system and the end for which it exists [8:124].

Capital is a means in the production process. Capitalism, (4) seeking profit as an end in itself with human labor as another commodity to be bought and sold, is a basic moral perversion, "an immoral deviation."

Pesch acknowledges the use of Kant in offering the principle, "All things have their price, but man has his dignity!" [8:124], but then thinks it necessary to point out that the dignity possessed by human beings is something far greater than Kantian autonomy. In Catholicism all life is considered to be the gift of a personal God and is therefore sacred. Human beings are seen to be the special and supreme creation of this loving God. Made in God's own image, the human reality is a personal one as well. Each person is viewed as having infinite value because of the immortal being that he or she is.

To Pesch, capitalism represented an inversion because it took what was of its nature impersonal and gave it dominion over people. Little wonder then that the system "turned out to be downright inhuman" [8:125]. Pesch's insistence on man being the true purpose of the whole of production becomes understandable. Without a strict observation of it, the absurd and destructive consequences of a system proceeding from false value premises could not be avoided.

* Private Property (Subordinate Natural Right): The right to possess things privately as one's own is a natural right--i.e., it is a right human beings have by virtue of what they are as human beings, by virtue of what makes man man. "We are dealing with a right which man did not get first from the state, but which instead comes along with being a human being" [9:1, 1,254]. A number of reasons are given to legitimate private ownership in natural law [9:1, 1,254-67].

  i) There exists an imperative to preserve one's self. There is
  therefore a right of self-preservation and this means a right to the
  means needed to maintain one's self.

  ii) As a being who can rise above the passage of time, man can
  prudently provide for his livelihood and the well-being of his
  progeny. Ownership of a supply of goods which are capable of meeting
  future needs accomplishes this.

  iii) A person has a natural right to the fruits of his labor--i.e., it
  is a violation of the natural freedom of the human person to be robbed
  of what he has brought into being [the 7th Commandment].

The basic argument is that the institution fits with what we are as human beings. The right to private property respects the transcendent dignity of the human person. It honors our nature as:

  i) spiritual beings in possession of the faculties of intellect and
  will and thereby capable of initiating thoughtful action and assuming
  responsibility,

  ii) material beings in need of physical sustenance on a recurring
  basis,

  iii) social beings whose lives are made by loving relationships with
  others.

Given this, it is not surprising that Pesch goes on to assemble a strong case that the economic, social, cultural, intellectual, and moral progress of a nation is dependent on this institution.

The right of private property is not an absolute right, however. It is subordinated in two ways--i) to other, more basic rights, and ii) to the limits of moral obligation.

Private property is not the highest right man enjoys. "The natural and personal right to life and to the necessary means of subsistence occupies a higher position than any derived right to material property" [10:75].

Property ownership is a subjective right, not a law unto itself. It is a means that makes well-being possible, not an end in itself. Pesch observed the transmogrification of authentic liberty into license--"the right of an individual to do what he pleases" [10:142] and knew that nothing less than the existence of a stable social order was at stake. Moving contrary to the trend of considering private ownership as an absolute right having no limits or concomitant responsibilities, he shouted, "Freedom is problematical--not axiomatic" [10:167].

The perennial question human beings face is, "How ought I to act?" We have always had to reflect on what the responsible use of our freedom is. No enduring civilization has ever gotten away with allowing this to lapse, as a normative standard for everyone, into "What do I want." "Order, not freedom, is the highest principle and the best guarantee also of the right degree of freedom" [10:151, emphasis in original].

  Where will this order come from? Pesch identifies three regulating
  factors in economic life:
  a) the conscience of the individual person. Without a solid moral
  fiber in people, there can be on question of a healthy economic
  fabric;

  b) autonomous occupational groups. The center of gravity in all
  regulation rests on them ...;

  c) the state, which, by its subsidiary, complementary, regulative
  activity protects the rights of individuals and of organizations as
  well as of the whole political community [8:182].

Legal enforcement can restrain the heartless, and an industry body can discipline and counsel, but self-control or temperance must be present in the citizens. It is only from virtue that social order is achieved without freedom being traded off.

* The Purpose of Enterprise: Although he was a strident critic of capitalism, Pesch had great respect for the institution of commercial enterprise. For Pesch business is a noble calling. A review of the foundational principles of his solidaristic system of economics already presented makes it easy to see why this position was one he necessarily had to hold.

Human beings are dependent on the natural world. We must continually use our rationality to "win our way," as it were. We must provision for ourselves. To "economize" [10:66] is to be active doing this. It is to set out to provide the material goods that people need to live full human lives. Enterprises, those "unified, organized, economic institutions which at the risk of their legal owners, the 'entrepreneurs,' produce or provide goods and services for the market, and seek to sell them for a profit" [9:1, 1, 44], are charged with fulfilling this aim.

There are a number of essential points related to this understanding.

  i) Clearly Pesch recognizes the importance of profitability. It is a
  necessary condition for the viability of the firm. What Pesch doesn't
  allow is that it is sufficient in itself to legitimate the
  institution. We need oxygen to stay alive but no one would contend
  that breathing is the ultimate reason for our existence. Pesch
  trenchantly critiques those who propose that there is "no higher goal
  in life than to buy as cheaply as possible and to sell at the highest
  price possible" [10:55]. Economics should not be confused with
  chrematistics, the science of making as much money as possible.

  ii) The ruling purpose of the economy is not power or profit, but
  human well-being in its totality. The justification of enterprise as
  an institution then is the contribution that it makes to human
  flourishing, the correspondence of the economic activity with God's
  plan for humanity.

  iii) Not all production and exchange is to be commended then. Just
  because something can be made and sold doesn't mean that it should be.

Christian teaching excludes from the concept "goods" anything which makes people morally and therefore, as a rule, also physically and materially poor and miserable. Thus, things which lead people to their bodily and spiritual destruction are not classified as "goods" merely because they have exchange value [10:74].

Producers have an objective duty to fulfill--"to serve the welfare of the people" [10:78]. It is the obligation of economic science to insist on this, to "approve only the kind of want structure which has the most beneficial possible effect on moral formation and which is a real blessing for it" [10:63]. In this, Pesch is reiterating a plea made some decades earlier by Ruskin:

  The real science of political economy, which has yet to be
  distinguished from the bastard science, as medicine from witchcraft,
  astronomy from astrology, is that which teaches nations to desire and
  labor for things that lead to life: and teaches them to scorn and
  destroy the things that lead to destruction [11:209].

Economics is a moral discipline through and through because it is the study of how people conduct themselves economically. The natural law basis to Pesch's theorizing holds that this conduct ought to conform to justice and charity. "Charity will here become the guardian of justice; and together with justice, it becomes the bulwark of human welfare" [10:92].

  iv. The idea of progress is also examined from this framework.
  Developing, enlarging, refining human wants is not rejected
  out-of-hand. Such provisioning is the very nature of "economizing."
  What is rejected as inadequate is an orientation to life that sees
  having more material wealth as being the very end of one's human
  existence. To Pesch this degraded man to the level of an animal [9:1,
  1, 146]. "Human life ... involves more than just its material aspect.
  There are spiritual and moral goods too ... and these are not to be
  sacrificed on the alter of material interests" [8:164]. Once again,
  Pesch does not detour from the foundations of his analysis or the
  implications they have for economics.

  It now becomes the most exalted and noblest task of science to recall
  that man is the image of God, that the full development of this image
  is the goal and law of historical developments desired by God, and
  that the sublime Son of God, Jesus Christ, was placed at the focal
  point of world history to serve as the model image and the way toward
  this goal [9:1, 1, 146].

* Universal Destination of Goods (Distributive Justice): This is the first principle of the whole ethical and social order. The basis for it is found, once again, in reality. The gifts of creation are God's gifts and they have been given to the whole of humanity--i.e., no one should be excluded from accessing or using what they need.

  We are always and everywhere bound by the destiny which God has
  established for the world. This destiny, however, requires that the
  earth with its treasures and energies will serve all, so as to provide
  us with nourishment, clothing, and shelter, and to ensure our
  sustenance until God calls us to Him in our eternal home [9:1,
  1, 139].

The natural destiny of goods is that they are here for all. Rationality is the common property of all people. Dominion is based on this nature. Therefore, all people are called to share in that dominion. This does not negate the right to private property but subordinates it to this prior and more basic claim. The right to life and sustenance is more fundamental than the claim of ownership. In fact, taking the goods of another to meet immediate essential needs when this is the only option is not theft, because the universal destination of goods is primordial.

  In the event of extreme need, the right to own a material thing has to
  give way to the right of a person to survive. In this sense, all
  things are common, i.e., all of them continue to be destined for the
  preservation of the human race [10:75].

Maldistribution of resources, "a progressive accumulation of wealth in the hands of a few, while the rest of the nation is increasingly proletarianized" [10:54] is referred to as a great social and economic evil. Everyone ought to have enough to live a decent human life. It is possible then for one to have too much. Luxury is, of course, a relative concept, but one's overabundance ought to be distributed to those who live in undue poverty, to those whose lack threatens their dignity as human persons. It is for this reason that Augustine could say that he who possesses a surplus possesses the goods of others, a sentiment not foreign to Pesch.

  What Christian ethics condemns is only the kind of luxury which arises
  from immoderate vanity and unrestrained craving for pleasure, such as
  accompanies the wasteful destruction of goods which could and should
  have been used to satisfy the needs of one's neighbor [10:64].

Advancement in ensuring that no one goes without what they need will be the result of virtue, first on the part of state authorities and then all citizens. When people lack the basic necessities of life, distributive justice is being violated. It is the role of the officials of the state to protect against this, to ensure that the goods of the community are distributed on the basis of need. The virtue of temperance must also be cultivated in the members of society. Our "natural craving for gain and possessions" [10:114] must be moderated. The principle of the universal destination of goods can never be upheld if "greed and restless and unscrupulous craving to accumulate money" [10:114] holds sway.

* Equivalence (Justice in Exchange): The basis for Pesch's solidaristic third way in political economy is the idea that the human race forms a unity. The other person really is one's neighbor. "For the Christian, all men are brothers" [8:48]. Pesch is aware that the structure of modern society, particularly the shape an extensive division of labor has given it, has made trade necessary and voluminous. Given these two facts, one metaphysical and one empirical, Pesch sets out a principle to guide exchange.

Exchanges take place in a social community and are made by human beings--i.e. an exchange is a moral act. What Pesch seeks to bring out is the application of the cardinal virtue of justice to these transactions, for it is his understanding that justice upholds the social order and is of paramount importance within the economic order. "Justice is the foundation of kingdoms" [8:221]. What is the just price? What makes for a fair exchange?

First of all, it is not enough to fall back on the fact that an agreement was made. [We have to oppose] "the viewpoint of those who would be willing to base price determination solely and totally on the 'consensus' of the parties to the exchange" [10:82]. This would leave open the exploitation of the dire need of others. Neither can market forces be used to avoid the responsibility that comes with economic personhood.

  Supply and demand are not causes which operate as if by natural
  necessity. There is no natural law of supply and demand and no
  mechanism for price determination. Behind supply there are suppliers,
  and behind demand there are demanders, causes which operate freely,
  human deliberations, human ambitions, human passions, and human power
  relationships [10:83].

The moral agency of those engaged in economic exchange ought to be directed by the principle of equivalence. Repayment should be in accordance with the value of the good or service. A valid operationalization of the principle would stand up to the Golden Rule. Elementally, the justice here is that found in the division between two persons, where one cuts and the other chooses.

For Pesch, the use value of a good provided the motive for exchange. Objective factors such as the commonly estimated intrinsic value of the good, the costs of making the good available with an allowance for reasonable profit, the qualities of the products which made them suitable for satisfying human wants, had to be factored in when setting the price. What could not be countenanced was striving for gain at the expense of one's fellow man since this was antithetical to solidarity. Exaggerations in advertising, disguising true quality, the use of names and trademarks which are designed to deceive are all condemned as violations of the 7th Commandment. Other lucrative occupations are also regarded as being inherently unjust because they take away from some more than they bring in for others ... i.e., they violate the principle of equivalence. Included here are games of chance, usurious speculation, and measures designed to take customers away from other competitors [10:87].

For Pesch, "the economy is not a field waiting to be plundered" [10:99]. To set out to make a killing--the words are telling--is to violate the serious and admirable purpose of the work of economizing with the result that national economic harmony is upset.

* Living Wage (Justice in Compensation): Property ownership confers power. A key moral question in using this power responsibly is what those employed should be paid. The answer in Pesch's solidaristic system of human work: a living wage.

  Wages represent that crucial portion of the national income on which
  the great majority of people are dependent for their livelihood. The
  wage, therefore, has to be sufficient so that even the unskilled
  worker will have enough to live on at a decent human standard which
  corresponds to the level of cultural advancement achieved by the
  particular society in question. It has to provide that not only for
  him alone, but it must also enable him to support his family as befits
  his station in life; and it must do this also when possible along with
  some sharing in the profits [8:159].

The defense of this prescription is found in the nature and relevance of the human person. The first justification for paying a living wage is that everyone ought to enjoy a living standard in conformity with human dignity. The worker's material interests ought to be protected. Secondly, providing this level of compensation safeguards the worker's status as a subject of economic life. Employees can never be looked at on par with the material means of production since they are persons, united body and soul in a single nature. As spiritual beings, they transcend the tools at management's disposal. They are rightly seen as associates in the enterprise [10:104]. To understand the significance of this, it must be related back to the spirit of community inherent in the solidarist view of human beings.

  It is not capital and labor which are bound by a labor contract, but
  the worker and the employer; it is a person-to-person relationship.
  Legally speaking we have a wage contract, but ethically there is a
  social relationship here involving a working community [9:159,
  emphasis in original]!

Wages are not just another cost. Labor is not just another commodity to buy. An industry that cannot pay a living wage is lacking in economic justification.

The Legacy of Solidarist Economics: 100 Years Out

Pesch's hope that exposing the errors of Manchester liberalism would mean a movement to solidarism has not come to pass, although pockets of success can be cited. Organizationally, an experiment like the Mondragon cooperatives in Spain are an enactment of many of his ideas. Industry councils in Japan and Germany could be considered to be a modern day outworking of the vocational orders Pesch proposed in his economic system. Even societal movements, like Poland's Solidarity, could be pointed to as an exemplar of this thought. Companies, communities, and countries alike are realizing that working together to address problems is the way to solve them.

It is clearly the case, however, that the regime of capitalism [4] has swamped solidarism, drowning out Pesch's voice in the process [7]. If Pesch could describe his age as "ultramaterialistic" [10:119] and the financial system of 1900 as "a maelstrom of acquisitive speculation and the unbridled urge to get rich" [10:95], then how much surer is this diagnosis today after 100 years of profit-accumulating water has passed under the political economic bridge. Yet it is possible to say that Pesch would still be hopeful for he understood the power of ideas.

  Ideas control the destiny of the world, and the absence of ideas or
  the confusion of ideas can destroy the world [9:1, 1, 166].

This is his legacy: the ideas he left of a science of economics erected on a solid, durable philosophical foundation. These ideas live on in the corpus of Catholic Social Thought, brought forward since 1891 in a series of Papal encyclicals and recently compiled in a Compendium. While not acknowledged by the Church's teaching authority, it is obvious that the Magesterium relied on Pesch's insight. All the major principles Pesch elucidated--solidarity, subsidiarity, universal destination of goods, dominion, work, etc.--are present and have been developed more fully in this tradition.

The vision of social life presented in the Social Doctrine of the Church exercises little real influence over the practical policies of any nation. The timing, it seems, is not right [6]. But serious thought precedes serious action. Pesch did this serious work conforming his mind to reality. His ideas can guide us to a way that promises prosperity and upholds human dignity. When we are ready to reject systems of thought that defy common sense, the ideologies of capitalism and socialism, we can access the legacy left by this father of Catholic Economics.

References

1. Aquinas, St. Thomas. Summa Theologica, 5 volumes. New York: Benzinger Brothers, 1948. (Originally published in English in 1911).

2. Azar, L. Philosophy and Ideology: An Adventure (2nd ed.). Dubuque, IA: Kendall, 1983.

3. Azar, L. Twentieth Century in Crisis: Foundations of Totalitarianism. Dubuque, IA: Kendall/Hunt Publishing Company, 1990.

4. Heilbroner, R. L. The Nature and Logic of Capitalism. New York: W. W. Norton, 1985.

5. Keynes, J. M. The General Theory of Interest, Employment and Money. London: MacMillan, 1936.

6. Marens, R. "Timing is Everything: Historical Contingency as a Factor in the Impact of Catholic Social Teaching upon Managerial Practices," Journal of Business Ethics, 57, 2005, 285-301.

7. O'Boyle, E. J. Contributions of German and American Jesuits to Economics: The Last 100 Years. Forum for Social Economics, 31(2), 2002, 25-43.

8. Pesch, H. S. J. Heinrich Pesch on Solidarist Economics: Excerpts from the Lehrbuch der Nationalokonomie (R. J. Erderer, Trans.). Lanham, MD: University Press of America, 1998.

9. Pesch, H. S. J. Lehrbuch der Nationalokonomie/Teaching Guide to Economics (R. J. Erderer, Trans.) (Vols. 1-5). Lewiston, NY: Mellen Press, 2002. (Original work published 1905-1926).

10. Pesch, H. S. J. Ethics in the National Economy (R. J. Erderer, Trans.). Norfolk, VA: IHS Press, 2004. (Original work published 1918).

11. Ruskin, J. Unto this Last and Other Writings. London: Penguin Books, 1985. (Original work published in 1862).

12. Wishloff, J. "Teaching Ethics: A Classroom Model," Journal of Business Ethics Education, 2(1), 2005, 1-28.

Endnotes

(1) The reference here is to the Summa Theologica (Aquinas, 1948), II, ii, Q184A1, 3.

(2) This point is made repeatedly through his writings. At the beginning of his Study Guide to Economics a complete definition is given.

  The economy refers to the sum total of the kinds of human
  transactions, relationships, institutions, which serve the purpose, in
  an ongoing and systematic, orderly manner, of providing a person or a
  group of persons on a continuing basis or at least for a particular
  period of time, e.g., a fiscal period, with the material things which
  are needed to satisfy their wants, and which are directly related in
  this manner to realizing the material side of human welfare. [9:1, 1,
  13]

(3) This restates in a clearer manner Pesch's somewhat unwieldy phrasing,

  ... the sum total of those public conditions and institutions which
  would provide, preserve, and enhance the potential of all members,
  through their combined energies so that they may freely and
  independently achieve their true temporal welfare according to their
  own particular capacities and situations, and to preserve what they
  have achieved in an honest manner [8:23].

(4) Pesch is a great defender of human initiative in the economic realm. He took great pains to distinguish the institution of private property from the historical manifestation of the economic system of capitalism, a regime he felt was rotten to the core. The summary definition he provides at one point: "capitalism means control over economic life in the name of the unrestricted and unlimited acquisitive interests of those who own capital" [10:159]. The essence then is seeking profit for the sake of profit.

Jim Wishloff, The University of Lethbridge, Edmonton, Canada