Date:      Tue, 26 Jan 1993 12:21:17 est
From: "John Covici" <covici@ccs.covici.com>
Message-Id: <2b657318.ccs@ccs.covici.com>
Organization: Covici Computer Systems
Reply-To: "John Covici" <covici@ccs.covici.com>
To: uunet!css.itd.umich.edu!pauls@uunet.UU.NET
Subject:   Can Economic Policy be Based on Christian Principles:? part 6
Status: RO

The following series is taken from Executive Intelligence Review V20, 
#5 and is the cover story of that issue.  For further information on 
EIR, please contact me by Email.

Neuhaus: doing evil and calling it
good
by William F. Wertz, Jr.
                                                  
Doing Well and Doing Good, The Challenge to the
Christian Capitalist
by Richard John Neuhaus
Doubleday, New York, 1992 312 pages, hardbound,
$22. 

{This review will also appear in the Feb. 1, 1993 issue
of }New Federalist{ newspaper. Because of its exceptional
importance to the subject of our report, the newspaper and
author have granted us permission to reprint it here in
full.} 

   On May 2, 1991, the day after Pope John Paul II's
encyclical {Centesimus Annus} celebrating the hundredth
anniversary of Pope Leo XIII's encyclical {Rerum Novarum}
was officially released, an article by Richard John
Neuhaus, entitled ``The Pope Affirms the `New
Capitalism,'|'' appeared in the {Wall Street Journal}.
{Doing Well and Doing Good, The Challenge to the Christian
Capitalist} is a book-length elaboration of the thesis
proclaimed in that article, i.e., that {Centesimus Annus}
was ``very likely'' shaped by the work of Neuhaus's fellow
liberal capitalist Catholic, Michael Novak, and as such is
an endorsement of Novak's concept of ``democratic
capitalism.'' 
   Neuhaus, a former Lutheran minister who converted to
Catholicism and was then ordained as a Catholic priest,
bases his argument not only on an erroneous history of
capitalism, but more disconcertingly, on an unconscionably
selective reading of both this encyclical and other
encyclicals written by Pope John Paul II. His self-serving
interpretation is further bolstered by the inclusion at
the end of his book of a ``condensation'' of {Centesimus
Annus}, which when compared to the original text reveals a
thoroughly dishonest censorship of Pope John Paul II's   
words. 
   To most succinctly indicate the fraud which underlies
Neuhaus's book, one must merely point to the fact that not
once does Neuhaus mention the problem of Third World
foreign debt in the entirety of the text of his book,
although he does include an abridged four sentences on
this subject from the pope's text in his attached
condensation. This omission of what the pope has
repeatedly identified as one of the primary causes of both
poverty and war in the world today, is related to
Neuhaus's attempt both to portray {Centesimus Annus} as a
significant break from Pope Paul VI's {Populorum
Progressio} and to isolate it from the pope's other
encyclicals, such as {Sollicitudo Rei Socialis}, which was
written in 1987 on the 20th anniversary of {Populorum
Progressio}. 

                 - `Structures of sin' -
   What Neuhaus and Novak want us to ignore from
{Sollicitudo Rei Socialis} is the pope's explicit
denunciation of the existence of the ``evil mechanisms''
and ``structures of sin'' which are thwarting the
development of the less developed countries. The pope
argues that ``In the West there exists a system which is
historically inspired by the principles of the liberal
capitalism which developed with industrialization during
the last century.'' Neuhaus correctly points out the
pope's opposition to socialism, but he would have us
believe that after 1989 the pope has literally endorsed
Adam Smith, the father of liberal capitalism in the West. 
   In {Sollicitudo Rei Socialis} the pope says that both
liberal capitalism and Marxist collectivism are ``in need
of radical correction.'' He says, ``Each of the two blocs
harbors in its own way a tendency towards imperialism, as
it is usually called, or towards forms of
new-colonialism.'' He argues that ``misguided
mechanisms'' or ``structures of sin'' arise from the
``all-consuming desire for profit'' and from the ``thirst
for power.'' Therefore, certain forms of modern
``imperialism'' are ``real forms of idolatry.'' He
explicitly calls for reform of the international trade
system and reform of the world monetary and financial
system which are the very ``structures of sin'' which he
has identified. 
   A comparison of Neuhaus's condensation of {Centesimus
Annus} with the pope's text shows that he has
systematically eliminated all those statements by the pope
which, as in {Sollicitudo Rei Socialis}, call for
intervention on an international level. For example, the
pope writes: ``In the developing countries, tragic crises
loom on the horizon unless internationally coordinated
measures are taken before it is too late.'' Neuhaus's
condensation reads: ``In the developing counties, tragic
crises loom on the horizon.'' There is not even an
ellipsis! The sentences in section 58 which call for
reform of the international monetary system are all
omitted. Therefore, in Neuhaus's condensation we do not
read that development ``requires above all a change of
lifestyles, of models of production and consumption and of
the established structures of power which today govern
societies.'' We do not read that ``There is a growing
feeling, however, that this increasing
internationalization of the economy ought to be
accompanied by effective international agencies which will
oversee and direct the economy to the common good,
something that an individual state, even if it were the
most powerful on earth, would not be in a position to
do.'' We do not read in section 52 that ``Just as within
individual societies it is possible and right to organize
a solid economy which will direct the functioning of the
market to the common good, so too there is a similar need
for adequate interventions on the international level.''
In section 34 we do not read that ``In Third World
contexts, certain objectives stated in {Rerum Novarum}
remain valid, and, in some cases, still constitute a goal
yet to be reached, if a person's work and very being are
not to be reduced to the level of a mere commodity. These
objectives include a sufficient wage for the support of
the family, social insurance for old age and unemployment,
and adequate protection for the conditions of
employment.'' 
   Neuhaus goes so far in his whitewash of the
``structures of sin'' as to suggest that the nations of
the Third World are primarily responsible for their own
misery, and that their problems would be solved over time
if they were merely integrated into the ``new
capitalism.'' Thus Neuhaus writes: ``It simply will not do
for them to blame their plight on colonialism,
neocolonialism, imperialism, and the such. While foreign
states and corporations have taken and do take unjust
advantage, Third World leaders are firmly told to put
their own houses in order.'' 

        - The pope does not endorse junk bonds -
   One of the most outrageous arguments in Neuhaus's
book is his defense of ``junk bonds'' and Michael Milken.
Neuhaus has the audacity to suggest that only the ``more
ideologically minded'' have no doubt that a Michael Milken
is engaged in ``illicit speculation.'' Neuhaus argues that
the ``defenders of the trade in high-risk bonds claim that
they make available billions of dollars to capitalize
entrepreneurial ventures that would otherwise languish.
While many criticize the corporate takeovers financed by
junk bonds, others contend that such takeovers typically
improve management and make corporations more accountable
to stockholders.'' Then he writes, ``Is what such people
do an instance of `illicit speculation'? It would appear
that the only answer {in principle} proposed by John Paul
is that property and economic activity `is just and
legitimate if it serves useful work.'|'' 
   Does the pope really endorse junk bonds? Then why
does Neuhaus omit the following statement by the pope in
section 48: ``The absence of stability, together with the
corruption of public officials and the spread of improper
sources of growing rich and of easy profits deriving from
illegal or purely speculative activities, constitutes one
of the chief obstacles to development and to the economic
order.'' 

              - Economics apart from God -
   The source of Neuhaus's fraudulent representation of
the arguments of {Centesimus Annus} stems from his
severing economics from Christian theology. The book
starts by stating that ``The Latin word {oeconomicus}
refers to divine dispensations or the general arrangement
of everything that is. Christian theologians, for example,
refer to the `divine economy,' meaning both the internal
life of God--Father, Son, and Holy Spirit--and the
external way in which God has arranged the whole
creation.'' However, Neuhaus rejects this theological
definition of economics and instead follows Adam Smith in
reducing economics to the ``considerably more modest''
concept of household ``stewardship.'' Moreover, he is not
unaware of what he is doing. Therefore, he adds
parenthetically for the benefit of his Christian
readership: ``(Although, to be sure, Christians would
insist that what we are discussing cannot be understood
fully apart from the life and purposes of God.)'' 
   In so doing, Neuhaus rejects the rooting of economics
either in natural law or in the Trinitarian concept of
equality. He then argues unashamedly that the pope agrees
with this approach to economics: ``The almost complete
absence of any explicit reference to natural law in
{Centesimus}, and its very limited place in the pope's
other writings, is noteworthy.'' Moreover, after falsely
arguing that the Christian concept of equality is derived
from the {Egalite@aa} of the French Revolution, he insists
that equality ``is the name of the dog that does not bark
in {Centesimus}.'' 
   The Christian concept of equality is derived by St.
Augustine, St. Thomas Aquinas, and Nicolaus of Cusa from
the concept of Christ, the second person of the Trinity.
As St. Augustine wrote in {On Christian Doctrine}: ``Unity
is in the Father, equality in the Son, and in the Holy
Spirit is the concord of equality and unity.'' 
   As Pope John Paul II writes in {Sollicitudo Rei
Socialis}: ``One's neighbor is then not only a human being
with his or her own rights and a fundamental equality with
everyone else, but becomes the living image of God the
Father, redeemed by the blood of Jesus Christ and placed
under the permanent action of the Holy Spirit.'' He
further writes: ``Surmounting every type of {imperialism}
and determination to preserve their {own hegemony}, the
stronger and richer nations must have a sense of more
{responsibility} for the other nations, so that a {real
international system} may be established, which will rest
on the foundation of the {equality} of all peoples and on
the necessary respect for their legitimate differences.''
In {Centesimus} itself, where John Paul argues that a free
economy ``presumes a certain equality between the parties,
such that one party would not be so powerful as
practically to reduce the other to subservience,'' Neuhaus
says ``here we encounter a rare reference to
equality''--as if this were not an essential principle of
the pope's message. 
   The brotherhood of all in Christ, ``children in the
Son,'' is the essence of the principle of Solidarity
espoused by the pope. In denying the Christian concept of
equality, Neuhaus is literally denying Christ. Instead of
Christ being the Lord of economics, Neuhaus would transform
Christ be into Adam Smith's ``Invisible Hand''
of the marketplace. 
   This is no exaggeration. Neuhaus literally claims
that Pope John Paul II has come around to the thinking of
the father of liberal capitalism, Adam Smith. Neuhaus
writes: ``When we speak of property and ownership, John
Paul says, we must give our attention to `the possession
of know-how, technology, and skill.' And then this: `The
wealth of the industrialized nations is based much more on
this kind of ownership than on natural resources.' Fans of
Adam Smith are no doubt warranted in drawing some
satisfaction from the implied reference in that sentence
to {The Wealth of Nations.} (It seems unlikely that it is
an accident.) At the very time the American Founders were
launching this experiment in political and cultural
freedom, Smith was laying out the rationale for a free
economy that could benefit all. As becomes evident in John
Paul's treatment of global poverty, his hope, like
Smith's, is that `the wealth of the industrialized
nations' will indeed become, through expanding the circle
of exchange and productivity, the wealth of all nations.''
In another location Neuhaus argues that Adam Smith ``was
first of all a moral philosopher and he insisted adamantly
that the free economy depends upon the cultivation of
virtue and the `moral sentiments' of a free people.'' 
   Now you may ask, how is it that Neuhaus can honestly
maintain that he and Novak are not advocating the very
liberal capitalism which is denounced by every pope since
Leo XIII, including John Paul in this encyclical? Honestly
they can't. Therefore, they must rely both on a false
history of the development of capitalism and of the
American System of political economy in particular and
construct a false notion of liberal capitalism in order to
counterpose it to their own liberalism, which they
disguise as the free economy espoused by the pope. 
   The way the latter is accomplished is to define
liberal capitalism as libertarianism. Then, by definition,
any form of capitalism which is not absolutely
libertarian, can be represented as the other, non-liberal
form of capitalism. This is precisely what Neuhaus does in
order to say that Novak's democratic capitalism based on
Adam Smith is the alternative form of capitalism advocated
by the pope. 
   Neuhaus is correct in maintaining that there are two
forms of capitalism. However, either out of ignorance or
design, he and Novak have explicitly adopted the
Calvinistic, liberal version of capitalism correctly
rejected by the Catholic Church. Therefore they maintain
that Max Weber was right when he argued that capitalism
arose based upon Calvinism and the Protestant work ethic:
``There is little doubt that what we now call democratic
capitalism was shaped in a Protestant, and usually
Calvinist, milieu.'' 
   He makes this argument without a single critical
reference to British imperialism, let alone any reference
to the fact that the American Revolution was fought
against Great Britain and against the imperialist economic
policies which are the core of Neuhaus and Novak's dearly
beloved ``moral philosopher,'' Adam Smith. 
 
          - Adam Smith and the British System -
   Adam Smith's ``moral philosophy'' has nothing to do
with Christian love for one's fellow man and has
everything to do with ``moral indifference.'' That is
clear from the following quote from his 1759 {Theory of
Moral Sentiments}: ``The administration of the great
system of the universe ... the care of the universal
happiness of all rational and sensible beings, is the
business of God and not of man.... Hunger, thirst, the
passion which unites the two sexes, the love of pleasure,
and the dread of pain, prompt us to apply those means for
their own sakes, and without any consideration of their
tendency to those beneficent ends which the great Director
of nature intended to produce by them.'' So much for the
principle of Solidarity! 
   The economic policy which flows from this reduction
of man to an animal dominated by ``original and immediate
instincts'' is the colonial policy of enforced
backwardness against which the American colonies revolted.
The policy advocated by Adam Smith in {The Wealth of
Nations} under the guise of free trade was that the
American colonies not develop their own manufacturing
capability and that they not impose any restriction on the
importation of British goods. The colonies were to be
maintained as an agrarian protectorate. Their produce,
from timber to tobacco, was to be taxed so as to pay the
British national debt. 
   This is in essence the same imperialist system which
insists today upon ``free trade'' as the means by which
Third World nations are denied the right to develop their
manufacturing capability, maintained in a state of being
raw materials producers, and taxed to death in the form of
foreign debt payments. Neuhaus and Novak would have us
believe that the pope, who has raised his voice precisely
against these ``evil mechanisms,'' has joined with them in
bowing down in worship of Adam Smith's ``Invisible Hand.''
This is the message which they are currently peddling
throughout Latin America to gain support from the Catholic
Church for the ``adjustment'' programs of the
International Monetary Fund (IMF). 

          - The American System of economics -
   What then was the American Revolution about in terms
of philosophy and economic policy? 
   First of all, it was definitely not what Neuhaus
asserts it to have been, i.e., ``a Puritan-Lockean
Synthesis.'' Although it is commonplace among liberal
ideologues to assert that the American Revolution was
inspired by John Locke, who certainly had influence and
advocates in America, anyone who looks for the positive
kernel of the American Revolution will not find it there,
but rather in the Christian philosophy of Gottfried
Wilhelm Leibniz and ultimately in the Renaissance
tradition of Nicolaus of Cusa, who first espoused the idea
that government must be based upon the consent of the
governed in his work {On Catholic Concordance}. 
   Secondly, in respect to economic policy, it is
irrefutable that the United States based its economic
policy not on Adam Smith, but rather upon mercantilism.
Beginning with the establishment of the First National
Bank of the United States by U.S. Treasury Secretary
Alexander Hamilton, U.S. economic policy was what later
became known as the American System of political economy.
After Alexander Hamilton, the economists of this school
included Mathew Carey, Henry C. Carey, who was the adviser
of Abraham Lincoln, and Friedrich List. 
   It is this American System of political economy,
conveniently ignored by Neuhaus and Novak, which
represents the real capitalist alternative to the British
imperial system of liberal capitalism. Unfortunately this
form of Christian economy, which opposed the British
System slave trade and opium wars, is no longer the
economic policy of the United States. Rather the United
States has adopted the British system, which Neuhaus and
Novak now recommend the Catholic Church adopt as its own. 
   Even though Neuhaus knows very well that the pope
opposed the Gulf war, which President Bush and Margaret
Thatcher spearheaded in the name of a ``new world order,''
he cannot refrain from suggesting that ``something like a
new world order is afoot'' and from arguing that the
``free economy,'' as he and Novak define it, ``is
apparently the order of the future in this post-socialist
world.'' Therefore, even though the pope criticizes both
``national security'' states and ``the affluent society or
consumer society,'' Neuhaus advises that it is ``unseemly
for Americans to be excessively defensive.'' 
   According to Neuhaus, even though the pope writes
``that it is unacceptable to say that the defeat of `real
socialism' leaves capitalism as the only model of economic
organization ... in the real world to which the pope
directs our attention, it would seem that despite his
disclaimer, capitalism is `the only model of economic
organization.'|'' And of course that means Adam Smith's
``Invisible Hand'' of the marketplace reincarnated as
Michael Novak's ``democratic capitalism.'' 
   Neuhaus ends his book by saying that ``God loveth
adverbs.'' This is a reference to the title of the book:
``Doing Well and Doing Good.'' As he says earlier in the
book, ``The only thing some people know how to do really
well is to make money. It is not an unworthy thing to
offer up.'' But to whom? While it is absolutely true that
profit is not in itself illegitimate, but rather a
positive good insofar as it is earned morally and
reinvested productively, in equating making money well
with doing good Neuhaus contradicts Christ's teaching that
one cannot worship both God and mammon. 
   As Pope John Paul II writes in {Sollicitudo Rei
Socialis}, solidarity is ``a {firm and persevering
determination} to commit oneself to the {common good};
that is to say to the good of all and of each individual,
because we are {all} really responsible {for all}. This
determination is based on the {solid} conviction that what
is hindering full development is that desire for profit
and that thirst for power already mentioned. These
attitudes and `structures of sin' are only
conquered--presupposing the help of divine grace--by a
{diametrically opposed attitude}: a commitment to the good
of one's neighbor with the readiness, in the gospel sense,
to `lose oneself' for the sake of the other instead of
exploiting him, and to `serve him' instead of oppressing
him for one's own advantage.'' 
   Neuhaus's attitude is just the opposite--to portray
the pope as endorsing the very ``structures of sin'' he in
fact denounces, in order to render the nations of the
Third World and the former Soviet sector, especially the
Catholic nations of Ibero-America and eastern Europe,
defenseless before the genocidal policies of the
International Monetary Fund. He is doing evil and calling
it good. 

-- 
         John Covici
          covici@ccs.covici.com