In the many discussions about socio-economic matters we partake in here at The American Catholic – not all of them as charitable as I would like – the topic of wealth redistribution often comes up. Clearly some of us hold different views as to the effectiveness of wealth distribution, or the forms it ought to take. Catholic social teaching does not attempt to confine redistribution to one set of particular policies, and it does not support the enlargement of “the welfare state”.
But there is no question that the redistribution of wealth through taxation is in itself a morally legitimate practice for government to engage in.
The Catechism of the Catholic Church, paragraph 2240 states that “[s]ubmission to authority and co-responsibility for the common good make it morally obligatory to pay taxes.”
That, I should hope, settles the question of the morality of taxation, though in other places the Church clearly warns about excessive taxation; where it would clearly create more problems than it would solve, especially for the poor, raising taxes becomes immoral.
What of redistribution beyond the basic functions of the state? Nowhere is it categorically condemned; in may places, it is explicitly endorsed. The Compendium of the Social Doctrine of the Church states:
Tax revenues and public spending take on crucial economic importance for every civil and political community. The goal to be sought is public financing that is itself capable of becoming an instrument of development and solidarity. Just, efficient and effective public financing will have very positive effects on the economy, because it will encourage employment growth and sustain business and non-profit activities and help to increase the credibility of the State as the guarantor of systems of social insurance and protection that are designed above all to protect the weakest members of society. (355, emphasis in the original)
It strikes me as strange that anyone would find these ideas controversial. If there are areas of the economy where state intervention is necessary, or where there is clearly an opportunity for public financing to serve the common good, there is no moral objection to be made, at least not on the grounds of Church teaching.
The Catechism and Compendium in turn are based upon 120 years of Papal teaching on the development of a moral economic order. As far back as Rerum Novarum Pope Leo XIII argued that if anyone was going to receive assistance from the state, it was going to be the working poor:
The richer class have many ways of shielding themselves, and stand less in need of help from the State; whereas the mass of the poor have no resources of their own to fall back upon, and must chiefly depend upon the assistance of the State. And it is for this reason that wage-earners, since they mostly belong in the mass of the needy, should be specially cared for and protected by the government. (37)
Obviously this does not mean the creation of a nanny state, but it does mean the endorsement of a social safety net to support those workers who become the victims of fluctuations in the labor market and the restructuring of various sectors of the economy. That requires redistribution. What else might redistribution affect? Leo also writes that “[t]he law… should favor ownership, and its policy should be to induce as many as possible of the people to become owners.” (46)
So it does not seem unreasonable to me to assume that redistribution might also, in various ways, be used to spread ownership in the manner that Leo suggests. Public financing on the one hand, or tax incentives on the other (which might mean an increased burden elsewhere), are two possibilities that come to mind.
In Quadragesimo Anno Pius XI inveighs against the unequal distribution of life’s goods:
Yet while it is true that the status of non owning worker is to be carefully distinguished from pauperism, nevertheless the immense multitude of the non-owning workers on the one hand and the enormous riches of certain very wealthy men on the other establish an unanswerable argument that the riches which are so abundantly produced in our age of “industrialism,” as it is called, are not rightly distributed and equitably made available to the various classes of the people. (60)
While we may dispute the extent to which this problem has been mitigated in some areas of the planet today, there is no question that it is an enduring problem for many others. We are still confronted with an “immense multitude of the non-owning workers”, as well as “the enormous riches of certain very wealthy men.” Nowhere in Catholic social thought are these enormous riches justified as morally legitimate outcomes of market activity. They are condemned as real and symbolic threats to public order.
That Pius describes the multitude as “non-owning” is particularly relevant. If non-ownership and poverty are often related, or at least correlated, it follows that one possible solution (not the solution, and in conjunction with many other solutions) is to follow Leo’s advice, which is precisely what Pius suggests:
We consider it more advisable, however, in the present condition of human society that, so far as is possible, the work-contract be somewhat modified by a partnership-contract, as is already being done in various ways and with no small advantage to workers and owners. Workers and other employees thus become sharers in ownership or management or participate in some fashion in the profits received. (65)
Now, let us take the following facts into account. 1) Taxes are not intrinsically immoral. 2) The redistribution of wealth is not intrinsically immoral. 3) The Church speaks strongly in support of just and effective “public financing”. 4) The Church does endorse the spreading of ownership, particularly in productive enterprises. Is it reasonable to therefore assume that a legitimate and positively good use of public funds would include the development of cooperative enterprises, of ESOPs, EOCCs, and whatever other models may develop in the future? I believe so.
In that way “redistribution” becomes a process not by which the wealthy are taxed and the revenues go to fund social programs that end up costing more than the benefits they provide; instead it becomes a process whereby, through the more equitable distribution of ownership, the fruits of economic growth are also more equitably distributed. The dichotomy some like to draw between “growth” and “redistribution” is false. One does not need to come at the expense of the other. Through creative, cooperative structures these two processes can continue on in a complimentary way.
On a closing note, I want to publicly thank fellow contributor Blackadder for the book he sent me, Spin Free Economics – and I want to take the opportunity to say once again that I am not opposed to free markets. My concern has always chiefly been with the structure of firms and the distribution of ownership, and not what happens between them. Catholic social teaching is supportive of market economies, provided that they are subordinated to higher moral values. So within broadly defined moral limits, I too would call myself, if not a “libertarian” pragmatist, at least an economic pragmatist.