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Mitt Romney in an infamous photo taken during his time at Bain.
There is a rough underbelly to capitalism. Newt Gingrich’s attack on Mitt Romney’s record with the private equity firm, Bain Capital, may be motivated more by politics than by theology, but his criticism follows Catholic social justice doctrine. The church’s teaching on economics is sophisticated and complex, but repeats basic principles first articulated in 1892’s
The church safeguards the right to private property, thus legitimating capitalism while condemning systems that abolish all private property like Communism. But the popes also condemn the type of capitalism that exploits workers in unregulated search for profits. For a Catholic, there are two kinds of capitalism. The difference between them is how an economic system serves the means to human dignity by providing living wages, decent housing, sufficient food, health care, civil rights, clean water and air, etc. If only a privileged few benefit, then the church considers the economic system to be immoral. This warning against the super-wealthy is taken from the teachings of Jesus who said it the rich could not squeeze into heaven (Mt. 19:24). In a term, an economic system is acceptable to Catholics as long as it puts
people before profits
The church’s century-old wisdom is particularly relevant today. Social inequality in the U.S. is a fact: less upward mobility, greater poverty, more children going hungry, more people losing their homes while one percent of the population has grown richer by more than 275 percent since 1979. The most recent declaration from the papal committee in charge of such matters sides with Occupy movements protesting the unequal distribution of wealth. But the papal call for the redistribution of wealth is not from envy and is not a call to replace capitalism with socialism, as some conservative ideologues would contend. The fault lies not with “the free enterprise system” but whether or not the system is rigged so that it is “free” for only the few who are millionaires, but too costly for the many.
In academia, scholars make a distinction between “Industrial Capitalism” and “Late Capitalism.” The former is the investment system that erects factories and “builds a better mouse-trap” for the consumer. Late Capitalism, in contrast, is based on profit by the financial class by manipulating money.
The analogy of the automobile “chop-shop” works here. While the mechanic at the garage tries to fix your car so it will run better, the thief takes your auto to the chop-shop where it can be dismantled and he can make money by selling of the individual parts. Newt Gingrich may be wrong if he suggests that Bain Capital conducted only chop-shop economics, but it is a fact that Mr. Romney was a venture capitalist who made millions by bankrupting 22 percent of companies that he “managed.” Dark-side Capitalism echoes the fictional Gordon Gekko “I create nothing. I own.”
The moral issues raised by the church are not foreign to the American way. The words “capitalism” or “free-enterprise system” do not appear anywhere in the U.S. Constitution. The Founding Fathers, however, saw the purpose of government was “to promote the general welfare.” The Declaration of Independence followed defense of “life, liberty and the pursuit of happiness” by asserting: “That whenever any form of government becomes destructive to these ends, it is the right of the people to alter or to abolish it….” Thus, if revolution is the American legacy against dark-side monarchy, clearly we are also empowered to act against dark-side Capitalism.
Faced with economic crisis, papal teaching urges an industry to seek cooperation and shared responsibility between union workers and corporate ownership. Government’s role is limited to reconciling competing interests for the many, because it ought to “promote the common welfare.” Dark-side Capitalism, in contrast, uses crisis to seek private profit by cutting wages, laying-off workers, disbanding unions, and seizing pension funds. In this concept of capitalism, the corporation is a “person” whose private rights to profit override interference by government, even in public defense of the many.
The church labels greed one of the seven deadly sins and getting rich off other people’s misery is immoral (I Tim. 6:5), while enjoying firing people is inexcusable. I’m not ready to call Mr. Gingrich, “Saint Newt” but he is right to ask the question.