To Chrys (22): First, not all “market economies” make use of debt. The Arab souk does not, and consequently it does not generate the wealth that Wall Street does. Second, the freehold landowner of the Middle Ages had “equity” and “cash flow,” but the economic value of his land was limited by his inability to lend the income from his land to others at interest or borrow money for capital improvements (irrigation, farm machinery, all of the things that make today’s farms so productive). Third, banking is almost all about money-lending, and it has only been in the last 500 years that banking has come to dominate economics, such that a crisis of liquidity (no cash to lend) can threaten our economy with collapse. It is therefore useful and important to distinguish between mere market economies, based on trade, and capitalist market economies, which also make use of money-lending (in a word, debt).

I can’t argue with the three virtues of market economies you name in 24. Our present system did arise “organically,” is obviously more efficient than any command economy, and is based on peaceful and profitable interdependence among people. I will even add a fourth virtue specifically related to the capitalist aspect of our modern economy: It encourages optimism, based as it is on an expectation of future communal success.

To Fr. Johannes (25): Thank you for the kind words about my book, but let me say a few things about it so that others are not misled: First, the book is strictly descriptive in approach, not prescriptive. Nowhere in it do I say what ought to be, only what is and what can be. Second, the book was written in an evenhanded fashion for the academic market. (It passed peer review by the University of Oklahoma Press.) This deliberate evenhandedness might account for much of what you see as “moral leveling.” My intent was not to indict Chomsky as a potential tyrant, but to distinguish him from others on the Left. It is true that some “Radicals” like Chomsky actually do become tyrants when put in power, and I say so in the book. It is also true that many people are not entirely consistent or even honest about their politics, and I say that in the book, too.

Of course, anyone with a good ear will get an idea where I’m coming from in the book. I am most comfortable in the “upper right” of my compass. This is the corner of traditional conservatism, called Paleoconservatism in the book. Paleoconservatives are indeed less in love with capitalism than Neoconservatives and Paleolibertarians, but they are not socialists. They merely recognize that money and freedom, however important, are not themselves the summum bonum, that people need government, that God gave us government, and that economics is no exception. It needs limits.

I am surprised that you assume me to be a monarchist. Nowhere in the book do I express such a preference. I suppose an ideological republican — an anti-monarchist — might take me for a monarchist because I criticize democracy without condemning monarchy. But then, I’m not writing about monarchy; I’m writing about today’s politics, which are entirely democratic. Can’t someone point out the faults of democracy and capitalism without people jumping to the conclusion that he’s a monarchist and a socialist? Can we only think in terms of A and not-A? I wrote the book to show that reality is not that simple, that politics can’t be reduced to just left and right, but my experience before and after writing it has been that people in general cannot abide complexity and reflexively reduce everything to two alternatives. They are more comfortable that way.

Here’s what I really think: All reality is ultimately personal, therefore all government is ultimately personal as well. We are never ruled by systems; we are ruled by people, and almost invariably there’s one person at the top who does the most ruling. In that sense, monarchy is inescapable. What matters most is who the monarch is and who the people supporting him from below are, for no monarch ever ruled alone. If they are bad people, no system known to man will give us good government; if they are good people, any system will. In either case, it will still be a fallen, imperfect, and sinful world, until the King — yes, the king — comes again.

Is this moral leveling? If it is, it’s the leveling of a world-weary believer who has read and seen enough history to understand that we mortals are and always have been ignorant and confused sinners who just don’t get it, even when we take the right side in the fight. Man careens through history not knowing where he is going. God knows. We don’t. Lord have mercy!

Your fellow fool,

Dn. Patrick

I agree that Jews have received better treatment here than in Russia. And while we have not had pograms against the Jews we have had the equivalent against the members of the Native American Nations and there is the matter of slavery.

All that said while we have our sins as a nation, we also repented and work to right (granted with varying degrees of sincerity and success) the wrongs we have committed.

Your example of the relationship between Greeks and Macedonians or Greeks and Turks is a good one. Yes there have been (and are) racial and ethnic tensions in America, even as there are in Europe and other parts of the world. But thank God while we have not always resolved these tensions as well as we ought (or even could), America has in the main worked to maintain some semblance of justice and peace between and among the different communities that make up the nation.

Like you, I would not wish to live in Byzantium (#27) and I suspect very few of those who post here would. Nor, for that matter, do I have any desire to live in Russia, Greece, the Middle East or any traditionally Orthodox country. I am, and am happy to be, an American.

While I thank God for my Orthodox faith, I also thank Him for my Catholic boyhood (and more for my Catholic education!), and for being an American. As I have mentioned here (among other places) before, I think the arrival of the Orthodox Church in the US in providential–not only for America but also for the Church. In America the Church can see the best and worst to modern (i.e., post-16th Century)thought played out. Not only that, we have in America the freedom to shift through and take what is best and leave what isn’t and put it all at the service of the proclamation of Christ and the Gospel. To quote Metropolitan Jonah, in America we need not beholden to the needs and desires of secular government–we have here unparalleled freedom and opportunity that, to borrow a phrase, for which I am frankly (and unapologetically) an evangelist–but I am so only insofar as it serves primary evangelistic obligation: the Gospel of Jesus Christ.

Thanks for the comments above. You’ve given me much to think about.

In Christ,

+FrG

Fr Hans, I have on more than one occasion encountered Orthodox Christians who seem to argue that monarchy is the only form of government even potentially compatible with Orthodoxy. I have not read Dn Patrick’s book so I cannot comment on his political philosophy, but the concerns you raise (#25) is one’s I have heard before–not only the preference for monarchy but also the moral leveling in matters pertaining to economics and politics. If I am not mistaken, the charge of moral leveling was also made by Fr Alexander Webster in his examination of how SCOBA has responded to issues of war & peace.

As has been pointed out before (both here and elsewhere) the central questions of our age pertain to issues of anthropology–what does it mean (and not mean) to be human? The technical questions of economics (and for that matter politics but civil and ecclesiastical) are important to be sure but their importance is secondary.

The phenomenological psychologist A. Giorgi has characterized the importance of anthropology in his use of the term “approach.” Is our approach or stance towards technical matters informed by a sound vision of the human person and community or not? What I appreciate about Novak is his frankly evangelical approach to capitalism, an evangelistic spirit informed by a sound vision of the human (as evidenced in the post that served as the occasion for our conversations here).

In Christ,

+FrG

Nevertheless, I think you are running from the points John presented.

I noticed too a presumption running through your book, that capitalism is morally offensive in that it does not check wanton behavior in the arena of commerce (pornography, etc.). Is that correct? Also, it appears you think that a benevolent monarchy is the the only government suitable for a Christian people/nation. Is that correct as well?

Also, I noticed what I would call a moral leveling at work. Your brief description on Noam Chomsky’s political/social philosophy for example, while very well expressed never really deals with the concrete ramifications of Chomsky’s ideas if they ever were implemented. You make I think a very fair and clear distinction between, say, Chomsky and Alexander Cockburn who both share some fundamental ideas in common, but never mention that Chomsky was an apologist for Pol Pot while Cockburn, as far as I understand him, would never be deceived by the Marxist delusion to the degree that Chomsky was. (You can see that I think Chomsky’s ideas are a recipe for tyranny.)

I wonder if the leveling occurs because you really don’t see any type of rule apart from monarchy as viable. All of the West seems poisoned by the waters of capitalism.

Am I on track here or am I misreading it?

Though I may be taking another tangent, three quick (and not terribly penetrating) thoughts come to mind.

First, in describing why the market economy works so well, Novak is trying to described something that – while a social construct – emerged “organically” (primarily within the context of English common law). It was not a “concept” that was designed or imposed – as were more than a few efforts in the 20th century which ultimately disintegrated from defectiveness. We are better at describing what seems to work that designing it. (Score one point for humility.)

Second and related to the first, as Hayek showed, one cannot know enough effectively command an economy. To put it more positively, the gifts and contributions that each of us can make are infinitely richer than the outcomes imagined by “the best and brightest” none of whom could have imagined even a fraction of the innovations that we take for granted today. Thus, when we respect the unrepeatable gift of each, we all benefit. (Score two points for humility and one for gratitude.)

Third, what may be reflected in Novak’s comments (at least as quoted) and your comments, (and – I suspect – Dn. Brian Patrick’s taxonomy), is that the market’s effectiveness is – at least in part – reflective of our being made in the image of “communion.” That is, we thrive as individuals – and our gifts generate value – when offered within a community (reinforced necessarily by law) that engenders trust and accountability, respects/defends the boundaries of the individual, and offers incentives that reward and foster creativity. In overly simple terms: without any one of these features, the effort fails; together, they can generate unimagined wealth that can bring blessings to everyone.

Having read through the various comments generated by Dn Patrick’s comment I find myself more than a little confused. Yes, certainly, Novak’s understanding of capitalism is not exempt from criticism and I don’t imagine Novak would say otherwise. But it seems to me that the conversation that has ensued rather misses the point of Novak’s defense of capitalism.

Novak’s piece was posted on the First Things’ blog in anticipation of Pope Benedict’s encyclical “Caritas in Veritate.” Just as Pope Benedict does with economics in general, Novak seeks to offer us what he sees as the anthropological foundations of capitalism; what is the human truth that underlies at least his understanding of capitalism?. Whether he is successful or not in bring to light the human foundation of capitalism this is certainly a question that can be debated but I do not see in the criticism here any attempt to engage Novak’s specific concern to articulate the human truth about capitalism or if one prefers, the free market.

This is not to say that I necessarily disagree with the criticisms that have been offered–I don’t. But I do think that Dn Patrick’s concerns about law and debt (to name only two) can be subsumed under Novak’s more general argument about the importance of community for the both the practical success of capitalism and is moral compass (a compass that seems rather lost these days).

Besides being empirically and anthropologically sound, Novak’s argument anticipates Pope Benedict’s own in “Caritas in Veritate” and offers a potential point of communality between the Tradition of the Orthodox (and for that matter, Catholic) Church and at least some forms of capitalism.

Finally it seems to me that even if we agree with him, in not taking up Novak’s anthropological concern we do him an injustice. We in effect end up responding not to what he says but what we wish he had said and (in so doing) also miss the opportunity to explore areas of common concern with him and each other.

In Christ,

+FrG

That said, I too, have questions which I hope your book will resolve. Like John, I wonder how debt is a distinctive element of market economies?

As noted before, I strongly agree with your focus on property rights. (On a related point, I recall a book a few years back – forget the title – that persuasively criticize the failure of South American economies to emerge from their economic chaos because of very high barriers to property ownership and the tentative nature of the claim once acquired.)

It is the emphasis on property rights that points to what I view as THE essential element of a market economy: equity. In short, you can’t leverage what you don’t own. Debt presumes equity (and cash flow). Debt is one possible use once you have an asset, but equity ultimately precedes any notion of debt in both function and primacy. This, to me, is THE distinctive of the modern market economy (certainly as compared to mercantilism or the feudal economies of once and future underdeveloped nations). My limited experience with investment bankers seems to reflect that hierarchy of value: debt will be more readily offered and is “cheaper” for the asset-holder than giving up equity, which is usually deemed as more valuable. In a different but related way, the “equity premium” seen in stock markets around the world recognizes the importance, potential value – and increased risk – of ownership over and above debt instruments. Not sure if this is somehow incorporated into what you mean by debt – and I am sure that you provide important nuances in the book – but it expresses my confusion about the point. (Or am I just seeing the trees and missing the forest?)

My response was designed to show that you were unfair in your characterization of Novak’s views. Is he an “evangelist” for the market economy? Sure he is. Is he blind to its snares or destructive tendencies. Not at all, in my view.

Again, to say that capitalism is founded on “money lending” seems terribly reductionist. And is money lending good or is it bad? I would say it’s essential for business expansion and economic growth, something we’re all trying to figure out how to jump start these days.

De Soto (I’ve recommended the book to many people over the years) says that “implementing a property system that creates capital is a political challenge because it involves getting in touch with people, grasping the social contract, and overhauling the legal system.” This makes sense to me. All of this works together in a complex social, political and economic fabric. It seems to me like there’s a lot more going on in the “Mystery of Capital” than simple money lending.

I’m actually reading, among other things, Judith Herrin’s excellent “Byzantium: The Surprising Life of a Medieval Empire.”

First, I confess my impatience. After all I have already written to distinguish the historical phenomenon widely recognized as “capitalism” from other more or less free economies, you still only use “capitalism” as another name for free enterprise, leaving me to wonder whether I’m wasting my time.

Second, I confess my pique at what appears to be a deliberate insult — something along the lines of “Gee, I’d love to read your book, but I’ve got so many other books at home more worthwhile.”

Third, I confess my mistake in trying to communicate with someone who doesn’t know me and so doesn’t know how to take what I say. I do know you to some extent; I’ve been reading your blogs for some time, and nothing you have written in this exchange surprises me. But this is the first time you’ve heard from me, and you’re probably wondering if I’m not some kind of leftist. I am not, but I am also not Novak’s kind of conservative.

Now to the issues:

First, capitalism: What is it? We can’t discuss its strengths and weaknesses if we can’t agree on what it is. I say it’s a modern economic system founded on money-lending, in one form or another. I don’t see any point in using the word to mean simply free enterprise or market economics. If you still want to talk that way, then nothing I say will make any sense to you. In that case, I suggest you read Hernando de Soto’s The Mystery of Capital and maybe Niall Ferguson’s The Ascent of Money.

Second, Novak: What’s his take on capitalism? My initial post commented on a specific article by Novak in which he presented a view of capitalism that is inaccurate and overblown. This article is typical Novak. Whatever qualifications he feels obliged to admit at times, he remains an evangelist for a system he believes will save the world, and in his evangelism he very often overstates the system’s virtues and overlooks its vices.

Obviously you don’t share my estimation of Novak, which is why you really should read Eight Ways to Run the Country. It’s not about political systems; it’s about political perspectives. It explains where people are coming from and why. In doing so, it contrasts Novak’s kind of conservatism and other kinds more appropriate for Orthodox Christians. The theory behind the book is based on the distinction of archê and kratos (for rank and force). It’s a very Byzantine distinction, with Orthodox theological relevance. But if you have other books at home that you feel more worthwhile, please tell me what they are, so that I can read them too.

For the record, the Romans sometimes charged interest as high as 48 percent per annum.

Best in Christ,

Dn. Patrick

You are reading entirely too much into my brief cautionary notes on Michael Novak’s praise of capitalism. No point in arguing the matter.

Peace in Christ,

Dn. Patrick