Monday, March 26, 2018

The Creators of Poverty



The Creators of Poverty,
a Complementary Truth, and Sundry Consequences
 


Carmine Gorga 


November 2015
Mother Pelican, A Journal of Solidarity and Sustainability






Key points:

  • The rich are not the creators of poverty; it is the wicked who create poverty, not the rich.
  • The rich are not the creators of jobs; it is the entrepreneur who creates jobs.
  • The rich do not have the numbers to consume the Gross National Product; it is the poor who by their numbers perform this essential function.
  • Giving tax deductions, grants, and subsidies to the rich in order to create jobs is a waste of money. Yet, the money is not really wasted; it compounds the weight of today's economic problems--it does great damage by being a significant source of inequality. Hence we increase the level of poverty in the nation.
  • Some solutions for unfair economic inequality: Employee Stock Ownership Plans (ESOPs); Consumer Stock Ownership Plans (CSOPs); give loans to entrepreneurs who produce real wealth, not to financial speculators; cancel unduly inflated debts.



Some time ago I published this piece [1] in which I recognized that the rich are not the creators of poverty. I found that to be a powerful discovery that freed me from many an error.
Ever since the publication of this piece I have discovered a complementary truth: the rich are not the creators of jobs.

This is also a liberating verity that has freed me from many an error. The generous offer by the editor of Mother Pelican to republish this piece gives me the opportunity to briefly highlight the complementary verity that the rich are not the creators of jobs.

THE RICH ARE NOT THE CREATORS OF POVERTY

I can hardly contain myself. After years of studying the issue at a not inconsiderable depth, I have found in an unsuspected source an insight that clears up the issue of the cause of poverty in a definitive and powerful way. The source of this insight is neither a treatise in economics, nor a work in sociology, nor a tome in the theory of justice. The source is a paper published in “Spiritual Life,” — a periodical of Carmelite spirituality — in the Fall of 1997. The author is Suzanne Mayer. The title is: “Songs of the City of God: Merton, Social Justice, And the Psalms.”

The author prefaces her essay with this quote from Thomas Merton’s “Bread in the Wilderness”: “The Psalms are the songs of (the) City of God.... Singing them, we become more fully incorporated into the mystery of God’s action in human history.” Recalling that the Psalms are the “ancient prayers of Israel” ascending “like incense before the altar of God,” she proposes to “explore ‘the mystery of God’s action in human history’ through the vision the Psalms give of divine justice and through the covenant call to all humanity to enter into this process.”

These are some of the Psalms she quotes. Ps. 10:2: “In arrogance the wicked hotly pursue the poor...” Ps. 37:14: “The wicked draw the sword and bend their bows, to bring down the poor and the needy...” How do you read these Psalms? I read them in this way: Poverty is created, not by the rich, but by the wicked. What a liberating thesis.

So often repeated, most of us have assumed it to be true. We have assumed that poverty is caused by the rich. Even I who, as those who have worked with me, ever listened to my words, or read any of my writings can attest, has never used one word against the rich, even I had never penetrated the issue as through this reading. In fact, most of my efforts were unfocused and must have seemed quixotic to many just because I have always refused to point the finger at “the rich.”

Let us be honest. We have all assumed that poverty exists because of the rich. Indeed, have not many rich people themselves assumed that to be true? Certainly, society as a whole in its organized political effort has trained all its guns in that direction — and the reaction from the rich has, of course, been to resist that effort.

That most political discourse and action has for centuries been dominated by that assumption is not worth discussing at length. Much more interesting is another question. What is a fair assessment of the result of all that effort?

Do we not find that every now and then one faction wins a few painful battles, but that the war is constantly lost by all?

Are we not, generation after generation, faced with the same age-old problem of poverty? There are times when we become so exhausted by this burden that we refuse even to discuss it any more. But the problem remains stubbornly there. And it gnarls our soul. Not much joy, not much enjoyment of what we possess can be had, if we somehow keep in the back of our minds the suspicion that we have not done nearly enough to alleviate the pain and suffering of men and women who unwillingly live in poverty.

How can we tackle such an endemic condition? Is the situation hopeless? I believe that the first ray of light, and hope, can be grasped if we really try to learn about poverty, starting with splitting the problem into absolute and relative poverty. This is an important distinction. Relative poverty is the existential condition for which there will always be someone richer than others. The feast is a movable feast, indeed. That does not matter at all. Not one iota. What matters is that those who have less be not deprived of the conditions for a dignified and free life. When poverty of material conditions impinges on our freedom and our dignity, then we are suffering from absolute poverty. Then the quality of life of society as a whole is impoverished. Freedom and dignity are absolute qualities. No one can be deprived of them or we are all deprived of them — to say the least, we are all deprived of the joys of a guiltless life.

What changes when we distinguish between relative and absolute poverty? What changes when we make the wicked culpable for the existence of absolute poverty? Everything changes — and the problem becomes abruptly soluble. Let us look only at a few effects on us, through the lenses of some of the effects on the political stump and the religious pulpit.

Our political discourse changes. Our eyes are no longer focused on the behavior of the rich and the behavior of the poor. That polarization in our political life, with people taking sides between the two poles and making the other the enemy, vanishes. We all know the hatred generated by the “undeserving poor.” How many pieces of legislation are passed on the strength of that hatred! How many punitive agencies exist in the vain attempt at enforcing those laws!

Though less spoken about, how much hatred is directed against “the undeserving rich”? Is not most of our tax code written on the assumption that the rich have taken something away from others? The wicked rich are most certainly engaged in those practices. But are all the rich wicked? And are there not poor people who are wicked? Our political discourse is purged of many impurities, and our political action becomes much more pointed, if we keep those two basic distinctions in the back of our minds. Our finger is pointed in only one direction, the proper direction.

The religious pulpit and the political stump can finally become allies — on an equal footing. The split that has plagued society, it seems forever, is healed. Ultimate goals remain different. One is concerned more with the metaphysical life and the other more with the physical life, but the struggle, in this life, on this earth, becomes one and the same: resistance against wicked actions.

Is it easy to identify the wicked? No. Absolutely not. As distinguished from the rich and the poor who can be easily identified, the wicked cannot be easily identified by others. But the wicked themselves know who they are. (At moments of deepest insight, we know that we are all wicked, at least sporadically, at least in part. In those moments we also know that some people do not know they are wicked: hence the need for moral and technical instruction, because without knowledge of good and evil, there is no “sin.”)

The root to the solution of the problem of poverty is no longer found in punishment of the rich or punishment of the poor, or both. The solution can be found only in that eternal prescription for happiness: love your neighbor; love your God; and if you love them both, you will eventually cease to be wicked and you will even love yourself.

Thus the schism within the very soul of the religious people as well as the soul of the political people and, ultimately, the soul of each citizen is healed. The religious people can be concerned only with affairs of the moral life and the eternal life: they can eventually get out of “the social action.” The political people can be concerned only with providing a framework for the “good government,” namely the just government, within which we can take care of all our earthly needs. And we will all succeed. The political people will no longer be dealing with wicked people in sheep’s skin coming out of the synagogues, the churches, and the mosques. The few — always few — vastly wicked people will no longer intermingle with the good people. They will isolate themselves; they will ostracize themselves. Only when self purged, will they come back. Without insurmountable obstacles posed by the wicked, the majority of the people will satisfy all the needs that can and must be taken care of.

Poverty is a moral issue. As such it can be solved. But, then, just because poverty is a moral issue, do we not run against the hard fact that wickedness is an intrinsic part of human nature? I was myself under this  impression until recently when, in a discussion with Father John Hughes of Fitchburg, MA, the issue was clarified for me. I pushed him to admit the inevitability of wickedness. But the goodness that is in him, resisted my push. He still declared himself optimistic that the human race will eventually shunt wickedness aside. It was then that it occurred to me. Yes, the potential for being wicked will always be with us. That is inherent in our human nature; otherwise we would not be free — free to choose between good and evil. But do we have to choose evil? Do we have to destroy ourselves in the process? Not at all. Our struggle will be to resist wickedness. Our millennium has committed more wicked acts than all other millenniums combined, perhaps. We have had our fill. We can now gain control of ourselves and mold ancient aspirations into a Movement Toward Goodness (MTG). This is a challenging task indeed. We need all our wits to succeed.

THE RICH ARE NOT THE CREATORS OF JOBS

It is the entrepreneur who creates jobs. Not the rich. Financial capital is wholly passive; indeed, physical capital is equally passive, unless it is invigorated by the entrepreneur. There are plenty of apples on the ground that gradually disintegrate. It is the entrepreneur, who may also be rich, but the entrepreneur—as entrepreneur—who gathers them, and by bringing them to market, transforms a natural product into a useful product.
Much might also be said in relation to the size of the enterprise. Small and medium-size enterprises create jobs. Not to put too fine a point on it, but large corporations tend to destroy jobs. With their penchant for consolidation of two or more enterprises into one, they are bound to reduce rather than enlarge the number of jobs available on the market. Another way large corporations tend to reduce jobs is by chasing the lowest wage markets, no matter where they are located, even if they are located abroad.

SUNDRY CONSEQUENCES

There are innumerable consequences that flow from these two verities. We can look only at the most important ones here.

Tax Abatements, Grants, and Subsidies

Just remember this simple verity, the rich do not create jobs, and you know how to react when charlatans tend to convince you to give tax abatements, grants, and subsidies to large corporations, especially large financial, agricultural and maritime corporations, on the specious promise of the creation of jobs.

Will someone calculate the amounts? These are not empty words. They are words laden-full with dollars. If in doubt, just contemplate our financial landscape.
Is there any reason for the bail-outs and the ongoing bail-ins, at taxpayers’ expense, for failing corporations other than the vain hope of the purported preservation and creation of jobs? Is there any other reason for paying interest on reserves, cash hoarded actually, held at the Federal Reserve System (the Fed)? Indeed, is there any other reason for the oil depletion allowance?

Jobs, (Living) Wages, and Technology

Jobs as a talisman? Why does the discussion of jobs carry such weight in a modern society? Why is it presented as the solution to most, if not all, our economic ills?

The topic of “jobs” is generally discussed separately from the topic of wages—especially living wages—and the topic of technology. Let us try to avoid this pitfall. Let us link these three topics together. A new world opens up to sight.

Let us put it starkly. Wage increases are eaten up by rising prices; jobs are eaten up by technology. Wage raises followed by price increases make the world that much harder for the poor, those who are outside even the margins of the economics process; and the concentration of ownership of new job cutting innovations increases only income and wealth inequality.

This is a story that repeats itself. Remember Einstein’s definition of insanity ("doing the same thing over and over again and expecting different results") and ask yourself: Should the unions ever again demand higher wages and taxpayers demand jobs?

The answer is a resounding, no.

Is this a defeatist attitude? Far from it. Long story to be made short. Solutions are these: Taxpayers ought never to submit to the extortion of financial privileges on the promise of jobs; and unions should never push for higher wages. What are the real solutions?

Unions Should Push for Employee Stock Ownership Plans (ESOPs)

Employee Stock Ownership Plans (ESOPs) are growing by leaps and bounds. But more is to be done.

ESOPs will grow steadily when, as suggested in the petition to restructure the procedures of the Fed that is now circulating on the Internet, the creation of new money is pursued only if it benefits all citizens of a nation.

Once employees and workers become stockholders of the corporation in which they work, employees and workers can push for a fair distribution of profits: You see, wages are distributed before income is realized; profits, both as income streams and streams of capital appreciation are distributed after they are realized in the market.

And the Poor, What to Do with the Poor?

What is never realized is a third verity of the present train of thought: The poor are an essential component of the economic process. The rich get richer with the increase of production and consumption of the Gross National Product. The rich do not have the numbers to consume the Gross National Product; it is the poor who by their numbers perform this essential function.
Apart from compensating workers and employees fairly, what is there left to do? The best is perhaps left. This is the creation of Consumer Stock Ownership Plans (CSOPs).

Can you imagine the world in which McDonalds, Stop and Shop, and Macy’s at the end of the year
distribute a fair portion of their income among the consumers who have been keeping them alive all year long?

An Analysis of Financial Wealth

This new world, the world of Concordian Economics, will not come about until we run a deeper analysis of financial wealth. The long story, again, must be cut short. Here is its gist.
You and Joe have one million dollar each. You are equally rich. Joe’s wealth eventually grows by leaps and bounds to 10 million dollars. Clearly, Joe is now ten times as rich as you are. But, by hook and by crook, you raise your financial wealth to 10 million dollars as well. You are now again as rich as Joe.

What has occurred—from a purely economic point of view—between the initial and the final position? Nothing has occurred. There has been only an accumulation of zeros. Hence my second petition on the Internet to avoid a cataclysmic reduction of financial wealth by financial crisis, rather than systematic reduction of zeros. This is nothing more than the application of the ancient Mosaic application of the Jubilee Solution.

Financial wealth is a pure accumulation of zeros. This is true for the global economy, not only the American economy.

Note
[1] "The Creators of Poverty," Gloucester Daily Times, Symposium, December 18, 1998, p. A10.



ABOUT THE AUTHOR

Carmine Gorga, President of The Somist Institute, is a Former Fulbright Scholar and recipient of a Council of Europe Scholarship for his dissertation on the “Political Thought of Louis D. Brandeis,” Using age-old principles of logic, he has founded Concordian economics, Somism (beyond Individualism and Collectivism), and Relationalism (as distinguished from Relationism). Dr. Gorga has fundamentally transformed the linear world of economic theory into a relational discipline in which everything is related to everything else—internally as well as externally. He was assisted in this endeavor by many people, notably for twenty-seven years by Professor Franco Modigliani, a Nobel laureate in economics at MIT. Mr. Gorga is the author of numerous publications, including The Economic Process: An Instantaneous Non-Newtonian Picture, 2002, a book that was reissued by The University Press of America in an expanded paperback edition in 2009. For details, see www.carmine-gorga.us. At times, he blogs at New Economic Atlas and Modern Moral Meditations


Toward the Definition of Economic Rights


Journal of Markets & Morality 2, no. 1(Spring 1999), 88-101
Copyright © 1999 Center for Economic Personalism
Toward the Definition of Economic Rights
Carmine Gorga
President
Polis-tics, Incorporated

Introduction

With the assistance of a rigorous analysis of a long sweep of history by Daniel
Rush Finn,1 the central legal dilemma of our age can be identified as follows: We either redefine property rights or we define economic rights. This essay attempts to define economic rights.

Currently, the terms economic rights, property rights, and entitlements are treated as nearly interchangeable synonyms. We will see that these entities are, in fact, connected to one another by many subtle links of timing sequence and by many overlapping intellectual conditions determining their respective identities. In the process, distinctions will emerge that separate these three entities from each other and firmly implant economic rights within the structure of the theory of justice.

From a practical point of view, the judgment that economic rights are neither entitlements nor the same entity as property rights leads to a fundamental realization. Since no accepted definition of economic rights can be found in theory, there is no rationale for the exercise of economic rights in practice. There is observable evidence of access to economic resources, but, clearly, the fact of access is not the same as the right of access.

The task of defining economic rights assumes particular importance because these rights occupy a pivotal position in an integrated system of social thought. They can be conceived not only as the focal point of economic policy and economic theory, but they can be construed as the keystone in the arch of economic justice. To anticipate the conclusion of this essay, only those who exercise economic rights can be said to participate in the economic process in full dignity and self-reliance.

Toward the Definition of Economic Rights

To clarify issues concerning the definition of economic rights, it might be useful to begin with an overview of three factual distinctions between economic rights, property rights, and entitlements. These distinctions can be taken as facts at this stage of the discussion but they will be justified in the course of the argument. First, the content of these three entities is different. The object of property rights are marketable things, tangible or intangible things such as material goods and services. The object of entitlements are human needs, from food to shelter to health. The object of economic rights are economic needs. Second, the legal form of these three entities is different. Property rights are concrete legal titles over existing wealth; economic rights are abstract legal claims over future wealth; and entitlements are moral claims on wealth that legally belong to others. Finally, the quantity that they measure is variable. While both property rights and entitlements relate to existing wealth, and therefore a necessarily finite quantity, economic rights relate to future wealth, an unknown and elastic—if not a potentially infinite—quantity.

Economic rights can be defined as follows: Economic rights are rights of access to resources—such as land, labor, physical, and financial capital—that are essential for the creation, legal appropriation, and market exchange of goods and services. Economic rights are self-evident. However, for their full recognition, economic rights require at least three conditions: (1) they require a knowledge of basic economic needs for a person to operate in the economic world; (2) they require a knowledge of their legal characteristics; and (3) they have to be fully integrated into the theory of justice. This essay attempts to articulate a framework that satisfies these three conditions.

Basic Economic Needs

The basic economic needs of any human being extend over one or more functions that are related to the creation, legal appropriation, and market exchange of goods and services. These needs have traditionally been satisfied through access to labor and land, which also includes natural resources. In the modern world, one must include access to physical as well as financial capital among the prerequisites of an independent and productive economic life.

There is no economic activity that does not require labor, land, and natural resources to be carried out. No poet or painter, let alone an industrialist, can perform any function without access to these resources. Furthermore, once money is seen as a means of exchange, it will be conceived to include all forms of wealth, whether physical or financial wealth. Then it can be seen how, even in a condition of barter, money is essential to carrying out any market function.

And equally essential to carrying out any economic function today is access to physical capital, whether it is a pen, a computer, or a shovel. In previous times, poets may have subsisted on berries and may have been able to produce their own papyrus on which to scratch their poems. Today, we have restricted our own capabilities through the acquisition of specialized knowledge and so, in order to function properly in the economic sphere, we need access to physical capital that is generally owned by others. To put it restrictively, access to labor, land, natural resources, financial, and physical capital is essential to the performance of any economic function—whether it is production, legal appropriation, or market exchange of wealth. Indeed, access to these resources is essential to the very existence of human life.

This is generally well-known. What is not known—and, if known, not readily granted—is the legal fact that only productive people acquire by right the title to marketable products and services, a title that is independent of other people’s will. And what is openly disputed is the claim that only productive people have the legal as well as the practical means to exchange goods and services in the market. The great tension that exists in the field of entitlements is the attempt to overthrow these basic legal and economic realities.

In accordance with these complex practical and theoretical conditions, four economic rights can be isolated from other potential rights, which must be placed at the foundation of a modern economic policy that is concerned with the production, legal acquisition, and exchange of marketable goods and services. These four rights are formulated in correspondence with the factors of production of classical economic analysis; namely, land, labor, and capital— with capital being specified in both its financial and physical aspects. These rights belong to each human being, and can be expressed in these terms:
  The right of access to land and natural resources
  The right of access to national credit
  The right to own the fruits of one’s labor
  The right to protect one’s wealth
This system of rights can be subdivided in a variety of ways. To be established singly and jointly, these rights have to be justified on many grounds. In some of my earlier work,2 readers can find the contours of the economic, political, and moral rationale for these rights. Our primary focus here has to do with the legal grounds of these rights.

Some Legal Characteristics of Economic Rights

Economic rights are rights of access to resources that are essential for the creation, legal appropriation, and market exchange of goods and services. In order to obtain a more precise understanding of this definition, the legal characteristics of economic rights can be pinpointed as follows.

Economic Rights Distinct From Property Rights and Entitlements

Economic rights can be clearly distinguished from property rights, once it has been acknowledged that economic rights are the necessary precondition for the creation and the legal establishment of property rights and entitlements. Property rights cannot be identified with economic rights. Property rights are the bundle of dominion rights over existing goods and services that are demanded for the fulfillment of human needs. Economic rights, on the other hand, are rights of access to resources that are needed to create future goods and services. This differentiation is transparent when economic resources are not owned by anyone at the time they are energized to serve in the production process. For instance, in the process of creating consumer goods, one can fish or hunt for animals that are still held in the commons, and the only legal tool that one needs is the right of access to those resources. Moreover, one can make use of a financial resource such as credit—an entity that manifests itself as the power to create money not exclusively by a government agency but by private parties as well. Indeed, by looking deeper into the subject it becomes evident that the power to create money belongs to the people exclusively, and the role of government agencies is confined to administering that function properly. The differentiation between economic rights and property rights holds even when resources are owned by someone else at the time they are acquired and energized to serve in the production process. The bundle of legal prerequisites involved in accessing those resources constitutes the set of economic rights. Thus, the process of creating new wealth, of legally acquiring ownership or transferring ownership of wealth, involves the exercise of economic rights. Ownership of specific items of wealth involves the exercise of property rights. Property rights are static; economic rights are dynamic. Property rights involve stocks of wealth; economic rights involve flows of wealth.

Entitlements must be distinguished from economic rights. Entitlements transfer the possession of specific property (e.g., money or things) and property rights from one person to another—forcibly, if necessary, under penalty of retribution from an agency of the state. An example of this power is exercised by the Internal Revenue Service. Entitlements relate to existing wealth.

Both property rights and entitlements have a clear market value and are social to the extent that if society did not exist, property rights not only would not exist but would not be necessary to human existence. Property rights and entitlements are social and alienable, while economic rights are innate and inalienable. Since economic rights are inextricably linked to the basic requirements of life, they accompany the very existence of life; and unless one wants to live the life of enslavement—a condition that is not legally permissible in a civilized society—they are also not alienable. Succinctly put, provided economic rights are in vigorous existence, the denial of an entitlement or a property right would not necessarily imply a denial of the right to life. With due qualifications, singly and jointly, the denial of the right of access to land and natural resources, the denial of the right of access to national credit, the denial of the right to enjoy the fruits of one’s labor, and the denial of the right to protect one’s property, essentially amounts to a denial of the rights to life and liberty, and certainly to the denial of civilized life and liberty.

The major differences between economic rights, property rights, and entitlements can be summarized this way: Economic rights represent a legal claim on potential property rights; property rights represent a legal claim on wealth that is already in existence; and entitlements represent a moral claim on wealth that is legally owned by others.

The Differentiation Between Private Rights and Public (or Constitutional) Rights

The proposed set of economic rights offers the interesting theoretical possibility of establishing the category of public rights within the theory of justice. For some reason, the category of public rights does not exist in any of the texts or the standard reference books of Anglo-Saxon legal literature. Therefore, it seems that in order to realize this possibility, we need to go back to Immanuel Kant’s Philosophy of Law,3 where the foundation for the distinction between public and private rights is clearly defined. However, it is important to realize that Kant left the category of public rights as an empty set. He concluded his analysis by stating that “… the Matter of Private Right is, in short, the very same in both”—namely, in the “sphere of PRIVATE RIGHT” as in the “sphere of
PUBLIC RIGHT.”4

The acceptance of economic rights would give content to the category of public rights, and would help to differentiate between public and private rights within the field of economic justice. This differentiation would be useful not only in establishing continuity of thought with the range of political freedom where most public rights are fully recognized. The immediate usefulness of the category of public rights would consist in clearly distinguishing property rights from economic rights. Property rights would be categorized as private rights and economic rights as public rights. If the category of public rights were unacceptable for some reason, then economic rights could be classified as constitutional rights.

Another Difference Between Property Rights and Economic Rights

If the distinction between private and public (or constitutional) rights is accepted, one can further clarify the essential differences that exist between property rights and economic rights. By confining property rights to the category of private rights and assigning economic rights to the category of public (or constitutional) rights, one could clearly see that property rights regarding a specific item of wealth belong to us exclusively on either a personal or an individual basis. Economic rights, instead, are those that belong to everyone on a universal basis.

To eliminate a potential source of confusion, it is necessary to classify the right to ownership in general as an ancillary economic right and therefore as a public right—a right belonging to everyone. While the right of ownership over a specific piece of property would always be classified as a property right and therefore as a private right, economic rights, instead, would belong exclusively to the category of public (or constitutional) rights.

These are not simply intellectual distinctions. They have a solid foundation in fact. While property rights restrict other peoples’ freedom, because they necessarily exclude people from using specific pieces of property, economic rights enlarge the range of freedom for everyone. Economic rights are similar to voting rights. Voting rights do not restrict the freedom of anyone; rather, they enlarge the range of freedom of everyone.

The Differentiation Between Rights in Posse and Rights in Esse

Public (or constitutional) rights are potentialities; they are rights in posse. For example, the right to vote is a potential right and not the actual act of voting. Public (or constitutional) rights are recognized by the community on behalf of all its citizens. Private rights, on the other hand, are granted by the community to individual persons exclusively. Thus, economic rights are rights in posse and property rights are rights in esse.

In these theoretical questions, the issue of the practical usefulness of economic rights is embedded. Succinctly stated, their usefulness rests on the fact that they represent a legal claim on future property rights. In other words, economic rights, as many other rights, represent legal potentialities. To distinguish them from other rights, these potentialities perform a specific function. They represent opportunities to create wealth. Thus, their exercise allows people to exist in the economic sphere with full dignity and a degree of interdependence. Since, by nature, economic rights are universal they represent a fair distribution of opportunities to create future wealth.

Rights and Responsibilities

From Giuseppe Mazzini5 to Oliver Wendell Holmes,6 it has been recognized that the very essence of rights is that they imply responsibilities. There are various reasons for the existence of an indissoluble link between these two entities. The first reason can be found in the very nature of rights observed in the full glory of social and communal relations. If rights are innate, they belong to all human beings universally. Therefore, since the community does not possess them, when it assigns them to each individual person—i.e., when their title is conferred by society—the community must request a quid pro quo as compensation for all other people. The quid is the responsibility. It is the assignment of responsibilities that, given community relationships, provides legal legitimacy to the assignment of rights.

Then there is the issue of moral legitimacy. Society cannot give rights away without simultaneously assigning responsibilities. Responsibilities, so understood, confer moral justification for rights. One justification for this linkage can be found in the domain of political science. David E. Stephens, a moral theologian, once suggested the following to me in a letter: “If one has responsibilities but no corresponding rights, then one is bound by and a victim of necessity—in the form of some kind of tyranny. If one has rights and no corresponding responsibilities, then one is unaccountably free, a state of anarchy.” He went on to make an important philosophical argument: “Yet, in both cases the linkage between right and responsibility is inescapable: If one is bound by necessity, either one has a responsibility to conform to necessity or to suffer the alternative sanctions. If one is unaccountably free, then either one is selfaccountable or self-destructive. Barring destruction of the party or parties in either state, some responsibility or some rights must coordinate with the state of necessity or freedom. Between these polar states, a full spectrum of proportionality of coordinated rights and responsibilities are to be found.”

A society that wants to be civilized must link people together through a set of mutual rights and responsibilities. Human relationships then become legal because they are moral, and they are moral because they are legal. From one perspective, responsibilities are the quid pro quo that diminishes the reasons for society to ever take rights away from individual human beings, and thus binds society to the individual person. From the other side, responsibilities represent what is given back to society, and thus bind the individual person to society. In either case, responsibilities provide the moral justification for rights. If the right balance is found, the statesman builds not only upon a moral foundation but he also ensures stability for the future. Members of society will not desire to alter those relationships.

Corresponding Economic Responsibilities

Responsibilities cannot be superimposed upon rights arbitrarily. Rather, they are an inherent part of them, and are time- and place-specific. If the rights are conceptual, then the responsibilities must be conceptual. Yet, as soon as the exercise of rights becomes concrete, their inherent obligations become legal obligations—obligations, that is, enforceable in a court of law.

All too briefly, since the arguments belong mostly to the field of economic analysis and economic policy, the responsibilities that one might want to associate with the four economic rights enunciated above can be pinpointed as follows. In correspondence with the right of access to natural resources, there ought to be the duty to pay taxes for the use of those resources. The basic rationale for this duty is not only that natural resources are a common good and the good of all requires that they be equitably shared, but that the payment of taxes is a token compensation for the exclusion of others from the use of those resources. Furthermore, the rationale is that much—but by no means all—of the value of one’s property derives from communal efforts (e.g., the provision of water, sewer, and electric lines; schools, theaters, and museums). The rationale is also that by paying taxes on land and natural resources one eliminates the incentive to hoard those resources and thus, with full compensation, one makes the resources that are hoarded potentially part of the commonwealth through voluntary market exchanges. The alternative is clear: One can hold on to the land but one must pay taxes on those holdings. Taxes on land and natural resources cannot be construed as “takings.” Quite simply, they represent payment for the provision of public services received directly by the owner of the land. The extent to which taxes on land and natural resources should exceed the value of the public goods received can be ascribed to payment for the social and economic benefits of the absence of hoarding.

In correspondence with the right of access to national credit there ought to be the duty to repay the loan. The exercise of this right should be subjected to the following restrictions: (1) Access should be limited to capital credit to create new wealth (consumer credit, credit for paper transactions, as well as credit for transfer of ownership titles would not qualify); (2) It should be issued to benefit all participants in the enterprise; and (3) It should be issued at cost. The rationale for the basic duty to repay the loan is that national credit is a common good. Failure to repay the loan causes the pool of common resources to be drained. Worse yet, due to inflationary effects, by not repaying the loan one debases the currency to the detriment of everyone—the abuser of the right included.

Corresponding to the third right mentioned above, the right to own the fruits of one’s labor, there ought to be the duty to meet the obligations outlined in the performance of the work. Likewise, corresponding to the right to protect one’s wealth, there ought to be the duty to respect other people’s wealth.

A brief note regarding the implementation of these duties should be appended here. As it can be seen from this list, the obligations are not obligations of the state. If the state does not have economic rights to apportion, it cannot assume economic obligations to fulfill. The obligations flow from individual human beings to other human beings. The state can only administer the policies that make for an easy fulfillment of those obligations.

Theory and Practice

The natural mutuality of interests and concerns among human beings makes for an integration of rights and responsibilities. We have seen that this integration is such an essential part of the theory of economic rights one might conclude that the link forms an implicit contract. However, does this imply that the theory is always respected in practice? Since the law does not have a soul, since it does not have an essence of its own, there is no ultimate justification in the law for this linkage. The justifications we have found occur in the domain of morality, sociology, politics, and philosophy, but not in the law. The law is a tool, in fact, a neutral tool of society. In the end, the law can accomplish anything society wants it to accomplish. Hence, there is no legal justification for rights to be tied to responsibilities. Indeed, since rights are social entities, they are a two-edged sword. Society giveth; society can take away. Society can only grant privileges. Society cannot grant rights; it can only recognize them. But society can prevent their exercise.

The link between theory and practice can be dissolved; yet if the link is a natural one, many problems will arise from its dissolution. Rather than the administration of universal rights, one shall find the granting of factional privileges. Rather than the protection of the laws, one shall find a favoritism imposed by force. Rather than freedom for all, one shall find libertinism for the few. Rather than social integration, one shall eventually find social disintegration. Liberty and stability exist only in a regimen of just laws. For moral, sociological, and political reasons it is advisable that rights be indissolubly tied to responsibilities. With such a burden lying on the propriety of the link between rights and responsibilities, one must make sure that the theory is indeed sound.


Economic Rights Within the Theory of Justice

We will examine five tests of legal validity that the proposed economic rights must pass before they can be accepted as true public (or constitutional) rights.

Thereafter, we will see whether they conform with established principles of economic justice. Finally, we will see what sort of place they might eventually occupy within the structure of the theory of justice.

Some Theoretical Perspectives

For these rights and responsibilities to be accepted, they must pass a number of theoretical tests that belong to the legal understanding of justice. First, do the proposed rights and responsibilities yield the essential elements of “the original position” envisioned by Rawls?7 Second, do they meet the requirements of the “reverse theory” enunciated by Nozick?8 Recognizing that “particular rights over things fill the space of rights, leaving no room for general rights to be in a certain material condition,” Nozick postulates: “The reverse theory would place only such universally held general ‘rights to’ achieve goals or to be in a certain material condition into its substructure so as to determine all else; to my knowledge no serious attempt has been made to state this ‘reverse’ theory.”9

A third theoretical test of validity can be construed in relation to the Principle of Generic Consistency, which has been carefully designed and cogently argued for by Alan Gewirth.10 Will the above set of four rights and responsibilities pass this test? Gewirth’s principle to “Act in accord with the generic rights of your recipients as well as of yourself11 is an attempt to synthesize the logical requirements advanced by Rawls with those of Nozick.

There are many other tests of validity. The next that might be considered is based on the conditions for the existence of a “system of rights” as specified by Rex Martin.12 Can those rights function as a system of rights? One final test comes to mind. Are the proposed rights and responsibilities properly “integrated within a robust vision of a very traditional Catholic concern, namely, the common good,” as Finn recommends?13

The Principles of Justice

For the proposed economic rights and responsibilities eventually to become an integral part of the theory of justice they have to be expressions of sound legal and philosophical principles. The most important test that those four rights and responsibilities, singly and jointly, have to sustain is this: Are those rights built on the basis of solid principles? The essential principles submitted for scrutiny are:
           Each specific right shall make us free (the intellectual, rationalist argu-ment);
           Each specific right shall be universal (the idealist as well as the utilitarianargument);
           Each specific right shall be fair (the emotional, naturalistic, transcenden-talist argument);
           Each specific right shall be enforceable in a court of law (the positivistargument);
           Each specific right shall create social order (the political and aesthetic ar-gument).
Only a few questions can be raised here to point toward the necessary analysis that must be done to determine the correspondence of those rights with the above principles: (1) Is each one of those rights intimately related to the question of truth—and hence to freedom in general—as well as to issues of economic freedom in particular? (2) Is each one of those rights an expression of universality and even of universal utilitarianism? (3) Is each one of those rights related to natural rights theory? (4) Can each right also be justified in terms of positivism? (5) Does each right have the potentiality to contribute to social as well as intellectual harmony?

A Place Within the Theory of Justice

If the proposed rights and responsibilities pass the specific tests of legal validity mentioned above and if they pass the theoretical test of concordance with basic principles of philosophy, in order to become fully accepted, they have to occupy a specific place within the theory of justice. Is there such a place for them?

A place for economic rights and responsibilities within the structure of the theory of justice will be found only if two requirements are met. First, one must adhere to the ancient division of this body of knowledge into two fields: political justice and economic justice. With regard to economic justice, we must add to it a new plank: participative justice.

From Aristotle to the late Middle Ages, and within the Catholic tradition up to Monsignor Ryan’s work in the twentieth century, the theory of economic justice was thought to be composed of two major parts, distributive and commutative justice—with the latter presenting rules of justice that applied to the exchange of goods and services. The right to participate in the production of wealth must have seemed so natural, so innate in human beings, that no need was felt to specify it in writing. With the progressive closure of the commons, the full development of a monetary economy, and the propensity to cluster immense concentrations of wealth in a few hands, the economic conditions of the world have, indeed, changed. The right to be an active participant, rather than being relegated to the margin of economic life is a right that needs to be asserted.

Implementation of the requirements of participative justice is imperative today. Taking the lead from the seminal economic policy analysis of Louis O. Kelso,14 this addition to the theory of economic justice can be justified from many points of view. Its moral rationale can be most clearly found in the social teaching of the Roman Catholic Church. In Centesimus Annus, for instance, Pope John Paul II calls for a “society of free work, of enterprise and of participation.”15 In the preceding paragraph he specifies: “Inseparable from that required ‘something’ (which is due to man because he is man) is the possibility to survive and at the same time to make an active contribution to the common good of humanity.”16

Some of the legal rationale for this addition is provided by Nozick with his principle of “justice in acquisition.”17 The economic rationale can be found in the revision of Keynes’ model first envisaged by this writer in the summer of 1965, and gradually developed ever since. This work yields the equivalence of production to distribution to consumption.18 In accordance with these results the test is as follows: Can the proposed system of rights be justified, through a series of iterations, by the requirements of participative, distributive, and commutative justice?

All too briefly, without the exercise of the proposed four rights, people are not free to participate in the economic process. They are not put in a position of parity in relation to the apportionment of shares in the process of the distribution of wealth. If people do not participate in the production process or are at a disadvantage in the process of the distribution of wealth, then they are automatically at a disadvantage in the process of the exchange of wealth. It would be naive to see the latter set of needs as involving only problems of consumerism; one must enlarge the scope to encompass problems of monopoly and hoarding of wealth. Note Monsignor John A. Ryan’s major work, Distributive Justice: The Right and Wrong of Our Present Distribution of Wealth,19 where he builds on the solid tradition of the past but without ignoring the problems that are still with us today. For instance, this work contains a legal and economic analysis of the minimum wage that is far superior to anything existing in the current literature on the subject.20

In summary, the proposed four economic rights offer the opportunity to complete the structure of the theory of economic justice. The structure can be built upon three planks: participative justice, distributive justice, and commutative justice. But the three component parts of the structure do not operate sequentially. As in a physical structure, they operate synchronously, and the theory becomes a powerful engine of decision and analysis.

Conclusion

There are many indications today that, while public struggles over the last few centuries were mostly concerned with issues of political justice, the current struggle is one of economic justice. Foundational to this struggle is the issue of defining economic rights. This article has sought to define these rights as rights of access to essential resources in the process of production, distribution, and the exchange of wealth. It is through access to those resources that one creates property and property rights. By regressing the search of the legal title of ownership to present wealth, one is led to the realization that this was the reality in the ancient past as it still is today.

The practical thrust of this essay consists in transforming the fact of access to economic resources into the right of access to economic resources. Rich and poor alike—the rich to an obviously greater degree than the poor—live in a legal regimen that is one of privilege. They acquire access to economic resources as a fact—not as a right. This is the ultimate source of instability in the modern polity. The fact of access has to be transformed into a universal right. If rich and poor alike are to live under a regimen of laws, economic rights have to be defined and exercised universally.

This article has sought to provide an understanding of basic economic needs that are met by those rights. It has also described an understanding of the legal characteristics of economic rights. Throughout we have suggested that the theory of economic justice should be seen as composed of participative justice, distributive justice, and commutative justice—three planks that have to be treated not as three sequential segments but as three synchronous parts whose requirements are either satisfied simultaneously or not at all.21

Notes

1                    Daniel Rush Finn, “Catholic Social Thought on Property: An Urgent Need for Extension andRenewal.” Paper presented at the conference on “The Legacy of Msgr. John A. Ryan,” University of Saint Thomas, 1995.
2                    Carmine Gorga, “The Revised Keynes’ Model,” Atlantic Economic Journal 10 (September 1982):
52; “Bold New Directions in Politics and Economics,” The Humane Economy Newsletter 12 (March 1991): 3–6, 12; “Quality Assurance: Internal and External Financing Opportunities,” in Quality Control and Quality Assurance for Seafood, eds. Gilbert Sylvia, Ann L. Shriver, and Michael T. Morrisey (Corvallis, Oreg.: Oregon State University, 1994), 158–63; “Four Economic Rights: Social Renewal Through Economic Justice For All,” Social Justice Review 85 (January/February 1994): 3–6; Carmine Gorga and Norman G. Kurland, “The Productivity Standard: A True Golden Standard,” in Every Worker An Owner: A Revolutionary Free Enterprise Challenge to Marxism, ed. Dawn M. Kurland (Washington, D.C.: Center for Economic and Social Justice, 1987), 83–6; Carmine Gorga and Stuart B. Weeks,
“Fisheries Renewal: A Renewal of the Soul of Business,” The Catholic Social Science Review 2 (1997): 145–62.
3                    Immanuel Kant, “Philosophy of Law,” in The Great Legal Philosophers: Selected Readings in Jurisprudence, ed. Clarence Morris (Philadelphia: University of Pennsylvania Press, 1959).
4                    Ibid., 252.
5                    Giuseppe Mazzini, The Duties of Man (London: Chapman and Hall, 1862).
6                    Oliver Wendall Holmes, “Uncollected Letters,” in The Wisdom of the Supreme Court, ed. Percival E. Jackson (Norman, Okla.: University of Oklahoma Press, 1962), 398.
7                    John Rawls, A Theory of Justice (Cambridge, Mass.: Harvard University Press, 1971), 12, 72, 136, 538.
8                    Robert Nozick, Anarchy, State, and Utopia (New York: Basic Books, 1974), 238.
9                    Ibid.
10                  Alan Gewirth, “Economic Justice: Concepts and Criteria,” in Economic Justice: Private Rights and Public Responsibilities, ed. Kenneth Kipnis and Diana T. Meyers (Totowa, N.J.: Rowman & Allanheld, 1985).
11                  Ibid., 19.
12                  Rex Martin, Rawls and Rights (Lawrence, Kans.: University of Kansas Press, 1985), 114–8, 129. 13 Finn, “Catholic Social Thought on Property.”
14              Louis O. Kelso and Mortimer Adler, The Capitalist Manifesto (New York: Random House, 1958), chap. 5; Louis O. Kelso and Patricia Hetter, Two–Factor Theory: The Economics of Reality (New York:
Vintage Books, 1967), 10, 28, 32.
15              John Paul II, Encyclical Letter Centesimus Annus (May 15, 1991), no. 35.
16              Ibid., no. 34.
17              Nozick, Anarchy, State, and Utopia, 150ff., esp. 168.
18              Gorga, “The Revised Keynes’ Model.”
19              John A. Ryan, Distributive Justice: The Right and Wrong of Our Present Distribution of Wealth (New York: Macmillan and Company, 1942 [orig. 1916]).
20              Ibid., 249–302. The historic emphasis there is on the living wage.
21              I would like to acknowledge Professor Michael J. Naughton, who invited me to participate inthe conference on “The Legacy of Msgr. John A. Ryan,” University of Saint Thomas, 1995, and Professor Robert G. Kennedy, who exhibited enormous patience with my unexpected delays in completing this article. I have benefited from the constructive criticism of Janis D. Stelluto, David E. Stephens, Stuart B. Weeks, and David S. Wise.

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