In Search of a Better Economic System
Every society, from the most primitive tribes to the modern post-industrial West, must answer four pairs of important economic questions: what to produce more and what less, what to produce sooner and what later; and what to consume more and what less, what sooner and what later. All economic theories try to answer these questions, but the ultimate answers to these questions are not exclusively economic. There are also moral, political, and social ramifications involved. Free markets or socialism, an invisible hand or scientific planning, the rule of law or the rule of a demos in the end the question is how can humans live in a tolerable society.
Underlying all such discussions and theoretical nuances are, and must be, our human differences, psychological as well as physiological, character and personality, temperament and commitment, experience and theoretical understanding of the whole issue. In the final analysis our differences are more than just ideological. They are rooted in our DNA uniqueness and our human heterogeneity.
McDaniel’s God & Money is another endeavor to solve some of these dilemmas. The book, as it were, is neither about God nor about money—it is about a third way, how to glean the best from all the theory and create a Christian society that would be pleasing to . . . whom? Obviously it would please McDaniel, but he would be surprised how many Christians would reject his recommendations. Some of these people he even mentions, the “odious” followers of Austrian economists Hayek and Mises (whom he so obviously dislikes, that he even blames all the current problems in America on Hayek), Michael Novak, Father Sirico, and Ronald Nash. But other Christians, from left and right, would also find his ideas wanting.
The book is full of contradictions. If, as McDaniel himself asserts, “Christianity cannot establish any unbreakable bonds with any ‘ism’ regardless of its perceived superiority to others isms,” his case for the third way, and his book, loses its reason to be published. It is itself something of an “ism.” Not only that, later in the book he himself chooses Reinhold Niebuhr’s “realism,” Chesterton’s “distributionism,” and Pope John Paul’s “economic personalism,” as “isms” being essential toward establishing a “Christian” economic system. It is “the economic principles advanced in Christian realism, Christian personalism, and distributism [that] are capable of contributing to a redifinition of progress that would draw values from a wider cross-section of society and spread responsibility across both individuals and institutions.” Are some “isms” in the end more equal than others?
The book is replete with similar inconsistencies. In the end, the book falls short in its endeavor to convince that the “third way” philosophy is a viable “Christian” alternative, because it fails to recognize and address the history of the “third way” as an alternative. Someone like McDaniel, who wants to offer the third way as a Christian alternative, should be aware that it already has a long history and do more research on the topic.
The concept of a third way has been used by both the Right and the Left to explain a variety of political and economic policies for some two centuries. It is an attempt at compromise between socialism and a free market for those who understand that in their pure forms neither system can exist. The term itself extends back at least a century, when Pope Pius XI called for a Third Way between socialism and capitalism. These ideas were then implemented by both so called progressives and fascists in the early 20th Century. On the Right, Wilhelm Roepke offered his version resulting in the development of the concept of the social market economy which had practical consequences in what we now call the German economic miracle.
If we thus divide previous “third way” approaches into right- and left-wing alternatives, then it was Benito Mussolini, a socialist, who offered the first “third way” system in the 1920s. Fascism or corporatism was a system in which, according to Mario Palmieri in his Philosophy of fascism (1936), “the Fascist state not only recognizes the specific interest of individuals, of classes and categories—also recognized by the liberal and the democratic State—but, in addition, organizes them, submits them to the authority and the discipline of the State and makes of them the most appropriate instruments for the development of the economic life of the nation.” Later, Palmieri concludes that the “triumph of the Fascist idea of subjection of all individual life to the life of the Whole will . . . furnish man with the long sought solution of the riddle of life.” Then Tito, the Yugoslav dictator, after his ideological quarrel with the Stalinist Soviet Union in 1948, offered another alternative—workers’ self-management socialism. According to Nenad D. Popovic, in Yugoslavia: The New Class in Crisis (1968): “It was implied that the Yugoslav economy represented a successful blend of Marxist rules and capitalist business ability.” The philosophy behind it was that “Instead of issuing orders, the [Communist] Party must stir the very soul of the people and insure that each citizen, according to his own knowledge and ability, makes his own decisions. . . . Compulsory directives, orders prohibitions, and restrictions are conveniently shifted from the Party to the bureaus of self-management, where competent professional decisions are made.”
Although this background was likely lost to them, democratic politicians such as Bill Clinton and Tony Blair offered a third way too. In his State of the Union speech in 1998, Bill Clinton, a Democrat, said: “We have moved past sterile debate between those who say Government is the enemy and those who say Government is the answer. My fellow Americans, we have found a Third Way.”
At the same time, in 1998, Tony Blair, a Labour Party prime minister, offered this explanation in his book, The Third Way: New Politics for the New Century: “The ‘Third Way’ is to my mind the best label for the new politics which the progressive center-left is forging. . . . The third way stands for a modernised social democracy, passionate in its commitment to social justice and the goals of the center-left . . . It is founded on the values that have guided progressive politics for more than a century—democracy, liberty, justice, mutual obligation, and internationalism. But it is a third way because it moves decisively beyond an Old Left preoccupied with state control, high taxation and producer interests; and a New Right treating public investment, and often the very notions of ‘society’ and collective endeavor, as evils to be undone.”
As mentioned above, the first to offer a “third way” from a conservative viewpoint was Wilhelm Roepke. His influence on Conrad Adenauer and Ludwig Erhard, the architects of the German “economic miracle” after the Second World War, was admitted by Erhard himself. In his Social Crisis of Our Time, published in 1941, Roepke writes:
“Socialism, collectivism, and their political and cultural appendages are, after all, only the last consequence of our yesterday; they are the last convulsion of the nineteenth century and only in them do we reach the lowest point of a century long development along the wrong road; these are the hopeless final state toward which we drift unless we act . . . The new path is precisely the one that will lead us out of the dilemma of ‘capitalism’ and collectivism. It consists of the economic humanism of the ‘Third Way.’”
Roepke’s Third Way was
“an economic policy which is in one sense conservative and radical in another, equally definite sense: conservative in insisting on the preservation of continuity in cultural and economic development, making the defense of the basic values and principles of a free personality its highest, immutable aim—radical in its diagnosis of the disintegration of our ‘liberal’ social and economic system, radical in its criticism of the liberal philosophy and practice, radical in its lack of respect for moribund institutions, privileges, ideologies and dogmas, and finally, radical in its unorthodox choice of the means which today seem appropriate for the attainment of the prominent goal of every culture based on the freedom of the individual.”
It is interesting that McDaniel never acknowledges Roepke as one of those who coined the term. He admits that “the Austrian social theorist Wilhelm Roepke”— never specifying whether the term Austrian is meant geographically or ideologically, although Roepke was a German—was better than Hayek or Mises, but, using the explanation of Roepke’s third way from a secondary source, he only notes that he had “much in common with the thought of Niebuhr, Chesterton, and John Paul.” None of Roepke’s books is even mentioned in the Bibliography, and McDaniel’s analysis appears unfamiliar with even Roepke’s great work, The Social Crisis of Our Time.
So the third ways have been offered many more times than McDaniel cared to investigate. Some of them have been tried in practice, and ultimately failed. (Even the German economic miracle after Erhard faded when socialist Willy Brand took over.) They failed for the same reasons that capitalism, socialism, communism, and fascism are bound to fail—human nature. Although the third ways claimed to offer systems allegedly more in tune with human nature, human nature ultimately betrayed them.
So some interesting questions still remain unanswered by McDaniel: Is a Christian economic, or political, order even possible? And if it is, what should such an order offer to Christians? And, most importantly, is it possible to make Christians agree on such a proposal? The book somehow fails to answer these questions adequately so we will have to wait for some more definite answer.
Ivan Pongracic Sr. teaches economics at Indiana Wesleyan University and was a government budget auditor in former Yugoslavia.
Posted: November 13, 2010
‘Et tu, Brute?’
James V. Schall, S. J.