Property in "Rerum novarum"
Pope Leo XIII’s discussion of private property in Rerum Novarum has quite often been criticised, however politely, as both untrue to the Thomistic understanding of the concept and all too true to an essentially anti-Christian approach that is generally associated with John Locke. In this paper, I will join the critical chorus, largely following the scholarship of the late Ernest Fortin [i]. I will then move the argument forward, suggesting that Catholic thinkers need to fortify the Thomistic alternative to capture the full reality and ethical ambiguities of “property” in the contemporary world.
Locke and Leo XIII
First, on Leo and Locke. In section 46 of the Vatican website’s English translation of the encyclical, the pope summarises his earlier long encomium of private property (sections 4-15) with a reference to the “principle that private ownership must be held sacred and inviolable”.
Leo was emphasising his firm rejection of the Socialist claim that all private property is something like “theft” from the people, as Pierre-Joseph Proudhon had famously put it in 1840. Even so, the word “sacred” is at best ill-chosen. The idea that a property claim, a statement that “this is mine”, has divine sanction is almost directly contrary to the Christian understanding of all creation as “owned” by its Creator.
More theologically, Leo’s sacral language strongly suggests that the idea of private property essentially belongs to pre-fallen human nature. In other words, we would have property even if there was no sin. That claim seems opposed to the teaching of Thomas Aquinas, which Leo himself did so much to promote. Thomas explains (ST II.II 66.2 ad 1) that “the division of possessions is not according to the natural law, but rather… belongs to positive law…”. In Thomas’s understanding, positive law is largely constructed to deal with fallen human nature, as can be seen in Thomas’s justifications of individual property (in the article’s corpus): we are less negligent of things we own, the division of the ownership of things increases efficiency, and this division promotes social peace.
Property is social and murky, not private and clear
Further, Leo’s claim that the nature of private property is “inviolable” is also suspect, as Leo seems to recognise elsewhere in the encyclical (21-22). In line with a tradition associated with the poor-in-theory Franciscans, the Pope separates the ownership of property, which he says is inviolable, from its actual use. Leo follows a well-established patristic and scholastic Christian teaching in stating that owners are morally, although not legally, obliged to use their wealth to serve the common good.
In reality, though, while the ownership-use distinction may be neat, in this context it is misleading. Ownership of property is no more inviolable than use, not in any society or economy, not even the most neoliberal. On the contrary, economic property, whether private or public, is always and everywhere a social construction. Like any such construction, its rules and practices can be, and often are, changed, for the better or for the worse.
The practical moral ambiguity is inherent to private property. Like all other social constructions, it can be good, bad, or both at once. Leo notes such positives of property as its ability to restrain political power and to offer personal satisfaction. Popes after Leo have more often noted such negatives as private property’s tendency to entrench injustice and reduce social solidarity.
Leo’s successors might have rapidly scrubbed away his excessive rhetoric away, if the nascent social teaching had been understood as an always and necessarily imperfect response to current issues. However, the popes, like many students of this teaching, have tended to sacralise all papal writings, including ones that are particularly likely to be distorted by the controversies and ideas of the moment. As a result of this exaggerated respect, it has taken more than a century of backtracking and equivocation before could Francis boldly declare that, “The principle of the subordination of private property to the universal destination of goods, and thus the right of everyone to their use, is a golden rule of social conduct” (Laudato Si’ 93).
This reversal is welcome, but I would argue that Locke’s nefarious influence is still too strong in the papal treatment of private property. Like doctrinaire socialists and fervent capitalists, Francis and his immediate predecessors have all seemed to assume that private property is a clear and distinct idea, something independent of the particular societies in which it is found. In that assumption, they are implicitly accepting Locke’s absurd way of thinking.
The 17th century pioneer of individualism thought that economic property was like the property of being tall, something that is primordially mine, under my total control even before I enter into social and political life. The truth is the exact opposite. There is no simple and obvious idea of economic property. On the contrary, a description of a thing as “my property” is always a complex claim of specific privileges and duties that are set in a complex tapestry of other social and legal duties, privileges, and relations.
The social-economic-legal tapestries have changed greatly since Thomas’ day. Then property was mostly land, and what we might call property rights often concerned the relations of people to each other: the mutual obligations of tenants or serfs and landowners, the capacity of one owner to transfer obligations and privileges to another, and the relations between landowners and their overlords and rulers.
Modern property
In comparison, modern property involves many more things and far more intricate relations. It needs much more complex analysis than Thomas could have provided.
For example, a car may provide its legal owner with a Lockean sense of individual identity, but the property is legally constrained in numerous ways. There are extensive and intrusive rules about taxes, mechanical fitness, and sobriety while driving, all set by some government. Also, the car’s Lockean meaning would disappear without the existence of a large infrastructure of roads, fuel, and repairs. Further, warranties effectively transfer some responsibilities typically associated with ownership to the manufacturer. To call a car my property is not wrong, but the meaning of this automotive “property” is far from self-evident.
Property lawyers understand the issue. American law students are taught that “property” refers to specific “bundles of rights” that are established by law, and that can be changed by law. For example, today in the UK I am allowed to bequeath all my property to a donkey farm, but tomorrow the law may mandate, as it does in France, that I must leave at least half of “my” property to my children. Or the government could impose a near-100% tax rate on estates, effectively declaring that death marks the near-extinction of individual private property rights.
Quite appropriately, some lawyers add “responsibilities” or “duties” to property’s bundle of “rights”. Property often and increasingly comes with weak secular equivalents to what John Paul II called a social mortgage (Sollicitudo rei socialis, 42). For example, owners of land are legally obliged to pay property taxes and keep their property up to a certain standard. The owners of guns and of certain medicines are legally required to store and use them in certain ways.
These legal obligations are welcome, exactly because they do not adhere the Lockean vision of property as essentially a buffer that separates people from each other and from the government. One good thing about property is that the shared responsibilities it entails can be socially unifying.
I should perhaps add that while property and the legal system are largely inseparable in modern law-bound societies, the separations and unifications associated with property exist in all human communities, from families through pre-literate tribes to today’s clubs and churches. “This toy is my property”, says the precocious Lockean child. “Yes, but you have a duty to share it with your sister” says the communitarian parent. The law is not involved in this family’s socially helpful rules of property.
Four suggestions for improvements
Catholics trying to respond wisely and virtuously to the challenges of the contemporary world need to get past all ideological oversimplifications of private property. I will suggest four ways to make the concept more complicated.
First, the property connected with living lives is quite different from the property connected to the production of the things that aid people in their life-living. In purely economic terms, this is the difference between ownership of consumption goods and the ownership of the means of production of such goods, and also the ownership of the means of production of services that are consumed before they can really be owned.
Leo should have made this distinction. The socialists with whom he is arguing often treated personal and productive property differently. In the 1848 Communist Manifesto, already a fairly old thing by the time Rerum Novarum appeared, Marx and Engels declared that, “The distinguishing feature of Communism is not the abolition of property generally but the abolition of bourgeois property.”
This bourgeois property is exactly the physical capital used in industrial production. True Marxists insist that the people, through their communist government, should control all this capital. In contrast, limited quantities of personal property were allowed in the Soviet Union and other Communist countries, if only as a sort of concession to the lingering effects of the bourgeois original sin of individualist property rights.
Leo’s battle with the socialists of his day has lost relevance, but the property rights connected with the means of production are as socially important as ever. In particular, private corporations are “legal persons” that have a sort of “owners”, shareholders, but have structures are designed to be impersonal. They do not conform at all to the Lockean notion of property as a bulwark of individual freedom.
In any case, the distinction between the consumed property and producing property is very helpful for Catholic Social Teaching. Private ownership of the property that is used and used up in living is appropriate, because it ties things to the most relevant people. In a fallen world, children are the natural owners of toys, resident families of family homes, and local swimmers of local swimming pools. When well regulated, such property can be an example of the social teaching’s principle of subsidiarity – higher and larger organisations protecting and promoting the activity of smaller and more intimate ones.
In contrast, the means of production should be organised in a spirit of solidarity, to bring numerous people and groups with different desires and perspectives into a shared project that serves the common good. This solidarity is not incompatible with treating the means of production as private property, but the fit is often poor. Pragmatically, the separate ownership of different parts of the production process tends to break up long and closely integrated chains of activities. Ethically and psychologically, the concept of property provides little guidance for dealing with the numerous necessarily non-owned employees and the even more numerous non-owned customers who are central to the productive economy.
However, insofar as the means of production are treated as property, there is a reasonable case that the entire community is an appropriate owner for at least some of it. Leo seems only dimly aware of this line of thinking. However, I doubt he would have been troubled by governments owning munitions factories or mints. While subsequent popes have stayed away from debates on state ownership, they have often asked governments to behave as if they actually owned the means of production, by using laws, regulations, and economic clout to force the legal owners to use “their” property in socially desirable ways.
It is reasonable to worry that the State will set bad policies for the means of production that it controls or owns, as I will discuss in a minute. However, the alternatives are not necessarily clearly superior, either in theory or in practice. The current dominant model for organising the means of production – corporations with numerous, mostly ignorant shareholders, largely self-selecting boards of directors, and highly remunerated professional managers – is certainly highly problematic, especially when profitability is treated as a more important goal than the promotion of the common good. Another alternative form of organisation is what I think of as the university model. It suffers from a shortage of clear and consistent goals and from managers who are subject to limited and often erratic oversight.
It is safe to say that no system for organising production is ideal, simply because all organisations are composed of fallen men and women. There are merely more or less bad compromises. Just as no form of property can create a perfect organisation of the physical, social. and intellectual means of production, no reform of property can do much more than help create less unsatisfactory arrangements. Catholics should not be fooled by the exaggerated claims of Locke, Marxists, or Leo.
Second, Leo’s idea of state property come from a political theory that postulates the existence of The State with A Single Motivation. In the hypothetical world of the monolithic State, this legal super-person can ensure that all or any of the means of production work in perfect accord with its Single Motivation, whether that motivation is power for the rulers, the common good, efficiency, or some other goal.
The Communist experiment in the Soviet Union and its satellites showed that the monolithic state is strictly imaginary. Making the State the legal owner is easy enough; gaining effective central control is quite another. Soviet economies were not fanatically dedicated to efficiency, but to work at all, they had to be divided into numerous units of production. Each of these had its own leaders, structures, and motivations. The motivations might have included the common good, but local and selfish interests were often more important. The managers of the units often acted against the interests of the owner-State.
The overall results were atrocious by almost any modern standard. The key point for my argument is not the failure, however, but the fact that uniformity of ownership did not provide unity of operations. Control is far more important – and far more difficult to get right – than property claims.
As far as it goes, governments can be effective owners of the means of production. For example, in advanced economies governments typically “own” most road and some rail systems, which they generally run fairly well. From a Catholic perspective, there is no strong ethical principle in favour or opposed to some amount of state control of at least some means of production, with or without property ownership. Extremes, however, should be avoided.
At one extreme, total state control invites the sinful misuse of power and is incompatible with spiritually and practically enriching forms of personal economic freedom. Also, no state can be both monolithic and sufficiently flexible to support the common good adequately throughout the full complexity of a modern economy.
Conversely, no state control at all is bad, because in complex modern economies the common good requires extensive guidance and some direct control from the political authorities and their bureaucratic agencies. However, the control need not take the form of ownership – and often should not.
Again, there is no perfect role for governments in the economy, including the means of production. The position and motivations of the various governments and parts of governments present in any economy at any time will always be imperfect, just like the position and motivation of corporations, universities, and every other actor in this fallen world. Once again, though, in the search for the least damaging variety of imperfection at a particular place and time, the questions of property, of who is the legal owner of what, are at best secondary. Issues of actual control, organisational units, legal rules, and cultural expectations are all far more important.
Third, Leo gives too little thought to what we might call financial property – stocks, bonds, and other investments that produce income and possible capital gains. He merely condemns “rapacious usury” (3) and hopes that the small investments of the frugal worker – “to put by some little savings and thus secure a modest source of income” (46) – will narrow the “wide chasm” between “the party which holds power because it holds wealth… [and] the needy and powerless multitude, sick and sore in spirit and ever ready for disturbance” (47). This aspiration fits well with Leo’s desire preserve a healthy but not extreme social hierarchy.
What is financial property? Economists often associate finance with the means of production, otherwise known as capital, but that connection is not actually essential. After all, the physical capital, the actual means of production, can be created and maintained without any financial capital. Governments, for example, can pay for it with tax revenues. Conversely, the organisation of physical capital is not the only or even the predominant use of financial property. Government debt and mortgages are just as much finance as are shares of companies.[ii]
The defining feature of financial property is not how it is used, but the financial form itself, the intertemporal exchange of money. In return for receiving money at one time, the borrower or investee is obliged to pay the provider of that money, the lender or investor, specified amounts of money at later times.
Leo hoped that the poor and the rich could both invest. His idyllic dream of small savers was presumably influenced by the success of the many varieties of “popular banks” that flourished in industrialising and urbanising economies in the late 19th century. These institutions were set up to help relatively poor workers, artisans, and would-be homeowners support each other, largely by borrowing in youth and saving in more mature years. In Italy and elsewhere in Europe, many of these banks were explicitly Catholic.
The wealth-equalising finance was a real accomplishment. Unfortunately, it, and more importantly the attitude behind it, largely disappeared in the late 20th century. The conceptual and then legal demutualisations of American Savings and Loans and British building societies are good examples of the shift. Institutions that had relied on the shared goodwill of lenders and borrowers and that had been dedicated to local communities abandoned both goodwill and communities. They turned into normal banks, generally no less mercenary but often much less competent that the commercial variety.
Small savers and borrowers are still present in today’s developed economies, but they play a small role in financial systems. Overall, financial obligations move money from disempowered and relatively poor people to powerful and relatively rich people.
Catholics have much to contribute to any debate on financial property. They can suggest that finance should work more like governmental systems of taxes and welfare benefits, in which money flows mostly from rich to poor. They can point out that the imbalance of power in financial property easily leads to unjust exploitation, for example charging the usurious interest rates that Christians have consistently condemned.
Fourth, I should briefly mention intellectual property. There were patents and copyrights in Leo’s time, but they were not very significant economically, so he cannot be criticised for not discussing them. Now, however, ideas, knowledge, artistic works (frequently known as entertainment), and information now play a fairly significant economic role.
Some of the bundles of property’s rights and responsibilities may be appropriate for some of these “things”, but Catholics should treat the idea of intellectual property with scepticism. Things of the mind, things of beauty, and things that can be shared without any great loss to anyone all naturally belong to the whole community rather than to their individual creators or, as is common today, to some corporation with narrowly commercial interests. The common good is best served by ensuring that intellectual property is treated as property as little as is practically possible.
And that anti-property comment is a good way to close. My basic conclusion: property is best understood as Thomas did, as a sometimes very helpful way to reduce sins. However, it is an awkward concept, ill-suited for much of the contemporary economy and sometimes harmful to modern societies. The varieties of property should be studied separately, but all of them should be treated with care and caution.
Leo got carried away in one direction, as some socialists have in another. Catholics should search for a middle way, one that recognises the complexity and ambiguity of these bundles of responsibility.
Notes
[i] http://cdn.theologicalstudies.net/53/53.2/53.2.1.pdf Ernest Fortin, “’Sacred and Inviolable’: Rerum Novarum and Natural Rights”, Theological Studies 53 (1992), 203-233. For background, see Douglas Kries, “Leo Strauss’s critique of Modern Political Philosophy and Ernest Fortin’s Critique of Modern ‘Catholic Social Teaching’”, in Geoffrey M. Vaughan ed., Leo Strauss and His Catholic Readers, Washington: Catholic University of America Press, 2018, pp. 116-133. For an even more critical and comprehensive description of the “natural rights” tradition that influenced, via John Locke, the thinkers who helped Leo with Rerum Novaraum, see https://churchlifejournal.nd.edu/articles/the-history-of-natural-right/#_ftnref7 John Milbank, “The History of Natural Right” Church Life Journal, January 18, 2019.
[ii] For more on finance and property, see Chapter Three of my Money, Finance, Reality, Morality, Cambridge UK: Ethics Press, 2022.