Heinrich Pesch and the Germanic-Catholic Tradition of Economics

From Durendal by Dr. E. Michael Jones

Dr. Jones opened his second talk discussing the discontinuity we’ve inherited. Going from the movements described in Lt. Cmdr. Sharpe’s preceding conference to things like the Acton Institute. The valuation of labour has been lost, and we’re left to dig among the ruins and try to rebuild from that.

He proposed to start with a contemporary phenomenon and work back to it’s source: the “Arab Spring”. The picture of the Arab Spring is of a man standing in Tahrir Square holding up a sign which says “Egypt Supports Wisconsin: One World One Pain” (cf. the protests again the Wisconsin governor). The one thing that Egypt and Wisconsin have in common is capitalism.

The world we’ve lived in has been the “triumph of capitalism over communism”. What we see in the Arab Spring is people realising that this is not the case. Egypt was the quintissential neo-liberal state (a theory human well-being can be advanced by liberating man through free market, free trade). This neo-liberalism was introduced by Mubarak’s regime. But the people are not accepting it -- everywhere neo-liberalism has been tried it has failed. In America, especially in Wisconsin where the manufacturing has been looted by outsourcing and the people become poorer and poorer and the looters richer. When the Tea Party Republicans came into power in Wisconsin, their first action was union-busting and more looting (of pension funds, which is stealing deferred wages).

This was all predictable because capitalism as we know it (beginning in England at the time of Protestant Revolt) began as a form of looting. The chief object of the “English Reformation” was the plunder of Church property: “the nobility had their teeth in the carcass and would not be whipped off by a sermon”

In the light of what’s happened in the last three years, we need a new definition of capitalism that more accurately describes it. Economics has to be brought back into the “matrix” of morality. One of the crucial issue is wages (cf. denying a just wage being a sin that cries to heaven for vengeance) because it involves a major power imbalance. The capitalist position on wage is that the just wage is whatever a worker agrees to -- their agreement to work for a certain wage is what makes it just. Likewise, a loan is deemed just, ipso facto, by the fact that someone agrees to its terms. The Church teachings is, of course, that usury is wrong.

In dealing with usury, the Church has traditionally spoken of “mixed will”: it is not that an individual desires to pay 500% interest on a payday loan, it is that he doesn’t want his family to starve. But the understanding of usury has disappeared from Catholic discourse today.

He noted the Benedictine motto “ora et labora” as an example of the medieval economy that replaced the economy of antiquity. In the Renaissance, the ancient economics were resurrected by usurers and the Protestant Revolt was used as an engine to bring this about. He discussed the role of the Medicis’ role (with Cosomo Medici as the prime personality responsible) in this which was covered briefly and packed with more detail than I could record. In the end he took the position that Savanarola (who essentially took over Florence after the fall of the Medicis) came very close to reaching a resolution to the question of capitalism while it was still very young but his murder at the order of Pope Alexander VI. He also noted how the robbing of workers of their wages in Florence destroyed it.

The real definition of capitalism according to Dr. Jones: usury at the expense of labour.

This brought us to the 20th century and the great rise of German political thinking. Pesch defined capitalism as “a system of freedom to exact usury with the sanction of the state”. According to Bruland capitalism means the domination over the economy by the inquisitive interest of those who own capital. Contractual appropriations of surplus value was put forward as an aspect of usury. According to Pesch Capitalism represents an inversion of the true economic order.

Dr. Jones’ proposal: economics as if God matters. Modern economics is greed and competition as the regulating factors of the economy. All the money in the world cannot make this economic model work. We have to order the economy, rather, according to reason and morality. The crucial test therefore becomes whether a given economy values labour over usury, or usury over labour. Economics as if God matters recognizes that freedom only has meaning if it conforms to the moral law.

Money cannot produce wealth, whereas labour can. Therefore human labour is the basis for the economy.

Heinrich Pesch called the pre-Protestant Revolt economy the Germanic-Christian tradition of economics (basing the Germano-”centric” aspect on the Holy Roman Empire as the civil arm of the Church). One of the great accomplishment of this economy was the exclusion of the liberty to get in debt.

According to Pesch wages cannot be regarded as costs from the point of view of the national economy. Cutting wages is cutting one’s own throat. This perpetuates the problems of an economy as things begin to spiral (more debt). A populace which lives in poverty and misery will find even cheap goods too expensive.