Poverty, the Economy, and the Natural Law

Two major reports came out in July that showed disturbing trends in poverty levels, both in the US and internationally.  You would think such a thing would be something of a wet blanket on all the exuberance surrounding record stock market highs, corporate profits, and levels of personal wealth beyond all reason. But that certainly has not been the reaction of governments, the media, or the markets. That leaves us out here in the sticks to try to think through the implications of what is looking more and more like a failing system.

Before turning to the reports, I want to point something out that we should keep in mind as we consider the numbers.  In the natural law tradition, especially as articulated by Saint Thomas Aquinas, every human activity aims by nature at some end; it is the “good” at which the activity aims. Thus the end of medicine is health, and the end of scientific inquiry is knowledge, both good things. But any human activity can either fail to reach its end (someone might be a poor doctor through laziness) or be made to serve another end (a student might study medicine in order to get rich and not to heal), sometimes an evil one (medical knowledge might be used to murder through poisoning).

Economic activity is no different. There is a natural end of production, and that is the meeting of human needs. Today, the world’s productive forces are sufficiently developed to enable humankind to end poverty many times over, but there is a radical mismatch between the natural purpose of production and the purpose it has been made to serve, namely profit—more specifically, profit for the owners of capital. Nothing else explains how we can have a million homeless sitting across from a million unsold homes, or food insecurity or even chronic hunger in a country with so much abundance that it’s suffering from an epidemic of obesity.

But today almost a quarter of American children live below the poverty line, according to the Kids Count Data Book, an annual report put out by the Annie E. Casey Foundation.1 That’s 16.3 million kids. This represents a steep increase from 2000, when 16 percent of children lived in poverty. Fully 45 percent of US children live below 200 percent of the federal poverty line, the amount research suggests is needed for economic self-sufficiency. Also, in 2000, 9 percent of kids lived in communities with 30 percent of their residents considered poor (simply put, in poverty-stricken neighborhoods); this year, 13 percent live in such communities. Of all Americans, over 15 percent live in poverty as defined by official measures, up sharply from about 12 percent in 2000.2

These trends exist despite soaring stock market values and obscene corporate profits, the outcome of trillions of dollars handed over to Wall Street during the bailouts and by way of the Obama Administration’s “Quantitative Easing” program, all of which ordinary Americans are being made to pay for through cuts to social programs, slashed jobs, and inflation—austerity, in other words. Even the jobs “created” during the “recovery” have been mostly low-wage and part-time. The disconnect between the natural function of the economy—to meet human need—and the purpose it is being made to serve—to maximize the wealth of a tiny elite—could not be more plain.

The world situation is dire as well, according to the United Nations Development Report, “Sustaining Human Progress: Reducing Vulnerabilities and Building Resilience.” About one-third of the world’s population—2.2 billion people— lives in poverty or teeters just on the edge. Twelve-percent, or 842 million people, lives with chronic hunger. Fully 80 percent lack “comprehensive social protection” 3  (health insurance, unemployment insurance, labor protections, nutrition assistance, and so on). Even Europe, traditionally at the top economically and socially by most measures, has seen sharp increases in poverty and an overall decline in living standards as the financial elite took aim at welfare provisions in the wake of the 2008 crisis. At the other end of the spectrum, 71 percent of the population in South Asia lives in poverty or near-poverty.

All of this is the consequence of a single economic system: capitalism. There is no longer any competing ideology to point fingers at. We have all the resources we need to provide a high standard of living to every human being on the face of the earth, but the logic of private profit will never allow it. Instead, as Marx foresaw and as current trends in wealth inequality show, stupendous wealth is accumulated at one pole (the richest 85 people own as much wealth as the world’s 3.5 billion poor combined, for instance) as misery increases at the other, meaning the broad mass of the people.

Those who advocate the mere reform of the system are dreaming. The dire situation in the US, characterized by the numbers we just reviewed, exists despite the government’s yearly expenditure of some $800 billion on social welfare. Moreover, with the acceleration of global competition, social spending and social protection measures make nations and regions (like US states) “uncompetitive” because they have to be paid for through higher taxes and regulations. Why would a company locate to a country with higher taxes and more regulation?  The same forces have rendered unions impotent or, rather, mere tools of corporate and other elite power, helpful in imposing job- and pay-cuts desired by owners and shareholders, but not much more. As is well known, private sector union membership has plummeted to about 7 percent, down from  over 30 percent in the 1940s when our economic competitors lay in smoking heaps.

The fact is that lasting reform that would ameliorate the situation is not possible because the system itself is not in accord with the divine order.  Economic activity is meant to meet human needs, and while that does not mean that we have to become socialists, it does mean that we who believe that our political communities ought to exemplify the natural law need to be thinking a whole lot harder about what such a community and its economic life might actually look like

Doran Hunter