Monday, December 21, 2009

Corporation Christendom: The True School of Salamanca

Corporation Christendom: The True School of Salamanca
By: Dr. Peter Chojnowski
Feast of St. Peter Chysologous
Revised: December 21, 2009

“In the market economy the individual is free to act within the orbit of private property and the market. His choices are final.” Ludwig von Mises, Human Action

When we read this text from the grandfather of modern Neo-Liberalism (Which manifests itself, in the United States, in the movements called Libertarianism and Neo-Conservatism), we are not surprised. Von Mises, culturally Polish and politically Austrian, but a practical atheist in his political philosophy, is concerned to render absolute, the only absolute (other than “market forces”) he seems to acknowledge as having any relevance for the affairs of mankind, the volitional determination of individuals. Nor are we surprised when he unfolds his basic conception of reality and applies it to the public actions of individuals. Referring to the entire doctrinal and moral activity of Christian Civilization and comparing it to his idea of the autonomous, self-interested, and willful individual, von Mises states, “In urging people to listen to the voice of their conscience and to substitute considerations of public welfare for those of private profit, one does not create a working and satisfactory social order [emphasis mine].” In one sweeping statement, von Mises has negated Christendom and every social, economic, and moral teaching of the Catholic Church; this statement, also, renders “inoperative” the entire Classical moral and philosophical tradition.
Such statements by the hero of contemporary Libertarianism and Neo-Conservatism (read, Neo-Jacobinism), need not disquiet us at all if we understand it exactly as he meant it to be, a statement by one who upheld the modern Liberal, anti-Christendom world-view and denigrated the civilization, overall and in its detail, built by the Catholic Church; this civilization, of course, was constructed in a certain way, on account of the Church’s attempt to conform the circumstances and the means of man’s life to the Eternal Law, which includes within itself the Providential Plan by which each created being is brought to a state of perfect fulfillment and satisfaction. Christendom, unlike the “market forces,” presupposes real freedom; if man was not free and meant to be fulfilled in his freedom, Christendom would not be needed. “Freedom,” of course, is meaningless, and soon becomes bizarre (as in our own commercialist culture), if it is not directed towards a true “good” that fulfills human nature. If freedom does not achieve a true satisfaction of human nature, why is freedom “good”? If, however, freedom is “good” because it genuinely fulfills human nature, economic “freedom” or the ability to sell goods made and to purchase goods made by others, must be subordinated to over-arching considerations of the “good.” Since we are speaking about a public “good,” we must speak about the “common good,” in which every private good is included. The common good entails the fulfillment of human nature at large. If all of the above reasoning is valid, economic freedom to buy and sell must be ordered to the achievement of a truly fulfilled human nature, both individually and commonly.
Only those with the most animalistic conception of man would think that the ability to buy and sell things is the pivot around which should turn an individual life, a political ideology, or the efforts of the State. That “man does not live by bread alone” is not only a religious truth, but is, also, a bit of wisdom testified to by universal human experience. It is the religious devotion of man, his virtuous moral actions, and his aesthetic and emotional appreciation and expression, which are the higher aspects of man’s being that mercantile trade is meant to facilitate and sustain. In light of this, it is perfectly rational that the normal and traditional (i.e., non-Liberal) societies and governments of the past have tried to ensure that the buying and selling that went on amongst men, truly facilitated the genuine end of all economic relationships, the full and complete good of men, both individually and as, necessarily, living within a civic body. It was for this reason that such notions as “the just price” and the “the just wage” were normative, and limitations on the use and procurement of private property were instituted.
One point in favor of Ludwig von Mises, however, one not shared in by a number his disciples, is that he recognized that the whole bulk, theoretical and practical, of historical Christendom was against his understanding of the proper order of things. He, at least, recognizes that there was a very definite concept of “justice” in “medieval” Christendom. He simply relativizes it. In pure Nietzschean fashion, he insists that claims about the “justice” of this or that social arrangement or economic condition, are merely an attempt by some to preserve an arbitrarily adopted “utopia.” “They call ‘just’ that mode of conduct that is compatible with the undisturbed preservation of their utopia, and everything else unjust.” Von Mises, also, does not claim St. Thomas Aquinas as an early advocate of Liberal Capitalism and the “free-market economy.” He understands that St. Thomas, as a Catholic philosopher and theologian, held views profoundly at variance with his own, including in matters of economics. With regard to the question of the “just price,” von Mises writes: “If Thomas Aquinas’ doctrine of the just price had been put into practice, the thirteenth century’s economic conditions would still prevail. Population figures would be much smaller than they are today and the standard of living much lower.” The sentence following should, also, be of interest to those who would like to see the sharp distinction between von Mises’ Liberalism and the great tradition of the Christian World: “Both varieties of the just-price doctrine, the philosophical and the popular, agree in their condemnation of the prices and wage rates as determined on the unhampered market.” If Aquinas was a capitalistic Pre-Liberal, von Mises certainly did not see it; in fact, he uses St. Thomas’s teachings as the embodiment of the very mentality and outlook, which he is rejecting.
A) De Roover’s Libertarian Dreaming
To base one’s ideas solely on conceptions prevailing in relatively current times, has never been a very attractive option. The American Whigs of 1787 looked to Republican Rome and the French Democrats of 1789 could look to Democratic Athens. Looking back 2,000 years for a political model is a genuine example of antiquarianism. At least Napoleon, with his later emulation of Charlemagne, only had to look back 1,000 years to find an example of a situation in which his newly chosen form of government, “worked” (We must keep in mind here that the reason people had not, for so long, adopted these first two old systems of government was because they were historically conscious enough to realize that they had not “worked”). A number of Libertarians have felt the need to trace their ideas back to the established thought of Catholic Christendom. We can only speculate as to their motives. However, what is clear is this, within the second half of the 20th century and, even, into our own, there have been some Libertarians who identify nascent Capitalistic ideas (I simply identify Capitalism here as the economic form of Liberalism – not to be confused with American Leftism) as existing within the corporate organism that was Christendom, prior to the “dawning” of the Enlightenment. There are some more reckless Libertarian thinkers who would even state that, not only are there Liberal anomalies within the paradigm of historical Christendom, but rather, that Liberalism is the Christian civilizational paradigm itself. The recurrent focus of such Libertarian “dreaming” is the late Renaissance Spanish School of Salamanca and Sts. Bernadine of Siena and Antonino of Florence. The main issue, although not the only one, is the one of the “just price.” Can it be that the later Scholastics, as represented by the School of Salamanca, along with the two Renaissance saints known for their sermons on economic concerns, should be identified as early advocates of Liberal Capitalism due to their, supposed, insistence that the “just price” which must be upheld by Church, State, and Society at large, is simply the one which is assigned to a product due to the interplay of producer supply and consumer demand? If economic “justice,” at this most basic and essential level, is simply a matter of adhering, faithfully, to the “laws of supply and demand,” we can say that the view of these Catholic thinkers could, indeed, be characterized as an example of Early Economic Liberalism. If there were something more to “justice” than the simple end result of the interplay of the free will of producer and the free choice of the consumer, than their thought could not be denominated as a early form of von Misesian Neo-Liberal/Libertarian conceptions.
When looking for an example of a Neo-Liberal who represents this attempt to find roots in the distant past for Liberal doctrines that seem quite modern, we can turn to Raymond de Roover who published an article entitled, “The Concept of the Just Price: Theory and Economic Policy” in Journal of Economic History (December 1958). Here it is interesting to read De Roover’s portrayal of the “typical” view of medieval thought as it relates to the topic of the “just price.” In this article, we read, “According to a widespread belief – found in nearly all books dealing with the subject – the just price was linked to the medieval conception of a social hierarchy and corresponded to a reasonable charge which would enable the producer to live and to support his family on a scale suitable to his station in life. This doctrine is generally thought to have found its practical application in the guild system. For this purpose the guilds are presented as welfare agencies which prevented unfair competition, protected consumers against deceit and exploitation, created equal opportunities for their members, and secured for them a modest but decent living in keeping with traditional standards [emphasis mine].” I will place in the footnote all the authors who held these universally acknowledged “misconceptions.” Such was the “idyllic” view of the Middle Ages upheld by the great German economist Max Weber and by the British author, controversialist, and historian, Arthur Penty. According to De Roover, another famous German economist, Werner Sombart (1863-1941), went even further: according to him, not only the medieval craftsmen but even the merchants strove only to gain a livelihood befitting their rank in society and did not seek to accumulate wealth or to climb the social ladder. This attitude, Sombart claimed, was rooted in the concept of the just price “which dominated the entire period of the Middle Ages.”
De Roover, however, has a different understanding of the common mind of the Christian Era as regards prices and economic activity in general. Amidst the presence of many non sequiturs, confused and, even, contradictory historical claims, we find de Roover throwing out various red herrings such as, “Thomas Aquinas himself recognizes that the just price cannot be determined with precision, but can vary within a certain range, so that minor deviations do not involve any injustice. This…is not in accord with Marxian dialectics; but it agrees with classical and neoclassical economic analysis” [emphasis mine] So an obvious and balanced moral statement about a minor aspect of the just price issue, because it does not agree with the Marxist theory, makes St. Thomas’ economic position into one that “agrees with classical and neoclassical analysis.”
The bizarre and forced logic present in de Roover’s analysis can only be touched upon here. For example, one of the “naïve” economists, Werner Sombart cites Heinrich von Langenstein (1325-1397) to the effect that “if the public authorities fail to fix a price, the producer may set it himself, but he should not charge more for his labor and expenses than would enable him to maintain his status (per quanto res suas vendendo statum suum continuare posit).” This is fully in accord with the “traditional” understanding of social and economic thinking in the Catholic Middle Ages. Langenstein continues in the same vein, “And if he does charge more in order to enrich himself or to improve his station, he commits the sin of avarice.” This position, of von Langenstein, was “regarded as a characteristic formulation of the scholastic doctrine of the just price,” according to de Roover. Having been cited by Sombart, de Roover insists that it was “copied by one author after another.” De Roover tries to throw cold water on the enthusiasm, on the part of economic historians, for the writings of Langenstein, by stating that, “Langenstein was not one of the giants in medieval philosophy but a relatively minor figure.” This statement is, of course, totally irrelevant to the topic at hand. The question was not whether or not Langenstein was one of the “giants” of medieval philosophy, but whether his statement of economic theory and practice can be seen as “characteristic.” Someone need not be a giant in order to be characteristic. “Giants,” of course, are not characteristic at all, but that is another point entirely.
When de Roover does treat a giant, St. Thomas Aquinas, we find contradictory statements interwoven with more than questionable deductions. With regard to St. Thomas, he focuses on the topic that he – de Roover – believes will confirm that the “majority of the [Scholastic] doctors” held that the “just price” did not correspond to cost of production as determined by the producer’s social status, but was “simply the current market price.” Clearly, de Roover understood that if the just price meant something other than the Capitalistic “just the price,” his attempt to root Neo-Liberal Capitalism in Catholic social tradition and thought would fail. He had to prove that the “justice” of the price charged in the times of Christendom was nothing other than the price that the item could fetch on the open marketplace. The plan was to portray St. Thomas as an early economic liberal and, then, indicate how later Scholastic thought followed him and, thereby, set the stage for Adam Smith and Capitalistic Manchester Liberalism.
De Roover starts his analysis of the position of St. Thomas on the question of the “just price” by stating that in the works of Aquinas, “the passages relating to price are so scattered and seemingly so conflicting that they have given rise to varying interpretations.” He then goes on to state, unambiguously, what St. Thomas definitely meant by the term “the just price.” As he goes on “definitively” articulating St. Thomas’ position, he proceeds to contradict his own interpretation of and statements about this position. For example, de Roover states, “By selecting only those passages favorable to their thesis, certain writers even reached the conclusion that Albertus Magnus and Thomas Aquinas had a labor theory of value.” In a footnote, on the same page, he states, “As a matter of fact, Aquinas comes close to saying that any exchange of two commodities should be based on the ratio between the amounts of labor expended on each.” Isn’t he affirming here that Aquinas had a “labor theory of value,” when he was just one paragraph above, chiding “certain writers” for reaching the conclusion that St. Thomas “had a labor theory of value”?
The Liberal scholar’s reasoning becomes somewhat more convoluted when we find him, at the beginning of a paragraph, stating that St. Thomas “nowhere puts the matter [of the just price] so clearly,” and by the end of the paragraph states that “this [single] passage [which is only a story addressing a very limited moral question] destroys with a single blow the thesis of those who try to make Aquinas into a Marxist, and proves beyond doubt that he considered the market price to be just.” So, within a single paragraph, made up primarily of an illustrative story about a merchant selling wheat in a town when he knows that more wheat is on the way, we go from Aquinas the Ambiguous to Aquinas the Absolute. When we look for the passage cited by de Roover, in the Secunda Secundae of the Summa Theologica, we find that the article cited has absolutely nothing to do with the topic of the just price. It is from the question dealing with “Cheating” and the specific article is entitled, “Whether the Seller Is Bound to State the Defects of the Thing Sold?” St. Thomas states here that a seller is acting rightly, from the view point of strict justice, if he merely accepts the amount offered for his wheat by the buyer, without informing the buyer of the greater amount of wheat to come. In other words, it is not unjust to fail to provide information that one could provide about the relative short-term worth of one’s products. St. Thomas ends by saying, “If however he were to do so, or if he lowered his price, it would be exceedingly virtuous on his part: although he does not seem to be bound to do this as a debt of justice.” From this short story concerning a very specific moral question, having nothing in itself to do with economic systems or the general topic of the just price, de Roover takes it as proven that “Aquinas upheld market valuation instead of cost,” thus beginning a pre-Capitalist tradition in moral theology, which bore fruit in the late Renaissance Salamanca School and in the economic related sermons preached by St. Bernadine of Siena and St. Antoninus of Florence in the 15th century.
Before treating the real attitude of the late Scholastics in Salamanca and the sermons of St. Bernadine of Siena and St. Antoninus of Florence, it is worthwhile to look at a simple reply to an objection, present in Question 77, “On Cheating, Which is Committed in Buying and Selling.” In Article 1, the same article from which de Roover draws his conclusions about the “free market” inclinations of St. Thomas, we read, in Reply to Objection 2, a line of reasoning that would, certainly, put St. Thomas outside the boundaries of any form of Liberal Capitalistic sympathies. Here he cites St. Augustine who says, “th[e] jester, either by looking into himself or by his experience of others, thought that all men are inclined to wish to buy for a song and sell at a premium. But since in reality this is wicked, it is in every man’s power to acquire that justice whereby he may resist and overcome this inclination. The example, cited by St. Thomas, which St. Augustine uses to illustrate this idea, is one of a man who gave the just price for a book to a man who through ignorance asked a low price for it. Here we see the virtuous buyer, who knows the real value of the book, ignoring the market value of the book (the one which was being asked by the seller of those wishing freely to buy), and, instead, justly compensating the seller for his loss. St. Thomas concludes from this example that the “capitalistic” drive to buy as cheaply as possible and sell as dearly as possible – expressive, as it is, of an unlimited drive for acquisition and an overriding self-interestedness – can be overcome just like any vice is overcome. He acknowledges, however, that this self-interested attitude – which is, precisely, the attitude assumed by Liberal Capitalism – is “common to many who walk along the broad road of sin.” Here we see clearly that economic attitude of Christendom contrasted with the economic attitude of Neo-Liberalism. Neither St. Augustine nor St. Thomas Aquinas are anything like Neo-Liberals. Clearly the “market price” is not, necessarily, the “just price.” To quote a phrase commonly used by Raymond de Roover, “This text…does not lend itself to a different interpretation.”
B) The Spanish Fairs and Renaissance Banking
To offer proof that the Scholastics, early or late, did not adhere to Libertarian principles of economic life, it is best to cite the historical works of the Neo-Liberals themselves. The two which draw our attention are The School of Salamanca: Readings in Spanish Monetary Theory 1544-1605 by Marjorie Grice-Hutchinson and Raymond de Roover’s San Bernadino of Siena and Saint Antonino of Florence: The Two Great Economic Thinkers of the Middle Ages. Our task can, also, be simplified if we can demonstrate, using the research of the Neo-Liberal scholars themselves, that the later Spanish Scholastics of Salamanca, along with the two above-mentioned saints, were fully within the great intellectual, social, and economic tradition of Catholic Christendom most particularly concerning the question of the “just price.” If the “just price” is formulated in a way, which allows for many factors other than the exigencies of “supply and demand” (i.e., whether there is a social and moral aspect of the determination of price) and, especially, if there is a role for the “prince” in the determination of “market prices,” than we can safely reject the notion that these Catholic scholars of the past accepted a paleo-Capitalistic conception of the determination of price and, hence, of the entire economic life of society.
Even though Salamanca University was the most prominent place of higher learning in the European world at the time, it was Spain’s position as master of the New World that set the stage for a concentration on the problems of economics by the Scholastics of Salamanca. The gold and silver coming from the mines of the Americas made Seville, the homeport of the treasure fleet, the economic center of and primary money market in Continental Europe during the middle of the 16th century. Here we have a place where there was a large circulation of money and a high price level. Tomás de Mercado (d. 1585), a Dominican from Mexico who was present in Seville and preached on commercial morality, portrays the merchantile and financial situation that grew up in these conditions to us. According to Mercado, when the fleet comes in, every merchant puts into the bank all the treasure that is brought to him from the Indies, the bankers having first given a pledge to the city authorities that they will render good account to the owners. The bankers served their depositors free of charge and used the money deposited with them to finance their own operations. Most of the gold and silver brought in by the fleet passed in this way through the hands of the bankers and served as a basis for credit. The opening for usury was occasioned, however, by these transactions. As Mercado complained at the time, “money-changers sweep all the money into their own houses, and when a month later the merchants are short of cash they give them back their own money at an exorbitant rate.” In Spain, concludes Mercado, “a banker bestrides a whole world and embraces more than the Ocean, though sometimes he does not hold tight enough and all comes crashing to the ground.”
The above stricture, on the part of Mercado (who died on a ship in 1585 on his way back to Mexico), against the financial transactions of bankers and merchants, was an articulation of an idea that was of ancient origin. Interest paid simply for the use of money during a certain period of time was considered usurious and universally condemned. Much of the moral thought about economics coming out of Spain during this period was, specifically, an attempt to grapple with the moral considerations occasioned by certain attempts to avoid the Church and State’s condemnation of usury.
The attempted circumventing of the usury laws occurred in a very subtle way. It originated in a seemingly legitimate attempt to deal with two practical difficulties encountered by merchants at the time. First, there was there was, generally, a lack of cash available at the time, requiring merchants to set debts against one another at the merchant “fairs” held at various times, in various places, throughout the year. Second, the merchants of the period, at the various fairs, had to act as money changers since, often, a debt was incurred in one place, say Seville, and paid in another, say Flanders. In this regard, it was generally agreed that the merchant who paid out money in one place and recouped himself in another was entitled to make a reasonable charge for his services. Even with regard to this type of “financial service,” to charge a similar fee for bills transferring money from one Spanish fair to another was forbidden by a royal decree in 1551. Clearly the Spanish Catholic Crown was even willing to “dislocate the whole business of the fairs” rather than allow merchants to become involved in unnecessary “financial servicing.” There, also, developed situations in which borrowed money was not to be paid back at the next fair but at one years later. Due to the “fees” attached to such “financial services,” these became loans camouflaged as fees and involving a high payment of interest. According to Grice-Hutchinson, these met with “fulminations from both Church and State.”
It is when dealing with this question of the transference of funds from one fair to another, that Grice-Hutchinson, as representative of the Neo-Liberal Economic School, focuses on the question of “price” and the factors determining the “prices” of both money and goods.
C) The Function of Money and the Question of Foreign Exchange
Medieval ideas about the origin and functions of money are largely based on a few short passages in Aristotle’s Politics and Nicomachean Ethics. Here, Aristotle insists that the function of money was its use as a medium for the exchange of goods. Money was first invented to overcome the difficulties of transport and need that are bound to arise in a barter economy. Money, therefore, is meant to serve as a common denominator that brings into line with each other things diverse in nature: “Making all things commensurable, equalizes them.” Along with rendering commensurable for the seller and buyer what is, by nature, qualitatively different, money can serve as “capital,” or as a store of value to be used at a future time. Aristotle emphasizes the function of money as a man-made instrument by indicating that its value rests on custom and that it, “rests on us to change its value or make it wholly useless.” Averroes (1126-1198), whose commentary on the Ethics was translated into Latin early in the 13th century, follows Aristotle closely on the origin and functions of money.
Since St. Thomas Aquinas upheld this traditional view that money was invented for purposes of exchange, he held that it was unlawful to take payment for the use of money lent, which payment is known as usury. Here we have a reassertion of Aristotle’s own condemnation of usury. St. Thomas himself applies this to our issue under discussion, gain on account of the foreign exchange of money, by condemning this practice outright. Merchants who attempt to make money by lending money where money is plentiful and collecting it where money is scarce for a real financial gain, meet the following statement by St. Thomas, from his Commentary on Aristotle’s Politics, I, lvii: “Likewise the art of money or acquisition is natural to all men for the purpose of procuring food, or money with which to buy food, out of natural things such as fruit or animals. But when money is acquired not by means of natural things but out of money itself, this is against nature.” This teaching concerning making money on the basis of the relative “price” of money in one place or another, appears again in 1532 when the Spanish merchants of Antwerp sent their confessor to Paris to get a ruling on the legitimacy of exchange transactions from the learned doctors of the University. They condemned forthright all exchange business. The point that the Neo-Liberals, represented by Marjorie Grice-Hutchinson, would like to draw out of this incident is that, in this reply, the rate of exchange fluctuates according to the state of supply and demand and is not derived from the labor and costs incurred by the person in whose favor the bill is drawn. The assumption here being that that which all think should determine the “price” of money, is the same as what all think should determine the price of commodities. This is an arbitrary assumption. Moreover, the doctors of the University of Paris are, apparently, merely speaking of a matter of fact. In itself, it by no means determines what the Scholastic doctors will say about the “just price” of things that ought be sold, namely commodities. What we are truly left with from this reply is a further verification of a perennial teaching of the Christian Era; money should not be made off money. As St. Thomas states, such activity is justly deserving of blame, because, considered in itself, “it satisfies the greed for gain, which knows no limit and tends to infinity.”
D) The School of Salamanca and the Just Price
When considering what the, purportedly, innovative School of Salamanca said about this important question of the “just price,” the economic issue extraordinaire in the Middle Ages, I came across a text, included in The School of Salamanca by Grice-Hutchinson, which led me to hesitate for a moment. Here, in a citation from Domingo de Soto’s book De Justitia et Jure published in 1553, we find the following in answer to the question, “Should prices be determined according to the judgment of the merchants themselves?”: “Firstly….excluding fraud and malice, we should leave merchants to fix the price of their wares. Secondly…. every man is the best judge of his own business. Now, the business of merchants is to understand merchandise. Therefore, we must defer to their opinion in settling prices. Thirdly, that a man may do as he likes with his own property. Consequently, he may ask and receive whatever price he can extort for his wares.” “Now,” I said to myself, “we have a big problem.” “Domingo de Soto is an important figure in the history of the School of Salamanca. He was a Dominican, a contemporary of the School’s founder Vitoria, and considered to be one of its best writers on economic subjects. In 1532 Soto was appointed to a chair of theology at Salamanca. His fame was such that, in 1545, the Holy Roman Emperor and King of Spain Charles V appointed de Soto, now regarded as the most eminent of the Spanish theologians after Vitoria, as his own representative at the Council of Trent. He became Charles’ own confessor 2 years later. Surely if this man held for the “free market” approach to commodity pricing, such must be a genuine teaching emanating out of Salamanca.”
After some uncomfortable consternation, it dawned on me what I was reading; rather than being de Soto’s own position and teaching on the matter these were the Objections to Soto’s own position, which always, of course, appear first in any properly organized Scholastic article. De Soto’s own teaching on the matter of the just and proper price is perfectly in line with what you would expect a Catholic theologian of a still flourishing and faithful civilization to say.
De Soto’s first “conclusion” with regards to this issue is to make a distinction that is the common-sense ground work for any discussion of prices: the price of a “good” (or commodity) is not determined by its essence (how the thing fits into the whole hierarchy of creation), but rather, “by the measure in which [it] serve[s] the needs of mankind.” Here he affirms what was taught during this same period (1554) by another Salamancan scholar Diego de Covarrubias, “The value of an article does not depend on its essential nature but on the estimation of men, even if that estimation be foolish.” The “goods” we are citing here are “goods” which are good insofar as they service human needs. These things, therefore, have a price insofar as they are valuable in the eyes of the citizens; these goods or commodities would allow the citizens to satisfy their human needs. De Soto concludes this foundational claim about prices by saying, “We have to admit, then, that want is the basis of price.” Things are, therefore, more desirable, and therefore will go for a higher price, insofar as they more perfectly satisfy man’s desire for fulfillment and sustenance, irrespective of the place which the thing holds in the hierarchy of Creation. As St. Augustine states (City of God, Book 2, chapter 16), “a man would rather have corn than mice in his house”; this, even though mice are ontologically more perfect than grains of wheat.
When speaking of the “want” which is at the basis of all economic life and pricing, de Soto recognizes, in a very balanced way, that when we speak of “want” we must not exclude a recognition of the fact that the city needs “adornment”; even though such things are not necessary for human life, it is something which render life “pleasurable and splendid.”
In de Soto’s second “conclusion,” we find a statement which directly contradicts the Libertarian claims that the later Scholastics of Salamanca thought that nothing should be considered when calculating price, other than “supply and demand.” De Soto lists supply and demand as one of the elements that go into determining the just price for an item. “Next, we must bear in mind the labor, trouble, and risk which the transaction involves. Finally, we must consider whether the exchange is, for better or worse, to the advantage or disadvantage of the vendor, whether buyers are scarce or numerous, and all other things which a prudent man may properly take into account.” In other words, much to the consternation of those who would insist that the Salamanca School recognized nothing but the needs of “supply and demand,” we find one of its most prominent scholars asserting that the entire process and situation of production and sale must be considered when the just price is calculated. Social and economic prudence is truly queen here.
We find out in the next paragraph who it is, exactly, who is entitled to make a binding judgment, while employing this social and economic prudence. The answer to this question depends upon another Scholastic distinction. This distinction is between the “legal” price and the “natural” price. These are, as de Soto states, the “two-fold” aspect of the “just price.” Here we find that “the just legal price” is that which is fixed by the prince. The “discretionary” or “natural price” is that which is current when certain prices are not legally controlled. De Soto states that this distinction is one drawn by Aristotle in his Nicomachean Ethics (V, chapter 7). Notice, in this regard, de Soto is not making a “value judgment,” saying that the “legal price” is bad and the “natural price” is good. As we will find, the application of these two different types of prices depends upon what type of good or commodity we are speaking of.
The next few paragraphs of the passage we have been citing are very significant and are echoed by other scholars of the Salamanca School. De Soto states, “To understand the [above] Conclusion and to judge its validity, and to see why it is necessary for prices to be controlled, we must realize that the matter is a primary concern of the republic [in the sense of res publica or the commonweal] and its governors, who, in spite of the arguments repeated above [i.e., those “free market” arguments in the Objections], ought really to fix the price of every article. But since they cannot possibly do so in all cases, the task [of “fixing” the price of those commodities which the prince has not fixed] is left to the discretion of buyers and sellers. The price that results is called the natural price because it reflects the nature of the goods, and the utility and convenience which they bring [emphasis my own].”
In proof that the term “legal price,” entails no negative judgment on this form of pricing, we can cite de Soto as stating, “When a price is fixed by law (for instance, when a measure of wheat or wine, or a length of cloth, is sold for a certain sum) it is not lawful to increase this price by even a farthing. If the excess be great, then it is mortal sin and a matter for restitution.” Those prices, which are not regulated, especially the prices of commodities extraneous to the basic needs of the citizenry, can “enjoy a certain latitude within the bounds of justice.” Here we find that even the prices allowed to fluctuate, must be kept within the bounds of justice; “justice,” in this case, meaning the requirements of the common good.
E) The Complexity of the Just Price Reaffirmed
De Soto was, as was every Scholastic, an inheritor of a centuries old tradition of scholarship and learning. His statements concerning the advisability of “fixing” prices, had antecedents deep in the heart of the Middle Ages. That characteristic, “non-giant,” the Viennese scholar Heinrich von Langenstein was an advocate of a strict system of price controls. He advises the prince, however, to fix prices in accordance with the customary price, which is determined by “the degree of human want.” Moreover, Langenstein shows a completely balanced approach to the question of the just price. He acknowledges that there is an objective factor, in the sense that it should be fixed by some authority standing outside the market, and yet subjective as being the product of subjective factors. Some of those subjective factors that Langenstein mentions are: supply and demand, utility, cost of production, remuneration of labor, cost of transport, and risk. All of these are to be taken into account when determining value. Just like St. Thomas Aquinas, Langenstein understood “supply and demand” to play a part in determining price. Grice-Hutchinson herself recognizes this to be the generally held position of the Scholastic tradition, when she writes, “we have seen that the concepts of utility and rarity were placed high in the traditional list of factors determining value which accompanied scholastic discussions of the ‘just price.’” She, also, admits, “we have seen that our Scholastic writers regarded utility and rarity as the primary, though not the sole, determinants of value [emphasis mine].”
If we should look, specifically, for another member of the School of Salamanca who affirms de Soto’s teaching on the desirability of fixing prices, especially those of “staple” commodities, we come upon one Pedro de Valencia. In his Discurso sobre el precio del trigo, he states that, “those who allege that a thing is worth the price it will fetch must be understood as referring only to things that are not essential to life, such as diamonds, falcons, horses, swords, and also to other commoner things when there is no fraud, compulsion or monopoly, and when vender and purchaser enjoy equal liberty or suffer equal need [emphasis mine].” Recognizing, however, that in matters of real need the citizenry is at a distinct disadvantage in any exchange, he states, “in the case of bread, in years when it is dear – the vendor always enjoys liberty and plenty, and the purchaser always suffers urgent need and want.” Now we come to the question of the just price, “The just price is not whatever a thing will fetch on account of the purchaser’s need, nor can such a price in conscience be demanded. No price is just or should be regarded as current if it is against the public interest, which is the first and principal consideration in justifying the price of things.”
F) Bernadine of Siena and Antonino of Florence: Saints Misconstrued
We ought be very much surprised when we find a Neo-Liberal scholar like Raymond de Roover focusing our attention on two great saints, St. Bernadine of Siena and St. Antonino of Florence. It is, first of all, surprising to see that they are termed, “The Two Great Economic Thinkers of the Middle Ages,” when they lived their lives square in the heart of the blossoming Italian Renaissance. That these thinkers are acclaimed as far-sighted prophets of the goodness of Liberal Capitalism is also surprising, since their attitude towards economics itself could not be farther away from the mentality of a von Mises, who would hold the laws of private property and the “free-market” to be adverse to the “heterogeneous” moral claims made by the divine and natural law. Here it would be useful to recall von Mises statement that, “In urging people to listen to the voice of their conscience and to substitute considerations of public welfare for those of private profit, one does not create a working and satisfactory social order [emphasis mine].” The only thing which the two great saints under consideration intended by their preaching and writing on economic issues was to “urg[e] people to listen to the voice of their conscience and to substitute considerations of public welfare for those of private profit.” They, also, held that only if such things were done, would a just and satisfying civil order be attained.
When we consider the moral teachings of St. Bernadine (1380 – 1444) as these relate to economic issues, what we are analyzing are 14 sermons, which are part of a larger collection of sermons entitled De Evangelio aeterno (Concerning the Eternal Gospel). These Latin sermons, as opposed to his Italian ones, were meant to be read rather than preached. Here we can see the continuation of a long tradition, echoed in our own age by men like Heinrich Pesch, S.J., of including economic questions within the larger framework of ethics. In these sermons of St. Bernadine (a Franciscan and the great apostle of devotion to the Holy Name of Jesus), we find the general teachings of the Church as regards economic life repeated anew. As de Roover himself admits, the condemnation of usury was a prominent theme in St. Bernadine’s writings. Just as was the case with the other Scholastics, St. Bernadine was “preoccupied with another set of problems [as opposed to questions of “how the market operates”]: what is just or unjust, licit or illicit? In other words, the stress was on ethics: everything was subordinated to the main theme.” Both St. Bernadine and St. Antonino (Archbishop of Florence from 1445 to 1459), both frown upon acquisitiveness as leading to sin and eternal perdition. St. Antonino deals with the whole topic of market transactions in section of his Summa moralis that deals with the sin of avarice. Moreover, economics was discussed within the framework of contracts, as Roman law understood these. The virtues that regulated the individual and collective economic actions of men were the virtues of distributive and commutative justice (i.e., the State giving to its citizens “their due” and citizens “giving to each other their due”). Let us face it, the only “due” that the Libertarians allow is the absolute claim that each man has to have the government and his fellow citizens respect his, already demarcated, private property right. They forget what the Distributists remembered quite well, all men have a certain right to private property. Those who uphold the Social Teachings of the Catholic Church, better than their Libertarian antagonists, understand the role of private property in personal and familial fulfillment.
When we study de Roover’s book on these two, putatively, innovative saints, we find ourselves at a loss to find a significant teaching that is not firmly rooted in the wisdom of the Catholic past or one which is not clarified, in a purely traditional way, by the later Scholastics of the School of Salamanca. As de Roover himself recognizes, St. Bernadine, like the Medieval Scholastics before him, understood price determination to be a social process. Price is not set by the arbitrary decision of individuals but collectively by the community as a whole. St. Bernadine makes this explicit when he states, “the price of goods and services is set for the common good with due consideration to the common valuation or estimation made collectively by the community of citizens [emphasis mine].” According to de Roover, in the writings of St. Bernadine, there was “only minimal analysis of changes in demand or supply as this affects prices.
With regard to the above question of price, as we found earlier with his analysis of the economic thought of St. Thomas Aquinas, de Roover’s portrayal of the intellectual “innovations” of St. Bernadine is very forced and often involves the use of statements that do not at all prove his point, in fact, they often contradict it. One example is his citation of a single sentence, from the “sermons” of St. Bernadine, which seems to indicate that the saint held to an idea of the “just price” which was convertible with the idea of “market valuation.” In support of this view, he cites St. Bernadino as defining the “just price” as, “the one which happens to prevail at a given time according to the estimation of the market, that is, what the commodities for sale are then commonly worth in a certain place.”
As we have seen, however, with regard to this determination of price based upon “supply and demand” and “market conditions,” there was a solid moral tradition, passing into late Scholastic times, in which it was considered perfectly reasonable that prices of certain inessential items were allowed to “float” freely, their value being determined by how much someone, who did not absolutely need the item, was willing to pay. De Roover himself seems to recognize that the language of “just price” as “prevailing market price” refers to just this situation and to these kinds of goods. And yet, that de Roover wants to insinuate that St. Bernadino equated the “just price” with the “one that happens to prevail at a given time according to the estimation of the market” in all cases, is clear. With his usual hesitant definitiveness he says, “This statement [about just price and prevailing market price], it seems to me, is so clear that it does not admit any other construction.”
If, as he seems to say, St. Bernadino equated just price with market price, all prices should, for justice’s sake, be subject to the free flow of market forces – any interference would be, according to this view, an interference in the market’s setting of the “just price.” That this is not St. Bernadine’s view is made clear, again by de Roover himself, when he admits that the Franciscan taught “prices may be fixed for the common good.” Society, then, is in charge of setting prices. Who does not hear the echo of the entire economic ethos of Christendom in St. Bernadine statement that, prices may be fixed for the common good, “because nothing is more iniquitous than to promote private interests at the expense of general welfare.”
G) St. Antonino, the Just Price, and the Just Wage
St. Antonino of Florence was explicitly committed to the position that civil authority had the right and, often, the obligation to fix prices for the sake of the common good. Clearly the “common estimation” by which prices ought be determined, included the possibility of the State explicitly setting the price of items. According to de Roover, “Sant’ Antonino…states that it might be desirable under certain circumstances to have prices of victuals [i.e., food stuffs] and other necessities fixed by the bishop, or even better, by the civil authorities. If there is such regulation, it is binding and victuallers and other tradesmen may not, without sinning, raise the price above the legal minimum.” Rather than being anything like a “free market” advocate, the Archbishop of Florence reaffirms the traditional condemnation of usury and monopoly. He, also, insisted upon there being a “just wage.” The calculation of what would constitute a “just wage” was a social and a complex process that would involve the consideration of many different elements. To quote de Roover’s citation of St. Antonino, “Sant’ Antonino states that the purpose of wages was not only to compensate the worker for his labor but also to enable him to provide for himself and his family according to his social situation.” Moreover, “it was as unfair and sinful to pay less than the just wage because a worker had mouths to feed as it was unfair to pay less than the just price because of the seller’s urgent need for cash.” St. Antonino clearly saw man as a whole, not just as a private property owning (or not owning) unit. The whole talk about a “just wage” (not to mention a “just price”) means nothing unless we understand man to be a social creature and all of man’s activities and social interactions, including his economic ones, as having an orientation to the higher and more perfect good, at least the true and fulfilling good of human existence. We see this over-arching teleological (from the Greek word telos or goal) understanding of the human good present in the following statement that de Roover makes concerning the teaching of St. Antonino: “The purpose of a fair wage was to enable the worker to earn a decent living, the purpose of a decent living was to enable him to lead a virtuous life, and the purpose of a virtuous life was to enable him to achieve salvation and eternal glory.” As we might expect, from what we have seen from the various Libertarian writers cited in this article, de Roover “summarizes” St. Antonino’s position by overturning everything he had previously stated concerning the saints’ teaching: “St. Antonino’s own wage theory according to which the just wage was set by common estimation, that is, by market forces without any reference to individual needs.” Here he is asserting A and not A simultaneously. Here we have the manipulation of a classical Christian moral text by a Libertarian whose views on economics, logic, politics, society, and, even simple human psychology would be completely inexplicable to our saintly Renaissance bishop.
H) Restoration Economics
Why does all of this matter? Much of “conservative” and “libertarian” thought, in the United States, in the British Commonwealth, and on the Continent of Europe has attempted to find a way to, as Arthur Penty put it, “stabilize the abnormal.” What is truly needed is a return to the normal. What we have seen when analyzing the actual statements made by the Medieval and Renaissance moral theologians on economic issues is a balanced portrayal of what the “normal” is. What has been amazing to see is not how innovative they were, in a Liberal direction, but rather, how traditional and deeply Christian they were. That there was room for discussion on such questions as the worth of money as a result of foreign exchange is a perfectly normal manifestation of the Catholic desire for justice and a deep prudence that understands the multiplicity of situations in which human beings act. Such prudence cannot be taken as a revolutionary innovation or for an opening to modern economic liberalism.
The basis of our current “abnormal” is an inflated and unnatural understanding of man as an individual, free to “create” his own “value system,” which, to a certain extent, means to “create his own world.” Liberalism, in its economic and political manifestations, has created a situation in which the ancient psychological, social, economic, and political tapestry of human societies has been unraveled. By upholding an ethereal concept of “choice,” it has robbed us of our honor, our personal security, and our heritage. This entire conception of man and human existence is embedded in the Neo-Liberal equation of the “just price” with the “market price.” That Arthur Penty and many others would present the “just price” and its attainment as the primary purpose of the Medieval Guild System is testimony to the fact that the very social life of Christendom, in a very real way, pivoted upon this reality. That “justice” should involve more than mere “freedom of choice,” rather including within the very term an idea and concrete historical reality expressive of a higher order and more fundamental and essential obligations, is testimony to the fact that the spiritual psychology of Christendom was profoundly different from the one we find possessed by all those who reject the ancient way, whether they be Socialists, Globalists, or Libertarians. For those who would, correctly, seek for a life outside of the spiritually suffocating totalitarian Liberalism that we find ourselves immersed in, Penty warns them that any attempt to realize the dream of an independent rural existence without price controls put into place, would result, for most, in economic suicide for families and for individuals. These are sobering words. Our struggle must then take on a more encompassing religious, moral, and even political dimension if our children and our children’s children are to live a life richer and, hence, more traditional than our own.

Saturday, September 05, 2009

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Thursday, June 25, 2009

The Dollar's Demise: The Coming American Default

The Dollar as Toxic Asset: The Coming American Default
By: Dr. Peter E. Chojnowski
May 5, 2009

If the saying is true that, “The greatness of a depression is commensurate to the government’s efforts to prevent it,” we can assuredly say that we are in the greatest downturn ever to threaten the prosperity of our civilization. As of this writing, the United States Treasury and the Federal Reserve Bank has committed $13 trillion to bailouts and “stimulus” packages. To put this “injection of liquidity” into perspective, we can say that the United States government has spent more money propping up the financial system since August of 2008, as it spent, with inflation adjusted dollars, on all the wars in its history put together. To make another illustrative comparison, the entire gross domestic product (GDP) for the year 2008 (i.e., the total amount of goods and services produced in the nation) totaled $14 trillion. This tally works out to $42,105 for every man, woman, and child in the United States and some 14x the $900 billion of currency in circulation. Not desiring to “cry wolf,” Dana Johnson, chief economist for Comerica Bank in Dallas, said, “The comparison to GDP serves the useful purpose of underscoring how extraordinary the efforts have been to stabilize the credit markets.”
This attempt to “stabilize the credit markets” has taken two forms in the United States, “stimulus” and “bailout”.
A) “Stimulating” a Zombie Economy
The most basic, and seemingly inconsequential, aspect of the attempt by government to “increase liquidity” and “demand” within the economy is the $787 billion dollar “stimulus” package offered by the Obama administration. To use the adjective “inconsequential” seems fitting on account of the fact that the package would pump a mere $185 billion into the economy this year. The very partisan legislation, having received only 3 Republican votes in the Senate and none in the House, includes extra-spending, a large increase in the debt limit, and some small-scale tax cuts. With regard to the tax cuts, millions of American workers can expect to see about $13 extra in their weekly paychecks beginning in June; this tax credit, in the year 2010, will result, on average, in $7.70 more in the typical American’s pay-packet per week. Not, seemingly, having learned from catastrophic indebtedness of the American family, which caused the worst financial crisis since the Great Depression, first-time homebuyers will be eligible for a $8,000 tax credit and those who buy a new car before the end of the year can write off the sales tax. In this regard, can we assume that all the borrowers who “earn” these tax credits, are “credit worthy” or is the government simply encouraging borrowing for the sake of pumping up the GDP? We seem to be simply attempting to “re-inflate” the credit-bubble here.
With regard to the new spending portion of the “stimulus package,” some of the money goes for worthwhile projects, like development of alternative energy sources and infrastructure projects that have been put off for decades. Even the “positive” aspects of the spending allocations, however, demonstrate that this legislation is truly nothing more than an attempt to “stimulate” and not to repair a national economy that began to realize in September 2008 that it was primarily a “phantom” economy; the appearance of life, without the substance. The $90 billion to be spent on the nation’s infrastructure, for example, is only a meager down payment on the repairs needed to fix the problems with the bridges and highways. The $9.2 billion earmarked for environmental projects and the Environmental Protection Agency (EPA) will only, according to reports, make a dent in the backlog of cleanups facing the EPA and the long list of chores at the country’s national parks, refuges and other public lands. This expenditure too can be considered to be a mere down payment on a much bigger problem.
What many of the expenditures in the “stimulus package” do is to federalize projects and programs that have been cut back by near-bankrupt state governments. Of course, with federal money comes federal control. For example, for those who lose their jobs and who want to extend their health insurance coverage for 18 months (the COBRA program), the federal government will now pick up 65% of the total cost of that premium for the first 9 months. With regard to education, the package allocates some $54 billion of federal money to compensate for state budget cuts over the next 3 years. This means that the federal government will try to ensure that the potential 600,000 elementary and secondary school teachers that would have been laid off on account of state budget cuts, will not need to be laid off.
B) No Banker Left Behind
“Quantitative Easing” is the term being used to describe the Treasury’s and Federal Reserves injection of trillions of dollars into the financial system in order to keep it afloat and prevent “deflation.” It has been these regular injections of trillions of dollars into the banking system, which has dwarfed the relatively paltry hundreds of billions allocated by Congress for the purpose of “stimulus” and buying “toxic assets” from the 5 largest banks. In describing this “quantitative easing” policy, the Federal Reserve, on March 21, 2009, said, “In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to ¼ % [N.B., the European Central Bank has just lowered this same interest rate to 1%, a record low] and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide greater support to mortgage lending and housing markets, the Committee decided today to increase the size of the Federal Reserve’s balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion. Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months.”
What you have in the above is a summary of the unprecedented intervention in the financial system. Traditionally, the key number that the Fed would vote on and that they would communicate to the public with a statement like the above, would be a target interest rate that the Fed had settled on for the Fed funds rate, an interest rate charged on overnight interbank loans. The Fed, however, has recently found that keeping the fed funds rate at near zero has not helped to bolster and stabilize the banks and the equity markets. That is why they have reverted to buying US government securities (i.e., monetizing the debt) and trying to get the credit flowing by relieving the banks of risky assets like mortgage-based securities. All of this, of course, occurred only 2 weeks before Treasury Secretary Geithner new Public-Private Partnership Investment Program (PPIP) to price and remove toxic assets from banks’ balance sheets to the tune of some $500 billion to $1 trillion.
C) Paper Mill on the Potomac: The Marginal Productivity of Debt
Whether the extra expenditure will “grow” the economy or not, is still an open question. What is not an open question, however, is that both “stimulus” and “added liquidity” will radically boost the national debt of the United States. Forecasters expect the 2009 deficit to top 2.1 trillion dollars, which is more than 3x last year’s shortfall. The overall National Debt is now approximately 11 trillion dollars.
The thinking of the past and present administrations, Bush and Obama, and the past and present Federal Reserve chairmen, Greenspan and Bernanke, is that the more money “printed,” either through government expenditure or lower interest rates --- both of which produce more debt --- the greater likelihood of stopping both economic contraction and asset deflation. Will, however, this be the case? Can such a scenario be assumed? What seems to be the great-unasked question, in this regard, is whether greater amounts of public and private debt will in any way “grow” the economy and encourage only moderate inflation. What we are really speaking about here is the “quality of debt”. What do we mean by the “quality of debt”? The Keynesians in the Bush and Obama administrations take comfort in the fact that the total national debt as a percentage of GDP is safely below 100% in the United States, while it is 100% or higher in some other countries. According to Melchior Palyi, a Hungarian-born Chicago economist who died in the early 1970s, the significant ratio to watch is additional debt to additional GDP, in other words, the amount of GDP contributed by the creation of $1 in new debt. This is the ratio that determines the “quality of debt”. For example, if the marginal productivity of debt was ½, then $2 in debt had to be incurred in order to increase the nation’s output of goods and services by $1. An increase in total debt by $1 could no longer reproduce its cost in the form of an equivalent increase in the GDP. In this situation, debt would have lost whatever justification it may have once had.
To chart the “quality of debt” historically, we can say that in the 1950s, when the dollar was still redeemable in the sense that foreign governments and central banks could covert their dollar balances into gold at the fixed statutory rate of $35 per ounce, the marginal productivity of debt was 3 or higher, meaning that the addition of $1 in new debt caused the GDP to increase by at least $3. When, in 1971, Richard Nixon defaulted on the international gold obligations of the United States, the marginal productivity of debt fell below the critical level of 1. If the marginal productivity of debt is ½, then $2 in debt had to be incurred in order to increase the nation’s output and services by $1.
As long as debt was constrained by gold, deterioration of debt was relatively slow. It took the economy 35years after Nixon’s taking the US off the gold standard for the capital of society to erode and be consumed through a steadily deteriorating marginal productivity of debt. The year 2006 was a watershed. Late in that year, the marginal productivity of debt dropped to zero and then went negative for the first time ever. Here a red light warning of an imminent economic catastrophe was set off.
If Palyi’s theory is correct, being supported by such economists as Peter Warburton and Antal Fekete, when there is a negative marginal productivity of debt, it indicates that any further increase in debtedness would necessarily cause economic contraction. In view of the fact that the marginal productivity of debt is now negative we can see that the damage-control measures of the Obama administration, which are being financed through creating unprecedented amounts of new debt, are counterproductive. It could, moreover, be the direct cause of further economic contraction of an already prostrate economy, including unemployment. This is, perhaps, what the head of the European Union and Czech Prime Minister Mirek Topolanek meant when he publicly characterized Obama’s plan to spend nearly $2 trillion to push the US economy out of recession as the “road to hell.”
D) Dumping the Dollar: America’s Stealth Default
If many Europeans and American economists worry about deflation, its seems as if the Chinese government is definitely worried about inflation. They have good reason to worry. “A policy mistake made by some major central bank may bring inflation risks to the whole world,” said the People’s Central Bank in its quarterly report. “As more and more economies are adopting unconventional monetary policies, such as quantitative easing major currencies’ devaluation risks may rise,” it said. Premier Wen Jiabao, at the Communist Party summit in March, left no doubt that China was extremely irritated with Washington’s response to the credit crisis set off by the AIG (i.e., American International [Insurance] Group) and Lehman Brothers collapse. The Chinese have come to suspect that the United States is engaged in stealth default on its debt by driving down the dollar. Premier Wen continued, “We have lent a massive amount of capital to the United States, and of course we are concerned about the security of our assets. To speak truthfully, I do indeed have some worries.” A few days later, the Chinese central bank chief wrote a paper suggesting a world currency based on Special Drawing Rights issued by the International Monetary Fund (IMF). This call to replace the US dollar as the world reserve currency was recently echoed by a United Nations panel of economists. The panel was led by US economist Joseph Stiglitz, the 2001 Nobel economics laureate, who told a press conference that there was “a growing consensus that there are problems with the dollar reserve system.” Such as system was “relatively volatile, deflationary, unstable and had inequity associated with it.” “Developing countries are lending the United States trillions of dollars at almost zero interest rates when they have huge needs themselves,” Stiglitz noted. “It’s indicative of the nature of the problem. It’s a net transfer, in a sense, to the United States, a form of foreign aid.” A new global reserve currency, however, “is feasible, non-inflationary and could be easily implemented.” Feeling that the Bretton-Woods Agreement of 1944, which established the US dollar as the world’s reserve currency --- and the United States as the beneficiary of the world-wide need to possess the dollar and dollar-denominated assets, is coming to an end, the Kremlin’s chief economic advisor, Arkady Dvorkevich, has publicly stated that Russia would favor the partial return of the gold standard, as part of a system of a new world currency based on Special Drawing Rights (SDR) issued by the IMF. The Kremlin has already instructed the its central bank to gradually raise the gold share of foreign reserves to 10%.
What was, perhaps, the most surprising aspect of the very public call by the Chinese for a new global reserve currency to replace the US dollar was the lack of any real objection to this proposal coming from the US Treasury Secretary Timothy Geithner. When speaking at an event hosted by the Council on Foreign Relations in New York, Geithner was asked about China’s Central Bank Governor Zhou Xiaochuan’s call for a new international reserve currency. Geithner said that he had not read Zhou’s proposal, but that “he understood it was a plan designed to increase the use of the IMF’s special drawing rights. And we’re actually quite open to that.” Having just, nonchalantly, thrown into question America’s 65 year commitment to the enshrinement of the US dollar as the world’s reserve and commodity trading currency, Geithner was subtly given the heads up that he had driven the value of the US dollar down some 1.3% against the Euro, since his remarks about the Chinese proposal began. This occurred when Roger Altman, who worked with Geithner as deputy Treasury secretary in the Clinton administration, asked Geithner if he wanted to “clarify” his comments. “I’d like to ask one final question, in effect on behalf of the market” [hint: you are causing months of dollar appreciation to disappear], said Altman, founder of Evercore Partners, Inc., “Let me ask the question this way. Do you see any change over the foreseeable future in the basic role of the dollar as the world’s reserve currency?” Apparently catching the hint, Geithner responded, “I think the dollar remains the world’s dominant reserve currency.”
E) Obama’s Multi-lateral New World Order: The End of the Americanist Paradigm
If Secretary Geithner is “open” to the idea of the end of the United States’ domination of the economic and political processes of the world, which would result from the toppling of the dollar as the world’s reserve currency, Barack Obama seems to be acting as if that “toppling” has already taken place. In the context of holding a press conference with Angela Merkel in Baden-Baden after the G-20 meeting in April, Obama was asked about his “grand designs” for NATO and said simply, “I don’t come bearing grand designs,” instead, “I’m here to listen, to share ideas and to jointly, as one of many NATO allies, help shape our vision for the future.” When asked by two American reporters for his response to the claim by Gordon Brown (referred to as “Crash Gordon” in Britain) that the “Washington consensus is over,” meaning the uni-lateral American exceptionalism, Obama did not object, but seemed, rather, to agree, noting the term “Washington consensus” had its roots in a set of economic policies that have been shown to be defective. Obama’s vision of the world as a consortium of “enlightened” nations fighting the remnants of religious militancy and exclusivism, won the appreciation of Nicolas Sarkozy, when the French leader praised this new post-Americanist global system and the man that made it happen, “It feels really good to work with a US president who wants to change the world and who understands that the world does not boil down to simply the American frontiers and borders….And that is a hell of a good piece of good news for 2009.”
A concrete manifestation of this new New World Order, was the activation of the IMF’s power to create money and to begin a global “quantitative easing”. The leaders at the G-20 summit literally tripled overnight to $750 billion, the IMF’s ability to provide credit to national economies on the edge. The move is akin to a national central bank such as the Federal Reserve creating the money out of thin air, except this is on a global scale. A list of the countries that the IMF has already “bailed out” are Latvia, Iceland, Pakistan, Hungary, Belarus, Serbia, Bosnia, and Romania. In April, Mexico became the first G-20 nation to ask the IMF for immediate help. Along with providing the IMF with plenty of national “bailout money” and the world with the basis for a global currency (N.B., the SDR), the G-20 leaders, with the support of Barack Obama, established a international Financial Stability Board, which appears to be meant as a global financial regulator. Obama appears to take it for granted that the post-WWII United States dominated and determined world has ceased to be and that another one is emerging. At the end of the G-20 conference in April, he stated, “I think we did OK.” Bretton Woods in 1944 was a simpler affair, “Just Roosevelt and Churchill sitting in a room with a brandy, that’s an easy negotiation, but that’s not the world we live in.”
F) Hyperinflation or Deflationary Spiral? Possibilities for 2009
That what we have witnessed since the September collapse of Lehman Brothers has been an unprecedented intervention in the banking and economic sector on the part of the government and central banks of the world, is not the issue which is being currently debated. What is being debated is the ultimate consequence of such a “injection of liquidity” (i.e., printing of money) into the financial system. As Peter Schiff has recently stated, what we are suffering from now is an overdose of past stimulus. A larger dose will only worsen the condition. According to Schiff, “The Greenspan/Bush stimulus of 2001 prevented a much needed recession and bought us seven years of artificial growth. The multi-trillion dollar tab for that federally-engineered economic bullet-dodging came due in 2008. The 2001 stimulus had kicked off a debt-fueled consumption binge that resulted in economic weakness, not strength. So now, even though the recent stimulus administered a much larger dose, we will likely experience a much smaller bounce. One can only speculate as to how much time this stimulus will buy and what it will cost when the bill arrives.”
Whatever the consequences, clearly the response of the governments of the world to the current financial crisis reveals, unequivocally, the extent of the crisis. The talk about “green shoots” coming from the “in the pocket” economists employed by the mass media and their corporate and financial sponsors must be a siren song that causes us to tie ourselves to the mast and plug our ears. The IMF in the “green shoots” month of April was saying that the world had entered “by far the deepest global recession since the Great Depression.” A recession which would cost the nations of the world “trillions of dollars in lost business, millions of people thrust into hunger and homelessness and crime on the rise.” This assessment of the current downturn as “the worst since the Great Depression,” was further confirmed by a recent statement of Professor Tim Congdon of International Monetary Research, in which he stated that company bank deposits in Europe have begun to contract at rates not seen since the early 1930s, threatening severe damage in the coming months. “It’s a catastrophe. Company bank deposits have been falling at 1% a month since December. It is what happened in the US during the Great Depression, and it is why we are seeing such a horrific recession in Europe.”
The word “since” the Great Depression is even somewhat deceptive in this context. Mark Twain said, “History does not repeat itself, but it does rhyme.” The current financial and economic crisis is both “like” the Great Depression and, yet, distinctly different. The “distinctly different” here should not, however, be an occasion for comfort. Even the IMF has pointed out the differences, saying, “While the credit boom in the 1920s was largely specific to the United States, the boom during 2004-2007 was global, with increased leverage and risk-taking in advanced economies and many emerging economies. Levels of integration are now much higher than during the inter-war period, so US financial shocks have a larger impact,” it has said. This should engender a great concern since, “Synchronized world recessions striking all major regions are ‘historically rare’ events. They last one and a half times as long as typical downturns, and are followed by painfully slow recoveries.” Leap/Europe 2020 has given 3 reasons why this current crisis is distinctly more dangerous that was the Depression of the 30s. First, “today’s world is far more integrated than in the 1930s so this crisis is definitely the first truly global crisis ever. The 1930s one was essentially limited to the US and Europe. Second, our societies depend much more on the financial sphere than 80 years ago. Credit (especially consumer credit) has been the key tool for our GDP growth in the past decades; so the impact of the financial meltdown is going to affect more deeply and durably our societies than it did 70 years ago. Finally, the US, which is the epicenter of the current global crisis, was an ascendant world power in the 1930s when now it is a decaying one. So the impact of the crisis will reinforce the downward trends affecting the US today when, in the 1930s, the crisis impact was strongly diminished by the upward trend affecting the US at that time.” This leads to the conclusion that, “this crisis will be much stronger and last much longer than in the 1930s, especially in the case of the US which is at its epicenter.” All Lollipop Guild economists aside. In regard to those “green shoots” of recovery that we hear about on CNBC, let us apply to them what Dr. Samuel Johnson said about second marriages, they are “the triumph of hope over experience.”
Although many economists make the conclusion that the only result of the inundation of the economy with trillions of fake dollars by the Fed and the Treasury will inevitably produce an unprecedented hyperinflation, especially when the Chinese stop buying US Treasuries and begin bringing their $1.4 trillion reserve back to the United States by spending it on American commodities, if what Melchior Palyi said is true concerning the marginal productivity of debt, it is rather a deflationary spiral that ought to concern us now. Clearly there has been a sharp decline in the amount of US debt that the Chinese are willing to take on; because of the “policy mistake” --- to quote the Chinese, of “quantitative easing,” they are clearly showing signs that they view the US dollar and US Treasuries as “toxic” due to the increasing likelihood of a US default, whether officially or by stealth. Could this debasement of the US currency lead to deflation, rather than inflation, however? Could our currency become worth too much and become scarce, rather than being worth too little and overly plentiful?
The trajectory for a future downward deflationary spiral is clear enough. While prices for primary products such as oil and food may, initially, rise, there is no purchasing power in the hands of the consumer, nor can they borrow as they once did, in order to pay the higher prices. The flood of newly created money has gone to bail out banks. Very little will trickle down to the ordinary consumers who are still squeezed by the debts that they have contracted in the past. Price rises are, then, unsustainable, insofar as the consumer is unable to pay them. When consumers become squeezed, merchants become squeezed; when merchants become squeezed they are forced to retrench and lay-off people and this rise in unemployment put less cash into the hands of the consumer --- and so the vicious cycle goes. For the “stimulus” money that does get into the hands of the people, it is fair to assume that it will be used to pay off the debt that, in spite of all the transference from banks to government of “toxic debt,” are still the unaltered obligation of the consumer. Switzerland has been the first Western nation to tip into deflation. Swiss consumer prices fell .4% in March (year-on-year). The Swiss Consumer Price Index will be at –1% by July. This tipping into the deflationary spiral described above is, says Philipp Hildebrand, a governor of the Swiss National Bank, “something that we must prevent at all costs. The current situation is extraordinarily serious.” All are concerned that Switzerland is entering an economic situation resembling that of Japan. “We don’t fully realize in the West what a catastrophic collapse Japan has suffered,” says Albert Edwards, global strategist at Société Générale. Japan’s industrial output fell 38% in February (year-on-year), mostly concentrated into the last 5 months. No economy imploded at this speed in the 1930s. If America enters this type of deflationary spiral, the word “depression” will seem a bit too optimistic.

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Friday, February 13, 2009

Our Lady as Woman and Warrior

Here is one of the article, published in The Angelus about 11 years ago, in which I discuss the various understandings of the name of "Lady" as given to the Mother of God. I publish it again now in order to present the entire document so that people can read for themselves what I have said and not fall victim to the various writers on the internet who insist on distorting everything I have to say about women and the Blessed Virgin Mary. One of the passages most viciously attacked, was taken from the 1913 edition of the Catholic Encyclopedia published under St. Pius X. Here is the article to set the record straight. Please send my your comments via my email address found in my profile.

Our Lady: Woman and Warrior
When researching the subject of the Blessed Virgin Mary, what is most obvious is the wealth of material which one must grapple with and, secondly, the greater and greater degree of doctrinal and dogmatic definitiveness with which the Catholic Church has presented to the faithful the complete reality of the Mother of God. Whereas, by the seventh century, the doctrinal questions concerning the nature and person of Our Lord Jesus Christ had been resolved by the first six Ecumenical Councils of the Church, the doctrinal and dogmatic clarification concerning the Blessed Virgin Mary has continued into the nineteenth and twentieth century (e.g., the dogmatic definitions of the Immaculate Conception and the Assumption), and we can even assert that such an attempt at clarification continues into our own (e.g., concerning Our Lady as Co-Redemptrix and Mediatrix of All Graces. Cf. Newsweek, Aug. 27, 1997).
Just as the Catholic Church moves, perhaps, towards a definition of the last of the great Marian doctrines, there is another aspect of Our Lady which is distinctly and, without question, pertinent, and even essential, for our times. As the tide of Feminism has risen, hopefully, to its high point in our time, it is imperative for those who wish to remain faithful to Tradition to look to the most perfect of woman in order to both provide for ourselves an ideal and model of feminine virtue and to help us purge ourselves of the Feminist preconceptions which only those in the best of circumstances could have avoided acquiring, even "subconsciously."
That is why I intend to consider, in this article, the Blessed Virgin Mary as our "Lady." Why as "lady"? On account of the fact that the "lady," in all of her various aspects and roles, is commonly accepted to be the model of what all woman, on the natural level, ought to be. Just as the masculine ideal is one of being a "master," whether of one’s own house or of one’s craft, the noble feminine ideal of the "lady" includes both the aspects of "mistress" of her master’s house and the inspiration and companion of those who enter into battle.
A) Mary as Lady
This topic and focus suggests itself, on account of two "controversies" regarding the Mother of God, one etymological and one exegetical. The etymological question concerns the meaning of the Holy Name "Mary" itself. Of course, "Mary" is the English form of the Hebrew Miryam or Miriam, which was the name of the sister of Moses (giving rise to speculation that the name is of Egyptian origin), and of several women in the New Testament as well as of Our Lady. This name is analogous to the Syriac and Aramaic name Maryam. This same name appears throughout the Vulgate Bible, in both the Old and New Testaments, as Maria. The difficulty in interpreting the name lies in the fact that there are 70 possible meanings of the name Miryam. Even though all of these exist as possibilities, there are some meanings, which are more likely than others. The interpretation of the name thought to have been given by St. Jerome, stella maris or "star of the sea," is not the one favored by current scholarship. Instead, following the lead of St. Peter Chrysologus and St. John Damascene, along with the meaning of the name in the Syriac tongue, the rendering of "lady" has been given; "lady" signifying here the counterpart of a "master" or "lord." Moreover, this particular interpretation appears to be more probable when we consider the some of the other interpretations given to the name by various scholars; all appear to be aspects of the model feminine type, which we would refer to as a "lady." For instance, we have "mistress," the "strong one" or the "ruling one," the "exalted one," and the "gracious" or "charming" one. Of these other renderings, the most widely accepted is that of the "fat" or "well-nourished" one. As we might imagine, for the peoples of the Near East to be "well-nourished" was synonymous with beauty and bodily perfection. "Mary," then, implies the beauty and perfection of the true "lady."
The New Eve
Not only does the very Holy Name of Mary indicate the ways in which she is truly blessed amongst women, but the role of the Mother of God as the New Eve, the woman of obedience and holy submission as opposed to the Eve of rebellion and autonomy, indicates the way in which Our Lady, as a woman, has crushed the head of the serpent by her exemplary possession of specifically feminine virtues. Just as Eve was misled by Satan on account of her inconstancy, changeableness, and exaggerated concern for the sensibly immediate (i.e., the attractiveness of the fruit of the Tree of Good and Evil), the Blessed Virgin Mary conquered the ancient tempter of Eve by simply accepting all that God willed to bestow upon her and achieve through her. Mankind begins its ascent to sanctification through the voluntary passivity of a woman, whereas it fell from this state of sanctification on account of Eve’s aggressive attempt to dominate the will of man through subtle manipulation.
That a woman should be a conqueror through passive acceptance of the will of another, rather than through the assertion of her own will, is testified to by the Fathers and the Doctors of the Church when they speak of Our Lady as the New Eve. The teaching of Our Lady as the "reversed" Eve, appears in the Ave, maris stella: "Oh! by Gabriel’s Ave, Utter’d long ago, Eva’s name reversing, Establish peace below." This teaching of Our Lady as being a "reversed" Eve, appears in Venerable Pope Pius IX’s bull Ineffabilis Deus, defining the doctrine of the Immaculate Conception. St. Irenaeus (c. 180) expresses the common understanding of the Fathers when we states: "Eve was led away by an angel’s word to flee God after transgressing His word. Mary has good tidings brought by an angel that she should bear God within herself after obeying His word." So it is by Our Lady’s very being and her acceptance of God’s will that she conquers the seducer of Eve.
When speaking of Our Lady as the "passive" conqueror of the ancient Adversary of mankind, we necessarily refer to the passage in the Book of Genesis in which God curses the serpent by stating the following: "I will put enmities between thee and the woman, and thy seed and her seed: she shall crush thy head, and thou shalt lie in wait for her heel (Gen. III, 15)." It is concerning this passage that we encounter the second of the "controversies" mentioned earlier. This one is exegetical. Assuming that the "she" mentioned is a prophetic reference to Our Lady, is it she who will crush the head of the head of the Evil One or will it be her "seed" who crushes it.
The "difficulty" lies in the fact that in the Vulgate text, the pronoun (ipsa) refers to the woman, while in the Hebrew text and, also, in the Greek translation of the Hebrew text, the same pronoun refers to the seed of the woman. According to the Latin Vulgate, the woman herself will win the victory; according to the Hebrew text, she will be victorious through her seed. Rather than seeing some intentional corruption of the original text by St. Jerome, who was fully conversant with Hebrew, we ought to see the Vulgate translation as an explanatory version expressing explicitly the fact of Our Lady’s part in the victory over the serpent, which is contained implicitly in the Hebrew original. Therefore, if Our Lady crushes the head of the Evil One and, on that account, establishes eternal enmity between her offspring and the serpent’s, she either does it on account of her very being (i.e., her Immaculate Conception) or she does it through her acquiescence to God’s redemptive plan, her Fiat. Whichever reading we should give this passage, Our Lady conquers through an exemplary instance of the feminine virtue of voluntary passivity.
For St. Bernard, there is no question as to the implications or the intent of the passage from the third chapter of Genesis. He, likewise, understands Our Lady’s triumph to be a reversal of Eve’s seduction. Moreover, St. Bernard understands it to be significant that it was not merely a "person" who was chosen to crush the head of the ancient serpent by her existence and her acts of voluntary submission to the Divine Will, but, rather, a woman. Here we see the essential connection between womanhood and maternity, both in the natural and in the supernatural orders; while Eve was the mother of all in the order of nature, Mary is the mother of all in the order of grace.
St. Bernard speaks of Our Lady as woman, mother, and valiant conqueror of the Evil One, when he states in one of his sermons, "Of whom, then, if not of the Virgin, does the Lord appear to have spoken when He said to the serpent, ‘I will put enmities between thee and the woman?’ But if you are not yet convinced that He was alluding to Mary, attend to what follows, ‘She shall crush thy head.’ For whom but Mary was that victory reserved? She undoubtedly crushed the serpent’s venomous head by bringing to naught every attempt of the wicked one to seduce her with his suggestions of pleasure and pride. Again, whom else but Mary was Solomon seeking when he asked: ‘Who shall find a valiant woman?"
In the above, St. Bernard recognizes that in light of the way in which God was going to redeem mankind, through the Incarnation and the propitiatory Sacrifice of the Cross, it would be a woman, a woman who would combine the two morally licit forms of feminine life, by whose immaculate being and by whose fiat all who shall be saved will be saved. In the following passage, he again points to Our Lady as the one chosen by God to fill the role of the "valiant woman": "But he knew also from the Scriptures the promise made by God - and it seemed to him only natural [emphasis mine] - that he who had conquered by a woman should be conquered by a woman. And hence he [King Solomon] cried out in an excess of admiration, ‘Who shall find a valiant woman?’ That is to say, ‘If the salvation of us all, and the recovery of our innocence, and our victory over Satan, thus depend upon a woman, it is absolutely essential to find a valiant woman, who shall be capable of accomplishing so difficult a task. But who shall find such a valiant woman?’ . . . . ‘Far and far from the uttermost bounds is the price of her.’" With the Blessed Virgin, we have a woman who is valiant, because she is steadfast. It is the New Eve who forever refutes Virgil’s stricture in the Aeneid that: Varium et mutabile semper femina.
C) Our Lady’s Sorrows: Passion and Endurance
The victory of Our Lady over the Evil One spoken of in Genesis involves a combat, which has three distinct aspects. The first is the most purely passive. The term "passive" here, refers not to a state of inactivity or any state which lacks actuality, rather, I use the term in the sense that Aristotle used it to describe an attribute of a being by which it receives some form of actuality or perfection from another being. It is in her Immaculate Conception, in which she, from the first moment of her existence, exists free from all stain of Original Sin that she inflicts the first defeat on Satan. Since it was her soul which was free from Original Sin, and since the soul is the "first act" of a living being, in the very primal actuality of her being she defeated Satan’s desire to make the entirety of mankind endure a period during which they did not bear within themselves the very image and likeness of God. It is on account of the sinlessness of her being that the Little Chapter of Prime in the Little Office of the Blessed Virgin states: "Who is she that cometh forth as the morning rising, fair as the moon, bright as the sun, terrible as an army set in array?"
"Rejoice, O Virgin Mary, thou alone hast destroyed all heresies in the whole world." This antiphon from Matins in the Little Office, states clearly the understanding of the Church which holds that Our Lady, by being the Mother of God, defeats all heresies which in any way throw into question the Hypostatic Union (i.e., the union of a human nature and a divine nature in the Divine Person of Our Lord Jesus Christ). The dogma of the Divine Maternity was affirmed at the very same Ecumenical Council (Ephesus 431) in which the unity of the two natures in one Divine Person was asserted. If Mary is the Mother of God, then she is the mother of the "whole" Christ, the Mother of a Christ who cannot be divided. From the moment of Our Lady’s Fiat, the Divine Logos would be Man and God, Soul, and Body for Eternity. By her voluntary Fiat, unlike her Immaculate Conception, Our Lady was not purely passive. Her single affirmation of the Father’s will for her, was what made her the instrument by which the True Religion was introduced into the society of men. St. Bernard emphasizes the refutation of heresy as being a consequence of Our Lady’s Fiat, when he states, "For Mary is the woman, promised of old by God, who shall crush the serpent’s head with the foot of her virtue, and for whose heel he has lain in wait with many wiles, but all to no purpose. It is through Mary alone that every impious heresy has been vanquished. One heresiarch maintained that Christ, although brought forth by her, was not formed from her flesh. . . . whilst [another], unable to endure that she should be called the Mother of God [i.e., Nestorius, condemned by the Council of Ephesus], impiously sought to deprive her of that crowning title. But the serpents lying in wait have been crushed, the would be supplanters have been trodden under foot, the slanderers of Mary have been put to confusion [by true doctrine], and, behold, all generations now call her blessed." We find a perfect artistic representation of this teaching that by being the Mother of God Our Lady puts to rest the intellectual fermentation of unbelievers, in the chapel of St. Januarius in Naples. There we find a fresco by Il Domenichino showing the triumph of the Virgin Mother over the Protestant Revolt. Here we find a young hero treading underfoot Luther and Calvin, who are identified by name in inscriptions. He carries a white banner on which we read three answers to the protestant attacks: Semper Virgo – Dei Genitrix – Immaculata. In Emile Male’s book Religious Art After the Council of Trent, we read the following description of this overtly apologetic work of art: "Against the innovators, the young champion of the Virgin affirms that she was virgin before and after the birth of Jesus, that she is the Mother of God and not merely the Mother of Christ, and finally that she is free from original sin. Near him a young woman, Prayer, carries the rosary that the Lutherans denounced as an invention of Satan. The Ave Maria mounts up to the Virgin, who is on her knees before her Son. She offers to Him the prayers of mankind which have moved her heart to pity, and two angels put into the scabbard the sword of divine wrath."
It was, of course, in her internal suffering, exemplified in her Seven Sorrows, that Our Lady showed herself completely to be both woman and warrior, that is, a true lady. In the fourteenth century, we hear St. Catherine of Siena exclaiming, "O Mary, you bring us the fire of God’s mercy! Your are the liberator of the human race, since Christ purchased it with His passion, and you, Mother, purchased it with the pain of your body and the anguish of your soul." When we meditate on the most "active" way in which Our Lady participated in Our Lord Jesus Christ’s conquest of Satan, we find that this active role was, likewise, a type of "passivity," a true passion. How can one who is continuously submitting be considered a "valiant" woman, a woman useful in and used to battle? To fail to see the valiant nature of Our Lady’s life and her passion is to fundamentally misunderstand the true nature of the virtue that has always characterized the valiant, the virtue of fortitude or courage.
According to Aristotle and, before him, the Classical Greek ethical tradition as a whole, fortitude was considered to be the virtue which regulated and rightly channeled our natural fear of the horrible, so that the object provoking our fear would not interfere with our attainment of the difficult and great good. The quintessential possessor of this virtue was the warrior, the man who faced, as part of his normal life, the most naturally horrible thing, death. To be brave in battle meant to so control our fear of death, that it would not interfere with our achievement of the difficult good of victory in battle, hence, safety for the commonweal from its enemies. Notice here, that it is not the man who does not fear who is brave, he is simply reckless; it is the man who fears, but does not let fear become his master, who is the man of true fortitude.
Concerning this virtue possessed by the valiant soldier in battle, St. Thomas Aquinas makes a very interesting and penetrating point. Of the two principal acts of fortitude, endurance and attack, endurance is more of the essence of the virtue. Keeping in mind that fortitude has to do with allaying the fear of death, St. Thomas gives three reasons why endurance is more difficult than an aggressive attack. First, because endurance normally infers being attacked by something stronger than oneself, whereas, aggression connotes that one is attacking as though one were the stronger party. Second, because he or she who endures already feels the presence of danger, whereas the aggressor looks upon danger as something to come. Finally, endurance implies length of time; it is more difficult to remain unmoved for a long time, than to be moved suddenly by the call to attack. This is why St. Thomas speaks of the martyrs, who were "valiant in battle," as the ones who manifested the virtue of fortitude to the most heroic degree. They endured by cleaving to the good of the Faith and to the good of Grace amidst the roaring beasts.
It is Our Lady, undergoing an internal suffering at the foot of the Cross, that we would attribute endurance to in the highest degree. Her endurance, however, for which she is given the title Co-Redemptrix, is an endurance different for the one of the martyrs. Her exemplary endurance, for which she can, also, be given the title "valiant in battle," mirrors that of her Divine Son. Just like the Holy Martyrs, Our Lord and Our Lady did not attack the unjust like a soldier would in a just war. They endured a great evil, the infliction of death, in order to attain a great good. Our Lord Jesus Christ, however, did not have to "cleave" to the good, since He is the Good, the source of all grace, and the intellectual expression of God the Father’s own being. Neither was he faced with a superior and, circumstantially invincible force; He is the Omnipotent Lord of all. He laid down His own life; it was not taken from him. The real sufferings, however, both psychological and physical, had to be endured. It was precisely by enduring those sufferings, and enduring the death that was the consequence of those sufferings, that evil, death, sin, and Satan were defeated. By endurance they were reduced to naught. Here we are confronted with a conquering passivity; one that will not be moved.
Our Lady of Compassion, the one who stands at the foot of her dying Son’s Cross, does not undergo the physical pains which afflict her Redeemer. Neither is she, being a human person, stronger than those who oppress her by lacerating her only begotten Son. Rather, her own sufferings, which were her sympathetic endurance of the Passion of her Son, were not an enduring of, but rather, an enduring with. By enduring with her Son to the end, to His death, by standing with Him, she shared in the redemption of all of mankind; to her belongs the booty of the Savior. "Bruis’d, derided, curs’d, defil’d, She beheld her tender child; All with bloody scourges rent. For the sins of His own nation, saw Him hang in desolation, Till His spirit forth He sent." It is with the tears, that only a mother could shed, that Our Lady showed herself to be the consummate woman, warrior, and lady. The true Mistress of the Lord’s household.