Universal Destination of Goods: Why equality matters part 1

One of the basic principles of Catholic social thought is the Universal Destination of Material Goods. What is often overlooked by those who would turn Catholic teaching into neoconservative economics is that John Paul II defense of private property is set within the context of the principle of the universal destination of goods. The basic idea of this universal principle is that regardless of how property and other economic rights are distributed (and these rights will change as the mode of production changes) the use of property has to be for the benefit of the good of all and for the common good. It is related to the classical idea of equity: outcomes have to be fair and not just processes (this is not to minimize the importance of processes, for if we can bring justice to processes would we would need much less in redistribution).

The Catholic social thought tradition differs from many of the assumptions of neoclassical economics. It has always recognized what the classical philosophers and classical economists understood, that income generation is a social act and not just the sum total of individual actions. Neoclassical economics starts with the assumption of individualism and uses methodological individualistic methods to empirically measure and evaluate incomes and their distribution, and thus, not surprisingly, argues that each individual earns what they contribute to the market, and if there is a deviation from this principle it is because of market failures. Yet the reality is that economists have never been able to adequately measure “marginal products” because, for one thing, it cannot measure capital, as the Capital Controversies pointed out in the 1970s. Yet common sense teaches us that all production is a social act, cooperating between individuals towards some common goal.


CST more balanced approach looks at rights and corresponding responsibilities, that the right to an adequate sandard of living has with it the right and duty of social participation. “Social justice implies that persons have an obligation to be active and productive participants in the life of society and that society has a duty to enable them to participate in this way” (Economic Justice for All, 71). CST also notes that greater equity is to the benefit of both rich and poor; that there are gains to society from greater equity. “Excessive economic and social inequalities within the one human family, between individuals or between peoples, give rise to scandal, and are contrary to social justice, to equity, and to the dignity of the human person, as well as to peace within society and at the international level” (GS 29). Equity and efficiency go hand in hand in Catholic social thought for both are needs based.

The social nature of property in Catholic social thought goes to the deeper source of these goods and services, property and incomes. As John Paul II has stated in Centesimus Annus: “The original source of all that is good is the very act of God, who created both the earth and man, and who gave the earth to man so that he might have dominion over it by his work and enjoy its fruits” (CA 31). This is the basis of the principle of the Universal Destination of Material Goods, which is referred to in Rerum Novarum “the earth, though divided among private owners, ceases not thereby to minster to the needs of all” (RN 7) and is carried forward in Quadragesimo Anno: “Each class, then, must receive its due share, and the distribution of created goods must be brought into conformity with the demands of the common good and social justice. For every sincere observer realizes that the vast difference between the few who hold excessive wealth and the many who live in destitution constitute a grave evil in modern society” (QA 58).

Paul VI, supporting this principle, notes: “All other rights whatsoever, including those of property and of free commerce, are to be subordinated to this principle. They should not hinder but on the contrary favor its application. It is a grave and urgent social duty to redirect them to their primary finality” (PP 22). Both the faith and reason justifications of the principle of the universal destination of goods are found in Centesimus Annus. That is, John Paul II combines the original arguments based on the Natural Law tradition of St. Thomas, with Biblical sources, especially the Book of Genesis. The call for just wages is based partly on the equity criteria of all having a decent minimum income and sharing in society’s economic progress and partly on the justice requirement of giving to each their due (which for the worker is their contribution to output, and to the citizen their share in the common goods).

The classical understanding of equity, as applied to the economy, recognizes that outcomes are important and not just processes. The procedural view of equity held by neoclassical economic theory is faulty for it is based on the assumption that the processes by which incomes are determined are natural and best promote economic efficiency, yet the reality is that we are far removed from the idealized world of “perfectly competitive markets” and that the processes by which incomes are determined include aspects of power and discretion. The Catholic social thought tradition calls for intervention into how incomes are determined if either the processes or outcomes do not promote both equity and efficiency (efficiency is understood in terms of promoting common good and not what is most profitable to firms). Such intervention needs to be based on a case by case basis; according to what methods best promote the dignity of all individuals and the common good. It can quite possibly be the case that the needs of the economy would require increasing income inequality to promote the common good, such as rising wage inequalities because of surplus or shortages of certain categories of workers. However, the requirement that all receive a sufficient income to meet their basic needs never can be set aside.

The Universal Destination of Goods recognizes the fact that the most important contributions to the production of goods and services come from God and from past efforts (building of tools and accumulation of knowledge), and that no individual or group of individuals (nations) have the right to exclude the rest of humanity from access to them without demonstrating that it is in their interest and in the interest of humanity as a whole.

Social scientists are increasingly coming to recognize the costs of inequality. The United Nations expert group on the financial crisis listed inequality as a major contributing factor (Keynes linked inequality to Great Depression, an often overlooked point). But recent work is linking inequality to many social problems.

In a recent book Richard Wilkinson and Kate Pickett The Spirit Level(2011) have done an outstanding job in marshaling the evidence of the social costs of inequality and in explaining the causal links. By making international comparisons and inter-state comparisons, they show the strong connection between high inequality and high levels of social pathologies. By showing the correlation between inequality and say child poverty you can see a connection between low inequality and low child poverty. This example is particularly good, because usually economists try to link outcomes (like poverty) to individual choices and not with aggregate factors level of inequality, yet no person could reasonably use choices of children as determining their poverty, much less national levels of inequality. Some of their most compelling evidence comes from comparing outcomes in US states with the level of inequality in each individual state, thus comparing areas with more similar legal and cultural systems than when making international comparisons. Thus they show that crime rates are not only higher in countries with higher inequality, but so to for states within the US. Wilkinson and Pickett’s list of social factors made worse by inequality is:

Level of trust
Mental illness (including drug and alcohol addiction)
Life expectancy and infant mortality
Obesity
Children’s educational performance
Teenage births
Homicides
Imprisonment rates
Social mobility

Among the great contributions of Catholic social thought to social analysis is the promotion of a broader persepctive, of including ALL the social sciences and not just market outcomes, and remembering that the economy is always part of a society and needs to be in the service of society.

In future posts we will look at the causes and consequences of inequality, using solid social analysis and guided by St. Paul's (2 Corinthians 12-15)call for equality:

Our desire is not that others might be relieved while you are hard pressed, but that there might be equality. 14 At the present time your plenty will supply what they need, so that in turn their plenty will supply what you need. The goal is equality, 15 as it is written: “The one who gathered much did not have too much, and the one who gathered little did not have too little.”