Lesson 116- Capitalism, Overproduction and Depression

            As I ended my last program I was analyzing the Communist Manifesto that, as I had indicated, is probably the best critique of Capitalism, since it is the antithesis that rose to challenge it. As I said as I ended that program, I find myself agreeing with the problems that the Manifesto identifies with Capitalism but I disagree with the solution. However, contrary to popular opinion, Communism in not totally opposed to Capitalism because, according to its historical view, Communism can’t exist unless Capitalism precedes it. In fact, Communism sees itself as the antidote to the problem that threatens to destroy Capitalism. Before addressing this inherent problem in Capitalism, let me first review the points that the Manifesto has made so far.

            First, all existing powers opposed Communism because of its goal of

            overthrowing existing systems through violent revolutions.

Second, even those reform movements that weren’t Communistic were accused of being so.

Third, history is the story of class oppression in which the “haves” of every age, have oppressed the “have nots”

Fourth, all previous revolutions to eliminate “class oppression” have failed because, since the revolutionaries never got rid of the cause of class- that is private property- the new class after the revolution soon divided into two new groups of “haves” and “have nots.

Fifth, only a Communist revolution will end “class oppression” because it will eliminate “private property” and establish a “dictatorship of the proletariat” and create a workers’ paradise in which  everyone will “work according to their ability and receive according to their need.”

Sixth, this workers’ paradise will finally create the aims of the French Revolution based on “Liberty,  Fraternity, and Equality.” In this New World Order, all rank and titles will disappear and equality in all things will be established.

Seventh, eventually all government will disappear because the source for greed will be eliminated and people will be able to operate according to their basically good human nature

Eighth, Capitalism replaced the Feudal System because of its inability to keep up with the demand created by the increase in world trade following the discovery of American and trade with the East.

Nineth, Capitalism has destroyed all traditional relationships among people and has left nothing but monetary profit as the connection between one person and another.

Tenth, Capitalism, because it has replaced the small cottage industries of the Feudal Period with large factories and machines, have caused people to move from rural to urban areas

Eleventh, Capitalism has created a world after its “own image and likeness” because once any primitive society comes in contact with the goods and services of Capitalism, it has taken the first step towards its own destruction. Either it will become dependent on Capitalistic countries to resupply them or it will be forced to adopt the same methods of production to meet their own needs.

Twelfth, Capitalism will cause a movement towards centralization and growth. Cities will replace towns; large businesses will replace small businesses; local governments will be overshadowed by state or national governments; national markets will replace local markets and, eventually, Capitalism will lead to  an international level of complexification and organization.

Thirteen, Capitalism will eventually create an international culture as businessmen and merchants who are seeking profit, will cross pollinate cultures, like bees who are seeking honey cross pollinate flowers, and eventually native, ethnic cultures will be replaced by a worldwide cultures in which music, dress, entertainment, and values will be the same throughout the world. Eventually, the needs of businessmen for uniformity will create an international money, measurements, laws, and the elimination of all obstructions to free trade. Thus, the multiple forms of money in the Colonial Period gave way to national money; the various methods for calculating weights and measures in the Feudal Period gave way to standard weights and measure based on the metric system. And eventually, the United States will have to fall in line and adopt the metric system itself. As businesses move international they will require international laws to protect their patents and property rights and, former areas with tariff barriers, like those in Europe, will be forced to meet the competition by uniting. Thus, for example, the European Common Market, has united the separate economies of different European nations in order to meet the challenge of international competition. It should be noted that this trend toward higher complexification and uniformity are indicative of the left hemisphere of the brain.

          Marx and Engel have proven to be pretty good prophets as we are seeing many of the trends they predicted coming true now. However, their most devastating prophecies concerning Capitalism have failed to materialize even though their analysis of the problem seems to be correct.


          According to the Communist Manifesto, Capitalism contains the seeds of its own destruction. Marx and Engel say that the thing that made it most successful- it fantastic ability to produce goods-  will eventually destroy it. Capitalism came into existence at a time of scarcity when only the very rich could afford scarce luxury items. However, the Capitalistic mass production methods produced goods in such enormous quantity that the price per item dropped to levels that even common people could afford them. Thus, it has rightly been said that relatively poor people today have luxuries that even the very rich never had in the past. Will Rogers used to joke that we were the only country in which destitute people drove to the poor house in a car. It certainly is true that our idea of poverty is nowhere comparable to poverty in the Third World.

          And how does Capitalism accomplish this fantastic production? Certainly mass productive methods have a lot to do with it but even more so is the incentive that Capitalism offers to workers who produce more or what the public is demanding. Thus, in comparison to Communism’s goal of “equal distribution” in which “everyone will work according to their ability and receive according to their need”, Capitalism is based on “unequal distribution” in which those who produce more or what the public is demanding, get a greater share of the total wealth. In other words, “the more you produce what the public wants, the more you get.” Frank Sinatra owned over 500 suits ; Reggie Jackson owned over 100 cars; some people own more than one home while others are homeless.

          In effect Capitalism, which is driven by “self-interest”, had tied “production” to “distribution.” And, in its earlier period, when scarcity was the problem this worked well. However, a problem arose in later periods when, due to its fantastic productive output, it eliminated scarcity and began to produce large surpluses. When this happened, factories, which had been running at full blast, found their warehouse full of items for which there wasn’t sufficient demand. At this point, they stopped production and began to layoff or fire workers. The problem, however, was that when you stopped production, you also stopped the “distribution of income.” In other words, you had workers who wanted to work and needed to work to get their share of the total wealth but, through no fault of their own, were blocked from getting it because of the problem of overproduction.

In the past, it was scarcity that caused people to starve but now society was faced with the absurd problem of people starving because there was too much. It was like saying that a man had died of thirst and starvation in a house with running water and a fully stocked refrigerator. It defied logic and common sense. Yet this was exactly what happened. The Capitalistic economies followed a “business cycle” that swung from periods of inflation, when the supply couldn’t keep up with the demand, to deflation, when the demand couldn’t keep up with the supply, and back again. How long the slump lasted depended on how effective the capitalists were in reducing their surpluses.

And how, according to Marx, does capitalism solve this problem of overproduction.? First, by allowing the “business cycle” to run its course. Eventually, the surplus will be bought by those who still had money and, once that happened, the factories would reopen and rehire and the demand for goods would increase again, that is, until the next period of overproduction. Second, by seeking new and untapped markets. Thus, says Marx, the elimination of their surpluses will become a major incentive for capitalistic businessmen to expand beyond their own borders to other areas of the world. Nestle, for example, was criticized for spending money, time, and effort trying to convince Third World mothers to use their baby formulae instead of breast-milk. The problem was that the formulae would have been mixed with contaminated water that would have led to disease and death among the children while their mother’s milk contained anti-bodies that would have protected them. This strategy by businessmen , of course, is a major mechanism in the creation of a world-culture as American and other capitalistic countries seek markets throughout the world. This, by the way, is one of the root problems that we are having with conservative Muslims who see us as a major threat to their traditional values and it may explain why the twin-towers of the World Trade Center became one of the targets for their attack on 9-11.

A third way of eliminating surplus goods is to create a “throw-away” economy in which products are built to break down sooner or become outmoded before their usefulness ceases, due to style or technological changes. This is obvious in the clothing industry where people with a closet full of clothes don’t have anything to wear because of style changes. Thus a big part of a Capitalistic economy is the expenditures of enormous amount of advertising dollars to convince people that they “want what they never knew they wanted” or “need what they never knew they needed.” In other words, the manufacturing of the “demand” to match the “supply.” The result is a super-active economy that can’t stop producing because that is the major way for distributing income.

Another result is a trash disposal problem that threatens the environment and the depletion of the natural resources of the earth. As a result, the U.S,, which has 6% of the world’s population, is using over 50% of its resources. Yet, we are happily trying to convince the rest of the world to follow our example. One can just imagine what will happen when India and China begin to match our standard of living. Obviously, something has to give. One of the major motives behind the limitation of population through contraceptives and abortion is this fear of overtaxing the resources of the earth. Yet, it has been estimated that the impact on the earth resources of one American child is five times that of a child in the Third World. What this means is that if no children were born in the next generation and our life style continued to grow in the Third World, the impact on the environment and resources of the earth would be the same as multiplying those populations by five times.

So what is the solution? If Capitalism can’t stop producing because by doing so it stops the distribution of income and if by constantly producing at a fantastic rate it will eventually deplete the world’s resources and create a tremendous trash problem that threatens the environment, then what are we to do? The answer, says Marx, is simple. Separate distribution from production so that you can stop one without affecting the other. 

Thus, Marx’s solution to the problem of overproduction is to have a central body, such as the Communist Party, take over the productive forces of Capitalism and separate distribution from production. Instead of basing it on how much one produces, this central agency will base it on need. Thus, everyone will “work according to his ability and receive according to his need.” In short, Capitalism knows how to produce but Communism knows how to distribute and that is why Capitalism has to come first. It will provide goods in enough quantity that everyone will be able to have his just share.

Obviously, if Marx’s analysis of Capitalism is correct, something has to change or we are headed for an ecological disaster. And since, as Christians, we believe that one of our duties is to be steward’s of the earth, we should be the ones to bring Wisdom to bear on these issues. But before we can do that we have to understand the issues and problems and that is why I am devoting so much time to the issue between Capitalism and Communism. There ought to be a third way that combines what is best in both while eliminating what is worse.

I already mentioned at the end of my last talk that I found myself agreeing with much of Marx’s analysis of the problem but I disagreed with his solution. But how, according to Marx, will these problems lead to the destruction of Capitalism?


Marx says that because of the problem of overproduction, Capitalism will experience reoccurring depressions whenever the “supply outstrips the demand”. When this happened a “domino effect’ will take place as laid off workers in one area of the economy decreased demand in other sectors of the economy which then leads to layoff in those areas which then decreases the demand in still other areas. As a result, mass unemployment will result and the economy will slide from a recession into a depression. The net result of this will be that  weaker businesses will go  bankrupt and these smaller capitalists will slide into the ranks of the working class or proletariat. Each time this happened, the number of remaining capitalists will get smaller while the proletariat will get larger until eventually the numbers will be so disproportionate that the proletariat will realized that a small handful of capitalists own nearly all the “means of production”. At this point, Communist will lead a revolution to overthrow the capitalists, seize their factories, and establish a worker’s paradise in which everything will be owned in common. Of course, since the capitalists aren’t going to give anything up willingly, this will require a violent revolution. As Mao Tse Tsung, the former leader of Communist China, said, “Revolution comes out of the mouth of a gun.”


Obviously some type of revolutionary movement will be necessary to solve many of the problems of the world. Most people when they hear revolution think of violence but that is not so. Thomas Merton, in his writings, spoke of Christians as Gentle Revolutionaries who, instead of pointing a gun at someone else and demanding that he should change, instead look inward and say that the revolution begins in their own hearts. Like the comic strip Pogo our attitude should be, “We have met the enemy and they is us.”


Thus, a change of heart is the only permanent assurance that the changes made won’t be just cosmetic or a passing fad.  Hegel had said that God uses revolutionary and geniuses to move the historical process towards its final goal of Ultimate Truth or God. Instead of yearning for a time when philosopher kings will rule us, Christians yearn for a time when wise people will learn to rule themselves. This is the only way that we will be truly free when the basic conflict between freedom, which chaotic people interpret as “no control”, and order, which dictatorial people interpret as “other control”, will finally be resolved and synthesized into “self control.” It was the dream of our Founding Fathers when they created our nation and it was the dream of the Hebrew prophets. In Ezekiel 36, the prophet quotes God as saying:

“I will give you a new heart and place a new spirit within you, taking from your bodies your stony hearts and giving you natural hearts. I will put my spirit within you and make you live by my statues, careful to observe my decrees.”

And in Jeremiah 31:31-34, the prophet writes;

“The days are coming, says the Lord, when I will make a new covenant with the house of Israel and the house of Judah. It will not be like the covenant I made with their fathers the day I took them by the hand to lead them forth from the land of Egypt; for they broke my covenant, and I had to show myself their master, says the Lord. But this is the covenant that I will make with the house of Israel after those days, says the Lord, I will place my law within them and write it upon their hearts; I will be their God, and they shall be my people. No longer will they have need to teach their friends and relatives how to know the Lord. All from the least to the greatest shall know me, say the Lord, for I will forgive their evildoing and remember their sins no more…”


We got into our present predicaments through the stupidity of putting our secondary purposes on the micro level ahead of the primary purposes of the Creator on the macro level. We were never taught St. Thomas’ principle that “secondary purposes were alright so long as they either helped or did not interfere with primary purposes” and therefore, lacking humility, we go our proud way believing that we are the masters of our own lives without any concern for the long term impact of our actions on the larger picture. 

The Catholic Church, which has become a buffoon in the eyes of secular society that never tires of undermining its teachings or of gloating over and magnifying its warts, is the reservoir of this ancient wisdom and we may yet come to see a time when “the stone that the builders rejected has become the cornerstone.” The ultimate goal of the Church, even though many of its members don’t sense it, is to become the major driving force towards the Omega Point when, acting as the physical body of Christ, it become a living example and light to the rest of the world. When this happens then the biblical prophecies of Ezekial, Jeremiah, and others will finally come true.


What the world needs now, in addition to love, is Wisdom. Wisdom is the type of knowledge that knows the deeper principles of reality and how to apply them to the real world. Of course, to say that the world needs Wisdom is the same as saying that the world needs Jesus, the Logos or Wisdom of God. If, as my previous programs have indicated, we all have this Logos in the left hemisphere of our brain, which is the source of logic and technology, then what is keeping us from solving these problems?

The answer is that logic operates on premises and thus, as any logician will tell you, it’s quite possible for a logical conclusion to be valid but not true. Logic, by its very nature, must lead you where your premises take you and that might be how an all-forgiving God who desires everyone’s salvation becomes compatible with hell. Because He respects our right to choose, His Logos, or Logic, must take us where our premises lead. The only problem is that many of us live our lives according to hellish premises because, like Freud’s Id, we are self-centered and operate according to the Libido or Pleasure Principle. However, when you create of community of such like-minded people the end result is not pleasure rather it is chaos, confusion, and despair. In other words, it is hell which, instead of being a punishment is simply the logical conclusion of the premises that arise in the hearts of its members. In this context, you might remember a story I told about a young priest who gave a homily on heaven and hell at my cousin’s funeral. According to him hell is a large banquet hall with tables full of the most luscious food. Dispersed throughout the hall were a large mob of starving people, each of whom had a six-foot long fork in one hand, and the other arm tied behind his or her back. Everyone was pushing, shoving, fighting and cursing trying to get to the food on the tables and when one finally broke through, he took his six-foot long fork and stabbed a juicy steak. However, when he tried to place it in his mouth, the fork was too long and it fell on the floor as the other starving people jostled and fought him for the steak. But no one could get the steak because they all had the same problem. Then a howl of protest broke out among them as they curse the creator of such a hellish place.

As I envisioned the picture the priest was drawing, I was struck by the futility and hopelessness of the people caught there. Then the priest began his description of heaven. Heaven, he said, is a large banquet hall with tables full of the most luscious food. Dispersed throughout the hall was a crowd of starving people, each of whom had a six-foot long fork in one hand, and the other arm tied behind his or her back.  At this moment, I became embarrassed for the young priest because I was sure that he had lost the point of his story. He was describing hell again. Then he said, one of the members of the crowd said, “Excuse me brothers and sisters, but could I get to the table where the food is?” They answered, “Of course,” and opened up an aisle for him. He then took his six-foot long fork, stabbed a juicy steak, and reached across the table with it and fed another person on the other side of the table who, in turn, stabbed another steak and fed him. The moral of the story was that heaven and hell were the same place, the only difference was the attitude of the people there. In hell the attitude was “you get by taking” and in heaven it was you “get by giving” and all it took to change one into the other was a change of the premise in the hearts.


And that is also true of the world in which we live. It can be a heaven or hell depending on the attitudes of those who reside in it. Thus, if as Christians we are called to be Gentle Revolutionaries who are working towards a New World Order then we better start seeking God’s Wisdom to guide us to the attitudes that are required to bring about His Kingdom on earth as it is in heaven. And so we ought to spend some time sorting out where we agree or disagree with the two other world contenders: Communism and Capitalism. Each of them have some positive and negative qualities that ought to be part of the world to come.


Communism and Socialism are spin-offs of the French Revolution of 1789 that was a major movement during the historical period known as the Enlightenment when human reason was starting to bring impressive results in the solution of problems facing Humankind. It was also a time when the conflict between multiple Christian churches, resulting from the Protestant Reformation, had become a scandal. Luther, an Augustinian monk in 1517, reacting to corruption that had infected the Catholic Church during the Renaissance, protested the abuses involving the sale of indulgences. Eventually his protest expanded to include 95 Theses that he is reputed to have nailed to the door of a church in Wittenberg, Germany. At this point, what had begun as a reform movement became an outright rebellion against the Catholic Church. Luther, reflecting the individualism of the Renaissance, opened a Pandora’s Box when he preached that every person had the right to interpret the Bible for himself. The result was an explosion of different churches, all claiming to be Christian, but, at the same time, disagreeing on one or more theological points with other Christian churches. The result was Protestants against Catholic, Catholic against Protestant, Protestant against Protestant. Anyone who has studied the history of this country knows that the various Protestant denominations that settle here who were fleeing persecution in Europe, began to persecute each other.

It shouldn’t surprise anyone that many thinking people, disgusted with the behavior of so-called Christians, began to reject Christianity in particular, and religion in general. As the historian James Billington said, it was at this point that many European intellectuals started to reject Christianity and began looking towards the pre-Christians philosophers of ancient Greece and Rome, especially Plato and his Republic. It was from this environment that the premises of Secular Humanism sprung. Premises like:

“Religion is the opiate (or drug)  of the people”

“It are so heavenly minded, that it is of no earthly good”

“It promises ‘pie in the sky’ rather than ‘bread on earth’”

And finally, “There is no God to save Mankind; Mankind must save itself”


Thus, in all honesty, the Christian churches are reaping what their ancestors have sown. That is why, after 400 years of interfaith fighting, Pope John XXIII called for the windows to be thrown open to allow some fresh air in. He called for Vatican II and placed the Church on the road to “repentance and reform.” Unfortunately, he didn’t live long enough to carry his plan into action but the popes that follow him tried to carry on the thrust that he had begun. That is why one of the pivotal points in the papacy of John Paul II was when he began to ask the forgiveness of various groups that throughout Church history had been at odds with the Church. In doing so, he was trying to heal any divisions that might exist between the Catholic Church and the Eastern churches, Protestants, Jews, Muslims, Hindus, Buddhists, atheists and anyone else that felt they had been offended or ignored by the Church. In this way, he was taking the first step towards forgiveness for our past sins by confessing our faults and seeking repentance and reform. And what were some of these faults and sins for which the Church should seek forgiveness? Well I probably only have time to mention one. But it is the one that laid the foundation for many of the others.

The first thing that the Church had to ask forgiveness for was the corruption and scandal that existed in the Church during the reign of some of the Renaissance popes, some of whom spent vast sums of money building elaborate tombs for themselves. The political intrigue and corruption during thatt time reads like something from the Godfathers. Italian politics at its worst was the order of the day. It is hard to read the history of the Church during this time without wondering how the Church ever survived them. However, Jesus did not promise that He would preserve the Church from “wolves in sheep clothing”. In fact, he gave a parable in which the owner of a field, symbolizing Himself, was informed by his servants that there were weeds growing up among the wheat that he had planted. When asked if they should pull up the weeds, he replied that an enemy must have sown the weeds but not to disturb them because in uprooting them they might also uproot the wheat. Therefore, they should wait until harvest when they could then separate the wheat from the weeds. In this he indicated that the Church would contain not only the good and holy but also the evil and corrupt. However, what He did promise was that He would send the Holy Spirit to protect the “deposit of faith” so that even if corrupt leaders should gain control, they would not infect what had been passed down through scripture and tradition. Thus, we should not defend these corrupt men. In fact we should pray for them because they have a lot to answer for when they stand before the throne of God.

In many ways we can see the problems of the past as a chastisement for the behavior of our ancestors that was necessary to return the Church to a purer state.

Well I see that my time is up and I’ll have to continue this analysis in my next program.   Here’s Dom!