I.
It is with great joy that I take up a response to Mr. Caleb Estep, who is kind enough to insist that, though New Polity’s condemnation of the stock market is incorrect, we are not “off our rockers.” In insisting so, Mr. Estep—may God bless him, turn His face toward him, etc.—has started off on the wrong foot. The reverse is true. We are completely off whatever rockers we were trusted to sit on—and our condemnation of the stock market is entirely correct.
Jacob Imam, for instance, is a verified nutter. He drinks coffee with heavy whipping cream and invites his five-year-old godchildren to shoot deadly weapons with him in order to celebrate Christmas. I have seen him, under the influence of New Year’s champagne, alternatively sing pop songs and offer interest-free loans to a roomful of bewildered strangers. But for being so far off his rocker, he is not so nutty as to argue that investment in the stock market is evil because the companies in which one is investing do evil things—simply put and without any other circumstances taken into account.
Yes, our daily efforts to satisfy our needs and desires often end up lining the pocket of some dork who supports abortion and dreams of the destruction of the working class. Mr. Imam does not critique blind investing on this basis; his work does not consist of the application of the doctrine that one can never cooperate with evil men and their wicked schemes—a doctrine as foreign to Mother Church as it is to Common Sense. Rather, he critiques blind investing on the grounds that investing in the stock market is never necessary. As he says: “[W]ithout a sufficiently grave reason for investing in a company, no investment in evil can be justified.”[1]
If you need groceries to live, and the only grocery store in town is run by slavers, then of course, no one will condemn you for shopping at Slavers R’ Us. In such a slavish situation, we could all countenance Caleb’s rehearsal of the Church’s teachings concerning our “remote participation in moral evil,” agreeing with him that the slavers “render very helpful services,” that they do, in their way, “build up society,” that the good they do is at least “proportionate” to the evil. But if the Little Sisters of the Poor open up a grocery co-op across the street; if we have every ability to do our grocery-shopping under their pious and religious auspices; if another way is genuinely possible then only a fool would push his shopping cart into Slavers R’ Us muttering about the “technical permissibility of remote cooperation in moral evil.” Remote cooperation in evil is not something that Christians are simply “allowed” to do. It is something we are allowed to do when not cooperating with that evil, in certain circumstances, would involve us in the immediate loss of a genuine good.
These are the conditions that apply to most of the “goods” that Mr. Estep offers as analogies to stock-ownership. The good man, says Estep, uses “the Internet, computers, and the automobile, ... modern advances in medicine, sanitation services, [and] electricity,” despite the fact that these things have bad effects. Certainly. But a man without an automobile, in a world designed for its use, undoubtedly suffers for the fact, even to the point of finding himself unable to perform the basic duties of his vocation. Because of this, he may cooperate, however begrudgingly, with the idiocy, greed, and carelessness by and for which cars are produced. But a man without Robinhood on his phone?
It would be condemnable to continue shopping with the slavers when we could shop with the saints. But if the Christian who would continue to support Slavers R’ Us when there is no need to do so stands condemned, then the stock-investor stands condemned. Stock investment is never necessary. You don’t put the grocery budget into Microsoft. And even when investment is helpful, or useful, investment through the stock market is never the only form of investment available to the investor. And even if one were in some insane situation in which life, duty, vocation, and God’s will all hinged on investing in the stock market, still, it is not necessary to invest blindly.
Mr. Estep’s arguments only hold if we presume what we simply cannot: that it is necessary to invest in the stock market. Only then could we shake our heads with him, and say, “Ach, ’tis a pity Apple uses slaves. A tragedy, really. Still, we must make a 10% average return on our excess money, for if we don’t—” Then what? Will we die? Will our families go without heat? We will be obliged to neglect the divine liturgy? No, of course not. As evidence, I humbly offer myself, a foolish and ignorant man, who, for all his sins, has not once invested money in the stock market and yet pays the bills (that is to say, whose wife pays the bills), and often in a timely manner. And if I turn out to be a special case, I offer, as a secondary form of evidence, all of human history prior to the 20th century, which managed to squirrel about just fine without the New York Stock Exchange.
II.
The irony of all this is that there may be an obligation to invest, but it will never come from the needs of the investor. It comes from the one who needs an investment. It is characteristic of the good man that he “takes pity and lends.” It is an act of justice for the man who has capital to lend to the man who has nothing but his labor; an act of fraternity and friendship for those with capital and those with labor to enter into a society for the sake of the latter’s employment and the former’s service of the common good.
Shareholding is not a response to this cry of the poor, but a moment of stuffing our ears to it, of looking at a world that needs your investment, and investing in—Amazon. Ah, but it is worse, for the prime beneficiaries of our stock-purchases are those members of Amazon who are rewarded in and through the increased market value of their company—who are paid in financial assets, and not in wages. Our stock-purchases may be utilized to produce rewards for Amazon’s workers—and our Christian fingers are crossed for it!—but they will certainly end up producing rewards for Amazon’s CEO, CFO, C3PO, etc. And all of this is allowed under the justification that, with some later act (and surely, it will come soon), that at some future date (and surely, we can predict that we will “carry on business and make money” and not die before our big decade of Christian action arrives), that eventually (for, as it is said, we “know what will happen tomorrow”), eventually we will use our huge gains for the poor, for the laborer, for expanding and dignifying work and wealth within our society. As Estep puts it, “Choose any good activity or cause that requires money. One could invest in the stock market with the end of serving that cause.”
The stock market ties up our excess money in a rich man’s market when it, in justice, belongs to the poor. My $2,000 bought Apple shares—it should have bought Masha an oven for her apple fritters. Instead of giving it to the one in need, we give it to public companies and other merchants buying and selling out of their own excess. The stock market forestalls our obedience to Matthew 5:42, 1 John 3:17, and Deuteronomy 15:11 to boot, and no one has shown us otherwise.
III.
Mr. Estep agrees with Pope St. John Paul II, that “[o]wnership of the means of production ... becomes illegitimate ... when it is not utilized or when it serves to impede the work of others,”[2] but he argues that stock-ownership is not necessarily ownership of this sort. And in this much, I agree: our critique is not that the moment a company goes public it sends the workers home and leaves the productive property to gather dust. Rather, through the mechanism of the stock market, a company acquires a newfound capacity to gain through speculation rather than through labor. The owner of a public company may make greater profits by hiring more workers whose labor contributes more thoroughly to the common good—but he might also hire a marketing team to make ad campaigns to increase the value of his company’s stock, paying himself and his C-suite with that stock, all without utilizing the means of production entrusted to his care.
Surely no one would deny this most basic premise: that the stock market enables capital to reproduce itself without thereby increasing opportunities for or compensation to laborers. We pointed to Gamestop as an extreme case that clarifies what the stock market makes possible: it had a high stock price benefiting shareholders alongside a company laying off its workers and closing its physical stores. We pointed to Tesla as another example: it produces no profit but gains market value. We cited the National Bureau of Economic Research to show that these extreme cases are part of a general trend: “From 1989 to 2017, $34 trillion of real equity wealth ... was created by the U.S. corporate sector ... [and] 44% of this increase was attributable to a reallocation of rewards to shareholders in a decelerating economy, primarily at the expense of labor compensation.”[3] I would advise anyone who is not convinced to read the works of Mr. William Lazonick, whose meticulous research into the activities of our dear corporations reveals how “senior corporate executives, Wall Street bankers, and hedge-fund managers ... extract far more value from industrial corporations in which they have acquired shares than they have contributed to the creation of value by these corporations.”[4] They achieve this through the “the open-market repurchase of the corporation’s own outstanding shares—aka stock buybacks.”[5] These buybacks “come at the expense of rewards to employees for prior contributions to successful value creation as well as the company’s investment in the productive capabilities to generate the innovative products on which a new round of value creation depends.”[6]
The mechanism of stock investment enables companies to gain without increasing or dignifying the amount or the kinds of work within their society, and it is a simple, indisputable fact that companies have been acting on this newfound ability.
Perhaps there is a possible world in which we have the stock market and yet do not act on the power it gives to us—that is, the power to multiply money for some without rewarding or multiplying the labor of others. There is another possible world in which we have the atomic bomb but leave Hiroshima and Nagasaki intact. But in this sadly actual world of ours, the capacities of our technologies inform our actual use of them, and our actual use of the stock market has been to indulge what the pope called “illegitimate” (read: “bastard”) behavior with our capital: we “impede the work of others, in an effort to gain a profit which is not the result of the overall expansion of work and the wealth of society.”[7]
To this latter charge, Estep argues that “the stock market hardly curbs the overall expansion of work and wealth” because “the material standard of living is now higher than it has ever been, while at the same time society is more invested in the stock market than ever.” I do not know what Estep includes in his “material standard of living”—not, I am sure, the overdose or suicide rates!—but if we grant to Mr. Estep that we are all getting richer, in some manner or another, we must also note that our increased riches only occur within a world in which there is immense income inequality (and thus, immense power difference) between those who have access to complex financial techniques and those who do not.
If human life and happiness were a mere matter of stuff, of consumption, of income, then Mr. Estep would have a point. But human life and happiness are not measured in stuff but in freedom, authority, ownership, the just distribution of property, the presence of dignified work, in being able to honorably compare with one’s neighbor, in having a house, a business, a vocation, and so on. I, for one, would rather die than have a life that consisted in a “high standard of living”—without ownership. But these goods are less and less available under the conditions of massive income inequality, and the stock market is a tool by which this income inequality is produced.
Oxfam gave the latest on what we are all familiar with, that “the richest 1 percent grabbed nearly two-thirds of all new wealth ... created since 2020, almost twice as much money as the bottom 99 percent of the world’s population.”[8] We all have more money, sure, but we have it in a world in which our “more” is unable to buy, say, land—because Bill Gates, who has more “more” than us, has purchased it. We have more money with which to rent things from the (fewer and fewer) people who own them.
IV. A Parable
Middle-class Mike buys stocks. Mike gets some piddling 10% return on whatever income he invested. Mike saves his gains for a house and a farm near his aging parents. Go, Mike, go.
Because Mike was buying stocks (and we all keep the stock market in existence by buying stocks) Hedge-fund Harry can utilize the stock market to make $2 billion on Apple stock buybacks after months of hounding Apple’s CEO, Tim Cook. Tim Cook does not answer Mike’s emails, but he does meet with Hedge-fund Harry: “Apple undervalued? Increase the value of the stock? Of course, Hedge-fund Harry! Whatever you say, Hedge-fund Harry!”
With his $2 billion, Hedge-fund Harry buys up property. Prices rise as a result. Middle-class Mike can no longer afford the house and farm he wants. Mike is sad, despite his gains, despite his rising material standard of living, because the stock market is a game that Middle-class Mike enables and Hedge-fund Harry wins.
V.
The poor and the middle-class have the power to buy and sell stocks, but the rich have these powers and the power to influence stock prices, shareholding decisions, and even laws for the sake of huge gains. If the material standard of living is rising as a result of the stock market, it is rising alongside the income inequality by which some men are lords and masters over others. This, generally speaking, helps to make sense out of our world, which is richer, but more unhappy; in which middle-class families see some slight increase in monetary income, but cannot afford a home; in which we have access to a fantastic number of technologies held out to us by the super-rich, but neither skill nor land nor community; in which we have more stuff and hate our jobs; in which, in short, our rising standard of living is paired with a profound loss of ownership.
VI.
Mr. Estep makes three final points that merit brief responses. First, he argues that John Paul affirms that good can come from market activity, and that we neglect these passages in our argument. We respond that “market activity” is not “the stock market” in the writings of John Paul. The fact that good can come from market activity is precisely our point: by choosing the stock market instead of other forms of investment, one effaces, avoids, and minimizes the good that can come from market activity.
Secondly, Estep argues that if John Paul II meant to condemn the stock market, “he would have been very explicit about his intentions and used the utmost precision in specifying what he meant.” We reply that Pope John Paul II’s Wednesday audiences, popularly called “the Theology of the Body,” are evidence that the pope was entirely comfortable with being less than explicit about what he meant. More seriously, we do not argue that the pope explicitly condemned the stock market, only that the principles laid out in his Centesimus Annus continue the Church’s tradition of condemning speculation. We provide the minor premise—that shareholding is a form of speculation—and draw the conclusion: therefore, the stock market is condemnable. We are not proof-texting the popes, but applying their principles; we are not papal positivists, but members of the living Church, whose work is to apply what the Magisterium receives from Christ to the concrete circumstances of our lives, which is a somewhat pompous way of saying: “The popes have more to do than call out a particular nation’s financial institution. That’s our job.”
Thirdly, Estep argues that “if John Paul thought the stock market by necessity involved one in ‘illicit speculation,’ he would have leveled such a restraint on the Church’s fiscal policy.” We respond that, like so many of us, the pope could clearly and easily condemn illicit, speculative practices “out there in the world” without seeing them roosting in his own hen-house. The story of the papacy in the last fifty years has been one of increasing alarm, consternation, and efforts at cleaning said hen-house. This is clear with Pope Francis, especially. As we reported in Issue 3.3 of New Polity:
Pope Francis ... has stripped every Vatican department of the ability to invest their funds independently, and has ordered them to close their foreign bank accounts and turn over their assets to the Institute for the Works of Religion (IOR). At the same time, he has placed Vatican investments under strict rules—the usual prohibition of unethical investments, of course, but then this absolute banger: according to the Vatican’s press release, investments are to be “aimed at financial operations of a productive nature, ruling out any designed to be speculative in nature.”
Is the Pope thinking along [our] lines? At least to some extent: Reuters reported that the new law requires that “investments in complex financial ... products should be avoided as well as in those that include short selling and day trading.” Gone, also, is the ability to invest in any private equity fund. Stocks themselves should be next. In a recent speech, the Pope said that “the worship of the ancient golden calf has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose.” One can condemn an “impersonal economy lacking a truly human purpose” for only so long without eventually putting one’s finger on the secondary market as the smoking gun—the actual structure of sin which daily transforms personal, purposeful, and productive economies into the unproductive and mercantile pursuit of money for its own sake. I predict—through reason, not spatulamancy, necromancy, or any other mancy—that the Pope will include a condemnation of stock market investments in an encyclical published before 2025.[9]
Only one more year to go!
VII.
Mr. Estep makes the argument that there is no difference between buying stocks and buying things, because both things and stocks are means to other ends and not ends in themselves. But this hardly means much at all, given that anything that is an end in itself cannot be bought: Estep mentions “health ... knowledge, friendship, aesthetic experience.” He might have also mentioned the beatific vision. All of these are absent, despite continued efforts, from our corporation’s catalogs. I grant that there is a similarity between stocks and forks, in that both are instrumental for other ends, but I would simply say that they are similar in this respect and yet different in other, more important respects.
For though Estep says that Mr. Imam and I are “unclear as to why the exchange of a lawn-mower for money is different in kind from the exchange of stocks for money,” it hardly seems mysterious: you can’t do anything with a stock besides sell it to another investor, but you can mow your lawn with a lawn-mower. Estep thinks that “all of these things—money, stock, hammer, and lawn-mower— merely have an instrumental, extrinsic, or use value” and that “these three words are ... synonyms,” but that last word, use-value, seems too different from the others to serve synonymically. Typically, we would say the stock does not have a use-value, only an exchange-value. Peasant economies are said to produce things for use, and by this we distinguish their patterns of labor and consumption from those of the merchant who produces things for exchange. If Estep is saying that because we use hammers for things other than the hammer itself, and we use stocks for things other than the stock itself, that therefore hammers and stocks are the same kind of thing, he is simply being illogical.
The crux of our argument is that money is meant for purchasing things; that trade receives its justification, not by more trade, but by something that transcends it—namely, use or consumption, in which the possibility of further trade ceases. To have money is to be obliged to make this transformation, to turn a mere means into some definite service to the common good, to exit the abstract world of “potential buying power” and numerical valuation, to enter back into the concrete world of things and stuff and people by way of purchase, gift, use.
As Aquinas puts it, “the proper and principal use of money is its consumption or alienation whereby it is sunk in exchange,”[10] and it is for this reason that it is unlawful “to take payment for the use of money lent”[11]—that is, to commit the sin of usury—for it treats money, which is a means to other ends, as an end in itself. The usurer uses money for the sake of money rather than using it according to its purpose: being sunk, given away, and gotten rid of for the sake of goods.
One may purchase a lawn-mower for exchange rather than for use—one may licitly and lawfully trade lawn-mowers. Estep is correct to remind such merchants of their obligation to intentionally devote their gains to the service of the common good. But the necessity of justification only applies to the money the man makes from trading lawn-mowers. He doesn’t have to justify selling lawn-mowers. It is, as it were, already justified by the nature of the lawn-mower itself, which is not an abstract “gain” but a thing with a positive use-value—a thing for which money is sunk, alienated, and used up. Because the lawn-mower is, at the end of the day, real—because its value is not merely its power to command a price but also (and indeed, chiefly) its power to mow the lawn (which grounds and produces its monetary value)—the possibility of a genuine use (and so the very end and purpose of money) is present in every act of exchange as the principle of its justification. The man in the lawn-mower business may get up to all sorts of despicable behavior, but his act of trading lawn-mowers is per se reasonable and in accord with nature. Because of this he may take a certain pride in his business—he is making lawn-mowers available for use, which contributes to the common good, and thereby his trade is justified. The daytrader can say no such thing.
A stock does not serve human life or one’s neighbors; a stock cannot be used or consumed, only exchanged. The seller only “benefits” if the buyer enters into the same moral position as the one who sells it to him, that is, if the buyer becomes a merchant, looking for someone who will buy the stock for more than he bought it for. This is why Mr. Estep is wrong to argue that what one can licitly do with a lawn-mower, one can licitly do with a stock:
For example, suppose there are two parties who exchange stocks for money. One party has money, with its security and short-term purchasing power, but lacks stock. The other party has stock, with its long-term earning potential and greater risk, but lacks money. The person with money may want to invest with the end of providing for his child’s education while the person with stocks may have the goal of giving food to a charity. Each wants what the other has and so they make a trade.
This mystifies what’s really happening. The one who purchases a lawn-mower gains a benefit. The one who purchases a stock does not gain an actual benefit, only a potential one. To sell a stock puts the buyer in a bind. It says to him, “You must find a buyer for this if it is to benefit you.” He may successfully sell the stock for more than he bought it for—but if he does manage to do this, then he does so by selling the stock as a potential asset to the next guy, thus binding him to the necessity of a successful sale, and on and on ad infinitum.
But such an infinitely increasing stock-price—in which everyone benefits; in which each person in the indefinite, endless chain of buyers and sellers always manages to buy low and sell high—is both theoretically and actually impossible. A stock of infinite value cannot be purchased by a finite amount of wealth. If every stock-exchange were mutually beneficial, a stock would eventually be for sale which would cost the wealth of the entire cosmos. To sell an object with no use-value, on the basis of its buyer being able to make a future sale, is to enter into a process which has as its theoretically certain outcome someone getting screwed—someone who purchases the stock and cannot sell it for more than he bought it for.
Of course, there is no need to point out the theoretical injustice of purely speculative assets, no need to imagine a far-off future in which an infinitely increasing stock-price wears out a finite world. This happens all the time. Every stock market crash is a realization of the theoretical necessity of every single exchange of stock—that someone gets screwed. Inflation, to which the exchange of stock contributes, is simply a masked version of the same thing; the man who technically sells the stock for more than he bought it for, but whose purchasing power is diminished by virtue of money being held in the stock market rather than in real goods and services, is the one who gets screwed, the sacrificial victim of every “mutually beneficial exchange” that preceded him. Estep’s example, in which two people exchange money and stocks for the sake of better supporting “education” and “charity” ignores the fact that the efficacy of their trade depends on some third, fourth, fifth, or nth seller who cannot find a buyer.
The moral argument here is simply that if it is wrong to sell a lemon, if it is wrong to sell a guy a liability rather than an asset, then it must also be wrong to enter into a system that depends on some guy, at some point, being sold the same. Pagans can close their eyes, can kick the can down the road, can say “well, it benefits us, who cares about the next trade.” I don’t think Christians can do the same.
VIII.
It is true that a merchant can justly seek gain. One may intend that one’s gains go to some good cause, but the act by which those gains are made is what is at issue here. Aquinas does not say what Estep ascribes to him, that “trade is a type of act that is neither good nor bad in itself.” He says that “gain which is the end of trading ... does not, in itself, connote anything sinful or contrary to virtue.”[12] When Aquinas argues that trading has a certain “debasement” attached to it, this is not because trade is a neutral act, but “insofar as, by its very nature, [trade] does not imply a virtuous and necessary end.”[13] We agree and confess that the end of trade— gain—can and must be intended and devoted to the common good. But Aquinas does not say of the act (trade) what he says of its end (gain)—that it is neither good nor bad.
This is because Aquinas defines a tradesman as “one whose business consists in the exchange of things.”[14] I take him quite literally. A tradesman is one who, at the end of the day, provides a thing. The fact that he provides a thing is the undefended presumption of the entire question that Aquinas poses: “Whether, in trading, it is lawful to sell a thing at a higher price than what was paid for it?” The things in question, and the things that were the substance of “trade” in Aquinas’s time, were things that had use beyond the extrinsic, potential use that they might accrue by being subsequently and successfully sold for more than they were purchased for. I tend to think—and of course, I cannot prove this any more than I can look up Aquinas’s treatise on the New York Stock Exchange—that if someone presented Aquinas with a description of the stock market mechanism, he would argue that such a thing was only “trading” by a weak analogy. To take a piece of paper and to sell it for one hundred francs on the justification that the buyer might be able to find someone else who will buy it for two hundred would have struck him as mere speculation. He would likely ask what I ask: “Surely, such a thing cannot go on forever? Surely someone with the paper will no longer be able to find a buyer?”
IX.
In considering Mr. Estep’s last point, we have occasion to clarify that lamentable obscurity that we attempted to clarify in our previous debate with Mr. Humpherys. Estep is right that “the mere fact that one profits from a venture without contributing anything to the venture’s success would not by itself be enough to make the act of investing immoral.” Gifts, windfalls, and strokes of luck are the stuff of life, and if it were a crime to profit without contribution, every child born to his mother and father would be a criminal. Rather, it is illicit to make “an effort to gain a profit which is not the result of the overall expansion of work and the wealth of society.”[15] With these words, John Paul preserves two realms of licit “profit”: the realm of the gift, in which one makes no “effort to gain” and yet gains nonetheless, and the realm of investment, in which one benefits as a result of his service to the whole, whether directly (i.e. working for a venture) or indirectly (i.e. enabling others to work or dignifying their labor: paying people more, bettering their working conditions, etc.).
Let this suffice for the objections, and let me conclude by expressing my sincere gratitude to Mr. Estep for challenging our views and giving us an opportunity to better explain and defend them. If he is not yet off his rocker with us, I invite him to respond through the usual channels.
This article is part of a debate on the stock market published in New Polity Issue 5.1 (Winter 2024). Subscribe for all our best essays.
Notes
Jacob Imam, “ The Case Against Blind Investing,” New Polity (blog), December 15, 2021, https://newpolity.com/blog/ against-blind-investing.
Centesimus Annus 43.
Daniel L. Greenwald, Martin Lettau, and Sydney C. Ludvig- son, “How the Wealth Was Won: Factor Shares as Market Fundamentals” (published as a working paper with the National Bureau of Economic Research, Feb. 2019; this draft was finished April 2021 and presented at New York Universi- ty),www.sv.uio.no/econ/english/research/news-and-events/ events/guest-lectures-seminars/department-seminar/ paper/2021/sydney-c-ludvigson-sept-21.pdf. Cited in Marc Barnes and Jacob Imam, “Should Christians Invest in the Stock Market?,” New Polity 3.1 (Winter 2022), 37, and Marc Barnes and Jacob Imam, “The Stock Market Is Not Investment or Trading,” New Polity 4.2 (Spring 2023), 82.
William Lazonick, “ The Scourge of Corporate Financialization: Income Inequity, Employment Instability, Productive Fragility,” Institute For New Economic Thinking, August 21, 2023, www.ineteconomics.org/perspectives/blog/ the-scourge-of-corporate-financialization-income-inequity-employment-instability-productive-fragility.
Ibid.
Ibid.
Centesimus Annus 43.
“Richest 1% Bag Nearly Twice as Much Wealth as the Rest of the World Put Together Over the Past Two Years,” Oxfam International, January 16, 2023, www.oxfam.org/en/press-releases/richest-1-bag-nearly-twice-much-wealth-rest-world-put-together-over-past-two-years.
Marc Barnes, “Overture,” New Polity 3.3 (Summer 2022): 2–6, at 2–3.
Aquinas, ST II-II, Q. 78, A. 1, corpus.
Aquinas, ST II-II, Q. 77, A. 4, corpus. Emphasis mine.
Ibid.
Ibid., emphasis mine.
Centesimus Annus 43.