A Comedy of Errors: Marc Barnes and Jacob Imam on Shareholding

Originally this essay was meant to find a place in the New Polity magazine 5.1. Unfortunately, the editors at New Polity didn’t have the resources to edit my essay. Given my terrible prose and the length of the article, I can certainly understand. Therefore, I hope you’ll forgive any editorial errors, which of course are my fault. Fortunately, this gives you dear reader the opportunity to access it freely. Also, since my interlocutors are not my host, I feel more free to be more frank and severe in my assessment. I hope this will be more valuable to New Polity as I hope they will clarify or correct their position, which as I argue is quite contrary to the Christian Tradition.

Update 2/14: Light editing for typos.

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A Comedy of Errors: Marc Barnes and Jacob Imam on Shareholding

The aim of my first essay in this debate was to correct some historical and theoretical misrepresentations, show deficiencies in the moral arguments and seek greater clarity from Jacob Imam and Marc Barnes. Unfortunately, I was not as successful as I had hoped. While Barnes and Imam attempted to clarify their position, they ignored most of my substantial challenges. In addition, as we saw in their first article, they continue to misrepresent and misunderstand various authors, including myself. I hope dear reader, you will forgive the frequency with which I must cite myself to correct Barnes and Imam’s poor reading of my article.

While I understand that Imam and Barnes cannot excuse my misinterpretation of their “wildly ambiguous statements,” I hope they will understand it was out of an excess of charity. When reading the original essay, I made my best effort to read it as an iron man rather than as a straw man. In this effort, I unfortunately granted too much to my interlocutors, assuming a position, though incorrect, was at least a plausible misreading of the cited sources. By clarifying their position, I see now that their position is not merely a misreading, but far worse. Thus, I will begin by discussing how Barnes and Imam’s theory of licit profit is not only unsupported and contrary to reason, but also contrary to the tradition and even the Catholic Magisterium.

The second part of this essay I will return to the thoughts concerning market value, dividends, and shareholder authority. I will clarify what I think is wrong about Barnes and Imam’s arguments, hopefully getting some technical details cleared up. Finally, we will turn to some theological considerations as we discuss Barnes and Imam’s advocacy of theft from shareholders, a much worse and fallacious exegesis of St. Paul and finally a scandalous misreading of Pope Benedict XVI.

Act One: An Unprofitable Theory

Scene One: A Theory without a Reason

Fortunately, in their most recent essay, Imam and Barnes at least attempt to clarify their theory of profit. We are told that one cannot licitly make a profit unless one either puts in “productive labor to attain that increase – or without dignifying the labor of someone else, leading to an overall increase in productive labor.”[1] However, this fails to improve their position and rather makes it worse. In my previous essay, I laid out the fundamental problem with their theory. Nowhere do they define “labor” and as I showed the Scholastics took labor very broadly.[2] This is a central problem, because if the stock trader labors, as I’ve suggested the medievals might admit, then he meets the first condition of Barnes and Imam’s theory. Moreover, mutual fund investors or those who hire traders would also be justified by the second condition. The addition of “productive” to labor does little to address this ambiguity and without an at least tentative definition their theory lacks definite content to judge from and they merely beg the question against stock traders.

Another primary question we must ask is why these two condition determine licit profits and not others or more. The first condition seems  reasonable enough, if someone performs some productive labor then he is due the reward for his efforts. The second condition which - for the sake of argument - we can assume correctly derives from St. John Paul II’s Centesimus Annus and has the weight of his authority. However, at this point they have only putatively established these conditions as sufficient. That is if someone meets one of these conditions, then he profits licitly. However, Barnes and Imam have yet to show that these conditions are necessary, i.e. profit is licit if and only if one of these conditions is satisfied. Indeed, we have good reason that to think this is not the case.

To see this let us consider St. John Paul II more closely. As I argued in my previous article, part of the problem with Barnes and Imam’s reading of Centesimus Annus is taking parts of it out of context and the case is the same here. One of the general themes of the encyclical is the relation between capital and labor, specifically in employment for a company. Section 46 discusses this explicitly, denouncing the hindrance of laborers or the fail to use the means of production.  Indeed, His Holiness is specifically discussing the use of the means of production in the context of a business with employees. Given this context, it is far from clear that he is proposing a general condition for all licit profit and moreover there are more goods than the means of production and more arrangements than business employment from which to derive a profit.

For example, consider a person who leases some of his property, whether a house, a lawn mower or something as simple as a DVD. The lessor profits from someone else’s use of it, without dignifying or expanding labor. The leasee makes use of it as he sees fit and returns it to the owner. Whatever labor the lessor engages in to maintain it does not attain the increase for him, but the sale of the temporary use of it does. Indeed, on the first occasion of leasing it he makes a profit without adding or expanding labor. As long as the price is just, this has not been considered a controversial arrangement.

Another example would be the storage of goods, such as in a safety deposit box. The depository neither adds any productive labor, nor does he expand labor. He watches over a thing for a time and returns it back upon request. He arguably labors by protecting the thing and so receives the reward of his labor, but it is difficult to imagine this as productive labor. Or simply consider a person who buys a sapling which grows naturally and sells it later. The fuller grown plant is manifestly more valuable though the owner has not added this value personally, though it would seem to violate Barnes and Imam’s theory.

A further question we must ask is why this would be evil at all. In their original article they at least attempt to give an account of the evil of stock trading. They propose that a shareholder grows in wealth without improving the world for others and thus fails to contribute to the common good. If he goes on to buy real estate with the proceeds of this stock sale, he will cause the price of houses and rents to increase, “meaning that someone, somewhere is worse off.”[3]

The first issue with this argument is what it ignores. Barnes and Imam simply ignore the fact that the company the shareholder owns provides for the common good. All else equal, it generates goods and services for others, while also providing labor to the employees. Second is that house prices and rents would increase whether someone bought it with stocks or through his personal labor and thus some unspecified persons may be worse off in either case. However, that someone is impacted in someone negative way tangentially related to our action is not a Catholic moral principle. Barnes and Imam would need to employ actual moral principles like double effect to arrive at some moral culpability beyond this merely vague and vacuous claim of harm.

Far worse than the above, if we consider the second condition it is not obvious that profiting from shareholding even fails to meet this condition. The company that the shareholders own, Barnes and Imam’s objections notwithstanding, provides dignifying labor for workers all else equal. The capital of the company serves the laborers by providing them the means of providing a dignifying living for themselves. It seems from this that shareholders indeed meets the second condition and obtaining profits from dividends or selling their ownership claims over the company for a profit is not illicit even by Barnes and Imam’s theory.   

Scene Two: A Theory without a Tradition

Let us turn once more Scholastic tradition on trading. In my previous article, I pointed out that the Scholastics treated trading as licit principally as a matter of intention, but some explicitly allowed for profit based not only on labor but also risk and care and do not even discuss the expanding of labor.[4] However, matters are far worse for Barnes and Imam. In Odd Langholm’s work, “The Merchant in the Confessional,” he walks through centuries of penitential manuals that often derive their teaching from St. Thomas Aquinas, Alexander of Hales, Bl. Duns Scotus and Peter of St. John Olivi.[5] The clear picture that arises from this tradition is that trade is licit where there is labor, care, or risk. Some others go so far as to read the “changing” in pseudo-Chrysostom’s dictum against trading as changes in form, place, time or even wholesale versus retail.[6] The strict literal reading of the Arian appears almost non-existent in the Middle Ages. Indeed, St. Alphonsus Liguori, Doctor Moralis of the Church, asks “When is it illicit for the laity to trade?” to which his only answer is when it causes a dearth of necessities.[7] Given the risk stock traders suffer and the changes in value with the passing of time or change in “form” of the company, it is difficult to see how the tradition would condemn trading stocks.

This is a serious blow to their theory, since they claim “the tradition” supports their theory of the necessity of labor and/or expanding labor. In Barnes and Imam response,[8] they don’t address this problem, rather pointing out how some traders still fail to meet one or more of Alexander of Hale’s criteria for licit trade. That some traders engage in avaricious trading is entirely uncontroversial. Since they did not respond to this objection we may safely assume that the tradition doesn’t support their theory and we needn’t take it as a specifically Christian theory of profit.

Beyond failing to substantiate their position, they take issue with the interpretation of Aquinas I present. They begin by reading Aquinas as insisting that trading as such is intrinsically evil. While they do not say so explicitly, they focus on Aquinas saying that trading possesses a certain baseness by its very nature. Moreover, they oddly accuse me of allowing the ends to justify the means, being similar to Proportionalists.[9] Now, since Aquinas approves of some traders Barnes and Imam introduce the distinction between “trading as such” and “trading in fact.” We are told the former does not exist, but is considered as an “abstract possibility.” The profit of medieval traders is excused because they trade in real commodities that have some real end to their use, i.e. their trading does not go on endlessly but ends with some use. The shareholder, therefore, stands condemned because his trading “approaches” “trading as such” because his trade never ends.  

First, the claim that my interpretation of Aquinas is flawed is mistaken, because it is not my interpretation. I looked to the interpretation of the Thomistic commentary tradition of Thomas Vio Cajetan, Francisco de Vitoria and Charles Rene Billuart.[10] To this company we may also add St. Antonius of Florence, who makes a similar interpretation.[11] Moreover, nothing even resembling Barnes and Imam’s interpretation of Aquinas can be found in that tradition. Again, we see Barnes and Imam are divorced from the tradition they claim to be articulating.

The problem with Imam and Barnes reading of Aquinas, as we saw several times in their previous article, is failing to consider the full context. While they acknowledge Aquinas’ remark that trading has a debasement of its nature, they fail to note the immediately following sentences:

Hence trading, considered in itself, has a certain debasement attaching thereto, insofar as, by its very nature, it does not imply a virtuous or necessary end. Nevertheless gain which is the end of trading, though not implying, by its nature, anything virtuous or necessary, does not, in itself, connote anything sinful or contrary to virtue: wherefore nothing prevents gain from being directed to some necessary or even virtuous end, and thus trading becomes lawful.[12]

The baseness of trading is found in the fact that it is ordered to profit alone. Indeed, this is where the passage from Aristotle’s Politics comes in. Aristotle is considering trading only in so far as the trader seeks profit for itself and Aquinas’ commentary regards what Aristotle is saying and not Aquinas’ final position.[13] However, in the Summa Theologica, Aquinas expands this consideration acknowledging that trading for profit is made lawful when it is sought not for profit alone,  but for some virtuous end. Establishing this end puts a limit on the profit and it no longer tends to infinity and gratifying greed, but satisfying some virtuous end or need, therefore making trading lawful.

We may compare this to Aquinas’ treatment of profits gained from prostitution,[14] which is uncontroversially intrinsically evil. There he acknowledges the baseness of prostitution, but recognizes that profits themselves are not unlawful and the prostitute lawfully receives them. However, even if the prostitute gives the profits in alms, as Aquinas suggests the trader may do, the prostitution is not rendered lawful. Indeed, the act of prostitution is intrinsically evil, that is it can never be done well. In contrast, trading is not intrinsically evil, since a virtuous end can be added to use of the profits rendering the whole act lawful.

Now because Imam and Barnes have opted for a reading of Aquinas that reads trading as intrinsically evil, they must make an incoherent distinction between “trading as such” and “trading in fact.” Trading as such in Aquinas identifies a nature or genus of behaviors, namely buying low in order to sell high for a profit. The introduction of the notion of “trading in fact” by Barnes and Imam only establishes a species of that genus. They add to the genus the difference of trading specifically commodities. However, if the genus of moral acts are intrinsically evil, then the species are evil in sharing in that same nature. The addition of adding labor to procure these good for trading or that the goods are consumed also can’t make the trading licit, for as Barnes and Imam remind us: an act “cannot be licit by virtue of some other act.”[15] Barnes and Imam’s distinction is like saying murder as such is intrinsically evil but murder in fact with this or that weapon is not.

Additionally, to save the traders which Aquinas et. al. allow, Imam and Barnes must introduce auxiliary assumptions and ignore what is actually said. Rather than accepting that Aquinas says trading is made lawful by adding some virtuous end, we are told he really means that the traders are justified because traders “always labored to procure goods” and trading has “an end-point, and a goal which was not simply ‘gain’ or more trading, but consumption and use.”[16] We must merely accept these as implicit assumptions that are the real justifications instead of what the authors actually say. In this way we are to find that the medieval trader is exonerated, but the shareholder is in a damnable position. That this merely begs the question is obvious enough.

Yet, there is a further problem with this position, their assumptions do not actually hold. As I noted in the previous article, various canonists and theologians in the tradition discussed the trading of the “forced loans” and the census contracts in the 14^th century.[17] Among these included no less than Astesanus, who Barnes and Imam originally cite,[18] as well as St. Bernardine of Sienna, St. Antonius of Florence, among many others.[19] None condemn this trading for the reasons articulated by Imam and Barnes, but rather some found the trading to be licit though it remained controversial. Further, St. Alphonsus Liguori argues that buying and selling census contracts for more or less than they were originally purchased is “certain from natural law.”[20] Also, as I noted societas credits were also traded, but I have yet to find any condemnation of this among Scholastic thinkers. Hence, the implicit assumptions suggested by Imam and Barnes are in fact not really present.

                Another point I wish to return to is the context of the Scholastic discussion of trading. I pointed out that there is an important difference between trading commodities and stocks. Unfortunately, it seems that Barnes and Imam entirely missed the point, accusing me of asserting that trading stocks is “better.”[21] As with most of their references to authors, this is not what I said or meant. My point is rather about the nature of the Scholastics’ concern. They specifically are struggling with the Arian pseudo-Chrysostom’s teaching that buying low and selling high without changing the thing is sinful. This is specifically problematic for traders who merely move or hold goods, because the intrinsic value of the good has not been changed. This, however, is not at all the context of a stock where the company is dynamic and changing with its consequent intrinsic value and price changing. From this it seems that stock trading doesn’t even fall under the context of their discussion, which is reinforced by the history mentioned above of trading loans and census contracts.  

                However, the disagreement does not end here. Imam and Barnes continue to condemn speculation, which was defined in the original article as “to purchase an asset… with the hope that will become more valuable in the future.”[22] Note that this definition makes no excuse for labor of any kind, but is merely just generally denotes buying low in order to sell high later. However, if this is the meaning of speculation, then the traders defended by the tradition are speculators. Imam and Barnes may adjust their definition to excuse these traders, but without a substantive argument it would be ad hoc since the original definition had the authority of the economists behind it.

                Further, we find a more explicit problem with Barnes and Imam’s theory in Aquinas own discussion of trading. In response to the second objection, Aquinas discusses the person who buys a good, not to sell it, but for some other purpose and then decides to sell it later for a profit. Aquinas notes that this person is not properly called a trader since he does not buy to sell later, but intends to use the good. However, Aquinas admits that the person may sell it for more because a change in the value due to change in time or place. That is the person may profit from selling the good having added no value through his labor. This does not meet either of Barnes and Imam’s proposed conditions, though Aquinas considers it licit.

Scene Three: A Theory without a Prayer

                Now we turn to the Magisterium and in particular the teaching of St. John Paul II. Now, in my article I disputed the claim that His Holiness “categorically condemns pure speculation” with “speculation” defined by Barnes and Imam as already mentioned.[23] Unfortunately, they take issue with my claim that trading stocks does not in fact fail to use the means of production or hinder labors from using them rather than addressing my actual objection.[24] Even if they were right, this would still fail to address the substance of the criticism. However, let us consider their argument in any case.

                Imam and Barnes confidently declare that trading stock undermines the use of the means of production, asserting this it is just obvious.[25] With bated breath we await the explanation of this manifest fact. However, we are presented with a criticism of making profit from meme stocks and the increase in value of the stock market. They do this by shifting the focus away from my point, namely the context of John Paul’s discussion, to what they’d prefer to talk about, namely profiting in controversial ways. This obvious distraction is of course completely irrelevant to the point Barnes and Imam claim to be defending, that investing in the stock market categorically hinders or prevents the use of the means of production.

                What the Holy Father is talking about in the passage is setting capital against labor. This is obvious from the text, but also from his reference to Laborem Excerens 14. Ownership of the means of production is legitimate when it serves labor. Capital serves labor by providing laborers with a means of providing for themselves through work. Work that ought to be dignifying. However, selling one’s ownership share in the means of production does not impact this, whether it is a sole proprietor or a shareholder. This sale does not close factories or disrupt production lines. It simply does not fail to utilize the means of production nor impede the work of others. Indeed the purchaser is often interested in buying the ownership share, because he wants the capital to continue to be used to profitable ends. Hence, the stock trader does not fall under the Holy Father’s condemnation.

                Returning to my original objection, the Magisterium has not been shy about discussing and condemning speculation over the past decades. We know that Barnes and Imam prefer to ignore the passage from the Catechism because it treats only a type of their sense of the “speculation.” However, we see in other Magisterial documents the same focus, such as the manipulation of food prices,[26] driving up interest rates,[27] taking advantage of the weak,[28] or merely quick profits.[29] Indeed, Pius XI condemns people buying and selling because “their one aim [is] to make quick profits with the least expenditure of work, raise or lower prices by their uncontrolled business dealings so rapidly according to their own caprice and greed…”[30] As with the Scholastic tradition we saw above, the popes have not condemned speculation as buying and selling for a profit, but when profit is sought for itself and alone especially considering the negative consequences of that avaricious intent.

                However, this is not the end Barnes and Imam’s conflict with the Magisterium. As I noted in my article, there is the case of the census contract.[31] Without rehashing the whole history and nature of the contract, suffice it to say that the one who purchases the census contract receives rents from the seller. Hence, the purchaser of the census profits from contract. However, the purchaser neither adds labor nor was his capital required to provide further dignifying labor. Indeed, the seller could use the money for whatever he saw fit. Therefore, it appears this contract comes under the condemnation of Imam and Barnes.

                However, the census contract is not merely an interesting historical contract, but it came under the intervention of the Magisterium. This contract was subject to serious treatment by the canonists and theologians, because it has the appearance of usury. However, Popes Martin V, Callistus III and St. Pius V all affirm that the census contract, when grounded in real estate,[32] is not usurious and indeed licit. Callistus III’s Apostolic Constitution is arguably an infallible statement[33] and explicitly declares the contract licit. Therefore, it seems that what the Magisterium has declared licit, Barnes and Imam’s theory would condemn.  

                Hence we see the sorry state that Imam and Barnes’ theory is in. It is unreasonable, because it fails to justify its intrinsic limits on profits, would condemn contracts which are largely uncontroversial, while also allowing for profits from shareholding. Moreover, rather than being rallied to their support, the Scholastics stand in clear opposition to the Barnes and Imam. Labor is not the only justification for profit and trade is not intrinsically evil. Finally, their interpretation of St. John Paul II’s use of “speculation” remains undefended for the second time.[34] Even worse, their theory would condemn as illicit a contract that has been defended by the Scholastics for centuries and the Magisterium has firmly declared as licit.

Act Two: A Market of Fallacies – Two for One Sale

Scene One: A Tale of Two Relations

                In my original discussion of market value, I was addressing specifically the assertion that market value is mere “conjecture” and “opinion,” taking these to mean it has no rational basis. On this point, I attempted to lay out some of the rationale for valuing a company in light of its productivity, since Barnes and Imam claimed it was divorced from its productivity.[35] If such a rationalization is bourgeois, I’ll stand with my bourgeois compatriots, the medicants, Peter of John Olivi,[36] St. Antonius of Florence,[37] among others.[38] Fortunately, Barnes and Imam have clarified what they actually meant is that it is what a person is willing to pay and it extrinsically related to the productivity of the company. However, they claim that the intrinsic relation between production and profit “alone have the capacity to serve as signs of the dignification and increase of labor and production, the purpose and justification of all investment.” Let’s consider what they say then.

                Their discussion of market value takes a strange course. In the beginning they talk about problems of risk and safety, ultimately comparing investing in mutual funds like Vanguard with “safe sex.” It is unclear to me who Barnes and Imam are talking to and if there is actually an intelligible criticism of anything in what they’ve said, let alone a criticism of what I wrote. My point about uncertainty in my essay was merely conceding that to an extent all market valuations are “conjecture” or “opinion.” This is because it is of the very nature of productivity or value generation that there is uncertainty because it is future oriented. This is just as true of a societas as anything else. It is not until the profits are finally delivered and distributed that the value of the contract is realized. Of course, this does not preclude the possibility of selling one’s societas credits at a market or fair valuation, as was practiced and didn’t receive a condemnation from the tradition.

Let’s now turn to what appears to be something like a moral objection. Barnes and Imam object that market value is really insufficient because it is not a sign of dignification or expansion of labor. Indeed, they assert that only the intrinsic relation of profit and productivity is the only such sign.  It’s unclear what Barnes and Imam mean here, but as stated it is obviously false. For example, New Polity itself has pointed out the undignified labor of certain companies and one can look at an income statement as a sign of production or wages. Hence, there are other signs which may be indicative of a mispricing of a company’s stock in the market. Moreover, this intrinsic relation certainly isn’t an infallible sign. Even in a societas where the relation supposedly exists, the working partner may be subject to undignified labor or his labor may not actually increase as I pointed out with an established merchant, or the traveling merchant may be engaging in buying and selling illicit goods and services. Moreover, as I’ve pointed out above with the census, its purpose and justification was not expanding or dignifying labor, but still was licit regardless. As late as the 18^th century, Benedict XIV acknowledged in Vix Pervenit that one could invest his money to obtain an income for one’s self and family.[39] This certainly sounds like a justification for an investment similar to Aquinas’ justification of trading. Hence, the absolute and necessary moral significance of the supposed intrinsic and necessary relation is far from obvious.   

Scene Two: Paying Dividends of Silliness

In the discussion on dividends, Barnes and Imam inform us that they don’t think dividends are bad but silly. Since the whole debate so far has been on the moral significance of shareholding, this seems to be a sleight of hand. In the original essay, we were told that dividends were a “radical break” from the societas,[40] though we now know this has apparently no moral significance. This just appears silly to Barnes and Imam because they at least appear to hold the societas as the paradigm of ownership and shared profits. However, while I can’t argue with feeling of silliness, let’s at least discuss why these feelings are misplaced.

Barnes and Imam appear to find dividends silly because they are arbitrary, not proportional profits, and merely incentivize investors. Now, to say that the dividends are arbitrary is somewhat unclear. Barnes and Imam suggest a so-called “profit-sharing company” could hold capital and share profits at the management’s discretion. However, the level of dividends and consequently held capital is determined by the same sort discretion. This discretion, whether a “profit-sharing” or “dividend paying” company, may be more or less “arbitrary” but that is the point of the discretion. Management needs to have the leeway to make these decisions for the sake of business. So, its unclear what makes dividends arbitrary but “profit-sharing” non-arbitrary.

This brings us to the claim that dividends are not proportional profits. In my original article, [41]  I meant to point out that dividends are not proportional payments of total profits, since some is held back as capital. However, less that capital, dividends are typically paid on a per share basis. They are proportional to the amount of the company you own. This is not essentially different from the way that profits are paid out in a societas with many partners, except of course for retained capital. Why Barnes and Imam think that dividends are not proportional profits remains unclear. Indeed, it is unclear what this mysterious “profit-sharing company” is, since a dividend paying company is a profit-sharing company.  

 Next, it is not clear what is silly about incentivizing investors to invest in a company. One could easily imagine a merchant looking for a partner and tells a man a story that last he was in Antioch or Cyprus he made a profit of 20% with his last partner. While this incentivization could be disordered in some way, it does not seem to be categorically problematic. If this is the case, it is not obvious in the least why dividend payments, as proportional shares in profits, are silly at all. They are a share in the profits of the business and differ from the acceptable societas only as a matter of being an on-going business.  

Scene Three: A Shareholder and His Dog

                We turn now to Barnes and Imam’s novel argument against shareholder ownership.[42] Unfortunately, this argument is a terrible mess of equivocation and contradiction. Rather than trudging through these fallacies, let us begin by making the appropriate distinctions, so that we can see exactly what is wrong with their dog owner example. We will need to distinguish and define authority and responsibility, and then establish the difference between legal and moral responsibility. After this the sophistry of the argument will become apparent.

                Authority is a moral power to command another which binds another to obedience in justice.[43] The sergeant commands his troops to take that hill and they are obliged in obedience to do that. Now not all authority is as complete as with the military commander, as when several people share authority and must come to some agreement or consensus, such as through a voting process. However, the point here is that as a moral power authority of its nature is potential. A proprietor may or may not command someone to get off his property, and prudence dictates when he ought to.

                Responsibility on the other hand has the character of an end or a goal. Someone is responsible for achieving something and he has authority to do this. A father is responsible for raising children as upright citizens and he has authority to achieve that end by various commands or different means. Indeed, he may forgo commands for some greater good, such as a child internalizing virtue rather than merely acting from fear of punishment. Thus, the fact that an authority may choose not to exercise his power does not entail that he is not responsible in any given circumstance.

                Now, we ought to distinguish between moral and legal responsibility. We often have a moral responsibility where we do not have a legal responsibility, i.e. someone will come after us. If we lie to someone, we have failed morally, but not necessarily legally. We have a moral responsibility to speak the truth, but not every lie is criminal. As Aquinas points out not all virtues, wherein lie our moral responsibilities, are enforced in law as legal responsibilities. Thus, the absence of someone coming for you for some failure does not entail an entire lack of responsibility.

                From this hopefully it is clear the problem with Barnes and Imam’s argument. First, the notion of a “potential responsibility” is incoherent. You have authority to achieve the end and are responsible for at least pursuing it. While one can choose to not exercise authority, he cannot choose to not be responsible. Consequently, the ownership of a dog and stockholder are not different in essence. The dog owner may fail to exercise his authority and thus fail either legally or morally. He may not treat his dog well, but if he’s not excessively abusive he may not be pursued legally. The stockholder may fail to exercise his rights and so too fail morally if not legally. Indeed, this is part of the point of what the bishops have said about voting in shareholder meetings, namely there is a moral if not legal responsibility.[44] As a shareholder you may have a moral responsibility to seek change in a business that is obstinately ordered to some evil and perhaps if you can’t you should consider disinvesting.[45] The stockholder who fails in this may only be morally liable even if he isn’t legally liable, but there are ways in which shareholders can be held legally liable and responsible for criminal activity in a business.[46] Thus, one ought not to merely “just press on with our portfolios”[47] even if they are not held legally liable in all cases that would concern a man of conscience.   

                Now in my original essay I challenged the claim that shareholders have no dominion or authority whatsoever. I briefly pointed out that shareholders at least have voting rights, something not considered by Barnes and Imam. In their recent essay, they’ve acknowledged this but offer only the fallacious argument above as an attempt to deny it is real authority and responsibility, contrary to the opinion of our bishops. It seems that Barnes and Imam agree there is authority and responsibility, but they’d like to see more. Certainly people have argued shareholder should have more.[48] However, far from being “nervous” I know that neither I nor my interlocutors are experts in corporate governance or law, so I have no strong opinion at present. On the other hand, I do know Barnes and Imam’s categorical assertion that shareholders hold no dominion is false and that is the extent of my arguments.

Act Three: The Theological Turn

Scene Three: The robbed that reads Pius XI

                Much of Barnes and Imam’s article has been charged with an excess of needless rhetoric, which can generally be ignored, as it serves little more purpose than to excite the emotion rather than the reason of the reader. However, as we consider their treatment of voting rights, though seriously mistaken, they invoke the “Christian Tradition” in a most absurd way. They claim that our tradition “would not bat an eye” at shareholders, having failed to exercise their voting rights, being stripped of their property and the value of it distributed to religious orders. This claim, though perhaps more excessive hyperbole and rhetoric, cannot go unchallenged, since it is explicitly condemned.

                Now, as I have already mentioned, the shareholder has a moral responsibility to exercise his voting rights according to right reason. However, a failure to do so may or may not be sinful given particular circumstances. Even if it is sinful, in a particular case, it would be gravely unjust to dispossess him of his property as suggested by Barnes and Imam. Indeed, Pope Pius XI draws the classical distinction between the use and ownership of some goods. He teaches that ownership is attached to commutative justice whereas use to other virtues and this commutative justice “forbids invasion of others’ rights thought exceeding of the limits of one’s own property.” Consequently he teaches that “it is much farther from the truth to hold that a right to property is destroyed or lost by reason of an abuse or non-use.”[49] Just because the shareholder abuses or fails to use his authority over the company, does not entail he has lost his rights and his property can be taken from him. Therefore, one ought to more than flinch at the suggestion of such theft, but rather with His Holiness ardently reject such a grave injustice.

                However, Barnes and Imam attempt to call forth the saintly pontiff, John Paul II, to their unjust cause. They note him saying: “Ownership of this kind has no justification and represents an abuse in the sight of man and God.”[50] They seem to take John Paul’s “no justification” to entail the owner loses his property rights and so his goods may be taken. Now, unless we are to concede that the Magisterial teaching of popes can contradict, then reading St. John Paul in light of Pius XI would lead us to conclude that John Paul is condemning the behavior of using ownership to hinder workers, rather than that the ownership is lost. Indeed, since Pius is clearer and more explicit in his condemnation of the error, it seems reasonable to take him as the point of reference for the more ambiguous statements.  

This is also made clear from the context of the discussion. John Paul talks specifically about when ownership “is not utilized or when it serves to impede the work of others,” that is a particular use of the ownership of the capital. This is further clarified in the parallel discussion in Laborem Excerens, which His Holiness cites in Centesimus Annus. He writes “Isolating these means [of production] as a separate property in order to set it up in the form of “capital” in opposition to “labor” – and even to practice exploitation of labor – is contrary to the very nature of these means and their possession.”[51] His Holiness is clearly talking about the use of the means of production that puts this capital against labor. Hence, an owner cannot be justly dispossessed for such a use, though such a use may be a grave sin.

Scene Two: Citing Scripture for Their Purpose

                Let us now turn once more to Scriptural exegesis. In my original article I addressed a very brief attempt at exegesis of 2 Thessalonians 3:11. My main focus was on the proper translation of the Greek term “περιεργάζομαι” which Imam and Barnes argue that the traditional translation of “busybody” is better rendered as something like “haggling in the marketplace.” Imam and Barnes admit that I am free to interpret it as St. Chrystostom, the Didache,[52] St. Thomas Aquinas,[53] George Haydock,[54] Corneilius Lapide[55] and the whole Latin translation tradition[56] has understood, which I appreciate and I hope they will consider following the tradition at some point in their reasoning. However, much like our Protestant brethren may pick up a dictionary and see different meanings of “until” to deny the Perpetual Virginity of our Blessed Mother,[57] Barnes and Imam’s novel interpretation ought to be challenged.

                Imam and Barnes attempt to defend this novel translation by accusing me of reading “idle” as “busybody.” This was not my point. Rather if we look to St. Thomas Aquinas, the idle man becomes a busybody because “the idle suffer from an unrest regarding unlawful things.”[58] So, we see the similarity to the common proverb, “Idle hands are the workplace of the devil.” Indeed, Aquinas gives the example of thievery, but not haggling in the marketplace, in line with the gloss on the passage.[59] So, Aquinas is reading Paul as saying something along the lines of “Stay busy lest you fall into evil matters, such as the disorderly conduct, theft or otherwise.” Since Aquinas approves of at least some traders who “haggle in the marketplace” as shown above, reading such haggling as among the “unlawful things” mentioned would render his teaching incoherent.

                Having failed to demonstrate the plausibility of their novel translation, Barnes and Imam attempt to use “busybody” to condemn shareholders. However, rather than taking it as the disorderly conduct as normally understood, they read it as “one who sticks his nose into other people’s business.” We are then told the tale of such a person who apparently goes around talking to people picking up tidbits which he uses to haggle in the marketplace. That chatting with other people is not what St. Paul is condemning seems obvious and the haggling in the marketplace afterward is only incidentally related to the supposed “busybodying.” Needless to say this is just an obvious equivocation to squeeze shareholders into a condemnation that does not include them.

                Next, we need to turn to the notion from the original article that this is passage is to be taken as a general orientation of Christians, that is they should work for their income. Now, Barnes and Imam challenge me to explain how the idle man procures his bread. The understanding of the Christian tradition, as in the Didache, is not that this man is necessarily a beggar, but is capable of work and simply chooses to live off the charity of others.[60] Aquinas argues that St. Paul’s admonishment to work is in fact a precept, since one needs to provide for the needs of one’s body. However, Aquinas admits that this may be accomplished through a man’s work or through his possession,[61] which for the shareholder would include his stocks. Moreover, as I noted in my previous article, there was some dispute about the census contract as providing an income without labor, but was not considered in violation of St. Paul’s injunction.[62]

                Yet more, as we saw with their theory of profit, Barnes and Imam’s exegesis is not only contrary to reason and the tradition, but also contrary to the Magisterium. In Quadragesimo Anno, Pope Pius XI discusses how to share profits between capital and labor. He rejects the notion that capital should receive a share of profits that leaves the workers near destitution or worse. However, he also rejects the notion that workers receive all the profits. In this latter discussion, he considers the misapplication of St. Paul’s command “If any man will not work neither let him eat.” As with the tradition, His Holiness understands this as condemning the man who can work but refuses to, rather being a burden to others. He then goes on to say “the Apostle in no wise teaches that labor is the sole title to a living or an income.”[63] As His Holiness makes clear, despite Barnes and Imam’s assertions to the contrary, St Paul does not stand with them against shareholders and indeed is even against their assertion that a Christian “should [not] pursue individual wealth apart from work.”[64]

Scene Three: To Thine Own Pontiff Be True

                Before closing out this essay I cannot leave Barnes and Imam’s scandalous misreading of Pope Benedict XVI’s words unquestioned. Now as we’ve seen many times already Barnes and Imam will take the words of authors out of context to try and condemn shareholders and His Holiness Benedict is no different. After quoting the late pontiff, they claim Benedict is identifying “a complete world” of stakeholders that does not include the shareholders.[65] Shareholders fail to be subject to reality and stakeholders stand over and against them in Benedict’s mind. That this is Benedict’s intended meaning is clearly wrong from merely reading the next few sentences.

                In the section of Caritas in Veritate, His Holiness is discussing the problem with placing the concerns of shareholders as the sole and primary focus of the managers, especially with their short-term views. Where he brings up the list of stakeholders he specifically referring to the problem of the “outsourcing of production” and here with specific attention to their geographical locality. There is an obvious sense in which outsourcing can harm workers by sending their jobs overseas or local suppliers who lose the opportunity to work with local companies, and so on. This specific example of outsourcing indeed represents the short sightedness managers who focus on the shareholder over other stakeholders.

                I say “other” stakeholders because shareholders are manifestly stakeholders in the company. Indeed, His Holiness refers to them also as the “proprietors.” Only a few sentences after Barnes and Imam’s quote ends, Benedict writes, “there is nevertheless a growing conviction that business management cannot concern itself only with the interests of the proprietors, but must also assume responsibility for all the other stakeholders who contribute to the life of the business.”[66] The twisting of the words of Benedict by Barnes and Imam is quite startling and inexcusable. Stakeholders a “complete world” apart from shareholders? Pure fiction. Shareholders not subject to reality? Truly bizarre. If anyone thinks they are not subject to reality it appears to be Barnes and Imam who often seem to think they are not bound by what authors actually say.  

The Prologue: The modest doubt is called the beacon of the wise

                Now, dear reader, hopefully you have noticed that I have not made a positive case for stock trading or shareholding. My intention has only been to refute the errors of Barnes and Imam as they’ve been expressed, wildly ambiguous as they may be. This is important not only because they are false, but also because they are dangerous. It should come as no surprise that my interlocutors who contradict the tradition on trading and other legitimate means of profit apart form labor, also do not bat an eye at proposing theft from shareholders. Additionally, because of their impoverished reading of the tradition, they undermine the coherence and credibility of that tradition and Catholic Social Teaching.

                Indeed, the numerous fallacies and problematic readings they propose should lead us to question their credibility as heralds of the Christian Tradition. Any one of the substantive issues above from a theory of profit at odds with the Magisterium, to numerous assertions divorced from the tradition, to a fallacious reading of St. Paul, should make us suspect of their invocations of our venerable tradition. These problems taken together lead one to question why we should take them seriously at all, lest they provide unambiguous and well-documented sources and reasons for their assertions.

                Thus, if they should find themselves upon a mountain or before a pulpit, hopefully they will choose silence to preaching, lest they preach contrary to the Catholic Tradition. I hope they can clarify their position and reasonably respond to the various objections I have posed. The work of New Polity is good at least in its aim, but Catholic Social Teaching is far too important to be so mishandled and distorted, especially so publically. If they can’t or won’t, as we’ve seen they “will find not me alone, who am least among men, but many others who know and foster the truth, by whom [their] error may be refuted or [their] ignorance enlightened,”[67] for it seems the tradition and Magisterium are against them.

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[1] Barnes, Marc and Imam, Jacob, “The Stock Market is not Investment or Trading,” New Polity 4.2, 80.

[2] Humpherys, Michael, “Shareholding is Not a Sin”, New Policy 4.2, 73.

[3] Barnes and Imam, “Should Christians Invest,” 39-40.

[4] Humpherys, 75-79.

[5] Langhom, Odd, The Merchant in the Confessional: Trade and Price in the Pre-Reformation Penitential Handbooks, Brill Boston: 2003. The frequency of approval of trade throughout the book prohibits complete references.   

[6] Ibid, 182.

[7] Moralia Theologiae, Lib III, Tract. V, Cap. III, Dub. VIII, 838. https://archive.org/details/theologiamorali06mansgoog/page/126

[8] Barnes and Imam, “The Stock Market,” 86-89.

[9] As is well known, St. John Paul II condemns the Proportionalists not for using intention in their moral calculus but rather for denying moral absolutes, namely that there are not intrinsically evil behaviors. See Veritatis Splendor 75-76.  

[10] Humpherys, Michael. 77-78.

[11] “…commerce as such, considered in itself, has something shameful about it in so far as it is not intrinsically calculated to fulfil right and necessary requirements. Nevertheless neither does it carry the notion of anything vicious or contrary to reason. There is, therefore, nothing to stop profit being subordinated to an activity that is necessary, or even right.” St. Antonius, Summa, 2.1.16.2.1 , quoted in Brown, Jason Aaron, St Antonin of Florence on Justice in Buying and Selling: Introduction, Critical Edition, and Translation, 2019, 335-336.

[12][12] ST II-II, q. 77, a. 4, co. Emphasis mine.

[13] St. Antonius, Summa, 2.1.16.2.1

[14] ST II-II, q. 32, a. 7, co.

[15] Barnes and Imam, 80. Emphasis original.

[16] Imam and Barnes, 88.

[17] Humpherys, 69-70.

[18] Imam and Barnes, “Should Christian Invest”, 40n41.

[19] Noonan, John T., The Scholastic Analysis of Usury, Harvard University Press: Cambridge, MA (1957), 166.

[20] “Ut non vendatur aliis census majori vel minori pretio, quam ab initio constitutes fuit. De jure autem naturali certum est, us dictunt Salm. c. 4 n. 35 censum non liquidum posses minori emi. Et etiam, attentat Bulla [Cum Onus], probabilissimum videtur hoc fieri posses, uta it Viva q. 4, art. 3 cum Less. Et Mol. Et Bon.” Moralia Theologiae, Lib III, Tract. V, Cap. III, Dub. IX, 847.IX. https://archive.org/details/theologiamorali06mansgoog/page/139

[21] Barnes and Imam, “The Stock Market,” 88. Quite bizarrely Barnes and Imam admit to the non-applicability of the Scholastic discussion but then spend the next several paragraphs trying to apply it to stock trading.  

[22] Imam and Barnes, “Should Christians Invest” 39n. 37.

[23] Humpherys, 74-75.

[24] Dr. Thomas Storck takes up this question in the same issue of the New Polity magazine. However, he falls into the same error of asserting that St. John Paul II means “speculation” in the broadest economic sense. Dr. Storck excuses the speculator in some cases, such as storing, shipping and distributing goods, and seems to reduce his condemnation to the speculator “speculator who performs no useful function in the economy.” While this claim is controversial, it is beyond the scope of this essay, but suffice it to say that it would mistake to say John Paul II condemns the broad sense of speculation when what is really problematic are speculator who serve no useful purpose. Storck, Thomas, “Speculation, Investment, The Common Good,” New Polity 4.2, 41.

[25] Barnes and Imam, “The Stock Market”, 81.

[26] Fratelli Tutti, 189.

[27] Ecclesia in America, 22.

[28] Oeconomicae et pecuniariae quaestiones, 17.

[29] Fratelli Tutti, 168.

[30] Quadragesimo Anno, 132

[31] Humpherys, 68-70.

[32] This is distinguished from the so called census personalis, which was grounded in the future labor of the seller and was condemned as usurious by at least St. Pius V.

[33] There are three conditions for a declaration to be infallible, namely the subject, i.e. the pope, the objects, i.e. a matter of faith and morals, and the act itself, namely that it be held by all the faithful. (See Joy, John P., Disputed Questions on Papal Infallibility, Os Justi Press: Lincoln, NB (2022), 5. Callistus III invokes his “apostolic authority” indicating he is speaking as the Supreme Pontiff and to German Bishops outside his normal jurisdiction as prelate of Italy. Second, he is speaking on a matter of morals, namely whether the census contract is licit. Finally, he indicates this is to be held by all the faithful by stating he wishes to “remove every doubt” effectively establishing a certain doctrine.

[34] It is worth noting that in his debate with Trent Horn, Imam failed to defend this point when challenged by Horn. It may be assumed at this point, that the argument has been conceded and they have no justification for this interpretation.

[35] Humpherys, 71-72.

[36] Peter of John Olivi, A Treatise On Contracts, trans. Ryan Thronton and Michael Cusato, Franciscan Institute Press: St. Bonaventure, NY (2016), 7-9.

[37] St. Antonius, Summa 2.1.16.3.1, Brown, Jason, 349-351.

[38] Giles of Lessines, De Usuris in Communi, c. 9. Giles of Lessines is of particular interest because he was one of the first to postulate a theory of time preference in valuation. He was concerned with rationalizing  how a census purchaser could buy the census today but end up making back more than he paid over many years.

[39] Vix Pervenit, 3.III. https://www.papalencyclicals.net/ben14/b14vixpe.htm

[40] Imam and Barnes, “Should Christians,” 30.

[41] Humpherys,  70-71.

[42] Ibid. 84

[43] Kinkead, Thomas L., Baltimore Catechism No. 4, TAN Books: (2010), 129. Lesson 12, q. 123.

[44] Socially Responsible Investment Guidelines for the United States Conference of Catholic Bishops, 6-7. https://www.usccb.org/resources/Socially%20Responsible%20Investment%20Guidelines%202021%20(003).pdf

[45] Such a consideration needs to come under some moral analysis. Even the bishops acknowledge that there are questions of the degree of cooperation with evil that need to be balanced with other concerns. However, since the stock market is more than Tesla, Apple, Alphabet and meme stocks, there certainly may be stocks that are not morally problematic.   

[46] A shareholder can be held liable when the company acts as an “alter ego.” See  https://www.law.cornell.edu/wex/alter_ego

[47] Imam and Barnes, 84.

[48] Barrera, Albina, OP, Market Complicity and Christian Ethics, Cambridge University Press: New York (2011), 21.

[49] Quadragesimo Anno, 47. Empahsis mine.

[50] Centesimus Annus, 46.

[51] Laborem Excerens 14.

[52] The Didache teaches that if a man is capable of working and refuses to do so, then he is a “Christ-monger” who would abuse the generosity of Christians. They were not despised for being hagglers in the marketplace. Teachings of the Twelve Apostles Ch. 12, (ANF 6). https://ccel.org/ccel/schaff/anf07.viii.iii.xii.html

[53] See note 59 below.

[54] “By prying with curiosity into other men’s actions. He that is idle, saith St. Chrysostom, will be given to curiosity.” Haydock Commentary Online, https://haydockcommentary.com/2-thessalonians-3

[55] “Cum enim, inquit ex Chrysostomo Theophylaetus, meus nostra mobilis sit (et quasi molendinum quod semper volvitur, et molit vel farina, vel seipsum), necesse est, si frugiferum opus non aggrediatur, ut infrugiferum et inutile attentat, adeo que aliorum, vitas otiose scrutetur, hincque ad obtrectationem aliasque nugas deferatur.”

“Since, says Chrysostom Theophylaetus , our mind is mobile (and like a mill that is always turning and mills either flour or itself), it is necessary, if fruitful work is not undertaken, that it strives after unfruitful and useless work, so much so that it scrutinizes the lives of others and from here announces detraction and other trifles.” Lapide, Cornelii A., Commentaria Scripturam Sacram, vol 19, ed. 9, 177. http://cdigital.dgb.uanl.mx/la/1080014741_C/1080014759_T19/1080014759_14.pdf

[56] Humpherys, 74.

[57] “…[Joseph] took his wife [Mary], but knew here not until she had borne a son and called his name Jesus.” Matt 1:24-25. The ambiguity here being that “until” can be understood as “up to that point but no afterward” or “up to that point” without an implication of anything following.

[58] Aquinas, Commentary on 2 Thessalonian c. 3, l. 2, n. 79.

[59] Imam and Barnes, “Should Christians Invest,” 40n.44.

[60] See note 55 above.

[61] C. 3, L. 2, n. 77.

[62] Humpherys, 69.

[63] Quadragesimo Anno, 57.

[64] Barnes and Imam, “Should Christians Invest,” 40

[65] Barnes and Imam, “The Stock Market,” 80.

[66] Caritas in Veritate, 40. Emphasis mine.

[67] De Unitate Intellectus ch. 5.