Joseph Cardinal Höffner CHRISTIAN SOCIAL ... - Ordo Socialis

net profit of a national economy the national income as it accrues in the course of a year in the
form of newly generated material goods (in agriculture, handicraft, and industry), of services
(e.g., in trade and transport), and of the use of existing durable goods (e.g., as the use of a
home). To the national income as the sum of all income from earnings and property there is
opposed the net national product at factor costs as the equivalent value in goods produced
(production goods) . The national income is in this case the sum of all gross income from
wages and salaries as well as from entrepreneurial activity and property income that benefits
the citizens of a nation. The gross national product at factor costs corresponds to the national
income.(1a)
3. In the market economy, income formation (i.e., the distribution of the social product) takes
place in the immediate exchange of and return services. Only the one who as owner of capital
or landed property, or as entrepreneur or employee, invests economically significant amounts
earns an equivalent income in the market economy. In the market economy system, large
population groups are factored out, as it were, because, as non-productive, they are unable to
invest any economically significant amounts. Here we can mention children first of all, who
are not yet able to work, and who are supported within the caring and providing bond of the
family by the income of their parents. Thus, if the market economy is to function, it presupposes
the family. Further, pensioners, the disabled, the sick, the unemployed, and war victims
belong to non-productive. In order that these millions may be able to live, a redistribution of
the original market-economy income formation must take place through social insurance and
taxation. In modern society, this redistribution has assumed an enormous scope.
According to the principles of Christian social teaching, the original market-economy income
distribution and the new distribution resulting from the implementation of ‘social security’ are
not of the same rank. Rather, the former should at the same time meet social needs to the
greatest possible extent. This sets the task of evaluating the distribution process of the market
economy in the light of Christian social teaching. Four factors are to be distinguished: ground
rent, interest, earned income, and business profits.
§ 1 Ground Rent
l. Ground rent is that return on real estate that is not reducible to capital expenditure or to labor
output. Whereas François Quesnay († l774) and Adam Smith († l790) saw the root of
ground rent in the productive forces of the land and thus in a superfluity, David Ricardo (†
l823) sought to explain ground rent in terms of the deficient fruitfulness of the land: prices for
agricultural products are determined by the production costs necessitated by inferior lands;
consequently, owners of better lands obtain a higher net profit which cannot be attributed to
labor and capital expenditure, but results from the difference in yield between good and poor
land. Concerning this theory, it is to be observed that, with a growing population, the demand
for agricultural products and land usually increases and thus the price of land does also, and
that the tillage of poorer lands and the more intensive cultivation of all lands work against this
price increase. The causal connection is thus the opposite of that found in Ricardo. The cause
of ground rent is the scarcity and difference of lands. Ground rent does not therefore presuppose
price formation, but intrinsically belongs to the factors determining it. Its economic function
lies in leading to a more sparing and economical use of the land. When there is a change
of ownership, the ground rent is capitalized in the price of the land, i.e., it is most of the time
converted into interest payment on the assumable mortgage.
2. Today the fruitfulness rent that consists in the difference in yield between good and poor
lands is less a matter of dispute than the location rent on the building market. In cities and
industrial areas, but more and more in villages also, the prices of building sites have risen
continuously and considerably since the monetary reform, in some cases more than a hundred
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