“Catholic social doctrine is not a surrogate for capitalism.” [Blessed John Paul II]

By Fred Kammer, SJ

Issues in the current political campaign season, the Occupy Movement, and claims made by free market extremists about Catholic social teaching require us to take another look at the uneasy relationship between Catholicism and capitalism. In the development of modern Catholic social thought, beginning with Rerum Novarum in 1891, there is a shift from an apparent “acceptance,” without formal endorsement, of capitalism by Pope Leo XIII in the beginning of this period. This initial acceptance is gradually changed by the doubts of Pius XI, by Pius XII's recognition of capitalism's tie to egoism, and John XXIII's call for its reform. Paul VI then seems to take a posture of greater neutrality on both capitalism and communism, allowing local church affirmation of the good and criticism of the evil in a plurality of economic and political models operative in local situations.

The In-Depth Criticism of Capitalism by Blessed Pope John Paul II

Pope John Paul II in his earlier writing then attempts to distance the Church from the dominant political and economic schools of both east and west. He harshly criticizes the underlying ideologies of both liberal capitalism and Marxist collectivism and the devastating evil and destructiveness of their interaction.

Then, in Centensimus Annus (1991), Pope John Paul reflects on both socialism and liberalism in light of the fall of the U.S.S.R. and the dominance of capitalism on the world stage. He contends that Pope Leo foresaw the negative political, social, and economic consequences of the social order proposed by socialism, including its suppression of private property [no. 12 in text]. Socialism's flawed anthropology subordinates persons to socioeconomic mechanisms [13] and is rooted primarily in atheism [13] and class struggle [14]. "Real socialism" was embodied in the oppressive regimes which fell in 1989. Their fall, John Paul says, was due to violations of the rights of workers (private initiative, ownership of property, and economic freedom) [23], the inefficiency of the economic system as a consequence of violating human rights [24], and the spiritual void created by atheism [24].

Turning to capitalism and in the context of affirming the efficiency of "the free market," John Paul writes:

We have seen that it is unacceptable to say that the defeat of so-called "real socialism" leaves capitalism as the only model of economic organization. It is necessary to break down the barriers and monopolies which leave so many countries on the margins of development and to provide all individuals and nations with the basic conditions which will enable them to share in development.¹

Again, he asks whether "capitalism should be the goal of the countries now making efforts to rebuild their economy and society?" John Paul's answer is:

The answer is obviously complex. If by capitalism is meant an economic system which recognizes the fundamental and positive role of business, the market, private property and the resulting responsibility for the means of production as well as free human creativity in the economic sector, then the answer is certainly in the affirmative even though it would perhaps be more appropriate to speak of a business economy, market economy, or simply free economy. But if by capitalism is meant a system in which freedom in the economic sector is not circumscribed within a strong juridical framework which places it at the service of human freedom in its totality and which sees it as a particular aspect of that freedom, the core of which is ethical and religious, then the reply is certainly negative.²

It is important to read this statement in full. Many commentators quoted it in part and out of context, even going so far as to reverse the two alternative "if" sentences to end with the affirmative (Richard John Neuhaus).³ Ringing praises of capitalism, as some claimed, or "the moral vision of a political economy such as that of the United States" (Michael Novak)⁴ were at best a new form of theological spin control and at worst a form of "market idolatry" [40] when judged in the encyclical's full complexity. As John Paul explained at an audience on the day Centesimus was released, the Catholic Church "has always refused and still refuses today to make the market the supreme regulator or almost the model or synthesis of social life."⁵

John Paul's position, consistent with the tradition, has been to criticize both socialism and capitalism, even the "new capitalism." As if to respond to the wishful thinking of some free market commentators, the Pope once more made clear in a 1993 address in Latvia his criticism of both communism and capitalism:

Besides, Catholic social doctrine is not a surrogate for capitalism. In fact, although decisively condemning “socialism,” the church, since Leo XIII’s Rerum Novarum, has always distanced itself from capitalistic ideology, holding it responsible for grave social injustices (cf. Rerum Novarum, 2). In Quadragesimo Anno Pius XI, for his part, used clear and strong words to stigmatize the international imperialism of money (Quadragesimo Anno, 109). This line is also confirmed in the more recent magisterium, and I myself, after the historical failure of communism, did not hesitate to raise serious doubts on the validity of capitalism, if by this expression one means not simply the “market economy” but “a system in which freedom in the economic sector is not circumscribed within a strong juridical framework which places it at the service of human freedom in its totality” (Centesimus Annus, 42).⁶

Pope John Paul endorses neither capitalism nor communism, nor does he propose some third way between the two or some economic model of its own. The church's proper contribution is Catholic social teaching which, in the prophetic mode, "recognizes the positive value of the market and of enterprise, but which at the same time points out that these need to be oriented toward the common good" [43]. The 1999 discussion by John Paul II of “neoliberalism” in Ecclesia in America[56] adds further weight to the argument that Catholic social teaching remains profoundly critical of current market-driven societies and the injustices which they perpetuate.

Pope Benedict Continues this Critical Analysis

In Caritas in Veritate (2009), Pope Benedict follows his predecessor Pope John Paul II in Centesimus Annus (1991) by highlighting “the need for a system with three subjects: the market, the State and civil society” [38].

The Market

The pope understands and affirms the importance of the economic marketplace as the institution “that permits encounter between persons, inasmuch as they are economic subjects who make use of contracts to regulate their relations as they exchange goods and services of equivalent value between them, in order to satisfy their needs and desires” [38]. He further acknowledges that in the global era, the economy is influenced by a number of competitive and different models tied to cultures. Economic life requires contracts, the point at which commutative justice is most applicable to regulate relations of exchange. But, as the pope notes, “the social doctrine of the Church has unceasingly highlighted the importance of distributive justice and social justice for the market economy…” [35]. Benedict also makes it clear at various points that in a globalized economy, it is access to international and other markets that is most needed by the poor and by underdeveloped nations. 

The State

The second sector or subject in society is political authority, which Pope Benedict promotes as ideally “dispersed” and “effective on different levels” [41], including the international. It is “the political community” which has responsibility for directing economic activity towards the common good [36]. Grave imbalances are produced, he writes, “when economic action, conceived merely as an engine for wealth creation, is detached from political action, conceived as a means for pursuing justice through redistribution” [36]. 

Benedict further acknowledges that, “the State finds itself having to address the limitations to its sovereignty imposed by the new context of international trade and finance, which is characterized by increasing mobility both of financial capital and means of production, material and immaterial” [24]. This has altered the political power of States and calls for a reevaluation of the role of the States. Rather than “being too precipitous in declaring the demise of the State,” however, Benedict suggests that in the current world economic crisis the State’s role seems destined to grow in working towards resolution of this crisis [41]. In addition, he argues that governments must commit themselves to greater collaboration with one another to deal with a transnational integrated economy [41], as well as a stronger and reformed United Nations and other international economic institutions and international finance [67].

Civil Society

Pope Benedict is in continuity with his predecessors as well in emphasizing the importance of civil society which Pope John Paul II saw “as the most natural setting for an economy of gratuitousness and fraternity…” [38]. In this country, this sector is what we call the “voluntary sector” or “non-profit sector.” It is very consistent with the principle of subsidiarity, and in Catholic social thought this sector has been critical to arguments against the absorbing tendencies of centralizing governments. It also has been important to cushioning the worst aspects of the market. For Benedict, civil society is essential to preserving important aspects of human society and promoting integral human development. In his words:

When both the logic of the market and the logic of the State come to an agreement that each will continue to exercise a monopoly over its respective area of influence, in the long term much is lost: solidarity in relations between citizens, participation and adherence, actions of gratuitousness, all of which stand in contrast with giving in order to acquire (the logic of exchange) and giving through duty (the logic of public obligation, imposed by State law) [39].

Thus, civil society is a key counter-balance to both the market and the State for Pope Benedict and Catholic Social Teaching.

In conclusion, Pope Benedict highlighted the importance of markets, the necessity of justice to assure that markets are directed to the common good and function effectively, and the role of political authorities in making justice a reality. In response to free market extremists, Benedict is clear that “the conviction that the economy must be autonomous, that it must be shielded from ‘influences’ of a moral character, has led man to abuse the economic process in a thoroughly destructive way” [34]. One way in which he discusses the implementation of economic justice is the redistribution of particular goods to those most in need. (Beware, “Joe the plumber”!) Some examples where the pontiff cites the importance of redistribution are in the economy [37], redistribution of wealth on an unprecedented and worldwide scale through appropriate globalization [42], and a necessary worldwide redistribution of energy resources [49].