The State’s Role Regarding Economic Activity




The state must act to encourage a free economy

The State Must Promote a Free Economy

Pope St. John Paul II identifies the role of the state as regards economic activity. What should, and must the state do, and not do, regarding encouraging a free economy?

Well, the State must: (Centesimus Annus, 48)

  • Guarantee individual freedom.
  • Guarantee private property rights.
  • Ensure a stable currency.
  • Ensure efficient services are provided.
  • Creation conditions that will ensure job opportunities by:
    • stimulating those activities where are lacking, and
    • supporting them in moments of crisis.
  • Intervene when monopolies create delays or obstacles to development.
  • In exceptional circumstances, the state should exercise a substitute function in a crisis or when getting started. This, however, must be as brief as possible.
  • The state should avoid enlarging excessively the sphere of state intervention to the detriment of both economic and civil freedoms.


On this last point Catholic social teaching has a special warning based on recent years where what Pope St. John Paul II called a new “Welfare State” and in its worst examples a “Social Assistance State” has developed whose malfunctions and defects result from an inadequate understanding of the tasks proper to the state. “Here again the principle of Subsidiarity must be respected.” (Centesimus Annus, 48)

Catholic social teaching states that: “By intervening directly and depriving society of its responsibility, the Social Assistance State leads to a loss of human energies and an inordinate increase in public agencies which are dominated more by bureaucratic ways of thinking than by concern for serving their clients, and which are accompanied by an enormous increase in spending. In fact, it would appear that needs are best understood and satisfied by people who are closest to them and who act as neighbors to those in need”. (Pope St. John Paul II, 48)

Pope St. John Paul II went on to state he “favors and promotes” volunteerism and urged everyone to participate.

This theme was echoed by Pope Benedict XVI when he said we need a State that “generously acknowledges and supports initiatives arising from different social forces and combines spontaneity with closeness to those in need.” (Pope Benedict XVI, 28) And, later, “subsidiarity is the most effective antidote against any form of all-encompassing welfare state.” (Pope Benedict XVI, 57)

Three circles containing symbols of the three principles of catholic social teaching: human dignity, subsidiarity, and solidarity.

Three Key Principles

Catholic social teaching is built on three foundational principles - Human DignitySolidarity and Subsidiarity. Human Dignity, embodied in a correct understanding of the human person, is the greatest. The others flow from it. Good governments and good economic systems find ways of fostering the three principles.

Human Dignity

This means a correct understanding of the human person and of each person’s unique value. All Catholic social teaching flows from this: the inherent dignity of every person that comes from being made in God’s image. 


Solidarity is not “a feeling of vague compassion or shallow distress at the misfortunes of others. It is a firm and persevering determination to commit oneself to the common good”. (Pope St. John Paul II, 38) Love of God and love of neighbor are, in fact, linked and form one, single commandment.


Subsidiarity “is a fundamental principle of social philosophy, fixed and unchangeable, that one should not withdraw from individuals and commit to the community what they can accomplish by their own enterprise and industry. So, too, it is an injustice and at the same time a grave evil and a disturbance of right order to transfer to the larger and higher collectivity functions which can be performed and provided for by the lesser and subordinate bodies”. (Pope Pius XI)