What is Capitalism?
by CAPP-USA
What is capitalism? Is it good? Is it bad?
What does the Church say about this economic system?
Define Capitalism
Capitalism is an economic system in which private actors own and control property and the means of production while demand and supply freely set prices for goods and services.
Capitalism’s intellectual basis was developed by Scottish economist and moral philosopher Adam Smith in his 1776 book “An Inquiry into the Nature and Causes of the Wealth of Nations”.
What is capitalism?
Is Capitalism Bad?
Capitalism, by its nature, is not evil and the Church endorses capitalism within
clear limits.
However, “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.” (Pope St. John Paul II, 42)
Pope Francis echoed this when he said that “creation of wealth must always be at the service of the common good, and not only for the benefit of a few.” (Pope Francis, 3)
“[M]oney must serve, not rule”. (Pope Francis, 58)
Catholic Social Teaching points out an unreasonable “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.” (Pope Benedict XVI, 34)
Pope Francis forcefully denounced this abusive and selfish manifestation, calling it “intolerable”. It “has imposed the mentality of profit at any price, with no concern for social exclusion…An unfettered pursuit of money rules. This is the ‘dung of the devil’.” (Address at the Second World Meeting of Popular Movements, 1)
Capitalism vs Socialism
In some ways capitalism and socialism are both rejected by the Church – for the same reason!
In unbridled form capitalism “denies an autonomous existence and value to morality, law, culture and religion,” and “agrees with Marxism…it totally reduces man to the sphere of economics and the satisfaction of material needs.” (Pope St. John Paul II, 19)
“[I]n a seemingly paradoxical way, free and disinterested solidarity is the key to the smooth functioning of the global economy.” (Pope Francis)
Is Capitalism Good?
The Church understands that the right to private property is “fundamental” and a requirement “for the autonomy and development of the person.” (Pope St. John Paul II, 30)
“[I]t is evident that this system [free markets] is not to be condemned in itself. And surely it is not of its own nature vicious.” (Pope Pius XI, 101)
However, this ensues only 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”. (Pope St. John Paul II, 42)
The free economy has to be free — within limits and “requires respect for the universal destination of goods” (Catechism of the Catholic Church, 2401)
“Once capital becomes an idol…once greed for money presides over the entire socioeconomic system, it ruins society, it condemns and enslaves men and women, it destroys human fraternity, it sets people against one another”. (Pope Francis, 1)
Greed and Profit: A Dilemma?
“Naturally, profit is legitimate and, in just measure, necessary for economic development.” (Pope Benedict XVI)
“The Church acknowledges the legitimate role of profit as an indication that a business is functioning well…Profit is a regulator of the life of a business”. (Pope St. John Paul II, 35)
However, “the purpose of a business firm is not simply to make a profit”; (Pope St. John Paul II, 35) “profit cannot be the sole criterion to be taken into account”. (Pope Francis, 187)
“We see how the world of finance can dominate mankind. Possession and appearance dominate and enslave the world. … Finance is no longer a tool to promote well being and to support the life of man, but a force that oppresses him, one which almost has to be worshipped”. (Pope Benedict XVI)
An Economy Guided by Catholic Social Teaching
“The economic sphere is part and parcel of human activity and precisely because it is human it must be structured and governed in an ethical manner.” (Pope Benedict XVI, 36)
“It is imperative to have a proactive economic policy directed at ‘promoting an economy that favors productive diversity and business creativity’”. (Pope Francis, 129 and 168)
“[I]n a seemingly paradoxical way, free and disinterested solidarity is the key to the smooth functioning of the global economy.” (Pope St. John Paul II, 11)
Business Professionals Guided by Catholic Social Teaching
“Today’s international economic scene, marked by grave deviations and failures, requires a profoundly new way of understanding business enterprise.” (Pope Benedict XVI, 40)
“Concretely, in economic activity” this means business professionals must “engage in economic activity for the sake of the common good“. (Pope Benedict XVI, 5)
Business professionals must “experience this commitment as something transcending their self-interest, for the benefit of present and future generations.” (Pope Benedict XVI, 5)
“In the wider life of society we come to see that ‘gratuitousness’ is not something extra, but rather a necessary condition of justice…Who we are, and what we have, has been given to us so that we can place it at the service of others.” (Pope Francis)
The Cause of the Problem
“[T]he logic of profit and that of the equal distribution of goods…do not contradict each other if their relationship is well ordered.” (Pope Benedict XVI)
Our problems originate “in a profound human crisis: the denial of the primacy of the human person!” (Pope Francis, 55) “We have created a ‘throw away’ culture which is now spreading.” (Pope Francis, 53)
