Contemporary Issue: Free Markets
Catholic Social Teaching informs us that the free market economy is an
"important source of wealth in modern society" (CA, 32)
Of the economic systems currently available, free market economies have the best potential for promoting human development.
"In this way, the role of disciplined and creative human work and, as an essential part of that work, initiative and entrepreneurial ability becomes increasingly evident and decisive.70 This process, which throws practical light on a truth about the person which Christianity has constantly affirmed, should be viewed carefully and favourably." (CA, 32)
"Certainly the mechanisms of the market offer secure advantages: they help to utilize resources better; they promote the exchange of products; above all they give central place to the person's desires and preferences, which, in a contract, meet the desires and preferences of another person." (CA, 40)
"The modern business economy has positive aspects. Its basis is human freedom exercised in the economic field, just as it is exercised in many other fields." (CA, 32)
"It would appear that, on the level of individual nations and of international relations, the free market is the most efficient instrument for utilizing resources and effectively responding to needs." (CA, 34)
With the fall of the Soviet Union transpiring during his papacy, Pope Saint John Paul II was careful not to exhort the general assumption that Capitalism is the outright 'panacea' for civil and economic progress, especially with regards to developing nations:
"Returning now to the initial question: can it perhaps be said that, after the failure of Communism, capitalism is the victorious social system, and that capitalism should be the goal of the countries now making efforts to rebuild their economy and society? Is this the model which ought to be proposed to the countries of the Third World which are searching for the path to true economic and civil progress?
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." (CA, 42)
Nevertheless, the validity of the free market system ultimately hinges upon its service of society and the human person, as our Holy Fathers have emphasized in their Social Encyclicals:
"...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: the workers, the clients, the suppliers of various elements of production, the community of reference." (CIV, 40)
"Ownership of the means of production... is just and legitimate if it serves useful work. It becomes illegitimate, however, when it is not utilized or when it serves to impede the work of others, in an effort to gain a profit which is not the result of the overall expansion of work and the wealth of society, but rather is the result of curbing them or of illicit exploitation, speculation or the breaking of solidarity among working people.87 Ownership of this kind has no justification, and represents an abuse in the sight of God and man." (CA, 43)
Is the Church’s Support of a Free Economy unequivocal?
Absolutely not. For example, Pope Benedict has said, today "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". (Visit to the Pontifical Roman Major Seminary on the Feast of Our Lady of the Trust, February 15, 2012, reported by the VIS)
Why Does the Church support “Free Markets”?
"1. Charity in truth, to which Jesus Christ bore witness by his earthly life and especially by his death and resurrection, is the principal driving force behind the authentic development of every person and of all humanity. Love — caritas " [e:CIV,1]
The Church supports Free Markets for two main reasons:
Related Thoughts on Free Markets
Marketers invest a good deal of research in setting the right price on new products....But the Catholic Church has a different idea about pricing. Blessed John Paul II, in his encyclical Centesimus Annus, advocates the setting of a “just” price, that is, the price that would be achieved after mutual free bargaining. Selling at above a just price and forcing a sale at below a just price are both morally unacceptable. Taken from "“Just Pricing” and the Apple iPhone"
Centesimus Annus demonstrates the greatest depth of economic understanding of any magisterial document and contains a modern appreciation for the dynamic nature of free exchange and the way wealth is produced. Indeed, in its breadth and depth, it has been called “a completely new synthesis previously unseen in any other single work of religious reflection on the economy”. Taken from "What Makes Saint John Paul the Great's "Centesimus Annus" So Important?"
Catholic Social Teaching is a set of values for us to internalize, to evaluate the framework of modern society, and to provide criteria for prudential judgement and direction for current policy and action. Taken from "Precisely, What is Catholic Social Teaching? (Audio)"
Related Speakers / Panelists / Authors on: Free Markets
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