Catholic Social Teaching and Economics
Important Source of Wealth
Serve the Common Good
What is the Role of Profit?
Rooted in Human Freedom
Goods Must Benefit all Humanity
What Must the State Do?
The Church Supports Free Markets
A Free Market
A “business economy has many positive aspects – its basis is human freedom exercised in the economic field.”
“It would appear that at the national and international level the free market is the most efficient way for utilizing resources and effectively responding to needs.”
Free markets must be “circumscribed in a strong juridical framework, which places it at the service of human freedom in its totality”. (Pope St. John Paul II, 42)
“The creation of this wealth must always be at the service of the common good, and not only for the benefit of a few.” (Pope Francis)
The “free” market advanced by Catholic social teaching is free — within limits.
A Free Economy
The free market economy is an “important source of wealth and should be viewed carefully and favorably.” (Pope St. John Paul II, 32)
For, “Certainly every country needs economic growth and the creation of wealth, and the extension of these to each citizen, without exclusion.” (Pope Francis, 3)
A foundational guide is that “money must serve, not rule”. (Pope Francis)
Catholic social teaching “requires respect for the universal destination of goods” (Catechism of the Catholic Church, 2401) and has always understand 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)
“[T]he logic of profit and that of the equal distribution of goods…do not contradict each other if their relationship is well ordered. Naturally, profit is legitimate and, in just measure, necessary for economic development.” (Pope Benedict XVI)
However, “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)
Q: So, what is the “bottom line” of Catholic social teaching regarding the economy? Is it more than economics?
A: The Church has much to inform mankind of re the ‘realities’ of economics. Catholic social teaching makes clear: there is no such thing as an ethically neutral business leader. Henceforth, while continuing to address the structures of society, our political and economic milieu, Catholic social teaching also requires we focus on true, integral development – not leaving out the spiritual and cultural elements which greatly impact on us.
By ignoring ethical and religious dimensions in the public square we have weakened ourselves. How? By allowing the necessary relationship between truth and freedom to become hidden or appear inappropriate for public dialogue.
“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.” “The goods of the earth are meant for everyone, and however much someone may parade his property, which is legitimate, it has a social mortgage – always.” (Pope Francis, Address to a Meeting With Political, Economic and Civic Leaders, Quito, Ecuador, July 7, 2015)
But these “details” are not the Church’s most important offering on the topic of economics. Our Church clearly “sees the forest for the trees”:
“[T]he human person must work, must involve himself in domestic and professional concerns, to be sure, but he has need of God before all else, who is the interior light of love and truth. Without love, even the most important activities lose value and do not bring joy. Without a profound meaning, everything we do is reduced to sterile and disordered activism.” (Pope Benedict XVI, Angelus, July 18, 2010)
Catholic social teaching/social action requires belief, acceptance and the integration of God in all facets of life and development, it requires personal conversion: “Adhering to the values of Christianity is not merely useful but essential for building a good society and for true integral human development.” (Pope Benedict XVI, 4)
“[W]e need to broaden our perspective and to hear the plea of other peoples and other regions…We need to grow in a solidarity which ‘would allow all peoples to become the artisans of their destiny’, since ‘every person is called to self-fulfillment.’” (Pope Francis, 190)
“It must be reiterated that ‘the more fortunate should renounce some of their rights so as to place their goods more generously at the service of others”. (Pope Francis, 190)
In the end, the ‘answer’ is found in Jesus because: “once Jesus dwells in our heart, the center of life is no longer my ravenous and selfish ego, but the One who is born and lives for love.” We need to ask ourselves: “Do I really need all these material objects and complicated recipes for living? Can I manage without all these unnecessary extras and live a life of greater simplicity?” (Pope Francis, Homily, Solemnity Of The Nativity Of The Lord, December 24, 2018)
Q: Why does the Church support “free markets”?
A: The Church supports Free Markets for two main reasons:
1. In Centesimus Annus Pope St. John Paul II places economic freedom parallel to political freedom. Catholic social teaching recognizes that free enterprise, rightly understood and implemented, is currently the best available vehicle for systemically caring for the physical needs of the poor and that a true global economy is the key way to create lasting development and thereby, peace.Catholic social teaching says a “business economy has many positive aspects – its basis is human freedom exercised in the economic field”. (Centesimus Annus, 32)
2. Catholic social teaching also recognizes the free market for its:
- Better resource utilization;
- Promotion of commerce, and;
- Its giving central place to individual desires and preferences in a contractual context. (Centesimus Annus, 40)
In summary: “It would appear that, at the level of individual national and of international relations, the free market is the most efficient way for utilizing resources and effectively responding to needs.” (Centesimus Annus, 34)
Q: Does the Church “recommend” any economic system for the developing world?
A: The free market economy is a model that should be proposed to the third world – as long as it is “circumscribed within a strong juridical framework which places it at the service of human freedom in its totality”. (Pope St. John Paul II, 42)
Q: Is the Church’s support of a free economy unequivocal?
A: Absolutely not. 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.” (Pope Benedict XVI, 34) Indeed, the current system “is by now intolerable”. “[T]hat system 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’.” (Pope Francis, Address to the Second World Meeting of Popular Movements, Bolivia, 1)
“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, Visit to the Pontifical Roman Major Seminary on the Feast of Our Lady of the Trust, February 15, 2012, reported by the VIS)
Among the many positive effects of the global advancement of free markets, Pope Francis identifies a threat: “In many countries globalization has meant a hastened deterioration of their own cultural roots and the invasion of ways of thinking and acting proper to other cultures which are economically advanced but ethically debilitated.” (Evangelii Gaudium, 62)
Catholic Social Teaching points out that “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”. (Pope Benedict XVI, 40)
Indeed, “The full gravity of the current economic crisis…should be understood. This crisis has numerous causes and is a strong reminder of the need for a profound revision of the model of global economic development.” (Pope Benedict XVI, Angelus, November 14, 2010)
Also, “Charity in truth requires that shape and structure be given to those types of economic initiative which, without rejecting profit, aim at a higher goal than the mere logic of the exchange of equivalents, of profit as an end in itself”. (Pope Benedict XVI, 38)
Q: What is the Church teaching about profits?
A: “The Church acknowledges the legitimate role of profit as an indication that a business is functioning well. When a firm makes a profit, this means that productive factors have been properly employed and corresponding human needs have been duly satisfied. But profitability is not the only indicator of a firm’s condition…In fact, the purpose of a business firm is not simply to make a profit…Profit is a regulator of the life of a business, but it is not the only one; other human and moral factors must also be considered which, in the long term, are at least equally important for the life of a business.” (Centesimus Annus, 35)
“A business cannot be considered only as a “society of capital goods”; it is also a “society of persons” in which people participate in different ways and with specific responsibilities, whether they supply the necessary capital for the company’s activities or take part in such activities through their labor.” (Centesimus Annus, 43)
Q: Are the ‘problems’ we experience the fault of the free market system?
A: Catholic social teaching is clear in not blaming the free market economy for our culture’s many problems. As Pope St. John Paul II said: “Of itself, an economic system does not possess criteria for correctly distinguishing new and higher forms of satisfying human needs from artificial new needs.” (Centesimus Annus, 36)
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)
“[T]his time of crisis”, while manifesting itself in economic ways, is really “a human crisis: it is the human person that is in crisis! Man himself is in danger of being destroyed!” (Pope Francis, Address in Saint Peter’s Square, May 18, 2013)
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.” (Pope Benedict XVI, 34)
Our problems originate “in a profound human crisis: the denial of the primacy of the human person!” (Pope Francis, 55)
“It is not the instrument that must be called to account, but individuals, their moral conscience and their personal and social responsibility.” (Pope Benedict XVI, 36)
We are invited “to look to the deeper causes of this situation: In the last analysis, they are to be found in a current self-centered and materialistic way of thinking that fails to acknowledge the limitations inherent in every creature”. (Pope Benedict XVI, Address to the Vatican Diplomatic Corps, January 11, 2010)
Our “problems” result from ethical and cultural shortcomings – not from an economic system.
“In this sense, the various grave economic and political challenges facing today’s world require a courageous change of attitude that will restore to the end (the human person) and to the means (economics and politics) their proper place. Money and other political and economic means must serve, not rule, bearing in mind that, in a seemingly paradoxical way, free and disinterested solidarity is the key to the smooth functioning of the global economy.” (Pope Francis, Letter to H.E. Mr David Cameron, British Prime Minister on the Occasion of the G8 Meeting, June 15, 2013)
Q: What does the Church say about "human development”?
A: The Church is clear that the “pathologies” eating away at our environment are the fault of our ethical and cultural systems, not economic ones: “a globalization of indifference has developed. Almost without being aware of it, we end up being incapable of feeling compassion at the outcry of the poor, weeping for other people’s pain, and feeling a need to help them, as though all this were someone else’s responsibility and not our own.” (Pope Francis, Address to Conference of the Food and Agriculture Organization of the United Nations, 1)
Perhaps the greatest danger rests in a global economy where-in “human beings are themselves considered consumer goods to be used and then discarded. We have created a “throw away” culture which is now spreading. It is no longer simply about exploitation and oppression, but something new. Exclusion ultimately has to do with what it means to be a part of the society in which we live; those excluded are no longer society’s underside or its fringes or its disenfranchised – they are no longer even a part of it. The excluded are not the “exploited” but the outcast, the “leftovers”. (Pope Francis, 53) “This, dear friends is truly scandalous. A way has to be found to enable everyone to benefit from the fruits of the earth”. (Pope Francis, Address to Conference of the Food and Agriculture Organization of the United Nations, June 20, 2013, 1) We must always remember that “the mere fact that some people are born in places with fewer resources or less development does not justify the fact that they are living with less dignity.” (Pope Francis, 190)
A situation has developed where “[h]uman beings are themselves considered consumer goods to be used and then discarded.” (Pope Francis, 53)
True development must be Integral — not focusing only on the material: “Progress of a merely economic and technological kind is insufficient. Development needs above all to be true and integral.” (Pope Benedict XVI, 23) “Only in charity, illuminated by the light of reason and faith, is it possible to pursue development goals that possess a more humane and humanizing value.” (Pope Benedict XVI, 9)
Catholic social teaching informs us that, “authentic human development concerns the whole of the person in every single dimension.” (Pope Benedict XVI, 11) Indeed, “The question of development is closely bound up with our understanding of the human soul…Development must include not just material growth but also spiritual growth”. (Pope Benedict XVI, 76)
As Pope Benedict XVI said: “man needs to be liberated from material oppressions, but more profoundly he must be saved from the evils that afflict the spirit.” (Homily, Mass in Bruno, Czech Republic, September 27, 2009)
The goal of Catholic social teaching is for life styles in which the quest for truth, beauty, goodness, and communion with others for the sake of the common good will determine consumers’ choices, savings, and investments. (Pope Saint John Paul II, 36)
Q: What are the responsibilities of the State regarding the economy?
A: Pope St. John Paul II outlined clear responsibilities. The State must:
- Guarantee individual freedom
- Guarantee private property rights
- Ensure a stable currency
- Ensure efficient services are provided
- Create conditions which will ensure job opportunities by
- Stimulating those activities where they are lacking, and
- Supporting them in moments of crisis
- Intervene when monopolies create delays or obstacles to development
- The state should avoid enlarging excessively the sphere of state intervention to the detriment of both economic and civil freedoms. (Centesimus Annus, 48)
- In exceptional circumstances, the state should exercise a substitute function in a crises or when getting started. This, however, must be as brief as possible.