Catholic perspective on economics balances good of man and society

The Church doesn’t participate directly in the running of a nation’s economy (other than Vatican City), but it does propose principles that will lead to healthier societies if nations follow them. These principles are represented by Jesus and his Gospel teachings, and recognize the importance of promoting an economic system that has the dignity of man as its primary objective. According to the Catechism of the Catholic Church:

“The development of economic activity and growth in production are meant to provide for the needs of human beings. Economic life is not meant solely to multiply goods produced and increase profit or power; it is ordered first of all to the service of persons, of the whole man and of the entire human community. Economic activity, conducted according to its own proper methods, is to be exercised within the limits of the moral order, in keeping with social justice so as to correspond to God’s plan for man” (No. 2426).

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A second key principle is a proper understanding of the need for profit and efficiency, without making profit the “ultimate end of economic activity,” because “the disordered desire for money cannot but produce perverse effects” (No. 2424).

In applying these two principles, the Church rejects communism and socialism because these systems are associated with atheism and totalitarianism.

It’s interesting to note that the Church also does not accept a “pure” form of capitalism, where the economy is regulated solely by the law of the marketplace. “‘There are many human needs which cannot be satisfied by the market.’ Reasonable regulation of the marketplace and economic initiatives, in keeping with a just hierarchy of values and a view to the common good, is to be commended” (No. 2425).

It’s important here to discuss two additional principles: socialization and subsidiarity. Socialization isn’t the same as socialism. Socialism refers to public or state ownership of the means of production, and as noted above, the Church has rejected it as a viable economic system. Socialization, however, recognizes that man doesn’t live alone on an island, but instead is part of a broader society with the need to interact with that society in multiple ways.

Think for a moment about the types of interactions you have: family, friends, school, work, clubs you belong to, buying stuff from businesses, getting your driver’s license from the state — the list could go on and on. At its best, socialization helps you attain worthy objectives that exceed your individual capacity to do so (No. 1882).

Socialization can be a very good thing, but the Church notes that it also has its dangers. “Excessive intervention by the state can threaten personal freedom and initiative” (No. 1883). In order to minimize this danger, the Church encourages people to first look to the smallest and least centralized forms of community as they seek solutions for the issues of the day. This is known as the principle of subsidiarity, and is described as follows:

“A community of higher order should not interfere in the internal life of a community of a lower order, depriving the latter of its functions, but rather should support it in case of need and help to coordinate its activity with the activities of the rest of society, always with a view to the common good” (No. 1883).

Generally speaking, solving problems “locally” makes sense, while recognizing at the same time that some issues require solutions at the state, national, or even international level.

The writings of several popes have been influential in how Gospel values should apply to the economic realm. These include Rerum Novarum (“On the Condition of the Working Classes”) by Pope Leo XIII, which was issued in 1891. Written as a response to the emerging threat of communism, the encyclical covers many issues, one of which is establishing the right to private property. Then in 1991, Pope John Paul II issued Centesimus Annus (“On the Hundredth Anniversary of Rerum Novarum”) after the fall of the Berlin Wall in 1989. More recently, Pope Benedict issued Caritas in Veritate (“Charity in Truth”) in 2009, and Pope Francis issued Laudato Si’ (“On Care for Our Common Home”) last year. A little time spent with these encyclicals will reward you with a deeper appreciation of how much the economic system matters to a person’s ability to live as God intended.

God love you!

Phil Lenahan is the president of Veritas Financial Ministries (www.VeritasFinancialMinistries.com) and the author of “7 Steps to Becoming Financially Free” (OSV, $19.95). Submit questions for columns to askphil@osv.com.