Part 1 Benedict’s 2nd Encyclical: bigger government?

As reported on http://www.catholic.org/international/international_story.php?id=25018, Pope Benedict XVI is set to publish his second encyclical on the subject of economics. Among its themes, it is reported that the new encyclical will urge more regulation of world trade and economic systems and condemn tax evasion as “socially unjust.”

If the above report is true, it will be tragic. In these first few articles, I will argue that this future encyclical may represent:

1) A departure from the last social encyclical of Pope John Paul II, which seemed to open the way to a reconciliation between a market economy, Liberalism and Catholicism
2) A return to traditional Catholic Social Doctrine, which I contend is polluted with socialist economics, philosophy and propaganda.
3) A missed opportunity for Pope Benedict to synthesize the connection between his writings on Christianity as a philosophy of freedom and a free market economy based solely on private property, freedom of exchange and no state intervention.



Pope John Paul II, Free Market Economy and Liberalism

Writing in Centesimus Annus (http://www.vatican.va/edocs/ENG0214/_INDEX.HTM), John Paul II tackled the question of the role of capitalism after the failure of communism. Paragraph 42 reads as follows:

“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…”


Obviously, in answering the question in the affirmative, John Paul II reflects on other critical principles that are clearly compatible with a market economy:

1) Establishes both "freedom" and "original sin" as essential in understanding of how human reality works. When we ignore this, we make matters worse.

"Man tends towards good, but he is also capable of evil. He can transcend his immediate interest and still remain bound to it. The social order will be all the more stable, the more it takes this fact into account and does not place in opposition personal interest and the interests of society as a whole, but rather seeks ways to bring them into fruitful harmony. In fact, where self-interest is violently suppressed, it is replaced by a burdensome system of bureaucratic control which dries up the wellsprings of initiative and creativity. When people think they possess the secret of a perfect social organization which makes evil impossible, they also think that they can use any means, including violence and deceit, in order to bring that organization into being. Politics then becomes a "secular religion" which operates under the illusion of creating paradise in this world."

2) Places the role of the state in its proper place of guaranteeing individual freedom and private property.

"48. These general observations also apply to the role of the State in the economic sector. Economic activity, especially the activity of a market economy, cannot be conducted in an institutional, juridical or political vacuum. On the contrary, it presupposes sure guarantees of individual freedom and private property, as well as a stable currency and efficient public services. Hence the principle task of the State is to guarantee this security, so that those who work and produce can enjoy the fruits of their labors and thus feel encouraged to work efficiently and honestly."

3) Places individuals, groups and associations (and not the state) in the primary role of overseeing human rights in the economy.

"Another task of the State is that of overseeing and directing the exercise of human rights in the economic sector. However, primary responsibility in this area belongs not to the State but to individuals and to the various groups and associations which make up society. The State could not directly ensure the right to work for all its citizens unless it controlled every aspect of economic life and restricted the free initiative of individuals."

4) Re-interprets the principle of subsidiarity, asserting that it limits the role of the state even when it has to intervene in cases of emergency or market failures.

"The State has the further right to intervene when particular monopolies create delays or obstacles to development. In addition to the tasks of harmonizing and guiding development, in exceptional circumstances the State can also exercise a substitute function, when social sectors or business systems are too weak or are just getting under way, and are not equal to the task at hand. Such supplementary interventions, which are justified by urgent reasons touching the common good, must be as brief as possible, so as to avoid removing permanently from society and business systems the functions which are properly theirs, and so as to avoid enlarging excessively the sphere of State intervention to the detriment of both economic and civil freedom."

5) Criticizes the role of the welfare state and places responsibility for welfare on the hands of "neighbors," individuals and associations.

"By intervening directly and depriving society of its responsibility, the Social Assistance State leads to a loss of human energies and an inordinate increase of 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."

6) Recognizes the universal social dimension of labor markets, individual initiative and entrepreneurship.

"Mention has just been made of the fact that people work with each other, sharing in a "community of work" which embraces ever widening circles. A person who produces something other than for his own use generally does so in order that others may use it after they have paid a just price, mutually agreed upon through free bargaining. It is precisely the ability to foresee both the needs of others and the combinations of productive factors most adapted to satisfying those needs that constitutes another important source of wealth in modern society. Besides, many goods cannot be adequately produced through the work of an isolated individual; they require the cooperation of many people in working towards a common goal. Organizing such a productive effort, planning its duration in time, making sure that it corresponds in a positive way to the demands which it must satisfy, and taking the necessary risks — all this too is a source of wealth in today's society. 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."

7) Recognizes the primacy of the free market as the most efficient and effective

"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."

8) Acknowledges the proper role of profit and points out how critical human capital is to the firm.

"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. It is possible for the financial accounts to be in order, and yet for the people — who make up the firm's most valuable asset — to be humiliated and their dignity offended. Besides being morally inadmissible, this will eventually have negative repercussions on the firm's economic efficiency. In fact, the purpose of a business firm is not simply to make a profit, but is to be found in its very existence as a community of persons who in various ways are endeavoring to satisfy their basic needs, and who form a particular group at the service of the whole of society. 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."

9) Recognizes the importance of religious values in capitalism and that one cannot have capitalism without freedom in other realms, not just economic (i.e., what the Chinese are trying to do...).

"If economic life is absolutized, if the production and consumption of goods become the center of social life and society's only value, not subject to any other value, the reason is to be found not so much in the economic system itself as in the fact that the entire socio-cultural system, by ignoring the ethical and religious dimension, has been weakened, and ends by limiting itself to the production of goods and services alone. All of this can be summed up by repeating once more that economic freedom is only one element of human freedom. When it becomes autonomous, when man is seen more as a producer or consumer of goods than as a subject who produces and consumes in order to live, then economic freedom loses its necessary relationship to the human person and ends up by alienating and oppressing him."

10) Derives private property rights from its labor theory, in a similar fashion as John Locke and other champions of liberalism do:

a. Here's JPII: "Man fulfils himself by using his intelligence and freedom. In so doing he utilizes the things of this world as objects and instruments and makes them his own. The foundation of the right to private initiative and ownership is to be found in this activity."

b. Here's Locke: "Sec. 27. Though the Earth, and all inferior Creatures be common to all Men, yet every Man has a Property in his own Person. This no Body had any Right to but himself. The Labor of his Body, and the Work of his Hands, we may say, are properly his. Whatsoever then he removes out of the State that Nature hath provided, and left it in, he hath mixed his Labor with, and joined to it something that is his own, and thereby makes it his Property. It being by him removed from the common state Nature placed it in, it hath by this labor something annexed to it, that excludes the common right of other Men. For this Labor being the unquestionable Property of the Laborer, no Man but he can have a right to what that is once joined to, at least where there is enough, and as good left in common for others."

11) Declares as illegitimate private property that is left idle, in a similar fashion as John Locke does:

a. Here's JPII: "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. Ownership of this kind has no justification, and represents an abuse in the sight of God and man."

b. Here's Locke: "...yet there are still great Tracts of Ground to be found, which (the Inhabitants thereof not having joyned with the rest of Mankind, in the consent of the Use of their common Money) lie waste, and are more than the People, who dwell on it, do, or can make use of, and so still lie in common."

12) Supports the universal destination of goods, just like John Locke does:

a. Here’s JPII: “In Rerum novarum, Leo XIII strongly affirmed the natural character of the right to private property, using various arguments against the socialism of his time. This right, which is fundamental for the autonomy and development of the person, has always been defended by the Church up to our own day. At the same time, the Church teaches that the possession of material goods is not an absolute right, and that its limits are inscribed in its very nature as a human right. While the Pope proclaimed the right to private ownership, he affirmed with equal clarity that the "use" of goods, while marked by freedom, is subordinated to their original common destination as created goods, as well as to the will of Jesus Christ as expressed in the Gospel. Pope Leo wrote: "those whom fortune favors are admonished ... that they should tremble at the warnings of Jesus Christ ... and that a most strict account must be given to the Supreme Judge for the use of all they possess"; and quoting Saint Thomas Aquinas, he added: "But if the question be asked, how must one's possessions be used? the Church replies without hesitation that man should not consider his material possessions as his own, but as common to all...", because "above the laws and judgments of men stands the law, the judgment of Christ

b. Here's Locke, admitting that God gave the world to all "men in common": "Sec. 39. And thus, without supposing any private Dominion, and property in Adam, over all the World, exclusive of other Men, which can no way be proved, nor any ones Property be made out from it; but supposing the World given as it was to the Children of Men in common, we see how labour could make Men distinct titles to several parcels of it, for their private uses; wherein there could be no doubt of Right, no room for quarrel.

c. Here's Locke saying that the same Natural Law that gives us the right to private property also bounds us to share what duly belongs to others when we own more than we need: "30. It will, perhaps, be objected to this, that if gathering the acorns or other fruits of the earth, etc., makes a right to them, then any one may engross as much as he will. To which I answer, Not so. The same law of Nature that does by this means give us property, does also bound that property too. "God has given us all things richly." Is the voice of reason confirmed by inspiration? But how far has He given it us- "to enjoy"? As much as any one can make use of to any advantage of life before it spoils, so much he may by his labor fix a property in. Whatever is beyond this is more than his share, and belongs to others."

d. And here's Locke saying that private property is also bound by the rights of others who are not left with enough: "For this "labor" being the unquestionable property of the laborer, no man but he can have a right to what that is once joined to, at least where there is enough, and as good left in common for others."

Clearly, John Paul’s thinking evolved from his first social encyclical, Laborems Exercens, where he offered sound criticisms of socialism and communism, but biased against capitalism. All modern Popes before him offered the same approach. If Pope Benedict indeed is considering a return to traditional Catholic Social Doctrine of more state intervention in economics, it will be a huge step backwards and a blow to the many who are attempting not only to reconcile Catholicism to free markets, but indeed to prove and establish historical and theological cause and effect links between the evolution of free markets, Catholicism and the Church.

In Part 2 of this series, I will offer a critical review of key Papal social encyclicals to demonstrate how Catholic Social Doctrine is influenced by socialist economics, philosophy and propaganda.