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The Moral Principles of a Catholic Economy

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By Jonathan C. McMonigal, Holy Apostles College and Seminary

Part I: Introduction

At the advent of the Industrial Revolution, the social question of how to relate capital to labor vexed the modern world. Two economic systems formed as possible consensus answers, namely Capitalism or Socialism. As Capitalism prioritized the right of private ownership of the means of production, Socialism responded by abolishing private ownership in favor of communal property. The Catholic Church faced the risk of fading into obscurity without a proper answer to society concerning the fate of the social question.

The papal encyclical “Rerum Novarum” by Pope Leo XIII was the initial Catholic answer to the social question. The Supreme Pontiff rejected materialistic, godless economics in favor of an unabashedly Catholic system. Before any questions of fiscal policy can be addressed, the economic system must be grounded in the natural law of God. No field of knowledge can be divorced from a holistic Catholic worldview, lest human dignity be denigrated. Following Pope Leo XIII, a rich tradition of papal encyclicals dealing with the social question followed suit. From Popes Pius XI, St. John XXIII, St. Paul VI, St. John Paul II, Benedict XVI, and the current Pontiff Francis, the Church has perpetuated her social teaching. As the world economy changes year by year, the Popes have continued to respond to the signs of the times with the Gospel.

The moral principles of a Catholic economy rest on the trifecta of dignity, solidarity, and subsidiarity. Building on this foundation, secondary principles such as the universal destination of goods, the preferential option for the poor, and the stewardship of creation offer a charitable economic vision. A Catholic economy stands in contradistinction vis-à-vis secular economics, because the foundation of the system is on the transcendental nature of the human person made in the Image of God. Catholic economics brings together capital and labor within the harmony of a social order resting within the supernatural charity of God.

Part II: Dignity

The foundation of the economy is the dignity of man. The etymology for the term “economics” harkens back to the Greek concept for “the prudent management of household and state.”[1] The economy exists solely to service the subsistence of the household. As Pope St. John Paul II declared: “It must be said over and over again that work is for man, not man for work.”[2] Work is not merely a means to an end, but it is a dignified activity. As the Catechism of the Catholic Church states: “Human work proceeds directly from persons created in the image of God and called to prolong the work of creation by subduing the earth, both with and for one another.”[3] Thus the economy is an extension of interpersonal labor in pursuit of life.

Now the concept of the exchange of goods calls into question the reality of property. As Pope Leo XIII defined: “For, every man has by nature the right to possess property as his own.”[4] Private property is created when a man turns the activity of his mind and body upon matter, so that he leaves “the impress of his personality.”[5] For instance, if a person molds mud into pottery, the labor of the individual changes the mud into a private creation. Now there is no absolute right to private property, but there is a right relative to the common good. As Pope St. John Paul II stated: “the right to private property is subordinated to the right to common use, to the fact that goods are meant for everyone.”[6] For instance, a farmer shouldn’t hoard his superfluous crops from the starving masses. The universal destination of goods harmonizes liberty within equity.

Now human dignity is not limited to a mere extension unto private property. On the contrary, Pope St. John XXIII comments: “Indeed, precisely because one is a person one has rights and obligations flowing directly and simultaneously from one’s very nature.”[7] The right to life is the most fundamental of rights, and the corresponding responsibility of an employer to an employee is of a just wage. As Pope St. John Paul II notes: “Furthermore, society and the State must ensure wage levels adequate for the maintenance of the worker and his family, including a certain amount for savings.”[8] A just wage is a family wage, because man as a social creature doesn’t subsist in solitude but forms interdependent relations of extended families.

In contrast to the just wage, Capitalism promotes a free wage set only by capricious competition within a business market. Labor is reduced to a mere exchangeable commodity. On the contrary, Pope St. John XXIII states: “We therefore consider it Our duty to reaffirm that the remuneration of work is not something that can be left to the laws of the marketplace; nor should it be a decision left to the will of the more powerful.”[9] The freedom of a wage contract must be ordered to the common good of subsistence. On the polar opposite, Socialism repudiates the concept of wage contract. The Socialist cries for the workers of the world to seize the means of production, subsuming all private property into collective ownership. This is unjust. As Pope Leo XIII states: “Socialists…strike at the interests of every wage-earner, since they would deprive him of the liberty of disposing of his wages,…”[10] By denying the right of property, the Socialist reduces the worker to a slave of the State, so that human dignity is offended by denying personal agency. The just wage is the necessary golden mean between individualism and collectivism. 

Part III: Solidarity

In respect of the universal dignity of man, all persons exercise social charity, or solidarity, towards one another. As the Compendium of the Social Doctrine of the Church relates: “Solidarity highlights in a particular way the intrinsic social nature of the human person, the equality of all in dignity and rights and the common path of individuals and peoples towards an ever more committed unity.”[11] Solidarity is the glue of society, binding together individuals within community. The Catechism of the Catholic Church teaches the necessity of “…solidarity of the poor among themselves, between rich and poor, of workers among themselves, between employers and employees in a business, solidarity among nations and peoples.”[12] A society of solidarity functions as an organic union of interdependent people.

A notable example of solidarity at work is taxation for the sake of social welfare. As Pope St. John XXIII notes: “In a system of taxation based on justice and equity it is fundamental that the burdens be proportioned to the capacity of the people contributing.”[13] Since the wealthy have more than subsistence, they can afford to pay higher taxes for the common good. Pope St. Paul VI even rhetorically questions the rich man, asking: “Is he ready to pay higher taxes so that the public authorities can intensify their efforts in favor of development?”[14] A preferential option for the poor demands taxation of excess for the sake of subsistence. As Pope Benedict XVI related: “Within the community of believers there can never be room for a poverty that denies anyone what is needed for a dignified life.”[15] Wealth is good per se, but avarice can make the heart cold towards the poor. Solidarity never abandons the poor to suffer.

Within the human family, each nation is compelled by the reality of solidarity to care for one another. As Pope St. Paul VI declared: “We must repeat that the superfluous goods of wealthier nations ought to be placed at the disposal of poorer nations.[16] International charity is simply a magnification of personal charity. As the Holy Gospel states, “Whoever has two tunics should share with the person who has none. And whoever has food should do likewise (Lk 3:11 RSVCE).”[17] Now international solidarity must pursue an integral human development. Pope St. John XXIII lists that all must have access to the following: “…food, clothing, shelter, rest, medical care, and finally the necessary social services.”[18] Solidarity cannot rest until the poor of the world have their bare necessities met with opportunity for socio-economic progress.

Now the development of international society must be in parallel to the stewardship of creation. As Pope Benedict XVI related: “The environment is God’s gift to everyone, and in our use of it we have a responsibility towards the poor, towards future generations and towards humanity as a whole.”[19] Although persons cannot sin against the environment per se, the reckless exploitation of creation is a sin against the humans dependent on the environment for subsistence. As Pope Francis rhetorically questions humanity, asking: “What kind of world do we want to leave to those who come after us, to children who are now growing up?”[20] A sin against the environment is an analogous sin against the populace who shall be robbed of breathable air, edible food, and potable water. Solidarity demands that integral human development progresses in harmony with a renewable stewardship of ecology.

Part IV: Subsidiarity

The multiplicity of human persons must be organized within a respectful framework in order to facilitate an economy. As the family is a stratified dynamic, so society must be in parallel as an interdependent, hierarchical structure. Pope Francis defines this concept, stating: “Let us keep in mind the principle of subsidiarity, which grants freedom to develop the capabilities present at every level of society, while also demanding a greater sense of responsibility for the common good from those who wield greater power.”[21] In society, subsidiarity gives due respect to the individual, the family, the city, the province, and the nation. Pope Pius XI upholds the corporate dimension of subsidiarity, saying: “For every social activity ought of its very nature to furnish help to the members of the body social, and never destroy and absorb them.[22] Thus subsidiarity is always at the service of the common good.

Within the economy, subsidiarity manifested in the formation of labor unions. As industrialization transplanted the worker from the farm to the factory, collective association between workers became necessary to protect human rights. As Pope St. Paul VI taught of labor unions: “their object is the representation of the various categories of workers, their lawful collaboration in the economic advance of society, and the development of the sense of their responsibility for the realization of the common good.”[23] Without unionization, laborers became vulnerable to be taken advantage of by employers for profit maximization. Pope St. John Paul II related that: “The role of trade unions in negotiating minimum salaries and working conditions is decisive in this area.”[24] Labor unions enabled proper stratification in the economy.

Part V: Conclusion

The moral principles of a Catholic economy are founded upon the trifecta of dignity, solidarity, and subsidiarity. With the advent of Industrialization, the social question of how to relate capital and labor seized the developed world. Instead of an antipathy of capital against labor, the Church holds the two in reasonable harmony. The philosophical foundation of economics is neither capital nor labor, but it is the dignity of man bestowed by our beneficent God. Since man is made in the image of God, the rights and duties concerning capital and labor are by nature inviolable. Thus any attempt to reduce economics to a mere materialistic science will immediately fall short. The economy is at the service of human dignity.

In the case of capital, the economic model of Capitalism promotes the rights of private property ownership free of social concern. The Catholic response is to promote the concept of solidarity, a social charity which compels the common destination of all goods. The wealthy are to share their superfluous goods with the needy, and governments must promote a preferential option for the poor based on solidarity. Now pertaining to labor, the economic system of Socialism promotes the abolition of all private property to the detriment of personal agency. In response, the Catholic Church promoted subsidiarity, a stratification of powers to prevent totalitarianism. The objectification of the worker at the hands of the almighty state is prevented through a separation of powers via unions, coopts, and the Church. Both solidarity and subsidiarity flow from dignity to necessitate the harmony of capital and labor.

In the face of a modern world averse to religion, Catholic social teaching provides the best possible solution to the social question. The solution for economic strife cannot be found in the material world, but the transcendent God provides the answer through his Church. An economy for the common good can only be truly founded upon the Creator of all.

Bibliography

Catechism of the Catholic Church. At The Holy See, w2.vatican.va.

“Economics.” In Encyclopedia of Catholic Social Thought, Social Science, and Social Policy. Ed. Michael L. Coulter, Stephen M. Krason, Richard S. Myers, and Joseph A. Varacalli, vol. 1 (Lanham, MD: Scarecrow Press, 2007), 340-342.

Pope Benedict XVI. Encyclical on Christian Love Deus caritas est (25 December 2005).

Pope Benedict XVI. Encyclical on Integral Human Development in Charity and Truth Caritas in veritate (7 July 2009).

Pope Francis. Encyclical on Care for Our Common Home Laudato si (24 May 2015).

Pope John Paul II. ‘Address of John Paul II to the Workers in the Factory “Transfield Limited.”’ (26 November 1986).

Pope John Paul II. Compendium of the Social Doctrine of the Church (2 April 2004).

Pope John Paul II. Encyclical on the Centenary of the encyclical Rerum Novarum Centesimus annus (1 May 1991).

Pope John Paul II. Encyclical on Human Work Laborem exercens (14 September 1981).

Pope John XXIII. Encyclical on Peace in our Time Pacem in terries (11 April 1963).

Pope John XXIII, Encyclical on Christianity and Social Progress Mater et magistra (15 May 1961).

Pope Leo XIII. Encyclical on Capital and Labor Rerum novarum (15 May 1891).

Pope Paul VI. Encyclical on the Development of Peoples Populorum progression (26 March 1967).

Pope Paul VI, An Apostolic Letter on A Call to Christian Action Octogesima adveniens (14 May 1971).

Pope Pius XI. Encyclical on Reconstruction of the Social Order Quadragesimo anno (15 May 1931).

The New American Bible, Revised Edition. Washington, DC: Confraternity of Christian Doctrine, 2011. At United States Conference of Catholic Bishops, www.usccb.org.


[1] “Economics,” in Encyclopedia of Catholic Social Thought, Social Science, and Social Policy, ed. Michael L. Coulter, Stephen M. Krason, Richard S. Myers, and Joseph A. Varacalli, vol. 1 (Lanham, MD: Scarecrow Press, 2007), 340.

[2] Pope John Paul II, ‘Address of John Paul II to the Workers in the Factory “Transfield Limited,”’ (26 November 1986), §5.

[3] Catechism of the Catholic Church, 2427, at The Holy See, w2.vatican.va.

[4] Pope Leo XIII, On Capital and Labor Rerum novarum (15 May 1891), §6.

[5] Pope Leo XIII, Rerum novarum, §9.

[6] Pope John Paul II, On Human Work Laborem exercens (14 September 1981), §14.

[7] Pope John XXIII. Encyclical on Peace in our Time Pacem in terries (11 April 1963), §9.

[8] Pope John Paul II. Encyclical on the Centenary of the encyclical Rerum Novarum Centesimus annus (1 May 1991), §15.

[9] Pope John XXIII, Encyclical on Christianity and Social Progress Mater et magistra (15 May 1961), §71.

[10] Pope Leo XIII, Rerum novarum, §5.

[11] Pope John Paul II, Compendium of the Social Doctrine of the Church (2 April 2004), §192.

[12] CCC, 1941.

[13] Pope John XXIII, Mater et magistra, §132.

[14] Pope Paul VI, Encyclical on the Development of Peoples Populorum progression (26 March 1967), §47.

[15] Pope Benedict XVI, Encyclical on Christian Love Deus caritas est (25 December 2005), §20.

[16]   Pope Paul VI, Populorum progression, §49.

[17] The New American Bible, Revised Edition. Washington, DC: Confraternity of Christian Doctrine, 2011. At United States Conference of Catholic Bishops, www.usccb.org.

[18] Pope John XXIII, Pacem in terries, §11.

[19] Pope Benedict XVI, Encyclical on Integral Human Development in Charity and Truth Caritas in veritate (7 July 2009), §48.

[20] Pope Francis, Encyclical on Care for Our Common Home Laudato si (24 May 2015), §160.

[21] Pope Francis, Laudato si, §196.

[22] Pope Pius XI, Encyclical on Reconstruction of the Social Order Quadragesimo anno (15 May 1931), §79.

[23] Pope Paul VI, An Apostolic Letter on A Call to Christian Action Octogesima adveniens (14 May 1971), §14.

[24] Pope John Paul II, Centesimus annus, §15.

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