Capitalism, socialism ... or something else?

Dr. Andrew Abela writes that the Catholic Church’s teaching on economics is clear on the validity of the market economy. Find out what the Church has to say about capitalism, socialism and other economic systems. Abela draws from the forthcoming Catechism for Business to explore what the Holy Fathers have written about both socialism and capitalism over the past decades.

Dr. Andrew Abela

The current lingering economic malaise has led some to question the validity of the market economy. I will draw again from the forthcoming Catechism for Business to explore what the Church has to say about capitalism and socialism.

Let’s begin in the middle: Does Catholic teaching on economics represent some sort of middle or third way between capitalism and socialism? The answer is No. “The Church’s social doctrine is not a ‘third way’ between liberal capitalism and Marxist collectivism … it constitutes a category of its own … [as] the accurate formulation of the results of a careful reflection on the complex realities of human existence … in the light of faith and of the Church’s tradition” (Blessed John Paul II, Sollicitudo Rei Socialis, #41).

Nor does the Church recommend a particular economic model as the Catholic way for economic life. “The Church has no models to present; models that are real and truly effective can only arise within the framework of different historical situations through the efforts of all those who responsibly confront concrete problems in all their social, economic, political and cultural aspects as these interact with one another” (John Paul II, Centesimus Annus, #43).

Does socialism, then, conform with Gospel teaching? Again, the answer is No. “The illusion that a policy of mere redistribution of existing wealth can definitively resolve the problem must be set aside. In a modern economy, the value of assets is utterly dependent on the capacity to generate revenue in the present and the future. Wealth creation therefore becomes an inescapable duty, which must be kept in mind if the fight against material poverty is to be effective in the long term,” Pope Benedict XVI said in his Jan. 1, 2009, message for the World Day of Peace.

This, in part, is because “solidarity is first and foremost a sense of responsibility on the part of everyone with regard to everyone, and it cannot therefore be merely delegated to the state” (Benedict XVI, Caritas in Veritate, #38). Also, 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” (Centesimus Annus, #48).

And thus, “religious socialism [and] Christian socialism are contradictory terms; no one can be at the same time a good Catholic and a true socialist” (Pope Pius XI, Quadragesimo Anno, #120).

What about capitalism, then? Does it conform to Gospel teaching? The answer here, given by John Paul II in 1991 in the wake of the collapse of the Soviet Union, is carefully and beautifully nuanced. He wrote:

“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 (Centesimus Annus, 42).

Thus a market economy conforms to Gospel values if it is set within a system of laws that ensure that it serves all of human freedom, not just economic freedom. This is because “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” (Centesimus Annus, #39).

In a previous column I mentioned the new Master of Science in Business Analysis (MSBA) program at the Catholic University of America, a one-year graduate program designed to teach liberal arts students the language and tools of business (msba.cua.edu). As part of that program, I teach a course called The Spirit of Enterprise in which we read the major papal documents cited above in their entirety to give students a sound moral perspective on the economy. And employers seem to agree. I’m happy to report that all graduates who were in the job market coming out of our first year are gainfully employed — and at an average salary more than 50% higher than what they would have made a year before, prior to the program!

A charter member of Legatus’ Northern Virginia Chapter, Andrew V. Abela, Ph.D., is chairman of the Business and Economics department at the Catholic University of America.