Although his media soundbites sometimes sound like sweeping condemnations, Pope Francis has merely “underscored the anthropological errors of capitalism,” according to Father Robert Sirico, president of the Acton Institute, a think tank on liberty and religious principles. “The most critical statement [Pope Francis] has made is about the idolatry of money” rather than wholesale rejection of free markets.
In his 2015 visit to the United States, Pope Francis praised capitalism in his address to Congress. “Business is a noble vocation,” the pontiff said, “directed to producing wealth and improving the world. It can be a fruitful source of prosperity for the area in which it operates, especially if it sees the creation of jobs as an essential part of its service to the common good.” Further, in his referencing the fight against poverty, the pope said, “Part of this great effort is the creation and distribution of wealth.”
Capitalism often is wrongly equated with consumerism or idolizing material wealth, added Fr. Sirico. “The economic question with regard to its morality is a subset of a broader theological question: Is human freedom compatible with religious beliefs?”
Reality of capitalism
Simply stated, in a capitalist system the means of production of goods or services are privately owned and operated for the purpose of turning a profit. Businesses hire workers for wages, and they offer goods or services in competition with other providers.
In theory, a pure capitalist economy involves a free market unregulated by government — meaning production, wages, and consumer prices are driven by the market itself through supply and demand. In a purely socialist economy, all capital assets and means of production are owned collectively; private individuals own nothing, and the government controls production, distribution, labor, and prices.
In practice today, most are “mixed” economies. All capitalist economies are subject to some government regulation by way of tariffs, taxation, antitrust laws, price controls or labor laws. Meanwhile, some countries that follow a “socialist” model nevertheless allow for significant private initiative and market competition.
Catholic social teaching and capitalism
Catholic thought on economic systems has roots in the 4th century, when St. Augustine and St. Basil contemplated issues like the private ownership of property and the charging of interest on loans. In the 13th century, St. Thomas Aquinas’ deliberations on natural law, human dignity and the primacy of the common good laid the foundation for modern Catholic social teaching.
That accelerated with Pope Leo XIII and Rerum Novarum (“On Capital and Labor”), his 1891 social encyclical. The Industrial Revolution had then given rise to an expansion of labor and mass production of goods, even as the principles of socialism and communism were beginning to take root in Europe.
Rerum Novarum was “the first major application of Christian principles to the modern economy,” said wealth-management attorney Tim Busch, founder/CEO of a hotel development and management company and Legate of the Orange County, CA Chapter. “Pope Leo XIII’s ideas have been broadened and deepened by Pope Pius XI, Pope St. John XXIII, Pope St. John Paul II, Pope Francis, and many other thoughtful advocates of a just economy.”
Catholic social teaching developed over time to address new global realities and challenges to human dignity.
To mark the centenary of Rerum Novarum, Pope St. John Paul II wrote Centesimus Annus, arguably the most comprehensive treatment of Catholic social teaching on economics to date.
At the encyclical’s release in late 1991, the Berlin Wall had fallen and the U.S.S.R. was in the final throes of dissolution. “The Marxist solution has failed,” the pope pronounced, “but the realities of marginalization and exploitation remain in the world,” leaving many people “living in conditions of great material and moral poverty.” He warned against the spread of “a radical capitalistic ideology” that “blindly entrusts their solution to the free development of market forces.”
The Church, he affirmed, “recognizes the positive value of the market and of enterprise,” but “at the same time points out that these need to be oriented towards the common good.”
Pope St. John Paul “took Rerum Novarum and gave it a modern focus,” Busch said in an interview. “Pope John Paul clearly attacks communism and socialism, for example, which for decades had suppressed the Church and freedom of religion as well as private property. He also defends private property and markets, while calling for the defense of the rights of the poor and needy. I believe that’s what Catholic social teaching is all about — striking the right balance between the two, while looking at the common good and society as a whole.”
Good capitalism vs. bad capitalism
“Sometimes what is done under the auspices of capitalism by certain capitalists deserves a bad name and is much maligned,” said Anthony DeToto, president of Legatus’ Houston Chapter and senior vice president of an investment management firm. “While capitalism is deeply flawed as you unpack it, it is better than the alternatives.”
He identified “extremely unequal distribution of wealth, price gouging, conspicuous consumption, fraud, and waste” among the potential excesses of free-market capitalists — sins that result from greed, competitive fervor, and a “win at any cost” mentality.
Tom Heule, a Denver Chapter Legate and partner in a private equity firm, agreed. “Competitive pressures can make a series of small decisions lead to discounting the values we cherish,” he said. “Given the pace of business today, it’s imperative to demonstrate to those we interact with at all levels of the enterprise the ‘why’ behind our actions.”
Firms must regularly take stock of their employment practices, vendor relationships and accountability with all stakeholders to review how they align with core values and to assess plans and policies “in the light of the impact on individual persons,” Heule explained.
“Good” capitalism requires governments, business leaders and workers to behave in an ethically responsible way.
“Free markets only work within a moral culture,” Busch wrote in the Wall Street Journal in 2014. “When business is unmoored from a concern for the common good, capitalism can slide into cronyism and corruption—exactly what Pope Francis has critiqued…. It is such perversions of a free-market economy that do not fit Catholic teaching.”
Businesses, he explained, play a central role in advancing Catholic moral principles.
“Business leaders have a moral duty to increase opportunities for the poor to provide for themselves and their families through dignified work—such ‘co-creation’ is a direct reflection of God himself,” he wrote in Forbes magazine last year. “The poor benefit the most from economic progress.”
GERALD KORSON is a Legatus magazine staff writer.
7 Themes of Catholic Social Teaching
The U.S. Conference of Catholic Bishops has identified seven key themes gleaned from the body of Catholic social teaching:
- Respect for the life and dignity of the human person
- Support for marriage and family, along with the right and duty to participate in society
- Protection of human rights, and fulfillment of duties to family, community, and one another, with government practicing the principle of subsidiarity
- Fundamental option for the poor and vulnerable
- Respect for the rights and dignity of workers
- Solidarity in the pursuit of justice and peace for all people
- Stewardship of God’s creation