How free can a market be before it gets in trouble? Well maybe I should explain why free markets would be a problem in the first place. Perhaps then I can tackle answering that question.
Despite the fact that Catholic Social Teaching over the last hundred-plus years has never stated that any one economic model is the best one, the popes who wrote those encyclicals and apostolic exhortations have been pretty adamant that socialism is not compatible with Christianity.
Pope Pius XI goes so far in Quadragesim Anno (1931) to say that while socialism’s “demands at times come very near those that Christian reformers of society justly insist upon,” “if it remains truly Socialism, even after it has yielded to truth and justice on the points which we have mentioned, [it] cannot be reconciled with the teachings of the Catholic Church because its concept of society itself if utterly foreign to Christian truth.”
With socialism out of the picture many may assume that the Church supports free markets. After all, the only possible alternative to socialism must be capitalism. That’s not quite true, though, and then there is the question of how one defines “capitalism” and “free market.” I mean, how free are we talking? As it turns out, a market free from any and every state intervention or involvement is no good.
Again, it was Pope Pius XI who wrote that while human society cannot be founded on the opposition of classes, as the Marxists would have us believe, “so also the right ordering of economic life cannot be left to a free competition of forces. For from this source, as from a poisoned spring, have originated and spread all the errors of individualistic economic thinking.” This individualistic economics holds that the markets must be “altogether free from and independent of public authority, because in the market, i.e. in the free struggle of competitors, it would have a principle of self direction which governs it much more perfectly than would the intervention of any created intellect.” (#88)
Pope Pius’ condemnation here would seem to strike right at the heart of the modern libertarian, especially those “anarcho-capitalists” who reject any sort of law touching on economic activity. It should not be any wonder, then, that Catholic libertarians have attempted to paint the social teaching as a kind of collection of interesting and insightful aphorisms written by wonderfully intelligent popes having no bearing on our moral lives at all.
If, however, the reader actually cares about what the Church teaches, well then a market totally unencumbered by any state authority is just the sort of “free market” condemned by the Church. If you hold to the idea that the market will always provide you a more perfect solution to the economic problems of society, then you’ve adopted an economics incompatible with Catholic teaching. Yours is an “individualistic economics,” and it does not comport with the Church’s views.
Now progressives or liberal Catholics (that is their term for themselves) love to quote these lines from Pope Pius XI. They have come to the conclusion that anything which smacks of or which uses the phrase “free markets” has been condemned by the Church. But that’s not true either.
Consider the following. In Centesimus Annus Pope St. John Paul II wrote that after the Second World War, some nations, employed “a positive effort to rebuild a democratic society inspired by social justice.” They did this by attempting “to preserve free market mechanisms.” The sainted Holy Father points out that these same nations tried “to avoid making market mechanisms the only point of reference for social life.” The nations subjected the market mechanisms to public control. Therefore, “in this context an abundance of work opportunities, a solid system of social security and professional training, the freedom to join trade unions and the effective action of unions, the assistance provided in cases of unemployment, the opportunities for democratic participation in the life of society – all these are meant to deliver work from the mere condition of ‘a commodity’, and to guarantee its dignity.” (#19)
These are hardly condemnatory words for “free market mechanisms.” But wait, there’s more. He says:
“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.” (#34)
That’s an interesting claim. Does it pit John Paul II against Pius XI? I say it doesn’t because of the following quotation from #42:
“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, 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.”
So is a free market good or bad? Pope St. John Paul II avoids contradicting Pius XI by fleshing out, developing or one could argue re-defining what we mean by a free market and by capitalism. For the Holy Father, a free market can be subject to governmental control, to a “strong juridical framework” but still be considered free.
How can this be? He explains it earlier in the encyclical. There are certain marks of a free market that work to help make them just:
- an abundance of work opportunities,
- a solid system of social security and professional training,
- the freedom to join trade unions and the effective action of unions,
- the assistance provided in cases of unemployment,
- the opportunities for democratic participation in the life of society
With those things in place, the free market remains free and has the chance to be just as well.
So how free can a market be before it gets in trouble? Well, it can be free enough to allow for “human creativity” and competition in the economic sector, “recognizing the fundamental and positive role of business, the market and private property.” It can be free enough to do what it wills so long as unions are allowed and effective, so long as there is a social security program and actual jobs for actual people, so long as the laborer is still allowed to participate in public life, and so long as it recognizes not just that the state can intervene but that faith and morals do touch on economic decision. That’s pretty free.
A free market gets into trouble when it pretends it does not answer to any law or when it reject the notion that faith and moral precepts ought to come into play in economic decisions.
In our current political climate, this is important since Catholics on the left will no doubt accuse Catholics on the right of not being true to Catholic Social Teaching for promoting free market or capitalist positions. Just remind our Catholic brothers and sisters of Pope St. John Paul II’s praise for free markets and hand them a copy of Centesimus Annus.
