Popes, Bishops and the Economy of the Free Market

Article by Philip Booth in the Catholic Times

In a new book, Catholic Social Teaching and the Market Economy, nine Catholic scholars from the US, the UK and Australia, examine various fields of economic policy in the context of Catholic social teaching. Most of the authors take a line that, whilst in tune with the great encyclicals such as Rerum novarum and Centesimus annus, will be challenging to many Anglo-American Catholic commentators on political matters. It also challenges some local Bishops’ Conferences whose statements on policy matters have perhaps shown undue confidence in political structures to solve economic and social problems.

In exploring the teachings of Popes such as Leo XIII, John Paul II and, lately, Benedict XVI the authors show the error of assuming that welfare provision, and the redistribution of income by the political system, is a natural extension of the Christian obligation to share goods and provide welfare. John Paul II put it very lucidly in describing how, in his words, “the welfare state, dubbed the social assistance state” exhibited malfunctions and defects that arise because of the lack of understanding of the tasks proper to the state. Benedict XVI has written about, “The State…absorbing everything into itself, would ultimately become a mere bureaucracy incapable of guaranteeing the very thing which the suffering person—every person—needs.”

Christians should be concerned that, in most developed Western countries, the state takes and spends close to 50% of an average family’s income. Despite this, despair and hopelessness do not seem to diminish and young families struggle on diminished net incomes. Perhaps this is because, as Popes John Paul and Benedict have said, the state is so remote from the people whose needs it is trying to meet. The state takes money from families in taxes that they could better spend themselves – not least in providing charitable support for the less well off.

Opponents of the market economy often object that markets work on the basis of self interest. An incorrect and incoherent connection between self interest and selfishness is then often made. There is nothing intrinsically wrong with self interest. It is in my self interest to cycle to the station; it then becomes in the best interest of a shop to provide me with a cycle at a reasonable price. There is nothing selfish about this expression of demand or about its satisfaction. The market is a natural way, in harmony with human nature, of harnessing self interest to the common good.

Opponents of the market seem to switch off the assumption of self interest when they propose that economic resources should be allocated by the state. But self interest still operates here. Farmers campaign on the streets of France for resources to be allocated to them at the expense of farmers in the developing world; people in Britain campaign to keep their hospital open, often at the expense of resources for other hospitals. Self interest expressed through the political system quickly leads to conflict. Another way of putting this is to say that, where resources are not allocated through the market economy, they have to be allocated through the “political market”. Who gets what is then determined by which groups are the most articulate, which groups campaign the most and which groups can muster the most votes. Power is centralised and decisions taken away from families.

Whilst there are challenges that arise from a culture of materialism and consumerism, issues that are covered at length in this book, Christians should feel comfortable with the basis of a market economy. A market economy distributes resources by mutual agreement. Cooperation and peaceful coexistence are therefore at the heart of the culture of a market economy. The government, on the other hand, is the appropriate vehicle for providing collective goods such as defence and dispensing justice but, when it begins to distribute economic resources, it can only do so in a blunt, heavy handed way, remote from the needs of the people and through intrinsically coercive means.

The correct ordering of political society is best understood by the concepts of subsidiarity and solidarity – ideas also discussed at length in the book. Pope Benedict has very lucidly described the advantages of personal, voluntary help for those in need in Christian communities and beyond. Responsibility lies with the lowest groupings in society first: families, communities, voluntary associations and then local levels of government. Only if there is still great need should the state step in – and then it should do so in a way which provides help to the lower levels in society rather than by displacing their functions. Perhaps the whole Catholic adoption debate of recent months has arisen because we approach the issue upside down. In the UK voluntary adoption agencies and families are dancing to the tune of the state. Instead the state should be aiding – where aid is necessary – families and voluntary organisations in their roles. Perhaps the Church should have shouted louder, earlier, when the whole adoption process became disordered. In education, the Vatican has taught, in accordance with the principle of subsidiarity, that it is an injustice for the state not to provide the same help to parents who educate their children in private schools as it provides to state schools. This approach is a fine example of subsidiarity, tempered by solidarity: the state should aid parents in obtaining an education for their children but not step in as the main provider.

The book is as much empirical and practical as philosophical. Too often Christian commentators take account of the “seen” effects of economic policy whilst ignoring the “unseen” effects. In the chapter on the “just wage” the obligation to ensure that those who work have the means to provide for their families is noted. But if we do this, as is often suggested by Christian commentators, through the imposition of a minimum wage, unemployment will normally result. As employment, even at low levels of income, is the best route out of poverty, this is a counter-productive policy. Economists can help theologians weigh up which are the least damaging ways of helping the poor.

There is also a chapter devoted to foreign aid. The Church has called upon governments of developed countries to provide aid to poor countries. Yet the evidence suggests that aid has generally failed, and sometimes even damaged, its recipients. And it has failed for reasons that the Church should understand. Proper development is a bottom-up and not a top-down process. It cannot be “organised” from the top using funds provided by governments. Human nature is such that concentrating power and money in the hands of governments of poor countries can destroy incentives and pervert otherwise beneficial economic behaviour. The Church can do more by providing health and education and, crucially, support for basic local business infrastructure through its missions and charities than can ever be achieved by government-to-government aid. This would be an expression of solidarity that had realistic expectations of political structures.

The economics in Catholic Social Teaching and the Market Economy is underpinned by what John Paul II would have called an “anthropology of the human person”. Each created person has free will, the ability to reason, and an ability to be creative. Each person should have the space to use those God-given characteristics in the economic sphere. We join in solidarity to achieve things that cannot be achieved as individuals. However, the state’s role should be limited, partly because it is naturally coercive – if I do not pay my taxes to fund abortion clinics then I go to prison – but also because it is remote and can never know our individual needs and circumstances. The state has various roles but, argue our authors, these roles of administering justice, protecting property and human life, and sometimes p