Catholic Economics

Pope Leo XIII
Good practising Catholics in America are often confused and perplexed as to why the popes sometimes sound so "socialist" in some of they're papal encyclicals that address economics. Often such Catholics simply dismiss these words of the Holy Father, basically because they don't fit the standard American worldview.

These papal encyclicals on economics are:
  1. Rerum Novarum: On the Condition of Workers, Pope Leo XIII, 1891
  2. Quadragesimo Anno: On the Reconstruction of the Social Order, Pope Pius XI, 1931
  3. Mater et Magistra: Mother and Teacher, Pope John XIII, 1961
  4. Populorum Progressio: On the Development of People, Pope Paul VI, 1961
  5. Laborem Exercens: On Human Work, Pope John Paul II, 1981
  6. Sollicitudo Rei Socialis: On the Twentieth Anniversary of Populorum Progressio, Pope John Paul II, 1987
  7. Centesimus Annus: The Hundredth Anniversary of Rerum Novarum, Pope John Paul II, 1987
  8. Caritas in Veritatae: Charity in Truth, Pope Benedict XVI, 2009
The American worldview on economics is black and white. Either something is socialist or capitalist, or else some combination (grey) of the two. America is seen as the champion of capitalism and therefore capitalism must be "good." Communist countries were our enemies during the Cold War, and they were socialist. Therefore socialism is "bad." Yet the papal encyclicals of the last 100 years seem to openly attack capitalism. Of course, if one only has a black and white worldview on economics, then any attack on capitalism is going to look rather "socialistic."  Good practising Catholic Americans, who go to mass, pray and live good lives, are usually very patriotic too. What seems like a papal assault on capitalist principles just doesn't compute in the minds of many such people. It borders on an assault on America! Are the popes socialists!?! Do they not regularly attack "Liberation Theology," a heresy of Christian socialism? Did not Pope John Paul II help bring down the socialist regimes behind the iron curtain? So what gives!?! Why do the popes attack socialism as some great evil, then turn around and attack capitalism, while sounding so "socialistically" in their papal encyclicals on economics? This doesn't make any sense from an overly simplified (black and white, with shades of grey) American perspective.

May I suggest that the reason why papal economics does not make sense to Americans is because many Americans have no point of reference to compare it to? Americans see economics two-dimensionally. That's how we've been taught to see it for over half a century now. On the one hand there is capitalism, while on the other hand there is socialism, and everything else must be something in between. That's the average American understanding of economics. Americans must pick a point on the Left-Right scale. Either go with the socialist Left side, or else the capitalist Right side, or find your place somewhere in the middle. So that's what most Americans do, including most Catholic Americans.

May I suggest to you now that this overly simplistic view of economics simply does not work in a Catholic worldview? May I suggest to you that there is a third dimension to economics (and hence politics as well) that is the dimension the popes are calling us to in their encyclicals? This third dimension is the dimension of morality and it is governed by two Christian principles -- Subsidiarity and Solidarity.

Solidarity is simply charity. It is charity expanded beyond the individual and the church into the realm of politics. That's probably the simple way of looking at it. In short, it is Christian charity playing out in the social order both through the private sector and through the public sector. It's how we, as a civilised and Christian people, work together to take care of the poor and weakest among us. For the Catholic, Solidarity is not an option. It is as necessary as charity itself. Yes, we Catholics are called upon to use all means available, including the tools of the state of necessary and appropriate, to help those in need.

Subsidiarity, on the other hand, is the counterbalance to Solidarity. It keeps Solidarity from running amok. Subsidiarity is the Christian principle that governments and economies should be decentralised. The government that governs best, is not the government that governs least, but rather the government that governs closest to home, wherein it has the most contact with the people it governs. In other words, the more centralised a government becomes, the less Christian it becomes. The most basic functions of government should always be at the lowest level of government. Hence the highest, and most important form of government is the traditional human family. Husbands and wives, fathers and mothers, make up the basic building block of government. That's why this institution must be supported at all cost. Beyond that, higher forms of government are to take a subsidiary role to the lower (and thereby smaller) forms. So city government should only step in and help the family on those things the family simply cannot do on its own. Beyond that, city government should butt out! Allowing family government to do what it needs to do. Likewise county government should coordinate to help cities, in a subsidiary role, basically just coordinating and assisting in those things the city cannot do for itself. Beyond that, the county government stands aside. The same goes for state government in how it relates to counties, and ultimately the federal government in how it relates to states. On a federal level, we have a different name for this in our American tradition. It's called "federalism." So even our nation's founding fathers recognised this principle in a simplistic form, applying it to the republic they created. But Subsidiarity goes beyond that and applies to economics as well, and this is where a great deal of confusion and misunderstanding happens among Catholic Americans.

You see when Subsidiarity is applied to economics in the same way Solidarity is applied, it completely changes the two-dimensional face of the capitalist-socialist worldview. Now a third dimension is added, and it all centres around the ownership of property.

You see both capitalism and socialism have something in common. That thing they have in common is centralisation. They both want to centralise the economy.

When it comes to socialism it's obvious. Centralisation takes effect when a central (national or federal) government takes ownership of property. There is soft socialism; wherein large industry, or just certain types if industry, are owned by the central government. Then there is hard socialism (communism); wherein all property, including housing and clothing are taken over and owned by the government. By in large, the world has rejected hard socialism (communism), except in some places like China, North Korea and Cuba. Also by a large majority, the world has embraced soft socialism, wherein the central government takes control of some forms of property relating to certain industries. Western Europe is a good example where this is playing out.  In all cases what we are talking about here is centralised ownership of property, and a top-down big government administration of such property. This is a violation of the natural order. It's unnatural and its immoral. Though it is often done in the name of Solidarity, it is a blatant violation of the counter principle of Subsidiarity.

Likewise, capitalism has a similar problem. Again, capitalism in its most pure form, free of all government restrictions and regulations, tends to create monopolies, or at the very least oligopolies. Now to understand this, any business is really nothing more than a form of government. A governor, or businessman, simply applies certain rules to his activity to govern his business. If he does well by those rules, he turns a profit and becomes successful. When this happens on a small scale it is considered "good" and rightfully so, because it is good. This is how people take care of themselves and provide jobs for others. However, in an unrestricted and unregulated market, what usually happens is one businessman is usually better (more shrewd) than another, and as a result he wipes out his competition. Again, this is not necessarily a bad thing in and of itself, especially when it happens on a small scale, but when it happens on a large scale, it starts to become a real problem. As more shrewd businesses (or corporations) gradually wipe out less shrewd businesses (other corporations) there comes a point wherein only one business, or a small number of businesses, control all of the property dealing with that particular market. As this comes about, the prospect of new businesses starting up in that market becomes impossible, as they will immediately be shut-down or gobbled-up by the large monopolies and oligopolies. Thus owning your own business in this market becomes impossible, and in order to work in that field, one has no other option but to work for somebody else - one of the big businesses controlling it. This in time creates a servile class of "workers" verses a dominant class of "employers." The employers own all the business property, while the workers simply use it to help the employers make profit. In the 19th century a similar phenomenon was widespread in American agriculture called "tenet farming," but in the Middle Ages they called it something else -- serfdom. So hopefully you can begin to see the problem here. Capitalism, in its most pure form, unrestricted and unregulated, creates an economy wherein the majority of productive property is owned and controlled by just a handful of people -- corporate plutocrats. In this sense, it is similar (not identical but similar) to socialism, in which the majority of productive property is owned and controlled by just a handful of people -- government bureaucrats. Under both systems, a small handful of people gain ownership and control of the majority of productive property.  The only thing that is different is "which group" of people do you want in charge? Corporate plutocrats or government bureaucrats?  History tells us that, when given a choice, most people will choose government bureaucrats over corporate plutocrats 60% of the time.  Why this choice?  Because it is often presumed (quite incorrectly) that at least with a government bureaucrat, there are elections to be held accountable to.  In other words, the people choose the empty promise of more popular control.

In the early part of the last century (1900 - 1930) Americans experienced the full force of corporate plutocracy, and in an attempt to counter the serfdom this created, along with wild swings in the economy (rapid growth followed by big recessions), Americans turned to an extremely soft form of government bureaucracies. In other words, in their limited two-dimensional view of economics, 20th-century Americans, with the help of many Catholic voters, slid the scale away from the capitalist Right and toward the socialist Left.  This first began under the Franklin Roosevelt administration and continued all the way through the Barack H. Obama administration. What Americans ended up with was something "right of centre." America became an economy that was still capitalist, but just a little socialist too. Of course this did nothing to solve the problem of property ownership. All they did was transfer some property from the hands of corporate plutocrats into the hands of government bureaucrats. The general working population got nothing out of this other than new masters. The new masters were a little better than the old, sort of, because after all you can vote to have a say in a government bureaucracy, whereas in a corporate plutocracy the people have no say at all. Still the government becomes a master nonetheless, and we have still done nothing to address the problem of property ownership.

So enters the popes into this discussion on economics. The underlying themes of the papal encyclicals dealing with social justice and economics is the twofold principle of Solidarity counterbalanced with Subsidiarity. The popes argue for widespread property ownership, in effect decentralising the economy along with the government. Productive property, where you work, not just where you live, should be owned and operated by the people who work there. This starts with small business, wherein the sole proprietor (owner) is also the main employee, doing the work and making a living at doing it. Of course, not all businesses are small. Some are a little bigger, having as few as half a dozen, to as many as a couple hundred, employees. Again, if one man owns this, it's fine, because that one man will likely work side-by-side with his employees and have a hands-on understanding of them and their needs. However, when businesses get extremely large, often incorporating to insure long-term survival, they run the risk of becoming part of an oligopoly, or even worse, becoming a monopoly. When this happens, their existence becomes counter-productive to the common good of society and often times an obstruction not only to Subsidiarity but to Solidarity as well. Here the popes call for reason and sanity. Business is made for man, not the other way around. When we reach a point when business starts to utilise people as if they were nothing more than "cogs in a machine," we know something has gone terribly wrong. Herein alternatives to big business are called for.

One common and popular form of alternative to big business is the workers cooperative, wherein the workers share in joint ownership of the business. This gives the workers a stake in the productive property they use every day as workers. "That's not just a drill press I'm working on," for example "that's literally MY drill press, and my coworkers' drill press. We own the thing!" Such workers also own the factory or warehouse they're working in, along with the salaries they earn and the pensions they provide. It's a way of giving back to the common man a piece of productive property that he could never previously acquire on his own.

There are many implications to this way of thinking, but what we are talking about here is decentralisation of the economy and returning ownership back to individual people. This is what is called an "ownership economy" and the message of the popes to us over the last 100+ years is that widespread distribution of productive property is the best, and most sure, way of combating real poverty and social injustice. Back in the early days the name "Distributism" was used by some to describe this way of three-dimensional economic thinking. Today the word "Communitarian" is bantered around as the polar opposite of communism. Wherein society is structured around joint ownership among individual workers rather than the centralised state. In a way, this thinking, whatever you wish to call it, is the opposite of both capitalism and socialism. Because both capitalism and socialism concentrate property into the hands of a few, while this papal way of thinking, puts property back into the hands of the common man, regardless of what you want to call it, if you choose to call it anything at all. Some people just call it the "free market," while others call it the "fair market."

Along with an economy based on Subsidiarity, come many other things that deal with Solidarity. Workers who are co-owners will likely organise in such a way that takes care of each other and their families, such as medical insurance pans and pension plans, etc. These can likely be extended to larger communities, such as cities, counties and states, but administered on the local level instead of a centralised national level. Of course, churches would likely play a key role in this process, as they most especially serve as a large means through which social interaction occurs.

The reason why papal encyclicals on economics seem so foreign to the capitalist mind in America is because they are. They are simultaneously just as foreign to the socialist mind. That however, never stops the capitalist from calling the pope a "socialist" and a socialist from accusing the same pope of pandering to "capitalism." There seems to be a common error in this two-dimensional economic thinking, that if one doesn't align on one side, he must be on the other. Yet the popes align with neither.

Catholic Americans, no matter how devout as Christians and patriotic as Americans, must put down their preconceived notions of how economics works, and stop trying to plug the pope into that flawed understanding. The popes are not socialists. The popes are not capitalists either. The popes see economics in three-dimensions, and we would do well to learn how to do the same.


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That is an excellent explanation of these topics. I have often found myself confused when reading these encyclicals about the meanings of Solidarity and Subsidiarity. I was close in my understanding, but this does clarify. Thank you much.

Kristin Regina said…
Hi Shane. A friend sent me your post on how to convert Protestants. I just wanted to remind you that Sts Peter and Paul offered the Mass in Latin in Rome -- not Greek. At the Last Supper -- Our Lord used Hebrew since Hebrew is the language spoken at Passover.