Catholic Social Teaching and the Market Economy

Catholic Social Teaching and the Market Economy

edited by Philip Booth,

The Institute of Economic Affairs, London 2007, 273 pages, £20

Reviewed by Edward Hadas.

This review appeared in Faith, June 2008

Does Catholic Social Teaching support free market economics? Most of the contributors to this book of essays argue that it does. It is an odd claim, both in theory and in practice.The theoretical arguments which support free markets are not explicitly anti-Catholic, but they come close. To start with, proponents praise a morally impoverished sort of freedom – the ability to choose, whether or not the choice is good. The rich Catholic sense of freedom – the ability to will the good – is hardly recognised. Indeed, the concept of the good is largely left aside in favour of a non-moral “self-interest”.

Catholics should also be wary of the free marketers’ idea of a “market” – a collection of impersonal transactions set in a culture of pure competition. So-called “perfect” markets have no room for the guidance and discipline that governments provide. Nor is there much room for love, sacrifice and community.

The contributions by Philip Booth (the book’s editor), Denis O’Brien and Andrew Yuengert argue that Pope John Paul II approved of free markets. They are correct, but only relative to Communism. The pope said that such arrangement provide an “efficient instrument” for “effectively responding” to the limited set of needs which are “solvent”, that is which are appropriately bought and sold. (Centesimus annus 35).

John Paul II, however, was much more wary than enthusiastic. In the same encyclical, he emphasised that private property, a near-divine concept for free marketers, must be constrained by the obligations inherent in the “universal destination of goods” (19). He held that the market’s “logic of a fair exchange of goods” should always be secondary to “something which is due to man because he is man, by reason of his lofty dignity”. Thus, the market must be “appropriately controlled by the forces of society and by the State” (35).

The Pope did praise entrepreneurial energy and businesses directed to the good, but he also praised labour unions and criticised “capitalism” for its preference for impersonal capital over labour. He was distressed by “consumerism”, which seemed to be prized in modern economies.

Catholic Social Teaching and the Market Economy is published by a leading British “free market” think tank, so it is not surprising that the authors prefer to let their economics shape their Catholic thinking, rather than the reverse. The writers unquestionally rely on the claim that, in Booth’s words, “rigorous economic analysis tends to lead in a pro-market direction”.

That claim runs into the practical problem with “free market economies”, one which John Paul II himself seems only partially to have recognised: free-market don’t really exist. True, market-style competition plays a role in the economies of all rich countries, but hardly a dominant one. Governments and other not-for profit organisations account for as many as half of all jobs. Even in profit-seeking companies, regulation and cooperation play at least as important role in shaping the economy as any sort of market action. To praise the free market as a sole guide to economic organisation is in practice to endorse a utopian dream.

Such utopian economics undercuts the book’s much more realistic and solidly Catholic arguments against the excesses of the Welfare State. Here John Paul II is clearly on the anti-State side. “Malfunctions and defects in the Social Assistance State are the result of an inadequate understanding of the tasks proper to the State.” (ibid, 48)

For a century, popes have consistently endorsed the principle of “subsidiarity”, that social problems should be dealt with as directly as possible – by families, small communities and the Church rather than by the impersonal State. Samuel Gregg, in what is probably the book’s best essay, explains that, “The very nature of the Catholic Church’s own self-understanding therefore means that it cannot accept a state that purports to have no theoretical or practical limits...”

In a more querulous contribution, Denis O’Brien laments that the bishops of England and Wales are so keen to endorse government programmes that they seem to have forgotten the principle of subsidiarity. The complaints have merit, although O’Brien might have admitted that the modern Welfare State does much good through the provision of universal education and health care, not to mention some relief from misfortune. He might also have praised the bishops’ opposition to restrictive government policies on immigration.

It is not clear how authors would wean modern societies away from government welfare programmes. The title and tone of the collection suggests a belief that a good dose of free markets would be enough roll back the bossy State. If so, the writers are dodging the challenge. Competitive free markets are a mistaken utopian ideal, unheard of in economic history and are too socially abrasive to play more than a limited role in a trust-dependent complex industrial economy.

Catholic Social Teaching is a valuable gift of the Magisterium to the modern world. This book unwittingly shows the danger of trying to combine it with ideas that come from an alien intellectual tradition.