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CATHOLICISM vs CAPITALISM

By Patrick Harrington

This year marks the 100th anniversary of Rerum Novarum, the Encyclical Letter of Pope Leo XIII. Rerum Novarum is one of the cornerstones of Catholic Social teaching, laying down a set of principles governing working rights. Pius XI’s Quadragesimo Anno appeared 40 years later and developed Leo’s social principles emphasising the common good and state responsibility. At a time when the present Pope has warned Catholics against becoming complacent after the fall of Communism and has criticised Capitalism it is all the more timely to consider the teaching of Rerum Novarum which I should argue is in accord with the distributist principles of the Third Way.

OF THINGS NEW

At the heart of Rerum Novarum is a defence of the institution of private property. Pope Leo XII made the following telling criticism of Socialism:-

In working for a wage he works also for a full and perfect right to use his earnings as seems good to him. If, therefore, a man spends less on consumption and uses what he saves to buy a farm, that farm is his wage in another form, as much at his disposal as was the wage itself. It is precisely in this power of disposal that ownership consists, whether the property be in real estate or in movable goods. It follows that when socialists endeavour to transfer privately owned goods into common ownership they worsen the condition of all wage earners. By taking away from them freedom to dispose of their wages they rob them of all hope and opportunity of increasing their possessions and bettering their condition.
Pope Leo XII foresaw the effects of Socialism as witnessed in the former Eastern Bloc when he declared that socialism would lead to:-

All incentive for individuals to exercise their ingenuity and skill would be removed and the very founts of wealth dry up. The dream of equality would become a reality of equal want and degradation for all.
So far the reader might think that the Church was simply defending ‘free enterprise’ concepts. A thorough understanding of Catholic Social Teaching will, however, show that this is far from being the case.

A JUST WAGE

Some Capitalists justify low wages by saying that the worker is free not to make the contract if he feels that the money offered is insufficient. A cleaning supervisor of my acquaintance used this very argument to justify the payment of cleaners at a pitiful £2 per hour. These exploiters see no connection between the work itself and the rate offered. Pope Leo XIII outlined an alternative concept – the principle of a ‘just wage’. He stated:-

Let workers and employer, therefore, make any bargains they like, and in particular agree freely about wages; nevertheless, there underlies a requirement of natural justice higher and older than any bargain voluntarily struck; the wage ought not to be in any way insufficient.
Pope Leo XIII condemned those who “misuse men as instruments for gain and to value them only as so much energy and strength”. He stated that, “To defraud a man of the wage which is his due is to commit a grievously sinful act which cries out to heaven for vengeance.”

USURY

Another way in which Catholic Social Teaching stands in conflict with Capitalism is its forthright condemnation of Usury. The edition of Rerum Novarum that I would recommend is that published by the Catholic Truth Society with explanatory notes by Joseph Kirwan of Plater College, Oxford (ISBN 0-851835244). This centenary edition contains a very useful section outlining the traditional teaching on usury. This points out the definition of usury contained in the encyclical VIX pervenit sent by Pope Benedict XIV to the bishops of Italy in 1745:-

The sin called usury is committed when a loan of money is made and on the sole ground of the loan the lender demands back from the borrower more than he has lent. In the nature of the case a man’s duty is to give back only what he borrowed.
It is unfortunate fact that the Catholic Church in recent times has not campaigned as vigorously as say some Islamic groups against usury. Usury is something which has corrupted relations between not only individuals but also nations (see our articles on Third World Debt).

STATE INTERVENTION

Rerum Novarum also sets out a philosophy which contradicts the ‘Thatcherite’ outlook. It contains a defence of the right of the State to intervene in economic matters:-

The public authority must intervene whenever the public interest or that of a particular class is harmed or endangered, provided that this is the only way to prevent or remove evil.
John Paul II, the present pope, has underlined this point in Centesimus Annus saying:-

The State has a duty to sustain business activities by creating conditions which will ensure job opportunities, by stimulating those activities where they are lacking, or by supporting them in moments of crisis.
It is clear, however, that the State is not expected to ‘plan’ the economy. Rather it is expected to intervene where consideration of Justice impels it to do so, Centesimus Annus supports the principle of subsidiarity – that higher level organisations, such as the state, should not take over any of the functions that lower level organisations such as businesses or the family are capable of performing.

THE NATURE OF PROFIT

Centesimus Annus also gives rather different definition of the role of profit to that which would be put forward by many capitalists:-

The Church acknowledges the legitimate role of profit as an indication that a business is functioning well….. (however) the purpose of a business firm is not simply to make a profit, but is to be found in it’s very existence as a community of persons who in various ways are endeavouring to satisfy their basic needs, and who form a particular group at the service of society.
Pope John Paul II has explicitly stated the objection of the Church to our present Capitalist system, warning that the consumer society has the same effect as discredited Marxism:-

…..in the sense that it totally reduces man to the sphere of economics and the satisfaction of material needs.
The free economy must not lead to an “idolatry of the market” or a culture in which ‘having’ is more important than ‘being’, says the Pope.

CATHOLICISM V. CAPITALISM

As we have seen Catholic Social Teaching condemns usury, calls for state intervention in economic matters to uphold justice, demands a just wage for workers and its highly critical of the materialist ethos of capitalism which reduces the dignity of men to abstract economic equations. At the same time it condemns socialism and defends the right to private property. These teachings are not contradictory, as some would have it, but find their political expression in the Distributist philosophy of Belloc and Chesterton. This is the philosophy which underlies the economic policies of the Third Way. Can any Catholic seriously believe that the Labour Party Tories or Liberal Democrats will challenge the fundamental nature of Capitalism – an unjust system which stands condemned by these neglected social teachings of the Church? Needless to say the Third Way, as a secular body, does not endorse the theology of the Catholic Church or any other religious denomination. Yet those of the Catholic faith should consider carefully how social teaching can be expressed in the political arena…

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The Centenary Study Edition of Rerum Novarum with notes and introduction by Joseph Kirwan is available for 3.50 UK pounds from the Catholic Truth Society, 30-40 Eccleston Square, London, SW1V 1PD, ISBN 0 85183524 4.

Patrick Harrington is the writer of The Third Way – An Answer to Blair and a co-writer (along with Anthony Cooney and John Medaille) of Catholic Social Teaching

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