Pope Benedict XVI’s much anticipated economics encyclical, Caritas in Veritate, is scheduled to be released early next week, according reports. For a good sense of this pope’s thinking on economics, we offer an article the then-Joseph Cardinal Ratzinger presented in 1985 at a symposium in Rome.  The Acton Institute published it under the title “Market Economy and Ethics.”  As indicated by the following quote, the pope believed in integrating morals into economics in order to have sound and successful economic policy:

This determinism, in which man is completely controlled by the binding laws of the market while believing he acts in freedom from them, includes yet another and perhaps even more astounding presupposition, namely, that the natural laws of the market are in essence good (if I may be permitted so to speak) and necessarily work for the good, whatever may be true of the morality of individuals. These two presuppositions are not entirely false, as the successes of the market economy illustrate. But neither are they universally applicable and correct, as is evident in the problems of today’s world economy.

Without developing the problem in its details here — which is not my task — let me merely underscore a sentence of Peter Koslowski’s that illustrates the point in question: “The economy is governed not only by economic laws, but is also determined by men…” Even if the market economy does rest on the ordering of the individual within a determinate network of rules, it cannot make man superfluous or exclude his moral freedom from the world of economics. It is becoming ever so clear that the development of the world economy has also to do with the development of the world community and with the universal family of man, and that the development of the spiritual powers of mankind is essential in the development of the world community. These spiritual powers are themselves a factor in the economy: the market rules function only when a moral consensus exists and sustains them.


  • MaryAnn

    Makes sense to me. Anything constructed by and used by human beings will be moral and just only to the extent that the humans constructing it and using it are moral and just. Human beings are flawed, and as such, they need Spiritual guidance to keep them as close as possible to moral and just governance. The quest for guidance is, of course, individual, and should never be a State mandate.
    I’m looking forward to the Holy Father’s encyclical.

  • Roger McKinney

    It seems to me that the Cardinal makes a false dichotomy between the “binding laws of the market”, which he seems to think are deterministic, and the free will of humans. He quotes Peter Koslowski’s: “The economy is governed not only by economic laws, but is also determined by men…”

    There are no economic laws that are not determined by men. The “laws of the market” are nothing but a short hand way of talking about how people generally act. There is no determinism. I think that perspective comes from taking mainstream econ too seriously when it tries to make economics a subdiscipline of physics. It’s not, never has been and never will be. Economics is social science, not natural science; it’s about human action, not the action of physical particles that can’t think.

    “But neither are they universally applicable and correct, as is evident in the problems of today’s world economy.”

    If human nature is the same everywhere and at every epoch in history, then the laws of the market are universally applicable and correct. The problems in the world economy today are the God-given consequences of violating the principles of human nature as He made them, or as they exist in mankind’s fallen nature.

    “These spiritual powers are themselves a factor in the economy: the market rules function only when a moral consensus exists and sustains them.”

    Well then he contradicts every liberal economist from Smith to Hayek. The whole point of Smith’s writings was that the free market limits the immorality of mankind to the greatest degree. If the market depended upon the moral development of mankind, then it would always fail.

    China is a good example. By opening the door a crack to a tiny amount of freedom in the marketplace, the Chinese lifted hundreds of millions of people from starvation to wealth in a generation. The Chinese did not suddenly achieve a higher standard of morality. The state allowed freedom for humans to act as God intended them to act in the marketplace and they created enormous amounts of new wealth.