Acton Institute Powerblog

An aid to defining ‘capitalism’

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I am working on a project now that has to do with the various attempts to reform, redeem, redirect, or otherwise update capitalism. And in so doing, I’m reminded of one of the most incisive, insightful, and relevant passages in all of Catholic Social Teaching.

I’m of course referring to section 42 of John Paul II’s Centesimus Annus, in which he distinguishes between two definitions of capitalism. This distinction is outlined in response to the following questions: “can it perhaps be said that, after the failure of Communism, capitalism is the victorious social system, and that capitalism should be the goal of the countries now making efforts to rebuild their economy and society? Is this the model which ought to be proposed to the countries of the Third World which are searching for the path to true economic and civil progress?”

“The answer is obviously complex,” says John Paul II. And what makes it complex is, in part, what one understands capitalism to be. He continues:

If by “capitalism” is meant an economic system which recognizes the fundamental and positive role of business, the market, private property and the resulting responsibility for the means of production, as well as free human creativity in the economic sector, then the answer is certainly in the affirmative, even though it would perhaps be more appropriate to speak of a “business economy”, “market economy” or simply “free economy”.

But another understanding of capitalism is also pervasive. I take it to be shorthand for simply “that which oppresses” when it is used by critics in this way. As John Paul II puts it:

But if by “capitalism” is meant a system in which freedom in the economic sector is not circumscribed within a strong juridical framework which places it at the service of human freedom in its totality, and which sees it as a particular aspect of that freedom, the core of which is ethical and religious, then the reply is certainly negative.

He continues, observing that “the Marxist solution has failed,” but that this does not mean that we have entered a world free from complexity, oppression, injustice, or doubt.

In any case, let me commend this passage, and the entire encyclical, for its help in discerning the difficulties of our present age.

Jordan J. Ballor

Jordan J. Ballor (Dr. theol., University of Zurich; Ph.D., Calvin Theological Seminary) is a senior research fellow and director of publishing at the Acton Institute for the Study of Religion & Liberty. He is also a postdoctoral researcher in theology and economics at the VU University Amsterdam as part of the "What Good Markets Are Good For" project. He is author of Get Your Hands Dirty: Essays on Christian Social Thought (and Action) (Wipf & Stock, 2013), Covenant, Causality, and Law: A Study in the Theology of Wolfgang Musculus (Vandenhoeck & Ruprecht, 2012) and Ecumenical Babel: Confusing Economic Ideology and the Church's Social Witness (Christian's Library Press, 2010), as well as editor of numerous works, including Abraham Kuyper Collected Works in Public Theology. Jordan is also associate director of the Junius Institute for Digital Reformation Research at Calvin Theological Seminary.