From the very first pages of the Book of Genesis it is clear that all creation is ultimately a gift from God and that man was created to be his steward of this creation for the benefit of all God’s children. As captured in Gaudium et Spes, a Vatican II document, “God intended the earth with everything contained in it for the use of all human beings and peoples. Thus, under the leadership of justice and in the company of charity, created goods should be in abundance for all in like manner.” This fundamental principle–that all creation is ultimately God’s and, therefore, belongs to all God’s creatures–has come to be known as the universal destination of material goods.
Unfortunately, this teaching of the church, like so many others, has been misinterpreted over the centuries as supportive of one form of socialism or another, including government redistribution of wealth. Indeed, at first blush, the principle of the universal destination of material goods appears to be a troubling teaching for Christians committed to individual liberty and the free market. This principle would seem to indicate that all material goods should be held in common ownership, no matter their origin. If this were the case, however, then private property would be impossible. No individual would have the ability to say, “This is mine and not yours because I created it by means of my own blood, sweat, and tears.”
A thorough understanding of the nature of private property and free-market exchange, however, exposes this apparent paradox as a chimera of the leftist’s creation and not a fact of church teaching or economic reality. In fact, we will see that the freedom of exchange based on private property rights actually reinforces the church’s teaching on the universal destination of material goods by limiting man’s human impulses away from God and by magnifying man’s positive impulses toward God’s moral Scripture.
The Christian Understanding of Private Property and the Universal Destination of Material Goods
The first step we must take is a review of the church’s teaching on private property. The record here is not what those fearful of the market would have us believe. The Bible and the teachings of the church strongly support man’s natural right to private property. The Seventh Commandment, “Thou shalt not steal,” is emphatic that one wrongs a neighbor by taking what belongs to him. The understanding of the biblical authors is that the act of stealing violates human dignity. Stealing, clearly, is seen as contrary to solidarity, to charity, and to the overall well-being of a community.
Much as do the Scriptures, the Fathers of the church generally give voice to the right to private property. As in the Bible, Saint Augustine teaches that private property is necessary and useful for our earthly sojourn as well as in accord with God’s design of man himself. The world and its goods must be used, according to Augustine, for the journey from temporal existence to our homeland in eternity. Likewise, Saint Thomas Aquinas affirmes a role for private property as part of man-made positive law that serves in the proper structuring of human affairs toward the common good.
The modern era of Roman Catholic social teaching can be said to have begun with Pope Leo XIII’s 1891 Encyclical Letter Rerum Novarum, “Of the New Things.” The new things to which the church was responding included the Industrial Revolution and the consequent changes in the disposition of labor and capital. Of primary concern, however, was socialism, which was gaining footholds in the West in both theory and practice. At the heart of the socialist agenda was the denial and abolition of the right to private ownership. Leo condemned socialism outright in this encyclical, and in so doing, launched the most concerted defense of private property that the church had seen to date. “Nature confers on man the right to possess things privately as his own” (no.10), Leo writes. Leo goes so far as to demand respect for the principle that “the right of private property … be regarded as sacred” (no.65).
By the time of the pontificate of John Paul II, the principle of property rights was brought by the church into fuller conversation with contemporary economic science. The Encyclical Letter Centesimus Annus was expressly written to commemorate the hundredth anniversary of Leo XIII’s watershed document and articulates a solid defense of economic freedom based on private property, provided that this freedom is oriented to human dignity and the truth about man. For John Paul II, property is an extension of the freedom of the human person. In this sense, private property is a proper extension of the subjectivity of the person into the material order.
In summary, from the early books of the Bible through modern Catholic social teaching, the right to private property has been as central to the Christian life as the universal destination of material goods. Therefore, it cannot simply be assumed that the existence of the church’s teaching on the universal destination of material goods invalidates the institution of private property. A more elaborate understanding of the two principles is needed.
Alternative Economic Systems and the Universal Destination of Material Goods
Let us assume for a moment that private property rights were abandoned as antithetical to the church’s teaching on the universal destination of material goods. Another system for organizing economic activity would then have to emerge or (rather) be imposed. Indeed, various other systems that are not based on private property rights and free exchange have been proffered and even tried, often in the name of a just distribution of material goods.
One such non-liberal system oft attempted has been central planning. In the extreme, a single dictator or planning board is placed in charge of directing every aspect of economic activity. Less-severe systems have called merely for a central actor to redirect a portion of economic activity or material goods from one sector to another. In any case, a benevolent dictator or a planning board composed solely of moral individuals is required to establish a specific moral level and distribution of wealth. This may be possible in theory but is highly unlikely in reality. The cost of such strenuous self-restraint is too high for any human being to sustain. To state the problem more succinctly, we need turn to no less an authority than Lord Acton: “Power tends to corrupt, and absolute power corrupts absolutely.” The result–as the experience of dictatorships throughout history teaches–is a most unjust and arbitrary distribution of goods hardly in line with the church’s teaching on the universal destination of material goods.
Another option is to delegate some or all decisions concerning wealth production and distribution to a collective decision-making process. In the extreme, collective decision making requires unanimous consent to make any and every economic decision. Every individual affected by a particular economic decision must agree to the course taken with regard to that decision. Since every economic decision will affect at least a small group of individuals, every decision becomes a group decision requiring unanimous consent. Again, a less-severe variation is possible, namely, a democratically elected representative portion of the entire population given the right to make decisions on behalf of the collective.
There are significant costs associated with a collective decision-making process, be it in the extreme or through an elected minority. First, there are tremendous “shoe leather” costs in simply gathering all affected parties together to make a decision. Second, the time necessarily spent by each individual to acquaint himself with the circumstances surrounding each decision is significant. A third, related cost is the time spent by individuals educating or lobbying fellow decision makers on the pros or cons of a particular choice. All of these costs take time, time that could be spent more productively in direct wealth creation that could benefit all individuals. Moreover, as economist Armen Alchian points out, “Under [common] ownership the costs of any decision or choice are less fully thrust upon the selector than under private property…. [T]he gains to any owner resulting from any cost-saving action are less fully effective.” In other words, there is a “moral hazard” problem associated with common ownership since individuals do not bear the full costs of their action (or inaction).
The Positive Case for Private Property Rights
It is not merely because private property and market exchange are the best available options that we can claim their alignment with the principle of the universal destination of material goods. Inherent in a system of free exchange is actually a positive reinforcement of that doctrine.
First, private property and free exchange fully align the costs and benefits of economic decisions. There is no moral hazard. Individuals have every incentive, therefore, to search for cost-saving measures because they will receive the full benefit of these actions. Likewise, individuals have every incentive to seek out new, productive opportunities because they will receive all of the direct benefits of such opportunities. The result is greater creation of wealth.
Second, free exchange based on secure private property rights leads to specialization in labor and ownership. Increased specialization of labor and ownership, as Adam Smith so elegantly pointed out in the eighteenth century, increases wealth production and accumulation because individuals can concentrate their efforts on a relatively few tasks. Specialists can incorporate more thorough knowledge in their work and can spot entrepreneurial opportunities more quickly and efficiently. Specialization and the alignment of costs and benefits lead to greater and more efficient production that, in turn, leads to a relatively large accumulation of wealth–wealth that can benefit all individuals better than if it were never created in the first place.
The creation and accumulation of wealth is only the first step toward fulfillment of the universal destination of material goods. How do private property rights and free exchange lead to a just distribution of goods? First, secure private property rights open the door to charity. Charity is impossible in the absence of privately owned property. Aquinas teaches that charity is not only the fundamental and most important virtue but that it is the form of all other virtue. Charity is love. And the two greatest biblical commandments are to love God and to love one’s neighbor as oneself. Consider, in this context, Christ’s parable of the widow’s two mites. It was precisely because the widow’s gift came from her own relative poverty that Christ exalts it over that of the wealthy. If there were no private property, the widow’s pittance would be insignificant.
Just as important as the opportunity for charity is that private property rights and free exchange make one’s economic sustenance dependent on making others happy. And, importantly, this is the case whether or not individuals realize the fact. Even if (or, more properly, when) individuals have self-enrichment as their sole incentive, their success is based on spreading their accumulated wealth. In a system of free exchange, accumulated wealth is not usually stored or hidden from sight but, instead, is traded or lent to others who are able to put these resources to immediate use. For example, wealth is invested in companies through the stock market. The employees of these companies are able to use this wealth to increase their own productivity and, therefore, their own incomes. The important point is that, in a system of free exchange, wealth is not hoarded but, instead, put to its most productive use in the creation of further wealth. As Michael Novak has written, “Isn’t it better that the rich invest, rather than merely consume or (like the aristocracies of old) spend their fortunes on courtiers, hangers-on, and private armies? Our current system encourages the wealthy to keep investing. That’s socially useful.” So we see that a system of free exchange distributes wealth to individuals depending on their productivity and not on some arbitrary characteristic such as birthright or the decision of a central planner or representative body.
Reinforcing the Church’s Social Teaching
We see that, far from being contradictory, private property rights and the freedom of exchange actually reinforce the church’s teaching on the universal destination of material goods. First, as an alternative to either central planning or collective action, free-market exchange and private property, through specialization, produce the material wealth that is needed for just distribution in the first place. Moreover, private property allows for opportunities to practice the core Christian virtues of charity and love. Even more fundamentally, personal success in the free market ultimately depends on making others happy by giving to them exactly what they want, where they want it, and when they want it. And this is the case even if–in more base, human moments–individual economic actors are motivated only by self-interest.
In summary, more than any other variant of economic organization, private property and free exchange reinforce the church’s teaching on the universal destination of material goods by magnifying man’s positive impulses toward God’s moral Scripture and limiting man’s human impulses away from God.