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Papal Economics 101: Freedom and Truth

Where did Pope John Paul II stand on economic issues? The same place he stood on all other issues involving the well-being of the human person. He favored the rights and dignity of all people, freedom to work and to create, an environment of security that permits the flourishing of faith. He had faith in freedom and no love for the grand secular state. Thus did this pope understand that human dignity implies non-socialist political and economic structures, which are commonly known as the business economy.

He was a fierce critic of socialism and worked to bring about its end in Eastern Europe. He saw the merit of the institutional arrangements commonly called capitalistic: protection of private property, the freedom of trade, the enforcement of contract, the right of economic initiative, and the social merit of a growing economy essential to support a rising population.

Whenever I've made these claims in any kind of public forum, I'm immediately hit with a barrage of objections to the effect that John Paul II also criticized American consumerism, worried about the effects of globalization on the poor, called for the forgiveness of loans to poor countries, backed labor unions—all positions uncharacteristic of an uncritical backer of the American capitalist state. To this, I can only respond: True indeed, and note that none of the claims above contradict his essential conclusion that socialism and socialist institutions are incompatible with freedom and dignity, whereas institutions of the business economy are just so compatible.

To be sure, individuals and institutions must also use their freedom within the marketplace in a manner consistent with virtue and in accord with the common good. The business economy is a necessary but not sufficient condition; what is crucial from the point of view of comparative systems, however, is that the pope taught that it was necessary.

“The modern business economy has positive aspects,” he wrote. “Its basis is human freedom exercised in the economic field, just as it is exercised in many other fields. Economic activity is indeed but one sector in a great variety of human activities, and like every other sector, it includes the right to freedom, as well as the duty of making responsible use of freedom.” Again, he says, “it would appear that, on the level of individual nations and of international relations, the free market is the most efficient instrument for utilizing resources and effectively responding to needs.”

It is a particular contribution of John Paul II to have introduced the “right of economic initiative” into the theological vocabulary. “It should be noted,” writes the pope, “that in today's world, among other rights, the right of economic initiative is often suppressed. Yet it is a right which is important not only for the individual but also for the common good. Experience shows us that the denial of this right, or its limitation in the name of an alleged 'equality' of everyone in society, diminishes, or in practice absolutely destroys the spirit of initiative, that is to say the creative subjectivity of the citizen.”

For a strong economics education, I cannot recommend too highly John Paul II's 1991 encyclical Centesimus Annus, which discusses the division of labor, property, prices, profits, debate, development, sound money, trade, the environment, and a host of other issues, all with the desire to teach and encourage more freedom. He said he had no models to present or endorse, but what he did offer was a higher ideal that challenges all nations in the world to reject the failed economics of planned states and embrace total freedom, including an economic freedom, directed towards the truth.