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The following essay is excerpted from Samuel Gregg’s new book For God and Profit: How Banking and Finance Can Serve the Common Good (Crossroad, 2016).

No one ideal financial system is immediately derived from either Christian faith or natural reason. That’s not just because of sin and its effects. It’s also a reflection of a truth that has already been stated but that cannot be repeated enough: while Christianity teaches that one can never choose evil, there are often many ways of doing good that, while differing from one another, don’t violate the principles revealed by natural law and divine revelation. There is no uniquely right way to provide, for instance, housing for the homeless. But fraud always constitutes injustice.

Like any sector of the economy, finance is subject to the requirements of justice. And the nature of justice is a topic on which the Christian tradition has long brought very clear principles to bear. A succinct description of these principles may be found in the Catechism of the Catholic Church. This text is especially helpful, not least because it draws on a range of sources such as Scripture, the Church Fathers, and natural law to outline these principles, many of which precede the East–West schism of 1054 and Western Christianity’s splintering in the Reformation’s wake.

Revealingly, the Catechism’s discussion of justice follows immediately after its reaffirmation of the classic Christian teaching on common use and private ownership. Beginning with a strong condemnation of theft as a violation of one of the moral absolutes affirmed in the Decalogue, the Catechism considers the promises we make to one another in the form of contracts.

Contracts, the Catechism specifies, are subject to what Christianity calls commutative justice: that “which regulates the exchanges between persons and between institutions with a strict respect for their rights.” Drilling down another level, the Catechism immediately adds that commutative justice “obliges strictly.” That is strong language. It requires, in the Catechism’s words, “safeguarding property rights, paying debts, and fulfilling obligations freely contracted.” One reason for this strictness is, as the Catechism states, “without commutative justice, no other form of justice is possible.” A moment’s reflection underlines the truth of this. Life would quickly grind to a halt if everyone considered himself entitled to simply walk away from freely undertaken promises.

Two qualifications need to be made here. First, many parties to a contract may disagree about the meaning of what they have formally decided to adhere to, and what’s implied in a given contractual arrangement. Contract law emerged because of the need to resolve such disagreements. Second, commutative justice itself cannot be separated from the demands of other forms of justice. Even if two parties agree to perform certain actions, that doesn’t legitimate every single promise made in a given contract. If, for instance, I freely sign a contract that involves me selling myself into slavery, the Christian response would be that the intrinsic immorality and injustice of slavery immediately nullifies the contract.

Understanding the nature of another mode of justice long stressed by Christianity illustrates this point. The Catechism defines distributive justice as that “which regulates what the community owes its citizens in proportion to their contribution and needs.” The words “contribution” and “needs” are important. They remind us that while distributive justice means ensuring people have what they need, it is also attentive to other criteria such as merit, willingness to assume risk, and how much responsibility a person carries. All other things being equal, this means, for instance, that those who work harder, assume more risk, or take on higher levels of responsibility deserve a higher income or salary than those who decline to do so. But distributive justice also has implications for the state’s role in the economy. It suggests that the state may regulate economic institutions such as contracts and private property—not in an arbitrary way, but rather to ensure that contractual arrangements and the workings of free exchange don’t embody significant violations of distributive justice.

The workings of bankruptcy law illustrate the point. Bankruptcy is the process by which an insolvent person or company is declared by the law to be unable to meet his financial obligations. As a result, the bankrupt’s property is vested in the courts or some other designated legal trustee who has the responsibility to divide it among the bankrupt’s creditors. Bankruptcy law also normally prevents seizure of things that bankrupts require to earn an income or to maintain their families.

Bankruptcy law seeks to reconcile two principles. The first is that, as far as possible, people receive what they are owed in light of the inability of others to pay back all that they owe. The second is that no fulfillment of promises obliges any party to the contract to accept conditions that violate human dignity. From this standpoint, bankruptcy involves consideration of both the demands of commutative justice and distributive justice. The creditor’s specific claims against the debtors are given attention (commutative justice). At the same time, the claims of all known creditors are pooled by the courts and the debtor’s property is treated as if it were the commonly owned property of the creditors (distributive justice).

Here we see the subtle ways in which commutative justice and distributive justice shape each other as we seek to resolve some of life’s most thorny economic disputes. Note, however, that the ability of a given society to promote and protect commutative and distributive justice relies on people being willing to accept the decisions of courts, legislatures, and governments. This is what the Catechism calls legal justice: that “which concerns what the citizen owes in fairness to the community.” It is, after all, the state and the legal system that assume coordinating these modes of justice. They provide an overall framework that governs the ownership and use of property, and establishes and presides over the arrangements for adjudicating and resolving disputes. Unless people are willing to accept the rulings of courts, human flourishing and the common good become impossible.

Samuel Gregg is research director of the Acton Institute.

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Dr. Samuel Gregg is research director at the Acton Institute. He has written and spoken extensively on questions of political economy, economic history, ethics in finance, and natural law theory. He has an MA from the University of Melbourne, and a Doctor of Philosophy degree in moral philosophy and political economy from the University of Oxford.

Gregg oversees Acton’s research program and team of scholars and is responsible for oversight of research international programing, including budgeting, management, personnel, publishing, and program development and