Capitalism, Socialism, and Catholicism: Four Things to Know

With another presidential election quickly approaching, the economy is a frequent topic of political conversation. The debates typically present two economic alternatives: either “Capitalism” or “Socialism.”

Catholic popes for more than a century have written extensively about the economy. Which of these economic systems does the Catholic Church advocate?

Actually, neither. Both ideologies have weaknesses that need to be understood when making political decisions. Here are four things to know:

1. Every person has a right to private property.

During the Industrial Revolution, when many workers moved from country farms to city factories, countless people found themselves in destitution. In the name of capitalism, factory owners were increasing their profits by paying their workers as little as possible, making it nearly impossible for families to provide for themselves.

In response to Capitalism, Karl Marx’s Socialism argued that the means of production (e.g, factories, farms) should be owned by the State, so that each worker could receive his or her fair share directly from the government.

Pope Leo XIII condemned Socialism in the 1891 encyclical Rerum Novarum,because it denies individuals their human right to own and work for private property. Without this right, the Seventh Commandment – “You shall not steal” – makes no sense. This condemnation of Socialism has been repeated over and over again by the Catholic Church (CCC 2403, 2425).

2. The goods of creation are meant for everyone.

At the same time, Pope Leo XIII and later Popes have warned that Capitalism tends to concentrate too much property into the hands of a few, leaving the poor with little or none. God created the earth and its goods for all people, not just the wealthiest. The Catechism of the Catholic Church quotes the bold words of St. John Chrysostom: “Not to enable the poor to share in our goods is to steal from them and deprive them of life. The goods we possess are not ours, but theirs” (CCC 2446).

The “right to private property” must be thus carefully balanced by an understanding of the “universal destination of goods” and concern for the poor. Business owners and stock holders have a very serious responsibility to consider the needs of their employees, their customers, and of the community, not just their own profits (CCC 2432). Furthermore, when the poor cannot provide the necessities of life for themselves, it is not theft for the State to assist them with the excess wealth of others (CCC 2406, 2408).

3. Fruitful work is both a responsibility and a right.

This brings us to a common concern today: What about people who, enabled by state assistance, simply choose not to work? The Catechism quotes St. Paul, who wrote, “If any one will not work, let him not eat” (1 Thessalonians 3:10; CCC 2427). Productive work is a human responsibility for all who are able, because we have been made in the image of God the Creator. Although there is often a need for State assistance of the poor, John Paul II clearly warned against the creation of a “Welfare State,” in which overreaching government replaces personal and local responsibility (Centesiumus Annus 48).

At the same time, we cannot expect individuals to provide for themselves and their families if they cannot find jobs that pay a living wage. Catholic Social Teaching emphasizes that businesses have a responsibility to provide sufficient income to their employees, (CCC 2434) and the State has a responsibility to help create conditions for sufficient job opportunities (CE 48).

4. A truly free market requires reasonable regulations by the State.

The Catholic Church, then, clearly stands against socialism, and its stance toward Capitalism, John Paul II explained, depends on how we define it. If we simply mean a system in which private businesses are responsible for the means of production (e.g., factories, farms), which encourages human creativity, ingenuity, and responsibility, then Catholic Social Teaching strongly endorses it. If we instead mean a system in which businesses are allowed to do whatever they want in pursuit of profit, without regard for the good of society, then Capitalism isn't consistent with Catholic morality (CE 42). Pope Leo XIII warned that such so-called economic freedom often lays upon the lower class “a yoke little better than that of slavery itself” (Rerum Novarum 3).

For this reason, the Catechism of the Catholic Church recommends “[r]easonable regulation of the marketplace and economic initiatives” by the State, for the sake of the common good (CCC 2425). Pope Francis explained in his recent Encyclical Laudato Si:

To ensure economic freedom from which all can effectively benefit, restraints occasionally have to be imposed on those possessing greater resources and financial power. To claim economic freedom while real conditions bar many people from actual access to it, and while possibilities for employment continue to shrink, is to practice a doublespeak which brings politics into disrepute.

There is room for much discussion and debate within Catholic Social Teaching to decide whether particular State regulations are truly beneficial for all or not. Such reasonable regulation of the market is not Socialism, as some may argue, but is the exact opposite: Socialism eliminates private ownership from all, while Catholic teaching proclaims, “The law, therefore, should favor ownership, and its policy should be to induce as many as possible of the people to become owners” (RN 46).