Saturday 11. July 2020

Peter Henrich o.p.

A Socially Ordered Economy


Catholic Social Teaching speaks out for a free and socially order economy. A market price for the production of goods and services based on supply and demand is shaped by the market. “When a firm makes a profit, this means that productive factors have been properly employed and corresponding human needs have been duly satisfied.” (Centesimus annus, 35)


In a market economy, it is a decentralised system of decision-making that determines which goods or services will be produced, not state or social authorities. Production is not determined by any centrally determined goals. “In a climate of mutual trust, the market is the economic institution that permits encounter between persons, inasmuch as they are economic subjects who make use of contracts to regulate their relations as they exchange goods and services of equivalent value between them, in order to satisfy their needs and desires. The market is subject to the principles of so-called commutative justice, which regulates the relations of giving and receiving between parties to a transaction.” (Caritas in veritate, 35)


“It would appear that, on the level of individual nations and international relations, the free market is the most efficient instrument for utilizing resources and effectively responding to needs.” (Centesimus annus, 34) Each need can only be satisfied insofar as something is paid for and bought. In the world at large, many people have no access to the market, so that their basic needs cannot be satisfied. (cf. Centesimus annus, 34)


It should not be forgotten that this takes place in the market, not according to an unchangeable law of nature, nor as something that is automatic. The market may not be set in stone. Economic activity is only a partial sphere of human action: “for man is the source, centre and the purpose of all economic and social life” (Gaudium et spes 63). And what applies in this sphere, also applies in every other sphere where human freedom and duty come into play.


The concept of a free and social market economy “links the principle of a free market and the instrument of a competitive economy with the principle of solidarity and with mechanisms designed to serve the interests of greater social equality”. (COMECE* 1) This would, however, be a broadening of the market towards aspects of desirable distributive and social justice, but the principle of endowing and free-giving must still remain an option for human activity. “Without internal forms of solidarity and mutual trust, the market cannot completely fulfil its proper economic function.” (Caritas in veritate, 35)


The price of human labour will also be determined by the market. Derived from the dignity of what it is to be human, work may never be seen as a “commodity of a particular kind” or as something that is anonymous, something that is viewed just as an indispensable “power” for production. A man or woman is always to be seen as a person. The goal of all economic activity is the “service of man, and indeed of the whole man with regard for the full range of his material needs and the demands of his intellectual, moral, spiritual and religious life.” (Gaudium et spes 64)


Dr. Peter Henrich o.p.

Theologian and Member of the Dominican Order, Düsseldorf











"...the riches that economic-social developments constantly increase ought to be so distributed among individual persons and classes so that the common advantage of all... will be safeguarded; in other words that the common good of all society will be kept inviolate". Pope Pius XI. (Quadragesimo anno, 57-58)



"As long as the problems of the poor are not radically resolved by rejecting the absolute autonomy of markets and financial speculation and by attacking the structural causes of inequality, no solution will be found for the world’s problems or, for that matter, to any problems. Inequality is the root of social ills Pope Francis (Evangelii Gaudium, 202)


To live charitably means not looking out for our own interests, but carrying the burdens of the weakest and poorest among us.