Rerum Novarum and the Catholic legacy of Economic Justice

The current budget battle between the two dominant American political parties involves two familiar, age-old, disagreements on how to provide prosperity for as many people as possible. From the political forces on the right we have a firm belief that economic growth happens through a free and unregulated market system. This tradition comes to us from the legacy of American capitalism that was developed from Alexander Hamilton and those who shared his economic vision. The political left on the other hand believe that an unregulated market is volatile and inherently unequal thus it is threat to democracy unless the forces of democracy are able to regulate the market for the benefit of the common good. This vision was inspired by Thomas Jefferson and his legacy of promoting American democracy as a way of addressing political and economic injustice.

While this partisan duel is underway we in the Catholic community are also observing another important milestone within our social tradition. This year makes the 120 anniversary of the Papal Encyclical Rerum Novarum. This document that was promulgated by Pope Leo XIII in 1891 has sparked the Catholic social tradition which continue with the recent encyclical by Pope Benedict XVI, Caritas in Veritate. The Catholic social tradition has addressed numerous issues of social concern but in light of the current economic crisis is worth noting that both Rerum Novarum (RN) and Caritas in Veritate (CV) have focused their social analysis on the economic question and the concern regarding Communism on the one hand and Market Fundamentalism on the other. With this blog post and the others that we will be developing within the next few weeks Fr. Sebastian MacDonald, CP and I will reflect on the Catholic social tradition and what it tells us about the current economic situation and financial crisis which is now manifesting within the budget debate. This post will highlight the tradition of economic justice as developed between these two encyclicals.

In the most simple terms, capital and labor have always been pitted against one another. In a market system capital and labor are vital ingredients to the economic engine. Each side has historically set itself apart from the other by emphasizing its own position with regards to how it interprets freedom and control (rule of law).  For example, the capitalist system is big on freedom from external controls imposed on it by outside forces, distorting the free give and take of market mechanisms.  But, by a strange turn of the knife, this same system imposes extensive controls on the working class, disallowing them certain freedoms, such as those concerning the right to assemble and voice their opinions.  Similarly, the labor group is big on freedom to express itself, to assemble, to organize, to bargain for certain privileges, etc.  But it is also found on the side of controls, both of its members who have to conform to union dues and rules, and also of the owners, on those occasions when labor gains the ascendancy in its disputes with capital, and can call the shots about the privileges and benefits it demands from the owners.  So the freedom-control conflict is as central to this issue as the capital-labor dispute.

In the current struggle for balance between these two forces labor is again at a growing disadvantage. The increase use of automation and the surplus of cheap labor in Asia and Africa has diminished the bargaining power of labor. The recent situation in Wisconsin where the bargaining rights of workers have been legislatively threatened highlights this concern. The globalized economy has brought us back to the original concern that the Church expressed 120 years ago with the struggle between capital and labor.

Hence, by degrees it has come to pass that working men have been surrendered, isolated and helpless, to the hardheartedness of employers and the greed of unchecked competition. … To this must be added that the hiring of labor and the conduct of trade are concentrated in the hands of comparatively few; so that a small number of very rich men have been able to lay upon the teeming masses of the laboring poor a yoke little better than that of slavery itself. RN #3

Catholic social teaching has consistently reminded us that the economy is at the service of humanity and not vice versa. The tradition has been very critical of the emergence of profit as an end in itself and it has been condemned by both Pope Paul VI and Pope Pius XI as the “international imperialism of money.” Pope Benedict XVI adds to this consistent teaching as well.

I would like to remind everyone, especially governments engaged in boosting the world’s economic and social assets, that the primary capital to be safeguarded and valued is man, the human person in his or her integrity: “Man is the source, the focus and the aim of all economic and social life” (CV #25)

Nonetheless, wealth production is a worthwhile, indeed a necessary, ingredient of a healthy society based on possessions of one’s own goods. Paragraph 8 of Rerum Novarum stated a firm defense for private property and Catholic social teaching has consistently promoted that stance. There’s no question here of disregarding or diminishing the importance of wealth or private property.  It’s a matter of adequate distribution of wealth/capital, so that a truly capitalist system can prevail, wherein everyone is a capitalist, that is, a holder/owner of true capital.  When capitalism is understood as the prerogative of only a few, then the capitalist system fails its promise.

Based on these considerations a frustrated Catholic may find him or herself asking the question: “What economic system does the Catholic Church support? Does it support a socialist or a capitalistic system? The answer is neither.

As far as the Church’s teaching is concerned the struggle between the absolute power of the State and the absolute freedom of the Market is a struggle between two idols that enslave the human person by forcing it to serve an extrinsic value outside of itself. In absolute terms both the State (under communism) and the Market (under neo-liberalism) are idols and the Church has rejected such interpretation of either institutions.

Instead the Church has defended a well ordered balance between the state and the market which serves the human community. In this regard the recent development of Catholic social teaching has offered a system that pursues the common good through a balance between the principles of subsidiarity and solidarity. Subsidiarity defends the freedom of the individual and the local social unit by professing that any social power, responsibility and authority that can be relegated to the most local social unit (eg. family, community associations, municipalities, etc.) ought to be. Solidarity on the other hand is a Catholic principle that dictates that our economic and social policies ought to take into consideration the common welfare especially with regards to those in need. Thus it is that Pope Benedict XVI articulates the interrelationship of these two principles in this way:

The principle of subsidiarity must remain closely linked to the principle of solidarity and vice versa, since the former without the latter gives way to social privatism, while the latter without the former gives way to paternalist social assistance that is demeaning to those in need. (CV #58)

The Church refuses to be caught between a moral struggle between two absolute systems. Instead the Church challenges us to explore an alternate system that can integrate the freedom of the market with the responsibility of the democratic state in serving the basic dignity of every individual and the common good of all. In our next blog post we will explore an alternative economic system that can do this through the Gospel mandate to “Love one another” and to foster a system that can promote a compassionate rather than a competitive relationship between one another.


About jdgonzo73

I am a Catholic lay minister in the field of Christian ethics, Latino theology and Paulacrucian spirituality. I am currently a Doctor of Ministry student at Fordham, an ad-junct professor at Molloy College and St. John's University and the Project Coordinator with the Catholic Roundtable.
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3 Responses to Rerum Novarum and the Catholic legacy of Economic Justice

  1. Pingback: “The Moral Measure of this Budget Debate” Part 1. The Catholic Concern | The Reluctant Prophet

  2. Helene Jnane says:

    You have dangerously mischaracterized the Jefferson Hamilton debate as a debate about “how to provide prosperity for as many people as possible.” God provides, not government.

    The Jefferson Hamilton debate was essentially a debate about freedom vs. tyranny and, more specifically, about the role and authority of the newly constituted government of the United States of America. Hamilton favored a strong central government. Jefferson, a founding father, author of the Declaration of Independence, did not. He believed that local self-government was the best way to preserve the liberty that Americans had so dearly won – he preferred the authority of state government over which the people could exercise greater control to that of a distant federal government.

    In his first inaugural address, Jefferson said: “It is proper you should understand what I deem the essential principles of our Government…the support of the State governments in all their rights, as the most competent administrations for our domestic concerns and the surest bulwarks against antirepublican tendencies.”(Thomas Jefferson, First Inaugural Address, 1801)

    Elsewhere in the address, he stated: “Sometimes it is said that man can not be trusted with the government of himself. Can he, then, be trusted with the government of others? Or have we found angels in the forms of kings to govern him?” (Thomas Jefferson, First Inaugural Address, 1801). Prior to his becoming president, Jefferson had authored the Virginia and Kentucky Resolutions of 1798 which resolved that each state as a party to the contract that formed the federal government had the right to nullify unconstitutional federal legislation.

    In order to strengthen the power of the federal government, Hamilton, as Secretary of the Treasury under George Washington, chartered the Bank of the United States, a private bank funded – under a scheme devised by Hamilton – with stock purchased by the federal government, with money borrowed by the government from the bank, that was to be repaid to the bank out of the monies that the government took from the people in the form of taxes! How better for government to control the people than through the yoke of debt and taxes. Needless to say, Jefferson opposed the central bank as a form of theft – regardless of what services the government could provide with the monies it stole from the people – and as an assault on the liberties of the people: “The Bank of the United States is one of the most deadly hostilities existing, against the principles and form of our Constitution.”(Thomas Jefferson to Albert Gallatin, 1803) “I sincerely believe that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale.”(Thomas Jefferson to John Taylor, 1816)

    If you misapprehend the debate between Hamilton and Jefferson and fail to see how debt and the institution of a central bank played such a decisive role in empowering the federal government at the expense (literally) of the people and to their detriment – and continues to do so today – you not only misunderstand the American political debate but you shall not properly apply the principles of Catholic social teaching – to the “current budget battle” or even in general.

    For Jefferson, a frugal government, which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvement, and which shall not take from the mouth of labor the bread it has earned is the sum of good government, and -yes – necessary to a prosperous people. (see First Inaugural Address) But, contrary to your assertion, Jefferson has no “legacy of promoting democracy as a way of addressing politicial and economic injustice”. It sounds like you are confusing him with Karl Marx. Or is it that you have found angels in the form of politicians? OR…are you making the fatal reigning error of substituting governments for God?

  3. jdgonzo73 says:


    Let me begin by apologizing for my late comment. I have been taking some time off from blogging. Your responce is interesting and you have captures an essential element of the Jeffersonian/Hamiltonian debate but you err in assuming that neither Hamilton nor Jefferson had an implied economic expectation for the poltical system that they designed. Hamilton may not have been the ideologue that Jefferson was but regarding his understanding of the macro-economic situation he was a genius. No sooner had the Revolutionary war ended that Hamilton realized that the future of the US depended on its economic engine and a trade relation with Great Britain. That was why he did not cozy up the the French revolution as Jefferson did. The famous compromise where he allowed the capitol to move to DC for he sake of the banking system demonstrates that his political agenda was dictated by his economic system. In fact it is better to characterize Hamilton as a believer in meritocracy rather than democracy as he feared the tyranny of the majority. Jefferson was more driven by his republican/democratic ideals but he too recognized the economic impact especially of Hamilton’s policy. His democratic ideals had an implied economic position where he feared the rise of the corporate robber barrons over the agricultural system which he identified with. No I am not mistaking Jefferson with Marx. Capitalism is not encapsulated in the neo-liberal (Friedman/Hayak) model. Adam Smith also warned about the robber barrons and he very supported some government regulations to the “unscrupulous merchant class”. Jefferson believed that a functioning democratic system would regulate the interest of an economically dominant group and so he believed that his political ideals would check Hamilton’s economic aristocracy.
    On another note you seem to suggest a theology of prosperity. An old Protestant ethic that suggest that God rewards his hard working followers with divinely endowed prosperity while punishing the lazy with poverty. I do not subscribe to this theology and nor does the Catholic Church. The Book of Job in fact is dedicated to debunking this theology. St. Paul the Apostle tells us that we are invited to be co-workers with Christ and as such God allows us to freely engage in our social and economic affairs in the hope that we use these natural gifts for the common good of all. The Divine Will calls us to serve one another not to serve ourselves. God has given us these gifts but we are very much responsible for how we handled them. Our recent economic prosperity had more to do with how we have mishandled our own economic affairs and abused the global south for the sake of attaining a “bigger bang for our buck.” We have reaped our present economic instability and unless we can adopt the authentic Christian values of the Common good and solidarity we will fail to create a stable global economic system. I think Pope Benedict XVI makes this case quite clear in the following statement from his most recent encyclical Caritas In Veritate Paragraph 36.
    “Economic activity cannot solve all social problems through the simple application of commercial logic. This needs to be directed towards the pursuit of the common good, for which the political community in particular must also take responsibility. Therefore, it must be borne in mind that grave imbalances are produced when economic action, conceived merely as an engine for wealth creation, is detached from political action, conceived as a means for pursuing justice through redistribution.”

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