Capitalism and Socialism in Catholic Social Teaching
a. The essence of capitalism
The very term “capitalism” signals the nature of its ideological error: just as the “humanist” revolution placed too much exclusive emphasis on the human order, so the capitalist revolution represents one more step down this same path. While humanism shifted emphasis from God to man, capitalism shifts emphasis from man to things. Traditional civilization had God for its pivot; Renaissance civilization had man; modern civilization has the economy. This last transition amounts to a reversal of the proper hierarchical relationship between material goods and the human being—or capital and labor.
Very early in the development of Catholic Social Teaching the Church acknowledged the need for cooperation between these two elements in the economic process: “Neither capital can do without labor, nor labor without capital.” But man must always maintain priority, and it is precisely this priority that becomes lost through “the development of a one-sidedly materialistic civilization.”
Once materialism gains sway, it is only a matter of time before the material component of the economic process supersedes the human one:
“In all cases of this sort, in every social situation of this type, there is a confusion or even a reversal of the order laid down from the beginning by the words of the Book of Genesis: man is treated as an instrument of production, whereas he—he alone, independently of the work he does—ought to be treated as the effective subject of work and its true maker and creator. Precisely this reversal of order, whatever the programme or name under which it occurs, should rightly be called ‘capitalism.’ ”
This particular error will reappear whenever man is,
“…treated on the same level as the whole complex of the material means of production, as an instrument and not in accordance with the true dignity of his work—that is to say, where he is not treated as subject and maker, and for this very reason as the true purpose of the whole process of production.”
Here the reader is encouraged to recall what was emphasized earlier in our discussion of morality, which was that the human subject is never to be treated as a mere means. With the nature of man degraded in this way, his relationship with material wealth becomes inverted. Capital then overthrows man as the most significant factor in economic considerations.
b. The separation of ownership from work
Chronologically, as well as logically, this inversion of the relationship between capital and labor is preceded by another more subtle development. In order for capital and labor to be placed in opposition, they first must become distinct. For example, the man who owns his own shop and works from within it as its proprietor could never conceive of his activity as a duality of “capital and labor.” For him such an antimony does not exist. In order for the capital-labor duality to come into existence, he must assume one of the roles and abdicate the other. For example, he may transition into the role of an owner who pays employees to run his business instead of running it himself. In such a case, he limits his role to that of proprietor of the establishment (capital) and hires wage-workers (labor) for the day to day maintenance of the place, filling orders, keeping shop, etc. Now and only now do we begin to see the two parties mentioned above—one representing capital and the other labor.
Further, because capitalism takes competition as a positive force in its theory, it exacerbates this division. Thus, we find Leo XIII lamenting the fact 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.” Here are sown the seeds of concentration, inequality and strife.
c. Forces of concentration unleashed
Isaiah issued a warning to the Israelites: “Woe to you that join house to house and lay field to field, even to the end of the place: shall you alone dwell in the midst of the earth?”
Clearly, then, the Christian aversion to the concentration of ownership and wealth has ancient roots. It should therefore not come as a surprise when the popes waste no time in condemning it. In order for the principle of private property to be realized, economic systems that favor concentration are to be avoided. This is because a society in which only a few possess property is one in which the institution of property is diseased, for how could it be considered healthy when, for the majority of men it does not exist? What is called for are “centrifugal” forces in the economy as opposed to the “centripetal” forces of capitalism.
d. Capitalism as economic liberalism
The popes use the terms capitalism and liberalism almost interchangeably and always with a negative connotation:
“[W]e are witnessing a renewal of the liberal ideology. This current asserts itself both in the name of economic efficiency, and for the defense of the individual against the increasingly overwhelming hold of organizations, and as a reaction against the totalitarian tendencies of political powers. Certainly, personal initiative must be maintained and developed. But do not Christians who take this path tend to idealize liberalism in their turn, making it a proclamation in favor of freedom? They would like a new model, more adapted to present-day conditions, while easily forgetting that at the very root of philosophical liberalism is an erroneous affirmation of the autonomy of the individual in his activity, his motivation and the exercise of his liberty.”
This “erroneous affirmation of the autonomy of the individual” lies at the heart of capitalism’s praise for individualism, self-interest, and competition which leads to social Darwinism.
e. Socialism as the child of capitalism
Clearly there is no place in Catholic Social Teaching for the capitalist ideology. But at the same time we must be careful to avoid that even greater error, which arose as a false cure for the capitalist disease, a cure that was worse than the disease itself, called socialism:
“To remedy these wrongs the socialists, working on the poor man’s envy of the rich, are striving to do away with private property, and contend that individual possessions should become the common property of all, to be administered by the State or by municipal bodies. They hold that by thus transferring property from private individuals to the community, the present mischievous state of things will be set to rights, inasmuch as each citizen will then get his fair share of whatever there is to enjoy. But their contentions are so clearly powerless to end the controversy that were they carried into effect the working man himself would be among the first to suffer. They are, moreover, emphatically unjust, for they would rob the lawful possessor, distort the functions of the State, and create utter confusion in the community”
These words come from Leo XIII who would later be praised by Pius XI for his rejection of both liberalism (capitalism) and socialism: “He sought no help from either Liberalism or Socialism, for the one had proved that it was utterly unable to solve the social problem aright, and the other, proposing a remedy far worse than the evil itself, would have plunged human society into great dangers.” “…let all remember that Liberalism is the father of this Socialism that is pervading morality and culture and that Bolshevism will be its heir.” Liberalism as used within this context, and as we always find it within Catholic Social Teaching, refers directly to the ideological tenets of capitalism, which is simply another name for economic liberalism.
f. Capitalism and socialism as two ideologies to be avoided
The following passage from Economic Justice for All embodies the attitude of Catholic Social Teaching toward the extremes of ideology:
“Some people argue that an unfettered free-market economy, where owners, workers, and consumers pursue their enlightened self-interest, provides the greatest possible liberty, material welfare, and equity. The policy implication of this view is to intervene in the economy as little as possible because it is such a delicate mechanism that any attempt to improve it is likely to have the opposite effect. Others argue that the capitalist system is inherently inequitable and therefore contradictory to the demands of Christian morality, for it is based on acquisitiveness, competition, and self-centered individualism. They assert that capitalism is fatally flawed and must be replaced by a radically different system that abolishes private property, the profit motive, and the free market. Catholic social teaching has traditionally rejected these ideological extremes because they are likely to produce results contrary to human dignity and economic justice.”
Catholic Social Teaching is the guardian of the “invariable middle”—the “narrow way”—which is to say Catholic Social Teaching promotes the universal principles of truth and justice and is in this sense immune to the tunnel vision of ideology, which always emphasizes one truth to the expense of all others.
g. Against forms of materialistic ‘economism’
In order to summarize the complaint the Church places at the feet of both capitalism and socialism, we can refer to the broad notion of economism. Economism is the reduction of all social concerns to the economic or material level, on the assumption that if the economy succeeds, all other social goods will be fulfilled as a result. While rarely acknowledged openly and adopted as such, this sort of economism is very common in practice. This is true even for those nations who would still explicitly deny materialism in its doctrinaire form.
Once economism becomes the ruling attitude of a society, its “image” of man is automatically defaced. St. John Paul II describes the historical development of this process as follows:
“This consistent image, in which the principle of the primacy of person over things is strictly preserved, was broken up in human thought, sometimes after a long period of incubation in practical living. The break occurred in such a way that labour was separated from capital and set in opposition to it, and capital was set in opposition to labour, as though they were two impersonal forces, two production factors juxtaposed in the same ‘economistic’ perspective. This way of stating the issue contained a fundamental error, what we can call the error of economism, that of considering human labour solely according to its economic purpose. This fundamental error of thought can and must be called an error of materialism, in that economism directly or indirectly includes a conviction of the primacy and superiority of the material, and directly or indirectly places the spiritual and the personal (man’s activity, moral values and such matters) in a position of subordination to material reality. This is still not theoretical materialism in the full sense of the term, but it is certainly practical materialism, a materialism judged capable of satisfying man’s needs, not so much on the grounds of premises derived from materialist theory, as on the grounds of a particular way of evaluating things, and so on the grounds of a certain hierarchy of goods based on the greater immediate attractiveness of what is material.”
h. The doctrine of diffused property
The Church’s proposed solution to these errors is based on the nature and needs of man, and can now be put forth in three short quotes from Rerum Novarum. It embodies the idea of a “centrifugal” economy in which widely distributed property is the norm.
First Leo XIII notes the sad conditions brought on by unrestrained capitalism:
“…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.”
Then he condemns the Marxist solution:
“To remedy these wrongs the socialists, working on the poor man’s envy of the rich, are striving to do away with private property, and contend that individual possessions should become the common property of all… But their contentions are so clearly powerless to end the controversy that were they carried into effect the working man himself would be among the first to suffer.”
Finally, he proposes the true solution, which is opposed to both capitalism and socialism:
“…private ownership must be held sacred and inviolable. The law, therefore, should favor ownership, and its policy should be to induce as many as possible of the people to become owners.”
 Section V, 6d.
 Isa 5:8.