The Pope's Vision of Moral Markets
POPE John Paul II issued an important document this month, one that will repay study by non-Catholics as well as by the pope's religious followers. It is a thoughtful, moderate, yet in some respects daring rumination on economic morality after the collapse of communism in Eastern Europe. The encyclical, ``Centesimus Annus'' (``The Hundredth Year''), appears a century after ``Rerum Novarum'' (``New Things''), the Roman Catholic Church's first major statement on economic issues. In the 1891 document, Pope Leo XIII defended private-property rights against the arguments of socialists.
In the ensuing years, however, papal statements moved the church away from Pope Leo's endorsement of economic individualism and approved increased government intervention in economic affairs. The new statement to a degree reverses the church's developing skepticism toward free markets in the ordering of production and exchange.
The events in Eastern Europe, the encyclical indicates, are the culminating proof that mankind's 150-year experiment with communism has been a disastrous failure. The free market, it says, ``is the most efficient instrument for utilizing resources and effectively responding to needs.''
The statement recognizes ``important virtues'' in free enterprise, ``such as diligence, industriousness, prudence in undertaking reasonable risks, reliability and fidelity in interpersonal relationships, and courage in carrying out decisions....'' Furthermore, ``the church acknowledges the legitimate role of profit as an indication that a business is functioning well.''
Yet ``Centesimus Annus'' is not a ringing paean to unregulated capitalism. The encyclical notes that many people, especially in the third world, do not have the resources either as producers or consumers to participate fully in modern, market-driven economies, and that capitalism has not avoided the ``alienation'' and ``marginalization'' of such people. It observes that capitalism has not altogether shed ``ruthlessness.'' Moreover, ``there are important human needs which escape [the market's] logic. The re are goods which by their very nature cannot and must not be bought or sold.'' And we must guard against ``an `idolatry' of the market.''
The encyclical doesn't just split the difference between Adam Smith and Karl Marx. It rejects both capitalism and communism to the extent that each regards economic life as the response of faceless atoms to impersonal forces, whether called the ``invisible hand'' or ``dialectical materialism.'' Free enterprise has triumphed because it meets human needs, and it mustn't lose sight of the humanity and dignity of those whose needs it offers to satisfy.
This humane and compassionate document is not only about economics; it's really about freedom and morality. And it reminds us that free enterprise is a necessary but not sufficient condition for a free and moral order in human affairs.