Toward a Moral Economic Life

Compendium Lays Out Principles

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ROME, JAN. 22, 2005 ( The Compendium of the Social Doctrine of the Church dedicates a special chapter to look at economic activity in general. Like other chapters, it starts with an overview of some biblical principles.

In the Old Testament, riches are seen as a blessing from God. Abundance is not seen as a problem in itself, but there is strong condemnation for the misuse of material goods — fraud, usury, injustice — especially when it is the poor who suffer these abuses.

The other side of the coin, poverty, is seen as part of the human condition. In this context the Old Testament calls upon people to recognize their poverty before God. He, in turn, is portrayed as answering the cries of the poor, who will receive their reward through a new David. “Poverty takes on the status of a moral value when it becomes an attitude of humble availability and openness to God, of trust in him” (No. 324).

In the New Testament, Jesus calls for a conversion of hearts and to be attentive to the needs of others. Working for justice and helping the poor is one way of building the Kingdom of God.

In general, the Bible considers economic activity as part of the vocation in which mankind is called upon to administer the gifts received from God. The parable of the talents also teaches that “what has been received should be used properly, preserved and increased” (No. 326).

Sharing riches

Material goods, even when they are the legitimate property of someone, retain their universal destination. “Riches fulfill their function of service to man when they are destined to produce benefits for others and for society” (No. 329).

This nexus between morality and economic life is a constant in Church doctrine. “Just as in the area of morality one must take the reasons and requirements of the economy into account, so too in the area of the economy one must be open to the demands of morality” (No. 331).

The Compendium suggests that morality and economic principles do have some points in common. For example, producing goods in an efficient manner can be seen as a moral duty, in the sense that not to do so would be a waste of resources. But the production of wealth also needs a moral orientation, in order to ensure that economic growth is distributed equitably and is guided by principles such as justice and charity.

Economic activity carried out in this way becomes an opportunity to practice solidarity and to build a more equitable society and a more humane world. The Church also considers that terms such as development cannot be seen merely in an economic dimension, as just accumulating goods. An exclusive concentration on the material aspect risks falling into the error of consumerism and is not the way to achieve authentic happiness.

Private initiative

A section of the chapter on the economy spells out the position of Church social doctrine regarding private initiative and business activity. The freedom of people to engage in economic activity is “a fundamental value and an inalienable right to be promoted and defended” (No. 336).

Initiative in the economy is part of human creative activity and businesses also have an important social role to play through producing goods and services. While this role needs to be carried out according to economic criteria, the Compendium adds: “the authentic values that bring about the concrete development of the person and society must not be neglected” (No. 338).

In this context the Compendium recalls that the Church has long supported family and small- to medium-sized businesses, along with cooperative activities, which can make a valuable contribution to economic and human life. In fact, economic activity provides an opportunity for the practice of many virtues, such as diligence, prudence, fidelity and courage.

The text also has positive words for the role of making profits, which are a sign that the productive factors involved in the enterprise are being used well. However, businesses must also serve society properly and this is not done when the obligations of social justice or the rights of workers are violated.

The Compendium also notes that in today’s world individual states can find it difficult to govern the operations of businesses and that this places on private enterprise a greater responsibility to be open to the values of solidarity and authentic human development.

Serving people

On the matter of the free market in general the Compendium explains that it “is an institution of social importance because of its capacity to guarantee effective results in the production of goods and services” (No. 347). A truly competitive market, continues the text, “is an effective instrument for obtaining important objectives of justice.”

Nevertheless, the Compendium adds that the ends of the common good and human development must also be taken into account in a free market, and not just the profit motive. There are important human needs and goods that cannot be bought and sold in the marketplace.

Regarding the role of the state in regulating the market the Compendium invokes the application of two principles: solidarity and subsidiarity. Solidarity is to stimulate actions to defend the weak and disadvantages; subsidiarity is to guarantee that the state’s intervention will not become overly invasive.

Over several numbers the Compendium insists that the state must not interfere too much in the workings of the economy, thereby unduly restricting the liberties of individuals and businesses. On the other hand, it also defends the legitimate role of taxes and public spending, which play an important role, especially in protecting the weak. Therefore, paying taxes is “part of the duty of solidarity” (No. 355), but the state has the corresponding obligation to ensure that taxes are “reasonable and fair,” and that public resources are administered with “precision and integrity.”

Global dimension

The last part of the chapter considers some of the recent developments related to globalization and international financial markets. “Globalization gives rise to new hopes while at the same time it poses troubling questions” (No. 362).

The Compendium recognizes that globalization has opened up many opportunities, but expresses concern over the inequalities between advanced economies and developing countries. Citing John Paul II the text calls for a “globalization in solidarity” to deal with this problem.

A more equitable system of international commerce, and a strong defense of human rights are among the reforms called for by the Compendium. Respecting cultural and religious differences and ensuring a greater solidarity between generations are other points dealt with.

Regarding financial markets, the text acknowledges their positive role in facilitating economic growth and large-scale investments. However, there is a risk that the financial sector will lose sight of serving human development and will become “an end unto itself.” And faced with the severe problems caused by financial instability, there is also a need to make these markets more stable.

Globalization also requires greater cooperation by states to coordinate the economy, given that individual governments are often no longer able to exercise effective guidance. The Compendium calls for the creation of “adequate and effective political and juridical instruments” (No. 371) that will ensure “the common good of the human family.”

Renewing its call for solidarity, one of the concluding numbers observes that achieving this will also bring benefits for richer countries, where the abundance of material goods is often accompanied by “A sense of alienation and loss of their own humanity” (No. 374). The chapter concludes by calling for educating people so they will realize that economic activity must be seen in the wider human context.

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