Catholics and Economics: Three Schools of Thought

The question of economics is central to the crisis in the Church, due to the fact that a great many of the controversial things in society that we lament — abortion, contraception, and divorce, to name just a few — are promoted not only philosophically or politically, but economically. More generally, we can trace a causal relationship between the Protestant theft of Church property (c. 1521-1558) and the dark age of tyranny that followed and the creation of a situation that was ripe for revolution several generations later.[1] The American and French revolutions both had economics as central motivations. The two Industrial Revolutions (1760-1840, 1870-1914) were each crucial factors in the rise of Liberalism; they not only broke down the village family unit and contributed to the rise of Feminism, but gave birth to Communism as an extreme reaction to resulting economic injustice.[2]

With so many philosophical trends related to economics, it is central that the Church not only face these things in their doctrinal import, but also in their economic aspects. The body of Catholic Social Teaching has attempted to do just that. Remarkably, this is an aspect of the Church’s moral theology which seems to have more or less remained intact after Vatican II, notwithstanding the collapse of moral theology. The modern Catholic Social Teaching inaugurated with Rerum Novarum in 1891 has worked to take the moral theology of Christian thought and apply it to the changed economic situation after the Industrial Revolution. We might summarize the purpose of this teaching as simply to perform the corporal works of mercy in a modern context—to show mercy to the poor and give them real aid according to the norms of justice and charity in Catholic moral theology. The purpose of moral theology in economics is to provide for natural needs according to the two forms of justice: commutative and distributive (II-II q61 a1).

This is no easy task in the complexity of the modern economic world, and in my study of this subject I have identified three main schools of thought which are arguably Catholic. The proponents of each school may in fact argue that the others are in fact not Catholic or transgress crucial Catholic moral principles, which I will discuss below. As such, the following is not intended to be a defense of one school or another, but rather an introduction to these three main parties of economic thought among Catholics. It is important to be cautious when drawing conclusions about economics due to the complexity of the subject and the necessity of a great deal of study — philosophical, theological, historical, and empirical.

“Progressive” Catholic Economics

This point of view is best identified by its promotion of “big government.” I take its name from the term “Progressive Era,” used to describe the era of social activism in the history of the United States (c. 1890-1920s), which attempted to address the Second Industrial Revolution. A large part of this era was an effort to make the government assert greater control over excesses in big business, imposing, for example, the 8 hour work day, the “Blue Laws” created ostensibly to promote Sunday rest, or the regulation of monopolies. These reforms can be used as proof by the Progressives to justify their vision of large government regulations of the economy due to a skeptical view of Capitalism as tending toward exploitation and inhumane conditions (as had already been memorialized in Charles Dickens).

This was the era when American Catholic economist Msgr. John A. Ryan was writing. Ryan helped support the expansion of American government into economics under President Roosevelt (1933-1945) in a series of programs known as the “New Deal.” Although Ryan is also claimed by the Distributist school below, he wrote that “practically all the reform measures enacted by the Roosevelt Administration have met with my hearty approval.”[3]

But the primary figure who typifies this point of view is Catholic politician Sargent Shriver (1915-2011), brother-in-law to John F. Kennedy. Shriver was a pious Catholic and pro-life Democrat who spent his political career promoting the expansion of government for the sake of the poor. He helped create the Peace Corps (1961), which used tax money to fund relief workers in poor countries, as well as directing the War on Poverty (1964) under President Johnson.

The criticisms of the Progressive Catholic economics can be drawn from the Church’s condemnation of socialism, since the Progressive vision of government (more than the other two) is one able to work closely with socialism due to its reliance on large government bureaucracy and high taxation. Progressive Catholicism has unfortunately not done enough to resist this tide of anti-Catholic Marxist thought within its own ranks, leading from the piety of Shriver to the outright heresy of Catholics who subscribe to the “fishwrap.” Thus the primary basis for this criticism is found in “that most weighty principle” summed up by Pius XI:

Just as it is gravely wrong to take from individuals what they can accomplish by their own initiative and industry and give it to the community, so also it is an injustice and at the same time a grave evil and disturbance of right order to assign to a greater and higher association what lesser and subordinate organizations can do. For every social activity ought of its very nature to furnish help to the members of the body social, and never destroy and absorb them.[4]

The difficulty in the Progressive economic school is balancing proper government intervention into economics without taking “from individuals what they can accomplish by their own initiative.” Indeed, entrepreneurship (with indissoluble marriage) is arguably the most effective means of poverty alleviation.[5]

The Austrian School

This brings us to the second school of economics among Catholics, which can be contrasted with the first in that the Austrians eschew government involvement in economics and prize the entrepreneur and his positive influence on the common good. They seek to keep government to the bare minimum of enforcing contracts and preventing theft and violence. This school is particularly optimistic about the achievements of Capitalism and the free market, contrasting with the Progressives’ pessimism.

The primary thinkers in this school are two non-Christians: Ludwig von Mises (1881-1973) and Murray Rothbard (1926-1995). Mises and Rothbard helped to create a system of philosophy known as praxeology. This philosophy posits a number of “economic laws” based on the logic of human action in order to assert presuppositional principles when analyzing economic situations. These “laws” are considered by the Austrians to be similar to empirical laws like the law of gravity, and as such are largely counted to be absolutely certain as well as amoral. One prominent Catholic Austrian puts it this way:

[I]f economic law exists, then it no more makes sense to say that economic law should be subordinate to moral law than it does to say that physical laws should be subordinate to moral law[.]…Economic law…is purely descriptive and necessarily amoral, having nothing to do with morality one way or another.[6]

Thus the Austrian economic law discusses the motivations of human choice regarding the price of goods, their scarcity, and the resulting interplay between business, supply and demand, wages, unemployment, etc. The Austrians point to the overall rise in living standards and alleviation of poverty in Euro-America, counting this as a result of the Industrial Revolutions spurred on by the free market. They see this as proof that their philosophy of an amoral market (unhindered by government) is the swiftest route to help the poor. The Austrians thus highlight the crucial role of entrepreneurship in alleviating poverty.

Critics of the Austrian school assert that for all the goods created by a free market, it has also created many evils, such as the pornography industry, and indeed, they argue, our whole post-Christian secularist world. As such, economics must be subordinated to moral law (as it was traditionally understood in Catholic moral theology), citing the Catholic Social Teaching which has taught that the state has a role beyond the limits given by Austrians. The teachings of the Pian Magisterium accord well with John Paul II in his statement that “there are collective and qualitative needs which cannot be satisfied by market mechanisms. There are important human needs which escape its logic.”[7]

Critics maintain that there is an acceptable form of Capitalism for Catholics, but only when the free market is placed “within a strong juridical framework” more than the minimal government advocated by Austrians, and that the Austrians’ “social and legal modernism” has been explicitly condemned by the Church.[8] The Austrians assert in reply that the papal encyclicals exceed their authority by transgressing the Austrian economic laws to advocate things like a just wage and just price. Thus the discussion centers around a philosophical debate over the rights of the Magisterium and the limits of its teaching office.

Distributism and Solidarism

This school of thought may be distinguished from the other two in that it eschews both big business and big government. It asserts that unfettered Capitalism and Socialism both amount to the same thing: the elites controlling society and neglecting or exploiting the poor. The origins of this school are found in German bishop Wilhelm von Ketteler (1811-1877) and economist Heinrich Pesch, S.J. (1854-1926) whose writings influenced Rerum Novarum (1891) and Quadragesimo Anno (1931) respectively. The term that Pesch used was “solidarism” taking for its principle the Catholic idea of solidarity. It is also known as “distributism” through G.K. Chesteron (1874-1936) and Hilaire Belloc (1870-1953), taking its name from the Catholic principle of distributive justice (II-II q61).

As such, this school advocates the principles and morals also contained within Catholic Social Teaching: the just wage, just price, right of workers to form unions, and a larger role for the state beyond the minimal Austrian framework. This school of thought emphasizes the achievements of the so-called “Middle Ages” in Christian economic order, with its system of cooperative oaths, interdependence, and agrarian leisure.

The criticisms of Distributism assert that Solidarism is simply a veiled form of Socialism. This is because Solidarism asserts the right of the state to promote the common good beyond the limited scope Austrians hold. The Distributists, for example, might defend a particular form of taxation if they believe it necessary for the common good. This is based on the view of the state mentioned above as well as the rejection of the Austrian principle of the absolute right of property. As we have mentioned elsewhere, any excess wealth beyond necessities is understood by moral theology to belong to the poor—this is what distributive justice is. But the Austrians would assert that Catholic Social Teaching actually disallows a taxation on the rich for the sake of this justice, citing the following from Leo XIII:

[W]hile the socialists would destroy the “right” of property…and, claiming a community of goods, argue that…the property and privileges of the rich may be rightly invaded, the Church, with much greater wisdom and good sense…holds that the right of property and of ownership, which springs from nature itself, must not be touched and stands inviolate.[9]

The reply may hinge on a defense of taxation as per se legitimate, or a defense of distributive justice limiting property rights even without enforcement by the state.

In any case, this quotation emphasizes the evil that all Catholics, no matter their economics, are bound to condemn with our Lady of Fatima: the errors of Russia. While the debate continues over economics, let us not forget our common enemy in Marxism.



[1] I am dating the process of this theft from the Diet of Worms to the Act of Supremacy under Elizabeth.

[2] For the economics involved in the revolutions, see Charles Coulombe, Puritan’s Empire (Tumblar House: 2008), Christopher Ferrara, Liberty: the God that Failed (Angelico: 2012). For the breakdown of the family, see David Popenoe, Families without Fathers (Routledge: 2009).

[3] John A. Ryan, Social Doctrine in Action: A Personal History (Harper: 1941) cited in Thomas Woods, Church and the Market, Revised Edition (Lexington: 2015), 194.

[4] Pius XI, Quadragesimo Anno (1931), 79

[5] I have witnessed the need for entrepreneurship personally in global urban poverty. A good introduction to this topic can be found in the documentary and organization Poverty Cure by the Acton Institute.

[6] Woods, ibid., 29-30

[7] John Paul II, Centessimus Annus (1991), 40. See also Rerum Novarum (1891), 31; Quadragesimo Anno (1931), 83.

[8] John Paul II, Centessimus Annus (1991), 42. On “Social Modernism” see Pius XI, Ubi Arcano Dei (1922), 61.

[9] Leo XIII, Quod Apostolici Muneris (1878), 9

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