Just like many other Magisterium documents, Benedict XVI's Caritas in Veritate was not designed as an economy treatise. Rather, it is a theological-pastoral document, whose claims fill the gap between social sciences and Christian anthropology these refer to. The Social Doctrine of the Church relates to social sciences and provides for their inclusion within the realm of Christian anthropology.
A fundamental element enabling the appropriate understanding of the recent document of the Social Doctrine of the Church is the enhancement of the continuity of the social Magisterium of Benedict XVI with that of his predecessor. In fact, John Paul II dedicated the Sollicitudo rei socialis to the theme of development, with the same intentions of Benedict XVI, namely, to celebrate and update the document Populorum progressio, upon its 20th anniversary.
The pillars on which reposes the analysis of Benedict XVI are the principles of solidarity and subsidiarity. Showing the complementarity of the two principles, and highlighting the fact that subsidiarity cannot be viewed without a consistent understanding of solidarity, thus of social justice, is a peculiar trait of Benedict XVI's Magisterium since the promulgation of Deus caritas est.
The theme of subsidiarity is the leitmotif of Benedict XVI's reflection that is also conveyed in the encyclical Caritas in veritate. But in this case the Pope does not refer it to the development of powers within State establishment, whose role ought to be 'prudently reviewed and remodelled" also to the light of the ongoing financial and economic crisis. In reality, Benedict XVI proposes the implementation of the principle of subsidiarity and polyarchy on a supra-national scale, in order to attempt a response to the new challenges of global interdependence. Given the crisis of the nation State on the one side and the quest for new and urgent forms of political, economic and cultural participation on the other, the Pope suggests, 'Once the role of public authorities has been more clearly defined" we might advocate the redefinition of institutions present and active in civil society, 'in this way it is to be hoped that the citizens' interest and participation in the res publica will become more deeply rooted".
What has been said with reference to the principle of subsidiarity, enables us to reflect also on possible exit strategies from the ongoing crisis in the economy. Accordingly, we ought to relinquish the idea that economy is separated from morals, which, within given limits and with more or less maximalist arguments, ends up denying the effectiveness of politics, institutions and the rules enabling correct market performance.
The theme of the market comes up again in the statement that the exercise of commutative justice is not unrelated. Indeed, it takes on its true meaning in the practice of the virtue of distributive justice. Benedict XVI addresses the question in chapter three, paragraph 35, which refers to market complementarity vis à vis other areas of social life. Firstly, writes the Pope, 'In a climate of mutual trust, the market is the economic institution that permits encounter between persons, inasmuch as they are economic subjects who make use of contracts to regulate their relations as they exchange goods and services of equivalent value between them, in order to satisfy their needs and desires. The market is subject to the principles of so-called commutative justice, which regulates the relations of giving and receiving between parties to a transaction". Here the market is understood as the highest form of cooperation among individuals who not necessarily share the same goals. Market is founded on the contracting principle of 'reciprocity," which means that the market's basic assumption, the element that triggers its very existence, is voluntary exchange. Two people who exchange information on mutual expectations realize they can mutually support one another. Market performance is not triggered by legislations, and the market does not come into being with an edict. The market can be regulated, promoted, hindered, but nobody can be compelled to undertake a transaction against his own will. If this should occur, it would be outside the realm of market economy. It ensues that a transaction will take place only with the deliberate encounter of two wills, since each view money in exchange for a material good and vice-versa as a source of mutual profit.
In this perspective, market processes, however virtuous, must never be identified with a bestowal nor, however vicious, can they be taken for rip-off. This is why the category of bestowal should not be taken as market regulator, or as a form of ethical quid and a factor that can balance the market. Conversely, bestowal is the indispensable living dimension that humanizes relations and our very existence. We are aware that men's life is not fulfilled in the market realm and the experience of bestowal enables us to acknowledge – in person – the partiality of market logics. But confining the market to utilitarian relations isn't only a historical and logical mistake. Indeed, it is a practical mistake, which in the long run could develop into a political error. Catallaxis, i.e. the market, is the social realm of free persons who deliberately search together (cum-petere – it would say Michael Novak) to achieve the best possible results, as relates to the allocation of available and scarce material goods. Those goods that are not scarce and are not available – namely, not economical, are evidently alien to market criteria. And this is how things must remain.
We believe that the emphasis placed by Benedict XVI on the important role played by distributive justice for the very existence of market economy ought to be viewed within this framework. Indeed, its performance enables access to extra-contracting factors for the drawing up of a contract at the best possible conditions. 'In fact, if the market is governed solely by the principle of the equivalence in value of exchanged goods, it cannot produce the social cohesion that it requires in order to function well." Continues the Pope: 'Without internal forms of solidarity and mutual trust, the market cannot completely fulfil its proper economic function. And today it is this trust which has ceased to exist, and the loss of trust is a grave loss." In this conceptual and pastoral framework a valuable propositional statement is made: 'it was not just a matter of correcting dysfunctions through assistance. The poor are not to be considered a ‘burden,' but a resource, even from the purely economic point of view." In these words are conveyed all the themes addressed by John Paul II in Sollicitudo rei socialis and in Centesimus annus. At the time of its publication, some commentators defined it as barefoot capitalism, recalling the analyses of the Peruvian economist Hernando De Soto, along with the 'popular capitalism" advanced by Fr. Luigi Sturzo.
Given such anthropological understanding, Benedict XVI conveys the integrality and the indivisibility of freedom and human development, by conceptualizing the market's impossible self-foundation. For Benedict XVI the market lives and develops owing to virtues such as honesty, trust and 'sympathy." But the market alone cannot create them. Writes Benedict XVI: 'It is in the interests of the market to promote emancipation, but in order to do so effectively, it cannot rely only on itself, because it is not able to produce by itself something that lies outside its competence. It must draw its moral energies from other subjects that are capable of generating them."
It ensues that Benedict XVI does envisage a new social order, as was the case upon the aftermath of World War II for the fathers of 'ordoliberalism" like Eucken, Böhm, Grossman-Dörth, Rüstov, Röpke, Müller-Armack, just to mention a few of the German intellectuals that contributed to the reconstruction of Germany, and placed the cultural and institutional foundations of the European Union. In the thought of Benedict XVI, this view of a global economic and political order is equally inspired by the principle of horizontal and vertical subsidiarity, that escapes Hobbes' trap of a global Leviathan, whose sovereign prerogatives today would not even be balanced, hence limited, by thready national barriers.
In short, it may be said that Benedict XVI's understanding of 'Ordoliberal" refers to both order and ordering. Indeed, since the promulgation of Centesimus annus, 'order" and 'ordering", understood as a system of regulations, i.e. the legal and institution framework of business performance, are viewed as a crucial variable for the definition and the appreciation of a given market. Beyond all dogmatic criteria: whether state-managed or anarchical-libertarian, in our view Benedict XVI reaffirms that a 'pure and simple market" does not exist. That being the case, it's useless to delve into the different 'economic styles," as described by Eucken in the Principles of Political Economy. The market is a system of relations, whose 'civil" component is represented by the regulators' capacity to identify, with the support of cooperative tools (participatory-democracy) the procedures enabling the market to share the very same rules. Although according to the thought conveyed in the Social Doctrine of the Church it is insufficient, the respect of such rules entails the subsidiary establishment of national and supra-national institutions system, ensuring transparent and certain market performance, granting special attention to the players' integral freedom, which is the basic prerequisite of all forms of development.
A conclusion may be drawn on the basis of what we understand to be the very essence of the concept of economic development conveyed in the encyclical of Benedict XVI. It appears that the document's sophisticated prose and articulated analysis are effectively encompassed in the following statement: 'If some areas of the globe, with a history of poverty, have experienced remarkable changes in terms of their economic growth and their share in world production, other zones are still living in a situation of deprivation comparable to that which existed at the time of Paul VI, and in some cases one can even speak of a deterioration". Benedict XVI identifies the causes of poverty as being primarily rooted within a crisis in meaning, leading to a distorted view of human development. Hence the Church's need to continue being a 'Master of humbleness". Benedict XVI points out that the true problem of contemporary Christian philosophy is the anthropological element, which is therefore a problem of the Social Doctrine of the Church, although too many commentators have underestimated it, thus reducing Church teaching to mere sociological visions voiced in political claims that more than often are distant from the Magisterium's. Benedict writes, 'A Christianity of charity without truth would be more or less interchangeable with a pool of good sentiments, helpful for social cohesion, but of little relevance".
It clearly appears that the Pontiff's criticism of a prevailing economic paradigm does not refer to private property, nor to the market or the pursuance of profit, which in fact, in harmony with his predecessor, Benedict XVI analysed and gave new meaning to. Indeed, Benedict XVI criticizes materialistic reductionism that ends up denying the integral dimension of human development whilst promoting a purely economic and technological form of development. Benedict XVI teaches that development is authentic if it is integral.
The entire reflection of the Social Doctrine of the Church espouses the theoretical elaboration of social market economy in the awareness that economic activity, along with any other dimension of human action, is never implemented in an ethical void nor in a virtual world. Rather, its enforcement takes place within a given cultural realm, whose foundations can be either recognized and valued, or despised and neglected. When a social system denies the transcendental value of the human person, starting from the right to be born and leading a life within the economic – as well as the political and cultural – dimension, this system brings out its inhuman trait, which deserves strictures. In this framework, a sound market economy is always part of a legal framework that regulates it within ethical establishments such as the family and the multifaceted bodies they interact with, influence, and are influenced by in return.
Flavio Felice is a adjunct scholar at AEI and the president of the Acton-Tocqueville Studies Centre.