John Paul II And The World Economic Order
By Rafael Termes
Following the line of all his predecessors, Pope John Paul II declared more than once that "the Church does not propose economic and political systems or programs, nor does she show preference for one or the other, provided that human dignity is properly respected and promoted, and provided she herself is allowed the room she needs to exercise her ministry in the world".
"The Church's social doctrine," the Pope concludes, "is not a 'third way' between liberal capitalism and Marxist collectivism, nor even a possible alternative to other solutions less radically opposed to one another: rather, it constitutes a category of its own. Nor is it an ideology, but rather the accurate formulation of the results of a careful reflection on the complex realities of human existence, in society and in the international order, in the light of faith and of the Church's tradition.
"Its main aim is to interpret these realities, determining their conformity with or divergence from the lines of the Gospel teaching on man and his vocation, a vocation which is at once earthly and transcendent; its aim is thus to guide Christian behavior. It therefore belongs to the field, not of ideology, but of theology and particularly of moral theology." And where is this Social Doctrine of the Church to be found? In all its centuries-long Magisterium.
In the encyclical Sollicitudo rei socialis, the Pope addresses the problem of the foreign debt of developing countries, which he regards as one of the specific indicators of underdevelopment. The Pope calls upon the experts to seek solutions to that problem in light of ethical principles.
An equally constant tradition of the Magisterium is that the right to private property, recognized as having a natural character, "is not an absolute right" -in the words of Centesimus Annus- as its limits are inscribed in its very nature as a human right. Yet it was precisely John Paul II who, in Sollicitudo rei socialis, explicated the connection that exists between, on the one hand, the abstract legacy that God, at the origin, granted in favor of all men, by giving them dominion over all the things of the earth, and on the other, the necessary regime of private property.
Another important aspect of John Paul II's thought on economic matters has to do with work. Work is a subject to which he devotes long sections of Laborem Exercens, where, near the beginning, he states, "The Church is convinced that work is a fundamental dimension of man's existence on earth".
But what is new about John Paul II's thought on the subject of work becomes apparent when he makes us realize the difference there is between work in an objective sense and work in a subjective sense. Thus, in section 5 of Laborem Exercens, he tells us, "This universality and, at the same time, this multiplicity of the process of 'subduing the earth' throw light upon human work, because man's dominion over the earth is achieved in and by means of work".
The fact is that, although work in a subjective sense escapes that law and although the one who works, whatever the worth of the things he produces, must be valued as befits the dignity of the human person, there is nothing to stop the product of work from being valued, that is, paid for, according to the criteria that determine the just price of things.
John Paul II concludes, "The key problem of social ethics in this case is that of just remuneration for work done". And he stresses, "wages, that is to say remuneration for work, are still a practical means whereby the vast majority of people can have access to those goods which are intended for common use: both the goods of nature and manufactured goods. [...] Hence, in every case, a just wage is the concrete means of verifying the justice of the whole socioeconomic system".
The conclusion we can draw from these words of John Paul II is that those of us who think that, economically speaking, the free market system is the best of all possible systems must do all we can to rid it of the pernicious effects that, according to John Paul II, would make it unacceptable.
This article, extracted from the speech of the same title given by Rafael Termes on the occasion of the 25th anniversary of John Paul II's papacy, was published in "La Gaceta de los Negocios", 14/04/05 in Spanish.
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Following the line of all his predecessors, Pope John Paul II declared more than once that "the Church does not propose economic and political systems or programs, nor does she show preference for one or the other, provided that human dignity is properly respected and promoted, and provided she herself is allowed the room she needs to exercise her ministry in the world".
"The Church's social doctrine," the Pope concludes, "is not a 'third way' between liberal capitalism and Marxist collectivism, nor even a possible alternative to other solutions less radically opposed to one another: rather, it constitutes a category of its own. Nor is it an ideology, but rather the accurate formulation of the results of a careful reflection on the complex realities of human existence, in society and in the international order, in the light of faith and of the Church's tradition.
"Its main aim is to interpret these realities, determining their conformity with or divergence from the lines of the Gospel teaching on man and his vocation, a vocation which is at once earthly and transcendent; its aim is thus to guide Christian behavior. It therefore belongs to the field, not of ideology, but of theology and particularly of moral theology." And where is this Social Doctrine of the Church to be found? In all its centuries-long Magisterium.
In the encyclical Sollicitudo rei socialis, the Pope addresses the problem of the foreign debt of developing countries, which he regards as one of the specific indicators of underdevelopment. The Pope calls upon the experts to seek solutions to that problem in light of ethical principles.
An equally constant tradition of the Magisterium is that the right to private property, recognized as having a natural character, "is not an absolute right" -in the words of Centesimus Annus- as its limits are inscribed in its very nature as a human right. Yet it was precisely John Paul II who, in Sollicitudo rei socialis, explicated the connection that exists between, on the one hand, the abstract legacy that God, at the origin, granted in favor of all men, by giving them dominion over all the things of the earth, and on the other, the necessary regime of private property.
Another important aspect of John Paul II's thought on economic matters has to do with work. Work is a subject to which he devotes long sections of Laborem Exercens, where, near the beginning, he states, "The Church is convinced that work is a fundamental dimension of man's existence on earth".
But what is new about John Paul II's thought on the subject of work becomes apparent when he makes us realize the difference there is between work in an objective sense and work in a subjective sense. Thus, in section 5 of Laborem Exercens, he tells us, "This universality and, at the same time, this multiplicity of the process of 'subduing the earth' throw light upon human work, because man's dominion over the earth is achieved in and by means of work".
The fact is that, although work in a subjective sense escapes that law and although the one who works, whatever the worth of the things he produces, must be valued as befits the dignity of the human person, there is nothing to stop the product of work from being valued, that is, paid for, according to the criteria that determine the just price of things.
John Paul II concludes, "The key problem of social ethics in this case is that of just remuneration for work done". And he stresses, "wages, that is to say remuneration for work, are still a practical means whereby the vast majority of people can have access to those goods which are intended for common use: both the goods of nature and manufactured goods. [...] Hence, in every case, a just wage is the concrete means of verifying the justice of the whole socioeconomic system".
The conclusion we can draw from these words of John Paul II is that those of us who think that, economically speaking, the free market system is the best of all possible systems must do all we can to rid it of the pernicious effects that, according to John Paul II, would make it unacceptable.
This article, extracted from the speech of the same title given by Rafael Termes on the occasion of the 25th anniversary of John Paul II's papacy, was published in "La Gaceta de los Negocios", 14/04/05 in Spanish.
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Was Pope John Paul II An Economist?
By Antonio Argandoña
Not long after John Paul II died, a university colleague asked me: Is there anything, in all that the late Pope said, that is of interest to economists? The question rather took me aback. John Paul II was not an economist, so, on the face of it, he was not likely to have much to contribute to our discipline. And yet I replied: Yes, there is. Yes, he said certain things that are interesting, especially at a time when the limits of economics in relation to psychology, sociology, philosophy or politics are becoming increasingly apparent. Or, in some cases, theology. And, yes, what he said about the economy sounds very relevant today.
Let's just take the example of the business firm. We economists have some very good explanations of what a business firm is. An institution created to maximize economic efficiency, which means that it has to concentrate on maximizing value for shareholders. A set of contracts that binds the factors of production in order to achieve that maximum efficiency, under the CEO's baton. An island of authority -"command and control"- in an ocean of democracy -the market- to optimize that efficiency.
I imagine that John Paul II would have agreed with those explanations. But he would have thought that they fall short. In an encyclical published in 1991, he said that a business firm is, first and foremost, a "society of persons". No doubt he would have liked the idea of efficiency: it's good if a company is as efficient as possible. But efficiency is not an end, as economists often seem to imply, but a means.
Organizations exist to serve people: that was his key idea. Imagine: it's late, it's raining, and the bus hasn't arrived. one of the people at the stop suggests taking a taxi and sharing the fare. Three or four others agree. There, already, you have the makings of a simple human organization. Of course everybody wants to be efficient: not to get soaked, not to get home too late, and not to spend more than necessary on transportation... That's economic efficiency. But if they hail a taxi, it's not because they want to make the society we live in more efficient. What they want is to satisfy their own needs. The organization, that miniature business firm consisting of four strangers in a taxi, is there to serve them all. And the taxi driver, too, of course. And their families: the whole of society.
John Paul II acknowledged the role of profit "as an indication," he said, "that a business is functioning well". "When a firm makes a profit, this means that productive factors have been properly employed [that is the kind of efficiency that we economists like to talk about] and corresponding human needs have been duly satisfied." In other words, not only the needs of the consumers in the market, but also the needs of the people in the company (owners, employees, managers) and those around it (customers, suppliers, local community).
"In fact, the purpose of a business firm is not simply to make a profit, but is to be found in its very existence as a community of persons who in various ways are endeavoring to satisfy their basic needs, and who form a particular group at the service of the whole of society," he said in 1991. And a few years earlier, in 1982, in Barcelona, he reminded us that "business firms are called upon to fulfill a social function that is deeply ethical: that of contributing to the perfection of man, every man, without discrimination". What John Paul II said does not contradict what we economists say. After all, we're the ones who know about economics, not him. But he reminded us that economic institutions exist to serve man.
In business firms, "the role of human work is becoming increasingly important as the productive factor both of non-material and of material wealth". What lies at the core of the business firm? When Henry Ford started his company, the most important thing was the plant, the physical capital. Today, in an engineering firm, an advertising agency, a consultancy, even in an automobile factory, the most important thing is people, human capital. What John Paul II said sounds - as I said before- very relevant today.
I think his message may be of interest to social scientists: not because he has anything to add to our discipline, but because he can help us to think about the meaning of our discipline and its underlying assumptions. Obviously, the business firm is a tool of efficiency, and in that sense we economists are on the right track. But it is more than just a tool of efficiency. And that is where we economists have some serious learning to do. Because neither the religious authorities nor the great philosophers are going to do the heavy lifting for us. That's our job.
Antonio Argandoña is professor and chairman of the department of economics and holds IESE's 'la Caixa' Chair of Corporate Social Responsibility and Corporate Governance. He works principally in the areas of macroeconomics and monetary economics, international economics and applied ethics in economics and business and corporate social responsibility. He has held teaching appointments at the universities of Barcelona, Malaga and Navarra.
A version of this article was published in "El País" (Cataluña), in Spanish 14/04/05.
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