Online Course Unit 5

The Positive Role of Virtuous Business in Economic Life


Catholic social teaching on business

Catholic social teaching on business is a tree rooted in the soil of the bible and the tradition of the early Church, from which it draws its nourishment. In order to grow, this tree needed additional elements: philosophy, law and the social sciences. To be understood and implemented in social life, faith requires the mediation of systematic thought (philosophy) as well as the order of practical reason that determines and makes concrete general principles in light of the common good. This is the task of law, both of canon law (the law that regulates the life and organisation of the Church on earth) and civil law (originally, in the history of the Church, Roman law). However, for law to be effective it needs to understand reality. Social sciences deliver the data and their interpretation that are necessary in order to address the real issues and concerns that beset society in each moment of history.

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The principles and normative insights of Catholic social teaching

In this chapter I cannot present the development of the whole tradition of Catholic social thought regarding business. I will therefore concentrate on the social encyclicals from their inception with Leo XIII’s Rerum novarum in 1891 to Pope Francis’s Laudato si published in 2015. In preparation of this chapter, I have re-read all the social encyclicals for the umpteenth time. I came out of this re-reading with mixed feelings. On the negative side, I felt somewhat embarrassed that some unsubstantiated claims, without discussion or analysis of data, were made in the name of the Catholic magisterium. In some sections I could not avoid an acute sense of boredom and needed to force myself to work through tedious pages that have become (or always have been) at best irrelevant, if not meaningless. Some descriptions of economic affairs are so negative that the reader is left to wonder what world the author lived in. On the positive and preponderant side, I was filled with gratitude for the deep wisdom contained in the hundreds of pages of social magisterium. The principles of Catholic social teaching are well formulated and exquisitely balanced.

The principles are human dignity, the common good, solidarity, and subsidiarity. They relate to each other in tension. Human dignity supports individual freedom and flourishing through the integral development of one’s personal talents and gifts. The common good potentially requires the sacrifice of individual freedom and goods in order to serve the community. Solidarity, as social principle and not as individual virtue, creates a system that collectivises social burdens. Take public debt as an example. Society as a whole shares the financial and economic burdens that have become necessary to uphold the common good (health, security, old age, unemployment benefits, etc.). Partly as a result, public debt is sky-rocketing, a tendency which is encouraged by dwindling demographics and reactions to the COVID-19 pandemic. Readily we perceive that there needs to be a check on this tendency. It is subsidiarity that delivers the check. Subsidiarity fulfills the task of reining in free-riders and dysfunctional shrugging off of personal duties. Subsidiarity requires that those things that smaller entities can and should achieve should not be taken away from them by larger ones, nor should the smaller entities call for relief too quickly. Resilience is a prerequisite for subsidiarity.

The four mentioned principles are antagonistic and in their opposing tendencies form the social space in which we can live well. They are like the straps that are needed to erect a tent. Four straps pull in four opposite directions, thus pulling up the tent and maintaining it upright. If we capped one of the straps, the tent would collapse, we would lose our social space. If we absolutised one of the principles at the expense of the others, we would lose all. They who sacrificed freedom on the altar of equality (as communism did) ended up losing both freedom and equality. They who sacrifice equality on the altar of freedom (as libertarianism does) end up losing both. By contrast, Catholic social teaching avoids extremes and creates a social space for peaceful social life and integral human flourishing. The stability and continuity of Catholic social teaching over the centuries reveals its conformity with human nature and the deepest desires of our hearts and minds. It is a secure path forward.

Looking at the encyclicals regarding business in their entirety, we see that some stress the socio-economic system as a whole (Quadragesimo anno; Populorum progressio). Others rather address the individual business actor (Rerum novarum; Mater et magistra). Still others are a mixture of both approaches (Gaudium et spes; Centesimus annus; Caritas in veritate). Some encyclicals are pessimistic and somber (Quadragesimo anno; Populorum progressio), others optimistic (Mater et magistra; Centesimus annus).

Following the development of Catholic social teaching, as formulated in the encyclicals over time, we notice that the quality and quantity of topics they deal with expand. There are ever more topics to be found. Initially, the plight of the workers was at the forefront (the workers’ question), but soon the social question became that of the whole socio-economic system; then the institutional question was broached; then the anthropological; and, finally, the ecological question. There is hardly any social topic that has not been mentioned in one of the social encyclicals. In Caritas in veritate (Benedict XVI 2009) alone I have counted 92 different themes of concern (I am sure other readers will count differently depending on what they consider to be a theme). This inflation of Catholic social teaching has to do with wish of the to bring earlier encyclicals up to date by shedding the light of the principles of the teaching on the new and rapidly evolving historical circumstances of their own times. It also has to do with the process of publication of such an encyclical: many hands are at play and add their own favourite items before the pope approves the final text. The interaction between perennial principles and their applications to varying and diverse historical circumstances is a hallmark of Catholic social teaching. It is characterised by continuity and reform (see Sollicitudo rei socialis, 3).

What becomes apparent in reading the social encyclicals is the existence of an intermediate level between the perennial and very abstract principles mentioned above (human dignity, common good, solidarity, and subsidiarity) and the ebb and flow of events and circumstances (a financial crisis, a pandemic, etc.). This intermediate level consists of regulative ideas or normative insights that render the principles applicable on an operational level. The gap between the sublimity of human dignity and the concrete question whether to lay off workers in a specific situation or not, is so wide that the human mind grasps for something more specific to aid it in its decision. We need an intermediate level. Beauchamp and Childress (2001) report something similar for the field of bioethics. From their work in bioethical committees they gathered the experience that members with varying and even opposing ethical convictions (utilitarians, Kantians, liberals, communitarians, ethics of care) nevertheless were able to converge on certain normative insights.[1] They were able to agree on what to do in a given case but not on why they were to do so. In Catholic social teaching there is perennial unity of basic values (the principles): as Christians we know why we do things. However, we need also to put them into practice in an effective way. This is where the encyclicals supply a thread of normative insights that form a tradition.

In the social encyclicals I discern three such intermediate regulative ideas or big convictions regarding the economy and business that form a common thread throughout the whole tradition:

  1. The economy is part of a bigger moral order; this implies, that so-called economic laws are no excuse for immoral economic behaviour.
  2. The human person is at the center of the economy: as a consequence, the purpose of business is not profit maximisation but human flourishing.
  3. The common good takes precedence over individual economic interest.

These intermediate regulative ideas or basic convictions have many theoretical implications and practical consequences. In what follows I will strive to unfold their meaning for business based on Catholic social teaching. I cannot possibly summarise all the encyclicals and list all the examples they contain but will try to give the gist of each normative insight. I will quote a few relevant texts from social encyclicals[2] and analyse possible applications for economics and business life today by tracing the lines of tradition in the social teaching of the Church.

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The economy is part of a bigger moral order: so-called economic laws are no excuse for immoral economic behaviour

The magisterium of the Church respects the professional expertise of economists and the technical skills of businesspeople. The magisterium is not competent in these matters and cannot venture to impose any professional or scientific judgment. It would be just as foolish for a priest or theologian (who has not studied economics) to make pronouncements on economic data and analysis, as it would be for him to try to wire or plumb his house, even though he legitimately insists on having wiring and plumbing in his abode.

The Church’s authority is moral. She claims to be divinely endowed with a patrimony of moral wisdom which she is charged to share also with the world of business. All free human activity is moral activity. Its ultimate goal is to express love for God and our fellow creatures. This is why the Church formulates a moral doctrine on economic activity (Quadragesimo anno, 41-2). The economy is not a purely mechanical, technical or scientific system: it is made up of human persons with bodies and souls, desires and wishes, reasonable and irrational fears and hopes. These are the people the Church is trying to illuminate with the light of the gospel and to set on fire with the Holy Spirit. In other words, the Church respects the autonomy of earthly affairs whilst, at the same time, reminding us that such an autonomy can only be relative: relative to God’s moral law (Gaudium et spes, 64). This is the kind of secularity that the Church accepts. In modernity, sectors of social life have become emancipated from ecclesial tutelage and developed their own rules and governance independent from the clergy. Politics, economics, science, culture, education, even military power were, at one time, under the control and guidance of the clergy or at their service. At the Second Vatican Council the Church proclaimed the universal vocation to holiness of all the faithful, also of the laity, who are called to be leaven, salt and light in the middle of the world, building up the kingdom of God with their secular nature and mindset. In their own responsibility, guided by their well-formed conscience, with the sacramental and educational help of the clergy, the laity have to blaze the trail of what it means to be truly Christian in their own walk of life, with its infinite variations and constant flow and ebb.

In their apostolic mission in business, lay Christians frequently encounter an environment hostile to faith, including the Christian faith. Instead of good secularity a culture of secularism has spread. Secularism excludes Christian faith from public life. Christianity is tolerated as a purely private affair that must not influence public behaviour. Instead, a stance of supposed scientific neutrality that is considered the only objective truth is imposed on all. The magisterium has reacted in a threefold way to contemporary cultural currents.

Already during the Second Vatican Council, the Church proclaimed that “Christ, the final Adam, by the revelation of the mystery of the Father and His love, fully reveals man to man himself and makes his supreme calling clear.” (Gaudium et spes, 22). The modern moral order is a failed attempt to preserve Christian values (human dignity, equality, freedom, etc.) without faith in the Christian God. However, these values stand and fall with the conviction of the existence of a Creator and Father of all, in whose image and likeness we are created and in whom we can recognise each other as brothers and sisters. Without God we can be neighbors but not brethren. In a world and a culture that exclude God, humanism becomes inhuman. For some time perhaps people stick to the traditional values handed on to them by their believing forbears but then the rationale and the narrative are lost. The values wither like cut flowers that have been severed from their roots. The rules and norms become meaningless like the lines on a football field and the rules of the game when the goals are removed. For some time, players remember that once there were goals and where they stood but in the end the lines and rules lose their sense. People ask themselves why they are made to run after a ball. The rejection of God therefore has immediate repercussions on the vision of man, on our anthropology. Thus economics (and any science, especially social science) makes many implicit anthropological assumptions when it formulates its own theories. These assumptions can approximate truth or distort it. For this reason, John Paul II, I think rightly, posited Catholic social teaching in the field of Christian anthropology, thus of theology, more precisely moral theology. It concerns itself with the way men and women behave in society and business. (Centesimus annus, 55 quoting Sollicitudo rei socialis, 41)

The second line of argument in recent magisterial pronouncements warns of the rise of a form of positivism that by absolutising certain aspects of human life, ends up losing the capacity to understand the human person in her totality. “This scientific reduction…mutilate[s] man…” (Octogesima adveniens, 38). We know more and more about our bodies, we know what we are in a physical and chemical sense but we know less and less who we are and what our purpose on earth is. “Having subdued nature by using his reason, man now finds that he himself is as it were imprisoned within his own rationality; he in turn becomes the object of science” (38). Without a holistic vision of the human being and a guiding moral order, technology, economic growth and progress turn against us: “Progress of a merely economic and technological kind is insufficient. Development needs above all to be true and integral” (Caritas in veritate, 23). Progress is true and integral when it develops the moral dimension of the human person. The spectacular rise of natural and social science since the enlightenment was partly due to specialisation. Scientific disciplines made themselves independent, focused on smaller sections of reality, relying on empirical data gained through experimentation. However, when this specialisation rejects metaphysics and declares faith in God irrelevant, it damages:

not only…the development of knowledge, but also…the development of peoples, because these things make it harder to see the integral good of man in its various dimensions. The ‘broadening [of] our concept of reason and its application’ is indispensable if we are to succeed in adequately weighing all the elements involved in the question of development and in the solution of socio-economic problems.” (Caritas in veritate, 31, quoting Benedict XVI, Address at the University of Regensburg, 12th September 2006.)

We end up knowing more and more about less and less, until we know everything about nothing, at least nothing that is humanly relevant. For this reason, Pope Francis too called for a more integral vision: “We urgently need a humanism capable of bringing together the different fields of knowledge, including economics, in the service of a more integral and integrating vision.” (Laudato si, 141).

Building on the above, the third claim of Catholic social teaching on this subject is that “the economy needs ethics in order to function correctly” (Caritas in veritate, 45). On the one hand, this sentence recalls the traditional teaching that the whole of the economy must be ethical because it is free human behaviour. On the other hand, the quoted sentence is also intended to invert the traditional line of argumentation: in order to be correct in an economic sense, business must be ethical. There is only one reality, one truth that can be seen from different angles and under different formal aspects, but the results of the different disciplines must converge in substantial agreement. In the case of apparent disagreement, the higher, defining, discipline decides. However, where there is no disagreement, all disciplines support each other: ethics aids business, and economics supports ethics.

In Caritas in veritate, Benedict XVI used economic reasons to back moral claims. This is new in the magisterium and something Amartya Sen (1987) had already proposed back in 1987[3]. Benedict XVI wrote: “there is a convergence between economic science and moral evaluation. Human costs always include economic costs, and economic dysfunctions always involve human costs.” (Caritas in veritate, 32)

Why should we belabour ethical or moral arguments if there are enough economic reasons for a good course of action? The difficulty that arises here, however, is that we must distinguish between human agency in economic praxis and the methodology of economics as science. The ethical dimension is not the same on the practical and epistemological levels. When it comes to human activity as a business person, it is quite clear, actually trivial, that it has to be evaluated in a moral sense. Every free action is located on the moral level by the mere fact of being free, directed by our will to an aim, and therefore either good or evil.[4] There is a vast literature on this in business ethics.

In contrast, the prevalence of ethics is not so clear when it comes to economics as a science. Should economics be value-neutral? How does ethics influence economic research? Should economic research be curtailed for moral reasons? These are difficult questions that exceed the scope of this chapter. However, I give two brief answers. First. Even though there is no universally accepted definition of economics, generally speaking economics studies the efficient use of scarce resources for the attainment of alternative ends: it studies the creation of wealth, and it does so either in a descriptive (positive economics) or in a prescriptive way (normative economics). I propose that economics should study certain pursuits of profit not as economic but as criminal activities. Take for instance the different markets and distribution systems for drugs; or human trafficking, prostitution and pornography. These activities move billions of dollars. Nevertheless, they are immoral and, in many legal systems, criminal. As economists we should study the economic aspects of these activities (formation of prices, distribution models, etc.) but signal them as evil. Otherwise, in a certain sense, we could become accomplices. By giving the impression of value-neutrality we would grant such activities the right to citizenship. Secondly, in economics we use expressions that are defined by other disciplines or by culture in general: person, good, service, wealth, work, production, and so on. We also are part of a value system that we have not created ourselves. In order not to be manipulated, we need to reflect and, as far as possible, make values explicit. Take for instance empirical studies on the impact of the liberalisation of prostitution on rape (see the study by Bisschop, Kastoryano and van der Klaauw, 2017). Liberalising prostitution seems to reduce the incidence of rape. In affirming this empirical fact, we rightly presuppose that rape and prostitution are bad and undesirable, but that one is worse than the other. These are values that guide our research.

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The human person is at the centre of the economy: the purpose of business is not profit maximisation but human flourishing

Catholic social teaching started out with the defence of the worker:

…it is only by the labor of working men that States grow rich. Justice, therefore, demands that the interests of the working classes should be carefully watched over by the administration, so that they who contribute so largely to the advantage of the community may themselves share in the benefits which they create – that being housed, clothed, and bodily fit, they may find their life less hard and more endurable. It follows that whatever shall appear to prove conducive to the well-being of those who work should obtain favorable consideration. There is no fear that solicitude of this kind will be harmful to any interest; on the contrary, it will be to the advantage of all, for it cannot but be good for the commonwealth to shield from misery those on whom it so largely depends for the things that it needs.” (Rerum novarum, 34)[5]

Thus from the beginning we encounter the firm conviction in Catholic social teaching that the economy should serve all, not only a few. The Second Vatican Council expressed it in these words:

The fundamental finality of this production is not the mere increase of products nor profit or control but rather the service of man, and indeed of the whole man with regard for the full range of his material needs and the demands of his intellectual, moral, spiritual, and religious life; this applies to every man whatsoever and to every group of men, of every race and of every part of the world. (Gaudium et spes, 64)

On the other hand, the Church certainly does not defend egalitarianism (all must have and be the same) but is aware of the beneficial effect of incentivising those who have talent and rewarding people for their hard work by defending their right to private property. Catholic social thought consistently rejects socialist attempts at abolishing private property of the means of production and of collectivising economic output. Nothing motivates work more than the prospect of enjoying the fruits of one’s labours. The social encyclicals defend private property as an extension of individual freedom and as in the interest of family independence. For the same reasons (freedom and independence), John XXIII included economic rights in his list of human rights and duties. Among these are the right to work and to entrepreneurship, but also social rights of workers in work (just wage, social protection, safety, rest, etc.). (Pacem in terris, 18-22) On the other hand, the popes repeat the traditional Catholic teaching that property is not an absolute and unlimited right but is under a “social mortgage”: not only is the use of property common to all in circumstances of extreme need but private property obliges its owners to use it in the interest also of others not only in their own interests: property ennobles but noblesse oblige. From the first social encyclical we discover a special concern for the poor: “when there is question of defending the rights of individuals, the poor and badly off have a claim to especial consideration.” (Rerum novarum, 37). These words formulate a kind of “preferential option for the poor” ante litteram: it will become a central term in liberation theology and in Catholic social thought after Paul VI.

As Western and other developed societies became more opulent, the popes grew increasingly concerned about the purpose of economic goods and the hierarchy of values in human life. Their commitment to the poor and the workers did not wane, but the call for the centrality of the human person in business and economy took on a new, additional note. Consumerism and practical materialism threaten to stifle higher spiritual and intellectual aspirations, enticing people to stumble into the trap of increasing desires and diminishing satisfaction. We desire more and more but get less and less from every additional possession. So many people in opulent societies seem to be on a treadmill, running and running but not getting anywhere, except into a spiritual void and human emptiness. The reason for this frustration lies in the fact that happiness is “a matter of perfection rather than extensive accumulation (of material goods or experiences).” Perfection “is coming to the fullness of being that is possible.” (Hirschfeld 2018, page 93)

In a Christian world view, our ultimate end is to know and to love the ultimate good, which is God. Catholic social teaching therefore underscores the instrumental character of material goods. “Material goods are, indeed, good. But they are purely instrumental. It is not enough to be wealthy. Happiness requires that we deploy our wealth toward the worthy end of realizing our nature as fully as possible in lives ordered to God.” (Hirschfeld 2018, 97) Economic goods are means not ends in themselves: they should help us achieve human flourishing (Mater et magistra, 246).

From this conviction, stems the Church’s teaching on the essence of integral human development. Development must be true and integral and therefore is moral in nature. Benedict XVI delineated the Church’s notion of integral human development in his social encyclical Caritas in veritate. Integral human development requires economic growth, without which people could not enjoy the prosperity and leisure necessary for the attainment of higher ends. However, besides the material aspect, true and full human development also implies the solidity of happy families that are open to life, according to the teaching of the encyclical Humanae vitae. Furthermore, development in the Christian sense requires formation in the faith and evangelisation. Christ the Logos purifies every person and culture from within and brings it to their true self (Caritas in veritate, 15).

For this reason, Catholic social teaching consistently condemns profit maximisation as a “structure of sin”, if it is understood as an all-consuming desire for profit that leads to a quest for maximising profit “at any price” (Sollicitudo rei socialis, 37). Profit as such is an indicator of a well-functioning business both in the economic and the moral sense: when there is profit, resources are used well and put to the service of owners and workers. However, when the thirst for profit becomes the main motive of economic activity it becomes self-destructive. Profit cannot be the purpose of business just as petrol cannot be the purpose of a car. The purpose of business are the goods and services they provide. When business leaders make profit their only goal they are bound to make many practical mistakes: they lose the trust of their customers and employees; the quality of their products goes down as they are not passionate about them; they become ethically blind and morally mute about the human needs of people and society. Here we come to the deep underlying issue of the Church’s insistence on the instrumental character of economic goods. We live in a society that upholds a paradigm of accumulation (“the more the better!”) instead of a paradigm of perfection (“what and how much of it do I need in order to achieve excellence?”) (see Hirschfeld 2018, page 100). The paradigm of accumulation and greed is a structure of sin that leads to an absolutisation of partial and subordinate goods and in consequence to “real forms of idolatry: of money, ideology, class, technology” (Sollicitudo rei socialis, 37). “The evil does not consist in ‘having’ as such, but in possessing without regard for the quality and the ordered hierarchy of the goods one has. Quality and hierarchy arise from the subordination of goods and their availability to man’s ‘being’ and his true vocation” (Sollicitudo rei socialis, 28). Pope Francis is forcefully outspoken in this sense.

These deeper considerations, and not political alliances, define the Church’s position on the different economic systems. The popes are consistently critical of both liberal capitalism and of Marxist socialism, if and in so far as they are dominated by a materialistic notion of the human person, and thus reverse “the order laid down from the beginning by the words of the Book of Genesis: man is treated as an instrument of production, whereas he – he alone, independently of the work he does – ought to be treated as the effective subject of work” (Laborem exercens, 7). Catholic social teaching recommends socio-economic systems that combine free markets with social responsibility, at the same time repeating the principle that the magisterium does not have socio-economic programmes or technical solutions or systems to offer. After the collapse of real socialism John Paul II recommended a “business economy”, “market economy” and “free economy” as forms of good capitalism (Centesimus annus, 42), whereas Francis speaks rather of “social market economy”, “social economy” and “economy of communion”.[6]

Benedict XVI added an innovative aspect to the understanding of markets that has to do with the centrality of the human person in business. In the intellectual and cultural context of post-modernism, Benedict XVI approached the question of socio-economic systems in a unique way. Post-modernism rejects all universal narratives of meaning: all meaning and sense in life is subjective choice. As it were, each one of us sits on a cloud without connection to others because there is no sky in common that would allow us to communicate. Post-modernism thus implicitly rejects the notion of essential differences given by a Creator or by nature, replacing it with the notion of diversity as the result of individual choice. One’s identity is defined by choice and is liquid. People have no stable profile anymore; it can change continually because no objective limits on self-definition are accepted. Without difference in the strong sense of the word, stable duality or relationships are not possible because they presuppose objective difference of persons and qualities, and lasting commitments based on them. In this context, Benedict XVI rethinks the Holy Trinity in its social dimension. The Three Persons are subsistent relations, one in nature and at the same time different in their personhood. Analogically, human personhood does not consist in mere individuality but in communion of relationships that make possible what is truly human about us: love, compassion, friendship, gift, etc. Benedict XVI attributes the capacity to build human relationships also to the markets: “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” (Caritas in veritate, 35)

Such a vision exceeds existing socio-economic models and finds no or little correspondence in contemporary political programmes. Using the language of the French Revolution: equality is blazoned on the banners of socialism; liberty on those of liberalism. Where is the political party that really fights for fraternity?

These last two sections on the overarching moral order and on the centrality of the human person are intimately linked. Ethics is the practical wisdom of human flourishing, and thus is essentially person-centered. The human person is relational or social in nature, and this leads us to the third section on the common good. It is intrinsically linked to all that has been said so far.

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The common good takes precedence over individual economic interest

That business should promote a situation in society that has been called the commonwealth, the common weal, or the common good is a mantra that Catholic social teaching repeats incessantly. This message is not always well received by business people who feel encumbered by additional burdens that make entrepreneurship excessively difficult. Entrepreneurs need few incentives. They have enough drive of their own. What they need is protection against excessive fiscal and bureaucratic strain that drains their energies. Acting in business with economic acumen and in an ethical and Christian spirit that places human flourishing at its centre (as described in the preceding sections), is a form of business that promotes the common good. What else can a business person do? What more is expected of them? In particular, what role should government play in economic life? In order to answer these questions, we need to clarify the concept of the common good as it appears in Catholic social teaching.

The common good is not the same as a public good. A public good is a good in public or common ownership that can be used by everyone individually. Examples are streets, sewage, public lighting, etc. Of course, public goods greatly contribute to the common good. The Second Vatican Council defined the common good as “the sum of those conditions of social life which allow social groups and their individual members relatively thorough and ready access to their own fulfillment [perfectionem].” (Gaudium et spes, 26 and 74).

This definition conceives of the common good as something external to the person or the group itself, like a framework, in which persons as individuals or groups can develop their potentialities. It reminds one rather of the notion of public good than of the authentic common good; and has therefore also been called an “instrumental common good” (Lewis 2019, 254). Benedict XVI therefore complemented this notion with a more relational outlook. In his social encyclical he wrote: “It is the good of that ‘all-in-one,’[7] made up of individuals, families and intermediate groups who together constitute society. It is a good that is sought not for one’s[8] own sake, but for the people who belong to the social community and who can only really and effectively pursue their good within it.” (Caritas in veritate, 7).

The innovation that Benedict XVI made explains the common good as the good of being and acting together. The common good is not the sum of individual goods nor is it the outer framework for individual action, it is the good of communality. The common good is a shared good in the strong sense of the word. It cannot be achieved alone by oneself, or by divvying up an object held in common property. If we divide a pie and each one takes a piece to their room and eats it alone, we have divided a shared object but we have destroyed the common good. Whereas when we share the same pie in a common meal we have created the common good of a meal and the conversation during it. Having a beer by oneself is a pleasurable experience but drinking one together creates so much more community. From the framework definition in Gaudium et spes (26), Benedict XVI has moved to the notion of the common good as a product. We all know the difference between a product and a sum. In a sum, any addend can be a zero without the sum changing (2+2+0=4). In a product, if one factor is reduced to zero, the product is zero, even though all other factors are high numbers (2x2x0=0). If one person in a community is violated in her human dignity the community has a whole has lost its common good.

This conception of the common good has led Catholic social teaching to refer to the business firm as a community of persons (Centesimus annus, 35). A firm is a productive unit, an entity submitted to necessities of the market and of efficiency. However, in its operations there must be room for personal relationships and friendship. Otherwise it would lack cohesion and motivation. This has important consequences both for employers and employees. On the side of the employees, concern for the common good of the firm increases the sense of responsibility, motivation and cohesion that stimulates us to go beyond and above the call of duty. In times of crisis, employees understand that pay-cuts might be inevitable and sacrifice must be shared. Lack of resources increases tensions. This is when strong ties among colleagues save an enterprise. On the side of the employers, understanding their business firm as a community of persons, will give them a heightened sense of responsibility for their workers. It will lead them to avoid layoffs as long as possible, finding alternatives that do not endanger the life of a family. When pay-cuts are inevitable, then the leader of a community of persons takes a pay-cut him or herself. Understanding the business as a community leads to reinvest some of the profit in the firm. This may be through the finance of research and development and through programmes that enhance the security of employees or the well-being of workers. There are examples of successful businesses which act in this way. Their voluntary commitment has been rewarded.

However, as stated above, the crux of the Church’s discourse on the common good is government involvement. How much can and should government intervene in economic affairs? Since Quadragesimo anno, published in 1931, Catholic social teaching has insisted on the need for social justice, without fully defining this expression. Most reliable authors understand social justice as a modern way of referring to legal or general justice in the terminology of Thomas Aquinas (Calvez and Perrin 1961, 133-161; Gregg 2019, 93-98; Kennedy 2019; Booth and Petersen 2020) In a nutshell, what this means is the following: general justice is the general ordering of all individual acts, both of the two species of particular justice (commutative and distributive justice) as well as the acts of all other virtues, towards the common good. It must not be confused with a mere obligation of fulfilling existing laws, but it obliges us in conscience to contribute to the common good even if there are no laws forcing us to do so. General justice is also called legal justice by St. Thomas, because the common good is the aim of all law. Thomas, needless to say, did not reduce law to positive law.

As true as this interpretation of Aquinas might be, this understanding of social justice by the authors mentioned above misses, I think, the crucial point of the social encyclicals’ use of the term social justice. From Pius XI to Paul VI, Catholic social teaching placed the task of creating a socially just (and charitable) society on the shoulders of the state, the government and public authorities. This precisely was the novelty of the expression. Up to the beginning of the twentieth century the Church had strenuously defended the Church’s monopoly of charity. Leo XIII still wrote in favour of rejecting forms of state-organised relief of the poor: “Charity, as a virtue, pertains to the Church” (Rerum novarum, 30). With mounting social tensions, masses of unemployed and after the carnage of the First World War among Christian nations, Pope Pius XI changed course, calling on public authorities to exercise the functions the Church could no longer fulfill because she was overwhelmed by the needs of the time.

In more recent magisterium, the popes have become warier in their appeals to state intervention. John Paul II spurns assistentialism and the spendthrift welfare state, he criticises the suffocation of economic initiative by totalitarian governments and calls for freedom of all kinds in the name of Christ. Benedict XVI and Francis have continued this tendency, most notably Francis. Benedict XVI called for a rediscovery and revaluation of civil society with its logic of reciprocity, gift and fraternity, to act alongside the logic of exchange (markets) and the logic of duty (state). This made him write of a great challenge: “to demonstrate, in thinking and behaviour,…that in commercial relationships the principle of gratuitousness and the logic of gift as an expression of fraternity can and must find their place within normal economic activity” (Caritas in veritate, 36) This does not disenfranchise or discredit the government but does remove its monopoly on the preservation of the common good. Francis goes even further.

Contrary to general perception, Francis is not in favour of big government and of government handouts except in situations of humanitarian crises. He has used the expression “social justice” very rarely in his pontificate. Instead, he speaks of the preferential option for the poor. This is not merely a terminological shift. Social justice traditionally assigns the role of actor to the public authorities. The preferential option for the poor is a duty incumbent on all of society and on each of its members. In his own words:

In the present condition of global society, where injustices abound and growing numbers of people are deprived of basic human rights and considered expendable, the principle of the common good immediately becomes, logically and inevitably, a summons to solidarity and a preferential option for the poorest of our brothers and sisters…We need only look around us to see that, today, this option is in fact an ethical imperative essential for effectively attaining the common good.” (Laudato si, 158).

No pope before him has made as clear that the promotion of the common good is a task and a duty for all of us. This is also true for business people. In his message to the World Economic Forum of 2014, he urged the business community to use their high intelligence which made them rich to find ways to include the poor in the market economy. When the human person is at the centre, money serves, it does not rule[9].

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As has become clear in this chapter, the tradition of Catholic social teaching sees virtuous business in a distinctly positive light. The Church affirms what exists with a vision informed by faith, justice, and charity. In order to evangelise persons who live in a culture or system, we must love them. In a second and necessary step, Catholic social teaching calls Christians and all persons of good will to purify the existing systems and foremost their own personal behaviour from anything sinful. In particular, the tradition warns against unethical acts in business justified by “economic laws”; against any attitude that would lead those in business to succumb to the lures of profit maximisation at any price; and against placing their own interest before the common good in a selfish and short-sighted way. All these normative insights are based on the perennial principles of Catholic social teaching: human dignity, common good, solidarity, and subsidiarity. It is up to each individual to use their well-formed conscience to find the Christian way forward in a world that is in great need of the light and warmth of Christ.

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References and further reading for this section

Beauchamp, T. L. and Childress J. F. (2001), Principles of Biomedical Ethics. Oxford: Oxford University Press, 4th Edition.

Bisschop, P., Kastoryano, S. and van der Klaauw, B. (2017), Street Prostitution Zones and Crime, American Economic Journal: Economic Policy 2017, 9(4): 28–63

Booth, P. and Petersen, M. (2020), Catholic Social Teaching and Hayek’s Critique of Social Justice, Logos: A Journal of Catholic Thought and Culture, 23(1): 36-64.

Bradley Lewis, V. (2019), “Catholic Social Teaching on the Common Good,” in Catholic Social Teaching: A Volume of Scholarly Essays, 235-266. Edited by Bradley, G. V. and Brugger, E. C., Cambridge: Cambridge University Press.

Calvez, J-Y. and Perrin, J. (1961), The Church and Social Justice: The Social Teaching of the Popes from Leo XIII to Pius XII (1878 – 1958), 133-161, Chicago: Regnery.

Gregg, S. (2019), “Quadragesimo Anno (1931)” in Catholic Social Teaching: A Volume of Scholarly Essays. Edited by Bradley, G. V. and Brugger, E. C., 90-107, Cambridge: Cambridge University Press.

Hirschfeld, M. L. (2018), Aquinas and the Market: Toward a Humane Economy, Cambridge, Ms–London, UK: Harvard University Press.

Kennedy, R. (2019), Social Justice and Competing Visions of the Common Good Logos: A Journal of Catholic Thought and Culture, 22(2): 106-150.

Sen, A. (1987), On Ethics and Economics. Malden: Blackwell.

Smith, A. (1776), An Inquiry into the Nature and Causes of the Wealth of Nations, edited by Campbell, R. H., Skinner A. S. and Todd W. B., Oxford: Oxford University Press (1976)), Glasgow edition of the Works and Correspondence of Adam Smith in the reprint by the Liberty Fund, Indianapolis (1981).

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Papal encyclicals and other Church documents referred to in this section

Francis, 2015, Laudato si, encyclical letter :

Benedict XVI, 2009, Caritas in veritate, encyclical letter:

John Paul II, 1991, Centesimus annus, encyclical letter:

John Paul II, 1987, Sollicitudo rei socialis, encyclical letter:

John Paul II, 1981, Laborem exercens, encyclical letter:

http :// /john-paul-ii/en/encyclicals/documents/hf_jp-ii_enc_14091981_laborem-exercens.html

Paul VI, 1971, Octogesima adveniens, Apostolic letter:

Paul VI, 1967, Populorum progressio, encyclical letter:

Vatican II, Gaudium et spes, 1965, Pastoral Constitution on the Church in the World,

John XXIII, 1963, Pacem in terris, encyclical letter:

John XXIII, 1961, Mater et magistra, encyclical letter:

Pius XI, 1931, Quadragesimo anno, encyclical letter :

Leo XIII, 1891, Rerum novarum, encyclical letter:

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Questions for discussion

Explain why economics and ethics are inseparable.

Discuss the ends towards which business activity should be ordered

Discuss what is meant by the phrase: “virtuous business is a noble vocation”.

What are the responsibilities of different actors and institutions in society for the

promotion of the common good?

What have the various social encyclicals and other Church documents had to say

about business ethics and how has that teaching evolved over time?

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[1] Beauchamp and Childress call these intermediate normative insights “principles of bioethics”. This would not work for Catholic social teaching, in which the principles are sublime and abstract notions that require greater practicability.

[2] These texts are taken from the official English translation on However, I have corrected some of the translations where necessary to render the English more comprehensible or convey the original meaning with more precision.

[3] Sen (1987, page 10): “Economic issues can be extremely important for ethical questions, including the Socratic query, ‘How should one live?’”

[4] In this sense, the affirmation of Caritas in veritate (37) is incoherent: “Thus every economic decision has a moral consequence.” No: every economic decision is a moral decision.

[5] The quoted passage paraphrases Adam Smith in The Wealth of Nations I.viii, 36 (Smith, 1776).

[6] See both Pope Francis. 2016. Address at the Conferral of the Charlemagne Prize, May 6, 2016, and Pope Francis. 2017. Address to Participants in the Meeting of “Economy of Communion,” Sponsored by the Focolare Movement, February 2, 2017,

[7] The official English translation says: “the good of ‘all of us,’”. However, the original Italian version is more incisive: “il bene di quel ‘noi-tutti’”. This would be translated better as: “the good of that ‘all-in-one’”. “Quel ‘noi-tutti’” substantiates the communal aspect of the common good.

[8] Here the official English translation says “its”. However, according to the original Italian context the ambiguity in the Italian word is better solved, so I propose, by the version I offer here: “one’s”. Any good that is truly good must be sought for “its own sake”, because this is what makes it good. Here the encyclical wishes to stress that we are seeking a good not for ourselves but for the community as a whole. It is the shared good of togetherness.

[9] See Pope Francis, Message to the Executive Chairman of the World Economic Forum, January 17, 2014;

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Photo by Samson on Unsplash

About the author

Mgr. Martin Schlag holds the Alan W. Moss endowed chair for Catholic Social Thought of the John A. Ryan Institute in the Center for Catholic Studies at the University of St. Thomas (Minnesota), where he is full professor with dual appointment in the department of Catholic Studies and the Opus College of Business. He is also director of the Program for Church Management at the Pontifical University of the Holy Cross in Rome. Born in New York, raised in England and Austria, Mgr. Schlag has authored more than 80 publications, among them: (together with Domènec Melé) Humanism in Economics and Business: Perspectives of the Catholic Social Tradition; The Handbook of Catholic Social Teaching: A Guide for Christians in the World Today; and The Business Francis Means: Understanding the Pope’s Message on the Economy.

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