Market Economy and Ethics By Cardinal Ratzinger(Pope Benedict XVI) 1985

The economic inequality between the northern and southern hemispheres of the globe is becoming more and more an inner threat to the cohesion of the human family. The danger for our future from such a threat may be no less real than that proceeding from the weapons arsenals with which the East and the West oppose one another. New exertions must be made to overcome this tension, since all methods employed hitherto have proven themselves inadequate. In fact, the misery in the world has increased in shocking measure during the last thirty years. In order to find solutions that will truly lead us forward, new economic ideas will be necessary. But such measures do not seem conceivable or, above all, practicable without new moral impulses. It is at this point that a dialogue between Church and economy becomes both possible and necessary.

Let me clarify somewhat the exact point in question. At first glance, precisely in terms of classical economic theory, it is not obvious what the Church and the economy should actually have to do with one another, aside from the fact that the Church owns businesses and so is a factor in the market. The Church should not enter into dialogue here as a mere component in the economy, but rather in its own right as Church.

Here, however, we must face the objection raised especially after the Second Vatican Council, that the autonomy of specialized realms is to be respected above all. Such an objection holds that the economy ought to play by its own rules and not according to moral considerations imposed on it from without. Following the tradition inaugurated by Adam Smith , this position holds that the market is incompatible with ethics because voluntary “moral” actions contradict market rules and drive the moralizing entrepreneur out of the game. 3 For a long time, then, business ethics rang like hollow metal because the economy was held to work on efficiency and not on morality. 4 The market's inner logic should free us precisely from the necessity of having to depend on the morality of its participants. The true play of market laws best guarantees progress and even distributive justice.

The great successes of this theory concealed its limitations for a long time. But now in a changed situation, its tacit philosophical presuppositions and thus its problems become clearer. Although this position admits the freedom of individual businessmen, and to that extent can be called liberal, it is in fact deterministic in its core. It presupposes that the free play of market forces can operate in one direction only, given the constitution of man and the world, namely, toward the self-regulation of supply and demand, and toward economic efficiency and progress.

This determinism, in which man is completely controlled by the binding laws of the market while believing he acts in freedom from them, includes yet another and perhaps even more astounding presupposition, namely, that the natural laws of the market are in essence good (if I may be permitted so to speak) and necessarily work for the good, whatever may be true of the morality of individuals. These two presuppositions are not entirely false, as the successes of the market economy illustrate. But neither are they universally applicable and correct, as is evident in the problems of today's world economy. Without developing the problem in its details here — which is not my task — let me merely underscore a sentence of Peter Koslowski's that illustrates the point in question: “The economy is governed not only by economic laws, but is also determined by men...”. 5 Even if the market economy does rest on the ordering of the individual within a determinate network of rules, it cannot make man superfluous or exclude his moral freedom from the world of economics. It is becoming ever so clear that the development of the world economy has also to do with the development of the world community and with the universal family of man, and that the development of the spiritual powers of mankind is essential in the development of the world community. These spiritual powers are themselves a factor in the economy: the market rules function only when a moral consensus exists and sustains them.

If I have attempted so far to point to the tension between a purely liberal model of the economy and ethical considerations, and thereby to circumscribe a first set of questions, I must now point out the opposite tension. The question about market and ethics has long ceased to be merely a theoretical problem. Since the inherent inequality of various individual economic zones endangers the free play of the market, attempts at restoring the balance have been made since the 1950s by means of development projects. It can no longer be overlooked that these attempts have failed and have even intensified the existing inequality. The result is that broad sectors of the Third World, which at first looked forward to development aid with great hopes, now identify the ground of their misery in the market economy, which they see as a system of exploitations, as institutionalised sin and injustice. For them, the centralized economy appears to be the moral alternative, toward which one turns with a directly religious fervor, and which virtually becomes the content of religion. For while the market economy rests on the beneficial effect of egoism and its automatic limitation through competing egoisms, the thought of just control seems to predominate in a centralized economy, where the goal is equal rights for all and proportionate distribution of goods to all. The examples adduced thus far are certainly not encouraging, but the hope that one could, nonetheless, bring this moral project to fruition is also not thereby refuted. It seems that if the whole were to be attempted on a stronger moral foundation, it should be possible to reconcile morality and efficiency in a society not oriented toward maximum profit, but rather to self-restraint and common service. Thus in this area, the argument between economics and ethics is becoming ever more an attack on the market economy and its spiritual foundations, in favor of a centrally controlled economy, which is believed now to receive its moral grounding.

The full extent of this question becomes even more apparent when we include the third element of economic and theoretical considerations characteristic of today's situation: the Marxist world. In terms of the structure of its economic theory and praxis, the Marxist system as a centrally administered economy is a radical antithesis to the market economy. 6 Salvation is expected because there is no private control of the means of production, because supply and demand are not brought into harmony through market competition, because there is no place for private profit seeking, and because all regulations proceed from a central economic administration. Yet, in spite of this radical opposition in the concrete economic mechanisms, there are also points in common in the deeper philosophical presuppositions. The first of these consists in the fact that Marxism, too, is deterministic in nature and that it too promises a perfect liberation as the fruit of this determinism. For this reason, it is a fundamental error to suppose that a centralized economic system is a moral system in contrast to the mechanistic system of the market economy. This becomes clearly visible, for example, in Lenin's acceptance of Sombart's thesis that there is in Marxism no grain of ethics, but only economic laws. 7 Indeed, determinism is here far more radical and fundamental than in liberalism: for at least the latter recognizes the realm of the subjective and considers it as the place of the ethical. The former, on the other hand, totally reduces becoming and history to economy, and the delimitation of one's own subjective realm appears as resistance to the laws of history, which alone are valid, and as a reaction against progress, which cannot be tolerated. Ethics is reduced to the philosophy of history, and the philosophy of history degenerates into party strategy.

But let us return once again to the common points in the philosophical foundations of Marxism and capitalism taken strictly. The second point in common — as will already have been clear in passing — consists in the fact that determinism includes the renunciation of ethics as an independent entity relevant to the economy \. This shows itself in an especially dramatic way in Marxism. Religion is traced back to economics as the reflection of a particular economic system and thus, at the same time, as an obstacle to correct knowledge, to correct action — as an obstacle to progress, at which the natural laws of history aim. It is also presupposed that history, which takes its course from the dialectic of negative and positive, must, of its inner essence and with no further reasons being given, finally end in total positivity. That the Church can contribute nothing positive to the world economy on such a view is clear; its only significance for economics is that it must be overcome. That it can be used temporarily as a means for its own self-destruction and thus as an instrument for the “positive forces of history” is an ‘insight’ that has only recently surfaced. Obviously, it changes nothing in the fundamental thesis.

For the rest, the entire system lives in fact from the apotheosis of the central administration in which the world spirit itself would have to be at work, if this thesis were correct. That this is a myth in the worst sense of the word is simply an empirical statement that is being continually verified. And thus precisely the radical renunciation of a concrete dialogue between Church and economy which is presupposed by this thought becomes a confirmation of its necessity.

In the attempt to describe the constellation of a dialogue between Church and economy , I have discovered yet a fourth aspect. It may be seen in the well-known remark made by Theodore Roosevelt in 1912: “I believe that the assimilation of the Latin-American countries to the United States will be long and difficult as long as these countries remain Catholic.” Along the same lines, in a lecture in Rome in 1969, Rockefeller recommended replacing the Catholics there with other Christians 8 — an undertaking which, as is well known, is in full swing. In both these remarks, religion — here a Christian denomination — is presupposed as a socio-political, and hence as an economic-political factor, which is fundamental for the development of political structures and economic possibilities. This reminds one of Max Weber's thesis about the inner connection between capitalism and Calvinism , between the formation of the economic order and the determining religious idea. Marx's notion seems to be almost inverted: it is not the economy that produces religious notions, but the fundamental religious orientation that decides which economic system can develop. The notion that only Protestantism can bring forth a free economy — whereas Catholicism includes no corresponding education to freedom and to the self-discipline necessary to it, favoring authoritarian systems instead — is doubtless even today still very widespread, and much in recent history seems to speak for it. On the other hand, we can no longer regard so naively the liberal-capitalistic system (even with all the corrections it has since received) as the salvation of the world. We are no longer in the Kennedy-era, with its Peace Corps optimism; the Third World's questions about the system may be partial, but they are not groundless. A self-criticism of the Christian confessions with respect to political and economic ethics is the first requirement.

But this cannot proceed purely as a dialogue within the Church. It will be fruitful only if it is conducted with those Christians who manage the economy \. A long tradition has led them to regard their Christianity as a private concern, while as members of the business community they abide by the laws of the economy.

These realms have come to appear mutually exclusive in the modern context of the separation of the subjective and objective realms. But the whole point is precisely that they should meet, preserving their own integrity and yet inseparable. It is becoming an increasingly obvious fact of economic history that the development of economic systems which concentrate on the common good depends on a determinate ethical system, which in turn can be born and sustained only by strong religious convictions. 9 Conversely, it has also become obvious that the decline of such discipline can actually cause the laws of the market to collapse. An economic policy that is ordered not only to the good of the group — indeed, not only to the common good of a determinate state — but to the common good of the family of man demands a maximum of ethical discipline and thus a maximum of religious strength. The political formation of a will that employs the inherent economic laws towards this goal appears, in spite of all humanitarian protestations, almost impossible today. It can only be realized if new ethical powers are completely set free. A morality that believes itself able to dispense with the technical knowledge of economic laws is not morality but moralism. As such it is the antithesis of morality. A scientific approach that believes itself capable of managing without an ethos misunderstands the reality of man. Therefore it is not scientific. Today we need a maximum of specialized economic understanding, but also a maximum of ethos so that specialized economic understanding may enter the service of the right goals. Only in this way will its knowledge be both politically practicable and socially tolerable.

The economic inequality between the northern and southern hemispheres of the globe is becoming more and more an inner threat to the cohesion of the human family....
....Since the inherent inequality of various individual economic zones endangers the free play of the market, attempts at restoring the balance have been made since the 1950s by means of development projects. It can no longer be overlooked that these attempts have failed and have even intensified the existing inequality. The result is that broad sectors of the Third World, which at first looked forward to development aid with great hopes, now identify the ground of their misery in the market economy, which they see as a system of exploitations, as institutionalised sin and injustice....
....This reminds one of Max Weber's thesis about the inner connection between capitalism and Calvinism , between the formation of the economic order and the determining religious idea. Marx's notion seems to be almost inverted: it is not the economy that produces religious notions, but the fundamental religious orientation that decides which economic system can develop. The notion that only Protestantism can bring forth a free economy — whereas Catholicism includes no corresponding education to freedom and to the self-discipline necessary to it, favoring authoritarian systems instead — is doubtless even today still very widespread, and much in recent history seems to speak for it....

.... this cannot proceed purely as a dialogue within the Church. It will be fruitful only if it is conducted with those Christians who manage the economy.

The notion that capitalism is somehow necessarily and inevitably a friend of Jesus Christ is one of the greatest American delusions of the past century. That doesn't make capitalism evil. It makes it a "philosophy according to human tradition" and no necessary part of the Faith.
-- Catholic apologist Mark Shea, in the thread Capitalism, Colossians and the Miller Brewing Company
....Catholics, even devout Catholics, are not ideologically conservative, as currently defined. We don’t view low taxes, less government regulation, more capitalism as obtaining to the level of the moral law.
-- Catholic FReeper sitetest, on the thread Puzzling Over Why Catholics Back Democrats
Capitalism has failed in less than 300 years. No surprise that a system of calvinistic puritan Freemasons would not be able to understand and maintain TRUE freedom.
-- Catholic FReeper stfassisi, on the thread Pope to issue encyclical on economics
Show me just one Catholic bishop who will speak up against coveting your neighbors’ goods. That is why Catholics ignored the Bishops on abortion. They know abortion is wrong but overlooked the Dems on that point because those same politicians pandered to their covetousness. Same for protestants and evangelical pastors, leaders and activists. American politics and government at all levels is driven by government-mediated coveting. Until the Church takes a stand against this we can expect to sink deeper and deeper into socialism and, oh yeah, abortion.
-- Catholic FReeper all the best, on the thread With the Help of Catholics…Obama’s Victory

More from Cardinal Ratzinger(Pope BenedictXVI)-who truly understands that unbounded freedom is NOT really freedom at all and is geared towards destruction of the family and a form of marxism
http://www.communio-icr.com/articles/PDF/ratzinger31-3.pdf

It must be admitted: by means of this remarkable synthesis,
Christianity had stepped once more onto the world stage and had
become an “epoch-making” message. It is no surprise that the
socialist states took a stand in favor of this movement. More
noteworthy is the fact that, even in the “capitalist” countries,
liberation theology was the darling of public opinion; to contradict
it was viewed positively as a sin against humanity and mankind,
even though no one, naturally, wanted to see the practical measures
applied in their own situation, because they of course had already
arrived at a just social order. Now it cannot be denied that in the
various liberation theologies there really were some worthwhile
insights as well. All of these plans for an epoch-making synthesis of
Christianity and the world had to step aside, however, the moment
that that faith in politics as a salvific force collapsed. Man is, indeed,
as Aristotle says, a “political being,” but he cannot be reduced to
politics and economics. I see the real and most profound problem with
the liberation theologies in their effective omission of the idea of God,
which of course also changed the figure of Christ fundamentally (as we
have indicated). Not as though God had been denied—not on your
life! It’s just that he was not needed in regard to the “reality” that
mankind had to deal with. God had nothing to do.

One is struck by this point and suddenly wonders: Was that
the case only in liberation theology? Or was this theory able to
arrive at such an assessment of the question about God—that the
question was not a practical one for the long-overdue business of
changing the world—only because the Christian world thought
much the same thing, or rather, lived in much the same way,
without reflecting on it or noticing it? Hasn’t Christian consciousness
acquiesced to a great extent—without being aware of it—in
the attitude that faith in God is something subjective, which
belongs in the private realm and not in the common activities of
public life where, in order to be able to get along, we all have to
behave now “etsi Deus non daretur” (“as if there were no God”)?
Wasn’t it necessary to find a way that would be valid, in case it
turned out that God doesn’t exist? And, indeed it happened
automatically that, when the faith stepped out of the inner sanctum
of ecclesiastical matters into the general public, it had nothing for
God to do and left him where he was: in the private realm, in the
intimate sphere that doesn’t concern anyone else. It didn’t take any
particular negligence, and certainly not a deliberate denial, to leave
God as a God with nothing to do, especially since his Name had
been misused so often. But the faith would really have come out of
the ghetto only if it had brought its most distinctive feature with it
into the public arena: the God who judges and suffers, the God
who sets limits and standards for us; the God from whom we come
and to whom we are going. But as it was, it really remained in the
ghetto, having by now absolutely nothing to do

Yet God is “practical” and not just some theoretical
conclusion of a consoling worldview that one may adhere to or simply disregard. We see that today in every place where the
deliberate denial of him has become a matter of principle and where
his absence is no longer mitigated at all. For at first, when God is
left out of the picture, everything apparently goes on as before.
Mature decisions and the basic structures of life remain in place,
even though they have lost their foundations. But, as Nietzsche
describes it, once the news really reaches people that “God is dead,”
and they take it to heart, then everything changes. This is demonstrated
today, on the one hand, in the way that science treats human
life: man is becoming a technological object while vanishing to an
ever-greater degree as a human subject, and he has only himself to
blame. When human embryos are artificially “cultivated” so as to
have “research material” and to obtain a supply of organs, which
then are supposed to benefit other human beings, there is scarcely
an outcry, because so few are horrified any more. Progress demands
all this, and they really are noble goals: improving the quality of
life—at least for those who can afford to have recourse to such
services. But if man, in his origin and at his very roots, is only an
object to himself, if he is “produced” and comes off the production
line with selected features and accessories, what on earth is man
then supposed to think of man? How should he act toward him?
What will be man’s attitude toward man, when he can no longer
find anything of the divine mystery in the other, but only his own
know-how? What is happening in the “high-tech” areas of science
is reflected wherever the culture, broadly speaking, has managed to
tear God out of men’s hearts. Today there are places where
trafficking in human beings goes on quite openly: a cynical
consumption of humanity while society looks on helplessly. For
example, organized crime constantly brings women out of Albania
on various pretexts and delivers them to the mainland across the sea
as prostitutes, and because there are enough cynics there waiting for
such “wares,” organized crime becomes more powerful, and those
who try to put a stop to it discover that the Hydra of evil keeps
growing new heads, no matter how many they may cut off. And do
we not see everywhere around us, in seemingly orderly neighborhoods,
an increase in violence, which is taken more and more for
granted and is becoming more and more reckless? I do not want to
extend this horror-scenario any further.

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