Centesimus Annus: a Theological Challenge to Economists.

Listener 17 June, 1991.

Keywords History of Ideas, Methodology & Philosophy

Roman Catholic theology is much more interesting than Protestant. It is not that Protestants are boring, but Protestantism developed with the rise of the modern industrial economy; expecting an economic theology from it is a bit like asking a fish to give an account of water . Catholicism was thrown in at the deep end; its church and theology evolved before the modern market economy. Slowly and painfully they had to come to terms with it.

Catholicism’s first authoritative confrontation with the issues is the papal encyclical Rerum Novarum: The Condition of Workers, released by Leo XIII 100 years ago. It came after Catholicism had taken an ideological beating through most of the 19th century; Protestants and socialists had been seen as more responsive to economic change.

Now, John Paul II has just released Centesimus Annus: The Centenary of Rerum Novarum. This encyclical rejects “atheistic” Marxism in favour of an economic theology which modifies uncontrolled capitalism. (The rejection may be a diversion, since the spirituality in the early Karl Marx has much in common with theologians such as Martin Buber. And, even if many Marxists insist they are atheists, there are mainline Christians and Muslims who say they are Marxists.)

Catholic theology supports private property, but critically. Centesimus Annus says, ‘Ownership of t he means of production is just and legitimate if it serves useful work. It becomes illegitimate when it is not utilised or when it serves to impede the work of others in an effort to gain a profit which is not the result of the overall expansion of work and the health of society.’

I would use the Biblical term “stewardship” (or the Maori term “rangatiratanga”) to describe this conception rather than the conventional capitalist term “ownership”. The possessor of property does not have unlimited rights to use it. Rather, the use is only justified if it is consistent with some wider social objective.

On labour markets, both encyclicals uphold the principle of a “just wage”, where workers get paid sufficiently for their family needs, An economist has considerable difficulty with this concept, A just wage for a single worker will be inadequate for a worker supporting a family, And what if a just wage means the worker is unemployable?

Could Catholic theology allow the just wage to be replaced by the “social wage”, in which the community pays part of the family income? With the social wage, market wages reflect productivity, but are then modified through community support to reflect people’s needs more closely. Certainly the Catholic parties in the European Parliament have combined with the socialists to pursue harmonisation and extension of the social wage in the European Community.

Indeed, Catholic theology appears most supportive of trade unionism, The New Zealand Catholic bishops made a thoughtful submission criticising the Employment Contracts Act (which was implemented 100 years to the day after Centesimus Annus).

Local bishops would have been heartened by the John Paul II encyclical’s reaffirmation of Leo XIII’s conclusion that the just wage “cannot be left to the free consent of parties so that the employer, having paid what was agreed upon, has done his part and seemingly is not. called upon to do anything beyond …This concept of relations between employers and employees, purely pragmatic and inspired by thoroughgoing individualism, is severely censured as contrary to the twofold nature of work as a personal and necessary reality. … If through necessity or fear of a worse evil the workman accepts harder conditions [than the just wage] because an employer or contractor will afford no better, he is made the victim of force and injustice.”

The 1991 encyclical comments: “Would that these word’s written at a time when what was called ‘unbridled capitalism’ was pressing forward. should not have to be repeated today with the same severity. Unfortunately even today one finds instances of contracts between employers and employees which lack reference to the most elementary justice. …The Pope attributed to the ‘public authority’ the ‘strict duty of providing properly for the welfare of workers, because failure to do so violates justice.” lt is all enough to tempt a Pat Kelly to abandon the Labour party for the Catholic Church.

The encyclicals can be challenging. Centesimus Annus extends the concept of the just wage from one “adequate for the maintenance of the worker and his family” to one including “a certain amount for savings”. As if state involvement in wage setting is not enough, the encyclical appears to be a call to set the poverty line so the worker has opportunity to save.

If the encyclicals can be fascinating reading, some of the theology can be quite obscure. Both ,the 1891 and 1991 encyclicals use familiar economic and political terms in an unfamiliar way. For instance, in their condemnations of “socialism” they are referring to extremist Marxism and socialism. And the “liberalism” which is equally condemned sounds more like what most of us would call “capitalist libertarianism”.

The 1991 encyclical is very Eurocentric and. being based on the earlier 19th-century lone, it barely touches on the Third World, the environment, or women in the paid workforce. Understandably, John Paul II is concerned with Central Europe. But the political upheavals there are so recent, his encyclical lacks the reflection which is a strength of Leo XIII’s commentary on the industrial revolution.

I struggle with these encyclicals because they challenge economists. Bubbling on the top or the brew, we tend to ignore deeper philosophical issues. The encyclicals are not about whether wages and profits should be up or down; they arc about the fundamental role of wages and profits. You do not have to agree with the popes, but you have to think hard when confronting the economic issues they raise.