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Catholic Social Teaching and the Market Economy Catholic Social Teaching and the Market Economy CSTATME text v2.indd 1 05/03/2014 10:04 CSTATME text v2.indd 2 05/03/2014 10:04 Catholic Social Teaching and the Market Economy P HILI P B OOTH With Contributions From Samuel Gregg Robert Kennedy Kishore Jayabalan Michael Miller Denis O’Brien Dennis O’Keeffe Anthony Percy Robert A. Sirico Thomas Woods Andrew Yuengert ST PAULS CSTATME text v2.indd 3 05/03/2014 10:04 First published in Great Britain in 2007 by The Institute of Economic Affairs 2 Lord North Street Westminster, London SW1P 3LB in association with Profile Books Ltd The mission of the Institute of Economic Affairs is to improve public understanding of the fundamental institutions of a free society, by analysing and expounding the role of markets in solving economic and social problems. ©2014 Institute of Economic Affairs, UK The moral right of the authors has been asserted. Second edition published by ©2014 St Pauls Publishing 187 Battersea Bridge Road – SW11 3AS London All rights reserved. Without limiting the rights under copyright reserved above, no part of this publication may be reproduced, stored or introduced into a retrieval system, or transmitted, in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of both the copyright owner and the publisher of this book. ISBN 978-0-85439-837-9 Typeset by David Exley at www.beamreachuk.co.uk Production and Cover Design: DX Imaging, Watford, Herts, UK Printed by Martins The Printers, Berwick upon Tweed, UK A CIP catalogue record for this book is available from the British Library. ST PAULS is an activity of the priests and brothers of the Society of St Paul who proclaim the Gospel through the media of social communication CSTATME text v2.indd 4 05/03/2014 10:04 CONTENTS The authors 1 Foreword by John Kennedy 9 Acknowledgements 13 Preface by Leonard P. Liggio 15 1 Introduction: understanding Catholic Social Teaching in the light of economic reasoning 23 Philip Booth Understanding policy issues in the light of Catholic Social Teaching 26 Challenges to theologians and Christian politicians 27 The scope of Catholic Social Teaching and the Market Economy 27 Fundamental messages 29 Community, society and government 30 Self-interest in the market and self-interest in the political system 32 The market allocates resources by agreement 35 The common good, solidarity and subsidiarity 36 Distinction between the free economy and the market economy and the relationship to the ‘Big Society’ 39 Mercy, compassion and the market 42 New expressions of ‘distributism’ 44 The main themes 47 References 53 Annexe: a note on referencing 54 v CSTATME text v2.indd 5 05/03/2014 10:04 2 The Catholic social encyclical tradition 56 Kishore Jayabalan What is an encyclical? 58 Basic principles of Catholic Social Teaching 61 Summary of the social encyclicals 64 Future challenges in Catholic Social Teaching 73 References 77 PART ONE: ECONOMIC WELFARE AND THE ROLE OF THE STATE 3 Rethinking welfare, reviving charity: a Catholic alternative 81 Robert A. Sirico Introduction 81 The welfare issue 85 Bureaucracy does not help the poor 89 True Christian charity 93 Defining and dividing responsibilities: solidarity and subsidiarity 95 Conclusion 100 References 101 4 Aid, governance and development 103 Philip Booth Introduction 103 Catholic exhortations to the developed world to finance ‘aid’ 105 Catholic Social Teaching: making the case for aid 110 Catholic Social Teaching: the relationship between aid and governance 115 vi CSTATME text v2.indd 6 05/03/2014 10:04 The Bauer critique of papal encyclicals 119 Aid in theory and practice 121 Aid and government 122 Aid and development 127 Growth and governance 130 Catholic Social Teaching tempered by realism – is there a way forward? 134 Charity and relief 139 References 141 5 The unanswered questions of the just wage 144 Thomas E. Woods, Jr The limits of the Church’s teaching authority 144 The minimum wage, the plight of the poor and Catholic conscience 151 The ‘market power’ argument 153 We cannot assume away the fact that it is the poor who will suffer from a minimum wage ... 156 Providing a living wage ... as soon as possible 160 Non-economic arguments and the just wage 161 Conclusion 166 References 168 6 Taxation and the size of the state 170 Philip Booth Introduction 170 Modern Catholic teaching on taxation and the role of the state: taxation for redistribution and welfare 172 Summary 185 Modern Catholic Social Teaching and the role of the state: the provision of legal institutions 186 Modern Catholic Social Teaching and the role of the state: the distinction between charity and taxation 187 Informing Catholic Social Teaching with economic theory: the burden of taxation 189 Conclusion 200 vii CSTATME text v2.indd 7 05/03/2014 10:04 Informing Catholic Social Teaching with economic theory: public goods and externalities 201 Informing Catholic Social Teaching with economic theory: public choice economics 204 Conclusions: taxation and the role of the state 210 References 212 PART TWO: BUSINESS, THE CONSUMER AND CULTURE IN CHRISTIAN LIFE 7 Free markets and the culture of consumption 219 Andrew Yuengert Introduction 219 Papal encyclicals on consumerism 223 Consumerism and public policy 234 Conclusion 241 References 243 8 Business and the common good 244 Robert G. Kennedy Introduction 244 Catholic social thought and the good society 247 The person and the common good 252 Common goods and the common good 255 The contribution of business to the common good 262 What the Catholic social tradition has to learn from business and economics 268 Conclusion 276 References 277 viii CSTATME text v2.indd 8 05/03/2014 10:04 9 The entrepreneur in the life of the Church and society 279 Anthony Percy Introduction 279 The entrepreneur 280 The entrepreneur and the Word of God 281 The entrepreneur in the Fathers of the Church 282 The entrepreneur and the virtue of magnificence 283 Social doctrine and the entrepreneur 284 The wisdom of Pope Pius XII 288 The Church is a ‘joy and hope’ 291 The Pope from Galilee – John Paul II 294 Conclusion 302 References 303 10 The environment, the common good and the economic way of thinking 305 Philip Booth Solidarity and subsidiarity 305 Catholic Social Teaching and the environment 312 Solidarity and subsidiarity and the environment 315 Private property and environmental protection 316 International environmental problems 321 Slogans and muddled thinking 326 Personal and business responsibility for the environment 328 Concluding remarks 330 References 331 ix CSTATME text v2.indd 9 05/03/2014 10:04 11 Corporate social responsibility and the role of business in society 333 Michael Miller Introduction 333 Critique of CSR 337 CSR and the problem of private property 340 Four additional critiques of corporate social responsibility 343 Conclusions 358 References 359 12 Education and the Catholic Church in England and Wales 361 Dennis O’Keeffe Introduction 361 Our depleted spiritual resources 365 The Compendium of the Catechism of the Catholic Church published by the Catholic Truth Society 368 Difficulties: Catholic, educational, sociological and economic 370 What the Church does not talk about: Catholicism and tough social science 375 Markets versus centralised state control of resources 377 Category errors, wrong theorising and the loss of the sacramental 381 The socio-economy of public finance 382 Markets, Catholicism and mercy 384 References 386 x CSTATME text v2.indd 10 05/03/2014 10:04 13 Catholic Social Teaching and the financial crash 389 Philip Booth Prudence – the importance of not saying too much 389 The ‘common good’ 391 The regulation of the financial system 392 Should banks be bailed out? 397 The provision of credit–is credit a Christian issue? 400 Debt and equity finance 404 Government borrowing 405 ‘New’ financial institutions and Christian social movements 407 Conclusion 411 References 413 PART THREE: SUBSIDIARITY AND SOLIDARITY – THE ROLE OF THE INDIVIDUAL, THE COMMUNITY AND THE STATE 1 4 The social teaching of Benedict XVI 417 Samuel Gregg Introduction 417 Justice, truth and love: a ‘trinity of principles’ 420 Justice, truth and charity in the marketplace 427 Hope, utopia, and eschatology 432 xi CSTATME text v2.indd 11 05/03/2014 10:04 15 Subsidiarity and solidarity 438 Denis O’Brien Introduction 438 Leo XIII and Pius XI 439 John XXIII and John Paul II 444 The economic model 450 Lessons not learned – Gaudium et spes 453 The Hierarchy of England and Wales 456 Conclusion 464 References 465 16 Catholicism and the case for limited government 467 Samuel Gregg Introduction 467 Freedom and the call to perfection 473 The state and the common good 479 Prudence, sin and love 482 Conclusion 490 References 491 Appendix: major Church documents to which the authors refer 494 xii CSTATME text v2.indd 12 05/03/2014 10:04 CSTATME text v2.indd 13 05/03/2014 10:04 CSTATME text v2.indd 14 05/03/2014 10:04 The Authors Philip Booth Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs and Professor of Insurance and Risk Management at the Cass Business School where he was formerly Associate Dean. He has an undergraduate degree in economics from the University of Durham and a PhD in Finance. He is a Fellow of the Institute of Actuaries and of the Royal Statistical Society. Previously, Philip Booth worked for the Bank of England as an adviser on financial stability issues. He has written widely, including a number of books, on investment, finance, social insurance and pensions, as well as on the relationship between Catholic social teaching and economics. Recent publications as co-author or editor include: Verdict on the Crash, Modern Actuarial Theory and Practice, The Road to Economic Freedom and Christian Perspectives on the Financial Crash.
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