5.2.5 How does CST assess ‘capitalism’?

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Unit 5 Contents

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In the first part of this unit, we paid attention to the historical context of the debate about ‘capitalism’.

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EXERCISE

On screen 5.1.3, I distinguished two main senses which the word ‘capitalism’ can have.  Can you remember what they were?

To the extent that you can, make notes to try to distinguish them clearly.

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RESPONSE TO EXERCISE: Click here

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This distinction of two senses that ‘capitalism’ can have might bring to mind that, in a reading you have recently done from the Compendium, there is also a distinction of two meanings of capitalism.  This comes in a quotation of an important statement from John Paul II’s encyclical Centesimus Annus. Let us look at this.  It is reproduced below (including a sentence at the start that is not quoted in the Compendium).

[C]an it perhaps be said that, after the failure of Communism, capitalism… should be the goal of [those] countries… making efforts to rebuild their economy and society? …

If by ‘capitalism’ is meant an economic system which recognizes the fundamental and positive role of business, the market, private property and the resulting responsibility for the means of production, as well as free human creativity in the economic sector, then the answer is certainly in the affirmative, even though it would perhaps be more appropriate to speak of a ‘business economy’, ‘market economy’ or simply ‘free economy’.

But if by ‘capitalism’ is meant a system in which freedom in the economic sector is not circumscribed within a strong juridical framework which places it at the service of human freedom in its totality, and which sees it as a particular aspect of that freedom, the core of which is ethical and religious, then the reply is certainly negative.

(Centesimus Annus, #42, second para. break added)

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Reflection

Do the two meanings of capitalism contrasted in this quotation correspond with the two I distinguished above?

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These two ways of distinguishing two meanings of capitalism do correspond pretty closely, it appears to me.  They do so as follows.

The broader, imprecise sense I gave is similar to the first way in which Pope John Paul says the word can be used.  The Pope described a form of economy that “recognizes the… positive role of business, the market [and] private property…, as well as free human creativity in the economic sector”.  This fits with the positive view of enterprise set out in the reading from the Compendium on the last screen.  It is certainly not consistent with an overriding goal of maximizing return to capital – so it fits with the broader, less precise meaning in which any and every market economy is called ‘capitalist’.

However the Pope does not seem keen to use the label ‘capitalist’ for this kind of economy. He suggests it would be “more appropriate to speak of a ‘business economy’, ‘market economy’ or simply ‘free economy’”.  The obvious reason why ‘capitalist’ isn’t a good label is that such an economy is not capitalist in the precise sense – it is not defined or driven by serving capital as the overriding goal.

This more precise or strict sense of capitalism corresponds with Centesimus Annus’s second meaning.  The Pope shows no similar doubt about whether this version should be called ‘capitalist’.  However his definition is not presented in terms of the goal which this capitalism pursues, i.e. maximum return to capital.  Rather, it is presented in terms of what such a form of economy lacks, namely a “strong juridical framework” that places economic freedom in the context of an integral vision of human freedom, and so of human development. But these positive and negative ways of describing it are consistent: without such a framework to ensure the economy serves human persons, there is only capitalism in the narrow sense, in which pursuit of return to capital is the overriding goal and persons are subjected to mere things.

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Reflection

Do you agree that the distinction made earlier in this unit, between a broad and imprecise meaning of ‘capitalism’ and a precise or narrow sense of the term, maps on to the way the term’s two meanings are distinguished in Centesimus Annus?

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Where does this leave us?  Four major points follow from all we have looked at in this unit so far.

  • CST regards the binary contrast which dominated the twentieth century debate, between laissez-faire capitalism and state socialism, as profoundly misleading.  These are not the only two possible options for economic life.
  • CST strongly favours a form of market economy which contributes to integral human development and in which business is seen in a highly positive way.
  • This form of economy is not helpfully called ‘capitalist’ but is better called, simply, a ‘market economy’ or a ‘free economy’.
  • CST rejects the economic system that is, precisely speaking, capitalist.  According to Pope John Paul II, its judgment on this “is certainly negative”.

In summary, CST is pro-business and anti-capitalist.

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Reflection

In much debate in public life, even more than 20 years after the end of the Cold War, it is simply assumed that ‘capitalism’ and ‘market economy’ mean the same thing.  But CST rejects this, arguing for a market economy that is not, in the strict sense, capitalist.

What descriptive term is appropriate for referring to an economy of this kind? Simply a ‘market economy’, a ‘free economy’ or a ‘business economy’, as John Paul II suggested (quoted above)?  Or is there a better term?

After the next page, you will have an opportunity to address this, as one of the ‘questions for discussion half way through unit’ (5.2.7).

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End of 5.2.5

Go to 5.2.6 The ‘free economy’ and its ‘juridical framework’

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