5.2.3 Applying moral principles in economic life

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Unit 5 Contents


The next reading addresses what the principle of the universal destination of goods means for the basic approach we should take to the economy.

##328-329 begins by referring to this principle and then outlines some of what the great theologians of the Early Church said about wealth and poverty.  They had less of a sense of the possibilities of major reform of the economic order than we do now, granted which they tended to focus on the responsibilities of wealthy people.

The main point in the rest of this reading, ##330-335, is that what happens in the economy is not separable from morality, i.e. from assessment in terms of right and wrong.

To most Christians, saying that what is done in economic activities is properly subject to moral analysis will seem a statement of the obvious – indeed I guess it would to most people.  They would agree that such issues as rates of pay and whether products supplied to people actually benefit them or are harmful are moral questions.  Pay rates can be so low that they are inherently wrong – pure exploitation.  Products can be so dangerous that they simply ought not to be supplied.

But in making that point explicitly, the document is showing that CST opposes neoliberalism – because, surprisingly enough, neoliberalism denies that what happens in market transactions should be subject to moral assessment.  I shall explain this important point further after you have done the reading.

You will notice that the last paragraph of the reading quotes Pope John Paul’s evaluation of ‘capitalism’, in which he contrasts two senses of this term.  We shall focus on this highly important passage later in this unit.


Reading (4pp)

Compendium, ##328-335 (Chap 7, parts Ib and II)


As you have just read, in #331 the Compendium says, “The relation between morality and economics is necessary, indeed intrinsic: economic activity and moral behaviour are intimately joined one to another”.

As I noted above, here CST is insisting that what people do in market transactions – as they invest, supply goods and services, trade, and consume – is subject to moral evaluation.  It needs to be assessed in terms of the principle of the universal destination of goods.  Does this particular investment, or the employment conditions in that company, or what is sold in this shop, really contribute to the common good?

In contrast, neoliberalism denies that what happens in economic transactions should be subject to moral analysis.  This is a point of vast significance for understanding current debates and it marks one pivotal difference between neoliberalism, which is still the dominant approach to economics, and Catholic Social Teaching.  We have noticed the basic argument for that neoliberal denial already, in the historical outline in Unit 2 that you looked at again earlier in this module.  You will recall that what is now called neoliberalism, namely the economic liberalism of the nineteenth century, rested on seeing the economy in mechanistic terms, driven by everyone’s desire to maximize utility.  As the theory of economic liberalism developed, it emphasized that what drives the mechanism is the ‘preferences’ people have, whatever these preferences are for.  You might prefer roast dinners and arduous cycle rides and I might prefer horse racing and taking cocaine.  In the mechanistic view of humans which generated classical economics, all such preferences have a basic equality – they just happen to be things people prefer, things that give them utility.  The more people can exchange things in markets, the more people’s preferences will be satisfied.  But this mechanistic view of humans gives no reason for ruling out, on moral grounds, anything that people actually have preferences for.

Rather, what happens in markets, as people invest, supply, trade and consume, is morally neutral – because it is just part of a mechanism which will work best the more you leave it alone.  According to neoliberalism, this even applies to the labour market.  Wage levels are not a moral question, because they are what they are simply in consequence of people freely bringing their preferences to the market place.  If I want to earn some money, I need to work, so I need to try to get relevant qualifications, and then to bargain to get the best deal in the workplace.  Buying and selling labour is no different from trading in other goods and services.  In short, neoliberalism sees economic life as an autonomous mechanism that works best when it is left alone.

I am outlining a very pure neoliberal view here, according to which what happens in market transactions is not subject to moral analysis at all.  In fact most neoliberals agree that there should be some rules limiting what should be supplied to markets (e.g. to rule out highly dangerous products, like chemical weapons) and guaranteeing minimum safety standards for workers, even if not minimum wages.  (Neoliberals generally oppose a legal minimum wage, such as has existed in the UK since 1997.)  But neoliberalism usually accepts such limits, not on grounds of justice or human dignity, but because their absence would threaten the existence of the system – for example by encouraging social disorder.

Catholic Social Teaching emphatically rejects this neoliberal claim that what people do in market transactions is not subject to moral evaluation.

It is worth stating immediately that this does not in any way mean that CST is opposed to markets or to people freely engaging in economic transactions with one another.  It is necessary to make this clear because, characteristically, neoliberals jump to the conclusion that any such critique of what happens in markets assumes a demand that government should step in and direct economic activity.  We shall look briefly at the responsibilities of government later, but this reaction entirely misses the main point that CST makes when it insists that the economy must not be considered separately from morality.  The main point is that everyone who acts in markets, whether investing, producing/supplying, trading or consuming, is responsible for acting morally – that is, in a way consistent with the universal destination of goods – regardless of whether there is a law requiring them to do so.

On one hand, then, the theory of neoliberalism means that it is regarded as acceptable to deal with people, even workers, without paying any attention to their human dignity or vocation from God to ‘integral human development’.  On the other hand, CST insists that, “[i]n the economic realm…, the dignity and complete vocation of the human person and the welfare of society… are to be respected and promoted” (Gaudium et Spes, #63, quoted in Compendium, #331).

CST not only rejects neoliberalism but offers a different vision of what positively can be achieved for people through economic transactions in markets.  As you have read, the Compendium puts it like this:

When practised morally, economic activity is… service mutually rendered by the production of goods and services that are useful for the growth of each person, and it becomes an opportunity for every individual to embody solidarity and live the vocation to “communion with others for which God created him [or her]” (Compendium, #333, quoting John Paul II, Centesimus Annus, #41)

The reading on the next screen takes further what this statement expresses.



Bring to mind again your experience of private business, which you were asked to reflect on at the start of this unit.

To what extent do you think the forms of business you are aware of operate as though a morality-free zone driven by the goal of maximizing profit?

Or is it clear that those involved, including at senior level, are seriously committed to business practice that respects human dignity and is “useful for the growth of each person”?



End of 5.2.3

Go to 5.2.4 ‘Private Initiative and Business Initiative’

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