Economics and the Social Thought of the Catholic Church

Abstract

The economic theory we know today has been in development since the XVIII century. Physiocrats, Adam Smith, David Ricardo, and Thomas Malthus developed a theory that assumes that economy is governed by natural laws themselves, free competition, individual interest, and a laissez-faire guided the State to protect private property. In the second half of the XIX century, Marx demonstrated the weaknesses of the classical model; however, a few years after Alfred Marshall systematized economic theories and developed the concept of marginal utility, Léon Walras rebuilt the basis of the classical model, according to marginal analysis, and renamed this theory as neoclassical. During the Great Depression of the 30s, John Maynard Keynes appeared to solve the problems derived by the crisis and he practically built what is now known as macroeconomics. Now the World is back to traditional economics driven by neo-liberalism. Meanwhile and facing the uncontainable advance of capitalism, the social doctrine of the Church has also been in development from the late eighteenth century. Pope Leo XIII wrote the social encyclical Rerum Novarum, and his successors Pius XI, Pius XII, John XXIII, Paul VI, and John Paul II completed the social doctrine, whose principles (dignity of person, solidarity, moral, ethics, responsibility, labor rights, etc.) generally are opposed to mainstream economics, which is represented by a selfish agent maximizing his utility function. Unfortunately, there has not been an open dialogue between the doctrine of the Church and mainstream economic theory; they seem to have taken part in social and economic history without ever interacting. It's time to reach agreements for the sake of humanity.