Caritas in Veritate: A new way of economic life

Pope Benedict XVI’s new social encyclical, Caritas in Veritate [Charity/Love in Truth] is a challenge to the way we think about economics. Drawing on the riches of Catholic Social Thought, particularly that of Pope Paul VI, he proposes a new approach to integral human and economic development based on the principles of solidarity and subsidiarity.

We are all in various ways suffering the effects of the global recession, caused mainly by the dangerous and unethical practices of a number of major banking institutions. Banks gave out loans without having the financial reserves to honour them. In short, they played with money they did not have and many went bankrupt leading to business collapses and job losses.

We are also aware of how the globalised economy has led to the emergence of sweatshop economics. Poorly paid workers, many of them children, produce goods in Third World countries that are sold cheaply in other countries resulting in local industries going out of business. To compete these countries have to cut wages – and sometimes safety standards. While no one, least of all the pope, is against healthy economic competition, the effect is unemployment in some places, subsistence wages in others.

In addition many countries have privatised basic utilities, including water, with the result that costs have skyrocketed. This has led in some places to declining quality of life and the resurgence of poverty-related diseases.

None of this has been met passively. Protests have erupted locally and globally, with some campaigns reversing water privatisation (e.g. Bolivia) and others shaming multinationals into improving wages and labour conditions. With this encyclical, in particular with his insistence that basic food security and access to water is a human right, Benedict is adding his voice to the protest.

Central to his argument are two of the pillars of modern Catholic Social Thought, solidarity and subsidiarity. Rooted in the conviction that all human beings are created in the image and likeness of God and thus have inherent human rights to be treated with fairness and dignity, solidarity expresses the belief that cooperation rather than cutthroat competition is just way in which human interaction – including economic interaction – should proceed. Subsidiarity is the belief that societies (including economic activity) should not be centralised but operate, in effect, from the ‘bottom up’. What can be done locally or regionally should be done there; only activities that need centralisation – by national governments, for example – should be done centrally.

As an expert on the great Catholic theologian St Augustine of Hippo, Benedict is all too aware of the human tendency towards selfishness. This is implicit in his criticism of the global economic tendency towards monopolies, cartels and the undermining of local, small and medium enterprises. Back in the 1960s his predecessor Pope Paul VI warned that if development led to growing inequality between people’s rebellion and revolution might result. Looking today at a world where inequality has grown and where discontent is leading many despite the fall of communism to loathe the capitalism that exists we might say that Paul was a prophet.

We might say that with this encyclical Benedict XVI has become a prophet for our times.

Next time: A look at Benedict’s understanding of integral development and economic justice.