An economic system is a set of institutions constructed by people, living in community, to fulfill their needs and goals, not to be its servants. To elevate an economic system into a philosophy of life is a form of idolatry that deforms and corrupts the nature of society and its members. Since Leo XIII’s Rerum Novarum, the Church has condemned unregulated capitalism and state socialism because the former denies the need for social restraints on ownership and the latter rejects private property entirely. John Paul II reaffirms this position in Laborem Exercens.
The Church affirms that individuals have a right to own property including productive property but that right is constrained by the demands of the common good. As the Second Vatican Council stated, in using the goods of this earth a person “should regard his lawful possessions not merely as his own but also as common property in the sense that they should accrue to the benefit of not only himself but of others.”‘ Specifically citing this stewardship conception of property from the traditional teaching of the Church, John Paul II goes on to state:
. . . the only legitimate title to their (property) possessions — whether in the form of private ownership or in the form of public or collective ownership — is that they should serve labor and thus by serving labor that they should make possible the achievement of the first principle of this order, namely the universal destination of goods and the right to common use of them. From this point of view, therefore, in consideration of human labor and of common access to the goods meant for man, one cannot exclude the socialization, in suitable conditions, of certain means of production.
Clearly, John Paul II is carrying on traditional Catholic social thought and applying it to the problems of the day. The Church has always taught that the economy is to serve people not people to serve the economy. Call this vision “socialist” or “democratic capitalist” if you wish but it is profoundly Christian.
John Paul II calls the state and employers in both “capitalist” and “socialist” countries to place the needs of the human person at the center of economic decisions. How this will be translated into specific institutions and policies will vary from country to country depending upon differences in natural resources, cultural and political traditions, and so on.
The other guiding principle, besides stewardship, found in Catholic social thought is subsidiarity — the principle that economic policies should be carried out at the lowest feasible level beginning with the individual. Thus a strong preference is shown for intermediate bodies such as family, parish, unions, and so on.
In this light John Paul II goes on to declare:
. . . the many proposals put forward by experts in Catholic social teaching and by the highest magisterium of the church take on special significance: proposals for joint ownership of the means of work, sharing by the workers in the management and/or profits of business, so-called shareholding by labor, etc. Whether these various proposals can or cannot be applied concretely, it is clear that recognition of the proper position of labor and the worker in the production process demands various adaptations in the sphere of the right to ownership of the means of production . . .
Therefore, while the position of “rigid” capitalism must undergo continual revision in order to be reformed from the point of view of human rights, both human rights in the widest sense and those linked with man’s work, it must be stated that from the same point of view these many deeply desired reforms cannot be achieved by an a priori elimination of private ownership of the means of production. For it must be noted that merely taking these means of production (capital) out of the hands of their private owners is not enough to ensure their satisfactory socialization. They cease to be the property of a certain social group, namely the private owners, and become the property of organized society, coming under the administration and direct control of another group of people, namely those who, though not owning them, from the fact of exercising power in society manage them on the level of the whole national or the local economy.
This group in authority may carry out its task satisfactorily from the point of view of the priority of labor; but it may also carry it out badly, by claiming for itself a monopoly of the administration and disposal of the means of production and not refraining even from offending basic human rights. Thus, merely converting the means of production into state property in the collectivist systems is by no means equivalent to “socializing” that property. We can speak of socializing only when the subject character of society is ensured, that is to say, when on the basis of his work each person is fully entitled to consider himself a part-owner of the great workbench at which he is working with everyone else. A way toward that goal could be found by associating labor with the ownership of capital, as far as possible, and by producing a wide range of intermediate bodies with economic, social and cultural purposes; they would be bodies enjoying real autonomy with regard to the public powers, pursuing their specific aims in honest collaboration with each other and in subordination to the demands of the common good, and they would be living communities both in form and in substance in the sense that the members of each body would be looked upon and treated as persons and encouraged to take an active part in the life of the body.
It is clear from the above quote that John Paul II is squarely in the mainstream of Catholic social thought: the economy should serve persons (labor) and economic policy should be guided by the principles of stewardship and subsidiarity. Those who call John Paul II a “socialist” or a “democratic capitalist” are simply trying to safely “pigeon-hole” him, and Catholic social thought, into their preconceived conceptions of an economic system.
A final note on the meaning of “capitalism” and “socialism” is worthwhile. The classic definitions of capitalism and socialism differentiated them on the basis of private versus public ownership and use of productive property. This distinction has lost all meaning today. Most West European countries have a significant sector of public owned industry. Many have legislation mandating worker participation and ownership. Most use the tax system to direct from one-third to one-half of economic resources to the public sector. National economic planning is common. Many of the countries called “socialist” — Poland, Tanzania, Burma, even China — have a significant private sector.
Except at the extremes — no private ownership, no public regulation — the fact of property ownership is not useful for defining a country’s economic system. Rather, what is important, is does it enable people to fulfill their basic needs with dignity and freedom. John Paul II, and Catholic social thought generally, can guide us in the right direction. The rest is up to us.