Capitalism with a Heart: The Man They Called the “Last Socialist” Comes Out in Favor of Free-Market Capitalism

The pope’s splendid new encyclical, Centesimus Annus (dated May 1, 1991), adds a new characteristic to his defense of liberty. It has been clear for many years that Pope John Paul II supports democratic institutions more than any previous pope and sees them as the best way to secure human rights. It has also been clear to some that he supports a type of “reformed capitalism.” But this new encyclical makes clear beyond a shadow of a doubt that the pope endorses the “business economy,” the “market economy,” or simply the “free economy” as the goal he now proposes for formerly Communist and Third World societies. This support, even though limited, is very important for his native Poland and many other suffering peoples.

The institutional limitations on capitalism on which the pope insists are two: first, a juridical framework that protects other fundamental liberties besides economic liberty; and, second, a grounding of all liberties in a moral and religious core. In short, the economic system must be limited by a democratic polity and by a strong set of moral and cultural institutions (families, unions, associations, universities, media, churches, etc.). Only in this way will it, better than other systems, meet basic needs and constantly raise the level of the common good of peoples.

Jacques Maritain and Reinhold Niebuhr refer to such a mixed system as “capitalistic democracy.” America’s Founders used the term “commercial republic.” Some of us prefer (on the model of “political economy”) “democratic capitalism.” The name does not matter; it is the political and moral checks and balances that count.

Centesimus Annus is 113 pages long in its Vatican edition. Its main purpose is to mark the centenary of the first of all modern papal social encyclicals, Leo XIII’s Rerum Novarum (May 15, 1891). Whereas Leo XIII warned against the coming scourge of socialism, John Paul II now vividly describes the collapse of “real existing socialism.” His third chapter, “The Year 1989,” is a particularly brilliant commentary; it was, after all, the year this pope himself did so much to make possible.

There is much that is new and fresh in this encyclical. The pope is a professional philosopher with a very concrete turn of mind. Thus page after page is filled with sustained, complex, nuanced argument, noting the specific differences between Latin America and Africa, Eastern Europe and Western Europe, etc. Regularly, he cuts through slogans. He tries to see the whole human reality true—in its glory and in its self-betrayals.

Yet for readers alert to the main debates of the last 20 years, two contributions of this encyclical stand out. First, the collapse of socialism suggests to him that much in “liberation theology” has been bypassed by events, and in section 42 he proposes as the goal for formerly Communist nations and the Third World a new ideal for` `integral liberation”: democracy and, in the appropriately limited sense, capitalism. This analysis, subtle and nuanced, is little short of brilliant. It has more than fulfilled the dreams (and prayers) of many of us. The market, the pope sees, is an important but limited tool of integral human liberation. Through it surges the creativity that God has endowed in every woman and man.

Second, Chapter 5, “State and Culture,” offers the papacy’s strongest language ever about limitations on state power. It includes a trenchant but fair criticism of the human losses involved in the “welfare state” and even more in the “social assistance state.” No neo-liberal or neo-conservative ever made the case more profoundly and with so resounding a ring of truth. The pope emphasizes the human side—or better, the anti-human side of bureaucratic “social assistance.” He all but uses Edmund Burke’s phrase about “the little platoons” of society. The social democratic states of Western Europe have been put on notice.

The pope’s greatest originality, however, may lie in going beyond questions of politics and economics to questions of morality and culture. In a sense, the political argument of the twentieth century has been resolved in favor of capitalism. Thinking of the chief battleground of the next century, the pope turns to the disappointing use that existing free societies are now making of their freedom. He turns to the inadequacies of modern culture and morals.

Pope John Paul II is a humanist through and through. The legacy he wants to leave to Catholic social thought, he says, is that it is made for humans, not humans for it. He places Catholic social thought at the service of the high vocation that the Creator gives to every woman and every man. It is a vocation that we each often fail. The pope describes humans as highly endowed by nature, gifted by Grace, and yet, nonetheless, tending often to turn against God and His gifts. The Pope’s anthropology may be summarized as: “humans simultaneously graced and sinners.”

Each society, John Paul II observes, has its own ecology—its own culture, ethos, distinctive shape and story. Sometimes a culture disfigures the human character of its citizens, pollutes their minds, warps their wills, twists their instincts. Human beings can be made into monsters by their culture. The pope calls for a new science of “human ecology.” This means a protracted public inquiry into human nature and destiny. Wrong answers in this inquiry can mean social suicide. Wrong answers always entail the disfigurement of human beings.

You can tell the quality and depth of a nation’s culture, the pope trenchantly states, by observing what it produces and consumes. This simple remark imposes a new moral accountability on capitalist firms, advertisers, and media. In this century, the pope thinks free peoples have neglected their responsibilities for the quality of the moral atmosphere, the cultural ecology in which they try to raise their children and to be faithful to their destiny as free citizens.

This is a great encyclical. It will raise enormous energies in Eastern Europe, the Third World, and   advanced societies. It should read as well in 2091 as Leo XIII’s accurate predictions about socialism in 1891 still read today. No other world leader could have produced such a profound tour d’horizon. Get a copy and see for yourself. You will be glad you did.



Michael Novak (1933-2017) founded Crisis Magazine with Ralph McInerny in 1982. He held the George Frederick Jewett Chair in Religion and Public Policy at the American Enterprise Institute and was a trustee and visiting professor at Ave Maria University. In 1994, he received the Templeton Prize for Progress in Religion. He was also an emissary to the United Nations Human Rights Commission and to the Conference on Security and Cooperation in Europe.

Join the conversation in our Telegram Chat! You can also find us on Facebook, MeWe, Twitter, and Gab.