In Two-Factor Theory: The Economics of Reality (1967), Louis Kelso explains that there are two principles of distribution. These are needism, that is, individuals, groups or governments distribute benefits or enter into exchanges on some basis other than equality or equivalence (status), and private property, that is, individuals, groups or governments distribute benefits or enter into exchanges based on free association or contract.
Ordinarily, transactions between individuals and groups of equal status are based on private property — contract. Governments, because they are charged with the care of the common good and not individual good (at least usually), act primarily on the basis of need. Chaos results when people get the different roles of government and that of citizens and their free associations confused.
The government is to look after the general welfare — the common good — as its usual business, and individual welfare (individual good) as an expedient at need. Individuals and free associations within the State are there to look after individual welfare — individual goods — as their usual business, but with the responsibility to organize and correct flaws in the institutional structures of the common good at need.
All of this made the response to the last posting in this series puzzling indeed. We were informed that the later encyclicals, particularly Centesimus Annus, did not mention property, therefore it is not important.
This was, in essence, a restatement of the same claim the commentator had made regarding Rerum Novarum, and the frankly bizarre notion that Rerum Novarum made no reference to the importance of capital ownership. § 42 of Centesimus Annus refers to the free market, necessarily based on property, circumscribed within a strict juridical order.
The commentator's response, however, ignored the fact that I did not say that Centesimus Annus referred to property — even though it does. Had she taken the time actually to reread what we wrote, we clearly stated that later encyclicals have stressed the emergency measures to be taken on the way to an ownership society.
This in no way detracts from the importance of private property or could possibly contradict earlier teachings without impugning papal infallibility. This is particularly so in that ownership provides the basis for the politically equal status on which the principles of subsidiarity and solidarity depend. Groups — contractual relationships — cannot be formed by persons of unequal status, and solidarism requires groups, persons who come together in solidarity.
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