Last week we noted Pope Francis’s call for world financial reform. We raised the possibility, however, that what the pope says about financial reform might not be quite what some people hear. Take, for example, the meaning of “free competition.”
As we saw last week, whenever a pope says something about the market or competition, those hearing it have a tendency to put one of two meanings on it. Either they think that unrestricted, cutthroat competition has been endorsed, or total State control of the economy is absolutely mandated. (There are some gradations and shadings in these positions, but that gives the extremes.)
Under these understandings of the role of the State, any abuses in either system will presumably be held in check by the personal virtue of the people in charge. That is how we end up with greed as a virtue at one end of the spectrum, and a divine right economic dictator at the other. It is no coincidence that Monetarists and Austrians assume that the free market will somehow regulate itself without outside interference from government, and the Keynesians and their clones always call for some form of dictatorship because you simply cannot trust the private sector to do anything right.
Both understandings are clearly wrong, as a more careful reading of the passage we quoted last week from Quadragesimo Anno reveals. Primarily, “free competition” cannot mean “unfree competition.” That rules out all forms of regulation that are simply external control by another name, as well as State control in any other form.
This does not mean that competition — or anything else — is carried on in a lawless environment. A free man, for example, is not released from his obligation to obey just laws or even unjust laws, if breaking the unjust laws would result in a greater evil than the law imposes. The popes’ comments assume a “strong juridical framework” (Centesimus Annus, § 42) as a matter of course.
The fact is, consistent with the laws and characteristics of social justice, the State has the job of maintaining the common good, not providing for everyone’s individual good. That means looking after the system so that people have a reasonable opportunity to provide for themselves. If they cannot, private charity should take care of them.
If private charity proves inadequate, the State can levy taxes to redistribute enough wealth to keep people in reasonable health until the system can be changed so that people can once again meet their own needs through their own efforts. As Leo XIII pointed out,
“Man's needs do not die out, but forever recur; although satisfied today, they demand fresh supplies for tomorrow. Nature accordingly must have given to man a source that is stable and remaining always with him, from which he might look to draw continual supplies. And this stable condition of things he finds solely in the earth and its fruits. There is no need to bring in the State. Man precedes the State, and possesses, prior to the formation of any State, the right of providing for the substance of his body.” (Rerum Novarum, § 7.)