The Catholic Ethic and the Spirit of Capitalism.

This latest Michael Novak book provides a much richer and humane vision of capitalism than the one Max Weber described in The Protestant Ethic and the Spirit of Capitalism. Indeed, Novak is quick to point out that one need not be Catholic, Protestant or even religious to embody the spirit of capitalism, as is evidenced by the Jews and Japanese.

A major tenet of capitalism is individualism, a philosophy that permeates both the old and new testaments. In both Jewish and Christian tradition, people are instructed to act for themselves rather than look to the state for assistance or support. This individualistic approach encourages the natural creativity that is within all persons. "Capitalism has its origin in the human capacity for invention and innovation--the human capacity to create." The long-term effect of the unleashing of this natural creativity is economic growth and prosperity. As Novak points out, capitalism is the only economic system that has ever delivered the goods. All other economic systems have failed to unleash the human creativity that leads to economic growth.

Novak offers a vision of how the Catholic ethic undergirds, corrects and enlarges the spirit of capitalism. He begins Part One of this three-part book by critiquing Fanfani's thesis that capitalism is incompatible with Catholicism and points out that Fanfani's thesis is based on an incomplete and distorted understanding of capitalism. One major weakness in Fanfani's view of capitalism, as Novak points out, is the fact that so many capitalists proceed on grounds other than those outlined by Fanfani. In short, Novak points out that Fanfani's view of capitalism is far removed from reality. When Fanfani and others disparage capitalism, they are disparaging a caricature, not the real thing.

Novak then proceeds to discuss Pope Leo XIII's 1891 encyclical, Rerum Novarum, which pointed out the futility of socialism long before the events of 1989 in eastern Europe. This encyclical listed at least ten reasons why socialism was doomed to fail--it is against natural justice, against nature, against liberty and against common sense, it violates the right to private property, dampens personal initiatives and fails to recognize natural inequality. Leo XIII rejected Marx's idea of class conflict, exploitation, the labor theory of value and the theory of surplus labor and recognized that labor and capital need each other. But this encyclical also criticized many of the customs, beliefs and abuses that he observed in the practices of the liberal capitalist nations.

Chapter three analyzes the concept of social justice, a term that officially entered into Catholic thinking with the publication of Pope Pius XI's encyclical, Quadragesimo Anno in 1931. While the right considers "social justice" to be an oxymoron (justice can only be individual) and the left uses it as a party platform, Novak presents a third view, that social justice should be seen from the vantage point of civil society rather than the state. His view gives rise to a new approach to government and social activism, which he calls "the civil society project."

In Part Two, Novak discusses the social thought of Pope John Paul II. In his 1987 encyclical, Sollicitudo Rei Socialis, the Pope declared the right of personal economic initiative to be a fundamental human right, second only to the fight of religious liberty. He stated that men and women are endowed with creativity, that they are called to be co-creators with God in the economic realm, and that the denial of religious and economic liberty and other core liberties impoverishes humans. In his 1991 encyclical, Centesimus Annus, which Novak calls a classic restatement of Christian anthropology, the Pope indicated a strong desire to end the divorce between economics and religion once and for all.

John Paul II takes the position that the birth of a capitalist system requires a moral revolution. The Polish people (and others) must stop thinking of themselves as objects of the state and start thinking of themselves as creative subjects. They must become creators. Economics in these emerging market economies will increasingly be seen as the study of human choice. The Pope advocates a limited state, democratic checks and balances, and constraints on the welfare state. A major flaw in socialism is the incomplete and incorrect view it takes of human beings. As John Paul II points out in Centesimus Annus,

The fundamental error of socialism is anthropological in nature. Socialism considers the individual person simply as an element, a molecule within the social organism, so that the good of the individual is completely subordinated to the functioning of the socio-economic mechanism. Socialism likewise maintains that the good of the individual can be realized without reference to his free choice, to the unique and exclusive responsibility he exercises in the face of good or evil. Man is thus reduced to a series of social relationships, and the concept of the person as the autonomous subject of moral decision disappears, the very subject whose decisions build the social order.

In Part Three, Novak applies the new "Catholic ethic" to some social perplexities such as the condition of the world's poor, ethnicity and race and the omnipresent media of communication. The Catholic Church is not seeking some middle way between socialism and capitalism. It (through the Pope) sees solutions to many of the world's problems through the expansion of democracy, capitalism and religious liberty. Abundance is possible only where property rights are respected by law. Where respect for private property is lacking, as in Russia, the result is poverty and human degradation. Nations that engage in protectionism impoverish their people. Liberation theologists must rid themselves of Marxist ideas like the labor theory of value, class conflict, zero-sum logic and the disparagement of property rights. They must stop thinking about fulfilling the "basic needs" of the people and allow them to exercise their freedom and creativity to make their own futures.

This book is well worth reading for anyone who wants to read a detailed and well-thought out statement of modern Catholic economic thought. But this book goes far beyond mere Catholicism. It points out the relationship between the economic system adopted and the possibility of human economic and moral progress.

Robert W. McGee Seton Hall University