Benedict XVI's encyclical Caritas in Veritate (Charity in Truth) was released in mid 2009, following his earlier Deus Caritas Est. This encyclical deals with globalisation, a topic largely absent from John Paul II's Centisiumus Annus 1991 which celebrated the hundred years of papal social teaching since Leo XXIII's Rerum Novarum.
Caritas in Veritate represents a new direction in Catholic social teaching, signalled by taking Paul VI's 1967 encyclical Populorum Progressio (On Human Development) as its starting point rather than the hundred year tradition which he perhaps saw his predecessor John Paul II as crowning.
Centisiumus Annus, with its strikingly positive language about the market economy, was heralded by many as the Vatican finally seeing the light after for so long being lost in the mists of socialism. This is not entirely the case; as in my view the market language sits uneasily with the underlying philosophical framework of the document.
Benedict's philosophical background is rather different to that of John Paul II (see for instance Tracey Rowland's excellent account of his thought) and in my view he has better chance of pulling off the serious engagement with economics that we still await from the encyclical tradition. This is in part because of his Augustinianism and different perspective on natural law. Traditional Catholic moral theology has always dealt far better with small scale interpersonal relationships than with large scale impersonal social systems like market economies.
Benedict's encyclical is an admirable engagement with economics — certainly at the upper end of church statements on economic matters. There is a respect for technical expertise of economists, and a reticence lacking in many church statements to pronounce on complex matters of economic theory and empirical evidence.
Benedict attempts instead to reframe economic discussion. Economic activity needs to be directed towards the pursuit of the common good. Love and truth are guiding lights. The market needs internal forms of solidarity and mutual trust. Human evil and ignorance, as well as extraordinary creativity, are part of the picture. A proper understanding of the human person in relational terms is necessary for those who guide economic development.
Some commentators have latched on to Benedict's encyclical as a new 'third way', which I think is a remarkably bad idea. The encyclical carefully avoids the old polarities of capitalism and socialism, instead speaking of the market economy. The discussion is about the sort of market economy we should have.
Here the Pope has been much influenced by Stefano Zamagni from University of Bologna, and his writings on the tradition of civil economy. Zamagni draws on Franciscan traditions, Italian civic humanism and the Neapolitan near-contemporary of Adam Smith, Genovese. Incidentally, about the best treatment of Genovesi's economics is an unpublished PhD thesis by the now retired Australian Catholic University economics lecturer Paul Augimeri.
The other main influence seems to have been the economic views of the Radical Orthodox theologians including John Milbank. This debate about varieties of market economies is much more productive than the tired set-piece warfare of capitalism vs socialism that the now equally tired 'third way' language evokes.
The other more fundamental problem with the third way language is that it encourages Catholics working in the area to attempt to build a 'Papal Economics' or 'Vaticanomics' (to borrow the language of some major newspaper headlines after the release of the Encyclical) that loses contact with mainstream economic and theological discourse. This has been the tragedy of much non-Catholic work on Christianity and economics in recent decades (discussed further in my essay in the recent volume Christian Theology and Market Economics).
The third way language is perhaps more benign when it is used about distinctive economic institutions than when it is used about a distinctive economic theory. Christians building organisations within the market economy, such as those carrying out social service and advocacy work, exploring different sorts of financial intermediation, cooperatives etc., seems very much in line with Benedict's Encyclical and defensible on other grounds.
Paul Oslington is professor of Economics at Australian Catholic University, with joint appointment in the Schools of Business and Theology. He organised a conference 'Globalisation and the Church: Reflection on Caritas in Veritate' at Australian Catholic University in November 2009 with colleagues Neil Ormerod and Patrick McArdle.