Those who study Pope Benedict, who announced his retirement yesterday, have been impressed by his humanity and by his understanding of human nature. Statements he has made on the economy, written in his own hand, reflect that.

The Pope, for example, did not see the problems that led to the financial crisis as solvable by government regulation. Instead, he saw an ethical crisis that needed a call to virtue. As he said in Caritas in veritate: “Economy and finance, as instruments, can be used badly when those at the helm are motivated by purely selfish ends. But it is man’s darkened reason that produces these consequences, not the instrument per se”. In other words, credit derivative swaps are not evil, but those who abuse them might be.

He had a similarly wise understanding of the problems facing the welfare state. As he stated elsewhere: “There will always be suffering which cries out for consolation and help. The state which would provide everything, absorbing everything into itself, would ultimately become a mere bureaucracy, incapable of guaranteeing the very thing that the suffering person needs: namely, loving personal concern. We do not need a state which regulates and controls everything”. Solidarity as a virtue is far superior to an intrusive welfare state.

Indeed, though the Church often makes strong statements criticising people’s actions within a market economy, the foundational principles of its social teaching are strongly welcoming of a free and virtuous economy, and very suspicious of the centralisation of power.

Family and civil society come before the state and the state is there only to serve. As was stated in the earliest modern social encyclical: “If one man hires out to another his strength or skill, he therefore not only expressly intends to acquire a right to the remuneration, but also to the disposal of such remuneration as he pleases. Thus, if he lives sparingly, saves money, and, for greater security invests his savings in land, the land is only his wages under another form. Socialists, by endeavouring to transfer the possessions of individuals to the community, strike at the interests of every wage-earner.” This is the so-called “workers” encyclical which did impose moral obligations on employers, but spoke little of regulation.

It is to be hoped that Pope Benedict’s successor will promote articulately the foundational principles of the Church’s social teaching. This keeps the Church above day-to-day politics because, once the requirements for justice exist, society is best lifted out of its mire by the practice of virtues and not the writing of regulations.

Not all in the Vatican see it that way. This can be seen in analysis of some of Pope Benedict’s writings in which the Vatican’s Justice and Peace Commission sometimes takes a hand. That commission often has a keen understanding of human imperfection in the market economy, while assuming that regulators, and those in charge of state welfare, are made of finer clay.

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