At Commonweal, Anthony Annett has written one of the most important articles on economics and Catholic social teaching in recent years. Here are some key points:

Technological changes have benefited high-skilled workers and the owners of capital; globalization has allowed corporations to set up camp in countries with the lowest taxes and the fewest regulations and social protections; and the increasing plutocratic capture of the political system has led to policies that favor the rich. The result has been the hollowing out of the middle class and the evisceration of the working class in advanced economies. No wonder the global financial crisis, when bankers were bailed out and ordinary people left to sink, left a bitter legacy of resentment in its wake.

Grave social problems have arisen in tandem with this concentration of wealth. As Robert Putnam has documented in the United States, social ties have become frayed over the past few decades as neoliberal ideology has undermined our sense of solidarity. Signs of this fraying are all around us. They include obesity, substance abuse, and mental-health disorders. Indeed, such problems have become so common and so grave that life expectancy is actually falling among some key demographics.

Hovering over all of this is the existential environmental crisis threatening to destroy the conditions for human flourishing….

Blame for the current state of affairs can, to a large extent, be laid at the feet of an ideology known as neoliberalism. That ideology involves an extension of the values of neoclassical economics—values like individualism, efficiency, and competition—to all aspects of society. According to neoliberalism, free markets always and everywhere promote well-being, economic growth will always trickle down, and the private sector needs to be unshackled from the grip of government to be efficient and innovative. Public services should be privatized, industries deregulated….

The first question to ask is what motivates the person. In neoclassical economics—and by extension neoliberalism—the answer is self-interest. This is often traced to Adam Smith’s famous dictum that without self-interest, businesses would not supply the goods we need and want. By contrast, Catholic social teaching elevates such principles as solidarity, reciprocity, and gratuitousness. It insists that a core human motivation is willing the good of the other, including the person on the other side of an economic transaction….

The next question to ask is what constitutes the good of the individual. For neoclassical economics, the answer is straightforward: you seek to maximize your subjective preferences. Put simply, you try to consume the most you can, in line with your personal tastes, with whatever resources are available to you….

When Catholic social teaching ponders the good of the individual, it points in a sharply different direction. It emphasizes instead integral human development, which is the good of the whole person and all people. Thus, it goes beyond the material to emphasize all dimensions of well-being. In an Aristotelian sense, it calls for the fullest development of each person’s potential. Implicit in this is a more objective notion of the good, a good common to all people that sets natural limits to their needs and desires. It does not confuse happiness with the maximal satisfaction of appetites. And that means it does not confuse our collective well-being with maximal economic growth….

As noted, neoclassical economics assumes that the sole role of the corporation is to maximize profits, typically equated with shareholder value, and hence that the corporation has no wider social role—this view was stated most forcefully by Milton Friedman. In this framework, labor is simply a factor of production….

Catholic social teaching takes a different perspective. Under its principles, the role of business, just like the state, is to further the common good. This has numerous implications. First, it calls on businesses to produce goods and services that further genuine human flourishing rather than support mere preference satisfaction. This casts a moral pall over many goods in our modern economy, including addictive products, advertising, luxury brands, pornography, and the fossil-fuel industry. Second, business must support decent work, putting this goal above profits—Catholic social teaching recognizes the priority of labor over capital.

You can read the full article here.