The Crisis of Global Capitalism: Pope Benedict XVI's social encyclical and the future of political economy

This collection of essays outlines a new political economy. Twenty years after the demise of Soviet state communism, the global recession in which free-market capitalism has plunged the world economy provides a unique opportunity to chart an alternative path. Both the left-wing adulation of centralized statism and the right-wing fetishization of market liberalism are part of a secular logic that is collapsing under the weight of its own inner contradictions. It is surely no coincidence that the crisis of global capitalism occurs at the same time as the crisis of secular modernity.

Building on the tradition of Catholic social teaching since the groundbreaking encyclical Rerum Novarum (1891), Pope Benedict’s Caritas in veritate is the most radical intervention in contemporary debates on the future of economics, politics, and society. Benedict outlines a Catholic ‘third way’ that combines strict limits on state and market power with a civil economy centered on mutualist businesses, cooperatives, credit unions, and other reciprocal arrangements. By advocating an economic system re-embedded in civil society, the Pope proposes a political economy that transcends the old, secular dichotomies of state vs. market and left vs. right.

His call for a civil economy represents a radical ‘middle’ position between an exclusively religious and a strictly secular perspective. Faith can lead to strong notions of the common good and a belief that human behavior, when disciplined and directed, can start to act more charitably. There can also be secular intimations of this: the more faith-inspired practices are successful even on secular terms (e.g. more economic security, more equality, more sustainability, greater civic participation), the easier it will be for secular institutions to adopt elements of such an overarching framework without however embracing its religious basis. Thus, Benedict’s vision for an alternative political economy resonates with people of all faiths and none.