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In his 1891 encyclical Rerum Novarum, Leo XIII condemned socialism as contrary to nature, liberty, natural justice, and common sense; predicted its failure; and upheld private property, personal initiative, and natural inequality. Forty years later, Pius XI’s Quadragesimo Anno established social justice as a central concept in Catholic social teaching. This evolution culminated in John Paul II’s Centesimus Annus (1991), which condemns socialism and the “social assistance state” and endorses a morally conscious capitalism. An accomplished phenomenological philosopher, author of the treatise The Acting Person, John Paul had long been impressed by “the human being’s most arresting characteristic: his or her capacity to originate action; that is, to imagine and to conceive of new things and then to do them. He found in creative acts the clue to human identity.” From this came the Pope’s “fundamental insight: Every woman and every man has been created in the image of the Creator, in order to help co-create the future of the world.” Thus man “is endowed by Him with an inalienable right to creative initiative,” whence follows the religious case for the free economy.

Novak’s outstanding merit is his stress on John Paul’s great achievement in placing the creative human mind and the acting person at the heart of his analysis, which at one stroke routs the lethal nonsense of Marx’s labor theory of value (which ignored the mind), grounds political economy in our nature as beings made in God’s image, and implies that a free economy is the proper economic system for such transcendent beings.

Mindful of human sinfulness, Novak rightly warns of the danger of “unbridled anything”–democracy, capitalism, or free expression--and contends that in free societies the “three great systems of human life,” the economic system, the political system, and the culture, “are placed in balance against one another,” in a system of checks and balances to prevent acquisition of excessive power.

Unfortunately, Novak’s work is marred by editing of facts to fit his thesis, giving a misleading impression that the Church’s social teaching embodied in encyclicals has undergone a linear evolution. Paul VI’s Populorum Progressio (1967), which is bitterly hostile to capitalism, is mentioned only once, in passing. Whatever Paul’s errors, Populorum Progressio merits thoughtful evaluation, if only to make Novak’s account of the Catholic ethic complete.

Nevertheless, The Catholic Ethic and the Spirit of Capitalism is indispensable for understanding the evolution of Catholic social teaching toward endorsing capitalism.