Religious Believes Of The Social Market Economy Concept Developers And Followers

The vision and religious believes of the creators of some theory, and of those who are bringing its’ implications to the shape of economic policies are in many ways determining the theory itself and the policy it’s supporting. This thesis is brilliantly proved by many distinguished authors, such as Maks Veber, priest Sergiy Bulgakov and others. Thanks to their works, modern researchers can see clearly the connection between Antuan de Montchretien and Thomas Man Protestantism and their trade apologia; between catholic believes of Francois Quenay and physiocratic doctrine; between presbytery of Adam Smith and his system; between religious atheism of Karl Marx and his historical materialism. Ordo-liberal doctrine and Social Market Economy concept were created by people, raised in traditional catholic or Lutheran families from different social strata. Though neither Walter Eucken and ordo-liberalists nor Ludwig Erhard stressed their religious believes, it manifested itself in their doctrines. Konrad Adenauer, the leader of political power, which adopted their ideas, often emphasized his activity as solidly grounded in Christianity. Already in 1922 he pointed at the danger of de-Christianizing of German society and urged joint political activity of the Christians. He didn’t share the beliefs of the Weimar republic founders, and he quit from the German chancellor position in 1926. In the first post-war years Konrad Adenauer founded Cristlich-Demokratische Union (CDU). This political party tried to unite everyone who accepted Christian values and conservatism. In his first public speech at 1946 Adenauer appealed for making the Christian ethics as a ground for German society and Europe in general. He perceived Christianity as the only alternative for both Nazi and communist totalitarianism (1). We should note, that Adenauer’s fellows in European integration Robert Schumann and Alcide de Gaspari had the same beliefs. Unfortunately, in half-century time the developers of European Constitution didn’t even mention the Christian ideological ground of the European integration. It’s an evidence of serious ideological transition, happened in a short time span.

We should note, that among the most prominent representatives of CST there are some, educated in Freiberg University. For example, Joseph Kardinal Hoffner in 1938 received in Freiburg im Breisgau doctor in theology degree, the second one after receiving the similar degree in Pope’s University Gregoriana for the social history and social ethics research “Peasant and Church in medieval Germany”. His studies in economics were crowned by finishing thesis “Economical ethics and monopolies in XV-XVI centuries”, Walter Eucken being his scientific adviser at the same university in 1940. And in 1944 in Freiburg he defended doctoral thesis on moral theology named “Christianity and human dignity. The objectives of Spanish colonial ethics at the Golden Age”.

Main Resemblances of Social Market Economy and Catholic Social Thought

Catholic Social Thought in its’ modern shape began to form at the end of XIX century. In 1891 encyclic «Rerum novarum» was published, the first one that was almost entirely devoted to this topic. Most influential social theories of that time were Marxism and Liberalism. In Rerum novarum catholic social thought distinguish itself from them, defining a medium approach, based on traditional Christian values. Social Market Economy concept was also forming in ideological confrontation with socialistic and ultra-liberal doctrines and under strong influence of CST (2). The similarity of both approaches shows, first of all, in critical attitude towards Marxism and classical Liberalism (in terms of catholic social thought “paleo-liberalism”) and in forming on this ground of a new conception, so-called third way. We can define several similarities of this kind.

I. CST, as well as SME, state human dignity (and originating from it individual freedom, social justice and wellbeing) as invariable principle. CST is basing on ideas of Thomas Aquinas and several encyclics of Pius XI, Pius XII, John Paul II. These principles are vividly seen in the work of W. Eucken, L. Erhard, A. Mü ller-Armack and other representatives of ordo-liberals & SME.

II. Marxist materialistic understanding of the history, his doctrine of the basis and superstructure is rejected. As it was denoted by Joseph Kardinal Hoffner: « All … dialectal materialism theses are obscure, single-sided and extremely vulnerable simplifications. Was it a hand-mill and medieval suzerain-governed society to generate Thomas Aquinas’ “Summa Theologica”? Can be Christ, Paul, Augustinus, Benedict, St. Francis of Assisi (Francisci Assisiensis), Luther and others understood taking into account only economic factors?»(3)

III. Marxist thesis on fundamental incompatibility of private property on means of production and social justice is rejected, and economic system, based on private property is advocated. W. Eucken and SME theorists considered private property as an element, providing flexible decentralized decisions in market economy, especially in the investments field. Moreover, they thought of private property as a precondition for ensuring individual freedom. Citing W. Eucken: «… private property is a necessary condition for securing individual freedom of a person. When collective property on means of production is dominating in the society, the economic authority is using its’ power over the individual, restricting his freedom. As a result, individual in the frame of such social order has weak dependent position». (4). CST, in contradiction to the Marxism thesis of regaining the true realm of freedom after abolition of private property on the means of production, is offering following considerations: Without the Fall, paradise-communistic communality of the property would be possible to achieve; After the Fall the communality of the property can be only achieved without fatal consequences in families and monastic communes, which are a “reflections of the saint commune” of Jerusalem and the property of which forms the saint “communality”; In our epoch – after the Fall – the national economy can only be based on private property (5). Kardinal Hoffner, following the encyclics of Popes Leo PP. XIII, Pius XIII, Pius XII, is offering some positive and negative proofs of advantages of economic system, based on private property. This is one of the strongest codes of arguments, protecting private property in the world’s economic thought. Positive proofs are: first of all, private property institutionalizes self-affirmation. It guarantees independence, freedom of disposal and “closely connected with individual dignity and individual rights”; Second, private property functions as a competence and responsibility separator in economy; Third, private property meets the human need in safety and care, especially important for family relationships; Fourth, social system, based on private property, generates active economic exchange, which is uniting trades and peoples in a peaceful voluntary manner, not through authorities protocols; Fifth, private property gives a possibility to be good to others, selflessly help them. Governmental care is cold and de-personalized. Negative proofs are even more convincing: first, communality of the property leads to passivity and unwillingness to work, because everybody wants to delegate his work to others; second, while private property helps to differentiate competences and responsibilities in economy, property communality leads to obscurity and confusion, because everyone would care for all possible common possessions and attempt to use them at his will; third, the commonality of property leads to social contention; fourth, within the frame of modern economy management the communality of property would mean a great power centralization, causing nearly irresistible temptation to abuse it; fifth, centrally controlled common property threatens personal freedom and dignity. (6)

IV. Paleo-liberal thesis of the beneficial nature of spontaneous economic system («laissez-faire» principle) is rejected. The main drawback of this principle, according to ordo-liberals, is that sooner or later it leads towards market monopoly, away from ideal competition, reducing to a minimum its’ positive influences. CST brings to attention, that economic liberalism epoch led to social discomfort and caused reoccurring market depressions. Encyclic «Quadragesimo anno» states, that paleo-liberal approach, with its’ believe in «economic regulatory principle in market, in free competition, thanks to which it regulates itself better then any external conscious intervention», doesn’t take into account «neither social, nor ethical nature of economy» (7).

V. SME & CST has the same vision of the important role of the state in economy. The state should not limit its’ functions to the position of “night warden” but have to ensure the conditions for developing of free competition by recognition of private property and free price formation, opening the markets, controlling or banning the monopolies. Constituting influence of the state should not replace market price formation, which supports self-regulation on the market. Such common understanding allowed Kardinal Hoffner to claim, that neo-liberal vision of the state role in reassuring by its’ policies free commercial competition shows the “third way” in between the capitalism and collectivism. CST «…doesn’t know the better solution for the economic system, and «Quadragesimo anno» encyclic bring us in essence «to the same result». Neo-liberalism and Christian social thought “are not in any genuine contradiction”. (8) ^{«Centesimus annus» encyclic emphasize such important functions of the state, as guaranteeing of individual freedom and property protection, and stabilizing the currency: «Economic activity, market economy in particular, can’t exist in structural, juridical and political vacuum. On contrary, it implies presence of reliable guarantees of personal freedom and possession, let alone stable local currency and effective municipal services». This composes «the main objective of a state». (9) These ideas are concordant with the L. Erhard conceptions of the state functions.}

L. Erhard was convinced, that controlled competition policy is able to solve major social problems. This gave the ground for his thesis of the unity of economic and social policies. CST also stresses the danger of excessive bias towards social policy, which in this case negates itself. As J. Hoffner says: «… the larger the ratio of those, legible for social protection to the overall population, and those, who are subject to obligatory social insurance, the smaller are the grants to the socially weakened minority and the bigger is the share paid as indirect taxes and in other ways by the insurants themselves.» (10)

These are the main points of similarity in CST & SME visions.

Main Differences in CST & SME Economic Visions

«Centesimus annus» encyclic, published in 1989, develops the catholic economic system doctrine. It offers the most precise concept of the third way. W. Eucken’s, ordo-liberal and SME concepts have a visible influence of CST. The encyclic is an example of a reverse influence of SME theory and practice of the post-war period on the CST. According to Kardinal Hoffner «Centesimus annus» «essentially describes in details the ethic basis of the system and political and economic outcomes of the social market economy: definitions of “freedom” and “social justice” describe the ethical basis, definitions of “market mechanism” and “public control” are describing the two core principles of the system. Main objectives of social market economy are shaped, assisted by defining “certain abundance of employment offers”, “solid system of social security and professional education”, and overcoming “market nature” of the labour by securing its’ “dignity” with labour legislation.»(11) Yet Pope John Paul II avoids using the term “Social Market Economy”. It’s not a coincidence. CST, unlike SME concept, develops universal normative model of modern economy. CST is closer in this respect to the ordo-liberals of Freiburg school like W. Eucken and others. SME concept developers, and first of all L. Erhard are binding their model to the certain place and time – post-war Federal Republic of Germany.

L. Erhard is adjusting his model to the consumption society. “Wellbeing for everybody” motto implies a stable growth of consumption for every person. This can be easily explained. L. Erhard, as a politician, had to comply with the desires of the electorate. Unlike L. Erhard and his followers, CST has negative attitude toward the consumption society in general. If the objectives of economy are locked on consuming and “production and consumption becomes a center of social life”, “then the reasons for this should be searched for not inside the economic system itself, but in the social and cultural system, that neglected ethical and religious aspects and grew decrepit, limiting itself with production of goods and services only” (12).

Next difference in the approaches is that L. Erhard assigns primary importance to individual freedom (freedom for…) and individual interests are considered of higher priority then collective interests. For CTS it’s often vice versa. It’s mentioned in «Centesimus annus» that “the objective of the enterprise is not mere profit production, but the existence of the enterprise as a community of people” (13). A. Mü ller-Armack, who almost always gave higher place to group interest, then to individual, is closer to CST vision in this respect.

LIMTATION OF THE STUDY AND FUTURE STUDIES These are the main differences in CST & SME visions. These differences are caused mainly by the variations in aims and objectives. CST is developing universal (for western civilization) normative doctrine, pointing out the directions for evolution, and, applied to the situation of the beginning XXI century, preventing degradation of the late Christian civilization. SME saw its’ main objective as defining of German and integrating Europe economic policy at the second half of XX century.

REFERENCES

1. Dovgjallo G.A. Unknown United Europe? – X International Kirill& Mefodiy readings: readings materials (Minsk, 24-26 May 2004) in 2 parts, part 2. Minsk: “Kovcheg” Ltd., 2005. – p. 40.

Slavomir Partycki Nauczanie Kosciola Katolickiego a Spoleczna Gospodarka Rynkova w Polsce / Spoleczna Gospodarka Rynkowa. Pod red. Elzbiety Maczynskiej i Piotra Pysza. - PTE. - Warszawa. 2003. S. 234-235

3. Joseph Kardinal Hoffner /