civil economy

8/7/2019 Civil Economy

1/29

Civil Economy:

The Trinitarian Key to Papal Economics*

Wolfgang Grassl

St. Norbert College

[email protected]

1. Introduction

Caritas in Veritate has added several new elements to the tradition of Catholic social teaching.

Formally, it uses economic reasoning in emphasizing that many arrangements in our market

economies are not even efficient by the standards of economic logic ( 21, 32, 35, 40, 44, 50;

Grassl and Habisch 2011). Efficiency itself is good, because it is required by a good stewardship over

resources, although it makes only a necessary but not a sufficient contribution to integral human

development ( 50, 70). Materially, the Encyclical promotes two institutions that have previously

not been specifically mentioned in papal teaching: on the micro-level, the economy of communion

( 46), and on the macro-level, the civil economy ( 38f., 46f.).1 The two are related, for the

Economy of Communion consists of enterprises and business practices that exemplify a civil

economy where the latter amounts to re-embedding economic relations into civil society (Bruni and

Uelmen 2006; Gold 2010). Various authors have understood the term civil economy with some

semantic latitude. Its intellectual pedigree does not derive from the Anglo-American tradition of

economic thought that has come to nearly monopolize textbooks. The meaning of civil economy

within Caritas in Veritate, and the role it plays in Catholic social thought, therefore need a rational

reconstruction. This must be done against the background of the Augustinian theology which deeply

shapes the thought of Benedict XVI. Of particular importance is here its insistence on humans being

ontologically relational creatures, and consequently on the primacy of love in human interactions. A

civil economy is then built on an application of Trinitarian love to social reality. This insight is

indispensable for any proper understanding of the Encyclical. This paper shall investigate the

meaning of civil economy and shall in this context demonstrate the relevance of Trinitarian

structures in economic thought.

* Economic Justice and the Encyclical Caritas in Veritate. Panel Session, Association for the Study of the

Grants Economy, Allied Social Science Associations Conference, 8 January, 2011, Denver, CO.1 It has been observed that this focus and the heavy emphasis in the Encyclical on social unity show the

influence of economists associated with the Focolare Movement.


2/29

2. The Dichotomous Social Ontology

Classical liberalism has always framed society and politics as in a dichotomous opposition:

individual versus society, and individual versus government. Society has been understood as an

accidental aggregate of individuals, and government as a coercive institution necessitated by the anti-

social propensities of the human soul. The idea that these are the only agents and their relationship is

contradictory rather than merely one of contrast or tension, originates in Hobbes, and via Locke and

the philosophy of the Enlightenment it has influenced American political thought. In the United

States, this bipolar social ontology is tenaciously defended in all political camps, assuming that

issues of power, distribution, representation, and influence must be seen as zero-sum games, with any

marginal weakening of the individual benefitting government, and any marginal weakening of

government benefitting the individual. Economic activity is located at the level of the individual by

assuming markets to emerge spontaneously in response to supply and demand, and markets being but

forms of how a society of individuals co-operates. Markets and societies are basically the same,

whether (in the economistic view) society is rather seen as a complex of market transactions or

whether (in the sociological view) markets are rather treated as organizational forms of society.

Under the first perspective, all social phenomena originate from the voluntary acts of individuals that

seek to produce public goods at lower cost. Consequently, methodological individualism has become

the dominant paradigm for economic research. However, by ignoring the great complexity of modern

society, which has several types of agents that cannot simply be attributed to one of two poles, this

view of social and political life is narrowly reductionist. Its underlying dualism, which is stronger in

American economic thought than elsewhere, is untenable from a sociological, philosophical, and

theological perspective. But even more importantly, it has failed to provide good explanations of

economic life itself. Consequently, sociological and anthropological explanations of markets have

recently gained ground. In both cases, a dichotomous structure of social reality is assumed.

The most far-reaching contribution ofCaritas in Veritate may be its unambiguous dissociation from

this dichotomous model of social ontology, and by implication from liberalism and much of modern

economic thought, but also from all kinds of social constructivism. In perhaps the most radical

passage of the Encyclical, Benedict XVI laments the bipolar opposition: The continuing hegemony

of the binary model of market-plus-State has accustomed us to think only in terms of the private

business leader of a capitalistic bent on the one hand, and the State director on the other. In reality,

business has to be understood in an articulated way ( 41). Because he rejects the dichotomy of

individual versus State, the Pope does not relegate the civil economy to a third sector but sees it at

work throughout society, as a broad new composite reality embracing the private and public spheres,

2


3/29

one which does not exclude profit, but instead considers it a means for achieving human and social

ends ( 46). Persons as relational individuals make up the civil economy, and reciprocity as its

defining characteristic must extend to the State. The Pope thus challenges modern economics in its

underlying social ontology.

3. A Tripartite Social Ontology

The arguments ofCaritas in Veritate are not entirely new, for they have been used in previous papal

teaching and in the works of theologians and social scientists. Already the sociologist Georg Simmel

argued that more complex social relationships go beyond the basic dyad, which allows individuals to

maintain their identity and to have control over it by withdrawal. Triadic groups change the form of

interaction by allowing for strategies of competition, alliances, or mediation. Triads are likely to

develop a group structure independently of the individuals in it, which makes them the true building

blocks of society (Simmel 1908: ch. 2). At a higher level of aggregation, the communitarian tradition

in social thought has long recognized communities as a third agent besides individuals and

government. Some of the literature on civil society may be attributed to this camp. Alexis de

Tocqueville already described a vibrant community life in the United States in the 1830s. However,

when appreciating the self-help actions of citizens, he described them as spontaneously formed

groups of citizens rather than as intermediate structures; his account does not present a civil society

as envisaged by communitarian thought (Zaleski 2008). Unlike the stable guilds, corporations, or

municipalities of the Middle Ages, sheriffs posses did not mediate between individuals andgovernment. American political thought has counted such citizen action towards the sphere of

individuals, and the bipolar model has been retained. Few thinkers indeed have stepped outside it

regardless of their own political positions mostly philosophers, theologians, anthropologists, or

sociologists, but hardly an economist (Wicks 2009). Among the economists, a rare exception was

Kenneth Boulding, who divided the social system into three large, overlapping and interacting sub-

systems: markets (exchange), government (threat), and an integrative system that establishes

community (Boulding 1973: 5, 27f.). Representative of the latter is the grants economy

characterized by unilateral transfers between social agents. Boulding thus represented the structure ofsociety in the form of an equilateral triangle (Figure 1) with the vertices of exchange, threat, and love

as the functional dimensions of markets, government, and the integrative system (or, in a more

common formulation, civil society) (Boulding 1973: 107):

3


4/29

Figure 1: Bouldings Social Triangle

Benedict XVI makes no reference to Boulding, and his thoughts on economics are of a different

provenance. Yet the similarities are substantial. Caritas in Veritate proposes a tripartite (rather than a

trichotomous) structure of social reality, but not one with individuals, groups, and government as the

players. Rather, the Encyclical presents as subjects, or social agents, the market, the State and civil

society ( 38). Benedict in this context refers to a similar conception proposed by John Paul II in

Centesimus Annus ( 35) of society being different from the market and the State. However, the

earlier encyclical was never as forceful in suggesting a trilateral social ontology nor in elaborating a

theological anthropology as its foundation. What is remarkable, however, is how both pontiffs

describe the identity of the three types of constituents of the system ( 38). Different from liberal

thought, they do not consider individuals but the market and society, and the pronouncements of both

pontiffs revolve around the differences between these social structures. Catholic social thought has

long used the term persons to designate individuals as ontologically defined by relations (Maritain

1947). Equally, Caritas in Veritate does not simply equate markets with society, as merely one socialfunction or organization. Rather, markets enjoy a distinct position in social ontology. Lastly,

individuals are not opposed to government a term from the American political tradition that

means something quite different in the European context in with Catholic social thought originates.

Rather than government, the third social constituent is the State in the capitalized form as

referring to institutionalized public authority rather than to individual national states. Most of the

liberal tradition made no distinction between State and government; neither did American

constitutional thought.2 All constitutions of European countries, on the other hand, distinguish

between changing governments and the enduring State, in whatever political form it may appear,with concrete governments representing the more abstract State. This thought goes back to Aristotle,

for whom the State (polis) existed by nature whereas it could be constituted in various forms.

Anthropology has not claimed the universality of states for all periods of history and regions; but

2 In theFederalist Papers and in the United States Constitution, the term state refers only to the individual

territorial states whereas a Republican Form of Government (Art. IV sect. 4) is equivalent to what Western

political thought since Aristotle has referred to as a form of state (polis).

Love

Exchange Threat

4


5/29

anthropologists tend to argue that as societies evolve, through internal differentiation or external

conquest, their systems of government invariably develop a State (Krader 1968). The political

authority of the sovereign is vested in the State but exercised by governments. In British

constitutional law, the Crown is identical with the State, and there as in continental jurisdictions,

national defense, public order, and a monetary system are upheld on behalf of the State, not on behalfof the governments of the day. However, economic regulation pertaining to competition, taxation,

product standards, labor conditions, etc., are matters for individual governments and not for the State,

as Caritas in Veritate indeed claims ( 25). The Encyclical takes the tripartite European model for

granted, not the simpler American opposition of individuals and government, and all ten occurrences

of the term government in the text are indeed in the plural. Only thus can one understand a sentence

such as the following: The integrated economy of the present day does not make the role of States

redundant, but rather it commits governments to greater collaboration with one another ( 41).

The social ontology ofCaritas in Veritate may then be described in the form of equilateral triangles.

In language borrowed from the Thomistic tradition, one may see the structure of social ontology, i.e.

the three social agents, as standing in a relation of analogy with how they operate, and with the ends

to which these functional modes are ordered (Figure 2). This homomorphism (reflected in congruent

triangles) expresses who the players are, what their play is about, and why it is played.

Figure 2: Social agents (center) in their functional roles (left) and aims (right)

Caritas in Veritate thus presents economic life as a multi-layered phenomenon ( 38) taking place

in various structures which have not at all emerged spontaneously but are components of a more

complex social ontology. Civil society is constituted by the various intermediary communities which

John Paul II called real communities of persons (Centesimus Annus, 49). The civil economy

referenced in the Encyclical is then civil society using co-operation between producers and

consumers that aims at reciprocity. Where Benedict XVI goes beyond his predecessor, more in

emphasis than in direction, is by locating the civil economy not only in civil society but throughout

the social sphere, and thus in configuring intermediary bodies not in a linear sense as between

Market State

Civil society

Efficiency Equity

ReciprocityCo-operation

Autonomy Control

5


6/29

individuals and the State, but as the glue that holds all of human society together. Civil society must

again extend the principles that are germane to it gratuity, reciprocity, and solidarity to the sphere

of markets, where other principles predominate, and even to that of public administration. Agents of

the civil economy can fulfill their horizontal function of driving development and justice only

because of their vertical dimension of preparing humans with bounded rationality and weak will forthe true objective of community (koinna) growing into communion with God through integral

human development ( 54). Being multi-layered also means that the economic system is dynamic if

its triadic structure is well integrated, it attains a higher quality which allows for development in a

vertical sense.

4. A Trinitarian Model

The fundamental theme ofCaritas in Veritate is to present the biblical account of the economy of

Gods household (oikonoma tou theou) as a model for ordering human society. The Sacred Trinity is

Gods mode of being, and the Encyclical outlines the normative implications of the nature of God as

a community in unity of three different persons: The Trinity is absolute unity insofar as the three

divine Persons are pure relationality. The reciprocal transparency among the divine Persons is total

and the bond between each of them complete, since they constitute a unique and absolute unity (

54). Like the Father, Son, and Holy Spirit of the Nicene Creed, the three social actors have different

identities and functions and are therefore different entities yet are of the same substance, since

they are ultimately but different forms of human organization. It is persons that exchange on markets,build institutions of society, and embody functions of State. Yet regardless of their roles, they are

united in serving one single purpose integral human development ( 4, 9, 18). The vertices of a

triangle to use an insufficient geometrical analogy are not opposed to each other but are related.3

As extrema, they have an individual identity and yet cannot be defined in abstraction from each

other. Each divine person is a whole rather than a part (Aquinas, Summa Theologiae I, q. 30, a. 4); by

analogy, a society composed of human persons is also a whole composed of wholes rather than of

individuals (Maritain 1947: 46f.).4

The doctrine of the Trinity says that God is Himself community,

and every human institution seeking to grow into the perfection of God must by necessity transformitself into a community of persons. Benedict XVI does not advocate a new super-corporatism, and he

3 Any such analogy can only capture part of Christian dogma about the Sacred Trinity and hold at the level of a

model. The New Testament contains numerous passages defining the nature of the three persons that cannot be

reduced to the simplicity of the several symmetrical properties of an equilateral triangle. Although old

Christian emblems such as the Shield of the Trinity identify vertices with particular divine persons, all such

models are merely metaphorical.4

In a similar spirit, Braudel refers to society as a set of sets (Braudel 1982: ch. 5).

6


7/29

abstains from invoking an organic conception of society, as previous Papal teaching and Catholic

thought have done (Fanfani 1935). Rather, the Trinitarian model (and Caritas in Veritate uses

exactly this term) is open and dynamic, for true openness does not mean loss of individual identity

but profound interpenetration ( 54). The mutual interpenetration of market, State, and civil society

like theperich

r

sis (mutual indwelling) of the persons of the Trinity is a theme that invites areconceptualization of social thought, and within it of economic theory, that goes beyond the

distributional games between market individualism and State socialism.

In his Encyclical, Benedict XVI clearly builds on the idea formulated by St. Augustine of Hippo and

further expounded in scholastic theology that imprints of the Trinity (vestigia Trinitatis) can be found

throughout the created order (De Trinitate, VI). Contemporary theology speaks of the ontological

Trinity the reciprocal relationships of the Father, Son, and Holy Spirit as being immanent within

the essence of God being reflected in the economic Trinity, or its operation within history in terms

of the roles or functions performed by each of the divine persons (Mowry LaCugna 1991). St.

Augustine saw all charity and goodwill in the world ultimately have its origin in the mutual love

between the persons of the Trinity. Benedicts Augustinian theology applies this thought to the

human condition and to social life ( 5). Contrary to any and all antagonistic models of society of

class struggle, racism, feminism, nationalism, etc. he sees humanity as a unity in diversity much

along Trinitarian lines: that they may be one even as we are one (John 17:11, 21). If identity is

defined through reciprocity, the search for an absolute identity must fail. The justification is

syllogistic: Achieving integral human development implies growing into the likeness of God (Eph.

2:19-22, 4:14-16); God is by His essence Triune; it therefore means participating in His Trinitarian

mode of being; and this defines humans as being essentially relational rather than by membership in

discrete categories. The identity politics so popular in American academics and beyond cannot be

Trinitarian, and it therefore cannot be Catholic (and probably not Christian).

The Trinitarian anthropology ofCaritas in Veritate points to the transcendent dimension of human

beings ( 54, 75). They not only exchange goods with each other but are also made for gift ( 34).

Society must not be reduced to a system of market exchanges but also manifests itself in families,

associations, companies, churches, or nations: Because it is a gift received by everyone, charity in

truth is a force that builds community, it brings all people together without imposing barriers or

limits ( 34). Markets have the important task of enabling persons to make use of contracts to

regulate their relations as they exchange goods and services of equivalent value between them, in

order to satisfy their needs and desires ( 35). But markets as such are disembedded from society:

decisions are not constrained directly by social custom and ethical norms. Benedict XVI agrees with

much recent work on welfare economics that a market cannot produce the social cohesion that it

7


8/29

requires in order to function well. Without internal forms of solidarity and mutual trust, the market

cannot completely fulfil its proper economic function ( 35). For this, it requires civil society, and

sometimes support by the State. Economic studies on trust, social capital, solidarity, and happiness

have provided ample support for this conclusion. But the market and the State, too, have a

transcendent function. Gift-giving and gratuity are most characteristic of civil society, but they mustextend to the other social domains (Cambn 2010).

Previous magisterial teaching has pointed to Trinitarian love as the origin and goal of the human

person and of proper social relations (Pontifical Council 2004: 34, 54). Yet the work of applying

the Trinitarian model to a deeper and more comprehensive understanding of social reality has barely

begun (Meeks 1989; Hemmerle 1994, 1995; Cambn 2009; Uelmen 2004). Labor, culture, human

rights, justice, health, ecology, education, art, politics, and other social phenomena have been seen

under aspects of the Trinity (Cambn 2009: ch. IV). Strategic management decisions and

organizational patterns of businesses have recently been analyzed in terms of triadic structures that

can be given a Trinitarian interpretation (Keidel 1995, 2010). And management itself, as the

application of practical reason, can be seen in the light of the Trinity (Grassl 2010, 2011). In all this,

the model of the Trinity imposes structure on and makes sense out of social arbitrariness and chaos.

5. The Civil Economy

Understanding the term civil economy in the Encyclical is made more difficult by the fact that the

underlying notion of civil society has not been unambiguous in the history of social thought. Thecritical question has been the autonomy of this aggregate from its components, or the exact nature of

the part-whole relation. The term has been used in at least two different senses to refer to the

market, and to refer to associations that are independent of the State. If civil society ( brgerliche

Gesellschaft), as for Hegel, amounts merely to the totality of egoistic, utility-maximizing individuals,

it indeed coincides with the market. Hegel held that it had emerged at the particular period of

capitalism and served its interests by safeguarding individual rights and private property. For

Tocqueville, on the other hand, civil society comprises all those associations of individuals that

emerge in autonomy from the State. The two notions have sometimes come to be opposed to oneanother, especially by proponents of unfettered markets who reject associations trade associations,

labor unions, guilds, or other non-governmental bodies as rent-seeking parasites attempting to

distort autonomous market processes. Where sympathy and other moral sentiments were seen at all,

they were, as in Smith, confined to the sphere of individuals who may include them in their utility

function and choose to correct the results of market forces. The liberal tradition would therefore see

philanthropy as a post factum corrective to markets but maintain the exclusive role of markets as

8


9/29

coordinating human decisions. Where feelings of compassion and solidarity had to be recognized,

they were, as somewhat perverse or inexplicable side-effects of human personalities, still subsumed

under the utilitarian calculus. Society thus became subordinate to markets, an idea that is still

reflected in contemporary attempts to subject all manner of social and even religious issues to

economic analysis by assuming the existence of exchange. Even political economy, as the study ofhuman behavior as contaminated by the presence of institutions of government, has been reduced to

economics, as a pure study of human behavior. The tradition of civil economy is an alternative to

this thread in economic thought.

Based on his work on economic history, Karl Polanyi identified two alternative non-market

mechanisms of economic organization: redistribution and reciprocity (Polanyi 1977: 35-43).

Redistribution is typical of state actors whereas reciprocity, which is common particularly within ties

of kinship, ethnicity, or religion, amounts to sharing with others in the expectation that when needed

the action would be reciprocated. Societies thus have three basic options for producing and

transferring value. It is crucial to appreciate the distinctions between altruism and reciprocity, and

between reciprocity and exchange of equivalents (e.g., market exchange). In our current society,

which is still built on dichotomous thought about society, we tend to categorize every transfer of

value as either altruism or market exchange. In a civil economy, there is a space for a third kind of

transfer of value reciprocity. Altruist behavior sees the recipient as helpless and is thus motivated

by mere compassion, which can create dependencies and invites situations of moral hazard. Market

exchange requires an exact equivalence between what is exchanged, i.e. a fair price must be found,

charged, and paid for a transaction to be successful. Reciprocity, by contrast, recognizes that both the

giver and the receiver invest something into the relationship, even if their contributions are at first

sight unequal. Its objective is the development of ever tighter social networks of direct mutual

relations. Gifts create imbalances; they obligate but do not require immediate reciprocation. As a

result, they build closer relations between persons and social capital (Meeks 1989: 118f.). In civil

economies, all three systems will be present, but it is that of reciprocity that constitutes the salt of

the earth (Mt 5:13) animating the whole. Civil economies will therefore be institutionally diverse,

containing for-profit and non-profit businesses, whether in the form of individually owned

companies, co-operatives, or corporations.

The civil society of Italian city states in the late medieval and Renaissance periods generated vibrant

markets that together with those of Flanders supplied Europe with capital and finished goods. There

was an intricate coexistence of private commercial enterprises developed by the leading families of

Venice, Florence, Pisa, Genoa, or Lucca with smaller-scale artisans, craftsmen, and traders.

Throughout Europe, business was deeply embedded in society and governed by its values, customs,

9


10/29

and codes, as is evidenced by the old prohibition on usury, which was was condemned primarily

because it violated the obligation to reciprocate (Clavero 1991). Banks, insurance companies and co-

operatives were founded on mutualist principles, including institutional pawnbrokers run as charities

as invented by the Franciscans (Monti di Piet).5 The workers employed in the building of French

cathedrals in the twelfth century organized themselves as Les Compagnons du Devoir, and this oldestlabor union still in existence has supported the development of a strong artisan culture in France not

least because of its deep embeddedness in civil society (Kleymann, Malloch, Redman and Angot

2008). Markets flourished and led to momentous technological and institutional improvements, and

consequently to economic development even before the emergence of capitalism and the institutions

that it later added anonymous ownership of companies, a split between ownership and

management, and the subordination of social and religious values to the perceived exigencies of

enterprise (Braudel 1982). With the Industrial Revolution, the civil economy gave way to the

political economy that Adam Smith described.

The Scottish tradition in economic thought, from which mainstream economics largely developed,

is a relative newcomer. A much older tradition, which includes Aristotle and the scholastic

theologians of the Middle Ages, assumed households of persons rather than atomistic individuals as

decision-makers, and abstained from reifying markets by isolating them from civil society with its

religion, customs, practices, codes, values, and institutions. In the European world, a Mediterranean

tradition in economic thought long preceded the Anglo-American tradition (which is actually of

Scottish origin); the latter won out as Western society moved from religious and ethical orientations

to the rationalistic thought of mercantilism, and particularly as the Industrial Revolution prioritized

the principle of efficiency (Baeck 1994). In the eighteenth century, public happiness was still the

paramount goal of economists committed to the common good rather than the private goods of

individuals. Most notably, a school of Italian economists emerged, primarily in Naples and Milan,

that saw markets not as a forum for exchange but as forms of friendship civil life as economic life,

and economic life as civil life (Bruni 2009: 76). The historical experience on which they reflected

was the rich network of civil economies that had developed in the Italian city states by the

Renaissance period. For Antonio Genovesi (1712-1769), reciprocity was the hallmark of human

sociality where for Smith it was the propensity to truck, barter and exchange one thing for another

(Smith 1976: 25). Economic development was seen as depending on trust, and the aggregate stock of

trust in a society was not seen as reducible to individual dispositions but rather as a common good.

Several Italian economists shared a view of the market not as being opposed to civil society but as a

part and function of it (Bruni 2009: ch. 4; Bruni 2010: chs. 8-9; Bruni and Zamagni 2007: ch. 4).

5 Caritas in Veritate in fact sees the origin of microfinance in the pawnbroking model introduced by civil

humanists ( 65).

10


11/29

These economists stood themselves in the tradition of Aristotelian ethics with its emphasis on

eudaimonia, and of scholastic moral theology, including the School of Salamanca and the Franciscan

writers about economics (Bruni and Smerilli 2010).

Central to the civil economy tradition in economic thought is the conception of man as a relational

being by nature. In the same spirit, Benedict XVI, in a metaphysical interpretation of the humanum,

defines relationality [as] an essential element ( 55). Man is not homo oeconomicus because his

utility function is not only, or not even primarily, determined by individually producible and

appropriable goods (OBoyle 2007; Bruni 2008: ch. 2; Becchetti 2009; Davis 2011: 6ff.). Nor is he

homo collectivus, or a herd animal whose identity is derived from membership in a particular race,

culture, gender, nation, class, or other unchosen group. Rather, man is homo reciprocans who does

not always seek to exchange what is of equal value, or a quid pro quo, whose exchanges may be

staggered in time, or who acts from pure gratuity (Becchetti, Bruni and Zamagni 2011: ch. 9).

Reciprocal behavior is by all means compatible with markets; historical evidence shows that it has

fostered markets and has in turn been strengthened by the markets of civil economies.

The social model Benedict XVI proposes in Caritas in Veritate is that of a civil economy ( 38f.,

46f.). The Pope even refers to its origin in civil humanism ( 65). It is little understood on the

American stage, where economic thought is often deemed to originate with Adam Smith and where

social ideals, legal norms, and political models are derived from Anglo-Scottish and French

Enlightenment thought and presuppose social dualism. The Pope does not present a third way

between the market and the State, not even between traditional capitalism and traditional socialism,

but a unitary model uniting three poles animated by three types of social agents the market, the

State, and civil society. This resembles only formally the model of market socialism that also

postulates a tripartite social ontology but invariably sees one element overpower the others (Miller

1990). Similarly, it bears only a weak and formal resemblance to models of corporate social

responsibility or stakeholder capitalism, all of which impose ethical constraints on market behavior

(Williams and Aguilera 2008). The Encyclical avoids bicategorial oppositions in the first place that

would then be corrected in the direction of one or the other pole. Neither does it postulate a static

trichotomy of society; rather, the dynamic of charity received and given is what gives rise to the

Churchs social teaching ( 5). The three social agents are dynamically related in that the principle

of charity in truth must pervade all sectors of society and reciprocity must spread from civil society

to the market, which ought to come under the control of society again, but also to the State, which as

another agent of society needs to fulfill subsidiary functions where others cannot do so.

Caritas in Veritate equally opposes the heavy reliance on public welfare systems typical of European

countries and the heavy reliance on voluntary philanthropy typical of the United States. Since no

11


12/29

State program can ever replace individual compassion, altruism, and love, subsidiarity is the most

effective antidote against any form of all-encompassing welfare state ( 57). Public welfare through

transfer payments shifts economic power to the State instead of civil society; private philanthropy is

based on a self-centered motivation, since altruism is not identical with Christian love. Ostentatious

philanthropy through tax-exempt foundations, as it is practiced in the United States, reflects aProtestant and extrinsicist separation of nature from grace; it often simply serves to compensate for

the wealth accumulated through morally reproachable business practices. What is called for is a

Catholic project that allows grace to transform nature, yielding a more integral generosity practiced

by large portions of society as part of their normal way of doing business. Benedict XVI therefore

proposes the development of a self-sustaining and caring civil economy: The Churchs social

doctrine holds that authentically human social relationships of friendship, solidarity and reciprocity

can also be conducted within economic activity, and not only outside it or after it ( 36). This

project requires that the creativity fostered by markets needs to be joined by the power of the State to

enforce social institutions against free riders. State action as such is not an expression of solidarity

but a substitute for it it cannot therefore be merely delegated to the State ( 38). Benedict XVI

defines the limits of both social and free market economies: The principle of subsidiarity must

remain closely linked to the principle of solidarity and vice versa, since the former without the latter

gives way to social privatism, while the latter without the former gives way to paternalist social

assistance that is demeaning to those in need ( 58).

Many of the proposals ofCaritas in Veritate seem to support the program of distributism, which to

varying degrees has been promoted by Catholic social teaching since Rerum Novarum (1891).

Worker participation in share capital and management ( 63), mechanisms of wealth redistribution

( 32), commercial entities based on mutualist principles and pursuing social ends ( 38) and other

forms of economic democracy ( 38) indicate this direction. But differently from previous

magisterial teaching, the Pope claims that broader access to resources may also be more efficient, and

efficiency in economic logic should and must precede equity (Grassl and Habisch 2011). However,

Benedict XVI does not call for a return to any previous state in economic development, and he does

not engage the State in imposing such solutions. In fact, he explicitly points out that globalization has

imposed limits on redistribution, and in general on State action ( 37). The Pope expects civil society

and the market which it should inspire and control to develop innovative solutions within economic

logic ( 36) by letting it be infused by the logic of gift ( 34, 36).

Underlying any civil economy, then, is the recognition that, in addition to the categories of private

and public goods, which are produced by the market and the State, respectively, there is one of

relational goods (Bruni 2007: ch. 6; Bruni and Zamagni 2007: 239-45). Examples are

12


13/29

companionship, social approval, solidarity, emotional support, and a sense of belonging goods that

the monastic tradition has typically subsumed under the concept of communio. These have been

defined in different ways, by some authors as coinciding with relationships and by others as parts of

them (Bruni 2008: 8ff.). The common denominator is that the relevant differences between three

types of goods are the following (Table 1):

Private Goods Relational Goods Public Goods

Rivalry in consumption YES NO (anti-rival) NO (non-rival)

Excludability YES YES/NO NO

Consumption in isolation YES NO YES

Separability production/consumption YES NO YES

Table 1: Types of economic goods

Relational goods undermine the dichotomy between private and public goods. Neither type involves

a relation amongst the subjects involved, but relational goods do. Excludability is possible but

depends on the relationship with partners (which is the only property shared with private goods).

Relational goods are anti-rivalrous in consumption, because their very nature is based on

interpersonal sharing; in the sense of Aristotelian logic, relational and private goods are

contradictories on rivalry in consumption, whereas private and public goods are merely contraries.

Production must be done in person and cannot be contracted out. Participation in consuming a

relational good actually creates a positive externality on partners (Becchetti, Pelloni and Rossetti

2008). They can therefore never be consumed in isolation, and their production cannot be separated

in time and space from their consumption. Some of their properties (but not that of consumption in

isolation) they share with club goods such as golf courses, swimming pools, open source software,

and other information goods created through the process of commons-based peer production. Club

goods are excludable but non-rivalrous, and they produce increasing utility from sharing until

satiation is reached and congestion occurs. Relational goods, on the other hand, are not subject to

congestion. In fact, they are not affected by material but by social scarsity. Human beings need them

but the market mechanism cannot produce them. This suggests the necessity of developing a more

nuanced conception of scarcity (Barrera 2005).

With relational goods, the personal identity of producers and consumers matters. Producers, who are

at the same time consumers, must participate in person. These goods come about in a form of team

production where marginal inputs of producers can change the quality of the good for all (Grassl

1998). Relational goods are not fungible; they have a value but no market price. These goods fulfill

13


14/29

all the conditions for common goods: The common good does not consist in the simple sum of the

particular goods of each subject of a social entity. Belonging to everyone and to each person, it is

and remains common, because it is indivisible and because only together is it possible to attain it,

increase it and safeguard its effectiveness [] (Pontifical Council 2004: 164). Common goods in

this sense are not public goods in the sense of public finance. The identity of and relations amongproducers of public goods are irrelevant whereas a common good, as the social and community

dimension of the moral good (Pontifical Council 2004: 164), establishes direct relationships

among persons (Bruni 2007: 102ff.). It imposes obligations and personal involvement.

For relational goods that are produced by a civil economy, intentions therefore matter. Caritas in

Veritate points out that economic and financial instruments that are good in themselves can [] be

transformed into harmful ones ( 36). Not instruments are bad but persons who use them may act

unwisely, sinfully, or criminally. The right intention (in the scholastic sense of intentio) is crucial

the objective towards which a social institution is ordered, as Benedict XVI explains with reference

to finance ( 65). The civil economy is ordered towards enhancing integral human development.

Reason can be a partial motivation in this direction, but it must be complemented by love and by a

supportive culture to carry weight ( 2f., 5, 9, 19, 22, 30, 34, 64). Three forms of reciprocity have

been distinguished: (i) an instrumental (or cautious) reciprocity that arises from a rational calculus

and leads to cooperation without benevolence; (ii) friendship (or brave reciprocity) as being

personal and benevolent but not unconditional and necessarily reciprocal; (iii) unconditional (or

gratuitous) reciprocity, which is motivated by an intrinsic reward independently of any

reciprocation (Bruni 2008: chs. 3-5). These forms of reciprocity correspond to three types of love

that, in Greek and Christian thought, have been identified as eros,phila, and agp. They coexist in

individual persons who, as Maritain reminded us, themselves are wholes consisting of various

components and layers (Maritain 1947: 69). Economics has developed a theory of multiple selves

(Davis 2011: ch. 3). Similarly, Benedict XVI emphasizes that love is one and many, not least because

it ultimately derives from Trinitarian love (Deus Caritas Est 2-18). Eros as desire is directed at

obtaining what one does not have; it is the acquisitive motivation that underlies the contractual

relationships typical of market exchange.Phila also motivates market exchange, but under the rule

of quid pro quo, by treating others as alter ego and building on the mutuality of relations (Bruni

2010: 52ff.). Only agp captures the strong sense of reciprocity, as unconditional giving. This form

of love operates by a different logic from the others. Most notably, it is inexhaustible and as a

personal virtue grows with use. The presence ofagp in society ennobles it by elevating it above a

network of merely purposeful relationships (Figure 3).

14


15/29

Reciprocity

agp

eros phila

ControlExchange

Figure 3: Three forms of love as motives of reciprocity

If love is essential for reciprocity, there is a form of love that tends more towards spontaneous

exchange, another that forms the basis of longer-term sociality, and one that is pre-eminently and

unconditionally directed towards the other. There is a triangle inscribed into the apex of the triangle.

These three forms of reciprocity must not be understood as an arithmetic sum but rather as a product:

R = CFL

where R = reciprocity, C = contract (eros), F = friendship (phila), L = love (agp) (Bruni and

Smerilli, 2010: 99). If they were a sum, any summand could be negative, which could be outweighed

by another strongly positive summand to achieve a positive value for reciprocity. Product notation

makes reciprocity negative (or absent) if any single factor is negative. They are all required, even

though by different proportions, for reciprocity to be effective. Desire is the natural force of

consumers to act on their needs and wants and of producers and marketers to implement their ideas

and strive for financial gain. Friendship as the building of relationships may have a natural

motivation and one inspired by grace; but agapic love is due to grace alone. In the Catholic view,

grace must infuse nature in order to perfect it (Summa Theologiae I-II, q. 110, a. 2 and 4). Without

the agp that comes from Trinitarian love, a truly civil economy cannot succeed. But this also

entails that the principle of subsidiarity applies to these forms of love to establish an ordering that has

been called a fundamental principle of civil life (Bruni 2007: 113): L > F > C. Contracts are

subordinate to friendship, and friedship is subordinate to (agapic) love. A high value for L is the

sufficient condition for a good society, and at least some amount ofFis a necessary condition for any

society at all. On the basis of this program, models of a civil economy may be developed that capture

the social teaching ofCaritas in Veritate and carry it further (see Appendix).

15


16/29

6. New Forms of Economic Organization

Caritas in Veritate recognizes the role of markets in harnessing human creativity (Grassl and

Habisch 2011). In fact, their function of facilitating exchange is indispensable. But they do not by

themselves produce the personal virtues that are required for them to function well ( 32, 35).

Markets must not be reduced to one historically contingent form of economic organization

capitalism ( 41). Market economies existed long before the Industrial Revolution brought about

capitalist forms of production and consumption (Braudel 1982). Even within capitalism, there are

different economic cultures with variegated models of industrial organization, management styles,

and of the public sector (Grassl 2003). It is a mistake to reduce capitalism to the form that has

emerged in the United States only over the past century, with joint-stock corporations dominating

and corporate policy therefore being directed at maximizing shareholder profits over the short term.

Benedict XVI rejects the binary model of market-plus-State ( 41) and questions it on several

grounds. On the contrary, he expects that business enterprise involves a wide range of values,

becoming wider all the time ( 41). Most of all, he calls for new and creative forms of businesses

operating on markets and typically for profit, or as hybrid forms of commercial behavior: Charity

in truth [] requires that shape and structure be given to those types of economic initiative which,

without rejecting profit, aim at a higher goal than the mere logic of the exchange of equivalents, of

profit as an end in itself ( 38). The Pope rejects the traditional division between for-profit and non-

profit business. Not only does he expect hybrid forms to emerge. More radically, he expects the

logic of giving and forgiving ( 6) gradually to embrace the market and the State.

European countries, and particularly those with strong Catholic cultures, have developed co-

operative movements for farmers, craftsmen, shopkeepers, and consumers, that have become

formidable players on factor and consumer markets. They allow smaller suppliers to bundle their

otherwise atomistic market power to compete with multi-national corporations and thus at least

partially to overcome diseconomies of scale. They allow household buyers to approximate the

purchasing power of corporate buyers, although the success of this movement has for organizational

reasons always been greater on business than on consumer markets. Several institutional forms have

been created ranging from limited partnerships to marketing co-operatives and consortia based on

rules of both efficiency and equity (Grassl 1998). These models have spilled over to Latin America,

where Brazil is now home to a thriving co-operative movement of solidarist businesses ( economia

solidria), and to Africa, where microlending on the model of Bangladesh has facilitated the

emergence of a new class of business owners (Carvalho de Frana Filho 2007). Ethical investment

funds, fair trade organizations, and alternative forms of travel complement this trend. All these

businesses use a wide variety of governance models (Travaglini, Bandini and Mancinone 2010).

16


17/29

Under globalization, different cultures will continue to bring about different business models for the

civil economy.

To a large extent, Catholic social thought stood at the origin of this movement in the nineteenth

century, and often since has the Church supported the development of co-operatives, mutuals, unions,

and other membership-led organizations (Davis 2000, 2006 ). Caritas in Veritate even mentions

credit unions as a positive example ( 65). The worldwide Economy of Communion as a project of

the Focolare Movement is a network of businesses that freely choose to share their profits according

to three principles of equal importance to grow their businesses, help people in need, and spread the

culture of giving (Gold 2010). Benedict XVI supports exactly these endeavors when he proposes the

civil economy ( 38f., 46f.) and the Economy of Communion ( 46) as models to be followed.

Caritas in Veritate also states that the consumer has a specific social responsibility in parallel with

that of businesses ( 66). The Pope calls for new models of consumption, for example, forms of co-

operative purchasing like the consumer co-operatives that have been in operation since the nineteenth

century, partly through the initiative of Catholics ( 66). Here, too, creativity is needed, and the

pontiffs call is partially being answered. Better access to information and greater transparency of

corporate decisions have reduced the asymmetry of information and thus price-setting power on

which traditional forms of consumption and retailing relied. A business landscape is developing that

exhibits many properties of a civil economy (Ridley-Duff and Bull 2011). Consumer movements

have created new models of household production, direct distribution, and quality-conscious

consumption. One may think of the Slow Food movement, which started in Italy and has expanded to

much of the world (Petrini 2007). Out of this movement grew Terra Madre, a worldwide network of

food communities which spreads by bypassing the large commercial distribution systems (Petrini

2010). Under the cover term collaborative consumption, various models of sharing, swapping,

bartering, trading, and renting, have been invented and have been facilitated by advances in social

media and peer-to-peer online platforms (Botsman and Rogers 2010). The transformation of passive

consumers into collaborators through social media harbors the opportunity of creating new human

communities (although the quality of these still remains to be seen) (Shirky 2010). On both sides of

the market, those of consumers and producers, the future may lie in sharing (Gansky 2010).

On the other hand, the Pope does not ignore the necessity for the State to introduce regulation where

market behavior leads to monopolies or the protection of consumers is necessary. Recently Benedict

XVI called for a strategic revitalization of agriculture. In an Angelus message (Sunday, 14

November, 2010), he deplored how particularly in less-developed countries the agricultural sector is

being crowded out by low-value manufacturing only then to import foodstuff from dynamic

economies. These, however, are tempted to pursue advantageous alliances, and an increasing

17


18/29

oligopolization of large industrial producers in a few developed countries leads to higher prices and a

growing dependency for developing countries that used to be largely self-sufficient. The Pope

concludes that a new balance between farming, industry and services is necessary so that

development may be sustainable ( 27). More responsible consumption and more enlightened

business practices are as important as is government regulation to solve the problem.

What would it take to recover, at least in certain pockets of society, some of the rich artistic and

commercial culture of the Renaissance that still serves as a model for a civil economy? Both arts and

crafts are individually appropriated skills that are socially recognized and transmitted. They require

for their flourishing a community of practitioners, institutions of training and adjudication, systems

of patronage and sponsorship, efficient supply chains for raw materials and tools, and distribution

channels to intermediaries and final consumers. Even all of these would be insufficient were it not

also for the social appreciation of individual accomplishment, and of beauty and individual style

within path-dependent traditions; they create incentives to enter an art or a craft, which by necessity

implies joining a guild or self-regulating community of practitioners, and they influence price

formation. Sociologists have long recognized that crafts from carpenters to cooks and goldsmiths, if

they are truly meant to flourish, require standards that are produced by communities but cannot be

generated by markets of anonymous consumers (Sennett 2008). From the State is needed protection

against fakes and counterfeits. Lastly, the humus of creativity depends on inspiration and talent,

which are products of divine grace. Here, too, all three social agents need to cooperate, and all three

forms of love must be present, in order to develop an economy that can truly be called civil.

7. Lessons for Economics as a Science

The model of civil economy suggested by Caritas in Veritate is opposed to all dualisms in social

thought. It therefore squares badly with mainstream economic thinking, which still relies on

dichotomous oppositions drawn by classical liberalism, particularly between markets and society.

There are approaches outside the predominant paradigm, but they are typically more inspired by

sociology, economic history, or anthropology, than by economic theory. Many of these derive from

the study of cases of civil economies past and present.

Several trends in mainstream economics work in favor of an accommodation of the model of civil

economy also at the level of theorizing. Economic personalism and social economics have long

argued that the assumption of isolated individuals that underlies the theory of rational choice is

fundamentally misguided (Davis 2011). An entire research stream on reciprocity has emerged (see

Bruni 2008: 98-102; Kolm 2008; Kolm and Mercier Ythier 2006). Phenomena of gratuity, grants,

18


19/29

and altruism are increasingly studied within the frameworks of and by using the tools of behavioral

economics, game theory, economic psychology, and welfare economics. There is a burgeoning series

of works on positional goods, social preferences, peer effects, social capital, reputation, and other

topics which have a bearing on the civil economy (Gui and Sugden 2005; Kolm 2008). There is also

a literature on the more limited meaning of civil economy as non-profit associationscomplementing the market and on the management of voluntary organizations (Bruyn 2000). Lastly,

marketing has recognized the importance of building long-term relationships with customers

including acts of gratuitousness (Gummesson 2008; Tadajewski 2009).

Many results about the power and limitations of exchange on markets, control by the State, and

reciprocity in civil society have been obtained. A growing experimental literature shows the

importance of reciprocity for behavior in labor markets and other settings (Dohmen, Falk, Huffman

and Sunde 2009). To quote a single example, it has been shown that the likelihood for reciprocity

networks to develop and be sustainable is a function of size. When more people engage in gift

exchange, reciprocity is more rewarding for givers, not least because the likelihood of reciprocal

response increases; on the other hand, search costs also increase. There is an interaction between

exchange on markets and reciprocity: if many people in the economy engage in reciprocal exchange,

the market is thin, and it is hard to locate trading partners in the market. Market exchange yields

lower levels of utility. On the other hand, if many people engage in market exchange, the market is

thick, and it is easy to buy and sell goods on the market. But, it is difficult to enforce a long-term

exchange agreement (Kranton 1996: 831). Since both forms of economic organization have negative

external effects on the other, it would be socially efficient for everybody to participate in only one or

the other. On the other hand, the results indicate that the effectiveness of gratuity is not limited to

small groups of persons with ties of kinship or proximity. These studies have of course limited

themselves to reciprocity as contractual exchange or as conditional friendship.

But Caritas in Veritate suggests a much more profound rethinking of economics as a science than the

mere addition of areas of study, which are then often treated under the same assumptions and with

the same tools as in mainstream economics, merely as exceptions from the assumption of markets.

If central axioms about consumer choice full information, non-satiation, revealed well-being, etc.

and about the competitive behavior of firms are dropped, the classical models of price theory require

substantial revision (Yuengert 2009). Caritas in Veritate goes even further it calls for the

development of a new economics no longer based on inherited assumptions that have broken down in

the light of empirical evidence. First among these is the assumption that there is something like the

economical that can be distinguished from the social. Economics can at best be defined through

particular methods but not throughy an ontologically distinct field of studies.

19


20/29

In the light ofCaritas in Veritate, the objective of economics must be reconsidered. Lionel Robbins

famously defined economics as the science which studies human behaviour as a relationship

between ends and scarce means which have alternative uses (Robbins 1945: 16). Persons play no

role in this science, only their utility functions do. Businesses as communities of persons play no

role but are reduced to production functions. Entire economies are not societies of persons withdifferent objectives and tasks in the economic system who are connected by numerous ties, but are

reduced to welfare functions. Ends can be arbitrary, since economics deals only with means-ends

relations.

Contrary to such understanding of economics, Benedict XVI requires that it serves the purpose of

assisting integral human development. He makes it clear that the traditional division between positive

and normative economics breaks down and that the discipline cannot claim any autonomy from

ethics ( 34). Much of the debate on economic methodology has moved towards the same position

(Grassl and Habisch 2011). With its anthropological turn, which in fact is a theological turn, Caritas

in Veritate shows the direction for future developments in consumer theory and microeconomics in

general. For papal economics, the microfoundation of macroeconomics is evident. Economic

considerations not only start with personal decisions, macroeconomic outcomes must again serve

human welfare and are judged by it. Towards this purpose, a reformulation of economics has already

been proposed: Economics deals with the allocation of scarce resources to their best competing uses

with an eye toward effecting sufficiency in material provisioning for all (Barrera 2005: 202f.). A

definition in the spirit of civil economy will go even further, by emphasizing that material

provisioning will be a proximate goal whereas economics in a Trinitarian understanding must also

contribute to the ultimate goal of integral human development, which is a vocation in the sense of

deriving from a transcendent call and being incapable, on its own, of supplying its ultimate meaning

( 16f.). Any purely technical conception of economics cuts too short because it ignores the

transcendent nature of human beings ( 71). If economics is to make a contribution to human

flourishing, it must also study the intricate network of relations that give meaning to human lives and

that go much beyond material provisioning. As a corollary, reciprocity cannot be reduced to transfer

payments, which is another assumption frequently found in the literature. Traditional economic

categories may not suffice to explain real human behavior and its underlying motivations.

Great attention must be given not to slip into a meaning of reciprocity that is overly narrow and

technical. One stream of research, for example, has identified three possible rationales for

reciprocity: (i) balance or compensation as related to equality and fairness, or to the desire to avoid

moral indebtedness; (ii) liking, because being purposefully favored induces liking which induces

favoring, or because liking can directly result from being liked; (iii) self-sustaining sequences of

20


21/29

mutual favors, which can be solely self-interested (Kolm 2006b; Kolm 2008: ch. 5). Explanation (i)

begs the question, (ii) introduces circularity by identifying reciprocity with a proximate with unclear

direction of causality, and (iii) does not in fact reflect proper reciprocity.6

Assumption of a

reciprocity equilibrium (Kolm 2008: 314ff.) excludes its unconditional form as motivated by agp.

Along these lines, a distinction of twelve basic types of altruism includes sentiments such asaffection (reduced to family settings) and empathy but not the elemental fact of love (Kolm 2006a).

Certainly reciprocity may be understood as motivationally interrelated gift-giving (Kolm 2008). But

research, if it wants to produce meaningful results, must not skirt the fact that love is one of the most

powerful motivations. Attempts at introducing reciprocity into the social choice framework with its

formal notation make sense only if the distinctions they assume have psychological validity.

Taking the proposals ofCaritas in Veritate seriously means engaging in research, application, and

knowledge transfer. Various fields of economics can assist in this endeavor, from the economics of

networks to public choice theory, from the economics of social security to the theory of clubs and of

co-operation, and from development economics to work on corporate governance and organization.

8. Conclusion

Within the tradition of Catholic social teaching, Caritas in Veritate is nothing if not innovative, but

maybe less so for the individual precepts it formulates than for the vision it proposes. It does not

present a social model as a third way between capitalism and socialism but combines the virtues of

a market economy (which is not identical with capitalism) with the virtues of a communitarian

economy (which is not identical with socialism). In this sense, Benedict XVI presents a third way

on the ideological plane only, in the sense of rejecting two reductionist ways of thinking. But he

presents one best way in economic reality flooding all areas of society with charity in truth. In a

sense, the Encyclical expands the unalienable rights of the U.S. Declaration of Independence

life, liberty, and the pursuit of happiness to the values of the French (and largely the European)

political tradition freedom, equality, and fraternity. Freedom belongs to the sphere of market

participants, as an expression of the autonomy of consumers and producers; equality before the law

characterizes the good State; and fraternity is the resultant of reciprocity and gratuity that animate

civil society (Cavara 2005). The Encyclical gives a Trinitarian explanation of the interplay of these

principles in a form ofperichrsis. Fraternity is the value most central to the civil economy, since it

engenders attitudes of gratuity, reciprocity, and charity. In the Encyclical, fraternity ( 11, 13, 19f.,

34, 36, 38, 57, 73) is a value at least equal to that of freedom ( 9, 11, 13, 17, 23, 25, 29, 34, 40,

6Cf. the alternative classification of types of reciprocity presented above, sect. 5.

21


22/29

48), although it is clear that the latter is a precondition of any true fraternity. Benedicts vision is the

cumulative building of social capital, which is antithetical to Schumpeters creative destruction

through radical and precipitous innovation. The Pope has positioned his teaching at a great distance

from the liberal tradition in which, next to classical and neo-classical economics, also the American

political tradition stands. Where liberalism has exclusive regard for contracts and communitarianismfor friendship, Benedict claims a role for the prophetic voice and centrifugal force of agp in

economies, which in turn places society under the form of the Trinity (Cambn 2010).

Papal social teaching does not belittle the value of social justice; but neither does it accord to it

primacy of place (as particularly Jesuit theologians have done over the past decades). In the proper

causal ordering, love comes first, and all other virtues and goals follow from it. Caritas in Veritate

advocates all classical precepts of Catholic social teaching, and most prominently the three

paramount principles of human dignity (subjectivity), solidarity, and subsidiarity. But they are not

disconnected axioms; they themselves follow from the fundamental law of charity, which is revealed

and exemplified by Trinitarian love. Consequently, Caritas in Veritate exhorts mankind to strive for

a society that lives by the twin principles of charity and truth, which then will also bring about

greater justice in human relations ( 37). In fact, without gratuitousness, there can be no justice in

the first place ( 38). This project requires religion, because it is predicated on an anthropology that

assumes a specific calling of human beings in their social relations ( 56, 78f.). Seeking social

justice independently of a religious foundation is futile at best and a dangerous totalitarian phantasy

at worst ( 34, 38, 53).

The social vision the Encyclical proposes is no phantasy. It has, in various shapes and degrees,

existed over long historical periods, and forms of it are practiced today. True, its underlying principle

caritas in veritate in re sociali ( 5) may always only be implemented partially and imperfectly.

Benedict XVI very realistically calls for changes on the margin by making structures of civil

economy perfect the market where it otherwise leads to failures: [] action is required not only on

improving exchange-based transactions and implanting public welfare structures, but above all on

gradually increasing openness, in a world context, to forms of economic activity marked by quotas of

gratuitousness and communion ( 39). Despite its spirit of realism, the Encyclical is bold in

achieving two things defining the goal very clearly, and presenting a theological rationale for it.

The rest is up to us.

22


23/29

Appendix: A Geometrical Model of Civil Economy

Caritas in Veritate is not averse to using the term model, which appears eleven times in the text.

Western thought but also other religious traditions have accorded a special significance to the

number three and to triples occurring in the natural and social world. Plato, St. Albert the Great and

many others have regarded triads and triangles as a clue to the ultimate structure of reality (Schimmel

1993). In Christian symbolism, equilateral triangles have long (though not exclusively) been used to

depict the structure of the Trinity (Webber 1971). An equilateral triangle inscribed in a circle or a

circle interwoven with an equilateral triangle were also common emblems. If the structure of society

is seen in the light of the Trinity, a triangular model therefore suggests itself; the equilateral form is

dictated by the revealed dogma of the equality of persons of the Trinity. Equilateral triangles are, on

intuitive and on formal grounds, regarded as geometric forms with properties such as completeness,

stability, symmetry, compactness, or closure (Fuller, 1975; Keidel 1995, 2010). In a certain sense,

triangles are primes among geometrical figures. They are particularly suited to express the

functions of a civil economy (Zamagni 2009: 77; Bruni 2008: 75ff.).

Every social aggregate, from a spontaneously composed group to an entire society, uses three types

of coordination: exchange through contracts (E), control through command mechanisms (C), and

reciprocity through gratuitous giving (R). Among these options, E is typical for markets, Cfor the

State, and R for civil society. Ternary diagrams can then be used to depict the interaction of these

three components. Equilateral triangles ECR represent the available options for mixing therespective policies and instruments, in analogy to production possibility frontiers ( Fi gure 4):

Reciprocity

Civil societyC X

Y

a

Figure 4: Triangular representation of social structure

(i)

(b)R

100%

R100%R

(iii)

100%

E100%

C

X

EExchange

C

Control

X

r

100%

E100%

C

(ii)

23


24/29

For any interior point X, the sum of the lengths of perpendicular segments onto the sides equals the

altitude of the triang , each perp ndicular se ment equalling the radius rof an incircle (i):le e g

1

2 1

2 1

2 1

2 3 1

23

where side length a =EC=ER =RC. Case (i) represents the center where the shares ofE, C, andR

in the economy are equal. Points along the edges represent combinations of (E, C,R) with one of the

three elements at 100% and another at 0%. They are not feasible in social reality. All interior points

are (at least theoretically) feasible. X in case (ii) represents an economy where market exchange

contributes 55%, government action 20%, and the civil society 25% of total social product. Yin case

(iii) represents an economy that relies less on market exchange, more on the State, and has also a

weaker civil economy thanX.

Measurement problems are the greatest stumbling block for a reliable depiction of progress towards a

civil economy as suggested by Caritas in Veritate. In order to plot the shares ofE, C, and R in a

ternary diagram, contributions to aggregate economic activity must be measured, even if the latter is

(contrary to recommendations by social economics) equated with Gross Domestic Product. For a

small convenience sample of countries, the following diagram was developed:

R

100%

Predominance of

civil economy

GER

SWE

CHN

USA RUS

CMRSPN

ITA

100%

E100%

C

Figure 5: Example of comparative analysis

24


25/29

Shares were estimated on the basis of sectoral employment in total employment (sources: OECD,

Worldbank). The proxy for civil society is employment in the third sector (comprising businesses

engaged in voluntary and cooperative activity). Better measurement would be based on contributions

to aggregate production, where the civil economy would also comprise those economic agents that

engage in market exchange or State activities but do so for the common good rather than privateprofit. Such data are still unavailable at least for cross-country samples.

In this sample, Sweden is farthest on the way towards a civil economy. The large share of co-

operatives and similar businesses provides the most likely explanation. In Germany, large parts of the

agricultural sector and of the banking and dairy industries are operated by co-operatives or mutual

companies, in addition to housing co-ops, mortgage companies, and other small-scale businesses.

China seems to have a surprisingly large third sector; however, the existence of numerous multi-

stakeholder co-operatives is not adequately reflected in official economic statistics and would make

the estimate for the civil economy for China much larger. The United States has a comparatively

small third sector; measurement of employment shares does not reflect the importance of private

foundations and of philanthropy by households since these hardly create direct employment. The

lowest share of civil economy in the sample was estimated for Russia, where most of the formerly

socially owned enterprises were either privatized or converted into corporations owned by the

State.

This geometrical representation of social structure is still very inadequate although it seems to

capture the intentions ofCaritas in Veritate. It needs significant improvements in measuring the civil

economy if it is to reflect any measure ofperichrsis. Data about time use, i.e. about time spent on

E, C, andR, respectively, may prove to provide a better picture about the extent of the civil economy

(Becchetti, Pelloni and Rossetti 2008). Lastly, the internal dynamics of societies can be depicted. The

characteristics of civil economy (such as reciprocity and volunteering) are meant to invade and

fructify both private and public businesses including State administrations. Positions on the

horizontal axis (which reflect the respective contributions of the private and public sectors) are not as

decisive as are vertical positions. For every society, finding a combination closer to apexR is then a

bliss point.

Such models can only depict the extent of a civil economy, which according to Caritas in Veritate

reflects some properties of the Trinity ( 54). They must not be misunderstood as a geometrical

representation of the Sacred Trinity, which is not only too complex to allow for such simplification,

but which is first and foremost a profound mystery.

25


26/29

References

Baeck, L.: 1994, The Mediterranean Tradition in Economic Thought(Routledge, London).

Barrera, A., O.P.: 2005, God and the Evil of Scarcity. Moral Foundations of Economic Agency(University of Notre Dame Press, Notre Dame, IN).

Becchetti, L.: 2009, Oltre lhomo oeconomicus. Felicit, responsabilit, economia delle relazioni(Citt Nuova, Rome).

Becchetti L., A. Pelloni and F. Rossetti: 2008, Relational Goods, Sociability, and Happiness.

Kyklos 61: 343363.

Becchetti, L., L. Bruni and S. Zamagni: 2011, Microeconomia: Scelte, relazioni, economia civile (IlMulino, Bologna).

Botsman, R. and R. Rogers: 2010, Whats Mine Is Yours: The Rise of Collaborative Consumption(HarperBusiness, San Francisco).

Boulding, K.E.: 1973, The Economy of Love and Fear(Wadsworth, Belmont, CA).

Braudel, F.: 1982, Civilization and Capitalism 15th-18th Century. Vol. II: The Whels of Commerce

(Harper & Row, New York, NY).

Bruni, L.: 2007,La ferita dellaltro. Economia e relazioni umane (Il Margine, Trent).

Bruni, L.: 2008,Reciprocity, Altruism and the Civil Society. In Praise of Heterogeneity (Routledge,

Abingdon) [original:Reciprocit. Dinamiche di cooperazione economia e societ civile (Mondadori,Milan), 2006].

Bruni, L.: 2009,Limpresa civile. Una via italiana alleconomia di mercato (EGEA, Milan).

Bruni, L.; 2010, Lethos del mercato. Unintroduzione ai fondamenti antropologici e relazionalidelleconomia (Mondadori, Milan).

Bruni, L. and A. Smerilli, 2010:Benedetta economia. Benedetto di Norcia e Francesco dAssisi nellastoria economica europea (Citt Nuova, Rome).

Bruni, L. and R. Sugden: 2008, Fraternity: The Market Need Not Be a Morally Free Zone.

Economics and Philosophy 24: 35-64.

Bruni, L. and A.J. Uelmen, 2006: Religious Values and Corporate Decision Making: The Economy

of Communion Project.Fordham Journal of Corporate and Financial Law 11: 645-80.

Zamagni, S. and L. Bruni: 2007, Civil Economy. Efficiency, Equity, Public Happiness (Peter Lang,Berne) [original:Economia civile. Efficienza, equit, felicit pubblica (Il Mulino, Bologna), 2004].

Bruni, L. and S. Zamagni (eds.), 2009:Dizionario di Economia Civile (Citt Nuova, Rome).

Bruyn, S.T.: 2000, Civil Economy: Transforming the Market in the Twenty-First Century (Universityof Michigan Press, Ann Arbor, MI).

Cambn, E.: 2009, Trinit modello sociale. 3/e. (Citt Nuova, Rome).

Cambn, E.: 2010, Comunione trinitaria e sviluppo sociale. gens. Rivista di vita ecclesiale 39, n.1/2. http://www.indaco-torino.net/gens/10_01_04.htm

Caruso, R.: 2009, Il pensiero di Kenneth Boulding, economista irenico. Relazioni sociali tra

scambio, dono e coerzione. Storia del pensiero economico 6, 5-30.

Carvalho de Frana Filho, G.: 2007, Teoria e Prtica em Economia Solidria. Problemtica,

Desafios e Vocao.Revue du MAUSS permanente, 8 May 2007.

http://www.journaldumauss.net/spip.php?article83

26


27/29

Cavara, P, 2005: Liberty, Equality, Fraternity: The Complexity of a Triad. In: V. Arajo (ed.):

Social Relationships and Fraternity: Paradox or Sustainable Model? Accounts of the InternationalConference on Sociology Social-One, Castelgandolfo (Rome), 11-13 February, 2005.

Clavero, B.: 1991,Antidora. Antropologa catlica de la economa moderna (Giuffr, Milan).

Cowen, T.: 2000,In Praise of Commercial Culture (Harvard University Press, Cambridge, MA).

Davis, J.B.: 2011,Individuals and Identity in Economics (Cambridge University Press, Cambridge).

Davis, P.: 2000, Co-operative Management as a Catholic Vocation. In: S.M. Natale (ed.):BusinessEducation and Training: A Value Laden Process. Vol. 4 (University Press of America, Washington,

DC), 157-180.

Davis, P.: 2006, The Co-operative, Catholic Social Thought and the Good Company: The

Importance of Pluralism in the Market. In: The Good Company. Sixth International Symposium on

Catholic Social Thought and Management Education, Rome, 5-7 October 2006.http://www.stthomas.edu/cathstudies/cst/conferences/thegoodcompany/Finalpapers/Davis

Dohmen, T., A. Falk, D. Huffman and U. Sunde: 2009, Homo Reciprocans: Survey Evidence onBehavioural Outcomes.Economic Journal119: 592-612.

Fanfani, A.: 1935, Catholicism, Protestantism, and Capitalism (Sheed and Ward, London) [original:Cattolicesimo e Protestantesimo nella formazione storica del capitalismo, Milan: Vita e Pensiero,1934].

Fuller, R.B. : 1975, Synergetics: Explorations in the Geometry of Thinking(Macmillan, New York).

Gansky, L.: 2010, The Mesh: Why the Future of Business Is Sharing(Portfolio, New York, NY).

Gold, L.: 2010,New Financial Horizons. The Emergence of an Economy of Communion (New CityPress, Hyde Park, NY).

Grassl, W.: 1998, Cooperative Marketing: Efficiency Conditions for Alliances. In: T. Brunton and

T. Lituchy (eds.): Canada/Caribbean Business: Opportunities and Challenges for Management.

Port-of-Spain: University of the West Indies Press, 87-101.

Grassl, W.: 2003, Lentreprise europenne inxistante, moribonde, ou modle pourlexportation. Goconomie no. 28, 153-180.

Grassl, W.: 2010, Aquinas on Management and its Development. Journal of ManagementDevelopment29: 706-15.

Grassl, W., 2011: Business as the Exercise of Practical Reason: A Trinitarian Model. In: A.

Habisch and G. Lenssen (eds.): Practical Wisdom in Christian Perspective (Routledge, Abingdon).

Grassl, W. and A. Habisch, 2011: Ethics and Economics: Towards a New Humanistic Synthesis for

Business.Journal of Business Ethics 96, .

Gui, B. and R. Sugden: 2005, Why Interpersonal Relations Matter for Economics. In: B. Gui and R.

Sugden (eds.), Economics and Social Interaction: Accounting for Interpersonal Relations

(Cambridge University Press, Cambridge), 1-22.

Gummesson, E.: 2008, Total Relationship Marketing. 3/e (Butterworth-Heinemann, Oxford).

Hemmerle, K.: 1994, Das unterscheidend Eine. Bemerkungen zum christlichen Verstndnis von

Einheit. In: B. Fraling (ed.): Kirche und Theologie im kulturellen Dialog(Herder, Freiburg), 339-354.

Hemmerle, K.: 1995,Leben aus der Einheit.Eine theologische Herausforderung(Herder, Freiburg).

Keidel, R.W.: 1995, Seeing Organizational Patterns. A New Theory and Language of Organiza-tional Design (Beard Books, Washington, DC).

27


28/29

Keidel, R.W.: 2010, The Geometry of Strategy. Concepts for Strategic Management(Routledge, NewYork).

Kleymann, B., H. Malloch, T. Redman, and J. Angot: 2008, The Dynamics of a Variably Coupled

Social System: The Case of Les Compagnons du Devoir. Journal of Management Inquiry 17: 381-396.

Kolm, S.-C.: 2006a, Introduction to the Economics of Reciprocity, Giving and Altruism. In: Kolmand Mercier Ythier (eds.), 1-44.

Kolm, S.-C.: 2006b, Reciprocity: Scope, Rationales and Consequences. In: Kolm and Mercier

Ythier (eds.), 371-541.

Kolm, S.-C. and J. Mercier Ythier (eds.): 2006, Handbook of the Economics of Giving, Altruism andReciprocity. 2 vols. (North Holland, ).

Kolm, S.-C.: 2008, Reciprocity: An Economics of Social Relations (Cambridge University Press,Cambridge).

Krader, L.: 1968,Formation of the State (Prentice-Hall, Englewood Cliffs, NJ).

Kranton, R.E.: 1996, Reciprocal Exchange: A Self-Sustaining System.American Economic Review

86: 830-51.

Maritain, J.: 1947, The Person and the Common Good. Trans. J.J. Fitzgerald (Charles ScribnersSons, New York, NY).

McCann, D. P.: 2002, Business Corporations and the Principle of Subsidiarity. In: S.A.

Cortright and M.J. Naughton (eds.):Rethinking the Purpose of Business (University of Notre

Dame Press, Notre Dame, IN), 169-89.

Meeks, M.D.: 1989, God the Economist: The Doctrine of God and Political Economy (FortressPress, Minneapolis, MN).

Miller, D.: 1989, Market, State, and Community. Theoretical Foundations of Market Socialism(Clarendon Press, Oxford).

Mowry LaCugna, C.: 1991, God for Us: The Trinity and Christian Life (Harper, San Francisco).

Nisbet, R.: 1953, The Quest for Community. A Study in the Ethics of Order and Freedom (OxfordUniversity Press, Oxford).

OBoyle, E.: 2007, Requiem forHomo Economicus.Journal of Markets and Morality 10: 321-338.

Petrini, C.: 2007, Slow Food Nation: Why Our Food Should Be Good, Clean, And Fair(Rizzoli, NewYork, NY).

Petrini, C.: 2010, Terra Madre: Forging a New Global Network of Sustainable Food Communities(Chelsea Green Publishing, White River Junction, VT).

Polanyi, K.: 1977, The Livelihood of Man (Academic Press, New York).

Pontifical Council for Justice and Peace: 2004, Compendium of the Social Doctrine of the Church(Libreria Editrice Vaticana, Rome).

Ridley-Duff, R. and M. Bull: 2011, Understanding Social Enterprise (Sage, London).

Robbins, L.: 1945, The Nature and Significance of Economic Science. 2/e (Macmillan, London).

Schimmel, A.: 1993, The Mystery of Numbers (Ocford University Press, Oxford).

Sennett, R.: 2008, The Craftsman (Yale University Press, New Haven, CT).

28


29/29

Shirky, C.: 2010, Cognitive Surplus: Creativity and Generosity in a Connected Age (Penguin, NewYork, NY).

Simmel, G.: 1908, Soziologie. Untersuchungen ber die Formen der Vergesellschaftung(Duncker &Humblot, Leipzig).

Smith, A.: 1976 [1776], An Inquiry into the Nature and Causes of the Wealth of Nations (Oxford

University Press, Oxford).Tadajewski, M.: 2009, The Foundations of Relationship Marketing: Reciprocity and Trade

Relations. Marketing Theory 9: 9-38.

Travaglini, C., F. Bandini and K. Mancinone: 2010, Social Enterprise in Europe: Governance

Models. Working papers 75, Facolt di Economia di Forl, University of Bologna.

Uelmen, A.J.: 2004, Toward a Trinitarian Theory of Products Liability.Journal of Catholic Social

Thought1, 603-645.

Webber, F.R.: 1971, Church Symbolism. 2/e (Gale Research Center, Detroit).

Wicks, R.: 2009, A Model of Dynamic Balance among the Three Spheres of Society Markets,

Governments, and Communities Applied to Understanding the Relative Importance of Social

Capital and Social Goods.International Journal of Social Economics 36: 535-65.Williams, C.A. and R.V. Aguilera: 2008, Corporate Social Responsibility in a Comparative

perspective. In: A. Crane et al. (eds.): Oxford Handbook of Corporate Social Responsibility (OxfordUniversity Press, Oxford), 452-472.

Yuengert, A.M.: 2009, Elements of a Christian Critique of Consumer Theory.Faith and Economics54:

Zaleski, P.: 2008, Tocqueville on Civilian Society. A Romantic Vision of the Dichotomic Structure

of Social Reality.Archiv fr Begriffsgeschichte 50, 260-66.

Zamagni, S.: 2009,Economia e

civil economy

Documents