If one had to be extraordinarily brief with respect to Catholic social thought, I would say that the Catholic Church is too collectivist for capitalism, and too individualist for communism.
The first aspect of Catholic theology that indicates how the Catholic Church is too collectivist for capitalism is the Catholic notion of the universal destination of goods. We as Catholics believe that God, when creating the goods of the earth, created it for the common benefit of all mankind. Even now that private property exists, individuals must still use their property for the benefit not only of themselves, but of all mankind. As the Catechism of the Catholic Church says,
In the beginning God entrusted the earth and its resources to the common stewardship of mankind to care for them, master them by labor, and enjoy their fruits. The goods of creation are destined for the whole human race. … The right to private property, acquired or received in a just way, does not do away with the original gift of the earth to the whole of mankind. The universal destination of goods remains primordial, even if the promotion of the common good requires respect for the right of private property and its exercise. (CCC, #2402, 2403)
What this means is that God created the goods of the earth for the benefit of all mankind. Although the goods of the earth can be legitimately divided up among individuals for private ownership and private use, this does not undermine God’s original intention that the goods of earth were meant for the benefit of all. Hence, even though the right to private property ownership must be respected for the sake of maintaining social stability and the common good of society, the right to private property ownership must be ordered towards the end of benefiting all of humanity.
The reason for this is because each individual must think beyond himself or herself, and in all things act towards the common good. As the Catechism later goes on to say, “The ownership of any property makes its holder a steward of Providence, with the task of making it fruitful and communicating its benefits to others, especially his family.” (CCC, #2404) Further, “The goods of production – material or immaterial – such as land, factories, practical or artistic skills, oblige their possessors to employ them in ways that will benefit the greatest number.” (CCC, #2405) Pope Leo XIII, in his landmark encyclical Rerum Novarum, speaks similarly, noting that God giving the earth to humanity as a whole is “in no way a bar to the owning of private property.” The reason for this is that, first and foremost, God gave the earth not to any one person, but to humanity as a whole, and the earth brings forth its goods for the wellbeing of all. The division of property is something that comes forth not from the Divine Law, but from how we as humans make use of the land, and from the laws of different nations and peoples. Hence, private property ownership stems not from the Divine Law, but from human law, originating for practical reasons; yet, the ownership of property among individuals does undermine the fact that the fruits of the earth are a gift from God for all of humanity, granted that the fruits of the earth are used properly – that is, for the benefit of all (cf. Rerum Novarum, #8). Finally, concerning the nature of capitalism, Pope St. John Paul II, in his famous encyclical Centesimus Annus, asked the question of whether or not, in the collapse of communism, capitalism should fill the void left by communism, particularly in the Third World. John Paul II noted how the answer is yes, but only if we develop a free market system which can adequately meet the demands of justice for all. As he wrote,
…can it perhaps be said that, after the failure of Communism, capitalism is the victorious social system, and that capitalism should be the goal of the countries now making efforts to rebuild their economy? … The answer is obviously complex. If by “capitalism” you mean an economic system that recognizes the fundamental and positive role of businesses, the market, private property and the resulting responsibility for the means of production, as well as free human creativity in the economic sector, then the answer is certainly in the affirmative, though it would be more appropriate to speak of a “business economy,” “market economy,” or simply “free economy.” But if by “capitalism” you mean a system in which freedom in the economic sector is not circumscribed with a strong juridical framework which places it at the service of human freedom in its totality, and which sees it as a particular aspect of that freedom, the core of which is ethical and religious, then the answer is simply in the negative. (Centesimus Annus, #42)
Again, what he is saying is if by capitalism, you mean an economic system that recognizes the right to private property ownership, including the private ownership of the means of production, and which allows for full creative freedom in the production of goods and services, then yet, capitalism is a good thing. But, if by capitalism you mean an economic system that sees that accumulation of wealth as being at the center of freedom or social life, then capitalism is to be rejected. Capitalism is good insofar as it is subjected to the common good of all.
Yet, as the Catechism of the Catholic Church notes, even though the final end of the goods of the earth is in reference to all of humanity and not towards any one individual alone, the right to private property can be “acquired or received in a just way,” and the division of property among individuals and private organizations is something that can serve the common good. Further, Pope John Paul II, in the quote above, viewed an economic system based on private property ownership to be, in and of itself, just. This thus shows how the Catholic Church is, in many ways, too individualistic for communist and socialist ideologies. Pope Leo XIII, in Rerum Novarum, states that although the fruits of the earth are by their nature meant for all people, when a person puts the effort in to harness or cultivate the fruits of the earth, he or she is entitled to the fruits of their labor. As he wrote, “Now, when a man thus turns the activity of his mind and the strength of his body towards procuring the fruits of his labor, by such act he makes his own that portion of nature’s field which he cultivates – that portion on which he leaves, as it were, the impress of his personality…As effects follow their cause, so it is just and right that the results of labor should belong to those who have bestowed the labor.” (Rerum Novarum, #9, 10) The Catechism further says that the creation of private property is necessary to create stability, safety, and order in life: “However, the earth is divided up among men to assure men the security of their lives, endangered by poverty and threatened by violence. The appropriation of property is legitimate for guaranteeing the freedom and dignity of persons and for helping each of them meet their basic needs and the needs of those in his charge.” (CCC, #2402)
This recognition of the right to own private property, which by nature makes the Catholic Church too individualistic in Communist terms, also contains within it something that makes it intolerable to the abuses that take place within the capitalist system. The right to own property gives a moral justification to the notion that the rich have the right to get rich off of the means of production; however, that same principle by which the wealthy justify their wealth is also used to justify the notion that the working class have the right to a fair wage. In the end, what Catholic views on property ownership center on is the creation of justice. Justice, with regards to property ownership, partly means “to preserve our neighbor’s rights and to render him what is his due.” (CCC, #2407) Justice thus makes certain demands on both the working class and those under whom they work. As Pope Leo wrote, among the responsibilities of the working class include: “fully and faithfully to perform the work which has been freely and equitably agreed upon; never to injure the property, nor outrage the person, of an employer; never to resort to violence in defending their own case, nor to engage in riot or disorder; and to have nothing to do with men of evil principles, who work upon the people with artful promises of great results, and excite foolish hopes which usually end in useless regrets and grievous losses.” Yet, among the responsibilities of the ruling class and the employers is “not to look upon their work people as bondsmen, but to respect in every man his dignity as a person ennobled by Christian character.” This means that although it is morally licit for business owners to profit off of the work of their laborers, “to misuse men as though they were things in the pursuit of gain…is truly shameful and inhuman.” Thus, Leo concludes, “To defraud any one of wages is a great crime which cries to the avenging anger of heaven.” (Rerum Novarum, #20)
We must also create a sense of temperance. The Catechism speaks of how the true and proper use of property is as means to a further end, namely the spiritual, social, moral, economic and political uplifting of both ourselves and others. To attain this end requires us to avoid undue attachment to material things (cf. CCC, #2407). We need to avoid an overly materialistic mentality. The abuses of capitalism bring about just those abuses which Leo condemned – namely the defrauding of the working class by the employers – and socialism thus spreads through “working on the poor’s envy of the rich” (cf. Rerum Novarum, #4). Both of these are rooted in a disordered desire for material things. As Pope John Paul II wrote in his 1981 encyclical Laborem Exercens, humans, as rational beings created in the image and likeness of God, we are thus subjective beings – that is, beings who have the capacity to act in a manner which we plan or determine ourselves. As a result, “man is also the subject of work,” in the sense that our actions, “independently of their objective content…must all serve to realize his humanity.” (cf. Laborem Exercens, #6) The Pope also correlated this statement in another statement from Centisimus Annus: “It is not wrong to want to live better; what is wrong is a style of life which is presumed to be better when it is directed towards ‘having’ rather than ‘being’, and which wants to have more, not in order to be more but in order to spend life in enjoyment as an end in itself.” (Centesimus Annus, #36) What this means is that work is supposed to express some element of human nature, and is meant to be ordered towards fulfilling all that humanity is and is meant to be, the final end of which is union with God.
The Church has thus also warned against two types of materialism: the materialism of capitalism, rooted in a consumerist mentality whereby the acquiring of wealth is seen as the highest good, and the spiritual side of man is completely ignored; and the materialism of communism, rooted in an atheistic worldview that sees all of history as the struggle between those with economic and social power and those without economic and social power, and which, as a solution, takes actions which infringe upon man’s right to own property, and in the long term creates a situation which, as we have seen, is crushing to the human spirit. They both offer us a false freedom. Yet, man only feels liberated in his labor when his labor is ordered towards a higher good, namely God.