II. THE TEACHING OF RERUM NOVARUM

51. It should be stated at the outset that in the economic order first place must be given to the personal initiative of private citizens working either as individuals or in association with each other in various ways for the furtherance of common interests.

52. But-for reasons explained by Our predecessors-the civil power must also have a hand in the economy. It has to promote production in a way best calculated to achieve social progress and the well-being of all citizens.

Personal Initiative and State Intervention

53. And in this work of directing, stimulating, co-ordinating, supplying and integrating, its guiding principle must be the "principle of subsidiary function" formulated by Pius XI in Quadragesimo Anno. (s. f. – n. d. r. - 24 "This is a fundamental principle of social philosophy, unshaken and unchangeable. . . Just as it is wrong to withdraw from the individual and commit to a community what private enterprise and industry can accomplish, so too it is an injustice, a grave evil and a disturbance of right order, for a larger and higher association to arrogate to itself functions which can be performed efficiently by smaller and lower societies. Of its very nature the true aim of all social activity should be to help members of the social body, but never to destroy or absorb them."²⁵

54. The present advance in scientific knowledge and productive technology clearly puts it within the power of the public authority to a much greater degree than ever before to reduce imbalances which may exist between different branches of the economy or between different regions within the same country or even between the different peoples of the world. It also puts into the hands of public authority a greater means for limiting fluctuations in the economy and for providing effective measures to prevent the recurrence of mass unemployment. Hence the insistent demands on those in authority-since they are responsible for the common good-to increase the degree and scope of their activities in the economic sphere, and to devise ways and means and set the necessary machinery in motion for the attainment of this end.

55. But however extensive and far-reaching the influence of the State on the economy may be, it must never be exerted to the extent of depriving the individual citizen of his freedom of action. It must rather augment his freedom while effectively guaranteeing the protection of his essential personal rights. Among these is a man's right and duty to be primarily responsible for his own upkeep and that of his family. Hence every economic system must permit and facilitate the free development of productive activity.

56. Moreover, as history itself testifies with ever-increasing clarity, there can be no such thing as a well-ordered and prosperous society unless individual citizens and the State co-operate in the economy. Both sides must work together in harmony, and their respective efforts must be proportioned to the needs of the common good in the prevailing circumstances and conditions of human life.

57. Experience has shown that where personal initiative is lacking, political tyranny ensues and, in addition, economic stagnation in the production of a wide range of consumer goods and of services of the material and spiritual order-those, namely, which are in a great measure dependent upon the exercise and stimulus of individual creative talent.

58. Where, on the other hand, the good offices of the State are lacking or deficient, incurable disorder ensues: in particular, the unscrupulous exploitation of the weak by the strong. For men of this stamp are always in evidence, and, like cockle among the wheat, thrive in every land.

Ramifications of the Social Process

59 . Certainly one of the principal characteristics which seem to be typical of our age is an increase in social relationships, in those mutual ties, that is, which grow daily more numerous and which have led to the introduction of many and varied forms of associations in the lives and activities of citizens, and to their acceptance within our legal framework. Scientific and technical progress, greater productive efficiency and a higher standard of living are among the many present-day factors which would seem to have contributed to this trend.

60. This development in the social life of man is at once a symptom and a cause of the growing intervention of the State, even in matters which are of intimate concern to the individual, hence of great importance and not devoid of risk. We might cite as examples such matters as health and education, the choice of a career, and the care and rehabilitation of the physically and mentally handicapped.

It is also partly the result, partly the expression of a natural, well-nigh irresistible urge in man to combine with his fellows for the attainment of aims and objectives which are beyond the means or the capabilities of single individuals. In recent times, this tendency has given rise to the formation everywhere of both national and international movements, associations and institutions with economic, cultural, social, sporting, recreational, professional and political ends.

Advantages and Disadvantages

61. Clearly, this sort of development in social relationships brings many advantages in its train. It makes it possible for the individual to exercise many of his personal rights, especially those which we call economic and social and which pertain to the necessities of life, health care, education on a more extensive and improved basis, a more thorough professional training, housing, work, and suitable leisure and recreation. Furthermore, the progressive perfection of modern methods of thought-diffusion-the press, cinema, radio, television-makes it possible for everyone to participate in human events the world over.

62. At the same time, however, this multiplication and daily extension of forms of association brings with it a multiplicity of restrictive laws and regulations in many departments of human life. As a consequence, it narrows the sphere of a person's freedom of action. The means often used, the methods followed, the atmosphere created, all conspire to make it difficult for a person to think independently of outside influences, to act on his own initiative, exercise his responsibility and express and fulfil his own personality. What then? Must we conclude that these increased social relationships necessarily reduce men to the condition of being mere automatons? By no means.

Creation of Free Men

63. For actually this growth in the social life of man is not a product of natural forces working, as it were, by blind impulse. It is, as we saw, the creation of men who are free and autunomous by nature-though they must, of course, recognize and, in a sense, obey the laws of economic development and social progress, and cannot altogether escape from the pressure of environment.

64. The development of these social relationships, therefore, can and ought to be realized in a way best calculated to promote its inherent advantages and to preclude, or at least diminish, its attendant disadvantages.

Proper Balance Necessary

65. To this end, a sane view of the common good must be present and operative in men invested with public authority. They must take account of all those social conditions which favor the full development of human personality. Moreover, We consider it altogether vital that the numerous intermediary bodies and corporate enterprises-which are, so to say, the main vehicle of this social growth-be really autonomous, and loyally collaborate in pursuit of their own specific interests and those of the common good. For these groups must themselves necessarily present the form and substance of a true community, and this will only be the case if they treat their individual members as human persons and encourage them to take an active part in the ordering of their lives.

66. As these mutual ties binding the men of our age one to the other grow and develop, governments will the more easily achieve a right order the more they succeed in striking a balance between the autonomous and active collaboration of individuals and groups, and the timely coordination and encouragement by the State of these private undertakings.

67. So long as social relationships do in fact adhere to these principles within the framework of the moral order, their extension does not necessarily mean that individual citizens will be gravely discriminated against or excessively burdened. On the contrary, we can hope that they will help him to develop and perfect his own personal talents, and lead to that organic reconstruction of society which Our Predecessor Pius XI advocated in his encyclical Quadragesimo Anno as the indispensable prerequisite for the fulfilment of the rights and obligations of social life,²⁶

The Remuneration of Work

68. We are filled with an overwhelming sadness when We contemplate the sorry spectacle of millions of workers in many lands and entire continents condemned through the inadequcy of their wages to live with their families in utterly sub-human conditions. This is probably due to the fact that the process of industrialization in these countries is only in its initial stages, or is still not sufficiently developed.

69. Nevertheless, in some of these lands the enormous wealth, the unbridled luxury, of the privileged few stands in violent, offensive contrast to the utter poverty of the vast majority. In some parts of the world men are being subjected to inhuman privations so that the output of the national economy can be increased at a rate of acceleration beyond what would be possible if regard were had to social justice and equity. And in other countries a notable percentage of income is absorbed in building up an ill-conceived national prestige, and vast sums are spent on armaments.

70. In economically developed countries, relatively unimportant services, and services of doubtful value, frequently carry a disproportionately high rate of remuneration, while the diligent and profitable work of whole classes of honest, hard-working men gets scant reward. Their rate of pay is quite inadequate to meet the basic needs of life. It in no way corresponds to the contribution they make to the good of the community, to the profits of the company for which they work, and to the general national economy.

Factors Determining Just Wage

71. We therefore consider it Our duty to reaffirm that the remuneration of work is not something that can be left to the laws of the marketplace; nor should it be a decision left to the will of the more powerful. It must be determined in accordance with justice and equity; which means that workers must be paid a wage which allows them to live a truly human life and to fulfill their family obligations in a worthy manner. Other factors too enter into the assessment of a just wage: namely, the effective contribution which each individual makes to the economic effort, the financial state of the company for which he works, the requirements of the general good of the particular country-having regard especially to the repercussions on the overall employment of the working force in the country as a whole-and finally the requirements of the common good of the universal family of nations of every kind, both large and small.

72. The above principles are valid always and everywhere. So much is clear. But their degree of applicability to concrete cases cannot be deter mined without reference to the quantity and quality of available resources; and these can-and in fact do-vary from country to country, and even, from time to time, within the same country.

Balancing Economic Development and Social Progress

73. In view of the rapid expansion of national economies, particularly since the war, there is one very important social principle to which We would draw your attention. It is this: Economic progress must be accompanied by a corresponding social progress, so that all classes of citizens can participate in the increased productivity. The utmost vigilance and effort is needed to ensure that social inequalities, so far from increasing, are reduced to a minimum.

74. As Our Predecessor Pius XII observed with evident justification: "Likewise the national economy, as it is the product of the men who work together in the community of the State, has no other end than to secure without interruption the material conditions in which the individual life of the citizens may fully develop. Where this is secured in a permanent way, a people will be, in a true sense, economically rich, because the general well-being, and consequently the personal right of all to the use of worldly goods, is thus actuated in conformity with the purpose willed by the Creator."²⁷ From this it follows that the economic prosperity of a nation is not so much its total assets in terms of wealth and property, as the equitable division and distribution of this wealth.

This it is which guarantees the personal development of the members of society, which is the true goal of a nation's economy.

Sharing Ownership

75. We must notice in this connection the system of self-financing adopted in many countries by large, or comparatively large firms. Because these companies are financing replacement and plant expansion out of their own profits, they grow at a very rapid rate. In such cases We believe that the workers should be allocated shares in the firms for which they work, especially when they are paid no more than a minimum wage.

76. We should recall here the principle enunciated by Pius XI in Quadragesimo Anno: "It is entirely false to ascribe to the property alone or to the work alone whatever has been obtained through the combined effort of both, and it is wholly unjust for either, denying the efficacy of the other, to arrogate to itself whatever has been produced."²⁸

77. Experience suggests many ways in which the demands of justice can be satisfied. Not to mention other ways, it is especially desirable today that workers gradually come to share in the ownership of their company, by ways and in the manner that seem most suitable. For today, even more than in the time of Our Predecessor, "every effort must be made that at least in future a just share only of the fruits of production be permitted to accumulate in the hands of the wealthy, and that an ample sufficiency be supplied to the workers."²⁹

The Demands of the Common Good

78. But a further point needs emphasizing: Any adjustment between wages and profits must take into account the demands of the common good of the particular country and of the whole human family.

79. What are these demands? On the national level they include: employment of the greatest possible number of workers; care lest privileged classes arise, even among the workers; maintenance of equilibrium between wages and prices; the need to make goods and services accessible to the greatest number; elimination, or at least the restriction, of inequalities in the various branches of the economy-that is, between agriculture, industry and services; creation of a proper balance between economic expansion and the development of social services, especially through the activity of public authorities; the best possible adjustment of the means of production to the progress of science and technology; seeing to it that the benefits which make possible a more human way of life will be available not merely to the present generation but to the coming generations as well.

80. The demands of the common good on the international level include: the avoidance of all forms of unfair competition between the economies of different countries; the fostering of mutual collaboration and good will; and effective co-operation in the development of economically less advanced communities.

81. These demands of the common good, both on a national and a world level, must also be borne in mind when assessing the rate of return due as compensation to the company's management, and as interest or dividends to investors.

The Structure of Industry

82. Justice is to be observed not only in the distribution of wealth, but also in regard to the conditions in which men are engaged in producing this wealth. Every man has, of his very nature, a need to express himself in his work and thereby to perfect his own being.

83. Consequently, if the whole structure and organization of an economic system is such as to compromise human dignity, to lessen a man's sense of responsibility or rob him of opportunity for exercising personal initiative, then such a system, We maintain, is altogether unjust-no matter how much wealth it produces, or how justly and equitably such wealth is distributed.

Pius XII's Directive

84. It is not possible to give a concise definition of the kind of economic structure which is most consonant with man's dignity and best calculated to develop in him a sense of responsibility. Pius XII, however, comes to our rescue with the following directive: "The small and average sized undertakings in agriculture, in the arts and crafts, in commerce and industry, should be safeguarded and fostered. Moreover, they should join together in co-operative associations to gain for themselves the benefits and advantages that usually can be gained only from large organizations. In the large concerns themselves there should be the possibility of moderating the contract of work by one of partnership."³⁰

Artisans and Co-operative Enterprises

85. Hence the craftsman's business and that of the family farm, as well as the co-operative enterprise which aims at the completion and perfection of both these concerns-all these are to be safeguarded and encouraged in harmony with the common good and technical progress.

86. We shall return shortly to the question of the family farm. Here We consider it appropriate to say something about artisan and co-operative enterprises.

87. First of all it is necessary to emphasize that if these two kinds of undertaking are to thrive and prosper they must be prepared constantly to adjust their productive equipment and their productive methods to meet new situations created by the advance of science and technology and the changing demands and preferences of the consumer. This adaptation must be effected principally by the workers themselves and the members of the co-operatives.

88. Both these groups, therefore, need a thoroughgoing technical and general education, and should have their own professional organizations. It is equally important that the government take the proper steps regarding their training, taxation, credit, social security and insurance.

89. Furthermore, these two categories of citizens-craftsmen and members of cooperatives-are fully entitled to these watchful measures of the State, for they are upholding true human values and contributing to the advance of civilization.

90. We therefore paternally invite Our beloved sons-craftsmen and members of cooperatives throughout the world-to realize the greatness of this task which is theirs in the State. By the force of their example they are helping to keep alive in their own community a true sense of responsibility, a spirit of co-operation, and the constant desire to create new and original work of outstanding merit.

The Participation of Workers in Specific Enterprises

91. We, no less than Our predecessors, are convinced that employees are justified in wishing to participate in the activity of the industrial concern for which they work. It is not, of course, possible to lay down hard and fast rules regarding the manner of such participation, for this must depend upon prevailing conditions, which vary from firm to firm and are frequently subject to rapid and substantial alteration. But We have no doubt as to the need for giving workers an active part in the business of the company for which they work-be it a private or a public one. Every effort must be made to ensure that the enterprise is indeed a true human community, concerned about the needs, the activities and the standing of each of its members.

92. This demands that the relations between management and employees reflect understanding, appreciation and good will on both sides. It demands, too, that all parties co-operate actively and loyally in the common enterprise, not so much for what they can get out of it for themselves, but as discharging a duty and rendering a service to their fellow men.

Balancing Unity of Direction With Role of Individuals

All this implies that the workers have their say in, and make their own contribution to, the efficient running and development of the enterprise. As Pius XII remarked, "the economic and social function which every man aspires to fulfil, demands that the carrying on of the activity of each one is not completely subjected to the others."³¹

Obviously, any firm which is concerned for the human dignity of its workers must also maintain a necessary and efficient unity of direction. But it must not treat those employees who spend their days in service with the firm as though they were mere cogs in the machinery, denying them any opportunity of expressing their wishes or bringing their experience to bear on the work in hand, and keeping them entirely passive in regard to decisions that regulate their activity.

93. We would observe, finally, that the present demand for workers to have a greater say in the conduct of the firm accords not only with man's nature, but also with recent progress in the economic, social and political spheres.

94. For although many unjust and inhuman economic and social imbalances still exist in our day, and there are still many errors affecting the activity, aims, structure and operation of economies the world over, it is an undeniable fact that, thanks to the driving impulse of scientific and technical advance, productive systems are today rapidly becoming more modernized and efficient-more so than ever before. Hence a greater technical skill is required of the workers, and more exacting professional qualifications. Which means that they must be given more assistance, and more free time in which to complete their vocational training as well as to carry out more fittingly their cultural, moral and religious education.

95. As a further consequence, the modern youth is enabled to devote a longer time to his basic schooling in the arts and sciences.

96. All this serves to create an environment in which workers are encouraged to assume greater responsibility in their own sphere of employment. In politics, too, it is of no small consequence that citizens are becoming daily more aware of their responsibility for furthering the common good in all spheres of life.

The Participation of Workers in the Economy as a Whole

97. In modern times we have seen an extensive increase in the number of workers' associations, and their general recognition in the juridical codes of single States and on the international level. Members are no longer recruited in order to agitate, but rather to co-operate, principally by the method of collective bargaining. But it is worthwhile stressing here how timely and imperative it is that workers be given the opportunity to exert their influence throughout the State, and not just within the limits of their own spheres of employment.

The More Important Decisions

98. The reason for this is that the individual productive concerns, regardless of their size, efficiency and importance in the State, form but a part-an integral part-of a nation's entire economic and social life, upon which their own prosperity must depend.

99. Hence it is not the decisions made within the individual productive units which have the greatest bearing on the economy, but those made by public authorities and by institutions which tackle the various economic problems on a national or international basis. It is therefore very appropriate, or even necessary, that these public authorities and institutions bring the workers into their discussions, and those who represent the rights, demands and aspirations of the workingmen; and not confine their deliberations to those who merely represent the interests of management.

Praise and Appreciation

100. It is Our prerogative to be a Father, and there is a special place in Our thoughts and in Our heart for those professional groups and Christian associations of workers which exist and operate in so many parts of the world. We know the nature and extent of the difficulties under which these dearest sons of Ours are laboring, as they strive continually and effectually to promote in their own countries and throughout the world the material and moral interests of the working people.

101. They are fully deserving of Our praise. The importance of their work must be gauged not merely by its immediate and obvious results, but also by its effect on the working world as a whole, where it helps to spread sound principles of action and the wholesome influence of the Christian religion .

102. We wish further to praise those dear sons of Ours who in a true Christian spirit collaborate with other professional groups and workers' associations which respect the natural law and the freedom of conscience of their members.

103. We must also express here Our heartfelt appreciation of the work that is being done by the International Labor Organization-popularly known in various countries as the O.I.L. or I.L.O. Or O.I.T. For many years now it has been making an effective and valued contribution to the establishment in the world of an economics and social order marked by justice and humanity, an order which recognizes and safeguards the lawful rights of the workingman.

Private Property

104. It is well-known that in recent years in the larger industrial concerns distinction has been growing between the ownership of productive goods and the responsibility of company managers. This has created considerable probems for public authorities, whose duty it is to see that the aims pursued by the leaders of the principal organizations-especially those which have an important part to play in the national economy-do not conflict in any way with the interests of the common good. Experience shows that these problems arise whether the capital which makes possible these vast undertakings belongs to private citizens or to public corporations.

105. It is also true that more and more people today, through belonging to insurance groups and systems of social security, find that they can face the future with confidence-the sort of confidence which formerly resulted from their possession of a certain amount of property.

An Advanced View of Work

106. And another thing happening today is that people are aiming at proficiency in their trade or profession rather than the acquisition of private property. They think more highly of an income which derives from capital and the rights of capital.

107. And this is as it should be. Work, which is the immediate expression of a human personality, must always be rated higher than the possession of external goods which of their very nature are merely instrumental. This view of work is certainly an indication of an advance that has been made in our civilization.

Confirmation of the Right of Ownership

108. What, then, of that social and economic principle so vigorously asserted and defended by Our predecessors: man's natural right to own private property, including productive goods? Is this no longer operative today, or has it lost some of its validity in view of the economic conditions We have described above? This is the doubt that has arisen in many minds.

109. There is no reason for such a doubt to persist. The right of private ownership of goods, including productive goods, has permanent validity. It is part of the natural order, which teaches that the individual is prior to society and society must be ordered to the good of the individual.

Moreover, it would be quite useless to insist on free and personal initiative in the economic field, while at the same time withdrawing man's right to dispose freely of the means indispensable to the achievement of such initiative.

Further, history and experience testify that in those political regimes which do not recognize the rights of private ownership of goods, productive included, the exercise of freedom in almost every other direction is suppressed or stifled. This suggests, surely, that the exercise of freedom finds its guarantee and incentive in the right of ownership.

110. This explains why social and political movements for the harmonizing of justice and freedom in society, though until recently opposed to the private ownership of productive goods, are today reconsidering their position in the light of a clearer understanding of social history, and are in fact now declaring themselves in favor of this right.

Guarantee for Both Individual and Society

111. Accordingly, We make Our own the directive of Our Predecessor Pius XII: "In defending the principle of private ownership the Church is striving after an important ethico-social end. She does not intend merely to uphold the present condition of things as if it were an expression of the divine Will, or to protect on principle the rich and plutocrats against the poor and indigent. . . The Church aims rather at securing that the institution of private property be such as it should be according to the plan of the divine Wisdom and the dispositions of Nature."³² Hence private ownership must be considered as a guarantee of the essential freedom of the individual, and at the same time an indispensable element in a true social order.

Wages and Property

112. Moreover, in recent years, as we have seen, the productive efficiency of many national economies has been increasing rapidly. Justice and fairness demand, therefore, that, within the limits of the common good, wages too shall increase. This means that workers are able to save more and thus acquire a certain amount of property of their own. In view of this it is strange that the innate character of a right which derives its force and validity from the fruitfulness of work should ever be called in question-a right which constitutes so efficacious a means of asserting one's personality and exercising responsibility in every field, and an element of solidity and security for family life and of greater peace and prosperity in the State.

The Effective Distribution of Property

113. But it is not enough to assert that the right to own private property and the means of production is inherent in human nature. We must also insist on the extension of this right in practice to all classes of citizens.

114. As Our Predecessor Pius XII so rightly affirmed: The dignity of the human person "normally demands the right to the use of the goods of the earth, to which corresponds the fundamental obligation of granting an opportunity to possess property to all if possible."³³ This demand arises from the moral dignity of work. It also guarantees "the conservation and perfection of a social order which makes possible a secure, even if modest, property to all classes of people."³⁴

115. Now, if ever, is the time to insist on a more widespread distribution of property, in view of the rapid economic development of an increasing number of States. It will not be difficult for the body politic, by the adoption of various techniques of proved efficiency, to pursue an economic and social policy which facilitates the widest possible distribution of private property in terms of durable consumer goods, houses, land, tools and equipment (in the case of craftsmen and owners of family farms), and shares in medium and large business concerns. This policy is in fact being pursued with considerable success by several of the socially and economically advanced nations.

Public Ownership

116. This, of course, is not to deny the lawfulness of State and public ownership of productive goods, especially those which "carry with them a power too great to be left to private individuals without injury to the community at large."³⁵

Principle of Subsidiarity

117. State and public ownership of property is very much on the increase today. This is explained by the exigencies of the common good, which demand that public authority broaden its sphere of activity. But here, too, the "principle of subsidiary function" must be observed. The State and other agencies of public law must not extend their ownership beyond what is clearly required by considerations of the common good properly understood, and even then there must be safeguards. Otherwise private ownership could be reduced beyond measure, or, even worse, completely destroyed.

Precautions

118. It is important, too, not to overlook the fact that the economic enterprises of the State and other agencies of public law must be entrusted to men of good reputation who have the necessary experience and ability and a keen sense of responsibility towards their country. Furthermore, a strict check should constantly be kept upon their activity, so as to avoid any possibility of the concentration of undue economic power in the hands of a few State officials, to the detriment of the best interests of the community.

The Social Function of Property

119. Our predecessors have insisted time and again on the social function inherent in the right of private ownership, for it cannot be denied that in the plan of the Creator all of this world's goods are primarily intended for the worthy support of the entire human race.

Hence, as Leo XIII so wisely taught in Rerum Novarum: "whoever has received from the divine bounty a large share of temporal blessings, whether they be external and corporeal, or gifts of the mind, has received them for the purpose of using them for the perfecting of his own nature, and, at the same time, that he may employ them, as the steward of God's Providence, for the benefit of others. 'He that hath a talent,' says St. Gregory the Great, 'let him see that he hide it not; he that hath abundance, let him quicken himself to mercy and generosity; he that hath art and skill, let him do his best to share the use and the utility thereof with his neighbor'."³⁶

Always Vast Field For Personal Charity

120. In recent years the State and other agencies of public law have extended, and are continuing to extend, the sphere of their activity and initiative. But this does not mean that the doctrine of the social function of private ownership is out of date, as some would maintain. It is inherent in the very right of private ownership.

Then, too, a further consideration arises. Tragic situations and urgent problems of an intimate and personal nature are continually arising which the State with all its machinery is unable to remedy or assist. There will always remain, therefore, a vast field for the exercise of human sympathy and the Christian charity of individuals. We would observe, finally, that the efforts of individuals, or of groups of private citizens, are definitely more effective in promoting spiritual values than is the activity of public authority.

The Real Treasure

121. We should notice at this point that the right of private ownership is clearly sanctioned by the Gospel. Yet at the same time, the divine Master frequently extends to the rich the insistent invitation to convert their material goods into spiritual ones by conferring them on the poor. "Lay not up to yourselves treasures on earth; where the rust and moth consume and where thieves break through and steal. But lay up to yourselves treasures in heaven; where neither the rust nor moth doth consume, and where thieves do not break through nor steal."³⁷ And the Lord will look upon the charity given to the poor as given to Himself. "Amen, I say to you, as long as you did it to one of these my least brethren, you did it to me."³⁸