With the goal of providing a moral compass, theologians and leaders of the Catholic Church have often written about economic principles. Some such principles can even be drawn from Christ’s own parables. Here, though, I will focus on writings of the three most recent popes: John Paul II, Benedict XVI, and Francis. It is a safe bet that Pope Leo XIV will continue with similar messages, incorporating the teachings of his immediate predecessors.
To put these writings in context, it is necessary to start with the framework provided by Church documents, especially the Pastoral Constitution on the Church in the Modern World Gaudium et spes, which is a cornerstone of Vatican II’s social teaching. In its 76th paragraph, the constitution clarifies that Church teachings should not be taken as political documents: “It is very important, especially in pluralistic societies, that there be a correct notion of the relationship between the political community and the Church. It is clear that the political community and the Church are autonomous and independent of each other in their own fields. Yet both, under different titles, are devoted to the personal and social vocation of the same human beings. The more both foster sound cooperation between themselves, with the more circumspect safeguarding of freedom proper to each, the more effective will their service be exercised for the good of all.”
Gaudium et spes speaks also of the autonomy of science, and this includes economics. Autonomy of science, and especially of social science, does not mean independence. While the natural order and the spiritual order do not have all the same principles, the two orders are by no means completely separate. It is essential to start with a correct understanding of the human person and his relationships.
When it comes to political systems, few paragraphs have been quoted more on this than paragraph 42 of John Paul II’s landmark encyclical Centesimus annus: “Returning now to the initial question: 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 and society? Is this the model which ought to be proposed to the countries of the Third World which are searching for the path to true economic and civil progress? The answer is obviously complex. If by ‘capitalism’ is meant an economic system which recognizes the fundamental and positive role of business, 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, even though it would perhaps be more appropriate to speak of a “business economy”, “market economy” or simply “free economy”. But if by “capitalism” is meant a system in which freedom in the economic sector is not circumscribed within 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 reply is certainly negative.”
Cardinal Joseph Ratzinger, before becoming Pope Benedict XVI, stressed that a free society can only subsist where people share basic moral convictions and high moral standards. He emphasized this at his induction into the Academy of Moral and Political Sciences of the Institute of France, adding that such convictions need not be “imposed or even arbitrarily defined by external coercion.” In his lecture he noted, “[Tocqueville’s] Democracy in America has always made a strong impression on me.” He added that to make possible “an order of liberties in freedom lived in community, the great political thinker [Tocqueville] saw as an essential condition the fact that a basic moral conviction was alive in America, one which, nourished by Protestant Christianity, supplied the foundations for institutions and democratic mechanisms.”
Pope Benedict XVI argued that freedom, coupled with consciousness and love, comprise the essence of being. “The person, the unique and unrepeatable, is at the same time the ultimate and highest thing. In such a view of the world, the person is not just an individual; a reproduction arising from the diffusion of the idea into matter, but rather, precisely, a ‘person.'”
In his encyclical Caritas in veritate, Pope Benedict affirmed the necessity of a strong charitable sector that would help foster community and mutual respect. His teachings challenged the world to see economic activity not merely as a means of wealth generation but as an integral part of human development. Inspired by this encyclical, the Pontifical Council for Justice and Peace (PCJP, since renamed the Dicastery for Promoting Integral Human Development) published a document titled “The Vocation of the Business Leader” as a kind of vade-mecum for business men and women. It reads like a handbook to be utilized by professors in formative moments and for instruction in schools and universities. The document is now in its fifth edition and includes a guide for the examination of conscience, a discernment list, with insightful questions such as: “Am I creating wealth, or am I engaging in rent-seeking behavior?” And: “Do I truly accept the competitive market economy or am I engaging in anti-competitive practices?”
Having spent most of his life in Argentina, Pope Francis witnessed the decay of his once prosperous society. As a young priest he lived through the horror and drama of an internal war between left-wing subversive groups and the overt and covert repression by military and paramilitary organizations. He lived through periods of hyperinflation. While Francis was bishop of Buenos Aires, three large multinational companies – IBM, Siemens and Skanska – were convicted for bribery. Francis thus did not have an optimistic view of the market economy. For instance, in his post-synodal apostolic exhortation Evangelii gaudium he denounced the “idolatry of money” and called for an economy that places people, especially the poor, at its center. In his encyclical Laudato si’ he links economic justice with environmental sustainability, framing both as interconnected aspects of care for creation. As I wrote in previous articles for Forbes.com, I had hopes that Pope Francis would incorporate into his teachings the economic contributions of noted Jesuits, especially the writings of Matteo Liberatore (1810-1892) and Oswald Von Nell-Breuning (1890-1991), who helped refine social doctrine on private property, but that was not the case.
Leo XIV and Peruvian Economic Success
Previous popes’ respective native countries and academic cultures influence their teachings and behavior. John Paul II spent many decades under communism, Benedict XVI lived in Germany and in Rome studying and surrounded by scholars, and Pope Francis, as I wrote above, lived during difficult periods of Argentine decay. Pope Leo XIV spent over two decades in Peru, from 1985 to 1998 and later as bishop of Chiclayo from 2014 to 2023. When he arrived, society was under attack by several left-wing terrorist organizations, notably the Shining Path and the Tupac Amaru movement.
At the time, analysts in Washington were predicting the disintegration of Peru as a nation. But after the terrorists were defeated under the presidency of Alberto Fujimori, Peru changed economic course and achieved some of the fastest rates of economic growth in the Americas. This big jump in economic freedom took place during the end of the last century. During the first decades of our century, Peru maintained a moderately free economy, as measured by the Heritage Foundation’s Index of Economic Freedom. Peru also showed a similar improvement in the economic freedom index of the Fraser Institute, it went from a score of 6 out of 10, to 7.42 in 2022, from #70 in the world to #43. Both Heritage and Fraser rank Peru in the top third of the world. The country would have scored higher in economic freedom if not for its very low scores in rule of law and government integrity. Peru’s relative stability in economic policy, though, contrasts with the political scene. Most Peruvian presidents during Pope Leo’s stay in Peru were indicted, impeached, or deposed, and one of them, Alan García, who served two terms, rather than facing jail, committed suicide.
When explaining why he chose his name, Leo XIV stated that he is following Leo XIII’s commitment to social issues and workers’ rights during the industrial revolution. Leo XIII’s 1891 encyclical Rerum novarum (“On New Realities”) addressed the era’s rapidly changing economic scene and the resulting impact on workers. Private property was an essential aspect of his views on social justice. Leo XIV, in explaining his choice of name, spoke about the new challenges of our century that parallel those confronted by Leo XIII, especially the rise of artificial intelligence, which is already affecting the workforce.
I, for one, expect that Leo XIV’s economic teachings will parallel those of John Paul II and Pope Benedict XVI, as well as some, but not all, of Pope Francis’s views on economics. I also expect that Leo XIV’s views will be influenced by the decades he lived in Peru. During that period, the Peruvian economy began a remarkable run.
A key component of Peruvian economic success was the control of inflation, which in the late 1980s had soared past 7000%. Peru began to implement rigorous monetary policies in the 1990s. By the 2000s and 2010s, inflation rates were maintained in the low single digits, fostering price stability and growing investor confidence.
Fiscal discipline helped the monetary authorities. Successive governments, despite being plagued by scandals and having different ideologies, pursued prudent fiscal policies. This led to low fiscal deficits and manageable public debt levels, ensuring that Peru avoided the financial pitfalls that plagued many of its neighbors.
Between the early 2000s and 2019, Peru saw an average annual GDP growth rate of 5–6 %, one of the fastest-growing economies in the region during that period. These solid economic fundamentals allowed the country to weather the 2008 financial crisis and the 2014 commodity price shock better than other countries. Economic growth also led to a huge decline in poverty rates, which fell from over 55% in 2001 to approximately 20% by 2019. I have traveled to Peru fairly often, and one can see the impact of sustained economic development, which particularly in urban areas has contributed to a growing middle class.
Freer trade also played a major role in Peru’s economic growth. The country signed free trade agreements with the U.S., China, and the EU, which opened doors for trade diversification. Mining exports have been key to Peru’s success in reducing poverty. Private sector investment in mining positioned Peru among the world’s top exporters of copper, gold, and silver, and the country also has abundant rare earth deposits. All this has made Peru a leading destination for foreign direct investment (FDI) in Latin America.
In addition to the issue of corruption that affects Peru and most developing countries, the Pope likely has a special understanding of the problem of the extra-legal economy, the large informal sector which limits access to social protection. The in-depth studies appearing in Hernando de Soto’s pathbreaking book The Other Path, written in collaboration with Enrique Ghersi and Mario Ghibellini, explained in detail the causes of this informality: a myriad of regulations and the high cost of property titling. Despite the many gains made, this problem still affects two thirds of Peru’s economy.
Before being called to the Vatican, the future Leo XIV was bishop of Chiclayo, which performed even better than most other regions of Peru. The new pope’s experience of the issues that have affected Peru over the last few decades will hopefully shed new light on the papal economics of this century.
