The Catholic Ethic and the Spirit of Capitalism.

• Author: McGee, Robert W.

This latest Michael Novak book provides a much richer and humane vision of capitalism than the one Max Weber described in The Protestant Ethic and the Spirit of Capitalism. Indeed, Novak is quick to point out that one need not be Catholic, Protestant or even religious to embody the spirit of capitalism, as is evidenced by the Jews and Japanese.

A major tenet of capitalism is individualism, a philosophy that permeates both the old and new testaments. In both Jewish and Christian tradition, people are instructed to act for themselves rather than look to the state for assistance or support. This individualistic approach encourages the natural creativity that is within all persons. "Capitalism has its origin in the human capacity for invention and innovation--the human capacity to create." The long-term effect of the unleashing of this natural creativity is economic growth and prosperity. As Novak points out, capitalism is the only economic system that has ever delivered the goods. All other economic systems have failed to unleash the human creativity that leads to economic growth.

Novak offers a vision of how the Catholic ethic undergirds, corrects and enlarges the spirit of capitalism. He begins Part One of this three-part book by critiquing Fanfani's thesis that capitalism is incompatible with Catholicism and points out that Fanfani's thesis is based on an incomplete and distorted understanding of capitalism. One major weakness in Fanfani's view of capitalism, as Novak points out, is the fact that so many capitalists proceed on grounds other than those outlined by Fanfani. In short, Novak points out that Fanfani's view of capitalism is far removed from reality. When Fanfani and others disparage capitalism, they are disparaging a caricature, not the real thing.

Novak then proceeds to discuss Pope Leo XIII's 1891 encyclical, Rerum Novarum, which pointed out the futility of socialism long before the events of 1989 in eastern Europe. This encyclical listed at least ten reasons why socialism was doomed to fail--it is against natural justice, against nature, against liberty and against common sense, it violates the right to private property, dampens personal initiatives and fails to recognize natural inequality. Leo XIII rejected Marx's idea of class conflict, exploitation, the labor theory of value and the theory of surplus labor and recognized that labor and capital need each other. But this encyclical also criticized many of the customs...