I am a capitalist. As a graduate of the Wharton School of the University of Pennsylvania who studied finance, accounting and economics (and worked in corporate finance before entering the Jesuits), I believe that capitalism is the economic system that most efficiently distributes goods and services. Adam Smith’s image of the “invisible hand,” in which self-interest and the desire to make money naturally drive people to respond to market forces in a more efficient way than in any other system, has always made sense to me. And the market (or economy) does best when left alone, not managed by the state. This notion, sometimes called “free-market capitalism,” “laissez-faire capitalism” or “neo-liberalism,” has always rung true.



But, as a quick glance around our world will confirm, capitalism is not perfect. Countless people languish in poverty even in free-market economies. Even the “freest” market is characterized by what one of my economics professors called the “transitional poor,” that is, those who are poor temporarily, until the market can raise all the boats. Moreover, the system is unfairly weighted toward the wealthy, who can secure loopholes and special treatment. 

Pope Leo XIV’s superb new encyclical, “Magnifica Humanitas,” is the most cogent Catholic critique of capitalism that I have ever read. Pope Leo does this in sure, deft and lucid strokes. (And it’s clear that an English-speaker wrote this encyclical and that it was not simply translated into English. It’s beautifully written.)

How does he approach this critique, and what does he say?

First, the Holy Father centers our attention not on profits, or even progress, but on something far more valuable: human dignity. At Wharton, we were taught that corporations have one goal and one goal only: to maximize profits and to provide the maximum possible income for their shareholders, that is, for the owners. Everything else, we were taught, is beside the point; besides, anything else that you would want from a company (say, better health care benefits for employees) would be achieved most efficiently by making more money.

But Pope Leo reminds us that a focus on profits alone means that the human being is sometimes seen as expendable: People are casually laid off, some lose the ability to support their families, and often whole communities are affected by layoffs and closures. An economic system that looks upon these results as simply inevitable needs to be critiqued. “The positive potential of the market and private initiative [makes sense] only if they remain subordinate to the moral law and guided by the principle of solidarity, without sacrificing the most vulnerable to the rationale of profit” (No. 39).

Speaking of “solidarity,” Pope Leo’s new encyclical offers a master class in Catholic social teaching and reminds us that these tenets must guide all economic decisions, including decisions about the backdrop of this new teaching: artificial intelligence. It is notable that “Magnifica Humanitas” was signed on the 135th anniversary of “Rerum Novarum,” Pope Leo XIII’s great encyclical that started the modern tradition of Catholic social teaching. Leo XIV’s lucid summary of Catholic social teaching helps us to see different “rationales” by which economic decisions should be made.

Among them are: the dignity of the person, which comes from God; the common good, where goals are not simply individualistic but communal; the universal destination of goods, where the resources of the earth are meant for everybody, not just a few; subsidiarity, where decisions are made closest to those who are affected by them; and social justice, which reminds us that social structures need to be evaluated for sinful patterns (“structures of sin”) and that we must always take the preferential option for the poor. 

Again, these principles, not simply the desire for profits, need to guide our economic decision-making. For example, decisions about A.I. must be taken while bearing in mind  the common good. “Magnifica Humanitas”  refers to Pope Benedict XVI’s encyclical, “Caritas in Veritate,” and says, “[E]conomic activity cannot claim to solve social problems simply through the expansion of a commercial mentality, but must be ordered toward the common good, for which the political community bears its own irreplaceable responsibility” (No. 40).

Further, Pope Leo says, the traditional concept of the “universal destination of goods,” in which resources are meant for the benefit and use of all, supersedes rights to private property. This is an idea that will probably challenge free-market enthusiasts, who would be more likely to say, “To the victor belong the spoils.” But, as Pope Leo reminds us, “the Christian tradition has never recognized the right to private property as absolute or inviolable” (No. 66). The common good always takes precedent.

Here, the church presents another challenge to the capitalist model: Among those “universal goods” are “new forms of property, such as patents, algorithms, digital platforms, technological infrastructure and data.” In an era where access to such things as patents for drugs may mean life and death, the good of the human person, indeed all human persons, must take precedence over the deification of private rights.

Finally, Pope Leo effectively critiques any systems  that would reduce human beings to cogs, machines or even algorithms. Interestingly, his encyclical connects the dangerous idea that human beings are merely workers with the strange goals of “transhumanism” and “posthumanism,” through which some believe we can “perfect” the human being or transcend physical limitations, illness and even suffering itself.

But Pope Leo reminds us that not only should the human being not be seen as a cog in a soulless economy but also that we cannot be measured by the values of economic production. Human beings are “worth” far more than that. “The value of persons,” he writes bluntly, “does not depend on what they achieve or produce” (No. 51). 

Moreover, our worth does not diminish if we diminish physically. This is the great mistake of “transhumanism” and “posthumanism.” “Finitude, when truly accepted, does not diminish us but opens us to recognizing the face of God and others,” Leo writes. “Indeed, precisely because we experience limits—vulnerability, suffering and failure—we can recognize the inviolable dignity of every person, both our own and that of others” (No. 122).

Overall, “Magnifica Humanitas,” along with the entire body of Catholic social teaching, reminds us that the market, for all its power, does not save. Only God does. And God asks us to look not simply at profits but more importantly, at the infinite dignity of the human person.