This is an article I published in the Fall 2002 issue of "Markets and Morality", which you can find on the Acton Institute's website (click here to view it). I am posting it here in its entirety, except for the footnotes, which can be found in the original article linked above.
Theologian John Courtney Murray was the primary motivator behind the Vatican II document, The Declaration on Religious Liberty. Murray and that document held that man had an inherent dignity that does not allow coercion in religious belief by public or private groups or institutions. Only religious actions detrimental to public order were to be subject to State regulation. Despite his insistence on human dignity and freedom in religious matters, Murray seems to accept the pre-Centesimus Annus Catholic view that the free economy, while a good thing in essence, is a dangerous entity requiring heavy governmental supervision. Various authors, some with approval, some with dismay, use this view to prove that Murray, and the older Catholic view as well, are Socialist. This paper argues that Murray, who admitted that he was not an economist and who used the views of another noneconomist, Adolph Berle, as his starting point, is inconsistent with his own views. This means that if Murray followed his own teaching on religious liberty, and if he was instructed in the discipline of economics in order to correct badly understood concepts, he would have accepted the free market without the qualifications he added.
Introduction: Catholicism and Socialism
In his book Socialism, originally published in 1922, Ludwig von Mises discusses the prevailing attitude of the major religions of Europe toward the free market and pays special attention to Catholicism. The main question seems to be whether either Christianity or private property should reach a point in its evolution that renders the compatibility of the two impossible supposing that it had ever existed. He finds a dichotomy between the way that the Scriptures and the early church approached political and economic systems and the later writers and practitioners of the Faith. Jesus himself, while not hesitating to criticize the current state of affairs, especially the hypocrisy of the ruling elites, abstains from suggesting any alternative political or economic system. This prescinding from political and economic systemic recommendations held through the early centuries of Christianity. Even the communism of chapter 4 of the Acts of the Apostles, Mises points out, is a communism only of consumer goods, not of production or ownership of the means of production, much less an ideological principle. This was true of the exhortation of Saint John Chrysostom (d. 407) to restore a type of Christian communism. Mises points out that even monastic communism is still that same type of consumer communism; after all, the religious orders owned the land and the monastery in the same way that the nobles of the Middle Ages owned their land and that the religious orders employed peasants on that land as did the nobles.
What, then, accounts, according to Mises, for the sudden (in the late 1800s) interest of the Church in private property? His explanation centers around the situation in which the Church found itself in the dynamic world of the sixteenth century: The roots of Christian socialism are found neither in the primitive nor in the medieval Church. It was the Christianity that emerged revitalized from the tremendous struggles of faith in the sixteenth century that first adopted it, though only gradually and in the face of strong opposition. The struggle for orthodoxy with Protestantism, as well as the struggle with the reborn classical forms in art, literature, and philosophy, of which some churchmen were in the forefront, caused the Church to fall back and regroup, so to speak. From the Catholic counterreformation onward, according to Mises, the Church has been fighting not merely to reassert the time-honored doctrinal and spiritual teachings of Christianity but to recoup its position of world dominance lost since the waning of the Middle Ages:
Now the Church condemns socialism only in its atheistic forms but suggests its own version: That the Church, generally speaking, takes up a negative attitude to Socialist ideas does not disprove the truth of these arguments. It opposes any socialism, which is to be effected on any other basis than its own. It is against socialism as conceived by atheists, for this would strike at its very roots; but it has no hesitation in approaching Socialist ideals, provided this menace is resumed.
While a full discussion of Mises's analysis is the subject of another paper, it does lead into the topic of this paper. Many religious thinkers in this century, both Catholic and Protestant, have endeavored to show the compatibility of Christianity with capitalism. Edmund Opitz's Religion and Capitalism: Allies Not Enemies, Michael Novak's The Spirit of Democratic Capitalism, Marvin Olasky's The Tragedy of American Compassion, and Ronald Nash's Poverty and Wealth: The Christian Debate Over Capitalism, and interfaith work such as the Acton Institute for the Study of Religion and Liberty, have provoked new discussions in this area.
Even the Vatican itself has shown some movement in this direction. A (by now) famous section of Pope John Paul II's encyclical, Centesimus Annus, speaks approvingly of a capitalism that means a system which recognizes the positive role of business, the market, private property and the resulting responsibility for the means of production, as well as the free human creativity in the economic sector. The same document recognized the legitimate role of profit, a focus on the person, and a recognition of the legitimate authority of the democratic order.
Nevertheless, a statist trend in Catholic thought about economics remains. German Archbishop Emmanuel von Ketteler, who was greatly influenced by the writings of Socialist Ferdinand Lasalle,19 and who is said to have influenced Leo XIII, is still held in veneration in conservative Catholic circles. The American Bishops' recent pastoral on Catholic Social Teaching and the United States Economy echoes familiar Catholic themes critical of a fuller version of a free market. Mises, at the time of the writing of Socialism, saw little hope of a reconciliation of Christianity and socialism:
If the Roman Church is to find any way out of the crisis into which nationalism has brought it, then it must be thoroughly transformed. It may be that this transformation and reformation will lead to its unconditional acceptance of the indispensability of private ownership in the means of production. At present it is still far from this, as witness the recent encyclical Quadragesimo Anno.
Recent Developments in Catholic Teaching
That this transformation might be under way is possible. Since the 1960s, there have been many changes in the Church; for example, liturgy, sacred music, the role of lay people, and an emphasis on evangelization, just to mention a few. The Second Vatican Council (1962-1965), became the focal point and, in many ways, the initiator, of many of these developments.
Immediately prior to the opening of the Council, there was much excitement among Catholics and non-Catholics as to what Pope John XXIII's ultimate goals behind his stated purpose in calling the Council were, but arguably, the Council went far beyond this modest intention. It took what could be called a proactive approach to spreading the Faith. It emphasized that all the faithful and not just the clergy, by virtue of their baptismal character, which conferred on them a sharing in the priesthood of Christ, had the responsibility of spreading the Faith. In addition, the Church, laity and clergy alike, were to pay more attention to the plight of the unfortunate of this world, and to take an active part in solving social problems. But, at least for our purposes, the most significant document that came out of Vatican II, and the most controversial, was Dignitatis Humani, the Declaration on Religious Freedom. While not prescinding from the Church teaching that the fullness of truth is in the Catholic faith, this decree states the following:
This Vatican Council declares that the human person has a right to religious freedom. This freedom means that all men are to be immune from coercion on the part of individuals or social groups and of any human power, in such wise that no one is to be forced to act in a manner contrary to his own beliefs, whether privately or publicly, whether alone or in association with others, within due limits. The right to religious freedom has its foundation in the very dignity of the human person as this dignity is known through the revealed word of God and by reason itself. This right of the human person to religious freedom is to be recognized in the constitutional law whereby society is governed and thus, it is to become a civil right.
In practical terms, this decree meant that the days of official State religion were over if, by "official State religion" was meant the prohibition of the public or private practice of other faiths, or even, one would suppose, the supporting of any religion by taxing those who do not adhere to its tenets.
John Courtney Murray
The man whose thought was the catalyst behind this reorientation of Church teaching was John Courtney Murray of the Society of Jesus. Born in 1903, Murray received bachelor's and master's degrees at Boston College. After joining the Jesuit order, he received the Licentiate in Sacred Theology from the Jesuit theologiate at Woodstock College and attended the Gregorian University in Rome, where he received his Doctorate in Sacred Theology in 1943.
One main thrust of Murray's writings is the need of believers to unite to defeat the onslaught of atheism that he saw coming to the United States from the continent, where he witnessed it while studying there. He believed that Nazism and Fascism were not merely the accession to power by force and cunning of a small minority of totalitarian ideologues. Successful totalitarianism was made possible by the wholesale European abandonment of Christianity. This naturally led him to concentrate on questions or problems that applied to everyone as human beings, not just Catholics. While many of his writings are on theology or ecclesiology, and despite the fact that he was a professor of dogmatic theology, much of his scholarship is in the area of political philosophy, and, following that, the nature of man and the nature of man's freedom. What this meant was purely and simply natural law. Natural law, the impress of the divine reason upon all of his creation, is accessible to human reason. Hence, in discussing things in political life, which, after all, have only natural ends, reason can be used to develop truths that may have been obscured by historical practice.
Murray and Leo XIII
It is here that Murray's greatest contribution lies. In point of fact, Murray seems consciously continuing the project of Leo XIII to reintroduce the thought of Saint Thomas Aquinas into the modern world. That project began with Leo's encyclical Aeterni Patris in 1879. Leo praises the philosophic thought of Saint Thomas saying that "The Angelic Doctor" pushed his philosophic inquiry into the reasons and principles of things, which, because they are most comprehensive and contain in their bosom, so to say, the seeds of almost infinite truths, were to be unfolded in good time by later masters and with a goodly yield. This project explains Leo's insistence that the Church does not require any of the particular classical forms of government, provided that the content of the rule be just. It implies a final rejection of the theory of papal monarchy and the "two swords"  theory that holds that governments, to be legitimate, get their authority from the Church a position that Saint Thomas did not hold. This view, Murray terms political Augustinianism because Augustine, the authority for most of the Middle Ages, viewed the State as only a necessary evil unless it is taking direction from Church leaders. With the rejection of "political Augustinianism" comes the acceptance of Aquinas's more natural-law view of temporal matters. This also means that there is a certain natural autonomy to human beings, and even though no one is morally permitted to be culpably wrong in his or her beliefs, politically human beings are to be secure in their conscience from coercion in the natural realm.
Murray's Stated Views on Economics
John C. Cort is enthusiastic to place Murray in the Socialist camp based on his expressed views in economics. But Cort seems more interested in showing with approval (as did Mises with disapproval) that Catholic teaching on economics is socialistic. Cort correctly relies on one of Murray's articles for his more extensive views on economics, Leo XIII: Two Concepts of Government, which appeared in Theological Studies.
Published in 1953, it would make sense that, Murray, a noneconomist, even in sections where he is not explaining Leo XIII's views, would support a strong governmental role in the economy. After all, this period was the height of Keynesianism, and ideas of "market failure" abounded. Economists holding the opposite view were mostly of the Austrian School. Hence, Murray writes:
Leo XIII boldly took from the Enemy the truth that he had the principle that government, under the conditions of modern society, must take an active role in economic life. In grasping this problem, the United States, in the person of Andrew Jackson, was nearly six decades ahead of Rerum Novarum. Industrialism had wrought a progressive depersonalization of economic life. And the impersonality of the employer-employee relationship had, in turn, bred moral irresponsibility. A new "master" had appeared the corporation. And, as the American aphorism had it, Corporations have neither bodies to be kicked nor souls to be damned. They were seemingly immune from the restraints that conscience had imposed on the old master, the individual, in an age where economic relationships were generally personal. The private conscience had ceased to be an affective means of social control. Therefore, the only alternative to the tyranny of socialism or the anarchy of economic liberalism was the growth of the public conscience and its expression through the medium of law and governmental act a medium whose impersonality matched the impersonality of the economic life into which it was thrust as a principle of order. On these grounds Leo took his stand for interventionism.
But Murray is quick to demonstrate that Leo, in opting for interventionism, took the sting out of the Socialist version of it, basing his view on what, later, Pius XI would term subsidiarity. Subsidiarity holds that nothing should be done by a higher social organization that can be done satisfactorily by a lower level of organization, and nothing should be done by public authorities that can be done adequately by private authorities. This principle explains why Leo insisted that State intervention has to be used only to remedy serious wrongs and has to be a last resort: Whenever the general interest or any particular class suffers, or is threatened with harm, which can in no other way be met or prevented, the public authority must step in to deal with it.
The question naturally arises regarding why it is that a corporation might have no check of conscience, but the government, a corporate body in the medieval sense, does. Murray's perspective is provided by the other lengthy discussion of economics in Natural Law and the Public Consensus. Here Murray sees the industrial system as a system of power, and he asks how this system of economic power can be made legitimate, since, unlike the Socialists, he does not want it destroyed. Murray does not mention that government is also a system of power and, in addition, coercion.
Since Murray admits that he has no economic expertise, he turns for the answer to the writings of Adolph Berle. It is interesting that he turns to Berle. Berle was a corporate lawyer and professor of law at Columbia before being tapped as an official in the Roosevelt administration. Note that neither Berle nor Murray, both noneconomists, appear to have any knowledge of the feedback mechanism of the market, and they attribute "democratic" control of the market, not to the sovereign consumers but to the people working through democratic (i.e., governmental) institutions. Berle writes that he had a debate with Friedrich Hayek where he, Berle, was trying to forecast the corporation as a neutral but powerful instrument of society twenty-five years hence: The real questions being philosophy and the ultimate control lying outside corporations that would become instruments like a government agency. So, Murray, in agreement with Berle, writes that the native tendency of an individual economy is toward oligarchical organization and to an independence of all political, not to say, popular control. The decision for economic democracy is not an economic decision. It is political. More profoundly, since the issue affects the substance of society, the decision is ultimately moral  and lies in the idea of a public consensus based on widely accepted values that energize political action when necessary.
The term native tendency is interesting here. Does Murray mean that this tendency is natural, inevitable? The meaning of native might indicate so, but in Leo XIII: Two Concepts of Government, Murray clearly praises Leo XIII's policy of governmental intervention precisely because it is applied according to specific situations, and is not necessarily a permanent feature of social life:
In returning to his political concept of government, the next thing to be noted is the way he effectively dethroned the principle which he took from the Enemy on the left the principle of interventionism from the status it had in the Enemy's camp, the status of an absolute. Government intervention is not an absolute, any more than free enterprise (as the Enemy on the right understood the term) is an absolute. Intervention is relative to the proved social damage or danger consequent on social imbalance and disorder.
Murray, again, commends Leo's ideas on government because they reveal a healthy distrust of government when it begins to infringe upon the freedom of society and its natural and free associational forms. But Leo's theory also has a respect for government when it acts within the limits of social necessities created by irresponsible uses or abuses of freedom. Hence, Leo is not recommending a paternalistic attitude, as if government were somehow to become the Father of the Poor. Hence, for Leo (and Murray), the phrase that describes the proper parameters of government is, as much freedom as possible, as much government as necessary. The proper role of government is not intervention but the promotion, protection, and vindication of a truly free, self-governing, and ordered economic life.
Of course, ordered is a vague term. If an economy is free and self-governing, it is also ordered spontaneously. If Murray means that the role of government is to preserve the ability of that economy to order itself spontaneously, then an Austrian economist may not be able to find a serious objection. If Murray is siding with what Virginia Postrel calls technocrats, with their static views of reality and their fears of the onrush of capitalism with its disruptive consequences, than an Austrian will have serious disagreements with Murray.
The answer seems to center around the dates of the articles. The article Leo XIII: Two Concepts of Government, was published in 1953. The clearly more statist, Natural Law and Modern Society was published in 1961. Hence, sometime between the two, Murray accepted a view of the market more in line with a Keynesian-Galbraithian approach.
Nevertheless, it should be noted that despite the use of the term native tendency in the 1961 article, it appears that Murray's criticism of a free economy is based not on its essence but on its accidents. In praising free, self-governing, and ordered economic life, whatever his ultimate meaning is, he is saying that a free economy is good per se, but that it has biases toward power accumulation per accidens, requiring governmental adjustment and remedy.
When looked at in this perspective, a solution suggests itself. If one could have shown to Murray, who died in 1968, that the idea that concentrations of economic power was actually quite temporary and beneficial (as in natural monopolies), or government sponsored (as in the electric companies or my local cable company), Murray might have been persuaded that his acceptance of the Berlian-interventionist model was an error. Accidents do not change the essence of a thing but merely modify it.
Murray's Idea of Man
In an essay, Religious Freedom, contained in the book that Murray edited, entitled Freedom and Man, and in the foreword to the same volume, Murray thoroughly sets out his views of man's nature and the role of freedom in that nature.
For Murray, freedom is central to human nature. Referring to Saint Thomas, Murray wrote that man is made in the image of God, and by this is meant that man is, by nature, intelligent, free in his power of choice, and of himself the master of himself the active source of what he does. Freedom is not to be seen as some utopian royal way, since it leads through all the density of the human, all the limitations of the finite, all the contingency of the historical moment, whose demands are ever unique, to be met by personal judgment and choice. But there is no other way.
Certainly, much of this is not incompatible with the Austrian understanding of the context of human action. As Karen Vaughn summarizes some common themes in Austrian economics:
The first is that a social science should devise explanations about social phenomena that are traceable to the ideas and actions of individual human beings. The second implication is that since individuals only experience the world through the filter of their own subjective intelligence, economics must explain human action as the responses that people make to their subjective interpretations of their internal and external environment. Austrians also agree that all human action takes place in time and always under conditions of limited knowledge; this requires that economics not abstract from either time or ignorance in developing its theories. Austrians infer that economics should be about how humans pursue their projects and plans over time, and with limited knowledge of present conditions and with pervasive uncertainty about the future.
For Murray, freedom is founded on humanity's great dignity:
I myself, in taking up the subject of religious freedom, touch one sector of the larger problem of preserving about the human person in society a certain zone or sphere of freedom, within which man must be immune for coercive restraint in the pursuit of the highest values of the person as such, who transcends society in virtue of his direct relatedness to the truth and to God who is truth.
Although the above quotation refers primarily to religious freedom, Murray places this in the context of pursuit of man's (highest) values as a person as such. While we could agree that a person's religious beliefs are the most important of his existence, because how persons see themselves in relation to the transcendent goes to the very core of their existence, human action, the specific actions that people will take, presuppose the cluster of beliefs ultimately referenced back to these more core values. This is the foundation of Austrian subjectivism. For each individual, ultimate ends are ultimately given, they are purely subjective, they differ with various people and with the same people at various moments in their lives.
But Austrian subjectivism is a philosophical-economic principle. We cannot look into the intentions of people when they act, but only reason in reverse from the signals given by market prices. This is not to deny that there are objectively good and true principles but only that our science takes for granted the acceptance of one set or another of these in the acting subject. Murray, a theologian, places more emphasis on the objective, God-given value of man, and by doing so, arrives at a divine origin of human dignity and, hence, a theological argument for freedom. In The Construction of a Christian Culture, Murray attacks American culture as being radically bankrupt because of its rampant materialism. He attacks the idea (poorly understood) of man as merely homo economicus, and attacks the (straw man) notion of radical individualism. But, despite the particulars or accidents of any particular culture, the redemption of Christ, who came down in human flesh and died as the ransom for all of our souls, raised man to an immeasurable dignity, so that the primary cultural significance of this theology is that it is in this light that man, as Saint Thomas said, now dares to think worthily of himself. The Incarnation answered the spiritual desire that, in spite of thwartings, man has always cherished, namely, the dream of becoming master of the world of nature and master, too, of the dark powers of evil whose presence in the world he has never ceased to feel. The Incarnation teaches man his proper dignity. If man has dignity, as Vatican II and Murray affirmed, then man must have freedom. Therefore, says Murray,
An exigence for immunity from coercion is resident in the human person as such. It is an exigence of his dignity as a moral subject. This exigence is the source of the fundamental rights of the person those political-civil rights concerning the search for truth, artistic creation, scientific discovery, and the development of man's political views, moral convictions, and religious beliefs.
And, to be consistent material betterment.
This paper has attempted to develop a possible foundation for the approval of free-market economics from the thought of a dogmatic theologian, who had much to say about politics, human dignity, and human freedom, and very little to say about economics, most of it interventionist. But it appears that, had Murray not merely engrafted onto his thinking common statist, technocratic notions of economics, rampant during his time, his theory would have allowed for the human freedom consistent with a free market. His foundation for allowing religious freedom provides that basis for market freedom, and his earlier writings stress a free market more than his later, explicit though sparse, economic writings. In addition, even his criticisms of a market economy are centered on what he sees as accidental components of our market system and not on the essence of the system.
Murray had a tremendous output, much of which has become available only recently. This provides economic philosophers with much fertile ground for future work. His recently available writings, as well as the work of Pope John Paul II, may actually have begun the process of finding common ground between Catholicism and the free market that Mises suspected may never be forthcoming.