Finding a Medium: Vatican II as an Emergence from Marx and Smith

The modern times has experienced exponential economic development unparalleled to

any other century. Much of the development can be attributed to Capitalism, an economic

system that espouses free-market mechanisms. However, it also contributed to a growing

disparity between the privileged and the underprivileged. How did this happen? Karl Marx

provided a possible answer, as he provided an analysis and critique of free-market economics.

However, Marx’s ideas also had its own shortfalls, especially in resolving the inequality present

in the Capitalist system. As such, the paper argued to reconcile these two ideas, and reached a

middle ground, Church social teachings.

Key Ideas

Self-sufficiency was necessary for Smith as man has “the desire of bettering our

condition.”1 Incidentally, the same desire also indirectly helped advance the needs and wants

of society or as Smith said in the Wealth of Nations or WN, “it is not from the benevolence of

the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their

own interest. We address ourselves, not to their humanity, but to their self-love…”2 The

interwovenness between self-reliance and the public good was the traditional interpretation of

the invisible hand.3

The self-reliant attitude of Smith contributed to his belief in laissez-faire economics.

Smith proposed that the state, in this laissez-faire system, must have as little intervention in

economic affairs.4 The state would be called a “night watchman, ” which only focused its

attention on the absolute basics such as education and peace and order.5 In the meanwhile, the

state encouraged that the market provided the most efficient way in the distribution of

1
Spiegel, Henry William. The growth of economic thought. Duke University Press, 1991, 243.
2
Smith, Adam. Wealth of Nations. Edited by Salvio Marcelo Soares,
www.ibiblio.org/ml/libri/s/SmithA_WealthNations_p.pdf. 16.
3
Sandmo, Agnar. Economics evolving: A history of economic thought. Princeton University Press, 2011, 48.
4
Ibid. 54.
5
Ibid. 55.

1
resources. Again, Smith argued for the laissez-faire system due to the inefficient and centrally

planned Mercantilist system, in which the profits and gains of society were primarily for the

elites and the rich, which resulted into a great disparity in income.6

Another key idea of Smith was the efficiency of the division of labor. Grounded on

man’s “propensity to truck, barter, and exchange,” the idea regarding the division of labor

hinged on the objective that any firm maximized its production capacity through specialization

of labor. As such, the productivity of labor is maximized, and this was seen as Smith used the

example of pin making. In the factory, one man drew out the wire, one man straightened it, the

next one cut it, until at the very end of the production line, a usable pin for the consumer, but

now, through a faster and more efficient process. Three positive outcomes occurred in this

situation. The workers’ skills increased over time, while it also saved time for other productive

activities, and also further incentivized innovation of machinery.7

Marx, through his writing of Das Kapital, believed in the failure of capitalism.8 He

mentioned the failure was due to the three contradictions of the system itself.9 Firstly, any

society’s objective was the accumulation of goods. However, in a capitalist society, the

motivation for such accumulation and production was not for each one’s individual

development, but for profit. As such, as said by Bober “with such an ideal, the expansive

development of the productive forces is incompatible,” which led to conflict and eventual

disintegration of society. Secondly, even though the production of goods is for the benefit of

everyone, policies were implemented by private individuals, who had their own private

agendas. Rather than enact policy that was beneficially for society, companies would be guided

by individual agendas or as Bober said “the products resulting from the collective productive

6
Rick, Jon. “Historical Context for the Wealth of Nations.” Historical Context for the Wealth of Nations,
Columbia College, www.college.columbia.edu/core/content/wealth-nations/context.
7
Spiegel, Henry William. The growth of economic thought. Duke University Press, 1991, 245.
8
Ibid. 467.
9
Bober, Mandell Morton. Karl Marx’s Interpretation of History. Vol. 2, Cambridge Harvard University Press,
1950, 206-208.

2
forces are not appropriated socially but become the property of the capitalist.” Lastly, the

factory or company, despite its order and cooperation within the production processes, led an

anarchic tone as it produced, procured, and sold goods without regard of the social

consequences involved. Anarchy among factories was present as they constantly competed to

gain market share. All three contradictions highlighted that self-reliance did not lead to social

good, but just for private gain. And in the end, the capitalist system encouraged the

accumulation of capital among the few large companies.10 These large companies tended to

“beat out” smaller companies, and a cycle emerged, in which large companies got larger.

Meanwhile, the working class, valued so little in this capitalist society, lived on subsistence

wage, further aggravated their despair.

Marx lamented the capitalist system. He viewed the elites of this society, or the

bourgeoisie, as the “trustees of social wealth,” yet only looked after their own well-being, as

they not only controlled the means of production, but also benefited from the protection of the

political organizations.11 However, Marx, as mentioned above, believed that capitalism would

fall. It would start from an economic crisis or depression.12 The misery experienced by the

proletariat was the key ingredient for the changing of the guard. Once this occurs, a revolution

would occur, as the proletariat would seize the modes of production. Violence is necessary in

this situation, as the elites would resist such a chance, or as Marx said in the Communist

Manifesto, “openly declare that their ends can be attained only be the forcible overthrow of

all existing social conditions.”13 Marx believed in the inevitability of such conflict, and

understood that only through the suffering of the proletariat can they realize the inequality

inherent in the capitalist society, and eventually overthrow it.

10
Spiegel, Henry William. The growth of economic thought. Duke University Press, 1991, 471-472.
11
Bober, Mandell Morton. Karl Marx’s Interpretation of History. Vol. 2, Cambridge Harvard University Press,
1950, 259.
12
Ibid,. 261-262.
13
Marx, Karl. Communist Manifesto. www.marxists.org/archive/marx/works/download/pdf/Manifesto.pdf, 34.

3
Criticisms of Smith and Marx

Marx’s critique on Capitalism, showcased the reality of Smith’s laissez-faire

economics. As Marx pointed out in his critiques of Capitalism, the motivation to provide a

good was not for the social beneficial reasons, but to safeguard one’s well-being. As such, the

extreme to this situation, as Marx pointed out, led to abuse, as when a factory is led by profit,

and not by social responsibility, it led to treat its workers as machines, not people. For example,

the 2008 financial crisis, motivated by the banks’ desire to increase profits, crippled pensions,

trust funds, and jobs for the regular working American.14 Banks were supposed to lend money

and create growth, however, since they were motivated to earn, and not by welfare of society,

many banks used their power and leverage to gamble the money of the working American to

accumulate massive profit margins at the expense of the working-class American.

Despite the shortcomings of Capitalism, Smith’s idea of self-reliance has ushered

significant development in the last few hundred years. Even Marx himself acknowledged this,

as he said, “the bourgeoisie, during its rule of scarce one hundred years, has created more

massive and more colossal productive forces.”15 In contrast, the communist state and class

equality that Marx aspired for was an ideal, but was not pragmatic. One cannot ignore that the

most well-known communist state, the Soviet Union, collapsed due to its failure to achieve a

true classless society, or as said “while millions of citizens died of starvation, the Politubro

(elite party members) enjoyed German cars, ate French food, and slept on luxurious Italian

silk sheets.”16 Even China, a communist state, has shifted to a more mixed economy, in which

14
Reavis, Cate. "The global financial crisis of 2008: the role of greed, fear, and oligarchs." MIT Sloan
Management Review16 (2012): 10.
15
Marx, Karl. "Capital, volume I." (1867).391.
16
“Articles Master of Arts in Military History.” 5 Reasons for the Collapse of the Soviet Union | Norwich
Online Graduate Degrees, Norwich University Online, July 2016, graduate.norwich.edu/resources-
mmh/articles-mmh/exploring-5-reasons-for-the-collapse-of-the-soviet-union/.

4
capitalism played a role in its ongoing development. Additionally, Marx’s solution, a violent

revolution, despite his claims, was cruel. Marx cited inhumane conditions of the proletariat,

and yet, he was also committed to inhumane acts as well to achieve his kind of liberation.

Additionally, his transition to communism, he advocated for the “dictatorship of the

proletariat.”17 And yet, as the proletariat came into power and re-distribute the resources, was

this not another form of coercion? Granted, the bourgeoisie have amassed so much fortune,

what about the middle class who were caught in the middle? The middle class, or as Marx

referred to them as “petty bourgeoisie,” had no place for Marx in the struggle for communism.18

Marx insisted for their “proletarianization,” but people cannot work be forced to do actions

they did not want. Marx condemned factory work as a form of slavery as people are forced to

work there to live, and yet, Marx also insisted on the proletarianization of the middle class,

without their consent.

Church Social Teaching as an Emergence

Vatican II, a landmark conference held from 1962-1965 by Pope John XXIII, was a

reaction to the growing inequality of the times. It encouraged the Church to look outward

through articles such as the Justice in the World (1975).19 What is the stance of the Church? In

essence, the Church took the pros of capitalism, such as the liberty for self-sustenance and

opportunity to economically grow, while condemned its cons through a Marxist analysis, albeit

without the revolution. For example, in Laborem Exercens, while man was called to develop

earth’s resources, the right to private property is secondary to the collective good.20

Additionally, Sollicitudo Rei Socialis observed that the obscenely wealthy individuals

17
Bober, Mandell Morton. Karl Marx’s Interpretation of History. Vol. 2, Cambridge Harvard University Press,
1950, 268.
18
Ibid,. 108.
19
“Justice in the World.” Cctwincities.org, www.cctwincities.org/wp-content/uploads/2015/10/Justicia-in-
Mundo.pdf.
20
John Paul II. Laborem Exercems. w2.vatican.va/content/john-paul-ii/en/encyclicals/documents/hf_jp-
ii_enc_14091981_laborem-exercens.html.

5
experienced a failure of “being” as they experienced the “cult of having” in which they are

consumed by the culture of materialism.21 The culture encouraged people to “substitute

material goods for psycho-spiritual fulfillment,” which proved detrimental to not only the

marginalized, but also themselves, as they became obsessed with consumption.

The solution, for the Church, would then be reform of the current system, and not a

violent revolution. For example, in Centesimus Annus, it lauded the organization and efficiency

of the current Capitalist system, yet condemned the marginalization of the ostracized classes.22

The answer provided was to keep the market economy, yet enact pro-people laws that serviced

the common good, rather than large corporations.23 In essence, the state must adhere to the

principle of subsidiarity (its activities must not limit the self-determination of individuals),

while also adhere to the principle of solidarity (its responsibility to protect the interests of the

marginalized).24 While the Church agreed that the capitalist structure of Smith was flawed, it

also deplored the violent revolution encouraged by Marx.25

Conclusion

Smith believed in the self-determination of man. Through his need to survive, he must

sustain himself, and as such, look after his own well-being. As such, he encouraged the

invisible hand ideal, which piloted the economic development and industrialization of Western

society. However, the system became excessive as the ideal of the invisible hand was flawed,

since the bourgeoisie’s actions only benefitted himself, and for the most part, proved to be

detrimental to society. Marx analyzed and critiqued the Capitalist system and argued for the

21
John Paul II. Sollicitudo Rei Socialis . w2.vatican.va/content/john-paul-ii/en/encyclicals/documents/hf_jp-
ii_enc_30121987_sollicitudo-rei-socialis.html.
22
John Paul II. Centisemus Annus. w2.vatican.va/content/john-paul-ii/en/encyclicals/documents/hf_jp-
ii_enc_01051991_centesimus-annus.html.
23
Ibid.
24
Ibid.
25
Ratzinger, Joseph Cardinal. Instruction on Certain Aspects of the "Theology of Liberation".
www.vatican.va/roman_curia/congregations/cfaith/documents/rc_con_cfaith_doc_19840806_theology-
liberation_en.html.

6
complete abolishment through a violent revolution. Despite his intentions to save the worker,

he also had flaws in his critique, and this was corrected through Church social teachings. The

Church, noted into the laudable ideas of both Smith and Marx, while condemned the radical

nature of both ideas. As such, the Church promoted a middle ground, in which man still had

the opportunity for self-determination, but also protected the rights and interests of the

marginalized community through peaceful reform.

Bibliography:

Bober, Mandell Morton. Karl Marx’s Interpretation of History. Vol. 2, Cambridge Harvard
University Press, 1950.

Brewer, Anthony. "Adam Smith’s stages of history." Bristol Economics Discussion Papers 8
(2008): 601.

Hill, Lisa. "The hidden theology of Adam Smith." European Journal of the History of
Economic Thought 8.1 (2001): 1-29.

John Paul II. Centisemus Annus. w2.vatican.va/content/john-paul-

ii/en/encyclicals/documents/hf_jp-ii_enc_01051991_centesimus-annus.html.

John Paul II. Laborem Exercems. w2.vatican.va/content/john-paul-

ii/en/encyclicals/documents/hf_jp-ii_enc_14091981_laborem-exercens.html.

John Paul II. Sollicitudo Rei Socialis . w2.vatican.va/content/john-paul-

ii/en/encyclicals/documents/hf_jp-ii_enc_30121987_sollicitudo-rei-socialis.html.

Marx, Karl. "Capital, volume I." (1867).

Marx, Karl. Communist Manifesto.

www.marxists.org/archive/marx/works/download/pdf/Manifesto.pdf, 34.

Ratzinger, Joseph Cardinal. Instruction on Certain Aspects of the "Theology of Liberation".

www.vatican.va/roman_curia/congregations/cfaith/documents/rc_con_cfaith_doc_198
40806_theology-liberation_en.html.

Reavis, Cate. "The global financial crisis of 2008: the role of greed, fear, and oligarchs." MIT
Sloan Management Review16 (2012): 10.

Rick, Jon. “Historical Context for the Wealth of Nations.” Historical Context for the Wealth
of Nations, Columbia College, www.college.columbia.edu/core/content/wealth-
nations/context.

7
Sandmo, Agnar. Economics evolving: A history of economic thought. Princeton University
Press, 2011.

Smith, Adam. Wealth of Nations. Edited by Salvio Marcelo Soares,

www.ibiblio.org/ml/libri/s/SmithA_WealthNations_p.pdf. 16.

Smith, Adam, and Jonathan Bennett. Section 2: The Character of the Individual in Its Bearing
on the Happiness of Other People.” The Theory of Moral Sentiments, p. 126,
www.earlymoderntexts.com/assets/pdfs/smith1759.pdf.

Spiegel, Henry William. The growth of economic thought. Duke University Press, 1991.

“Articles Master of Arts in Military History.” 5 Reasons for the Collapse of the Soviet Union
| Norwich Online Graduate Degrees, Norwich University Online, July 2016,
graduate.norwich.edu/resources-mmh/articles-mmh/exploring-5-reasons-for-the-
collapse-of-the-soviet-union/.

“Justice in the World.” Cctwincities.org, www.cctwincities.org/wp-

content/uploads/2015/10/Justicia-in-Mundo.pdf.