Economic analysis—at the systemic level—that genuinely respects private property and a rightful role for the market but avoids a view of “capitalism” that is at odds with Catholic social teaching

Rediscovering Heinrich Pesch

 and Solidarism

by Stephen M. Krason

Heinrich Pesch, 1854-1926, a German Jesuit priest and economist, is largely unknown in the U.S., but arguably he is one of the most important and influential Catholic thinkers of the past few centuries. It was to the thought of Pesch and his disciples that Pope Pius XI turned to in composing his monumental encyclical Quadragesimo Anno (1931), and it is from Pesch that John Paul II has taken many of the ideas of his own social encyclicals, including the idea of man as the subject of work, of man's dominion over the world as founded on his exercise of work, and even the key term "solidarism" (solidarity). Indeed, it sometimes seems uncanny, after reading John Paul, to turn to Pesch and see the same ideas, sometimes presented in nearly the same words. Any thinker who has had such influence over more than one Supreme Pontiff is worth knowing better.

The passing of the eminent American Catholic economist, Dr. Rupert J. Ederer, at the age of ninety on Thanksgiving Day 2013 calls attention to the great, but equally unsung, economic thinker and system that he devoted most of his career to furthering: Heinrich Pesch, S.J. and solidarism. Pesch, who died in 1926, was thought to have inspired Pope Pius XI’s great social encyclicalQuadragesimo Anno five years later. In spite of Pesch’s relative obscurity, Ederer called him an economic “system builder,” on par with Adam Smith, Karl Marx, and John Maynard Keynes—although the system he constructed was based firmly on Catholic teaching and the natural law. The word “solidarism” rings of the principle of solidarity, which has been stressed more recently in Catholic social teaching. In fact, solidarism is also referred to as “the solidarity work system.” There is some indication that Pesch’s solidarism influenced the famed Solidarity trade union movement in Poland that rose to prominence a generation ago and led the way to the collapse of Eastern European communism.

What, broadly, are the basics of solidarism?

First, it rejects both individualism and collectivism and seeks to uphold the good of both the individual and society. In short, it embraces the common good as understood by sound ethics.

Second, there is a solidarity among all men because of, simply, their common humanity.

Third, the worker cannot be reduced to a mere factor of production, nor can economics be made the be-all-and-end-all, so that everything is reduced to economic calculation.

Fourth, the market and its advantages are accepted as givens by solidarism and economic freedom is a good thing.

Fifth, in line with this, while there are certainly market inclinations and forces (e.g., supply and demand) they cannot be treated as rigid “laws” (a notion that came from the Enlightenment).

Sixth, the sense of solidarity motivates the solidarist to promote occupational groups or other sorts of arrangements of those taking part in a particular industry—which must be voluntarily agreed to, and not imposed by the state—which would aim at a kind of enlightened self-regulation.

Seventh, solidarism has no illusions about economic reorganization as some kind of panacea. The proper shaping of the human soul, of course, is a prerequisite.

Eighth, solidarism strongly defends private property, although private ownership—whether on the individual or large-scale corporate business level—can never be separated from the obligation of its social use (i.e., the concern about others and the community in the use of one’s property).

Ninth and tenth: the concern for socialization and the universal destination of created goods perhaps underlies the ninth and tenth points. While the state could step back with a solidaristic-type economic restructuring, its role cannot be minimal. Besides the proper kinds of interventions in the economy it must provide what in the Reagan period first came to be called a “safety net.” While—consistent with the principle of subsidiarity—the family and religious and other civil-society-type groups should be the first to take care of the needy, the state as a matter of justice must help out when this is insufficient. Also, it cannot be indifferent to the situation of wealth distribution; disparities of wealth have to be addressed.

Eleventh, solidarism stresses the need for a just wage. This has direct implications for the state’s social welfare role: a just wage across the economy would mean that there would be less demand for public assistance programs.

Twelfth, solidarism is concerned about justice in pricing (which, interestingly, is an area that has not been developed much in the social encyclicals). A just price is one that both covers costs and yields the producer or trader a reasonable gain (a profit).

Thirteenth, any tax levied must be truly necessary, must take into account persons’ level of wealth, may be heavier on, say, investment income than income earned from work, and must be used to fund activities that will promote the common good and not merely the private good of some (e.g., interest groups).

The fourteenth and final point is one that certainly collides with prevailing economic thinking: completely free trade must be rejected. This is because of commutative justice: certain countries are unable to derive the same advantage as others in a free trade regimen.

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