Civil Economy:

The Trinitarian Key to Papal Economics *

Wolfgang Grassl

St. Norbert College

wolfgang.grassl@snc.edu

1. Introduction
Caritas in Veritate has added several new elements to the tradition of Catholic social teaching.
Formally, it uses economic reasoning in emphasizing that many arrangements in our market
economies are not even efficient by the standards of ‘economic logic’ (§§ 21, 32, 35, 40, 44, 50;
Grassl and Habisch 2011). Efficiency itself is good, because it is required by a good stewardship over
resources, although it makes only a necessary but not a sufficient contribution to integral human
development (§§ 50, 70). Materially, the Encyclical promotes two institutions that have previously
not been specifically mentioned in papal teaching: on the micro-level, the ‘economy of communion’
(§ 46), and on the macro-level, the ‘civil economy’ (§§ 38f., 46f.). 1 The two are related, for the
Economy of Communion consists of enterprises and business practices that exemplify a civil
economy where the latter amounts to re-embedding economic relations into civil society (Bruni and
Uelmen 2006; Gold 2010). Various authors have understood the term ‘civil economy’ with some
semantic latitude. Its intellectual pedigree does not derive from the Anglo-American tradition of
economic thought that has come to nearly monopolize textbooks. The meaning of ‘civil economy’
within Caritas in Veritate, and the role it plays in Catholic social thought, therefore need a rational
reconstruction. This must be done against the background of the Augustinian theology which deeply
shapes the thought of Benedict XVI. Of particular importance is here its insistence on humans being
ontologically relational creatures, and consequently on the primacy of love in human interactions. A
civil economy is then built on an application of Trinitarian love to social reality. This insight is
indispensable for any proper understanding of the Encyclical. This paper shall investigate the
meaning of ‘civil economy’ and shall in this context demonstrate the relevance of Trinitarian
structures in economic thought.

*
“Economic Justice and the Encyclical Caritas in Veritate”. Panel Session, Association for the Study of the
Grants Economy, Allied Social Science Associations Conference, 8 January, 2011, Denver, CO.
1
It has been observed that this focus and the heavy emphasis in the Encyclical on social unity show the
influence of economists associated with the Focolare Movement.
2. The Dichotomous Social Ontology
Classical liberalism has always framed society and politics as in a dichotomous opposition:
individual versus society, and individual versus government. Society has been understood as an
accidental aggregate of individuals, and government as a coercive institution necessitated by the anti-
social propensities of the human soul. The idea that these are the only agents and their relationship is
contradictory rather than merely one of contrast or tension, originates in Hobbes, and via Locke and
the philosophy of the Enlightenment it has influenced American political thought. In the United
States, this bipolar social ontology is tenaciously defended in all political camps, assuming that
issues of power, distribution, representation, and influence must be seen as zero-sum games, with any
marginal weakening of the individual benefitting government, and any marginal weakening of
government benefitting the individual. Economic activity is located at the level of the individual by
assuming markets to emerge spontaneously in response to supply and demand, and markets being but
forms of how a society of individuals co-operates. Markets and societies are basically the same,
whether (in the economistic view) society is rather seen as a complex of market transactions or
whether (in the sociological view) markets are rather treated as organizational forms of society.
Under the first perspective, all social phenomena originate from the voluntary acts of individuals that
seek to produce public goods at lower cost. Consequently, methodological individualism has become
the dominant paradigm for economic research. However, by ignoring the great complexity of modern
society, which has several types of agents that cannot simply be attributed to one of two poles, this
view of social and political life is narrowly reductionist. Its underlying dualism, which is stronger in
American economic thought than elsewhere, is untenable from a sociological, philosophical, and
theological perspective. But even more importantly, it has failed to provide good explanations of
economic life itself. Consequently, sociological and anthropological explanations of markets have
recently gained ground. In both cases, a dichotomous structure of social reality is assumed.

The most far-reaching contribution of Caritas in Veritate may be its unambiguous dissociation from
this dichotomous model of social ontology, and by implication from liberalism and much of modern
economic thought, but also from all kinds of social constructivism. In perhaps the most radical
passage of the Encyclical, Benedict XVI laments the bipolar opposition: ‘The continuing hegemony
of the binary model of market-plus-State has accustomed us to think only in terms of the private
business leader of a capitalistic bent on the one hand, and the State director on the other. In reality,
business has to be understood in an articulated way’ (§ 41). Because he rejects the dichotomy of
individual versus State, the Pope does not relegate the civil economy to a ‘third sector’ but sees it at
work throughout society, as ‘a broad new composite reality embracing the private and public spheres,

2
one which does not exclude profit, but instead considers it a means for achieving human and social
ends’ (§ 46). Persons as relational individuals make up the civil economy, and reciprocity as its
defining characteristic must extend to the State. The Pope thus challenges modern economics in its
underlying social ontology.

3. A Tripartite Social Ontology

The arguments of Caritas in Veritate are not entirely new, for they have been used in previous papal
teaching and in the works of theologians and social scientists. Already the sociologist Georg Simmel
argued that more complex social relationships go beyond the basic dyad, which allows individuals to
maintain their identity and to have control over it by withdrawal. Triadic groups change the form of
interaction by allowing for strategies of competition, alliances, or mediation. Triads are likely to
develop a group structure independently of the individuals in it, which makes them the true building
blocks of society (Simmel 1908: ch. 2). At a higher level of aggregation, the communitarian tradition
in social thought has long recognized communities as a third agent besides individuals and
government. Some of the literature on civil society may be attributed to this camp. Alexis de
Tocqueville already described a vibrant community life in the United States in the 1830s. However,
when appreciating the self-help actions of citizens, he described them as spontaneously formed
groups of citizens rather than as intermediate structures; his account does not present a civil society
as envisaged by communitarian thought (Zaleski 2008). Unlike the stable guilds, corporations, or
municipalities of the Middle Ages, sheriff’s posses did not mediate between individuals and
government. American political thought has counted such citizen action towards the sphere of
individuals, and the bipolar model has been retained. Few thinkers indeed have stepped outside it
regardless of their own political positions – mostly philosophers, theologians, anthropologists, or
sociologists, but hardly an economist (Wicks 2009). Among the economists, a rare exception was
Kenneth Boulding, who divided the social system into three large, overlapping and interacting sub-
systems: markets (exchange), government (threat), and an ‘integrative system’ that establishes
community (Boulding 1973: 5, 27f.). Representative of the latter is the ‘grants economy’
characterized by unilateral transfers between social agents. Boulding thus represented the structure of
society in the form of an equilateral triangle (Figure 1) with the vertices of exchange, threat, and love
as the functional dimensions of markets, government, and the integrative system (or, in a more
common formulation, civil society) (Boulding 1973: 107):

3
 Love

Exchange Threat

Figure 1: Boulding’s Social Triangle

Benedict XVI makes no reference to Boulding, and his thoughts on economics are of a different
provenance. Yet the similarities are substantial. Caritas in Veritate proposes a tripartite (rather than a
trichotomous) structure of social reality, but not one with individuals, groups, and government as the
players. Rather, the Encyclical presents as ‘subjects’, or social agents, ‘the market, the State and civil
society’ (§ 38). Benedict in this context refers to a similar conception proposed by John Paul II in
Centesimus Annus (§ 35) of society being different from the market and the State. However, the
earlier encyclical was never as forceful in suggesting a trilateral social ontology nor in elaborating a
theological anthropology as its foundation. What is remarkable, however, is how both pontiffs
describe the identity of the three types of constituents of the ‘system’ (§ 38). Different from liberal
thought, they do not consider individuals but the market and society, and the pronouncements of both
pontiffs revolve around the differences between these social structures. Catholic social thought has
long used the term ‘persons’ to designate individuals as ontologically defined by relations (Maritain
1947). Equally, Caritas in Veritate does not simply equate markets with society, as merely one social
function or organization. Rather, markets enjoy a distinct position in social ontology. Lastly,
individuals are not opposed to ‘government’ – a term from the American political tradition that
means something quite different in the European context in with Catholic social thought originates.
Rather than ‘government’, the third social constituent is the ‘State’ – in the capitalized form as
referring to institutionalized public authority rather than to individual national states. Most of the
liberal tradition made no distinction between State and government; neither did American
constitutional thought. 2 All constitutions of European countries, on the other hand, distinguish
between changing governments and the enduring State, in whatever political form it may appear,
with concrete governments representing the more abstract State. This thought goes back to Aristotle,
for whom the State (polis) existed by nature whereas it could be constituted in various forms.
Anthropology has not claimed the universality of states for all periods of history and regions; but

2
In the Federalist Papers and in the United States Constitution, the term ‘state’ refers only to the individual
territorial states whereas a ‘Republican Form of Government’ (Art. IV sect. 4) is equivalent to what Western
political thought since Aristotle has referred to as a ‘form of state’ (polis).
4
anthropologists tend to argue that as societies evolve, through internal differentiation or external
conquest, their systems of government invariably develop a State (Krader 1968). The political
authority of the sovereign is vested in the State but exercised by governments. In British
constitutional law, the Crown is identical with the State, and there as in continental jurisdictions,
national defense, public order, and a monetary system are upheld on behalf of the State, not on behalf
of the governments of the day. However, economic regulation pertaining to competition, taxation,
product standards, labor conditions, etc., are matters for individual governments and not for the State,
as Caritas in Veritate indeed claims (§ 25). The Encyclical takes the tripartite European model for
granted, not the simpler American opposition of individuals and government, and all ten occurrences
of the term ‘government’ in the text are indeed in the plural. Only thus can one understand a sentence
such as the following: ‘The integrated economy of the present day does not make the role of States
redundant, but rather it commits governments to greater collaboration with one another’ (§ 41).

The social ontology of Caritas in Veritate may then be described in the form of equilateral triangles.
In language borrowed from the Thomistic tradition, one may see the structure of social ontology, i.e.
the three social agents, as standing in a relation of analogy with how they operate, and with the ends
to which these functional modes are ordered (Figure 2). This homomorphism (reflected in congruent
triangles) expresses who the players are, what their play is about, and why it is played.

Co-operation Civil society Reciprocity

Autonomy Control Market State Efficiency Equity

Figure 2: Social agents (center) in their functional roles (left) and aims (right)

Caritas in Veritate thus presents economic life as a ‘multi-layered phenomenon’ (§ 38) taking place
in various structures which have not at all emerged spontaneously but are components of a more
complex social ontology. Civil society is constituted by the various intermediary communities which
John Paul II called ‘real communities of persons’ (Centesimus Annus, § 49). The civil economy
referenced in the Encyclical is then civil society using co-operation between producers and
consumers that aims at reciprocity. Where Benedict XVI goes beyond his predecessor, more in
emphasis than in direction, is by locating the civil economy not only in civil society but throughout
the social sphere, and thus in configuring ‘intermediary’ bodies not in a linear sense as between

5
individuals and the State, but as the glue that holds all of human society together. Civil society must
again extend the principles that are germane to it – gratuity, reciprocity, and solidarity – to the sphere
of markets, where other principles predominate, and even to that of public administration. Agents of
the civil economy can fulfill their horizontal function of driving development and justice only
because of their vertical dimension of preparing humans with bounded rationality and weak will for
the true objective of community (koinōnía) – growing into communion with God through integral
human development (§ 54). Being multi-layered also means that the economic system is dynamic – if
its triadic structure is well integrated, it attains a higher quality which allows for development in a
vertical sense.

4. A Trinitarian Model
The fundamental theme of Caritas in Veritate is to present the biblical account of the economy of
God’s household (oikonomía tou theou) as a model for ordering human society. The Sacred Trinity is
God’s mode of being, and the Encyclical outlines the normative implications of the nature of God as
a community in unity of three different persons: ‘The Trinity is absolute unity insofar as the three
divine Persons are pure relationality. The reciprocal transparency among the divine Persons is total
and the bond between each of them complete, since they constitute a unique and absolute unity’ (§
54). Like the Father, Son, and Holy Spirit of the Nicene Creed, the three social actors have different
identities and functions – and are therefore different entities – yet are of the same substance, since
they are ultimately but different forms of human organization. It is persons that exchange on markets,
build institutions of society, and embody functions of State. Yet regardless of their roles, they are
united in serving one single purpose – ‘integral human development’ (§§ 4, 9, 18). The vertices of a
triangle – to use an insufficient geometrical analogy – are not opposed to each other but are related. 3
As extrema, they have an individual identity and yet cannot be defined in abstraction from each
other. Each divine person is a whole rather than a part (Aquinas, Summa Theologiae I, q. 30, a. 4); by
analogy, a society composed of human persons is also a whole composed of wholes rather than of
individuals (Maritain 1947: 46f.). 4 The doctrine of the Trinity says that God is Himself community,
and every human institution seeking to grow into the perfection of God must by necessity transform
itself into a community of persons. Benedict XVI does not advocate a new super-corporatism, and he

3
Any such analogy can only capture part of Christian dogma about the Sacred Trinity and hold at the level of a
model. The New Testament contains numerous passages defining the nature of the three persons that cannot be
reduced to the simplicity of the several symmetrical properties of an equilateral triangle. Although old
Christian emblems such as the Shield of the Trinity identify vertices with particular divine persons, all such
models are merely metaphorical.
4
In a similar spirit, Braudel refers to society as a ‘set of sets’ (Braudel 1982: ch. 5).
6
abstains from invoking an ‘organic’ conception of society, as previous Papal teaching and Catholic
thought have done (Fanfani 1935). Rather, the Trinitarian ‘model’ (and Caritas in Veritate uses
exactly this term) is open and dynamic, for ‘true openness does not mean loss of individual identity
but profound interpenetration’ (§ 54). The mutual interpenetration of market, State, and civil society
– like the perichōrēsis (‘mutual indwelling’) of the persons of the Trinity – is a theme that invites a
reconceptualization of social thought, and within it of economic theory, that goes beyond the
distributional games between market individualism and State socialism.

In his Encyclical, Benedict XVI clearly builds on the idea formulated by St. Augustine of Hippo and
further expounded in scholastic theology that imprints of the Trinity (vestigia Trinitatis) can be found
throughout the created order (De Trinitate, VI). Contemporary theology speaks of the ontological
Trinity – the reciprocal relationships of the Father, Son, and Holy Spirit as being immanent within
the essence of God – being reflected in the economic Trinity, or its operation within history in terms
of the roles or functions performed by each of the divine persons (Mowry LaCugna 1991). St.
Augustine saw all charity and goodwill in the world ultimately have its origin in the mutual love
between the persons of the Trinity. Benedict’s Augustinian theology applies this thought to the
human condition and to social life (§ 5). Contrary to any and all antagonistic models of society – of
class struggle, racism, feminism, nationalism, etc. – he sees humanity as a unity in diversity much
along Trinitarian lines: ‘that they may be one even as we are one’ (John 17:11, 21). If identity is
defined through reciprocity, the search for an absolute identity must fail. The justification is
syllogistic: Achieving integral human development implies growing into the likeness of God (Eph.
2:19-22, 4:14-16); God is by His essence Triune; it therefore means participating in His Trinitarian
mode of being; and this defines humans as being essentially relational rather than by membership in
discrete categories. The identity politics so popular in American academics and beyond cannot be
Trinitarian, and it therefore cannot be Catholic (and probably not Christian).

The Trinitarian anthropology of Caritas in Veritate points to the transcendent dimension of human
beings (§§ 54, 75). They not only exchange goods with each other but are also ‘made for gift’ (§ 34).
Society must not be reduced to a system of market exchanges but also manifests itself in families,
associations, companies, churches, or nations: ‘Because it is a gift received by everyone, charity in
truth is a force that builds community, it brings all people together without imposing barriers or
limits’ (§ 34). Markets have the important task of enabling persons to ‘make use of contracts to
regulate their relations as they exchange goods and services of equivalent value between them, in
order to satisfy their needs and desires’ (§ 35). But markets as such are disembedded from society:
decisions are not constrained directly by social custom and ethical norms. Benedict XVI agrees with
much recent work on welfare economics that a market ‘cannot produce the social cohesion that it

7
requires in order to function well. Without internal forms of solidarity and mutual trust, the market
cannot completely fulfil its proper economic function’ (§ 35). For this, it requires civil society, and
sometimes support by the State. Economic studies on trust, social capital, solidarity, and happiness
have provided ample support for this conclusion. But the market and the State, too, have a
transcendent function. Gift-giving and gratuity are most characteristic of civil society, but they must
extend to the other social domains (Cambón 2010).

Previous magisterial teaching has pointed to Trinitarian love as ‘the origin and goal of the human
person’ and of proper social relations (Pontifical Council 2004: §§ 34, 54). Yet the work of applying
the Trinitarian model to a deeper and more comprehensive understanding of social reality has barely
begun (Meeks 1989; Hemmerle 1994, 1995; Cambón 2009; Uelmen 2004). Labor, culture, human
rights, justice, health, ecology, education, art, politics, and other social phenomena have been seen
under aspects of the Trinity (Cambón 2009: ch. IV). Strategic management decisions and
organizational patterns of businesses have recently been analyzed in terms of triadic structures that
can be given a Trinitarian interpretation (Keidel 1995, 2010). And management itself, as the
application of practical reason, can be seen in the light of the Trinity (Grassl 2010, 2011). In all this,
the model of the Trinity imposes structure on and makes sense out of social arbitrariness and chaos.

5. The Civil Economy

Understanding the term ‘civil economy’ in the Encyclical is made more difficult by the fact that the
underlying notion of ‘civil society’ has not been unambiguous in the history of social thought. The
critical question has been the autonomy of this aggregate from its components, or the exact nature of
the part-whole relation. The term has been used in at least two different senses – to refer to the
market, and to refer to associations that are independent of the State. If civil society (bürgerliche
Gesellschaft), as for Hegel, amounts merely to the totality of egoistic, utility-maximizing individuals,
it indeed coincides with the market. Hegel held that it had emerged at the particular period of
capitalism and served its interests by safeguarding individual rights and private property. For
Tocqueville, on the other hand, ‘civil society’ comprises all those associations of individuals that
emerge in autonomy from the State. The two notions have sometimes come to be opposed to one
another, especially by proponents of unfettered markets who reject associations – trade associations,
labor unions, guilds, or other non-governmental bodies – as rent-seeking parasites attempting to
distort autonomous market processes. Where sympathy and other moral sentiments were seen at all,
they were, as in Smith, confined to the sphere of individuals who may include them in their utility
function and choose to correct the results of market forces. The liberal tradition would therefore see
philanthropy as a post factum corrective to markets but maintain the exclusive role of markets as
8
coordinating human decisions. Where feelings of compassion and solidarity had to be recognized,
they were, as somewhat perverse or inexplicable side-effects of human personalities, still subsumed
under the utilitarian calculus. Society thus became subordinate to markets, an idea that is still
reflected in contemporary attempts to subject all manner of social and even religious issues to
economic analysis by assuming the existence of exchange. Even political economy, as the study of
human behavior as ‘contaminated’ by the presence of institutions of government, has been reduced to
economics, as a ‘pure’ study of human behavior. The tradition of ‘civil economy’ is an alternative to
this thread in economic thought.

Based on his work on economic history, Karl Polanyi identified two alternative non-market
mechanisms of economic organization: redistribution and reciprocity (Polanyi 1977: 35-43).
Redistribution is typical of state actors whereas reciprocity, which is common particularly within ties
of kinship, ethnicity, or religion, amounts to sharing with others in the expectation that when needed
the action would be reciprocated. Societies thus have three basic options for producing and
transferring value. It is crucial to appreciate the distinctions between altruism and reciprocity, and
between reciprocity and exchange of equivalents (e.g., market exchange). In our current society,
which is still built on dichotomous thought about society, we tend to categorize every transfer of
value as either altruism or market exchange. In a civil economy, there is a space for a third kind of
transfer of value – reciprocity. Altruist behavior sees the recipient as helpless and is thus motivated
by mere compassion, which can create dependencies and invites situations of moral hazard. Market
exchange requires an exact equivalence between what is exchanged, i.e. a fair price must be found,
charged, and paid for a transaction to be successful. Reciprocity, by contrast, recognizes that both the
giver and the receiver invest something into the relationship, even if their contributions are at first
sight unequal. Its objective is the development of ever tighter social networks of direct mutual
relations. Gifts create imbalances; they obligate but do not require immediate reciprocation. As a
result, they build closer relations between persons and social capital (Meeks 1989: 118f.). In civil
economies, all three systems will be present, but it is that of reciprocity that constitutes the ‘salt of
the earth’ (Mt 5:13) animating the whole. Civil economies will therefore be institutionally diverse,
containing for-profit and non-profit businesses, whether in the form of individually owned
companies, co-operatives, or corporations.

The civil society of Italian city states in the late medieval and Renaissance periods generated vibrant
markets that together with those of Flanders supplied Europe with capital and finished goods. There
was an intricate coexistence of private commercial enterprises developed by the leading families of
Venice, Florence, Pisa, Genoa, or Lucca with smaller-scale artisans, craftsmen, and traders.
Throughout Europe, business was deeply embedded in society and governed by its values, customs,

9
and codes, as is evidenced by the old prohibition on usury, which was was condemned primarily
because it violated the obligation to reciprocate (Clavero 1991). Banks, insurance companies and co-
operatives were founded on mutualist principles, including institutional pawnbrokers run as charities
as invented by the Franciscans (Monti di Pietà). 5 The workers employed in the building of French
cathedrals in the twelfth century organized themselves as Les Compagnons du Devoir, and this oldest
labor union still in existence has supported the development of a strong artisan culture in France not
least because of its deep embeddedness in civil society (Kleymann, Malloch, Redman and Angot
2008). Markets flourished and led to momentous technological and institutional improvements, and
consequently to economic development even before the emergence of capitalism and the institutions
that it later added – anonymous ownership of companies, a split between ownership and
management, and the subordination of social and religious values to the perceived exigencies of
enterprise (Braudel 1982). With the Industrial Revolution, the civil economy gave way to the
political economy that Adam Smith described.

The ‘Scottish’ tradition in economic thought, from which ‘mainstream’ economics largely developed,
is a relative newcomer. A much older tradition, which includes Aristotle and the scholastic
theologians of the Middle Ages, assumed households of persons rather than atomistic individuals as
decision-makers, and abstained from reifying markets by isolating them from civil society with its
religion, customs, practices, codes, values, and institutions. In the European world, a Mediterranean
tradition in economic thought long preceded the Anglo-American tradition (which is actually of
Scottish origin); the latter won out as Western society moved from religious and ethical orientations
to the rationalistic thought of mercantilism, and particularly as the Industrial Revolution prioritized
the principle of efficiency (Baeck 1994). In the eighteenth century, ‘public happiness’ was still the
paramount goal of economists committed to the common good rather than the private goods of
individuals. Most notably, a school of Italian economists emerged, primarily in Naples and Milan,
that saw markets not as a forum for exchange but as forms of friendship – ‘civil life as economic life,
and economic life as civil life’ (Bruni 2009: 76). The historical experience on which they reflected
was the rich network of civil economies that had developed in the Italian city states by the
Renaissance period. For Antonio Genovesi (1712-1769), reciprocity was the hallmark of human
sociality where for Smith it was ‘the propensity to truck, barter and exchange one thing for another’
(Smith 1976: 25). Economic development was seen as depending on trust, and the aggregate stock of
trust in a society was not seen as reducible to individual dispositions but rather as a common good.
Several Italian economists shared a view of the market not as being opposed to civil society but as a
part and function of it (Bruni 2009: ch. 4; Bruni 2010: chs. 8-9; Bruni and Zamagni 2007: ch. 4).

5
Caritas in Veritate in fact sees the origin of microfinance in the pawnbroking model introduced by ‘civil
humanists’ (§ 65).
10
These economists stood themselves in the tradition of Aristotelian ethics with its emphasis on
eudaimonia, and of scholastic moral theology, including the School of Salamanca and the Franciscan
writers about economics (Bruni and Smerilli 2010).

Central to the civil economy tradition in economic thought is the conception of man as a relational
being by nature. In the same spirit, Benedict XVI, in a ‘metaphysical interpretation of the humanum’,
defines ‘relationality [as] an essential element’ (§ 55). Man is not homo oeconomicus because his
utility function is not only, or not even primarily, determined by individually producible and
appropriable goods (O’Boyle 2007; Bruni 2008: ch. 2; Becchetti 2009; Davis 2011: 6ff.). Nor is he
homo collectivus, or a herd animal whose identity is derived from membership in a particular race,
culture, gender, nation, class, or other unchosen group. Rather, man is homo reciprocans who does
not always seek to exchange what is of equal value, or a quid pro quo, whose exchanges may be
staggered in time, or who acts from pure gratuity (Becchetti, Bruni and Zamagni 2011: ch. 9).
Reciprocal behavior is by all means compatible with markets; historical evidence shows that it has
fostered markets and has in turn been strengthened by the markets of civil economies.

The social model Benedict XVI proposes in Caritas in Veritate is that of a civil economy (§§ 38f.,
46f.). The Pope even refers to its origin in civil humanism (§ 65). It is little understood on the
American stage, where economic thought is often deemed to originate with Adam Smith and where
social ideals, legal norms, and political models are derived from Anglo-Scottish and French
Enlightenment thought and presuppose social dualism. The Pope does not present a third way
between the market and the State, not even between traditional capitalism and traditional socialism,
but a unitary model uniting three poles animated by three types of social agents – the market, the
State, and civil society. This resembles only formally the model of market socialism that also
postulates a tripartite social ontology but invariably sees one element overpower the others (Miller
1990). Similarly, it bears only a weak and formal resemblance to models of corporate social
responsibility or stakeholder capitalism, all of which impose ethical constraints on market behavior
(Williams and Aguilera 2008). The Encyclical avoids bicategorial oppositions in the first place that
would then be corrected in the direction of one or the other pole. Neither does it postulate a static
trichotomy of society; rather, the ‘dynamic of charity received and given is what gives rise to the
Church’s social teaching’ (§ 5). The three social agents are dynamically related in that the principle
of charity in truth must pervade all sectors of society and reciprocity must spread from civil society
to the market, which ought to come under the control of society again, but also to the State, which as
another agent of society needs to fulfill subsidiary functions where others cannot do so.

Caritas in Veritate equally opposes the heavy reliance on public welfare systems typical of European
countries and the heavy reliance on voluntary philanthropy typical of the United States. Since no

11
State program can ever replace individual compassion, altruism, and love, ‘subsidiarity is the most
effective antidote against any form of all-encompassing welfare state’ (§ 57). Public welfare through
transfer payments shifts economic power to the State instead of civil society; private philanthropy is
based on a self-centered motivation, since altruism is not identical with Christian love. Ostentatious
philanthropy through tax-exempt foundations, as it is practiced in the United States, reflects a
Protestant and extrinsicist separation of nature from grace; it often simply serves to compensate for
the wealth accumulated through morally reproachable business practices. What is called for is a
Catholic project that allows grace to transform nature, yielding a more integral generosity practiced
by large portions of society as part of their normal way of doing business. Benedict XVI therefore
proposes the development of a self-sustaining and caring civil economy: ‘The Church’s social
doctrine holds that authentically human social relationships of friendship, solidarity and reciprocity
can also be conducted within economic activity, and not only outside it or “after’ it”’ (§ 36). This
project requires that the creativity fostered by markets needs to be joined by the power of the State to
enforce social institutions against free riders. State action as such is not an expression of solidarity
but a substitute for it – ‘it cannot therefore be merely delegated to the State’ (§ 38). Benedict XVI
defines the limits of both ‘social’ and ‘free’ market economies: ‘The principle of subsidiarity must
remain closely linked to the principle of solidarity and vice versa, since the former without the latter
gives way to social privatism, while the latter without the former gives way to paternalist social
assistance that is demeaning to those in need’ (§ 58).

Many of the proposals of Caritas in Veritate seem to support the program of distributism, which to
varying degrees has been promoted by Catholic social teaching since Rerum Novarum (1891).
Worker participation in share capital and management (§ 63), ‘mechanisms of wealth redistribution’
(§ 32), ‘commercial entities based on mutualist principles and pursuing social ends’ (§ 38) and other
forms of ‘economic democracy’ (§ 38) indicate this direction. But differently from previous
magisterial teaching, the Pope claims that broader access to resources may also be more efficient, and
efficiency in ‘economic logic’ should and must precede equity (Grassl and Habisch 2011). However,
Benedict XVI does not call for a return to any previous state in economic development, and he does
not engage the State in imposing such solutions. In fact, he explicitly points out that globalization has
imposed limits on redistribution, and in general on State action (§ 37). The Pope expects civil society
and the market which it should inspire and control to develop innovative solutions within ‘economic
logic’ (§ 36) by letting it be infused by the ‘logic of gift’ (§§ 34, 36).

Underlying any civil economy, then, is the recognition that, in addition to the categories of private
and public goods, which are produced by the market and the State, respectively, there is one of
relational goods (Bruni 2007: ch. 6; Bruni and Zamagni 2007: 239-45). Examples are

12
companionship, social approval, solidarity, emotional support, and a sense of belonging – goods that
the monastic tradition has typically subsumed under the concept of communio. These have been
defined in different ways, by some authors as coinciding with relationships and by others as parts of
them (Bruni 2008: 8ff.). The common denominator is that the relevant differences between three
types of goods are the following (Table 1):

Private Goods Relational Goods Public Goods

Rivalry in consumption YES NO (anti-rival) NO (non-rival)
Excludability YES YES/NO NO
Consumption in isolation YES NO YES
Separability production/consumption YES NO YES

Table 1: Types of economic goods

Relational goods undermine the dichotomy between private and public goods. Neither type involves
a relation amongst the subjects involved, but relational goods do. Excludability is possible but
depends on the relationship with partners (which is the only property shared with private goods).
Relational goods are anti-rivalrous in consumption, because their very nature is based on
interpersonal sharing; in the sense of Aristotelian logic, relational and private goods are
contradictories on rivalry in consumption, whereas private and public goods are merely contraries.
Production must be done in person and cannot be contracted out. Participation in consuming a
relational good actually creates a positive externality on partners (Becchetti, Pelloni and Rossetti
2008). They can therefore never be consumed in isolation, and their production cannot be separated
in time and space from their consumption. Some of their properties (but not that of consumption in
isolation) they share with club goods such as golf courses, swimming pools, open source software,
and other information goods created through the process of commons-based peer production. Club
goods are excludable but non-rivalrous, and they produce increasing utility from sharing until
satiation is reached and congestion occurs. Relational goods, on the other hand, are not subject to
congestion. In fact, they are not affected by material but by social scarsity. Human beings need them
but the market mechanism cannot produce them. This suggests the necessity of developing a more
nuanced conception of scarcity (Barrera 2005).

With relational goods, the personal identity of producers and consumers matters. Producers, who are
at the same time consumers, must participate in person. These goods come about in a form of team
production where marginal inputs of producers can change the quality of the good for all (Grassl
1998). Relational goods are not fungible; they have a value but no market price. These goods fulfill
13
all the conditions for common goods: ‘The common good does not consist in the simple sum of the
particular goods of each subject of a social entity. Belonging to everyone and to each person, it is
and remains “common”, because it is indivisible and because only together is it possible to attain it,
increase it and safeguard its effectiveness […]’ (Pontifical Council 2004: § 164). Common goods in
this sense are not public goods in the sense of public finance. The identity of and relations among
producers of public goods are irrelevant whereas a common good, as ‘the social and community
dimension of the moral good’ (Pontifical Council 2004: § 164), establishes direct relationships
among persons (Bruni 2007: 102ff.). It imposes obligations and personal involvement.

For relational goods that are produced by a civil economy, intentions therefore matter. Caritas in
Veritate points out that economic and financial instruments ‘that are good in themselves can […] be
transformed into harmful ones’ (§ 36). Not instruments are bad but persons who use them may act
unwisely, sinfully, or criminally. The right intention (in the scholastic sense of intentio) is crucial –
the objective towards which a social institution is ordered, as Benedict XVI explains with reference
to finance (§ 65). The civil economy is ordered towards enhancing integral human development.
Reason can be a partial motivation in this direction, but it must be complemented by love and by a
supportive culture to carry weight (§§ 2f., 5, 9, 19, 22, 30, 34, 64). Three forms of reciprocity have
been distinguished: (i) an instrumental (or ‘cautious’) reciprocity that arises from a rational calculus
and leads to cooperation without benevolence; (ii) friendship (or ‘brave’ reciprocity) as being
personal and benevolent but not unconditional and necessarily reciprocal; (iii) ‘unconditional’ (or
‘gratuitous’) reciprocity, which is motivated by an intrinsic reward independently of any
reciprocation (Bruni 2008: chs. 3-5). These forms of reciprocity correspond to three types of love
that, in Greek and Christian thought, have been identified as eros, philía, and agápē. They coexist in
individual persons who, as Maritain reminded us, themselves are wholes consisting of various
components and layers (Maritain 1947: 69). Economics has developed a theory of multiple selves
(Davis 2011: ch. 3). Similarly, Benedict XVI emphasizes that love is one and many, not least because
it ultimately derives from Trinitarian love (Deus Caritas Est §§ 2-18). Eros as desire is directed at
obtaining what one does not have; it is the acquisitive motivation that underlies the contractual
relationships typical of market exchange. Philía also motivates market exchange, but under the rule
of quid pro quo, by treating others as alter ego and building on the mutuality of relations (Bruni
2010: 52ff.). Only agápē captures the strong sense of reciprocity, as unconditional giving. This form
of love operates by a different logic from the others. Most notably, it is inexhaustible and as a
personal virtue grows with use. The presence of agápē in society ennobles it by elevating it above a
network of merely purposeful relationships (Figure 3).

14
 Reciprocity
agápē

eros philía

Exchange Control

Figure 3: Three forms of love as motives of reciprocity

If love is essential for reciprocity, there is a form of love that tends more towards spontaneous
exchange, another that forms the basis of longer-term sociality, and one that is pre-eminently and
unconditionally directed towards the other. There is a triangle inscribed into the apex of the triangle.

These three forms of reciprocity must not be understood as an arithmetic sum but rather as a product:

R=C×F×L

where R = reciprocity, C = contract (eros), F = friendship (philía), L = love (agápē) (Bruni and
Smerilli, 2010: 99). If they were a sum, any summand could be negative, which could be outweighed
by another strongly positive summand to achieve a positive value for reciprocity. Product notation
makes reciprocity negative (or absent) if any single factor is negative. They are all required, even
though by different proportions, for reciprocity to be effective. Desire is the natural force of
consumers to act on their needs and wants and of producers and marketers to implement their ideas
and strive for financial gain. Friendship as the building of relationships may have a natural
motivation and one inspired by grace; but agapic love is due to grace alone. In the Catholic view,
grace must infuse nature in order to perfect it (Summa Theologiae I-II, q. 110, a. 2 and 4). Without
the agápē that comes from Trinitarian love, a truly civil economy cannot succeed. But this also
entails that the principle of subsidiarity applies to these forms of love to establish an ordering that has
been called a ‘fundamental principle of civil life’ (Bruni 2007: 113): L > F > C. Contracts are
subordinate to friendship, and friedship is subordinate to (agapic) love. A high value for L is the
sufficient condition for a good society, and at least some amount of F is a necessary condition for any
society at all. On the basis of this program, models of a civil economy may be developed that capture
the social teaching of Caritas in Veritate and carry it further (see Appendix).

15
6. New Forms of Economic Organization
Caritas in Veritate recognizes the role of markets in harnessing human creativity (Grassl and
Habisch 2011). In fact, their function of facilitating exchange is indispensable. But they do not by
themselves produce the personal virtues that are required for them to function well (§§ 32, 35).
Markets must not be reduced to one historically contingent form of economic organization –
capitalism (§ 41). Market economies existed long before the Industrial Revolution brought about
capitalist forms of production and consumption (Braudel 1982). Even within capitalism, there are
different economic cultures with variegated models of industrial organization, management styles,
and of the public sector (Grassl 2003). It is a mistake to reduce capitalism to the form that has
emerged in the United States only over the past century, with joint-stock corporations dominating
and corporate policy therefore being directed at maximizing shareholder profits over the short term.
Benedict XVI rejects the ‘binary model of market-plus-State’ (§ 41) and questions it on several
grounds. On the contrary, he expects ‘that business enterprise involves a wide range of values,
becoming wider all the time’ (§ 41). Most of all, he calls for new and creative forms of businesses
operating on markets and typically for profit, or as ‘hybrid forms of commercial behavior’: ‘Charity
in truth […] requires that shape and structure be given to those types of economic initiative which,
without rejecting profit, aim at a higher goal than the mere logic of the exchange of equivalents, of
profit as an end in itself’ (§ 38). The Pope rejects the traditional division between for-profit and non-
profit business. Not only does he expect ‘hybrid forms’ to emerge. More radically, he expects the
‘logic of giving and forgiving’ (§ 6) gradually to embrace the market and the State.

European countries, and particularly those with strong Catholic cultures, have developed co-
operative movements for farmers, craftsmen, shopkeepers, and consumers, that have become
formidable players on factor and consumer markets. They allow smaller suppliers to bundle their
otherwise atomistic market power to compete with multi-national corporations and thus at least
partially to overcome diseconomies of scale. They allow household buyers to approximate the
purchasing power of corporate buyers, although the success of this movement has for organizational
reasons always been greater on business than on consumer markets. Several institutional forms have
been created ranging from limited partnerships to marketing co-operatives and consortia based on
rules of both efficiency and equity (Grassl 1998). These models have spilled over to Latin America,
where Brazil is now home to a thriving co-operative movement of ‘solidarist’ businesses (economia
solidária), and to Africa, where microlending on the model of Bangladesh has facilitated the
emergence of a new class of business owners (Carvalho de França Filho 2007). Ethical investment
funds, fair trade organizations, and alternative forms of travel complement this trend. All these
businesses use a wide variety of governance models (Travaglini, Bandini and Mancinone 2010).

16
Under globalization, different cultures will continue to bring about different business models for the
civil economy.

To a large extent, Catholic social thought stood at the origin of this movement in the nineteenth
century, and often since has the Church supported the development of co-operatives, mutuals, unions,
and other membership-led organizations (Davis 2000, 2006 ). Caritas in Veritate even mentions
credit unions as a positive example (§ 65). The worldwide Economy of Communion as a project of
the Focolare Movement is a network of businesses that freely choose to share their profits according
to three principles of equal importance – to grow their businesses, help people in need, and spread the
culture of giving (Gold 2010). Benedict XVI supports exactly these endeavors when he proposes the
civil economy (§§ 38f., 46f.) and the Economy of Communion (§ 46) as models to be followed.

Caritas in Veritate also states that the consumer ‘has a specific social responsibility’ in parallel with
that of businesses (§ 66). The Pope calls for new models of consumption, ‘for example, forms of co-
operative purchasing like the consumer co-operatives that have been in operation since the nineteenth
century, partly through the initiative of Catholics’ (§ 66). Here, too, creativity is needed, and the
pontiff’s call is partially being answered. Better access to information and greater transparency of
corporate decisions have reduced the asymmetry of information and thus price-setting power on
which traditional forms of consumption and retailing relied. A business landscape is developing that
exhibits many properties of a civil economy (Ridley-Duff and Bull 2011). Consumer movements
have created new models of household production, direct distribution, and quality-conscious
consumption. One may think of the Slow Food movement, which started in Italy and has expanded to
much of the world (Petrini 2007). Out of this movement grew Terra Madre, a worldwide network of
‘food communities’ which spreads by bypassing the large commercial distribution systems (Petrini
2010). Under the cover term ‘collaborative consumption’, various models of sharing, swapping,
bartering, trading, and renting, have been invented and have been facilitated by advances in social
media and peer-to-peer online platforms (Botsman and Rogers 2010). The transformation of passive
consumers into collaborators through social media harbors the opportunity of creating new human
communities (although the quality of these still remains to be seen) (Shirky 2010). On both sides of
the market, those of consumers and producers, the future may lie in sharing (Gansky 2010).

On the other hand, the Pope does not ignore the necessity for the State to introduce regulation where
market behavior leads to monopolies or the protection of consumers is necessary. Recently Benedict
XVI called for a ‘strategic revitalization’ of agriculture. In an Angelus message (Sunday, 14
November, 2010), he deplored how particularly in less-developed countries the agricultural sector is
being crowded out by low-value manufacturing only then to import foodstuff from ‘dynamic
economies’. These, however, ‘are tempted to pursue advantageous alliances’, and an increasing

17
oligopolization of large industrial producers in a few developed countries leads to higher prices and a
growing dependency for developing countries that used to be largely self-sufficient. The Pope
concludes that a new balance between farming, industry and services is necessary so that
development may be sustainable (§ 27). More responsible consumption and more enlightened
business practices are as important as is government regulation to solve the problem.

What would it take to recover, at least in certain pockets of society, some of the rich artistic and
commercial culture of the Renaissance that still serves as a model for a civil economy? Both arts and
crafts are individually appropriated skills that are socially recognized and transmitted. They require
for their flourishing a community of practitioners, institutions of training and adjudication, systems
of patronage and sponsorship, efficient supply chains for raw materials and tools, and distribution
channels to intermediaries and final consumers. Even all of these would be insufficient were it not
also for the social appreciation of individual accomplishment, and of beauty and individual style
within path-dependent traditions; they create incentives to enter an art or a craft, which by necessity
implies joining a guild or self-regulating community of practitioners, and they influence price
formation. Sociologists have long recognized that crafts from carpenters to cooks and goldsmiths, if
they are truly meant to flourish, require standards that are produced by communities but cannot be
generated by markets of anonymous consumers (Sennett 2008). From the State is needed protection
against fakes and counterfeits. Lastly, the humus of creativity depends on inspiration and talent,
which are products of divine grace. Here, too, all three social agents need to cooperate, and all three
forms of love must be present, in order to develop an economy that can truly be called civil.

7. Lessons for Economics as a Science

The model of civil economy suggested by Caritas in Veritate is opposed to all dualisms in social
thought. It therefore squares badly with ‘mainstream’ economic thinking, which still relies on
dichotomous oppositions drawn by classical liberalism, particularly between markets and society.
There are approaches outside the predominant paradigm, but they are typically more inspired by
sociology, economic history, or anthropology, than by economic theory. Many of these derive from
the study of cases of civil economies past and present.

Several trends in ‘mainstream’ economics work in favor of an accommodation of the model of civil
economy also at the level of theorizing. Economic personalism and social economics have long
argued that the assumption of isolated individuals that underlies the theory of rational choice is
fundamentally misguided (Davis 2011). An entire research stream on reciprocity has emerged (see
Bruni 2008: 98-102; Kolm 2008; Kolm and Mercier Ythier 2006). Phenomena of gratuity, grants,

18
and altruism are increasingly studied within the frameworks of and by using the tools of behavioral
economics, game theory, economic psychology, and welfare economics. There is a burgeoning series
of works on positional goods, social preferences, peer effects, social capital, reputation, and other
topics which have a bearing on the civil economy (Gui and Sugden 2005; Kolm 2008). There is also
a literature on the more limited meaning of ‘civil economy’ as non-profit associations
complementing the market and on the management of voluntary organizations (Bruyn 2000). Lastly,
marketing has recognized the importance of building long-term relationships with customers
including acts of gratuitousness (Gummesson 2008; Tadajewski 2009).

Many results about the power and limitations of exchange on markets, control by the State, and
reciprocity in civil society have been obtained. A growing experimental literature shows the
importance of reciprocity for behavior in labor markets and other settings (Dohmen, Falk, Huffman
and Sunde 2009). To quote a single example, it has been shown that the likelihood for reciprocity
networks to develop and be sustainable is a function of size. When more people engage in gift
exchange, reciprocity is more rewarding for givers, not least because the likelihood of reciprocal
response increases; on the other hand, search costs also increase. There is an interaction between
exchange on markets and reciprocity: ‘if many people in the economy engage in reciprocal exchange,
the market is thin, and it is hard to locate trading partners in the market. Market exchange yields
lower levels of utility. On the other hand, if many people engage in market exchange, the market is
thick, and it is easy to buy and sell goods on the market. But, it is difficult to enforce a long-term
exchange agreement’ (Kranton 1996: 831). Since both forms of economic organization have negative
external effects on the other, it would be socially efficient for everybody to participate in only one or
the other. On the other hand, the results indicate that the effectiveness of gratuity is not limited to
small groups of persons with ties of kinship or proximity. These studies have of course limited
themselves to reciprocity as contractual exchange or as conditional friendship.

But Caritas in Veritate suggests a much more profound rethinking of economics as a science than the
mere addition of areas of study, which are then often treated under the same assumptions and with
the same tools as in ‘mainstream’ economics, merely as exceptions from the assumption of markets.
If central axioms about consumer choice – full information, non-satiation, revealed well-being, etc. –
and about the competitive behavior of firms are dropped, the classical models of price theory require
substantial revision (Yuengert 2009). Caritas in Veritate goes even further – it calls for the
development of a new economics no longer based on inherited assumptions that have broken down in
the light of empirical evidence. First among these is the assumption that there is something like the
‘economical’ that can be distinguished from the ‘social’. Economics can at best be defined through
particular methods but not throughy an ontologically distinct field of studies.

19
In the light of Caritas in Veritate, the objective of economics must be reconsidered. Lionel Robbins
famously defined economics as ‘the science which studies human behaviour as a relationship
between ends and scarce means which have alternative uses’ (Robbins 1945: 16). Persons play no
role in this science, only their utility functions do. Businesses as ‘communities of persons’ play no
role but are reduced to production functions. Entire economies are not societies of persons with
different objectives and tasks in the economic system who are connected by numerous ties, but are
reduced to welfare functions. Ends can be arbitrary, since economics deals only with means-ends
relations.

Contrary to such understanding of economics, Benedict XVI requires that it serves the purpose of
assisting integral human development. He makes it clear that the traditional division between positive
and normative economics breaks down and that the discipline cannot claim any ‘autonomy’ from
ethics (§ 34). Much of the debate on economic methodology has moved towards the same position
(Grassl and Habisch 2011). With its anthropological turn, which in fact is a theological turn, Caritas
in Veritate shows the direction for future developments in consumer theory and microeconomics in
general. For papal economics, the microfoundation of macroeconomics is evident. Economic
considerations not only start with personal decisions, macroeconomic outcomes must again serve
human welfare and are judged by it. Towards this purpose, a reformulation of economics has already
been proposed: ‘Economics deals with the allocation of scarce resources to their best competing uses
with an eye toward effecting sufficiency in material provisioning for all’ (Barrera 2005: 202f.). A
definition in the spirit of civil economy will go even further, by emphasizing that material
provisioning will be a proximate goal whereas economics in a Trinitarian understanding must also
contribute to the ultimate goal of integral human development, which is a vocation in the sense of
deriving from a transcendent call and being incapable, on its own, of supplying its ultimate meaning
(§ 16f.). Any purely ‘technical’ conception of economics cuts too short because it ignores the
transcendent nature of human beings (§ 71). If economics is to make a contribution to human
flourishing, it must also study the intricate network of relations that give meaning to human lives and
that go much beyond material provisioning. As a corollary, reciprocity cannot be reduced to transfer
payments, which is another assumption frequently found in the literature. Traditional economic
categories may not suffice to explain real human behavior and its underlying motivations.

Great attention must be given not to slip into a meaning of ‘reciprocity’ that is overly narrow and
technical. One stream of research, for example, has identified three possible rationales for
reciprocity: (i) balance or compensation as related to equality and fairness, or to the desire to avoid
moral indebtedness; (ii) liking, because being purposefully favored induces liking which induces
favoring, or because liking can directly result from being liked; (iii) self-sustaining sequences of

20
mutual favors, which can be solely self-interested (Kolm 2006b; Kolm 2008: ch. 5). Explanation (i)
begs the question, (ii) introduces circularity by identifying reciprocity with a proximate with unclear
direction of causality, and (iii) does not in fact reflect proper reciprocity. 6 Assumption of a
reciprocity equilibrium (Kolm 2008: 314ff.) excludes its unconditional form as motivated by agápē.
Along these lines, a distinction of twelve basic types of altruism includes sentiments such as
affection (reduced to family settings) and empathy but not the elemental fact of love (Kolm 2006a).
Certainly reciprocity may be understood as motivationally interrelated gift-giving (Kolm 2008). But
research, if it wants to produce meaningful results, must not skirt the fact that love is one of the most
powerful motivations. Attempts at introducing reciprocity into the social choice framework with its
formal notation make sense only if the distinctions they assume have psychological validity.

Taking the proposals of Caritas in Veritate seriously means engaging in research, application, and
knowledge transfer. Various fields of economics can assist in this endeavor, from the economics of
networks to public choice theory, from the economics of social security to the theory of clubs and of
co-operation, and from development economics to work on corporate governance and organization.

8. Conclusion
Within the tradition of Catholic social teaching, Caritas in Veritate is nothing if not innovative, but
maybe less so for the individual precepts it formulates than for the vision it proposes. It does not
present a social model as a ‘third way’ between capitalism and socialism but combines the virtues of
a market economy (which is not identical with capitalism) with the virtues of a communitarian
economy (which is not identical with socialism). In this sense, Benedict XVI presents a ‘third way’
on the ideological plane only, in the sense of rejecting two reductionist ways of thinking. But he
presents one best way in economic reality – flooding all areas of society with charity in truth. In a
sense, the Encyclical expands the ‘unalienable rights’ of the U.S. Declaration of Independence –
‘life, liberty, and the pursuit of happiness’ – to the values of the French (and largely the European)
political tradition – freedom, equality, and fraternity. Freedom belongs to the sphere of market
participants, as an expression of the autonomy of consumers and producers; equality before the law
characterizes the good State; and fraternity is the resultant of reciprocity and gratuity that animate
civil society (Cavara 2005). The Encyclical gives a Trinitarian explanation of the interplay of these
principles in a form of perichōrēsis. Fraternity is the value most central to the civil economy, since it
engenders attitudes of gratuity, reciprocity, and charity. In the Encyclical, fraternity (§§ 11, 13, 19f.,
34, 36, 38, 57, 73) is a value at least equal to that of freedom (§§ 9, 11, 13, 17, 23, 25, 29, 34, 40,

6
Cf. the alternative classification of types of reciprocity presented above, sect. 5.
21
48), although it is clear that the latter is a precondition of any true fraternity. Benedict’s vision is the
cumulative building of social capital, which is antithetical to Schumpeter’s ‘creative destruction’
through radical and precipitous innovation. The Pope has positioned his teaching at a great distance
from the liberal tradition in which, next to classical and neo-classical economics, also the American
political tradition stands. Where liberalism has exclusive regard for contracts and communitarianism
for friendship, Benedict claims a role for the prophetic voice and centrifugal force of agápē in
economies, which in turn places society under the form of the Trinity (Cambón 2010).

Papal social teaching does not belittle the value of social justice; but neither does it accord to it
primacy of place (as particularly Jesuit theologians have done over the past decades). In the proper
causal ordering, love comes first, and all other virtues and goals follow from it. Caritas in Veritate
advocates all classical precepts of Catholic social teaching, and most prominently the three
paramount principles of human dignity (subjectivity), solidarity, and subsidiarity. But they are not
disconnected axioms; they themselves follow from the fundamental law of charity, which is revealed
and exemplified by Trinitarian love. Consequently, Caritas in Veritate exhorts mankind to strive for
a society that lives by the twin principles of charity and truth, which then will also bring about
greater justice in human relations (§ 37). In fact, ‘without gratuitousness, there can be no justice in
the first place’ (§ 38). This project requires religion, because it is predicated on an anthropology that
assumes a specific calling of human beings in their social relations (§§ 56, 78f.). Seeking social
justice independently of a religious foundation is futile at best and a dangerous totalitarian phantasy
at worst (§§ 34, 38, 53).

The social vision the Encyclical proposes is no phantasy. It has, in various shapes and degrees,
existed over long historical periods, and forms of it are practiced today. True, its underlying principle
– caritas in veritate in re sociali (§ 5) – may always only be implemented partially and imperfectly.
Benedict XVI very realistically calls for changes on the margin by making structures of civil
economy perfect the market where it otherwise leads to failures: ‘[…] action is required not only on
improving exchange-based transactions and implanting public welfare structures, but above all on
gradually increasing openness, in a world context, to forms of economic activity marked by quotas of
gratuitousness and communion’ (§ 39). Despite its spirit of realism, the Encyclical is bold in
achieving two things – defining the goal very clearly, and presenting a theological rationale for it.
The rest is up to us.

22
Appendix: A Geometrical Model of Civil Economy
Caritas in Veritate is not averse to using the term ‘model’, which appears eleven times in the text.
Western thought but also other religious traditions have accorded a special significance to the
number three and to triples occurring in the natural and social world. Plato, St. Albert the Great and
many others have regarded triads and triangles as a clue to the ultimate structure of reality (Schimmel
1993). In Christian symbolism, equilateral triangles have long (though not exclusively) been used to
depict the structure of the Trinity (Webber 1971). An equilateral triangle inscribed in a circle or a
circle interwoven with an equilateral triangle were also common emblems. If the structure of society
is seen in the light of the Trinity, a triangular model therefore suggests itself; the equilateral form is
dictated by the revealed dogma of the equality of persons of the Trinity. Equilateral triangles are, on
intuitive and on formal grounds, regarded as geometric forms with properties such as completeness,
stability, symmetry, compactness, or closure (Fuller, 1975; Keidel 1995, 2010). In a certain sense,
triangles are ‘primes’ among geometrical figures. They are particularly suited to express the
functions of a civil economy (Zamagni 2009: 77; Bruni 2008: 75ff.).

Every social aggregate, from a spontaneously composed group to an entire society, uses three types
of coordination: exchange through contracts (E), control through command mechanisms (C), and
reciprocity through gratuitous giving (R). Among these options, E is typical for markets, C for the
State, and R for civil society. Ternary diagrams can then be used to depict the interaction of these
three components. Equilateral triangles UECR represent the available options for mixing the
respective policies and instruments, in analogy to production possibility frontiers (Fi gure 4):

Reciprocity R R
R (b)
100% 100%

Civil society
X X X
C
Y
r

E C 100% 100% 100% 100%

Exchange Control E C E C
(i) (ii) (iii)

Figure 4: Triangular representation of social structure

23
For any interior point X, the sum of the lengths of perpendicular segments onto the sides equals the
altitude of the triangle, each perpendicular segment equalling the radius r of an incircle (i):

1 1 1 1 1
3 √3
2 2 2 2 2

where side length a = EC = ER = RC. Case (i) represents the center where the shares of E, C, and R
in the economy are equal. Points along the edges represent combinations of (E, C, R) with one of the
three elements at 100% and another at 0%. They are not feasible in social reality. All interior points
are (at least theoretically) feasible. X in case (ii) represents an economy where market exchange
contributes 55%, government action 20%, and the civil society 25% of total social product. Y in case
(iii) represents an economy that relies less on market exchange, more on the State, and has also a
weaker civil economy than X.

Measurement problems are the greatest stumbling block for a reliable depiction of progress towards a
civil economy as suggested by Caritas in Veritate. In order to plot the shares of E, C, and R in a
ternary diagram, contributions to aggregate economic activity must be measured, even if the latter is
(contrary to recommendations by social economics) equated with Gross Domestic Product. For a
small convenience sample of countries, the following diagram was developed:

R
100%

Predominance of
civil economy

SWE
ITA GER CHN
SPN CMR
USA RUS

100% 100%
E C

Figure 5: Example of comparative analysis

24
Shares were estimated on the basis of sectoral employment in total employment (sources: OECD,
Worldbank). The proxy for civil society is employment in the ‘third’ sector (comprising businesses
engaged in voluntary and cooperative activity). Better measurement would be based on contributions
to aggregate production, where the ‘civil economy’ would also comprise those economic agents that
engage in market exchange or State activities but do so for the common good rather than private
profit. Such data are still unavailable at least for cross-country samples.

In this sample, Sweden is farthest on the way towards a civil economy. The large share of co-
operatives and similar businesses provides the most likely explanation. In Germany, large parts of the
agricultural sector and of the banking and dairy industries are operated by co-operatives or mutual
companies, in addition to housing co-ops, mortgage companies, and other small-scale businesses.
China seems to have a surprisingly large ‘third’ sector; however, the existence of numerous multi-
stakeholder co-operatives is not adequately reflected in official economic statistics and would make
the estimate for the civil economy for China much larger. The United States has a comparatively
small ‘third’ sector; measurement of employment shares does not reflect the importance of private
foundations and of philanthropy by households since these hardly create direct employment. The
lowest share of civil economy in the sample was estimated for Russia, where most of the formerly
‘socially’ owned enterprises were either privatized or converted into corporations owned by the
State.

This geometrical representation of social structure is still very inadequate although it seems to
capture the intentions of Caritas in Veritate. It needs significant improvements in measuring the civil
economy if it is to reflect any measure of perichōrēsis. Data about time use, i.e. about time spent on
E, C, and R, respectively, may prove to provide a better picture about the extent of the civil economy
(Becchetti, Pelloni and Rossetti 2008). Lastly, the internal dynamics of societies can be depicted. The
characteristics of civil economy (such as reciprocity and volunteering) are meant to ‘invade’ and
fructify both private and public businesses including State administrations. Positions on the
horizontal axis (which reflect the respective contributions of the private and public sectors) are not as
decisive as are vertical positions. For every society, finding a combination closer to apex R is then a
bliss point.

Such models can only depict the extent of a civil economy, which according to Caritas in Veritate
reflects some properties of the Trinity (§ 54). They must not be misunderstood as a geometrical
representation of the Sacred Trinity, which is not only too complex to allow for such simplification,
but which is first and foremost a profound mystery.

25
References
Baeck, L.: 1994, The Mediterranean Tradition in Economic Thought (Routledge, London).
Barrera, A., O.P.: 2005, God and the Evil of Scarcity. Moral Foundations of Economic Agency
(University of Notre Dame Press, Notre Dame, IN).
Becchetti, L.: 2009, Oltre l’homo oeconomicus. Felicità, responsabilità, economia delle relazioni
(Città Nuova, Rome).
Becchetti L., A. Pelloni and F. Rossetti: 2008, ‘Relational Goods, Sociability, and Happiness.’
Kyklos 61: 343–363.
Becchetti, L., L. Bruni and S. Zamagni: 2011, Microeconomia: Scelte, relazioni, economia civile (Il
Mulino, Bologna).
Botsman, R. and R. Rogers: 2010, What’s Mine Is Yours: The Rise of Collaborative Consumption
(HarperBusiness, San Francisco).
Boulding, K.E.: 1973, The Economy of Love and Fear (Wadsworth, Belmont, CA).
Braudel, F.: 1982, Civilization and Capitalism 15th-18th Century. Vol. II: The Whels of Commerce
(Harper & Row, New York, NY).
Bruni, L.: 2007, La ferita dell’altro. Economia e relazioni umane (Il Margine, Trent).
Bruni, L.: 2008, Reciprocity, Altruism and the Civil Society. In Praise of Heterogeneity (Routledge,
Abingdon) [original: Reciprocità. Dinamiche di cooperazione economia e società civile (Mondadori,
Milan), 2006].
Bruni, L.: 2009, L’impresa civile. Una via italiana all’economia di mercato (EGEA, Milan).
Bruni, L.; 2010, L’ethos del mercato. Un’introduzione ai fondamenti antropologici e relazionali
dell’economia (Mondadori, Milan).
Bruni, L. and A. Smerilli, 2010: Benedetta economia. Benedetto di Norcia e Francesco d’Assisi nella
storia economica europea (Città Nuova, Rome).
Bruni, L. and R. Sugden: 2008, ‘Fraternity: The Market Need Not Be a Morally Free Zone.’
Economics and Philosophy 24: 35-64.
Bruni, L. and A.J. Uelmen, 2006: ‘Religious Values and Corporate Decision Making: The Economy
of Communion Project.’ Fordham Journal of Corporate and Financial Law 11: 645-80.
Zamagni, S. and L. Bruni: 2007, Civil Economy. Efficiency, Equity, Public Happiness (Peter Lang,
Berne) [original: Economia civile. Efficienza, equità, felicità pubblica (Il Mulino, Bologna), 2004].
Bruni, L. and S. Zamagni (eds.), 2009: Dizionario di Economia Civile (Città Nuova, Rome).
Bruyn, S.T.: 2000, Civil Economy: Transforming the Market in the Twenty-First Century (University
of Michigan Press, Ann Arbor, MI).
Cambón, E.: 2009, Trinità modello sociale. 3/e. (Città Nuova, Rome).
Cambón, E.: 2010, ‘Comunione trinitaria e sviluppo sociale’. gen’s. Rivista di vita ecclesiale 39, n.
1/2. http://www.indaco-torino.net/gens/10_01_04.htm
Caruso, R.: 2009, ‘Il pensiero di Kenneth Boulding, economista irenico. Relazioni sociali tra
scambio, dono e coerzione’. Storia del pensiero economico 6, 5-30.
Carvalho de França Filho, G.: 2007, ‘Teoria e Prática em Economia Solidária. Problemática,
Desafios e Vocação’. Revue du MAUSS permanente, 8 May 2007.
http://www.journaldumauss.net/spip.php?article83
26
Cavara, P, 2005: ‘Liberty, Equality, Fraternity: The Complexity of a Triad.’ In: V. Araújo (ed.):
Social Relationships and Fraternity: Paradox or Sustainable Model? Accounts of the International
Conference on Sociology Social-One, Castelgandolfo (Rome), 11-13 February, 2005.
Clavero, B.: 1991, Antidora. Antropología católica de la economía moderna (Giuffrè, Milan).
Cowen, T.: 2000, In Praise of Commercial Culture (Harvard University Press, Cambridge, MA).
Davis, J.B.: 2011, Individuals and Identity in Economics (Cambridge University Press, Cambridge).
Davis, P.: 2000, ‘Co-operative Management as a Catholic Vocation.’ In: S.M. Natale (ed.): Business
Education and Training: A Value Laden Process. Vol. 4 (University Press of America, Washington,
DC), 157-180.
Davis, P.: 2006, ‘The Co-operative, Catholic Social Thought and the Good Company: The
Importance of Pluralism in the Market.’ In: The Good Company. Sixth International Symposium on
Catholic Social Thought and Management Education, Rome, 5-7 October 2006.
http://www.stthomas.edu/cathstudies/cst/conferences/thegoodcompany/Finalpapers/Davis
Dohmen, T., A. Falk, D. Huffman and U. Sunde: 2009, ‘Homo Reciprocans: Survey Evidence on
Behavioural Outcomes’. Economic Journal 119: 592-612.
Fanfani, A.: 1935, Catholicism, Protestantism, and Capitalism (Sheed and Ward, London) [original:
Cattolicesimo e Protestantesimo nella formazione storica del capitalismo, Milan: Vita e Pensiero,
1934].
Fuller, R.B. : 1975, Synergetics: Explorations in the Geometry of Thinking (Macmillan, New York).
Gansky, L.: 2010, The Mesh: Why the Future of Business Is Sharing (Portfolio, New York, NY).
Gold, L.: 2010, New Financial Horizons. The Emergence of an Economy of Communion (New City
Press, Hyde Park, NY).
Grassl, W.: 1998, ‘Cooperative Marketing: Efficiency Conditions for Alliances’. In: T. Brunton and
T. Lituchy (eds.): Canada/Caribbean Business: Opportunities and Challenges for Management.
Port-of-Spain: University of the West Indies Press, 87-101.
Grassl, W.: 2003, ‘ L’entreprise européenne – inéxistante, moribonde, ou modèle pour
l’exportation.’ Géoéconomie no. 28, 153-180.
Grassl, W.: 2010, ‘Aquinas on Management and its Development.’ Journal of Management
Development 29: 706-15.
Grassl, W., 2011: ‘Business as the Exercise of Practical Reason: A Trinitarian Model.’ In: A.
Habisch and G. Lenssen (eds.): Practical Wisdom in Christian Perspective (Routledge, Abingdon).
Grassl, W. and A. Habisch, 2011: ‘Ethics and Economics: Towards a New Humanistic Synthesis for
Business’. Journal of Business Ethics 96, .
Gui, B. and R. Sugden: 2005, ‘Why Interpersonal Relations Matter for Economics.’ In: B. Gui and R.
Sugden (eds.), Economics and Social Interaction: Accounting for Interpersonal Relations
(Cambridge University Press, Cambridge), 1-22.
Gummesson, E.: 2008, Total Relationship Marketing. 3/e (Butterworth-Heinemann, Oxford).
Hemmerle, K.: 1994, ‘Das unterscheidend Eine. Bemerkungen zum christlichen Verständnis von
Einheit’. In: B. Fraling (ed.): Kirche und Theologie im kulturellen Dialog (Herder, Freiburg), 339-
354.
Hemmerle, K.: 1995, Leben aus der Einheit. Eine theologische Herausforderung (Herder, Freiburg).
Keidel, R.W.: 1995, Seeing Organizational Patterns. A New Theory and Language of Organiza-
tional Design (Beard Books, Washington, DC).
27
Keidel, R.W.: 2010, The Geometry of Strategy. Concepts for Strategic Management (Routledge, New
York).
Kleymann, B., H. Malloch, T. Redman, and J. Angot: 2008, ‘The Dynamics of a Variably Coupled
Social System: The Case of Les Compagnons du Devoir.’ Journal of Management Inquiry 17: 381-
396.
Kolm, S.-C.: 2006a, ‘Introduction to the Economics of Reciprocity, Giving and Altruism’. In: Kolm
and Mercier Ythier (eds.), 1-44.
Kolm, S.-C.: 2006b, ‘Reciprocity: Scope, Rationales and Consequences’. In: Kolm and Mercier
Ythier (eds.), 371-541.
Kolm, S.-C. and J. Mercier Ythier (eds.): 2006, Handbook of the Economics of Giving, Altruism and
Reciprocity. 2 vols. (North Holland, ).
Kolm, S.-C.: 2008, Reciprocity: An Economics of Social Relations (Cambridge University Press,
Cambridge).
Krader, L.: 1968, Formation of the State (Prentice-Hall, Englewood Cliffs, NJ).
Kranton, R.E.: 1996, ‘Reciprocal Exchange: A Self-Sustaining System’. American Economic Review
86: 830-51.
Maritain, J.: 1947, The Person and the Common Good. Trans. J.J. Fitzgerald (Charles Scribner’s
Sons, New York, NY).
McCann, D. P.: 2002, ‘Business Corporations and the Principle of Subsidiarity.’ In: S.A.
Cortright and M.J. Naughton (eds.): Rethinking the Purpose of Business (University of Notre
Dame Press, Notre Dame, IN), 169-89.
Meeks, M.D.: 1989, God the Economist: The Doctrine of God and Political Economy (Fortress
Press, Minneapolis, MN).
Miller, D.: 1989, Market, State, and Community. Theoretical Foundations of Market Socialism
(Clarendon Press, Oxford).
Mowry LaCugna, C.: 1991, God for Us: The Trinity and Christian Life (Harper, San Francisco).
Nisbet, R.: 1953, The Quest for Community. A Study in the Ethics of Order and Freedom (Oxford
University Press, Oxford).
O’Boyle, E.: 2007, ‘Requiem for Homo Economicus’. Journal of Markets and Morality 10: 321-338.
Petrini, C.: 2007, Slow Food Nation: Why Our Food Should Be Good, Clean, And Fair (Rizzoli, New
York, NY).
Petrini, C.: 2010, Terra Madre: Forging a New Global Network of Sustainable Food Communities
(Chelsea Green Publishing, White River Junction, VT).
Polanyi, K.: 1977, The Livelihood of Man (Academic Press, New York).
Pontifical Council for Justice and Peace: 2004, Compendium of the Social Doctrine of the Church
(Libreria Editrice Vaticana, Rome).
Ridley-Duff, R. and M. Bull: 2011, Understanding Social Enterprise (Sage, London).
Robbins, L.: 1945, The Nature and Significance of Economic Science. 2/e (Macmillan, London).
Schimmel, A.: 1993, The Mystery of Numbers (Ocford University Press, Oxford).
Sennett, R.: 2008, The Craftsman (Yale University Press, New Haven, CT).

28
Shirky, C.: 2010, Cognitive Surplus: Creativity and Generosity in a Connected Age (Penguin, New
York, NY).
Simmel, G.: 1908, Soziologie. Untersuchungen über die Formen der Vergesellschaftung (Duncker &
Humblot, Leipzig).
Smith, A.: 1976 [1776], An Inquiry into the Nature and Causes of the Wealth of Nations (Oxford
University Press, Oxford).
Tadajewski, M.: 2009, ‘The Foundations of Relationship Marketing: Reciprocity and Trade
Relations’. Marketing Theory 9: 9-38.
Travaglini, C., F. Bandini and K. Mancinone: 2010, ‘Social Enterprise in Europe: Governance
Models’. Working papers 75, Facoltà di Economia di Forlì, University of Bologna.
Uelmen, A.J.: 2004, ‘Toward a Trinitarian Theory of Products Liability.’ Journal of Catholic Social
Thought 1, 603-645.
Webber, F.R.: 1971, Church Symbolism. 2/e (Gale Research Center, Detroit).
Wicks, R.: 2009, ‘A Model of Dynamic Balance among the Three Spheres of Society – Markets,
Governments, and Communities – Applied to Understanding the Relative Importance of Social
Capital and Social Goods.’ International Journal of Social Economics 36: 535-65.
Williams, C.A. and R.V. Aguilera: 2008, ‘Corporate Social Responsibility in a Comparative
perspective’. In: A. Crane et al. (eds.): Oxford Handbook of Corporate Social Responsibility (Oxford
University Press, Oxford), 452-472.
Yuengert, A.M.: 2009, ‘Elements of a Christian Critique of Consumer Theory’. Faith and Economics
54:
Zaleski, P.: 2008, ‘Tocqueville on Civilian Society. A Romantic Vision of the Dichotomic Structure
of Social Reality’. Archiv für Begriffsgeschichte 50, 260-66.
Zamagni, S.: 2009, Economia ed etica. La Crisi e la sfida dell’ economia civile (La Scuola, Brescia).

29