6. The social doctrine of the Catholic Church and Kirzner’s contribution

Perhaps one of the most significant aspects of the latest formulations of the social doctrine of the Catholic Church in favour of the free market economy stems from the great influence that the contributions of the Austrian School of Economics has had on them, particularly those of Hayek and Kirzner, the former of whom was a non-practising Catholic agnostic, while the latter is a profoundly religious practising Jew. In effect, the Catholic thinker Michael Novak surprised the world when he made public the long personal conversation between Pope John Paul II and Hayek which took place before the latter’s death.(11) Subsequently, in his book The Catholic Ethic and the Spirit of Capitalism, Novak points out the great parallelism that exists between the conception of creative human action developed by the Pope in his doctoral thesis entitled The Acting Person and the conception of entrepreneurship we owe to Kirzner.(12)

This conception was refined by John Paul II in his encyclical Centesimus Annus where he expressly refers to entrepreneurial capacity or creative human action as the decisive factor in society or, in his own words, “man himself, that is his knowledge”, in its two embodiments of scientific knowledge and practical knowledge, which John Paul II defines as what is necessary in order to “perceive the needs of others and to satisfy them”. According to John Paul II, this knowledge allows human beings “to express their creativity and develop their potential” and to introduce themselves into “the network of knowledge and intercommunication” that constitutes the market and society. Thus, for John Paul II, “the role of disciplined and creative human work [I would prefer to say ‘human action’] and, as an essential part of that work, initiative and entrepreneurial ability becomes increasing evident and decisive”.(13) Without any doubt, the encyclical Centesimus Annus shows how its author’s idea of the essence of economic relations has been enormously modernized and taken a significant leap forward from the scientific point of view, leaving a great deal of the Church’s former social doctrine obsolete. It even surmounts significant sectors of economic science itself which have, to date, been anchored in the mechanisms of the neoclassical-Keynesian paradigm and been unable to include the eminently creative and dynamic nature of entrepreneurship in their “models”. For the first time in history, thanks to the positive influence of the Austrian School of Economics, the social doctrine of the Catholic Church has overtaken the mainstream paradigm of economic science, which has, so far, ignored the creative human being and mainly continues anchored in a static conception of market and society.

Jesús Huerta de Soto
Professor of Political Economy
King Juan Carlos University of Madrid, Spain

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(11).”During the last months of his life, Hayek had the opportunity for a long conversation with Pope John Paul II. There are signs of Hayek’s influence in certain portions of the Pope’s encyclical Centesimus Annus. In sections 31 and 32 in particular Centesimus Annus employs unmistakably Hayekian insights” (Novak 1993a).

(12) .See Novak 1993b, p. 117, and Wojtyla 1979.

(13) .See John Paul II 1991, 25, Chap. IV, nos. 32-33.