5.2.4 ‘Private Initiative and Business Initiative’

Back to 5.2.3

Unit 5 Contents


In the light of all you have read so far, both in this unit and for the module overall, the next part of the Compendium’s chapter on economics needs little introduction.  It brings out the way in which CST is certainly pro-business, despite the depth of its critique of capitalism and neoliberalism.

Very near the start, it quotes the Catechism:

Everyone has the right to economic initiative; everyone should make legitimate use of his talents to contribute to the abundance that will benefit all, and to harvest the just fruits of his labour” (Catechism of the Catholic Church, #2429, italics in original).

This is a strong statement, one of several that present a very positive picture of the benefits that business should have, both for business people and their customers.



As you do the next reading, make a list of the positive benefits of business enterprise that it refers to.

There is a Response to this Exercise after the reading.



Reading (5pp)

Compendium, ##336-345 (Chap 7, part III)





Interlude: usury

As that Exercise brings out, the last reading mainly emphasizes the positive aspects of business.   But half way through there is one paragraph that makes a very strong condemnation of a practice called ‘usury’.  Have a look again at #341, which quotes the Catechism: “Those whose usurious and avaricious dealings lead to the hunger and death of their brethren in the human family indirectly commit homicide, which is imputable to them” (Catechism of the Catholic Church, #2269).

That strong statement makes very clear that, whatever usury is, it is bad!  This is one of only two references to usury in the Compendium – you have read the other in the first paragraph of the Economic Life chapter, #323, where it is in the list of the economic sins that the biblical prophets condemned.  That there are only these two references to usury is in a way surprising because there has been a great deal of debate about usury, including in recent times.

One thing that is at the centre of this debate is: what is usury?  A rough and ready definition is that usury is making loans to poor people at rates of interest that are so high that lenders are just ripping off borrowers, making them even poorer.  However, for a very long period of the Church’s history, right up until about 1600, the definition of usury was understood differently – it was taken to mean any charging of interest on loans at all.   In other words, usury and charging interest were seen as same thing, and this was morally wrong.

But since the seventeenth century the Church’s teaching has developed to the position that not all charging of interest is usury.1. Much debate has focused on whether this amounted to a change in Catholic teaching.  This is controversial because, if it should be seen as a change, it follows that other aspects of the Church’s teaching could change also.

The discussion about whether, on usury, there was a change or a proper development in Catholic teaching is a fairly complex topic and is more than we can go into here.  Suffice to say that one factor which makes it plausible to say that the Church’s moral teaching did not change is that usury is still so strongly condemned – such as here in the Compendium.  What has developed is understanding of what counts and doesn’t count as usury, and in particular that there can be loans made at interest which are not usurious.

On this view, the teaching that usury is wrong remains, but there is now a better understanding of which acts fall within the definition of usury.

You might wish to look at the second of the items in the ‘optional reading’ below which gives a helpful short discussion of this question about change or development.  However, what is far more important for the topic of this unit is the recognition that usury is completely unacceptable, a terrible sin, a “scourge… that has a stranglehold on many people’s lives” (Compendium 341, quoting John Paul II speaking in 2004).

As I noted earlier, the 2008-13 financial and economic crisis – the biggest for 80 years – was triggered by loans made to poor people to buy houses, ‘sub-prime’ loans (5.1.4).  Without any doubt, such loans amounted to usury.  Many of the world’s major banks were involved, directly or indirectly, in such sub-prime lending and there is a real question about the extent to which they are routinely involved in other practices that are usurious.  Moreover, in deprived communities throughout the world, there are moneylenders exploiting people who desperately need cash, by making loans to them at exorbitant rates of interest, often enforcing repayment by threats of violence.  Usury remains very widespread and CST regards it as a business practice that is wholly unacceptable.


Optional readings (15pp + 8pp)

Here is an article that summarizes the history of teaching on usury in the major world religions:

W. Visser and A. McIntosh, ‘A Short Review of the Historical Critique of Usury’,

originally published in Accounting, Business & Financial History, 8:2 (1998), pp. 175-189

Second, here is a short article (at a website called catholicculture.org) that discusses the question of whether the Catholic Church’s teaching on usury has changed or only developed.

David J. Palm, ‘The Red Herring of Usury’ (no date)


It is striking that the strong condemnation of usury in Compendium, #341, comes in the middle of a section which, overall, is highly positive about the benefits that business enterprise can bring.  As the first sentence of that paragraph suggests, making an “equitable profit” is fine – indeed it is a necessary condition of remaining in business, and a sign that a company is working well (#340).  But usury is just one instance of the sin that is involved in pursuit of profit above all else, in maximization of financial return regardless of moral criteria.

This is a good cue for turning attention again to what Catholic teaching means for what we should say about ‘capitalism’ in general.


End of 5.2.4

Go to 5.2.5 How does CST assess ‘capitalism’?

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  1. We can’t look at the details of this history here.  According to Roger Ruston, from early in the seventeenth century, “a new generation of Christian moralists redefined usury as excessive interest”, (‘Does It Matter What We Do With Our Money?’ Priests & People, May 1993, 171-77, at 174).