Recent lecture focuses on controversial topic of Catholic Church and the free market economy

"I get into a little bit of trouble for this book," Dr. Thomas E. Woods admitted in his Moral Foundations of Capitalism lecture last week. The book he referred to was his 2005 published and Templeton Enterprise Award winning book, The Church and the Market: A Catholic Defense of the Free Economy.

Dr. Woods' lecture spoke directly to students about the highly controversial subject of the Catholic Church and a free market economy. Woods' conversational tone made it easy to follow his points and to understand just how easily his words can be misconstrued.

Woods admits to being a devout Catholic, but feels that the church and talk of economics need to be two separate institutions.

Specifically, he cautions against the use of papal documents regarding the economy. Woods cited numerous papal documents that have been interpreted by economists and taken as fact, he warns students against this stating that the "Pope's authority is carefully delineated: Popes can make statements about morality in our economy," but he reminds us that the Pope cannot possibly possess the answers to all the technical questions of economics.

A major focus of Woods' lecture was defining where exactly religion fits into the economic discussion. Woods carefully skated around the material covering exactly what the church says about the free market economy. He defined the free market economy for the audience as, "a system of voluntary exchanges bounded by private property rights." Using this definition to base his discussion, Woods demonstrated for the audience instances where church and papal documents could be used to defend the use of a free market economy and to deny its merits.

Specifically Dr. Woods spoke of Pope Leo XIII's Rerum Navarum, in which he discusses capital and labor, the two key elements in the discussion of economics. "Each needs the other: capital cannot do without labor, nor labor without capital," Rerum Navarum reads, and Woods interprets for us saying that Leo is arguing that labor and capital are not antagonistic, but instead need each other to function.

Woods uses this as an example of the Catholic Church supporting a free market economy, because labor and capital working together reinforces the idea of a functional economy resulting from exchanges of property.

Woods is the first to admit that this is "not what I was taught in school," implying that he was taught that this statement by the Pope implied that the free market was evil in society and it should be avoided, which shows just how many interpretations can come from papal documents regarding the economy. Instead, he believes that this highly controversial statement can be used in support of the free market because, if labor and capital are co-dependent neither can survive without the other. This in effect enforces Woods' ideas about a free market relying on exchanges of private property.

People possess some combination of labor and capital and they can trade that property with others to allow for a functional economy. Woods argues that this will occur without heavy governmental intervention, the free market should be allowed to work itself out without the massive institutions such as the World Bank, Woods says that "state intervention in the economy [should be kept] to a minimum."

Specifically, Woods highlights the flaws in current economic theory relating to the redistribution of resources or "foreign aid packages."

He claims that they enforce the dictatorships in place in third world countries by providing them money to pay their armies and fuel their current method of governing instead of enticing change.

Instead, he suggests, aid packages should be stopped so that the governments have an incentive to change. As the system stands currently, there is no incentive for change however, if the aid is stopped they will need to industrialize in order to keep their government in power, and the power of the free market will shine through.

Woods provided ample examples including some shocking statistics that reinforce his point. As he concluded his thought provoking lecture, Woods opened up for questions. The audience, made up of almost equal parts students and teachers were quick to both challenge and reinforce his ideas.

"Catholics can have differences of opinion," says Woods, refusing to limit Catholics to one party or another. He ended the conversation by encouraging education and discussion about the free market economy and how it relates to Catholicism.