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While Christian social principles harmonize with certain premisses of microeconomic theory, private property and freedom of behaviour for instance, deep‐rooted differences call for recasting certain foundations and pieces of analysis. Broad dissent concerns positive versus normative approach, the holistic character of Christian thought, and the latter′s view of human behaviour as flawed and often sinful. Discusses six more specific areas of dissent: consumer behaviour; the firm; income distribution; welfare economics; market failure and government, and public choice. The Christian mind requires revision of conventional treatments, since present microeconomic discussion is subversive of a religious interpretation of life.

Argues that the new classical economics cannot be reconciled with Christian economic principles, which in fact fit Keynesian analysis better. General dissent turns on positive versus normative thought, the holistic approach of Christian thought, and suppression of attention to proper human participation in economic institutions and decisions. Specific disagreements concern well‐known policy applications of the new classical economics, notably inflation and money supply rules, and presumptions of clearing markets, especially that for labour. The Keynesian tradition does have room for normative values and supposes imperfect product and labour markets.

The total of foreign debt of less developed countries (LDCs) is so great that only a modest part of the interest and principal due is ever likely to be paid. The dilemma of the situation is that further capital inflow is necessary for growth and poverty relief, but is unlikely to be granted because of non‐servicing of existing debt and governmental instability within the LDCs. Christian commentary on LDC debt is so often simplistic, condemning lenders and urging forgiveness of principal due and interest, write‐downs of loans and lower interest rates. In addition to the moral and humanitarian issues raised, due weight should be given to financial and economic analysis. A statement issued by the Political Commission for Justice and Peace provides a model of Christian comment on the eventual solution of the debt crisis, outlining ethical principles concerning the assistance wealthier countries should extend to LDCs, disclaiming technical recommendations as the Church′s role, and calling upon industrialised countries to draw up fresh plans for co‐ordinated assistance for LDCs, while stressing that the latter should put their houses in order.

The economic and financial picture of the whole world in the early 1980s does not look at all good despite the optimistic rhetoric used by the leaders of the seven major industrial democracies during the May 1983 Summit Conference held in Williamsburg, Virginia, USA. Almost everywhere there are artificial monetary injections to produce another problematic boom with the well‐known residual effects, negative social and financial consequences. But beyond there are no visible signs that on this road the prevailing conditions of disequilibrium embedded in contemporary economies will vanish and a new, better international economic and financial order will emerge.

This essay develops four points. First, two basic reasons led to John Paul II’s advocacy of the market economy in Centesimus Annus ‐ the creativity of labour, and the failures of socialism and excessive state intervention to ensure basic welfare, especially in underdeveloped countries. Second, the implications of this new‐found support for the market system, its institutions and their working require some clarification. Third, essential qualifications remain: private and social morality must guide economic freedom, just legal framework is required, and government surveillance must remain especially of distribution. Fourth, today’s market system, now operating globally, has given rise to new needs for ensuring adequate employment with security of tenure. Firms and public agencies should see themselves as “communities of persons” concerned with the welfare of their employees. Finally, this discussion of the market economy takes issue with those who confuse a morally directed version with one reflecting automatic forces, and with others who think a desirable economic system and policy and the premises of economic science cannot be influenced by Christian thought.

While disputes over the nature of economic science go back almost to its origins, the search for new directions and even some recasting has become more intense as slackening growth and virulent inflation heighten old quarrels over distribution and other issues. The alternative of “social” economics, itself at least 150 years old, has been subject to many attempts to formulate its essential character, from the early socialists and Catholic social reformers to the current resurgence of interest. My purpose here is to re‐assert that that which is of the essence of a social approach to economics must derive from placing values (I mean ethical or moral values) at the heart of economic enquiry; so that their nature and source cannot be passed over sotto voce as is often done, nor the real difficulties that arise from incorporating values within social science (see the first part of this article). Secondly, mainstream economics is currently undergoing a deep malaise, deriving partly from its over‐specialised character but more importantly from a certain loss of direction; and whether you choose or not to regard a values‐oriented social economics as merely one of several “paradigms”, it clearly can restore purpose to economic enquiry. This is discussed in part II of this article. My conclusion is that, while study of societal relations in the economic domain is rewarding and important, a social economics that is not centred on values will lose its historic opportunity to share in solving the widely acknowledged “crisis” of Western society.

The social principle of an “option for the poor” is discussed in the light of Roman Catholic socio‐ethical thought, notably Papal Encyclicals since Vatican II. The consequences for the economy are outlined.

The Pareto optimum is usually described as a production or an exchange situation, or some combination, where no further improvement can be made to the position of one participant without harming that of another, and movements toward it are termed “efficient”. Perhaps most economists take the opening premise, that good is what the individual wants, in guarded fashion and view the technical demonstration of improvements in exchange and production situations as curious devices which nevertheless offer people with different philosophies of the good a rigorous method for agreeing on what is better. Now, it is my purpose in this article to argue that the substance and techniques of Pareto‐type reasoning cannot be reconciled with social as opposed to individualistic thought; and to sustain this view I shall (i) recall the substance of Pareto's argument (ii) outline several key objections to it (iii) examine the meaning of “social”, and (iv) criticise versions of altruism offered by Hockman and Rodgers and Becker.

High inbuilt inflation is a frightening problem for many western societies, undermining not merely the efficiency of the economy but the moral strength of participants as well. There is a widespread if loose belief that the recommendations of economists amount to little more than moving the furniture about, while deep causes remain untouched. My thesis—which in the nature of the case cannot be “proven” but can only be presented as plausible—is that conventional anti‐inflation policies and new expedients will not work so long as they do not receive the moral co‐operation of the free agents of a democratic society. Accordingly, this article (l)notes the failure of present policies, (2)outlines the distributional quarrel at the centre of current inflation, (3)asks how basic corrections may be set in motion, and (4)concludes by relating our lack of confrontation of the moral side of inflation partly to the mechanistic nature of economic analysis and partly to the apparent break‐down of values in society. Throughout, “moral” denotes my concern with behaviour as a matter of conscience and responsibility, and my open reference to ethics in contrast to talk of “sociological factors” and “political economy”.

John Paul II's views on economic systems have been construed differently by some commentators who have been seeking approval for their own views rather than searching for the meaning that he himself intends to convey. John Paul is labeled by many as favoring capitalism, and by others as supporting socialism. A few have been scrutinizing his statements in hopes of finding support for a “third‐way.” In this paper, John Paul is quoted at length to represent his views more accurately.

This paper originated in a collection of essays on the theme of John Paul II's vision of the social economy that was published by the International Journal of Social Economics in fall 1998. This author is indebted to the contributors to that collection for many insights into John Paul's vision. Eight topics are covered: consumption, distribution, capital investment, work as such, leisure, labor, development, and market economy versus command economy. This paper uses many more direct quotes than is customary in scholarly work, but there is no other way to proceed and remain faithful to John Paul's vision of the social economy.

John Paul's writings on economic affairs are significant for what they teach about the premises employed in economics. His own philosophy of the human person reinforces the four premises of personalist economics more so than the premises of the mainstream and challenges the mainstream at its foundations in the philosophy of individualism.

John Paul speaks to a wide range of issues and questions central to economics and economic affairs. It would be presumptuous to represent this paper as a thorough examination of everything that John Paul has said, written, and means in this regard.

This paper attempts to highlight some of the key arguments that John Paul II has set forth on eight centrally important economic topics, comparing and contrasting his pronouncements with the views of mainstream economists on the same topics.

This paper draws on the insights of 20 professional colleagues specialized in range of subdisciplines in economics, holding faculty positions at major universities in the USA, Italy, and Canada, and with a strong interest in understanding the social economy. The concluding section states John Paul's vision of the social economy in terms of 13 most important arguments.