Christian democracy
Solidarity and social capitalism

The Christian democratic political economy has not tethered itself to one "third way" between capitalism and socialism, but rather various ways between capitalism and socialism. Over time, Christian democrats moved from solidarism to a social market economy.

Initially, many Catholic political movements in the 19th century opposed capitalism and socialism equally, as both were based on materialism and social conflict. Initially, the system that Catholics advocated was one of corporatism, based on bringing back a guild-organized economy. The idea was a society where individuals were organized by their economic position. In these corporatist systems, the fathers were the head of families. One of these conceptions was that of Franz von Baader, who advocated for proletariat enfranchisement in the corporatist system. Baader is recognized as the first person to advocate for workplace codetermination. Codetermination would become a key point of unity amongst the Christian democratic trade unions. In the 19th century and early 20th century, the Lutheran social Christians advocated an authoritarian view of corporatism, and the Neo-Calvinist corporatist idea has been credited as an inspiration for the polder system that currently exists in the Netherlands. Many of these corporatisms would advance the idea of replacing the elected parliament with corporative parliament recognizing the various corporate estates of the nation; industrialists, small businesses, peasants, landowners, workers, etc. The papal encyclical Rerum Novarum would recognize some of the principles behind corporatism.

The Christian democratic notion of corporatism was found within Heinrich Pesch 's solidarism. Pesch's solidarism argued for international solidarity based on shared humanity, national solidarity based on shared nationality, familiar solidarity for family members, and class and cross-class solidarity based on shared interests in the workplace. This latter solidarity focused on occupational associations advancing collective interests, codetermination, and a "third house of parliament" that would advise on economic matters. Heinrich Pesch's idea of corporatism would be a qualified notion of subsidiarity. Pesch's ideas would be influential in the Papal Encyclical Quadragesimo Anno, given that Pesch's disciple Oswald von Nell-Breuning would draft the document. Quadragesimo Anno was significant in legitimatizing the push for a corporatist system and subjected it to the notion of subsidiarity. Around this time, corporatism became increasingly prominent among young Catholics frustrated with parliamentary politics and, in many instances, would inspire authoritarian and fascist regimes movements in Austria, France, Spain, Portugal, and Germany. Eventually, corporatism fell out of the political debate due to this association with authoritarian and fascist regimes.

Another economic idea within Christian democracy is the social market economy, which is widely influential across much of continental Europe. The social market is an essentially free market economy based on a free price system and private property. However, it supports government activity to promote competitive markets with a comprehensive social welfare system and effective public services to address social inequalities resulting from free market outcomes. The market is seen not as an end but as a means of generating wealth to achieve broader social goals and maintain societal cohesion. The basis of the social market economy is ordoliberalism, or German neoliberalism, an idea related to thinkers such as Walter Eucken, Franz Böhm, Ludwig Erhard, Wilhelm Röpke and Alfred Müller-Armack. Ordoliberals viewed the concentration of power as a significant danger to liberty. They desired an economic constitution that would ensure competition in markets and free decisions, where people are uninfluenced by the government. As a result of the economic constitution, this model is mildly corporatist. This model of capitalism, sometimes called Rhine–Alpine capitalism or social capitalism, is contrasted with Anglo-American capitalism or enterprise capitalism. Whereas the Anglo-capitalist model aims to remove restrictions on capitalism and enable individual prosperity, the Rhinish Model embeds the market into the social framework, with the goals of nation-building and of taking care of citizens.

Beginning in the 1980s, European Christian democratic parties have partially adopted "neo-liberal" policies. However, Christian democrats in the American Solidarity Party instead adopted distributism. The promotion of the Christian democratic concepts of sphere sovereignty and subsidiarity led to the creation of corporatist welfare states throughout the world that continue to exist to this day. In keeping with the Christian democratic concepts of the cultural mandate and the preferential option for the poor, Christian justice is viewed as demanding that the welfare of all people, especially the poor and vulnerable, must be protected because every human being has dignity, being made in the image of God. In many countries, Christian democrats organized labor unions that competed with communist and social democratic unions, in contrast to conservatism's stance against worker organizations. In solidarity with these labor unions, in Belgium, for example, Christian democrats have lobbied for Sunday blue laws that guarantee workers and civil servants a day of rest in line with historic Christian Sabbath principles. Another example of a Christian-inspired workers' movement is the Catholic Worker Movement established by Dorothy Day, which not only fought for better working standards, but also contributed to promoting the idea of pacifism and a just war.
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