When the Vatican Met Adam Smith

Two hundred and fifty years after Adam Smith published An Inquiry into the Nature and Causes of the Wealth of Nations, an old argument has resurfaced in a new form. Writing in America magazine this July, the economist Richard Levins argued that Smith’s account of self-interested, profit-maximizing behavior has “blinded us” to unequal income distribution, and that free-market thinking creates “a powerful temptation to turn away from our Christian faith.” He set Smith against Pope Leo XIV, who has told the faithful that “every good placed in our hands… bears an intrinsic need not to be held back, but to be shared, so that everyone’s life may be better.”

It is an understandable argument.

It is also, I believe, the wrong one.

The real question is not whether Adam Smith or Pope Leo is right. It is whether each possesses something the other needs - and whether modern debate, eager to cast them as adversaries, has misunderstood them both.

Levins’s real complaint, it should be said plainly, is not really about greed as a cultural mood. It is about distribution - about the gap between what a market economy produces and who ends up with it. That is a serious argument, and it deserves a serious answer rather than a defense of Smith’s character. I will return to it, because I think Smith himself, and not just his modern admirers, already had more to say about wages and fairness than either his critics or his fans usually remember.

For much of the past two centuries, economists have devoted extraordinary intellectual energy to understanding how societies create wealth. The Church has devoted centuries to asking how wealth ought to be used. Both questions are indispensable. Yet somewhere between them lies a third question - one that has received remarkably little attention despite sitting at the intersection of economics, ethics, philosophy, and theology.

Can creating wealth itself be a moral act?

I believe the answer is yes.

Not because wealth is an end in itself. Not because markets are infallible. Not because entrepreneurs deserve canonization. But because creating genuine value for other human beings may be one of the most overlooked forms of service in modern society.

We have become remarkably comfortable celebrating those who give wealth away - and rightly so. The philanthropist who endows a university or finances a hospital deserves admiration. Charity occupies a central place in every major religious tradition because it reflects something deeply human: the willingness to sacrifice one’s own resources for the benefit of another.

Yet our admiration often begins surprisingly late in the story. We celebrate the donor who funds the children’s hospital; we spend far less time celebrating the entrepreneur who built the company that generated the wealth from which the donation was made. We honor the benefactor who establishes scholarships; we rarely honor the engineer whose innovations created the high-paying jobs that let families send their children to college without needing a scholarship at all.

This asymmetry has always struck me as curious, because charity cannot distribute wealth that has never been created. Before there can be hospitals, someone must manufacture medical equipment. Before there can be Catholic universities, someone must produce steel, harvest timber, invent computers, and create the prosperity from which tuition and charitable donations ultimately flow.

Every charitable act rests upon an earlier act of creation. The Church has rightly celebrated the first. Perhaps it has not celebrated the second with equal enthusiasm.

This is not a criticism of Catholic Social Teaching. One of its greatest strengths has been its insistence that economic life must always remain subordinate to human dignity. Beginning with

Rerum Novarum in 1891, and continuing through Quadragesimo Anno, Centesimus Annus, Caritas in Veritate, and more recent papal teaching, the Church has consistently rejected the idea that markets alone can determine what is good, just, or worthy. It has defended workers against exploitation, defended private property while reminding owners of their responsibilities, and insisted that economic decisions always carry moral consequences.

Much of this teaching has aged remarkably well. Many of the problems confronting modern capitalism - consumerism, financial speculation detached from productive investment, environmental degradation, growing loneliness despite rising prosperity - were anticipated by Catholic thinkers decades before they entered mainstream economic discussion. The Church has been correct to remind economists that people are not merely producers and consumers. They are persons.

Yet every intellectual tradition develops blind spots. I wonder whether one of Catholic Social Teaching’s has been its relatively limited attention to the moral significance of wealth creation itself - not accumulation, not conspicuous consumption, not speculation, but creation. History reminds us why the distinction matters.

For almost all of human existence, poverty was the normal condition of mankind. This is difficult for those of us in prosperous societies to appreciate, because abundance has become so ordinary we scarcely notice it. We complain about grocery prices while standing in supermarkets that offer more food than medieval kings ever imagined. We grumble about flight delays while crossing oceans in hours. Our frustrations are real; our prosperity is extraordinary.

For thousands of years, most families lived a failed harvest away from starvation. Infant mortality claimed children with heartbreaking regularity. Diseases now treated with routine antibiotics killed millions. None of this was for lack of compassion - monasteries fed the poor, villages cared for widows, religious communities practiced extraordinary charity. But charity alone could not eliminate scarcity. One cannot redistribute what does not exist.

The great economic miracle of the modern era was not that human beings suddenly became more generous. It was that they became dramatically more productive. The Industrial Revolution and the waves of innovation, science, and trade that followed transformed the productive capacity of civilization itself. Extreme poverty, which had defined nearly every society throughout history, has fallen dramatically over the past two centuries.

That is where Adam Smith enters the story - not as the defender of greed, but as the philosopher who explained how ordinary human creativity, operating within institutions that protected liberty and property, could generate extraordinary social outcomes.

His famous example of the pin factory has become almost a cliché among economics students, but its significance extends far beyond manufacturing. Smith observed that when individuals specialize, cooperate, and exchange voluntarily, productivity increases dramatically. The division of labor allows each person to become extraordinarily good at a narrow task, while markets coordinate these specialized efforts into products no single individual could produce alone. The result is not merely more wealth. It is more civilization.

Smith understood something that remains astonishing today: human beings need not know one another in order to improve one another’s lives. The baker in Boston will never meet the farmer in Kansas who supplied the wheat, the engineer who designed the oven, or the banker who financed the expansion of the business. Yet together they cooperate - not through central direction or coercion, but through institutions that allow free people to exchange, specialize, and create.

If Adam Smith’s insight was that free people, operating within just institutions, can create extraordinary prosperity, the Church’s enduring contribution has been to ask a different question altogether. Prosperity may explain how societies become wealthier; it does not explain what wealth is ultimately for.

Economics is extraordinarily good at answering questions of efficiency. It can explain why competition lowers prices, why innovation increases productivity, why secure property rights encourage investment, and why some nations grow prosperous while others remain poor. What it cannot do is tell us whether a wealthy society is necessarily a good one. It cannot tell us whether a new technology ought to be developed simply because it is profitable, or whether a community should sacrifice ancient forests for economic development. These are not failures of economics. They are simply questions that lie beyond its competence.

This is where Catholic Social Teaching performs an indispensable service. The Church reminds us that markets exist for people; people do not exist for markets. That single reversal changes everything.

No parent hopes merely to raise children with higher lifetime earnings. No physician measures a successful life solely by income. We instinctively know that love, friendship, family, faith, beauty, and courage cannot be reduced to financial metrics. The Church performs a necessary corrective: prosperity is a means, not an end. Wealth exists to expand human possibilities, not to become an object of worship.

Here Pope Leo stands squarely within a tradition stretching back generations. Leo XIII defended the dignity of labor against both unfettered capitalism and revolutionary socialism. St. John Paul II, having witnessed both Nazism and Communism firsthand, argued for the moral legitimacy of markets while insisting that economic freedom could survive only within a broader moral culture. Benedict XVI reminded us that markets depend on trust and reciprocity they cannot themselves produce.

Catholic Social Teaching has never rejected markets as such. It has rejected the idolization of markets. Those are entirely different propositions.

Yet if economics sometimes forgets morality, I wonder whether theology occasionally forgets something equally important: it sometimes speaks as though wealth simply exists, as though societies are forever debating how to divide a pie whose size remains fixed.

Adam Smith understood something that transformed the modern world precisely because it overturned that assumption. The pie can grow. That insight should never be taken for granted.

Perhaps the most remarkable sentence in The Wealth of Nations is not the famous observation about the butcher, the brewer, and the baker. It is Smith’s quiet confidence that ordinary people, left reasonably free to pursue their aspirations within stable institutions, will continuously discover new ways of making life better - not only for themselves, but for others.

The entrepreneur who invented refrigeration never intended primarily to reduce global hunger. The engineer who perfected container shipping did not set out to transform international trade. Yet each participates in something much larger than himself: creation.

Economists speak of production. Business schools speak of value creation. Theologians recognize another dimension. Human beings are uniquely creative creatures. We imagine things that do not yet exist. We solve problems that previously seemed impossible. We transform ideas into reality.

Genesis presents God as Creator. Human beings, made in God’s image, do not create ex nihilo - we cannot summon universes into existence. But we do participate in creation. We cultivate. We improve. We invent. We build. We discover.

Perhaps this is where Adam Smith and Catholic theology unexpectedly meet. Markets are not simply mechanisms for allocating scarce resources. At their best, they become arenas in which human creativity flourishes. The entrepreneur is therefore more than a capitalist - he is a creator. The business owner who builds a successful enterprise does more than generate profits; she creates livelihoods, relationships, and futures that would not otherwise have existed.

This does not mean every fortune deserves admiration. Quite the opposite. History is filled with fortunes accumulated through fraud, monopoly, political privilege, and exploitation. Adam Smith himself devoted considerable attention to warning against businessmen who sought government protection from competition; he understood that markets become morally compromised whenever economic success depends more on political influence than on serving customers. Rent-seeking is not entrepreneurship. Cronyism is not capitalism.

Here, Smith and the Church find themselves surprisingly close together. Both oppose systems in which privilege replaces competition. Both insist that economic activity should improve the human condition rather than merely enrich those who already hold influence. The real disagreement is not nearly as great as contemporary debate suggests - it is a matter of emphasis. Economists tend to celebrate creation while assuming moral responsibility. The Church celebrates moral responsibility while sometimes underappreciating creation. Both perspectives are incomplete.

Now to the argument I set aside earlier. Levins’s real target is not Smith’s psychology but his economics: a system that lets efficient growth outrun fair distribution, leaving economists to patch the results after the fact with progressive taxation, minimum wages, and subsidies. Pope Francis made the same point more sharply still, warning against “magical markets” and calling for a faith that “disrupts the calculations of human selfishness” and “disturbs the schemes of those who, in the shadow of power, play with the lives of the weak.” That is not a caricature of markets. It is a real indictment, and it deserves a real answer rather than a defense of Smith’s character.

The answer, I think, is that Smith agreed with more of it than either his critics or his champions tend to admit. He was not a theorist of unearned reward. In The Wealth of Nations, he accused employers of routine collusion against their own workers: masters, he wrote, are “always and every where in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their actual rate.” He measured a nation’s health not by its aggregate output but by the condition of its ordinary people, insisting that “no society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.” A theory of wealth creation that ignores who shares in the wealth created is not the theory Smith actually wrote.

None of this makes the distribution problem disappear, and no honest defense of markets should pretend otherwise. Wages can lag productivity. Political power can rig the rules in favor of those who already hold it - the very rent-seeking Smith spent pages warning against. What it does mean is that the choice is not, as the debate is often framed, between a Smithian economy indifferent to fairness and a Christian one indifferent to growth. Smith’s own account already demands that ordinary workers share in what they help create; the Church’s contribution is to insist that this demand is a matter of justice, not merely of efficient policy design.

Pope Leo’s own words point toward a similar reconciliation rather than a rupture. In a Sunday Angelus address, he asked how we are investing the “treasure of our lives” - a treasure that includes, he said, “our abilities, our time, our affection, our presence, our empathy,” not only our financial capital. That is a call to widen what counts as investment, not a rejection of the wealth creation that makes any of those gifts possible to give in the first place.

Civilization has advanced not on greed, and not on pure altruism, but on something more interesting. Alexis de Tocqueville called it ...

“self-interest rightly understood.”

A successful entrepreneur wants educated workers because educated workers improve her company. She wants safe neighborhoods because her employees and customers live there. She wants honest courts because contracts must be enforced. She wants roads, universities, and scientific research because each contributes, directly or indirectly, to the success of her enterprise. Her interests become inseparable from the interests of society itself. This is not greed. It is enlightened self-interest - the recognition that individual flourishing depends on social flourishing. Love of neighbor does not require economic naïveté, and prudent self-interest does not require indifference toward one’s neighbor. The most successful societies have generally found ways of aligning the two.

Consider the Catholic hospital or the Jesuit university. We rightly admire their compassion. Yet each rests on an economic foundation - someone quarried the stone, financed the building, manufactured the equipment, and paid the taxes that made the enterprise possible. Every act of charity rests on an earlier act of productive creation.

The Church has always celebrated the nurse, the missionary, and the philanthropist. Perhaps the twenty-first century invites it to celebrate one more vocation with equal enthusiasm: the entrepreneur who honestly creates prosperity. Not because wealth is holy, but because creating opportunities for others, employing families, and reducing scarcity are themselves forms of service. If that is true - and I believe it is - then creating wealth honestly is not simply compatible with Christian morality. It is one expression of it.

Two hundred and fifty years after Adam Smith published The Wealth of Nations, perhaps the time has come to stop asking whether the Vatican or Adam Smith better understood the human condition. Each understood only part of it.

Smith explained how free people, operating within just institutions, could produce extraordinary abundance through peaceful cooperation. He illuminated one of civilization’s greatest achievements: the capacity of millions of strangers to improve one another’s lives without ever meeting.

The Church reminds us that abundance alone cannot answer the deepest questions of human existence. Wealth without purpose easily becomes consumerism. Success without virtue becomes arrogance. Freedom without responsibility becomes license.

One teaches us how prosperity is created. The other reminds us why prosperity matters.

The invisible hand and the helping hand were never meant to compete. One builds abundance. The other gives abundance purpose.

Perhaps that is the real lesson of this remarkable anniversary - not that Adam Smith corrected the Church, nor that Pope Leo corrected Adam Smith, but that civilization requires both: an economy capable of rewarding creativity, enterprise, and honest work, and a moral tradition capable of ensuring that the prosperity it produces serves something greater than itself.

For in the end, wealth is not civilization’s highest achievement. The creation of wealth - in ways that allow human beings to flourish together - just might be.

References

Richard A. Levins, “Adam Smith vs. Pope Leo: A Catholic Critique of ‘The Wealth of Nations’ at 250,” America, July 22, 2026.

Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776).

Adam Smith, The Theory of Moral Sentiments (1759).

Alexis de Tocqueville, Democracy in America (1835–1840).

Pope Francis, remarks during his pastoral visit to Trieste, 2024.

Pope Leo XIV, remarks to the faithful, Monaco, 2026; Sunday Angelus address, 2025.

Rerum Novarum (1891); Quadragesimo Anno (1931); Centesimus Annus (1991); Caritas in Veritate (2009).