“I, Pencil” is a short imaginative essay by Leonard Read about the production of a pencil–from the pencil’s point of view. Do we ever stop to think about how many factors come together to make a simple pencil? The graphite, the wood, the rubber; the carving, the molding–it’s a small act of wonder to stare at the pencil in your hand and contemplate all the societal structures, geopolitical journeys, and labor that happened for it to make it to your desk. The essay illustrates the fundamental “Invisible Hand Theory” of classical economics.

Adam Smith (who coined the theory and is a father of classical liberalism) had the idea that, when each person pursues his self-interest, the result is not chaos, but order and innovation (The Wealth of Nations). You don’t have a pencil because someone who loves you went through the whole pencil production process (That’d be a touching gift, but there wouldn’t be many pencils in the world). Nor do you have it because the government-controlled factories were forced to meet a quota. You have a pencil because the woodsman exchanged wood for money, the factory workers needed jobs and were hired at the pencil factory so they could work to support their families, and because after the first pencil was invented a lot of people thought it was a brilliant utensil and were willing to pay for more of them. Classical economics is based on this idea that, when left uninterrupted, ordinary human choices of exchange and production will lead to a reasonably just society. 

What does this have to do with Rerum Novarum? There’s plenty to criticize about the abuses of capitalism, but I also think that there’s much to wonder at. There’s merit–even a kind of attractive harmony–in the free market described by the classical liberals. To add to this anniversary reflection of Rerum Novarum, I want to compare it with some ideas from Adam Smith to inspire discussion on how Catholic socioeconomic teaching is (or isn’t) compatible with classical economics. 

During my senior year of college, I studied under a professor who challenged us to consider the religious-like faith that classical liberals often have in the market. “The Invisible Hand” seems like the economic version of Providence–‘All choices work together for the good of the society that loves freedom and trusts the market’s purpose.’ Cf. Romans 8:28. Why should we trust the market? Is the Invisible Hand chance or Providence? 

Rerum Novarum suggests that when the market is left to itself, “by degrees it has come to pass that working men have been surrendered, isolated and helpless, to the hardheartedness of employers and the greed of unchecked competition” (3). Freedom isn’t enough. Justice, rather than being negative–saying “do what you want as long as you don’t encroach upon your neighbor’s rights”–should encourage a virtuous society. In the context of wages, it’s the difference between “don’t cheat whatever you’ve contracted to pay your employee” and “make sure you pay your employee a living wage.” 

In his Theory of Moral Sentiments, Adam Smith claims that humans are naturally inclined to work for their own self-interest. This could lead to anarchy, except humans also have a conscience and a strong sense of sympathy for their fellow humans. This moral sentiment guides human action so that self-interest is checked by sympathy. A moral society will self-regulate because its individuals are keeping themselves in check. His ideas of conscience are vague notions of the Enlightenment , but the Church’s aren’t. Relying on people to be sympathetic and “play nicely with each other” won’t really work without a robust religious influence in society, which the Church should provide. 

Pope Leo XIII emphasizes the natural human desire for work. Rerum Novarum posits that the purpose of work is to obtain and maintain property. This highlights the embodied aspect of man’s nature. A healthy human doesn’t work simply to amass wealth or power, but to take responsibility for a small section of the earth and cultivate it.  Adam Smith’s description of efficient production does mean that some people are left spending their time working on a very specific aspect of the production process. It’s less efficient for two people to make a pencil in their basement, but they’re probably more satisfied with the end result than two people who spent 8 hours screwing erasers on hundreds of pencils and never see the rest of the means (or the results) of production. Prioritizing the efficient use of resources to maximize profit does come with trade-offs in non-economic areas. As Marx said, it’s alienating. 

Because ultimately, humans aren’t made to maximize resources but to cultivate potential. The former goal can lead to “hustle culture” and treats the body and the person as a resource to increase production. The latter cherishes natural limits, allowing for rest and a rhythm of work and leisure. 

But on the other hand, there’s a good lesson in surrendering control over the “larger plan” of the production process and accepting the humility of repeating a small task whose results aren’t immediately visible. And if taking that small role allows you to make an honest living, why begrudge it? Again, Rerum Novarum steps in to describe how employers should treat their employees and respect their human dignity–the Church improving, rather than rejecting, the market process. 
Many tenets of classical economics are good descriptors of how the economy naturally operates when left to itself. As in many other areas, the Church does not work against human nature, but teaches that grace perfects nature. Free choice without purpose and intention does lead to chaos, but the Church can provide intention to choice without stifling freedom by teaching virtue. This is the spirit of Rerum Novarum–a rejection of human corruption and greed manifest in either crony capitalism or socialism–but not a rejection of the market. Perhaps it’s less about working for the common good and more about working to be good (which includes choosing to consider others’ out of free choice and not coercion) and seeing the fruits of that in work and trade.