Some people's faith in the marketplace is almost religious. It is so absolute that even the current economic crisis has not convinced them of the importance of sensible government regulation. Such faith is certainly not part of Catholic doctrine.
In his 2009 encyclical, Caritas in Veritate, Pope Benedict looked at the economic disaster and acknowledged the need FOR government regulations. He was critical of those who refused to recognize the value of such regulations.
"The conviction that the economy must be autonomous, that it must be shielded from 'influences' of a moral character, has led man to abuse the economic process in a thoroughly destructive way," he writes. "In the long term, these convictions have led to economic, social and political systems that trample upon personal and social freedom, and are therefore unable to deliver the justice that they promise."
Note how he argues that an unregulated economy tramples on personal freedom, contrary to the views of libertarians. When it comes to the economy, Benedict is not blinded by ideology like those who worship the market. He sees the actual effects of real people.
If anything, his views have become stronger as the crisis has gone on. "The worldwide financial breakdown has, as we know, demonstrated the fragility of the present economic system and the institutions linked to it," he said on April 30. "It has also shown the error of the assumption that the market is capable of regulating itself, apart from public intervention and the support of internalized moral standards. This assumption is based on an impoverished notion of economic life as a sort of self-calibrating mechanism driven by self-interest and profit-seeking. As such, it overlooks the essentially ethical nature of economics as an activity of and for human beings."
Benedict places his faith in God, not the marketplace. Those who make the unregulated market an idol are worshiping a false god. Benedict wisely does not go into detail on how the market should be regulated. That is beyond his competence. Nor does he ignore the importance of personal ethical values for economic actors. But he follows Catholic tradition in recognizing that the market is not God and government has a role in moderating its negative effects.
The United States has a special responsibility to enact financial regulations since we allowed unregulated banks and hedge funds to cause the crisis we face today. Government is not always the enemy. Government can be part of the solution.