In 1985, long before the current economic crisis, an address was delivered in Rome on capitalism and ethics. “It is becoming an increasingly obvious fact," said the speaker, "... that the development of economic systems which concentrate on the common good depends on a determinate ethical system...Conversely, it has also become obvious that the decline of such discipline, can also cause the laws of the market to collapse."

The speaker was Joseph Cardinal Ratzinger, who has since become pope.

Benedict XVI is not (and has never claimed to be) an economics specialist; but his speech did reveal an instinctive wisdom about the capriciousness of our global economy.

The Pope's new encyclical Caritatis in Vertitate ("Charity in Truth") is receiving much more attention than his 1985 speech, but it breathes with the same spirit.

In the days leading up to publication, pundits speculated about surprises, even potential shocks, in the papal letter. But they misread the situation. There are no "shocks" in official Catholic teaching. As Cardinal Newman noted, Catholicism never fundamentally "changes"; it develops, and in a way always true to the Church's original deposit of faith. Hence, Catholic social doctrine, like its moral teachings, is not a ball of wax shaped by the prevailing winds: it is a consistent body of thought rooted in enduring principles: the natural law, the dignity of the individual, and the common good. From Leo XIII's Rerum Novarum (1891) to John Paul II's Centisimus Annus (1991), the popes have addressed the economic concerns of their times, in different voices, while maintaining that unbroken tradition. Caritatis in Veritate now adds to it, incorporating Benedict's insights.

In line with his predecessors, particularly the often underrated Paul VI, Benedict strongly re-affirms Catholic social teaching: he endorses labour unions, worker rights, social security systems, the social (but not welfare) state, and aggressive political action to help the poor. Critics fear he encapsulates what Ludwig von Mises called "the anti-capitalist mentality", but Benedict acknowledges the fruits of capitalism and the legitimacy of profit. He simply wants the free market held accountable: left on its own and devoid of moral underpinnings, it can't guarantee just wages, or prevent greed and corruption from robbing people blind. The experience of the last few years offers ample proof of that. On the same token, it isn't unreasonable to ask whether Benedict thinks a little too much in terms of income redistribution, rather than wealth creation: how can we redistribute wealth, if we fail to create it in the first place?

As the Pope's economic proposals are debated, one shouldn't overlook his appealing theological themes: truth, charity, transcendence and unity. Truth, says Benedict, is a prerequisite for charity, and vice versa. Both are driving forces "behind the authentic development of every person and of all humanity." The truth about God, about his role for humanity - and our obligations to one another through the economy, and toward the environment - are expounded in this weighty encyclical.

Benedict's concept of truth, of course, is distinctly Catholic, but it is a concept shared by many outside the Church. So too is his affirmation of the supernatural, the transcendence of man. Rejecting both secularism and religious fundamentalism, the Pope asks for an end to what the late Catholic thinker Richard John Neuhaus called "the naked public square" - the exclusion of religion from public life (more a problem in Europe than America). The positive role Christianity has played in the advance of Western civilization is undeniable, and Benedict is right to defend it, even if Christians themselves are in constant need of self-examination and reform. In Benedict's judgment, the good of Christianity not only outweighs the bad, but it corresponds to objective truth, and thus is an essential part in building what John Paul II called "a civilization of love". True faith, however, "always needs to be purified by reason," - a theme Benedict introduced at his now-famous Regensburg address.

The most striking aspect of the encyclical is Benedict's linkage of traditional Catholic morality with social justice. Keenly aware of efforts to isolate certain Catholic teachings, while dropping others, Benedict emphasises their essential unity. Catholic teachings on the sanctity of human life, particularly in the womb, are re-affirmed, as is the Church's strong support for traditional marriage. Governments that undermine these teachings undermine society, argues the Pope, and actually suffer economically and culturally. In a world often sceptical (if not downright hostile) to such moral beliefs, this is a daring assertion, but a deeply Catholic one.

For Catholics the general moral principles outlined in this encyclical are binding; how best to apply those principles are open for debate. Benedict deserves a good-faith hearing on his prudential policy proposals, but shouldn't expect automatic agreement, particularly on his call for a "true world political authority" to regulate global affairs. John XXIII introduced this idea in his encyclical, Pacem in Terris (1963), but its always struck many as idealistic, if not utopian - not a natural fit for a Church which proclaims original sin. Nonethless, the pope's encyclical has touched a nerve. There is already a fruitful discussion taking place about Caritatis in Veritate, one sure to bring forth many valuable ideas. One message of lasting import is Benedict's call for high ethical standards: "Development is impossible without upright men and women, without financiers and politicians whose consciences are finely attuned to the requirements of the common good." In order to renew the economy and the environment, the pope proclaims, we need first to renew ourselves. It is a message that can be warmly welcomed.