What are the problems the Church has with capitalism, though? It’s not like it persecutes the Church the way Marxists propose to do, and it lets people buy and sell freely and consensually—what’s wrong with that?
There are a few problems with capitalism. First, it’s wrong about how human minds work.
Your run-of-the-mill defense of the free market states that people naturally pursue their own self-interest, and therefore, people who want to make money will make good products so that people will like them and support their business, especially where competition is free and rivals who sell better products will naturally be more successful. This isn’t a completely false picture, but it leaves out huge amounts of important, relevant stuff. For instance, it frames the whole issue as if consent were the only principle of conduct to consider—something most capitalists certainly aren’t willing to concede about, say, sexual ethics. (We’ll be circling back to this problem.) It also assumes that people are smart about pursuing their own self-interest, which, uh …
The framing of the example above makes it sound like all the participants have access to complete, correct information about the products in question. But advertising is a powerful force, and even when it’s not deliberately falsified (which does still happen when corporations think they can get away with it), its standard purpose is not to disinterestedly inform you of the existence of a product. Advertising creates demand by manipulating people’s emotions—the desire to be popular, insecurities about body image, vague associations with sex, fears about diseases and aging—in order to short-circuit the rational part of people’s brains and make them want the product they’re trying to sell. And that has nothing to do with whether the product is in any way necessary or good, which is part of why it’s actually pretty easy to flood capitalist markets with terrible products no sane person would want, even though capitalism starts off by claiming that the self-interest of both manufacturer and consumer leads to high quality. For that matter, a product (or the processes required to make it) could be actively toxic and destructive to the individual, to society, or to the entire world, and capitalism actively refuses to deal with those facts as long as the product sells well.
Capitalists usually argue in response to these things that it’s the consumer’s responsibility to moderate their desires and examine the real merits of products, and the state shouldn’t intervene in that process. This line of reasoning seems to imply that we should let people sell bottles of actual poison labelled as “health syrup” and then let the market take its course because it’s the consumer’s job to check these things, but obviously most capitalists are against that—they’ll usually allow the state the authority to prosecute outright lies.
More important for Catholics is that the Church states in so many words that the state does rightly have not only the authority, but the duty, to intervene in the economy in order to promote the welfare of its citizens. The right to work, the right to a just wage, the right to good working conditions, and the right to unionize so as to advocate for all those things, are explicit elements of Catholic social teaching, and encyclicals like Mater et Magistra say unambiguously that establishing real access to those things is not something that may be left merely to market forces.
Note, too, the weirdly selective view of human nature at work here: humans are so bad that you can’t ask anything but selfishness of them, yet at the same time so good that they approach every market interaction frankly and truthfully. Humans are so greedy that there’s no gain to be had by appealing to the common good, yet also so detached that they will allow their wealth to “trickle down” via job creation so everybody can win. People price gouge because they need to cover opportunity and materials costs—not because they’re billionaires hiding behind faceless corporations, monopolize more resources than they could possibly need in order to manipulate the market, and never have to consider the humanity of their customers to turn a profit. This is not the prophetic challenge to society and to sin that Catholics are called to be, even if we insist on contradicting our own faith by ignoring the utter clarity of the Popes that these are moral questions, on which the Church has competence to speak.