354. The State can encourage citizens and businesses to promote the common good by enacting an economic policy that fosters the participation of all citizens in the activities of production. Respect of the principle of subsidiarity must prompt public authorities to seek conditions that encourage the development of individual capacities of initiative, autonomy and personal responsibility in citizens, avoiding any interference which would unduly condition business forces.
With a view to the common good, it is necessary to pursue always and with untiring determination the goal of a proper equilibrium between private freedom and public action, understood both as direct intervention in economic matters and as activity supportive of economic development.** In any case, public intervention must be carried out with equity, rationality and effectiveness, and without replacing the action of individuals, which would be contrary to their right to the free exercise of economic initiative. In such cases, the State becomes detrimental to society: a direct intervention that is too extensive ends up depriving citizens of responsibility and creates excessive growth in public agencies guided more by bureaucratic logic than by the goal of satisfying the needs of the person**.[738]