I just finished reading a collection of essays titled
Building the Free Society:
Democracy, Capitalism, and Catholic Social Teaching Each essay is by an different author and comments on a particular social encyclical. This isn't to say the essays are merely summaries; each one critically examines the strengths and weaknesses of the encyclical it addresses.
I found the essay on the Declaration on Religious Freedom especially helpful. The author distinguishes three stages in the Catholic understanding of Church-State relations:
Stage 1: The Throne and Altar arrangement. This is the time of religious establishment as the Monarch and Church both endorse each other. The French called it the Ancien Regime, the Old Order. The problem with this arrangement, from my perspective, are twofold. First, the monarch ends up wanting to control the Church e.g. investiture controversy. Second, the Church's fortunes are tied up with the existing regime. If the monarch makes a mistake, then in the eyes of the people the Church is guilty by association. This is what happened in the French Revolution.
Stage 2: Continental Liberalism. This is the worldview of the thinkers behind the French Revolution: Democracy, autonomous individualism, and human rights. In the name of these ideas, the Revolutionaries unleashed the Reign of Terror and De-Christianization. It was these atrocities which were in the minds of churchmen when they opposed liberalism until Vatican II.
Stage 3: American Liberalism. A Jesuit, John Courtney Murray, argued that there was another form of liberalism which respected religion and would not lead to atrocities associated with Continental Liberalism. The Catholic Church had done well in America, even though it was a primarily Protestant Country. This occurred because the state did not establish any particular religion in the United States. Murray urged the Church to embrace this form of liberalism and in Vatican II's Dignitatis Humanae, she did.
The battle between the American (Personalist) and Continental (Liberal Individualist) meaning of democracy continues. It is occurring within America and the rest of the world generally. The first meaning views human beings as persons: social beings with rights AS WELL AS corresponding duties. Moreover, Personalist Democracy presupposes a transcendent reference point which is the source of our moral obligations. In contrast, the Liberal Individualist model sees humans as autonomous, self-interested beings. The source of moral obligations is either consent or utility.
The collection of essays is filled with interesting discussions like the one above. It was a difficult, but helpful, book to read.