Well, if I considered the Pope to be merely a holy person, and having no particular claim to infallibility, I could easier dismiss his grasp for an alternative to communism during the 1930s as simply an error. Many good people make mistakes. So, faced with the choice of fascism versus communism, the Pope went with fascism. Then, the alliance of the fascists and communists under the Molotov–Ribbentrop Pact must have been quite scary to those who thought the choice was fascism or communism. As who would have given the Democratic countries of the world a chance? And, then there was all that untidiness of genocide and aggressive war perpetrated by the fascists. Not that the Pope endorses those things. He wanted the good kind of fascism.
The Catholics, yes, have been having a hard time these past couple hundred years. During the 19th century, it was the twin evils of liberalism and socialism. Between these two evils, the Catholics choose monarchy. (We, in the U.S., chose liberalism.) Then, during early part of the 20th century, it was choosing between fascism and communism, between which they choose fascism (and we chose to be the arsenal of democracy).
During the late part of the 20th century, it seemed as though the Catholics passed through Democracy (without concern for Constitutional safeguards, since if we presume that people have good intentions we can dismiss the law of unintended consequences) to Liberal, Democratic Capitalism. Then, it was back to Democracy. And, then came a recession (due to the rapaciousness of Wall Street, so we are told, because we know the government could not have been guaranteeing zero-down, no paperwork mortgages) and, well, some people are unable to remain faithful through the hard times. So, now the Catholics seem to be back to defining their position as in-between liberalism and socialism.
There have always been liberals in the Catholic Church. Erasmus and Lord Acton come immediately to mind. During Vatican II, the American Catholic Michael Novak was quite influential. And, of course, John Paul II, John Paul the Great. I think Cardinal Dolan put it well when he said that of the current and past two Popes, we see three honored traditions with the Catholic Church: Aquinas (JPII), Augustine (BXVI) and St. Francis of Assisi. But, if were all to follow St. Francis in his way, we would soon die for lack of bread. Not that it would be a bad thing, were we all to die, starving to death, while loving each other. But, then where would the government get all the stuff that Pope Francis says are supposed to be everybody’s right?
Whoever told you the Pope claimed to be infallible on the subject of economics?
Where did you get that impression?