What is more important, society or the individual?
In God's sight every individual matters in the first place as a person and only then as a social being.
Society can never be more important than the individual person. Men may never be means to a societal end. Nevertheless, social institutions such as the State and the family are necessary for the individual; they even correspond to his nature.
How can the individual be integrated into society in such a way that he nevertheless can develop freely?
The individual can develop freely in society if the "principle of subsidiarity" is observed.
The principle of subsidiarity, which was developed as part of Catholic Social Teaching, states: What individuals can accomplish by their own initiative and efforts should not be taken from them by a higher authority. A greater and higher social institution must not take over the duties of a subordinate organization and deprive it of its competence. Its purpose, rather, is to intervene in a subsidiary fashion (thus offering help) when individuals or smaller institutions find that a task is beyond them. (YOUCAT questions 322-323)
Dig Deeper: CCC section (1883-1885) and other references here.
Part 3: Life in Christ (1691 - 2557)
Section 1: Man's Vocation — Life in the Spirit (1699 - 2051)
Chapter 2: The Human Community (1877 - 1948)
Article 1: The Person and Society (1878 - 1896)
I. THE COMMUNAL CHARACTER OF THE HUMAN VOCATION ⇡
Socialization also presents dangers. Excessive intervention by the state can threaten personal freedom and initiative. The teaching of the Church has elaborated the principle of subsidiarity, according to which "a community of a higher order should not interfere in the internal life of a community of a lower order, depriving the latter of its functions, but rather should support it in case of need and help to co-ordinate its activity with the activities of the rest of society, always with a view to the common good."7
7.
CA 48 § 4; cf. Pius XI, Quadragesimo anno I,184-186.
God has not willed to reserve to himself all exercise of power. He entrusts to every creature the functions it is capable of performing, according to the capacities of its own nature. This mode of governance ought to be followed in social life. The way God acts in governing the world, which bears witness to such great regard for human freedom, should inspire the wisdom of those who govern human communities. They should behave as ministers of divine providence.
The principle of subsidiarity is opposed to all forms of collectivism. It sets limits for state intervention. It aims at harmonizing the relationships between individuals and societies. It tends toward the establishment of true international order.