The National Catholic Review

On economic life, Pope Francis sees his responsibility in clear terms:

The Pope loves everyone, rich and poor alike, but the Pope has the duty, in Christ’s name, to remind the rich to help the poor, to respect them, to promote them. The Pope appeals for disinterested solidarity and for a return to person-centred ethics in the world of finance and economics. (5/16/213)

This strong call for ethics in economics is not new. He stands in continuity with his predecessors, particularly Pope Benedict in Deus Caritas Est and Caritas in Veritate.  Francis’ mind is with the Church and its constant teaching.  Where Francis is unique is his directness, urgency and passion.   It’s where he comes from and where he stands that makes a difference. Francis’ heart is with the poor; his feet were planted in the villas miseriasof Latin America. He calls for a Church “of and for the poor” that is not turned in on itself, but “in the streets.”

He has lived the Church’s social teaching in his own ministry so he speaks confidently and bluntly on its demands. Having challenged the Marxist temptations of some elements of liberation theology, he is more than comfortable challenging some elements of “savage capitalism” (5/21/13).  He refused to worship at the altar of Marxist utopianism; he won’t bend a knee to the utilitarian advocates of the invisible hand of the market.  As someone who challenged government corruption and overreach in Argentina, Francis recognizes the limitations of the state, but won’t abandon Catholic teaching on the obligation of government to protect the poor and seek the common good in economic life. 

Francis is not a chaplain to ecclesial or ideological factions, but challenges all of us. We cannot be a “compassionate NGO” or “slumbering” Christians.  The pope’s message on the moral imperative for greater ethics in economic life is not conservative or liberal, but Catholic.  It is not socialist or capitalist, but Christian.

Secular liberals are learning that Francis is convinced that Catholic teaching on human life and dignity requires us to defend the unborn child, the immigrant, the exploited worker, the frail elderly and essential institutions of faith and family.  Economic conservatives are learning that he truly places the poor first and measures economic life for how it treats “the least of these.”  Pope Francis takes on the secularism that suggests we can build the good society without God and the materialism that says we measure society by what we have or produce instead of how we care for one another, especially the poor and vulnerable. He takes on excessive individualism in both personal life where “choice” trumps almost all else and in economic life where “the absolute autonomy of markets” is the source of all power and wisdom. Worship of these secular idols undermines the common good and leaves the poor behind.

 Francis is focused on the dignity of the human person, not abstract economic theory or the ideologies of left or right. Francis is particularly scornful of ideologues: “The ideologues falsify the gospel. Every ideological interpretation, wherever it comes from – from (whatever side) – is a falsification of the Gospel,” Pope Francis said April 19“And these ideologues, as we have seen in the history of the Church, end up being intellectuals without talent, ethicists without goodness – and let us not so much as mention beauty, of which they understand nothing,” he added.

Ecclesial chaplains to ideological factions will find Francis threatening because of his consistency in warning us of the dangers of rampant secularism and materialism, from unrestrained markets and misguided government. The ecclesial spin masters claim “he is one of us”…social activist or evangelical Catholic, reformer or enforcer.  Francis doesn’t fit our categories.  He is a caring pastor in a global parish and a powerful teacher who proclaims the truths of our faith clearly and bluntly.  He reminds us of Jesus confronting the moneychangers and proclaiming the parable of the Last Judgment. Not a bad model for a Pope.

John Carr is the “Washington Front” Columnist for America and the Director of the new Initiative on Catholic Social Thought and Public Life at Georgetown University. He was the director of the U.S. Conference of Catholic Bishops’ Department on Justice, Peace and Human Development for more than two decades.

Comments

Bill Mazzella | 5/26/2013 - 11:27pm

And what kind of message do we send when we have to spend 187 million dollars to renovate St Patrick's Cathedral. Are we doing that because the free market which made a few CAtholics wealthy permits us to. More important to place marble all over the place than feed the hungry, and house the poor.......

J Cosgrove | 5/24/2013 - 11:49am

Mr. Carr,

I do not believe you understand just what the free market is or what the invisible had does. The term "savage capitalism," whatever that means does not have anything to do with the "free market" where theoretically every transaction is between two entities who freely engage in it. I suggest you read a lot more about the different forms of economic activity. The free market is the only truly moral way to distribute goods and while it is never enacted in a pure form, the closer we get to it the more moral the economic system is and the more likely that the poor will eventually be pulled out of poverty. There is never any favoritism in a free market.

Where the market leads to improper distributions then the rule of law should be applied but it should be applied as lightly as possible and never to favor particular individuals or groups. The unfortunate for whatever reasons can be cared for to a certain extent based on the overall level of economic activity. Even the 20th century's greatest champion of the free market, Friedrich Hayek, was in favor of providing for the needy to a certain level. He recognized that the actual level of support would grow as the society got richer. One of the problems with the Welfare State which rose as an answer to rent seeking and crony capitalism was that it sometimes went to far in what was distributed and because of this actually impeded what was available to the poor. Any time there is too much meddling in the market, the poor end up with small end of the stick.

I would read the article Dr. Stacie Beck wrote here recently about the excesses of social activity and how it can end up hurting the common good as people explore mis-guided ways to interfere in the market supposedly helping the poor but often having just the opposite effect. One of the results of all these programs is that there is very little material poverty in the US these days but real spiritual and cultural poverty as we may be inculcating a form of learned helplessness among a large subsection of the population.

Jim Lein | 5/24/2013 - 4:02pm

"All these programs" fall far short of meeting basic human needs. There is much more than "very little material poverty in the US these days." Welfare programs used to actually help people get jobs. In my long career in welfare and mental health services, I've known many who advanced from poverty to self-sufficiency thanks to job training programs with enough leeway for people to breathe and not fear being immediately cut off if they missed a class or an interview. But over the years we have pared back programs to the bone, with more and more regulations and conditions. And private programs, though very helpul, can in no way meet the need.

We need public welfare as much as we need publicly financed roads. About 37 years ago, Wisconsin gave all taxpayers a $300 rebate, and the following year the state was short of funds for road repairs. Surprise, surprise, the citizens didn't band together, pool their $300s, and repair the roads on their own. Of course we need some central organization, some government in today's large society. Maybe not in theory. But in reality. I suggest looking up a talk by the Chief Rabbi Jonathon Sacks of Great Britain on the strengths and shortcomings of the market system.

Greg Redford | 5/24/2013 - 1:55pm

I would be interested in your explanation of the invisible hand, Mr. or Ms. Cosgrove?

It seems to me Mr. Carr’s reference to a capitalism that is savage is not without warrant. Adam Smith coined the term “invisible hand” in his inquiry into the wealth of nations. His observation was, as individuals pursue their economic self-interest, the wealth of the nation increased along with the fortunes of the individual. It presumes an alignment between the economic good of the individual and the prosperity of the nation as a whole. To put a finer point on it, between self-interest and a common good. This is clearly, and rather frequently, not the case.

The most poignant example is the financial crisis of 2009, which was catalyzed by individuals on Wall Street who produced and sold financial products, for which they were compensated on a per transaction basis with more money than most people earn in three lifetimes, that brought the economies of the world to the brink of complete failure. Their actions were the root cause for an economic recession, and therefore lost economic output, on a global scale. This does not even account for the human turmoil and suffering inflicted as a result of them pursuing their self-interest. There was absolutely no alignment between self-interest and a common good.

As another example, it might be perfectly rational and the fulfillment of your self-interest to build a nuclear power plant in order to earn a profit of “$Y”. But, if you decide that in order to earn “$Y” you need to dump the toxic waste in a location that ultimately generates serious health conditions in the population of that area, and this costs society 3x “$Y” through Medicaid, Medicare, etc., then where is the alignment?

Capitalism can be savage. It is that simple. If you are trying to make a distinction between capitalism and the free market, then I would be likewise interested in that?

Further, your idea of a truly moral distribution of goods, which seems to be a distribution that does not impose some kind of favoritism, according to your own words, is rather narrow and seems to rely upon support from Friedrich Hayek, who in turn was a believer in the invisible hand. Again by your own words.

Regards,

J Cosgrove | 5/24/2013 - 4:34pm

Mr. Redford,

I suggest you either read or listen to Professor Jerry Muller of Catholic University or better do both. He has a Teaching Company course on capitalism and has written a couple books on it. He describes capitalism in all its various forms. His Teaching Company course has 4 lectures on Adam Smith and in it he describes how capitalism forces a free market capitalist into moral behavior without any influence of religion. Here are the links for these if you or anyone else is interested. I frequently publish them for those who do not seem to understand what capitalism really is.

http://www.amazon.com/Mind-Market-Capitalism-Western-Thought/dp/0385721668

http://www.thegreatcourses.com/tgc/courses/course_detail.aspx?cid=5665

Yes, capitalism has many forms and most are anathema to the advocates of the free market because they rig the transactions to favor the few. Professor Muller also has a major article in Foregn Affairs' latest issue which discusses inequality in detail which is a supposed failure of capitalism. This article is not available for all to read but may be available through a local library. He is extremely critical of both the left and the defenders of capitalism for not recognizing some of the effects of the free market.

The "free market" is one form of capitalism and is one which all transactions are done freely. It is where the focus is on the customer or the purchaser and where no undue pressure is brought to bear on either the buyer or seller to complete the transaction. Another short book on the topic is "The Morality of Capitalism: What Your Professors Won't Tell You":

http://www.amazon.com/books/dp/0898031702

There is no close second to capitalism for the fair distribution of goods. Any other system will end up making arbitrary choices favoring some sub-group over another and in the process inhibit economic activity at the expense of the common good. Just about every defender of the free market recognizes that there has to be some way to help the unfortunate so if one wants to criticize capitalism because it treads on the poor, that is a bogus argument. It is the best system for relieving the poor of their poverty. If there is such a thing as "savage capitalism," it is not the result of the free market and more likely the result of rent seeking.

As far as the financial crisis of 2008, there are several things that happened and few would say it was the free market working it self out. Government interference in lending practices in the early 90's started the housing bubble which was then fueled by cheap money especially after the internet crash and recession of 2000. Both of these are the result of the government intervention. Lenders were led to believe there would be no repercussion for these loans and eager investors all over the world were chasing interest rates on these bonds. At the same time these investors were investing in risky ventures all over Europe but especially in Ireland, Greece and Spain which also saw collapses. Few would describe much of this as the free market as investors knew that many of their investments would be protected by various governments. Similarly your description of a nuclear power plant is not an example of the free market. What you describe as savage is not the free market. It is a common misperception and an invalid one.

Is the free market the cure for everything? Certainly not but there is no better approach to organizing economic activity. Criticisms of the free market are nearly always comparisons to some idealistic utopian society and when done so, capitalism will of course fall short. But any other system will fail even greater in such a comparison. The criticism also fails to differentiate between the various forms of capitalism and a lot of what people call capitalism is rent seeking or the slicing off of part of the pie off for a privileged sub group through some political activity. We all see so much wealth about and want to somehow share it with everyone. The best way is to let the market play out over time and make sure everyone has a fair chance. Nearly every poor person in the United States is better off than the average person of 100 years ago or even 50 years ago in terms of food, clothing, shelter, education, health care and entertainment. The innovations of the few have resulted in the many having things and opportunities undreamed of in the past. They may be deficient in other things but it has nothing to do with capitalism, but often with what the government has done to them often in trying to make things better. Government action often has some very negative unexpected consequences.

Greg Redford | 5/25/2013 - 1:21pm

You are right, the roots of the financial crisis extend back to the 1990’s, and certain government actions. But, your glossy understanding needs correction. The government intervention you point to, and imply disrupted the proper functioning of financial markets, was The Financial Services Modernization Act of 1999. It repealed parts of the Glass Stegall Act of 1933. The repeal had the effect of allowing one financial institution to engage in all of banking, insurance, investment banking, and securities trading. But, most importantly, Mr. or Ms. Cosgrove, it was passed after significant lobbying from the financial services industry. So, your idea the financial crisis of 2009 was “the market working itself out” is not even remotely credible. The financial industry, i.e. the experts on matters financial, created the problem from start to finish. It is clear, and no amount of nuancing can obscure this fact.

Further, where was this magnificent invisible hand, that you seem to have such trust in, but cannot explain except to point to what someone else might have said about it?

You seem to be defending some kind of free market capitalism as if it were being threatened by a proposal for an economic system that would drastically limit the selection of goods you can find on the shelf during your next trip to Wal-Mart, or would require you to submit your paycheck to the government who would then give you an allowance. This is not the case.

I am not arguing, and the Church does not argue capitalism should be entirely abandoned in favor of some heavy-handed centralized economy. The Church has rejected Marxism and communism as appropriate for human living and thriving -- see John Paul II’s encyclical Fides et Ratio. And, as Mr. Carr points out, Pope Francis has rejected those ideologies.

As for your suggestions for my reading list, thank you, but I will pass. The fact that you cannot explain what Muller said, in your own words, except to say “the free market market capitalist is forced into moral behavior,” tells me that Muller was ineffective in instructing you, or that you have no idea what he was talking about. So, I have a suggestion for you. Read a primary source book, read it again, and then think about it. Then, evaluate it against your common sense and experience of life. Only then might you be in a position to imply that me, or Mr. Carr, or anyone else is ignorant and uninformed.

Good luck with your fundamentalist campaign for something you seem to have only the slightest understanding of.

J Cosgrove | 5/25/2013 - 7:27pm

Mr. Redford,

Thank you for your comments.

I have read about 20 books on the financial crisis and the supposed great recession. I am not sure what to call the economic scenario of the last 6 years since we have technically not been in a recession for a few years now but no one believes the economy is back to normal growth paths. Based on what I have read there are lots of causes of our current economic malaise. A major problem is that we have essentially eviscerated the construction industry since there is very little incentive to build houses as there is still a tremendous glut of excess inventory and lots of people defaulting every month.

If there had been no relaxing of housing mortgage lending practices few think that the large correction to the economy would have ever taken place because there would not have been a housing bubble. Nor would there have been quite as rosy economic times as there were in the period of 2002-2006. There were financial problems elsewhere in the world as I said that had nothing to do with US housing mortgage bonds. A lot had to do with the establishment of the euro and the ease this made for currencies to cross borders.

There were large pools of money circulating the world looking for good rates of return and they were aggressively seeking US investments as well as elsewhere. PBS had a speical on the effect of the large pools of money that existed in the world in 2008. I believe they said that 72 trillion dollars was circulating in 2008 compared to $36 trillion in 2000. This large pool of money was seeking returns and putting pressure on investors to find outlets for the money. That plus the lax lending standards in the US was a witches brew for an economic explosion. Without the lax lending standards the money would have gone elsewhere, probably causing other problems such as happened in Spain and Ireland.

If anyone believes that the repeal of Glass-Steagall was the cause of the economic downturn, then they have a few who agree with them but most do not. Here are a couple links for anyone to read in case they are interested

http://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Act#Glass.E2.80.93St...

http://www.forbes.com/sites/objectivist/2012/11/12/why-the-glass-steagal...

I am also sorry that I didn't try to distill 100 pages/four lecturers of a book/course into a paragraph. But essentially Smith said that one engaging in the free market has to consider the customer and this leads to behavior on the part of the seller that causes moral actions. Otherwise a competitor will win the business of this customer. That is those engaging in the free market have to behave ethically or they will not succeed. So I hope this helps.

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