Tuesday, May 21, 2013

Critique of O'Sullivan's Critique [National Review] of Pope Francis' Homily on Economics





Blogger's Comment: John O’Sullivan is working in a different epistemological key from Pope Francis.  He remarks that “His main aim was to argue that market decisions should be made within a Christian moral context…  

I would argue that Pope Francis is working with a person-centered morality (like Benedict XVI in “Charitas in Veritate”#55 and throughout) rather than an object-centered morality where one would speak of the morality of types of actions such as socially responsible investment (SRI) within a mechanical calculus of supply and demand. Hence, I would suggest that O’Sullivan is not reading, understanding, nor commenting on the same epistemological horizon as Francis

    The epistemological horizon of Pope Francis (as John Paul II and Benedict XVI) is the horizon of the social doctrine of the Church, which is the epistemology of the subject, i.e. finding self by gift of self. Hence it is not a morality of actions within a social structure but the morality of giving self or not giving self. The morality which the Church proposes in its social doctrine is based not on extrinsic performances of the individual but on the working person . The anthropology of the working person bifurcates, as enunciated by GS 24, into the principle of subsidiarity and the principle of solidarity. Hence, the finding of the self is subsidiarity; the giving of self is solidarity. The Church is not interested in capitalism or socialism as economic abstractions (ideologies) but in the ontological-real person working as imaging Christ the Worker, Christ Who is Self-gift to the Father and to us. "By virtue of the (principle of solidarity), man with his brothers is obliged to contribute to the common good of society at all its levels. Hence the Church's doctrine is opposed to all the forms of social or political individualism.
   "By virtue of the second, neither the state nor any society must ever substitute itself for the initiative and responsibility of individuals and of intermediate communities at the level on which they can function, nor must they take away the room necessary for their freedom. Hence the Church's social doctrine is opposed to all forms of collectivism" (Instruction on Christian Freedom and Liberation" SCDF March 22, 1986 #73).

   And so, Francis is not talking about "systems" perfect or imperfect, or working within a "Christian moral context."



 and if such a context is lacking, they will be even more imperfect than otherwise. For their part, liberal economists have always conceded that markets have imperfections — of which the most important is that they are subject to occasional crises of greater or lesser severity, which are the price for a long-run upward creation of wealth unmatched by any other economic arrangements. To borrow Eliot’s language, the free-market economy is an imperfect system, so people will still need to be good. That is one imperfection that the pope has perhaps either not quite grasped or misinterpreted. But it strengthens his main argument.
The pope nowhere attacks free-market economics and the global system of liberal economics as such, though he was widely reported to have done so. Still it is fair to say that he could be easily misunderstood as doing so. He uses anthropomorphic rhetoric about “manipulation” and “subjection” that suggests he thinks powerful actors rig world markets against the poor or poor countries. He criticizes “ideologies” (presumably extreme schools of libertarian or classical-liberal thought) that assert an “absolute autonomy” of markets that is responsible for recent crises. In reality, markets do not enjoy such absolute autonomy, or anything like it. And though some libertarians (for instance, Ayn Rand) deny Christian truths such as altruism, the common good, and man’s social nature, most classical liberals do not fall into these categories and would not earn the pope’s criticism.
In his discussion of the world economy, he advanced an analysis marred by major omissions that, if addressed, would require him to qualify some of his sterner criticisms. But this was a short address, not an encyclical. His rhetoric was allusive, cryptic, and hard to follow at times, but that will presumably be corrected in more formal documents. Even so, the main burden of his argument was readily compatible with a broad free-market approach and with the economic arguments of those Adam Smith liberals who have taken on board the social arguments of Edmund Burke and the social encyclicals of the past century.
It will be interesting to hear what the pope says on his next venture into social philosophy — now that he has seen how the media deal with papal first thoughts.





De Re Oeconomica Francisci 
The pope says that because free-market economies are imperfect, people need to be good. 


What follows below is the official English-language translation of Pope Francis’s address last week to new non-resident ambassadors to the Holy See, interrupted several times by some comments from me. Only the first and final paragraphs of the address, offering formal greetings and promises of cooperation to the ambassadors, have been omitted. The pope’s words are in Roman (naturally) and my comments (except for these two introductory paragraphs) in Italics.

This address has been widely interpreted — not quite accurately, as we shall see — as a general attack on free-market capitalism. One brief introductory point about the nature of the address may be necessary. Like more formal social encyclicals, the pope’s remarks are a blend of moral principles and practical observations. As best I understand these matters, the pope’s statements on moral principles are binding on Catholics; his remarks on social, political, and economic practicalities should be prayerfully considered by Catholics, but they may disagree with them; and constructing policies that reflect the binding moral principles is a matter mainly for the laity. (Other Christians may prudently want to reflect on what the leader of the largest Christian denomination says on such matters, but they are under no obligation to do so.) All that said, here are the pope’s remarks:

Ladies and Gentlemen, our human family is presently experiencing something of a turning point in its own history, if we consider the advances made in various areas. We can only praise the positive achievements which contribute to the authentic welfare of mankind, in fields such as those of health, education and communications. At the same time, we must also acknowledge that the majority of the men and women of our time continue to live daily in situations of insecurity, with dire consequences. Certain pathologies are increasing, with their psychological consequences; fear and desperation grip the hearts of many people, even in the so-called rich countries; the joy of life is diminishing; indecency and violence are on the rise; poverty is becoming more and more evident. People have to struggle to live and, frequently, to live in an undignified way.

Almost everything in this paragraph is an obvious truth. One might object that insecurity is part of the human condition, but given the 2008 financial and euro crises and their aftermaths, the advance of jihadist terrorism after 9/11, and the apparent paralysis of many democratic governments, insecurity is probably more acute today than it was a few years ago and even than under the stability of the Cold War. Thus, fear and desperation grip people’s hearts, indecency and violence are on the rise, and poverty is becoming more evident. These are harsh realities. But there is a glaring omission in this pope’s list — namely, that billions of workers, especially in the Third World, have actually emerged from poverty and entered the world labor market in the last 30 years. They are far more prosperous than at any time in history. World poverty may be more evident because of the advance of communications, but it is also less extensive, and markedly so. This is an astounding and welcome development. And it arises mainly from the reduction of barriers to trade and capital investment known as globalization. This produced great social advances until the financial crisis of 2007–08. The recession since then has aggravated the evils the pope describes, but it has been largely confined to the West. Asia, Africa, Oceania, and even parts of the pope’s native Latin America, notably Brazil, emerged quite quickly from it. Thus, the balance sheet of evil and good as a result of a liberal world free market is more mixed than the pope’s list suggests.

One cause of this situation, in my opinion, is in our relationship with money, and our acceptance of its power over ourselves and our society. Consequently, the financial crisis which we are experiencing makes us forget that its ultimate origin is to be found in a profound human crisis. In the denial of the primacy of human beings! We have created new idols. The worship of the golden calf of old (see Exodus 32:15–34) has found a new and heartless image in the cult of money and the dictatorship of an economy which is faceless and lacking any truly humane goal.

The pope’s critique of greed and the “golden calf” is right and eminently sensible. It is rooted not only in Christian doctrine but in the broad human sympathy that unites (or should unite) all men and women. Wordsworth makes the same point when he says: “The world is too much with us; late and soon, / Getting and spending, we lay waste our powers.” And, of course, it is an injunction that has to be addressed to people in all politico-economic systems.
Capitalism is often accused of being a system of greed, and classical liberalism of being an ideology of greed, because they rest in part on self-chosen goals that may include greed and other human vices. Hence a free economy, if it is to work well, must work within a moral framework that includes but goes beyond liberal prohibitions on force and fraud. At the same time, anti-liberal social philosophies that promise to eradicate greed may make matters worse. People under Communism were far more acquisitive and materialistic than they and their progeny are today. Because material goods were so scarce, people were willing to sacrifice their integrity and morality for a pair of jeans or a silk tie. The end result was rampant materialism, a general social anomie, and the collapse of any system of morality. In the popular saying, you can’t judge a book by its cover, especially not a book on political theory.
So what does the pope mean when he talks of “the dictatorship of an economy that is faceless and lacking any truly humane goal”? This is a kind of rhetoric that suffers from its cryptic colorfulness. It needs unpacking — and that is obviously something I cannot do. What I can do is offer a few reflections on some of the terms the pope uses. An economy — or at least a free-market economy — is neither a thing, nor a system, nor a person. It rather resembles an agora in which innumerable people pursue their different goals than a committee that sets out and pursues a common goal. Insofar as it is “faceless,” that is because there is no single person or group making decisions for all the participants. For the same reason, it is not a dictatorship — though if you have lost your job or seen your business go bust, it is tempting to believe that there must be some decision-makers somewhere who were consciously responsible for these disasters. But “the 1 percent” is a myth that tempts us to think in primitive terms.
Bankers on Wall Street are not the only people responsible for the 2008 financial crisis. Many other people contributed to it, notably those in official regulatory agencies that pushed banks into giving mortgages to borrowers who couldn’t afford them. Those in international agencies who devised regulatory rules that perversely encouraged unproductive financial speculation were similarly placed. All these different people believed in (and represent) different economic and political ideologies. We could put some of their faces on the “system,” if we wished (and as we have done with “bankers”); but that would be misleading as to both their motives and degrees of responsibility.

The worldwide financial and economic crisis seems to highlight their distortions and above all the gravely deficient human perspective, which reduces man to one of his needs alone, namely, consumption. Worse yet, human beings themselves are nowadays considered as consumer goods which can be used and thrown away. We have begun a throwaway culture. This tendency is seen on the level of individuals and whole societies; and it is being promoted!

Again, the pope’s opposition to the reductionist idea that man is nothing more than a consuming animal is a correct and necessary reminder. The throwaway culture, though not new (remember Vance Packard’s jeremiads against “planned obsolescence” in the 1950s), is wasteful and indeed silly. There is some understanding of this in wealthy countries: The clearest cases, in which “human beings are . . . considered as consumer goods which can be used and thrown away” — namely, victims of sex trafficking — are either crimes or social vices that society as a whole condemns. But this social understanding of the wider economic “throwaway” culture is certainly inadequate — and the pope’s reminder is therefore necessary.

To what extent, however, do these evils stem from an ideology of limitless consumption? They stem ultimately from fallen human nature, of course, in all its aspects. And some aspects of a free economy, such as advertising, are implicated in overconsumption. But advertising, as well as having a useful and necessary role in promoting innovation and competition, does not persuade healthy people to live a life of neurotic purchasing. The problem here goes deeper and arises from the decline in social morality and even commonsense moral formation. How many people realize that waste beyond a certain inevitable level is wrong? Still, the pope gets some help here from popular culture, which satirizes manic shopping as the recourse of empty souls.

In our times, however, these evils of waste stem most insidiously from social ideologies not of consumption but of production, which insist that society must consume enough to keep a given number of people in particular employments. This particular folly was especially marked under Communism, but it did not end with Communism. Europe’s Common Agricultural Policy (CAP) — with its beef mountains, wine lakes, and subsidized exports that undercut Third World producers — rests on such reasoningAnd the ideologies promoting such wasteful policies — far more wasteful, incidentally, than capitalist overproduction — are essentially social-democratic rather than liberal-capitalist in nature. Man is not merely a producing animal any more than he is merely a consuming one. Work is a vital part of a good life, but toil to produce goods that no one wants is merely another form of waste.

In circumstances like these, solidarity, which is the treasure of the poor, is often considered counterproductive, opposed to the logic of finance and the economy. While the income of a minority is increasing exponentially, that of the majority is crumbling. This imbalance results from ideologies which uphold the absolute autonomy of markets and financial speculation, and thus deny the right of control to States, which are themselves charged with providing for the common good. A new, invisible and at times virtual, tyranny is established, one which unilaterally and irremediably imposes its own laws and rules. Moreover, indebtedness and credit distance countries from their real economy and citizens from their real buying power.

Again, the moral sentiments in this passage are clearly right and worth always bearing in mind when making either policy or personal decisions. Some of the practical arguments, too — for instance, citizens have allowed easily available credit to distort their vision of what they could really afford. But is it really the case that the income of the majority is crumbling? Of course, there is still great poverty in the world, even if less than in the past. And in some countries, especially in Western Europe, living standards have fallen sharply since 2008, but only to levels that are still far higher than they were two decades ago. In Asia and Africa, moreover, post-2008 growth resumed after a relatively short interval, and as we have seen, living standards there before the crisis were rising to levels never before seen.

As for “the absolute autonomy of markets,” that is simply a myth. Banking in particular was a highly regulated industry before the crisis and it is more tightly regulated today. As we have already seen, perverse regulation rather than no regulation was among the causes of the crisis. Above all, the worst human suffering in the economic sphere inflicted since 2008 until today is that resulting from the creation of the euro, which was the work of “States . . . providing for the common good,” and which has become a new kind of tyranny (though not an invisible one). Finally, solidarity is indeed “the treasure of the poor” when it inspires policies to encourage self-reliance and rescue people from dependency. As the CAP example demonstrates, however, it is sometimes employed to justify dependency, waste, and excessive state power.
Added to this, as if it were needed, is widespread corruption and selfish fiscal evasion which have taken on worldwide dimensions. The will to power and of possession has become limitless.
All of this is true, and powerful, and it indicts a wide range of institutions. All I would add is that the will to power and the will to possession are not the same, indeed they are often in conflict. And we sometimes assist the will to power by focusing too narrowly on the evils arising from the will to possession.

Concealed behind this attitude is a rejection of ethics, a rejection of God. Ethics, like solidarity, is a nuisance! It is regarded as counterproductive: as something too human, because it relativizes money and power; as a threat, because it rejects manipulation and subjection of people: because ethics leads to God, who is situated outside the categories of the market. These financiers, economists and politicians consider God to be unmanageable, even dangerous, because he calls man to his full realization and to independence from any kind of slavery. Ethics — naturally, not the ethics of ideology — makes it possible, in my view, to create a balanced social order that is more humane. In this sense, I encourage the financial experts and the political leaders of your countries to consider the words of Saint John Chrysostom: “Not to share one’s goods with the poor is to rob them and to deprive them of life. It is not our goods that we possess, but theirs” (Homily on Lazarus, 1:6 — PG 48, 992D).

The demand that God and humanity should be present in all our economic calculations is powerful and obviously correct (from a humanistic standpoint as well as a Christian one), and should be heeded by policymakers and the rest of us, not only financiers, economists, and politicians. We shouldn’t be slaves to our possessions or our passions, including power and ambition, and that is true under any religious or philosophical dispensation. My qualms here and throughout the address are twofold: First, the pope seems tempted here to believe that world markets are consciously manipulated by powerful people. But the fact that some of these powerful people lose money suggests that they are forecasting future trends rather than determining them. Most “speculations” are not purely speculative. They are attempts to ensure, for instance, that productive businesses enjoy financial stability in fulfilling contracts in foreign currencies.
Second, the pope hardly notices the revolution of charitable giving that has been surging since the 1980s. (At most one sentence is devoted, ambiguously, to it.) Yet foundations, NGOs, and charitable institutions of every kind have been multiplying in the advanced world and working to counteract social evils in poorer countries. Like any other great movement in history, this upsurge of private charity is not unambiguously good, but it seems to me to be far more good than bad. It’s an integral element in the structure of global liberal institutions alongside democracy and free markets, as John Paul II recognized in his 1991 encyclical Centesimus Annus, and it is also an expression of that “solidarity” that Pope Francis commends as “the treasure of the poor.” It needs to be taken into account when we judge the worth of different policies and ideologies.

Dear Ambassadors, there is a need for financial reform along ethical lines that would produce in its turn an economic reform to benefit everyone. This would nevertheless require a courageous change of attitude on the part of political leaders. I urge them to face this challenge with determination and farsightedness, taking account, naturally, of their particular situations. Money has to serve, not to rule!

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-centered ethics in the world of finance and economics.

For her part, the Church always works for the integral development of every person. In this sense, she reiterates that the common good should not be simply an extra, simply a conceptual scheme of inferior quality tacked onto political programs. The Church encourages those in power to be truly at the service of the common good of their peoples. She urges financial leaders to take account of ethics and solidarity. And why should they not turn to God to draw inspiration from his designs? In this way, a new political and economic mindset would arise that would help to transform the absolute dichotomy between the economic and social spheres into a healthy symbiosis.

Here are the strongest passages in the pope’s address, because they lay out clearly the most important theme running through it: that any economic or political system will produce distorted results if it operates in a moral atmosphere devoid of both morality and devotion to the common good (however defined in specific circumstances). One of the most marked (but also least remarked upon) features of the 2008 financial crisis was the low commercial morality it revealed, reflecting a low social morality, on the part of both market participants and government regulators. That decline in morality meant that the agency principle, which is fundamental to any complex system, did not operate as it should. And that is a continuing and fundamental problem — a cancer of free-market capitalism, so to speak, but a disabling disease under any system. Consider its effects: Clients could not rely on brokers to represent their interests; the public could not rely on regulators to represent the public interest (or “the common good”). This decline in social and commercial morality never touched the depths that Marxist morality hit in the Soviet collapse, when state-owned property was ruthlessly pillaged with general connivance and approval. But it fueled the entire crisis in many ways. And it demonstrated yet again what T. S. Eliot described as the folly of “dreaming of systems so perfect that no one will need to be good.”

That is what the pope set out to do in this brief address — and it should be emphasized that it was a brief address. In my view he succeeds in this aim, and his overall remarks should be seen in this context. His main aim was to argue that market decisions should be made within a Christian moral context, and if such a context is lacking, they will be even more imperfect than otherwise. For their part, liberal economists have always conceded that markets have imperfections — of which the most important is that they are subject to occasional crises of greater or lesser severity, which are the price for a long-run upward creation of wealth unmatched by any other economic arrangements. To borrow Eliot’s language, the free-market economy is an imperfect system, so people will still need to be good. That is one imperfection that the pope has perhaps either not quite grasped or misinterpreted. But it strengthens his main argument.

The pope nowhere attacks free-market economics and the global system of liberal economics as such, though he was widely reported to have done so. Still it is fair to say that he could be easily misunderstood as doing so. He uses anthropomorphic rhetoric about “manipulation” and “subjection” that suggests he thinks powerful actors rig world markets against the poor or poor countries. He criticizes “ideologies” (presumably extreme schools of libertarian or classical-liberal thought) that assert an “absolute autonomy” of markets that is responsible for recent crises. In reality, markets do not enjoy such absolute autonomy, or anything like it. And though some libertarians (for instance, Ayn Rand) deny Christian truths such as altruism, the common good, and man’s social nature, most classical liberals do not fall into these categories and would not earn the pope’s criticism.
In his discussion of the world economy, he advanced an analysis marred by major omissions that, if addressed, would require him to qualify some of his sterner criticisms. But this was a short address, not an encyclical. His rhetoric was allusive, cryptic, and hard to follow at times, but that will presumably be corrected in more formal documents. Even so, the main burden of his argument was readily compatible with a broad free-market approach and with the economic arguments of those Adam Smith liberals who have taken on board the social arguments of Edmund Burke and the social encyclicals of the past century.
It will be interesting to hear what the pope says on his next venture into social philosophy — now that he has seen how the media deal with papal first thoughts.

— John O’Sullivan is an editor-at-large of National Review.

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