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.
"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.
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
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
reasoning. And
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.
