Pope Francis on Unreformed CapitalismPope Francis on Unreformed Capitalism
READING THE ACTUAL TEXT OF THE 2014 APOSTOLIC EXHORTATION Evangelii Gaudium by Pope Francis, after reading the wildly misleading analyses of it by The Guardian and Reuters, I was at first dismayed by how seemingly partisan and empirically unfounded were five or six of its sentences.
Later, rereading the exhortation in full in its English translation, and attempting to see it through the eyes of the current professor-bishop-pope who grew up in Argentina, I began to have more sympathy for the phrases used by Pope Francis. For one thing, when it comes to the Third World and to South America in particular, the second poorest continent on earth, the pope knows whereof he speaks. For another, he is only picking up a noteworthy theme highlighted in John Paul II’s Centesimus Annus. After distinguishing among good forms of capitalism and bad ones, John Paul II writes very severely about a bad form of capitalism still weighing down the poor in many countries of the world. He points to countries kept outside “the sphere of economic and human development”1 in which the more fortunate forge ahead. The lack of trade and communication, and the obstacles to the transfer of knowledge and skills, bring about the marginalization of many millions outside the mainstream of development. I quote here at length John Paul II’s poignant description of this reality:
The fact is that many people, perhaps the majority today, do not have the means which would enable them to take their place in an effective and humanly dignified way within a productive system in which work is truly central. They have no possibility of acquiring the basic knowledge which would enable them to express their creativity and develop their potential. They have no way of entering the network of knowledge and intercommunication which would enable them to see their qualities appreciated and utilized. Thus, if not actually exploited, they are to a great extent marginalized; economic development takes place over their heads, so to speak, when it does not actually reduce the already narrow scope of their old subsistence economies. They are unable to compete against the goods which are produced in ways which are new and which properly respond to needs, needs which they had previously been accustomed to meeting through traditional forms of organization. Allured by the dazzle of an opulence which is beyond their reach, and at the same time driven by necessity, these people crowd the cities of the Third World where they are often without cultural roots, and where they are exposed to situations of violent uncertainty, without the possibility of becoming integrated. Their dignity is not acknowledged in any real way, and sometimes there are even attempts to eliminate them from history through coercive forms of demographic control which are contrary to human dignity.
Many other people, while not completely marginalized, live in situations in which the struggle for a bare minimum is uppermost. These are situations in which the rules of the earliest period of capitalism still flourish in conditions of “ruthlessness” in no way inferior to the darkest moments of the first phase of industrialization. In other cases the land is still the central element in the economic process, but those who cultivate it are excluded from ownership and are reduced to a state of quasi-servitude. In these cases, it is still possible today, as in the days of Rerum novarum, to speak of inhuman exploitation. In spite of the great changes which have taken place in the more advanced societies, the human inadequacies of capitalism and the resulting domination of things over people are far from disappearing. In fact, for the poor, to the lack of material goods has been added a lack of knowledge and training which prevents them from escaping their state of humiliating subjection.2
In absorbing Francis’s perspective, what is most painful to Argentinians is that Argentina a century ago ranked among the top fifteen industrial nations. Then a destructive economic ideology dramatically slowed Argentina’s economic and political progress, and instability in the rule of law undermined economic creativity. Inflation blew upward to impossible heights. (In the early 1980s, I brought home from Argentina a note for a million Argentine pesos that had declined in worth to two pennies.)
For over three generations, very little of Argentina’s rich natural endowment has been available to the bottom half of the population. Upward mobility from the bottom up has been surprisingly infrequent. Even today, upward progress for Argentina’s poor is not yet in sight. The poor receive little personal instruction in how to improve their independent creativity. Few laws and few lending institutions support them in moving upward. Humiliation wells up in the poor as they see their lack of personal achievement and their dependency. This is what Pope Francis was painfully remembering as he wrote his exhortation, and it is exactly what the eyes of many other observers have seen.
Argentina is an exceptionally complex society. In Mendoza province, great Malbecs are wrested from the mountainous terrain, thanks to many generations of toil and loving attention. There one meets unusually determined entrepreneurs who are proud of what their ancestors have built by imagination, artistry, and hard work. In teeming cities to the south, amid depressing slums, some millions are either unemployed or underemployed. There is an immense amount of work to do to make neighborhoods habitable, let alone prosperous. There are electric poles and wires to put up, sewer pipes to lay, cement slabs to be laid as foundations for houses that would be sturdier than the rickety shanties covering the landscape. On the one hand, there are millions of unemployed. On the other, millions of hands are needed to build a new Argentina, an Argentina more hopeful for the poor. What will bring these two poles together, the unemployed with the immense work yet to be done?
What system works best for raising up the poor into a creative and ever-rising middle class? For creating beautiful neighborhoods, parks, schools, and thriving small businesses in every urban center? There is no doubt that the poor need a reconstruction of the social order. This chief question desperately needs an answer: How do we get there? How can we raise today’s miserably poor toward ever-improving life chances and inspiring environs?
All around the world, such progress is happening, even in some sectors of Latin America. In Chile, Uruguay, Brazil, Colombia, and parts of Mexico, one sees economic vitality bubbling up. This creative ferment seems to happen wherever economic policies evoke the creative and inventive energies of citizens. In other areas of Latin America, by sharp contrast, nations are sliding backward, down deeper into poverty, disorder, and dislocation—Venezuela most visibly of all. In different countries, different ideas guide the fates of nations. Thus, the most urgent question for the poor must be: What is the most secure and speediest way out of poverty and misery?
Some experts used to say that the problem is overpopulation. This opinion imploded when more astute scholars noted conclusively that densely populated nations, such as Japan, Taiwan, Singapore, Hong Kong, and many others, even with very few natural resources, could double and redouble the standard of living of their poorest people in one generation. Thus, the crisis of the poorest ones to which Pope Francis directs our attention is not a hopeless, desolate desert. Great economic progress can be made swiftly, and is being made, all around the world. I first saw Warsaw, Poland, in 1978: dark, drab, depressed, rundown, unpainted, still heavily pockmarked by ruins left by World War II. To see the festival of light it had become by my last visit at Christmastime in 2012 was to have my breath taken away by the stark contrast: the Polish miracle, one wants to say. Except that we have seen the same miracle in scores of countries around the world since 1945, including the Four Asian Tigers between the 1960s and the 1990s, in Eastern Europe after the fall of Communism in 1991, and in China and India over the last twenty-five years—and, to repeat once again, in many, many sectors in South and Central America. Still, both Africa and Latin America lag far below their economic potential.
On Terminological Consistency
Often one finds persons in different parts of the world today attaching widely different meanings to such terms as “socialism,” “social democracy,” “liberalism,” “neoliberalism,” “capitalism,” and even “mercantilism.”
Consider the many different meanings attached to the word “capitalism,” based on very different experiences in many different parts of the world. In many Latin countries, today’s corporate leaders are often the grandsons of the great landholders of the past. Some of these sons are men of vision, invention, and personal initiative who have built up whole new firms—or have at least formed alliances overseas to bring European, North American, or Asian brands into Latin America. Still, they are perceived as part of a rich-versus-poor culture that stretches back to the 1500s.
I learned in Italy in the 1950s that “capitalism” there meant a sharply two-tiered division of classes. Some owners of great companies were members of the old landed aristocracy, with their old fortunes now invested in automobiles, rubber tires, petroleum, chemicals, radio and television sets, fine wines, and large manufacturers of all sorts. The difference was not only rich versus poor, but also between those very few who could get into worldwide businesses and those who had no opportunity. Opportunity seemed open only to a few.
True, there were in the 1950s plenty of shopkeepers and small businesses of generations’ standing: producers of fine stationery, milliners, fine tailoring shops, and many others. But there were not many entrepreneurs, inventors, creative builders of new businesses, or founders of whole new lines of products. In Italy, “capitalism” was still used as a fairly nasty term, linked to privilege, inheritance, and the old stability. On the other hand, a new type of critic such as Aminatore Fanfani disagreed strongly with the British liberal writers of the nineteenth century, such as Bentham, Mill, and others. He thought of them as “Protestants,” outside the old humanistic consensus. He thought of them as giving their blessing to an irrational and destructive lust for unlimited acquisition.
But this is only one description of capitalism in the European context. As Hayek describes in The Counterrevolution of Science, the Continental model of capitalism is quite different from the Anglo-American model.3 The former was strongly influenced by the well-known socialist theorist Henri de Saint-Simon. A disciple of Saint-Simon was Napoleon III, who followed Saint-Simon’s theories in his policy for the industrialization of France. Similar models were deployed elsewhere in Europe, including Germany and Italy. Saint-Simon’s influence (and that of his disciple Auguste Comte) was also felt strongly in Latin America. Briefly put, their model assigns the state a commanding economic role. It parcels out rights to incorporate new businesses and demands long lists of regulations and requirements. It levies very high taxes, usually to pay for a large air/rail/auto transportation system and an expensive military.
Under such a model, the state daily awards large contracts to “capitalists” (typically friends of politicians or dummy corporations owned by politicians), who set up their industries with the benefit of large investments from major banks, with whom they are given “connections.” These individuals have very little capital of their own and assume very little risk. Their main asset is their connection with political power, and they form a kind of exclusive club, barring the vast majority from access to economic initiative. This has also been the historical model in Argentina, but there, due to the importance of agriculture, the landowning class has also played a significant economic role.
My own experience of capitalism in the American context was out of tune with these other national experiences of capitalism. Born in a small town in Pennsylvania founded in the early 1800s by German farmers, I was brought up proud of the great steel mills and complex coal mines pioneered by sturdy inventors, mostly born poor, who came to Johnstown as immigrants from many nations. By the time of the Civil War (1861–65), the iron mills of Johnstown had become, through newly invented processes, the first large makers of steel, and builders of some of the largest steel mills in the country. (Birmingham, Alabama, was its southern counterpart.) Steel was far more useful than iron, and later enabled many new industrial developments, with railway ties, bridges, automobile bodies, and girders for skyscrapers. We in America, by and large, were very proud of our many inventors. We owed our rich employment opportunities to such men. Among us, “capitalist” was a good name, and in our public schools one did not see portraits of aristocrats and soldiers, as in Europe, but local inventors of industry.
We begrudged no one who became rich by invention. Scores of thousands of young men in America were experimenting at home in order to become inventors who could own intellectual property. Abraham Lincoln himself earned two patents. My wife’s grandfather and his brother took out nearly fifty between them, some highly significant such as baling wire, a special lightning rod, the stump-puller “that cleared the West” (which won a gold medal citation from the Seattle World’s Fair of 1909), and an early prototype of the extension ladder.
For such reasons, we associated capitalism not with privilege but with an open door for poor young men of no particular family connections, but with inventive minds, initiative, stick-to-itiveness, and a knack for practical problem solving to produce new goods and services which made everyone’s lives a little better. We thought of such initiatives as serving the common good, and the more widely your product was used, the more wealthy you might justly become for producing something so useful to so many, and so soon. (Patents were and are valid only for a relatively short period of time.)
Another example of how differently the same word rings in different parts of the world: As of now, I suspect, most Americans cannot name a single household item invented by Argentines. Some Englishmen of the World War II era, however, would think immediately of the ballpoint pen (a novel invention then), which they call a biro, just as they call the vacuum cleaner a hoover. Lásló Biro invented the ballpoint pen in Budapest, but then emigrated to Argentina and perfected it there. He made large quantities for the Royal Air Force in World War II because ballpoints worked better at high altitudes than fountain pens.
True, in several new fields, creativity and invention are now growing rapidly in Latin America. The Brazilian Embraer jets (popular in the fleets of many U.S. carriers) are highly praised originals. But still the economic systems of too many Latin American countries are more like static and traditional market systems than they are “capitalist” in invention and enterprise.
Catholic Social Thought Is a Work-in-Progress
Anyone commenting on the economic themes of Evangelii Gaudium will note at the outset that the pope insists that this document is not a full expression of his views on political economy, which will come later, but only an expression of his pastoral heart. In paragraph 51 Francis writes:
It is not the task of the Pope to offer a detailed and complete analysis of contemporary reality, but I do exhort all the communities to an “ever watchful scrutiny of the signs of the times”. This is in fact a grave responsibility, since certain present realities, unless effectively dealt with, are capable of setting off processes of dehumanization which would then be hard to reverse. We need to distinguish clearly what might be a fruit of the kingdom from what runs counter to God’s plan. This involves not only recognizing and discerning spirits, but also—and this is decisive—choosing movements of the spirit of good and rejecting those of the spirit of evil. I take for granted the different analyses which other documents of the universal magisterium have offered, as well as those proposed by the regional and national conferences of bishops. In this Exhortation I claim only to consider briefly, and from a pastoral perspective, certain factors which can restrain or weaken the impulse of missionary renewal in the Church, either because they threaten the life and dignity of God’s people or because they affect those who are directly involved in the Church’s institutions and in her work of evangelization.
Those who favor capitalist techniques to raise the poor out of poverty observe that, traditionally, the poor in capitalist economies move upward, with higher employment rates, higher wages, measurable outbursts of personal initiative and new enterprises, and widespread homeownership. Immigrants move out of poverty often in just a few years, and the working-class “proletariat” become solid members of the middle class. (In a televised debate in Italy, my Marxist partner kindly offered me an argument he said he would use if he were I. Bowing to Gramsci, he pointed out that the problem Marxists in Italy then faced was that capitalism had succeeded in making workers part of the middle class, now more capitalist in their politics. And so, he smiled, Communists were reduced to recruiting new members from the class of journalists, radio and television and cinema workers, professors, and students.)
The history of the United States, as well as that of postwar Europe, and now large swathes of China, India, and much of the Third World, is heavily laden with such evidence. But in other portions of the world, Evangelii Gaudium warns against “a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system.”4 In Argentina and other static systems with little or no upward mobility, this observation might sadly be true. In nations with generations of reliable upward mobility, however, it is not really true.
The upward movement promoted by certain capitalist systems is the real experience of a large majority of North Americans, yet in some places it may seem to be “a crude and naïve trust.” Nor is “trickle-down” (another phrase in the English translation of the exhortation) an apt description of what has happened in the advanced world; rather, what has been experienced there is wealth “welling up from below.” This is precisely what continues to attract millions of immigrants into advanced economies.
In addition, the English translation of Evangelii Gaudium insists that there are people who believe that economic growth will inevitably produce greater justice and inclusiveness (equidad e inclusion sociál). But the Spanish text does not use the word “inevitably.” The more moderate (and accurate expression) in Spanish is por si mismo, or “by itself.” Unlike the English translation, the original Spanish gets it right: It takes a lot more than economic growth to make a system “equitable.” It takes the rule of law, the protection of natural rights, and the Jewish/Christian concern for the widow, the orphan, the hungry, the sick, the imprisoned. In short, it requires effective concern for all the vulnerable and needy.
Despite its glaring faults, especially in its entertainment sector—pop music, nudity, decadence—the American system seems to have been more “inclusive” of the poor than any other nation on earth.
In the End, a Positive Evaluation
There are two things I especially value in Evangelii Gaudium. First is its focus on caritas. The whole of the cosmos, and the whole of human life, are upward leaping flames from the inner life of the Creator, from caritas—that outward-moving, creative love that is God. As the erudite Benedict XVI showed in his first encyclical, Deus Caritas Est (2005), everything crucial to human life begins in God’s caritas. When we think of this in our own lives, we can ask: Is not the love you have for your dear spouse, children, and close friends the most “divine” experience you know?
That is one reason why Catholic social thought begins in caritas. It is also why the poor are so close to the center of Christian concern, and so much at the heart of Christian worship.
The second point I most value is the focus Evangelii Gaudium places on the main practical task of our generation: breaking the last round of chains of ancient poverty. In 1776, there were not yet even 1 billion people on earth—only an estimated 750 million. The vast majority of them were poor (les misérables of Victor Hugo’s France), and mostly living under tyrannies. Just over two centuries later, there are more than 7 billion human beings. Rapid medical discoveries and inventions have helped to double (and more) the average age of mortality, vastly reduce infant mortality, and provide relief for hundreds of diseases. Economic progress has allowed six-sevenths of the greatly extended human race to break free from poverty—over a billion of them just since 1950, and another billion since 1980. There are another billion more still in chains.5 The Jewish, Christian, and secular humanist task is to break this remaining billion free.
Worship of God, in the Christian view, gains its credibility from what the worshipper actually does in daily life to help the poor. If one doesn’t come to the aid of the poor, then in practice one does not love God.
“No one has ever seen God,” Saint John writes in his first Letter, “but if we love one another, God lives in us and his love is made complete in us” (1 Jn 4:12). And Jesus instructed, “Whatever you did for one of the least of these brothers and sisters of mine, you did for me” (Mt 25:40).
In the future, Francis will unfold his fuller arguments about the practical policies that best help the poor to move out of poverty. No doubt, consultations preparing him for this task have already begun.
Note, for example, what John Paul II said about the need for capitalist peoples to be vigilant and to do still more than before:
The Marxist solution has failed, but the realities of marginalization and exploitation remain in the world, especially the Third World, as does the reality of human alienation, especially in the more advanced countries. Against these phenomena the Church strongly raises her voice. Vast multitudes are still living in conditions of great material and moral poverty. The collapse of the Communist system in so many countries certainly removes an obstacle to facing these problems in an appropriate and realistic way, but it is not enough to bring about their solution. Indeed, there is a risk that a radical capitalistic ideology could spread which refuses even to consider these problems, in the a priori belief that any attempt to solve them is doomed to failure, and which blindly entrusts their solution to the free development of market forces.6
Although economic growth falls far short of being the only goal of free societies, its blessings for education, medical improvements, the prospering of freedom of conscience, and the private financing of civic life are not inessential to the common good. Fault it we must. But in all justice, such a system surely deserves gratitude for what it does better than all prior systems.
There are good versions of capitalism and bad ones. One test of the difference is how well and how rapidly the good system raises its poor out of poverty. On that, Pope Francis is on target.
It is all too true that market systems do not alone produce upward mobility, economic progress for all, and wide economic opportunity. Argentina has always had a market economy. So, too, almost all the peoples in human history. Market systems alone do not lift up the poor.
Jerusalem in the biblical period cherished private property (“Thou shalt not steal,” “Thou shalt not covet thy neighbor’s goods”), and it lived by a vital market (it was the commercial interface of three continents). But for 1,800 years after Christ lived, none of the world’s markets—nor the aggregate thereof—produced much economic development. The world’s economies remained relatively static as they faced a merciless cycle of “fat” years followed by “lean” ones. In nearly every generation, traditional market systems experienced famines and massive outbreaks of deadly diseases. No more.
Pope John Paul II came to see this historical reality. His insights are still in the treasury of Catholic social teaching, and naturally they will come to the attention of Pope Francis, who devotes a whole section of Evangelii Gaudium to the theme “Reality is more powerful than ideas.”