The statement about markets seems designed to be emotive rather than develop genuine discourse. ‘The market’ is simply an institution within which people exchange goods and services to satisfy their needs and wants. Within the market people may have many different objectives. Monks, for example, hold their private property in common and, no doubt, buy their electricity in the market economy: are they only motivated by profit and maximising gain?
However, let us first justify profit and gain. The Bishop was talking in the context of migrants coming to work in the UK. It is the potential for prosperity arising from the existence of a (broadly) profit-driven market economy rather than the suppression of the market economy that drives so many migrants to countries such as the US and the UK and away from their original countries of residence. Profit provides signals that market transactions are benefiting both parties – there is nothing wrong with a market economy that is broadly motivated by profit. In answering the rhetorical question of whether the market economy is the key to economic and civil progress, John Paul II, writing on the 100th anniversary of Rerum novarum (to which the Bishop referred) said:
‘If by “capitalism” is meant an economic system which recognizes the fundamental and positive role of business, the market, private property and the resulting responsibility for the means of production, as well as free human creativity in the economic sector, then the answer is certainly in the affirmative, even though it would perhaps be more appropriate to speak of a “business economy”, “market economy” or simply “free economy”.’
At least three qualifications are necessary. Firstly, that encyclical made clear that there are difficult issues about whether market prices (especially in the labour market) should always dictate the terms of exchange (this issue was covered in my previous post). Secondly, the market does not resolve all human problems. Much human activity is not economic activity and much economic activity takes place outside the market (or is tangential to the market) – there is a free economy outside the market economy. Finally, the existence of a market economy does not mean that we can ignore the need for morality.
To some degree Pope Benedict’s encyclical Caritas in veritate was designed to deal with these issues and this leads us to the point where the Bishop is objectively wrong and very careless. The market is not motivated only by gain and profit. The market is simply the set of institutions through which individuals undertake economic exchange. How can ‘the market’ be driven only by the maximisation of profit or gain? It is the individuals who exchange within a market economy who determine their own objectives which may be many. The example of monks has already been given. This point is so clear in the tradition of Catholic social teaching and was re-emphasised explicitly and strongly in Caritas in veritate that it is difficult to understand how the Bishop could have made this error. Fair trade, mutual insurance societies, Rain Forest Alliance certified coffee, the cooperative movement and so on are all part of the market economy. I am content to defend the profit motive but there are also many organisations and individuals who operate within the market economy who are not just motivated by the maximisation of gain. I assume that the Bishop takes part in the market economy himself – is he always motivated by the maximisation of gain? I suspect not.
Talking about the economy and finance, Caritas in veritate states what is obvious to any liberal economist:
‘Instruments that are good in themselves can thereby be transformed into harmful ones. But it is man’s darkened reason that produces these consequences, not the instrumentper se. Therefore it is not the instrument that must be called to account, but individuals, their moral conscience and their personal and social responsibility.’
For the Bishop to talk about the market in such emotive terms is grossly irresponsible and risks influencing people to oppose the very market economy that draws migrants to our shores. Indeed, to describe the market in this way is exactly analogous to describing the sexual aspect of the human body as something that is used only for personal satisfaction, exploitation and lust. It is free economic exchange which pulls man away from the drudgery of the kind of subsistence living which I suspect the Bishop has never experienced. Migrants know this – that is why they migrate.