Why does Pope Francis criticise the malign effects of capitalism on countries that don’t know capitalism?
I have commented in an earlier blog post about the error of arguing that ‘systems’ can have ‘goals’ or ‘idols’. It is acting, rational people who make good or bad moral choices. It is certainly legitimate for priests to criticise greed amongst the several billion people taking economic decisions each and every day, if they feel that this is an important moral issue. However, ‘systems’ do not take such moral decisions independently of human persons. The system produces what is willed by the persons who participate in economic life.
Pope John Paul II was right on target when he said in Centesimus annus, to a large degree echoing Rerum novarum: ‘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 [to the question of “what sort of economic system we should prefer?”] 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”.’
This statement is precise and important. The late pope was not only right to suggest that the word ‘capitalism’ might be confusing but he also talked elsewhere in the encyclical about how capitalism must have people at its centre, must operate in a juridical framework, must avoid the problems of monopolies, and so on. Indeed, implicitly Pope John Paul was criticising the crony capitalism systems such as those in South America and Italy that use the apparatus of the state together with the power of financial interests to oppress the people rather than to serve the people. A free economy naturally has the human person at its centre. Models of so-called capitalism which are, in reality, closer to corporatism and cronyism, as well as being riddled with corruption, do not bear any relationship to a truly free economy.
The countries in which Pope Francis has made most of his statements about capitalism are Italy and Argentina. In making his statements, he has related them to the economic conditions in those particular countries. This is interesting because Italy is the least free country in the EU according to the Index of Economic Freedom – and a long way down the world list (unusually for a European state). Argentina is one of the least free countries in the world. To criticise capitalism in Argentina is like criticising the malign influence of cricket on French society. The pope’s statements about capitalism are confusing in the least. They seem to involve visiting countries which are not in any meaningful sense capitalist and blaming the problems of those countries on a system that they have not adopted.
It is fair to say that the pope’s criticisms of capitalism could at least partly be put down to a misunderstanding of the concept due to his experience in South America. However, his criticisms of globalisation are much more dangerous – he does not like it, even when it functions well. The pope’s position is dangerous because globalisation has been responsible for the most rapid reduction in poverty in the history of the planet. The pope is capable of doing real damage if his ideas are widely adopted. Very poor people could be made poorer if the pope is successful in changing the climate of opinion. Again, looking at the data forming the Index of Economic Freedom, a simple measure of globalisation unsurprisingly puts Argentina towards the bottom of the whole world, whilst Italy also performs very poorly by the standards of developed countries.
The Catholic Church claims to be the universal Church. State borders that exist for human necessity should not impose unreasonable constraints on economic activity, especially when that activity does so much to raise the condition of the poorest people. As the church’s latest encyclical, Caritas in veritate, stated: ‘It [globalization] has been the principal driving force behind the emergence from underdevelopment of whole regions, and in itself it represents a great opportunity.’
The pope really should be reflecting on whether it really is globalisation and capitalism that is causing economic failure in Argentina and Italy or whether their failure is as a result of more serious problems that were analysed in a more sophisticated way by his predecessors. Indeed, it should be asked whether the current pope’s ambition to have trade and financial activity more heavily regulated by governments, such as those in Argentina and Italy, will not simply provide more opportunities for the cronyism which ought to be the focus of Francis’ criticisms.