Last week, Pope Francis all but denounced free market capitalism as a sin. Luckily, he wasn't speaking from the Seat of Peter, but from his own misguided view of the world. Much of Francis's statement gives important and honest direction to a world consumed with fame and money. The Pope is right in decrying systems in which money is the ruler instead of a means to an end. And he's right in describing the inhumanity of a system that protects the wealthy against loss.
Human beings are themselves considered consumer goods to be used and then discarded. We have created a “throw away” culture which is now spreading.
I joined the Conscious Capitalism movement precisely to fight against the evil of crony capitalism. Crony capitalism--which was called "fascism" in the last century--dehumanizes, exploits, and extracts the life of individuals for some common "good" defined and defended by the elite. The Conscious Capitalism Credo says:
We believe that business is good because it creates value, it is ethical because it is based on voluntary exchange, it is noble because it can elevate our existence and it is heroic because it lifts people out of poverty and creates prosperity. Free enterprise capitalism is the most powerful system for social cooperation and human progress ever conceived. It is one of the most compelling ideas we humans have ever had. But we can aspire to even more.
I believe that credo. Every word of it. Apparently, the Pope believes something else.
His targeted assault on the world's only means of producing wealth goes too far and too wrong.
Not that free markets don't have their problems. The naked pursuit of profits is killing liberty and feeding the beast of government. But Pope Francis doesn't look at pictures that large, apparently. He looks at results and assumes causes.
Here are three specific errors in Pope Francis's attack on capitalism.
1. Francis Errs in Understanding Free Markets
Francis assumes that "trickle down" economics and free market capitalism are the same thing. They're not. The divergence in wealth between the top 0.1% and the rest are not the result of unfettered capitalism but of unfettered government. Free markets do reward some merchants above others, but they also exact dire consequences for merchants and bankers who screw up. Only governments can save failed businesses. And governments have.
Since the global financial crisis (and long before), governments have mortgaged the young to feed the old and rich. Governments--the entities Francis would trust with everything--redistribute wealth from future generations to dying ones. And, apparently, the Pope likes that. Or maybe he just doesn't understand what free market capitalism is.
2. Francis Errs in Asserting that Free Markets Have Never Lifted People Out of Poverty
Aid is just a stop-gap. Commerce [and] entrepreneurial capitalism takes more people out of poverty than aid. In dealing with poverty here and around the world, welfare and foreign aid are a Band-Aid. Free enterprise is a cure. Entrepreneurship is the most sure way of development.
The United States generated more wealth than any nation in the world's history. And we're the most generous. Not just with our money, but with our time. Americans lead the world in per capita giving and in hours of volunteer work.
Without the excess wealth generated by ingenuity and industriousness, we would have nothing to give and no time to help. And free markets--the chance to bring great ideas to the world and earn a reward for doing so--drives that behavior.
3. Mostly, Francis Errs in Trusting Government
Francis says that "trickle down economics expresses a crude and naïve trust in the goodness of those wielding economic power." By implication, he, instead, places crude and naïve trust in the goodness of those wielding military, taxation, and police power. Has he heard of the IRS? The NSA? Has he read about Obama's lies and the millions Obama has left without insurance?
Yes, capitalism is sick these days. It's infected with the virus of government. The answer isn't to outlaw free markets, as the Pope would, but to constrain and manage government.
Sheldon Richman makes an excellent point over on Reason.com:
When I say the pope gets some things right, just not in the way he intends, here’s what I mean: In an important sense, we do have “an economy of exclusion and inequality.” But it is not the free market; rather, it’s interventionism, corporatism, crony capitalism, or just plain capitalism — that is, the abrogation of the free market on behalf of special, mostly business, interests. The reigning system is riddled with exclusion and inequality, the victims of which are society’s most vulnerable people. It’s easy to overlook this because the system produces a great volume and variety of consumer goods that even low-income people can afford. (The system needs consumers, though without intervention we could expect prices to be lower.)
Be sure to read the whole thing here.