Papal Economics

By John Goodman,

“Pope Francis attacked unfettered capitalism as ‘a new tyranny,’” reads the lead of the Reuters story by Naomi O’Leary. She is referring to the Evangelii Gaudium, the latest apostolic exhortation from the Holy Father. Similar headlines appeared at NBC, at the Daily Kos, in the Nation and elsewhere. But as Robert Ramono points out, nowhere did the pope actually say those words.

Still, the document is a mixed bag. It does contain some anti-capitalist rhetoric, using phrases familiar on the left. But it is also full of anti-statist, anti-collectivist exhortations. On balance the entire document looks like it was written by a committee whose members all have different views.

For me, however, this is a disappointment — a step back from progress I thought had been made only a few years ago. I participated in a conference at the Vatican in 1996, at which a group of pro-free enterprise intellectuals were assembled to analyze the crisis of the family and the role of government in creating it.

John Paul II met with our group and greeted each of us individually. We all thought this was a turning point for an institution that hitherto had shown little understanding of economics or appreciation of how markets work.

Now it seems that everything that was learned has been unlearned.

Here are some undisputed facts. For the 100,000 year history of the human race (including most of the 2,000 year history of the Catholic Church) virtually every human on this planet lived on about $1 a day — rarely more than $3 a day. This was no one’s fault. It was the natural condition of humankind. And then, about 200 years ago, a remarkable thing happened. It’s called capitalism. Wherever free markets and the institutions that sustain them have developed, the lives of people have become immeasurably better.

Although “unfettered capitalism” doesn’t really exist in the world today, the closest thing to it would probably be Hong Kong. When this country became a British colony, it was a rock in the ocean with no natural resources and an impoverished population. By the time Britain handed the country back to China, the per capita income in Hong Kong was higher than it was in Britain.

When I visited the Vatican almost two decades ago, these principles were not in dispute. Participants in the conference included Nobel Prize-winning economist Gary Becker (University of Chicago) and America’s foremost writer on theology and capitalism, Michael Novak (American Enterprise Institute). The attendees were united in a common belief that big government is more likely to be a cause of problems than a solution.

And the pope at that time was also explicit:

In his … encyclical on economics, Centesimus Annus, Pope John Paul II noted that the modern welfare state is often costly, bureaucratic, and counterproductive; further, he averred that it often substitutes for private sector charity that does a better job. Although contending that it can be a mixed blessing, the Pope called capitalism the most efficient instrument for utilizing resources and effectively responding to needs.

The current pope hales from Argentina and this may influence his thinking. Although free markets have emerged in Latin America to one degree or another, the countries of Central and South America have often experienced great difficulty adopting the institutions of capitalism.

More often than not they have been living under crony capitalism. In Argentina some call it “fascism.” It’s easy to confuse these other isms with the free market forces that have so successfully lifted the developed world out of poverty over the last two centuries.

It sounds like we need another Vatican economic conference.

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