Pope Francis, Capitalism, the Invisible Hand, and a Polite Dissent

 

Pope Francis

 

As many others do, Catholic and non-Catholic, I find very much to admire in Pope Francis.

 

But I’m afraid I’m going to have to register some reservations about his new “apostolic exhortation,” Evangelii Gaudium (“The Joy of the Gospel”).

 

The Roman Catholic Church has long had a problem with free economic markets — not only objecting to them but (perhaps still influenced by medieval suspicions about such things as “usury” and by the dead doctrine of mercantilism, and certainly under the influence, to some degree or another, of European socialism) failing to properly understand them in the first place.  It may not be coincidental, in the light of that fact, that predominantly Catholic countries have tended to lag in terms of historical economic development and poverty rates, as contrasted with Protestant countries — though I acknowledge that this is a complex and disputed matter.

 

“Inequality,” says the Pope, “is the root of social ills.”  He seems to be referring to economic inequality, to inequality of income and possessions.  However, given the innate inequalities between people (e.g., of talent, dedication, interests, energy, intelligence, luck, effort, and etc.) that no pope or church or doctrine has yet proven itself capable of eliminating, there seems no realistic way, short of gross state coercion, of achieving absolute economic equality.  (Alternatively, one might rely upon the arrival of an absolute indifference to material possessions never yet witnessed among humans on anything remotely like a wide scale — which would almost certainly lead to global impoverishment on a massive, and massively lethal, scale.  People completely unmotivated by material desires will rarely choose to spend the extra hours at work, or to take the risks, on which our world economy — including the surplus that funds left-leaning college professors and, for that matter, priests — absolutely depends,)

 

“Excessive centralization,” Pope Francis writes, “rather than proving helpful, complicates the Church’s life and her missionary outreach.”  And surely that is true.  So how would a massive centralization of economic power and decision-making in lumbering, sclerotic ministries of production, ministries of agriculture, and the like, prove helpful?  (Bureaucracy, a 1944 book by the great Austrian economist Ludwig von Mises, remains essential but neglected reading on this topic.)

 

“Some people,” the Pope says, “continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world.  This opinion, which has never been confirmed by the facts, expresses a crude and naive trust in the goodness of those wielding economic power and in the sacra­lized workings of the prevailing economic system.  Meanwhile, the excluded are still waiting.”

 

I strongly disagree with this statement, on several levels.  First of all, it has indeed been demonstrated, over and over and over again, in spades, that free markets do far more to increase wealth than do command economies.  (As John Stossel shows, this is a lesson that can be illustrated even in the story of the first Thanksgiving, at Plymouth Colony.)  And, unless “justice” be defined as equal poverty, that seems a salient point.  Moreover, the fact is that prosperity does trickle down.  People with surpluses tend to purchase things, to invest, and, directly, to hire.  All of those actions share wealth and create jobs.  Rich people don’t typically just bury their money in their backyards.  Poor people, by contrast, have little to invest, purchase less, and can’t afford to hire.  An overall decrease in capital helps nobody.

 

Ah, one might respond, but taking $100 dollars from the guy who has $200 and giving it to somebody who has nothing satisfies justice while still leaving a total of $200 for investment, purchase, and hiring.  Thus, overall capital is unaffected.  Well, maybe.  If you’re lucky.  But the person who amassed the $200 may be, and probably is, typically a better investor and a better manager than the fellow who had nothing.  So, overall, efficiency is reduced and capital is squandered.  The initial $200 becomes, effectively, $175, or $150, or perhaps only $125.

 

To choose an extreme example for illustrative purposes:  Would investing $100,000 with a mentally ill drug addict likely be as effective as investing it with an entrepreneur with an exciting new product and a history of successful ventures behind him?  If so, please send your surplus cash to me.  I have no particular ideas or experience in business, but I would like to have your money.  And, as a bonus, I’m not addicted to drugs and meet most minimum standards of mental health.

 

Moreover, preference for free and voluntary economic exchanges over centrally controlled economies emphatically doesn’t rely on the presumed benevolence of businessmen, farmers, and tradesmen.  Adam Smith’s great 1776 book The Wealth of Nations offers the classic statements on this issue, of which I cite two:

 

[M]an has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.  (An Inquiry into the Nature and Causes of the Wealth of Nations, I.ii.3)

 

[The merchant] intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.   (An Inquiry into the Nature and Causes of the Wealth of Nations, IV.ii.9)

 

“Francis seems to move the ball considerably in the direction of the idea that the market has far more power—the power to do good for humanity as well as to dehumanize—than the state,” said Chad Pecknold, assistant professor of theology at the Catholic University of America in Washington.

 

If so, though, his position seems to me naïve in the extreme, and even dangerous.  Auschwitz, Dachau, Mauthausen, and Sobibor had far more power to dehumanize than do General Motors, Walmart, and Apple.  The Cambodian “killing fields” dehumanized — and, for that matter, exterminated — considerably more people than have Toyota, Siemens, Nokia, Geico, and Amazon.com.  The Soviet Gulag liquidated or otherwise killed something on the order of ten million people — perhaps considerably more — and the induced Ukrainian terror-famine of 1932-1933 starved perhaps as many as eight million more.  That is, to put it very mildly, far more “dehumanization” than Cargill and Archer Daniels Midland have ever even been accusedof accomplishing, even by their most unhinged critics.  Chairman Mao may, some now estimate, have killed as many as 73,000,000 people.  How did he do it?  Not via market capitalism.  He was able to do it because he controlled the apparatus of state coercion.  “Every Communist,” he declared, “must grasp the truth: Political power grows out of the barrel of a gun.”  (枪杆子里面出政)

 

Tyrants, politicians, and bureaucrats are no less given to “self-love” and to pursuing their own interests than are restauranteurs, dentists, ranchers, plumbers, corporate executives, accountants, and day laborers.  But, unlike businessmen, farmers, and bookkeepers, they have coercive political power at their disposal.  “Give me that which I want” is always part of their approach. On the other hand, “and you shall have this which you want” may or may not be.

 

Pope Francis is entirely justified in raising the question of poverty, exclusion, and care for the poor.  I’m a Christian.  I agree that disciples of Christ have serious obligations in this regard.  And I don’t, by any means, buy into the entire ethical theory of Ayn Rand.  But suggestions that the state would do a better job of creating prosperity for the poor than free and voluntary exchanges have done must are, to be gentle about it, not instantly plausible.

 

 

  • joseph peterson

    in which you take on the Pope, and let your politics blind your reason.

    • DanielPeterson

      So you think that Ministries of Shoe Production allocate resources just as efficiently as decentralized markets do; that Ford Motor Company has killed as many people as the Chinese Cultural Revolution did; that collectivized farms are just as productive as private farms; that everybody is identical in terms of intelligence, work ethic, competence, willingness to risk; and that, absent incentives, people will continue to work just as hard?

      And you consider your view reasonable?

      Wow.

      • joseph peterson

        Did I say any of that? Wow is right. To think I once idolized you. Sheesh. You just built a giant straw man and stuck him in my yard which is based on your assumptions. Then you declared those unreasonable and freaked out. Quite the overreaction. And false. Had you asked, I would have conceded that many of your data points are valid and cogent. But my original observation is that your politics have blinded you, which you’ve only proven with your response.

        • kiwi57

          No Joseph, he didn’t freak out. He drew a fairly reasonable inference from your one-line response.

          If you want people to know your view is more nuanced than a bumper-sticker, it’s generally a good idea to make that point clear.

          And I’m not sure how mild and inoffensive you think it is to tell someone they are “blinded.” Frankly, I wonder how it is possible for someone not to question the economic nous of a cloistered academic celibate churchman with little experience of how a free market economy works, unless they are themselves “blinded” by his celebrity status.

        • DanielPeterson

          I asked you questions. You still haven’t answered either of them.

          Your comment (“[you] let your politics blind your reason”) was rather unhelpful, other than telling me that my political views are irrational. (Which, I take it, you consider a civil comment.) I was simply asking which of my comments you found unreasonable.

          You’ve now insulted me yet again, and have professed to be highly indignant and a victim, yet you’ve still failed to explain what in my opening post demonstrates my “reason” to have been “blinded.”

          • joseph peterson

            Sorry to offend. I thought you had thicker skin. Happy thanksgiving!

          • DanielPeterson

            You didn’t offend. My skin is plenty thick. But you also still haven’t answered my questions.

            Enjoy your Thanksgiving, as well.

          • joseph peterson

            I don’t feel required to answer your questions. They were neither genuine nor questions, really. More like rhetorical devices used to paint me in a corner regardless of my answer. You must recognize this. Leading questions, straw man rhetoric, etc. For the record, I don’t think my original content was particularly civil. Nor was I interested in a debate. I merely offered my observation that, while your ability to argue a point remains incredibly sharp, your outcomes of reason are decided from the beginning. Er go, your politics have blinded your reason, have closed your mind. This discussion isn’t naturally one where I must now prove my own beliefs as they differ from yours. I am just merely, and quite uncivilly offering my own criticism and opinion. Something you should, at least on some level, appreciate, seeing how this is exactly what you do on this blog on a nearly daily basis. Cheers! Thanksgiving was great! Glad to know you have a thick skin. At least in word, if not in practice.

          • joseph peterson

            content = comment. sorry.

          • DanielPeterson

            Whatever. I wasn’t particularly seeking further conversation with you and, if you’re not interested in conversing, that’s a win-win.

  • RG

    But the person who amassed the $200 may be, and probably is, typically a better investor and a better manager than the fellow who had nothing. So, overall, efficiency is reduced and capital is squandered. … Would investing $100,000 with a mentally ill drug addict likely be as effective as investing it with an entrepreneur with an exciting new product and a history of successful ventures behind him?

    I’d actually rather have you respond to my comment on the thread about Gee’s views of Mormon Studies, but I have to ask: Rather than a mentally ill drug addict, why not a person below the poverty line who was never taught how to invest, manage, or be an entrepreneur? The problem is with the systems that provide access to the kinds of skills necessary to be that entrepreneur.

    • DanielPeterson

      I’m not going to accept your invitation to publicly criticize my friend John Gee, so you can give that one up.

      As for the question here: By using the words “”may be, and probably is,” I allowed for the possibility that the fellow to whom a beneficent state grants the money seized from somebody else, though possibly incapacitated by lack of natural capacity or even by lack of training, could conceivably turn out to have previously unrealized abilities. I presume that such cases are, in fact, common.

      There may be a woman living in the Bolivian Altiplano who might have cured cancer in a better world. The potentially greatest of all Arab poets may die poor and illiterate in a village near Kom Ombo. Quite true.

      But the best hope for bringing people to the realization of their full capacity is free market economics, not Nasserite state capitalism and not Evo Morales’s centralizing Cuban-style socialism.

      • RG

        As for the question here: By using the words “”may be, and probably is,” I allowed for the possibility that the fellow to whom a beneficent state grants the money seized from somebody else, though possibly incapacitated by lack of natural capacity or even by lack of training, could conceivably turn out to have previously unrealized abilities. I presume that such cases are, in fact, common.

        There may be a woman living in the Bolivian Altiplano who might have cured cancer in a better world. The potentially greatest of all Arab poets may die poor and illiterate in a village near Kom Ombo. Quite true.

        But the best hope for bringing people to the realization of their full capacity is free market economics, not Nasserite state capitalism and not Evo Morales’s centralizing Cuban-style socialism.

        Fair enough.

        I’m not going to accept your invitation to publicly criticize my friend John Gee, so you can give that one up.

        Surely you see the irony in your refusal to criticize John on a thread where you criticize the Pope. And surely there is all kind of “criticism.” Mere disagreement need not be disrespectful. Since you’re unwilling to criticize John, even to the point of not stating your difference views, may I kindly request (on the grounds of good dialogue) that you refrain from promoting his views on Mormon Studies?

        • DanielPeterson

          You may ask.

          There’s no inconsistency between my willingness to criticize certain views of the Pope, who doesn’t know me and won’t feel betrayed by me, and my unwillingness to criticize my friend John Gee, who doesn’t need public criticism at a time when he is effectively under siege. Additionally, any disagreement that I might have with him, however slight, would instantly be turned by certain obsessive critics into a weapon with which to beat him. The community within Mormonism that cares about such things is very small, and sometimes quite nasty. The Pope, by contrast, will proceed serenely on with his views, utterly unconcerned at my dissent.

          I’ve expressed my views on the matter very clearly, I think. And I’ll probably do so at least once more, in a formal written way. I feel no need to personalize anything. Despite your repeated entreaties that I do it.

          • RG

            This makes sense to me; although I should add that I’m not interested in personalizing things. I think John actually raises a number of good points, but it’s important to sift those points from the silliness surrounding them. Without precisely identifying those valid points when mentioning his work, one runs the risk of promoting his spin.

          • Jon

            Who or what is attacking John Gee so that “he is effectively under siege”?

    • Jeremy Alleman

      Who says you need special skills to be an entrepreneur? You just need to do something that someone else is willing to pay you for. The more specialized the skill or how adept you are at it determin what you make.

      Most of it just takes the willingness and courage to actually do something.
      The most successful people that I know (and they own their own businesses) say that someone who is able to study and learn on their own outside of the formal education system has the ability to succeed because they take their future into their own hands and don’t wait for someone to teach or give them something.

      Success is a mindset, not a social status.

      • DanielPeterson

        I agree.

        • StBalthasar

          True “success is a mindset, not a social status.” Also true: the mindset to be successful – the realization one must have that “I can do it! I am worth it! I’m not a loser! Something I do/think/create is important!” etc. is far from innate in most people; it must be nurtured, nourished and given the opportunity to be manifest. There are a few out there who, by dumb luck (possibly: survived lack of good parenting, abuse, physical disability, etc.) have “the ability to succeed because they take their future into their own hands and don’t wait for someone to teach or give them something,” but for the vast vast majority the successful (seen as those with “willingness and courage to actually do something”) DID have teachers and people who gave them something – whether traditional or not. Motivation to succeed and create – and the courage to do so – are typically ignited, rather than naturally resulting from mere (or even strong) desire.

    • joseph peterson

      to solidify his point, Dan needs straw men like drug addicts as the natural opposite.

      • DanielPeterson

        What a weird comment, jp.

  • brotheroflogan

    “I’m not addicted to drugs and meet most minimum standards of mental health.” So from this can we presume that you only use drugs receationally and that you fail at least some minimum standards of mental healths? :)

  • brotheroflogan

    On a more serious note, I would point to the most common socialistic system in the world: marriage. Married couples share resources equally despite contributing unequally to the relationship. This is probably why many marriages fail. From this, I can assume that an economic marriage of millions would have an exponentially higher chance of failure. But I believe that a socialistic society could succeed but only if 99% of the people were highly committed, driven, Gandhi-like individuals. Something you aren’t likely to find.

  • Grant Vaughn

    Glad to hear that you don’t follow Ayn Rand’s “ethics” to the max, Bro. Peterson. How about those of King Benjamin and Brigham Young?

    And I take issue with your characterization of “polite dissent.” I don’t think it’s at all polite or helpful to associate progressives such as Pope Francis with Chairman Mao. No progressives I know, and I believe the same to be true of Pope Francis, promote redistribution of money through a centralized government. What we tend to promote is a better distribution of opportunities for education, work, and the basic necessities of life among all in society without judgments of who is “deserving” by class or any other false characterization to rank people. History teaches that this is best achieved through a strong democratic-republican government based on a broad-based and open society actively participating in the political process and not the imaginary utopias of the Randians and the Von Misses Institute.

    In my opinion, the main problem of our American system is the inordinate dominance of money in politics and government and the opportunities to get any money or power selfishly protected in very few hands (and many who don’t have them buying buy into the philosophies that provide this protection). In our well-founded objections to brutal dictatorships of the USSR and Maoist China, we have threatened American and gospel values with the worship of selfish materialism – the apparent god of this world.

    I’m with the Pope on this one.

    • DanielPeterson

      Grant Vaughan: “Glad to hear that you don’t follow Ayn Rand’s “ethics” to the max, Bro. Peterson. How about those of King Benjamin and Brigham Young?”

      I accept them absolutely, and try to model my life on them.

      But I fail to see where they call for specific government policies or mandate acceptance of a “progressive” legislative agenda.

      I object when people on the Right claim that advocacy of specific government policies is required in order to be fully Mormon. (Years ago, Jerry Falwell claimed that there was a biblical position on the Panama Canal treaty. I thought that completely ridiculous.) I’m scarcely inclined to grant liberals more slack when they attempt to wrap themselves and their policy preference in the authority of the scriptures.

      Vaughan: “And I take issue with your characterization of “polite dissent.” I don’t think it’s at all polite or helpful to associate progressives such as Pope Francis with Chairman Mao.”

      Oh come on. You can’t really have misread what I wrote that completely, and missed my modest little point so absolutely.

      Vaughan: “No progressives I know, and I believe the same to be true of Pope Francis, promote redistribution of money through a centralized government.”

      EVERY “progressive” I know promotes such redistribution. Constantly. For heaven’s sake, that’s essentially what Obamacare, and federal welfare, and Head Start, and food stamps,, and the progressive income tax, and agricultural subsidies ARE.

      • Grant Vaughn

        You must know different progressives than I do.

        • DanielPeterson

          I know the ones on Earth. I’ve never been to Zarkon.

  • RaymondSwenson

    The real “trickle down” theory of economics is the Progressive belief that spending two trillion dollars of Federal money for “shovel ready projects” will be redistributed throughout the nation and kick start the private economy. A particular project I am familar with spent $1.2 billion dollars over two years and employed 1200 people, after which they were all laid off. That is one million dollars per short term job.

    By contrast, free enterprise does not depend on handouts. It depends on initiative at the lowest level, as demonstrated.by the experience .

    • joseph peterson

      i’m all for redistribution. along with joseph smith, the pope and others.

      • DanielPeterson

        I’m not opposed to “redistribution.” I regularly give to charities, etc.

        But I distribute my possessions willingly.

        I don’t recall Joseph Smith calling for forcible government seizure and redistribution of other people’s money.

  • Ray Agostini

    Dan, “trickle down theory” only works where high profits are maintained. Beyond that, the plight of the poor is useless to the entrepreneur, and must be discarded by the principles of the theory itself, lest it become “welfare”. I’m not an advocate of the “Welfare State” at all, and in that sense I get your point of view, when it means “reward for nothing”, or very little work. But the “free market” entrepreneur isn’t about equality, he’s about the “mutual benefit” of increasing profit supposedly for the “benefit of all”.

    But what happens when profit driven Western economies cannot compete with low Chinese wages in manufacturing, for example? What happens, is unemployment on a mass scale in the “non-competing” economy. If a worker can produce the same goods at $5 per hour in one economy as that produced by the worker in a $25 per hour economy, then the latter becomes redundant. How does the entrepreneur help the redundant here? By offering $5 per hour jobs? But that’s the same as welfare, isn’t it? Work for no profit. “Trickle down” is based on mutual profit, but when the profit is gone, it becomes welfare supported by the generosity of the entrepreneur, who must operate at a loss to sustain the principle of “equality”. So in this case, there’s no “trickle down”, and can never be, unless former labour skills are turned in technological skill in order to compete, and how many of the “working class” will be able to do this?

    So who will look after them? The generous entrepreneur willing to operate at a loss, or the “welfare state”? Remember that these people don’t willingly want to be “idle” and spend days loafing on the beach, but at the same time, “trickle down” is meaningless to them in the realities of competing economies.

    • DanielPeterson

      These are difficult issues. But economies adjust. It can be painful for the individuals involved, but that’s how these things work.

      There are no more colliers on American railroad trains, and most pineapple in the United States now comes (I believe) from Mexico. Seamstresses are far less common in Britain now than they were before the advent of sophisticated machines. Makers of abacuses and slide rules either retooled or went bankrupt.

      Nations, like industries, are forced toward their areas of comparative advantage.

      We can (and should) make the transitions less painful, but we shouldn’t try to stop them. If we tried to freeze things in order to altogether avoid the pain, we’d still be using rotary phones, playing records, writing on typewriters, wearing hats, and employing lighthouse operators by the hundreds along our coasts.

      • Ray Agostini

        Just a wild thought here, a “shot in the dark” if you like. Let’s say, just hypothetically, that worldwide the Internet and all modern communications systems go down. Not for weeks, but months. Have we relied too much on technology, and not enough on basic survival skills? Children these days are, apparently, freely allowed to use calculators in mathematics. I wasn’t. I had to learn basic math at the grass roots, without relying on a calculator. “Progress” can never really replace practical survival skills, and this is the “art” that is being lost when it comes to the crunch.

        But in the name of “progress” and profit, we’re raising a generation who could not survive without “the Internet” and computer technology. Which could, theoretically, all vanish with a comet strike on earth. Remember that Einstein dictum, that the next war will be fought with nuclear weapons, but the war after that will be fought with sticks and stones?

        If only “progress” is financially rewarded, then we’re sailing on uncharted waters. If “keeping up with the times” means financial gain, and pity those left behind, then we just ripped out the anchor that holds the ship steady. The “shift” that needs to take place should not be a one-way street, but one that values all contributions as equal, and thus be financially recompensed, rather than as “redundant”.


CLOSE | X

HIDE | X