Is the Pope Anti-Capitalist, or Even … Communist?

Is the Pope Anti-Capitalist, or Even … Communist?

Pope Francis recent Encyclical “Laudato Si” has given new emphasis to the debate over whether Pope Francis is some sort of crypto-Socialist, or even Communist, with varied references to being a “populist,”  a “statist,” and the like.  Although his successful visit to the U.S. last week seems to have abated somewhat this debate, it will most likely recur in the years ahead.

Some phrases from Encyclicals and other writings can be used to support those claims. For instance, when it is emphasized “the principle of the priority of labour over capital.” Or when it is written that “the right to private property is subordinated to the right to common use, to the fact that goods are meant for everyone.”

Also comments such as “In spite of the great changes which have taken place in the more advanced societies, the human inadequacies of capitalism and the resulting domination of things over people are far from disappearing.” And these concepts are reinforced by negative comments about the markets, like “[T]he mechanisms of the market… carry the risk of an “idolatry” of the market, an idolatry which ignores the existence of goods which by their nature are not and cannot be mere commodities.”

These words would rest the case about Pope Francis, right? Of course, the only problem is that, as any attentive reader of Catholic writings may have noticed by now, the previous paragraphs are extracts from two Encyclicals from Pope John Paul II: “Laborem Exercens” (1981) and “Centesimus Annus” (1991).

Certainly, the role of Pope John Paul II in the East European transition from the Soviet Union era made him largely immune to any criticism about being a crypto Socialist, Marxist, or Communist. Yet he made those comments and those assertions are part of the Social Doctrine of the Catholic Church, as Pope Francis has argued when referring to his owns remarks.

So, for what is worth, let me expand on why the Pope is not Communist, Socialist, Marxist, Populist, Statist or any political category utilized by secular commentators. Nor can he be described utilizing the common journalistic categories of “liberal” or “conservative,” or “left” and “right.”  He is simply a Catholic priest from the developing world that has worked with, and listened to, the poor and marginalized.

In this regard, there are four points I would like to highlight: 1) the Christian view about human beings; 2) the Social Doctrine of the Church; 3) efficiency and equity in economic analysis; and 4) the fact that he is the first modern Pope that comes from the developing world.

  1. A religious view of human beings

The Christian view about human beings is based on two strong beliefs: God has created all human beings in His image; and Jesus Christ’s Passion is an act of redemption for all humanity’ flaws and failings.  Several corollaries follow from those two beliefs.

First, all human beings have an inherent dignity and are all called to achieve the fullness of his/her vocation.  In his last Encyclical “Laudato Si” Pope Francis quotes Pope Benedict saying “each of us is the result of a thought of God. Each of us is willed, each of us is loved, each of us is necessary.”  Second, if all human beings have been created by God the Father, then we are all brothers and sisters. We should care about each other as family. There are no some people that are more, and others less, sons and daughters of God. Third, as we are all sinners and in need of redemption, no one can feel superior or judge others from a “holier-than-thou” position. Jesus Christ has strong rebukes for those that feel they are better than others and ignore their own failings when judging fellow human beings, while at the same time he commands all to love your enemy and pray for those who persecute you.

From that view follows the only policy prescription consistently advocated by Jorge Bergoglio, before and after becoming Pope Francis: the need for frank, respectful, and humble dialogue among all stakeholders in any issue. In fact in Chapter Five of “Laudato Si,” entitled “Lines of Approach and Action,” which is supposed to be the “to-do list” for the problems mentioned in the Encyclical, Pope Francis lists five “dialogues:” “I. Dialogue on the environment in the international community;” “II. Dialogue for new national and local policies;” “III. Dialogue and transparency in decision-making;” “IV. Politics and economy in dialogue for human fulfilment;” and “V. Religions in dialogue with science.”

Unfortunately, in politics and public debate it is common practice to seek to mobilize support to one’s position by polarizing between “us” (all good and virtuous) and “them” (all bad and vicious). Also, in journalism, particularly in TV political shows, and even in academic work on public policy, it is easier to present dichotomous stories, than trying to develop more complex and realistic arguments. The debate between “liberals” and “conservatives,” “left” and “right,” “free marketeers” and “statists,” and between any other dichotomy that can be thought of, tend to degenerate into considering the other as less than worthy, someone probably intellectually obtuse or ill-intentioned and beholden to spurious interests, that must be thoroughly defeated. Those debate seems to be always conducted from a position of anger about the other, and with a “holier-than-thou” attitude.

This is not to deny that there are indeed different interests and views in public policy. The Pope recognized that much in his recent address to the U.S. Congress.  But he emphasized there as well the need to look for the common good through dialogue, which would of course be more fruitful if all of us would also recognize the others as God’s creatures while admitting that each one of us is a fallible and limited human being in need of grace and redemption.

  1. Social Doctrine

Regarding whether Pope Francis is anti-capitalist or simply repeating Catholic’s Social Doctrine, as far as I can tell, the words “capitalism” or “capitalist” are not in any of Pope Francis better known Encyclicals (Lumen Fidei, Laudato Si), and writings (Evangelii Gaudium). He does criticize the “global economic system,” and variations, but that notion cannot be considered a proxy for “capitalism” considering the variety of world economic regimes, starting with the second largest economy in the world, China, and including a diversity of economic regimes in many countries.  He has also criticized the systemic failures that led to the recent financial crisis, but many pro-capitalist commentators have done the same (such as Martin Wolf in the Financial Times).

Following the Catholic Church’s Social Doctrine, it was rather John Paul II who wrote about capitalism. He made the following distinction in Centesimus Annus (who updated the debate about social issues in Pope Leo XIII’s Encyclical “Rerum Novarum,” written in 1891):

“[C]an it perhaps be said that, after the failure of Communism, capitalism is the victorious social system, and that capitalism should be the goal of the countries now making efforts to rebuild their economy and society? Is this the model which ought to be proposed to the countries of the Third World which are searching for the path to true economic and civil progress?

The answer is obviously complex. 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…. But if by “capitalism” is meant a system in which freedom in the economic sector is not circumscribed within a strong juridical framework which places it at the service of human freedom in its totality, and which sees it as a particular aspect of that freedom, the core of which is ethical and religious, then the reply is certainly negative.” (Centesimus Annus, paragraph 42).

The Social Doctrine has always argued that “unbridled” capitalism not subject to moral and ethical standards (a point also present in Adam Smith’s work), that treats human being as objects, and that does not serve the common good, is not an appropriate economic system. And as the quotes at the start of this paper show, it was also argued that “markets” not always provide for the common good (a point reiterated in Pope Francis’ writings).

But the limitations that markets may suffer in promoting the public good should not be a surprise to any serious economist that studied welfare economics and public policy, as argued immediately.

  1. Efficiency and equity in economic analysis

It is well known that the branch of economic analysis known as welfare economics discusses a series of “market failures,” which lead to inefficient outcomes for the society and may require governmental intervention.  Those failures include the presence of public goods, externalities, information problems, imperfect competition, coordination problems, uncertainty, and others. Most of those problems are extensively discussed in economics. Recent examples focusing mainly on information issues are the two books (“Animal Spirits” and “Phishing for Phools”) co-authored by George Akerlof and Robert Shiller, both Nobel Prize winners in economics.

Most of the criticisms in “Laudato Si” about the environmental impacts from the current operation of the global economy focus on what in welfare economics are called “negative externalities,” in a context in which the generators of those externalities reap the benefits individually but do not pay the costs they are inflicting upon the rest of the society.

Besides the well-established theory of “market failures,” welfare economics distinguishes efficiency from equity. Welfare theorems argue that properly operating markets lead to efficient outcomes, but whether those are equitable outcomes is a separate issue. Economic analysis has always recognized that a) any efficient point assumes some underlying distribution of wealth and income; b) that there may be as many efficient points as those original distributions, and c) that the equity or fairness of such distributions is a value judgement, different from the discussion about the efficient operation of markets. Even if the neoclassical theory of distribution based on the marginal productivity of each factor of production (labor, capital, land) were a proper representation of how income is distributed (with other theories pointing rather to institutional and sociological forces), there is still the question of how those factors have been distributed across individuals in societies.

Furthermore, economic and political analysis strongly cautions that there may be “government failures” as well, such as corruption, rent-seeking, abuse of power, waste and inefficiency, incompetence, and the like. Therefore, specific public policies designed and implemented to avowedly correct “market failures” or redress inequities (both commendable objectives) may lead to worse outcomes than the original problem due to a variety of government failures.  As a priest from the developing world, Pope Francis has seen, and suffered personally, his share of “government failures.” So it is very difficult to argue that he is a “statist” that always sees government intervention as the solution. Again, the only policy approach he seems to consistently advocate is frank, respectful, and humble dialogue.

Therefore, if Pope Francis’ writings are within the Social Doctrine of the Catholic Church, and most of the welfare economics recognize the difference between efficiency and equity and the problems markets may encounter, what is the problem? Why so much discussion? This leads me to my fourth point: his experience in the developing world.

  1. A Pope from the global South.

Some people have found the tone of Pope Francis too “negative” and “strident.” I must admit that, when reading some sections of “Laudato Si” I found myself thinking that some assertions about facts seemed incorrect or imbalanced. For instance, in paragraph 100 “Laudato Si” uses language about the technology of genetically modified (GM) crops that suggests several negative impacts of such technology that seem unrelated to the technology per se but derive from other reasons that need to be addressed (for instance, inequitable governance of land ownership).  In the case of similar criticisms during the 1960s and 1970s for the expansion of the more productive seeds of the Green Revolution, detailed empirical studies have shown that the impacts were either more positive for the society as a whole than the critics argued, or that factors other than the technology itself were the cause of the negative effects identified. Still, GM technology, or any other, needs a proper regulatory framework and an ethical underpinning.

Also paragraph 165 Laudato Si considers that “the post-industrial period may well be remembered as one of the most irresponsible in history,” which seems to be referring to the period since the Industrial Revolution. Of course, the XIX and XX centuries have seen their share of human catastrophes and wars. But at the same time, it can be argued that the industrial revolution and economic growth, sustained in good measure by new forms of energy utilizing fossil fuels, have, among other things, allowed life expectancy at birth to move from about 40 years in UK at the end of the 18th century and less than 20-25 years in most of the world outside Europe, to about 46 years on average for developing countries in the early 1960s, and almost 69 years in 2013-2014 (81 years for UK). And good part of these expansion in life expectancy has been caused by significant declines in infant mortality.

Others would argue that the technological Green Revolution of the second half of the XX century has allowed the world to move from feeding about 3000 million people in the early 1960s to more than 7000 million now, using only 10% more agricultural area (about 4930 million hectares in 2013 against 4460 million hectares in 1961), and with prices that adjusted by inflation are lower than the 1970s (even after the price spikes of 2008 and 2011). Still, problems related to the triple burden of malnutrition (under and over nutrition, along with lack of vitamins and minerals), and to the advance of deforestation in key regions of the planet cannot be denied and need to be addressed.

Furthermore, some indicators suggest that poverty has been reduced significantly in the last decades, which is related to the growth of the global economy: according to the only global estimates with the participation of most countries (those conducted by the World Bank), the percentage of poverty in developing countries was cut almost by half in the last three decades: using 2 dollars/day as the poverty line, the incidence declined from about 70% of the population in those countries in early 1980s to about 36% in the last global count (2011).

Is the Pope denying those positive results? I do not think so. He is rather pointing forward to the problems we need to face as inhabitants of the common house that is planet Earth and the trilemma we face to properly articulate growth, poverty alleviation and environmental sustainability. And in that regard, Pope Francis must be understood as a priest from the developing world, as the first Pope of the global South, who has focused much of his work on the poor and excluded. For all the positive trends at the global level, many human beings are still living in very difficult conditions that he has experienced first-hand.

For instance, while it is true that the percentage of poverty in developing countries measured at 2 dollars a day has been cut in half, looking at the number of poor people gives a somewhat different picture depending on the poverty lines utilized and the regions considered: total population in poverty measured at 1.25 dollars/day and 2dollars/day has declined from 1980s to now, but if 4 or 5 dollars a day were used as the poverty line, the number has increased. It also matters whether China is included or not: for instance from 1987 to 2011, 64% of the decline in poverty at 1.25 dollars a day is explained by China’s performance; and if China is not considered the absolute number of poor people at 2 dollars a day actually increased by about 90 million people.  And there are regions, such as Sub-Saharan Africa and South Asia, where the number of poor people at any poverty line is now larger than in the 1980s.

Therefore, I think a reason for the urgency in Pope Francis’ tone is his work with poor people in developing countries. He also has to talk frequently with Church’s representatives from developing countries in LAC, Africa and Asia. If in those regions the Church is properly doing its work for the hungry, the naked and the thirsty (as the Gospel directs us all to do), much of the personal experience of Church’s members working there is that the problems have increased; they are dealing with more people in need, and slums are expanding in many cities in Africa, Asia, and LAC.

Some people seem to have taken offense from the assertion in “Laudato Si” that “The earth, our home, is beginning to look more and more like an immense pile of filth.” But, if you have to walk, as he has done, through the garbage-strewn mud of most slums in developing countries, that characterization would not sound as an exaggeration but as a factual description of life for the poor living there.

The tone may be also related to the fact that the Pope feels it has to impress the urgency of the issues raised to get some action. Many analysis suggest that, on current trends, the world is going to experience temperature increases clearly above 2C, which may trigger environmental changes of monumental and potentially catastrophic implications, particularly for the poorest countries. If you believe that is the case, you cannot avoid but being forceful in your call to action.

  1. Some final words

In summary, Pope Francis is certainly not a closet socialist or communist. He is not a statist either: the fact that he comes from the developing world, where besides of “market failures” he has also seen and suffered plenty of “government failures,” makes him extremely cautious about simply emphasizing government interventions. He warns in “Laudate Si” about government corruption and asks the organizations of civil society to enter in dialogue with governments and business on these issues. He has also raised in several of his trips to LAC countries the problem of abuse of governmental power and of public authorities that want to perpetuate themselves in power.

In fact, as mentioned several times, his main, and probably only policy recommendation, is frank and open dialogue among all of us on the interrelation between current growth pattern based on fossil sources of energy, the plight of the poor, and the condition of the environment. A main message of “Laudate Si,” in a systemic approach that most general-equilibrium economists would appreciate, is that all three issues (growth pattern, poverty alleviation, and environmental sustainability) need to be analyzed simultaneously in their interrelations (a point several times mentioned in “Laudato Si”). Reducing growth for the sake of environment would doom a large number of people to continue living in poverty. Accelerating growth with the current levels of fossil fuel consumption would reduce poverty in the short term but may compromise the environment in irreversible ways that may end up hurting the whole humanity (and particularly the poor that tend to leave in more vulnerable places). Hence, the call to all of us in “Laudato Si” to solve the trilemma through generous dialogue focusing on new technologies and sustainable and equitable approaches to production, consumption and distribution.

In that regard, Pope Francis’ words may be more dangerous for the complacency of many of us than if he had sided with any particular approach or ideology: along with many religious traditions he is telling us that no “external” change in societal structures will solve the problems we face if there is no “internal” conversion. So improvements in societal structures must start by recognizing one’s limitations and fallibility, by trying to change and improve oneself, and then by engaging with our fellow human beings in a respectful dialogue about what we need to do for the common good, focusing particularly on the poor and the sustainability of life on Earth.