On the Economics of Pope Francis's Evangelii Gaudium

Fr. Sirico, president of the Acton Institute for the Study of Religion and Liberty, responds thoughtfully to the views on economics and poverty expressed in Pope Francis's Apostolic Exhortation.  Where do unfettered, unregulated markets even exist and who even advocates them?  On the difference between crony (or state) capitalism, which prevails in Latin America and elsewhere, and real capitalism, see the excellent paper of Jesse Norman, MP, "Conservative Free Markets, and the Case for Real Capitalism." Norman makes the case for real capitalism - "the greatest tool of wealth creation, social advance and economic development ever known" - but says we are living through an age of crony capitalism.

Here's an interesting article from The Atlantic, by someone who's a speed reader or had an advance copy under embargo.

At this Thanksgiving holiday time, we would do well to remember the Pilgrims' experience.  John Stossel points out that Pilgrims, who held property in common, were saved from starvation for two years by Indians. Then Governor Bradford figured out that private property, capitalism, individual ownership of fields, was the solution to having enough food to eat.

Here's a much quoted passage by Blessed John Paul the Great, who has a more nuanced approach, where he endorses capitalism rightly understood.  As Adam Smith argued, free markets are not only key to the wealth of nations.  They also depend on a moral basis that is indispensable - the free market requires and builds certain virtues (honesty, diligence, creativity, responsibility, initiative, responsible risk-taking, prudence, courage, justice and the avoidance of certain vices - cronyism, corruption, bureaucratic interference, etc.  As all the popes from Leo XIII on say, socialism is bad, evil in all its forms; capitalism needs a proper juridical framework and regulation.  So they all opposed "unfettered capitalism" or strong libertarianism and the kind of individualism that leads people into selfishness and ignoring social problems and the plight of the poor and exploited.  They say, socialism NO, capitalism, yes but (the but standing for tendencies to materialism and greed, seeing economic freedom as the only freedom, etc.).

It seems the difference between JP II and Francis lies in the latter's seeing the market as somehow causing poverty instead of being key to eliminating or reducing it, as Governor Bradford came to see.

Here's the much quoted start of para #42 in John Paul II's social encyclical, Centesimus Annus:

42. Returning now to the initial question: can 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, even though it would perhaps be more appropriate to speak of a "business economy", "market economy" or simply "free economy". 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.

Of course, it doesn't help that there seems to be a serious error in the English translation, giving a key passage a slant that is not there in the original.  Fr. Z explains here.

See also this Poverty Cure video on what really helps the poor and what harms them: