Marx, Keynes, Friedman, Rand, and now Francis?

Economics, The Opening Print
credit Huffington Post

In his first major letter, Pope Francis had some strong and clear criticism of the excesses of capitalism as we currently practice it. He goes well beyond the now-routine call for compassion for the poor. If he continues to force Catholics and all people to consider his economic views seriously, he may end up having a greater impact than Ayn Rand.

He wrote:

Some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably bring 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 sacralised workings of the prevailing economic system.

Let’s keep in mind that his 20-year-old Renault, his residence in the guesthouse rather than the papal apartments, and his long-time advocacy for the poor notwithstanding, Pope Francis is the head of probably the world’s wealthiest institution, whose American dioceses alone spend over $150 billion annually, mainly on hospitals and educational institutions. The wealth he controls dwarfs that of any corporation.

The church began as the state religion of the Roman Empire and just kept growing from there. Its Medici popes and their allies created modern banking in the West, and it sanctioned the great source of European wealth for the last 500 years: colonization.

As the first pope from one of those former colonies, Argentina, Francis has a lifetime of experience dealing with the corruption of predominantly Catholic politicians, church officials, and business people. He has called the idea that slavery is over a “cock and bull story” and says that slavery is an active and systematic force in the lives the homeless of Rio de Janeiro, of garment workers in Bangladesh, and migrant farmers in the US. By any reasonable definition of slavery, he’s right.

More important, his message, though not original with him, is finding resonance around the world: An economy doesn’t exist simply to help a few people get rich by exploiting others. An economy exists to create opportunities for everyone to have dignified work and a productive, decent life.

With both the wealth of the most powerful CEOs and oligarchs and influence over the life and thought of over a billion people, he has the power to nudge the global economy a little bit, as do other very wealthy men like Warren Buffett, John D. Rockefeller, or George Soros.

When you get to that level of wealth and influence you start to think in centuries rather than years about economic cycles, looking for the next Industrial Revolution, the next information superhighway, the next New Deal, the next supply side.

Francis seems to be doing more than continuing the call of his predecessors to care for the poor. He is looking to reform systems and ideologies, not just individual morality. He’s beginning to sound as though he wants to use his power and have an impact. And the hysterical reaction from Rush Limbaugh and Fox News suggests that he is.

When the old system fails

Remember that every new economic theory or movement came in response to a previous system that had turned into a system of suffering. Marx, Lenin, and Trotsky rebelled against serfdom and the exploitation of factory workers.

Keynes rebelled against unchecked, devastating boom-bust cycles (and no, he was not a socialist).

Friedman rebelled against excessive and stifling (but not all) regulation. He, too, was misinterpreted; he never claimed that the natural reaction of people who got rich in unregulated free markets would be to trickle generously down on others. He simply pointed out that asking corporations to make society better was like asking a refrigerator to teach your child to ride a bicycle. Simply not designed for the job.

In 2013, fewer people yearn for or expect a complete free market. A free market doesn’t have TARP bailouts, or the government’s (now obviously beneficial) takeover of General Motors. And if the free market means the kind of joblessness and hopelessness and insurance-lessness that 2008 brought, and a level of inequality not seen since just before the Great Depression, most middle-class folks are willing to say, to hell with some fantasy of a free market that can never actually exist. I want a decent job and I need to see a doctor.

Pope Francis does not reject the idea of a free market, just the idea that markets don’t need sensible regulation to avoid excessive greed and corruption as we have it today, not just in the developing world, but in rich countries as well. Whether or not we are seeing the beginning of Francis economics, one thing is clear. Old capitalism has grown corrupt and ineffective at solving the real problems of human society and we need a new capitalism, one that values our shared human values.

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Vikram Rangala (68 Posts)

Vikram is a futures and options trader with 16 years of experience. He previously taught for the University of Florida's Warrington College of Business and Honors Program. He is a regular participant in the MrTopStep IM-Pro Trading Room.


3 comments

  • Hat off to Pope Francis, I hope he continues to exercise his influence, the current system of old capitalism is most definitely failing society. I read Warren Buffett believing corporations should be paying more tax, Well written Vikram, a excellent summary of historic philosophers perspectives of financial systems. Friedman is correct, corporations have not a shred of care for people, they have one obligation, to make money and at any cost. The trickle down effect in this supposed free market has not eventuated, as corporations set up shop in other countries to pay lower taxes, and use cheap labor from abroad.

  • Insofar as corporate responsibility is concerned, surely it demands more than cornering market share at any cost. The genetic modification and distribution of “Frankenfood” – otherwise known as Genetically-Modified Organisms, has shown us that the science behind such a scheme has long-term health consequences that are causing untold disease-related illnesses in many of the sentient beings exposed to these unnatural creations. If we do not know what we are eating, how can we make intelligent choices?

    At the very least, any company who is responsible for the production and distribution of foodstuff throughout the world must be held accountable for the long-term consequences of its actions. The most glaring betrayal of trust that has occurred in this context is that of our own government, who has literally given license to Monsanto and others to poison the world.

    Comparing corporate responsibility to a refrigerator teaching my child to ride a bicycle completely misses the point, and until the consciousness of corporate entities has attained a level of enlightened self-interest that takes into consideration the well-being of their consumers, there will always be the need for vigilant regulative authority…

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