Pope Francis continues to make waves as the new head of the Catholic Church, offering a blistering critique this week of free markets and capitalism in his first apostolic exhortation:
[S]ome people 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 naïve 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. [vatican.va]
azizonomics 
The Pope is partially correct. All free market economies are unstable and progressively trend toward extreme economic inequality. To be sustainable, free markets must be framed within pre-established resets, just as each game of Monopoly has to start over.
Somethings are by nature competitive and thus self regulating. There are indeed some that are difficult to compare and easy to conceil a fair comparison. That is why there were and still needs to be a means of regulating them. The Banks are just one example. Monopoly is a game but is unfairly played by some businesses against others and against the good of others. We no longer seem to enforce the anti-monopoly laws. Socialism is not the answer to this problem.
Socialism is part and parcel of every industrialized society on the planet. There are no purely capitalistic economies, and thank God for that. If there were such places there would not be a crust of bread left for the poor.
Unmitigated capitalism is the law of the jungle, a place where money replaces human considerations and rapacious thugs, such as Bernie Madoff, enjoy a life of ease among the masses of have-nots living in rags.
Capitalism is not a High Noon scenario where Gary Cooper faces down a man bent on killing him. It is a place where he faces 15 such men bent on his destruction along with their fellows hiding on the roof tops.
The founders provided several practical and viable solutions to this tendency of ‘free capitalism’ to evolve into a stratified, exclusive economy.
First are the problems of banking. The American founders gave to Congress the sole power to coin money and regulate its value. That way, the peoples representatives would have control of the peoples economy. What many of todays ‘socialists’ fail to appreciate is the elegant ‘power to the people’ the Founders created. By controlling money, the peoples representatives have control over nearly all commerce.. Money, being the literal ‘blood’ of any nation, was rightfully placed among the most crucial of powers.
Today and since 1913, the US Congress has outsourced the USA’s money supply to the private and secretive Federal Reserve. This was a complete abrogation of it’s duties to the nation and is a failure to uphold and defend the Constitution… All done in the name of getting reelected.. as now this powerful private bank is at heart, a vote buying machine. The Feds stock holders, (yes it has stock) are Goldman Sachs for one, and through interlocking directorates nearly all media is controlled by this top echelon of Fed connected owners.. This is not Free Capitalism. It is a Banking Monopoly running the country.
The Pope probably doesn’t know this.
Secondly, the questions and solutions of Marxism. Karl Marx created his manifesto to counter what he saw as Corporate powers and the elite of the world from creating virtual slaves of the workers. While growing up in Trier Germany, 3300 year old city, young Marx saw his fathers livelihood as a lawyer crushed by the national powers in Europe which at the time, disallowed those of his faith to practice law.
From this one event Karl created a work that would strike at the heart of class society, that he was excluded from. He introduced into his manifesto, a requirement for a Central Bank. (Fed Reserve-BOE-central banks) Central Banks had been around since the 1690’s and now Karl would include a central bank in his new theory of saving the workers from ‘exploitation’.
Karl’s new theory was gleefully adopted by NYC bankers and he was a hero of the early left in NY USA. Karl wrote hundreds of articles for the NYTimes during the 1890’s and beyond. His theories appealed to the high in society-the banking class, and the low, the miners, railroad builders, all hard working people who had no where else to go. Karl’s theory’s did not however help the middle class.
The middle class gained limited advantage from marxism and it’s claims of raising up the worker class to owner of production. The point is, as we have seen today in the US, the lower classes are quick to join into a marxist led political movement because they are programed to dispose the upper classes. The upper, banking classes and all their stock owned media, academia and popular culture outlets also join into marx inspired political movements because , that is where the money is… The central bank is key tot this equation… Today the USA is running on 40% borrowed money. Without this created money, the US Government would likely have riots in the streets. The Gov is being propped up by you know who… The Fed Reserve is ‘loaning’ as it were 40% Government operating costs… In exchange for a promise the gov will collect interest on these ongoing loans..
So… todays societies do not have a free market nor free market capitalism.
The pope may need to reconsider attacking capitalism, and instead look at the banking classes that have taken over nations lifeblood as their own.
Very well said, but these parasitic and exploitive bankers would be quick to defend the fed as a privately owned extension of free market capitalism.
Any claim that it constituted a monopoly would be met with laughter.
If the American people are “programmed to dispose of the upper classes” it is because they have been lied to, cheated and stolen from by these very people.
Francis is addressing neoliberalism as a political theory based on a market state rather than a welfare state. He is not opposing all market-based economies or lobbying for socialism or communism.
Assuming that capitalism = neoliberalism/laissez-faire is incorrect in that neoliberalism is exclusionary of many other possibilities. Minsky said that there are 57 flavors of capitalism.
And assuming that neoliberalism and Marxism/socialism/communism as the only two options possible is the fallacy of the excluded middle aka false dilemma.
The pope is in opposition to deifying markets in the sense of making markets the sole or even chief arbiter of social, political and economic policy and outcomes. Markets are to serve people, rather than people, markets.
Peter F. Drucker is credit with saying, “Efficiency is doing things right and effectiveness is doing the right things.” Effectiveness is about goals and objectives, and efficiency is about means for achieving goals and objectives. Goals are chosen based on policy and policy is based on values. Objectives are subsidiary to this choice.
Markets don’t provide either values or goals, and they cannot set objectives. They are simply efficient means of distribution through rationing by price and may be effective in many cases but not all.
In the full article you said:
“But I don’t think there is any essential conflict between religion and the market. The market in itself is not an ideology or a cosmology. It does not attempt to answer difficult existential or religious questions like: “What is the meaning of life?””
Is not “The market” simply an expression of what individuals and organizations value? If individuals and organizations value monetary gains over and above concern for the well being of their fellow man, then the market will express this desire—monetary gains will be pursued, and fellow man will suffer. This is what we see today in the market. Shareholders primarily seek monetary gain. The real conflict is between God and mammon. You cannot serve both, Christ said. God desires us to love our neighbor on par with ourself. This requires desiring our neighbor to prosper as well as ourself. Self-interest has an alternative aim. A healthy economic environment “encourages” mutual concern for fellow members of society and “restrains” temptation to do otherwise. Wise regulatory mechanisms are useful toward this end. An unhealthy economic environment encourages theft, deception, and worse. Needless to say, no economic framework can make up for what is missing in men’s hearts.
BTW, thanks for your thought-provoking forum and posts!
Talk about the pot calling the kettle black!