Darrow Miller and Friends

What Does Pope Francis Mean by “Capitalism”?

Recently we published a post about Pope Francis’ comments last November regarding capitalism in his missive, “Evangelii Gaudium.” Here’s a further observation about his message.

Michael Novak, a Roman Catholic economic philosopher, reflects on Francis’ paper in his article “Agreeing with Pope Francis.” Novak points out an important distinction between the historic contexts of John Paul II and Francis. John Paul II grew up in Poland under communism. Francis, on the other hand, hails from Argentina, a nation of “crony-capitalism.” That is, not capitalism derived from a Judeo-Christian worldview, but rather an economic model derived from an amoral framework. In such a model, big business leaders and powerful government officials cozy up to each other. The free market is circumvented by their favoritism in providing government grants, tax breaks, and legal permits.

Novak argues that each man was writing from his own experience and his growing maturity in economic philosophy. John Paul II, growing up under the atheistic and materialistic framework of Communism, needed a whole new vocabulary and economic understanding. Novak comments on John Paul’s maturing vision as expressed in paragraph 42 of Centesimus Annus (The Hundredth Year, 1991):

John Paul II defined his ideal capitalism, succinctly, as that economic system springing from creativity, under the rule of law, and “the core of which is ethical and religious.” In his first social encyclical ten years earlier, Laborem Exercens (On Human Work, 1981), directly rejecting orthodox Marxist language about labor, the pope had already begun to project “creation theology” as a replacement for “liberation theology.” A bit later, he reached the concept of “human capital.” Step by step, he thought his way to his own vision of the economy best suited to the human person — not perfectly so, in this vale of tears, but better than any rival, Communist or traditional. John Paul II set it forth as “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.”

What John Paul was describing was not the hedonistic capitalism or consumerism that Francis indicts, but the Judeo-Christian economic model of oikonomia. In the Biblical framework the universe is “open” (i.e. human creativity is the source of wealth) and “moral” (under the rule of God’s laws). This Judeo-Christian economic model comports with reality; it has lifted nations out of poverty.

Novak writes of the secret of the economic revolution brought by free markets in the United States:

The patent-and-copyright clause of the U.S. Constitution, which guaranteed to inventors the right to the monetary fruit of their inventions … the only time the term “right” is used within the body of the Constitution — launched a wholly new economic model for the world, based not on land (as it had been for thousands of years) but on creative ideas, inventions, and discoveries, which greatly speeded up a cascade of new improvements and new products to enrich the lives of ordinary citizens. The more people these improvements helped, the higher the inventors’ royalties. By serving others, they reaped rewards. These rewards furthered the common good.

Is capitalism the victor over communism? Is it the hope of nations trapped in poverty? In Centesimus Annus, John Paul II says “Yes, and no.”

The answer is obviously complex. The term “capitalism” is used to denote different systems.

In its truest form, capitalism is an economic system which recognizes the fundamental and positive role of business. It takes a positive view of the market and private property. Business owners are responsible for the means of production. Human creativity in the economic sector is encouraged. Capitalism so defined yields a definite Yes to the questions above.

But “capitalism” is not always used this way. Sometimes the word is invoked to denote a system without proper constraints. But freedom in the economic sector must serve human freedom in its totality. To guarantee that, a strong juridical framework must circumscribe economic freedom. Without such a foundation, the reply is clearly negative.

In other words, what is meant by “capitalism?” If we are speaking of a “moral-economic” system based on a Biblical worldview and principle, then nothing has done more to lift people out of poverty. If, on the other hand, we mean an amoral-economic system—be it communism, consumerism, or crony-capitalism—this will lead to injustice and greater poverty, as Pope Francis articulates.

Francis mistaken about true capitalismIn “The Joy of the Gospel” Francis challenges hedonistic consumerism. Novak suggests Francis is responding to the crony capitalism of his native Argentina. Both systemd—hedonistic consumerism and crony capitalism—are represented by the bottom left quadrant of the graphic, the open-amoral system (chrematistics). The answer is not the closed-moral framework of socialism. The answer is the open-moral system of oikonomia – stewardship capitalism.

Which is the more compassionate: free markets that pave the way for millions to get out of poverty, or statist programs that redistribute resources, build a dependency class, and stifle economic vibrancy?

Michael Novak suggests that Francis should begin to build where John Paul II left off: “I hope the pope’s aides will begin with the experience-impelled conclusion, a bit reluctantly advanced, in the well-reasoned pathway of paragraph 42 of John Paul II’s Centesimus Annus:

Communism has failed. Can it be said that free markets, given their limitations, are  still the best social–economic system, and that capitalism should be the goal of nation working to rebuild their societies? Is not 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.”

Until another system proves better, clearly the answer is Yes.

–          Darrow Miller

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  1. Scott Hunnicutt

    January 11, 2014 - 4:30 am

    ¨Communism has failed.¨ ¨If we are speaking of a “moral-economic” system based on a Biblical worldview and principle, then nothing has done more to lift people out of poverty.¨ In the same sense, we can say that Capitalism has failed too. Both systems with great ideology have the opportunity to function when they are in the highest level of morals and ethics. Remove the sin of greed from all involved, communism would work wonderful just as the apostles in Acts demonstrated, ¨and all…had all things in common.¨ Capitalism works fine, when all involved understand their wealth comes from consumers of their products and they return an amount to society for the causes of justice and equality. John Mueller explains in his book, Redeeming Economics: Rediscovering the Missing Element, that Adam ¨Smith had already banished benevolence and beneficence from rational economic theory to emotional psychology¨ (http://www.eppc.org/publications/redeeming-economics-how-federal-budgets-affect-the-american-family/ )
    Economic systems and/or forms of government function when they are based and guided by morals and ethics. The Old Testament shows that when good kings (judges) ruled, the country flourished, when corrupt kings ruled the country suffered. In its purest form, communism would flourish, a dictator or monarch would rule justly, everyone would share from their hearts out of love and care and it wouldn´t really matter how the economic system functioned. What was King David and Solomon´s economic policy for the country? Probably it was more the traditional economy of agriculture and bartering. In places where poverty exists, do we want industrialization to be the savior of the poor? Raise up the standard of living so people can be consumers instead of stewards. Traditional and artisanal production lost to industrialization, goods imported from China, obesity from cheaply produced foods in shanty towns, etc., seem to be the finale of modern day capitalism.
    Can current capitalism function in a ¨moral-economy¨ in today´s culture? Not in the present form. The US government cannot regulate itself or business, and the huge monopoly like businesses are into market and government domination. Seems like the Pope is calling all of us to re-evaluate how we do business and it seems like he is promoting biblical principles lost to even many Christians as well as an immoral economy. He may not have an economic degree but at least one world leader is bringing the subject out into the open whether we agree or disagee.

  2. C. McGarvie

    January 14, 2014 - 12:06 am

    Thank you for this clear and articulate explanation regarding Pope Francis’ comments on capitalism. It puts his comments into perspective and fosters understanding. It also underlines the importance of defining one’s terms.

  3. Denis Bailey

    January 27, 2015 - 4:26 pm

    I was reflecting and wonder why you classify Socialism as a “Moral Universe”. Living in a Socialistic Society, Brazil, I see there is so much corruption.

    • admin

      January 28, 2015 - 4:26 am

      I am certainly NOT saying that all Socialists are moral. I am not necessarily saying that Brazil is a Socialist society. I am simply pointing out that two sets of categories help frame different economic philosophies. The “Socialist” quadrant of the graphic borrows an idea from Judeo-Christian faith, ie there is a moral universe and we have a moral responsibility to care for our neighbor. In consistently, it borrows from a naturalistic framework that say the universe is a closed system and thus resources are finite – physical things in the ground. How do you help the poor? by doing what Brazil does, it redistributes resources at a national level. And this practice may involve corruption and certainly involves “power.”


      • Denis Bailey

        January 29, 2015 - 6:49 am

        Thank you for your reply Darrow. Now I have another question. If the Socialist Economy is a “Moral Universe” of a distribution. How would you define a Communistic Economy “Amoral”? (I have tried reading your material and haven’t been able to come to a conclusion.)

        • admin

          January 29, 2015 - 2:44 pm

          Hi Denis

          The “communism” is not the important thing. The important thing is that that quadrant is shaped by the atheistic framework of a closed system – mechanistic universe, where resources are limited and a universe without a moral framework. The question is, what kind of an economic system would be conceived in an universe that is amoral and closed?


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