Francis’s blind spots and ours (updated)

Samuel Gregg, a Catholic who serves as director of research for the Acton Institute, a conservative ecumenical think tank that advocates for a free market, took exception to the pope’s economic premises, saying Pope Francis has “significant blind spots” with regard to market economies.

“When you read through the text, you find the free market, and finance in particular, is identified more or less as responsible for many environmental problems,” Dr. Gregg said. “It’s almost a subterranean theme of the encyclical.…In many respects, it’s a caricature of market economies.”

Source

As an economist, it’s hard not to agree with the sentiments of Dr. Gregg here. Consider this excerpt: “A simple example is the increasing use and power of air-conditioning. The markets, which immediately benefit from sales, stimulate ever greater demand.” (#55) I’m all for reducing the use of air-conditioning; but, on first glance, I have no idea what the second sentence could mean. Is it really the fault of “markets” that people use too much air-conditioning? What does it mean to say that markets “stimulate ever greater demand” for air-conditioning? Is there some kind of A/C marketing campaign I am not aware of?

Another example that leaped out to me is the Holy Father’s use of the word “speculation” as an epithet, as in ““carbon credits” can lead to a new form of speculation…” (#171) There may well be problems with carbon credits, but is the potential for buying and selling them based on informed guesses about their future value really the first problem to be concerned about? Is speculation so obviously bad that there is no need to explain why, even briefly?

Yet, where I suspect I will disagree with Dr. Gregg (once I get around to reading the full encyclical) is his claim that a “subterranean theme of the encyclical” is identifying markets themselves “as responsible for many environmental problems.” While the Holy Father’s statements above do not suggest a sophisticated understanding of economics, it is possible to make sense of them by interpreting with a little generosity.

The primary message Pope Francis seems to intend with his references to markets is signaled more clearly here: “Many people know…the mere amassing of things and pleasures are not enough to give meaning and joy to the human heart, yet they feel unable to give up what the market sets before them.” (#209) For Francis, “markets” mean fatalism, a resignation to the way things are if not a rationalization of present injustices. I understand Dr. Gregg’s concern that Pope Francis’s words may obstruct public understanding of the very real benefits of market-oriented policies, but I sense the deeper issue Francis is onto is more important.

Pope Benedict put things more clearly in his own encyclical focused on this deeper issue: “Admittedly, the market can be a negative force, not because it is so by nature, but because a certain ideology can make it so. It must be remembered that the market does not exist in the pure state. It is shaped by the cultural configurations which define it and give it direction. Economy and finance, as instruments, can be used badly when those at the helm are motivated by purely selfish ends. Instruments that are good in themselves can thereby be transformed into harmful ones. But it is man’s darkened reason that produces these consequences, not the instrument per se. Therefore it is not the instrument that must be called to account, but individuals, their moral conscience and their personal and social responsibility.” (#36)

It may be helpful for economists to read Pope Francis’s encyclical through this lens, which I suspect he fully endorses. If you ask him what is to be done about these “markets” he keeps lamenting, he may offer up a naive economic policy or two. But the heart of his proposal is dislodging the “certain ideology” that Benedict refers to and transforming the “cultural configurations” which “define” the market. That seems to be the real theme of Laudato Si.

Update: Samuel Gregg has fleshed out his comments in a lengthy and cogent column. I look forward to responding after I’ve had the chance to read the encyclical.

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