Editorial: Capitalism doesn't merit papal slam

These pages have no need to weigh in on matters of faith, affairs better left to debate among religious leaders than journalists. When those figures choose to opine on matters of public policy, however, we occasionally have the need to respond, especially when their utterances – no matter how well-intentioned – may adversely affect the public’s understanding of vital issues.

Unfortunately, we find ourselves in just such a moment given Pope Francis’ recent pronouncements on economics.

In his recent apostolic exhortation,Envangelii Gaudium, most of which is properly dedicated to matters of faith, Francis takes some blistering shots at capitalism and the world it has created. “Some 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,” he notes. “This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power.”

To begin, we note that “trickle-down” economics is a caricature used by capitalism’s critics and not its defenders. Those of us who embrace free markets do so not out of a belief that the breadcrumbs of affluence will eventually reach those less well-off, but, rather, out of a conviction that the free market is the best mechanism for increasing wealth at all levels. As for being confirmed by the facts, we believe the empirical evidence is conclusive. Compare the two sides of Germany during the era of the Berlin Wall or the China of today with the China that hadn’t yet embraced an (admittedly imperfect) form of capitalism. The results are not ambiguous.

There’s a more fundamental misunderstanding at work here, however. When Francis talks about “economic power,” he misapprehends a fundamental aspect of free markets – they only provide power consensually. Apart from government, no one can force you to buy a product or purchase a service. There’s a similar error in his citation of Saint John Chrysostom’s aphorism: “Not to share one’s wealth with the poor is to steal from them and to take away their livelihood.” The economics of capitalism are not zero-sum. Trade only occurs when both sides are made better off by the transaction. The wealthy don’t get rich at the expense of the poor.

Francis’ critique is not entirely without merit. He notes, for instance, the hollowness of consumption for consumption’s sake. That’s a perfectly legitimate criticism, but is, at its core, a social concern, not an economic one. We also share his concern for the poor – and that’s why we’d encourage him to find other targets besides the free market, the single-most effective poverty relief mechanism humanity has ever discovered.