How could Pope Francis be so wrong on capitalism?

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I have to say that I was saddened by Pope Francis’s recent assertion that “rampant capitalism” is a source of many of the world’s ills.

I say this as a former Catholic, who still appreciates the Church, and the spirit of Jesus which I think Pope Francis embodies (as far as I can see) to a much greater degree than Pope Benedict who was put to pasture for good reason. I believe that Francis has his heart in a good place, and that his efforts to reform the Church (to the degree he can) are long overdue.

I say this not as one who pays particular attention to the Vatican, but as a lay person who picks up bits and pieces of policy from the news. My general perception is not an informed one, but one of feel. I could be wrong with Francis.

But what is absolutely clear to me is that Francis is very wrong on his economics. Not only is he wrong, but his assertions are potentially dangerous, as he does not appear to understand the inherent justice–yes justice–of markets. He (I believe unintentionally) gives fodder to the controllers of mammon, the denizens of the state.

Below is a quote from Francis on “capitalism.”

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It is clear to me at least that Francis comes from a position of good will. I believe he cares for the world’s poor. I believe he honestly wants a better world, a more just world. And in part of the quote he’s right, we should attack the “structural causes” of inequality, not that financial “inequality” (and there is an important difference between equality under the law and economic equality) is necessarily bad.

But the rest of the quote reflects a fundamental misunderstanding of markets, deeply rooted in 20th Century statism, which still clings to the minds of many people today. (Especially in my experience older folks.)

The reason people tend to be poor is not because of “unfettered capitalism.” People don’t tend to be poor when people are free to voluntarily trade goods and services. People do not tend to be poor because people engage in the “win win” exchanges which are at the heart of capitalism. No, people are poor because people with power seek to restrict the flow of information and to institute privilege through the state (which can take many forms). People are poor where there isn’t capitalism. From the slums of Chicago to Kolkota this is true.

To the degree that the free voluntary exchange of goods and services is restricted poverty grows. This has been shown time and time again, from the earliest economies of man.

But this stands in contrast to what we have been told for nearly a century, and to what Pope Francis (apparently) believes. How is it that the great men (and in some cases women) of the 20th Century (and still many in the 21st Century) clung to the idea that the state is the great equalizer, and that capitalism is in fact the “unjust” force?

Mussolini, to Hitler, to Stalin, to FDR, to Mao, to Richard Nixon, to Jimmy Carter, and really the entire political class post World War I around the world, believed that man could engineer prosperity. They believed that the poverty and injustice they saw was a reflection of an untamed system to be bent to serve the goals of man. What they didn’t realize was that it was actually the folly of man made government which to a large extent created the problems they were convinced the state could solve.

Many of the “great” men of the 20th Century couldn’t see that feudalism was just the embryonic form of the state, not a symptom of “capitalism.” The Marxist “train of history” was not moving down the track of enlightenment at all. It in fact was headed down the track of broadened and systematized feudalism. Marx, and his followers (those who knew they were his followers and vast many who did not) did not understand that for all the pretty bows, and regulatory whistles the reason life got better for the average person over the years was because of the shining rays of innovation and free exchange which occasionally burst through the cloudy gloom of the state. Things progress in spite of the state. But that is “an inconvenient truth.” (A real one.)

In some cases (to greater and lesser degrees) the members of the 20th Century political class didn’t actually care about a better world at all, but were interested in power for the sake of power. But it’s probably fewer of these people than we think. Power hungry people like to think they are pursuing power for some greater cause. It’s much more psychologically satisfying that way. It also makes killing the enemies of “injustice” much easier.

Markets resolve themselves. Markets clear. If there is an inefficiency within the market, the market–so long as it is not impeded by often well meaning but largely ignorant managers–will take care of things. It may not resolve things in the way some of us would like, but it will do it almost invariably better than the state.

Take for example the financial crisis which began in 2008. Had we let the market clear, that is let GE, Goldman Sachs, GM, Chrysler, AIG, etc. die with the associated short term fallout, we would be in a much better place today economically. The assets of these firms which were valuable would have been picked up by better managed firms and used more efficiently. New businesses would have been born from the short term carnage. Jobs would have been created.

Instead the government intervened in the marketplace under the auspice of preventing “worldwide economic meltdown” (it was a reversion to the mean from the unsustainable blip up caused by Alan Greenspan’s easy money policies) which was designed to get the broader public, “Main Street” on board with bailing out the world’s rich and powerful.

Strangely the advocates of “social justice” jumped right on the bailout bandwagon. The solution to the “crisis” which largely impacted the rich and powerful, which was caused by the state, was to give the state more power so that the vested rich and powerful remained rich and powerful.


This is not capitalism. This is crony capitalism. Crony capitalism is the current worldwide economic system. It is what creates poverty to a large extent, and restricts opportunity for the poor and the marginalized.

Capitalism, voluntary and non-coercive economic action, is the best vehicle for liberation on a wide scale there has ever been. Pope Francis, who I believe genuinely cares for the poor of the world, could do much good if he came to understand this fact.

I am ready to fly to Rome on a moments notice if he wants to talk.