Before digging into the nitty-gritty of the economic aspects of EG, I think it is first important to mention a concept taken from Biblical hermeneutics -- that of description versus prescription. Simply put, description merely describes certain social or cultural customs present in history. It is like saying is. Prescription, on the other hand, is a command, law, or exhortation for a community in history. It is like saying ought. A common example is in 1 Cor 11 where Paul says women should cover their heads in church. This certainly appears to be an example of prescription. Is it possible that, instead, Paul is merely describing the custom in the early church? This is what the early church looked like (description) but need not be binding for all of history? This is, of course, a debate that won't be addressed here; I use it only as a means of introducing descriptive vs. prescriptive.
One of the main debates about EG has been whether it is socialist or anti-capitalist. First, it is of utmost importance to establish that capitalism is not monolithic. There is no one capitalism. There are many capitalisms. There are the theoretical versions of capitalism such as the minimalist capitalism of Nozick, or the welfare state of Rawls, and also real life examples of the difference in economies in the USA, Great Britain, and Scandinavia, etc. Some attempt to narrow the definition of capitalism to mean only the most laissez-faire of economies. This is unfair and clearly ideological in its reasoning. So while reading EG, it is important to remember that there are several flavors of capitalism that all equally qualify as capitalism.
So when the Pope criticizes inequality, or how markets exclude some, or the idolatry of money, which is it? Is it prescription: does the Pope advocate socialism or jettisoning capitalism? Or is it description: does the Pope describe the many injustices brought about by our current flavor of capitalism? To answer this, its time to turn to his own words. Quotes are obviously taken from the English version of EG, although I have read some commentaries that suggest the debate is brought about largely through poor translations from the Latin (original) version. I have no clue.
The first critique of contemporary economics comes early on in the exhortation:
The great danger in today’s world, pervaded as it is by consumerism, is the desolation and anguish born of a complacent yet covetous heart, the feverish pursuit of frivolous pleasures, and a blunted conscience. (2)A critique not of economic systems, but of consumerism. The pursuit of the new, the bigger, the better, the more expensive. This pursuit of happiness in the possession and consumption of things leads to loneliness and sadness -- the opposite of the intent when purchasing them. This attitude is not surprising given the Pope's namesake. This is perhaps the most important quote, economically speaking, of the entire exhortation. Can we imagine a world economy in which buying the newer, better, bigger, more colorful thing is not our most important desire, but rather recognized for what it is, a vain chasing of the wind? (Eccles 1:14)
A similar thread throughout the economic passages of EG is an appeal to ethics. Economics without ethics is useless. Economics is ethics. When we forget this, when we are "economically advanced but ethically debilitated" (62), injustice is the result. If society made decisions more ethically, perhaps there would be no need to critique capitalism? Francis appeals to the leaders in society to help bring this about:
I exhort you to generous solidarity and to the return of economics and finance to an ethical approach which favours human beings. (58)If I may presume to paraphrase the Pope, economics should serve humans, not vice versa. Yet this change in attitude should come about by a change in priority by our leaders, not from on high by regulation or state intervention. Solid leadership is necessary if we want to re-inject ethics into economics. The pushback of ethics over profit will be strong -- perhaps even violent. The question of ethics is irksome for business (203). Yet without ethics, humans are pawns of the market as opposed to beneficiaries of it.
This leads to another common thread throughout EG -- are markets inherently bad? Are markets the problem and cause of inequality? Are markets made to serve humans or are humans made to serve the markets (cf. Mark 2:27)? It is in his comments on markets that Pope Francis could be viewed as an anti-capitalist. I hope to reconcile his words with a pro-market view without changing his intent.
The most critical of all the passages comes from a section titled "No to an economy of exclusion" and is perhaps the most often-quoted:
We can understand the Pope's reason for critiquing markets in the title he gives to this section. It is not that markets are necessarily at fault -- it is that their current construction excludes many. Markets do not work well when many, in this case mostly the poor, are not given entry into the market. Sometimes this is appropriate such as when the good or service is a luxury, but when the good or service is a necessity, excluding some from the market is unjust (cf. Obama, College, and Demand Curves). We must also remember that trickle-down economics is but on flavor of capitalism. There are many conservative economists and politicians who do not favor trickle-down economics. They believe this flavor still intervenes in markets, it just does so in favor of the wealthy with the hopes that the wealth flows downward. They think the state should not intervene on anyone's behalf whether rich or poor.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 . . . meanwhile the excluded are still waiting. (54)
The Pope also alludes to a contemporary change in what markets actually are. In their inception, as an emergent order, markets were personal interactions. We knew the person or business with which we were making an exchange. Fraud or deceit was remembered, communicated, and the results affected the market. Nowadays, markets are no longer personal or local. They are anonymous and global. Fraud and deceit are no longer easily remembered or communicated because of the identity-less nature of those with whom we exchange. The Pope more eloquently refers to this as the "idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose" (55).
An even more damning passage can be found in 56. The Pope critiques "ideologies which defend the absolute autonomy of the marketplace and financial speculation." This mindset "rejects the right of states . . . to exercise any form of control." The result is a transfer of power where transnational corporations "unilaterally and relentlessly [impose their] own laws and rules." This is not a critique of capitalism or free markets, but rather of neoliberalism (yet another flavor of capitalism). I've written on this before. The gist is best summarized by Foucault -- does the state supervise the market or does the market supervise the state (see here and here)? This is beautifully summarized in the Pope's title for the next section: "no to a financial system which rules rather than serves" (again cf. Mark 2:27).
So far, hopefully, I've argued that the Pope's comments can be seen as descriptive of the current state of global economics (perhaps most succinctly described as neoliberalism). Reading EG, can anything be gleaned from the prescriptive side of things? I believe so. And I believe it can best be seen when viewed alongside the work of Amartya Sen and Martha Nussbaum.
The key phrase in understanding Sen's work is "development as freedom" (also the title to one of his works). For Nussbaum it is "creating capabilities" (also a title). I don't wish to oversimplify how their views are different by conflating the two, but for brevity, we can look at Nussbaum's ten Central Capabilities: life, bodily health, bodily integrity, senses imagination and thought, emotions, practical reason, affiliation, other species, play, control over one's environment both political and material (Nussbaum "Creating Capabilities" 33-34). It certainly does not do Nussbaum justice to just list her Central Capabilities, but it helps illustrate that there is more than the state's responsibility than simply preserving one's right to life and property (the only two liberties that matter for many political philosophers including Nozick). I believe a broader understanding of liberty is needed in order to maintain free markets while also countering all the critiques of our current flavor of capitalism that the Pope has described above.
So is there anything in EG that alludes to the method of Sen or Nussbaum? There are small hints in the Pope's use of language, such as phrases like "promote the integral development of the poor" (188) and ensuring their "general temporal welfare and prosperity" as opposed to simple welfare acts such as "ensuring nourishment" (192). In this same paragraph. the Pope is even more explicit when he says these efforts should include "education, access to health care, and above all employment" because "a just wage enables them to have adequate access to all the other goods which are destined for our common use" (192). Here, I would argue that the Pope both supports the capabilities approach of Sen and Nussbaum and that he supports markets. By providing employment, the poor are able to escape the exclusion of the market and enter it as humans freely exchanging goods and services with other humans. It is markets that can help bring about the Pope's vision, not the elimination of them.
When liberties and rights are viewed from a broader perspective, in which they include education, health care, housing, sustenance, the ability to play, etc., there is no longer a need to ask the wealthy to "renounce their rights so as to place their goods more generously at the service of others" (190 taken from Paul VI Octogesima Adveniens). No one should be asked to renounce their rights. When we view rights/liberties as extending beyond bodily harm and private property and consider them more broadly, it is a question of balancing rights as opposed to renouncing them -- a concept with which the United States is historically grounded.
I believe in order to achieve the vision that the Pope describes we need markets. And these markets should be, so much as possible, free. Markets are still, usually, the best way to determine prices and wages. Yet they need some revisions -- not in regulations, but in our attitudes toward them. For instance, the goal of markets is efficiency. If we view markets as the master, then efficiency is the end. If we view markets as tools towards human flourishing, then efficiency is a tool towards the relief of suffering and the promotion of wellbeing. So we must prioritize the human end of markets over the economic end of markets while at the same time realizing that efficiency is an important tool to helping achieve this.
Secondly, markets must incorporate all costs and benefits. This means that market externalities must be accounted for. Failing to do so is appropriately called a "market failure" in textbooks. Failure to account for externalities results in improper prices and wages. Externalities such as pollution end up causing prices that are lower than they should be with the difference made up by society at large. Externalities such as a quality education end up causing prices lower than they should be. The Pope is aware of how these externalities, in a global economy, can result in concantenations that travel through the entire global population is extremely short amounts of time: "each meaningful economic decision made in one part of the world has repercussions everywhere else" (206). Because of this, governments must act to ensure that transnational corporations are not able to flee to a country which does not account for externalities such as pollution, child labor, and protection of the environment: "no government can act without regard for shared responsibility" (206).
In the end, it would be silly to expect the Pope, a spiritual leader, to speak about economics with the technical clarity of an economist (is that an oxymoron?). The Pope's comments can best be understood as describing what is wrong with our current system, not as a prescription for what should be done instead. When viewed in this light, the following passage is extremely appropriate and useful:
In her dialogue with the State and with society, the Church does not have solutions for every particular issue. Together with the various sectors of society, she supports those programmes which best respond to the dignity of each person and the common good. In doing this, she proposes in a clear way the fundamental values of human life and convictions which can then find expression in political activity. (241)