September 17, 2015

Pope Francis Misses the Sizable Moral Dimensions to Capitalism

Donald J. Boudreaux

Senior Fellow, F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics
Summary

Thanks to capitalism, billions of us — almost all descended from generations of peasants who were routinely disfigured and enervated by disease and malnutrition — live lives that not even the most powerful Byzantine or European potentate dared dream of just a few hundred years ago. These facts alone should suffice to give capitalism the benefit of the doubt whenever questions of its morality arise. Yet as Pope Francis' numerous broadsides against capitalism reveal, many thoughtful people believe capitalism to be morally deficient.

Defending capitalism on practical grounds is easy: It is history's greatest force for raising the living standards of the masses. Prior to the Industrial Revolution, the average person lived on about $3 per day (reckoned in 2015 dollars), and each denizen of today's developing countries — those places touched least by capitalism — scrapes by on $7 per day.

In contrast, the average person in today's market-oriented industrialized world lives on $110 per day, and the average American lives on $150. Now, thanks to capitalism, billions of us — almost all descended from generations of peasants who were routinely disfigured and enervated by disease and malnutrition — live lives that not even the most powerful Byzantine or European potentate dared dream of just a few hundred years ago. These facts alone should suffice to give capitalism the benefit of the doubt whenever questions of its morality arise. Yet as Pope Francis' numerous broadsides against capitalism reveal, many thoughtful people believe capitalism to be morally deficient.

This hostility toward capitalism springs from ignorance of the facts and a deep misunderstanding of the logic of markets. Consider the Pope's accusation that capitalism is a "new tyranny." His implication is that humanity escaped the tyranny of communism only to fall victim to the tyranny of markets. But reality refutes his charge of moral equivalence between communism and capitalism. Communism not only impoverished the masses by subjecting everyone to a central economic plan, it also stripped people of political, civil and religious freedoms.

Capitalism's results are the opposite. Not only does capitalism enrich the masses by allowing individuals the freedom to blaze their own economic paths, it typically also strengthens institutions that promote political, civil and religious freedoms. More generally, studies repeatedly find that the more economically free the country, the more prosperous its people. The French, for example, are economically freer and hence richer than Ecuadorians, while Americans are even freer and hence even richer than the French.

If there's any moral value at all (as there surely is) to an economy's capacity to enrich the masses, capitalism's consistent history of creating widespread prosperity counts not only as a practical point in its favor but as a moral one as well. And the moral points earned by capitalism increase if there's at least some moral value (as there surely is) to individuals being free to choose how to spend their own money and structure their own business and employment arrangements absent government dictates.

Indeed, capitalism should earn yet additional moral points from the Pope, given his insistence that "all of us can cooperate as instruments of God for the care of creation, each according to his or her own culture, experience, involvements and talents." No institution in history comes close to capitalism's success at inspiring multitudes of strangers, from different countries and with different talents, to cooperate for the betterment of humanity and of the natural environment.

The production and distribution of the very encyclicals in which Francis criticizes capitalism are capitalist achievements. They require the efforts of tree farmers (perhaps in Germany), of paper-mill workers (perhaps in Slovenia), of ink producers (perhaps in Canada), and of printers (perhaps in Italy). And each of these suppliers relies upon countless delivery vehicles (perhaps made in Japan), investors (perhaps in New York), insurers (perhaps in London) and designers of computer hardware (perhaps in China) and software (perhaps in Seattle).

A true marvel of capitalism is its continual weaving together of the efforts of billions of individuals from around the world into a unified global economy, with each person — as producer and as consumer — more free than under any other economic system to choose just how to participate. This process is peaceful, stupendously productive and requires no commands issued by any overseeing strongman or politburo.

Capitalism also doesn't damage the environment in the way that the Pope assumes. As Fr. Robert Sirico correctly noted in these pages in response to Francis' encyclical "Laudato Si," environmental despoliation is mainly found in poor non-capitalist countries rather than in rich capitalist ones.

Not only does capitalism give ordinary people regular access to such personal "cleansing" amenities as indoor plumbing, soap, safe drinking water, refrigeration and antibiotics, it also prompts firms to conserve resources by using production methods that consume as few resources as possible in order to produce as much output as possible. And importantly, capitalism alone makes societies rich enough to pay for efforts to reduce air and water pollution.

Capitalism isn't flawless. But it far outperforms any known alternative at peacefully uniting the peoples of the world in the practical and moral enterprise of producing dignity and extraordinary wealth for the masses.