The Pope on Capitalism
by: John Tyrrell
Your thoughts on this Meditation are welcome. Please sign in to the discussion forum below, or alternatively, use the contact page to provide your comments for publication.
As did his two predecessors during their reigns, Pope Francis attacked capitalism this week. He also called for governments to take action on poverty and income inequalities.
What the past three pontiffs don't seem to realize is that it is only under free market capitalism that a significant enough surplus can be produced which governments can use to fund programs to alleviate poverty.
And it is only under free market capitalism that a several hundred year trend of an increasing standard of living has been achieved.
Certainly capitalism as we see it today is far from perfect, but, still, no better economic system has been yet identified which will drive economic growth.
Actually it was "unfettered capitalism" that Pope Francis criticized - and while that's something that does not exist anywhere, it seems to be an ideal to which some corporations and some supporters of free market capitalization aspire. And therein lies a problem Because those corporations which attempt to cut themselves off from the rules of society are no longer part of society. They don't help solve the problems of society - they contribute to them.
We see corporations which demonstrate no respect for their employees; no respect for their customers; no respect for their suppliers; and no respect for their nominal owners - the shareholders. They seem to exist only to satisfy the short term goals of senior management.
This isn't a capitalism problem - it is a problem which exists in all economic systems - senior management can, at least in the short term, gather abnormal rewards for itself by ignoring the long term impact on the organization and on the society in which exists. Short term savings can always be achieved by underpaying employees, eliminating spending on research, development, and infrastructure, and squeezing suppliers remorselessly. And in the long term, it is a self-destructive process.
And the Pope is right to express concern when he sees this happening. The problem is with his solutions.
What is needed is a focus on the long term. And the long term is something about which the Catholic church could reasonably claim to have some perspective. That's where the Pope's advice should have been focused. Rather than criticizing capitalism in general, he could have recognized the benefits free market capitalism brings to society when companies focus on the long term - and a long term focus requires a stable, contented workforce; stable profitable suppliers; investment in the future through R&D and infrastructure maintenance, and reasonable rewards to the providers of capital.
And Pope Francis could better have called on governments to provide a regulatory framework which encouraged such a long term focus, rather than asking them to conjure up jobs for everyone out of thin air.
Have your say...
Please take a moment to share your thoughts, pro and con, on this Meditation.comments powered by Disqus