Market Assumptions : Pope Francis’ challenge to income inequality
In a tweet read around the world this past April, Pope Francis told over 10 million online followers, in nine different languages, “Inequality is the root of social evil.” The pope’s diagnosis did not go over well with many American Catholics, who criticized the statement as being radical, simplistic and confusing. This pushback stands in stark and telling contrast to the otherwise enthusiastic reception the new pope has met in the United States. From the moment of his election, Pope Francis has captured the attention of the American people with his message and manner, even as he has challenged us all to deep renewal and reform in our lives. Americans take heart in the pope’s call to build an ecclesial culture that casts off judgmentalism; they applaud structural reforms at the Vatican and admire Francis’ continuing focus on the pastoral needs of ordinary men and women.
But that Francis’ teaching on the scandal of economic inequality in our world has inspired a decidedly mixed response has not deterred the pope from speaking on this theme, one very close to his heart, repeatedly and forcefully. What Pope Francis tweeted in just seven words he had elaborated on at length five months earlier in his apostolic exhortation, “The Joy of the Gospel” (No. 202):
The need to resolve the structural causes of poverty cannot be delayed.... As long as the problems of the poor are not radically resolved by rejecting the absolute autonomy of markets and financial speculation and by attacking the structural causes of inequality, no solution will be found for the world’s problems, or, for that matter, to any problems. Inequality is the root of social ills.
Pope Francis identifies this inequality as the foundation of a process of exclusion that cuts immense segments of society off from meaningful participation in social, political and economic life. It gives rise to a financial system that rules rather than serves humanity and a capitalism that literally kills those who have no utility as consumers. Inevitably, such exclusion destroys the possibility for peace and security within societies and globally. The cry of the poor captured in “The Joy of the Gospel” is a challenge to the “individualistic, indifferent and self-centered mentality” so prevalent in the cultures of the world; it is a call to confront the evil of economic exclusion and begin a process of structural reform that will lead to inclusion rather than marginalization.
Commentators from the worlds of politics, economics and business have weighed in to identify the defects and limitations of the pope’s prescription for justice in the world. Some of these commentaries have been superficial and highly politicized; others have been thoughtful and incisive. The emergent critique of Pope Francis’ message about inequality focuses on three major themes. The first is that the pope does not understand the importance of markets. The second is that Francis’ critique is aimed at a type of capitalism far different from the economy of the United States. The third is that the pope’s perspective has been skewed by his Latin American roots and is out of step with the teaching of prior popes. Thus Francis’ criticisms of world economies are alternatively naïve or misplaced or doctrinally extreme.
But a sustained reading of Pope Francis’ words on inequality and the barrage of criticism that has greeted them raises another possibility, namely, that the backlash against the pope’s message did not arise because he failed to recognize the centrality of markets, the nature of economies like the United States and the trajectory of authentic Catholic social teaching, but precisely because he did recognize the realities, and in doing so has raised fundamental questions about justice and the American economic system.
Specifically, the pope’s writings on inequality and economic justice point to the fallacies inherent in a series of major cultural assumptions that are deeply embedded in American society. These assumptions touch upon the meaning and significance of economic inequality itself, the moral standing of free markets and the relationship between economic activity and membership in society. Only by examining the legitimacy of each of these assumptions in turn can the importance of Pope Francis’ critique and challenge be appreciated. Only by examining the cultural mindset that these assumptions taken together have created can it be understood why they collectively undercut the possibility for greater justice in the American economic system and world community today.
The Natural Order
The first cultural assumption is that current levels of domestic and international economic inequality are a natural part of healthy economic life. The logic behind this assumption is simple: Any economic system that seeks to enhance growth must incentivize individual initiative and effort. For this reason alone, economic inequality will be evident and substantial in every nation that values growth and opportunity.
Economic inequalities are natural, under this assumption, in another more fundamental sense as well. Economic inequality arises from the right of men and women to use their talents as they choose and from the claims of justice that reward individuals for their contributions to specific enterprises. Societies may have an obligation to provide a threshold of economic support to their citizens, but to go further and seek to limit economic inequality would not only cripple economic growth but violate fundamental norms of justice.
But in Catholic thought this assumption, which is so comforting for American culture, is utterly unacceptable. Catholic thought begins not with the need to maximize economic growth or with individual claims to recompense, but with the equal dignity of every man and woman made in the image of God. In the words of the Second Vatican Council’s “Pastoral Constitution on the Church in the Modern World” (No. 29):
Their equal dignity as persons demands that we strive for fairer and more humane conditions. Excessive economic disparity between individuals and peoples of the one human race is a source of scandal and militates against social justice, equity, human dignity, as well as social and international peace.
Grave inequalities within and among nations are automatically suspect in Catholic thinking and constitute not the legitimate natural order but a profound violation of that order.
It is vital to note that the council is not talking about the less-controversial right to some minimum threshold income in this passage; it is explicitly talking about disparities in income. Catholic teaching has long recognized that the most profound harms of economic inequality lie not merely in the material realm but in the social, psychological and political effects that flow from great economic inequalities. Those who are marginalized economically are also marginalized educationally, residentially and in their opportunities for meaningful work. As a result, as Pope Francis concludes, they are actually excluded from society: “Exclusion ultimately has to do with what it means to be a part of the society in which we live; those excluded are no longer society’s underside or its fringes or its disenfranchised—they are no longer even a part of it. The excluded are not the exploited, but the outcast, the ‘leftovers.’”
Pope Francis’ assertion that egregious levels of inequality constitute a profound injustice rather than a necessary part of the natural order is the central friction that underlies the rejection of the pope’s message within the United States. When the richest nation on earth has the highest level of post-tax-and-transfer income inequality among highly developed countries, that is injustice, not the natural order. When the 85 richest individuals in the world have more wealth than the 3.5 billion poorest, that is injustice, not the natural order. The cultural currents in American life that treat grotesque levels of inequality as inevitable in a market economy constitute an ideology of justification and complacency, and they are irreconcilable with the sense of complicity in injustice and the imperative to reform that flow from any meaningful application of the Gospel to economic relations in our world.
The Sacred Market
The second cultural assumption widely held in the United States is that the freedom of markets is a categorical imperative rather than an instrumental freedom. No element of Pope Francis’ teaching on justice and the economy has received more criticism than his call for rejecting the absolute autonomy of markets. Defenders of American capitalism have advanced two separate arguments to counter the pope’s critique. The first is that the economic systems in the Western world are not in fact absolutely autonomous but instead are subject to regulations that safeguard important human rights. The second is that the free market is the best engine for generating wealth for all segments of society and for embodying the fundamental human right to contract and undertake economic initiative.
Both of these arguments have important elements of truth. Western markets are not free in an absolute sense but reflect elemental safeguards for human dignity. In addition, markets are a central mechanism for the wealth creation that has lifted millions of people out of poverty over the past several decades, especially in China and India. Finally, free markets do express and nurture the important human freedom of economic initiative and contract. For all these reasons, relatively free markets are conducive to establishing economic justice in the world.
But as Catholic social teaching has made clear throughout the past half century, free markets do not constitute a first principle of economic justice. Their freedom is merely instrumental in nature and must be structured by society and government to accomplish the common good. In “Centesimus Annus,” in which St. John Paul II skillfully integrated a modern appreciation for markets into Catholic social teaching, he made clear that any market system must be “circumscribed within a strong juridical framework which places it at the service of human freedom in its totality, and which sees it as a particular aspect of that freedom, the core of which is ethical and religious.” And pointing to the wreckage of the financial collapse of 2008, Pope Benedict XVI observed in “Charity in Truth” that both distributive and social justice are essential to complement the commutative justice of markets, because “if the market is governed solely by the principle of equivalence in value of exchanged goods, it cannot produce the social cohesion that it requires to function well.” The sustained conviction of Catholic doctrine is that the dignity of the human person is the mean and the measure of every system and institution, and that markets must be structured to reflect that perspective.
It is in light of this fundamental stance that Pope Francis speaks to the question of markets and condemns the absolutism of those who resist structural reforms that will bring greater fairness and serve human dignity. He identifies a “sacralized” approach to existing market structures, which resists all calls for change and reform in the name of freedom and efficiency. Seen through this sacralized prism, any attack upon the status quo is portrayed as a pathway to state centralization, an encroachment upon personal freedom or an invitation to economic stagnation.
This same sacralization of free markets has marked the pushback faced by every major reform moment in American economic history—during the Populist and Agrarian reform movements of the 19th century, the Progressive reforms of the early 20th century and the reforms of the Great Depression. At each of these moments, those seeking reform were met with an absolutist defense of the markets that labeled any alteration in market structures as an assault on freedom and prosperity. Ironically, it is these same reforms that market defenders point to proudly today as evidence that our market structures are not absolutist.
The freedom of markets is essential to a vibrant and just economy, but it is an instrumental freedom, not a categorical imperative. Markets exist to serve the human person and human communities. It is the obligation of society and government to structure markets so that they best carry out that role.
Makers Versus Takers
The final cultural assumption is that there is a fundamental divide in American society between those who contribute to society economically and those who do not. This trend was captured in a narrative that emerged in the 2012 presidential election that there are two groups in America: “the makers” and “the takers.” “The makers” are those who pay more in taxes than they receive in government benefits. “The takers” are those who receive more in benefits than they pay in taxes. While there was a great deal of imprecision about what benefits counted in this calculation and whether those who had contributed economically in the past but were now retired or disabled should be counted as “takers,” the overarching theme was that a large segment of American society continually drains the American economic system.
This theme has been accentuated by the growing levels of inequality in the United States, and the decreased economic mobility of those born into the lowest income quintile of the population. As a consequence, the very exclusion that Pope Francis warns of has eroded public discourse and unity within American society. The poor, who were a central focus of political action and public concern during the 1960s and ’70s, have now been swept to the side of public debate. Programs that benefit the poor must be justified by their collateral benefit to the middle class. And a commonly unarticulated, yet deeply resonating theme of this cultural shift is the notion that the poor are largely responsible for their own poverty.
The notion that a society can be divided into “the makers” and “the takers” embodies precisely the individualism that Pope Francis condemns. It asserts that wealth creation is an individual undertaking, ignoring the enormous role that societal contributions make to every business enterprise. It is a denial of the core assertion in Catholic teaching that all creation was created by God and given to humanity, collectively, and that material goods have a universal destination that must not be undermined. The ideology of makers and takers regards market outcomes not merely as an efficient first-level filter through which material goods are distributed in society but as a moral arbiter of worthiness, effort and talent. And it constitutes a subversive influence in American society, one that sows division and discord.
One great irony of the myth of the makers and takers is that structures of inequality have raised enormous obstacles to meaningful job opportunities for so many young men and women. Pope Francis has pointed repeatedly to this dearth of productive jobs, saying:
We cannot resign ourselves to losing a whole generation of young people who don’t have the strong dignity of work.... Not having work does not just mean not having what one needs to live...the problem is not being able to bring bread to the table and this takes away one’s dignity.
Unless structural economic reforms are undertaken to remedy existing obstacles to greater employment, the cycle of economic and social exclusion that is at the center of the pope’s challenge to existing economies will only increase.
The United States, over the course of its history, has harnessed individual creativity, vast natural resources, market freedom and social cohesion to produce the most powerful economy the world has ever known. But like the rich man in the parable of Lazarus, we are blinded to our obligations to the poor and the marginalized by cultural assumptions that are irreconcilable with the Gospel. In the United States, these distorted assumptions convince us that extreme poverty is inevitable in our nation and our world, that structural reforms of our markets will decrease growth dramatically and lead to the centralized state and that the poor deserve the hand they have been dealt.
Pope Francis, in his vision of the inclusive society, has given us the opportunity to challenge these assumptions directly with the force of the Gospel and the substance of justice. It is essential that the Catholic community in the United States, both as followers of Jesus Christ and as citizens who love our country, bring this message of inclusion with all of its power to bear upon the questions of poverty, exclusion and inequality.