Lost in Translation: Pope Francis’ Message on the Economy

This post was written by Eileen Norcross, a senior research fellow at the Mercatus Center at George Mason University.

Pope Francis’ address to Congress this Thursday will be the first ever by a pope, and many Americans are anxious over what he might say about the global economy. Some expect he will give a rousing indictment of free-market capitalism as the culprit in global poverty, environmental degradation, and human suffering. Supporters of markets, including many Catholics and other Christians, are steeling themselves and continue to plead with the pope to reel in what they argue is a false characterization of market economies.

We don’t yet know what the pope will say, but his remarks on the economy to date give us some indication. His writings have produced strong reactions of support from the left and opposition from those on the right who are worried he has undermined their efforts to promote the common good. Francis does not intend for his message to be so politicized; on his plane ride from Cuba to the US, he rejected the notion that it is “to the left” and insisted that his teaching “is the social doctrine of the Church.” But the friction in interpreting Francis’s application of that doctrine to his diagnosis of what ails the global economy is undoubtedly the source of frustration.

In a new paper, “Pope Francis and the Economy: Evangelii Gaudium, New Institutional Economics, and the Search for Consistency Across Disciplines,” Christopher Koopman and I unpack Pope Francis’ 2013 apostolic exhortation, Evangelii gaudium, (Joy of the Gospel), and find that this frustration is born of a much deeper problem in the world of ideas.

The problem is that we are all stuck in a neoclassical rut. The neoclassical economic model that tends to frame how we talk about economics is a sparse and sterile abstraction from real human economies. It flows from a set of artificial assumptions in which a “utility-maximizing” individual is assumed, perfect information is available to the individual, and some perfect economic equilibrium is achievable. In neoclassical thought, economic activity is not so much observed as it is conformed to a false model of the world.

The pope’s indictment of the failure of economies is in its own way a criticism of the limitations of the neoliberal framework and how that framework views human nature. Three themes that surface in Evangelii gaudium echo the insights of an increasingly relevant economic school, called new institutional economics. The themes are:

  • the mistaken reduction of man to an abstract consumer;
  • a failure to recognize that the values that motivate and inform human action in society will be reflected in the economy; and
  • the false ideology of “economism,” or economics as salvation, which assumes economics is fully explanatory of human behavior.

We can build a bridge between these themes and Francis’s social critiques. New institutional economics offers a reform of neoclassical economics by allowing it “to come to grips and deal with a whole range of issues heretofore beyond its ken,” wrote Douglass North, Nobel Laureate and founder of the school of thought. New institutional economics improves upon neoclassical economics by keeping the principles of scarcity and competition, rejecting the models of perfect information and equilibrium, and adding the critical idea that “institutions matter.” It is economics as if it had to do with real human beings operating in the real world.

The emphasis on institutions is where new institutional economics has the most to contribute to the social thought of Pope Francis. Institutions are the formal and informal “rules of the game”—the values, cultures, norms, rules, constitutions, and laws in which human beings make decisions. An economic school that understands the importance of institutions allows economists to answer the questions that appear to be foremost in the mind of Pope Francis: Why do we observe great wealth and grinding poverty in the same city?  What explains the terrible poverty in nations rich in natural resources and human capital, such as Argentina, Brazil, and India? Why is it that the same economic system the pope attacks for producing greed and ignoring the poor is in fact responsible for dramatic declines in global poverty?

A close reading of Evangelii gaudium, and indeed earlier papal writings, seems to begin at the same point as new institutional economics. Both center on the role of individual action, rooted in the individual’s beliefs, in advancing or preventing the emergence of a peaceful social and economic order. The choices we make and the way we act matter. Our choices go on to form the fabric of human society and the institutions under which we are governed. A society that culturally sanctions theft or nepotism will likely find itself governed under institutions that produce unjust economic outcomes. As Catholic theologian, economist, and Vatican advisor Fr. Martin Schlag has said, “The market is something fragile. It’s something which isn’t just an economic fact . . . but it is an ethical and cultural achievement which needs laws and needs ethics, and needs culture.”

The pope rightly reminds us that we should never be satisfied with the existing social order or indifferent to the needs of the most vulnerable. The remedy proposed by Pope Francis is to live the gospel—to be your brother’s keeper—in all facets of life, whether you are a CEO, financier, politician, employer, or employee. It is only in doing so that social bonds are transformed and a just order may emerge.

  • ladykrystyna

    Very interesting. My feeling is that the words that this Pope uses do not appear to explain it the way you do. I’m all for “moral capitalism”. That is, capitalism practiced by moral people. I think the two go hand in hand, like Adams said of our Constitution – it was made for a moral and religious people. I think capitalism is the same. That is why civil society is so important, why religion is so important, especially Judeo Christian values.

    But this Pope seems incapable of actually relating that. He’s not a very good communicator. It may be a language problem. He speaks in one language and then it has to be translated and some things never really get translated right. Like the Polish idioms my mother uses. LOL. Something gets lost in the translation.

    But his emphasis on climate change is also a problem for me. If he left out those words and merely spoke of being good stewards, that would be fine with me. But using the word and pushing what is ultimately a leftist agenda drives me nuts. The Left is narcissistic and thinks it’s on the right side of history. It does no good to feed that ego.

    And he’s not forceful enough on abortion and marriage and religious liberty. He said some words to day, but they are too vague and not forceful enough. Especially with what’s been going on in this country re abortion (the Planned Parenthood videos), and marriage and religious liberty.

    And even more so – the persecution (including murder and torture) of Christians and other non-Muslims.

    He seems to have the leftist view that if we just talk nice to them and do nice things for them, all will be well. They don’t work like that and they don’t think like that.

    We are at a time when we need more leaders like Reagan, Thatcher and Saint John Paul II. That’s not what we’re getting and it shows in the chaos around the world.

    Thanks for the article!

  • Sharkey

    Your explanation ignores the effect of government regulation and control of enterprise that is the real culprit of poverty. Why is there poor in a out cities because the government institutions promote it by paying people to be poor. We need to stop telling them that they are failures and need the government to support them.

    Second, big business and big government are two heads of the same serpent. They feed off each other through campaign donations and government regulations that protect the big business at the expense of the entrepreneur.

    Third, there is no account for individual responsibility. We have made so many excuses for why people are stuck in poverty. Government and society has set up this notion that is always someone else’s fault. In a country like the United States that is not acceptable. We are all where we are based on our own decisions. In the case of many third world countries it is because of oppressive governments.

    It is time we stop talking about institutional economics and start focusing on the the real problem, big intrusive government, the do gooders that work in government, and the big money partners that keep them in power.

    • Eileen Norcross

      Thanks for your comment. Institutions are “the rules of the game” which include regulations, laws, constitutions, policies, and cultural attitudes. Institutional economics basically says it’s important to understand how these things affect markets. Our paper gets into why these matter and are responsible for producing societies where markets don’t function very well due to regulations, weak cultural support for enterprise, or special favors granted to corporations due to lobbying.

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