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Why Pope Francis is highlighting inequality

By: Bruce Duncan

Writing in the London online financial publication, City AM of 21 August 2014, US writer Keith Farrell accuses Pope Francis of being overly influenced by Marxist ideas that ‘the rich have only gotten rich at the expense of the poor’. Farrell argued that ‘the inequality gap simply doesn’t matter.’ ‘Capitalism has produced unrivalled economic growth’ and is ‘chiefly responsible for halving of world poverty rates over the past 20 years.’ He claimed that Pope Francis doesn’t see this, and is influenced by Argentina’s Peronism, ‘a political movement based on social justice, which advocates state redistribution of wealth.’ Farrell says that Pope Francis has departed from the anti-communist teaching of Popes John Paul II and Benedict.

What Farrell fails to acknowledge is that most of the recent global improvement in living standards is occurring in communist China, hardly a model capitalist country; that the global financial system is fragile and teetering on the edge of deeper recession; that the Global Financial Crisis stemmed from corruption at the very heart of Wall Street and the neoliberal capitalism it advocated; that income has been skewed to the wealthier ten per cent, while even in the United States the incomes of most of the population have barely improved in the last 30 years; and that globally two billion people still survive in severe poverty.

Confronting the ‘dark side’ of capitalism

Despite criticism that he is naïve or even Marxist in his thinking, Pope Francis acknowledges the great progress already made to lift living standards in many countries, but he is calling the world not to squander resources in wasteful spending but to prioritise lifting living standards for the rest of the world. He is highlighting the ‘dark side’ of our capitalist economic systems, and particularly how extreme economic inequality is harming billions of people, resulting in needless suffering and deaths.

Francis does not speak as an armchair philosopher, moralising from afar. He personally experienced the devastation in Argentina when it defaulted on its debts in 2001-02, driving half the population into poverty and crippling the country economically. Banks failed, and many people lost their life savings.

Even in Italy now Francis sees the prolonged economic depression, with unemployment at over 12 per cent, but youth unemployment at 40 per cent.  In Europe as a whole, 25 million (11.5 per cent) are unemployed, including 5.3 million young people (10.2 per cent), while in Greece and Spain over 25 per cent are unemployed, with over 55 per cent for youth. These countries have endured six years of this. How can they survive another six years of recession without extremist movements emerging, as in Greece?

Many developing countries have indeed made extraordinary progress in eradicating hunger and the worst forms of poverty, but it is still true that other countries have hundreds of millions of people in dire circumstances. It is not just between countries that the contrast between rich and poor is glaring, but even within many countries, not least in the United States itself.

Economics with heart

Francis repeated his strong attack on such economic inequality in South Korea in August 2014, where millions of people turned out to greet him. On the first day of his visit, he urged Koreans to show ‘special concern for the poor, the vulnerable and those who have no voice,’ and to be ‘leaders in the globalisation of solidarity’.

Like other Christian churches in Korea, Catholics have grown rapidly in numbers to over five million, about 11 per cent of the population. Other Christians number about 20 per cent of the population, with Buddhists 23 per cent, and the rest unaffiliated. Some 800,000 people crowded into Seoul as the Pope beatified 124 Korean martyrs. Francis urged Asian Catholic youth to build ‘a more missionary and humbler church’ that ‘loves and worships God by seeking to serve the poor, the lonely, the infirm and the marginalised.’

Francis applauds capitalist economies that offer just and reasonable outcomes for all citizens, with appropriate supports for the disadvantaged. This is the sort of economy that most countries aspire to, and which we see most evident possibly in the Scandinavian and northern European countries. Nor does Francis dispute that a moderate degree of inequality is needed if it provides incentives for people to work hard to provide for themselves and their communities.

What Francis opposes are types of capitalism that draw from neoliberal ideology, rejecting notions of social justice in the belief that the market of itself will resolve moral considerations, and reward people appropriately with governments playing only a very minimal role.
- Fr Bruce Duncan CSsR

What Francis opposes are types of capitalism that draw from neoliberal ideology, rejecting notions of social justice in the belief that the market of itself will resolve moral considerations, and reward people appropriately with governments playing only a very minimal role. Such views underlay the so-called Washington Consensus in organisations like the International Monetary Fund earlier on, urging lower taxes for upper income groups, deregulation in industry, privatisation of public assets, promoting free trade agreements, downsizing work forces and advocating wage flexibility (decreasing wages).

Moral argument for equity

Even in Australia, we are all confronted by the enormous gap between the wealthy and the very poor, especially our Indigenous peoples. And any reasonable person who has travelled in developing countries cannot fail to be struck by our comparative affluence on returning to Australia.

Francis is appalled that so many people are still barely surviving in many countries when the world has such unprecedented wealth and could do much more to lift the living standards of poorer populations with better policies and a sound moral compass.

Moreover, as development economists like Michael Todaro well know, even countries with a relatively low Gross Domestic Income can achieve greatly improved health care, education and life expectancy with well designed policies, as in Kerala, Sri Lanka and even Cuba. Sensible policies, such as many of those embraced in the UN Sustainable Development Goals, show that far from social equity being a subversive, communist notion, it can be a key opening the door to rapid social uplift for whole populations.

Speaking for the great numbers of people struggling to survive, Francis insists that their current situation is fiercely unjust and needs to change radically. He is not calling for violent revolution of course, but he fears such outcomes unless improved economics produce more viable outcomes for those in severe poverty. He repeatedly calls on the many people in business, finance and governments who are genuinely concerned about social justice to help develop more equitable policies.

Critique of neoliberalism

Undoubtedly Pope Francis is aware that he is challenging some of the most important centres of economic and political power. He is not against all the processes of globalisation, but appeals for globalisation with a conscience. To this end, many prominent economists and business people, including Joseph Stiglitz, Jeffrey Sachs, Muhammad Yunus and even the Governor of the Bank of England, Mark Carney, have been involved in discussions with the Pontifical Council for Justice and Peace or the Pontifical Academy of Social Sciences discussing the need for more equitable economic policies.

Undoubtedly Pope Francis is aware that he is challenging some of the most important centres of economic and political power. He is not against all the processes of globalisation, but appeals for globalisation with a conscience.
- Fr Bruce Duncan CSsR

The neoliberal ideology undermining ethical standards in business and finance has been vigorously promoted by right-wing think tanks and financial interests, with extravagant funding of many hundreds of millions of dollars from the late 1970s. In the view of leading economists like Stiglitz and Sachs, powerful sectional interests were able to reshape economic systems in a way that greatly increased their wealth and global power, even against major industrial nations.

Stiglitz criticised economists for their subservience to special interest groups, especially the financial markets. He said in his 2010 book, Freefall, that the management of globalisation had been appalling, and seemed like ‘a pact with the devil’. The discipline of economics itself was in crisis, because of the ‘moral deficit’ exposed by the unrelenting pursuit of profits and self-interest. In his 2012 book, The Price of Inequality, he warned that the phenomenal wealth of a tiny minority of people at the expense of the bulk of the population was undermining social stability, even in the United States.

One of the architects of the Millennium Development Goals, Jeffrey Sachs wrote in The Price of Civilization that ‘Globalization unleashed vast corporate power and undermined whole regions’. He denied that the so-called ‘trickle-down’ theory was working, as more than 80 per cent of Americans were worse off than decades before.

Equity matters

Francis on 16 June praised businesses that served genuine human needs, but said it as 'intolerable' that economies were being reshaped to serve the interests of financial markets, accumulating immense wealth in the hands of relatively few while depriving so many others decent livelihoods.

Keith Farrell is right on this point at least, that the Pope thinks some financial interests have exploited the poor, but who can credibly deny it? We can expect to hear more from Pope Francis along these lines, especially in a new social document on environmental responsibility and sustainability currently being prepared.

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• Fr Bruce Duncan CSsR is one of the founders of the advocacy group, Social Policy Connections, and Director of the new Yarra Institute for Religion and Social Policy, based at Yarra Theological Union in Melbourne