The ‘dark side’ of capitalism: why the Pope is highlighting inequality

Pope Francis has urged the world to avoid the greed of unchecked capitalism. Yonhap/AAP

Pope Francis has emerged as one of the most important voices on the global stage about the need for a stronger moral dimension in economic policies. This has caused some upset in business and financial circles.

Prominent US political commentator Keith Farrell responded by accusing Pope Francis of being overly influenced by Marxist ideas that “the rich have only gotten rich at the expense of the poor”.

Farrell argues that “the inequality gap simply doesn’t matter”. He wrote that “capitalism has produced unrivalled economic growth” and is “chiefly responsible for halving of world poverty rates over the past 20 years”.

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 that globally two billion people still struggle in severe poverty.

Confronting the ‘dark side’ of capitalism

Pope Francis acknowledges the progress already made to improve living standards in many countries, but is urging that priority be given to 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 millions of people.

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 Francis sees the prolonged economic depression, with unemployment at over 12%, but youth unemployment at 40%. In Europe as a whole, 25 million (11.5%) are unemployed, including 5.3 million young people (10.2%), while in Greece and Spain over 25% are unemployed, with over 55% for youth.

The reach of Catholicism

Francis repeated his strong attack on such economic inequality during his recent visit to South Korea, 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”.

Pope Francis embraces Oswald Gracias, the Archbishop of Bombay. Francis has been reaching outside Europe with his message of social responsibility. Yonhap/AAP

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”, one 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 supports for the disadvantaged. This is the sort of economy that most countries aspire to, and which we see most evident in the Scandinavian and northern European countries, but also to a lesser degree in Australia.

Religion still plays a part in Australian society, as census data reveals. The papal message of opposition to extreme capitalism may resonate in Australia. Francis rejects the neoliberal notion that the market of itself will resolve moral dilemmas and reward people appropriately, with governments playing only a very minimal role.

A moral argument for equity

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.

Moreover, as development economists well know, even countries with a relatively low Gross Domestic Income can achieve greatly improved health care, education and life expectancy with good policies, like many of those in the UN Sustainable Development Goals. They show that far from social equity being a subversive or communist notion, it can promote rapid social uplift for whole populations.

Francis insists that the current situation for millions of people 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.

Pope Francis is appealing for globalisation with a conscience. In June he praised businesses that served genuine human needs, but saw it as “intolerable” that economies were being reshaped to serve the interests of financial markets. This was accumulating immense wealth in the hands of relatively few while depriving many others of decent livelihoods.

Keith Farrell is right 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 document on environmental responsibility and sustainability now being prepared.