The Pope & the Market

Pope Francis
Pope Francis; drawing by James Ferguson

Pope Francis’s encyclical on the environment and capitalism, Laudato Si’, is an eloquent description of the natural world and its relationship to human societies.1 An appreciation of its poetic and epic qualities is completely absent from secondhand accounts, most of which are devoted to explaining why the pope got it right (about climate science) or wrong (about climate science). In reading the encyclical, one senses the struggle of an ancient institution, immersed in its doctrine and history, slowly and incompletely adapting to modern science. Most commentaries have focused on the pope’s endorsement of climate science, but my focus here is primarily on the social sciences, particularly economics.

My major point is that the encyclical overlooks the central part that markets, particularly market-based environmental policies such as carbon pricing, must play if countries are to make substantial progress in slowing global warming.

Laudato Si’ is a document that draws on the traditions of the Catholic Church and Catholic doctrine. Its quotations and references are virtually entirely to pronouncements of earlier popes or others in the church hierarchy. There are a few references to secular environmental documents, such as the UN Framework Convention on Climate Change (1992), as well as to a handful of Catholic philosophers such as Teilhard de Chardin, but no references to any scientific studies. Similarly, there is much discussion about economics, finance, and inequality, but no citations of any data or sources.

I will not attempt to reconcile the economic doctrines in Laudato Si’ with earlier statements, such as in Compendium of the Social Doctrine of the Church (2004). Rather, I will focus primarily on the economic analysis, starting with its general position toward the goals and means of the globalized market economy, and then discussing the views on environmental economics and policy.

Laudato Si’ contains an extensive discussion of the features of markets and modern capitalism. It emphasizes certain dysfunctional tendencies and distortions. For example, there is criticism of excessive consumption:

Since the market tends to promote extreme consumerism in an effort to sell its products, people can easily get caught up in a whirlwind of needless buying and spending. Compulsive consumerism is one example of how the techno-economic paradigm affects individuals. [Paragraph 203]

And of the distorting effect of profits:

Once more, we need to reject a magical conception of the market, which would suggest that problems can be solved simply by an increase in the profits of companies or individuals. Is it realistic to hope that those who are obsessed with maximizing profits will stop to reflect on the environmental damage which they will leave behind for future generations? [Paragraph 190]

Another statement, which argues that profit-seeking is the source of environmental degradation, is this:

The principle of the maximization of profits, frequently isolated from other considerations, reflects a misunderstanding of the very concept of the economy. As long as production is increased, little concern is given…

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