Free markets without solidarity - denounced in Francis new encyclical Fratelli Tutti. Should we institutionalize solidarity?

[arvo]

Yesterday Holy Father Francis signed his third encyclical Fratelli Tutti and today it was published on the vatican.va web site:
http://www.vatican.va/content/franc...ncesco_20201003_enciclica-fratelli-tutti.html

Free markets without solidarity are denounced again:

1. Some people are born into economically stable families, receive a fine education, grow up well nourished, or naturally possess great talent. They will certainly not need a proactive state; they need only claim their freedom. Yet the same rule clearly does not apply to a disabled person, to someone born in dire poverty, to those lacking a good education and with little access to adequate health care. If a society is governed primarily by the criteria of market freedom and efficiency, there is no place for such persons, and fraternity will remain just another vague ideal

The right of some to free enterprise or market freedom cannot supersede the rights of peoples and the dignity of the poor, or, for that matter, respect for the natural environment, for “if we make something our own, it is only to administer it for the good of all”.

1. The marketplace, by itself, cannot resolve every problem, however much we are asked to believe this dogma of neoliberal faith. Whatever the challenge, this impoverished and repetitive school of thought always offers the same recipes. Neoliberalism simply reproduces itself by resorting to the magic theories of “spillover” or “trickle” – without using the name – as the only solution to societal problems. There is little appreciation of the fact that the alleged “spillover” does not resolve the inequality that gives rise to new forms of violence threatening the fabric of society. It is imperative to have a proactive economic policy directed at “promoting an economy that favours productive diversity and business creativity”[140] and makes it possible for jobs to be created and not cut. Financial speculation fundamentally aimed at quick profit continues to wreak havoc. Indeed, “without internal forms of solidarity and mutual trust, the market cannot completely fulfil its proper economic function. And today this trust has ceased to exist”.[141] The story did not end the way it was meant to, and the dogmatic formulae of prevailing economic theory proved not to be infallible. The fragility of world systems in the face of the pandemic has demonstrated that not everything can be resolved by market freedom. It has also shown that, in addition to recovering a sound political life that is not subject to the dictates of finance, “we must put human dignity back at the centre and on that pillar build the alternative social structures we need”.[142]

 

[arvo]

…continued with questions for discernment:

Questions for discernment:

• should the charity and solidarity be written into laws? Should more just taxation, more social support, more access to healthcare and education and integral human growth, should the dignity to work and the just wage that supports the autonomy and subsidiarity of human persons and familities - should all this be written into law and supported by according federal, governmental and municipal institutions. Or should we allow the completely free markets and hope that non-governmental organizations take care of all the social issues, of all the charity and solidarity and common good? Should it be so, that the abortion and prohibition of the LGBT agend should be written into law and that the solidarity, charity, common good, autonomy of persons and families and subsidiarity (material preconditions for it) should be kept outside the law and institutions?
• how do the Republicans and Democrats, Trump or Biden adhere to the principles of solidarity, charity, common good and subsidiarity? How their policies and deed adhere to those principles.
• is the following paragraph the justification for the introduction of the Universal Basic Income in the whole world:

A truly human and fraternal society will be capable of ensuring in an efficient and stable way that each of its members is accompanied at every stage of life. Not only by providing for their basic needs, but by enabling them to give the best of themselves, even though their performance may be less than optimum, their pace slow or their efficiency limited.

Here is the discussion about Universal Unconditional Basic Income (Dividend): Universal/Unconditional Basic Income - European Commission starts collection of signatures

 

[Annie]

In the US, businesses get a tax break for hiring disabled people.

 

[adamhovey1988]

I’m pretty conservative, and I don’t see a problem with this.

Financial speculation fundamentally aimed at quick profit continues to wreak havoc.

I have stocks, and I can attest to that one

The story did not end the way it was meant to, and the dogmatic formulae of prevailing economic theory proved not to be infallible

Again, this rings true.

. It has also shown that, in addition to recovering a sound political life that is not subject to the dictates of finance, “we must put human dignity back at the centre and on that pillar build the alternative social structures we need”

No problem with that.

 

[Socrates92]

arvo:

Financial speculation fundamentally aimed at quick profit continues to wreak havoc.

I have stocks, and I can attest to that one

Stock market volatility is more a function of the political uncertainty due to how contingent it is on federal bailouts. In a normal free market, speculation actually serves to reduce overall risk and volatility by putting a price on the risk that is inherent. It is economically very similar to insurance. The current stock market does not fit the free market bill.

 

[Genesis315]

None of this new, really. Pius XI’s Quadragesimo Anno goes into much more detail on the individual and social aspects of private ownership and public authority’s role in ensuring ownership is in accord with the common good and social justice. The key takeaway is the liberal idea of the free market without public authority ordering it toward the common good is contrary to right order since public authority and society itself exist to seek and serve said common good. Public authority can determine certain duties and limits with regard to its use that help ensure a fair and just distribution. On the other hand, the state cannot abolish private property, or simply take from the rich and give to the poor to make them more equal (this is different than social insurance programs that are at the potential service of all).

49.It follows from what We have termed the individual and at the same time social character of ownership, that men must consider in this matter not only their own advantage but also the common good. To define these duties in detail when necessity requires and the natural law has not done so, is the function of those in charge of the State. Therefore, public authority, under the guiding light always of the natural and divine law, can determine more accurately upon consideration of the true requirements of the common good, what is permitted and what is not permitted to owners in the use of their property. … Yet when the State brings private ownership into harmony with the needs of the common good, it does not commit a hostile act against private owners but rather does them a friendly service; for it thereby effectively prevents the private possession of goods, which the Author of nature in His most wise providence ordained for the support of human life, from causing intolerable evils and thus rushing to its own destruction; it does not destroy private possessions, but safeguards them; and it does not weaken private property rights, but strengthens them.
…
57.But not every distribution among human beings of property and wealth is of a character to attain either completely or to a satisfactory degree of perfection the end which God intends. Therefore, the riches that economic-social developments constantly increase ought to be so distributed among individual persons and classes that the common advantage of all, which Leo XIII had praised, will be safeguarded; in other words, that the common good of all society will be kept inviolate. By this law of social justice, one class is forbidden to exclude the other from sharing in the benefits.

This is the “economy of exclusion” the current Holy Father often warns about.

 

[christofirst]

I think the Pope’s teaching verifies the need for sensible government oversight and regulation of the financial sector. I’m thinking of bills like the Dodd-Frank Wall Street Reform and Consumer Protection Act.

To ensure a more equitable balance of power between labor and management, I think bills like the PRO Act, Protecting the Right to Organize, which recently passed in the House of Representatives, is also a good idea, and supported, I believe, by the Holy Father’s teaching. Organized labor is an excellent example of solidarity put into practice, and should be encouraged, and not suppressed.

 

[Genesis315]

Just to add, I am undecided if UBI can actually be considered just. There is a form of justice called distributive, which the Catholic Encyclopedia describes as follows:

When it imposes taxes, military service, or other burdens; when it distributes rewards, offices, and honours; when it metes out condign punishment for offenses, it is bound to do so according to the various merits and resources of the persons concerned; otherwise the State will sin against that special kind of justice which is called distributive.

Paying all the same amount from tax revenue (regardless of merit or need) seems to violate this. Some distributions would necessarily be unjust. It seems to me a social insurance program based on need is more just in that regard.

St. Thomas says the following on distributive justice:

On the second place there is the order of the whole towards the parts, to which corresponds the order of that which belongs to the community in relation to each single person. This order is directed by distributive justice, which distributes common goods proportionately.

I could see a situation, like certain middle eastern countries, where it makes sense for say, the oil industry to be owned and operated communally by public authority (cf. Quadragesimo Anno 114 which notes situations where this is rightly done) and the income from it is paid to the members of the community. Even then though an equal distribution is not a proportionate distribution necessarily, as it does not seem to take into account either merit or resources.

Plus, there is the principle in Scripture that if a man not work, neither let him eat. This of course does not apply to those who cannot work or mean that labor is the sole title to income, but rather someone should be denied if they refuse to work (cf. QA 57). UBI would not take this into account, not to mention paying someone with plenty of resources who refused to work. UBI would not serve the common good in such a case.

 

[Hodos]

Reading this encyclical there are number of logical errors. The first being that the recent economic downturn was being characterized as the shortcoming of free markets, when the opposite is actually true. The recent economic downturn was actually the result of government intervention into free markets, forcibly shutting them down for extended periods of time as a response to coronavirus. Quite frankly it represents an instance of straying from one’s lane.

 

[Genesis315]

Reading this encyclical there are number of logical errors. The first being that the recent economic downturn was being characterized as the shortcoming of free markets, when the opposite is actually true. The recent economic downturn was actually the result of government intervention into free markets, forcibly shutting them down for extended periods of time as a response to coronavirus. Quite frankly it represents an instance of straying from one’s lane.

The general principle rooted in the natural law is that the market cannot be sovereign. Public authority exists to serve the common good and therefore is ultimately responsible for ensuring the market serves the common good, including a just and equitable distribution of resources (all of which were created by God to sustain all people). Liberalism denies this.

Surely different circumstance will require more or less activity from public authority in this regard and so ultimately what is appropriate in a given situation is a political question. Without making it some kind of irreformable dogma, there’s nothing wrong with a difference of opinions as to what the best course is in a given situation. Politics at its best is about about sifting and testing different ideas as to what best serves a commonly sought good in light of concrete circumstances. Pope Francis, to his credit, says he is merely offering his contribution to that discussion in light of Christian principles.

And to be fair, whether they were ultimately effective or not, the intended point of the pandemic lockdowns was not a narrow concern with maximizing wealth–they had in view a larger conception of the common good including life and health. And to use the Pope’s words, places with policies “promoting an economy that favours productive diversity and business creativity” were able to weather the social restrictions and disruptions to supply chains–especially foreign supply chains–better.

You might argue that the free market does promote such creativity and diversity. But the truth is, it can’t do this on its own. Free competition almost always leads to some growing stronger, others weaker, and then the strong more and more dominating the weak. This is not Christian. Earlier last century (and beginning later in the century prior), where it was tried, this is exactly what happened, and not only did the benefits not trickle down, the so-called free market without the necessary restraint or direction naturally became a kind of economic dictatorship or oligarchy with an undue influence on society as a whole. It’s not hard to see certain corporations heading that way today. Public authority needs to intervene or at least be ready or equipped to intervene to ensure the market remains open to and at the service of all.

 

[Hodos]

Again though, if you read the encyclical he makes an absolute mess of the economics he is discussing. He constantly confuses attributes of command economies with attributes of free market economies while trying to make a recommendation for one over the other. It especially strange when market economies have delivered far more affluence and raised people out of mere subsistence than at any other point in human history. I have no issue with him trying to address principles of charity and loving one’s neighbor, but even there I don’t think he understands the full ramifications of what he is saying while trying to prescribe guidelines for economic policy. He would do well to address the issues of secularism making its way into the Church rather than prescribe to the civil authorities how they should manage their economies. He has far more influence over that issue and can offer concrete recommendations rather than dabbling in a subject he is not an expert in. Just my opinion.