The Pope's Medieval Economics

Pope Benedict XVI, in a new book scheduled to be published next month, condemns the West for exploiting the Third World. News reports about the book -- called Jesus of Nazareth and excerpted earlier this week in the Italian newspaper Corriere Della Sera (which happens to be owned by Rizzoli, the publishers of the book) -- do not indicate whether the pontiff similarly condemns the rulers of Third World countries for their kleptocratic practices that serve to keep their subjects in poverty while the government elites party like the wealthy title character in the parable of the Rich Man and Lazarus.

Somehow I doubt he does, since -- whatever the Pope's merits as a theologian and rhetorician, which are considerable -- he lacks an understanding of basic economics. In fact, given what I have seen (again, based just on news reports), his views on economics are positively medieval, offering a sense that economics is a zero-sum game. That is to say, he seems to think that some people are rich because other people are poor. (All I can conclude from this is that Benedict somehow missed studying anything on economics written since before the Spanish Scholastics were around.)

Here is one quotation from the book that Reuters chose to illustrate Benedict's thought:

"If we apply it [the parable of the Good Samaritan] to the dimensions of globalised society today, we see how the populations of Africa have been plundered and sacked and this concerns us intimately," the Pope says in his book, which comes out on April 16, his 80th birthday.

He drew a link between the lifestyle of people in the developed world and the dire conditions of people in Africa.

Oddly enough, Reuters correspondent Philip Pullella refers to Jesus of Nazareth as Pope Benedict's "first book," when the Pope is, in fact, a prolific author. (A quick Amazon.com search results in 93 entries in which the Pope -- under his previous name, Joseph Ratzinger -- is listed as author. Even discounting those books in which he contributed only a chapter or a preface, Ratzinger's books as sole or primary author number in the dozens.)

Enough digression. What is particularly surprising and disappointing about the excerpt that appeared in the Italian press is that the German-born Pope appears to refer approvingly to the sociological analysis of Karl Marx, the father of modern Communism. According to EarthTimes,

Pope Benedict XVI draws from Karl Marx's theory of alienation in his forthcoming book on Jesus Christ to illustrate his point that the biblical parable of the Good Samaritan is still relevant today. The reference to the 19th-Century German philosopher and founder of modern communism is found in chapter seven of Jesus of Nazareth, extracts of which were published Wednesday by Italian daily Corriere della Sera.

"Karl Marx describes man's alienation in a drastic way; although by limiting his reasoning to the material sphere he fails to reach the true depths of alienation, he nevertheless provides a clear image of the man who falls victim to the robbers," Joseph Ratzinger writes....

"Is it not true that man ... during the full course of his history, finds himself alienated, mangled, abused?" the pope writes.

At least the Pope tries to distance himself a bit from Marx; still, it is jarring to see the progenitor of Stalin, Mao, and Pol Pot quoted in a papal document in anything other than terms of anathema.

The Catholic Church's skewed views on liberal economics are not new. While I was digging through some old files earlier this week, I came across an article of mine that was published precisely 20 years ago today.

At the time I was living in London, going to graduate school by day and attending as many plays and musicals as I could (using my substantial student discount for tickets) at night. Because the British university system is not quite so rigid in terms of requirements as is its American equivalent, this left me much time for pleasure reading. In ten months, I read dozens of books, many of which had little or anything to do with my studies.

One of those books, which turned out to have a profound effect on my political philosophy, was Jane Jacobs' Cities and the Wealth of Nations. (I often say that the two writers who were most responsible for making me realize I was a libertarian were Jacobs and Charles Murray.) A Vatican statement on global economics provided the news hook I needed to write a brief review of Jacobs' book. It was published in the New York City Tribune, a now-defunct sister publication to the Washington Times, on April 7, 1987 (coincidentally my 28th birthday).

I wrote a lot for the New York City Tribune that year I was abroad, averaging about one article or book review per week for several months, all without benefit of email or even a computer; the checks I received were the pocket money I needed to continue enjoying London as an impoverished student. (Food or theatre? Food or theatre? The answer was always clear.)

Here is that article, which I was surprised to find is still fresh and applicable today; I can identify a few phrases I might reword, but nothing I wince at after two decades:

The Hidden Causes of Third World Poverty
Richard Sincere

LONDON – The Vatican has issued, through the Pontifical Commission on Justice and Peace, an 8,000-word statement on the international debt crisis. “Political officials and economists, social and religious leaders, as well as public opinion throughout the world,” it begins, “recognize the fact that the debt levels of the developing countries constitute a serious, urgent, and complex problem due to their social, economic, and political repercussions.” That is VaticanSpeak for: Third World debt levels are precipitating a crisis of unprecedented proportions.

Average citizens in the industrialized countries of Western Europe and North America might be inclined to shrug off Third World debt as a problem, but no concern of theirs. Leaders in developing countries, they might say, made bad political and economic decisions and are now paying the consequences; it doesn’t affect us.

In fact, though, it does. As the Third World debt whirlpool swallows up capital from all over the developed world, the effects are felt in shrinking national budgets, declining industries, rising interest rates, and increasing trade deficits. For the ordinary person, it means more difficulty in purchasing a home or a car – particularly if he or she is a first-time buyer.

A unique perspective on Third World debt – indeed, on a whole range of issues regarding the world political economy – may be found in a 1984 book, Cities and the Wealth of Nations, by Jane Jacobs. The book was widely reviewed and critically acclaimed when it was first published by Random House in the United States and Canada and by Penguin in the United Kingdom.

Jacobs is respected worldwide for her research and writing on cities. Her 1961 book, The Death and Life of Great American Cities, is required reading for most students of urban planning. The secondhand department at the Economists’ Bookshop in London informs me that they get more requests for Jacobs’ The Economy of Cities (1969) than for any other out-of-print book. These observations reinforce her credibility and scholarship almost as much as the fact that she is a careful and thoughtful writer – averaging one book every seven to 10 years – as well as vibrant, witty, and commonsensical.

Cities and the Wealth of Nations begins by questioning the very structure of the world economy – its division into “nations” as distinct economic entities. They are political and military entities, but this does not mean they are also “the basic, salient entities of economic life or … the reasons for the rise and decline of wealth.” Jacobs argues that the failure of national governments and “blocs of nations” to control economic life effectively “suggests some sort of essential irrelevance.”

Political sovereignty is the only thing various nation-states really have in common, and Jacobs thinks it “affronts common sense, if nothing else, to think of units as disparate as, say, Singapore and the United States, or Ecuador and the Soviet Union, or the Netherlands and Canada, as economic common denominators.”

The basic unit of economic development, Jacobs asserts, is the city, and regions surrounding individual cities, and enlarging that unit inevitably leads to bad economic feedback and bad decision making. This problem cannot be overcome without a radical restructuring of the world economy – but the new structure must reflect free markets, attention to private enterprise, promotion of new industries, and (most important) trade among equals. That means underdeveloped Third World states should concentrate their commerce on other underdeveloped Third World states, learning “import replacement” and avoiding direct competition with the industrialized world unless and until their levels of development are more nearly equal.

Jacobs identifies what she calls “transactions of decline,” which include heavy lending to impoverished or underdeveloped areas. Such lending takes useful capital away from productive cities and sinks it into unproductive rural areas and uncreative towns and cities where it can do no good – and, indeed, often does harm. Transactions of decline like this may initially stimulate commerce and industry, but within a short while both economies – the lender’s and the borrower’s – begin to stagnate and then to decline. The downward spiral continues because policymakers, oblivious to the root causes of the decline, take more money from the pockets of productive workers and entrepreneurs and attempt to induce “development” in depressed areas at home or abroad. In the end the whole process is futile and frustrating. “Subsidies milked from cities,” notes Jacobs, are “profoundly antidevelopment transactions.”

To achieve genuine and lasting development, cities, regions, and whole countries must generate their own capital. Development must come about the old-fashioned way – you earn it.

There is no specific solution available from Jacobs’ analysis. But her arguments are worth pondering. The radical change suggested by Cities and the Wealth of Nations is precisely the opposite of the one demanded by Third World states called the New International Economic Order. Instead of authoritarianism, this change invokes free enterprise; instead of central planning, it calls for pluralism; instead of stagnation, it offers creativity and growth. If we are to solve the international debt crisis – an apparently insoluble problem – this is a good place to start

Richard Sincere is a Washington-based policy analyst who writes frequently on African affairs.

Unfortunately, I don't think anyone at the Vatican was reading the New York City Tribune in the late 1980s; at least not anyone in the Congregation for the Doctrine of the Faith was.