March 13 (Bloomberg) -- As Jorge Mario Bergoglio of Argentina, now known as Francis I, assumes leadership for the world’s 1.2 billion Catholics, we won’t presume to tell him how to think on matters religious. But for the sake of world markets, we hope the new pope will act in the best tradition of Catholic economic thought.
Ideally, that means recognizing the value of free markets and free economies, and realizing that work and trade endow humans with not just wealth but also dignity and freedom. It also means understanding the dangers posed by excessive inequality, the outsize burdens that technological advances and environmental degradation will impose on the poor, and the responsibility of the rich to help the underprivileged navigate a turbulent economic transition.
Most important, as more and more economic activity -- from finance to manufacturing to medicine -- is done by algorithms and robots, we hope the new pope will be able to communicate the church’s longstanding assertion that economics, to be moral, must be grounded in concern for the individual.
Since Pope Leo XIII issued the encyclical “Rerum Novarum” in 1891, Catholic social teaching has focused on ways to impose moral order on economic activity and to mitigate the worst effects of unrestrained commerce on the poor. The concern for the individual -- and especially for those left behind -- has been perhaps its most insistent theme.
Pope John Paul II’s landmark “Centesimus Annus” in 1991 extended this concern with the individual into the “complex network of relationships” that make up modern economies. He argued that a just society “is not directed against the market, but demands that the market be appropriately controlled by the forces of society and by the state so as to guarantee that the basic needs of the whole of society are satisfied.”
Pope Benedict XVI’s contribution to this tradition, “Caritas in Veritate,” was cryptic in some respects, but he was quite clear that “Every economic decision has a moral consequence” and that “The market is not, and must not become, the place where the strong subdue the weak.”
Beyond his words, Benedict’s actions as pope were consistent with a moral economic framework (his grievous lapses elsewhere notwithstanding). He argued correctly that the roots of the financial crisis were human greed and malfeasance, not a flaw per se in the structure of capitalism. He also exuded a consistent concern that climate change -- born of unbridled consumption by rich nations -- will overwhelmingly affect the poor, and he sought to turn Vatican City into the world’s only carbon-neutral state.
Francis I will have to grapple with the same issues, and plenty more. The temptations of unrestrained capitalism will surely reawaken as the financial crisis ebbs. Environmental degradation will probably accelerate. And the poor will always be with us. Perhaps the greatest challenge for a putative steward of moral economics in the next few decades, however, will be technology.
The coming revolution in robotics and automation, as we’ve argued, could cause immense disruption for the world’s workers, including wage stagnation, increased unemployment, growing inequality, and the painful alienation that comes with finding your skills obsolete or your job replaced by a machine. Imposing an ethical framework on this new world will require the kind of flexible thinking that hasn’t always come naturally to the Vatican. Serious work by the Pontifical Academy of Sciences on the moral implications of artificial intelligence, drones and other worrisome phenomena of the digital age would be an excellent start.
Of course, good economics should start at home. The next pope has his work cut out for him there, too. The Vatican bureaucracy has by many accounts grown too sprawling to effectively manage, and many dioceses are still reeling from the financial fallout of sexual-abuse lawsuits. Benedict made progress toward reforming the Institute for Works of Religion, better known as the Vatican bank, by replacing its president, creating a financial-intelligence unit and agreeing to some outside scrutiny. But the idiosyncratic institution still has a ways to go before it will be comfortably within international banking norms on transparency and money laundering.
And there are plenty of economic views the Vatican has expressed over the years that we would disagree with -- for instance, its call for a global finance authority, a tax on financial transactions and a degree of government redistribution that we would consider unwise.
Even so, it’s critical to have a powerful voice in the world arguing for anchoring economics to morality, both from the Chair of St. Peter and in the 220,000 Catholic parishes around the world. Whether one believes in God or not, that voice should serve as a reminder that markets, in the end, are collections of people. And that an economic system untethered by ethical consideration or concern for those left behind will be unstable, dangerous and ultimately counterproductive.
Francis I, we wish you luck.
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