Orbiting Dicta

Hollow Be Thy Name: The Triumph of Capitalism

It did not require the new encyclical by Pope Benedict, Caritas in veritate, to remind us that capitalism is not an unmixed blessing.  At best it is a two-edged sword, at worst an economic compressor wielded by powerful interests that concentrates wealth in fewer and fewer hands, increases the misery of the poor, and stringently constricts the middle classes.  So much Marx and Engels insisted, but the evidence was clear even to churchmen as clear-eyed as Pope Leo XIII.

Recent events here in Ireland illustrate the point.  Liam Carroll, one property developer (among many who with risk-prone bankers brought the economy to its knees), owes the banks 2.5 billion euros and can’t pay up.  He owes a single institution, Allied Irish Banks, over one billion in unpaid loans.  Six of his companies are teetering on the edge of receivership.  Smart fellow, though.

It doesn’t take a degree in economics to recognize that the much-vaunted “trickle down effect” predicted by disciples of libertarian economist Milton Friedman back in the 1980s didn’t work.  Money trickled up.  And, it would now seem, not only in increasing amounts, but into the coffers of financial barons whose borrowing and lending practices were all too often dodgy, to say the least.  And now it has mostly leaked out.  One wonders where it all went in the end.

Friedman, who died in November 2006, luckily did not live to see the dismal outcome of his brand of economic deregulation.  As central governments throughout the EU and the US attempt to shore up the houses of cards built by property developers and bonus-loving bankers, it is refreshing to recall one of the principal tenets of the Friedman credo:

“The preservation of freedom is the protective reason for limiting and decentralizing governmental power.  But there is also a constructive reason. The great advances of civilization, whether in architecture or painting, in science or in literature, in industry or agriculture, have never come from centralized government.”

Only the New Deal, the Second War, the end of polio, the space program, and now, the effort to combat the H1N1 virus.  Had Friedman been a better historian, he would have realized that the great contributions in art during the classical period, the Middle Ages, and the Renaissance, were made possible precisely because kings, dukes, princes, popes, and bishops funded them.  Leonardo, Michelangelo, and Raphael did not set up shop in the back streets of Sorrento.  From the pyramids of Egypt to Mount Rushmore to the Hubble Space Telescope, a good case can be made out for the constructive role played by central governments, not to mention the eradication of smallpox and the struggle against AIDS.  If the next stage of the H1N1 virus is going to be addressed with any measure of success, it will not be by the local pharmacist working alone in his cellar laboratory.

Unreconstructed Friedmanian Reaganomicists will point out that socialism has not worked any better than capitalism in meeting the world’s needs and providing great art and architecture, and in fact conspicuously failed in its most aggressive forms to date.  But there is a significant difference in objectives – capitalism seeks to create more wealth for the wealthy, even in its most benign forms.  Socialism seeks to promote the general welfare, at least in its most benign forms.  Benignity aside, both seem to come to grief on the shoals of power, greed, short-sightedness, and ambition.  Again, this is hardly news.  But the surprising economic collapse of 2008 resulted  mainly, I think, because the supportive restrictions placed on restive capitalism, particularly the avarice of financial entrepreneurs and large financial institutions, were increasingly and systematically removed in the 1970s and 1980s in the interests of Big Capital.  Perhaps the greatest blunder of all in the US was the repeal in 1999 of the Glass-Steagall Act of 1933, one of the central pillars of President Franklin Roosevelt’s economic reforms and an effective bastion against robber barons for the next sixty years.  Score one for the Neocons.  But hardly the only one.

Here in Ireland, the true scope of the national economic plight was made clear by the recently unveiled McCarthy Report, a specially-commissioned proposal outlining ways to trim five billion euros from the national budget to save the country from the foolishness of brash developers and big bankers – mainly, it would seem, by cutting social services and raising taxes.  Targeting the most vulnerable members of society – children, especially impoverished children, the elderly, the chronically infirm, people with special needs – hardly seems worthy of mention in a civil, nominally Christian country.  But there it is.

Caritas in veritate came at a propitious moment.  But will anyone in the corridors of political and economic power bother to read it?