Did the Pope attack ‘unfettered capitalism’?

Pope_FrancisBy Robert Romano

Did Pope Francis really lay a broadside into what he called “unfettered capitalism”?

That is certainly what headline writers the world over would have you believe. Well, at least the ones that picked up Reuters’ account of the Pope’s new apostolic exhortation, “The Joy of the Gospel,” a news story that was then syndicated globally.

“Pope Francis attacked unfettered capitalism as ‘a new tyranny,’” reads the lead of the Reuters story by Naomi O’Leary describing Francis’ work.

This led to the propagation of headlines such as by NBC: “Pope Francis attacks ‘tyranny’ of unfettered capitalism”. Or by the Daily Kos: “Pope Francis: Unfettered Capitalism Is ‘Tyranny’”. Or by the Nation: “The Pope Versus Unfettered Capitalism”.  Or by Bill Moyers: “Pope Francis Calls Unfettered Capitalism ‘Tyranny’”.

Even the Wiki warriors posting on Wikipedia fell for it, apparently forgetting to cite a primary source, writing under the “Capitalism” entry, “Pope Francis described unfettered capitalism as ‘a new tyranny.’”

So prevalent were the headlines, they even convinced conservative talk show host Rush Limbaugh that the pontiff had actually written it. “This is just pure Marxism coming out of the mouth of the Pope.  Unfettered capitalism?  That doesn’t exist anywhere.  Unfettered capitalism is a liberal socialist phrase to describe the United States.  Unfettered, unregulated,” Limbaugh told his millions of listeners.

And he might have been right.

There is, however, one acute problem with the quote. Francis never actually wrote that. Naomi O’Leary did. Search the document for yourself and search for the words, either “unfettered” or “capitalism.” They’re not there.

The actual phrase “unfettered capitalism,” ironically, was apparently coined in 1942 by economist Joseph Schumpeter, himself a critic of communism — he even had a chapter entitled “The Dictatorship of the Proletariat.” An even greater irony is that the phrase has since been adopted by various socialist and Marxist writers as a pejorative against capitalism’s supposed excesses.

But before returning to Francis, let us pause on Schumpeter for a moment, for it was he who famously argued that capitalism, after raising standards of living in a way no other system had ever before in history, would eventually fall, but not through violent uprising.

Instead, it would succumb as a victim of its own success that “undermines the social institutions which protect it.” That, through the passage of time it would morph into what he termed a “corporative state.” It would become “bureaucratized,” and since the system “by its very achievements, tends to automatize progress, we conclude that it tends to make itself superfluous — to break to pieces under the pressure of its own success.” It would give way, he wrote, to socialism.

The entrepreneurs would be replaced by bureaucrats, and then, when the daggers came out and government stepped in to take over, those very bureaucrats would simply surrender.

Just look, he wrote, at the manner in which these “capitalist interests… as a whole behave when facing direct attack. They talk and plead — or hire people to do it for them; they snatch at every chance of compromise; they are ever ready to give in; they never put up a fight under the flag of their own ideals and interests.”

In short, it “absorbs the slogans of current radicalism and seems quite willing to undergo a process of conversion to a creed hostile to its very existence. Haltingly and grudgingly it concedes in part the implications of that creed.”

One need look no further than the experience of 2008 through 2010, the bank bailouts, the seizure of AIG, the conservatorship of Fannie Mae and Freddie Mac, the government purchase of GM and Chrysler, the Federal Reserve’s quantitative easing programs, and then Obamacare, the takeover of the student loan industry, and Dodd-Frank’s financial regulations to conclude that Schumpeter at least in this narrow regard was indeed prophetic, even if he would have quibbled with the idea he was making any sort of prediction.

These were all episodes in a very short span of very big businesses — and their supposed representatives in government on the right side of the political spectrum — seemingly ceding their own interests, making way for unbridled state control of whole industries, and even going as far in some cases as to argue in favor of it.

This societal transformation, a revolution to be sure and still ongoing, is being achieved without firing a shot.

Which brings us back to what Pope Francis actually wrote. He criticized those who “assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world.”

Here, Francis’ discussion of the so-called “free market” is very much misplaced. For, nobody paying any level of attention can look at our current system and call it a “free market.”

The housing bubble that brought about the current recession is a case in point, where government-directed finance to achieve self-styled “affordable housing goals” found its way to millions of borrowers who it turned out could not afford the homes they were purchasing. Trillions of dollars flowed from the Government Sponsored Enterprises Fannie Mae and Freddie Mac, driving the market with little more than a printing press.

This was no “autonomy of the marketplace,” or simply “financial speculation,” as Francis described. It was an asset bubble the likes of which had never been seen in economic history, and without government-created debt — without the backing of the federal government — it would never have been possible. Never.

Francis is right that there is a “crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system,” which he called “a new tyranny.”  But Francis’ critique really should lay at the feet of the corporatists Schumpeter described, and the central planners they have long since surrendered to.

For it is they who bear responsibility for the consequences of their own policies, including those who now suffer under them. Francis accurately described the “masses of people [who] find themselves excluded and marginalized: without work, without possibilities, without any means of escape… the outcast, the ‘leftovers’” living under what he called “a globalization of indifference.”

Observe high youth unemployment throughout Europe and rising here, too, to get an idea who he is talking about. Those being excluded from opportunity today, an entire generation, are no figment. This is a real problem.

Overall, Francis is pointing to the rot of the system that Schumpeter had 71 years ago foreseen.

But, no one should be confused that the rot is a “free market” phenomenon, when instead it is the corrosion caused by decades of central-planning and in particular government-directed credit creation.

This is the necessary destruction brought about when government, not markets composed of individuals acting in their own self-interest, makes such sweeping economic decisions.

Robert Romano is the senior editor of Americans for Limited Government.

This article has 29 comments
  • TMLutas 04.12.2013 10:34 AM

    Capitalism is not, properly speaking, a totalitarian system. It requires a separate moral system, a guide to provide purpose to all the buying and selling. It can fit to a wide variety of moral systems which is a good reason that capitalism ends up being global.

    Capitalism’s limits to economic acts create a space for morality to survive and thrive and are natural fetters to the system. These are the fetters that would interest a churchman. Unfettered or unregulated capitalism is totalitarian. If you’re worshipping mammon. If you find value only in your bank account, if there is no other system that informs your purchases and your production, then you have a serious problem. The fetters of government regulation in the economic sphere are irrelevant to Pope Francis because he’s not a politician and not an economist. He has a different scope for his job and vocation.

    This is a virtue problem and one that has real world, practical effects. The difference in the education levels in virtue in the American colonies at the start of its revolution and Bourbon France at the start of its revolution are a major factor in why the former succeeded and the latter was ultimately a failure that died in the terror.

    Pope Francis’ gig is ultimately to inculcate virtue and prepare us for Heaven. Occasionally this means he falls into the jargon of his profession which, like all professional jargon, is sometimes confusing because in different professions, the terms have different meanings.

  • Frick 04.12.2013 12:35 PM

    O’Leary needs to have her journalism license pulled. She is just another lying journalist. The US is full of em!!!

  • RMorrow 04.12.2013 12:56 PM

    Without Capitalism, there is no American dream. With socialism, you have Government Tyranny and we have plenty of evil in the White House.

  • David Burton 04.12.2013 1:43 PM

    You are technically correct regarding the Pope not using the term “unfettered capitalism” but what the Pope wrote is certainly an uninformed attack on free markets that incorporates conventional left-wing rhetoric. Search on “market” rather than “capitalism” in the document and you see the basis of the press coverage.

    The following is a direct quote:

    “Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless. As a consequence, masses of people find themselves excluded and marginalized: without work, without possibilities, without any means of escape.

    “Human beings are themselves considered consumer goods to be used and then discarded. We have created a “throw away” culture which is now spreading. It is no longer simply about exploitation and oppression, but something new. Exclusion ultimately has to do with what it means to be a part of the society in which we live; those excluded are no longer society’s underside or its fringes or its disenfranchised – they are no longer even a part of it. The excluded are not the “exploited” but the outcast, the “leftovers”.

    “In this context, some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system. Meanwhile, the excluded are still waiting. To sustain a lifestyle which excludes others, or to sustain enthusiasm for that selfish ideal, a globalization of indifference has developed. Almost without being aware of it, we end up being incapable of feeling compassion at the outcry of the poor, weeping for other people’s pain, and feeling a need to help them, as though all this were someone else’s responsibility and not our own. The culture of prosperity deadens us; we are thrilled if the market offers us something new to purchase. In the meantime all those lives stunted for lack of opportunity seem a mere spectacle; they fail to move us.

    “One cause of this situation is found in our relationship with money, since we calmly accept its dominion over ourselves and our societies. The current financial crisis can make us overlook the fact that it originated in a profound human crisis: the denial of the primacy of the human person! We have created new idols. The worship of the ancient golden calf (cf. Ex 32:1-35) has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose.

  • Robert J. Romano 04.12.2013 2:00 PM

    I do not disagree with you. The latter half of the article deals with Francis’ take on the so-called “free market,” which I feel was most certainly misplaced, as it does not at all take into account the government-created factors that led to the current recession.

  • Henry L 04.12.2013 2:17 PM

    …..”where the powerful feed upon the powerless”…. as in a mammoth government aided by a gargantuan bureaucracy feeding upon the powerless, the taxpayer.

  • joanne 04.12.2013 4:09 PM

    So true and while the pope went around the mulberry bush he is definately on the wrong path

  • joanne 04.12.2013 4:11 PM

    The comment by Joanne is in response to r morrow

  • joecitizen 04.12.2013 4:42 PM

    One of the other commenters touched on this point, but I want to amplify the point that capitalism without a moral compass leads to either dictatorship or socialism. The quest for profit, while a great motivator, is not a justification for “the end justifies the means” where the gains are achieved from the unfair treatment of other participants. The devil being in the details suggests that what measure is to be used to define “unfair”? Is it unfair to pay someone less than what local labor is willing to work for even though that very pay is considered to be a fortune in the culture in which it is paid? Profit is the result of opportunity, risk taking and hard work among other things. Who is to judge when that profit is immoral? Who has the right to determine who should benefit from that profit? Someone making what many would consider to be obscene profit is not necessarily acting in an immoral manner overall. He or she may be contributing the “profit” for the betterment of another segment of society unseen by the critic. If the profits were not available, that segment of society would not have the benefits provided. In the end, it is God who will determine who acted justly, not anyone here.

  • jlbs 04.12.2013 5:19 PM

    It appears to me that he might be directing this to hussein in our White House.

  • jdelaney3 04.12.2013 6:38 PM

    He’s clearly not an economist and should have/could have chosen his words more carefully. The Church has become infested with social justice claptrap, but I am hopeful it hasn’t infected even the Pope’s thinking. For the moment, am reserving judgement as to the Pope’s real meaning.

  • Hotnike 04.12.2013 7:19 PM

    Maybe the Pope needs to concentrate on the pedophile priests around the world and leave his remarks about capitalism to us who believe in it.

  • ninammam 04.12.2013 8:23 PM

    Is this why Ronald Regan got his bronze statue in the white house for going along with the NWO and this UNholy Alliance with the Vatican!!!! Oh yes he was a good dooby for their agenda. http://www.bibliotecapleyades.net/sociopolitica/esp_sociopol_malta01.htm

  • Ramesses II 05.12.2013 12:44 AM

    Yes, the pope is a Marxist, Communist, Atheist, because they are all one thing, unless he is double minded. The final conclusion is that the pope is another 0bama.

  • reggiec 05.12.2013 12:05 PM


    “eudemonia” is a Greek
    word commonly translated as happiness or welfare; however, “human
    flourishing” has been proposed as a more accurate translation.

    “Eudaimonia” is a central
    concept in Aristotelian ethics and political philosophy, along with the terms
    “aretē”, most often translated as “virtue” or “excellence”, and “phronesis”,
    often translated as “practical or
    moral wisdom.”[2] In Aristotle’s works, eudaimonia was used as a term
    for the highest human good, and so it is the aim of practical philosophy,
    including ethics and political philosophy, to consider (and also experience)
    what “it” really is, and how it can be achieved; the “it” being the ability to
    flourish and thrive.


    The free market aka Capitalism, is the only political system that allows the above to occur.

    Socialism, every time it has been tried, not only results in
    the forced redistribution of wealth but also creates an elite group who place
    themselves in control and promotes special privileges for themselves or their
    supporters. They expect to be allowed to rise above the common misery created
    by their ideology. In the past, in order to implement their ideology, they have
    massively interfered with tried and true economic principles and human nature.
    They eventually have to use increasing levels of force to subdue human nature
    to implement their ideology. They must crush the ability to flourish and thrive.

  • Henry L 05.12.2013 12:25 PM

    I studiously read your comment containing some valid points. However, I am not sure that is it is axiomatic that capitalism without a moral compass leads to either dictatorship or socialism because “moral compass” is difficult to grasp the true meaning of. To illustrate my point I like to ask if Bill Gates got so rich by unfair treatment of other participants (no moral compass). Consider all the worthwhile organizations he and his wife are financing. Another person I like to mention is Henry Ford. Obviously, he started manufacturing cars to make a lot of money. To make more money he decided to give his employees an unheard of raise, thinking that way they would be able to buy his automobiles. My theory is that other manufacturers would, of economic necessity, have to follow suit. Of course, when the union extortionists flew into town to make things “fair”, Detroit and Flint happened. What IS an axiom is the fact that unfettered government leads to dictatorship or socialism or a combination thereof. So what is the answer? History shows that it is better to live under robber barons than under omnipotent moral busybodies who torment us “for our own good”.

  • WhiteFalcon 07.12.2013 9:27 AM

    Corrupt Government and business unrests that are to big and powerful; The
    size of businesses like GE and the huge pharmaceuticals and insurance companies
    should in some way be limited. Same is true in the defense industry.This
    Government itself needs to be reduced by about 2/3.

  • Not Gramsci 07.12.2013 3:57 PM
  • bob570 08.12.2013 8:41 AM

    You’re partially correct, however it’s the Free Market, or Free Enterprise system of Capitalism, that made us so successful. Rather than the old world concepts of Capitalism. Both Stalin, and Hitler used forms of Capitalism to build their totalitarian countries.

  • Henry L 15.12.2013 3:33 PM

    I agree that capitalism requires a moral system. I am a firm believer of the doctrine that greed creates morality. Let me explain. Two guys go into the same kind of business, whatever that might be. Joe is greedy, and for that reason he works his bud off till late in the night to satisfy his customers. He gives the best kind of service, charges reasonable prices and gives the best kind of service. Jack, on the other hand, is not so greedy, so he gives poor service, charges high prices because he does not want to work too much and does not take care of complaints. Now, who would you call the guy with morality? The only people to whom this concept does not apply are politicians because they have the enforcer squads with the guns.

  • TMLutas 15.12.2013 4:06 PM

    Boy are you coming at morality from a different angle. I understand your point and would agree with it as far as it goes. But it doesn’t go very far and in a lot of circumstances is pretty useless in resolving moral issues.

    Here are a few morality angles that you might not have considered.

    1. Tilting the playing field by lobbying politically in order to protect your mediocre large business from innovative new entrants is greedy as well as immoral. I can explain why, can you?

    2. Making the registration and thus protection of legal property a frictionless event helps the poor who would otherwise be unable to pay the fees and would leave their property outside the law. Given a large enough class whose property wasn’t recognized by the law creates a space where you can steal from the poor without legal consequence because the property is not registered and thus outside the law. Greedy yes, immoral also.

    3. Professional licensure laws disproportionately disadvantage the poor who have a harder time paying for the training and credentialing necessary. This permits incumbents to raise prices and provide poorer service without consequence. Greedy? Sure. Immoral? That too.

    All three of these examples are ones that pro-free market types regularly seek to right. But it isn’t greed that makes them do it.

  • Henry L 15.12.2013 9:46 PM

    I think I understand the point you are making. Inasmuch “morality” is a concept that is difficult to grasp the true meaning of one could come up with pages of different theories. As far as your third point goes, I am totally against the idea that one has to ask government and pay the government to start a business, so that is where we are in agreement.

  • Henry L 15.12.2013 9:56 PM

    Who would be in charge of the limiting? Government? I don’t think so. Government interference always has unintended -but for people with more than minimal intellect predictable- consequences. Obama care anybody? Any time government “limits” anything it also hinders innovation and inventions.

  • TMLutas 15.12.2013 11:30 PM

    I agree with you that there are a large number of morality systems out there and it can be difficult to choose. I am a christian, more specifically Romanian Byzantine Catholic which is part of the Catholic communion and thus headed by the Pope.
    Since you are coming at things from a distinctly market perspective, you might try Adam Smith’s other classic The Theory of Moral Sentiments as a next step. May God grant you grace and wisdom in exploring this topic.

  • Henry L 16.12.2013 12:02 AM

    I appreciate your reaction to my blog. Yes, I am a firm believer in a market system where the participants’ motto is “service with a smile”. I have lived by that motto and it has been very good to me. I am retired now, living on my laurels so to speak. I am Roman Catholic by the way; grew up in three European boarding schools. I am sad that the US has such deplorable school system. (Food for another discussion.)

  • TMLutas 16.12.2013 2:16 AM

    Food for another discussion indeed. I blog at flit-TM as well as at Chicagoboyz.net . I would like to discuss things further but not on this thread. I’m easy enough to find.

  • freethoughtpolice 25.12.2013 10:55 PM

    Page 47– While the earnings of a minority are grow-
    ing exponentially, so too is the gap separating the
    majority from the prosperity enjoyed by those
    happy few. This imbalance is the result of ide-
    ologies which defend the absolute autonomy of
    the marketplace and financial speculation. Con-
    sequently, they reject the right of states, charged
    with vigilance for the common good, to exercise any form of control.—
    Wow, sounds like he’s talking about unfettered capitalism, This article is crap.

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