The economics of Laudato Si

Pope Francis, head of the Catholic church, has once again courted controversy by intervening in the debate about pollution and global warming in an encyclical (a letter) dated 24 May and publicly released on 18 June.

The text, which runs for more than 35,000 words, frequently draws on Christian scripture, theology and the works of Christian scholars. Its title is Laudato Si (Italian for “Praise be”), the opening phrase of a short prayer written by Francis of Assisi, the Italian Catholic saint, in whose honour the pope took his official title.

For this reason, the encyclical is unlikely to attract attention from economists generally and from conventional economists in particular. They might share the view of Florida governor Jeb Bush, a Catholic convert and now a candidate for the Republican Party candidacy for the 2016 presidential nomination:

“I hope I’m not going to get castigated for saying this by my priest back home, but I don’t get economic policy from my bishops or my cardinal or my pope,” Bush said in speech at a political meeting in New Hampshire on 17 June.

And yet the encyclical makes challenging points that orthodox and heterodox economists might like to consider. They include questioning the inviolability of private property in all circumstances and asserting that the environment is a common home where market forces can’t apply.

These are 39 passages from the encyclical that directly address economic issues:

  1. “The urgent challenge to protect our common home includes a concern to bring the whole human family together to seek a sustainable and integral development….”
  2. “The climate is a common good, belonging to all and meant for all.
  3. “…access to safe drinkable water is a basic and universal human right, since it is essential to human survival and, as such, is a condition for the exercise of other human rights. Our world has a grave social debt towards the poor who lack access to drinking water…This debt can be paid partly by an increase in funding to provide clean water and sanitary services among the poor.”
  4. “… it is also conceivable that the control of water by large multinational businesses may become a major source of conflict in this century.”
  5. “Caring for ecosystems demands far-sightedness, since no one looking for quick and easy profit is truly interested in their preservation.”
  6. “…we cannot overlook the huge global economic interests which…can undermine the sovereignty of individual nations. In fact, there are proposals to internationalize the Amazon, which only serve the economic interests of transnational corporations”.
  7. ‘… the privatisation of certain spaces has restricted people’s access to places of particular beauty. In others, “ecological” neighbourhoods have been created which are closed to outsiders in order to ensure an artificial tranquillity.”
  8. “… we cannot adequately combat environmental degradation unless we attend to causes related to human and social degradation. In fact, the deterioration of the environment and of society affects the most vulnerable people on the planet”
  9. “.. the gravest effects of all attacks on the environment are suffered by the poorest… the depletion of fishing reserves especially hurts small fishing communities without the means to replace those resources; water pollution particularly affects the poor who cannot buy bottled water; and rises in the sea level mainly affect impoverished coastal populations who have nowhere else to go. The impact of present imbalances is also seen in the premature death of many of the poor, in conflicts sparked by the shortage of resources, and in any number of other problems which are insufficiently represented on global agendas.
  10. “… we have to realize that a true ecological approach always becomes a social approach; it must integrate questions of justice in debates on the environment, so as to hear both the cry of the earth and the cry of the poor.”
  11. “Inequity affects not only individuals but entire countries… The export of raw materials to satisfy markets in the industrialized north has caused harm locally, as for example in mercury pollution in gold mining or sulphur dioxide pollution in copper mining…
  12. The warming caused by huge consumption on the part of some rich countries has repercussions on the poorest areas of the world, especially Africa, where a rise in temperature, together with drought, has proved devastating for farming. There is also the damage caused by the export of solid waste and toxic liquids to developing countries, and by the pollution produced by companies which operate in less developed countries in ways they could never do at home, in the countries in which they raise their capital.”
  13. “The foreign debt of poor countries has become a way of controlling them… developing countries, where the most important reserves of the biosphere are found, continue to fuel the development of richer countries at the cost of their own present and future.”
  14. “The land of the southern poor is rich and mostly unpolluted, yet access to ownership of goods and resources for meeting vital needs is inhibited by a system of commercial relations and ownership which is structurally perverse.“
  15. “…we should be particularly indignant at the enormous inequalities in our midst… We fail to see that some are mired in desperate and degrading poverty, with no way out, while others have not the faintest idea of what to do with their possessions, vainly showing off their supposed superiority and leaving behind them so much waste which, if it were the case everywhere, would destroy the planet. In practice, we continue to tolerate that some consider themselves more human than others, as if they had been born with greater rights.”
  16. “… every ecological approach needs to incorporate a social perspective which takes into account the fundamental rights of the poor and the underprivileged”
  17. “The Christian tradition has never recognized the right to private property as absolute or inviolable, and has stressed the social purpose of all forms of private property…there is always a social mortgage on all private property, in order that goods may serve the general purpose …”.
  18. “The rich and the poor have equal dignity. This has practical consequences, such as those pointed out by the bishops of Paraguay: “Everycampesino has a natural right to possess a reasonable allotment of land where he can establish his home, work for subsistence of his family and a secure life. This right must be guaranteed so that its exercise is not illusory but real. That means that apart from the ownership of property, rural people must have access to means of technical education, credit, insurance, and markets”
  19. “The natural environment is a collective good, the patrimony of all humanity and the responsibility of everyone. If we make something our own, it is only to administer it for the good of all.”
  20. “Any approach to an integral ecology, which by definition does not exclude human beings, needs to take account of the value of labour…Work is a necessity, part of the meaning of life on this earth, a path to growth, human development and personal fulfilment. Helping the poor financially must always be a provisional solution in the face of pressing needs. The broader objective should always be to allow them a dignified life through work.
  21. “Yet the orientation of the economy has favoured a kind of technological progress in which the costs of production are reduced by laying off workers and replacing them with machines…to stop investing in people, in order to gain greater short-term financial gain, is bad business for society.”
  22. “To ensure economic freedom from which all can effectively benefit, restraints occasionally have to be imposed on those possessing greater resources and financial power. To claim economic freedom while realconditions bar many people from actual access to it, and while possibilities for employment continue to shrink, is to practise a doublespeak which brings politics into disrepute.”
  23. “Every violation of solidarity and civic friendship harms the environment”.”
  24. “A consumerist vision of human beings, encouraged by the mechanisms of today’s globalized economy, has a levelling effect on cultures, diminishing the immense variety which is the heritage of all humanity.
  25. “…it is essential to show special care for indigenous communities and their cultural traditions…in various parts of the world, pressure is being put on them to abandon their homelands to make room for agricultural or mining projects which are undertaken without regard for the degradation of nature and culture.”
  26. Lack of housing is a grave problem in many parts of the world, both in rural areas and in large cities, since state budgets usually cover only a small portion of the demand. Not only the poor, but many other members of society as well, find it difficult to own a home.”
  27. “Respect for our dignity as human beings often jars with the chaotic realities that people have to endure in city life. Yet this should not make us overlook the abandonment and neglect also experienced by some rural populations which lack access to essential services and where some workers are reduced to conditions of servitude, without rights or even the hope of a more dignified life.
  28. Human ecology is inseparable from the notion of the common good…. The common good is “the sum of those conditions of social life which allow social groups and their individual members relatively thorough and ready access to their own fulfilment”.
  29. “ Underlying the principle of the common good is respect for the human person as such, endowed with basic and inalienable rights ordered to his or her integral development. “
  30. “In the present condition of global society, where injustices abound and growing numbers of people are deprived of basic human rights and considered expendable, the principle of the common good immediately becomes, logically and inevitably, a summons to solidarity and a preferential option for the poorest of our brothers and sisters. This option entails recognizing the implications of the universal destination of the world’s goods, but…it demands before all else an appreciation of the immense dignity of the poor … We need only look around us to see that, today, this option is in fact an ethical imperative essential for effectively attaining the common good.”
  31. “… since the effects of climate change will be felt for a long time to come, even if stringent measures are taken now, some countries with scarce resources will require assistance in adapting to the effects already being produced, which affect their economies…the countries which have benefited from a high degree of industrialization, at the cost of enormous emissions of greenhouse gases, have a greater responsibility for providing a solution to the problems they have caused”
  32. “The strategy of buying and selling “carbon credits” can lead to a new form of speculation which would not help reduce the emission of polluting gases worldwide. (But) it may simply become a ploy which permits maintaining the excessive consumption of some countries and sectors.”
  33. “In some places, cooperatives are being developed to exploit renewable sources of energy which ensure local self-sufficiency and even the sale of surplus energy. This simple example shows that, while the existing world order proves powerless to assume its responsibilities, local individuals and groups can make a real difference.”
  34. Saving banks at any cost, making the public pay the price, foregoing a firm commitment to reviewing and reforming the entire system, only reaffirms the absolute power of a financial system, a power which has no future and will only give rise to new crises after a slow, costly and only apparent recovery. The financial crisis of 2007-08 provided an opportunity to develop a new economy, more attentive to ethical principles, and new ways of regulating speculative financial practices and virtual wealth. But the response to the crisis did not include rethinking the outdated criteria which continue to rule the world.”
  35. “The environment is one of those goods that cannot be adequately safeguarded or promoted by market forces. Once more, we need to reject a magical conception of the market, which would suggest that problems can be solved simply by an increase in the profits of companies or individuals.
  36. “ The principle of the maximization of profits, frequently isolated from other considerations, reflects a misunderstanding of the very concept of the economy. As long as production is increased, little concern is given to whether it is at the cost of future resources or the health of the environment; as long as the clearing of a forest increases production, no one calculates the losses entailed in the desertification of the land, the harm done to biodiversity or the increased pollution. In a word, businesses profit by calculating and paying only a fraction of the costs involved.
  37. “ Since the market tends to promote extreme consumerism in an effort to sell its products, people can easily get caught up in a whirlwind of needless buying and spending. Compulsive consumerism is one example of how the techno-economic paradigm affects individuals. (People are led to) believe that they are free as long as they have the supposed freedom to consume. But those really free are the minority who wield economic and financial power.”
  38. “We must regain the conviction that we need one another, that we have a shared responsibility for others and the world, and that being good and decent are worth it. “
  39. “Love, overflowing with small gestures of mutual care, is also civic and political, and it makes itself felt in every action that seeks to build a better world. Love for society and commitment to the common good are outstanding expressions of a charity which affects not only relationships between individuals but also “macro-relationships, social, economic and political ones”.

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