Sacred Economics

Sacred Economics

Meeting with global-finance students recently at the Chartreux Institute in Lyon, France, Pope Francis warned them “to remain free from the lure of money, from the slavery in which money traps those who worship it.” He also counseled them not to “blindly obey the invisible hand of the market” but rather to become “promoters and defenders of a growth in equality.”

The Pope's venture outside of religion follows a history of significant world contributions of popes in the past, notably John Paul ll. And no one would argue with the poetic conclusion of the danger of the love of money. But as history has shown, this is a lot more complex than an aphorism.

 

In his treatise The Wealth of Nations (1776), Adam Smith famously wrote, 

By preferring the support of domestic to that of foreign industry, [an individual] intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.

So  the government doesn’t need to promote domestic industry, because individuals who seek only their own narrow gain will do so on their own. Moreover the gain is not limited to the individual, it is communal.

Worse, almost every single bit of economic research and experience show the economy more complex than an administrator can predict. The great socialist experiments did not fail just because the government was run by homicidal thugs, they failed because even intelligent people can not control an economy's complexity and efforts to do so are damaging, not just neutral.

So in our uncertain world, even infallibility has its limits.