Among those who take issue with the Pope’s statement is Keith Farrell, a Students For Liberty campus coordinator at the University of Connecticut (“Why the Pope is Wrong on Inequality,” City A.M., Aug. 21). He accuses the Pope of “scapegoating world poverty on the wealthy” and credits Marx with first coming up with the idea “that the success of some hurts others economically and that the rich have only gotten rich at the expense of the poor.” Farrell quotes a South Korean: “If someone has made a fortune for himself, fair and square, and has a lot of money, I don’t think that’s something to be condemned.”

An interesting hypothetical, but just how much of the economic elite’s growing concentration of wealth actually was made “fair and square?” Throughout his op-ed, Farrell implicitly equates the system we live under now with “economic freedom” and “free enterprise.” But that’s an example of what I call “vulgar libertarianism,” defending actually existing corporate capitalism as though it were a free market, and using “free enterprise” rhetoric to defend wealth and economic power which corporate capitalists have actually amassed through an overwhelmingly statist system of power.

Marx was hardly the first to figure out that in a class society, ruled by a class state, the rich get rich at the expense of the poor. It probably dawned on some Sumerian or Chinese peasant busting his hump with a hoe trying to produce enough to live on after paying rent to a temple priesthood. And plenty of radical free market thinkers — Thomas Hodgskin, Benjamin Tucker, Franz Oppenheimer — have drawn the same conclusion more recently. The capitalist system we live under today is the lineal heir to the state-enforced class systems of thousands of years ago.

“Free markets,” far from structurally defining capitalism, are permitted to operate on its margins only to the extent that they’re compatible with the propertied interests controlling the state. Even in the supposedly “laissez-faire” nineteenth century, “free enterprise” was a superstructure erected on a foundation of centuries of massive robbery — the enclosure of land and dispossession of the peasantry, first in the industrializing West and then the colonial world, massive restrictions on the free movement and association of working people in industrial Britain, slave labor and the seizure of global mineral wealth. Today many of the fruits of that robbery, like absentee titles to vacant land and corporate ownership of Third World natural resources, and a monopoly on the supply of credit and the medium of exchange by the owners of stolen wealth, are still legally enforced.

Corporate capitalism today depends on even more statism — “intellectual property,” regulatory cartels and other entry barriers, and massive direct subsidies in such forms as the Military-Industrial Complex and the civil aviation and Interstate Highway systems.

It’s true, as Farrell says, that standards of living have increased in absolute terms despite the rise in inequality — true as far as it goes. But the advantages of technological progress are governed by the same targeted pricing that governs all monopolies: Giant corporations use patent monopolies to enclose technological progress and let just enough of the benefits of increased productivity trickle down to the working classes to make it worthwhile for them to keep buying, while appropriating the rest as monopoly rents for themselves.

Farrell’s statement that “capitalism has brought freedom and abundance” to South Korea bears similar looking into. South Korean capitalism was built on the foundation of US military occupation and a military regime installed by the occupation authority, which subsequently liquidated the quasi-anarchist society of self-governing village communes and self-managed factories that had emerged after the Japanese pullout in 1945. This regime put anarchists and leftists of all kinds in mass graves, and during its decades in power wasn’t exactly friendly to the “economic freedom” of — say — Korean workers who wanted to unionize.

Interestingly, Farrell shares one erroneous assumption with Pope Francis: That reducing inequality requires government “redistribution of wealth.” They’re both wrong. What we have now amounts to an upward redistribution of wealth, with “taxes” on the producing classes in the form of the state-enforced monopoly rents we pay to landlords and capitalists. We don’t need state intervention to redistribute wealth downward. We need revolution to stop the state from redistributing wealth upward.

It’s time for free marketers to stop acting as hired prize-fighters for the present system of power, and start using free market ideas to defend actual economic justice.

Translations of this article:

• Spanish, Por qué el Papa está menos equivocado que Keith Farrell.

He’s right — but not in the way he intends. Before I elaborate, let’s look at what else Francis said.

He complained that “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.”

Here he’s partly right and partly wrong.

“In this context,” he went on,

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.

Again, he’s partly right, though again not as he intended, and partly wrong.

He further stated, “This imbalance [i.e., inequality] is the result of ideologies which defend the absolute autonomy of the marketplace.”

Here he has things precisely backwards.

“In this system,” he added, “which tends to devour everything which stands in the way of increased profits, whatever is fragile, like the environment, is defenseless before the interests of a deified market, which become the only rule.”

He’s got a point, to which I will return shortly.

When I say the pope gets some things right, just not in the way he intends, here’s what I mean: In an important sense, we do have “an economy of exclusion and inequality.” But it is not the free market; rather, it’s interventionism, corporatism, crony capitalism, or just plain capitalism — that is, the abrogation of the free market on behalf of special, mostly business, interests. The reigning system is riddled with exclusion and inequality, the victims of which are society’s most vulnerable people. It’s easy to overlook this because the system produces a great volume and variety of consumer goods that even low-income people can afford. (The system needs consumers, though without intervention we could expect prices to be lower.)

It is true that those we call the poor in this country have household products that most middle-class people lacked, say, 40 years ago, and many things that no one had less than 20 years ago because they hadn’t been invented yet. It is also true that poverty worldwide has been much diminished in the last few decades, thanks to the demise of central planning and the introduction of limited market-style reforms (that nevertheless fall short of Adam Smith’s “system of natural liberty,” which consistently applied would include land reform).

But these are not the only measures of well-being. People are excluded and treated unequally to the extent that governments prevent them from breaking away from traditional (and, in the present context, oppressive) wage employment and setting out on their own or in cooperative ventures with peers. The prospect of self-employment, particularly among low-income people with government schooling, is next to impossible due to taxation, product regulation, occupational licensing, zoning and other land-use restrictions and exclusions, building codes, maximum-residential-density and other sprawl-inducing requirements, street-vendor and taxi-cab limits, minimum-wage laws, “intellectual property,” and more. Government has myriad ways to make what’s been called a comfortable subsistence much more expensive. All this is decreed on behalf of vested interests who want to preserve their current advantages.

“The poorer you are, the more you need access to informal and flexible alternatives, and the more you need opportunities to apply some creative hustling. When the state shuts that out, it shuts poor people into ghettoized poverty,” Charles W. Johnson writes. (See his “Scratching By: How Government Creates Poverty as We Know It,” and Gary Chartier’s “Government Is No Friend of the Poor.”)

This is exclusion and inequality of a most vicious sort. And it is not ameliorated by cheap smartphones or big-screen televisions equipped with TiVos. Those things might take some of the sting out of working under someone’s arbitrary authority at a mind-numbing job, but they don’t rectify the injustice or knock down the tollgates the state erects on the road to individual advancement.

In other words, the pope is wrong when he says, “Today everything comes under the laws of competition.” It is precisely this legislated suppression and prohibition of competition that cause “masses of people [to] find themselves excluded and marginalized: without work, without possibilities, without any means of escape.”

There’s not too much competition, but too little, because suppressing competition is how those with access to political power keep potential rivals at bay. As noted, these restrictions make low-income people (and others) dependent on wage employment: government regulations largely destroy self-employment and cooperative ventures as alternatives to a job, which diminishes workers’ bargaining power and leaves them more vulnerable to the caprice of politically protected oversized and hierarchical firms, not to mention to dips in the economy and resulting structural unemployment brought on by governments’ central banks and bubble-inflating favoritism. (With the falling cost of computers and other capital goods, it is more and more feasible for people to start home-based manufacturing businesses. For details on what’s possible, see Kevin Carson’s The Homebrew Industrial Revolution.)

So when the pope writes that our social problems are “the result of ideologies which defend the absolute autonomy of the marketplace,” he’s got it exactly wrong. The autonomy of the marketplace was compromised from the beginning by those who used the state to secure privileges that could not be obtained in a freed market.

When he says, “In this system, which tends to devour everything which stands in the way of increased profits, whatever is fragile, like the environment, is defenseless before the interests of a deified market, which become the only rule,” he is guilty of self-contradiction. One of the things that was devoured, long ago, because it stood in the way of (politically generated) profits, or rents, was the free market. (This has also had environmental implications, as when 19th-century courts chose to give priority to industrialization over common-law protections of property.)

Finally, the pope shows his confusion when in a single paragraph he equates the free market with the “sacralized workings of the prevailing economic system.” Whatever you wish to call the prevailing economic system, as I’ve demonstrated here, it is not the free market. A freed market would have no eminent domain (the victims of which are the economically disfranchised), subsidies, corporate bailouts, government debt-fueled speculation, and all the obstacles to individual advancement listed above. (This is not the first time I’ve brought free-market ideas to the attention of the Vatican. See this.)

The pope’s concern with the poor and excluded is well-placed. We should not tolerate their condition or its causes. But what the poor and excluded need are freedom and freed markets — really free markets, not “the prevailing economic system” — so they may be liberated from the oppression that holds them back.

When the pope laments that the prevailing ideologies “reject the right of states [i.e., governments], charged with vigilance for the common good, to exercise any form of control,” one must suppress the urge to laugh. When have states ever looked out for the common good? It is states and their elite patrons that preserve the exclusion and inequality that the pope abhors by squelching the social cooperation inherent in freed markets and the bottom-up — not trickle-down — progress they make possible. It is states that embody the worst sense of the “survival of the fittest” principle by defining “fit” in terms of prowess in navigating the halls of power. We know whom that includes and excludes.

Translations for this article:

• Spanish, El Papa Juguetea con la Economía.