STOCK MARKET WATCH -- Wednesday, 27 November 2013

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12. Pope Francis's Theory of Economics

http://www.theatlantic.com/business/archive/2013/11/pope-franciss-theory-of-economics/281865/


Pope Francis and, clockwise from top left: Keynes, Polanyi, Hayek, and Marx (Reuters/Giampiero Sposito/Wikimedia Commons)

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Karl Polanyi is most famous for his book The Great Transformation, and in particular for one idea in that book: the distinction between an "economy being embedded in social relations" and "social relations [being] embedded in the economic system."

Polanyi's Big Idea: The Economy Has to Serve Society, Not the Other Way Around

Economic activity, Polanyi says, started off as just one of many outgrowths of human activity. And so, economics originally served human needs. But over time, people (particularly, policy-making people) got the idea that markets regulated themselves if laws and regulations got out of their way. The free market converts told people that "only such policies and measures are in order which help to ensure the self-regulation of the market by creating the conditions which make the market the only organizing power in the economic sphere." Gradually, as free market-based thinking was extended throughout society, humans and nature came to be seen as commodities called "labor" and "land." The "market economy" had turned human society into a "market society."

In short (as social sciences professors prepare to slam their heads into their tables at my reductionism), instead of the market existing to help humans live better lives, humans were ordering their lives to fit into the economy.

What Pope Francis Said

Now, back to the pope. Pope Francis, in his exhortation, notably does not call for a complete overhaul of the economy. He doesn't talk revolution, and there's certainly no Marxist talk of inexorable historical forces.