As Pope Benedict XVI ended his trip to Brazil a few weeks ago, he warned Latin Americans to avoid the twin evils of Marxism and capitalism.
That reminded me of a quip by Thomas B. Reed, one of the great speakers of the U.S. House of Representatives. When a congressman prated at length about how he would “rather be right than be president,” Reed interjected, “The gentleman need not be disturbed, he will never be either.” Pope Benedict similarly need not worry. Latin America has little experience with Marxism and little more with capitalism.
I don’t mean to mock the pope. His concern with poverty and injustice is real. These issues are important. His warning in Brazil echoes his other writings, notably his most recent book, “Jesus of Nazareth.” It also springs from the deep body of Catholic social thought that began when Pope Leo XII issued the encyclical “Rerum Novarum” 116 years ago last month.
One must be careful, however, to think through what Benedict’s warning really implies for Latin America. What exactly does Benedict understand by the terms Marxism and capitalism? What changes in economic policies should it then make?
Marxism never took root in Latin America, except among intellectuals and a few labor leaders. Cuba, a totalitarian state with a centrally planned economy, certainly is Marxist. Beyond that, there is little. As Miami Herald commentator Andres Oppenheimer dryly noted, the charismatic populism of Venezuela’s Hugo Chavez has more to do with narcissism than Marxism.
When the pope speaks of capitalism, does he mean the 19th-century extremes depicted by Charles Dickens and Emile Zola? Or modern economies like New Zealand or Canada in which governments play a substantial role, but where most basic resource-allocation decisions are left to market forces?
Catholic social thinkers are not alone in seeking a “third way” between Marxism and capitalism. This was part of Tony Blair’s campaign vocabulary in the mid-1990s and implicit in some of Bill Clinton’s speeches.
This thinking becomes problematic if it assumes capitalism and Marxism are the only two reefs on which an economy can run aground. Steer a middle course between them, the thinking seems to be, and the economy will arrive safely at the port of prosperity and justice.
But capitalism and Marxism are not the only possible economic systems. Mercantilism, the dominant system in Europe through much of the 17th and 18th centuries, remains seductive to many, particularly in Latin America. Mercantilism advocated an important role for central government, deciding who could produce what and where, limiting trade, and establishing state enterprises or state-granted monopolies.
Mercantilism reached its apogee in France under Jean-Batiste Colbert, finance minister to Louis XIV in the late 1600s, but continued until the French Revolution. It was the economic system against which Adam Smith railed in his 1776 work, “The Wealth of Nations.”
Most Latin American countries pursue economic policies and have economic institutions shot through with mercantilism. Many, most notably Argentina and Brazil, include elements of Italian fascism. Under fascism the economy was organized around “corporate” bodies – industry, finance, labor, intellectuals, the press, landowners, the church and the military – with the national government playing a moderating role.
The racism and thuggish brutality of Italian fascism and Germany’s National Socialist Party (Nazism) have obscured the fact that these movements also styled themselves as the “third way” to avoid the excesses and injustices of communism and capitalism. Many fascist thinkers took “Rerum Novarum” as a starting point. Their ideas were attractive in conservative Catholic societies like Spain and Portugal and across Latin America. Regimes like that of Juan Peron in Argentina and Getulio Vargas in Brazil consciously emulated Italian fascist institutions and policies in ways that remain important today, such as labor laws that stifle productivity and a dominant role for the state.
Benedict’s concern would be more productive if he also recognized the dangers of Latin America’s blend of mercantilism and fascist corporatism. The continent has pursued a third way for 75 years and it isn’t working. Output grows slowly, poverty remains common and economic injustices are glaring – not despite the economic policies of the region, but because of them.
Rather than warning nations to avoid two polar alternatives that are caricatures, Benedict might have asked which direction Latin America needs to move. Its nations clearly need a smaller role for the state in the economy, better defined and enforced personal and property rights, more effective investment in education and a less-corrupt and more-efficient legal system.
© 2007 Edward Lotterman
Chanarambie Consulting, Inc.