By Peter Fox-Penner
In 1987, film character Gordon Gekko stood before the shareholders of fictional Teldar Paper and instructed them that “greed is good.” This cinematic moment came to symbolize an era in which privatization, deregulation and financialization supplanted the mid-20th century model of progressive government, belief in a social safety net, and a mixed economy. Interestingly, the New York Times reports that the phrase was condensed from a graduation address at the University of California, Berkley business school given by Ivan Boesky, a Wall Street figure later convicted of insider trading.
It has taken 25 years to produce an equally cinematic moment to mark the end of this era. On May 24, Pope Francis issued what was widely reported to be an encyclical on climate change. Although climate change is discussed, the encyclical is more properly described as a sweeping critique of our market, technology and consumption-oriented society. His Holiness has produced a document that ranges from the current state of world political and economic policies to the health of global ecosystems, and what he calls:
"The social dimensions of global change ... [including] the effects of technological innovations on employment, social exclusion, an inequitable distribution and consumption of energy and other services, social breakdown, increased violence and a rise in new forms of social aggression, drug trafficking, growing drug use by young people, and the loss of identity."
" ... The economy accepts every advance in technology with a view to profit, without concern for its potentially negative impact on human beings. Finance overwhelms the real economy. The lessons of the global financial crisis have not been assimilated, and we are learning all too slowly the lessons of environmental deterioration.
"Some circles maintain that current economics and technology will solve all environmental problems, and argue, in popular and non-technical terms, that the problems of global hunger and poverty will be resolved simply by market growth. They are less concerned with certain economic theories which today scarcely anybody dares defend, than with their actual operation in the functioning of the economy.
"They may not affirm such theories with words, but nonetheless support them with their deeds by showing no interest in more balanced levels of production, a better distribution of wealth, concern for the environment and the rights of future generations. Their behavior shows that for them maximizing profits is enough. Yet by itself the market cannot guarantee integral human development and social inclusion."
"There is an urgent need to develop policies so that, in the next few years, the emission of carbon dioxide and other highly polluting gases can be drastically reduced, for example, substituting for fossil fuels and developing sources of renewable energy. Worldwide there is minimal access to clean and renewable energy. There is still a need to develop adequate storage technologies.
"Some countries have made considerable progress, although it is far from constituting a significant proportion. Investments have also been made in means of production and transportation which consume less energy and require fewer raw materials, as well as in methods of construction and renovating buildings which improve their energy efficiency. But these good practices are still far from widespread.”
It is good to see that His Holiness and his researchers have absorbed the verdant literature on the potential for greater energy efficiency and saw fit to give this often-invisible approach a Papal shout-out. Renewable energy, also mentioned, clearly plays a central role, although His Holiness notes that it is too inaccessible by much of the world’s poor. Interestingly, the encyclical neither includes nor excludes nuclear energy, apparently leaving that option on the table.
Above all, two very large and very important themes emerge from this masterwork. First, His Holiness forcefully rejects the notion of humanity’s right to shape the earth as it chooses for its private enjoyment. Rejecting the oft-cited interpretation of Genesis 1:28 that God granted man dominion over earth, he writes:
“We are not God. The earth was here before us and it has been given to us. This allows us to respond to the charge that Judaeo-Christian thinking, on the basis of the Genesis account which grants man “dominion” over the earth (cf. Gen 1:28), has encouraged the unbridled exploitation of nature by painting him as domineering and destructive by nature.”
"This is not a correct interpretation of the Bible as understood by the Church. Although it is true that we Christians have at times incorrectly interpreted the Scriptures, nowadays we must forcefully reject the notion that our being created in God’s image and given dominion over the earth justifies absolute domination over other creatures.
"The biblical texts are to be read in their context, with an appropriate hermeneutic, recognizing that they tell us to “till and keep” the garden of the world (cf. Gen 2:15). 'Tilling' refers to cultivating, ploughing or working, while 'keeping' means caring, protecting, overseeing and preserving. This implies a relationship of mutual responsibility between human beings and nature."
"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. Saint John Paul II forcefully reaffirmed this teaching, stating that 'God gave the earth to the whole human race for the sustenance of all its members, without excluding or favoring anyone.'
It is important to see this not as a complete rejection of property and markets, but rather as a severe admonition that these institutions must be rigorously tempered by a purpose beyond pure private gain. Again, quoting Pope John Paul II, Francis writes:
"He clearly explained that ‘The Church does indeed defend the legitimate right to private property, but she also teaches no less clearly that there is always a social mortgage on all private property, in order that goods may serve the general purpose that God gave them.'"
“We are faced not with two separate crises, one environmental and the other social, but rather with one complex crisis which is both social and environmental. Strategies for a solution demand an integrated approach to combating poverty, restoring dignity to the excluded, and at the same time protecting nature.”
"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 ... This is due partly to the fact that many professionals, opinion makers, communications media and centers of power, being located in affluent urban areas, are far removed from the poor, with little direct contact with their problems. They live and reason from the comfortable position of a high level of development and a quality of life well beyond the reach of the majority of the world’s population."
And as for greed being good? Francis quotes Patriarch Bartholomew’s exhortation to consumption with sacrifice, greed with generosity, wastefulness with a spirit of sharing which “entails learning to give, and not simply to give up. It is a way of loving, of moving gradually away from what I want to what God’s world needs. It is liberation from fear, greed and compulsion."
Take that, Mr. Gekko.
Peter Fox-Penner, principal and Director of The Brattle Group, specializes in economic, regulatory, and strategic issues in network industries. His book, "Smart Power: Climate Change, the Smart Grid, and the Future of Electric Utilities," examines innovative business models for the changing utility industry.