How Pope Leo XIV Can Address Distributive Justice In The Age Of AI

In 1891, Pope Leo XIII issued a highly influential encyclical on the promise and perils of the tumultuous Industrial Revolution as it gained steam. It was titled “Rerum Novarum” — “of new things” or “revolutionary change.”

                                         

“Rerum Novarum” criticized both the exploitation of labor by raw capitalism and the statist socialism that many in those days saw as the corrective. It embraced private property as a natural right for all but also championed “distributive justice” and workers’ rights, including the organization of unions, in a manufacturing economy that was producing greater inequality even as it generated vast new wealth.

In his papal namesake’s first meeting with the College of Cardinals after his election in early May, Pope Leo XIV urged a present-day update to its social teaching in response “to developments in the field of artificial intelligence that pose new challenges for the defense of human dignity, justice, and labor.”

Rerum Novarum

The opening lines of the 1891 encyclical read in terms that could apply to our day:

“That the spirit of revolutionary change which has long been disturbing the nations of the world, should have passed beyond the sphere of politics and made its influence felt in the cognate sphere of practical economics is not surprising. The elements of the conflict now raging are unmistakable, in the vast expansion of industrial pursuits and the marvelous discoveries of science; in the changed relations between masters and workmen; in the enormous fortunes of some few individuals, and the utter poverty of the masses … it has come to pass that working men have been surrendered, isolated and helpless, to the hardheartedness of employers and the greed of unchecked competition.”

The encyclical continues, however, to argue that “every man has by nature the right to possess property as his own … private ownership is in accordance with the law of nature … Hence, it is clear that the main tenet of socialism, community of goods, must be utterly rejected, since it only injures those whom it would seem meant to benefit [and] is directly contrary to the natural rights of mankind. …The first and most fundamental principle, therefore, if one would undertake to alleviate the condition of the masses, must be the inviolability of private property. This being established, we proceed to show where the remedy sought for must be found.”

Claiming the middle ground in the ideological standoff of the day, the pontiff’s missive argued it would be “a great mistake … to take up with the notion that class is naturally hostile to class, and that the wealthy and the working men are intended by nature to live in mutual conflict.”

Here, toward the end of “Rerum Novarum,” is the remedy proposed by the Church:

“46. If a workman’s wages be sufficient to enable him comfortably to support himself, his wife, and his children, he will find it easy, if he be a sensible man, to practice thrift, and he will not fail, by cutting down expenses, to put by some little savings and thus secure a modest source of income. Nature itself would urge him to this. We have seen that this great labor question cannot be solved save by assuming as a principle that private ownership must be held sacred and inviolable. The law, therefore, should favor ownership, and its policy should be to induce as many as possible of the people to become owners.

47. Many excellent results will follow from this; and, first of all, property will certainly become more equitably divided. For, the result of civil change and revolution has been to divide cities into two classes separated by a wide chasm.

On the one side there is the party which holds power because it holds wealth; which has in its grasp the whole of labor and trade; which manipulates for its own benefit and its own purposes all the sources of supply, and which is not without influence even in the administration of the commonwealth.

On the other side there is the needy and powerless multitude, sick and sore in spirit and ever ready for disturbance. If working people can be encouraged to look forward to obtaining a share in the land, the consequence will be that the gulf between vast wealth and sheer poverty will be bridged over, and the respective classes will be brought nearer to one another.”

Universal Basic Capital: “Rerum Novarum” For The Age of AI

In considering how to update the reasoning of “Rerum Novarum” for the Age of AI, Pope Leo XIV might consider the idea of “pre-distribution of wealth through universal basic capital” — a concept that left-leaning Nobel economist Joe Stiglitz and top hedge fund investor Ray Dalio both agree is one answer to stemming inequality that is “neither capitalism nor socialism.” In effect, it delivers distributive justice by expanding private ownership of wealth across all of society.

“The best way to fight inequality in the digital age is to spread the equity around.”

Despite the enormous wealth created by the digital revolution sweeping the planet, the inequality gap continues to grow, especially between those who “own the robots,” through appreciating capital assets, and those who work and live paycheck to paycheck. In the U.S., the top 10% own 93% of all equities.

Further innovations of digital capitalism will surely exacerbate this condition as employment and income are increasingly divorced from productivity growth and wealth creation, generating an ever-widening inequality gap between those who own capital and those who labor for their livelihood.

A policy that responds to this challenge would foster an ownership share by all in the wealth generated by intelligent machines that are displacing gainful employment. The aim is to enhance the assets of the less well-off in the first place — pre-distribution — instead of only redistributing the income of others after the fact. We call this universal basic capital (UBC). The idea is not just to break up the concentration of wealth at the top, but to build it from below. The best way to fight inequality in the digital age is to spread the equity around.

James Manyika, a Google senior vice president who formerly led the McKinsey Global Institute’s research on AI’s impact on work, has put it succinctly: “It’s crucial that we have more people participating in the capital income pathway, because, while labor income remains the most important for the majority of people, capital income is a bigger and bigger part of where the value is going.”

Both Left & Right See Same Remedy

There are many ways pre-distribution through UBC could be accomplished, from “a data dividend” paid by Big Tech to the public whose data it profitably reaps and sells, to universal state-sponsored savings/investment plans that are individually owned (like a 401k) by which ordinary citizens earn returns on productivity growth and wealth creation generated by AI across the economy.

In the spirit of “Rerum Novarum,” this approach does not pit classes or ideologies against each other; it reconciles their interests.

One small but stunning example of the common appeal of the idea across ideological divides is that the liberal governor of California, Gavin Newsom, and MAGA members of the U.S. Congress, like  Texas Sen. Ted Cruz, are both championing a similar version of universal basic capital.

Newsom’s California Kids Investment and Development Savings Program (CalKIDS) establishes a college fund account of $500 to $1,500 for every low-income first-grader in California public schools. The money, pooled and invested, increases in value until withdrawn to pay for postsecondary education. CalKIDS is, in turn, linked to ScholarShare 529 accounts, which are 100% tax-exempt college savings funds. Under that plan, $10 invested for a newborn today would be worth roughly $21,000 by college age. ScholarShare now manages $16.5 billion across 454,000 accounts.

Republican-sponsored legislation presently in Congress proposes to further expand this idea through so-called MAGA accounts — Money Account for Growth and Advancement. It would initiate a $1,000 account for every child under 8 who is an American citizen, possibly as a loan at the Treasury bond rate, with the base amount due for repayment at the end of an 18-year term. All income from investments in the S&P 500 in that period would be tax-advantaged. Families can add up to $5,000 per year to the base amount. Profits could be used for education, starting a small business, helping purchase a home or in other ways.

Although embryonic, these initiatives embody a new logic of the relationship between capital and labor, pointing the way to greater possibilities.

Universal basic capital is clearly an idea whose time has come. By embracing the concept in an update of “Rerum Novarum,” Pope Leo XIV would be advancing the social teachings of the Church on distributive justice into the digital age, from the industrial to the information revolution. The moral authority of his blessing would universalize the appeal of universal basic capital.