The Church and the economic crisis

A common notion is that the scriptural command about rendering to Caesar the things that belong to Caesar and to God what belongs to God is a command to the Church not to get involved in material things. Another way of putting this notion is that churchmen should stay in the sacristy.

It is not as simple as that and the scriptural command has never stopped the Church from venturing out of the sacristy. In fact, we have seen documents issued by Episcopal Commissions and by the Pope himself in a number of major encyclicals on social matters. You might call these extra-sacristy excursions. The fact is that the Church does not see these as excursions foreign to its mission but rather as very much integral to its mission in behalf of humanity.

The most recent of these “excursions” has come not from the Holy Father himself but from the Pontifical Council for Justice and Peace. The document is titled “Towards reforming the international finance and monetary systems in the context of global public authority.” With this document, the Church has entered into the discussions of the Group of 20 and the International Monetary Fund.

The document has come out against the backdrop of demonstrators in major cities protesting against corporate greed and politicians struggling to find ways of solving the world economic crisis. The demonstrations started in Wall Street in New York and have now spread to Westminster Cathedral in London and to other cities of Europe.

It has been met with mixed reaction even from the Catholic world. I myself have not read the document, which came out only a week ago. Nor am I an economist capable of evaluating its wisdom. Nevertheless, because it deals with a very important matter, let me share with my readers some of the things more financially knowledgeable people have said about it even if in a general way.

Robert Mickens of the international Catholic weekly The Tablet, for instance, first notes that  “Vatican spokesman Fr. Federico Lombardi cautioned reporters that the note was not a papal document nor an official policy statement of the Holy See.” Then he continues: “However, the 8,000-word text draws primarily from the writings of all the popes of the past five decades. And it cites the Blessed John XXIII and Pope Benedict XVI specifically as calling for a ‘true world political authority’ that would ‘be endowed with structures and adequate, effective mechanisms equal to its mission.’ The note says such a body should have realistic structure and be set up gradually, but it also acknowledges that it will probably ‘not come about without anguish and suffering.’ The document warns: ‘What is at stake is the common good of humanity and the future itself.’”

The article continues: “The document harshly criticizes ‘the inequalities and distortions’ of capitalist development based on an economic liberalism that ‘spurns rules and controls.’ It says such ideologies have led to the development of some countries to the detriment of others, an injustice which—if not addressed—is ‘destined to create a climate of growing hostility and even violence, and ultimately undermine the very foundations of democratic institutions.’”

Another writer in the same Tablet, William Keegan, writes:  “The report is not an anti-globalization tract: indeed, the authors sing the praises of the way that the broader trading and overseas investment links, which go by the rather tiresome term ‘globalization,’ have spread prosperity: ‘It should be reiterated that the process of globalization with its positive aspects is at the root of the world economy’s great development in the twentieth century.’

“The problem, of course, is that ‘the distribution of wealth did not become fairer but in many cases worsened.’ In which context it notes that way back in 1967 Pope Paul VI, in his encyclical letter ‘Populorum Progressio,’ ‘clearly and prophetically denounced the dangers of an economic development conceived in liberalist terms because of its harmful consequences for world equilibrium and peace.’

“The commonly accepted term for the extreme free-market doctrines that have contributed to the financial crisis is ‘neo-liberalism.’ This is often a cipher for what the Pontifical Council calls ‘an economic liberalism that spurns rules and controls.’ They argue that the dogma ‘runs the risk of becoming an instrument subordinated to the interests of the countries that effectively enjoy a position of economic and financial advantage.’ The interesting thing is that the economic liberalism of recent years has not proved to be in the interest of many people in the countries that are supposed to have benefited either. It is the very rich, not least the more ruthless bankers, who have won the prizes of neo-liberalism.”

How have others reacted to it? The American Catholic, a publication which purports to write on politics and culture from a Catholic perspective, sums up other Catholic reactions into two contrasting views: first, the world would be a better place if people followed what the Church teaches; second, I am a Catholic who can think for myself and don’t have to follow what some old white men in Rome think.

I am certain that more will be written about it in the coming months. I am hoping that local economists will take a look at it and tell us what they think about the concrete things it is asking for in the context of the local financial economy.