Justice & Economics

Nearly three years ago Dennis C. Blair, President Barack Obama’s director of national security, garnered headlines as well as ridicule in some quarters when he reported to Congress that the most serious threat to the United States and to world peace was not terrorism, or Iran, or the rise of China, but the economic crisis.

Blair warned that the global nature of the economic crisis threatened both the military readiness of our allies and their ability to meet our shared humanitarian obligations. Noting that the crisis originated on Wall Street and in U.S. banks, Blair worried about a backlash against the United States, and especially against its promotion of increasingly unregulated financial and commercial markets, a policy usually referred to as economic neoliberalism. The Vatican, as it turns out, appears to agree with much of this assessment.

Last month the Vatican’s Pontifical Council for Justice and Peace released the document “Toward Reforming the International Financial and Monetary Systems in the Context of Global Public Authority.” Admittedly, neither its title nor the document itself, at least in its unofficial translation, trips lightly off the tongue. According to its authors, the aim of the statement is to contribute to a broader discussion about the perils created by the new global economy. The operations of the international economic system, the council argues, must be made accountable to legitimate democratic and political institutions, which in turn must be guided by sound ethical principles. The document does not pull punches when characterizing the reason for economic turmoil: “The crisis has revealed behaviors like selfishness, collective greed, and the hoarding of goods on a great scale. No one can be content with seeing man live like ‘a wolf to his fellow man.’”

Predictable howls of outrage were heard from certain Catholic commentators eager to obfuscate the church’s rejection of economic neoliberalism. Yet those familiar with Catholic teaching could hardly be surprised by the council’s description of the failures of such an approach to political economy or by its recommendations for bringing greater stability and a more equitable distribution of wealth to the global system. Among other things, the document calls for a tax on financial transactions to create a reserve fund to assist poorer countries, a recapitalization of banks with public funds but accompanied by greater public oversight, and transparency in so-called shadow financial markets such as securitized loans and hedge funds. Some have found an echo, if not an endorsement, of the Occupy Wall Street protests in the statement, and not without reason. “If no solutions are found to the various forms of injustice, the negative effects that will follow on the social, political, and economic level will be destined to create a climate of growing hostility and even violence, and ultimately undermine the very foundations of democratic institutions, even the ones considered most solid,” the document warns. 

The most controversial aspect of the council’s statement is a call for the creation of a “world political authority” that would have the power to regulate financial and economic activity in the increasingly interconnected and interdependent global economy. Expanding on an idea embraced by Benedict XVI’s Caritas in veritate, the document envisions this agency emerging from already established institutions of supranational cooperation such as the International Monetary Fund and the United Nations. The proposal is tentative and quite vague, although the Catholic Church’s history of championing such organizations, especially the UN, can hardly be questioned. 

Whether the creation of such an institution is likely in the foreseeable future, or even desirable, are fair questions. Nothing in the document suggests that Catholics must agree with the pontifical council’s highly technical and prudential judgments. The very idea of a “world political authority” raises as many concerns about potential corruption and the concentration and abuse of power as it does hopes for a more cooperative and democratic economic system. Many will bristle at the document’s hortatory tone and abstract idealism. Some will insist that this sort of regulation is best accomplished at the regional and national level whenever possible. These are useful criticisms. At the same time it would be a mistake to ignore the fact that power is increasingly concentrated in the hands of financial and corporate interests that are largely beyond the reach of established political and legal authority. That unprecedented state of affairs is a significant source of economic uncertainty. The stability of the international community as well as the global economy are being held hostage to the caprice of the markets, warns the pontifical council. What is to be done? Writing in this issue on the American bishops’ 1986 pastoral letter Economic Justice for All, David J. O’Brien reminds us that the ethical principles that guide economic behavior should be the same principles that guide us in every other aspect of our lives. When the church calls us back to those duties, it is doing its job.

November 1, 2011

Related: Economic Indicator, by E. J. Dionne Jr.



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"Last month the Vatican’s Pontifical Council for Justice and Peace released the document “Toward Reforming the International Financial and Monetary Systems in the Context of Global Public Authority.”"


One doesn’t need to be an economist to see that establishment economics is fundamentally dysfunctional.  “Freedom without unity”, as exemplified by the incoherent aims of the Occupy campaigns, or ‘unity without freedom”, which is what a “global public authority” would seem to suggest, are desperately facile solutions.  Astonishingly, the present economic mess has its roots in some very simple errors that were identified more than seventy years ago - the achievement of an Irish-Canadian Jesuit, Bernard Lonergan (1904-1984).


Lonergan’s discovery of the science of economics identifies what is lacking in current economic theory: the empirically verifiable fact that there are two kinds of firms and hence two productive circuits. The basic circuit is the flow of consumer goods understood as a rate (so much every so often) and the producer circuit is the flow of capital goods and understood as a series of accelerators (speeding up, slowing down, maintaining) the rate of flow in the basic circuit.


Although Lonergan’s writings have been available in the past two decades, they have not yet caught the attention of mainstream economists. Nonetheless some year twelve students--at a well respected Jesuit school in Sydney-- are able, by simple observation, to verify Lonergan’s discovery and, by comparison, the prescientific context of a single circuit of firms and households as presented in the standard textbooks.


As the editors point out: “The very idea of a “world political authority” raises as many concerns about potential corruption and the concentration and abuse of power as it does hopes for a more cooperative and democratic economic system.”  What is needed is not the deus ex machina of a “world political authority” but a truly scientific understanding of how to manage the productive process via an exchange economy.  So, rather than "public authority", the reform would be better implemented in the context of "scientific knowledge and responsible democratic freedom". 

I have used EJ's piece as a springboard into an examination of one of the biggest critics of the Vatican's writing on economy, George Weigel and have used his own book Witness to Hope to demonstrate how outrageous his description of the Justice and Peace commission is. I really aprreciate Commonweal's voice on these issues. Hope you like mine as well!


An increasingly fortress like conservative church and its hierarchy can hardly bring itself to be heard on justice and peace concerns. After the wide spread sex abuse of minors, it also cannot claim credibility nor influence over the national or international agenda. It is more and more just a museum of piety and irrelevance to the outside world. Sic transit evangelism (et gloria).

The Pontifical Council correctly observes the imperative need to provide a rational regulatory framework for the global flow of capital and trade. As things now stand, too much pain is inflicted on too many people. How can it be considered anything other than a "grave sin" to permit such humanly caused suffering to continue? There is also enormous danger in failing to recognize that the large and growing inequities generated by the current situation will create more political instability on a global scale and dramatically increase the threat to peace within, as well as between, countries -- and not just in countries and regions considered to be in the economic backwaters of the planet.

The power of the Council's statement flows from its logic, not the "teaching authority" of the Council or the Church. Nor, for the same reason, is the statement's persusaive power reduced by the all too human failings of the institutional Church. 

The problem is not only global, but essentially political rather than economic, and any nation that attempts to address the problem solely on its own will over time only bring more economic damage on itself.

The concerns generated by the term “world political authority” are, of course, understandable. But the term does not necessarily imply the creation of a new global governing body with dubious democratic accountability. We already have at least two global entities that to a large measure address the issues involved: The International Labor Organization (ILO) and the World Trade Organization (WTO). The WTO has fairly strong regulatory powers but no standards that protect the needs of ordinary people. The ILO, which brings labor and business as well as governments to the global decision making process, has standards addressing those needs, but no regulatory power. For starters, each organization should be brought to the next logical phase of its development. The WTO needs labor and environmental standards; the ILO needs to have strong sanctions.

The next priority is making the World Bank, the Regional Development Banks, and the International Monetary Funds more representative in their governance structures.

 Not simple. But on the other hand, achievable, and not "rocket science".

The following was posted before in reference to the American Bishops' effort to impose 'for the common good" on the  Federal governemt's taxing and spending policies  and it applies equally to the Vatican's recent proposal which would place the universal Catholic Church under the financial conrol of some world body."As the nation’s political discourse becomes increasingly theatrical and incoherent, the bishops, along with other leaders and sectors of the church, need to speak with clarity about the budget as a moral document." This memo to the Bishops continues the meme that government is necessary to "serve the all encompassing common good;" which certainly is not in keeping with Jesus Christ's teaching of who is responsible for dispensing charity.'For you will have the poor always with you" Matthew 26.11 and nowhere in the New Testament does Jesus Christ lay the responsibility for caring for the poor, the sick the hungry or thirsty, the homeless or any oppressed people on any governmental body. He did not cite King Herod, the priests of the temple, the local mayor or the Roman powers as the source of Charity. He made it an individual responsibility time after time in His sermons, in His parables and in His own acts. The Good Samaritan was not an example because he stopped at the nearest inn and asked that a 911 call be made but because he acted.Jesus's words "I was hungry, and you fed me; thirsty, and you gave me drink; naked and you clothed me; ill and in prison, and you visited me.   Whatever you did for these least ones, you did for me,"was directed to each and very individual not to any civil government or at the time the religious leaders of the Temple. How did our Church leaders manage to subvert the teachings of our Lord on individual responsibility for the idea that "government is necessary to serve the common good?" in all social and moral areas.Jesus Christ refused to negotiate with evil, the devil, three times and yet our Bishops, never really grasped the full extent of the absolute loss of Catholic moral teachings, on abortion, contraception, rationed care for the new born and the elderly, now called by Paul Krugman by its real name, death panels, resulting in euthanasia and no more conscience opt-out which were imbedded in and now are the law of the land. The demand for a social program of government funded universal medical care made it possible for the one who paid the piper to call the tune. Now the government controls health care from conception to death.There are many more Catholic moral beliefs, anti-Jesus teachings that have been ignored in Obamacare that the Bishops are remiss and derelict in their duties to uphold the Faith if they do not call for the repeal of this Obama abomination.  Regarding the old canard about "regressive tax cuts for the wealthy'" the fact is only the wealthy pay income taxes,ie,the top 1% of income earners pay 39% of all federal income taxes, the top 25% of income earners pay 86% and the top 50% pay 97% of all federal income taxes. That means that the lowest 50% of income earners pay only 3% of federal income tax revenues while most actually receive checks from the government, welfare payments disguised as earned income tax credits, children's tax credits as well as a packages of federally funded programs for the poor too many to list here. Instead of demanding bigger government involvementThe Bishops should be very concerned about the following;-plans being put forward to eliminate the tax deduction for charitable contributions which would have a devastating effect on the financial well being of an already strapped Church. -plans to control the teaching curriculum and diversity of what is taught through government accreditation of all higher education colleges and universities both public and private. In every Communist country the first to fall was religion, followed by education. It appears that our Bishops need a history lesson and a detailed study of Obama's past.The Bishops are headed for leading a Church which is subservient to the government as they meekly accept the idea "that government is necessary to serve the common good" even as it repudiates Catholic moral teachings."

The above comment was previously posted at America magazine.

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