The release of the Vatican’s new declaration on reform of the world financial system, long in preparation, happened to be published as media interest in the Occupy Wall Street movement was in crescendo. Headlines naturally drew a connection. While Catholic social teaching has often been at its most effective when social movements—labor unions, human rights movements, peace and environmental activists—have been its carriers, the still amorphous Occupy Wall Street movement and the Vatican report are not directly connected. Rather, they are parallel events responding to the suffering and loss of hope inflicted on so many by the current economic crisis.
Unlike many protesters, however, the Pontifical Council for Justice and Peace offers an analysis of the problems underlying the sputtering world economy. Even more, it offers challenging solutions, including a financial services tax, the conditioned recapitalization of banks that reinvest in “the real economy” and a world authority to regulate international financial transactions. These proposals are fully in line with the “the universal common good,” a principle requiring institution-building to meet global needs unsatisfied by the existing international arrangements.
The document indicts 20th-century liberal (that is, free-market) economics as an “ideology,” in the sense of a set of fixed ideas immune to correction by the inconvenient facts of human suffering. “In the 1920s,” it observes, “some economists had already warned about giving too much weight, in the absence of regulation and controls, to theories which have since become prevailing ideologies and practices on the international level.” The ideology has gone under different names: “liberalization,” “structural adjustment,” “the Washington consensus.” Its chief tenets were deregulation, small government, low taxes, free trade and the profit motive. The council admits that “global economic well-being...grew over the second half of the twentieth century, to an extent and with a speed never experienced in the history of humankind.” Nonetheless, it points out, this progress often exacted a tremendous human price.
The report recounts how more than 40 years of unrestrained free-market capitalism have produced repeated economic crises, first in the developing countries of Latin America, Asia and Eastern Europe, and now in Western Europe and the United States. The result has been the rampant growth of plutocracy and inequality reflected in the anti-Wall Street protestors’ chant, “We are the 99 percent.” As if to underscore the council’s (and protesters’) point, a report issued last week by the Bertelsmann Foundation of Germany listed the United States as 27th among 31 member states in its degree of social justice, ranked above only Greece, Chile, Mexico and Turkey.
In identifying inequality as a pressing social problem, the church that repeatedly opposed class conflict in Marxism cannot be charged with stirring up class warfare. The reduction of inequality has been a concern of modern Catholic social teaching since Blessed John XXIII’s encyclical letter “Mater et Magistra” (“Christianity and Social Progress,” 1961). The Second Vatican Council asserted that “vigorous efforts must be taken...to remove as quickly as possible the immense inequalities which now exist.” Pope Paul VI’s “Populorum Progressio” (“The Development of Peoples,” 1967) described “the scandal of glaring inequalities not merely in the enjoyment of possessions but in the exercise of power” and affirmed that “private property does not constitute for anyone an absolute and unconditional right.” One might reasonably say that an allergy to inequality and the demand for its amelioration are part and parcel of the Catholic common good tradition.
The most controversial recommendation of the report is the proposal for global management of financial transactions through “a kind of ‘central world bank’ that regulates the flow and system of monetary exchanges.” The proposals build on “the logic of the Bretton Woods institutions,” the World Bank and International Monetary Fund; and, like the 2009 G-20 meeting, they recognize the inadequacies of those bodies to meet the demands of a globalized economy. Far from imposing a one-world government, the proposal allows for a wide range of possible implementations. It simply recognizes that the advance of globalization requires new rules and new governing institutions.
As the economic crisis is drawn out and protests multiply, preachers ought to take the occasion to educate congregations on the pontifical council’s report. (The report, with commentaries, is at americamagazine.org/finance.) Catholic universities and colleges ought to study it and discuss inequality as a sign of our times. In this election year, Catholics will also be listening to hear what their bishops have to say about a question so integral to Catholic social teaching.