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‘Economic Examination of Conscience’

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Kishore Jayabalan, Rome director of the Acton Institute for the Study of Religion and Liberty, clarified remarks made by Pope Francis at a May 16 reception of new Vatican ambassadors. The pope, calling for an examination of the world’s relationship with money, said we are facing “dire consequences” due to the power we give money.

Jayabalan had this to say:

If we look at money as wealth itself, we can very easily place it above everything else. But if we look at money as a representation of wealth, as a measure by which we can judge whether we are using our resources well, it need not be an idol, but a useful instrument. The same goes for finance and the allocation of capital needed for new ventures and progress.

Jayabalan noted that we must also stress that economics is not simply about consumption, but human creation, and that “unregulated greed” leads to financial crises.

The Pope’s home country of Argentina is a good example of what happens when the rich and powerful make all the decisions — corruption, less competition, a shrinking middle class and no opportunities for the poor, which are the exact opposite of what proponents of the market economy had in mind.

Elise Hilton Communications Specialist at Acton Institute. M.A. in World Religions.


  • RogerMcKinney

    “The origins of today’s financial crisis, he reminded the diplomats, is “a profound human crisis — in the denial of the primacy of human beings.”

    The Pope’s economic advisers have served him poorly. Financial crises like the latest one have been regular features of society for centuries. The regularity of their occurrences exclude the possibility that changing morality causes them.

    “This imbalance, the Pope argued, results from ideologies which “uphold the absolute autonomy of markets and financial speculation,” denying the right of control to states whose duty is to provide for the common good.”

    Actually, the problem is the opposite: state control of the economy caused the disaster, especially the monopoly on money held by states.

    “The will to power and of possession has become limitless,”

    That proves that most economies are not free market. Competition in free markets with the rule of law severely limits ambition to power and possession.

    “He called on government leaders to enact financial reform along ethical lines so that everyone would benefit…”

    So let the Fox write the rules for the hen house?

    “The financial crisis, he said, is as much a problem of “collusion between politicians, bankers and insurers” as it is of unregulated greed.”

    That’s just bad economics.

    “corruption, less competition, a shrinking middle class and no opportunities for the poor, which are the exact opposite of what proponents of the market economy had in mind.“

    Argentina has never had a market economy. It has enjoyed varying degrees of socialism, but never a free market economy, not even close. Why can’t Jayabalan see that?

    “A rediscovery of order, stability and balance, grounded in an understanding and awareness of ourselves and those around us, can and does lead to a happier, more fulfilled and indeed productive society.”

    That’s true, but it won’t prevent the regular economic crises the world has endured for centuries. That would require a better understanding of economics than what mainstream econ possesses.

    • Roger, it seems to me that the Pope’s point (and Jayabalan’s) is that a focus on money without considering the human aspect, is what has sent us into this crisis.

      It would be wrong to assume this particular problem is unique in this particular crisis. The regularity of financial crises in fact supports the notion that man has regularly put aside the human aspect in favour of gaining power and possessions. Greed and selfishness have existed in every ethical system, so it doesn’t matter if moral has changed, this basic corruption has always existed. ‘The will to power and of possession’ has been around since the Garden – one of the reasons Eve picked the fruit so she could be wise like God (Gen. 3.1-7).

      I am not sure how you came to the conclusion that “Competition in free markets with the rule of law severely limits ambition to power and possession.” Are you saying that in a purely free market the desire for profit and power is somehow muted?

      It is true that state control of the economy is a major problem, but I do not believe it is the “opposite” to the problem as the Pope stated it. In some ways, it is limiting to compare a pure, free-market system with what we have because we will never see it. The point about Argentina seems precisely to be that it isn’t a free market because it is corrupted. Please show me a completely free market. I lived and worked in Hong Kong for years and I can assure you that even the ‘most free economy’ in the world still has greed and corruption (why do they need the Independent Commission on Against Corruption – ICAC?).

      The basic problem is that we are sinners. As such, we each strive after our own idols and money and power are both very popular ones in a material world. Regardless of how ‘pure’ an economic system is, it will still be misused and abused if the players focus on the material aspect and not on the human aspect. “For where your treasure is, there your heart will be also.” (Matt 6.21)

      • RogerMcKinney


        I agree that was the Pope’s point. I’m saying it’s back economics. Crises don’t happen because people suddenly become greedier. Mainstream econ thinks crises are random events, like tornados that can’t be predicted, but sound economics teaches that manipulation of interest rates by central banks cause crises.

        For the Pope’s argument to be credible, he would have to show that greed and selfishness wax and wane in sync with the expansions and contractions of business cycles. I doubt that happens. Business cycles average 6 years in length and I doubt greed goes through such cycles, because as you note it is always with us.

        Competition in free markets with the rule of law severely limits ambition to power and possession was the main point of Smith’s “Wealth of Nations.” Greed causes businessmen to try to raise prices, reduce quality and defraud customers. But competitors who treat customers better will take away the greedy person’s custoomers and cause him to fail. So to prevent failure, the greedy person must reign in his greed and treat customers at least as well as his competitors. Also, if a group of businessmen collude to defraud customers, other businessman will see profit potential in treating them better and enter the market. Thus competition mutes greed.

        I can’t show you free market in the world because none exist any longer. And you’re right that none have ever existed. But it is a trivial pursuit to compare less and more free markets. Economists do it every day and history has a lot to say about it. The evidence says overwhelmingly that greater regulation by the state, the Pope’s “cure”, causes greater corruption and poverty while freer markets reduce both.

        Of course free markets will have corruption and greed because humans are involved. No free marketer leader has ever said that free markets could eliminate them, only that free market competition forces businessmen to restrain themselves. On the other hand, socialist leaders have always claimed that socialism could change humna nature and eliminate greed. Of course, they failed miserably. And the government regulation that the Pope recommends and which socialists think is a cure has proven to breed even greater corruption as businessmen buy political power to enrich themselves.

        • Thanks Roger.

          I am not sure that I agree the hike in interest rates was the primary cause of the 2008 sub-prime crisis. It may have been ostensibly, but complex, esoteric derivative products meant primarily to make the issuers (lots of) money, were the real reason. Interest rates were simply the catalyst that brought the house of cards down. We have made interest rates a very powerful and dangerous tool, but it would not have nearly the effect it does if it was not operating around the caustic pool of human greed.

          “Greed causes businessmen to try to raise prices, reduce quality and defraud customers. But competitors who treat customers better will take away the greedy person’s customers and cause him to fail.” – I definitely agree we see the former, but I don’t think the competition is counteracting is as is being argued.

          The one thing I really noticed when I studied economics was that no matter how ‘perfect’ the system, it can never properly take into account the human factor and this has a major influence on what actually happens vs what is supposed to happen.

          Don’t get me wrong. I am in no way, shape or form an advocate of socialism. I am from Canada and I lived in China. I have seen what happens in socialist systems. What I am saying however, is that it is naive of us to try to analyse what happens in the market by using economics which generally makes its assumptions in a vacuum.

          I absolutely agree that we need to see the primacy of the human being, but I also agree that letting government take charge of that is letting the fox into the chicken coop. The problem is that we have taken morality out of the market and we are then surprised when money becomes the idol.

          • RogerMcKinney


            I didn’t intend to suggest that raising interest rates caused the crisis. I follow what is popularly known as the Austrian Business Cycle theory, made famous by Hayek. I earned an MA in mainstream econ, probably similar to what you studied, and then learned Hayek’s economics. His business cycle theory is the only one that has historical and empirical support. Mainstream theory is essentially crap happens! The ABCT says that low interest rates by the Fed cause an unsustainable boom that has to go bust.

            I think you should read more of Adam Smith and Austrian economics. Smith compared government efforts to control greed with free market attempts. I think he makes a good case that free market competition does a far better job because businessmen can legally buy politicians and use government power in their favor. That’s the message of the “public choice” school of political economy of Buchanan, also. The state’s role is to use its police powers to stop greed when it rises to the level of criminal activity.

            However, I don’t think even mainstream econ takes morality out of the market. It assumes moral behavior or that the state will intervene when behavior becomes criminal. But if the ABC theory is correct, then the crisis would have happened to a nation of angels. Morality had nothing to do with it.

            Hayek demonstrated that prices regulate market activity. But those prices have to be accurate to do their job and they can be accurate only in a free market. When the state intervenes and distorts prices, especially the price of money, the market becomes disorganized and crises happen. Those crises will happen even if all of the people involved are the most moral the planet has ever seen and always give primacy to the human being. Socialism fails because it distorts prices, destroys coordination and causes enormous waste.

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