Category: General

This morning the Pontifical Council for Justice and Peace issued a bold statement advising how to bring order to the global financial crisis. I was in attendance at the much anticipated press conference that was organized to debrief reporters on the statement’s content.

The statement came in the form of a “Nota” (“Note” in Vatican terms): Towards Reforming the International Financial and Monetary Systems in the Context of Global Public Authority.

The President and Secretary of the Council, together with a University of Rome economics professor summarized the points and context of the Note. They were met with tough questions from 60 feisty Vatican-beat journalists representing international newspaper, television and radio outlets.

To say the least, the Council’s Note was controversial and not something you normally see released from a Vatican Council. Normally, concerning specific economic policy and governance, Vatican authorities speak much more boldly on moral and theological matters and much less so on practical prescriptions.

Before getting started with the debriefing, there were a few waivers and clarifications to make about the Note’s official extent of authority and relevance.

Both the council’s President, Cardinal Peter Turkson, and Vatican Press Secretary, Fr. Federico Lombardi, made it very clear that the statement was “not in any way the opinion of the pope”, but solely that of the Pontifical Council of Justice and Peace and those that composed it.

One of the journalists present asked if the Holy Father himself had read the document, to which the Council’s Secretary, Bishop Mario Toso, said the document had only been reviewed by the Secretariat of State and was released to stimulate the practical and moral thinking of world economic leaders attending the G-20 summit this November 3-4 in Cannes, France and to “invite a process of discernment among all peoples of the world” as Cardinal Turkson later added.

Most of the heated questions at the Vatican press conference concentrated on the potential utopian vision of a single world government authority a la United Nations and IMF to promote financial and monetary security as well as greater equality among the rich and poor in teetering markets and destitute nations. Professor Leonardo Becchetti told journalists from the panel that “the world has changed…a globalized economy now calls for a global government”.

Bishop Toso was quick to point out that the statement’s opinions on a global financial authority took inspiration from Pope Benedict’s 2009 encylcical letter, Caritas in Veritate, where he said the Holy Father underscored that some form of world authority was necessary to bring order to the global economic chaos in full force. Therefore, as the Council’s officials argued, some legitimacy to their argument for a world economic authority stemmed from the Church’s official social teachings.

The reference to Caritas in Veritate had today’s journalists on edge with further demanding questions about the natural tendencies and historical proofs that corruption, self-interests and sin almost always destroy the good intentions and original human ideals of large-scale governance and any political authority wielding massive power.

Here are some extended clips from the first and third parts of the Council’s statement, where the issues of economic development, inequality and global financial authority are addressed.

The English translation is still in a process of final revision and should be released soon along with expert articulation and commentary from the Acton staff. Stay tuned for more!


1. Economic Development and Inequalities

The grave economic and financial crisis which the world is going through today springs from multiple causes. Opinions on the number and significance of these causes vary widely. Some commentators emphasize first and foremost certain errors inherent in the economic and financial policies; others stress the structural weaknesses of political, economic and financial institutions; still others say that the causes are ethical breakdowns occurring at all levels of a world economy that is increasingly dominated by utilitarianism and materialism. At every stage of the crisis, one might discover particular technical errors intertwined with certain ethical orientations.

In material goods markets, natural factors and productive capacity as well as labour in all of its many forms set quantitative limits by determining relationships of costs and prices which, under certain conditions, permit an efficient allocation of available resources.

In monetary and financial markets, however, the dynamics are quite different. In recent decades, it was the banks that extended credit, which generated money, which in turn sought a further expansion of credit. In this way, the economic system was driven towards an inflationary spiral that inevitably encountered a limit in the risk that credit institutions could accept. They faced the ultimate danger of bankruptcy, with negative consequences for the entire economic and financial system

After World War II, national economies made progress, albeit with enormous sacrifices for millions, indeed billions of people who, as producers and entrepreneurs on the one hand and as savers and consumers on the other, had put their confidence in a regular and progressive expansion of money supply and investment in line with opportunities for real growth of the economy.

Since the 1990s, we have seen that money and credit instruments worldwide have grown more rapidly than revenue, even adjusting for current prices. From this came the formation of pockets of excessive liquidity and speculative bubbles which later turned into a series of solvency and confidence crises that have spread and followed one another over the years…

A liberalist approach, unsympathetic towards public intervention in the markets, chose to allow an important international financial institution to fall into bankruptcy, on the assumption that this would contain the crisis and its effects. Unfortunately, this spawned a widespread lack of confidence and a sudden change in attitudes. Various public interventions of enormous scope (more than 20% of gross national product) were urgently requested in order to stem the negative effects that could have overwhelmed the entire international financial system.

The consequences for the real economy, what with grave difficulties in some sectors – first of all, construction – and wide distribution of unfavourable forecasts, have generated a negative trend in production and international trade with very serious repercussions for employment as well as other effects that have probably not yet had their full impact. The costs are extremely onerous for millions in the developed countries, but also and above all for billions in the developing ones…

Global economic well-being, traditionally measured by national income and also by levels of capacities, grew during the second half of the twentieth century, to an extent and with a speed never experienced in the history of humankind…

First and foremost, an economic liberalism that spurns rules and controls. Economic liberalism is a theoretical system of thought, a form of “economic apriorism” that purports to derive laws for how markets function from theory, these being laws of capitalistic development, while exaggerating certain aspects of markets. An economic system of thought that sets down a priori the laws of market functioning and economic development, without measuring them against reality, runs the risk of becoming an instrument subordinated to the interests of the countries that effectively enjoy a position of economic and financial advantage.

Regulations and controls, imperfect though they may be, already often exist at the national and regional levels; whereas on the international level, it is hard to apply and consolidate such controls and rules.

The inequalities and distortions of capitalist development are often an expression not only of economic liberalism but also of utilitarian thinking: that is, theoretical and practical approaches according to which what is useful for the individual leads to the good of the community. This saying has a core of truth, but it cannot be ignored that individual utility – even where it is legitimate – does not always favour the common good. In many cases a spirit of solidarity is called for that transcends personal utility for the good of the community….

One devastating effect of these ideologies, especially in the last decades of the past century and the first years of the current one, has been the outbreak of the crisis in which the world is still immersed.

In his social encyclical, Benedict XVI precisely identified the roots of a crisis that is not only economic and financial but above all moral in nature. In fact, as the Pontiff notes, to function correctly the economy needs ethics; and not just of any kind but one that is people-centred. He goes on to denounce the role played by utilitarianism and individualism and the responsibilities of those who have adopted and promoted them as the parameters for the optimal behaviour of all economic and political agents who operate and interact in the social context. But Benedict XVI also identifies and denounces a new ideology, that of “technocracy”.

3. An Authority over Globalization

On the way to building a more fraternal and just human family and, even before that, a new humanism open to transcendence, Blessed John XXIII’s teaching seems especially timely. In the prophetic Encyclical Pacem in Terris of 1963, he observed that the world was heading towards ever greater unification. He then acknowledged the fact that a correspondence was lacking in the human community between the political organization “on a world level and the objective needs of the universal common good”. He also expressed the hope that one day “a true world political authority” would be created.

In view of the unification of the world engendered by the complex phenomenon of globalization, and of the importance of guaranteeing, in addition to other collective goods, the good of a free, stable world economic and financial system at the service of the real economy, today the teaching of Pacem in Terris appears to be even more vital and worthy of urgent implementation.

In the same spirit of Pacem in Terris, Benedict XVI himself expressed the need to create a world political authority. This seems obvious if we consider the fact that the agenda of questions to be dealt with globally is becoming ever longer. Think, for example, of peace and security; disarmament and arms control; promotion and protection of fundamental human rights; management of the economy and development policies; management of the migratory flows and food security, and protection of the environment. In all these areas, the growing interdependence between States and regions of the world becomes more and more obvious as well as the need for answers that are not just sectorial and isolated, but systematic and integrated, rich in solidarity and subsidiarity and geared to the universal common good.

As the Pope reminds us, if this road is not followed, “despite the great progress accomplished in various sectors, international law would risk being conditioned by the balance of power among the strongest nations.”

The purpose of the public authority, as John XXIII recalled in Pacem in Terris, is first and foremost to serve the common good. Therefore, it should be endowed with structures and adequate, effective mechanisms equal to its mission and the expectations placed in it. This is especially true in a globalized world which makes individuals and peoples increasingly interconnected and interdependent, but which also reveals the existence of monetary and financial markets of a predominantly speculative sort that are harmful for the real economy, especially of the weaker countries.

This is a complex and delicate process. A supranational Authority of this kind should have a realistic structure and be set up gradually. It should be favourable to the existence of efficient and effective monetary and financial systems; that is, free and stable markets overseen by a suitable legal framework, well-functioning in support of sustainable development and social progress of all, and inspired by the values of charity and truth. It is a matter of an Authority with a global reach that cannot be imposed by force, coercion or violence, but should be the outcome of a free and shared agreement and a reflection of the permanent and historic needs of the world common good. It ought to arise from a process of progressive maturation of consciences and freedoms as well as the awareness of growing responsibilities. Consequently, reciprocal trust, autonomy and participation cannot be overlooked as if they were superfluous elements. The consent should involve an ever greater number of countries that adhere with conviction, through a sincere dialogue that values the minority opinions rather than marginalizing them. So the world Authority should consistently involve all peoples in a collaboration in which they are called to contribute, bringing to it the heritage of their virtues and their civilizations.

The establishment of a world political Authority should be preceded by a preliminary phase of consultation from which a legitimated institution will emerge that is in a position to be an effective guide and, at the same time, can allow each country to express and pursue its own particular good. The exercise of this Authority at the service of the good of each and every one will necessarily be super partes (impartial): that is, above any partial vision or particular good, in view of achieving the common good. Its decisions should not be the result of the more developed countries’ excessive power over the weaker countries. Instead, they should be made in the interest of all, not only to the advantage of some groups, whether they are formed by private lobbies or national governments.

A supranational Institution, the expression of a “community of nations”, will not last long, however, if the countries’ diversities from the standpoint of cultures, material and immaterial resources and historic and geographic conditions, are not recognized and fully respected. The lack of a convinced consensus, nourished by an unceasing moral communion on the part of the world community, would also reduce the effectiveness of such an Authority.

What is valid on the national level is also valid on the global level. A person is not made to serve authority unconditionally. Rather, it is the task of authority to be at the service of the person, consistent with the pre-eminent value of human dignity. Likewise, governments should not serve the world Authority unconditionally. Instead, it is the world Authority that should put itself at the service of the various member countries, according to the principle of subsidiarity. Among the ways it should do this is by creating the socio-economic, political and legal conditions essential for the existence of markets that are efficient and efficacious because they are not over-protected by paternalistic national policies and not weakened by systematic deficits in public finances and of the gross national products – indeed, such policies and deficits actually hamper the markets themselves in operating in a world context as open and competitive institutions.

In the tradition of the Church’s Magisterium which Benedict XVI has vigorously embraced, the principle of subsidiarity should regulate relations between the State and local communities and between public and private institutions, not excluding the monetary and financial institutions. So, on a higher level, it ought to govern the relations between a possible future global public Authority and regional and national institutions. This principle guarantees both democratic legitimacy and the efficacy of the decisions of those called to make them. It allows respect for the freedom of people, individually and in communities, and at the same time, allows them to take responsibility for the objectives and duties that pertain to them.
According to the logic of subsidiarity, the higher Authority offers its subsidium, that is, its aid, only when individual, social or financial actors are intrinsically deficient in capacity, or cannot manage by themselves to do what is required of them. Thanks to the principle of solidarity, a lasting and fruitful relation is built up between global civil society and a world public Authority as States, intermediate bodies, various institutions – including economic and financial ones – and citizens make their decisions with a view to the global common good, which transcends national goods.
As we read in Caritas in Veritate, “The governance of globalization must be marked by subsidiarity, articulated into several layers and involving different levels that can work together.” Only in this way can the danger of a central Authority’s bureaucratic isolation be avoided, which would otherwise risk being delegitimized by an excessive distance from the realities on which it is based and easily fall prey to paternalistic, technocratic or hegemonic temptations.
However, a long road still needs to be travelled before arriving at the creation of a public Authority with universal jurisdiction. It would seem logical for the reform process to proceed with the United Nations as its reference because of the worldwide scope of its responsibilities, its ability to bring together the nations of the world, and the diversity of its tasks and those of its specialized Agencies. The fruit of such reforms ought to be a greater ability to adopt policies and choices that are binding because they are aimed at achieving the common good on the local, regional and world levels. Among the policies, those regarding global social justice seem most urgent: financial and monetary policies that will not damage the weakest countries; and policies aimed at achieving free and stable markets and a fair distribution of world wealth, which may also derive from unprecedented forms of global fiscal solidarity, which will be dealt with later.
On the way to creating a world political Authority, questions of governance (that is, a system of merely horizontal coordination without an authority super partes cannot be separated from those of a shared government (that is, a system which in addition to horizontal coordination establishes an authority super partes) which is functional and proportionate to the gradual development of a global political society. The establishment of a global political Authority cannot be achieved without an already functioning multilateralism, not only on a diplomatic level, but also and above all in relation to programs for sustainable development and peace. It is not possible to arrive at global Government without giving political expression to pre-existing forms of interdependence and cooperation.

Jim Wallis, the author, public theologian, speaker, and international commentator behind the Christian Left’s Circle of Protection, was in Grand Rapids last night, and I went to hear him speak. Wallis was presented as the latest in a long line of progressive luminaries to speak (or play their guitars) at the Fountain Street Chruch: Eleanor Roosevelt, Clarence Darrow, Margaret Sanger, Malcolm X, Gloria Steinem, U2, and the Ramones have all appeared on the same dais. He was introduced to speak about “where we are going together so that we can keep our eyes on the prize.”

That’s a pretty hip list, and Wallis considers himself a pretty hip guy, so I was genuinely surprised to enter the nave and find a sea of grey heads. Even the handful of Occupy Grand Rapids protesters were in their forties and fifties. Well I’m here for his lecture, I reminded myself, not to draw conclusions from his demographics before he even speaks.

Wallis started off with baseball — a promising place to start — telling the audience, “Baseball, following teams like Detroit, it builds character.” (Detroit missed out on the World Series a few days ago when it ran up against the indomitable Texas Rangers.) I was hoping to hear him expound on this theme in the rest of the talk, but he moved on to his core message: that with respect to Christ’s words in Matthew 25:40, the budget is a moral document.

Then he addressed the handful of forty- and fifty-something Occupy Grand Rapids protesters, and spoke about hope. “Hope,” he said “is not a feeling. Hope is a choice we make based on faith.” His lesson for the protesters was the same, he said, was the same one he had learnt from Archbishop Desmond Tutu in South Africa during apartheid: that “hope means believing in spite of the evidence, then watching the evidence change.”

Both were very true statements on the nature of hope, and the secular, materialist world desperately needs to hear them. But hope is a theological virtue, and Wallis applied it only to the material world.

I understand that he was speaking to a wide audience in a Unitarian church, but the faith he spoke of — the faith that undergirds his hope in this world and the next — is a supernatural faith. Without talk of hope in the City of God, the lecture lacked a fundamental coherence that no anecdote about Desmond Tutu, Elizabeth Warren, or President Obama could supply. It lacked even a discussion of the character that the Tigers’ season might have instilled in the audience. (It is possible that part went right over my head, since I’m a Rangers fan and the experts have picked us to win in 6 games.)

The lack of any transcendent meaning in the talk may have been why the youth of today weren’t there. Times are hard, employment is scare, it’s a bad time to be graduating college and looking for a job. But young people don’t have time to go hear someone tell them that if they hope for more from this life, they’ll get it. Wallis should stay away from that message anyway, since Joel Osteen delivers it better.

Someone looking for a gathering of energized youth in Grand Rapids should come in June for Acton University. That’s a gathering based on true hope, and the attendees (with an average age probably 40 years lower than in Fountain Street Church crowd) gather from scores of countries to discuss economic growth motivated and guided by a transcendent faith. Until Wallis’s message goes a little deeper, he continue to expect audiences that just want to be told they’ve lived a benignant life.

Acton’s director of research Samuel Gregg’s reaction to last night’s GOP presidential debate is up at NRO’s The Corner. Like most people who saw the debate, he didn’t like the childish bickering, of which he says “the trivializing effects upon serious discussion are hard to deny.”

“There were, however, two useful moments,” he says:

One was several candidates’ efforts to put the contemporary disease of identity politics in its appropriate place (i.e., the grave).

The second was a number of candidates’ willingness to make the hard-to-hear but nevertheless accurate observation that the best way to address the slump in housing prices in places likeNevadais to allow the housing market to stabilize under its own volition. No matter how noble the intentions, government mortgage-relief programs have proved economically ineffective, and, in many instances they are deeply unjust. Who knows? If GOP presidential candidates are willing to make this point, maybe some of them will eventually dare to talk seriously about entitlement reform.

Hope springs eternal!

Acton’s director of research Samuel Gregg tackles the question of religious liberty in Islamic states this morning, over at The American Spectator. In a piece titled “The Arab Spring’s Forgotten Freedom,” Gregg describes the tensions between Christians seeking religious freedom in the Middle East and the Islamic states they inhabit, and then looks hopefully to the source of a resolution.

For at least one group of Middle-Easterners, the Arab Spring is turning out to be a decidedly wintery affair. And if confirmation was ever needed, just consider the escalation of naked violence against Christians throughout the region. The recent instance of Egyptian army vehicles crushing and killing Coptic Christians protesting against a church burning was merely one of numerous incidents that must make Middle-Eastern Christians wonder about their future under the emerging new regimes.

These trends appear to confirm that despite all the current freedom-and-democracy talk, much of the Islamic world continues to suffer from one particularly severe blind spot when it comes to human liberty. And that concerns the acceptance and protection of authentic religious freedom.

Gregg points out that the Christian population of the Middle East has plummeted since 1900 (when it was about 20 percent) for ethnic and for political reasons.

Islam confronts two specific dilemmas that raise questions about its ability to accept a robust conception of religious liberty.

First, from its very beginning, Islam was intimately associated with political power. That’s one reason why there is no church-state distinction in Islam that limits (at least theoretically) the state’s capacity to coerce religious belief or unreasonably inhibit religious-shaped choices.

Second, since approximately the 13th century, the dominant theological understanding of God’s nature within Islam has been one of Voluntas (Divine Will) rather than Logos (Divine Reason). And this matters because if you believe in a God that can, on a mere whim, act unreasonably, then it isn’t so problematic for such a Divinity’s adherents to engage in plainly unreasonable practices such as killing apostates.

If, however, God is Logos, the case for religious liberty is much easier to make insofar as a reasonable God would never demand compulsion in religion. Why? Because as St. Augustine wrote long ago, “If there is no assent, there is no faith, for without assent one does not really believe.”

Gregg sees hope, however, in thinkers like Turkish journalist and devout Muslim Mustafa Akyol, whose recent book Islam Without Extremes makes the Islamic case for religious freedom. Though most Western religious thinkers do little to plead the cause of persecuted Middle Eastern Christians, Gregg thinks the central cause of the persecution, and thus the ultimate solution, is to be found in Islamic thought.

In the end, non-Muslims can’t resolve Islam’s religious liberty challenge. Only theologically educated, historically informed and believing Muslims can do that. In the meantime, those reading the Arab Spring as a uniformly-positive event might like to consider that it appears to be doing little to secure the freedom, if not the very existence, of ancient Christian churches, many of which were founded by people who in all likelihood knew Christ or his first disciples. The loss of such a civilizational and religious heritage would be immeasurable — and not just for Christianity, but for the future of liberty within the Islamic world itself.

Mustafa Akyol happens to be speaking today at a luncheon hosted by the Cato Institute. Acton’s executive director Kris Mauren will be providing commentary. If you are in Washington, D.C., you won’t want to miss it!

I can always find common ground with the Distributists I meet. We want to replace the government-corporate cronyism that characterizes so much of our current economic system. And we want our culture to raise up young people with the skills, virtues and freedom to accumulate productive capital and invest it in ways that promote human flourishing for themselves and others.

But then there’s the question of centralized political power in the economy. Sometimes when Distributism is described, you get the sense that Distributism and one of its leading early proponents, Hilaire Belloc, have always been committed to a largely grass roots, bottom-up strategy of change. But Belloc himself painted a different picture in An Essay on the Restoration of Property:

We must seek political and economic reforms which shall tend to distribute property more and more widely until the owners of sufficient Means of Production (land or capital or both) are numerous enough to determine the character of society…. The effort at restoring property will certainly fail if it is hampered by a superstition against the use of force as the handmaid of Justice. (P.29)

So when I have a conversation with Distributists, the first thing I like to clear up is what they mean by Distributism. Do they merely want people and companies to model best-Distributist practices voluntarily, so as to propagate Distributist ideas and behaviors in a free marketplace of ideas? Do they just want to get the federal government out of the job of picking winners and losers in the economy? Or do they also want to vote in politicians who will arrogate to the federal government expanded powers to seize and redistribute private property and keep it more evenly distributed?

Until those questions are cleared up, the opportunities for muddle and fog are just too great to bother wading in.

Hilaire Belloc, An Essay on the Restoration of Property, (Norfolk, Virginia: IHS Press, 2002).

There are no more Christian churches in Afghanistan — not a single public house of Christian worship is left standing. In other news, NATO success against the Taliban may have been intentionally exaggerated, although we already knew that progress in that country is… slow. It’s no surprise, of course, that the United States hasn’t been able to establish self government-in-a-box in a country where, according to the State Department, religious liberty has declined measurably even in the last year.

Religious liberty must be at the heart of any free society, because if it is not protected, all other defenses are sure to fall. The abuses of Christians in Afghanistan violate not only their rights of conscience, but also their rights of property and even of free movement — their churches are seized and they are imprisoned. Contracts with Christians are not enforced, converts to Christianity are openly persecuted, and Afghan politicians approve of all of this.

We should not expect that in ten years our diplomats could have effected a constitutional transformation of Afghanistan. Liberty “is the delicate fruit of a mature civilization,” as Lord Acton said, “from the sowing of the seed at Athens, two thousand four hundred and sixty years ago, until the ripened harvest was gathered” in Western Europe. (He delivered that address in 1877, so you’ll want to update the numbers.)

But a backslide is cause for concern. It suggests that there is something wrong with the conception of human freedom that is motivating our efforts.

Blog author: kspence
Wednesday, October 12, 2011
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Acton director of research Samuel Gregg offers his thoughts on last night’s GOP Roundtable in this NRO Symposium. Gregg thinks the debate offered an important alternative to the government-driven economy talk that fills the news every other night of the week.

In a week in which two American economists from the non-Keynesian side of the ledger received the Nobel Prize for Economics, last night’s GOP debate gave us some insight into the depth and character of the various candidates’ free-market commitments and the different policy priorities which flow from the various forms of those commitments.

But if the ideas were strong, they were a reminder of separation between our free market ideals and our considerably less free economy:

For the most part, the candidates focused upon the institutional background that either impedes or facilitates economic growth: the regulatory environment, tax levels, trade policy, monetary policy, etc. Listening to the responses was a salutary reminder of the gap betweenAmerica’s free-market aspirations and rhetoric, and the rather different Eurosclerotic economic reality that has slowly envelopedAmerica– and not just over the past three years, but over several decades.

The only way we’re really going to get our economy going, is by addressing entitlements.

The surprising omission was substantial discussion of the issue of welfare reform and the related question of America’s public debt. While Obamacare was continually criticized because of its costs, that’s only part of the picture. Substantive entitlement reform is indispensable if we want to significantly reduce the spending and deficits that threaten to suck the life out of America’s economy. Addressing this subject is of course very politically risky because far too many Americans are more attached to the welfare state than they care to admit. But if fiscal conservatives aren’t willing to tackle this issue, then who will?