LifeSiteNews.com recently asked me to comment on statements made by Ettore Gotti Tedeschi, president of the Vatican bank, about the economic effects of demographic decline in Western industrialized countries. Tedeschi told the Zenit news service that the “true cause” of the financial crisis is the low birth rate in these countries.

Read more on ‘Man is man’s greatest resource’…

I don’t much like the term Calvinism. I think it is historically unhelpful, and in general prefer to use something like Reformed theology or speak about the Reformed confessions, depending on the particular context.

Read more on On Calvinism and Capitalism…

In response to the question, “What is wrong with socialism?”

I can hardly do better than Pope John Paul II, who wrote in Centesimus Annus, “the fundamental error of socialism is anthropological in nature,” because socialism maintains, “that the good of the individual can be realized without reference to his free choice.”

Read more on PBR: History Casts Doubt…

The famous Austrian economist, Joseph Schumpeter, despaired for the future of the free market system. The reason for this despair was that the excess wealth of the system would create educated folks who would turn on the very system that created them. Their education would make them into anti-capitalist ideologues, who would then kill the goose that laid the golden egg. He did not think that those who participated in the creation of such enormous wealth would be in any position to fight back, and this for two reasons: firstly, business people do not tend to be men of letters, so they are unable to mount arguments defending the system; secondly, the job of the business executive is the survival of the company, and thus, he will concentrate on those things required to weather the storm, not be controversial.

The man who is probably the most famous Austrian economist, Ludwig von Mises, despaired for the future of the free market system due to envy. Various sectors of society, academic, non-productive, uneducated, etc., would envy the wealth of the producers in society, and end up by finding means to take away that wealth and give it to the lesser productive people, despite the fact that they did not earn it, and therefore, are not entitled to it.

Our present political situation has a combination of both of these views. Both presidential candidates are in favor of redistribution of wealth, albeit one is more open about it. And very few business people are saying “no!” to any of it with a few exceptions, such as the president of BB&T Bank, who wrote an open letter to Congress asking why his totally solvent bank should be punished for the stupidity of the others.

But there is another culprit in this maelstrom. This culprit is the business person. Why? With tongue-in-cheek apologies to neo-classical (mathematical) economic theory, the purpose of a company is not to make a profit. As John Paul II said in Centesimus Annus, a profit is a sign of the health of a company, and therefore is good and necessary. But anyone who has taken a management course knows that the purpose of the company, aside from producing what the customers want, is to increase the wealth of the stockholders. This is different than making a profit, although profit is an integral part of it. Wealth is different than profit. Profit is a short run measurement of the short run health of the company. Wealth, by its very nature is long run. Profit appears on the financial statements of a company in mere money terms, and the accountants who produce those statements do not even take inflation into account. So a company could have an increase in profit, but not an increase in items sold, merely because they had to raise prices to accommodate the fall in the value of the dollar. But executives today are a slave to the profit line in the financial statements. They have a need to impress their boards and stockholders now by sacrificing the long term growth of the enterprise. Read more on Saving the Free Market…

Yesterday I enjoyed a stimulating presentation of Harvard Law Professor and current U.S. Ambassador to the Holy See Mary Ann Glendon’s new Italian-language collection of essays, Tradizioni in Subbuglio (Traditions in Turmoil). Glendon has previously spoken at Acton’s closing Centesimus Annus conference at the Pontifical Lateran University and her address has been published in the latest issue of the Journal of Markets and Morality.

Situated near the Pantheon at the Istituto Luigi Sturzo, the event was attended by professors, lawyers, journalists and Vatican officials. Kishore Jayabalan, director of Istituto Acton, and I attended the book release which turned into a mini-conference on human dignity and human rights.

Read more on Traditions in a Globalized Age…

At last year’s Acton University, a few Austrian attendees made an interesting youtube video celebrating their rediscovery of the huge and obvious contributions Austria has made to free-market economics. But what about the countries that don’t have an entire school of economic thought named after them? My conversations with international participants at this year’s conference underscored two themes over and over again. First, that even the unlikeliest countries have some philosophical heritage undergirding capitalist thought. Second, that AU attracts the kind of people who want to recapture — not necessarily import — foundational principles to apply them within their own cultural context.

From Poland, a place where communism was much more than a nebulous ideology not so long ago, Jakob Baltroszewicz learned at AU how to frame capitalism in a more positive light for those in his country who are still “infected” with traces of the old regime’s tendencies. Despite Pope John Paul’s profound contributions to the capitalist legacy, “People still think in Poland that being a good Catholic and being a good capitalist are incompatible,” said Baltroszewicz. “We have a word for it — homo sovieticus. It means someone who is still sick with the Soviet way of thinking about the market and his role in it.” Baltroszewicz is currently studying Michael Novak’s moral theology at the Pontifical Academy in Krakow. He plans to stay connected to Acton as he works to revive Poland’s interest in the principles of its own free-market philosophers, especially as expressed in John Paul’s Centesimus Annus. Read more on No Place Like Home…

How can developing countries best compete in a global economy? Humberto Belli, president of Ave Maria College of the Americas in Nicaragua, points to the power of education and human resources. In many cases, poorer countries have a long way to go. “This imbalance in the development of human resources, if not corrected, will negatively impact many countries, impeding them from enjoying the benefits of globalization,” Belli writes.

Read more on Creativity and Capital…

Dr. Mart Laar, former prime minister of Estonia, discusses the relevance for the papal encyclical Centesimus Annus for Europe today. “The message of Centesimus Annus is not a message of left or right. It is a universal message of hope. We can see these same ideas in most groups working on the future of Europe. The only problem is in finding political leaders ready to implement them in reality,” he writes.

Read more on Estonia and Centesimus Annus: A Universal Message of Hope…

On January 21, 2006, Dr. Jennifer Roback Morse, author of Smart Sex: Finding Life-long Love in a Hook-up World and a Senior Fellow in Economics at the Acton Institute, gave this lecture at the Centesimus Annus Conference in Rome. Dr. Morse talks about the failure of the European welfare state to sustain economy and the demographic implications resulting from the “marginalization of the family.” Dr. Morse covers quite a bit of ground in this lecture, beginning with a critique of the evidence of a failing “European Social Model” and following up with the “Catholic alternative.”

Read more on Family and the New Economy…

Proponents of social democracies claim that a large role for the state is important in tempering the profit motive of capitalism and creating a more humane and cultured state.

Free markets, they argue, result in an inhumane and disintegrated society, while the social democracy models of Europe protect the weak and create social cohesion. Yet these proponents rarely question whether the reality of Europe today bears this out. Even a cursory examination of European and American life reveals that the social democratic models have not achieved their goals. Europe is disintegrating more and more into a collection of individuals who rely on the state as their primary caregiver, and the effects on the family, society, and cultural output are insidious.

Acton Senior Fellow, Jennifer Roback Morse, addressed several of these issues in a lecture with titled “Catholic Social Teaching on the Economy and the Family: an alternative to the modern welfare-state.” The lecture was part of the Centesimus Annus Lecture Series, commemorating the 15th anniversary of the John Paul II’s encyclical. The second of the series, The Family in New Economy, was held on January 21st at the Pontifical North American College in Rome. Cardinal Alfonso Lopez Trujillo, President of the Pontifical Council for the Family, and Professor Manfred Spieker, one of Germany’s leading experts on Catholic social thought, also spoke. To listen to a Vatican Radio report on the conference go here.

She writes:

Today everyone understands that communism is not a viable strategy for achieving either economic growth or solidarity with the poor.

The more urgent task now is to see that Western European socialism has also failed. Although some aspects of the Western European model originally claimed Christian inspiration and objective, it is now clear that the modern Western European welfare-state is collapsing. And while many modern countries share some of the problems I shall loosely call the “European social model,” it is Europe that most desperately needs a genuinely Catholic alternative.

Read more on A Catholic Alternative to Europe’s ‘Third Way’…