Global Problems Require Global Governance: The Vatican’s Note on Financial Reform

(Unless otherwise indicated all quotations are from the “unofficial English translation found on the website of Radio Vatican”)

There is little doubt that the global community is presently in the midst of a serious economic crisis.  As politicians in the United States and Europe remain at (prideful) loggerheads over what to do, scores of people are suffering from the economic impacts of the failing economy. The gap between the superrich and poor seems to be increasing by the second. For many, this is a question of basic resources—a question of life and death. Albeit in different ways, the popular movements of the Tea Party and Occupy Wall Street in the United States and the street protestors in Greece, Spain, Italy, Germany and other nations reflect the concern and discontent at the present economic order. Clearly, something must change.

Towards the beginning of this crisis, Pope Benedict released his encyclical Caritas in Vertiate in 2009. Originally intended to mark the fortieth anniversary of Pope Paul VI’s 1967 encyclical Populorum Progressio, Caritas in Vertiate was delayed until 2009 so as to take into account the worldwide economic downturn that began with the collapse of Lehman Brothers in 2008. In his encyclical, Pope Benedict calls for creative and critical thinking of how best to respond to this crisis in the spirit of integral human development. “The crisis,” the pope writes,  “thus becomes an opportunity for discernment, in which to shape a new vision for the future.” (21)

“To the Left of Nancy Pelosi”

Today, in response to this call to offer the world a new vision, the Pontifical Council for Justice and Peace has issued a “Note on Financial Reform” As Fr. Thomas Reese, SJ suggested in a  post last week, many American Catholics might be surprised to see how this  statement places the official Church “to the left of Barack Obama” and Nancy Pelosi!

For those familiar with Catholic social teaching on the economy and global governance, however, this should come at no surprise. In today’s “note,” the Pontifical Council looks at the present global crisis and proposes action in light of the long tradition of Catholic social teaching. In this sense, the note does not say anything new, but seeks to apply traditional themes in light of the new reality.

Americans of all political parities might be surprised to discover some of the themes and ideas that emerge in the text. For example, the text includes:

  • a positive evaluation of the role of government regulation in the markets and a call for greater regulation of the “shadow markets” that go unregulated;
  • a strong argument for the creation of more robust structures of global governance;
  • an endorsement of the financial transaction tax (akin to the Tobin Tax which the Holy See has previously supported)
  • a proposal for the public to bail out (“recapitalization”) banks on the condition that they adopt more ‘virtuous’ behaviors aimed at developing the ‘real economy.’
  • a critique of the present (im)balance of power  in which the rich “prevail over the weakest”
  • and a forceful critique of liberalism.

So while some presidential candidates argue strongly against taxes, governmental regulation, threats to American sovereignty and the free market, the Vatican is calling for more taxes, reasonable governmental intervention, and the creation of an effective worldwide political authority.

The note is divided into four main sections that roughly correspond with the see-judge-act method of specialized Catholic action (What John XXIII defined as the method of Catholic social teaching

1.   Economic Development and Inequalities

The first section, offers a brief analysis of the present global crisis and the growing “inequalities within and between various countries.” Echoing Paul VI in Populorum Progressio and John Paul II in Sollicitudo rei socialis, the note decries the growing gaps between the rich and the poor. While globalization, the note writes, has brought unprecedented wealth to a select few millionaires and billionaires, over a billion people struggle to live on less than one dollar a day: over the past decade “the distribution of wealth did not become fairer but in many cases worsened.”

As for reasons of the present crisis, the note points to several causes, including:

  • “an economic liberalism that spurns rules and controls;
  • a lack of effective public regulation; and
  • the “prevailing ideologies” of individualism, liberalism, and utilitarianism.

Here, the note draws upon the long tradition of the Catholic critique of capitalism and socialism. In the same line as Paul VI, John Paul II, and Pope Benedict XVI, the note makes the point that the decisions we make in shaping our economic life are “moral in nature.”

2.    The Role of Technology and the Ethical Challenge

Entering into the judge or analysis stage, the second section deepens Pope Benedict’s warning about seeing technology or technical responses as the solution to all problems. While technology can be a tool, we cannot “evade the needed discernment and ethical evaluation.” If economic decisions, as the popes insist, are a moral issue, then we need a discernment that can root out social sin and the “behaviors like selfishness, collective greed and the hoarding of goods on a great scale.”

What is needed, according to the Pontifical Council is a new outlook that does not see the world through a Hobbesian state of nature, but looks at the world with “an ethic of solidarity” – what John Paul II strongly called for in Sollicitudo rei socialis.

3.    An Authority over Globalization

The third section deepens the analysis by reaffirming Catholic social teaching’s call for a world-wide political authority, “with power, organization and means co-extensive with [global] problems, and with a world-wide sphere of activity.” (John XXIII Pacem in Terris, 137).

In a publication for CIDSE a few years ago, I explored the question of global governance through the lens of Catholic Social Teaching, Many American Catholics will be surprised at the strong support given to the idea of global governance by the Church.,

Despite the opposition to structures of global governance from some philosophical and religious ideologies, the Catholic Church has been a strong advocate for international political governance since the early medieval ages. Throughout history, even as the pope governed specific regions of Italy, the Catholic tradition has been supportive of the creation of transnational political structures. Indeed the very first notions of a united Europe following Christendom emerge in the thoughts of the French monks Emeric Crucé (1590–1648) and Charles-Irenée Castel de Saint-Pierre (1658-1743) both of whom called for the creation of an international confederation of states (including non-Christian states). Following World War I, Pope Benedict XV strongly endorsed the idea of the League of Nations in his new year’s message to America in 1919 and his encyclical Pacem Dei Munus Pulcherrimum (1920). Later, Catholic thinkers such as Robert Schuman (1886-1963) and Jacques Maritain (1882-1973), laid the philosophical groundwork for European Union and UN.

Modern Catholic social teaching, beginning with Blessed Pope John XXIII’s encyclical Pacem in Terris and continuing through the encyclicals of Paul VI, Blessed John Paul II, and Pope Benedict XVI’s, has pointed to the need for the creation of a worldwide public authority to address the challenges facing the global common good. While the present note recognizes the United Nations as a good starting point, Catholic social teaching advocates for a more effective and robust “supranational Authority.”

At the heart of the present note is the realization that global problems call for global solutions. The multifaceted process of globalization calls for the creation of a more effective global authority. Recognizing that this is a long-term goal, the Pontifical Council recommends beginning 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.”

While it does not acknowledge this, the note appears to rely heavily on the work of the French philosopher Jacques Martian as it outlines several principles to guide the global authority as it is “set up gradually.” These include:

  • Subsidiarity: which delineates both the limits and responsibility of government. (Note: subsidiarity here is not used to argue against government and regulation but in fact argues for the creation of different levels of government in the spirit of freedom and responsibility)
  • Solidarity: an awareness that citizens, the global authority, and other institutions, including national states, NGOs, and corporations should  “make their decisions with a view to the global common good, which transcended national goods”
  • Pluralism: in which the diverse realties of different nations and cultures are “nourished by an unceasing moral communion on the part of the world community”
  • Personalist: where the global public authority maintains the human person at its center.

In addition to grounding this call for greater governance in reason, the Vatican’s note concludes with a theological reflection on how Pentecost, the antithesis of Babel, reveals to us:

God’s design for the whole of humanity: that is, unity in truth. Only a spirit of concord that rises above divisions and conflicts will allow humanity to be authentically one family and to conceive of a new world with the creation of a world public Authority at the service of the common good.”

4. Towards Reforming the International Financial and Monetary Systems in a Way That Responds to the Needs of All Peoples

In the final section, the Pontifical Council focuses on more concrete suggestions for reforming the present structures of global governance, dealing first with the urgent need of reforming the economy. These reforms include:

  • The development of structures in which the voices of a greater number of countries” can be heard. This is particularly problematic in the IMF, World Bank group, and the World Trade Organizations, where the primary decisions are made by the wealthy industrialized nations, often at the expense of the poor.
  • The possibility of creating a “body that will carry out the functions of a kind of “central world bank” that regulates the flow and system of monetary exchanges similar to the national central banks.”
  • taxation measures on financial transactions…Such taxation would be very useful in promoting global development and sustainability
  • “recapitalization of banks with public funds” with certain ethical conditions.
  • more effective management of the ‘shadow markets’ which have no controls and limits.

Limits to the Document

The present note by the Pontifical Council for Justice and Peace offers a helpful reflection in the present process of discernment about the future of the global economy, but it is limited in a few ways:

  • First, while the note is critical of specific policies, it diplomatically avoids mentioning any countries or situations by name. Given the key role played by the United States, the European Union and China in the global economy it is strange that there is not more explicit reflection on these economies. There is no mention of the petty bickering in Congress and between European leaders, which is only making the situation worse or of the role of the United States and Europe in preventing real reform at the UN, IMF and WTO. This, in my mind, is too soft and makes the document somewhat abstract. The fact that it is Europe and the United States (and to a lesser degree some Asian nations) that have designed the present international financial system, benefited from the power imbalances, and have prevented effective regulation from developing should be publicly acknowledged.
  • Second, while it stresses the need for regulation, the document does not directly speak to the role and responsibility of transnational corporations in this period of globalization as Pope Benedict and Blessed John Paul II have done previously. We cannot speak about the global economic system without considering the power of these corporations (i.e., Wall Street) and the temptation to idolatry and greed. Christian CEOs, shareholders, and (as Benedict reminded us in his encyclical) consumers need to be challenged as to how we have contributed to this present crisis (for example, there were a lot of Catholics working in Lehman Brothers and many of us have benefited from the economic bubble that burst).
  • Third, the document could have been strengthened with a stronger message of support for NGOs, international church organizations, and other “intermediary bodies” that help to build a sense of solidarity across borders or who are attempting to question the present context.  As Jacques Maritain recognized, these bodies are essential for effective global governance. Effective global governance, placed at the service of the person and the common good, needs the popular support and participation of people on the ground. With its many international structures, the Catholic Church is in a prime position to engender solidarity.
  • Finally, the document is addressed mainly to people in the positions of power. While this may be effective in terms of global policy reform, it seems distant from the reality of women, men, and children who are poor. This, perhaps, is the limitation of all Catholic social teaching. Indeed, there is almost no mention of the poor and the need for their empowerment. While penned by an African (Cardinal Turkson of Ghana), there is no mention of how this crisis is impacting Africa, Asia, and Latin America.

Despite these limitations, this document is sure to have a constructive impact in the present discussion and it has surely been read today in capitals around the globe. Since it does not intend to offer a blueprint solution to the present crisis, the real responsibility will fall on our shoulders as Catholics; as citizens; as voters; and as consumers.

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