The Pontifical Council for Justice and Peace published a statement applying Catholic Social Teaching to the current economic situation. Though a lot of the attention is going to the call for a world governing authority and a ‘central world bank’; I think the statement is most notable for its brilliant critique of the philosophy that underlies our current economic order:
What has driven the world in such a problematic direction for its economy and also for peace?
First and foremost, an economic liberalism that spurns rules and controls. Economic liberalism is a theoretical system of thought, a form of “economic apriorism.” It purports to derive the laws for how markets function from theory, these being laws of capitalistic development, but it exaggerates certain aspects of markets and downplays or ignores others. An economic system of thought that sets down a priori the laws of market functioning and economic development, without measuring them against reality, risks becoming a tool subordinated to the interests of the countries that effectively enjoy a position of economic and financial advantage.
The really interesting thing about this critique is that the Republican reaction to the crisis has proved beyond any doubt that those still supporting continued deregulation are relying entirely on a priori dogma and ignoring the events of the past four years. Some intellectually honest Republicans have been rethinking their economic positions, notably Alan Greenspan, former Fed Chairman and long-time champion of deregulation.
“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief.” Greenspan said. He later added, “This modern risk-management paradigm held sway for decades. The whole intellectual edifice, however, collapsed in the summer of last year.” (NY Times)
The majority of Republicans, however, led by Paul Ryan, have preferred to take their economic policy based on the theories of Ayn Rand, and to ignore any facts contrary to their theory. In the Republican world there are makers and takers, the rich are always under assault, tax breaks pay for themselves, and rising income inequality is like climate change (it may or may not exist, but it’s certainly not caused by humans). For more information on Republican reality, check out Jonathan Chait’s excellent demolition of Paul Ryan’s recent speech at the Heritage Foundation.
I’ll write another post soon about the details of the Pontifical Council’s plan and its call for a world governing authority and world central bank. You can find a good summary of other reactions to the Pontifical Council’s statement here, from the Washington Post’s blog ‘Under God.’