The Pontifical Council of Peace and Justice released a statement on the international economy that has been met with very mixed reviews. Conservative Catholics correctly point out that is not official church doctrine. Of course, since I’m not Catholic, I’m a lot more interested in the content of the document and the way in which it applies faith principles to the modern economy.
The basic thesis of the piece is that globalization has reached a point where our current international political and financial models are inadequate for the protection of “vital goods shared by the whole human family.” The piece then calls for two major changes and three more detailed ones.
The first major change is the call for a world governing authority. The problems of a world governing authority are not ignored, and subsidiarity is mentioned several times. Subsidiarity is a core social teaching of the Catholic Church and teaches that matters ought to be dealt with by the lowest level of government that is capable of dealing with them. They echo the encyclical Caritas en Veritatae (which is authoritative for Catholics) in arguing that “The governance of globalization must be marked by subsidiarity, articulated into several layers and involving different levels that can work together.”
The Pontifical Council of Peace and Justice is essentially arguing that economic globalization has reached a point where national governments are no longer capable of adequately protecting the common good.
The second major recommendation calls for the need for “a minimum, shared body of rules to manage the global financial market which has grown much more rapidly than the real economy.” The council goes on to give three specific suggestions
1) A financial transactions tax.
2) Recapitalization of banks with public funds, accompanied by rules forcing banks to focus on the ‘real economy’
3) A distinction between ordinary credit and investment banking.
These are all extremely popular ideas in the liberal blogosphere and in the liberal progressive movement in the U.S. in general. The financial transactions tax would be small enough (less than half of a percent) that people who trade or take control of their own stocks would barely be affected, but companies that engage in thousands of speculative trades a day would be. The intent is to both stabilize the market and provide funds for oversight. The recapitalization of banks with public funds is not popular with anyone, but forcing banks to focus more on investing in tangible goods and services and have fewer investments in complicated financial instruments is popular. And finally, the distinction between ordinary credit and investment banking is to put up a sort of security wall so that a crisis in the riskier realm of investment banking could not spread to ordinary credit banks. (This is the main request of those calling for the Glass-Steagall act to be reinstated.)
Finally, the closing paragraphs are a wonderful interpretation of the tower of babel and pentecost stories, and their meaning for the modern era of globalization. The PCPJ writes,
Through the account of the Tower of Babel (Genesis 11:1-9), the Bible warns us how the “diversity” of peoples can turn into a vehicle for selfishness and an instrument of division. In humanity there is a real risk that peoples will end up not understanding each other and that cultural differences will lead to irremediable oppositions. The image of the Tower of Babel also warns us that we must avoid a “unity” that is only apparent, where selfishness and divisions endure because the foundations of the society are not stable. In both cases, Babel is the image of what peoples and individuals can become when they do not recognize their intrinsic, transcendent dignity and brotherhood.
The spirit of Babel is the antithesis of the Spirit of Pentecost (Acts 2:1-12), of 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.