Vatican Critiques Free Market Ideology, Calls for New Forms of Economy and Finance

Here are some highlights from the new Vatican document from the Congregation for the Doctrine of the Faith and the Dicastery for Promoting Integral Human Development,“Considerations for an Ethical Discernment Regarding Some Aspects of the Present Economic-Financial System”:

  1. What is needed, on the one hand, is an appropriate regulation of the dynamics of the markets and, on the other hand, a clear ethical foundation that assures a well-being realized through the quality of human relationships rather than merely through economic mechanisms that by themselves cannot attain it. (1)
  2. Love for the integral good, inseparable from love for the truth, is the key to authentic development. (2)
  3. The recent financial crisis might have provided the occasion to develop a new economy, more attentive to ethical principles, and a new regulation of financial activities that would neutralise predatory and speculative tendencies and acknowledge the value of the actual economy. Although there have been many positive efforts at various levels which should be recognized and appreciated, there does not seem to be any inclination to rethink the obsolete criteria that continue to govern the world. On the contrary, the response seems at times like a return to the heights of myopic egoism, limited by an inadequate framework that, excluding the common good, also excludes from its horizons the concern to create and spread wealth, and to eliminate the inequality so pronounced today. (5)
  4. At stake is the authentic well-being of a majority of the men and women of our planet who are at risk of being “excluded and marginalized” from development and true well-being while a minority, indifferent to the condition of the majority, exploits and reserves for itself substantial resources and wealth….For this reason, the competent and responsible agents have the duty to develop new forms of economy and of finance, with rules and regulations directed towards the enlargement of the common good and respect for human dignity along the lines indicated by the social teachings of the Church. (6)
  5. Well-being must therefore be measured by criteria far more comprehensive than the Gross Domestic Product of a nation (GDP), and must take into account instead other standards, for example, safety and security, the growth of “human capital”, the quality of human relationships and of work. Profit should be pursued but not “at any cost”, nor as a totalizing objective for economic action. (11)
  6. Economic activity cannot be sustained in the long run where freedom of initiative cannot thrive. It is also obvious today that the freedom enjoyed by the economic stakeholders, if it is understood as absolute in itself, and removed from its intrinsic reference to the true and the good, creates centers of power that incline towards forms of oligarchy and in the end undermine the very efficiency of the economic system. (12)
  7. It is clear that markets, as powerful propellers of the economy, are not capable of governing themselves. In fact, the markets know neither how to make the assumptions that allow their smooth running (social coexistence, honesty, trust, safety and security, laws, and so on) nor how to correct those effects and forces that are harmful to human society (inequality, asymmetries, environmental damage, social insecurity, and fraud). (13)
  8. Precisely in this inversion of the order between means and ends, where work as a good becomes an “instrument,” and money an “end”, the reckless and amoral “culture of waste” finds a fertile ground. It has marginalized great masses of the world’s population, deprived them of decent labor, and left them “without possibilities, without any means of escape” (15)
  9. It is clear that applying excessively high interest rates, really beyond the range of the borrowers of funds, represents a transaction not only ethically illegitimate, but also harmful to the health of the economic system. As always, such practices, along with usurious activities, have been recognized by human conscience as iniquitous and by the economic system as contrary to its good functioning. (16)
  10. Experience and evidence over the last decades has demonstrated, on the one hand, how naive is the belief in a presumed self-sufficiency of the markets, independent of any ethics, and on the other hand, the compelling necessity of an appropriate regulation that at the same time unites the freedom and protection of every person and operates to create healthy and proper interactions, especially with regards to the more vulnerable. (21)
  11. In order to function well, the market needs anthropological and ethical prerequisites that it is neither capable of giving for itself, nor producing on its own. (23)
  12. In fact, an imposition of the taxes, when it is equal, performs a fundamental function of equalization and redistribution of the wealth not only in favor of those who need appropriate subsidies, but it also supports the investments and the growth of the actual economy…. Tax avoidance on the part of primary stakeholders, those large financial intermediaries, who move in the market, indicate an unjust removal of resources from the actual economy, and this is damaging for the civil society as a whole. (31)
  13. It is necessary to train ourselves to make the choice for those goods on whose shoulders lies a journey worthy from the ethical point of view, because also through the gesture, apparently banal, of consumption, we actually express an ethics and are called to take a stand in front of what is good or bad for the actual human person…. They must also have the same considerations towards the management of their savings, for instance, directing them towards those enterprises that operate with clear criteria inspired by an ethics respectful of the entire human person, and of every particular person, within the horizon of social responsibility. Furthermore, in general, each one is called to cultivate procedures of producing wealth that may be consistent with our relational nature and tend towards an integral development of the human person. (33)