Just Money and Finance

The global financial crisis that began in the US with the housing bubble (or was it $4 gasoline?) is well into its fourth year now with no end in sight. In October the Vatican Pontifical Council for Justice and Peace decided to, well, pontificate on the subject. They published a serious reflection on the implications of globalization generally and especially for the world’s economy, the impact on the poor, the need for more effective regulation, and a broad outline for what reform should look like. It isn’t light reading but it is a worthwhile treatment of a poorly understood topic that affects us all, and how Catholics might look at it from the perspective of our faith.

As have Popes at least since Paul VI, the Council advocates a new system of governance that will move us beyond the arrangement of sovereign nation states that has prevailed since the Peace of Westphalia ended the Thirty Years War in 1648. They are suggesting it is time to yield some of that sovereignty in favor of a global authority, one that will govern in a spirit of solidarity and subsidiarity that sounds a lot like federalism on a global scale, a scale that should include every country on the planet. The efficacy of every law and regulation would be weighed in light of the common good, with of course an appropriate preference for the needs of the poor. The new authority would step in only where individual states are unable or unwilling to adequately address the issue at hand.

The Council has a strong case, pointing out the increasing interdependence that has brought the world so much prosperity since the end of WWII. They think that is a good thing, though not without its flaws and dangers, not least in the evolving monetary and financial systems. There are still billions who have not prospered and the risks have become increasingly evident. In the 1970s we had the shock of a spike in oil prices that sent national economies reeling. Then came regional financial crises in Mexico and Asia. This one is different, spreading from America to Europe and around the world with the potential to do more damage than anything we’ve seen in decades.

The institutions established at Bretton Woods in 1944 are no longer adequate to control the enormous growth in credit and the massive flows of capital, often in the form of complex financial instruments no one fully understands or adequately regulates. Financial markets have exploded, far outstripping the growth in “real” economies, the underlying production of goods and services. The result is a vulnerability to economic collapse the world cannot long tolerate, and of course the effects are felt worst among the poor. The Council’s solution is a global authority with the power to regulate international and perhaps intranational financial transactions.

The Council is right but I can’t imaging there will be much talk of a new global “authority” in this year’s American presidential elections. If there is it will be one candidate accusing another of some sort of dark international conspiracy to undermine the US Constitution. We need to start the conversation though. We are all on this planet together and there are now seven billion of us. We need mechanisms in place to manage the risks and opportunities all those people represent. They need to be implemented for the common good, and without unnecessarily usurping the rights of regions, nations, communities, and families to govern themselves.

This new Vatican document didn’t get much publicity. The Global financial crisis didn’t make it into Faithful Citizenship, the US Bishops’ quadrennial review of issues for Catholics to consider in the election cycle. It should have.