New Vatican Attack on Capitalism
National Catholic Reporter (NCR) ran a series of articles about a new papal document, Oeconomicae et pecuniariae quaestiones, which formalizes Pope Francis’ repeated attacks on capitalism. The first article said “Vatican offices decry 'profoundly amoral culture' of global financial system.” CRUX was late to this game, being preoccupied with the kabuki theater of the Chilean bishops’ resignation for the child abuse scandal. But CRUX had the better introduction: “Vatican sees risk of ‘social collapse’ in global economic order.” The Vatican’s top officer, Archbishop Luis Ladaria Ferrer, threatened that failure to heed this prophetic warning will result in a “slip toward a social collapse at the global level, with devastating consequences.” The document itself is here.
The Dicastery and its Goal
Pope Francis had two Vatican bureaucracies work on this document. One was the Congregation for the Doctrine of the Faith (CDF), previously the Office of the Holy Inquisition, and currently the most important office in the Vatican. The other was the Dicastery for Promoting Integral Human Development, which I had never heard of. This is a new bureaucracy Pope Francis created to address “issues regarding migrants, those in need, the sick, the excluded and marginalized, the imprisoned and the unemployed, as well as victims of armed conflict, natural disasters, and all forms of slavery and torture” – the downtrodden from diverse areas and causes, none of which the Church has any control over.
The pope assigned the task to the new Dicastery, but apparently didn’t trust himself to supervise it. He made the CDF his surrogate, though no doubt they had considerably more involvement than the pope would have. No one knows what the fully-loaded cost of this effort was, but there is little doubt that it could have supported a great many downtrodden people.
The head of the Dicastery is Cardinal Peter Kodwo Appiah Turkson, who says the new document “offers some guidelines or ‘regulations’ from the ethical side of the spectrum, with the hope that they can help discern how to manage world resources with freedom, responsibility, justice, solidarity and love.” It should be noted that the Vatican itself is not known for such practices. For example, less than a century ago – modern history for the Catholic Church – its key allies were Mussolini, Hitler, and Franco. It consistently opposed what most of us would consider “freedom, responsibility, justice, solidarity and love.” It condemned democracy. The freedom-loving Church praised divinely-mandated kings – their euphemism for Catholic kings that played nicely with the Church. For centuries it was the world’s wealthiest institution, but it mismanaged its resources and impoverished its people.
About the New Document
You can learn a lot about the document without actually reading it. It has 49 footnotes, many containing multiple citations. None of them involve economic or financial texts. The attitude of the Church towards technical knowledge is basically one of disdain. They have faith, and claim to possess “higher” knowledge. They don’t need technical expertise. Every single reference and citation is to a Church document, generally a papal document – which in their minds assures its infallibility.
The document covers a wide variety of matters. It is clear that none of its authors ever consulted with subject matter experts. What little knowledge they have comes from newspapers, and general newspapers at that - not even The Wall Street Journal, much less The Economist. While the authors offer the world’s leaders advice on regulating its financial system, it is clear the Vatican did not seek the counsel of any financial leader. The Vatican believes it is dispensing divine wisdom, which supersedes secular knowledge. This is an ancient Church tradition that produced the Index of Forbidden Books, the arrest of Galileo, and assertions of the effectiveness of the rhythm method, among other absurdities and atrocities.
This incredible arrogance, coupled with technical ignorance, does not yield much of value. I would be shocked if any regulators of the financial world even consider devoting significant resources to implementing its suggestions. Had the Vatican consulted with experts and focused its complaints accordingly, it might actually have done a lot of good.
A few examples
Space does not permit detailed criticism of the paper, but a few examples are in order. Much of the paper consists of statements like: “Markets, the powerful propeller of the economy, are not capable of governing themselves.” This is hardly news, and virtually everyone acknowledges it. Their advice: “It is ... the duty of the competent agents and of those responsible to develop new forms of the economy and of finance, with rules and regulations that are directed towards the progress of the common good.” The Vatican offers nothing beyond a few moralistic platitudes.
The Vatican advises the regulators of the economy to “aim above all to promote the global quality of life that, before the indiscriminate expansion of profits, leads the way toward the integral well-being of the entire person and of every person” (italics added). Everyone realizes that neither profits nor GDP is a sufficient measure of quality of life. In fact, maximizing profits and GDP may well lower the quality of life due to environmental damage or other factors. Again, we need specifics, and the Vatican provides none. Furthermore, their mandate that any change benefits every person is absurd. Any significant change will produce winners and losers. Their mandate essentially prevents change, even as they condemn the present system and seek to change it. It seems clear that they want to transfer resources from the wealthy to the poor, but that is inconsistent with their stated principle.
Similarly, they say: “No profit is in fact legitimate when it falls short of the objective of the integral promotion of the human person, the universal destination of goods, and the preferential option for the poor.” But how do you determine whether a profit “falls short of the objective of the integral promotion of the human person”? What does this mean? What do you do about it? Does “universal destination of goods” mean that anyone can buy anything? A ‘preferential option for the poor’ is at least meaningful, but far too vague to be operational. The definition implies that the preferential option for the poor is built into individual economic transactions, implying that price varies with ability to pay. This would impose immense costs on the economy, and lower the global quality of life considerably. It would be far simpler to write welfare checks to the needy, but that is not directly related to profit. While focusing on the financial system, the Vatican ignores the concept of a safety net and transfer payments, which are better ways to address many problems of poverty.
Another Vatican condemnation: “the financial industry, because of its pervasiveness and its inevitable capacity to condition and, in a certain sense, to dominate the real economy today, is a place where selfishness and the abuse of power have an enormous potential to harm the community.” First, the financial industry is less pervasive than big business in general. Big businesses, including finance, do indeed abuse their power and often corrupt politics. But the Church offers no remedies. Nor do they mention that one of most corrupt members of the financial industry is the Vatican Bank, which has been involved in money laundering and other crimes since its inception. The Vatican has done far more to protect such criminal activity than to end it. In addition to arrogance and incompetence, this document also highlights the Vatican’s hypocrisy. Ever since Constantine empowered the Catholic Church, it has been one of the world’s most corrupt institutions.
(By the way, I suspect that the reason the Vatican focused on the evils of the financial industry and its corruption of political leaders, is that many within it retain the vision of the Protocols of the Elders of Zion - which they helped create. Many in the Vatican still believe those evil Jewish bankers are the world’s real troublemakers.)
While NCR’s in-house Jesuit declared, “Vatican document on economics is a serious, intellectually hefty indictment,” he provided no examples. He merely praised its emphasis on morality, and decried the absence of morality in the field of economics. Again we find that pious Catholics refuse to let technical knowledge interfere with their religious views. It is why the Papal States were virtually always the poorest and most backward nation in Europe. (When I say poor, I am referring to its people. The Pope and the Vatican were generally among the world’s wealthiest men and institutions, respectively.)
This new document contains broad condemnations of parts of the world’s financial and economic systems. Most of the criticisms are poorly defined, and its proposed “solutions” are little more than empty platitudes. There is massive ignorance of the technical subject matter.
In a few cases, such as corruption and tax avoidance of multinational corporations and wealthy individuals, the paper defines specific problems that might have been meaningfully pursued. These are problems that world leaders acknowledge, but cannot tackle due to the influence of wealthy corporations and individuals. The Vatican’s moral leadership might have proved useful in shaming some parties into participating in agreements to deal with this abuse. It is not too late. If the Vatican is willing to drop all the crap and try to do something useful, they might actually succeed.