As you may have heard by now, yesterday the Vatican, specifically the Pontifical Council for Justice and Peace, released a note on Global Financial Reform.  Let me first say that I am not an economist, so my comments should be taken with more than a grain of salt.  Secondly, I am not going to be offering a thorough summary or analysis of the document (for that, I highly recommend that you check out Kevin Ahern’s excellent and sophisticated post over at Daily Theology), just my initial reactions.  And finally, I intend for my comments not so much to be Definitive Statements of Truth as much as invitations to discussion and debate.

1. Despite the widespread perception that this document presents a resounding rebuke to economic conservatives, I think this document actually vindicates the defenders of capitalism.  In arguing that, if adequately regulated, capitalism is the best hope for the poor, this document actually affirms a central tenant of economic conservatism.

2. I think that the reason so many people are interpreting this as being a “radical” critique of the economic status quo is that we are confusing political rhetoric with political reality.  Republicans and Democrats both want us to think that the choice is between the “free” market or governmental regulation–Republicans of course want us to think that it is when the government gets involved in the economy that things go wrong while Democrats want us to think that it is when the government doesn’t get involved in the economy that things go wrong.

However, in perpetuating this narrative, Republicans and Democrats both help obscure the fact that there is not and never has been any such thing as a “free” market–capitalism is and has always been not merely a social construction, but a government construction.  Despite their rhetoric on the campaign trail, the last thing economic conservatives want is for the government leave the market alone.

For example, many of the largest and most powerful corporations depend almost entirely on government contracts, and this is especially true in the military and space technology sectors. Without the United States’ government hiring corporations to develop certain weapons or provide it with certain services, these corporations would be much less profitable than they are today.  The United States government is many of these corporations’ best customers.  For example, does anyone really think Halliburton wants the government out of the economy?

Think also of the United States government’s relationship to the timber industry.  The United States not only lets big timber companies harvest timber in national parks, which are publicly owned and maintained via tax dollars, but also builds the roads, again with public tax dollars, that these companies then use to access the timber.  Even worse, the US government often sells timber companies these contracts at very low bids.

When we recognize that capitalism is both created and maintained by governments, it is easier to see why the Vatican’s call for greater regulation of the economy is not necessarily in and of itself a critique of the economic status quo.

In other words, the problem seems to be the exact opposite of the way the Vatican and many “liberals” conceive of it: rather than being under-involved in the economy, the government is too involved in it.  Instead of desiring a situation in which the government tries to contain with one hand the fire that it stokes with the other (which is what I’m claiming the Vatican document inadvertently is doing), we might wonder whether the poor would actually be better off if the government simply stopped stoking the fires of corporate capitalistic domination.

3. And this brings me to my third point:  in our current world order, in which power is concentrated in the hands of a small elite, is the establishment of a “supranational” organization to ensure that the global financial industry works to serve the good of the poor even possible?  What makes us think that such an organization could succeed where the IMF and the World Bank failed?  This seems especially unlikely given that the Vatican wants this organization to be voluntarily established rather than coercively imposed upon the nations of the world.  When, in the history of the world, have the powerful, as a group, ever voluntarily surrendered their power?  As Martin Luther King, Jr. argued, “Freedom is never voluntarily given by the oppressor; it must be demanded by the oppressed.”

In other words, the problem would seem to be not that capitalism is improperly regulated but that capitalism, by its very nature, produces unequal and highly concentrated distributions of wealth which leads to a similarly concentrated and uneven distribution of political power both within and among nations.  It seems not unreasonable to ask whether a truly democratic distribution of power within and among nations is even possible as long as we have an economic system that, by definition, concentrates wealth in the hands of the few.

As my friend Glenn Brown argued on my facebook wall, any solution that fails to take this into account will inevitably come up short and maybe even make the problem worse:

“The real problem is the assumption that the solution is a central, transglobal oligarchic power…or, just as explicitly, that some centralized governing power will be able to decree and govern a global economy — curiously like how Rome thinks the body of Christ is meant to function. Realistically, the world economy is already run by such a thing, and it does not work

The idea of a transnational governing body with concerns beyond national interest — this is already the state of global capital. A really chilling statistical study in New Scientist showed how out of nearly 37 million companies in the world, 147 of those control most of the economy. The [Vatican’s] diagnosis of problems is sound, the solution is flawed.”

And you can read this study here.  Rather than getting into what seems like an unwinnable arms race between the big gun of corporate capitalism and the even bigger gun of governmental regulation, perhaps we should be thinking of ways to de-centralize economic and therefore political power.  Doing so would not only take power away from those who have the ability to impose their will on the masses (and therefore obviate the need for a “supranational” organization) but also address some of Kevin’s concerns that rather than simply protecting the poor, we must remove the structural obstacles that prevent the poor from exercising their own agency.  Rather than rescuing “the poor,” we should simply let them save themselves.

The upcoming “Bank Transfer Day” on November 5th, which calls for people to take their money out of “too-big-to-fail” banks and invest them in local Credit Unions or Community Banks which are more likely to invest in ways that help the poor, seems to be one step in this direction.

4.  And finally, the most profound critique of this document comes from my friend Steven Battin, who is finishing up his Ph.D in systematic theology at Notre Dame.  Steven prophetically argues that the recent economic crisis is not new to history but is merely the continuation of an imperialist and white supremacist world order begun more than 500 years ago when Pope Nicholas V granted all of “America” to Spain and all of “Africa” to Portugal, giving them

“full and free permission to invade, search out, capture, and subjugate the Saracens and pagans and any other unbelievers and enemies of Christ wherever they may be, as well as their kingdoms, duchies, counties, principalities, and other property […] and to reduce their persons into perpetual slavery.

Rather than a “new” crisis, this is yet another iteration of the same old crisis.  Steven argues:

“Isn’t this the same crisis that created a climate of hostility and violence for which people have been offering “solutions” over the last 500 years? Within Europe’s own intellectual tradition: Wasn’t this the point of naming and critiquing the control of the “means of production,” “primitive accumulation,” and the resulting “alienation” of persons within a capitalist system? Isn’t this crisis that Tupac Amaru tried to solve by leading an indigenous rebellion/revolution in Peru in the 16th century? Wasn’t it this crisis that sparked a variety of “solutions” articulated in the long and varied tradition of black”critical theory” in the writings and practices of [W.E.B.] DuBois, CLR James, Franz Fanon, MLK, Malcom X, James Baldwin, to name only a *very few*? But oh yeah… “capitalism”–built on “collective greed and the hording of goods on a great scale”–is the best hope for the impoverished populations that it created, so when non-Europeans or non-elite Europeans critique the crisis and its consequences *at its roots*, they clearly “know not what they do.”

Steven goes on to say:

“The attitude in this document reminds me of what the anti-colonialist thinker Aime Cesaire said with respect to the Holocaust/Shoa: the western European beneficiaries of colonialism/slavery didn’t see the systematic, technocratic, large scale genocide of peoples intrinsic to its “success” until those very techniques, honed in the colonies, were applied in their own back yard. The “new” and fundamental crisis is only a real crisis, because it will “ultimately undermine the very foundations of democratic institutions, even the ones considered most solid.” …The chicken is coming home to roost like never before! *Now* this longstanding, intrinsic problem is a problem worth naming and critiquing! Now it needs solutions!”

Steven is not so much questioning the intentions of the authors as he is their understanding of history. Steven’s point is that people living on “the underside of history” (women, people of color, indigenous people) have been living in a state of “crisis” for centuries.  The fact that we frame this moment in time as a historic crisis reflects not so much a universal truth but the fact that Vatican seems to be embedded within a white, Euro-centric perspective.  Steven’s analysis also challenges the Church (and all of its members) to see itself not just as one who offers a potential solution to this “crisis” but one who has historically been part of the problem.


10 thoughts

  1. Katie,
    I look forward to chatting about this more, but for now I’d just like to address your first point…which I think is slightly misguided. At is very starting point, the Pontifical Council (and CST at large) is not operating with the same basic definition of capitalism used by “neo-classical or neo-liberal economic conservative” to try and be a specific as I can.

    Capitalism, quite simply, is the private ownership of the creation and use of the social surplus. that is private ownership of the means of corruption. This is the basic conflict between Adam Smith and Karl Marx (and I apologize if I am sounding too much like I’m in front of my class…but as I tell my classes….)

    Smith supported capitalism because they judged that individuals would naturally use the surplus for future profit-making activities
    This would, in turn, increase competition, promote expanded production, efficiency to the gain of all. Marx, on the other hand contended, Argued that the surplus was based on exploitation of workers, that is the surplus profit’s use by private individuals would benefit only them and lead to wasteful economic activities. He argued that workers get paid less than the value they create in order to create the surplus. Marx argued the state would make better decisions. Now history has shown that both were right and both were wrong. The workers are often exploited to create the surplus; however, state control still often leads to the exploitation of workers. And, while Smith was right about the benefits of private ownership – but private ownership does not guarantee the profits / surplus will be directed at the common good. As well, Smith presumed a great deal of civic virtue (theory of moral sentiments) behind the “invisible hand” and as time progressed, neither Smith nor the invisible hand could envision the concentration of economic power in both the global corporation and financial sector. This is where regulation and the necessity of a mixed economy come in.

    Back to your first point – a “properly regulated market” is the crux here and it is precisely what those economic conservatives do not acknowledge. The devil’s in the details and I do not think this document concedes any foundational points to the neo-classical model. IN particular, it does not concede anything to “rational economic man” which is their very starting point for economic theory, ideology and models. Arguing for a world regulatory body is counter to their breed of capitalism – which gets us back to the point of “whose capitalism?”

    If you wish for all capitalism to be denounced – I would ask what will you replace it with? B/c even those (like me) who would argue for more democratic-socialism a la some european examples – it is still within the basic framework of a mixed economy largely based on capitalism. the Neo-Liberal/Neo-Classical free market ideology of Friedman and company is certainly not in the interest of the poor (but that’s already been rejected here and elsewhere in CST). Communism a la USSR isn’t an option either. So what will you replace it with? The question is what capitalism? whose regulation? —which brings us back to economic justice for all’s 3 main questions: what does it do to people? what does it do for people? and how do people participate in it? as measures to evaluate.

    Capitalism and markets tend towards a materialism and greed that are fundamentally problematic – that is when capitalism is the over-riding world view. The question is can it be a regulated and controlled in such a way as to be at the service of all the people? (In a similar vein, wealth itself is ambivalent — Whether it benefits or harms us depends entirely on how it is created, how it is distributed, and how it is used)

    I do not know how true neo-liberals will view this statement – but from the outset, the calling for redistribution and a global regulatory body are to non-negotiable NOs in the very ideology of their free-market capitalism. So I will be very surprised if it is taken by any real economic conservatives see this a s vindicating their position.

    (ok, I’ll stop now and hopefully this isn’t too long and tedious).

  2. Thank you Katie, and Steven, for these provocations. It is striking that now that Europe is looking at financial collapse, we are suddenly in a global crisis. My initial inclination to gladly accept a more concrete intervention on the part of the church is tempered by Steven’s reminder of past concrete interventions. What remains to be seen is whether or not authority is the answer, and if so, whether or not that authority will intervene for the ‘99%’ or for the ‘1%’, or for ‘US/Europe/etc’.

    I agree with Katie that it’s hard to see how such a body will fair better than the IMF or World Bank. At the same time, those bodies so clearly favor their principle backers, demanding the liberalization of markets so as to foster unbalanced trade agreements (not to mention environmental devastation). Is it possible to conceive of (do we have examples of) international organizations that advocate effectively for “all the people,” as Meghan asks?

    Steven is exactly right that if the Church is to take a lead in this, we must be ready to own up to our role in this colonial disaster. In theory, we ought to be good at this, seeing as how repentance is at the core of our understanding of faith, the good news of Jesus. However, if early reactions to this piece are any indications, many of us still think that ‘leading’ is the granting of control, domination, sovereignty, etc. to ourselves–even though such positions rarely benefit even those who think in such a way (always trickling up…).

    Last Sunday’s Gospel suggested to me that some of what is going on might be judgment, were it not for the fact that the poor are so disproportionately affected. Members of the Church have to find a way to escape the deadening effects of late capitalism and produce alternatives.

    One additional question for the proposal is: how will this be different from pronouncements, say, declaring a war unjust? That is, how will Church authorities exercise their authority in (peaceable) ways that matter most? I suggest the Church would soon find itself in much more hot water (much better than the lukewarm kind…)!

  3. Meghan,
    As I said when we were discussing this one-on-one, I really appreciate your comments and perspective, especially when it comes to the intersection of the economy and Catholic social teaching–two areas that you definitely surpass me in knowledge of. My knowledge of economic theory is especially shaky so your participation in this conversation is especially welcome.

    Ok. So, I’ve read a lot more Marx than Adam Smith (and most of what I know of Adam Smith is by way of Noam Chomsky who frequently claims that contemporary economic theory which often claims to be rooted in/faithful to Smith are actually complete distortions of and departures from Smith’s thinking) so please forgive me if my response is inadequate.

    What I would say about your Marx and Smith point is that, from what I’ve read of Marx, I believe him to be nearly %100 right about capitalism and nearly %100 wrong about communism. In other words, I strongly affirm your insight that capitalism IS inherently exploitative and wasteful and that the government can not be trusted to protect the poor.

    I would say this is for partially due to factors Marx himself diagnosed–any government that exists in a capitalistic society will necessarily be a servant of bourgeois class interests. But the other reason I think this is true is one that Marx did not anticipate–I think there is something inherently suspect about hyper concentrations of power…Marx and Lenin seemed to want us to further centralize power (the state in the transition from capitalism to communism) in order to gain control of the means of production and constrain oppressors…in this way, ironically (maybe?) the Vatican’s proposal shares much in common with Marx/Lenin (although it differs in that they don’t want it to be coercive and I assume that would not favor the stripping of human rights of the oppressing rich).

    WHat I am arguing for is that instead of waging a battle of centralized power versus centralized power, we should seek to de-centralize. Hence my reference to Boycott the Banks Day–a good first step would be that we simply stop feeding the monster.

    And yea, I totally hear what you say about two senses of capitalism but perhaps another critique of this document is that it does not make it sufficiently clear what exactly is the economic system it is endorsing?

    John Paul II also makes a somewhat similar distinction between two senses of capitalism in Centesimus Annus…if by capitalism you mean “an economy that recognizes the fundamental and positive role of business, the market, private property and resulting responsibility for the means of production, as well as free human creativity in the economic sector,” then it is ok but if by capitalism you mean a system in which “freedom in the economic sector is not circumscribed within a strong juridical framework which places it at the service of human freedom in its totality, and which sees it as a particular aspect of the that freedom, the core of which is ethical and religious,” then it is not ok.

    I think you are right to interpret this document as making the same distinction. But this is exactly my critique–the current economic system, by its very nature, can not “be circumscribed within a strong juridicial framework which places it at the service of human freedom in its totality.” CST consistently confuses “should” with “reasonable chance of actually happening” and so is too content to simply rely upon moral suasion of the powerful. (I think Kevin is also making this critique in his excellent post).

    If some sort of juridical institutional COULD make sure that “capitalism” worked well, then I would wholeheartedly support it. My claim is that in the current world order, this is an impossibility. We need to focus more on empowering the impoverished and/or simply removing the things that keep them from exercising their agency.

    Ok, so, before telling me what I am missing, 😉 have I done a better job of articulating my position…in other words, even if it is wrong, does what I am arguing for make sense?

  4. I think the main divergence here is your faith in a decentralized solution and my belief that you need a strong juridical framework that holds transnational corporations and government accountable to the RULES (wel and sets actual rules) but some of that is inherent in the nature of human rights theory they have to be able to be CLAIMED. I”m with you on the monster….but I don’t think either the decentralized “boycott the banks” or the regulatory body can work on thier own – i think you always need both bottom up and top down…the question for me really is can we create a financial regulatory institution that is somewhat democratic (b/c this is where the UN lacks a lot of its teeth — in the end, the security council holds most of the cards).

    And if you want CST/Marx overlap….reread Redemptor Hominis THEN Laborem Exercens!!! haha

    Have you read the John Allen piece? Having heard Turkson speak a few times and chatting with him and the new UN ambassador is from India by way of Iraq….while it is power to power (but I actually don’t find htat problematic in the scope of this document but I also agree with Kevin that moral suason’s not gonna cut it) — its not quite as “European” as some people wanna make it….

    Like Kevin, I would like more attention to NGOs and Transnational actors…but, I also understand the pointed/limited scope of this particular document ( I hope this is a sign of more specific directed statements – would be nice if Justice and Peace did this more often!! ) I’m also interested in seeing what the Holy See docs will look like for the Sustainable dev conference @ un (Rio+20 in Rio next year)

    1. Hey Meghan,
      As always, thanks for your comments. Yea, I would agree, I would also want to hold together the necessity of both “uprising from below” (although I think I’d rather focus on the metaphor of us making a concerted effort to “stop feeding the monster”) and regulation.

      And yea, I would never deny that CST actually does serve as a critique of the way “most” US-Americans think about the economy, I’m just not sure the critique is radical or explicit and concrete enough.

      I will read the John Allen piece tomorrow–thanks for sharing.

      I guess I just see almost no chance that such a democratic regulating body can ever come into existence, especially since the Vatican wants nations/financial institutions to voluntarily accept them.

      Put another way, while I’m not denying the goodness or function that such an agency could play, I think that, given its near impossibility, our efforts would better be directed elsewhere.

      Also, and this is a sense I have long got about CST (although JPII is better than his predecessors), I have long gotten the sense that the popes/encyclical authors haven’t really read Marx…I’m not sure they get why he thinks “capitalism” is bad and in this way I think CST’s critique of the economic status quo (though definitely “to the left” of a lot of people) falls short.

      But yea, if such an organization ever did exist, I would wholeheartedly support it.

  5. OK So this is my 2nd attempt to respond…so it’ll be shorter.

    First, Katie – I think our divergence is one of emphasis. I don’t think the regulatory body can work without uprising from below…but I think it is necessary. It’l lbe difficult, but if its not possible the nwe have a real problem -at least as far as i see it, it is absolutely necessary — someone to set rules and hold banks/transnational corp accountable to them. I don’t htink decentralized efforts can accomplish that- i just dont thiink they are enough. (keep in mind my human rights background – I

    Second, I agree with Kevin on most parts in his analysis. I don’t quite see it as being wrong for being power to power…particularly given its very directed focus and subject matter. This isn’t a broad generalized statement.

    Third, I highly recommend reading John Allen’s piece

    I do not htink this statement is as “european” as some are charging….I’m impressed by my encounters w/ Turkson and am interested to see what the Holy See papers look like for Rio+20 on sustainable dev next year (Its an interesting moment Turkson as head of PJ, and an Indian archbishop via Iraq as Ambassador in UN

    and on this note..maybe a smaller response will post :-/

  6. I guess what I’m trying to say is that CST keeps thinking that it is offering an
    adequate critique of economic injustice that would suffice as long as people would listen and heed them, when I think that part of the reason CST has failed is not just due to human sin and self-justifying, but also because CST has not sufficiently critiqued the system.

    And regarding my comment about popes not reading Marx: for example, in affirming a Thomistic, natural law based defense of private property, they have not grasped the Marxian insight that bourgeouis (sp) private property is a distinct type of private property (marx claimed to be against not private property but bourgeois private property) that can not be anything other than exploitative.

    In other words, I don’t think CST has grasped that “private property” today is not what it used to be…and that Aquinas’ notion of “private property” is not just a curb on contemporary realities of private property but something deeply different from it.

  7. Steve Battin is of course correct. The situation was is summed up in the title of the book by Noam Chomsky: Year 501 The Conquest Continues.

    And summed up in this stark image, which could also be titled The Conquest Continues

    Plus Naomi Klein describes how the process is now accomplished in her book The Shock Doctrine. A process which was given ideological “justifications” by the right-wing think-tanks, with which many right-wing Christians are closely associated.

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