Vatican council proposes a global financial authority

By David Kerr

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A stock market board. Credit: Katrina Tuliao (CC BY 2.0)

The Pontifical Council for Justice and Peace is calling for the creation of a new global authority which it hopes can make economic decisions based on the international common good rather than individual national interest.
 
The document on the economy, which was unveiled Oct. 24 at a Vatican press conference, was drafted with an eye to contributing to the upcoming G-20 summit, which will focus on the international monetary system and strengthening financial regulations.

It aims to “propose a reflection on possible ways forward--in line with the most recent social Magesterium--that are effective and representative at a global level, and which seek the authentic human development of all individuals and peoples,” said Bishop Mario Toso S.D.B., Secretary of the Justice and Peace council, in comments to the media.

The 20-page document is entitled “Towards reforming the international financial and monetary systems in the context of a global public authority.”
 
The document notes how economic globalization has meant that “between 1900 and 2000 the world population increased almost fourfold and the wealth produced worldwide grew much more rapidly,” while at the same time “the distribution of wealth did not become fairer but in many cases worsened.”
 
It adds that “today the modern means of communication make these great economic, social and cultural inequalities obvious to everyone, rich and poor alike,” giving rise to international tension and mass migration.
 
The document then reflects upon the roots of the present global economic crisis, and sets ethical parameters for a sustainable recovery, before concluding with some practical policy considerations.
 
Historically, it blames three strains of thought for the current crisis: economic liberalism, utilitarianism and technocracy.
 
The council writes that economic liberalism “spurns rules and controls” being placed on the free market but runs into trouble when such doctrinaire “laws of capitalistic development” do not reflect or explain economic realities. Such a system “runs the risk of becoming an instrument subordinated to the interests of the countries that effectively enjoy a position of economic and financial advantage,” it says.
 
Utilitarian thinking believes that “what is useful for the individual leads to the good of the community.” However, the document observes that sometimes “individual utility–even where it is legitimate –does not always favor the common good.”
 
In a technocracy all the problems that need tackling are seen as “exclusively of a technical nature,” which leads to those issues escaping “the needed discernment and ethical evaluation.”
 
But global markets require global ethics if they are to function properly, the council emphasized.
 
The document suggests that the present crisis has uncovered “behaviors like selfishness, collective greed and the hoarding of goods on a great scale.” Such a spectacle should motivate people to action as “no one can be content with seeing man live like ‘a wolf to his fellow man,’ according to the concept expounded by Hobbes,” it says.
 
Cardinal Peter Turkson, President of the Council for Justice and Peace, reflected on the current global situation in the preface of the publication. “The economic and financial crisis which the world is going through calls everyone, individuals and peoples, to examine in depth the principles and the cultural and moral values at the basis of social coexistence,” he said.
 
The document recalls how Pope John XXIII hoped in his 1963 encyclical “Pacem in Terris” (Peace on Earth) that one day “a true world political authority” would be created.
 
“A supranational Authority of this kind should have a realistic structure and be set up gradually,” it says.
 
However, the encyclical also cautions that “an Authority with a global reach that cannot be imposed by force, coercion or violence,” but only through “free and shared agreement” on the needs of “the world common good.”
 
And, the pontifical council said, in keeping with the principle of subsidiarity, which advocates always dealing with problems at the lowest or more local level of authority possible, the authority should intervene in global matters only when “individual, social or financial actors are intrinsically deficient in capacity, or cannot manage by themselves to do what is required of them.”
 
The suggestions issued today by Justice and Peace recognize that “a long road still needs to be traveled before arriving at the creation of a public Authority with universal jurisdiction,” and proposes that the reform or enhancing of present institutions such as the United Nations, International Monetary Fund or European Central Bank could be a starting point.
 
In terms of policy priorities it suggests that the global authority should prioritize “those regarding global social justice,” including crafting “financial and monetary policies that will not damage the weakest countries; and policies aimed at achieving free and stable markets and a fair distribution of world wealth.”
 
The document then gives three practical ideas for consideration: a financial transaction tax, making state backing of banks conditional on “virtuous” behavior, and a greater separation between retail and investment banking.
 
It also calls for moral training for those working in financial industries because “the gap between ethical training and technical preparation needs to be filled.”
 
It concludes by saying that the “time has come to conceive of institutions with universal competence, now that vital goods shared by the entire human family are at stake, goods which the individual States cannot promote and protect by themselves.”

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