There are a seemingly endless amount of accounts of who or what is to blame for the current economic crisis. Is it the US government for allowing the collapse of Lehman Bros? Or was it the rating agencies who rated high-risk packages of sub-prime mortgages as if they were a rock solid investment? Or is it perhaps the very structure of the corporation that encourages short-term profits over long-term sustainability?
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Into this debate, if mostly indirectly, enters the voice of Pope Benedict XVI. His latest encyclical, Caritas in Veritate (Charity in Truth), is an exposition of the social doctrine of the Catholic Church as it relates to contemporary issues. This extensive document brings Catholic teaching to bear on globalization, technology, development, politics and economics.
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The previous encyclical to comment on economics was Centesimus Annus. This was heralded by many as a theological justification for the free market, over and against a centrally planned economy. Though proponents of this view often exaggerate the extent that Pope John Paul II advocates laissez faire capitalism (after all, the encyclical is strongly in favour of labour Unions and wary of the imperialist tendency of economics), the encyclical certainly is supportive of some sort of market economy and particularly of its capacity to encourage creativity in the form of entrepreneurship. Whereas John Paul II was writing whilst communism was collapsing, Benedict XVI has as his context the near-collapse of Wall Street. Though Caritas in Veritate is certainly not against a market economy, it is wary of the dangers of an unfettered capitalism.
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The Pope is concerned with the social effects of globalization, particularly regarding the unfettered mobility of labour and capital. Though recognizing that profit is useful, the encyclical posits that when profit becomes the exclusive goal, it has deleterious economic and social consequences. Despite such critique, Benedict XVI is hopeful for the future.
“The current crisis obliges us to re-plan our journey, to set ourselves new rules and to discover new forms of commitment, to build on positive experiences and to reject negative ones. The crisis thus becomes an opportunity for discernment, in which to shape a new vision for the future. In this spirit, with confidence rather than resignation, it is appropriate to address the difficulties of the present time” (21).
As for the causes of this current crisis, Benedict mentions that the drive for short-term profit and badly managed and speculative financial dealing have had an impact. However, Benedict XVI goes on to offer an intriguing theological diagnosis and cure. He argues that, “in commercial relationships the principle of gratuitousness and the logic of gift as an expression of fraternity can and must find their place within normal economic activity” (36). To understand what is meant by this assertion, it has to be placed in the context of the primary concern the Vatican has with Capitalism. This is the problematic “conviction that the economy must be autonomous, that it must be shielded from “influences” of a moral character, [which] has led man to abuse the economic process in a thoroughly destructive way” (34). Though capitalism promises such, “The sharing of goods and resources, from which authentic development proceeds, is not guaranteed by merely technical progress and relationships of utility” (9). In considering itself autonomous as to moral concerns, modern economics has caused significant damage through its utilitarian assumptions about human behaviour and its belief in the modern heresy of technological progress. In response to this, Benedict XVI calls for the addition of something that defies utilitarian logic and cannot be considered under the notion of ‘progress’ – the economy of gift.
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This radically challenges some of the assumptions of neo-classical economics, particularly those of scarcity as the fundamental condition of life and competition as the means of economic development. In contrast, “Gift by its nature goes beyond merit, its rule is that of superabundance”(34). ‘Gift’ is foundational because life itself is received as a gift from God. In that everyone shares in this gift, which is charity-in-truth, it becomes the foundation for human community. The weakness of the modern economy is that it is based on a faulty anthropology, and therefore, it conceives of economics only through the lens of contractual exchange. A fuller, theological account doesn’t eradicate this understanding but qualifies it by arguing for the “logic of the unconditional gift” (37).
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The fundamental cause of the economic crisis is, for Pope Benedict XVI, theological in origin. The solution doesn’t call for the collapse of a market economy but a re-ordering based on the addition of the logic of gift.
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Though there is much I appreciate in this encyclical, one of its conclusions is deeply troubling. Based on the existence of a global economy with all of its problems, climate change, international conflict, questions of food security and so on, Benedict XVI argues that there is an “urgent need of a true world political authority” (67). There is a surprisingly positive affirmation of modern politics throughout the encyclical that culminates in a call for some form of global government. Surely there is as much need to theologically interpret modern political theory and institutions (as Oliver O’Donovan does) as there is need to interpret economic theory and institutions.
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