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Vatican issues call for world financial authority [News/Analysis]

October 24, 2011

The Pontifical Council for Justice and Peace has called for the creation of a worldwide financial authority to help create “a free, stable world economic and financial system at the service of the real economy.”

The new Vatican document, released October 24, immediately generated headlines suggesting that the Holy See had advocated the creation of a world government. Some commentators saw the document as a signal that the Vatican was aligning itself with demonstrators occupying Wall Street and other world financial centers, while American news services quoted the Jesuit, Father Thomas Reese, as claiming that the Vatican document was “to the left of Nancy Pelosi.”

Actually the document—entitled “Towards Reforming the International Financial and Monetary Systems in the Context of Global Public Authority”—is much more modest in its suggestions and in its status. Released by a pontifical council rather than by the Pope himself, the statement has no formal teaching authority. Although it draws on papal encyclicals—notably including Caritas in Veritate, in which Pope Benedict XVI raised the question of a worldwide financial oversight agency—the specific proposal advanced in this document is based primarily on an economic analysis of the current financial crisis.

As he introduced the document to the media at a press conference in Rome, Cardinal Peter Turkson, the president of the Pontifical Academy for Justice and Peace (PCJP), explained that it was intended as a contribution from the Vatican to the discussions that will take place at the G-20 summit meeting in Cannes, France, early in November. The Vatican, he said, wants to encourage world economic and political leaders in an “examination of every facet of the problem: social, economic, cultural, and spiritual.”

The new document argues that the economic downturn of recent months “has revealed behaviors like selfishness, collective greed, and hoarding of goods on a grand scale.” The PCJP says that the world’s economic system has produced an unjust distribution of wealth, as well as instability in global finance. The free-market system alone cannot correct these problems, the document says:

The inequalities and distortions of capitalist development are often an expression not only of economic liberalism but also of utilitarian thinking: that is, theoretical and practical approaches according to which what is useful for the individual leads to the good of the community. This saying has a core of truth, but it cannot be ignored that individual utility – even where it is legitimate – does not always favor the common good.

In pointing to the need for moral guidance to supplement the workings of the marketplace, the PCJP statement follows themes that have appeared frequently in social encyclicals and in other statements of Catholic social teaching. But the October 24 Vatican document goes far beyond those authoritative statements in its specific call for the creation of a worldwide financial authority that could tax financial transactions, create a “reserve fund” to sustain growth in developing nations, and supply public funding for troubled banks.

The PCJP document acknowledges briefly that a global authority would necessarily impinge on national sovereignty, and argues that it must be planned carefully to avoid conflicts. Nevertheless the document says that a global power is needed to address global problems:

Of course, this transformation will be made at the cost of a gradual, balanced transfer of a part of each nation's powers to a world authority and to regional authorities, but this is necessary at a time when the dynamism of human society and the economy and the progress of technology are transcending borders, which are in fact already very eroded in a globalized world.

The new Vatican document recognizes the importance of subsidiarity: the traditional principle of Catholic social teaching that most public problems are best handled at the local level. The document explains that broader authority should be invoked “only when individual, social or financial actors are intrinsically deficient in capacity, or cannot manage by themselves to do what is required of them.” Noting that Pope Benedict mentioned that principle in his own reference to a global authority in Caritas in Veritate, the PCJP argues that in the current financial crisis, local and even national authorities are inadequate to the task of restoring a just economic order.

The PCJP document does not address the most obvious practical objections against such an economic scheme: the likelihood that a global authority would repeat the errors of national regulatory agencies; the “moral hazard” created by pouring public funding into banks that have made unsustainable investment decisions; the prospect that powerful economic forces would manipulate the actions of the worldwide authority to suit their own ends; the hostility that existing international organizations have shown to the principles of Christian morality. In fact—tossing aside the track record of the UN and other international agencies—the PCJP suggests that the creation of a global authority would serve to restore “the primacy of the spiritual and of ethics” in the guidance of the world’s economy.


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  • Posted by: extremeCatholic - Oct. 27, 2011 10:41 PM ET USA

    You can google "Caesaropapism" or "Catholic monarchists" and see the deep roots of this: a theme throughout Christian is to put faith in princes [Ps 146:3] who have the power of the sword, and not in the appeal of the Gospel to people sitting in pews through the power of the word for voluntary offering. There's nothing in Mt 28:19, the commission given by Christ to the Church about banking.

  • Posted by: Erik George - Oct. 25, 2011 4:07 PM ET USA

    Wow. Just... Wow. This sounds like a really, really, REALLY bad idea. Financial institutions are ALREADY too divorced from the man on the street. ("It's a Wonderful Life" anyone?) Centralizing these functions will only make things worse. It is but a small step from financial dictatorship to political tyranny. What are these people thinking? They should read some Michael O'Brien.

  • Posted by: unum - Oct. 25, 2011 7:56 AM ET USA

    Ah, the old dual role of diplomat and cleric is alive in the Vatican as a Cardinal/ambassador tries to save the world from financial ruin by pontificating (pun intended) on global finance. Turkson was born in Western Ghana and studied at St. Teresa's Seminary in the village of Amisano and Pedu before attending St. Anthony-on-Hudson Seminary in Rensselaer, New York, where he obtained a Bachelor's degree in theology. That certainly qualifies him as an authority on global finance.

  • Posted by: mrschips19308196 - Oct. 24, 2011 8:54 PM ET USA

    Any group labeled "Justice and Peace". pontifical council or not, is immediately suspect in my humble opinion............garnered from past experience.

  • Posted by: koinonia - Oct. 24, 2011 8:45 PM ET USA

    Our Lord instructed Peter to feed his sheep entrusting to him the keys to his kingdom. Millions of Catholics cannot define sanctifying grace, identify the purpose of the Mass or explain the meaning of transubstantiation. Millions don't even know what being Catholic means. Where is the charity for souls? Where is the burning desire to save souls, to proclaim Jesus Christ and his infinite, undying love to all men? There is much work to be done, and it is not in the realm of economics.

  • Posted by: Ken - Oct. 24, 2011 8:05 PM ET USA

    Who can really argue with this? I mean the Soviet Union and China before the introduction of capitalism to it's economy were smashing successes at ensuring the equal distribution of resources! With such positive historical examples, it's not wonder the Vatican hasn't come out with this before now! It is when I see something like this come out of Rome that I begin to question my faith.

  • Posted by: Nuage - Oct. 24, 2011 8:01 PM ET USA

    He who has the power to tax has the power to destroy. The Vatican is imagining that those in control will be neither corrupt nor corruptible. Short of the Second Coming, I don't think we have a qualified candidate. The irresponsibility and corruption of individual nation states will bring suffering upon a particular people, but a global system that goes corrupt can destroy an entire international system. I'd like to take a closer look as to who exactly is behind this and where he came from.

  • Posted by: mwean7331 - Oct. 24, 2011 7:41 PM ET USA

    Shades of the UN!These prelates need to come into the real world. Who would be making the decsions in the world power? Humanity of course and why would it be any more honest than what we have now? As long as humans are in charge of anything there will be greed and corruption. It is not perfect but capitalism and free enterprise is the best option

  • Posted by: - Oct. 24, 2011 7:13 PM ET USA

    The Church should stick to theology... A Global Financial Authority - because the United Nations has been such a wonderful success?!??? Get real! So just who would make up this "authority"? Who would get to pick the members? Who would oversea it? And who will manage to disband it when it starts demanding funding of abortions world-wide?!? This CANNOT work; any 1st year economics or poli-sci student can see that. Only a bunch of theologians can't!

  • Posted by: - Oct. 24, 2011 6:56 PM ET USA

    The Church continues to display an amazing lack of concern about government power as well as the principle of subsidiarity. Meanwhile, about 300 priest in Austria are in full and open rebellion, catachesis generally remains poor, many "Catholic" colleges continue to destroy faith, etc.