The Vatican document on the world economy, as issued by the Pontifical Council for Justice and Peace, is very puzzling. It seems to dabble in Austrian business cycle theory, naming credit expansion and loose money as the source of the problem.
In recent decades, it was the banks that extended credit, which generated money, which in turn sought a further expansion of credit. In this way, the economic system was driven towards an inflationary spiral that inevitably encountered a limit in the risk that credit institutions could accept. They faced the ultimate danger of bankruptcy, with negative consequences for the entire economic and financial system
After World War II, national economies made progress, albeit with enormous sacrifices for millions, indeed billions of people who, as producers and entrepreneurs on the one hand and as savers and consumers on the other, had put their confidence in a regular and progressive expansion of money supply and investment in line with opportunities for real growth of the economy.
Since the 1990s, we have seen that money and credit instruments worldwide have grown more rapidly than revenue, even adjusting for current prices. From this came the formation of pockets of excessive liquidity and speculative bubbles which later turned into a series of solvency and confidence crises that have spread and followed one another over the years.
A first crisis took place in the 1970s until the early 1980s and was related to the sudden sharp rises in oil prices. Subsequently, there was a series of crises in the developing world, for example, the first crisis in Mexico in the 1980s and those in Brazil, Russia and Korea, and then again in Mexico in the 1990s as well as in Thailand and Argentina.
The speculative bubble in real estate and the recent financial crisis have the very same origin in the excessive amount of money and the plethora of financial instruments globally.
Whereas the crises in the developing countries that risked involving the global monetary and financial system were contained through interventions by the more developed countries, the outbreak of the crisis in 2008 was characterized by a different factor compared with the previous ones, something decisive and explosive. Generated in the context of the United States, it took place in one of the most important zones for the global economy and finances. It directly affected what is still the currency of reference for the great majority of international trade transactions.
Promising! But then the same document goes on to call for a world central bank administered by a world political authority. This is about as naive as those who favored the creation of the Fed because they imagined that the Fed would control the expansion of credit in the banking system. Actually, it is worse than that because we’ve had a full century of experience to know that central banking does not lead to responsibility, regulated credit flows, and sound money but precisely the opposite. This is the doctor who calls for poison to fix poisoning, who administers heroine to stop a cocaine addiction.
It’s good at the Vatican listen to the Austrian-like message on discovering the problem. The people who wrote this document should have sat through some more seminars before they put pen to paper, because their solution is guaranteed to make the problem worse rather than better.
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Freemasons/globalists infiltrating the Church, their greatest enemy? Nah. Probly just stupid liberal Bishops that haven’t read Tom Woods book on the Church and the freemarket…. Then again…
Beware the diying cobra! It is wounded and it is going to die…but still a living poisonous creature.
Hannah, you must be talking about socialism.
Being compared to socialism is an affront against all venomous snakes.
As a cradle- now struggling- Catholic, and an Austrian/Rothbardian, the history of the Catholic church causes for me a crisis of faith. The Church taught the “divine right of kings” for centuries, and now they generally endorse the State as a legitimate institution and a means of salvation for fallen man (not all States, obviously, but the State in general). Why would God take human flesh and start an organization that would go on to teach that some men had a divine right to rule over others? Jesus said “Give to Caesar what is Caesar’s” Well nothing is Caesar’s! The Romans had no right to be in Galilee.
Jon, people are not perfect nor infallible, Jesus only granted that the Church will not fall to the devil. False ideologies prevail today among all societies. I pray that you do not let the failure of humans get in the way of living out your Catholic faith. The Church is only infallible when declared and in teachings of morality.
The Church does not say you can not be an anarchist and a good Catholic. So many people do not understand nor have been introduced to Austrian Economics. Maybe that is your calling, to preach the truth of Austrianism.
It is obvious that everything is God’s and so when I hear Jesus say “Give to Caesar what is Caesars” I hear, “give him nothing”. The coin Jesus asks for from the people who question him is called a denarii, It had written on it something equivalent today as saying “King Obama from Hawaii, Divinely Inspired”. (I don’t think Jesus was too fond of false gods)
I encourage you to listen to EWTN radio. http://www.ewtn.com/radio/amfm.asp
God Bless!
Thanks Kyle. That makes sense, I was just frustrated earlier I guess. There’s 1 billion Catholics, it would be nice if the Church would lead them toward liberty and sound money instead of the total State. I agree, most people in the Church probably have never even heard of Austrian economics. I only discovered it about a year ago, it’s been kind of a whirlwind ever since. haha I didn’t know that about the denarii. Agree, King Obama can have as much of his fiat toilet paper as he wants
I’ll check out EWTN radio.
Glad your spirits are lifted. Easy to misread “Give unto Caesar what is Caesar’s”. Many Jews were expecting the Messiah to lead a political revolution. Christ brings Spiritual
revolution. Caesar demanded worship. But worship belongs to God alone.
The Acton Institute is a free market Catholic organization and has a good review of this silly document at http://blog.acton.org/
http://jesus-on-taxes.com/Page_7.html
Romani eti domum!
I have wrestled with the issues Jon raised myself. G_d started the organization, but being made of flawed and fallen people the Church doesn’t always transcend its building materials. I’d be happy if the US Council of Catholic Bishops would spend a little time at the Acton Institute.
Compare this confused mush of ideas with the brilliance of the Church Scholastics of the School of Salamanca and you’ll cry at how far the Catholic Church has fallen in terms of intellect and understanding. Church Scholastics gave us the capitalism which the Church now abhors.
The Church lauds the 4-fold increase in world population, but that population increase could never have happened without capitalism. Capitalism gave us the food and wealth to sustain a population four times as large as the population that the planet could sustain before capitalism. The Church has forgotten the regular Malthusian cycles of famine that plagued the planet before the advent of Church inspired capitalism.
The essence of the Church’s economics is this statement from the document: “No one can in conscience accept the development of some countries to the detriment of others.” The Church has gone back to medieval economics in which no man can gain except at the expense of another. The world is flat and wealth is limited. It is completely unaware of the process of wealth creation that lifted the West from starvation over 300 years and much of Asia from similar starvation over the past generation. In the Church’s fevered mind, we all grew richer by taking the wealth of others.
At the same time, the church acknowledges that total world wealth has grown in the same document. So which is it? Did we take the wealth of others or did we create new wealth? The Church doesn’t know. It only knows that it’s evil if some become richer than others. Can the Church be guilty of envy?
And because governments, the UN and the IMF have worked so well in the past, the Church wants to give them more power over us.
The great Catholic writer Michael Novak (“The Spirit of Democratic Capitalism”) once said that he remained Catholic because of the Church’s great intellectual traditional. It hasn’t had that tradition for centuries and this document is evidence of its increasing senility.
Well said fundamentalist. I just read the entire document and “confused mush” is putting it lightly. It’s embarrasing. “Even prior to the logic of a fair exchange of goods and the forms of justice appropriate to it, there exists something which is due to man because he is man, by reason of his lofty dignity.” So when Crusoe and Friday would like to trade with one another in a mutually beneficial exchange, are they supposed to stand there and wait until some entity magically gives them what is due to them by reason of their lofty dignity?? I can’t believe it. Yes, the Catholic Church is made up of fallen men, and the Pope is only infallible in faith and morals, but it’s almost impossible for me to believe that an institution founded and guided by the Omnipotent Creator could be this naive and absurd on such an important topic. jeez it’ll break my mother’s heart if I dump the Catholic faith
“In fact, one can see an emerging requirement for a…“central world bank” that regulates the flow and system of monetary exchanges similar to the national central banks.”
“..the creation of a public Authority with universal jurisdiction…with the United Nations as its reference…”
The institution created by God to lead his people to salvation is agitating for a global fiat currency and a World Government modeled after the UN? As a Catholic, I’m shocked and disgusted by this document, and I expect the Pope to publicly repudiate it. You don’t have to be a Mises University graduate to know that fiat money is inherently corrupt and that the UN is a lying, murderous enterprise that exists strictly for the benefit of global elites.
I was half joking with my Freemason comment. However there is absolutely a Liberal Socialist “intellectual tradition” that has been vying for power within in the Church and has been largely successful since the Second Varican Council. Research Communism’s influence on the Council. But that is very slowly changing. Like all lies socialism must die. The wheels are slowly grinding to a halt. It is up to us as Catholics to persevere. Many changes are forthcoming in the Church especially in America. There is a weakness in the Western Church, a poison, but it is slowly being bled out. I don’t think the sexual abuse scandals are unrelated. Watch and wait but don’t be silent.
It seems to me that the Church (and civilization in general) were on the right track until the Reformation. Because the Protestants rejected the Church’s power they instead looked to the government as the central authority in civil matters. This led to the slow decline of intellectual thought that we see today. Before you reject the Catholic Church because of your views on economics I strongly urge you to read Triumph by Harry Crocker III (its very good and sections of it are on LewRockwell.com, even if Crocker is a war monger in other places), as well as Thomas Wood’s book “The Church and the Market.” Woods points out that the essential problem with Catholic social teaching is that the Church’s view of the State has not developed at all since feudalism. A lot of Thomas Aquinas’s Ideas about government are actually not far off when applied to the a feudal government, but absolutely do not apply to modern democracy (If you’re not falling me here I suggest reading Hoppe’s work on democracy). I would also add that Rothbard borrowed the epistemology of Thomas Aquinas, and that Rothbard points out that the divine right of kings was originally suppose to LIMIT a kings power by making him responsible to God, and therefore the Church.
Thanks Lenti. I hadn’t heard of the book “Triumph,” I’ll check it out for sure. I also haven’t read “The Church and the Market” but I was very aware of it, and part of the reason I guess I’ve had an axe to grind against the Church lately is that there are a few Catholic authors who have attacked Mr. Woods over that book and referred to the “Austrian heresy.” Obviously that isn’t the official Church position but it still upset me a bit. I absolutely loved “Democracy- the God that Failed”. Wow! Totally blew my mind. Didn’t know what Rothbard said about the divine right of kings. I’ve always been impressed by how fair, maybe even benevolent, Rothbard was toward religion. He probably gives it more breaks than I do, and he was an agnostic
Thanks again for your thoughts.
Lenti, actually, the Protestants of the Dutch Republic implemented Church teaching on private property and free markets in the 17th century when no other country would. That gave birth to capitalism, freedom of religion and most of what we consider the liberal tradition. See Deirdre McCloskey’s “Bourgeois Values” and “Bourgeois Virtues” for a good history.
As a reflection on the spirit of polyarchy, I can’t find as much at fault with the document as it would seem my fellow commentors on this thread do. The Vatican has a delicate line to hoe in the arena of geopolitics, sowing seeds that may yet bear fruit even when steamrollered by FIAT fiduciary instruments. Too many misread the syntax, seeing proscriptions being made when suggestions were proferred (the Catholic Faith is always a proposition never an imposition, even Mary had free will to withhold her FIAT). For example near the conclusion, three separate “poles” of political power are enumerated:
“On the basis of this sort of ethical approach, it seems advisable to reflect, for example, on:
a) taxation measures on financial transactions through fair but modulated rates … [ ie fiscal ]
b) forms of … support conditional on “virtuous” behavior … [ ie juridical ]
c) the definition of the domains of … “ … markets” [ ie entrepreneurial ] “
Consider the applicability of moral hazard’s leverage on the polyarchic regimes of the G20
Argentina _____ fiscal/deficit; juridical/Roman; entrepreneurial/ autoarchic elite
Australia _____ fiscal/deficit; juridical/Anglo-Saxon; entrepreneurial/ aristocracy
Brazil _____ fiscal/surplus; juridical/Marxist; entrepreneurial/ statist mercantilism
Canada _____ fiscal/deficit; juridical/Anglo-Saxon; entrepreneurial/ aristocracy
China ___ fiscal/surplus; juridical/Maoist; entrepreneurial/ statist mercantilism
[ European Union ] ____? jury is out on this one, wait until Wednesday at the earliest!
France _____ fiscal/deficit; juridical/Anglo-Saxon(!); entrepreneurial/ statist mercantilism
Germany _____ fiscal/deficit; juridical/Roman(!); entrepreneurial/ statist mercantilism
India _____ fiscal/surplus; juridical/Anglo-Saxon; entrepreneurial/ statist castes
Indonesia _____ fiscal/deficit; juridical/Sharia; entrepreneurial/ autoarchic elite
Italy _____ fiscal/deficit; juridical/Roman; entrepreneurial/ statist mercantilist
Japan _____ fiscal/deficit; juridical/syncretic; entrepreneurial/ autoarchic elite
Mexico _____ fiscal/deficit; juridical/Anglo-saxon; entrepreneurial/ aristocracy
Russia _____ fiscal/deficit; juridical/syncretic; entrepreneurial/ plutarchic castes
Saudi Arabia _____ fiscal/tax-free; juridical/Sharia; entrepreneurial/physiocrat Monarchy
South Africa _____ fiscal/deficit; juridical/syncretic; entrepreneurial/ expat mercantilist
South Korea _____ fiscal/deficit; juridical/syncretic; entrepreneurial/ statist mercantilist
Turkey _____ fiscal/neutral; juridical/Sharia; entrepreneurial/ statist mercantilist
UK _____ fiscal/deficit; juridical/Anglo-saxon; entrepreneurial/ statist mercantilist
US _____ fiscal/deficit; juridical/Anglo-saxon; entrepreneurial/ statist mercantilist
Scholars of the Austrian school could contribute mightily in harmonizing this maelstrom of political worldviews and abstract philosophies. Since the Vatican rightly IMHO elevates political agency above economic agency, being in possession of a dinarii even if it has Caesar’s face on it does nothing for my freedom of conscience, as Tudor era Catholics will attest “The Act Concerning Peter’s Pence and Dispensations” outlawed the annual payment by landowners of one penny to the Pope [quoth wikipedia], extending to expropriation of the monasteries down to their very bricks and mortar, and legislating recusancy “fees” under the penal laws that impoverished many a faithful Catholic franchisee (landholder) whose liabilities included any recusants in his employ.
To harmonize fiscal poiesis (a) let us define what constitutes”fair … rates” before we can begin to discuss novel means to collect taxes (here Murray Rothbard’s decisive logic would be of indisputable value in clarifying terms of debate
http://mises.org/daily/1768/The-Consumption-Tax-A-Critique
To harmonize juridical poiesis (b) we would also need to define “capital” before we can ever begin to discuss what we mean by “recapitalize”. Eugen von Bohn Bawerk’s perceptive analysis could be applied most efficaciously methinks
http://mises.org/books/control_or_economic_law_boehm-bawerk.pdf
To harmonize entrepreneurial poiesis (c) we would need to explore integral human development under a monarchy relinquished to stewardship, the synoptic Gospels have some perfectly good examples of subjective value and time preference that the Vatican may not yet have considered in this light: the unjust steward (Luke 16:1-13), the workers in the vineyard (Matthew 20:1–16) the ‘creative destruction’ of the gadarene swine (Mark 5 1-13) operating a medical practice without insurance in the healing with spit (mark 8:22-26) and my favorite, the 5 foolish and the 5 wise maidens (Matthew 25:1-13).
So how about it …?
Start parsing “global public authority” !
When Mises U offers a Masters of the Universe diploma in “Prudential Judgment for Community Leaders” I’ll be first in line to let the chairman of the board of our HOA know all about it – our property values may even benefit from a refresher course in the heritage of right reason before the Reserve Fund runs dry!)
oops missing citation at (c) to qualify what counts as entrepreneurial in “the civilization of love” (Deus Caritas Est/Caritate in Veritate) we would of course need Hoppe’s “Time Preference, Government, and the Process of De-Civilization From Monarchy to Democracy” here http://blog.mises.org/1998/hoppe-on-time-preference/
note my use of the terms Anglo-Saxon and Roman refer to constitutional design as advocated by a lesser-known beatified economist, Blessed Antonio Rosmini
“The Constitution under Social Justice” see
http://books.google.com/books?id=y63Mggc2irEC&pg=PR1#v=onepage&q&f=false
This is an interesting response to much of the hoopla:
http://www.nationalreview.com/corner/281140/pope-chaplain-ows-rubbish-george-weigel
Read past the title of the article; it addresses the document in question. Apparently a number of people are using the document to claim Vatican support of the OWS crowd (ha!).
You have to keep in mind that the people that participate in making these pronouncements have a highly bureaucratic mindset. Coming from academia and church hierarchy they tend not to be deep thinkers, but think like mid-level managers. They’ve been indoctrinated, as almost everyone else has, into a reverence for statist tinkering with society. Unfortunately, most people in our age see the state as the de facto “church” and de facto “god” to a large extent. It’s the institution that gets things done – right or wrong, rain or shine.
And stuffy churchmen assigned to lofty councils can easily convince themselves that they are supposed to be the conscience of this monstrosity that runs the world. So they speak to it. Like everyone else, they can hardly see past it to the suffocated civil society which lies beneath. The status-quo is simply seen as a given, and then a plastic “progress” template is superimposed in vague flowery language. Like foolish voters and eager young reform-minded politicians, they hope against hope for the system to “work” once it is finally directed by the right people with the right ideas. And here they come to cheer from the sidelines. One more program that’s bigger and better just might do the trick! Eternal optimism that a little bit of hand-holding and a boatload of trite moralizing can turn a ferocious parasite into a saintly guardian. Not likely. The devil is a liar.
Since the birth of the modern nation-state the Church has been calling on the devil to be a good little devil and lead the world to salvation, but it seems the devil has a slightly different plan – mass murdering in war, plundering in peace time, and general mayhem throughout. The Church has no mission or mandate to preach politics or economics, and she certainly has a foundational understanding of that, but once the insidious ideology of democracy took hold, many in the Church took on the same delusion as the general population regarding the lie of “We the People.” It stupidly speaks to the state as if the state were the Flock. It isn’t, and never will be.
Hopefully the criticism coming from people who actually are deep thinkers and know what they’re talking about with respect to politics and economics – and theology, of course – can push back on this naive idiocy and we’ll have no more useless pronouncements about “supranational authority” and “new world order” coming from people who apparently can’t even discern that an all-powerful money monopoly creating worldwide debt slavery just might not be a good thing for the kiddies.
As a person from Brazil, a highly catholic country, I find very weird all those people from non-catholic countries admiring the church for being so “free market”, because I don’t see that at all.
Half dozen of medieval thinkers doesn’t make the CC a bastion of liberty.
Is anyone at mises.org in contact with Karl Denninger, he seems so close to comprehending the ethics of money production,
http://market-ticker.org/akcs-www?post=196517
and he has a new book “Leverage” coming out that speaks to cheap money.
A review or “bloggingheads” video debate would be fun!
Parse perspectives on entrepreneurship vs bureaucracy using the two pillars of human ingenuity: techne and poeisis. Which does more harm to integral human development, which is more utopian/dystopian?
Zorg …push back on this naive idiocy and we’ll have no more useless pronouncements about “supranational authority” and “new world order”
as I said over at Patheos earlier
http://www.patheos.com/community/deaconsbench/2011/10/24/vatican-condemns-selfishness-collective-greed-and-the-hoarding-of-goods/#comment-17797
the Vatican isn’t the first to the negotiating table with talking points about a new world reserve currency. I believe the BRICs (with 40% of the world’s population) suggested a new basket of currencies based on strategic drawing rights:
http://www.imf.org/external/pubs/ft/survey/so/2009/rea072209a.htm
The dollar is not long for the world, and the Vatican kinda oughta shoulda knows it…
my bad, forgot closing italic tag!
Zorg …push back on this naive idiocy and we’ll have no more useless pronouncements about “supranational authority” and “new world order”
as I said over at Patheos earlier (see comment #92)
http://www.patheos.com/community/deaconsbench/2011/10/24/vatican-condemns-selfishness-collective-greed-and-the-hoarding-of-goods/#comment-17797
the Vatican isn’t the first to the negotiating table with talking points about a new world reserve currency. I believe the BRICs (with 40% of the world’s population) suggested a new basket of currencies based on strategic drawing rights:
http://www.imf.org/external/pubs/ft/survey/so/2009/rea072209a.htm
The dollar is not long for the world, and the Vatican kinda oughta shoulda knows it…
Absent the political will in the US to return to a gold standard that is.
Which could be why the intellectuals of a Scholastic bent in the GOP (e.g. Gingrich, Sam Gregg at Acton) may have cottoned on to the benefits “in defense of our freedoms,” however tardily they are to be congratulated!!
Jeffrey, hope this delights:
a tongue-in-cheek take on the harmonization of central banking:
http://ftalphaville.ft.com/blog/2011/09/06/670431/athenian-rhapsody/
the AustroHungarians of course were the first choral bohemian rhapsody
Me? I’m more of a disco girl [chuckle]
http://blogs.wsj.com/brussels/2011/10/24/i-will-survive-the-debt-crisis/
H/T the Telegraph’s DebtCrisis liveblog
The document recognize an “authority” for dialogue, not for administration. And it also says the “central bank” will likely be an outgrowth of such a dialogue, but it does not necessarily call for one. You guys read too much into things without really understanding the Church. The Church wants the world economies to start teaching the developing countries “how to fish” instead of constantly “giving them fish to eat.” And that is going to take a group effort, what the document calls a “global authority”. The Church uses different language than you economists are used to, borrowing more on the language used over the past 500 years of the Church’s tradition. Reread the document and let the context interpret itself, not your own particular economic slant.
“Benedict XVI himself expressed the need to create a world political authority…the creation of a public Authority with universal jurisdiction. It would seem logical for the reform process to proceed with the United Nations as its reference…”
“…a kind of “central world bank” that regulates the flow and system of monetary exchanges similar to the national central banks.”
I agree, the language is muddled and wordy, but I don’t know how you could interpret the above to mean anything other than One World Government and a global fiat currency.
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