Clifford Longley - Canberra
Catholic Social Teaching
Presented by Clifford Longley
May 2 2012
To explore this topic Clifford Longley commences with the premise that the ”two fundamental models of human development have been found wanting, flawed and defective, unable to deliver the goods. Marxism, he says failed because rigid state control of economy stifles initiative and enterprise; the world free market pursues profit without regard to consequences which leads to instability of the system.
Catholic ethics as expressed in Catholic Social Teaching is the only recognisable alternative to those systems. The principal of common good which underpins Catholic Social Teaching is an ethical ideal which can guide living in a good and just society and govern behaviour leading to both virtuous people and organisational structures which foster virtue.
It is a great privilege to be invited to give this lecture here in Canberra. I have to thank my hosts for inviting me and you for coming to listen - and I hope you will join in a vigorous discussion afterwards.
The more I learn about Australia the more excited I become, for this is truly a country of tomorrow. I even have a small personal stake in its future myself, as my sister has lived here in Canberra for many years; and her children and grandchildren are helping to create and live the Australian Dream. I am very proud of them.
It is usual for a speaker to include within his serious remarks something a little lighter, so I diligently searched the internet for good Australian jokes. But then I realised three things. The first is that you will have heard most of them before, even the one about - well I won’t go on if you know it...
The second is that it would be easier and quicker just to tell you the web addresses, then you can enjoy them at your leisure! I particularly recommend Australian jokes about New Zealanders by the way, even though I have sister living there too. The web address you need is called Google.com
The third thing I realised is that there really is such a thing as a typical Ozzie joke, a kind of standard form of the genre. And the odd thing about them is that they are in reality anti-Ozzie jokes, the Barry Humphries syndrome - jokes which if an Englishman were to tell them would sound offensive to Australian ears even if they are also quite funny. I wouldn’t dare. Time to give Sir Les Patterson, Barry MacKenzie, Dame Edna Everidge and the whole Humphries family a solemn and dignified burial followed, if you insist, by a wild Australian party in celebration...
I know the United States fairly well - my wife is an American - and I just cannot imagine Australian jokes about Australians being translated into American. What these jokes tell me is that Australians don’t want to appear to take themselves too seriously. With Americans there is no such inhibition. My god do they take themselves seriously! They do not tell jokes against themselves. What Americans definitely do not do is ironic self-deprecation.
I used the expression the Australian Dream just now. I wasn’t referring to a treatment for arthritis, which is one common use of the term Down Under, nor even to the desire to own your own house and garden where you can conduct endless barbecues under endless sunshine, ditto. To Americans the term American Dream has almost religious significance. Indeed, I wrote a book about it, called Chosen People, and maybe you don’t need to buy the book as the title says it all. It is about the whole nation having a sense of mission, a manifest destiny indeed - a central role in God’s providential purposes. I sense that Australia does need to go that far... Please not.
But please, it ought not to go too far in the other direction. I find the American habit of self-adulation much less appealing than Australian self-deprecation and self-mockery. But - and this is my point - the world does need Australia. It needs it to be - not a joke in its own eyes or anybody’s else’s, but a success and an example. The ingredients are all there. Look at the map; look at the world economy - where is it all happening? Who, in this grim and dismal world, is making a success of things?
So I ask myself, what does Australia need to be and to do, or go on doing, to become that success and that example, to be the admiration of the rest of us? And my best answer brings me to the topic of my lecture tonight. Every society needs a set of principles to live by, and if it is a successful society those principles will aim high. They will aim, for instance, for the integral human development of everyone, without distinction. They will aim for well-being, for true human prosperity, for a society where virtue is rewarded rather than its opposite, and where the common good takes precedence over private or partisan interests. Australia already has many of these principles deeply imprinted on its soul. I intend that to be a sincere compliment, not buttering up my hosts!
It would not be original of me to point out that two fundamental models of human development, two engines of growth and prosperity, have both been found to be wanting, flawed and defective, unable to deliver the goods. Marxism failed, as Pope Benedict remarked on his way to Cuba not long ago. Rigid state control of the economy stifles initiative and enterprise - as the even Chinese have discovered for themselves. But free market capitalism, which for some years was thought to have been the final victor over Marxism, was also deeply flawed. The world free market economy, like that vast floating palace now lying on its side off the coast of Italy, had driven itself into to rocks. The pure pursuit of profit, without regard for consequences, did in the end prove inherently unstable as a system, holed below the water line.
So what else is there? I would not hesitate to say that it goes by the name of Catholic Social Teaching. You could call it something else, and sometimes I wish it were, as the name is likely to put some people off. But tonight we can use it comfortably and without embarrassment. So what is Catholic Social Teaching? It has been called the Church’s best kept secret, though frankly I think the secret is out.
It is best understood not by breaking it up into a series of theoretical categories and talking at length about each one, before struggling to assemble them into a whole, as one might try to put together a bicycle. You would not know what a bicycle was just by looking separately at the handlebars, the frame, the pedals and the wheels. But watch it in action, and all becomes clear. To see how a bicycle works, we have to get on it and ride it, experience it as a balance of forces in action.
So let’s clamber aboard Catholic Social Teaching and see where it takes us. Let us go to the North Atlantic, for instance. The economies of the North Atlantic - North America and Europe - have been going through a period of severe economic difficulty. Many commentators do not yet see light at the end of the tunnel. Countries not so much affected, like Australian, would do well to regard the economies of North America and Europe as examples of “how not to do it”, real-time laboratories where mistakes were made that everybody needs to heed and learn from. My own experience is that Catholic Social Teaching has proved again and again to be an effective tool for this necessary diagnosis. Its diagnosis of the ills and flaws of Communism was accurate, and its diagnosis of problems in the major economies of the West has also proved pretty accurate.
What makes this crisis particularly agonising is the strange combination of two opposing factors - it is devastating in its effects, and it is extremely hard to understand. You might compare it to the impact of the Black Death in 14th century Europe. Nobody understood anything at all about the bacterial transmission of disease. The nature of the force threatening to devour them was utterly baffling. So the impact of the Black Death must have been both terrifying and mystifying. There is something of that about the way people felt about the economic crisis that overtook the world from 2008 onwards. Why us, they said? Why now?
After the publication of Pope Benedict’s 2009 encyclical letter Caritas in Veritate, one prominent British economist, Lord Brian Griffiths of Goldman Sachs who was formerly head of the Downing Street policy unit under Margaret Thatcher, described it as “without doubt the most articulate, comprehensive and thoughtful response to the financial crisis that has yet appeared.” (The Times July 13 2009).
And Lord Maurice Glasman, not a Catholic but an agnostic Jew, who is a Labour peer in Britain and close adviser to Ed Miliband, the Opposition leader in Britain, recently described Catholic Social Teaching as “the only show in town.”
The economies of the free market systems in Europe and North America had come to depend on a culture of grim atomised individualism. I hardly need to say so, but these cannot be reconciled with the values of Catholic Christianity. Indeed, a recently published Vatican analysis of the problem talks about the phenomenon of the “divided lives” among people who work in finance and industry. They feel it necessary to leave their moral values at the door when they go to work, because they feel there is no place for them once they get down to business. This dichotomy leads to a deep state of sorrow in the soul, because it is not good or healthy for anybody to inhabit a world of such cognitive - and moral - dissonance. It can indeed be soul-destroying.
Let me quote to you from a paper written by Professor Stefano Zamagni, professor of economics at Bologna university who was one of the Pope’s principal advisers in the writing of that encyclical, Caritas in Veritate.
“From the very first,” says Zamagni, “the relationship between Catholicism and free-market capitalism has been characterized by structural ambivalence. On the one hand it is to Catholic thought, especially the Franciscan school of the 13th to the 15th century, that we owe the formulation of most of the analytical categories and no few economic institutions that would later serve the full assertion of the spirit of capitalism. On the other hand, the Catholic ethic essentially rejects the very mind-set of capitalism, what Max Weber called its Geist.”
He asserts that economic agents, acting in a market governed solely by the principle of exchange of equivalents, are led into strictly self-interested decision-making. With time, they tend to transfer this way of thinking to other social spheres, including those in which the public interest demands virtuous acts - a “virtuous” act being one he defines as one that not only is in the public interest but that is performed because it is for the common good. Thus “The market advances over the commodification and desertification of society.” Commodification, meaning to reduce the human things that matter to mere commodities that can be bought and sold; desertification, meaning laying waste to human culture to create a desert - and calling it a victory.
Thus Frederick von Hayek, the Austrian economist who became the chief guru of free market economics, called the very idea of social justice “absurd.” That’s rather like saying “there is no such things as society.”
Catholic ethics are necessarily centred on the common good, and that pursuit of the common good is incompatible with pure free market capitalism. You cannot pursue narrow self interest and the common good at the same time - they are inevitably contrary to one another.
Catholic Social Teaching has known this a long time. The principle of the common good is not merely a description of what is the case, like for instance the phrase “the public good” or the “total good.” Public goods are understood to be services or facilities available to all that are in more or less unlimited supply, like the air we breathe. The total good is the sum of all the goods available. We are into utilitarian territory here - if we are not careful the greatest good of the greatest number becomes our only basis of moral judgement. The common good is more complex. It is an ethical ideal, which can tell people how to approach living as members of a good and just society, how they should govern their behaviour, as “persons in community,” towards themselves and each other.
The common good stands in judgement over the public good. Let me give you an example. Earlier this year I was one of the organisers of a series of Lecture in Cambridge which addressed the question - “Can Catholic Social Teaching help us rebuild the moral basis of economic life?”
The question which kept coming back again and again was about creating not just virtuous people but rather organisational and institutional structures which make space for virtue, do not penalise it but foster it. In our final lecture in the series, Dr Catherine Cowley argued that a very important challenge that the situation in Greece has thrown back to us is the question of money: particularly whether for Catholics money is to be considered a private or a public good – a common good matter.
Dr Cowley, as well as being a religious sister with academic qualifications both in economics and theology, was formerly a City of London financial trader. Indeed she was one of the very few who predicted the crash of 2008 years before it happened. She argued that, in the interests of the common good, money should indeed be thought of as a public good: particularly when we look at the public good of producing a stable currency. If trading in currency is deliberately manipulated for private gain, with the benefits going to a particular group, and the risks being borne by another, ie the whole community, this threatens the common good. This phenomenon has been called “the privatisation of profit and the nationalisation of loss.” She suggested that we ask carefully when looking at flow of money – who benefits, and who is at risk? – not just in theory, but in practice. Much of the public outrage with the response of government to the financial crisis: both the banking crash and the sovereign debt crisis, concerns the failure to see where power lies. In entirely concrete, practical terms those with least access to the public goods of money lose most.
This is the very antithesis of “common good” thinking. To quote Sister Cowley: most people sense “that some financial institutions are acting in ways which undermine our life together and fulfilling objectives other than those which society has traditionally asked finance to fulfil.”
What has become apparent is that some aspects of modern business theory and practice are misaligned with human nature, or the better part of it. In the long run the remorseless appeal to the pursuit of self-interest is not very satisfying. Business people are social animals like everyone else, and they need to feel they are making the world a better place.
Many business leaders are only too aware that they are under critical and sometimes cynical scrutiny, and that public opinion is not over-impressed with some aspects of their performance. The public has lost confidence in the way business is run, and sees it as taking value out of the community instead of contributing value to it. In many cases that may be unfair, and may reflect the media’s interest in failure rather than success.
But it is not all about perception. There are assumptions and practices within business that see the interests of business working against the interests of society rather than for it. Society then starts to expend its energy on controlling business by ever more intrusive regulation, not trusting it to control itself; business reacts by expending its energy to meet what it sees as a threat, either by cheating, finding a legitimate or illegitimate way round the regulations, or lobbying government to reduce the regulatory burden. This leads to mutual resentment and to the depletion of resources. Handling this conflict between the interests of business and the wider interests of society is wasteful on both side: in economic terms it is inefficient.
Catholic Social Teaching says it does not have to be that way. Wealth creation and the meeting of human needs should bring huge benefits to society. There are shared benefits, or to use traditional philosophical language, a common good. So the aim should be to align business and society in such a way that their common good is enhanced. Society and business can then say to each other: “Your problems are our problems; let us solve them together.” And it is self-evidently much more efficient for business to have that attitude at the heart of its objectives from the start, rather than to be made to serve the common good against its will whether by government regulation, fear of media exposure or public disapproval.
At the same time it is realistic to acknowledge that this cannot be achieved by public relations spin. In the short term a business can “buy” a good public image by spending money on PR, advertising, corporate social responsibility projects and so on. If the image does not match the reality, however, that business is risking a backlash when its facade is eventually exposed as a false one. Nor do such companies feel good to work for, and companies which do not feel good to work for do not get the best out of their employees.
The best companies, those that serve both wealth creation and the common good, have certain things in common. They have a solid foundation in a set of unchanging purposes and values, which serve as a buffer against uncertainty and change. They conceive the firm as a social institution, which generates a long-term perspective. They are not obsessed with short-term gain, indeed short-term financial sacrifice becomes permissible in the interest of positioning the firm for sustainable success. Their strong institutional values evoke positive emotions of loyalty and pride; they stimulate intrinsic motivation, and propel self- or peer regulation.
They see themselves as primary pillars of society, not just local or national but global. In their engagement with wider society they seek to be good corporate citizens, cultivating relationships with public officials neither as a quid pro quo nor to push through particular deals. Rather, they seek to understand and contribute to the public agenda even as they influence it. Wise business leaders do not buy into rigid economic doctrine nor hide behind the alibi that they were “only obeying market forces.” They do not believe that “an invisible hand” will automatically turn self-interested choices to the public’s advantage. They instinctively understand what is meant by the common good - to revert to my opening metaphor, it is a bicycle they have been riding all their lives. Such business people do already abide by most of the principles of Catholic Social Teaching, whether they know it or not, as these instinctively feel the proper and right way to behave. It is a strength of Catholic Social Teaching that it articulates this moral intuition, so that many people often recognise it as what they have always thought and felt. That I suppose is what is meant by natural law.
So what is this common good? It is not at first easy to grasp, but very well worth the effort. The common good has been defined for us as “the whole network of social conditions which enable human individuals and groups to flourish and live a fully, genuinely human life... All are responsible for all, collectively, at the level of society or nation, not only as individuals.” Those are the words of Pope John Paul II. This concept of the common good dissolves the tension between selfishness and unselfishness, as it is in everyone’s interest to build up the common good by each person contributing to it. Those who serve others in this way automatically serve themselves.
Before Caritas in Veritate, the last of the series of authoritative teaching documents on social questions or “social encyclicals”, was Centesimus Annus of Pope John Paul II, published in 1991. That year was the centenary of the first social encyclical in the modern series, Rerum Novarum of Pope Leo XIII. Let us recall the flavour of Rerum Novarum, as it may be a while since you last read it.
“A tiny group of extravagantly rich men have been able to lay upon the great multitude of unpropertied workers a yoke little better than that of slavery itself. (paragraph 2)”
“What is truly shameful and inhuman is to misuse men as instruments for gain and to value them only as so much mere energy and strength. (paragraph 16)”
“The first task is to save the wretched workers from the brutality of those who make use of human beings as mere instruments for the unrestrained acquisition of profits. (43)”
“If having no alternative and fearing a worse fate, a workman is forced to accept harder conditions imposed by an employer or contractor, he is the victim of violence against which justice cries out. (45)
While the questions that Catholic Social Teaching tries to address change over time, the answer remains the same - and is in essence very simple and familiar. Jesus Christ reiterated the Golden Rule - “As you wish that others should do to you, do you also to them likewise” (Luke 6:31). He told his disciples “Love one another as I have loved you” (John 13:34). Such ideals are found in virtually all systems of behaviour and belief, modern and ancient, theist, pantheist and humanist. And Christ offered a simple summary of the Ten Commandments in even more positive and profound terms: “Thou shalt love thy neighbour as thyself” (Matthew 19:19, quoting Leviticus 9:18; sometimes called the Second Great Commandment.)
The Church has meditated for two thousand years on the meaning of these words of Christ, and how they are to be obeyed. Its Social Doctrine is the fruit of that meditation. What is love, who is my neighbour, and how and why should I love myself? Indeed, contained in that last question are the ultimate ones: “Who am I?”, Why am I of value?” and “What is my true destiny?” These are spiritual as much as moral questions.
What is it one should wish for oneself, and therefore for one’s neighbour? The answer given by Pope Benedict was a restatement of the concept first promoted by Pope Paul VI in his 1967 encyclical Populorum Progressio, and expressed in the term “integral human development”. Human beings have a potential for personal growth, for progress and development. Humans are social animals with an instinctive need for sociability, and all those areas of potential growth require a pattern of healthy and virtuous relationships.
This idea says not just that it is possible for individuals to flourish in mutual love and interdependence, but that it is possible to organise human societies in such ways that will help everyone to do so. Indeed, no concept of human development can be called either integral or human unless it envisages such development for everyone. Otherwise it is morally stunted and self-centred, and ultimately bound to fail. In the struggle to achieve integral human development, humanity is not alone. Through faith, hope and love we already look towards the end of the journey, God’s own happiness and freedom. Thy kingdom come...
Without this transcendental dimension human progress can seem an ultimately meaningless goal. Thus Pope Benedict writes in Caritas in Veritate:
“Paul VI set out to convey two important truths. The first is that the whole Church, in all her being and acting — when she proclaims, when she celebrates, when she performs works of charity — is engaged in promoting integral human development... The second is that authentic human development concerns the whole of the person in every single dimension. Without the perspective of eternal life, human progress in this world is denied breathing-space. Enclosed within history, it runs the risk of being reduced to the mere accumulation of wealth; humanity thus loses the courage to be at the service of higher goods, at the service of the great and disinterested initiatives called forth by universal charity.(11)
“Integral” means holistic, nothing left out, human development conceived as a whole. The intellectual, emotional, cultural, physical, moral and spiritual aspects of personal development relate to each other so intimately that they are interdependent. To neglect one is in the long run to diminish all. This interdependence extends from the individual to the social.
The common good is an idea that has often been marginalised in the past, though never lost sight of completely especially at times of national crisis. It has become central to the most important questions facing society in the 21st century. It has been made central by the growing realisation that the current economic crisis was and is a crisis of relationship and of trust, and by the realisation that the crisis is not confined to the economic and financial sphere, but is prevalent, in various manifestations, in all domains of human experience. The common good is a relational entity; take away the relationships in question and the goods previously shared cease to be there.
The common good is not an addition sum; it is not all the goods that were in the shared house, as if they could be shared out among its household members when the house is sold. It is more like multiplication. If a number of figures are multiplied, but one of them is zero, then the result is also zero. Thus nobody may be left out of the calculation: the principle of the common good can never discount the dignity, welfare and thriving of any person or group. It would constitute a denial of the Christian conception of the human dignity of all because all are made in the image of God. Simultaneously, it would deny that the common good is relational – utterly dependent upon the social relations of persons – such that the good life can only be produced communally and enjoyed together in society.
The structural problems of capitalism are in essence derived from over-reliance on Adam Smith’s famous principle in his defining work, The Wealth of Nations: that if each individual operating in a free market system pursues his own interests or goals, an “invisible hand” will ensure that their combined efforts go to the general benefit. But Adam Smith’s principle presumed not only that there would be physical capital - money - available to be invested in the market, but also social capital - trust, prudence, integrity - which would govern how people would behave morally.
The latter requirement has unfortunately received a lot less attention than the former. The industry is at last waking up to what this means: that free markets cannot function in a moral vacuum. Furthermore, as indicated in Caritas in Veritate, while free markets rely on social capital, they are not its source and can much more easily damage it than renew it. Thus they tend to cut off the branch in which they are sitting. At the point at which they have completely drained away social capital, trust in particular, they cannot operate at all. And one of the most spectacular symptoms of the 2008 crisis was the way operators in the major financial markets ceased to trust each other, and hence ceased to lend to each other.
So one way we could begin to correct the errors of the past would be by building in incentives that rewarded contributions to the nation’s social capital as well as to its economic capital. The idea of banks as generators of social capital is not exactly new, but has been lost sight of in the mad dash for profit. For instance, in Britain local bank managers were once pillars of the community, observers of human frailty, repositories of local wisdom as well as encouragers of the good. They would be governors of schools, magistrates, church wardens, Rotarians and indeed Freemasons, institutions with a wide portfolio of charitable works. It was the City of London “Big Bang” of the late 1980s which saw them swept away, for it made them seem a mere burden on profit-making, or functionaries whose work could be done more efficiently by computers.
The financial crisis that shook the world in 2008 and thereafter was characterised by a wholesale disregard of the virtues that modern institutions absolutely have to depend on if they are to survive. Prudence and temperance were abandoned in the pursuit of profit; justice was ignored as millions of people suffered fearful consequences through no fault of their own; courage was absent as financial institutions ran for cover or foundered in a culture of “every man for himself”.
The origins of the crisis can be addressed narrowly or broadly. At the narrow level, certain practices developed in banking and investments that were intended to take advantage of a sophisticated understanding of how financial markets worked, including the management of risk. It was thought that the mathematical modelling of market behaviours had tamed the factors that led to instability - had made risky investments safe so that market outcomes were henceforth more predictable and no longer so random and unexpected.
That meant that levels of indebtedness could be increased exponentially without a corresponding increase in hazard for investors. It was, at last, a safe “bubble”. There was a widespread expectation that this “boom” would not “bust”, based on little more than a misplaced faith in the theory that efficient markets could be relied upon to be self-correcting, and that financial risk is not dependent on the volume of financial transactions (the technical term for which is “exogenous.”)
It was this hubristic theory that led to the dismantling of systems of supervision, controls and regulations many of which were initially introduced to safeguard against a repetition of the crash and depression of 1929-1930. This sense of omnipotence, fuelled over the years by financial euphoria, took over the culture not only of the traders and financial institutions, but also of the politicians, the media and not a few university and research circles. And by such means, it escaped into the general culture and began to undermine the traditional structures, based on the idea of civic virtue, that had previously sustained society.
This was a fundamental theoretical fallacy with enormous consequences. Once the flaw became apparent, the levels of debt to which financial institutions were exposed were seen to be wildly imprudent, far beyond the capacity of some to bear, which led to a major collapse in confidence, huge bankruptcies and government rescues on an unprecedented scale. With their own reserves at risk, unsure whom to trust and still unsure what had gone wrong and why, the surviving banks stopped lending both within the financial sector and outside it. Individuals and whole industries dependent on a supply of credit, such as the housing sector and manufacturing, were severely damaged.
Meanwhile the very notion of credit, (a word derived from credere, to believe) was no longer based on trust and on personal reputation, but reduced to a formula that could be handled by a computer. Thus the moral bond of confidence (a word derived from the suffix con-, meaning together; and fide, meaning faith) between lender and borrower, based on mutual respect for virtue, was broken.
This catastrophic transition from bubble to collapse belied the reputation of the market system for rational behaviour, for it was driven to a large degree by emotion - first euphoria and then panic (panic as euphoria with a minus sign).
Nevertheless many people operating in financial services were culpable in some degree, and many have subsequently admitted that the mood of the moment lead them to act rashly or even dishonestly. The prospective benefits to them on a purely financial level were so large as to tempt them to behave irresponsibly with other people’s money. They were engaged in financial and economic practices that went against fundamental moral principles, in the belief that those principles did not apply to those practices. In short, those involved thought they had no need of virtue.
Yet few of them have faced a reckoning. Early retirement on a large pension has been the extent of their penalty. Many employees in other types of business, however, found themselves out of a job, resulting in repossession of property and even homelessness, threats to family life, and breakdown from stress and depression. This has driven a wedge of cynicism between the financial sector and the public generally, which has diminished public confidence in all financial institutions including the market regulators.
This is a situation from which recovery is imperative, for the good of society. That means a recovery of virtue - of an ethos, as used to be said in the City of London, where “My word is my bond.” Many date the decline of that ethos to the Big Bang of financial deregulation in the 1980s, and it is no coincidence that many of the factors that culminated in the crisis of 2008 can be traced back to that period. The globalisation of financial services, which was accompanied by a decline in the amount of government regulation, was certainly accelerated by a retreat from the requirements of virtue. The City of London lost its sense of honour and shame. In place of “My word is my bond” we have “Greed is good.”
The broader cultural factors contributing to the financial and economic crisis concern the overall ethos within which modern business is conducted. Late 20th century and early 21st century Capitalism has been characterised by excessive reliance on self-interest and excessive confidence that an economy in which all economic actors are so motivated will, as I said earlier, nevertheless “be led by an invisible hand” to serve the good of society even if that was not their intention.
Letting individuals pursue the maximisation of their own interest was regarded as a key to the efficient allocation of resources, that is to say to the least wasteful means of production and distribution, and had many good effects. The competition which ensued between individual economic actors drove quality up and prices down, to the general benefit. Competition was in itself regarded as good as it encouraged innovation and product improvement, and left consumers to make choices, leaving decision-making at the lowest appropriate level in accordance with the principle of subsidiarity.
Thus the operation of an efficient market economy did not require Government intervention or direction, which was regarded as counter-productive except for guaranteeing the viability of the institutional setup. Implicit in this model was a tug-of-war between efficiency and equity: the more efficient an economic systems was, the less equitable it would be. The demands of social justice - in so far as they were recognised at all - were seen as a drag on profit and prosperity, though perhaps a necessary price to pay for a minimum degree of civic peace.
Pope John Paul II discussed modern economic theory in his 1991 encyclical Centesimus Annus, and praised the operations of a market economy as a unique engine of wealth creation which was in turn a key to overcoming poverty. But he expressed a major reservation - that economic processes had always to be subject to the common good. He did not accept as some economic theorists have done that economic activity is autonomous, that is to say not subject to any external moral criteria and not requiring government supervision or regulation. On the contrary, when economic processes had results which ran counter to the common good, it was the responsibility of outsiders, including governments, to intervene.
Nor did Pope John Paul II endorse the metaphor of an invisible hand, which some have erroneously seen as the hand of Providence or indeed of God. The efficiency of markets had always to be balanced against the demands of equity. Market forces could be used and abused. Pope John Paul II declared (interview in La Stampa, Turin, November 1993) that Capitalism was still almost as “savage” in some Capitalist countries as it had been in the 19th century. In others its excesses had been tamed partly due to the influence of Socialist ideas, which, he said, contained “seeds of truth” particularly over concern for the poor.
Pope Benedict XVI’s encyclical Caritas in Veritate enters the world of economic theory to propose, contrary to the doctrines of economic liberalism, that efficiency and equity are not necessarily in opposition, and that a fair society can also be a more economically efficient society. In common with previous Popes going back to Leo XXIII, Benedict stresses the priority of labour over capital because labour is human, capital merely material.
“I would like to remind everyone, especially governments engaged in boosting the world's economic and social assets, that the primary capital to be safeguarded and valued is humanity, the human person in his or her integrity: Humanity is the source, the focus and the aim of all economic and social life.” (Caritas in Veritate 25)
So in the long run an economic system which gives priority to the creation of wealth for the few over meeting the needs of all is less efficient. But to make short-term profit the only priority can destroy the very conditions a market economy needs if it is to work.
One measure of the challenge presented by Caritas in Veritate, is Benedict XVI’s strikingly original contribution to the corpus of Catholic Social Teaching, his treatment of the idea of gift. It is a notion we have trivialised almost to the point of absurdity. Yet the neglect of the idea of gift, in its fullness, lies at the root of what has gone wrong with modern society, as Benedict convincingly argues. Therefore reviving it is the absolute priority if modern society is to be saved from itself. And it is all around us, all the time. Once we cotton on to what the Pope is really saying, we see it in abundance. But under threat.
Gift is the name the Pope applies to those of our social actions that are neither contractual - an hour’s pay for an hour’s work, this cheque for that property; nor legal - a demand from the taxman or a summons to jury service. These two kinds of example represent what Benedict calls the “exclusively binary model of market-plus-State”, by means of which the condition of our lives is dictated by our economic interests or our legal obligations. Anything outside that counts as gift, and is easily ignored.
He wrote: “The exclusively binary model of market-plus-State is corrosive of society, while economic forms based on solidarity, which find their natural home in civil society without being restricted to it, build up society. The market of gratuitousness does not exist, and attitudes of gratuitousness cannot be established by law.” Nevertheless, he goes on, the spirit of gratuitousness - going further than either law or contract requires - needs to be present in the transactions of both market and State as well as outside them. Indeed, we would see them as indispensable to both.
Take Adam Smith’s well known proposition (regarded as a truism by free market economists) that “it is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest.” In my experience, on the contrary, it is not the fear of the bailiff that gets brewers and butchers out of bed in the morning, but pride in a job well done, what human resources people mundanely call “job satisfaction”. And that is gift. It is anything done out of the pleasure of giving service to others, making a contribution to society, answering the call of conscience, helping the world tick over. It is whatever lies above and beyond obligations to the state and narrow self-interest.
Family life is the epitome of gift. Parents don’t love and nurture their children because they are paid to do so, nor because they will be sent to prison if they don’t. Religious institutions are almost exclusively about gift. Those who earn a living serving the church do so out of a conviction that it is a worthwhile thing to do, and hence they contribute much more than they are paid for. Democracy itself depends on it. This sphere of gratuitous action, this gift economy, pervades our public institutions too. A vast army of unpaid school governors, local government councillors, lay magistrates, members and officers of local political parties, trade union branches and so on, do what they do, as gift. And this is without counting all those who operate in what is sometimes called the voluntary or third sector, organising activities for the public benefit which have charitable status in law.
Thus the gift economy drives civil society, and it drives personal relationships too. You and the person you relate to have a common interest in fostering your bond. You are not in it for what you can get out of it but because the relationship itself matters. The spirit of fraternity is a relational good, to use the jargon. This reciprocity of gratuitous exchange is far from the contractual model, and one of the first lessons the Pope teaches us is not to mistake the one for the other. Paid-for child care will never be the same as family love, because gift isn’t at the heart of it, its primary motivation.
The reduction of everything to monetary transactions or legal obligations is the very death of civilisation. But - and this is where the Pope surprises us - the money economy needs gift too. Indeed, the very lack of this gratuitous element, the moral factor that lies over and above what the contract calls for, is what has run the world economy into the global recessionary buffers. Gift here means looking beyond short term financial gains to the needs of society - giving up, as it were, the pursuit of every last morsel of profit. Gift is necessary. That‘s not so odd, once we connect up the dots. Life itself is a gift, as is the planet that sustains it, and so is love. It's just that somehow we managed to sentimentalise it, and then forgot about it.
With the idea of gift comes the idea of conversion. Pope John Paul II defined the heart of Catholic Social Teaching in explicitly religious terms as “the need for conversion to one’s neighbour, at the level of community as well as of the individual.” This conversion, he goes on, affects attitudes which determine each person’s relationship with neighbours, human communities, and “with nature itself”: the ordered mutually connected system, including animals, which makes up the natural world. We can begin to see in these words where Benedict’s idea of gift might fit in.
The idea of conversion to another person is an interesting one - we usually tend to talk of conversion to God, or to faith. But if I am converted to you I am indeed making an act of faith - I am deciding to include you in own universe as another “self” that really exists alongside my own self. And that is not so different from what conversion to God is referring to. It is admitting God into one’s universe of realities. And most vividly present in this universe of realities are those who need us most.
The concept of the common good embraces all of us. There can be no exclusions. The concept of the common good fairly obviously implies a concept of solidarity, but we can see that it also implies a concept of subsidiarity. Vice versa too. Without solidarity, the horizontal dimension of social structure, subsidiarity, the vertical dimension, can easily become selfish insularity. The two concepts have often to be held in a necessary kind of tension. They are Siamese twins - you cannot have one without the other.
Subsidiarity was defined in the 1931 encyclical of Pope Pius XI as follows:
“Just as it is gravely wrong to take from individuals what they can accomplish by their own initiative and industry and give it to the community, so also it is an injustice and at the same time a grave evil and disturbance of right order to assign to a greater or higher association what lesser and subordinate organisations can do.”
To put this in a nut-shell - it isn’t just up to Governments to put these things right. We cannot shrug off our own responsibilities that way. This is one of those areas, which are not too common in Catholic Social Teaching, where it sounds to our ears more right wing than left wing.
Pope John Paul II defined the concept of solidarity in his 1987 encyclical Sollicitudo Rei Socialis in the following terms:
“The fact that men and women in various parts of the world feel personally affected by the injustices and violations of human rights committed in distant countries, countries which perhaps they will never visit, is a further sign of a reality transformed into awareness, thus acquiring a moral connotation...
“This then is not a feeling of vague compassion or shallow distress at the misfortunes of so many people, both near and far. On the contrary it is a firm and persevering determination to commit oneself to the common good; that is to say, to the good of all and of each individual because we are all really responsible for all”.
Fine ideals, you might say, but not workable. If that is what you think you could not be more wrong. It is the alternatives which are ultimately unworkable. You can tell I am convinced that economic systems that ignore the fundamental tenets of Catholic Social Teaching - based on a profound understanding of human nature - and which do so for the sake of pursuing the alleged greater efficiency and hence profitability of pure free-market systems, are ultimately unsustainable and self-destructive.
To return to my earlier metaphor of a bicycle - the nuts on the wheels are lose, and liable to fall off any moment, as is the rider. I am also convinced that what happened simultaneously on Wall Street and in the City of London in the autumn of 2008 was a catastrophic and cathartic empirical demonstration of that truth.
Finally, this - I am not well enough versed concerning the status of Catholic Social Teaching in Australia to know whether the following has occurred to anybody over here. Australia has managed to avoid the worst of the economic downturn. From the perspective of Catholic Social Teaching, why is that? If you apply the criteria of the encyclical Caritas in Veritate to the Australian economy, what do you get? What are you doing right? Is it just because you have vast mineral reserves eagerly sought after by the Chinese? Before jumping too quickly for that solution, it’s as well we don’t forget that mineral wealth by itself is no guarantee of economic growth and it is perfectly possible to mismanage a mineral-rich economy or even to bankrupt it.
Or is Australian capitalism in its nature less rapacious, by comparison with some others? Unlike the UK and US, one notes that economic inequality is not increasing by leaps and bounds in Australia, though there are trends here which some find worrying . Does this support the theory, promoted in the book The Spirit Level, Why Equality is Better for Everyone by Richard Wilkinson and Kate Pickett, that more equal societies are in the long run more successful? Is the explanation structural, or legal, or even moral? And let us all agree that answers which involve a dose of Australian self-mockery may be amusing, but not useful. We on the other side of the world badly need to know, straight up, because we really must start to do better ourselves. You taught us how to play cricket properly. Perhaps you can give us lessons in the creation of a fairer and more just society.
So now, thank you for your patience, I hope I have not taken up too much of your time with things you already know, and if I have misrepresented the Australian situation please do not hesitate to put me right. I do not claim to be an expert in the current Australian political scene or the Australian economy. But I hope we have time left for plenty of questions and I will give it my best shot .
This article is used with the permission of the author