Best Vatican document on Economics for some time

Thursday, May 24th, 2018

Wednesday, the Vatican issued a letter, Oeconomicae et Pecuniariae Quaestiones on economic and financial matters.

Quite unlike many recent communications on those issues, it was elegantly written – almost a joy to read.

It is a serious and constructive contribution to the debate and, in its earlier sections, it is, if not quite original, a vital contribution to the teaching of the Church.

The document has a beginning a middle and an end and is written in such a way that you don’t have to keep re-reading it to work out what the over-riding theme is.

Sadly, modern Church teaching documents on economic matters have not had such elegance: this letter is more like Quadragesimo Anno or Rerum Novarum.

Indeed, its content could have been written by Oswald von Nell-Breuning, the author of the former encyclical.

A feature of other recent documents on finance and the economy is that they have tended to exaggerate or, quite often, say things which are simply not true about the factual picture and this has taken the focus away from the essential moral and social teaching message.

This letter makes no such mistake.

So, what does it say?

In the first half the document, the authors, from the Congregation of the Doctrine of the Faith and the Dicastry for Promoting Integral Human Development, discuss at some length, though concisely, the essential nature of economic behaviour.

Economics is about human action in the economic sphere and so it cannot be separated from the need for ethics.

Keynesian economics and neo-classical economics have separated economics from ethics in order to focus more clearly on particular aspects of economic problems.

This works to an extent, but, just as when we focus on part of a painting in an art gallery, we have to adjust our eyes and step back to see the full picture in all its glory.

Economics and finance is about human interaction and co-operation.

It is ultimately inseparable from a consideration of normative ethics.

In recent documents, such discussion has got mixed up with sideswipes at those who believe in free markets (ironic, given that it is Austrian economics’ followers of Hayek and Mises who are quickest to understand the human element) or grandstanding about the failure of globalisation and markets to promote welfare for the most needy.

This time is different.

Some of the great advances in economic wellbeing are recognised.

It is not noted that the growth of globalisation and financialisation has coincided with the first era in over 200 years that income inequality on the planet has fallen.

Slightly more oddly is that the letter, quite rightly, mentions that there is much more to economic life than can be measured by GDP, but it does not note the collapse in infant mortality and child labour and the fall in deaths from pollution or huge increases in literacy that have taken place since globalisation took off in the early 1980s. Continue reading