Economy is not profit at all costs, but care for the common good
This is stated in the document "Oeconomicae et pecuniariae quaestiones. Considerations for an Ethical Discernment Regarding Some Aspects of the Present Economic-Financial System" a document from the Congregation for the Doctrine of the Faith and the Dicastery for Integral Human Development.
Vatican City (AsiaNews) - Phenomena such as "derivatives", "securitizations", "credit default swaps" or offshore finance appear to be easily contrary to ethics. But the global crisis caused by the subprime mortgages of the summer of 2007 and the damage caused to people, communities and states by a management of the economy that aims only to profit have highlighted that the economy, like any other human environment "needs ethics in order to function correctly — not any ethics whatsoever, but an ethics which is people-centred" and that" it is now undeniable that ethical scarcity exacerbates the imperfections of the mechanisms of the market ".
The document "'Oeconomicae et pecuniariae quaestiones' starts from this. Considerations for an ethical discernment about some aspects of the current economic-financial system "of the Congregation for the Doctrine of the Faith and the Dicastery for Integral Human Development, published today.
"The purpose of these considerations - explained Msgr. Luis Francisco Ladaria Ferrer, SJ, prefect of the Congregation for the Doctrine of the Faith - is to state clearly that, at the origin of the spread of dishonest and predatory financial practices, there is above all an anthropological myopia and a progressive crisis of the human being. Man, today, no longer knowing who he is, and what he is doing in the world, does not even know how to act well, ending up at the mercy of his convenience and the interests that dominate the market".
The document basically states that "selfishness does not pay in the end" and we need to rethink “the obsolete criteria that continue to govern the world", elaborating "new forms of economy and of finance, with rules and regulations directed towards the enlargement of the common good and respect for human dignity”.
To this end, given that we are facing "the growing and all-pervasive control of powerful parties and vast economic-financial networks, those deputed to exercise political power are often disoriented and rendered powerless by supranational agents and by the volatility of the capital they manage. Those entrusted with political authority find it difficult to fulfil to their original vocation as servants of the common good, and are even transformed into ancillary instruments of interests extraneous to the good. These factors make all the more imperative a renewed alliance between economic and political agents in order to promote everything that serves the complete development of every human person as well as the society at large and unites demands for solidarity with those of subsidiarity.[ (No. 12) ".
Remaining within the economic world, the document also notes that by now "capital annuity can trap and supplant the income from work, which is often confined to the margins of the principal interests of the economic system. Consequently, work itself, together with its dignity, is increasingly at risk of losing its value as a “good” for the human person and becoming merely a means of exchange within asymmetrical social relations. (No. 15) ".
The "asymmetric" relationship, then, favors the speculative intent that " This factor is devouring the immense patrimony of values that renders our civil society a place of peaceful coexistence, encounter, solidarity, renewed reciprocity and of responsibility for the common good. In this context, words such as “efficiency”, “competition”, “leadership”, and “merit” tend to occupy the entire space of our civil culture and assume a meaning that ends up in impoverishing the quality of exchanges, reducing them to mere numerical coefficients. What is demanded is an initiative, above all, for the renewal of humanity in order to reopen the horizons towards that abundance of values which alone permits the human person to discover himself or herself, and to construct a society that is a hospitable and inclusive dwelling place with room for the weakest, and where wealth is used for the benefit of all—places where it is beautiful for human beings to live and easy for them to have hope. (n.17) ". " For instance, very positive in this regard, and to be encouraged, are arrangements of cooperative credit, microcredit, as well as the public credit, in the service of families, businesses, the local economies, as well as credit to assist developing countries(n 16) ".
Experience and evidence over the last decades has demonstrated, on the one hand, how naive is the belief in a presumed self-sufficiency of the markets, independent of any ethics, and on the other hand, the compelling necessity of an appropriate regulation that at the same time unites the freedom and protection of every person and operates to create healthy and proper interactions, especially with regards to the more vulnerable (No. 21) ".
Such regulation is made even more necessary in view of the fact that among the major reasons for the most recent economic crisis was the immoral behavior of agents in the financial world, where the supranational dimension of the economic system makes it easy to bypass the regulations established by individual countries (n.21) ".
We need "complete transparency" and "the maximum amount of information possible, so that every agent can protect his or her interests in full, and with complete freedom", from the source to "morally critical behavior in the management of savings by financial advisors". These are "an excessive movement of the investment portfolio commonly aimed at increasing the revenues deriving from the commission for the bank or other financial intermediary; a failure from a due impartiality in offering instruments of saving, which, compared with some banks, the product of others would suit better the needs of the clients; the scarcity of an adequate diligence or even a malicious negligence on the part of financial advisers regarding the protection of related interests to the portfolio of their clients; and the concession of financing on the part of the banking intermediator in a subordinate manner to the contextual subscription of other financial products issued by the same, but not convenient to the client (No. 22) ".
All this is the result of an approach "wherever mere profit is placed at the summit of the culture of a financial enterprise". Against this, the document argues “a solidified ethical system founded on a sincere search for the common good (No. 23)". "Along these lines, an interesting suggestion that should be tried out, is the institution of Ethical Committees within the banks, to support the Councils of Administration. This is done in so far as the banks are helped not only to protect their balance from the consequences of sufferings and loses, and towards an effective coherence between the collective mission and the financial practices, but also to adequately sustain the actual economy (n.24) ".
In this logic, “every credit share must correspond to a potentially real value, and not merely to a presumed one that is difficult to verify. In this sense, a need for a public regulation, and an appraisal super partes of the work of the rating agencies of credit, becomes all the more urgent (No. 25) ".
The text then rolls out a critical judgment, from an ethical point of view, of financial instruments such as "derivatives", "securitizations" and "credit default swaps" for "the future uncertainty of these products". As far as offshore finance is concerned, through which not only huge economic sums flow, but is now the de-rigor resort for "dirty" money laundering, that is the fruit of illicit proceeds, the document states that "due to the non-transparency of those systems, it is difficult to establish with precision the amount of assets that are transacted in them. However, it was calculated that a minimum tax on the transactions accomplished offshore would be sufficient to resolve a large part of the problem of hunger in the world: why can’t we undertake courageously the way of a similar initiative? (No. 31) ".
But alongside public initiatives, such as state control over these behaviors, the document also suggests attention to individuals. "It becomes therefore quite evident how important a critical and responsible exercise of consumption and savings actually is". Such as shopping, through which we often opt, in an unconscious way, for goods, whose production possibly takes place through supply chains in which the violation of the most elementary human rights is normal or, thanks to the work of the companies, whose ethics in fact do not know any interest other than that of profit of their shareholders at any cost".
"It is necessary to train ourselves to make the choice for those goods on whose shoulders lies a journey worthy from the ethical point of view, because also through the gesture, apparently banal, of consumption, we actually express an ethics and are called to take a stand in front of what is good or bad for the actual human person. Someone spoke of the proposal to “vote with your wallet”. This is in reference to voting daily in the markets in favor of whatever helps the concrete well-being of all of us, and rejecting whatever harms it (n.33)". (FP)