Benedict XVI explains gifts and limitations of free market economy


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Vatican City, Jul 7, 2009 / 08:56 am (CNA).- Pope Benedict XVI's highly anticipated social encyclical, titled "Love in Truth," takes on the complex issue of what the global economy should look like. In his analysis, real development can be achieved by seeking to convert individual people, and not the economy, which is only an instrument.

The global financial crisis places on display the "pernicious effects of sin," the Holy Father said as he began the third chapter of his new encyclical. At the root of the current meltdown, the Pope explained that he finds three false convictions: that man is self-sufficient, that he can "successfully eliminate the evil present in history by his own action alone" and that the economy must be shielded from any moral influences.

Is the Market Evil?

While some people blame the market itself for the downward spiral into destitution, the Pope pointed out that the market is not a negative force by nature. Rather, the market can become a means of ruin when a certain ideology makes it so.

"Economy and finance, as instruments, can be used badly when those at the helm are motivated by purely selfish ends. Instruments that are good in themselves can thereby be transformed into harmful ones," Benedict said.

"But it is man's darkened reason that produces these consequences, not the instrument per se. Therefore it is not the instrument that must be called to account, but individuals, their moral conscience and their personal and social responsibility."

Creating a Just Economy

The transformation of the global economy, Pope Benedict wrote, requires more than the basic exchange of goods of equal value. An economy that answers both the demands of distributive justice and social justice must incorporate into its structure "internal forms of solidarity and mutual trust."

The current state of the world presents us with a "great challenge" that calls us to change our thinking and behavior, the Pope asserted. We must not only uphold "traditional principles of social ethics like transparency, honesty and responsibility" but we must make room in normal commercial relationships for "the principle of gratuitousness and the logic of gift as an expression of fraternity."

"This is a human demand at the present time, but it is also demanded by economic logic. It is a demand both of charity and of truth," the Pope taught.

"Economic life," he noted, "undoubtedly requires contracts, in order to regulate relations of exchange between goods of equivalent value. But it also needs just laws and forms of redistribution governed by politics, and what is more, it needs works redolent of the spirit of gift. The economy in the global era seems to privilege the former logic, that of contractual exchange, but directly or indirectly it also demonstrates its need for the other two: political logic, and the logic of the unconditional gift."

Benedict XVI described the incorporation of generosity and solidarity into the normal functioning of the economy as civilizing it. At the level of the individual business, the Pope said that it is "Without doubt, one of the greatest risks for businesses is that they are almost exclusively answerable to their investors, thereby limiting their social value."

The Holy Father pointed toward a solution by saying that there is "a growing conviction that business management cannot concern itself only with the interests of the proprietors, but must also assume responsibility for all the other stakeholders who contribute to the life of the business: the workers, the clients, the suppliers of various elements of production, the community of reference."

On the political level, Benedict XVI warned against investing abroad without taking into consideration the "long-term sustainability of the enterprise, its benefit to the real economy and attention to the advancement, in suitable and appropriate ways, of further economic initiatives in countries in need of development."

Although some are claiming that today's integrated economy makes "the role of States redundant," the Pope argued that instead, "it commits governments to greater collaboration with one another." In terms of the resolution of the current crisis, Benedict opined, "the State's role seems destined to grow, as it regains many of its competences. In some nations, moreover, the construction or reconstruction of the State remains a key factor in their development."

Turning to globalization, the Pontiff stated that by itself it is "neither good nor bad" and that it provides an opportunity to further improve the unity of the human family.

"The processes of globalization," he asserted, "suitably understood and directed, open up the unprecedented possibility of large-scale redistribution of wealth on a world-wide scale." Nevertheless, he cautioned that if this is badly directed, it could "lead to an increase in poverty and inequality, and could even trigger a global crisis. It is necessary to correct the malfunctions, some of them serious, that cause new divisions between peoples and within peoples, and also to ensure that the redistribution of wealth does not come about through the redistribution or increase of poverty: a real danger if the present situation were to be badly managed."

"International cooperation," Benedict XVI explained, "requires people who can be part of the process of economic and human development through the solidarity of their presence, supervision, training and respect. From this standpoint, international organizations might question the actual effectiveness of their bureaucratic and administrative machinery, which is often excessively costly. At times it happens that those who receive aid become subordinate to the aid-givers, and the poor serve to perpetuate expensive bureaucracies which consume an excessively high percentage of funds intended for development."

Stewardship of the Environment

One of the most anticipated sections of the Pope's new encyclical deals with the environment. Saying that today one often hears people asserting that their rights be respected, the Holy Father cautioned that this must be balanced out by our understanding of our duties to our fellow man.

"Today the subject of development is also closely related to the duties arising from our relationship to the natural environment," the Pope wrote. "The environment is God's gift to everyone, and in our use of it we have a responsibility towards the poor, towards future generations and towards humanity as a whole."

"However," he warned, "it should also be stressed that it is contrary to authentic development to view nature as something more important than the human person. This position leads to attitudes of neo-paganism or a new pantheism - human salvation cannot come from nature alone, understood in a purely naturalistic sense."

But it is also necessary "to reject the opposite position, which aims at total technical dominion over nature, because the natural environment is more than raw material to be manipulated at our pleasure; it is a wondrous work of the Creator containing a 'grammar' which sets forth ends and criteria for its wise use, not its reckless exploitation," the Holy Father taught.

Reflecting on the experience of the world, Pope Benedict observed that, "The way humanity treats the environment influences the way it treats itself, and vice versa. This invites contemporary society to a serious review of its life-style, which, in many parts of the world, is prone to hedonism and consumerism, regardless of their harmful consequences."

Noting that the "Church has a responsibility towards creation and she must assert this responsibility in the public sphere," Benedict said that "she must defend not only earth, water and air as gifts of creation that belong to everyone. She must above all protect mankind from self-destruction. There is need for what might be called a human ecology, correctly understood."

As countries around the world consider ways to care for God's Creation, Pope Benedict stressed that to protect nature, it is "not enough to intervene with economic incentives or deterrents; not even an apposite education is sufficient.

"These are important steps, but the decisive issue is the overall moral tenor of society."

Pope Benedict XVI finished his reflections on the need to care for the environment by pointing out that our "duties towards the environment are linked to our duties towards the human person, considered in himself and in relation to others."

"It would be wrong to uphold one set of duties while trampling on the other. Herein lies a grave contradiction in our mentality and practice today: one which demeans the person, disrupts the environment and damages society."

To read Pope Benedict XVI's full encyclical, please visit: