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THE SOCIAL DOCTRINE OF THE...
from issue no. 06/07 - 2007

The res novae of globalization between beneficiaries and excluded


The text prepared by the former Governor of the Bank of Italy for the miscellany of studies for the eightieth birthday of Pope Benedict XVI presented on 14 May 2007 at the Pontifical Salesian University in Rome


by Antonio Fazio


During the ’eighties and again in the early ’nineties I had the occasion and the honor of meeting the archbishop of Vienna, His Eminence Cardinal Franz König, several times.
That happened in the ambit of the meetings of the Nova Spes Foundation1. The cardinal was its President. In that role he invited to Rome, in those years, eminent scholars of economy, biology, physics, chemistry; among them Nobel prize-winners. The purpose of the meetings was to reflect on and discuss, in the ambit of the Foundation, themes of great importance for society and the Church. Those men of culture came from every part of the world: they were Catholics, Protestants, Moslems, Jews, followers of Confucius, Buddhists and they responded because of the prestige of the invitation and of the venue, but also because they shared a sincere interest in the themes dealt with and their effect on society and on the destiny of mankind.
Among the themes dealt with in the discussions I remember those of human and social development in the context of economic growth; the problems of climate change and the environment; the proliferation of nuclear weapons; biotechnology; genetic engineering2.
There were closing meetings and the results of the debates were set out in memorable informal gatherings or in audiences granted by John Paul II. As during a meeting held on 14 September 1981, the feast of the Holy Cross, in Rome and in Castel Gandolfo. His Holiness amiably gave us lunch in his summer residence and we discussed with him the emergence of China on the world economic and political stage.
We also met in smaller groups to go into the organizational aspects and the planning of the activities of the Foundation: several times Guido Carli took part in those meetings. At an informal meeting in my home, on a beautiful autumn day at the end of the ’eighties3, during lunch, Cardinal König told us about his doctoral thesis on the oriental religions and on Zoroaster. It was the period of perestroika and the cardinal spoke at length of the opening of the Church toward the East, a policy of which he had been in some ways the initiator and magna pars. After lunch he took his ease on the balcony, together with Don Pace, the secretary of the Foundation, chatting with great simplicity with my wife and my five children, then still youngsters between the ages of six and ten.
That day then he asked me an unexpected question: «Doctor, what do you think of the Council?». The question astonished me, I felt inadequate to give a pondered reply, but in some way at the same time it filled me with pride. I answered that I had studied the Gaudium et spes in particular finding it, among other things, full of trust and hope in the future of mankind – themes on which Nova Spes dwelt at length – and, at all events, I expressed the opinion that the harvest of ecumenical councils is garnered in the decades and sometimes centuries following. The cardinal seemed to agree with me and even to be pleased with the response. I wasn’t able to say much more. There was some mention, I don’t remember how explicit, of social teaching.

Leo XIII, who promulgated the Encyclical Rerum novarum on 15 May 1891

Leo XIII, who promulgated the Encyclical Rerum novarum on 15 May 1891

1. An ever relevant question
I have never forgotten that question. I already had studied carefully in its time the Pacem in terris and the Populorum progressio. I knew the Rerum novarum in its essential lines. In the opening speech at the Social Week of Italian Catholics in Naples, on 6 November 1999, I made an effort to set out some principles of the social doctrine, with reference to Italy.
In June of 2001 Cardinal Van Thuân invited me to give a paper, along with Michel Camdessus, director general of the International Monetary Fund, at the plenary session of the Pontificium Consilium de Iustitia et Pace. Though overburdened with commitments, I didn’t feel I could refuse an invitation addressed to me by a person who had been a heroic witness to the faith in one of the darkest periods of the communist persecution in Viet Nam.
The date of the speech at «Iustitia et Pax» was fixed for 14 September, twenty years after the meeting in Castel Gandolfo with John Paul II. The paper was already written by 11 September. It wasn’t necessary to change anything, I only added two pages to comment on the tragic terrorist attack.
Starting from the Populorum progressio, the paper centered on the character, become planetary and global, of the social question and on the connected and consequent social strains and policies. I argued on the need, in order to reduce the enormous poverty still present in various areas of the globe, to accelerate the growth of the world economy and in particular that of backward countries, allowing the latter fuller access, for their agricultural and alimentary products, to the markets of the economically more advanced countries.
The liberalizations in commercial exchange in the decades following the Second World War essentially involved industrial products and, in the two recent decades, financial capital. These forms of liberalization largely benefited countries already economically more advanced.
Precisely those countries – the United States, Japan and the European Union in the first place – maintain a high degree of protectionism towards the agricultural products of the developing countries. The getting rid, or at least diminishing, of such forms of protectionism would be of great benefit to the development of backward countries and for the whole world economy.
Taking up reasoning worked out by international bodies such as the Group of Seven and the periodical meetings of the World Bank and of the Monetary Fund, I pointed out in the paper the need to pursue policies suited to combating and attenuating, within the emergent economies, the negative effects of the policies of liberalization on the distribution of the benefits deriving from the intensification of trade4.
The res novae of globalization have brought up again in fact, at international level, problems in some way analogous to those that the industrial revolution and the development of mass production generated, during the 19th century, for the countries that we now consider economically advanced. The long historic phase begun with the industrial revolution, with the strains and imbalances, with the great opportunities and the material progress, with the conflicts, the wars and political convulsions that came from it, probably closed – at least in the aspects most dramatic and important for world politics – with the fall of the Berlin wall: two centuries!
With information science, with the development of communications and the international financial markets we find ourselves probably in a historic phase similar to that experienced from the end of the 15th century and in the following centuries, with the great geographical discoveries and with the invention of printing with moveable type.
Culture then reacted famously. Enough to think of the stance taken on the question of whether American Indians had souls or not, a question that masked enormous material interests that aimed at appropriating human beings thought of as chattels or cattle. In terms of the economy, think of the emergence, in that period, of new practical and moral problems connected with the development of markets, with the money fairs, with the new international dealings, with the ban on interest and usury: moralists such as Molina, Lessius, Lugo,5 dwelt on all these problems, developing a wide-ranging financial and economic doctrine still valid today.

John XXIII while signing the Encyclical Pacem in terris, on 9 April 1963

John XXIII while signing the Encyclical Pacem in terris, on 9 April 1963

2. The Gaudium et spes: a program
How are we facing today the large changes in the international scenario? The Gaudium et spes devotes an ample treatment to the problem of culture.
John Paul II dwelt several times in his encyclicals and speeches on the emergence and importance in the present historical context of the questions linked with globalization; he several times faced such problems with his pastoral action addressed to the whole human community. The issue of the imbalances that are produced at international level as a result of economic development based on merely economistic criteria is the object of constant reflection in the «Iustitia et Pax» Council.
In a long interview given in the summer of 1978 to Professor Possenti, the then archbishop of Krakow Karol Wojtyla argued of the need – for the Church – to possess, develop and teach its own social doctrine as essential part of its mandate «to preach the Gospel»6. There are many references in the interview to the Gaudium et spes. To a precise question from the interviewer whether Catholics should have their own concrete program for the society, national and international, in which they live and operate, and on what that program might be, the archbishop of Krakow answered that the political and social program of Catholics is the pastoral constitution Gaudium et spes.
The teachings and work of John Paul II in the course of his long pontificate, as regards society, the economy, politics are certainly on the lines of the thinking developed in that Council document. The then Cardinal Ratzinger in an outline presentation of the thinking done in the encyclicals of that Pontiff described their structure, highlighting the philosophical and theological base constituted by the anthropology and the mystery of the Incarnation7. In a central passage the pastoral constitution affirms that the possibility of understanding the essence of the human condition, the destiny of mankind, its task in the world, begins precisely from the incarnation of the Son of God.
The thinking developed by the Pontiff in his teaching finds ample preparation in his previous philosophical studies8. The reference to another man comes to mind, a man whose thinking and doing in Italian society, in the decades following the Second World War, are again the object of reflection. Giorgio La Pira stated forcefully that the central event of the Christian faith could not but have real and concrete implications also for society, for politics, for the relations among people in every nation and among different nations and cultures; and starting from that conviction he was active in depth in culture and in politics9.

Cardinal Franz König with Joseph Ratzinger during the Conciliar works in 1962

Cardinal Franz König with Joseph Ratzinger during the Conciliar works in 1962

3. The market in a globalized world
Attention should be paid to the apparent contrast between the optimistic vision, on the one hand, of businessmen, politicians, financiers, who see an unstoppable phenomenon and a powerful factor for material progress in globalization and, on the other, the vision of those who challenge, bitterly, the progress of globalization.
A wide-ranging and balanced discussion on the various cultural, social, political and economic aspects of the problem are offered by Jesús Villagrasa in his book Globalization. A better world?10. The experience of recent decades shows that the increase in the quantity of goods and services produced, in a historical phase of exceptional development in the world population, has been enormous, thanks not least to the free circulation of goods, of products, of capital.
Population growth has not slowed the increase of wealth, as widespread neo-Malthusian theories feared some decades ago. Indeed, we have seen that, historically, a slowing, a stagnation or even a regress in demographic evolution, in the end, turns out to be negative for economic growth itself. That happens because of complex phenomena of social psychology, expectations, incentives to investment that slow initiative, saving, the accumulation of productive capital, as eminent scholars have been arguing for some time. The aging of the population, the increase in the average lifespan, the reduction in the percentage of young people are phenomena that inevitably have a negative affect on the social balance-sheet11.
From the mid 20th century till today, in the course of the last fifty years, the growth of the world population has been on average 1.8% per year: It had remained practically unchanged for long periods in preceding centuries. While in some historical phases of the Middle Ages – the great plague of the 14th century – or of antiquity, the diminution of world population had caused ill-fated consequences for social life and economic progress: the population of the Roman empire, for example, in the first centuries of our era suffered a regression that contributed in that way to the crisis of the empire itself.
In the last fifty years, from the mid 20th century, with the accelerated increase in population the production of material wealth has grown at a pace never experienced in previous centuries. The gross national product has increased eightfold on world scale, the average product per head has trebled. Exchange, trade, the circulation of capital, the diffusion of ideas and knowledge, scientific and technological progress, the latter stimulated in its turn by exchange and communications, are at the basis of this exceptional development in the world economy.
It is, however, indubitable that where the market, freedom of exchange both of goods and of capital, the goals of wealth creation get promoted to the status of almost absolute values, economic analysis itself finishes by turning into an ideology. Starting from an anthropological conception that tends to reduce man to homo oeconomicus consequences are drawn that, on the theoretical level, and under precise conditions that are almost never entirely fulfilled in practice, lead to claiming the benefit and almost the necessity of applying this approach to economic and social policies in the aim of obtaining the maximum result in terms of development.
But the results, certainly positive in terms of wealth creation, are not so from the point of view of its distribution. Policy, on the national and international level, also for the good of the economy, cannot put aside the goal, the lofty goal, of distributive justice.

Pope Paul VI signs the Populorum progressio 26 March 1967

Pope Paul VI signs the Populorum progressio 26 March 1967

4. The imbalances and the need to remove them
Because of the progress of globalization the differences in the degree of material welfare of vast social groups have intensified between nation and nation, and within the national community itself12.
Some peoples have drawn full advantage from the progress of technology and the economy: the pro capita incomes of the latter has grown enormously in the last fifty years, but other peoples and nations have remained excluded from progress. Africa has remained practically excluded from the benefits of integration, while in Latin America economic evolution has perpetuated and intensified enormous differences in the distribution of income.
The growth of population in some areas of the globe has not been matched – as it has been at global level – by a more than proportional increase in the wealth produced. In other areas, because of wars, of endemic tribal and racial conflict, of natural disasters, there has been a regress in the living conditions of the population.
Above all the condition of an important portion of the world population has notably worsened, in relative terms. There are more than a billion people living in conditions that can be described as absolute need, with less than a dollar a day: almost a fifth of the world population. If one adopts a less stringent index – two dollars a day – the proportion of the poor rises to a third of the world population.
The development of communications now makes these contrasts more evident, with the foreseeable consequences, in the economically backward countries, on the attitude of individuals and of wide sections of the population, at the social level and, inevitably, at the political.
The enormous increase in the material welfare of some populations, in certain parts of the globe, is matched – and this is now well publicized by the media – by the enduring of backward living conditions in many other areas and in segments of the population also within the same country.
The phenomenon of emigrations – that is assuming so much consequence as a result of the economic and demographic imbalances between vast areas of the globe – is certainly an effect and part of the process of globalization. It is a phenomenon that can involve considerable costs and sometimes dramatic consequences from the human and social point of view, but it is freighted with positive potentiality for the world economy and for the various countries.
Positions taken by churchmen are critical of the contrasts, of the imbalances, of the social costs and of the tensions linked at national and international level with the current development of the global economy.
With reference to Latin America – almost a test-bed, in recent decades, of global economy and of development of forms of market based on a criterion of absolute liberalism – the Honduran Cardinal Oscar Rodríguez Maradiaga engages in an analysis that highlights the unsustainability, essentially social and political, and so in the end also economic, of such an approach to economic growth.
It also emerges from the criticism, based on the observation of a concrete situation, that the motives that are at the basis of the expansion of some economic activities are often so powerful as to override those ethical and social elements of rectitude, of respect for the rules, of distributive justice that are essential for the harmonious growth of the economy itself. One part of the population remains excluded from the benefits, while the part of population that is involved in the development of new productive activities often experiences conditions of work and life that recall those of the early industrial revolution.
The analysis as conducted does not run into the “censure” of the economist. It throws light on the human, social, political costs that economic theory deals with only in outline, in general terms, and that it definitely tends to consider as extraneous13.
This gives rise to the need for reflection on the directions in which to act, even if they are not always easy to indicate on the concrete level. The attitude of intellectual and political movements that reject the phenomenon of globalization en bloc doesn’t convince, above all it doesn’t construct.
It is in this direction – as happened in the second half of the 19th century with the development of systematic thinking and with the creation of institutions and of policies aimed at dealing with the “social question” – in the foreseeable future that thinking will need to be concentrated by those who, in the field, know and observe the social and economic phenomena linked to globalization and who at the same time can connect to higher thinking and to the magisterium to seek solutions in the light of the social doctrine also. This is also the method that the archbishop of Krakow recommended in the interview I mentioned above.
On more than one occasion, His Holiness Benedict XVI has reiterated the need to modify some of the mechanisms of the world economy, so as to deal with the scandal of hunger and alleviate the poverty that still afflicts vast populations, even in a context of increasing wealth and availability of goods at global level. The UN, with the Millennium Development Goals programs, the World Bank, the International Monetary Fund have been involved in the fight against poverty for some time.
The state of the economy and the problems of Africa are different from those of Latin America. In Asia the various emergent regions and economies and the large countries – China and India on the one hand, Japan on the other – present extremely different institutional situations and economic and social development. In Europe the societies and the institutions of the economically advanced countries are different from those of the countries of central and eastern Europe that come from the experience of socialist planning.

Cardinal Oscar Andrés Rodríguez Maradiaga leads a protest march of five thousand people, in Saint Ignacio, 4 July 2001

Cardinal Oscar Andrés Rodríguez Maradiaga leads a protest march of five thousand people, in Saint Ignacio, 4 July 2001

5. Possible lines to investigate
It seems to me that certain directions for theoretical investigation and of consequent action, at international level and of that of the developing countries, should be pursued as a priority. The pastoral constitution says at n. 86: «a) The developing countries should above all assign, expressly and without equivocation, as goal of progress, the full human enlargement of citizens. They should remember that this progress first of all has its origin and dynamism in the work and in the ingenuity of the populations themselves, given that it must gain leverage from outside aid, but first of all from the full exploitation of their own resources and also from their own culture and tradition. In this matter, those that exert greater influence on others must set the example. b) It is the most serious duty of the evolved nations to help developing peoples to carry out the above mentioned tasks [...]».
One seems to hear echoes of Adam Smith, who states in The wealth of nations that it is in the first place based on the «ability and dexterity of men», ability, ingenuity, initiative of men, and in a more technical term: human capital.
But the text quoted above solicits as a most serious duty help from the more advanced economies. Indeed, while in a first phase, up to the mid ’nineties of the 20th century, the emphasis of discussions in international gatherings was above all on growth and hence on market mechanisms, from that moment on the stress has tended to shift to the need for an equitable distribution of the benefits of economic development. That for the purpose also and above all of a lasting peace among the nations.
In the autumn of 2001, at an informal reunion of the ministers and governors convoked for the meeting of the Monetary Fund and the World Bank, the general secretary of the United Nations baldly stated: «... Poverty, absolute and relative, is the fertile soil on which terrorism arises»14. The color of the faces of those taking part in the reunions of the international bodies have been in prevalence, for some years, yellow, olive, black.
The issue of investment in education is now set alongside, with high priority, the fundamental ones of food, health, shelter. The Italian representatives have also insisted on every suitable occasion on this issue.
But more wealth needs to be created. At n. 85 the pastoral constitution says: «Without profound modifications in the current methods of world trade, the developing nations will not receive the material aid which they need». The issue has become the underlying one of the Populorum progressio.
The great development of the decades following the Second World War was based on the liberalization of the trade in industrial commodities; those who benefited from it – as mentioned above – were the countries best fitted technically to produce them, while the backward countries, whose national product came mainly from the primary sector, were excluded.
The agricultural sector is strongly protected, with enormous subsidies granted by the governments of the more advanced countries – the United States, Japan, the European Union – and at the same time with stringent limitations on imports from the developing countries; the latter could supply farm produce and animal products at very low prices with large mutual benefit to the importing countries and the exporters.
The negotiations on this issue are going ahead with difficulty. The resistances of some strata of the population involved in agriculture in the advanced countries is comprehensible. But the resistance is not justified in the long run. The way out in the developed economies could be that of a more intensive agriculture and of specialization in high-quality produce15.
Chapter IV of the pastoral constitution is devoted to the «life of the political community». The principles there set out are valid for our advanced societies and economies, but they are so also, in determinant fashion, for the emergent economies. The commitment of the director general of the Monetary Fund, Michel Camdessus, in the last period of his mandate, to encourage conditions of government apt to favor economic development in the countries benefiting from the program of foreign debt reduction has been noteworthy on this point. The World Bank has for some time been committed to combating, in the countries benefiting from investment and financings, the more widespread and serious forms of corruption.

Benedict XVI with Antonio Fazio in Saint Peter’s Square, 22 December 2005

Benedict XVI with Antonio Fazio in Saint Peter’s Square, 22 December 2005

6. Conclusion
The possibility, the benefit, the need to set out in decisional gatherings, at the level of individual countries, advanced or developing, and on the international level, the principles laid down in the document that Karol Wojtyla described as the «social and political program of Catholics», require, in preliminary fashion, an in-depth analysis of the problems of a general character and of the situations of the various countries and geographical areas of the globe.
All the greater Pontifical and Catholic universities offer teaching and courses now, wide and in depth, in the social sciences. The analysis of the various situations and problems, of global character or specific to individual countries and regions, can be entrusted to them, naturally also drawing on the studies and research conducted at the level of individual countries and in international bodies.
The analyses should then be linked to the principles, necessarily of general character and non-technical, expressed in the teachings of the social doctrine. A systematic coordination of the efforts and research of universities and experts, among themselves and with the magisterium, can help such efforts gain concreteness, depth, and efficacy.


Notes

1 The international Nova Spes Foundation, with the backing of men working in the institutions and in the world of culture, was set up in 1980 on the initiative of Don Pietro Pace, who died before his time in 1996. The Foundation is currently directed by Professor Laura Paoletti and is chaired by Vittorio Mathieu.
2 See in particular: L’economia e lo sviluppo globale della persona e della società [The economy and the global development of the person and of society], edited by V. Mathieu, Fondazione Nova Spes, Rome 1988; Man, Environment and Development: Towards a Global Approach, edited by P. Blasi and S. Zamboni, Nova Spes, International Foundation Press, Rome 1991.
3 It was 1 December 1989, the day of Gorbacev’s visit to John Paul II in the Vatican; I was invited to watch it directly on television and comment on the public moments of the visit.
4 Cf. Globalizzazione, progresso economico e riduzione della povertà [Globalization, economic progress and reduction of poverty]; paper at the conference: “Il lavoro. Chiave della Questione sociale” [“Work. The key to the Social Question”], on occasion of the gathering of the Pontificium Consilium de Iustitia et Pace, Vatican City, 14 September 2001.
5 Cf. the paper “Cultura, democrazia, progresso economico” [“Culture, democracy, economic progress”], given for the 450th anniversary of the foundation of the Collegio Romano, Rome 4 April 2001. See also the in-depth study by B.W. Dempsey, Interest and Usury, with an introduction of J.A. Schumpeter, Dennis Dobson Ltd, London 1948.
6 K. Wojtyla, La dottrina sociale della Chiesa [The social doctrine of the Church], Lateran University Press, Rome 2003. The interview, recorded by Professor Vittorio Possenti, was held back for thirteen years following on Wojtyla’s election to the pontificate.
7 Cf. T. Stenico (ed.), Le lettere encicliche di Giovanni Paolo II [The encyclical letters of John Paul II], preface by G. Andreotti, introduction by J. Ratzinger, Rome 2004; cf. Enchiridion delle encicliche, vol. 8: John Paul I – John Paul II. 1978-2005, Edb, Bologna 2005.
8 Cf. K. Wojtyla, Metafisica della persona. Tutte le opere filosofiche e saggi integrativi [Metaphysics of the person. All the philosophical works and linking essays], edited G. Reale and T. Styczen, Bompiani, Milan 2003.
9 Cf. V. Possenti, La Pira tra storia e profezia. Con Tommaso maestro [La Pira between history and prophecy. With master Tommaso], Marietti, Genoa 2004. The most significant among La Pira’s writings in the economic and social field is Le attese della povera gente [The expectations of poor people], Libreria Editrice Fiorentina, Florence 1951. The author stirred a wide-ranging political debate and stimulated important shifts in economic policy that contributed significantly to the Italian economic miracle in the ’fifties. He essentially followed the Beveradge Report and introduced to Italy – La Pira was a jurist, not an economist – the debate on Keynes’ theories for combating unemployment.
10 J. Villagrasa, Globalizzazione. Un mondo migliore? [Globalization. A better world?], Logos Press, Rome 2003.
11 See the fundamental contribution of A. Sauvy, Théorie générale de la population, vol. 1: Economie et population; vol. 2: Biologie sociale, Presses Universitaires de France, Paris 1952. See also the studies on the formation of savings and capital accumulation, among which those of F. Modigliani on the life-cycle and the formation of savings are to be noted.
12 As well as the ample documentation provided by the World Bank and other international bodies, a documented summary of these phenomena can be found in N. Acocella, Globalizzazione, povertà e distribuzione del reddito [Globalization, poverty and income distribution], in Studi e Note di Economia, n. 2, 2005.
13 Cf. E. Romeo, L’Oscar color porpora. Il cardinale Rodríguez Maradiaga, voce dell’America Latina [The purple-colored Oscar. Cardinal Rodríguez Maradiaga, voice of Latin America], Ancora, Milan 2006.
14 In the Angelus address of 16 July 2006, referring to the new wave of violence in Lebanon, Benedict XVI spoke of «objective violations of rights and justice».
15 See in this regard the speech at the Accademia dei Georgofili of Florence, “L’agricoltura italiana nel contesto europeo e internazionale” [“Italian agriculture in the European and international context”], 3 July 1999.


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