Can This Market Be Saved? A Catholic View of the Market Just May Be What's Needed to Rescue Our Economy from Its Moral Recession

U.S. Catholic, March 2009 | Go to article overview

Can This Market Be Saved? A Catholic View of the Market Just May Be What's Needed to Rescue Our Economy from Its Moral Recession


If anything good comes out of the current economic crisis, it might be a more urgent discussion of morality in the marketplace, theologian and economist Daniel Finn says.

Finn, a professor at St. John's University in Collegeville, Minnesota and president of the Society of Christian Ethics, has attended separate meetings of theologians and economists on back-to-back weekends for 30 years.

This incongruous experience has left him with a goal. "I've constantly been struck by how differently people think about these issues," Finn says. "Both within economics and Christian ethics, people on the left and right often don't talk to each other. They just think the other side is wrong."

Finn wants to bring all sides to the same table to discuss morality's role in the market. Even in exclusively Catholic circles, though, solutions won't be easy to come by. "You shouldn't say, 'What's Catholic social teaching's recipe for fixing this crisis?' There are several options within the general Catholic frame," says Finn, who also co-directs The True Wealth of Nations research project studying the relation of economics and Catholic social teaching.

Still, the discussion is worthwhile for religious folk. "There needs to be a sense that we're in this together as a church and as a society, even if we don't agree with each other," Finn says. "This way we'd live a fuller, more integrated spiritual life."

What brought about the current economic crisis?

There are several contributing causes, but the reigning philosophy that led to this crisis is the ideology of the free market. It says that people know their own interests better than anyone else and therefore are the best situated to act on those interests and decide what risks they're going to take.

Housing was a big part of the problem. Interest rates on mortgages were lowered so low-income families could afford to own a house, but many middle-income individuals also bought a second or third house to rent out. Everyone expected home values to keep rising. Even if a family fell on hard times, they could always sell the home for a profit, though now this is no longer the case.

At the same time, new financial instruments were invented that gave investors more confidence to take financial risks. The investments weren't based on real underlying assets like homes or factories but were derived from other financial instruments, hence the name derivative.

These new instruments were not subject to the usual financial regulation, and they got so complicated that nobody really knew what would happen if investments on which they were based were to fail.

London's Financial Times estimates there were $3 trillion to $4 trillion worth of bonds with real assets behind them and between $30 and $50 trillion worth of these derived instruments. So when something went wrong in the world of real assets, such as people being unable to keep up their mortgage payments, the effect in the financial markets was magnified by 10. That's what has made the current crisis so catastrophic.

How does Catholicism respond to free-market philosophy?

One of the biggest things Catholicism says about the economy is that it should be oriented toward the common good. Virgil Michel, a long-deceased Benedictine who taught at St. John's University, had one of the best definitions of the common good. He said it had two aspects: the common conditions of social life and the attainment of the good life by all.

Common conditions are the things that we all depend on but that no one person generates: schools, museums, parks, police forces, peace, and so forth. The good life means that there should be a minimum quality of life for everyone. It doesn't mean economic equality, but it does mean nobody can be left out. If you want plastic surgery and can afford it, I'm not going to stop you, but first everyone else has to have basic health and dental care. …

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