Following the Chancellor's Autumn Statement, Joanne Green of CAFOD discusses capitalism and Catholic Social Teaching
In the wake of economic and financial meltdown politicians
from all parties have been eager to offer new models of capitalism ranging from
the ‘responsible’ to the ‘popular’. As
has been recently noted in the media, Catholic Social Teaching (CST) has a lot
to contribute to the debate about the nature of capitalism, values and the
market place. Informed by our
experiences of working with local partners and communities in the Global South,
a reflection on CST principles as well as our own analysis of the current
economic debate we are in the process of developing three concepts - purpose,
participation and political communities - that we think need to be at the heart
of any new approach to capitalism and the economy.
Whilst staying silent on a preferred model of economic
organisation, CST’s most fundamental challenge to the market, business and
economy is that it must have a purpose and that purpose must be to serve wider
society and indeed, the common good. The
Common Good can be summed up as seeking the good of all people, with no group
or individual being left out.
Capitalism has lost its purpose. Partly as a result of the belief that free
markets will mysteriously, via the invisible hand, bring about desirable social
and environmental ends. Even Adam Smith, the originator of the “invisible hand”
believed that free markets could only work with a moral framework. There is also a distortion of the
concept of “freedom” in economies which is a narrow and a negative view of
freedom – that freedom is the absence of interference. In fact, it could be argued that the dominance of
this idea of “freedom” has curtailed broader freedoms. The dominance of
current economic discourse has disempowered poor people and their governments
as countries have been intellectually and legally blocked into adopting a
particular set of policies deemed most conducive to growth by the lack of a
debate on alternative economic policy and donors making acceptance of these
policies conditional on receiving aid.
obsession with GDP as the ultimate measure of economic success or failure is an
obvious symptom of the lack of purpose. Governments have come to judge
themselves and each other on their growth performance. Clinton's election
slogan “it's the economy, stupid” sums up the pre-eminence of looking after the
economy in government priorities. Governments need some reminding that looking
after the economy, or business, is done so to achieve broader objectives of social
progress and environmental sustainability.
So as well as having a clear purpose of serving the common
good, the success of economies needs to be measured against the specific
objectives we want the economy to fulfil; reducing poverty, creating decent
jobs, increasing environmental sustainability and promoting stability, rather
Moving on from purpose to the way people participate or not
in the economy: most economists and politicians now accept inequality is a
problem. The IMF has declared that inequality of income helped create the
financial and economic crisis through an abundance of capital being
concentrated in the hands of small number of people.
But what type of inequality do we really need to focus on
addressing – is it an inequality of opportunity or outcome? Politicians on the right tend to emphasise
policies that promote equality of opportunity whilst those on the left would
argue that it is inequality of outcome or income that is the real evil. We
believe that both of these aspects are important but inadequate by themselves
to address the real injustice of inequality. Instead we would like to see a focus on an equality of participation in economic
life which goes further than equality of opportunity as it is not just about
giving poor men and women the chance to participate in the economy, it is about
making that participation meaningful.
This is based on an understanding of what people need to
flourish as human beings – that being made in God’s image they are created for that
is to contribute to and participate in the common good – including economic
activity. According to CST, human beings should be the subjects (artisans) of
their work and their destiny. They are called to become ‘co-creators’ with God.
Of course distribution also matters, when there is too much
inequality it is unlikely that poor men and women will be able to participate
effectively in the economy, and it is also right that society looks after those
that cannot and should not work. But inequality of contribution is primarily about
fairness of returns rather than redistributive methods, for example, of
achieving a more equal sharing of wealth.
Focusing on inequality of contribution rather than opportunity or outcome has
implications for policy choices: that people in poverty have the means at their
disposal to take advantage of an opportunity and that the market system is not
unfairly stacked against them through making sure that the following is in
- an enabling environment that works for all
- a fair fiscal policy
- social protection
- regulation to correct market imbalances and instabilities.
Finally, requiring economic policy to be accountable to
people and political communities is
entirely consistent with the principle of subsidiarity expounded by Catholic
Social Teaching. Citizens and communities through political debate should be
the main arbiter of which economic policies are in their best interests. This
is not to argue for the abolition of global institutions such as the WTO and
IMF, but to argue for a much greater democratic accountability and connection
between those institutions and the wishes and opinions of the people over whose
lives they have enormous sway. This is
an argument for people and governments as their representatives to assert their
rights to decide their own economic policy rather than feel bound to conform to
the dominant ideology of market fundamentalism.
In the pursuit of deregulation at any cost, governments have
also let global companies become increasingly detached from political and judicial
processes intended to represent and protect their citizens. It is essential for governments to work
together to require companies to be transparent and accountable to citizens. As
enormous challenges still remain which allow global companies to avoid
oversight and ensure they make a positive contribution to society.
So, as we seek to respond to the Chancellor’s Autumn
we looking through the lens of a ‘common good’ Capitalism?