'Financialized' approach to world makes economy unstable, Social Sciences Academy states

Vatican City, May 5, 2010 / 14:32 pm

Mary Ann Glendon, former U.S. ambassador to the Holy See, presented the highlights of the Pontifical Academy of Social Sciences' annual full assembly on Wednesday at a press conference in the Vatican. She highlighted academy's the observation that a strictly "financialized approach" to the world “not only narrows the vision of the human person, but creates instability in the economy.”

The academy's meetings were focused on Pope Benedict XVI's encyclical “Caritas in Veritate” (Charity in Truth) and its insights on the economy. In this document, explained Glendon, "Pope Benedict XVI emphasized the moral and juridical framework" of the economy.

The academy sought to examine this encyclical and also deliberate on elements of the Holy Father's address to them last week.

Speaking to the academy members of the reasons for the economic crisis, Pope Benedict XVI said that the experience has "shown the error of the assumption that the market is capable of regulating itself, apart from public intervention and the support of internalized moral standards."

Glendon said of the meetings, "Our deliberations were largely occupied with what that 'public intervention' and those 'internalized moral standards' might be."

The former ambassador explained that three dominant themes emerged from the plenary sessions.

First, she alluded to the "Financialization of the Economy and of Common Life," noting that the crisis is rooted in the financial sector, and that "the fragility of the economic system was partly a consequence of an over-reliance on speculative financial activities separated from productive activity in the real economy."

Some participants spoke of the same effect in human relations, warning of the danger of the family or business firms being reduced "to a merely commercial dimension," viewing people as a commodity.

"Such a 'financialized' approach to the social order not only narrows the vision of the human person, but creates instability in the economy," said Glendon.

The second topic of reflection that emerged from the meetings was "The Consequences of the Crisis on the Poor," even though the crisis originated in wealthy countries. Talks were given during the sessions that focused on the suffering of the most vulnerable, with one speaker claiming there will soon be one billion malnourished people in the world.

Glendon remarked that one cannot help but conclude that "this crisis has distracted greatly from urgent questions of development." She went on to say, "A focus on financial instrument reform should not distract from basic development policy and investment in rudimentary human capital – nutrition, health and basic education."

The third fruit of discussion that she raised was the "Governance of Economic Activity."

Glendon said that "The principles laid out in 'Caritas in Veritate' about the need for stronger regulation of international finance were discussed with various concrete measures suggested in order to ensure greater transparency in financial instruments and to avoid the moral hazards arising from bailouts."

She noted for interested students of Catholic social doctrine that the deliberations of the Pontifical Academy of Social Sciences are traditionally published.