I must admit right up front that I am anything but an economist. My fiscal sensibility was formed by the heritage of seven generations of Pennsylvania Mennonite farmers. We live within our means. We don’t buy what we can’t pay for. We don’t have debt and we don’t gamble with our money — either in fabulous Las Vegas or fabulous Wall Street. Not only does this seem like common sense, it also seems simply honest and moral.
As our world economy faces meltdown, it is sobering to remember that for centuries the Catholic Church taught that loaning money for interest was intrinsically immoral. Money lending was considered a kind of incest: Nothing positive was being created, nor was a positive service being rendered for proper gain. Instead, money (which is only a necessary fiction in any case) was being used to breed money.
The present troubles in the world markets illustrate this very problem. Proper restrictions and regulations were lifted and, in a mind-staggering glut of greed and speculation, money was loaned on money that was borrowed on securities that were based on other monies that were insured by companies that had borrowed more money that only existed as computer calculations — and if that explanation is not exactly correct, neither is the reality any simpler.
To be plain, gamblers played with money that wasn’t theirs and that didn’t represent real assets — except those owned by someone somewhere faraway or some huge financial institution, often on the other side of the planet. They played and they lost, and now everybody has to pay and everybody will lose. The people I talk to who do know far more than I do about financial markets say that the big government bailout is only a stalling tactic that has little more than a cosmetic effect. Think of it like putting on a Band-Aid to treat cancer. The crisis will continue. There will be an economic collapse, and with this collapse will be a collapse of the American system as we know it.
In the midst of all this, it is apposite to remember that Pope John Paul II prophesied just such a collapse. He said that there were two materialistic, atheistic, economic and social systems: communism and secular capitalism. Both were doomed because both were built on a system without God, and therefore without morality, without respect for human rights, without concern for others, and without real concern for either individual human beings or society as a whole.
John Paul II said that both systems would eventually collapse because it was impossible — given their philosophical presuppositions — to stand. Pope Benedict XVI has reasserted the same truth by saying that the whole monetary system is a house built on sand. Such a house cannot stand, and the fall of a splendidly, luxurious house built on sand is even more spectacular and tragic to behold.
While John Paul II is well known for his criticism of Marxism, and indeed, his part in the downfall of the Soviet system, it is easy to overlook his criticisms of unrestrained capitalism. In the encyclical Sollicitudo Rei Socialis, the pontiff stated: “The Church’s social doctrine adopts a critical attitude towards both liberal capitalism and Marxist collectivism.” The “all-consuming desire for profit and the thirst for power at any price with the intention of imposing one’s will upon others, which are opposed to the will of God and the good of neighbor.”
John Paul II was writing in the great Catholic social tradition dating back to Rerum Novarum, which constantly stood up for the rights of individuals against economic systems and governments that would trample them. In 1981’s Laborem Exercens,John Paul II defended the dignity of the worker as opposed to the overwhelming system, and in his 1991 encyclical Centesimus Annus he wrote critically about unrestrained capitalism:
Here we find a new limit on the market: there are collective and qualitative needs which cannot be satisfied by market mechanisms. There are important human needs which escape its logic. There are goods which by their very nature cannot and must not be bought or sold . . . . Certainly the mechanisms of the market offer secure advantages . . . but these mechanisms carry the risk of an “idolatry” of the market, an idolatry which ignores the existence of goods which by their nature are not and cannot be mere commodities.
John Paul’s criticisms of unrestrained capitalism and the domination of economic forces by the powerful countries of the Northern Hemisphere are present in his encyclicals, his speeches, homilies, and apostolic visits throughout his pontificate. His thought was not simply a matter of telling the rich to give more money to the poor. Instead, a consideration for the individual, the poor, the disenfranchised, and the disadvantaged is itself a simple cure for the excesses of capitalism. It’s simple: If the rich had paid more compassionate attention to the poor they would not have been so greedy, and therefore not have brought on the wanton collapse of their own system.
John Paul II said that communism collapsed on its own because of its own internal foundational weaknesses. If we are witnessing the collapse of modern capitalism, then not only will John Paul II prove to be a prophet, but his analysis for the reason for the collapse of communism will match perfectly the collapse of unrestrained capitalism: “It collapsed on it’s own because of its own internal weaknesses.”
Last week the billionaire Warren Buffet, investing heavily to bail out one of the Wall Street banks, said, “This is like an economic Pearl Harbor.” No, it isn’t. It’s like an economic fall of the Berlin Wall. When that wall fell, communism collapsed. The irony of the coincidence is bitter: The collapse of unrestrained capitalism will be remembered not by the fall of a wall, but the fall of Wall Street.