There are reasons for concern today that the world economy is in serious difficulties. Shortly before preparing today's commentary by Dr Andrew Kania a link was posted on the Catholica Forum from Der Spiegel headlined: "Imagining the Unthinkable – The Disastrous Consequences of a Euro Crash"[1]. While sadly much of our time on Catholica is focused, for understandable reasons, on what has gone wrong with Catholicism, one area in which it does have a proud record is in the realms of social justice and social policy. Dr Kania's essay examines some of that legacy in the light of the present global economic problems.

It's a Small World (cf. Zechariah 7:10)

What do Vegemite, Sidchrome, Arnotts, Holden, Victa, Redheads Matches, Streets Ice Cream, Esky, Simpson Appliances, Milo, Cottee's, Uncle Tobys, and Foster's Beer have in common? They are all iconic Australian companies that in fact are no longer Australian owned. But before one bemoans, in victim-like fashion, the loss of Australian identity because of foreign ownership – consider the following; the great MG British sports car is now owned by China; and Jaguar, Land Rover and Rover – are now owned by India (Tata Motors), the latter having been sold to Tata Motors by the Ford Motor Company in 2008. The world is indeed rapidly getting smaller – and the shop next door can quite possibly have an owner who lives in New York, Shanghai, Tokyo, or perhaps still, Australia.

Globalization and Its Discontents by Joseph E. Stiglitz. More information in the Catholica Spiritual Marketplace HERE.

The 2001 Nobel Prize winner for Economics, Joseph Stiglitz, a former Senior Vice President of the World Bank is today most known for his writings on the contemporary economic phenomena: Globalization. In his best-selling text, Globalization and its Discontents [2002], Stiglitz discusses how Globalization has many positive aspects, yet alternately he can understand the voice of its detractors, or as he pens, discontents. Stiglitz defines Globalization as:

"the closer integration of the countries and peoples of the world which has been brought about by the enormous reduction of costs of transportation and communication, and the breaking down of artificial barriers to the flows of goods, services, capital knowledge, and (to a lesser extent) people across borders. Globalization has been accompanied by the creation of new institutions that have joined with existing ones to work across borders." [Stiglitz, 2002, p. 9]

It is not too difficult to understand how Globalization, with its emphasis on comparative advantage (producing and selling of items at a lower opportunity cost than another nation or competitor), can lead to, on paper at least, a more resource-efficient market place. But should this be the true measure of economic success? The world economy may have become leaner and more efficient – but is this not a case of the already wealthy, becoming yet wealthier, and the poor, like a penniless child looking through the windows of a candy store, waiting for the 'happy hour' to arrive? Stiglitz does not dispute that some wealth has trickled down to the developing nations, but the amount of wealth that has gone into these nations, compared to what has exited them, is a cause for concern. Developing nations may be producing items for wealthy multinational companies; but does the presence of a multinational company within the political borders of a developing nation really equate with large scale wealth generation? The question is valid, if one considers the disproportionate price paid for the production of an item (in a developing nation), against its far larger sale price on Fifth Avenue in New York, or on Oxford Street in London.

Further intriguing in Stiglitz's text is what he believes has been one of the greatest benefits of Globalization; that those in developing nations now have an insight into how people live in developed nations with higher material standards of living, and now those people of the developing world, are no longer prepared to exist as servants of the developed world. The people of developing nations today dream of more – and ask, why can't it be so? Herein lies the problem. For all their altruistic platitudes, the companies of the developed world are not prepared to lose their dumping grounds and their rich veins of cheap labour. Nor is the developed world, and its financial institutions such as the International Monetary Fund (IMF) and the World Bank, willing to trust those leaders of the developing world to run their economies wisely.

At this juncture Stiglitz makes a few incisive comments about the contemporary Global Financial Crises of the world, invariably actuating in the developed world, where the 'best' examples of financial management are supposed to derive from. To Stiglitz, capitalism has its great benefits – but the down-side is that capitalism unchecked has no understanding of: culture, of democratic movements within developing nations; nor does un-bridled capitalism understand the social nuance that each developing nation has as part of it national temper. The IMF can sit in New York – but does this think-tank have the best interest of the developing nations at heart? Stiglitz would answer that perhaps in its original mission statement it may have good intentions, but that the IMF can in no way be successful in applying 'generic', one size fits all economic patches on the needs of such diverse economies of the developing world, spanning from Asia to Eastern Europe and across to Latin America. No single blanket solution can ever succeed to answer such disparate needs and problems. As such Stiglitiz concludes:

Joseph E. Stiglitz

"Opposition to globalization in many parts of the world is not to globalization per se – to the new sources of funds for growth or to the new export markets – but to the particular set of doctrines, the Washington Consensus policies that the international financial institutions [both IMF and World Bank] have imposed. And it is not just opposition to the policies themselves, but to the notion that there is a single set of policies that is right. This notion flies in the face both of economics which emphasizes the importance of trade-offs, and of ordinary common sense. In our own democracies we have active debates on every aspect of economic policy ... Much of the rest of the world feels as if it is being deprived of making its own choices, and even forced to make choices that countries like the United States have rejected." [Stiglitz, 2002, p. 221]

Globalization and Spirituality?

So what does a discussion of Globalization have to do with Spirituality and Religion? According to Pope Benedict XVI — everything.

Caritas in Veritate – Pope Benedict's first social encyclical

In his third encyclical (and his first social encyclical), Caritas in Veritate [2009], the Pope discusses at length the importance of the Faithful chartering the course of Globalization, rather than letting this economic theory, steer a course solely derived on market values, and the Invisible Hand of self-interest and profit maximization. Benedict XVI is neither elated nor deflated about the existence of Globalization in the modern world; for of itself Globalization is neither a good or an ill; however its eventual impact will be either good or evil according to whether Globalization allows 'subsidiarity' to be expressed. Subsidiarity is a concept that has entered both regular political and economic parlance germinating from the social voice of the Catholic Church. The term is defined as being an organizational principle that emphasizes decision-making taking place at the lowest rung of competent authority; rather than having economic and political decisions being made at a level far distant from the eventual point of impact. As such, subsidiarity with regard Globalization, challenges multinationals and large international financial institutions; for it seeks to curb their power, by demanding that these organizations listen to the grassroots; listen to the nations and peoples who for centuries have borne the burden of decisions devised far off, and taken without their consultation.

The Catholic Church being a promulgator of a Social Gospel, is active in the debate of Globalization; for Globalization speaks about critical issues of scarce resources and humanity's intercourse with this paradigm. The Church can not be silent – for man comprises not only Spirit, but Body; and to isolate the Church from comment on either facet of human nature, is to rupture the Christian message. As such, Benedict XVI asks the world to listen when he requests an economic debate that speaks more about the human person, than about the balance sheet or profit:

Pope Benedict signing Caritas in Veritate

"Today the material resources available for rescuing these peoples from poverty are potentially greater than before, but they have ended up largely in the hands of people from developed countries, who have benefited more from the liberalization that has occurred in the mobility of capital and labour. The world-wide diffusion of forms of prosperity should not therefore be held up by projects that are self-centered, protectionist or at the service of private interests. Indeed the involvement of emerging or developing countries allows us to manage the crisis better today. The transition inherent in the process of globalization presents great difficulties and dangers that can only be overcome if we are able to appropriate the underlying anthropological and ethical spirit that drives globalization towards the humanizing goal of solidarity. Unfortunately this spirit is often overwhelmed or suppressed by ethical and cultural considerations of an individualistic and utilitarian nature. Globalization is a multifaceted and complex phenomenon which must be grasped in the diversity and unity of all its different dimensions, including the theological dimension. In this way it will be possible to experience and to steer the globalization of humanity in relational terms, in terms of communion and the sharing of goods. [Benedict XVI, 2009, par. 42]

Dr. Andrew Thomas Kania, submitted to Catholica on 17 Jun 2012

FOOTNOTE:
[1] The Der Spiegal article can be read at:
www.spiegel.de/international/europe/fears-grow-of-consequences-of-potential-euro-collapse-a-840634.html

[Index of Commentaries by Dr Andrew Kania]