The Vatican Calls For An End to Capitalism

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Adding a spiritual dimension to the incoherent war on capitalism rapidly spreading across Europe and America, the Pontifical Council for Justice and Peace, an official Vatican body, last week published a sweeping scholarly tome calling for the end of capitalism, individualism, free markets, and national sovereignty. Sound far-fetched? Consider what the proposal would entail.

Under the Council's proposal, the fiscal and monetary authorities of all nations of the world, as well as that of all financial institutions both public and private, are to be gradually subjugated under a supranational public authority with universal jurisdiction. This is to be financed by a global central bank empowered to collect a tax on all financial transactions. This bank would regulate all monetary exchange while also having the authority to promote global development and sustainability according to the principles of social justice and solidarity. It could also contribute to the creation of a world reserve fund to support the economies of countries hit by crisis.

This reform process is to be managed by the United Nations, whose mandate will be to act on behalf of the common good. Details as to what constitutes the common good are left to the reader's imagination.

I am not making any of this up; most of the words above come directly from the document. You can read it yourself on the Vatican website. I read it four times before I came to the conclusion that it was not published by The Onion. Given its timeliness and its influential source, I was amazed at how little news coverage it received.

Calls for the end of selfishness and income inequality coming from an organization that has spent centuries amassing treasure, none of which has been pledged to form the capital of the recommended global central bank, begs many questions. In addition, considering the well publicized problems that the Vatican has had getting some of its own clergy to live up to basic standards of human decency, the recommendation that an organization as dysfunctional as the U.N. should be tasked with forming a world government guided by nothing but an exhortation to "serve the common good" demonstrates a naiveté that takes your breath away.

But perhaps it is unfair to criticize the messenger and, instead, analysts should focus on a careful deconstruction of the message itself. Stripping out the intellectual semantic packaging, the essential concept of the Vatican's proposal is that the means of production are to remain in private hands but the objectives to which that production is put, the capital allocated to enable it, and the wealth that is created from it are to be directed by a central authority.

In truth, this is not communism. It is fascism.

Perhaps a return to an economic system practiced by Benito Mussolini might get the bailout trains to run on time. As for the economic system practiced during that same era in Pope Benedict's home country, it certainly ended unemployment and ramped up industrial production. On first impression, there is no reason why the economic dynamism unleashed by Der Fuehrer and Il Duce could not be put to noble, rather than nefarious, ends. After all, what could go wrong with handing all that money and power over to the U.N.?

That a proposal for global monetary union should be issued just as the Eurozone experiment aimed at that end is coming apart at the seams certainly demonstrates a triumph of hope over experience. If this experiment taught us nothing else it is that monetary unification without fiscal unification is a recipe for disaster. If such a process couldn't be managed by world-class technocrats in Brussels working with a set of countries that at least have a common heritage, can you imagine asking the U.N. to do it across countries including Zimbabwe, Venezuela, and Pakistan? Such a project would give Hayek's Fatal Conceit a whole new meaning.

The sad thing is that the Vatican document actually does a pretty good job of diagnosing the problem - namely fiat currencies gone wild fueling rampant speculation by financial institutions that were able to privatize gains and socialize losses banking on the belief that their respective governments would bail them out. Add to that a credit-besotted public sector that lavished material goods on constituents who believed they had a right to the good life without working for it and you get a series of dominoes that start with Greece and tumble all the way to the United States.

Had the Pontifical Council stopped there, condemning Crony Capitalism and demanding reform by calling for a return to an international currency system anchored in gold exchangeability, along with the elimination of moral hazard through the impartial application of bankruptcy law, it would have made a significant contribution to the public debate. Instead, the document pivots off the non sequitur of pointing out that a billion people live on less than a dollar a day. Embracing Rahm Emmanuel's admonition to never let a good crises go to waste, before you know it Ban Ki-moon is handed the keys to the kingdom as long as he promises to spread the wealth around.

Didn't we just see this movie?

While it is certainly not my intention to embarrass my many Catholic friends, they may want to use whatever means the laity has at its disposal to communicate with the ecclesiastical authorities, suggesting that they reexamine this piece of work. Either that or let it quietly disappear into the obscurity it so richly deserves.


Bill Frezza is a fellow at the Competitive Enterprise Institute, and a Boston-based venture capitalist. You can find all of his columns, TV, and radio interviews here.  If you would like to have his weekly columns delivered to you by e-mail, click here or follow him on Twitter @BillFrezza.

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