Creative Commons License

Pope Calls for a New Economic Order

Tuesday, July 07, 2009 at 07:53 AM EDT

Pope Benedict XVI has called for a new financial order, a new way of understanding business enterprise, that respects the dignity of workers and looks out for the common good by prioritizing ethics and social responsibility over dividend returns, according to a report by the Associated Press.

The Pope in the third encyclical of his pontificate has addressed squarely a myth that has surrounded modern capitalism and economic growth. Most often this mythology has attempted to perpetuate the dominance of the rich classes.

This mythology has as its key theme that for capitalism to thrive, trade unions must be weakened or non-existent, that profits have to be maximized even if it goes hand in hand with worker layoffs and lower wages, sometimes achieved through offshore outsourcing.

The profit motive is worthy, but it need not be exhorbitant profits at the expense of the worker. Both the capitalist and the workers can have a share in the wealth of a company.

On the other hand, the government does not exist for the investor but for the people, understood as workers, investors, and other classes of people on the margin of society.

It is the responsibility of the government to spend on development, on education, on healthcare. The private sector cannot be expected to deliver in these sectors in a manner that delivers services that are affordable to the poor.

There will be those who will argue that competition reduces prices. Competition will not however reduce prices beyond a point where they do not meet the high profitability requirements of the private sector. Don’t expect the private sector to insure the poor sick….those will be on the streets if the government cannot foot the bills.

Competition in private sector education may lower costs, but not as low as a government-run and subsidized schools. The private sector wants a share of the subsidies by offering to deliver services better than the government. The pet line goes: if poor kids can’t afford private schools let the government pay the fees for them. But the government can have far more kids educated at the fees private schools charge.

One of the greatest challenges facing the economy is to achieve the most efficient use, and not abuse of natural resources, based on a realization that the notion of ‘efficiency’ is not value-free, the Pope wrote.

The Pope said that the drive to outsource work to the cheapest bidder had endangered the rights of workers, and demanded that they be allowed to organize in unions to protect their rights and guarantee steady, decent employment for all, according to the AP report.

Pope Benedict is concerned about the inhuman conditions for factory workers in outsourcing hubs in China and south-east Asia. The move to outsource at the lowest cost has led to workers working in sweat shops, under inhuman conditions, as has been documented by Naomi Klein (No Logo) and other writers.

Some writers like nobel laureate Paul Krugman have argued that sweat shops are an improvement over the current lving conditions of people in some Asian countries. But the Pope cannot take the clinical (if cynical) view of an economist. His concern is the pain, the dehumanization of people worldwide.