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The moral resonance of Catholic Catholic


globalization
globalization perspectives perspectives
James Ianelli and Walter Block
College of Business Administration,
Loyola University New Orleans, New Orleans, Louisiana, USA 189
Abstract
Purpose – The purpose of this paper is to demonstrate that there is a gigantic difference in political
philosophy between earlier and later Catholic theology, regarding free trade.
Design/methodology/approach – The paper compares statements on free trade made in the
earlier period by adherents of the School of Salamanca, and in the later period by Populorum
Progressio.
Findings – The paper finds that early theologians favored free trade unreservedly, while later ones
were either ambivalent, or in opposition.
Research limitations/implications – Catholicism is not an unchanging philosophy, at least
insofar as the economics of free trade is concerned. Catholic social thought on other economic issues,
price controls, profits, usury, ought to be studied to see if there has been a similar sea change in
perspective from earlier to later theologians.
Originality/value – It might be harsh to characterize what has occurred in this dimension as the
‘‘high-jacking’’ of a political economy. On the other hand, it is not clear that this is not an accurate
characterization.
Keywords Free trade, Christian theology, Globalization, Political philosophy
Paper type Viewpoint

In December 1999, a protest of the Seattle meeting of the World Trade Organization
(WTO) erupted into a chaotic mob scene[1] as looters pillaged downtown businesses
and a few aggressors assaulted various protestors, police officers, and innocent
bystanders. The aftermath was characterized by many people throughout both Seattle
and the world espousing a common conclusion: that the reckless display of brute force
blurred the peaceful protestor’s valuable message of justice, equality, and harmony
against the evil globalization efforts of the WTO. What such commentary failed to
comprehend, however, was that the message of the peaceful protestors and the acts of
the chaotic mob both stood diametrically opposed to any true sense of economic justice,
peace, and harmony. While the nonviolent protestors merely advocated the use of
coercion to abridge liberty, the violent antagonists embodied that message’s logic in
their aggressions against private property and liberty both locally and worldwide.
While it cannot be denied that the papal encyclical Populorum Progressio contains
some rhetoric praising free markets and individual liberty, it also espouses an opinion
on global economics similar to that of the WTO protestors, violent antagonists, and
many modern Jesuits. As a product of the popular socialist intellectual environment at
the time of the Second Vatican Council, this document praises the virtues of market
interference by citing the so-called sinfulness characterizing unbridled markets,
capitalism, and the absolute protection of private property. Among its socialist claims,
Populorum Progressio explicitly and implicitly discourages globalization while
encouraging the regulation of international markets.[2] The position of all too many
within the church contends that isolationist[3] principles serve as the most effective Humanomics
Vol. 25 No. 3, 2009
means to the progressive development of civilization, or the progress of the people. pp. 189-196
# Emerald Group Publishing Limited
0828-8666
JEL classification – F1, Z12 DOI 10.1108/08288660910986919
H The School of Salamanca (http://cepa.newschool.edu/het/schools/salamanca.htm), a
Catholic group of educators and economists, also seek to advocate the ends leading to
25,3 progressive development of the people. Both Catholic intellectual groups desire to help
people escape the ravages of hunger, poverty, and ignorance and enable the poor to
seek a larger share of the benefits of civilization and a more active improvement of their
human qualities and ability to flourish within their inherent capacities.
The Vatican Council and the School of Salamanca base their theological and
190 economic arguments on the grounds of compassion, justice, fairness, and individual
integrity as the command of God.
However, the school holds a vastly different conception than the modern Catholic
Church on the best means of economic policy toward these shared ends. Instead of
favoring heavy government intervention, the Salamanca group believed in the value of
markets and private property. The School of Salamanca differs fundamentally in their
approach to the relationship between economics and morality with the encyclical due
to their reasoned faith in free markets.
Which Catholic conception of economics provides the means that truly leads to such
a shared end? The answer depends on the validity of their arguments in an economic
and ecumenical context. All premises put forth must be consistent with, and sufficient
for, their conclusions. This paper will assess the logical validity and the implications of
the two different perspectives on globalization.
Ascertaining the economic underpinnings of each theory on globalization requires
an analysis of regulated international markets, advocated by the pope, and unregulated
international markets, advocated by the Salamanca School. The two viewpoints concur
that God obligates humans to subdue the virgin resources of Earth through production.
They share the conception that God intends the whole of creation to exist for man and
that he has been charged to give it meaning and, through intelligent activity, to
complete and perfect Earth’s bounty efficiently by his own efforts and to his own
advantage.
Despite such shared theological conceptions, the encyclical contradicts itself on
economic and spiritual grounds (Woods, 2002; Watner, 1987) by advocating a position
on international trade that necessarily compromises man’s capacity to attain material
and moral fulfillment. The modern work undermines the diversity of productive
capacities inherent in the dispersal of Earth’s resources by dismissing the notions of
comparative advantages, specialization, free trade, and transnational investment.
In analyzing the modern church’s perspective on globalization, we must consider
the claim in Populorum Progressio that, ‘‘It is not permissible for citizens who have
garnered sizeable income from the resources and activities of their own nation to
deposit a large portion of their income in foreign countries for the sake of their own
private gain alone.’’ If citizens are not allowed to use the fruits of their labor to invest in
still other facets of production, then the resulting consequences necessarily include
wasted resources, impoverished populations, unemployment, and many other dire
consequences associated with underproduction. Prices for products remain higher
while the malevolent self-sufficiency doctrine limits the purchasing power of
consumers and stunts the productive potential for countries.[4]
The call against globalization cripples the growth of domestic economies due to an
ignorant and incorrect understanding of international markets. The authors of this
papal encyclical write as if the economy operates as a zero-sum game. Populorum
Progressio exhibits this naivety by stating that, ‘‘(as a result of free international trade)
the needy nations grow more destitute, while the rich nations become even richer.’’
Such a misunderstanding contends that participants in markets either win or lose with Catholic
every transaction. For example, socialist clergy claim that when wholesalers in the globalization
USA buy Hibiscus flowers from Fijian farmers at a mutually agreed upon price, the
former ‘‘win’’ while the latter ‘‘lose.’’ The modern church bases their claim against perspectives
foreign investment and unregulated international markets on just such ‘‘reasoning.’’
The School of Salamanca, finding zero-sum games inapplicable to free markets,
viewed them correctly in the context of positive-gains due to the very nature of 191
voluntary transactions. In the ex ante sense, any transaction voluntarily agreed upon
must of necessity result in a positive-sum gain because both parties believe they
benefit. If zero-sum games truly existed and one party of the transaction were always
to lose, then voluntary transactions would rarely take place. An individual will not
participate in a transaction unless he perceives he will be better of than without the
transaction.
In contrast, poker is truly a zero sum game. The winnings of the winners must
exactly equal the losses of the losers.[5] One person’s winnings are another person’s
losses. Why do people engage in pursuits of this nature? States Mises (1998, p. 116;
www.mises.org/humanaction/chap6sec6.asp):
Embarking upon games can be either an end or a means. It is an end for people who yearn for
the stimulation and excitement with which the vicissitudes of a game provide them, or whose
vanity is flattered by the display of their skill and superiority in playing a game which
requires cunning and expertness. It is a means for professionals who want to make money by
winning.
But, whatever the reason, a sharp distinction must be made between games and
market activity. In the former, there can be only one winner. There must be a loser. In
the latter, at least in the ex ante sense of expectations, both sides win. When A
purchases a newspaper for $1.00, he must value it at more than that amount, otherwise
he would not engage in any such commercial activity. Similarly, the vendor must see
this item as worth less than $1.00, how, else, to account for the fact that he willingly
parts with it? Both earned a profit. Each one earned a profit ‘‘off’’ of the other. If there is
any exploitation involved, it is surely mutual; e.g. there is no exploitation (Hoppe and
Block, 2002) at all.
Thus, the Salamancans possessed a very logical conception of market intercourse in
their reasoning about unregulated markets, national as well as international. Both the
US flower shops and the Fijian farmers trade with each other because they believe it to
be in their self-interest. It affords both of them a surplus of benefits greater their
physical and opportunity expenses. And the same holds true for the buyers and sellers
of newspapers, and indeed, for all other marketplace activities. Positive-sum games
must characterize every such transaction.
Domestic consumers and industries in Fiji and the USA benefit as well. Contrary to
the modern Catholic conception but not the Salamancan, international trade maximizes
the benefits in international and domestic economies by efficiently utilizing resources
and bringing marginal revenue to equalize at the point of marginal expenses. Without
artificial trade hindrances, Adam Smith’s (1776, p. 572) invisible hand tends to allocate
resources to their socially optimal point. It punishes reckless, irrational entrepreneurs
with losses, and rewards with profits those who satisfy consumer desires.
It is clear that the economic rationale of the School of Salamanca, the early Jesuit
fathers clearly included (De Soto, 2004), favored free trade. In their view, capitalism
H benefited parties directly and indirectly involved in transactions, whether locally or
25,3 globally.
The position of the modern Jesuits offers a very sharp contrast,[6] indeed. They
claim that domestic industries will unjustly suffer from outsourcing and increased
imports associated with globalization. However, any claim of justice essentially implies
a call for duty and, in terms of economics, that duty constitutes efficiently utilizing
192 resources to maximize the value supplied to consumers while minimizing expenses of
production and consumption. The efficient utilization of resources must be the duty of
producers because it constitutes the fulfillment of God’s calling to subdue the Earth. It
remains a safe assumption that in neither sacred scripture nor divine revelation can we
find any semblance of authorization for subjecting the Earth’s population to pandemic
inefficiencies so as to insulate a few local industries from foreign competition.
In fulfilling such a calling, many modern Catholic clergy fail to realize that the
efficiency of production afforded by a global economy will increase the material wealth
of all, not just the few. Without tariffs or other neo-mercantilist policies, free markets
allocate resources in a way that serves the will of consumers. Free enterprise on a
global scale offers the world the chance to fully subdue the Earth and increase per-
capita standards of living, and drastically so. How can someone, who professes to hold
a compassionate will, support tariffs? They raise prices for goods like food when
millions of people are impoverished. They stultify the worldwide division of labor, and
the benefits of specialization. They exacerbate poverty. They are a denial of private
property rights. For all the modern Catholic talk about liberty, universal brotherhood,
and empathy, these same people seem to lack the ability to critically reflect on the true
ramifications of protectionist policies in terms of even their own espoused Christian
ideals.
Anti-globalization efforts lose further credibility when examined in light of true
freedom, harmony, and prosperity provided by the free enterprise system. Isolationist
policies deny the individual his freedom of choice, something that Catholicism and the
doctrine of salvation are wholly predicated upon. They deny consumers the freedom to
purchase products at just, voluntary prices based on vague, shallow reasoning.
From what authority do governments derive the right to decide how people can
voluntarily interact? Free choice is a necessary component of Christianity and, so long
as one does not infringe upon the equal freedom of others, the burden of choice and
action is thrust by God upon the individual will, not the state. Yet when governments
impose regulative policies they restrict the freedom of their citizenry and act as if the
state is a deity worthy of competition with the will of God on influencing the minds of
men.
Contrary to the conjectures of many Jesuits and a critical assumption of Populorum
Progressio, markets, not state sponsored coercion, reduce inequities, eliminate
arbitrary discrimination, free men from the bonds of servitude, and give them the
capacity, in the sphere of temporal realities, to improve their lot, to further their moral
growth, and to develop their spiritual endowments. As Father Robert Sirico (2002,
p. 24-25) argues, markets serve human nature by embodying ‘‘the expression of human
evaluation, community, and solidarity – people bringing their talents and abilities to
the service of others through exchange.’’ Humanity is not degraded by the absolute
entitlements of the laissez-faire system but through the proportionalist, communitarian
system naively advocated by many modern Jesuits that sacrifices inherent human
dignity for so-called amoral calculations of the common good (Grisez, 1991, p. 61).
The modern church’s advocacy emphasizing the merits of self-sufficient economic Catholic
nationalism constitutes a dangerous threat to global peace as well as fiscal prosperity.
The 20th century advent of economic interdependence provides nations with a material
globalization
stake in the prosperity and stability of their counterparts, thus, giving them a strong perspectives
incentive for maintaining peaceful relations. International economic organizations
such as the Organization for Economic Cooperation and Development (OECD), the
European Coal and Steel Community (ECSC), and the European Union have increased
the levels of communication between countries; this, in turn, has had the effect of
193
bringing about prolonged peace (Russet et al., 2004, p. 310).
The phenomenon of economic interdependence and globalization creates an
international environment where states are far less likely to engage in wars or
militarized disputes. Other things equal, the use or threat of military coercion against a
significant trading partner is likely to disrupt commercial exchange as war endangers
importers’ preferred supply of goods and services and endangers exporters’ markets. It
is no coincidence that most of the industrialized countries of the world embracing free
trade have maintained peace since 1945, an unprecedented feat in world history
considering that this zone contains a total population of over 800 million, spread over a
geographic area equal to nearly half the land of the Northern hemisphere.
The peace created by economic interdependence and open international markets
contrasts starkly with the potential for turmoil accompanying sundered economic
transnational ties. The alternative to global economic interdependence is a dangerous
and precarious one. For example, the relatively feeble international trading connections
within the industrialized world following the Depression years help explain the
political tensions that culminated in World War II and the later Cold War[7]. By not
building functional relationships based on trade with each other, the Allies (Britain,
USA, France, and Russia) and Axis (Germany, Japan, Italy) and the USSR and US
possessed little disincentive to engage in hostile actions or threats of war (Russet et al.,
2004, p. 323). Tariffs bring retaliatory trade interferences, and these poison the
atmosphere; under such conditions, war is rendered more thinkable.
However, in arguing against globalization, modern Catholics betray the conception
of the universal brotherhood and community that connects all humans as the children
of God. Free trade opens up communication, as transnational commerce requires all
participants to express their interests while seeking to identify those of present and
potential foreign trading partners. International trade builds a social fabric that bonds
individuals together throughout the world as increases in the need for a continuous
flow of communication strengthen the sense of a collective identity. The past pope,
John XXIII, stressed such a need when he wrote that, ‘‘Every effort must be made to
ensure that the enterprise is indeed a true human community, concerned about the
needs, the activities and the standing of each of its members.’’[8] While the Catholic
scholars within the School of Salamanca recognized the virtues of peace and
harmony[9] of a global economy, many modern Jesuits fail to understand the full
beneficial implications of international economic interdependence in their advocacy of
state self-sufficiency.
Any argument in favor of economic isolationism also fails to recognize the Catholic
moral argument for globalization. Protectionism contradicts the most fundamental
moral principle, the Golden Rule, that which commands humans to love God above all
things and love one’s neighbor as oneself (Grisez, 1991, p. 82). The Golden Rule
excludes unreasonable partiality toward oneself and those to whom one feels attached
but includes notions of fairness and impartiality. National boundaries do not divide the
H kingdom of God in this world or the next because Catholic dogma conceives of all
humans as living in the same global family. As far as this religion is concerned, they
25,3 are only lines on a map.
The standard of integral human fulfillment is the first principle of morality in the
Catholic metaphysical concept of rational morality. It explicitly mandates impartiality
and fairness as necessary. Grisez’ fifth mode of responsibility, a derivation of integral
human fulfillment, applies the Golden Rule to the issue of national isolationism and
194 globalization. He (1991, p. 99) states: ‘‘differences in treatment are unfair when they
have no intelligible grounding, (which) is usually the case with discrimination based on
nationality. . .’’ People find it easy to favor those present within their immediate
surroundings who make claims on their sympathy, at the expense of others who are
absent and cannot make similar emotive claims, but this is not justified.
It is understandable, given the fallen human condition of original sin, that many
people and even many clergy would act partially towards domestic industries lobbying
for protectionist policies. But this is economic illiteracy. A clergy in favor of national
self-sufficiency can look at the happy faces within the specific industries with unfair
competitive advantages or think about how he righteously thwarted those pro
globalization, free market crazies in the name of social justice and gain some sense of
benevolence, as if he is contributing to the ‘‘common good.’’
However, Christian rational morality asks Catholics to put themselves in others’
places, to take into consideration how what we do will affect everyone else, and to not
depersonalize other sisters and brothers of the covenant merely because they are not in
our proximate presence (Grisez, 1991, p. 91). Fairness is superior to any feasible
advantage that can be gained from acting unjustly. But here, morality and economic
benefits work in the same direction. One does not have to be eschewed in order to
promote the other.
The school of Salamanca recognized the immorality inherent in mercantilist
policies. These Church fathers would not support individual states using one set of
reasons in justifying their own actions, while not allowing the same justifications to
govern the actions of people to whom the state felt no attachment. They had a passion
for logical consistency, and a basic opposition to hypocrisy.
In order to truly live up to their obligations as Catholics, the modern church must
embrace the notion of free trade and reject policies that infringe on consumers’ rights in
order to protect industries the best lobbyists. Tariffs, quotas and embargoes privilege a
few at the expense of the global community. Protectionist policies are unjust and
immoral because they forsake the interest of the common good; they unfairly exclude
the rest of the world from economic interaction with us. The resulting inefficient
utilization of resources cannot possibly be reconciled with the preferential option for
the poor.
Instead of favoring domestic jobs over foreign, it is imperative that Catholics live up
to God’s command to love thy neighbor as oneself, follow the lead of the Good
Samaritan and allow the bounty of the resources God placed on Earth to determine
who produces what in an open market. The school of Salamanca understood the moral
and economic imperative of globalization while the perspective expressed in
Populorum Progressio unfortunately does not. The Catholic calling to pursue integral
human fulfillment through the use of reason requires that men embrace globalization
as a vehicle in the service of humanity. With reckless naivety and emotion undermining
their economic reasoning, both the peaceful and nonpeaceful protestors at the Seattle
WTO as well as the modern church leaders favored the wrong side. They opposed the
expansion of international economic interdependence and have either knowingly or Catholic
unknowingly joined the cause of the violent antagonists in the fight against the globalization
harmonious goal of peace and justice.
perspectives
Notes
1. See on this http://seattlepi.nwsource.com/wto/; www.seattleweekly.com/supplements/wto/;
http://seattletimes.nwsource.com/wto/
195
2. www.vatican.va/holy_father/paul_vi/encyclicals/documents/hf_p-vi_enc_26031967_pop
ulorum_en.html
3. We must distinguish between economic and political isolationism. The former is the
enemy of free trade, and an end to tariff barriers. For a critique of this philosophy, see
Smith (1776). The latter rejects imperialism, colonialism, foreign military bases and
gunboat ‘‘diplomacy.’’ See on this Washington (1796).
4. It is very difficult to reconcile this attack on free trade with the celebrated ‘‘preferential
option for the poor’’ of Catholic social teaching. See on this: www.osjspm.org/cst/
q_poor.htm; www.uscatholic.org/1997/11/featb9711.htm; www.midwestaugustinians.org/
justpaxprefopt_aug.html. For there is strong empirical evidence that even the poor of
those countries that rely on free international markets are economically better off thereby.
See on this Gwartney et al. (1996).
5. In saying this, we abstract from the possibility of a house ‘‘take.’’
6. Exceptions include Fr. James Schall, S.J. and especially Fr. James Sadowsky, S.J.
7. The unconscionable Smoot-Hawley tariff was largely responsible for this debacle. Even
the government itself admits as much. See on this: www.state.gov/r/pa/ho/time/id/
17606.htm. See also: Anderson (1999) www.ncpa.org/oped/bartlett/oct2999.html
8. See: www.vatican.va/holy_father/john_xxiii/encyclicals/documents/hf_j-xxiii_enc_15051961_
mater_en.html
9. According to that old bit of economic folk wisdom, ‘‘If goods don’t cross borders then
armies will.’’ There is no doubt that protectionism tends to lead to war, because is
‘‘disharmonizes’’ individuals and peoples. A tariff, a sort of economic belligerence, is
only compatible with physical bellicosity. For more on this see http://bastiat.org/en/
#works; Bastiat, 1964; Hülsmann, 2001; Thornton, 2002.

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Corresponding author
Walter Block can be contacted at: wblock@loyno.edu

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