The "financialization" of the economy as a source of global crisis, which has affected mainly the weaker countries, confirmation "essentially ethical" nature of the economy and the need for greater public intervention in the matter and, finally, the possibility of "a new treaty to better ensure the foundations of the common currency" in Europe, in the wake of the Greek crisis.These are the main points arising from the sixteenth plenary session of the Pontifical Academy of Social Sciences, which was held from April 30 to May 4 on "Crisis in a Global Economy, Re-Planning the Journey", presented today to journalists by the chairman of Pontifical Academy, Mary Ann Glendon.
Glendon said the work followed the indications offered by Benedict XVI to the assembly that the crisis “has also shown the error of the assumption that the market is capable of regulating itself, apart from public intervention and the support of internalized moral standards”.
“This assumption - she continued - is based on an impoverished notion of economic life as a sort of self-calibrating mechanism driven by self-interest and profit-seeking. As such, it overlooks the essentially ethical nature of economics as an activity of and for human beings.”
"From that comes the need for greater public intervention to "ensure greater transparency in financial instruments and avoid moral risks and problems arising from bailouts."
“The current economic crisis – she continued - had its roots in the financial sector. Indeed, one invited speaker, Dr. Luca Cordero di Montezemolo, Chairman of Ferrari and Fiat, former president of Confindustria, spoke of a shift from an economy based in the real production of goods to an economy dominated by speculative activities driven by greed. The fragility of the economic system was partly a consequence of an overreliance on speculative financial activities separated from productive activity in the real economy.
Two members of our Academy, Professor Margaret Archer and Professor Partha Dasgupta, spoke more broadly of the danger of the “financialization” of human relations, in which human activities, even in the family, are reduced to a merely commercial dimension. One of our guests, Professor Stefano Zamagni, pointed out the danger of thinking even of business firms in this way, where the corporation ceases to be an association of persons and become a commodity instead. Such a “financialized” approach to the social order not only narrows the vision of the human person, but creates instability in the economy”.
The "most vulnerable", ie poor countries suffered most the consequences of this crisis. "for the first time, our world will soon have 1 billion malnourished people. If one compares the relative cost of the financial bailouts to the amounts needed for basic nutrition, for example, one cannot avoid the conclusion that this crisis has distracted greatly from urgent questions of development. In our attention given to questions of hunger and health, the Academy stressed also that meeting basic needs, especially for children, beginning in the womb, makes a decisive contribution to economic productivity. A focus on financial instrument reform should not distract from basic development policy and investment in rudimentary human capital – nutrition, health and basic education".
The assembly Glendon added “took place during the Greek crisis, indicating that the questions we examined were as relevant as the daily headlines” the issue was addressed by: Lucas Papademos of the central European Bank, Mario Draghi, Governor of the Bank of Italy, Ettore Gotti Tedeschi, president of the Institute for Religious Works, Hans Tietmeyer, former president of the Deutsche Bundesbank and Luis Ernesto Derbez Bautista, former Minister of Economy in Mexico.
“With reference to the Greek crisis - said the Glendon -, our expert guests addressed the recent package of relief measures, as well as the possibility that new European structures might be needed, not excluding the possibility of a new treaty to better secure the foundations of the common currency".