Financial and economic decisions are ethical decisions that can be virtuous or sinful, a new Vatican document said.
“There can be no area of human action that legitimately claims to be either outside of or impermeable to ethical principles based on liberty, truth, justice and solidarity,” said the document from the Congregation for the Doctrine of the Faith.
The text, “Considerations for an Ethical Discernment Regarding Some Aspects of the Present Economic-Financial System,” was approved by Pope Francis and released on May 17 at a Vatican news conference with Archbishop Luis Ladaria, congregation prefect, and Cardinal Peter Turkson, prefect of the Dicastery for Promoting Integral Human Development.
Based on Catholic social teaching and referring frequently to the teaching of St John Paul II, Pope Benedict XVI and Pope Francis, the document insisted that every economic activity has a moral and ethical dimension.
“At stake is the authentic well-being of a majority of the men and women of our planet who are at risk of being ‘excluded and marginalised’ from development and true well-being while a minority, indifferent to the condition of the majority, exploits and reserves for itself substantial resources and wealth,” the document said.
The size and complexity of the global economy, it said, may lead most people to think there is nothing they can do to promote an economy of solidarity and contribute to the wellbeing of everyone in the world, but every financial choice a person makes – especially if they act with others – can make a difference, it said.
“For instance, the markets live thanks to the supply and demand of goods,” it said. “It becomes therefore quite evident how important a critical and responsible exercise of consumption and savings actually is.”
Even something as simple as shopping can be important, the document said. Consumers should avoid products manufactured in conditions “in which the violation of the most elementary human rights is normal.” They can avoid doing business with companies “whose ethics in fact do not know any interest other than that of the profit of their shareholders at any cost.”
Being ethical, it said, also can mean preferring to put one’s savings in investments that have been certified as socially responsible and they can join others in shareholder actions meant to promote more ethical behavior by the companies in which they invest.
The document takes aim at greed, not capitalism. In fact, it praises economic systems and markets that respect human dignity and promote human freedom, creativity, production, responsibility, work and solidarity.
A healthy economy, it said, promotes all of those goods and realizes that the measure of progress is not how much money people have in the bank, but how many people are helped to live better lives.
One key to judging how well the economy works is how many decent jobs are created, the document said. But too often selfishness gets the upper hand, the rich speculate and gamble, accumulating more money but not creating more jobs.
“No profit is in fact legitimate when it falls short of the objective of the integral promotion of the human person, the universal destination of goods and the preferential option for the poor,” the document said.
“It is especially necessary to provide an ethical reflection on certain aspects of financial transactions which, when operating without the necessary anthropological and moral foundations, have not only produced manifest abuses and injustice, but also demonstrated a capacity to create systemic and worldwide economic crisis,” the document said.
The global financial crisis that began in 2007, it said, created an opportunity to review mechanisms of the economy and finance and come up with corrective regulations, but very little has been done.
In addition to the immorality of usury and tax evasion, the document signaled out other ethically problematic practices or practices that require more regulation to ensure ethical behavior: for example, executive bonus incentives based only on short-term profit; the operation of “offshore” financial bases that can facilitate tax evasion and the outflow of capital from developing countries; “the creation of stocks of credit,” like subprime mortgages, and credit default swaps; and the growth of the “shadow banking system.”