Palpable shock met Tuesday’s news of the Pope’s unequivocal and outspoken intervention in the debate on climate change and global inequality. The stir caused by his latest encyclical could partly be due to generally low expectations of the Catholic Church following years of relentless, negative scandal. But we shouldn’t be surprised. The world’s major religions all have economic teachings that apply to how we treat the planet and each other, and which often starkly contradict orthodox economic models.
Modern economics views itself as value free, but that wasn’t always the case and the major faiths all view economic prosperity through a moral lens. If that makes business leaders or economists squirm, it’s worth remembering that the grandfather of market economics, Adam Smith, wrote about The Theory of Moral Sentiments. To him, the economy was rooted in an explicitly moral universe. Whether we’re aware of it or not, and regardless of the fulminations of anti-environmental, extreme, right wing Republican Christians in the US, the economic teachings and moral frameworks of the great faiths profoundly shape how we view the path to prosperity, sometimes in surprising ways.
On this, the Catholic Church has form. Small is Beautiful by EF Schumacher is probably the most influential text on green economics ever written. As a collection of essays by a former industrial economist, who for two decades after the second world war was chief economic adviser to the National Coal Board, it did more than anything else to reimagine economics as servant to a convivial society living in balance with the environment.
But its most enduring idea from which the book’s title is derived, about the importance of scale, was taken straight from a papal encyclical. Schumacher took subsidiarity, the principle that things are always best done at the lowest practical level, from an encyclical of Pope Pius XII issued in 1931 in the wake of the economic catastrophe of the Great Depression. It is an injustice and disturbance of right order to push power up rather than down, it said, insisting that nations which do the latter will be happier and more prosperous. Today local democracy, decentralised food and energy systems and local participatory budgeting are arguably better paths for progress.
Following the Pope’s encyclical this week on the need for a more equal global economy that respects planetary boundaries, high-profile church figures from across the spectrum of faiths echoed his concerns.
The Christian faith has an honourable tradition of criticising capitalism and the excesses of the market, and of insisting on different ways of doing things, not least since the crash of 2007–08. Famously, medieval Christianity placed a prohibition on usury, the charging of punitive interest on loans. That was only relaxed with the emergence of an aggressive mercantile middle class. Islamic banking today, at least notionally, still operates without the charging of formal interest. There is also a debate in green economics about the degree to which interest-bearing loans are hard–wired to an environmentally destructive growth imperative.
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