Pope on Globalization, Dependencia & Easterly-ism

I've previously featured some of Pope Benedict XVI's reflections on globalization, and here is more along those lines. The holiday season usually includes a visit from me to the highly popular Vatican website, and this year is no exception. A few days back, the Vatican site posted the message of the Pope for the celebration of the World Day of Peace, 1 January 2009. Aptly enough for this blog, it concerns "Fighting Poverty to Build Peace." To say that I am very impressed by the Pope's apparent familiarity with the development literature would be an understatement. Although there are the usual church teachings rehashed here, he actually makes a very good summary of the state of the development literature. Benedict XVI starts his discussion by considering the relationship between globalization and poverty. Suffice to say, I agree that an interdisciplinary toolbox is required to analyze this problematique:

In this context, fighting poverty requires attentive consideration of the complex phenomenon of globalization. This is important from a methodological standpoint, because it suggests drawing upon the fruits of economic and sociological research into the many different aspects of poverty. Yet the reference to globalization should also alert us to the spiritual and moral implications of the question, urging us, in our dealings with the poor, to set out from the clear recognition that we all share in a single divine plan: we are called to form one family in which all – individuals, peoples and nations – model their behaviour according to the principles of fraternity and responsibility.

This perspective requires an understanding of poverty that is wide-ranging and well articulated. If it were a question of material poverty alone, then the social sciences, which enable us to measure phenomena on the basis of mainly quantitative data, would be sufficient to illustrate its principal characteristics. Yet we know that other, non-material forms of poverty exist which are not the direct and automatic consequence of material deprivation. For example, in advanced wealthy societies, there is evidence of marginalization, as well as affective, moral and spiritual poverty, seen in people whose interior lives are disoriented and who experience various forms of malaise despite their economic prosperity.

Learned man that he is, the Pope is sharing his knowledge of the phenomenon known as "social exclusion": aside from sheer material want, being unable to participate in society with dignity is another strong penalty inflicted by poverty (see Amartya Sen's backgrounder). He then continues to discuss globalization thusly:

One of the most important ways of building peace is through a form of globalization directed towards the interests of the whole human family. In order to govern globalization, however, there needs to be a strong sense of global solidarity between rich and poor countries, as well as within individual countries, including affluent ones. A “common code of ethics” is also needed, consisting of norms based not upon mere consensus, but rooted in the natural law inscribed by the Creator on the conscience of every human being (cf. Rom 2:14-15). Does not every one of us sense deep within his or her conscience a call to make a personal contribution to the common good and to peace in society? Globalization eliminates certain barriers, but is still able to build new ones; it brings peoples together, but spatial and temporal proximity does not of itself create the conditions for true communion and authentic peace. Effective means to redress the marginalization of the world's poor through globalization will only be found if people everywhere feel personally outraged by the injustices in the world and by the concomitant violations of human rights.

Now, to the juxtaposition posed in the title: the Pope proceeds to discuss poverty and globalization in line with doctrinal opposites. First, let us begin with his variation on dependency theory (dependencia) which I am absolutely certain he's referring to, albeit shorn of its Marxist undertones for obvious reasons. It is also here where he touches on the role of finance and the current financial crisis:

In the field of international commerce and finance, there are processes at work today which permit a positive integration of economies, leading to an overall improvement in conditions, but there are also processes tending in the opposite direction, dividing and marginalizing peoples, and creating dangerous situations that can erupt into wars and conflicts. Since the Second World War, international trade in goods and services has grown extraordinarily fast, with a momentum unprecedented in history. Much of this global trade has involved countries that were industrialized early, with the significant addition of many newly-emerging countries which have now entered onto the world stage. Yet there are other low-income countries which are still seriously marginalized in terms of trade. Their growth has been negatively influenced by the rapid decline, seen in recent decades, in the prices of commodities, which constitute practically the whole of their exports. In these countries, which are mostly in Africa, dependence on the exportation of commodities continues to constitute a potent risk factor. Here I should like to renew an appeal for all countries to be given equal opportunities of access to the world market, without exclusion or marginalization.

A similar reflection may be made in the area of finance, which is a key aspect of the phenomenon of globalization, owing to the development of technology and policies of liberalization in the flow of capital between countries. Objectively, the most important function of finance is to sustain the possibility of long-term investment and hence of development. Today this appears extremely fragile: it is experiencing the negative repercussions of a system of financial dealings – both national and global – based upon very short-term thinking, which aims at increasing the value of financial operations and concentrates on the technical management of various forms of risk. The recent crisis demonstrates how financial activity can at times be completely turned in on itself, lacking any long-term consideration of the common good. This lowering of the objectives of global finance to the very short term reduces its capacity to function as a bridge between the present and the future, and as a stimulus to the creation of new opportunities for production and for work in the long term. Finance limited in this way to the short and very short term becomes dangerous for everyone, even for those who benefit when the markets perform well.

Again, his statement that finance without reference to the long-term common good turning upon itself is insightful. Globophobes take note: my notion that there is nothing inherently wrong with globalization appears to have papal purchase. Trade and finance have their place in the, ah, larger scheme of things (even if they can be used to widely varying ends). After referring to dependencia, however, he launches into a William Easterly-esque trope familiar to readers of The Elusive Quest for Growth: people respond to incentives. He also adds some commentary germane to an Easterly-esque brand of aid skepticism:

All of this would indicate that the fight against poverty requires cooperation both on the economic level and on the legal level, so as to allow the international community, and especially poorer countries, to identify and implement coordinated strategies to deal with the problems discussed above, thereby providing an effective legal framework for the economy. Incentives are needed for establishing efficient participatory institutions, and support is needed in fighting crime and fostering a culture of legality. On the other hand, it cannot be denied that policies which place too much emphasis on assistance underlie many of the failures in providing aid to poor countries. Investing in the formation of people and developing a specific and well-integrated culture of enterprise would seem at present to be the right approach in the medium and long term.

If economic activities require a favourable context in order to develop, this must not distract attention from the need to generate revenue. While it has been rightly emphasized that increasing per capita income cannot be the ultimate goal of political and economic activity, it is still an important means of attaining the objective of the fight against hunger and absolute poverty. Hence, the illusion that a policy of mere redistribution of existing wealth can definitively resolve the problem must be set aside. In a modern economy, the value of assets is utterly dependent on the capacity to generate revenue in the present and the future. Wealth creation therefore becomes an inescapable duty, which must be kept in mind if the fight against material poverty is to be effective in the long term.

To say that I am amazed by the Pope's broad social science knowledge would be an understatement: he is very widely-read. Going through the passage above, you also get some of the capabilities approach-style reasoning that being and doing is more important than merely having. He also goes on to note the social dimensions of entrepreneurship. Not to toot my horn too much, but I've performed work along these lines integrating social entrepreneurship and the capabilities approach. If you have the scratch, I of course think it's worth a read. The IPE Zone proffers an interdisciplinary approach to global problems; it's humbling to know that a religious authority with the stature of Benedict XVI is thinking along similar lines.