The financial and economic crisis that has swamped the world points to an urgent need to reform the international financial system to meet the needs of a changed world.

The World Bank and the International Monetary Fund (Bretton Woods Institutions), the core of the world financial system, were designed for a world that no longer exists. In the dying days of World War 2, in a world still ruled by a few colonial powers with their many far-flung colonies, these few powerful nations could dictate the shape of the institutions that would bring ‘order’ to the world.

But that world is no more. The colonial powers have largely lost their colonies, but not their hunger to rule. Those possessions have long since claimed their independence. The colour of the world map has changed dramatically since 1945. Yet still we act as if the few – whether that is the G7 or the G8 or the G20 – is entitled to speak for the rest.

The radical changes of the past 60 years have opened into the 21^st century in which the welfare of both poor and rich, developed and developing nations is interdependent. The rapid contagion of the recent financial collapse of the North that spread to every country shows beyond doubt that ours is an increasingly integrated world economy.

We are not simply speaking high finance. It is a matter of life and death for so many brothers and sisters. The financial crisis is killing people. To stop the bleeding, we need short term measures to stabilise the current situation that has flung millions out of work and into poverty.

But long term measures are needed to replace the old financial architecture that is now unsafe. It is imperative that the views, the needs and the perspective of all countries are taken into account in the massive task of reshaping. More effective regulation of financial markets and control of corporate greed are needed. But also needed is a redesigned structure for the international financial institutions that have so much power to affect, for better or for worse, countries, the domestic policies of governments and the hopes of people in the developing countries.

The global crisis offers us a kairos moment, a moment of grace and possibility. We have a once-in-a-century chance to change the balance of power in our world. The UN, composed of 192 nations – the G192- must be the place where the challenging task of rebuilding a more equal and just world is carried out.

June 1-3 will see the United Nations Conference on the World Financial and Economic Crisis and Its Impact on Development has taken place this summer. In the next week I will offer another post related to the discussion of this conference.

For our part the U.S. administration will argue for four things:

• A robust global stimulus package that will commit all countries to financially shield the world economy from a dragged out global recession.
• Expanded regulations of financial institutions and other rules regarding the flow of capital
• A robust readjustment of the International Monetary Fund  to aid it in its mission of helping the developing world. This would triple the financial resources to the fund and offer emerging powers a stronger participation with the IMF.
• A concrete pledge against protectionism.

Certainly I will not argue the issues of global economic policies here. The onus will be on the people siting at the table in London to do this monumental task of redesigning the future of capitalism. There has already been a call to have a “group of experts” exist which can assess the efforts that may come out of this talk and I for one believe this is very appropriate since in many ways these national economies are walking through terra incognita and whatever comes out of these talks ought to be continuously evaluated and tweaked in order to adjust for unforeseen development.

My contribution with this post  is to do two things. First I would like to raise the moral position from our Catholic social tradition regarding the unsustainable global economy. Catholic social teaching has warned us against the unregulated free market time and time again as an instrument that is incapable of serving the global human community. This is because its narrow focus on quick short term profitability and the limited measurement of GDP produces an unsustainable system that does not assess long term repercussions.

But it is unfortunate that on these new conditions of society a system has been constructed which considers profit as the key motive for economic progress, competition as the supreme law of economics, and private ownership of the means of production as an absolute right that has no limits and carries no corresponding social obligation. This unchecked liberalism leads to dictatorship rightly denounced by Pius XI as producing “the international imperialism of money”. One cannot condemn such abuses too strongly by solemnly recalling once again that the economy is at the service of man. – Populorum Progression #26 (Pope Paul VI, 1967)

When the United States Catholic Conference of Bishops offered the document “Economic Justice for All” they offered an economic vision for collaborative capitalism that at the time (1986) could have help steer the American economy in a more sustainable global direction.

Completing the unfinished business of the American experiment will call for new forms of cooperation and partnership among those whose daily work is the source of the prosperity and justice of the nation. The United States prides itself on both its competitive sense of initiative and its spirit of teamwork. Today a greater spirit of partnership and teamwork is needed; competition alone will not do the job. It has too many negative consequences for family life, the economically vulnerable, and the environment. Only a renewed commitment by all to the common good can deal creatively with the realities of international interdependence and economic dislocations in the domestic economy. The virtues of good citizenship require a lively sense of participation in the commonwealth and of having obligations as well as rights within it. The nation’s economic health depends on strengthening these virtues among all its people, and on the development of institutional arrangements supportive of these virtues. #296

This vision unfortunately went undeveloped and today we are now living with the crisis that this moral vision tried to avoid.

The second purpose for this post is to offer the general public resources and a forum that could help move the community ahead in assessing and, at some level, to participate in a constructive exchange regarding this economic crisis. This is not to time to offer punitive legislation to punish those we feel are culpable for this situation. There is certainly enough blame to spread around. This is also not the time to produce unnecessary fear and promote isolationism. The solution, whatever it may be, exist with the global economy. To argue against some unqualified fear of either socialism or fascism and to prop up a retrenchment into isolated nationalism will destabilize of global society in such a way that we would be led down the same path that economic isolationist policies led to prior to World War II.

I offer the following resources for your consideration:

• The Carnegie Endowment for Peace is a good think tank monitoring the G-20 here is a link to that site.
• The Brookings Institute offers a recommendation for global policy coordination. Here is a link to that site.
• The Financial Times offers an interesting dialogue on the future of capitalism. I offer this link below for further study and engagement of this critical issue of our times. In depth coverage of The Future of Capitalism from the Financial Times.

www.youtube.com/watch?v=nVIewK9n6qw