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Michael Yore: Can we adjust our moral compass so economics truly enhances wellbeing for everyone?

Earth Care People Care Fair Share Melbourne World Environment Day 2011. Takver. flickr cc.

A Response to Catholic Bishops’ Social Justice Statement Everyone’s Business: developing an Inclusive and Sustainable Economy (2017-18)

Kristy was a mother of four small children who ended up in high-rise public housing after fleeing her abusive partner. The micro-finance scheme operated by the welfare organisation near her block of flats assisted her in a dignified way to purchase the basic household items which helped to create the semblance of a family home, albeit modest.

But, of greater importance, access to free no-interest loans liberated her from the shame of “not being able to provide for my children”. She regained some dignity after the traumatic experiences of her past.

Kristy still had to manoeuver her way through an obstructive Centrelink system, still had to sweat over unpaid bills, visit the local food bank, and struggle to clothe herself and her four children.

She and her children help make up the almost three million Australians who are living in poverty. They are the human face of the marginalised, whose lives of exclusion provide the Bishops, in their 2017-18 Social Justice Statement, with their starting point.

The many faces of disadvantage

Everyone’s Business: Developing an Inclusive & Sustainable Economy, calls out here in Australia what Pope Francis condemns as an economy of exclusion. Quite rightly, the Bishops’ statement not only shines the spotlight on those groups experiencing glaring suffering and poverty – the appalling disadvantage and struggle experienced by Aboriginal and Torres Strait Islander communities (which the Bishops call ‘a national shame’), the homeless poor, those exploited in the workplace, especially the young, the unemployed, casually employed, and under-employed.

They also point out that the malfunctions of the economic system affect a much wider group of Australians than this. Wage stagnation, rising power prices, lack of adequate corporate regulation, corporate tax avoidance, and gross ethical failures in the banking sector – all examples of market failure – must be seen within the wide context of strong Gross Domestic Product growth producing a high-wealth society but in which the benefits are spread so unevenly that disparity between the wealthiest and the poorest becomes starker than ever year by year.

Using the human face of poverty and hardship as their starting point, the Bishops call for a redefinition of what constitutes progress and development, based around the twin imperatives of inclusion and sustainability. They are proposing that the present economic system is unfit for purpose, that its malfunctions are so significant that it is, in effect, a flawed economic model which leads directly to injustice.

They do not propose an alternative economic model, but they do propose clearly articulated moral principles to guide the development of an inclusive and sustainable way of managing the economy to benefit all, not just the privileged few.

Neoliberal economics has failed us

Kristy would point to her four little ones and say, “It’s all so wrong”, and indeed it is. An ever-growing number of economists today are echoing Kirsty, criticising unchecked market fundamentalism – neoliberal economics – as, at best, ill-suited for the twenty-first century, at worst morally empty, rapacious, and destructive of social capital.

American economist, Kate Raworth, in her recent innovative work Doughnut Economics: Seven Ways to Think Like a 21st Century Economist, puts it simply: ‘Everybody’s saying it: we need a new economic story, a narrative of our shared economic future that is fit for the twenty first century’.

As quoted by Clifford Longley in Just money: How Catholic Social Teaching can redeem capitalism, the Governor of the Bank of England, Mark Carney, at a 2014 conference in London on Inclusive Capitalism, Creating a Sense of the Systemic, expressed his personal disgust with the excesses of neo-liberalism, identifying it as a direct contributor to the 2007/08 global financial crisis:

My core point is that … unchecked market fundamentalism can devour the social capital essential for the long-term dynamism of capitalism itself … Market fundamentalism – in the form of light touch regulation, the belief that bubbles cannot be identified and that markets always clear – contributed directly to the financial crisis and the associated erosion of social capital.

In their call to put human flourishing at the centre of economic discourse, the Bishops’ Social Justice Statement rejects one of the most fundamental principles of neoliberalism, namely that the denial that moral considerations have any place in economics.

This is expressed by businesses when they pursue the maximisation of shareholder value to the exclusion of the common good, as well as by government policies, when, in the interests of debt reduction and a return to surplus, they lay aside moral obligations to citizens, such as allowing the Newstart Allowance and the Youth Allowance to fall well below the poverty line, or abolishing penalty rates.

Promoting an economy that is inclusive and sustainable

Building on a succession of social teaching by the popes but, in particular, using the powerful prescriptions contained in Pope Francis’s encyclical Laudato Si’ for an economy inclusive of all, especially of the poorest amongst us, and ecologically sustainable, the Social Justice Statement proposes a different goal for the economy:

Developing a new economic model, with a balance between market, state, and civil society, is not revolutionary. It simply outlines a vision of a middle way between exclusive state control on the one hand and an unrestricted rule by the market on the other. This is the vision that Catholic social teaching has been working towards for well over a century. Building an inclusive economy is really about putting people at the centre (p15).

Perhaps it’s ‘not revolutionary’ as the Bishops say, but it is radical, that is, a root and branch reshaping of the goals of the economy and the principles that should underpin its operation. The Bishops propose five criticisms of the current economic system and some key principles which they describe as ‘pointers on our moral compass’. These are strong and clear statements meant to shape a new economic paradigm.

The challenge is to find ways of inserting these ‘pointers’ into mainstream political and business discourse, so that a new economic narrative can include people like Kirsty and her children.

Michael Yore has held senior leadership positions in the Catholic Social Services sector for more than thirty years, including over twenty as Chief Executive of Good Shepherd Youth & Family Service. He has qualifications in social work and theology, and has recently worked as a consultant in the social services and education sectors, including project work for Catholic Social Services Victoria and its member organisations. 
Posted by on Oct 3 2017. Filed under Book Reviews, Church and Social Justice, Economic issues, Feature, Recent articles by SPC members. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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