University of Notre Dame (2018)

30th October 2018

On Free Markets, Government, and Human Action

America has been a shining example of the rewards of a liberal democracy – a gateway to potential – accessible to anyone with talent, focus and a strong work ethic.  

Its effect on Democracy is the common thread that runs across the ‘power states’ of the 21st Century, and almost all of the centuries before it.  

The world has just five communist countries.  Communism has proven unpopular, unwieldy and unworkable and yet, it is being looked to again in some quarters. 

Politics don’t define people, but the worst seek to confine us.  

Democracy works to erode poverty and look after those who need it, with an even hand, without being prescriptive about how we live our lives.  It has been doing so for centuries.

That shared ancient history of governance is the foundation for the majority of today’s strongest world economies. 

The future brings the biggest challenges of our lifetime.  The Fourth Industrial Revolution has to be an opportunity to be exploited with intelligence and care.  We have a tiger by the tail and its sphere of influence will be fully immersive.  

My paper looks at the journey across the rise of ancient democracies and their transformation into those we live in today, the threat of populism, the contribution, inspiration and impact of faith, and why we need to keep our faith – in our ability to adapt and survive – across markets, politics, technology and people.  

Ladies and Gentlemen,

Firstly I would like to thank all of you for the opportunity to participate in this convention. My contribution to the discussion comes from my own experience and in particular my time as a candidate to the Italian Senato on the last election.

We, as Catholics, live, from the day we are born, in a dilemma: To belong to Christ or our Mammon. To following the Good Shepherd or our ambitions. 

One thing is evident from the beginning; our experience as Christians does not depend on outside influences, although the political landscape, in whatever shape, has always been there for those of faith to navigate, explore, or even use as a shield.  Our way of life was born during the Roman Empire, and we flourished in the MedioEvo (rectius during the Repubblica Christi, the real name of that period). We  created the Renaissance and the Enlightenment.  Our ancestors were born in the mightiest of all  despotic, dictatorial regimes – the Roman Empire – and grew stronger during the Repubblica Christi.  We are resilient and steadfast, surviving and burgeoning through democracies and communist regimes. 

So whatever the type of State structure, it cannot touch our relationship with Christ or the Catholic Church. It can obstruct, it can apply physical or moral force, but our hearts belong to Christ.  Faith and stoicism got early Catholics through.  Faith survived, whether it was alive and in refuge in the catacombs in Roman times, or remaining true to our beliefs in the face of communism in East Countries. 

However, the political climate does not determine our belonging – that is a discussion between us and God, no middleman.

It is evident that, in a modern liberal democracy, we live better. With all its contradictions and imperfections, the best of the modern liberal democracy that the USA represents is a lighthouse for everyone.  Its political system was built to foster peace and support hope and aspiration.  Its structure and society was the foundation upon which was built a land of possibility.  

In around seven decades of recent American history, largely peaceful, we have seen the reduction of world poverty. In 2018 only 11% of the world population lives in extreme poverty (with less than 2 dollars a day as income), against 90% at the beginning of the century.

Life expectancy has been increased. Today the minimum average life expectancy is over 58 years; the only exception is the Central African Republic.  Child mortality has been reducing too, it’s now 5% against 60% at the beginning of the century. 

Whatever else is going on in the world, living conditions are improving.

I am a Conservative. By that I mean I am a member of the Conservatives Party.  I see the State as the rule of order.  It’s the regulations and rules by which everyone has to be given the same opportunities.  Of course the outcomes depend on the abilities of the individual.

The growth of populism is a threat to democracy.

That threat is due to the increase of independent authorities that are largely outside the influence of democratic votes. The authority for energy, for telecommunication etc are all bodies beyond the control of democratic votes and they have created a perception that voters can no longer step up as the protagonists of the democratic process. 

We have an important challenge in front of us now – how to engage with populism and at the same time ensure minority communities are secure and the democratic system is upheld.

In my opinion, far and away the shining example of democracy is the USA model.  A representative democracy where groups within society have representation through the elective members.  Any form of direct democracy exposes itself to the risk of populism – and a majority that can create division and suffocate minorities.

There was never a time when the challenge for anyone of faith hasn’t been to follow the common human desire to be a part of the Creation.  A pure capitalist world is fair, offers rewards for those who work hard and looks after its dependants – its values are not so far from those encompassed within the story of the Creation.

The Bank system was created by the Church – the first system to support business and trade. The oldest bank in the world Monte Dei Paschi di Siena was founded 1472 as the “mount of piety”. 

The contribution of Christianity to a free trade world is immense. San Francesco, the pauper of Assisi, was the son of a Trader and supported free trade.   It is thanks to his support and interpretation of the Gospel that the system worked and was trusted.

It was Saint Francesco who interpreted the following passages of the old and new testament as an endorsement of the legitimacy of interest charges. 

Deuteronomy 23:19-20 ESV: “You shall not charge interest on loans to your brother, interest on money, interest on food, interest on anything that is lent for interest. You may charge a foreigner interest, but you may not charge your brother interest, that the Lord your God may bless you in all that you undertake in the land that you are entering to take possession of it.”

Luke 6:34-38 ESV:  And if you lend to those from whom you expect to receive, what credit is that to you? Even sinners lend to sinners, to get back the same amount. But love your enemies, and do good, and lend, expecting nothing in return, and your reward will be great, and you will be sons of the Highest, for he is kind to the ungrateful and the evil. Be merciful, even as your Father is merciful. “Judge not, and you will not be judged; condemn not, and you will not be condemned; forgive, and you will be forgiven; give, and it will be given to you. Good measure pressed down, shaken together, running over, will be put into your lap. For with the measure you use it will be measured back to you.”

The result: you can lend money but at a reasonable interest. In that way, the pauper of Assisi opened the door to the modern institution of Banking. In Catholic countries, the division between legitimate interest and illegitimate interests still exists even today, and the crime of usury (lending money at unreasonable levels of interest)  is in place too.

The capitalist system with all its shades of light and dark, is still the most efficient system to allocate goods and reduce poverty in the world. However, it can work only if we have a democratic representative system that can control it and avoid its transformation in monopolies.  

As Christians, we have the obligation to promote capitalism for wellbeing; that means for the wellbeing of the people.  Capitalism, as I’ve said before, makes sure that everyone has the same opportunities – according to the Talents parable, but the outcome depends on the individual’s effort, ingenuity and hard work.

So the background to today’s capitalist cultures is a long and venerable one.  We should be proud of the past, and positive about the future:  here’s why.

We look to today, and to the future, and we find that …. everything changes, and yet, nothing really changes.

Governments come and go, markets are made, merge and fracture and throughout it all human nature remains a constant; switching between open-handed generosity and close-fisted greed with a middle ground of indifference.  Catholic values, respect and an appreciation of what works best for everyone has to be our goal.

This is an interesting time.  Every decade of human history is defined by invention and ingenuity.  Sometimes that invention and ingenuity has found an outlet in treachery rather than technology.

Humans are capable of great things.  Philanthropy, exploration, world-changing discovery, medical breakthroughs, humanitarian endeavour of the highest order – the flip-side of course is cruelty, neglect, selfishness and hatred.  Whether it’s a time for hiding in catacombs or being out there in the world and building a better banking system, there is always the opportunity to be the best we can be – for ourselves and for others.  Wherever we are on the scale, we have to protect the right to have choices.

So, whether the glass is half full, or it is half empty. I, for one, celebrate the fact that there is a glass – the glass is hope.

Into that glass goes the invention of the wheel, the first man brave enough to make fire his servant, Roman road-building and plumbing, the combustion engine, the discovery of penicillin, man learning to fly, landing on the moon and the coming of age of artificial intelligence. 

All of these things have helped advance the human race.  But there’s been a flip-side here too.  The roads, the combustion engine, powered flight and the wheel have taken a toll on our planet; better medicine and sanitary plumbing too has placed a different complexion on how population growth has been controlled.  

And with AI, just how relevant will humans be?  The best people in business are those who work themselves out of a job.  AI is capable and flexible enough to challenge the employment models we’ve lived with for centuries. It is also, by its very nature, capable of learning.  How long does it take before those artificial brains equipped with a vast capacity for intelligence learn enough to know they want more, and that being constrained to serve perhaps is not enough?  Are we in a position where we’re about to self-emolliate*?

What will the style of government look like within countries with workforces increasingly made up by machines, how might the balances of influence change within the electorate? 

Then there’s the divide between the ‘haves’ and the ‘have nots’.  This applies across people, countries, economies.  If you have a weak economy and you earn 50 dollars a month, then maybe you’re not doing so badly.  If you have a strong economy and you earn 1,000 dollars a month, then in real terms you may be much worse off.  

Some of us are in a free market or we’re negotiating in, out or trying to shape a different one with different nations’ governments disagreeing and those within each nation’s parliaments point-scoring for public popularity.

We are besieged with problems; all of them are of our own making.  Seas of plastic, climate change, population growth, world leaders squaring up to each other in the most dangerous of stand-offs, a fundamental change to the way of doing things and the world of work – and the rise of populism.  

There are some weak politicians who fiddle while Rome burns and others who simply bury their heads, and there are the genuine ones, the ones who must fight the hardest.  

And yet – that glass is still there.

So, I would say to you, whatever is broken, humans have a natural aptitude as fixers – so yes, things can be fixed.  Where we fall down is with the posturing and the power plays – who takes responsibility, who leads and who gets the kudos for delivering the solution.  The truth is, none of those matter, what matters is we work together, and we get it done.  

We can learn much from the past.  In fact that is how futurists model likely outcomes, by looking closely at what’s gone before and the prevailing features that surround that change.

In the face of a common enemy, any species, tribe or pack will stick together, face forward and fight.

There’s never been a better time to fill the glass.

In faith

Dr Maurizio Bragagni, CEO Tratos UK.