To gain a better appreciation of Caritas in veritate, for instance, Cowen should read some of its predecessors that provide a lot of the specificity he is after. For instance, the social teaching embodied in the Compendium was quite accurate in describing the dynamics of separating the financial economy from the real economy and the dangers it posed well before the subprime crisis occurred. The Compendium even manages to prefigure global economic economic imbalances:
369. A financial economy that is an end unto itself is destined to contradict its goals, since it is no longer in touch with its roots and has lost sight of its constitutive purpose. In other words, it has abandoned its original and essential role of serving the real economy and, ultimately, of contributing to the development of people and the human community. In light of the extreme imbalance that characterizes the international financial system, the overall picture appears more disconcerting still: the processes of deregulation of financial markets and innovation tend to be consolidated only in certain parts of the world. This is a source of serious ethical concern, since the countries excluded from these processes do not enjoy the benefits brought about but are still exposed to the eventual negative consequences that financial instability can cause for their real economic systems, above all if they are weak or suffering from delayed development.[760]What economics blogs like Cowen's talk about nowadays were already identified by the Church in 2004: the rise of the financial economy; the disconcerting pursuit of deregulation and innovation of financial markets in the developed world having a blowback potential on the developing world when the system fails; spiralling notional amounts of derivatives products; and the search for institutionalizing mechanisms to foster systemic stability. To be fair to the Roman Catholic Church, can the doubting Tyler cite another religion that has devoted significant attention to such matters, let alone provided meaningful social teaching in thinking about them?
The sudden acceleration of these processes, such as the enormous increase in the value of the administrative portfolios of financial institutions and the rapid proliferation of new and sophisticated financial instruments, makes it more urgent than ever to find institutional solutions capable of effectively fostering the stability of the system without reducing its potential and efficiency. It is therefore indispensable to introduce a normative and regulatory framework that will protect the stability of the system in all its intricate expressions, foster competition among intermediaries and ensure the greatest transparency to the benefit of investors.
As some would say, it is a whale of a document in its insight. It is better to level criticisms from a position of knowledge than from ignorance about widely disseminated documents alike the Compendium.
