Church economics

One can easily say that the Mondragon Co-operative Corporation is a success story. The results achieved in financial, in economic and in human resources development are astounding. Guy Dauncey, in his book After the Crash quotes the founder's motivations: "Salvation is achieved through community action, and involves the development of the capacity to think, to invent and to serve. I advocate the thesis (of transforming the world) by doing real work, within what is possible". His inspiration was taken from Pope Leo XIII's encyclical, Rerum Novarum.

The person quoted is Fr José Maria Arizmendiarrietta who, in 1943, was appointed parish priest of a mountain district of Guipuzcoa. This place, within the Basque country, was poor, dilapidated, without natural resources and cut off from its Castillian and Catalan neighbours through the incomprehensible Basque language. General Franco purposely left it in economic wilderness because it sided against him during the Spanish Civil War. One has to say that few people ever thought that that place could change for the better.

That indomitable parish priest thought differently. He had realised that no foreseeable help would be coming to the extremely poor people, who had no resources, unless somebody thought long term. His first project was to invest in the people themselves; he established a technical training college. To be effective, skills have to be deployed. Perceiving that in Spain there was a high demand for cookers and refrigerators, he went to a local bank to borrow money to initiate a small co-operative, Ulgor, to produce them.

In his book The Ethical Investor, Russell Sparkes comments how Ulgor's small beginnings grew to become the Mondragon Co-operative Corporation. What are remarkably are not the corporation's results today but the routes taken to reach this stage.

Sparkes provides the salient features of this phenomenal progress: endorsing community action, developing workers' capacity to think, identifying products to produce, targeting a market, knowing your competitors, helping workers to buy shares and setting up of a local credit union.

The application of Rerum Novarum principles were the first stepping-stones - the parish priest put the encyclical's message into practice, positively tackling each problem as it arose, leading him to new pastures that made the country and people better off.

This was not a one-off for the Church in the economic field. Before Adam Smith consolidated all past theories and published his voluminous book An Enquiry into the Nature and Causes of the Wealth of Nations, many Churchmen had investigated economic situations.

St Thomas Aquinas, perhaps the best known, tackled issues dealing with interest, just price, money and property. St Bernardine, anticipating the modern theory of value and utility, argued that value is determined by three elements: intrinsic, scarcity and desirability. He also argued that price is determined by market valuation and condemned monopolistic collaring of the market.

Following in his footsteps was St Anthony of Florence. He condemned both employers who paid their workers in clipped money and workers who spoilt materials when he was theorising on the just price issue. Of greater interest is Nicholas Oresme, Bishop of Lisieux, who wrote De Moneta which anticipated, in many ways, Keynes' monetary theoretical framework.

One may remark that these famous Churchmen belonged to the era of Scholasticism and before Mercantilism introduced changes in the way trade was undertaken. Since then, the economic environment has changed radically. The core subject matter has branched out into various specialisations and the Church has more generally been concerned with social rather than economic teaching. This does not mean that it does not tackle problems bordering on economic matters.

Quite recently, the American bishops issued a pastoral letter, Economic Justice for all: Catholic Social Teaching and the US Economy. In Prophetic Visions and Economic Realities, Charles R. Strain, who edited a substantial number of contributions to this pastoral letter, illustrates different ways of tackling economic problems. The bishops and the different contributors did not just point out human suffering and how human dignity has been debased, expecting the authorities to take remedial actions without going against Christian values, but invoked social justice in the creation and distribution of national wealth.

Rarely do we come across a similar pastoral letter in Malta. Political power has succeeded in removing the Church from the centre stage in economic matters and has driven it to the sacristy, limiting its concern solely to people's religious and social needs. There is no need to point out that in the latter area the Church in Malta has made an immense contribution: schools, orphanages, institutions that look after the old, sick, handicapped. Furthermore, through Caritas, the Church's arms reach out to all people who are on the fringes of society.

It is debatable how effective the local Church is in looking after people's religious needs and in inspiring them to attach greater importance to religious practices in everyday life. Apparently, more people are being alienated from its teaching for a number of reasons, as can be seen from the consistent decline in church attendance. Unless the Church authorities are not careful, the people will only use church services in cases of baptism, wedding and funeral as happens in many countries abroad.

This does not mean that the local Church is lacking in activities and initiatives. The problem is to what extent they are really achieving results. For example, the Church introduced a monthly diocesan magazine. The faithful were told that this magazine would cut across parishes, and that it would take the format of the Italian Famiglia Cristiana. What parishioners received instead was an advertising-crammed magazine with few religious messages lost in the most colourful, and certainly, expensive adverts.

It is presumed that skilful public relations people are at work and have come up with a profitable venture. It is not certain how much of this revenue ends up in the Church's coffers. The perception, however, is that this magazine is a money-creating medium.

There is nothing wrong in the Church procuring a cashflow for itself. In today's world financial resources are extremely needed. But the Church's mission in the world is not to care unduly for money but more the good uses to which this money can be usefully employed. At least it has proved that it can generate substantial amounts of money not based on voluntary contributions.

If the Church wants to undertake something on the lines of Fr Arizmendiarrietta it could usefully employ this cashflow to help people in need, particularly newly-weds and couples who are raising children. In this way it may also be possible to stem the rise in marriage separations and family breakdowns.

What I have in mind is not the actual giving away of money but the setting up of a revolving fund; recipients will repay the sum provided when their fortunes change. Instead of charging interest the refundable sum ought to take account of the rate of inflation so that purchasing power will remain the same. Besides helping people in need, social awareness will be more pronounced within society and the Church's influence will certainly be strengthened.

In the Gospels we see Christ not just teaching and preaching but also helping people in need. The local Church, perceiving that people's prevalent problems are economic ones, has to focus its attention on this field to reconcile people's needs with salvation as Fr Arizmendiarrietta did in the best way possible.

Dr Borda is an economist specializing in the economic development of small states.