Sozialalmanach - Caritas Luxembourg

egoism. 5 The ‘real economy’ of goods and services links profit to success in meeting some
public need or demand. The new financial world, of hedge funds, of ‘leveraged buyouts’,
of risky ‘sub-prime’ mortgages bundled together and bought by respectable corporations
as a speculative investment, uproots profit from any social function beyond itself. 6 Money,
traditionally ‘only’ a means of exchange, becomes itself a product. In terms of quantity,
the ‘money economy’ far outweighs the ‘real economy’. Yet, as we have seen, the ‘money
economy’ is so opaque that it traps its own most adept manipulators, without manifestly
benefiting the ‘real economy’. Of course it might benefit it, since the ‘real economy’ cannot
function without investment: but the financial economy and its vast rewards functions
without reference to whether or not such benefit actually accrues. 7
In richer countries, rapid growth promoted even greater inequalities of wealth and
income – which were accepted as the cost of economic dynamism. Such inequalities have
rapidly grown since the 1980s: between capital and labour; between ‘rentier’ capital – that
which derives its profit not from work but from ownership of rents, dividends capital
gains – and entrepreneurial capital, between skilled and unskilled labour and especially
between the richest 1% of the population and the 20% poorest. In April 2004, the Financial
Times reported that in 1980 the average director of a company in the top 500 of Fortune,
made 40 times more than the average employee of the same company. By 2003 this had
risen to 530 times. 8
So rapid growth favours the richest and may exclude the poorest or, at best, ‘trickle
down’ to them. As the US theologian Joe Holland once remarked, ‘the economy is doing
fine. It’s just that the people are having a hard time’. Yet when growth shudders to a halt,
it is the poor who suffer first and most.
5 Lonergan (1972), pp. 44, 231.
6 Cf. Pontifical Council for Justice and Peace (2008): ‘Undoubtedly, today’s financial emergency came after
a long period in which, pressured by the immediate objective to pursue results in a short time, the
dimensions of finance itself have been left to one side: its „true“ nature, in fact, consists in favoring the
employment of the resources saved where they favor the real economy, well-being, the development of
the whole of man and all men (Paul VI, „Populorum Progressio,“ 14)’.
7 For example, at the time of writing, there are allegations that reputed finance houses, by means of speculative
instruments such as ‘credit-default swaps’, may gamble on the failure of, say, the Greek economy,
thus profiting from any such failure.
8 Defraigne (2009).
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