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In his first detailed public statement about the global financial crisis, Pope Benedict XVI may be revealing the outline of his forthcoming – and highly anticipated – social encyclical.

Besides a few general statements warning against greed and urging solidarity, made in differing contexts, Pope Benedict (as opposed to other Vatican officials) had not said much about the encyclical or the crisis. But in a February 26 question-and-answer session with priests of the Diocese of Rome, Pope Benedict XVI explained the difficulties in addressing the crisis with credibility.

He gave a lengthy response (Italian text here) to a question from a priest who complained about the poverty and uncertainty affecting his suburban parish and who concluded that "we must have the courage to denounce an economic and financial system unjust to its roots." The priest gave the pope an opportunity to denounce free-market economics in his own words.

Pope Benedict didn't bite. Echoing one of his few writings on the Church and the economy as Joseph Ratzinger, he warned against cheap, easy moralism without technical – in this case, economic – understanding. In many ways, his answer was a more theological version of Pope John Paul II's observation in the 1991 social encyclical Centesimus Annus that what really ails the free society is not the economic system as such, but the cultural-ethical framework that absolutizes economics. By implicitly admitting he has no technical economic competence, Pope Benedict also reveals his remarkable intellectual honesty and integrity.

Rather than denounce an economic system that encourages people to follow their self-interest, the pope denounces realities with more of a past and deeper effects – original sin, human greed, and idolatry. He does not equate profit with greed, probably realizing that waging spiritual warfare against profits would mean losing the interest, attention, and perhaps possible salvation of all who know anything about business and economics. And maybe most importantly, rather than tell us that we need a "new" system of producing and consuming, buying and selling, the Holy Father takes a more sober, realistic approach by reminding us that there is no just system without just people, and that sin is a permanent fact of life that we must learn to combat slowly, persistently, and above all spiritually.

Rumors of a social encyclical have been circulating Rome for two years or so, usually citing the need to celebrate the 40th anniversary of Pope Paul VI's social encyclical Populorum Progressio (On the Development of Peoples). That anniversary has long since passed, so the occasion for a social encyclical would now be – or perceived to be – the global financial and economic crisis.

In addition to the expected encyclical, surely there is much more the pope can and may say about the crisis. But I certainly do not expect him to follow the lead of Barack Obama, Gordon Brown, et al. in making the case for more government spending and bailouts, as if politicians and regulators are immune to Original Sin and greed, which would simply remind us of yet another Gospel parable – that of the blind leading the blind and falling into a pit.

Kishore Jayabalan is the director of the Acton Institute's Rome office. He translated the following statement from the Italian.

Pope Benedict's response to Fr. Giampero Ialongo during a talk with the priests of the Dioces of Rome in Vatican City, February 26, 2009

[...] I would distinguish two levels. The first is the macroeconomic, which realizes itself and reaches the last citizen, who feels the effects of a mistaken construction. Naturally, it is the duty of the Church to denounce this. As you know, for a long time we have been preparing an encyclical on these points. And on the long road I see how difficult it is to speak with competence, but if it is not undertaken with competence, a certain [assessment of] economic reality cannot be credible. And on the other hand, it is also necessary to speak with a great ethical awareness, let's say [one] created and awoken by a conscience formed by the Gospel. So there is a need to denounce these fundamental errors that are now shown in the fall of large American banks, basic errors. In the end, it is human greed as a sin, or, as the Letter to Colossians says, greed as idolatry. We must denounce this idolatry that is against the true God, and the falsification of the image of God as another God, "mammon." We have to do it with courage but also with concreteness. Because great moralism does not help if it is not based on an understanding of realities, which helps also to understand what can be done concretely to change the situation. And naturally, to be able to do this, the knowledge of this truth and the good will of all are necessary.

Here we are at a crucial point: does Original Sin really exist? If it doesn't, we can make an appeal to clear reason, with arguments that are accessible and incontestable to each, and to the good will that exists in everyone. In this simple way we can progress well and reform humanity. But it is not so: reason - even ours - is darkened; we see this everyday. Because egoism, the root of greed, is to want the whole world for myself. It exists in all of us. This is the darkening of reason: it can be very learned, with beautiful scientific arguments, and it can even be darkened by false premises. So it goes with great intelligence and with great steps forward along mistaken roads. We can also say that the will is bent, as the Fathers say: it is not simply ready to do the good but seeks itself above all or the good of its own group. So to actually find the road of reason, of true reason, is not an easy thing; it develops itself in a dialogue. Without the light of faith, which enters in the darkness of original sin, reason cannot progress. But faith meets the resistance of our will, which doesn't want to see the road that is also a road of renunciation of itself and a correction of the will in favor of the other and not for itself.

So I would say that we need the reasonable and reasoned denunciation of errors, not with great moralism, but with concrete reasons that are understandable in the world of today's economy. The denunciation of these errors is important; it has always been a mandate for the Church. We know that in the new situation created by the industrial world, Catholic social doctrine, beginning with Leo XIII, seeks to make these denunciations - and not only denunciations, which are not sufficient - but also to show the difficult roads where, step by step, the assent of reason, the assent of the will, together with the correction of my conscience, the will to renounce in a certain sense myself in order to collaborate with the true meaning of human life and humanity, are required.

Having said this, the Church always has the duty to be vigilant, to search with all its might to discover what is the reason of the economic world, to enter into this reasoning and illuminate it with faith which liberates us from the egoism of original sin. It is the duty of the Church to enter into this discernment, into this reasoning, to make itself heard--also at different national and international levels--in order to help and correct. And this is not easy work, because many personal and national group interests oppose a radical correction. Maybe it is pessimism but it seems realistic to me: so long as there is original sin we will never arrive at a radical and total correction. Still we must do everything toward at least provisional corrections, enough to let humanity live and to block the domination of egoism, which presents itself under the pretenses of science and the national and international economy.

This is the first level. The other is to be realists. And to see that these great objectives of marcoscience are not realized in microscience - marcoeconomics in microeconomics - without the conversion of hearts. If there are no just people, there is no justice. We must accept this. So education in justice is a priority, we can also say the priority. Because St. Paul says that justification is the effect of the work of Christ, it is not an abstract concept, regarding sins that do not interest us today, but it refers to justice as a whole. Only God can give us it, but he gives it with our cooperation at different levels, at all possible levels.

Justice cannot be created in the world solely with good economic models, which are necessary. Justice is realized only if there are just people. And there are no just people if there is no humble, daily work that changes hearts and that creates justice in hearts. Only like this is corrective justice spread. Therefore the work of the parish priest is so fundamental, not only for the parish, but also for humanity. Because if there are no just people, as I said, justice remains abstract. And good structures will not be realized if justice is opposed by the egoism of competent people.

Our humble, daily work is fundamental to achieve the great objectives of humanity. And we must work together at all levels. The universal Church must denounce, but also announce what can be done and how it can be done. Episcopal conferences and bishops must act. But all of us must educate in justice. It seems to me that the dialogue of Abraham and God (Genesis 18:22-33) is still true and realistic today, when the former says: Would you really destroy the city? Maybe there are 50 just people, maybe ten just people. And ten people are enough to save the city. Now, if there are not ten, even with all the economic doctrines, society will not survive. So we must do what is necessary to educate and guarantee at least ten just people, but if possible many more. With our call we can make it so that there are ten just people and that justice is truly present in the world.

In effect, the two levels are inseparable. If, on one hand, we do not call for macro-justice, the micro does not grow. But, on the other, if we do not perform the very humble work of micro-justice, the macro also does not grow. And always, as I said in my first encyclical, with all systems that can grow in the world, beyond the justice that we seek, charity remains necessary. To open hearts to justice and charity is to educate in the faith, it is to lead to God.

Kishore Jayabalan is director of Istituto Acton, the Acton Institute's Rome office. Formerly, he worked for the Vatican's Pontifical Council for Justice and Peace as an analyst for environmental and disarmament issues and desk officer for English-speaking countries. Kishore Jayabalan earned a B.A. in political science and economics from the University of Michigan, Ann Arbor. In college, he was executive editor of The Michigan Review and an economic policy intern for the U.S. Chamber of Commerce. He worked as an international economist for the Bureau of Labor Statistics in Washington, D.C.