How can the consequences of the financial crisis in the world be minimized?

Whithin the framework of the EZA special project a seminar on „How can the consequences of the financial crisis in the world be minimized?“ took place on 14 February 2009 in Prague, Czech Republic.

The seminar has focussed the attention especially to the following problems:

-What are the fundamental causes of the global financial crisis?

Is it possible to minimize the negative consequences of the crisis in the world of labour and how to do that?

What should be done to prevent any repeating of previous errors in the financial system?

-What a help in this effort could contribute the principles of the Christian social doctrine?

The following five points should be observed as the result:

  1. The crisis of nowadays is a crisis of the whole society primarily caused by a general acceptation and protection of the own profit without respecting fair behaviour standards in the world. Avarice, profit to debit of others cannot be taken as a reasonable device for functioning of the society. The actual crisis is not only a financial and economic crisis but a crisis of morality. Because the only appeal on morality could not be successful the structural measure for respecting the commonly agreed reasonable regulations at both national and international levels are needed.
  2. Such measures cannot be oriented against the market. The market is necessary. Money is something we need every day. Without money and capital no prosperity is possible. But the market cannot serve to misusing citizens for plays of powerful people on the market in contradiction to the market principles.
  3. The measures of nowadays are set up mostly for minimizing the consequences of the crisis. But it is necessary to seek how to overcome the fundamental causes of the crisis as – among others – the protection of borderless and uncontrolled markets, breaking away any liaison of money with creating real values, the false philosophy of the so-called “shareholder value” which is not oriented on a long term entrepreneurship prosperity and which is no more decisive for the productivity growth.

Also a crisis of trust and a long term deterioration of the situation of poorer parts of the society are among these fundamental causes. That all brings the danger of further centres of fire that might be worse than any crisis phenomena have been until now. Therefore it is important to pass from the “fire extinction” to a long term strategy.

  1. The global financial markets have to be submitted to strong rules. They have to correspond to the norms of the society standard of justice and fairness, guaranteeing stability of the financial sphere against interests and risky operations. In other words we have to search for such a path to the common prosperity where the option for the poor people in respect to the situation in the world is to be a decisive point.
  2. In order to achieve the aims mentioned sub point 4 the following structural measures have to be sinful:

-Setting up and strengthening competencies of the International Monetary Fund

-Specifying rules for admitting financial instruments and practices and for their control

-Public supervision and control of all financial institutions

-Strengthening the money function as means for exchange and for their liaison to the real economics

-Strengthening of possibilities to create the own capital in order to prevent any development of a capital power, e.g. by means of enabling employees to take part in the capital at their own workplaces

-Imposition of taxes for short term and speculative transactions

-Regulation and admitting of financial derivates and for their control

-Independent rating agencies

-Lower tax charges for supporting long term investments

-Higher interests for risky credits conditional on creditors and debtors participating in case of a loss

-Correction of asymmetric reimbursement of finance managers by means of progressive income taxes if necessary

-Support of the so called ethical investments