2009 Oxford Business & Economics Conference Program
ISBN : 978-0-9742114-1-1
Explaining The Global Financial Crisis: Did The Holy See See It Coming?
Dr. Jean-Luc Grosso
McDavid Professor of Business Administration
University of South Carolina Sumter
Sumter, South Carolina, United States
(803) 938-3859
jlgrosso@mailbox.sc.edu
Dr. Teresa L. Smith
Julian T. Buxton Professor of Business Administration
University of South Carolina Sumter
Sumter, South Carolina, United States
(803) 938-3710
tlsmith0@mailbox.sc.edu
June 24-26, 2009
St. Hugh’s College, Oxford University, Oxford, UK
1
2009 Oxford Business & Economics Conference Program
ISBN : 978-0-9742114-1-1
Explaining The Global Financial Crisis: Did The Holy See See It Coming?
Jean-Luc E. Grosso, University of South Carolina Sumter, Sumter, SC, USA,
jlgrosso@mailbox.sc.edu
Teresa L. Smith, University of South Carolina Sumter, Sumter, SC, USA,
tlsmith0@mailbox.sc.edu
ABSTRACT
The global financial crisis, the worst since the Great Depression, has wiped away
hundreds of billions of dollars in wealth and felled banking institutions that just months ago
seemed untouchable. It has thrown the world into the early stages of a global recession, and has
forced governments to intervene to stop the turmoil. This major cyclical downturn has come as a
surprise to most economists; however economic theories offer the explanation. Those theories,
capitalistic or socialistic, taught us that markets, either free or controlled, would adjust to any
economic change and avoid entering long periods of depression.
Over two hundred years ago, Adam Smith’s optimism in both Moral Sentiments and
Wealth of Nations, reconcile the individual with the social interest through the principle of the
invisible hand, or natural harmony, and the principle of natural liberty of the individual, or the
right to justice. In Moral Sentiments, sympathy and benevolence restrain selfishness; in Wealth
of Nations, competition channels economic self-interest toward social good. Over a century ago,
June 24-26, 2009
St. Hugh’s College, Oxford University, Oxford, UK
2
2009 Oxford Business & Economics Conference Program
ISBN : 978-0-9742114-1-1
Karl Marx explained that the government, not individuals, would guide a nation toward an
eternal social equilibrium.
Today most economists place themselves somewhere between those two. However, most
didn’t realize there was a missing piece; the role of business ethics (and religion) in economic
performance. The Great Advent of the discipline of “Business Ethics” can be dated back to the
year 1975 when the Foreign Business Corrupt Practice Act was voted in the United States. Thirty
years may not be long enough for one to think about it; however, one economist did, and in 1985
predicted that a global crisis would occur if the world didn’t think more ethically. This economist
was Joseph Ratzinger. This name may not sound familiar but I believe his new pseudonym will;
Pope Benedict XVI. Indeed, just over twenty years ago, Pope Benedict, in an article presented in
a symposium in Rome, was cleverly linking economics, ethics, and religion to predict today’s
global downturn.
This paper will offer a look at what has happened to business ethics since the early
1970’s, and how the focus has shifted away from business to the environment. It may have taken
one person, Pope Benedict, to bring us back to the true definition of ethics. For refocusing
economic thinking we should perhaps think of him as a leader of a new school of thought, not
just of a religious movement - something Max Weber surely didn’t and wouldn’t want to
envision.
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Broome, J. (1999). Ethics Out of Economics. Cambridge, United Kingdom: Cambridge
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Buchanan, C. and P. Hartley (2000). Equity As a Social Goal. Wellington, New Zealand: New
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June 24-26, 2009
St. Hugh’s College, Oxford University, Oxford, UK
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2009 Oxford Business & Economics Conference Program
ISBN : 978-0-9742114-1-1
Georges, E. (1999). International Business Ethics: Challenges and Approaches. Notre Dame,
Indiana: University of Notre Dame Press.
Jones, I. and M. Pollitt (1998). The Role of Business Ethics in Economic Performance. New
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Cardinal Ratzinger, J. (1985). Market Economy and Ethics. Acton Institute, accessed September
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http://www.acton.org/publications/occasionalpapers/publicat_occasionalpapers_ratzinger.
php]
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Wilson, R. (1997). Economics, Ethics, and Religion: Jewish, Christian, and Muslim Economic
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