The recent "Note" by the Pontifical Commission on Justice and Peace about the financial crisis bears comparison with the encyclical of Pope Pius XI, "Quadragesimo Anno," written in 1931, in the midst of an earlier financial crisis, the Great Depression. That encyclical, commemorating Leo XIII's "Rerum Novarum," the very first social encyclical of 40 years earlier, articulates what might be called the Basis of the Church's Legitimate Intervention in Social Issues.

"Quadragesimo Anno" states: "Since a problem was being treated 'for which no satisfactory solution' is found 'unless religion and the Church have been called upon to aid,' Pope [Leo XIII], clearly exercising his right, and correctly holding that the guardianship of religion and the stewardship over those things that are closely bound up with it had been entrusted especially to him, and relying solely upon the unchangeable principles drawn from the treasury of right reason and Divine Revelation, confidently and as one having authority, declared and proclaimed 'the rights and duties within which the rich and the proletariat -- those who furnish material things and those who furnish work -- ought to be restricted in relation to each other.'"

We may ask, then, of the Note offered by the Justice and Peace Commission, first, whether the current financial crisis is indeed one "for which no satisfactory solution is found unless religion and the Church have been called upon to aid"; and, second, whether the Note relies upon "unchangeable principles of right reason and Divine Revelation." If those criteria are not satisfied, then intervention by Church authorities would be unwarranted.

The criteria are related. The first is whether the Church has some distinctive contribution to make and the second is whether it has some distinctive competence. One can reason either from competence to contribution, or the other way round.

For example, the Church is competent to speak about human character, the family, and the social implications of poor ethical choices. Would the consideration of such things, then, be relevant to the current financial crisis?

Pope Benedict thought so. In an address last year to a conference commemorating the encyclical, "Centesimus Annus," Pope Benedict first stated that "it is not the job of the Church to define ways of tackling the financial crisis." But then he went on to say that the Church is concerned with fostering such goods as solidarity, and the "logic" of the gift, which should suffuse human economic activity. These are fostered within the family. Therefore, the family is at the heart of our response to the financial crisis: "the family model of the logic of love, generosity and the gift should be extended to a universal dimension."

Or consider how the President of the Vatican Bank, Ettore Tedeschi, in an interview last year in L'Osservatore Romano, tried to apply Church teaching by arguing that contraception is a deeper cause of the financial and sovereign debt crises. "Larger families are absolutely the answer to the crisis," he said, "Fewer people are entering into the production cycle and when they manage to, they do so very slowly... ." Moreover, governments cannot sustain social welfare programs when fewer young people support an increasing elderly population: "nature itself teaches us that if a man and a woman do not generate children it is difficult that someone takes care of them when they age. The state can try, but at a very high cost."

Since the financial crisis was ultimately caused by a housing bubble, and bubbles are speculative frenzies caused by greed -- a widespread greed, not limited to bankers, which vitiates rationality and leads people to do things like treat their home as an ATM machine and borrow imprudently -- and since greed is one of the Seven Capital Sins, one would think the Church would have something to say about that too.

The Justice and Peace Commission's "Note" takes a different approach. Ethics should be prior to economics, they assert. But this priority is shown, they say, by government regulation of market activity. The crisis was caused by a lack of government regulation of economic realities that are trans-national. Therefore, a world government needs to arise -- which they frighteningly call a "World Political Authority" -- to regulate the globalized marketplace so as to insure the dominance of ethical values. They then favor those particular economic responses, such as a tax on financial transactions, which would strengthen the International Money Fund and thereby move us closer, they think, to a World Political Authority.

World government was first proposed as an ideal by Blessed Pope John XXIII in "Pacem in Terris" on the perfectly sound logic that where there is a common good, there should be a public authority, and now the world has an evident common good. But "Pacem in Terris" also puts so many constraints on the proper institution of such an authority -- it must arise freely, without force, must respect all true rights and no false ones, be unified yet fully diverse, etc -- that a World Political Authority is not a realistic or prudent practical possibility at the moment.

But the main problem with the Note's argument is that it fails to recognize that governments are often just as corrupt as markets, that any system of regulation can be gamed, and that there is no reason to think that a global government would have been any quicker to identify and prevent the abuses which led to the crisis than national governments were.

Michael Pakaluk is the author recently of "Accounting Ethics ... and the Near Collapse of the World's Financial System" (Allen David Press, 2011).