with the most important representatives of socialism. catholic economists and sociologists – from the italian scholar giuseppe toniolo to the germanic intellectual carl von vogelsang – analysed the problems of capitalism and proposed new models of work organization ( see o. kohler, la formazione dei cattolicesimi nella societa moderna, in storia della chiesa, vol. ix : la chiesa negli stati moderni e i movimenti sociali 1878 - 1914, milan, jaca book, 1982, pp. 234 - 239, and o. de dinechin, sj, rerum novarum, in ‘ aggiornamenti sociali ’, 3, 2019, pp. 258 - 262 ). 1. war cannot generate prosperity humanity cannot thrive without peace, and neither can the economy. in the countries involved in a conflict, war seriously damages the drivers of growth. 4 hostilities destroy productive capital : infrastructure, machinery and raw materials. they claim victims, especially among the young generations, bending learning opportunities and the formation of a skilled workforce to the requirements of war. this reduces the availability and quality of ‘ human capital ’. furthermore, wars often erode social capital, 5 thereby weakening social cohesion and trust in institutions. the war effort supports aggregate demand and can stimulate innovation, but seriously distorts its purposes. the economic benefits are short - lived and do not remove the need to reconvert the economy once a conflict is over, even in countries that were involved in the conflict but suffered no direct damage to their territory. the high inflation and the steep fall of economic activity that often mark wartime periods are signs of the damage that wars inflict on the economic fabric ( figure 2 ). the manufacturing of war equipment does not help increase a country ’ s growth potential. 6 development comes from productive investment, not from arms. that is why, in the 1930s, john maynard keynes proposed a massive rise in public investment spending as a solution to economic depression in the united states, suggesting that president roosevelt ’ s focus should be on ‘ the rehabilitation of the physical condition of the railroads ’. 7 moreover, it is misleading to attribute technological progress to military expenditure. it is scientific research that sparks innovation. military investment can generate innovation if it is allocated to research. 8 however, we do not need to resort to war for this : technologies developed for military purposes only translate into progress when they later find civilian applications. war is therefore a

peace and prosperity in a fragmented world speech by fabio panetta * governor of banca d ’ italia economy and peace : a possible alliance fondazione centesimus annus pro pontifice bologna, centro san domenico, 16 january 2025 today, our world is facing an alarming rise in geopolitical tensions and conflicts. the number of wars, which had decreased after the fall of the berlin wall, has turned upward again in the last fifteen years ; in 2023 it reached its highest level since world war ii ( figure 1 ). in many regions, war – often fratricidal – is a daily reality. 1 day after day, the news brings us dramatic images, reawakening fears linked to the traumatic experiences of the two world wars. in western europe, the debate about significantly increasing defence spending has resurfaced after a long time. but conflicts are not the only cause for concern. the denial of basic needs, which still affects large parts of the world's population, is also a form of violence. after decades of ever stronger international cooperation and economic integration, history now seems to be taking a step backwards. it is a very different world from the days when i started working as a central banker. in many ways, it is a world of greater uncertainty and less hope for the future, although even back then there was no shortage of stark clashes and dramatic tensions. 2 * i would like to thank andrea brandolini, patrizio pagano, roberto piazza, pietro rizza and girolamo rossi for their help in writing this speech, and valentina memoli and roberto pisano for their editorial support. most of the ongoing armed conflicts are civil wars. those in myanmar, sudan and ethiopia are among the bloodiest ( source : acled ). the war in sudan is causing a devastating humanitarian crisis : some 25 million sudanese are suffering from food shortages ; 10 million have fled their homes and 2 million have sought refuge abroad. in the 1980s, despite signs of progress and hope – such as the possible rapprochement between the superpowers – there were still geopolitical, social and economic tensions. the cold war shaped world politics, fuelling fears of an imminent nuclear conflict. in the middle east, the iran - iraq war and the conflict in afghanistan, with the soviet invasion, strained international relations. apartheid in south africa was a further sign of the persistence of racial segregation dividing societies around the world. in poland, the solidarity movement