Dr Rowan Williams, the Archbishop of Canterbury, today gave warning that the liberalisation of trade barriers could lead to spiralling social disintegration or polarisation.
Dr Williams, preaching at St Paul’s Cathedral in London at a service to mark the 60th anniversary of Christian Aid, said that a fundamental lack of trust was hampering the world’s commitment to fighting poverty.
The "scandal" of the current global economy was not simply that it left children dying and more than a billion people in extreme need, he said.
"It is that it reinforces the assumption that trust is not possible and natural; it reinforces a picture of the world in which rivalry or mutual isolation are the obvious forms of behaviour."
Arguing that debt repayment had constantly distorted the possibility of stability, he said the rich talked about the virtues of free trade while taking care to protect their own markets.
Criticising a "naive confidence" that free trade will work to the benefit of all citizens of a country, he said that a universal liberalisation of trade could prove "very costly" to a whole generation of workers as well as the environment and political stability.
While acknowledging that trade liberalisation could offer fresh markets and increases in overall wealth, it could also create instability, poverty in many areas and a loss of social cohesion.
Dr Williams called for a greater understanding of the attendant costs of free trade.
He urged faith-based organisations such as Christian Aid to make their voices heard from a Christian perspective in order to challenge the ability of free trade to deliver a "flourishing human environment."
Dr Williams said: "The scandal of our current global economy is not simply that it leaves children dying, that it leaves over a billion in extreme need.
"It is that it reinforces the assumption that trust is not possible and natural; it reinforces a picture of the world in which rivalry or mutual isolation is the obvious forms of behaviour.
"Do we want to live in a world where trust seems natural? That is the question we need to be looking at today, as believers and as citizens."
Dr Williams quoted extensively from the work of the Dutch development economist Jan Pronk, who has argued that the questions surrounding free trade are not whether the stakes are high or how high they are, but how they can be shared.
Dr Williams said: "If Christian Aid and other faith-based bodies have a role here, it is surely to make certain that the costs are clearly understood, and that those who carry the greater costs have a voice in negotiating how these costs are to be managed without the Catch-22 risk of long term damage from spiralling social disintegration or polarisation."
His sermon chimed with Christian Aid’s own Trade Justice Campaign, calling for the richer countries to stop relying on trade agreements between each other to enable the poorer countries to develop. Christian Aid, which captured public imagination with its slogan, "We believe in life before death", claims free trade is not free or fair at all."