ST. PAUL, Minnesota, JAN. 16, 2003 (Zenit.org).- Can businesses realistically put people before profits?
Michael Naughton thinks they can go together — provide the priorities are right.
«What is at issue is not conflicting goals or purposes, but order among goals or purposes,» says the professor at the University of St. Thomas, in St. Paul. He teaches in the Catholic studies and theology departments and in the College of Business.
Naughton is also the director of the John A. Ryan Institute for Catholic Social Thought of the Center for Catholic Studies. In September 2001, the institute co-sponsored a conference with the Pontifical Council for Justice and Peace and some European universities on the 20th anniversary of John Paul’s encyclical on human work, «Laborem Exercens.» Papers from the conference can be viewed at www.stthomas.edu/cathstudies/cst/mgmt/LE/index.html.
Naughton, who helped to edit «Rethinking the Purpose of Business: Interdisciplinary Essays from the Catholic Social Tradition» (University of Notre Dame Press, 2002), outlined some of his ideas for ZENIT.
Q: Catholic social teaching emphasizes the centrality of the human person in the economic process, while modern economic theory stresses the role of profits or market share as a goal for business. How can Catholics reconcile these two approaches?
Naughton: What is at issue is not conflicting goals or purposes, but order among goals or purposes.
When Steve Cortright and I were editing «Rethinking the Purpose of Business,» we saw the book as an extended inquiry into the priorities, the right ordering of means and ends, in economic enterprises. Good management, for example, must be seen as a form of practical wisdom, which comes down to ordering complex purposes, to establishing and maintaining priorities.
Catholic social teaching requires us to take the common sense view that wealth creation — from accelerating productivity, to turning a profit on value added or increasing share value — qualifies as an intermediate purpose of business. Wealth, after all, is for use both within and outside the firm: It is quite literally no good unless it is made the means of human benefit.
At the level of economic theory, failure to understand economics as a value-laden inquiry, concerned with properly human uses of wealth, precipitates what the economist Charles Clark describes in his essay as a «crisis of values,» economics preaching a «competing gospel» at odds with Catholic social teaching.
I once heard someone say, «If I believed in God as much as they believed in markets, I would be a mystic.» Markets, profits, technology are important to a well-run economy and society, so long as they are ordered to the benefit of the human being in community. Once profits or shareholder wealth becomes the end and purpose of a business, the human person becomes displaced as the end of work and instead becomes a means. This is unacceptable according to the Church’s social teaching.
Q: The recent financial scandals highlighted the lack of ethical principles in some businesses. Is this problem a reflection of a general lack of ethics in what many call the post-Christian society, or are there more specific factors involved in this matter?
Naughton: The recent corporate scandals, like most organizational scandals, are the result of a complex combination of factors.
One of them is certainly a general lack of ethics, resulting from a culture that has failed both to constrain economic production and consumption and to ennoble those within business with a social and spiritual purpose. Two obvious manifestations of this cultural crisis are careerism and consumerism.
Another reason for the financial scandals is more structural, what Jeff Gates calls in his essay «disconnected capitalism.» Huge sums of money circle the globe in search of higher and higher capital gains without a concern for the effects that these speculative flows have on local communities. Boards of directors, in order to cash in on these higher capital gains, use managerial stock options as an incentive to induce executives to raise shareholder value to the first criterion in decision-making, subordinating all other responsibilities to employees and communities to the goal of profit.
Not surprisingly, this appeal to shareholders’ narrow interests backfired in some cases, as executives used speculative maneuvers, or even accounting tricks, to maintain or inflate share price artificially, then sold their shares before the inevitable correction or crash.
What the authors argue throughout the book is a more «connected» capitalism, where capital and labor can work together based on common goods that lead to greater community rather than individual selfishness.
Q: In the first part of your last answer, you mention the problem of careerism. What can Catholic universities, and especially Catholic business schools, do to address this problem?
Naughton: A great deal! The first thing Catholic universities need to do is to retain and strengthen their liberal arts requirements. The more university education moves to becoming only a technical education, the less it can resist the trend toward a «total work mentality,» as Josef Pieper once put it.
But retaining liberal arts requirements is not enough.
I was recently involved in a seminar with business executives, many of whom had been educated at liberal arts institutions. I was surprised by their accounts of their day-to-day practice, which seemed strictly and wholly informed by technical considerations. Their liberal educations were a matter of personal cultivation; their professional outlook belonged to the world of technique.
This is where I think Catholic social thought serves as an essential bridge, a middle discourse, between liberal arts and business education. A Catholic business education, for example, infused with the principles of Catholic social thought, has the possibility to help the student and the future businessperson to see more clearly what it means to have a vocation within business.
This kind education can help them effectively integrate the Church’s teachings on just wages, humane job design, the social nature of capital, truthful communication and other moral teachings.
Too often students can leave their business education with this vague regret that their faith and their work will simply have to settle for a compromise of indifference.
Q: There is much talk nowadays about corporate social responsibility. Yet some are reluctant to see companies become too involved in promoting social welfare, arguing that this is a task for the state and private citizens. Is there a danger in «distracting» businesses from their role in the art of creating wealth?
Naughton: Yes and no. Businesses are responsible to the common good, but they are not responsible for it.
As Bob Kennedy explains in his essay, while businesses can contribute to poverty programs, the arts, community development and the like, their primary responsibility lies in producing goods and services at a profit in a way that allows people to develop according to the constraints of an economic enterprise. The check to the museum, for example, cannot make up for the subliving wage.
Yet, it also needs to be said that while much of the wealth created by business enhances social living, business also creates social problems by shifting their costs onto society, especially in terms of low wages, poor working conditions, layoffs, pollution, etc.
Making businesses accountable to all its costs, including social costs, is not distracting them from the art of
creating wealth; it’s rather waking them up to a full account of what they are doing.
Q: One of the essays in «Rethinking the Purpose of Business» points out the importance of the concept of solidarity in John Paul II’s reflections on social teaching. What does solidarity mean in practice for an employee, a manager or the owner of a company?
Naughton: One thing that solidarity means is getting beyond the instrumental and so-called enlightened self-interest logic that too often pervades business.
For example, when John Paul II defines solidarity as the virtue that disposes us to seek the common good, he implies that a spiritual communion among persons precedes and motivates any community that consists in shared benefits and burdens.
As a manager, for example, while I want employees who are productive and efficient, solidarity calls me to see them as human beings endowed with dignity, created in the image of God and destined for the Kingdom. They are not simply cogs in the productive machinery of an organization. This solidarity, this theological virtue, shapes the relationships in the firm, thus creating a different organizational culture.
Solidarity in business can take many different forms. There is a firm here, in St. Paul, which has an employee ownership plan, a living wage policy, and a no-layoff policy. When downturns in business occur, as they have, the firm reduces the salaries of all employees — including, of course, managers and executives — except those for whom the reduction would mean falling below the established living wage.
One may well imagine that this way of sharing benefits and burdens is not accepted with equal grace by all, but who could devise policies of this sort except managers who accept the parable of the vineyard and the workmen as a faithful portrayal of our relations, before God, with one another?
Q: A large portion of people’s lives is tied up in their work. In his encyclical on human work («Laborem Exercens»), John Paul II said that work is «probably the essential key to the whole social question.» How can we apply in practice the principles of Catholic social teaching to help ensure that this activity be carried out in a fully human way?
Naughton: This question might well have been the first, and the only, question in our interview. I will not be able to do it justice. Since I must be brief, permit me to focus on the practical application of what John Paul II describes as «a spirituality of work,» where he describes our work as a participation in God’s ongoing creative and redemptive activity in the world.
How do I apply such theological notion of work? Here we need to understand spirituality as a very concrete discipline. If I live spiritually at work, I need to incorporate spiritual practices throughout my day, week and year that remind me that this world and my work are destined and ordered to the Kingdom and not simply to my pocketbook or self-serving goals.
Practices such as daily silence, praying my daily calendar, remembering the Sabbath, receiving the Eucharist, etc., inform me on a daily basis that my consumption and production does not own or control me. Such practices reveal, even though I fail more than I want to admit, that my work can contribute to a more humane and just world, and that the work I do can sanctify and lead me to the kingdom. I find this to be a daunting vision, but it is the vocation to which the Church calls me.
