Gabriel Martinez: New Encyclical Reflects Common Sense

Pope Takes Business Ethics to Transcendent Level

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By Gabriel Martinez

NAPLES, Florida, JULY 8, 2009 ( As I read the latest encyclical by Benedict XVI, a thought arose: No one understands an encyclical on Catholic social teaching.

When prominent people in authority speak on the economy, politics, or society, we expect them to express themselves in the categories of political parties. When they fail to toe the line, we find ways to discount or ignore what we do not like.

The key insight of the free-marketeer is that voluntary exchange must be mutually beneficial. The key insight of the left-liberal is that fair outcomes must be deliberately planned for.

The key double insight of Catholic social teaching, on the other hand, is that we are created in the image of God and that we are sinners. That is, we build an economy, politics, or culture that is human, if we remember that we are creatures who received our being as a gift, called by God to be like him and with him; and that our economy, our politics, and our culture are inhuman insofar as we forget it.

This position is often refreshingly commonsensical. Instead of, say, “idealizing technical progress, or contemplating the utopia of a return to humanity’s original natural state,” the Pope naturally mistrusts what comes from the hand of man, but also relies on the “human capacity to exercise control over the deviations of development.” Capacity implies responsibility, but it also implies that this responsibility is often abdicated in the name of a system, an idea, or a vice.

Or take another example. Some thinkers give the benefit of the doubt to the forces of the market and strive to protect it from the depredations of religion, custom or the state. Common sense and Catholic social teaching tell us that it requires a special kind of faith to assume that what is personally vicious can be socially virtuous.

Other thinkers instinctively trust in the capacity of social deliberation and rational planning to achieve desirable outcomes, which are not defined in relation to nature, blind to the obvious point that even well-intentioned, law-abiding people can make mistakes. Good intentions are not enough, common sense and Catholic social teaching tell us: action unmoored from the truth is ultimately wasteful and always soul-destroying.

In one of its most lucid passages, the encyclical points out that the exclusive pursuit of shareholder-value maximization is a risk for businesses. Maximization of shareholder value encourages faceless management, distance from stakeholders, and a short-term focus. But the benefits are only temporary.

Over the long haul, business benefits from permanence and from social ties. Skeptical of outsourcing (and doing honor to his name), Benedict XVI insists on geographical stability: cultivating stakeholders and making long-term profits are not substitutes, but complements.

Even more, Benedict XVI insists on the need to create a space for “the logic of gift” (which I wish he had explained more). This idea is one example of why encyclicals, like “Populorum Progressio” and “Caritas in Veritate,” often sound appallingly naïve.

We are taught, from first grade to business school, that grown-ups with their feet on the ground look out for themselves — and that they ought to look out for themselves, either to protect that fragile beauty called capitalism or because no one else looks after you anyway. We are taught that we should not care about the other fellow, unless it yields quantifiable results. We are fanatically brainwashed, and so we do not understand.

Accepting an “economy of communion” requires a dramatic expansion of the set of goods that one values, a huge increase in the virtue of patience, a drastic acceptance of uncertainty and unknowability, and a jarring openness to faith and hope. The human being so described is radically different from the human being of the business school, from what one would be taught in a Corporate Finance class. The “return on investment” is the fruit of not seeking the return, but of seeking the Kingdom of Heaven and its justice (and all the rest will be added unto you).

How different this is (and how hard it is to see the difference) from the nauseating insistence to follow our heart, to do what feels right, because there’s no such thing as truth! We are told that any non-selfishness not only sounds naïve, but that it should sound naïve and as unmoored from common sense as possible.

While politicians give us slogans and pretty words, without reference to the truth of the human person, the Pope sounds the warning note: “On this subject the Church’s social doctrine can make a specific contribution, since it is based on man’s creation ‘in the image of God’ (Genesis 1:27), a datum which gives rise to the inviolable dignity of the human person and the transcendent value of natural moral norms.

“When business ethics prescinds from these two pillars, it inevitably risks losing its distinctive nature and it falls prey to forms of exploitation; more specifically, it risks becoming subservient to existing economic and financial systems rather than correcting their dysfunctional aspects.”

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Gabriel Martinez is chair of the Economics Department at Ave Maria University. He earned his Ph.D. from the University of Notre Dame, and has worked at the Inter-American Development Bank in Washington, D.C., and at the Ministry of Government in Ecuador.

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