01-06-2012 - Traces, n. 6


The Logic of Gift
How does looking beyond profit and promoting the human good fit into the challenges of today's global economy? The Vatican's recently released booklet calls executives to "realize the grandeur of their vocation," starting not from a theory but from a relationship. An American business expert reads it for us.


What does Rome have to do with Wall Street? (Or Main Street, for that matter?) That was the question unsettling the Catholic blogosphere in the summer of 2009 as Pope Benedict XVI was about to issue his long awaited social encyclical, Caritas in Veritate (Charity in Truth). The world economy was struggling after barely surviving the worst financial crisis since the Great Depression, and pundits from across the ideological spectrum were parsing every statement from the Vatican hoping for an early read on the Church's moral judgment. Would the Church blame the crisis on capitalists gone wild? Or would it spread the blame to government policymakers and consumers too?
Ever since the first social encyclical, Pope Leo XIII's Rerum Novarum, was published in 1891, Catholic social teaching had avoided taking sides between Capitalism and Socialism by carefully balancing the interests of the market and the state. But after the fall of Communism in 1989, Pope John Paul II's encyclical, Centesimus Annus, seemed to move the Church towards a more favorable view of entrepreneurs and free enterprise.
But the reckless speculation that caused the global financial meltdown called that shift into question. The crisis seemed to fulfill Lenin's claim that "capitalists would sell their enemies the rope by which they would be hanged." Would Pope Benedict reverse the Church's course and call for an expanded role for the State?

A RADICAL PROPOSAL. Caritas in Veritate mostly sidestepped that debate. In the document, the Pope focused less on public policy, and more on outlining his vision of "business as a vocation," calling business leaders to look beyond profit, and manage their companies based on "the logic of gift."
This was a departure from the reasoning of previous social encyclicals. Instead of arguments grounded in the natural law, CV's language was deeply theological. Man's "astonishing experience of gift," explained the Pope, should have a place within "normal economic activity." This was radical–less Ten Commandments, and more Sermon on the Mount. Not surprisingly, this mixing of theology and social policy made many American Catholics nervous. The questions were asked: Was the encyclical merely concerned with the private spirituality of business executives? Or was it a naïve call to do business like lambs among the wolves of the marketplace?
Both questions implied that the encyclical's ideas were not relevant to real-life business. The Vatican must have noticed this lack of understanding among American business leaders and policy experts, because over the next two years the Pontifical Council on Justice and Peace organized several conferences to study how to put Caritas in Veritate into practice, and in April published a 32-page reflection booklet entitled, Vocation of the Business Leader.

PRINCIPLES OF HOPE. The document masterfully integrates the Pope's deep theology with contemporary business issues, and in clear, vivid language presents a practical discernment guide for Christian business leaders in the 21st century.
The theme running through Vocation is that economic crises will recur unless business leaders embrace Catholic social teaching: "There can be no genuine solution of the 'social question' apart from the Gospel." The main obstacle to this change is "the divided life"–"the split between the faith which many profess and their daily lives," which "contributes to much of the damage done by businesses in our world today." Christian business leaders who do not serve God and others in their work are leading "fundamentally disordered" lives, because "you cannot love both God and money" (Mt 6:24).
Instead, Vocation calls Christian business leaders to the integrated life, to "realize the grandeur and awesome responsibility of their vocation" by "participating in the work of the Creator through their stewardship of productive organizations." The vocation of business is rooted in the Gospel, "a message of love which is found not primarily in a theory or an ethic, but in a relationship with Christ." The Pope wants the "Call to Holiness" extended beyond Sunday to the workplace, where Americans spend most of their time.
Discerning how to put Gospel principles into practice involves three interconnected stages: Seeing. Judging. Acting. First, Christians are asked to "see" the "signs of the times"–globalization, communications technology, financialization, and cultural changes. The document provides a realistic and balanced account of the world economy, using terminology similar to "SWOT analysis"–strengths, weaknesses, opportunities, threats–familiar to any executive.
Next, Vocation outlines the Christian principles that business leaders must use to "judge" these realities, and guide their decision-making.
The first is respect for the dignity of each person. Everyone must be treated as an end in themselves, rather than a means, because each person is "made in the image of God." What does this mean in practice? Business leaders must act for the good of all stakeholders–customers, employees, suppliers, investors, the community, everyone touched by their decisions. Just because a person consents to an economic exchange or contract does not make it right. It is possible, for example, for an employer and an employee to freely degrade each other through their actions and attitudes.
The next principle is service for the common good. The business leader must look beyond profit and "actively seek ways to serve genuine human needs within their competence." This includes "taking responsibility for the social and environmental costs of production;" "watching for opportunities to serve the poor;" "organizing productive and meaningful work;" "structuring workplaces with subsidiarity that designs, equips, and trusts employees to do their best work;" and producing "sustainable wealth" that is distributed "justly" (a just wage for employees, just prices for customers and suppliers, just taxes for the community, and just returns for owners). This is a high standard of moral principle, but no higher than the standards set for Christians in their vocations as spouses, parents, or the religious life, or when dealing with issues such as sexuality, abortion, and bioethics.

A CALL TO ACTION. But judging is not enough. Vocation expects the Christian leader to act upon these principles. Too often, in social encyclicals, the Church's stock disclaimer that it "does not have technical solutions to offer or models to present" has given Catholics an easy excuse to disregard the demanding principles of human dignity and the common good. The usual argument is that unlike the five "non-negotiable issues" of abortion, gay marriage, embryonic stem cell research, cloning, and euthanasia, on social questions Catholics are free to take any position based on their "prudential" judgment. This is an often overlooked symptom of what the Pope calls the "Dictatorship of Relativism." Reason is reduced to judging those few questions where the answers are obvious (at least for now), or can be empirically verified. The human experience of truth, beauty, and goodness, and the virtues of justice, courage, self-control, and practical wisdom, are left to the "Kingdom of Whatever," a term used by Notre Dame historian Brad Gregory to describe the ethos of modern culture.
Vocation explains how to solve this problem. First, "the practice of virtues" is necessary to act effectively. "Wise business leaders act virtuously in their practical affairs, cultivating wisdom in concrete practices and policies, not just in abstract mission statements." Second, it provides a "Discernment Checklist for the Business Leader," with questions for an examination of conscience about nuts-and-bolts business practices, such as performance assessments and labor outsourcing. Third, because "prudence has often been reduced to the clever actions of leaders that advance their own private interests," it provides a concrete example about paying a "living wage": "If a living wage is not immediately sustainable for a business, virtuous businesspeople do not stop there and simply defer to market forces. They rethink how they are doing business and how they can change their situation creatively so as to be in right relationships with their employees. This could mean changes at the level of work organization or job design; it could mean moving into different product markets, or rethinking pay differentials."

FOR THE GOOD OF ALL. I can attest to the wisdom contained in this example. In the 1990s, my business partner and I grew a company to more than 100 highly skilled employees. What I learned is that the so-called "market wage" is not fixed, but a dynamic reality. We had intuitively reasoned that we should pay people above industry standards in exchange for hard work and dedication, and provide generous severance pay to anyone who was laid off. This created a high level of staff commitment, and positive "word of mouth" in our industry from ex-employees, which made it possible to attract excellent people. The result was greater profitability. "Doing the right thing" led to an objective experience of reciprocity–giving and receiving–that helped to create what Vocation calls "a community of persons" in our company. I believe that most people are similarly motivated by "the logic of gift" in the workplace, that experience of "something greater" that Christians recognize as the Logos of Christ. But mainstream economic theory–built upon Adam Smith's idea that self-interest, not self-giving, creates wealth– says that experience must be denied or, at best, never named. Why? Because a fear exists that this "something greater" will limit our freedom. To safeguard the autonomy of the individual, only what can be "objectively" measured–money–can guide our lives together.
In the 2012 elections, we will hear the mantra that wealth creates jobs. Vocation accepts this truth. But it places obligations on capital. It doesn't assume that good jobs and socially useful goods and services are the natural by-products of greed. Instead, it insists that the explicit purpose and end of business must be the good of persons and society. Unfortunately, corporate law, to a large extent, limits American companies–especially those that are publicly traded–to the single goal of making as much money as possible for shareholders. Since the financial crisis, however, the social enterprise movement has challenged this ideology, spurring the chartering of new "B" (or public benefit) corporations that are free to use their profits for the social good. The Vocation of the Business Leader may provide what has so far been lacking in that movement–a transcendent foundation rooted in a Christian anthropology.