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The Reckoning · Season 1

The Reckoning: Lesson Four

In this lesson, you’ll learn:

  • Why relativism is so dangerous in the area of economics
  • What the Church teaches about free markets and capitalism
  • The praise and warning of John Paul II regarding capitalism

Read the Transcript

Hello and welcome to Part IV of our series, The Reckoning; the coming battle between socialism and the practice of virtue in business.  In the prior sessions, we explored the current state of our culture in America, the state and perception of business therein, the root cause of the rising movement toward socialism in America, the amorphous reality of which Adam Smith foretold, and its ill-effects on free markets today.

 

We’ve suggested that socialism is a lagging indicator of injustice, and morality of one’s own choosing is a malignancy contributing to what could be a well-functioning free market, but isn’t.  To close this loop of reasoning and get to the root cause problem, let’s explore what the Church has to say about free markets, capitalism, and morality in business, among other domains.  Though we listen to many authors and experts on such topics, the clarity and richness of Church teaching should not and cannot be ignored.

 

The first reality check here for those of us leading in business, is that we live in a post-truth world. Coupled with the growing irrelevance of the Christian church in America, many believe and practice as if there is no absolute or objective truth.  How can one claim today that truth exists if the rules of the game or morality are determined by one’s own choosing – an ever-shifting target?  More directly, can a free market function well without a tether to moral truth?

 

Today in our post-truth world, moral relativism is considered necessary to preserve peace and equality in our diverse world.

Pope Emeritus Benedict XVI addressed this phenomenon saying, and I quote, “Relativism, which recognizes nothing as definitive, leaves as the ultimate criterion only the self with its desires.” – sounds like Adam Smith’s assertion regarding morality, doesn’t it!

 

The one concept to which most people in this post-truth world can agree on is tolerance, but that, too, is often misunderstood.  To tolerate something, one must first disagree with it!  Tolerating something to which we agree is not required!  So, is it tolerance or disagreement we are after, or is it actually compliance with the idea that no absolute or objective truth exists?  I suggest the latter is the purported goal here.  No objective truth mitigates the friction of life.  Who or what is going to call you into question where truth is fleeting, based upon what you do, much less who you are?!

 

Contributing to this societal confusion is the presence of poorly-ordered institutions; those where form trumps substance, and often clouds, if not conceals the truth.

 

While right-ordered institutions; the Church, government, even business; are an essential part of the body politic, poorly-ordered institutions seriously damage the fabric of society.  Man has institutionalized practices meant to mirror truth, but in reality, mask it.  For instance, the poorly-ordered institution of marriage today is more about convenience, than the hard, objective, and right-ordered truth of life-long commitment.  People don’t see this truth.  They see over 50% of marriages ending in separation or divorce.  Is the truth of marriage visible here?

 

The poorly-ordered institution of government today is more about politics, than the hard, objective, and right-ordered truth of principle.  Governing on principle is hard, yet politicians forsake principle for that which is politically beneficial to themselves and their constituents to ensure re-election.

 

The institution of business is no different.  The poorly-ordered institution of business today is all about profit, yet right-ordered, business is about purpose and people, not profit.

 

This institution of business and its polluted or clouded truth invited an ideology that has dominated business teaching and thinking for the last five decades!  And it is contrary to objective truth.

 

Moral relativism or morality of one’s own choosing opened the door for the dominant ideology currently governing business.  It was scribed by Milton Friedman, a University of Chicago economist, in a 1970’s New York Times article entitled, The Social Responsibility of Business is to Increase its Profits.  This is commonly rephrased as “the purpose of business is to maximize shareholder wealth,” but that is not what he said.

 

This is precisely what he said in his article, and I quote:

“There is one and only one social responsibility of business–to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”

 

Built on a society with an amorphous morality that leaves moral judgements as only a consequence of things to which we as a society can agree, else one is expelled to the fringes of that society; and a set of poorly-ordered institutions that cloud or conceal truth with their form-over-substance outcomes; one of which is business where profit prevails over purpose and people;

 

We have a consequential dominant ideology in business that promotes the maximization of shareholder wealth and profit, making the shareholder or owner the preeminent stakeholder in a business enterprise, often at the expense of other business stakeholders. This ideology has also polluted our society’s perspective on charity and philanthropy, a topic we’ll cover in a later session.

 

Wow!  What a mess!  Is there any way out?  Yes, there is and you might be surprised to know that the Church has provided the answers to its people all along.  We just haven’t read or been taught these things.  The answers aren’t some obtuse reference to divine mysteries.  They are concrete interpretations of scripture and church teachings and traditions in what culminates in what is known as Catholic Social Doctrine or Catholic Social Teaching.  These interpretations are found in numerous papal encyclicals; letters authored by Popes over the centuries to provide insight and application of relevant church teachings for the benefit of all in society and the world.  Let’s explore these teachings further to move closer to the answers for this festering mess that is fueling the coming reckoning.

 

 

Saint John Paul II asks this question in his Encyclical Letter, Centisimus Annus, paragraph 42: Is Capitalism the victorious social system and the goal of developing countries?  He answers his own question like this, and I quote:

 

“The answer is obviously complex. If by ‘capitalism ‘is meant an economic system which recognizes the fundamental and positive role of business, the market, private property and the resulting responsibility for the means of production, as well as free human creativity in the economic sector, then the answer is certainly in the affirmative, even though it would perhaps be more appropriate to speak of a ‘business economy’, ‘market economy’ or simply ‘free economy’.”

 

He continues, “But if by ‘capitalism’ is meant a system in which freedom in the economic sector is not circumscribed within a strong juridical framework which places it at the service of human freedom in its totality, and which sees it as a particular aspect of that freedom, the core of which is ethical and religious, then the reply is certainly negative.”

 

The free market cannot be judged apart from the ends that it seeks to accomplish and from the values that it transmits on a societal level. Indeed, the market cannot find in itself the principles for its own legitimization; its legitimization belongs to the consciences of individuals and to public responsibility to establish a just relationship between means and ends.

 

I suggest to you that the poorly-ordered institution of business has confused the means and ends of business where people are considered means to the end of profit, when the exact opposite should be the case; profits are the means by which people flourish economically and business is a community of persons organized for the purpose of adding value to society, dignifying those within her care, and seeking the common good of the communities in which we live.

 

Saint John Paul II made this comment about profit in his Encyclical Letter, Centisimus Annus, 35): “The Church acknowledges the legitimate role of profit as an indicator that a business is functioning well.  When a firm makes a profit, it generally means that the factors of production have been properly employed and corresponding human needs have been duly satisfied.”

 

In the Vatican publication and reflection, the Vocation of the Business Leader, the end of profit is addressed this way.  Quote, “The individual profit of an economic enterprise, although legitimate, must never become the sole objective,” unquote.  I often project this idea this way: the fact is this: profit is no more the purpose business, than oxygen is the purpose of life – yet both are necessary.

 

Additionally, those of us called to business should recognize that a truly competitive market is an effective instrument for attaining important objectives of justice.  The key question is this: Can true justice be achieved in a free market economy, and if so, how?

 

The Church’s teaching on the topics of free markets, business, and morality therein are profound and offer light unto our path toward truth and the full integration of our Christian faith to our work and in our business.  In the coming sessions, we’ll go deep on the solutions side of this battle, using Church teaching to direct our steps and strategies to ensure virtue in business prevails over the false promise and disease of socialism in the coming reckoning.  Again, you as a business leader have a heroic role to play in this battle.  Prepare well.  See you next session.