Андрей Иванов

Опыт Мондрагонских кооперативов: уроки для России

Ист.: http://fecoopa.narod.ru/mondragon.html, 17.9.2004

См. на англ.: http://www.mondragon.mcc.es/ing/index.asp

http://cog.kent.edu/lib/MathewsMondragon_(COG)_rtf.htm

http://www.ac.wwu.edu/~khoover/Mondragon.html

Arizmendiarrieta

Сборник докладов на английском, в основном вообще о католическом социальном учении и бизнесе: www.stjohns.edu/pls/portal30/ sjudev.retrieve_edu_img_data?img_id=4258

Отец Хосе еще молодым в 1941 году был послан в Страну Басков, вел катехизис, преподавал социальное учение студентам, в 1959 пятеро из них объединились в кооператив (делали керосинки).

Мондрагонская кооперативная корпорация представляет собой, пожалуй, наиболее интересный пример "экономики участия" - то есть такой экономической системы, которая основана на участии работников в собственности, управлении и доходах.

Мондрагонская кооперативная корпорация получила свое название по имени небольшого городка Мондрагон, расположенного в горах на севере Испании, в стране Басков. Свою историю она ведет с 1956 года, когда в этом городке был основан первый производственный кооператив, принадлежащий рабочим. Пример Мондрагонских кооперативов интересен во многих отношениях. Первое, что сразу бросается в глаза при знакомстве с этим опытом, - масштаб. Если большинство коллективных предприятий на Западе представляет собой мелкие фирмы, реже- средние, и совсем редко - крупные, то Мондрагонская группа кооперативов выделяется даже на фоне самых крупных акционерных предприятий, находящихся в собственности их работников. Это огромное производственное объединение, охватывающее около 180 (из них более 90 - промышленные) мелких, средних и крупных кооперативных предприятий различных отраслей. В 1995 году в этих кооперативах было занято 26 тысяч человек, а совокупный объем продаж Мондрагонской кооперативной корпорации (МСС - Mondragon Coooperative Corporation) превысил 4 млрд. долларов.

Вторая черта Мондрагонских кооперативов, отличающая их от отдельных кооперативных или акционерных предприятий, принадлежащих работникам, - наличие так называемых опорных структур. МСС - не просто конгломерат кооперативных предприятий. Помимо тесной технологической зависимости, объединение Мондрагонских кооперативов обязано своей прочностью также целому ряду пронизывающих всю эту кооперативную корпорацию структур, причем не только экономического порядка. Главная из этих опорных структур - кооперативный банк (Caja Laboral - Трудовой Банк). Все Мондрагонские кооперативы связаны со своим банком договором об ассоциации - это значит, что все свои средства они держат в этом банке, все расчеты проводят через него и обязаны придерживаться общих экономических принципов, установленных договором (в частности, руководствоваться типовым Уставом). Взамен кооперативы получают надежный источник кредитов, предоставляемых по льготным ставкам (кооперативы платят за кредит более низкий процент, чем все остальные клиенты банка).

В рамках Трудового Банка (первоначально - в качестве его предпринимательского отдела, а затем - выделившись в самостоятельную структуру) получила развитие система подготовки, планирования и финансирования создания новых кооперативов. Участники инициативной группы, предполагающие создание нового кооператива, получают ставку в Банке и затем, при помощи его специалистов и за его счет, проводятся беспрецедентные по длительности (два - два с половиной года) и по сложности исследования рынка для нового кооператива. По завершении этих исследований составляется детальный бизнес-план, который, после экспертизы Банка, дает основания для получения в первый год работы кооператива беспроцентного, а в последующие два года - льготного кредита на его развитие. Если новый кооператив выделяется из уже существующего, он получает поддержку (кадровую, финансовую и т.д.) и от него. Об эффективности работы такого "кооперативного инкубатора" можно судить по тому, что из многих десятков созданных таким образом кооперативов обанкротился пока лишь один.

Другая опорная структура - два кооператива, осуществляющих научно-исследовательские и опытно-конструкторские работы. Значительная часть современных изделий, выпускаемых МСС (например, промышленные роботы), разработана этими кооперативами. Они же разрабатывают и схемы технологических процессов на предприятиях корпорации. Об уровне этих разработок может свидетельствовать хотя бы факт участия исследовательских кооператив МСС в разработках НАСА и в европейской космической программе.

Третья опорная структура - кооперативы социального обслуживания. Поскольку по испанскому законодательству члены кооперативов не относятся к наемным работникам и на них не распространяются соответствующие правила социального страхования, то Мондрагонские кооперативы еще в начале 60-х годов создали собственную систему социального страхования. При более низких взносах на одного работника, чем в государственной системе, она обеспечивает медицинское обслуживание гораздо более высокого качества (система медицинского обслуживания в МСС признана в Стране Басков образцовой) и более высокий уровень пособий по безработице.

Наконец, четвертая (последняя по счету, но отнюдь не по значению) опорная структура - система образовательных кооперативов. Она включает сеть школ, профессионально-техническое училище, политехнический институт, институт промышленного дизайна, курсы подготовки менеджеров, курсы повышения квалификации специалистов и целый ряд других. Некоторые исследователи даже считают точкой отсчета истории Мондрагонских кооперативов не 1956 год, когда был основан первый производственный кооператив, а 1943, когда начало действовать кооперативное профессионально-техническое училище.

Кооперативы, входящие в МСС, построены на одинаковых принципах, соответствующих международно признанным кооперативным принципам (один человек - один голос; каждый новый член кооператива может вступить в него на тех же основаниях, что и ранее вступившие и т.п.). Члены кооператива на общем собрании (не реже раза в год; участие в собрании - не только право, но и обязанность члена кооператива) избирают Правление, которое назначает управляющих, и утверждают распределение прибыли по итогам года. Членами правления являются только члены кооператива. На время выполнения функций членов правления за ними сохраняется прежняя зарплата. Управляющие в состав правления не входят. Кроме правления, члены кооператива избирают Социальный совет, который выполняет примерно те же функции, которые обычно исполняют профсоюзы. Впрочем, в кооперативах могут действовать и профсоюзные организации.

Вступительный взнос в кооперативы примерно равен годовой зарплате неквалифицированного рабочего и составляет около 10 000 долларов. Для его уплаты предоставляется рассрочка от двух до четырех лет (для сравнения - стоимость создания одного рабочего места в Мондрагонских кооперативах превышает 100 000 долларов). Вступительный взнос члена кооператива зачисляется на его индивидуальный счет капитала.

Заработная плата в кооперативах построена на следующих трех принципах - 1) внешняя солидарность, означающая соответствие уровня оплаты в кооперативах тому уровню, который определен тарифными соглашениями в частном секторе; 2) внутрення солидарность, означающая сведение к минимуму различий между членами кооператива, основанных на разнице в доходах (высшая зарплата не может превышать низшую ставку неквалифицированного рабочего более, чем в 4,5 раза); 3) открытость условий оплаты, что означает свободу получения любым членом кооператива информации о любом окладе. Кроме заработной платы, по итогам года часть прибыли распределяется пропорционально индивидуальным счетам капитала, плюс к тому на средства на этих счетах начисляется обычный банковский процент. Только этот процент работник может получить наличными, а основную сумму выплачивают лишь при уходе из кооператива по старости или по болезни. Свой счет можно передать и по наследству, но при условии, что наследник будет работать в кооперативе.

За 40 лет своего существования Мондрагонские кооперативы прошли большой путь. Если первые кооперативы производил продукцию такого рода, как, например, кухонные плиты или простейшие отливки, то сейчас более 90 промышленных кооперативов производят гораздо более широкий круг весьма совершенных промышленных изделий. Среди них большой набор потребительских товаров - автоматические стиральные и посудомоечные мащины, микроволновые печи, холодильники, мебель; оборудование и мебель для торговых предприятий, в том числе различные водонагревательные приборы; большой спектр приборов и оборудования для технологического контроля (в том числе используемые в сложной бытовой технике, производимой кооперативыми); комплектующие изделия для компьютеров, аудио- и видеотехники; междугородные автобусы и комплектующие изделия для автомобилестроения; лифты и подъемники; множество видов станков и инструмента - абразивный инструмент, прокатное оборудование для сложных профилей проката, кузнечно-прессовые машины и прессы; промышленные роботы и гибкие производственные системы.

В МСС входят также строительные кооперативы, обеспечивающие жилищное и промышленное строительство, возведение мостов и крупных оффисных зданий. Есть и несколько сельскохозяйственных кооперативов различной специализации (молочные, винодельческий, свиноводческий и др.), занимающихся также переработкой сельскохозяйственной продукции. Наконец, в состав МСС входит потребительский кооператив Eroski, имеющий огромную сеть магазинов, супермаркетов и гипермаркетов не только по всей Стране Басков, но и на значительной части остальной Испании.

Кооперативы Мондрагонской группы обладают значительной устойчивостью - за все 40 лет их существования обанкротилось всего три кооператива (из них два не были созданы самой группой, а приняты "со стороны"). Этот результат можно сравнить с нормой, уже ставшей хрестоматийной - в США за первые пять лет существования выживает лишь 20% вновь созданных мелких фирм.

Помимо "выживаемости", можно обратить внимание и на устойчивый рост объемов продаж, и на постоянный рост занятости. В чем же секрет такой длительной успешной работы?

Обычные предприятия, принадлежащие работникам, находятся в очень большой зависимости от общих условий капиталистического рынка - колебаний спроса на их продукцию на товарном рынке, изменения условий на рынке капиталов (в частности, уровня процента за кредит), конкурентной борьбы и технологических нововведений... Не свободны от этой зависимости и кооперативы МСС, но для них она в значительной степени смягчается как масштабами кооперативной корпорации, так и наличием опорных структур. Эти структуры отчасти превращают внешние для изолированных предприятий условия рынка во внутренние факторы развития.

Мондрагонские кооперативы, разумеется, сталкиваются с колебаниями конъюнктуры рынка, как и обычные капиталистические фирмы. Однако у них существуют значительные возможности компенсировать возникающую структурную безработицу - в то время как одни кооперативы вынуждены свертывать производство и высвобождать работников, другие, напротив, расширяют дело и привлекают дополнительную рабочую силу. Такому переливу работников способствует разветвленная система подготовки, повышения квалификации и переподготовки кадров. За все время существования Мондрагонских кооперативов было лишь три года, когда происходило сокращение суммарной занятости. Все остальное время она росла. Общая занятость росла даже в конце 70-х годов, когда Испания переживала затяжной экономический кризис, а уровень безработицы в Стране Басков временами приближался к 30%. Наличие собственной системы подготовки специалистов и управляющих из членов кооперативов позволяет, кроме того, значительно снижать издержки на найм высшего управленческого персонала. И хотя заработки управляющих в МСС значительно ниже, чем на сравнимых капиталистических фирмах, кадры менеджеров и специалистов не уплывают "на сторону", а остаются в кооперативах, обеспечивая высокий уровень стратегического планирования и организации производства.

Даже в самые тяжелые кризисные годы МСС наращивала производственные инвестиции (подчас даже за счет замораживания, а то и сокращения заработной платы, проводимого по решению общего собрания). Такое поведение начисто опровергает расхожее мнение, что в коллективных предприятиях работники предпочитают все средства направлять на наращивание заработной платы в ущерб капиталовложениям. Возможность поддерживать высокий уровень инвестиций определяется тем, что индивидуальные счета капитала работников, сконцентрированные в Трудовом Банке, составляют значительную часть его активов и фактически являются гарантированным кредитным ресурсом. Активы Трудового Банка пополняются и за счет других источников, значительно превысив к 1995 году 3 млрд. долларов. Кроме того, договором об ассоциации предусматривается, что заемный капитал может составлять примерно половину используемого кооперативами капитала, остальное же они должны инвестировать сами. С этой целью из прибыли кооперативов делаются ежегодные отчисления в резервный фонд, колеблющиеся от 20 до 50% чистой прибыли. Таким образом, Мондрагонские кооперативы не зависят от "внешнего" рынка капиталов.

Значительно слабее и зависимость МСС от рынка инноваций. Хотя, разумеется, исследовательские структуры МСС не могут взять на себя все задачи по обеспечению технологического прогресса, все же зависимость корпорации от рынка новых технологий значительно смягчается. Более того, МСС сама выходит на рынок со своими информационными и технологическими продуктами, инжиниринговыми и консалтинговыми услугами.

И все же объяснить феномен Мондрагонских кооперативов только этими факторами нельзя. Ведь до сих пор МСС остается единственным в мире примером такой крупной системы, основанной на экономике участия. Следует подчеркнуть, что условия формирования МСС были во многом уникальными. В период становления Мондрагонских кооперативов сошлись в одной точке множество неповторимых условий.

Социальная политика франкистского режима была в общем более мягкой, нежели политика его германского или итальянского аналогов, и, наряду с жесткой антипрофсоюзной позицией и мелочным административным контролем над предпринимательской деятельностью, оставляла некоторое место и давала правовую основу для кооперативного движения. Основатели первых кооперативов обладали довольно необычными для Страны Басков того времени качествами - происходя из рабочих семей, они получили инженерное образование. Баски, как национальное меньшинство, обладают высокоразвитым чувством национальной солидарности, и любое начинание, которое может продемонстрировать их способность к успешному решению любых проблем - в данном случае экономических - встречает их поддержку. Этот же фактор обеспечивает высокую внутреннюю солидарность в Мондрагонских кооперативах, что, помимо всего прочего, объясняется еще и тем, что МСС успешно решает одну из очень болезненных и застарелых для жителей Страны Басков проблем - проблему занятости.

Наконец, ни в коем случае нельзя сбрасывать со счетов роль вдохновителя Мондрагонского эксперимента - Дона Хосе Мария Арисмендиарриета. Он воплотил в своей личности многие своеобразные и противоречивые тенденции того времени. Католический священник, активный участник антифранкистского движения, редактор газеты Баскской республиканской армии, он был заочно приговорен франкистами к расстрелу и лишь чудом избежал гибели, выдав себя за рядового солдата (список приговоренных к расстрелу, где значится его фамилия, можно увидеть в музее МСС). Будучи сторонником доктрин христианского социализма, Дон Хосе Мария стремился найти третий путь между капитализмом и социализмом советского типа. В этом нашло свое отражение широкое распространение в стране Басков различных социалистических идей. Обладая большим авторитетом одновременно как священник и как поборник социальной справедливости, он сумел объединить вокруг себя группу единомышленников из простых семей, которые получили при его содействии высшее образование. Дон Хосе Мария обладал и несомненным стратегическим чутьем: его сподвижники уверяют, что замыслы создания основных опорных структур МСС - кооперативного банка, исследовательских кооперативов и т.д. - исходили именного от него, хотя он не занимал никаких официальных постов в Мондрагонских кооперативах.

Однако при всей своей успешности опыт Мондрагонской кооперативной корпорации показывает нам и ограниченность таких - пусть и крупных - островков кооперативного движения в океане капитализма. Во-первых, это ограниченность масштабов. Помимо МСС, в Стране Басков действуют еще сотни кооперативных предприятий, и множество предприятий, частично принадлежащих работникам. Немало таких предприятий и в остальной Испании. Однако, несмотря на значительную долю кооперативов в производстве отдельных видов продукции, их удельный вес в испанской экономике в целом ничтожен.

Во-вторых, кооперативные предприятия, преодолевая капиталистический характер экономических отношений в одних аспектах, вынужденно сохраняют его в других. В кооперативах ликвидирован антагонизм между собственником средств производства (капиталистом) и наемным работником. Член кооператива выступает одновременно и как собственник, и как работник. Однако в них не ликвидирована другая основа классового деления, связанная с общественным разделением труда и разным местом людей в общественном процессе производства. Речь идет о противоречиях между рядовым работником и управляющим, о сохраняющихся существенных различиях между рабочими и специалистами. Значительно смягчив эти противоречия, найдя довольно эффективные формы компромисса между интересами рабочих и управляющих, Мондрагонские кооперативы не смогли снять проблему полностью. Часть этих проблем проистекает не только из технологической природы фабричной организации труда, но и диктуется общими условиями капиталистической экономики - менеджер должен добиваться прибыльности предприятия, обеспечивать необходимую интенсивность и дисциплину труда, экономить на издержках производства (в том числе и на заработной плате и на числе занятых) и т.д. Понятно, что в этих своих стремлениях он нередко будет натыкаться на интересы рабочего, которого привлекает более свободный режим труда и отдыха, более высокая оплата и т.д.

Отчасти компромисс между этими интересами обеспечивается в Мондрагонских кооперативах за счет временно занятых работников. Хотя по правилам их численность не должна превышать 10% занятых, нередко эта норма превышается. Временные рабочие получают ту же зарплату, что и члены кооперативов, но они не участвуют в распределении прибыли по итогам года, на них не распространяются различные гарантии и льготы, которыми обеспечиваются члены кооперативов. Эти временные работники первыми попадают под увольнение при неблагоприятных изменениях экономической конъюнктуры.

Не существует в Мондрагонских кооперативах и системы постоянного участия работников в принятии хозяйственных решений на различных уровнях (подбно той, которая существует на некоторых американских предприятиях, находящихся в собственности занятых, или существовала в 70-е - 80-е годы на Калужском турбинном заводе), хотя элементы производственной демократии там есть на верхнем этаже управления (общее собрание кооператива, Генеральная Ассамблея МСС) и на низовом уровне (автономные самоуправляющиеся бригады, кружки качества).

Такого рода противоречия и проблемы прорвались однажды в Мондрагонских кооперативах в открытой форме - в форме забастовки 1974 года на старейшем кооперативе Ulgor. Хотя с тех пор было предпринято немало шагов для смягчения указанных противоречий (расширены полномочия Социального Совета, получила развитие производственная демократия на низовом уровне), подспудное их проявление можно ощутить и сейчас.

Следует прямо сказать, что вряд ли в условиях капиталистической системы можно было бы ожидать много большего от такого рода изолированных экспериментов. Опыт Мондрагонских кооперативов ценен не тем, что являет собой некий идеальный образец самоуправляющейся социально-экономической системы. Отнюдь нет - мы видим пример реально возможного в рамках буржуазной цивилизации. Однако и этот пример показывает нам, что даже частичные шаги в социалистическом направлении обеспечивают более эффективное, более стабильное, более социально справедливое экономическое развитие, оказывая благотворное влияние и на всю социальную атмосферу.

Уникальность опыта МСС не означает при этом, что практика Мондрагонских кооперативов лежит вообще вне общего русла развития экономики участия. Многие элементы мондрагонского опыта уже применяются кооперативным движением на Западе. Это и использование схемы индивидуальных счетов капитала, и создание опорных структур, обеспечивающих кооперативам финансовую поддержку, помощь и консультации в области менеджмента, финансов, маркетинга и т.п.

Российское кооперативное движение переживает сейчас далеко не лучшие времена. После периода "бури и натиска" 1988-1991 гг., когда под видом кооперативов создавались в основном обычные частные фирмы, наступило похмелье. Оказалось, что "номенклатурный", мафиозно-монополистический капитализм враждебен любому самостоятельному предпринимательству, и не только коллективному. Кооперативы стали лопаться один за другим или уходить в сферу торговли и спекуляций.

Сейчас реальный кооперативный сектор в России представлен в основном реорганизованными колхозами и совхозами. И для этого сектора опыт Мондрагонских кооперативов, как мне представляется, окажется отнюдь не лишним. Разве не стоит для них проблема финансирования и задолженности? Разве не стоит проблема организации снабжения и сбыта? Думается, что объединение усилий наших сельскохозяйственных кооперативов в таких областях, как создание общей банковской структуры, совместной сети сбыта продукции, общей системы снабжения семенами, удобрениями, техникой, горючим, совместной ветеринарной службы, может стать для них большим подспорьем в борьбе за выход из кризиса. Да и многие внутренние проблемы Мондрагонских кооперативов, как и борьба за их решение, содержат для нас немало полезных уроков, как частного практического свойства, так и таких, которые подталкивают к теоретическим обобщениям.

И главным среди этих обобщений мне видится тезис, высказанный уже очень давно - что для подлинного успеха кооперативного движения, делающего его способным действительно преобразовать экономическую систему современного общества, кооперативный труд должен развиваться в общенациональном масштабе и на общенациональные средства.

См. также: Колганов А. И. Коллективная собственность и коллективное предпринимательство. М., Экономическая демократия, 1993; Боуман Э., Стоун Р. Рабочая собственность (Мондрагонская модель): ловушка или путь в будущее? М., то же, 1994; Ракитская Г. Миф левых о Мондрагоне //Альтернативы, № 2, 1996, стр. 104 - 118

Kenneth R. Hoover

Professor of Political Science

Western Washington University

"We are not working for chimerical ideals. We are realists. Conscious of what we can and cannot do [...] we concentrate on those things that we have hopes of changing among ourselves more than on those things that we cannot change in others [...] Dedicated to changing those things we can and that we are in fact changing, we are conscious of the force that this movement produces."

Fr. Josй Arizmendiarrieta

ABSTRACT

After a brief historical overview, the discussion centers on the ways that the Mondragуn cooperative network has dealt with some classic problems of utopian communities: 1) capital formation, 2) charismatic leadership, 3) responses to economic cycles, 4) differences in the interests of workers and managers, 5) the role of automation and technology, 6) the encouragement of entrepreneurship, and, finally, 7) socialization to the cooperative ideal. The analysis of the responses to these challenges is based on the research literature on Mondragуn, as well as on discussions with scholars and experts who have studied the system and with key individuals in the Mondragуn network. The conclusion suggests some of the remaining challenges and an agenda for further research.

CITATION: Hoover, Kenneth R. , "Mondragon's Answers to Utopia's Problems," Utopian Studies 3 (1992) 2, 1-19.

The allure of utopian visions is in the prospect of surmounting the difficulties that bedevil daily existence. As Frederic White observes, "It is this inspired disgust with things as they are that creates the literature of Utopia" (1981, viii). Yet nothing reveals the nature of these difficulties so clearly as various efforts to practice utopian ideals. The problems utopias encounter fill the concluding chapters of histories of utopian communities, provide the stuff of realist rejoinders to reformist proposals, and become the central theme of prominent dystopias such as Brave New World, and 1984.

The literature of utopia offers a critique of the failures of society, but it is a critique that itself can be analyzed to reveal the truly intractable elements of life's difficulties, as opposed to the possibilities for constructive change. The analysis offered here sets some of the classic problems of utopias against the experience of the Mondragуn cooperatives, a highly successful network that has achieved some of the principal goals utopias strive for.

My plan is to review briefly the history of the Mondragуn cooperatives and the record of their performance, then to identify a few of the problems utopian communities commonly face, and finally to suggest some of the ways that the Mondragуn cooperatives have avoided and, in some cases, met these challenges over the last thirty-five years. In the conclusion, I will point to the unsolved problems that remain for Mondragуn, and to an agenda for further research. The discussion is based on interviews with several Mondragуn participants as well as with researchers working on the topic, and on the cross-disciplinary literature that has been developing steadily as the "experiment" has become institutionalized.

Background

First, what is Mondragуn? The name identifies a community in northern Spain of about 28,000 located south and east of Bilbao among the valleys and small mountains of Guipuzcoa province. Mondragуn is the center of a network of more than 100 employee-

owned cooperatives, including Spain's largest appliance manufacturer, and its sole producer of micro-chips. The network spreads through towns and villages across the three provinces of the Basque country.

The performance of the Mondragуn cooperatives over the last three decades has attracted international attention. For example, it was reported recently in The Economist that:

"With sales in 1988 of Ptas 205 billion ($1.8 billion), a workforce of 22,000 and output equal to 4% of the region's GDP, the Mondragуn group ranks among Europe's industrial heavyweights... . It sets out not to earn dividends for shareholders but to provide jobs, social security, and education. Through fair weather and foul, it has done so." (Anon., 61)

A brief overview of the Mondragуn experiment may be useful. There are four periods to the development of the "Mondragуn Cooperative Experience": the establishment of a technical school by Fr. Josй Maria Arizmendiarrieta in 1943, the development of the first cooperative in 1956 followed by rapid growth, the recession period beginning in 1979 which saw unemployment reach 25% in the surrounding areas, and the present phase which began with full recovery of the cooperatives in 1986. Currently, the cooperatives have positioned their resources for the level of competition attendant upon the 1992 dismantling of tariff barriers within Europe.

At the heart of the Mondragуn network is a consortium of cooperatives in the kitchen products field marketed under the brand-name FAGOR. The FAGOR consortium is the direct descendant of the first industrial coop named Ulgor, a name composed of the first letters of the names of the five young engineers who founded it in 1956. These five were all students of a priest, Fr. Josй Arizmendiarrieta, whose interest in improving the lives of his parishioners took concrete form with the creation of a technical school in Mondragуn in 1943. This was the first step in the creation of an innovation in political economy.

Fr. Arizmendiarietta combined many qualities according to observers: he was a deft teacher, an inspirational figure, as well as a very practical person who guided the movement without institutionalizing his power (Whyte and Whyte, 223-254; Meek and Woodworth). Making a self-conscious attempt to navigate a course between the principles of Adam Smith and Karl Marx, he found his basic texts in a combination of Catholic moral teaching on the economy and the experience of the 19th century utopian cooperative experiment at Rochdale in England.

The priest remained in the role of teacher, rather than administrator, though occasionally he took direct action to assist the movement. In one instance, he persuaded the directors of ULGOR to create the cooperative bank as a solution to their financing problems. In another, he launched the concept of a working technical cooperative as an adjunct of the polytechnical training school. In both cases, he worked through study groups and endless consultations, while becoming a knowledgeable interpreter of Spanish legal and bureaucratic requirements (Meek and Woodworth, 1991, 519). He was not an overtly charismatic leader, but he clearly had a talent for synthesizing theory and practice in response to the needs of the moment. Father Arizmendiarrieta died in 1976.

The cooperatives are based on the principles of England's Rochdale Pioneers. Each member, upon being hired to work in a cooperative, loans a set amount to the cooperative's capital fund, for which he or she receives a fixed rate of interest. Compensation takes three forms: wages, 6% fixed interest on the capital loan, and profits of the cooperative which accrue to shares and are used for capital investment until the member's retirement. Wages are set at the entry level by the prevailing labor market, and constrained by the general principle of a 6:1 ratio between highest and lowest wages. The ratio was initially established at 3:1. With the increasing sophistication of technical and managerial skills required to sustain a competitive industrial position, the ratio was raised to 4.5:1, and in 1987 to the present level (Whyte and Whyte, 1991, 44-45). The initial capital loan contribution can be financed on credit through the bank for a specified period of time.

The administration of the cooperatives follows a pattern. Managers are appointed for a term, usually four years, by an elected Supervisory Board which is accountable to the General Assembly of all cooperative members. Thus there is indirect accountability, an approach that allows for some latitude on the part of managers as they pursue the economic and social objectives of the cooperatives. A second elected body, the Social Council, deals with the concerns of members "as workers," rather than "as co-owners" in the way that the supervisory board does. The management is accountable primarily to the latter, though it obviously has to work with the former as well (Whyte and Whyte, 213).

There are several features of the Mondragуn network that are distinctive, and perhaps the most important are the secondary institutions that tie the whole network together. Chief among them is the bank. All of the cooperatives participate in the bank: it is their creature in a sense, though it has grown to become one of Spain's most significant financial institutions. This ingenious institution provides a source of capital and, just as important, of expert advice and planning assistance for the member coops. The agreement that is the instrument of membership in the bank is, in effect, the constitution of the Mondragуn network. The agreement sets overall limits on pay ratios, the basic parameters of compensation, and many other aspects of policy.

The elaborate system of secondary cooperatives includes a health and pension system, a research institute that investigates new technological applications, an educational system covering all grades through to a technical university that is itself a producing cooperative, and an impresarial division that focuses in the start-up of new cooperatives. All are governed by boards held accountable to the member coops, as well as to their own working share-holders.

One distinctive feature that must be accounted for is the relationship with the Basque nationalist movement. This link is important for historical reasons, and a critical element in determining the transferability of the Mondragуn experience. It is very nearly impossible to reach a simple conclusion about this because of the many paradoxes presented by the cultural environment. There is a long history of cooperative efforts in the Basque country; yet there is also a history of bitter competition and political rivalry. Nationalist sentiment is strong and there is reportedly substantial support among Mondragуn participants for Herri Batasuna (a coalition of pro-Basque groups including the terrorist ETA), and the ETA itself. At the same time, the hiring policy is non-exclusionary and the coops do not engage directly in political activity. The coops were born in a period of adversity and persecution by the Franco regime, yet they have survived in a period of relative affluence in post-Franco Spain. The school system teaches the Basque language and emphasizes nationalist values, however more than a quarter of the cooperative's business is in international trade, and its products are widely marketed throughout Spain.

The best indicator as to whether the Basque factor is essential to the success of this form of production is to see if similarly successful efforts can be found elsewhere. The evidence shows that the cooperative sector in capitalist societies is much larger than most people realize. (Estrin and Jones; Ben-ner) While direct efforts to imitate Mondragуn have had mixed results, the reasons for the failures show patterns that can be dissociated from cultural factors. Perhaps the aspect of the Basque connection that is the most important is the incentive nationalism provides for establishing a thoroughgoing educational system that stresses values congenial to the cooperatives (Meek and Woodworth, 523). The question of transferability will receive further consideration as we analyze the approaches taken to the classic problems of utopias.

THE RECORD

An analysis of the Mondragуn cooperative experience must be set against the background of its remarkable economic performance. In the first twenty years, more than 15,000 jobs were created (Thomas and Logan, 9). The growth rate in the 1976-1983 was four times that of Spain's industrial output generally (Bradley and Gelb, 1987, 84). In the decade from 1976 through the recession until 1986, 150,000 jobs were lost in the Basque country while Mondragуn created 4,200 new jobs and left none of its members without employment or assistance.

Furthermore, by the range of products manufactured, the network has demonstrated that cooperatives can successfully compete across nearly the entire range of the economy. The most surprising aspect of the list of products is how many rely on high technology. Cooperatives have an image as service-related organizations, however the Mondragуn experience is that the system works better in association with forms of highly organized production.

The achievements of the Mondragуn cooperatives are numerous, significant, and increasingly well-documented by scholars from several nations. The cooperatives are more productive than comparable capitalist firms, and have absentee rates that are 50% lower (Thomas and Logan,, 50-51). Well organized cooperatives generally seem to have a stronger ability than conventional firms to survive and even prosper during recessions and downturns (Ben-ner, 22). Keith Bradley suggests that state policies favorable to worker-owned firms are more likely to produce solid economic results than interventionist strategies designed to shore up or subsidize conventional firms ( 51-71). In the case of Mondragуn, as much as a third of the production of some cooperatives is exported, and this is where the growth is for most product lines.

All of these economic benefits are in addition to the advantages to the workers of participating in a system where information is accessible, where there is a genuine commitment to providing a reasonable level of security for workers and their families, and where there is the real prospect of increasing community educational standards, health, cultural participation, and wealth itself.

Rather than reducing human labor to the status of a commodity in the marketplace, the cooperatives use markets to provide the critical information necessary to plan for the security of workers. Mondragуn has come to represent a major new "social invention," in the phrase of William Foote Whyte and Kathleen Whyte -- one that many would say has vindicated those who have labored in the utopian vineyard down through the centuries. But is it a utopia? A partial response to that question lies in appreciating Mondragуn's answers to utopia's problems.

UTOPIA'S PROBLEMS

One common scenario found in historical accounts of utopian communities unfolds as follows: the hopeful beginning, early struggles, a fruition of effort that bears the seeds of destruction, and a sober conclusion with lessons drawn as to the weakness of leaders, the perversity of followers, and the folly of planned communities The less pessimistic histories draw further lessons about the good effects of efforts at designed communities and the sense in which they point the way toward reforms of society generally.

There is a chronic aspect to the problems that are revealed in utopian experiments, and it is these symptoms of dystopia in the heart of utopia that I want to focus on. If there is a clinical metaphor here, our purpose is to understand the forms of preventive medicine, therapy, and intervention that have kept Mondragуn healthy through more than thirty years of changing conditions.

A number of classic problems need not be discussed in any detail since they do not apply to the case of Mondragуn. The problem of economic isolation generated by differences between the internal and external systems of economic exchange does not arise because Mondragуn operates as a business in the marketplace, rather than as a fully self-sufficient set of communes.

The familiar difficulty of disappointed expectations has been minimized since Mondragуn was founded in adversity, and has never aimed to offer a complete recipe for human happiness. The focus has been on economic security, with attention given to the forms of socialization required to achieve it. Mondragуn has not challenged the mores and customs prevailing in Basque society except insofar as they limit economic modernization. There is a political agenda related to Basque nationalism, however the network has a non-exclusionary hiring policy.

On the other hand, the significant issues that have been dealt with include: 1) capital formation, 2) charismatic leadership, 3) responses to economic cycles, 4) differences in the interests of workers and managers, 5) the role of automation and technology, 6) the encouragement of entrepreneurship, and, finally, 7) socialization to the cooperative ideal. Each of these has had fatal consequences for previous efforts at the establishment of utopian communities; and each has been the subject of careful attention at Mondragуn.

Capital

Capital formation is a fundamental weakness of cooperatives historically. Modern requirements for technological modernization exacerbate the problem. Furthermore, the need for capital investment sets off a conflict between compensation for labor, on the one hand, and investment in machinery, on the other.

In the latter part of the 19th century, Sidney and Beatrice Webb argued that this was reason enough for the Fabian Society to turn toward statist solutions to the evils of capitalism (Thornley, 27). On the contemporary scene, problems of capital investment pose the principal threat to the continuation of the Israeli kibbutzim. In a time of rising inflation, Israeli collectives engaged in speculative forms of investment using generous government credits. These credits reduced the need for discipline with respect to the trade-off between labor compensation and investment requirements. With the subsequent explosion of interest rates, a heavy debt burden has imperiled numerous kibbutzim (Brooks, A20).

Perhaps the most innovative aspect of the Mondragуn cooperatives is the creation of a banking system, named the Caha Laboral Popular (CLP), that works diligently at providing capital, monitoring performance, and planning new cooperatives. Founded at the initiative of Fr. Arizmendiarrieta in 1960, it is now the 15th largest bank in Spain (Anon., 61). It has several hundred thousand depositors, over $2 billion in assets, and more than 200 branches (Lutz and Lux, 263).

As a secondary cooperative, the Caha Laboral Popular is tied closely to the welfare of the network. The bank's board is made up of two-thirds representatives from the other cooperatives and one-third from the employees of the bank (the Social Council is elected by employees only). Compensation to the employees is in part dependent on the overall performance of the cooperative network. The Caha makes about 80% of its loans outside the network since the number of profitable opportunities for investment within the system is limited, however the profits are used to the advantage of the member cooperatives.

The initial success of the bank had to do with a law that permitted cooperative banks to pay 1/2% higher interest than regular banks, an advantage that contributed to a dramatic rise in deposits. If there is one area where state intervention may play a useful role in facilitating cooperative development, it is in providing an advantage for cooperative banks. The public receives in return the benefits that come from the creation of stable jobs that contribute to durable communities. Coops avoid the social costs of capitalist firms. They are far less likely to be bought out, or dealt with as exploitable property, than are conventional firms. Both the treatment of workers, and the treatment of the community by the cooperatives, offer substantial public benefits.

The centrality of the bank is underscored by the significance of the "contract of association" that all members must hold to. By refining the contract over time, the experience of the cooperatives has been given practical form. If there is a constitution to Mondragуn, this is it. Everything from ratios of pay, to the organization of authority, to external audit arrangements, to non-discriminatory employment policies are specified. The bank retains the right to intervene in failing cooperatives and has done so with dramatic results in several cases (Whyte and Whyte, 68-88).

The arrangements for using capital have become a principal strength of the Mondragуn cooperatives rather than, as with the Rochdale experiment, a source of weakness. The challenge of capital formation will be put to the supreme test, however, as Mondragуn faces up to the difficulties of competing with the major corporations of the European Community without tariff protection in post-1992 Europe. Currently experiments are under way with holding companies and joint ventures formed with conventional firms as a way of accessing international markets.

Charismatic Leadership

For all of the impressive social and economic machinery of Mondragуn, there is a factor of leadership that must be accounted for. Fr. Arizmendiarrieta died in 1976; Mondragуn is still alive and well 13 years and many severe challenges later. He was not, in any event, a domineering figure. Indeed, he preserved his role as teacher and guiding spirit while avoiding an active role in, for example, Mondragуn's one major labor dispute (Whyte and Whyte, 96-102).

Three of the founding five students of Fr. Arizmendiarrieta are still active in the cooperative, one in FAGOR as its international director, Sr. Jesus Larraсaga, whom we were able to interview. The other two, Sr. Ormaechea and Sr. Gorroсogoitia, served as heads of the cooperative banking system that now plays a powerful role in assuring the fiscal integrity of the cooperatives. While the departure of the founders will be clearly noticed, it is apparent that there has been substantial executive talent recruited from within as well as brought in from outside. Several outsiders have provided major leadership skills during periods of change and crisis (Whyte and Whyte, 113-127).

However, it must be said that the visitor senses that some of the cooperative zeal has dissipated with the passing of Fr. Arizmendi. Judging from interviews with participants, there is some concern that this has weakened the cooperative spirit. The necessity for laying down a firm educational base as the first condition of successful cooperative life is the key element that concerns activists in the Mondragуn network. As Meeks and Woodworth have suggested in their work on the centrality of education to the Mondragуn experience, both ideological and technical training are critical to the success of cooperatives (Meek and Woodworth). There are many cases where the former has been tried without the latter, and cooperatives have often failed for lack of participants who have the requisite technical skills.

For Mondragуn, the challenge may be the reverse. The polytechnical college is now one of Spain's most prestigious schools. The question is whether, in the absence of the socialization provided by the first wave of leaders and activists, the ideological dimension of cooperative socialization will be sufficiently dealt with.

Thus the impression at this stage is that the technical leadership is in place to deal with economic decisions; though there is less certainty about the exercise of leadership in the socialization and education functions associated with Mondragуn. Perhaps the organization of a highly successful schooling system has put in place a process that is self-renewing independently of charismatic leadership, however there is no reliable evidence available on this point.

Cycles in the Economy

For the first two decades of Mondragуn's existence, there was little outside attention paid to it. Partly as a matter of survival in Franco's Spain, the coops did not invite notoriety. For those who were inclined to notice the experiment, the Basque cultural factor may have seemed to render it unique and therefore of little interest as a generalizable experience.

What really attracted international attention was the ability of the coops to survive a major depression in the Basque economy. Western nations in the late seventies and early eighties experienced huge dislocations in their industrial economies. The successful adaptation to these adversities at Mondragуn contrasted sharply with the dislocation and despair found in other European and American industrial centers was startling indeed.

Economists began to look systematically at the cyclical adaptation of Mondragуn in comparison with Basque capitalist firms, and to relate that data to the comparative performance of cooperatives in other European countries. The comparative performance of Mondragуn was amazing; that of other cooperatives was, at the very least, impressive. Both forms of analysis yielded generalizations that could be applied to cooperatives generally, while diminishing the significance of the cultural factor in particular. (Bradley and Gelb, 1982, 1987; Whyte and Whyte, 129-222)

What emerges generally is that worker-owned firms have a lower likelihood of failure in downturns than capitalist firms, and they distribute the costs of recession far more equitably among the stake-holders in the business. The peril for worker-owned firms occurs, paradoxically, in prosperity when there is a tendency for some cooperatives to respond to immediate economic incentives by hiring non-members as workers in order to reduce both labor costs and long-term commitments to job security (Ben-ner, 26; Bradley and Gelb, 1982, 30-31). Over the long term, cooperatives may be in more danger of dissolution on the upside of a cycle than the downside. While this is the pattern for European cooperatives generally, Mondragуn appears to have benefitted from the downside strengths without succumbing to the upside threats to its integrity as a cooperative network.

Perhaps the most important factor in avoiding this development is the pro-active stance toward job creation through the expansion of membership rather than temporary labor. It is a condition of the contract with the Caha Laboral Popular that cooperatives will undertake membership expansion when market opportunities are present and capital is available.

It is also true that the cooperatives are situated in small communities where limited mobility makes transient labor less available and desirable. So far the rule that non-members may not be hired other than as a very small percentage of employment has held.

The semi-isolated situation of the Mondragуn cooperatives probably contributes another element to their stability by reducing labor turn-over. This has the effect of reducing training costs, and preventing the loss of equity capital. The labor market of these cooperatives, both for locational and cultural reasons, is somewhat separated from the national labor market which, in turn, makes it possible to operate with constraints on wages and particularly on managerial salaries that would be much less acceptable in a major urban area.

Diversification of risk is another major advantage of the Mondragуn network. The wide array of products manufactured, and the dispersion of manufacturing through a variety of units, means that risks from market failure as well as management failure are minimized. Correspondingly, the ability to adjust through labor transfers, and to avoid management failures by close monitoring and careful counseling through the bank, makes successful adjustment far more likely.

The fact that Mondragуn came through a recessionary period comparable in severity to a U.S. depression with virtually no real unemployment in the cooperatives is evidence for this extraordinary adaptive ability. What remains to be seen is how the cooperatives adapt to a new wave of prosperity in the context of a challenge from the European Community in 1992.

Differing Interests of Workers and Managers

The divergence of interests between managers and workers is built in to the foundation of the industrial system. It accounts not alone for the failure of cooperatives, but of capitalist firms as well. Indeed, much of the overhead cost of management in capitalist firms is devoted to dealing with the problems of motivation, productivity, absenteeism, stress, and turn-over attributable in large part to the human inefficiencies of this critical relationship.

Cooperatives generate expectations that such differences will be minimized; indeed that is the rationale for their existence. The classic error of cooperatives is to presume that democratic decision-making alone can address the problem. Mondragуn's constantly evolving system for minimizing class conflict is thus far a successful response to the problem as evidenced by the perceptions of participants. In a systematic survey in 1980, Bradley and Gelb report that "only 18 percent of co-operateurs perceived a substantial social divide (between workers and managers); 45 percent saw no division at all. (Bradley and Gelb, 1981, 221).

Beneath the question of social divisions lie the hard realities of divergent economic interests. The whole logic of the Mondragуn's institutional framework is that management must be constrained to operate in the interest of the security of the members. It is management's job to reconcile security with the marketplace, rather than to maximize profits for absentee owners at the expense of labor. At Mondragуn workers are rewarded for performance through increased financial security, and protected against arbitrary personnel management through carefully developed systems of representation and accountability.

The 6:1 pay ratio, the term of appointment for managers, and the formal representation of workers through the Supervisory Board and the Social Council establish parameters for the reconciliation of interests. The ethos of cooperation and the peer pressure for performance in a system of shared benefit from productivity sustain the cooperative mode of behavior.

There are limits to the success of participation as a key to reducing worker-management differences in Mondragуn however. The Whytes report that reactive participation is very high in Mondragуn. Workers have many opportunities to respond efficaciously to management proposals for changes in working situations. However pro-active participation is not as great as in some of the most advanced capitalist firms where workers may be involved from the beginning in job design. Most of the job redesign in the Mondragуn cooperatives has been management-initiated and has been slower to catch on than might otherwise have been the case (Whyte and Whyte, 210-211).

The growth of pro-active participation, one may speculate, has been limited first by the origins of the cooperatives in a poor area characterized by minimal education. The job redesign initiatives came with prosperity in the seventies. However they took second place to concerns for employment preservation in the face of recession. Now, with stability restored, there is new interest. However, again, a larger issue looms which is adaptation to the realities of European Community competition in an increasingly open environment. It is likely that further advances in this area await a period of stability and perhaps the incorporation of a new generation of better educated young workers who will wish to advance the agenda of humanizing work.

Automation and Technology

Cooperatives are often associated with service enterprises, and occasionally with resistance to technology. This resistance has roots in history as well as in the practical dimensions of these experiments. One root of the cooperative movement is found in the old craftsmen's guilds (Thornley, 26-29). The antipathy to technology arose out of rearguard actions against the arrival of industrialization and, finally, the systematization and schematization of blue collar work in the form of Taylorism.

Mondragуn represents an adaptation of Taylorism, and a rebellion against the managerial domination of the personal lives of working people known as Fordism (Meyer). An illustration is the response in the cooperatives to automation. FAGOR, the largest and most significant Mondragуn cooperative, operates Spain's most automated assembly line for producing refrigerators. Due to the sophistication of the machine tools, some of which were designed in the coops, four different models of refrigerators can move through the line simultaneously. As another example, EROSKI, the consumer cooperative associated with Mondragуn, has developed an automated warehouse with computer-driven forklifts.

Rather than avoiding automation, the Mondragуn cooperatives have defined the "problem" of automation as a matter of obtaining control over the benefits of technology on behalf of members. The dilemma posed by automation for job creation, a central social goal of the network, has been faced. The objective has not been to preserve every job at any cost, but rather to preserve the security of member's positions through the best use of technology. It is a system that treats direct labor as a "semi-fixed cost" similar to the treatment generally accorded to the cost of machinery and facilities, and often to indirect costs and managerial labor. Changes in demand are dealt with through burden-sharing and phased change.

In conventional firms, Fordism was a system of social control over workers aimed at reducing the behavioral problems involved in harnessing human labor to machine paced production. The conflict of interest between the laborer and his mechanical pace-setter was resolved through discipline, incentives, and manipulation. In the Mondragуn network, not all of these problems are resolved -- and there are still complaints about the monotony of factory work. However, the monetary benefits of technology accrue directly to the accounts of workers. Furthermore there are extensive facilities for adjustment and re-orientation as work processes change.

There is, finally, an element of Taylorism that cannot be eliminated in modern industrial production. Mondragуn has met that challenge in two ways: amelioration of the worst aspects of assembly line work, and redesign of the work process itself. In the refrigerator factory, the assembly process is integrated with rest areas that have green plants, work stations where employees can provide their own decorations, and a community bulletin board that contains all of the financial data about the coop and an invitation to the free expression of ideas.

In the COPRECI cooperatives where electronic components are the main product, work redesign experiments have been underway for the last fifteen years. One technique is to install tables where groups of workers build components in teams instead of working at assembly lines. Production is converted from a function base to a product base. Rather than being harnessed to functional processes with no immediate connection to a finished result, workers are now brought directly into a relationship with the end product. This led to many salutary effects for motivation, cost-reduction, product improvement, and adaptability to customer's needs (Whyte and Whyte, 118-127).

Beyond revising the process of production, it is becoming apparent that technology and cooperatives have an interactive relationship that is the reverse of what one might have expected. While cooperatives are often associated with labor-intensive service operations, the literature on cooperative success factors now recognizes that these may be the most difficult forms of cooperative venture. Technology seems to bring to the work-place a self-evident need for order and discipline that helps to objectify sources of conflict in the workplace so that they can be dealt with through the techniques of democratic consultation combined with economic rationality.

Entrepreneurship

The monastery is the utopia of the virtuous. Nineteenth century communal visions, including Marx's, envision a utopia of the creative (Geoghegan). The liberation of the creative instincts of the individual rose to prominence as a utopian ideal with the decline of feudalism and, with it, the diminution of monasticism and chivalry (Hirschman).

Yet, paradoxically, it is the entrepreneurial form of creativity that appears to be missing from many contemporary visions of utopia, and the communities they have spawned. It may be the attachment of the utopian tradition to arcadia and to the guild society of craftsmen that condemns it to commercial conservatism, but there is a distinctly reactionary style to most socialist utopian visions of economic life. Creativity is good, but commercial entrepreneurialism, particularly if it involves technology, is eschewed.

Whatever its relationship to utopian visions, the problem of entrepreneurial innovation is a practical issue for cooperatives. The tendency to stay with successful patterns of production is very strong when the security of one's share is a constant concern. The known product is a temptation for both capitalists and the members of cooperatives. Mondragуn's answer is to institutionalize the entrepreneurial function.

Originally, it was the Caha Laboral Popular that took on the function of identifying new products and advancing the formation of additional cooperatives. Working with Ikerlan, the secondary cooperative that specializes in research, planners from the bank facilitated product innovation at existing cooperatives and promoted new initiatives. Ikerlan operates as a research institute with clients in many fields of production technology, both within and outside of the Mondragуn cooperatives. It serves the purpose of linking the network to the latest trends in research-based product innovation.

Concern over the growing power of the bank led to the formation of a separate impresarial division which has just recently become an independent cooperative answerable to the governing council (Cornforth). While the imagery of entrepreneurialism is individualist in the mythology of capitalism, the practice is very often corporate. Mondragуn is no different in that respect.

The Impresarial Division works with Ikasbide, an educational conference center, and Alecoop, the cooperative of the technological university, to bring together new ideas and shape them into commercial concepts. The adaption to the recession in the past decade was aided immeasurably by the forward-looking activities of this research and development center.

Socialization and the Maintenance of Community

The renewal of socialization after the first generation of cooperative development is, of course, the critical test for utopian communities. It is a little too early to tell what the result will be in the Mondragуn network. Given the fact that Mondragуn represents a less than comprehensive attempt at community, and one that fits into many of the conventions of the market economy, the burden placed on socialization is lower than for other experiments.

If we take as a benchmark for understanding the role of socialization Rosabeth Moss Kanter's six "commitment mechanisms" (1972), Mondragуn relies on five of them to one degree or another: communion in terms of a group ideal is symbolically present, though membership is open to all and structured in terms of substantive individual incentives. What is perhaps instructive is that so much could be accomplished in the Mondragуn system with so little overt emphasis on the expressive forms of solidarity. Investment is tangible in the form of a share purchased and the cumulative savings that accrue over the years.

Renunciation of the outside world is a factor principally for those committed to Basque nationalism and its indirect affiliation with Mondragуn, though there are many other ways to express this commitment in Basque society. Another kind of renunciation may be found in the experience of those at the top of the pay scale in Mondragуn who could be earning more money, and achieving higher relative status, for similar work in the conventional economy. For these people, renunciation of the materialist status heirarchy of the conventional economy comes with acceptance of the alternative values of security, stability, and harmony that are found within the cooperative system.

Sacrifice was an early aspect of the experience, and a factor of renewed significance during the recession when some cooperatives voluntarily reduced wages rather than eliminating jobs. This form of sacrifice is the clearest indication that the bonds forged in the Mondragуn system are indeed strong. The transcendence of everyday experience through charismatic leadership is of a low order in Mondragуn. The remaining device, mortification, really has no place in this instance.

While Mondragуn fits in these respects with the general profile of utopian communities, perhaps the success of Mondragуn lies in not having over-estimated the level of community that could be achieved in a modern industrial economy. Differences of degree are important. Mondragуn, for all of its accomplishments, has presented a lower order of challenge to its socio-economic environment than most utopian communities.

There are critics who have pointed out that Mondragуn does not go far enough. Some feminists have criticized the cooperatives for not having moved more quickly and decisively to improve the position of women. Hacker, for example, attributes the limitations on the progress of women at Mondrag n to its common roots with capitalist firms in "militarist and patriarchal" forms of development. There is, on the other hand, a successful women's cooperative, and women are present in all phases of the network's activities in significantly higher percentages than in comparable Basque industries (Whyte and Whyte, 75-78).

Absent the pressure exerted by the EC's transformation in 1992, the socialization factor might not be so critical. The educational system associated with Mondragуn might be sufficient to reproduce the conditions for its maintenance. However both the level of material expectations and of market performance demanded by burgeoning world competition place fresh strains on the Mondragуn cooperative experience. It remains to be seen if the network is equal to this new challenge.

CONCLUSIONS

Is this a utopia at all, or is it, to adapt a phrase from Sir Thomas More, "a fiction whereby the [capitalist] truth, as if smeared with honey, might a little more pleasantly slide into men's minds?" (In Kumar, 24). Certainly there are skeptics on the left, Edward Greenberg principal among them, who fear that cooperatives may well become a form of "collective capitalism." My own conclusion is that Mondragуn does indeed combine elements of the utopias of Marx and Smith. Scarcity is overcome in an environment where the humanization of the labor process can at least be attempted, and Marx might have settled for that if he had seen the 20th century results of other avenues towards his utopia (cf. Hoover and Plant).

Adam Smith had a utopian vision as well. He conceived of industrious individuals increasing the social product through rational investment of their energies and capital. Smith defended his utopia against the accusation that it enshrined avarice by pointing out that the self-discipline engendered by the marketplace would provide a larger moral dividend than any attempt at altruistic preaching on behalf of "moral sentiments" (Hirschman).

In Mondragуn self-interest is indeed harnessed to the increase of the material product of the society, but the link is through a cooperative system that guards against abuse and exploitation. The reward to self-interest is made more secure and comprehensive by the functioning of the secondary cooperatives, and they, at the same time, give to the community an institutional claim to moral achievement that is considerably more secure than Smith's proposition about the ability of vanity somehow to discipline lust and avarice.

While there may be no intrinsic reason why a cooperative as opposed to a capitalist firm would behave in a more socially responsible fashion toward, for example, the environment, the conditions for prudence and long term vision are clearly in place. Absentee ownership, mobile labor, the treatment of products and facilities as speculative property all conduce to bottom-line short term thinking of a kind that is quite obviously dangerous to the rhythms and continuities that familial, social, and ecological survival require. Mondragуn has demonstrated this by generating its own social institutions and setting aside a fixed percentage of profits for community improvement. The relative performance of capitalist and cooperative firms in this region on environmental issues would make an interesting research project.

Beyond cooperative housing developments and the educational system, communal life styles are not, however, part of the experiment. Clearly it is not a liberationist utopia on the Freudian model of Norman O. Brown, Herbert Marcuse, or Charles Reich (Kumar, 401-402). Mondragуn attempts to build a kind of middle class familial utopia that carries its own benefits for the personal life, as well as the life of the community. Mondragуn can claim to provide the basis for family life through its cooperative housing developments, educational system, social agencies, and health programs.

The problem with assessing this aspect of Mondragуn is that virtually all of the research thus far has concentrated on its economic and political characteristics. It would be fascinating to know how the life of the Mondragуn member differs from that of other citizens with respect to social interactions, educational experiences, recreation, and family life. Research on these cultural and socio-psychological questions remains to be done. A fascinating project awaits.

Hopefully, inquiry of this sort will be an extension of the research model presently in place. Through a partnership between Mondragуn and Cornell University, a "participative action research" team has been developing new studies that grow out of a meeting of the minds between participants in Mondragуn and skilled social scientists experienced in labor and industrial relations. Independently of its association with Mondragуn, the research model needs to be considered as a pathbreaking attempt at resolving the tension between values and positivist analysis in modern social science (Whyte, Greenwood, Lazes, 5; Whyte, 1982; Hoover, 138-144).

Participative action research is linked in the Mondragуn case to the task of creating a "social invention," to use another of William Foote Whyte's evocative phrases. Thus the meaning of Mondragуn for academicians may well be that it is the harbinger of a new social science -- one that brings together the implicit agenda of social science, which is the improvement of human society, and the appropriate tools and strategies for analysis in an experiment with great significance for the future of the industrial world.

While there is surely more to be known about Mondragуn, it is apparent that by adopting a rather modest and straightforward approach to the classic problems of utopia, it has achieved far more than thousands of other experiments. This record of durability suggests that it may even be able to compete successfully in the new world of global competition, while retaining important elements of the cooperative ideal.

REFERENCES

Anon. (1989), "Co-operate and Prosper," The Economist, April 1, 1989, p. 61.

Ben-ner, Avner (1988), "Comparative Empirical Observations of Worker-Owned and Capitalist Firms," International Journal of Industrial Organizations, 6, pp. 7-31.

Benham, Lee, and Philip Keefer (1986), "How Diverse Organizations Survive: A Case Study of the Mondragуn Cooperatives," Working Paper No. 100, May, 1986, Center for the Study of American Business, Washington University, St. Louis, MO.

Bradley, Keith, and Alan Gelb (1981), "Motivation and Control in the Mondragуn Experiment," British Journal of Industrial Relations, 19, 2, pp. 221.

Bradley, Keith (1986), "Employee Ownership and Economic Decline in Western Industrial Democracies," Journal of Management Studies, 23 (January, 1986), pp. 51-71.

Bradley, Keith, and Alan Gelb (1982), "The Replicability and February 28, 1992 Mondragуn Experiment," British Journal of Industrial Relations, 20 (1982) 1, pp. 20-33.

Bradley, Keith, and Alan Gelb (1987), "Cooperative Labour February 28, 1992 Response to Recession," British Journal of Industrial Relations, 25 (March) 1, pp. 77-97.

Brooks, Geraldine (1989), "The Israeli Kibbutz Takes a Capitalist Tack to Keep Socialist Ideals: Collectives Are Deep in Debt But Find Innovative Ways to Serve Common Good," Wall Street Journal, Sept. 21, 1, A20.

Cornforth, Chris, "Can Entrepreneurship Be Institutionalized? The Case of Worker Cooperatives," International Small Business Journal, vol 6, n. 4, pp. 10-19.

Ellerman, David, "Management Planning With Labor as a Fixed Cost: The Mondragуn Annual Business Plan Manual," based on Plan de Gestion Anual de la Empresa, tran. by Christopher Logan and Francisco Diaz, Industrial Cooperative Association, Somerville, MA, and School of Management, Boston College, Chestnut Hill, MA.

Estrin, Saul, and Derek Jones (1987), "Are There Life Cycles in Employee Owned Firms? Evidence From France," Working Paper No. 962, Centre for Labour, Economics, March, 1987

Estrin, Saul, Derek Jones, and Jan Svejnar (1987), "The Productivity Effects of Worker Participation: Producer Cooperatives in Western Economies," Journal of Comparative Economics, 11, 40-61.

Geoghegan, Vincent (1987), Utopianism and Marxism, London and New York: Methuen.

Greenberg, Edward (1986), Workplace Democracy: The Political Effects of, Participation, Ithaca, N.Y., Cornell University Press.

Gui, Benedetto (1984), "Basque Versus Illyrian Labor-Managed Firms: The Problem of Property Rights," Journal of Comparative Economics, 8, pp. 168-181.

Hacker, Sally (1988), "Gender and Technology at the Mondragуn System of Producer Cooperatives," Economic and Industrial Democracy, 9, 2, pp. 225-243.

Hirschman, Albert (1977), The Passions and the Interests: Political Arguments for Capitalism Before Its Triumph, Princeton, N.J.: Princeton Univ. Press.

Hoover, Kenneth (1991), The Elements of Social Scientific Thinking, 5th ed., New York: St. Martin's Press.

Hoover, Kenneth (1990), review of Making Mondragуn, in The American Political Science Review 84 (March) 1, pp. 351-52.

Hoover, Kenneth and Raymond Plant (1989), Conservative Capitalism in Britain and the United States: A Critical Appraisal, London and New York: Routledge.

Kanter, Rosabeth Moss (1972), Commitment and Community: Communists and Utopias in Sociological Perspective, Cambridge, Mass.: Harvard University Press.

Kumar, Krishan (1987), Utopia and Anti-Utopia in Modern Times, Oxford, Basil Blackwell.

LeWarne, Charles (1975), Utopias on Puget Sound, Seattle: University of Washington Press.

Lutz, Mark, and Kenneth Lux (1988), Humanistic Economics: The New Challenge, New York, The Bootstrap Press.

Manuel, Frank and Fritzie Manuel (1975), Utopian Thought in the Western World. Cambridge, Mass., Belknap Press.

Meek, Christopher, and Warner Woodworth (1991), "Technical Training and Enterprise: Mondragуn's Educational System and its Implications for Other Cooperatives," 11 (November) 4, 505-528.

Meyer, Stephen (1981), The Five Dollar Day: Labor Management and Social Control in the Ford Motor Company, 1908-1921, New York: SUNY Press.

Sargeant, Lyman Tower (1979), "Capitalist Eutopias in America," in Kenneth Roemer, ed., America as Utopia: Collected Essays, American Cultural Heritage Series, New York: Franklin, Burt; pp. 192-205.

Sperry, Charles (1985), "What Makes Mondragуn Work?," Review of Social Economy, 43, 3, pp. 345-356.

Stillman, Peter (1990), "Recent Studies in the History of Utopian Thought," Utopian Studies, 1 (1990) 1, 102-110.

Thomas, Henk, and Chris Logan (1982), Mondragуn: An Economic Analysis London: Allen and Unwin, p. 9.

Thornley, Jenny (1981), Workers' Cooperatives: Jobs and Dreams London: Heineman Educational Books, rev. ed.

White, Frederic, ed. (1946, 1981), Famous Utopias, Introduction Frederic by White, Hendricks House, 1946, 1981.

Whyte, William Foote (1982), "Social Inventions for Solving Human Problems," 1981 Presidential Address, American Sociological Association], American Sociological Review, 47 (February), 1-13.

Whyte, William Foote, Davydd Greenwood, and Peter Lazes (1989), "Participatory Action Research: Through Practice to Science in Social-Research," American Behavioral Scientist, 32 (May/June) 5, pp. 513-551.

Whyte, William Foote, and Kathleen King Whyte (1988, 1991), Making Mondragon: The Growth and Dynamics of the Worker Cooperative Complex, Ithaca, New York: Cornell University ILR Press, 1988 (2nd ed. rev., 1991).

NOTES

Page 1

BUSINESS

Volume 25, Number 1

Winter 2004

Special Issue:

Catholic Social Thought and

Management Education

Review of

The Mondragуn Corporaciуn Cooperativa:

An Interview with Juan M. Sinde, Chief Executive Deputy

Bringing Realism to Management Education:

Contributions from Catholic Social Thought

Catholic Social Thought and Business Ethics:

The Application of 10 Principles

The Evolution of Business as a Christian Calling

Business as a Vocation:

Implications for Catholic Legal Education

The Stunted Vocation:

An Analysis of Jack Welch?s Vision of Business Leadership

Mondragуn: A For-Profit Organization That Embodies

Catholic Social Thought

On Globalization: Address of the Holy Father to the Pontifical

Academy of Social Science, April 27, 2001 (Reprint)

Page 2

Special Issue:

Catholic Social Thought and Management Education

From the Editor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Charles M. A. Clark

The Mondragуn Corporaciуn Cooperativa: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

An Interview with Juan M. Sinde, Chief Executive Deputy

Interviewed by Charles M. A. Clark

Bringing Realism to Management Education: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Contributions from Catholic Social Thought

Charles M. A. Clark

Catholic Social Thought and Business Ethics: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

The Application of 10 Principles

Jim Wishloff

The Evolution of Business as a Christian Calling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Gary L. Chamberlain

Business as a Vocation: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Implications for Catholic Legal Education

George E. Garvey

The Stunted Vocation: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

An Analysis of Jack Welch?s Vision of Business Leadership

Phillip M. Thompson

Mondragуn:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

A For-Profit Organization That Embodies Catholic Social Thought

David Herrera

On Globalization: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

Address of the Holy Father to the Pontifical Academy of Social Science, April 27, 2001 (Reprint)

Pope John Paul II

table of contents

1

Volume 25, Number 1

Winter 2004

Page 3

from the editor

2

Charles M. A. Clark

The Peter J. Tobin College of Business and Senior Fellow,

Vincentian Center for Church and Society, St. John?s University

Catholic social thought is nothing more than a reflection on

social, political and economic issues from the perspective of

the Gospels and the 2000 year-old Catholic intellectual

tradition. While most discussion of Catholic social thought

centers on the Papal Encyclicals from 1891 (Rerum Novarum)

to the present works of Pope John Paul II (the most recent

being Centesimus annus, 1991), these Encyclicals build on

the earlier tradition and are more like the tip of the iceberg.

This long tradition should not surprise us ? for God wants us

to live lives of authentic happiness, and thus Jesus instructed

Peter to build his Church to promote this end. For two

millennia the Church has brought the good news of the

Gospel to every corner of the planet; has followed Jesus?

dictates on caring for the poor and marginalized by being

by far the world?s largest ?social welfare agency? (and in

many times and places the only one); and in its role as

teacher and educator, has established the educational

systems which have served as the foundation and model for

the advances in the humanities, liberal arts and sciences that

are the hallmarks of Western civilization.

It is this tradition that served as the inspiration for the

Vincentian Fathers? founding of St. John?s University in 1870.

Since the economic and business aspects of our lives are very

important, it is natural and appropriate for the Vincentians

to include within their university a college for the study of

business administration, The Peter J. Tobin College of

Business. Jesus in the Gospels and the Apostles in the Acts

often refer to economic and business issues, as did the

Church Fathers and the great Scholastic philosophers

(especially St. Thomas Aquinas) of the Middle Ages. This is

the foundation, both theological and philosophical, of the

Catholic social thought tradition, as well as the foundation

of a Catholic business education.

In this fourth issue of the Review of Business devoted to

Catholic social thought and management education, we

start off with an interview with Juan M. Sinde, of Caja

Laboral, the bank for the Mondragуn Corporaciуn

Cooperativa (MCC). MCC is a cooperative explicitly based on

the social teachings of the Church, and it has grown into a

multi-billion dollar enterprise. Mr. Sinde discusses the

challenges of operating an ethically based cooperative in a

global economy.

Our first two articles concentrate on some of the basic

foundational issues. Charles M.A. Clark?s lead article argues

that a business education based on Catholic social thought

(which is to say the 2000 year-old tradition mentioned

above) provides a more realistic foundation for

understanding business and the economy than what one

normally sees in schools of business. It is more realistic

because it is based on the world as it is ? an accurate view of

the human person, society and values ? and it is based on an

ethical system grounded in universal truths ? the Gospel and

the natural law. Jim Wishloff?s article, after a detailed

development of the basic themes of Catholic social thought,

examines its implications for the field of business ethics.

Both articles reflect Pope John Paul II?s recent call to rethink

business and the economy:

Perhaps the time has come for a new and deeper

reflection on the nature of the economy and its

purposes. What seems to be urgently needed is a

reconsideration of the concept of "prosperity" itself,

to prevent it from being enclosed in a narrow

utilitarian perspective which leaves very little space for

values such as solidarity and altruism.

Here I would like to invite economists and financial

professionals, as well as political leaders, to recognize

the urgency of the need to ensure that economic

practices and related political policies have as their aim

the good of every person and of the whole person.

This is not only a demand of ethics but also of a sound

economy. Experience seems to confirm that economic

success is increasingly dependent on a more genuine

appreciation of individuals and their abilities, on their

fuller participation, on their increased and improved

knowledge and information, on a stronger solidarity.

These are values which, far from being foreign to

economics and business, help to make them a fully

"human" science and activity. An economy which takes

no account of the ethical dimension and does not seek

to serve the good of the person ? of every person and

the whole person ? cannot really call itself an

"economy," understood in the sense of a rational and

constructive use of material wealth. (World Day of

Peace Message, 2000).

Page 4

The next two articles come from the Fifth International

Symposium on Catholic Social Thought and Management

Education held in Bilboa, Spain in July 2003. The theme of

the symposium was ?Business as a Calling; the Calling of

Business.? The first article, by theologian Gary L.

Chamberlain, examines the development of the idea of

business as a calling, emphasizing the importance of social

responsibility and the common good. That is, one cannot

have a calling to business for the purpose of individual

wealth creation, but must instead use one?s talents for a

greater purpose. This article is followed by law professor

George E. Garvey?s investigation into the implications of

?Business as a Calling? for a legal education.

The last two articles, also from the symposium mentioned

above, look at two entirely different case studies related to

the theme of ?Business as a Calling.? Phillip M. Thompson

uses General Electric?s Jack Welch as an example of a

businessperson whose career has not been dedicated to the

promotion of the common good or social responsibility.

Then, David Herrera provides an overview of the

Mondragуn Corporaciуn Cooperativa, a business enterprise

discussed in the opening interview ? and an example of how

a career in business can be a ?calling.?

This issue is offered in honor of John Paul II?s silver

anniversary as Vicar of Christ. Appropriately, it ends with a

reprinting of his Address on Globalization as delivered to

the Pontifical Academy of Social Sciences, April 2001.

3

From the Editor

The Master?s Program

M.S. In Forecasting and Planning

St. John?s University proudly announces a new master?s program. Business forecasting has grown rapidly in recent

years. Ten years ago, only utility companies had dedicated forecasters on their staff, but now large corporations,

including Coca-Cola, Eastman Kodak, Hewlett Packard, Johnson and Johnson and Pfizer, have full-time forecasting

staffs. There is definitely a demand for people with a background in business forecasting, and St. John?s University

has the only M.S. in Forecasting and Planning.

The program has two tracks, Sales and Financial Forecasting, and can be completed in two years by taking two

courses each semester and each summer. Students not only learn how to forecast, but how to deal with various

managerial, systems, process and software issues. The emphasis is on application rather than theory.

For information, contact:

Chaman L. Jain, Director

Forecasting and Planning Program

8000 Utopia Parkway

Queens, NY 11439

(718) 990-7314

(718) 990-1403

jainc@stjohns.edu

Page 5

The Mondragуn Corporaciуn Cooperativa:

An Interview with Juan M. Sinde, Chief Executive Deputy

Interviewed by Charles M. A. Clark

The Peter J. Tobin College of Business, St. John?s University

the mondragуn corporaciуn

cooperativa:

4

The Mondragуn Corporaciуn Cooperativa

(MCC) is a cooperative in the Basque region

of Spain which includes over 150 individual

companies and has over 66,000

worker/owners. In 2002 it had total sales of

9.23 billion euros ($8.8 billion) and 15.3

billion euros ($14.6 billion) in total assets.

After the Spanish Civil War the Basque

region of Spain was economically and social

depressed. Inspired by a local priest?s

teachings on the principles of Catholic social

thought, five graduates of a school of

industrial skills (which the priest had started)

founded the Mondragуn cooperative based on these

principles. MCC lists 10 basic principles that form the core of

their vision and mission: Open Admission (non-

discrimination); Democratic Organization; Sovereignty of

Labor; Subordinate Nature of Capital; Participatory

Management; Payment Solidarity; Inter-cooperation; Social

Transformation; Universality; and Education. MCC has three

basic business divisions and two research and training

centers. The largest division is the Industrial Group, which

includes: Household Appliances; Construction; Machine

Tools; Industrial Equipment; Automotive Parts; and

Engineering Capital Goods. The Distribution Group consists

of retail stores and agricultural distribution. The Financial

Group includes Banking, Insurance and Social Welfare. Caja

Laboral, MCC?s bank, had 322 branches in 2002 and had

administered assets of 8.5 billion euros ($8.1 billion) and an

operating profit of 125 million euros ($119 million).

Juan M. Sinde is Chief Executive Deputy, responsible for

retail banking business, and a member of the Executive

Committee of Caja Laboral, the bank for the Mondragуn

Corporaciуn Cooperativa. He has a Master?s in Engineering

from the University of the Basque Country. He is also active

in many Catholic and cultural associations in the Basque

Country. He is married and has two children.

Q: The Mondragуn Corporaciуn Cooperativa (MCC) is a

very different type of business organization compared

to what is typically encountered at a business school.

What were the motivations for the founding of MCC?

A:

After the Spanish Civil War the Basque region was very

isolated and very under-developed economically. If there

are no jobs you will have a large migration out of the

region, which makes it harder for the region to develop,

as well as keeping the Basque culture alive. Thus to

avoid the migration of people from the Mondragуn

Area we needed to establish new businesses. A Priest,

Fr. Josй Marнa Arizmendiarrieta inspired five engineers

to establish MCC to create new businesses by putting

into practice Catholic Social Thought. The key was to

emphasize the dignity of the human person in the

design of new companies.

Q: In terms of developing a distinct mission or ethical

framework, how helpful was it to be able to ?start from

scratch??

A:

Very. I should mention, however, that different forms of

cooperatives have played an important role throughout

Basque history, so it was not an alien idea. But, to

answer your question, new companies do not have to

overcome old ways and an entrenched corporate

culture. In fact, conventional companies that converted

into cooperatives have suffered continuous problems

because of the lack of understanding of some

cooperative values by some workers. Nevertheless, we

are trying now to install some of the values

(participation of workers in the management decisions,

sharing profits, and even ownership of their companies)

in PLC companies owned by cooperatives.

Q: Mondragуn is quite large, 150 enterprises and over

60,000 worker-owners. How does MCC deal with

conflicts between member enterprises? Do any of them

compete head-to-head?

Juan M. Sinde

Page 6

A:

The cooperatives that are in the same economic activity

are included in one Division, led by one Vice-President

who deals with those issues and tries to find ways for

them to collaborate instead of having them compete. It

is thus very rare that they would go head-to-head.

Q: One of the things I found most fascinating

about MCC is the way compensation is determined,

especially profit-sharing. Could you tell us about this?

A:

The salary of each position is decided by a Committee

formed with representatives of the Management team

and representatives of Social Council (elected by

workers to defend their interests as workers). In that

Committee the balance between compensation of

different jobs is usually reached. A large share of profits

is reinvested in the individual cooperative, and a portion

goes to MCC to support the various social welfare,

community and educational (schools and colleges)

activities. As for profit-sharing going to workers, it must

be stressed that it is compulsory that all the profit-

sharing must be re-invested by everyone in the same

company and that money can be taken only when

someone leaves the cooperative or retires. The profit

assigned to each worker depends basically on his or her

salary. The workers do receive a very competitive return

(currently about 6-8%) on their invested profits, and

they receive that money.

Q: Many cooperatives in the U.S. are agriculturally based

or center on ?arts and crafts? type production, yet MCC

has focused on high tech production from the

beginning. Why this emphasis? While it makes MCC

more competitive, does it present any challenges?

A:

The cooperatives were born a few years after the

Spanish Civil War when the Spanish market was closed

to foreign companies. The problem was producing and

not selling. Fr. Arizmendiarrieta?s first step in promoting

economic development was the establishment of the

?Politechnic? so that the local workers would have the

skills to compete. Taking advantages of the skills of local

workers because there was a local ?Politechnic,? the

cooperatives set up companies using the technologies

they were able to use. The conflicts derived by different

levels of skilled workers are above all in the

compensation field and are dealt with by the

committees I mentioned previously.

Q: One of the most frequent comments I hear about

cooperatives is that they do not have adequate

disciplinary tools for workers, though they do not put it

so bluntly. How does MCC motivate its worker-owners?

How does it deal with ?slackers?? I know MCC does not

lay off workers, but can people get fired?

A:

People can be fired although it happens very rarely

(mostly due to frauds or lack of loyalty). Discipline

problems are handled by a specialized Committee,

which is comprised of members of management and the

Social Council. They decide the punishments according

to the gravity of the disciplinary faults. The ?moral?

pressure between workers to be responsible and honest

with the common company should not be undervalued.

Motivation is based in the challenge of the work itself,

the profit sharing ? and the threat of the company

disappearing if it is not competitive enough.

Q: What pressures does globalization place on MCC? How

is MCC dealing with these?

A:

We are setting up new plants in other countries

(different from the Basque Country) to deal with the

competitive problems related to globalization.

Sometimes it is not well understood by the members of

the companies because they would prefer to invest

locally and offer new jobs to the members of their

community. Besides that, there is the problem of how to

adapt the values of MCC to cultures very different from

ours and how to preserve human dignity while insuring

that those plants are competitive.

Q: All large organizations have a problem keeping the

mission alive. As MCC is more mission-driven than most

corporations, how does MCC keep its ?spirit? alive?

A:

It is not easy. We have a monthly magazine informing

all the worker-owners of the activities of different

cooperatives and usually it includes different articles

trying to keep alive the idea of being different,

remembering continuously our specific values, discussing

the problems of putting them in practice. Furthermore,

there is an annual meeting of representatives of

workers of all the cooperatives where at least every four

years we discuss our policies, and revise the application

of our values.

5

The Mondragуn

Corporaciуn Cooperativa:

An Interview with

Juan M. Sinde

Chief Executive Deputy

Page 7

6

Bringing Realism to Management Education:

Contributions from Catholic Social Thought

Charles M. A. Clark

The Peter J. Tobin College of Business, St. John?s University

?The time has come, for a new and deeper reflection on the

nature of the economy and its purposes.?

?Pope John Paul II, New Year?s Message (2000)

Abstract

Catholic social thought is based on the ideals of the Gospels,

but it is also based on an interdisciplinary and realistic

understanding of the nature of the human person, society,

property and the purpose of business. As an ethical

foundation for understanding the role of business in the life

of the person and society, Catholic social thought forces an

education in business to be more realistic than it typically is.

Introduction: Is There a Catholic Perspective

on Business?

Underlying the effort to bring the insights and perspective

of the Catholic social thought (CST) tradition to the

understanding of business is the assumption that a business

education at a Catholic business school should in some

manner be different from one received at a secular or non-

Catholic college or university. Catholic colleges and

universities do not exist so that Catholics can receive an

education without having to interact with non-Catholics.

This is not the purpose of such schools, nor is it the reality,

as many Catholic colleges and universities have very high

percentages of non-Catholics among their student

population, often above 50%. The mission of all Catholic

colleges and universities is to provide a ?Catholic?

education, but what exactly is a Catholic education, and

specifically a Catholic business education? At one level this

would mean the inclusion of the sacramental life of the

Church in the overall university experience, as well as the

other activities typically carried out by Campus Ministries.

At a deeper level, the significance and function of a Catholic

education stems from the root meaning of ?Catholic,? that

is a ?universal? education, an education of the whole

person. The mission of these institutions is to develop the

person both intellectually and spiritually; to provide a

morally-grounded and values-centered education. Although

most business schools in the United Sates have mission

statements that commit them to the promotion of ?values?

or a ?values centered education,? the grounding of such

values is left up in the air. Adherence to the post modern

outlook prevents them from asserting any substantial values,

any higher authority, any bottom line on what is right and

wrong. Thus they can talk of ?values? as long as they do not

mention any substantial or invariant ?values.? Though faith

and reason are clearly distinguishable, they can never be

fully separated. In the attempt to first delineate faith from

reason (during the Enlightenment) and then the modern

and postmodern effort to amputate faith from reason,

modernity has lost both.

1

In many ways, the Catholic social thought tradition is a

movement in the opposite direction, combining faith and

reason in an effort to understand economic and social issues. It

is my contention that the Catholic social thought tradition

brings more to the table than ?values? or uniquely ?Catholic?

(or Jesuit, Augustinian, Dominican or Vincentian) ?values.? It

offers a different ?vision? of the role of business in

contemporary society. Furthermore, this ?vision? raises

questions that typically do not get addressed in most business

programs. CST does not offer an alternative economic or

management theory. Instead it offers a perspective, a

metaphysical foundation, upon which one can construct

explanations of the economy and business. The purpose of this

article is to explore how this alternative ?vision? could

influence and shape the management education at Catholic

business schools, hopefully laying the foundations for future

efforts in actually creating authentically Catholic perspectives

on business.

What is the Catholic Social Thought Tradition?

2

The Catholic social thought tradition has been described as

?social wisdom based on: biblical insights; the tradition of

the early writers of the church; scholastic philosophy;

theological reflection; and the contemporary experience of

the People of God struggling to live our faith in justice?

[8:73]. The Vatican document on the Guidelines for the

bringing realism to

management education:

Page 8

7

Bringing Realism to

Management Education:

Contributions from

Catholic Social Thought

Study and Teaching of the Church?s Social Doctrine in the

Formation of Priests [ibid.], states that the development of

CST is based on a three-step process: see, judge and act:

? Seeing is perception and study of real problems and

their causes, the analysis of which, however, belongs

to the human and social sciences.

? Judging is interpretation of that same reality in the

light of the sources of social doctrine which

determine the judgment pronounced with regard to

social phenomena and their ethical implications. In

this intermediate phase is found the function

proper to the magisterium of the church which

consists precisely in interpreting reality from the

viewpoint of faith and offering ?what it has of its

own: a global view about man and humanity.?

Obviously in seeing and judging reality, the church

is not and cannot be neutral because she cannot

help but adapt to the scales of values enunciated in

the Gospel. If, hypothetically speaking, she were to

conform to other scales of values, her teaching

would not be what it in fact is, but would be

reduced to a biased philosophy or ideology.

? Acting is aimed at implementing these choices. It

requires a real conversion, that inner

transformation which is availability, openness and

transparency to the purifying light of God.

Many feel that when the Church speaks out on economic or

social issues it is overstepping its authority, going into fields

where it lacks the necessary expertise. Furthermore, the

Church exists mostly in pluralistic societies with adherents to

many religious traditions, and often in countries where

there is a strict separation between Church and State. Yet

such a separation, at least in the context of the United

States, does not mean that religious institutions and

perspectives have no role in the public discourse. It means

that the government has to stay out of the affairs of

religious institutions. It is a freedom to worship, not a

freedom from worshipers. While the earlier Papal encyclicals

were directed to Catholics, more recently they have been

directed to all people of good will.

There are many reasons the Church has entered the public

discussion on economic and social issues. One is that the

Church has always had the role of teacher, this being an

essential aspect of its mission from the very beginning. As

Pope John Paul II has written: ?The teaching and spreading

of her social doctrine are part of the Church?s evangelizing

mission. Since it is a doctrine aimed at guiding people?s

behavior, it consequently gives rise to a ?commitment to

justice,? according to each individual?s role, vocation and

circumstances. The condemnation of evils and injustices is

also part of that ministry of evangelization in the social

field, which is an aspect of the Church?s prophetic role? (13,

Sollicitudo rei Socialis, 41). Thus the Church feels that part of

its role is to promote social justice, not only in the hearts of

Christians, but also in the structures that make up society. To

do this it must engage the discussion and debate on these

structures. Furthermore, these debates and discussions are at

root moral and ethical debates. ?Precisely on the questions

frequently debated in moral theology today and with regard

to which new tendencies and theories have developed, the

Magisterium, in fidelity to Jesus Christ and in continuity with

the Church?s Tradition, senses more ungently the duty to

offer its own discernment and teaching, in order to help

man in his journey toward truth and freedom? (Veritatis

Splendor, 27).

3

The Church has a perspective to offer that is often excluded

from most modern political and economic discourse, one

that promotes the ?authentic development of man and

society that would respect and promote all the dimensions

of the human person? (13, SRS 1).

4

It represents values that

are important to the functioning of a peaceful and just

society, but which are not promoted by the vested interests

of the powerful, nor are the natural outcome of the

?invisible hand? of the market. It speaks for the voiceless

and powerless, demanding that their interests are

promoted. It challenges those with power and wealth,

pointing out that these come with responsibilities and

obligations. The CST tradition is not just a litany of the evils

of this world, of how we have come up short in our

?

We cannot rely on the logic or

standards of the market to evaluate

and access market outcomes, but

instead are called to a higher

standard, that based on the Gospels

and natural law.

?

Page 9

treatment of others and our care for the planet; it offers a

guide to action. As John Paul II has noted: ?The social

doctrine has once more demonstrated its character as an

application of the word of God to people?s lives and the life

of society, as well as to the earthly realities connected to

them, offering ?principles of reflection,? ?criteria of

judgment,? and ?directives for action?? (13, SRS 8).

The modern Catholic social thought tradition started with

Leo XIII?s encyclical Rerum Novarum (RN) (The Condition of

Labor) in 1891. It was the first official response and

reflection on the problems and conditions arising from the

Industrial Revolution. Half a century before RN, there were

movements of ?Social Catholics? who wrestled with the

problems of industrialization from the perspective of the

Gospels. Many of the themes they stressed became central

aspects of the official CST tradition: that Charity is not

enough, ?you must go beyond charity to justice? [11:11];

Just Wages; Need for State Intervention in Economy; Social

Nature of Private Property and Need for More Organic

Society.

5

Rerum Novarum set the tone for all subsequent

encyclicals on economic issues. It emphasized the moral

nature of economic actions at all levels, from the individual?s

responsibility to work toward the common good regardless

of their roles or place in society, as workers, as employers

and as consumers (?right use of money?), to the need for

social structures to promote social justice (defense of unions

and worker organizations). It also stated the Church?s

teaching on private property, drawing a balance between

the need of individuals for private property to promote the

well being of themselves and their families and the

inherently social nature of property and its responsibility to

be used toward the common good.

The Great Depression prompted the next major social

encyclical Quadragesimo Anno (After Forty Years, or The

Reconstruction of the Social Order) by Pope Pius XI. Setting a

format that subsequent popes would mostly emulate, it

started with a reiteration and extension of the central

themes developed in the previous encyclicals. More than

most of the official documents, Quadragesimo Anno (QA)

put forward models of economic structures to deal with the

problems inherent in both liberal capitalism and Soviet style

communism. Pius XI proposed ?Christian social order? to

deal with the problems of the Great Depression. It did not

win too many converts, but he expanded the tradition and

laid seeds which would germinate and bear fruit in

subsequent encyclicals. To give an example, Pius XI

introduced the term social justice, which included both the

dignity of each person and the promotion of the common

good as complementary conditions and not as competing

goals. One of the most important additions to the CST

tradition in this encyclical is the idea of subsidiarity.

John XXIII added two important encyclicals to the CST

canon: Mater et Magistra (MM) (Christianity and Social

Progress) in 1961 and Pacem in Terris (Peace on Earth) in

1963. O?Brien and Shannon have noted that two features of

John XXIII?s teachings are important to remember: ?First in

his emphasis on socialization, in increase of the network of

relations by which individuals are connected to each other.

Justice takes on even more significance as we move into

more complex and numerous interrelations. Second, John

argued for state intervention to ensure that property would

achieve its social functions. Justice required that property be

used for the common good? [13:82]. John also highlighted

the gap between the rich and poor nations and the need for

wider distribution of property to alleviate this gap (achieved

partly through efforts to generate wealth). In Peace on

Earth he stated one of the central themes of CST, the dual

need to promote and defend human rights and

responsibilities. John also called for the Second Vatican

Council, which produced the document Gaudium et Spes

(GS) (Pastoral Constitution of the Church in the Modern

World) in 1965. This document placed great emphasis on

reading the ?signs of the times? of the profound changes in

the world and in the social order. It also lays out clearly the

anthropology upon which the CST tradition is based. Pope

Paul VI?s two additions to this tradition: Popolorum

Progressio (The Development of Peoples) in 1967 and

Octogesima Adveniens (A Call to Action on the 80

th

Anniversary of Rerum Novarum) in 1971 extended the

concern of the growing gap between rich and poor

countries as well as calling on lay Catholics to engage in

political activities to promote social justice.

Pope John Paul II has been the greatest individual

contributor to the CST tradition, both in terms of the

volume of his writings, and, what is more important, in

terms of the extension of the scope and depth of the

analysis of the tradition. Starting with Laborem Exercens

(LM) (On Human Work) in 1981, and continuing with

Sollicitudo rei Socialis (SRS) (On Social Question) in 1987 and

Centesimus Annus (CA) (On the Hundredth Anniversary of

Rerum Novarum) in 1991, Pope John Paul II has developed

both the Biblical foundations of the tradition as well as

adding great insights from philosophy and his unique

personal experiences as someone who lived under

communism and who had a great understanding of the

ideas of economic and social theory.

8

Bringing Realism to

Management Education:

Contributions from

Catholic Social Thought

Page 10

9

The social teachings of the Church have also been developed

by the many statements on economic, social and political

issues by national conferences of Bishops. Of these, the most

important for our purposes has been the United States

Catholic Bishop?s pastoral letter Economic Justice for All

(1986). This document follows in the tradition set out by

their program for social reconstruction of 1919 (primarily

written by the great economist, and Roosevelt advisor,

Monsignor John A. Ryan). While most of the attention

focused on their support of specific economic policies (like

minimum wages), the more revolutionary or radical aspects

of this document were its clear statements on the moral

principles that should guide economic policy ? ?The dignity

of the human person, realized in community with others, is

the criterion against which all aspects of economic life must

be measured? (13, Economic Justice for All 28) and their call

for a Christian vision of economic life. They combined a

Biblical understanding of the moral foundations for

economic life with a clear and accurate understanding of

the state of the U.S. economy in the mid 1980s (?signs of the

times?). The reaction of economists was harsh to say the

least. For the most part the critics focused on economic

policy issues, leaving the ethical analysis aside. In fact, this is

perfectly consistent with the general tenor of the economics

profession. The economist would generally prefer to leave

the ethical issues to the Bishops, and the Bishops should

leave the economic issues to the experts. This fits into the

mainstream view that ethics and economics (or at least

economic theory) are two separate disciplines (the

separation of positive and normative economics).

Faith and Reason

In Rerum Novarum, Leo XIII sums up the central thrust of the

CST tradition: ?There is nothing more useful than to look at

the world as it really is ? and at the same time look

elsewhere for a remedy to its troubles? (13, RN 14). The

dynamic tension between critically understanding the

current state of the world, of reading ?the signs of the

times,? and of looking back to the Gospels, and the

tradition that sprang from them, are the driving force and

source of the vitality of the CST tradition. From the outset,

the Catholic intellectual tradition has always combined faith

and reason in its analysis of economic and social questions.

In fact, it seems to have been the goal of the CST tradition,

as well as the more general Catholic intellectual tradition, to

use the identifier ?Catholic? in both senses of the word, that

is with a capital ?C? and with a lowercase ?c?; Catholic in

the sense that it springs from the Church Jesus told St. Peter

to build, and catholic in the sense that it is searching for

?universal? principles and values upon which to view the

economy and society. The quintessential exemplar of this is

St. Thomas Aquinas, who combined the message of Jesus

with the logic and philosophical insights of Aristotle,

creating a new understanding of both theology and

philosophy. The CST tradition is explicitly based on the

Gospels, but it is also based on the Catholic natural law

tradition (to be distinguished from the Protestant and

secular natural law tradition following Hugo Grotius, which

attempted to develop a universally true moral code, which,

though derived from the Divine Law of God, was

discoverable and could be demonstrated independent of

Church doctrines). The key reason is what was emphasized,

and it resulted in an analysis that exists at many levels, one

that can be engaged by believers and nonbelievers alike.

Ultimately the doctrines and conclusions of CST are based on

the life and teachings of Jesus, yet they are developed and

argued in terms of human reason and thus can be accepted

or rejected (by non-Catholics) on the criteria of reason and

experience. This allows the tradition to engage secular and

non-Catholic/Christian based analyses of economic and social

issues. It has created a tradition that is both realistic and

idealistic. It is realistic because it is empirically based, it seeks

to understand actual conditions and problems, ?the world as

it is.? It is idealistic because its ideals are its driving force,

permeating all aspects of its analysis, from the questions it

asks to the evaluations of current conditions. Its goal is to

bring the world more in line with what God has intended

for humans, to live in peace and justice, where all are

granted the dignity due to God?s children.

The Catholic natural law tradition is based on a conception

of the natural law as a moral code, and not as a set of

physical laws. To quote the greatest modern proponent of

this tradition, Jacques Maritain, the ?natural law is an ideal

order relating to human actions, a divide between the

Bringing Realism to

Management Education:

Contributions from

Catholic Social Thought

?

A business education informed by

Catholic social thought?also

promotes a more realistic and useful

understanding of business and its

place in a good society.

?

Page 11

10

suitable and the unsuitable, between what is proper and

what is improper to the ends of human nature or essence.

This is an ideal order or divide which rests on human nature

or essence and the unchangeable necessities rooted in it?

[9:29-30]. It is not rooted in physical necessity, such as the

law of gravity, which cannot be violated. It is a moral code

which is often violated by humans who choose to act

contrary to it. Furthermore, this natural law tradition does

not hold that human reason is enough to discover the

natural law, and that the natural law was independent from

divine law.

In the scholarly literature on CST it is often noted that there

are two approaches to explaining it: Biblical and Natural

Law. While some see these as in conflict, I would argue that

this dual character adds to the vitality of CST as well as to

the scope of its audience. If we relied solely on the Biblical

or Scriptural tradition, then we would not be able to enter

into dialogue with those outside this tradition. Furthermore,

we would be severely hampered in our efforts to learn from

and engage the various social sciences that analyze the

various social issues that Catholic social thought addresses.

We would be limited to noting the conflicts between

Scripture and reality, which wouldn?t get us very far. Such an

approach is bound to ignore the historical and social context

of the social phenomena in question, moving us away from

the practical reasoning we need to employ. Thus the natural

law tradition, reason, allows us to engage secular social

theory and other non-biblical religious traditions.

To sum up, CST requires that our understanding of the

economy and business be fully grounded in reality: we must

understand the world of business as it is, but we must look

elsewhere to find criteria with which to evaluate what we

observe. We cannot rely on the logic or standards of the

market to evaluate and access market outcomes, but instead

are called to a higher standard, that is based on the Gospels

and natural law.

6

At the outset of this article I argued that a Catholic

education has the advantage that it attempts to educate the

whole person. It recognizes the fact that we are more than

the skills we sell to our employers. Thus even business and

science students are required to have a solid liberal arts

background, so that they can more fully appreciate what it

means to be human. The addition of theology requirements

adds another component, for it aims to give the student an

appreciation of what it means to be one of God?s children.

My task for the rest of this article is to argue that a business

education informed by Catholic social thought not only

promotes the stated goal of educating the whole person, it

also promotes a more realistic and useful understanding of

business and its place in a good society. It is both more

realistic and idealistic. It provides a more solid foundation of

the purpose of business, while at the same time calling for a

more empirically grounded understanding of actual business

practices. It is towards this end that, in David Letterman

fashion, I will give 10 reasons why CST makes a business

education more practical.

Ten Contributions CST Makes to a More Realistic Business

Education

7

1. To quote Michael Stebbins, ?If we are going to be clear

about what business is and how it should operate, we

have to do so in view of the overriding fact that out

ultimate goal is union with God and with one another

... In claiming this, we are not talking ?pie in the sky.?

We are talking about the real world, the world as it

actually is. To think about human living without

considering God's intentions for us is to think about a

world that simply does not exist. What could be more

unrealistic or unpragmatic?? [16:6]. One essential

component of human nature is a longing for the

universal, the infinite, that is, God. In contemporary

society we try to fill this void with consumer goods and

sex, yet these are no substitute for the real thing. Most

of the unhappiness felt in the world today is directly

attributable to the neglect of this human yearning,

for it affects our relationship with our selves and

with others.

2. Acceptance of a God-centered view of the world

naturally leads to the view that, as Sean Healy and Brigid

Reynolds have written: ?God speaks to every reality.

Whatever we are looking at whether it is an issue such as

world hunger ... or an economic system such as

Capitalism, God does have something to say to that

reality. Our world either is or is not in accord with God's

ideal for it. Consequently it is important for us to come to

know what God is saying to whatever reality we are

Bringing Realism to

Management Education:

Contributions from

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?

Economic activity only makes sense

when it is a means to a legitimate

human end.

?

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examining. God speaks to these issues or situations in

various ways: through the Bible, through the teachings of

His Church, through the signs of the times and through

the prophets who interpret those signs? [6:5-6].

3. Catholic social teaching provides a richer and more

realistic understanding of the human person. The

individualistic-utilitarian ?rational economic man? that

underscores much business education and economic

theory is not merely a gross simplification; he is a non-

existent abstraction. Such a one-dimensional person

could not function in civil society, much less in any real

business organization. It is an erroneous deduction from

classical and neoclassical economic theory that

individuals either always do or always should act in their

own narrow self-interest. Even Adam Smith, who is

often given credit for promoting the idea that

individuals need only promote their own self-interest

and rely on the invisible hand of the market to take

care of the common good, started his first book, The

Theory of Moral Sentiments, with the statement ?How

selfish soever man may be supposed, there are evidently

some principles in his nature, which interest him in the

fortune of others, and render their happiness necessary

to him, though he derives nothing from it except the

pleasure of seeing it. ...The greatest ruffian, the most

hardened violator of the laws of society, is not

altogether without it? [15:23]. The view of human

nature promoted by CST views the person as a member

of a community, and not as an isolate individual. As

stated in Quadragesimo Anno: ?According to Christian

doctrine, man, endowed with a social nature, is placed

on earth in order that he may spend his life in society?

(13, QA, 119). The implication of this for understanding

business activity is that we must always see such actions

and activities as taking place in the context of social

groups and not as isolated choices.

4. Rejection of the atomistic view of the human person

requires that we also reject the mechanistic view of

society that often underlies much economic theory and

business theory. The mechanistic view of society adopts

what is called methodological individualism, that only

the individual is real; society is a mental fiction. In terms

of theory this requires the elimination of historical and

social context from our understanding and explaining

economic actions. This leads to bad economic theory, for

we know full well that all economic actions are social

actions, happen in a social and historical context, and

only have meaning in that context. The businesswoman

who does not understand her activities, and the

activities of her company, in its social and historical

context, will not remain in business very long.

5. The underlying values of CST, the promotion of the

common good and the protection of human dignity, are

certainly more justifiable than the utilitarian values that

underlie the theology of economic society ? economic

theory. This is true both as an explanation of values

Western society strives for and of those minimum values

which are necessary for society and business

organization to survive and thrive. Economic activity

only makes sense when it is a means to a legitimate

human end.

When it becomes an end in-and-of itself, it becomes a

pathological activity, which will not promote human

happiness, either for the individuals carrying it out, or

for society in general, and it is time to call for a

therapist. Too much emphasis, as Pope John Paul II has

noted, is placed on having and not on being.

6. What is the purpose of a Business Firm? There are

generally two competing answers to this fundamental

question: the shareholder view and the stakeholder

view. The shareholder view has been given its strongest

defense by Milton Friedman when he maintained that

the only responsibility of the corporation was to earn as

much profits for the shareholders of the corporation as

possible, as long as the law is not violated. Underlying

this view is the assumption that the ?invisible hand? of

the market will lead these companies to promote the

common good, ?without knowing it and without

intending it,? as Adam Smith argued. The stakeholder

view notes that there are many individuals and groups

beyond the firm's shareholders that have a legitimate

?stake? in how and what firms do, such as workers and

consumers. The perspective of CST is that the traditional

stakeholder list of stakeholders is too narrow, for the list

of those who are affected by corporations? decisions

includes everyone, including future generations. This is

the common good. This does not mean that firms should

not try to earn profits, for clearly profits play an

important role in the economic process, a point even

Karl Marx noted. What it does mean is that the ultimate

purpose of business is to serve people?s needs and

legitimate wants, and the earning of profits should

reflect those who successfully achieve this, as a means of

rewarding and encouraging such activities. Often,

however, profits can be earned by undertaking activities

11

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that are contrary to the common good, as the activities

of many of the energy businesses during the California

energy crisis demonstrated. In this case markets were

manipulated and output was curtailed in order to raise

prices and profits, activities that were directly contrary to

the needs and legitimate wants of their customers. Just

as the purpose of the economy is to serve people, and

not the other way around, such is also the case for the

individual business firm.

7. CST offers a more compelling perspective on the nature

of work than the one offered by economic theory. In

economics, work is seen as a disutility, as drudgery. From

the perspective of the worker it is to be minimized, and

from the perspective of the employer it is a cost to be

minimized and a factor of production whose output is

to be maximized. In both cases, the worker and the

employer treat work and the worker as an object.

Among the main points of John Paul?s encyclical ?On

Human Work? (13, LE) are that in work man is

contributing to God?s creation, and that the purpose of

work is the development of the worker. While not

ignoring the significance of what John Paul II calls the

objective dimensions of labor (the goods and services

produced by workers), the Pope emphasizes that the

real output of work is the worker, what he calls the

subjective dimensions of labor. ?Man has to subdue the

earth and dominate it, because as the ?image of God? he

is a person, that is to say, a subjective being capable of

acting in a planned and rational way, capable of

deciding about himself, and with a tendency to self-

realization. As a person, man is therefore the subject of

work. As a person, he works, he performs various

actions belonging to the work process; independently of

their objective content, these actions must all serve to

realize his humanity, to fulfill the calling to be a person

that is his by reason of his very humanity? (13, LE, 6).

This allows for a much broader understanding of the

laboring process, and of non-paid forms of work, than

that usually offered in business or economics classes, yet

this broader perspective is much closer to the reality

and the ideal of work, what our students should strive

for in their own working lives, what will make them

happier and more fulfilled individuals and members

of communities.

8. By placing economic activity in its historical and social

context, CST provides a more realistic understanding of

the forces that produce economic outcomes such as the

distribution of wealth and incomes. In economic theory

almost all of our attention is placed on markets and

market outcomes, often causing us to lose sight of the

various factors that are outside of the market but which

nonetheless influence and partially determine these

outcomes. This is especially the case when we look at the

determination of the distribution of wealth and incomes.

A major determinant of the amount of wealth one will

have is the amount of wealth his or her parents had. This

directly impacts on wealth through inheritance, and

indirectly through the impact a person?s parents?

economic status has on schooling and other

opportunities. These factors greatly influence the

distribution of incomes, as do other non-market factors,

such as government policy, existence of unions, and

economic power. Such factors are outside of market

relations, and so when we look for exclusively

individualistic and market based explanations of

economic outcomes such as the distribution of wealth

and incomes, these often get excluded. Thus, taking a

more holistic approach to understanding business and

economic behavior leads to a better comprehension of

such activity and its impact of the community.

Furthermore, it allows us to recognize that the success

of markets requires many non-market activities and

institutions. Activities such as raising children, caring for

the elderly, volunteering at schools, and numerous other

contributions to the life of the community are often

carried out outside of a market setting. They are critical

to the well being of our society, yet they are often seen

as valueless because they do not add value to any

business?s bottom line. Any discussion on topics such as

corporate responsibility and business ethics, to have any

real meaning, needs to first have a sense of the

common good and the need to consider the common

good in all aspects of business life. Thus the holistic

approach of CST gives us a better understanding of

where we are and where we should be going.

9. The institution of private property has often been seen

as critical to a market based economy, and rightly so.

Yet the understanding of property in economics and

business is seriously flawed. Too often property is seen

solely in individualistic terms, as if the individual had

complete control of their property and society did not

have any right to place any restrictions or requirements

on it. Often such restrictions are seen as a ?taking? ?

that is, the government, by reducing the use of

someone?s property (i.e., by imposing taxes), is lowering

its value and thus taking wealth away from the property

12

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13

holder. Economists add to this chorus of objections to

restricting private property by claiming that only if

individuals use their property to their best economic

advantage will the property be used efficiently. This

view is an ideological one and not based on a clear and

accurate understanding of the economy. The fact of the

matter is that the understanding of private property in

CST offers a more realistic explanation of the nature

and purpose of property. Following the classical

tradition of Aristotle and St. Thomas Aquinas, CST

emphasizes that property has a social nature, what

Pope John Paul II calls its ?social mortgage,? and that

property needs to be used to promote the common

good. Aquinas noted that most often property best

promoted the common good when it is held and used in

private hands, yet in all cases the community always has

a stake in how the property of the community is used.

Thus it is perfectly legitimate for governments, acting in

the interest of the whole community, to place

restrictions and requirements on the use of private

property. Moreover, the social nature of property should

be obvious once it is pointed out that no property exists

without social institutions to first define what is

property, and second to protect it; that is, to ensure

others do not use it without permission, as exclusivity is

an essential aspect of what is private property. The

richest man in the world only remains so if the

government and the police force are there to defend

and protect his property. Society defines property,

society defends and protects property, and so it is thus

reasonable for society to be able to ensure that

property is used towards the common good.

10. A market economy and society require that prices are

meaningful; that is, the existing set of prices must

reflect economic and social values for them to accurately

signal market participants the correct information. In

the short run these prices are supposed to reflect supply

and demand imbalances, thus working to clear markets.

However, the long run role of prices is to reflect social

values, the forces that generate order in the economy

and society. Often, however, short run prices are

prevented from realizing this move towards long run

prices because of market imperfections such as

economic power. The tremendous influence of large

corporations to set prices and to manipulate supply and

demand in order to keep prices high, along with other

forms of economic power, prevent the market from

moving towards long run prices that reflect social

values. This often requires that some institution

must intervene in the market to ensure that prices be

more meaningful.

For example, the long run price of any good or service

in a market economy needs to reflect the full cost of

production of that good or service. This is a need that

reflects both the efficiency and equity requirements of

the economy. In terms of the price paid for labor

services, this means a just wage that supports the

worker and their dependents. Wages often fall below

what would be a just wage because of the extreme

imbalance of economic power between workers and

owners. Thus, wages are often well below a just wage,

which means that workers are subsidizing the wealth of

the owners by working for less than their just due.

While economic theory has a hard time dealing with

the issue of what is a fair wage, because its underlying

value is consumption of utility and not the dignity of

each human, CST has been able to assert the need for

just wages and just prices (going back to Aquinas)

noting both the efficiency and equity criteria for

paying workers a just wage (which is merely a just price

for labor).

The list could go on to many important issues, but my goal is

to present a brief case as to why the introduction of CST

into a business education would improve it in every sense ?

both in terms of making it more realistic and useful for the

student, and in terms of helping our students realize their

potential as humans.

Bringing Realism to

Management Education:

Contributions from

Catholic Social Thought

?

Society defines property, society

defends and protects property, it is

thus reasonable for society to be able

to ensure that property is used

towards the common good.

?

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References

1. Chesterton, C.K. ?Orthodoxy,? in The Collected Works of

C.K. Chesterton, Vol. I. San Francisco: Ignatius Press,

1986.

2. Clark, C. M. A. ?Catholic Social Thought and the

Economic Problem.? OIKONOMIA, Feb. 2001, 6-18.

3. Clark, C. M. A. "Catholic Social Thought and Business

Education." Vincentian Chair of Social Justice, 6,

2001, 35-37.

4. Daly, H.E. and J.B. Cobb. For the Common Good. Boston:

Beacon Press, 1994.

5. Dorr, D. Option for the Poor. Dublin: Gill and Macmillan,

1992.

6. Healy, S. and B. Reynolds. Social Analysis in Light of the

Gospels. Dublin: CORI, 1983.

7. Keynes, J.M. Essays in Persuasion. New York: W. W.

Norton & Company, 1963.

8. Kammer, F. Doing Faithjustice: An Introduction to

Catholic Social Thought. New York: Paulist Press,

1991.

9. Maritain, J. Natural Law: Reflections on Theory &

Practice. Edited and introduction by W. Sweet.

South Bend, Indiana: St. Augustine?s Press, 2001.

10. Massaro, T. Living Justice: Catholic Social Teaching in

Action. Franklin, Wisconsin: Sneed & Ward, 2000.

11. Mich, M. L. K. Catholic Social Teaching and Movements.

Mystic, CT: Twenty-Third Publications, 2000.

12. Myrdal, G. Value in Social Theory. Edited by P. Streeten.

London: Routledge, 1958.

13. O?Brien, D. J. and T. A. Shannon. Catholic Social

Thought: The Documentary Heritage. Marynoll, NY:

Orbis Books, 1992.

14. Smith, A. The Theory of Moral Sentiments. [1759]

Oxford: Oxford University Press, 1976(a).

15. Smith, A. An Inquiry into the Nature and Causes of the

Wealth of Nations. [1776] Oxford: Oxford University

Press, 1976(b).

16. Stebbins, J. M. ?Business, Faith and the Common Good,?

Review of Business, 10:1, Fall 1997, 5-8.

Endnotes

1

John Paul II?s encyclical ?Faith and Reason? is, of course, the

most important text to be consulted here, but I would also

highly recommend the works of C.K. Chesterton on these

matters, starting with ?Orthodoxy.? As he often noted, all

scientists, even the most ardent atheists, positivist,

pragmatist, whatever the school or predilections, start off

with a level of faith in the power of reason, especially their

own, that would put many a saint or martyr to shame.

2

Here we present only an outline of the CST tradition. For

an excellent introduction see Massaro, 2000, and Kammer,

1991, and for a more rigorous treatment see Dorr, 1992.

3

John Paul II, Veritatis Splendor, 1993.

4

?For the teaching of Christ joins, as it were, earth and

heaven, in that it embraces the whole man, namely, his soul

and body, intellect and will, and bids him to lift up his mind

from the changing conditions of human existence to that

heavenly country where he will one day enjoy unending

happiness and peace.? (MM 2)

5

See Mich?s Catholic Social Teaching and Movements, which

highlights the fact that this tradition has never been merely

the voice of the Church hierarchy, but has been a struggle

for social justice at all levels of the Church.

6

As St. Thomas Aquinas noted: ?Human reason is the norm

of the human will, according to which its goodness is

measured, because reason derives from the eternal law

which is the divine reason itself. It is evident then that the

goodness of the human will depends much more on the

eternal law than on human reason.? (Quoted in PT 38).

7

This section is adopted from my "Catholic Social Thought

and Business Education,? Vincentian Chair of Social Justice,

6, 2001, 35-37.

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Abstract

Catholic Social Thought is a treasure trove of moral wisdom

formulated to inform the conduct of believers. This doctrine

is designed to help form the consciences and guide the

actions of people the world over, not the least of who are

those responsible for leading business institutions.

Introduction

The Magisterium, or teaching authority of the Catholic

Church, provides a comprehensive body of doctrine to guide

those of the faith. This guidance extends to the moral

aspects of economic activity. The resources of Catholic Social

Thought (CST) have been underutilized in this regard,

however. The moral wisdom they provide has simply not

been tapped into sufficiently. This paper is an attempt to

rectify the situation. My goal is to link 10 themes of CST to

their applications to present day political/economic realities.

Ten Themes of Catholic Social Thought

Trinitarian Love: God?s Existence and Nature

It is evident from the normative expression of the Christian

faith found in the Church?s Creeds that the Christian

worldview is theistic ? i.e., the touchstone proposition is the

belief in the existence of one supremely powerful,

transcendent and personal God. The theism of Christianity is

thus distinguishable from worldviews that deny the

existence of God (atheism), that hold that many gods exist

(polytheism), that believe that everything that exists is God

(pantheism), or that assert that the God who created the

Universe has now fully withdrawn himself (deism). But

Christianity differs from the theism of Judaism and Islam in

its belief that the New Testament discloses in Jesus Christ a

person both fully God and fully man - i.e., God became

incarnate in his only begotten son Jesus Christ.

To understand the basic Christian beliefs about man and the

universe, to understand the fundamental assumptions that

make the Christian see the world as he or she does, the

place to naturally begin is with God. That is, since the

Christian worldview is theocentric, insight is particularly

sought into the Being at the center of this belief system.

What is God?s nature? What has God done? What is God

continuing to do? The first item of the Catechism provides a

concise summary of the Catholic vision or understanding of

reality:

God, infinitely perfect and blessed in himself [who God

is] in a plan of sheer goodness freely created man [what

God did] to make him share in his own blessed life [why

God made man]. For this reason, at every time and in

every place, God draws close to man. He calls man to

seek him, to know him, to love him with all his strength.

He calls together all men, scattered and divided by sin,

into the unity of his family, the Church [how God

accomplishes his purposes]. To accomplish this, when the

fullness of time had come, God sent his Son as

Redeemer and Savior. In his Son and through him, he

invites men to become, in the Holy Spirit, his adopted

children and thus heirs of his blessed life [3:1].

Human Personhood: Sacred, Social, Inclined to Evil

?God created man in his own image, in the image of God he

created him: male and female he created them? (Genesis

1:27). Human beings are the crowning glory of God?s

creative work in the universe. We are the only creatures on

Earth that God has willed for its own sake and everything

has been created by God for us. In a word, man has been

loved into existence by God, formed in the very likeness of

God and deliberately designed as male and female.

The vocation of being human is to come to the fullest

development of the distinctive human powers of intellect

and will by knowing truth and loving goodness. The

supreme truth is God and the supreme goodness is God.

Therefore, the ultimate purpose is to know and love God,

and since our imperishable soul destines us eternally, to

enjoy Him forever. In short, God made human beings for

loving fellowship with Himself. Settling on anything less

than this communion leaves the human heart restless [3:30].

There are a number of profound implications to the fact

that by virtue of being human men and women are made in

the image of God.

15

Catholic Social Thought and Business Ethics:

The Application of 10 Principles

Jim Wishloff, The University of Lethbridge, Edmonton, Canada

catholic social thought and

business ethics:

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16

Catholic Social Thought

and Business Ethics:

The Application of

10 Principles

? The end for which we have been created confers an

unsurpassable and inalienable dignity on us. As a

child of God, made by God and for God, the human

person is a sacred or holy being.

? The human person is in possession of inherent and

inviolable rights. Violating those rights is a grave

moral failure. For example, to wantonly kill

(murder) another human being whose life is

sacred is an attack on God, in whose image the

person is made.

? Human beings are of infinite worth. Every person?s

value is immeasurable and God knows each person

in intimate detail.

? In the light of God all human beings are equal.

Conditions such as race, gender and societal

position are of no significance to God in

establishing our worth.

? Human beings occupy a special place in the order of

creation. The great privilege of being stewards of

God?s creation is accompanied by the onerous

responsibility of emulating God?s providence.

Human beings are inherently social beings. This is clear from

the Genesis account of creation; ?it is not good for man to

be alone? [Genesis 2:18] and from the Catechism ?God did

not create man a solitary being? [3:383]. How deeply is our

nature social? We could not come into existence unless other

human beings procreated us. We would not stay in existence

unless other human beings maintained us in it. We have

needs that we cannot supply ourselves. We have powers,

such as the ability to teach, that can never be used except in

relation to others. Without other human beings none of us

would ever reach maturity. The documents of the Second

Vatican Council concisely state the understanding: ?For by

his innermost nature man is a social being; and if he does

not enter into relations with others he can neither live nor

develop his gifts? [Gaudium et spes:12].

The essential question of the human condition is how

freedom will be used. Will human beings give their hearts to

God, voluntarily returning his love, or will they turn away

from God? The doctrine of original sin says that our first

parents tragically decided to reject their divine destiny and

that their fall from goodness has been transmitted to all

subsequent generations so that we exist in a state of

fallenness. ?Man has a wounded nature inclined to evil?

[3:407]. Though originally created by God for fellowship

with him, human beings have rebelled against God.

Christianity asserts that the reality of our condition is that

we have chosen to be alienated from God.

Authentic Liberty: Adhering to Natural Moral Law

The theological doctrines of the Catholic faith, as

summarized in the Creeds, are not given as an end in

themselves. Right belief (orthodoxy) is meant to result in

right practice (orthopraxy). The linchpin proposition of

Christianity is this: Jesus Christ was God incarnate but was

nevertheless crucified and for our sake he was resurrected

from the grave. The Church honors this fact and thereby

stays true to its Founder, in formulating the Catechism. ?The

first and last point of reference of this catechesis will always

be Jesus Christ himself, who is ?the way, the truth and the

life?? [3:1698].

Morality is not just a way of behaving but is more essentially

a way of being. This brings out Catholicism?s commitment to

metaphysical and moral realism. What this means is that the

starting point in thinking about our lives and our world is

with things in reality, not with things imagined. Reflection is

on the world of real existence, which men have not made or

constructed, with the idea that the knowledge gained of

this reality is the only reliable guide to human conduct. That

is, sanity, and thus the possibility of sanctity, depends on

adapting one?s self to ultimate reality. Metaphysics uncovers

this reality. Morality is a right response to the discovery.

What one ought to be and do is based on what

[metaphysically] is.

In the Christian worldview God?s creation is thought to be

ordered, structured and law-governed. It is believed that just

as there are natural laws governing the physical world, so

too, there are natural moral laws which apply to the human

soul. God built both sets of laws into the very structure of

reality. Human beings thus feel the physical laws press on

their beings (e.g., effects of gravity), and they feel God?s

moral code, patterned on his own holiness, pressing on

them (e.g., stirrings of conscience).

?

In Catholic economics the ruling

purpose of the economy is not power

or profit, but human well being in its

totality.

?

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What are some of the characteristics of the natural

moral law?

? Teleological: The most important question of our

moral lives is: What is the summum bonum, the

greatest good or ultimate end? What are our lives

for, in an ultimate sense? The Catechism answers,

?we all want to live happily; in the whole human

race there is no one who does not assent to this

proposition? [3:1718], but then goes on to disclose

wherein true happiness lies - ?the joy of the

Trinitarian life? [3:1721].

? Virtue Theory: ?A virtue is an habitual and firm

disposition to do the good? [3:1803]. Virtues form a

person?s character - i.e., in possession of them, not

only does a person do good acts but also he

becomes good. The Catechism distinguishes

between the human virtues, those virtues that

perfect the distinctly human powers and protect

against concupiscence, and the theological virtues,

those virtues that adapt man?s faculties for

participation in the divine nature. Traditionally, four

virtues have been recognized as cardinal or pivotal

human virtues (from the Latin cardine, meaning

hinge). They are prudence, justice, fortitude and

temperance, and they serve to organize all the

other virtues. For example, honesty would be an

integral component of the virtue of justice. The

three theological virtues, faith, hope and charity,

are infused by God into the souls of the faithful and

have God as their object. God provides these virtues

to make people capable of acting as his children

and meriting eternal life. The theological virtues are

not added onto the natural virtues but inform and

give life to them. Faith, hope and charity ?are the

foundation of Christian moral activity; they animate

it and give it its special character.? Since morality is

based on human nature and since human nature is

perfected in Christ, the ultimate end of morality is

to become Christ-like. ?The goal of a virtuous life is

to become like God? [3:1803 and Matthew 5:48].

The perfection of charity or supreme happiness, the

very countenance of Jesus Christ, are depicted in the

Beatitudes. Such goodness is beyond human nature,

reason, and power. It is a free gift of God.

Supernatural grace perfects human nature and

makes us ?partakers of the divine nature? [2 Pet.

1:4]. God?s essence is love, and in Christ we have

God loving human beings to death, literally. God?s

love is universal, active, pursuing, personal,

substantial and sacrificial. Christians are called to

just that kind of love. In imitating Jesus, they must

be prepared to take up the Cross.

? Deontological: This type of theory identifies the

binding moral obligations and duties that human

beings have by virtue of being human. In Catholic

morality these are summarized in the Decalogue

and the Golden Rule. If the telos of the human

person is God, then the Ten Commandments

describe the path that leads a person home to this

destination. Since God is love and human beings are

made by love and for love, the commandments

have to do with the right ordering of love. The

commandments of the first tablet (#1-3) have to do

with loving God. Jesus summed up how we ought

to love God: ?with all your heart and with all your

soul and with all your mind? [Matthew 22:37]. God

deserves such total love because he is the infinitely

good Creator of our existence. The commandments

of the second tablet (#4-10) have to do with loving

others. Jesus again encapsulated how we ought to

love others: ?love your neighbor as yourself? [Mark

12:31]. This means that we are to will the good of

others since this is what we always will for ourselves

in loving ourselves. People deserve this love because

they too are persons made in God?s image. Things

of the world are to be loved according to their

nature, animals as animals, plants as plants, and

matter as matter. God made these other orders of

beings for use by people. To reverse this order, to

treat things as ends and use people as means, is a

basic moral perversion.

? Consequentialist: While the effects of one?s actions

are taken into account, a pure utilitarian calculus is

rejected as insufficient. ?One may not do evil so

that good may result from it? [3:1756]. Motives or

intentions also matter. ?The end does not justify the

means? [3:1753]. The stringent evaluation of moral

acts involves asking: have I done the right thing (the

act itself), for the right reason (the purpose), in the

right way (given the circumstances) [3:1757]. God

created man a free being. ?By virtue of his soul and

his spiritual powers of intellect and will, man is

endowed with freedom, an ?outstanding

manifestation of the divine image?? [3:1705]. Since

the human will is free, the human person is

responsible for his or her voluntary acts. Every

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human person has the ?natural right to be

recognized as a free and responsible being?

[3:1738] and since rights always entail obligations,

?all owe to each other this duty of respect?

[3:1738]. The exercise of freedom is not an

unlimited right however. There is no right to say

and do everything. True freedom only comes in the

service of what is good and just. Deviating from the

moral law violates one?s freedom and leads to one

being enslaved by sin.

Common Good: Basic Human Communities

We are social beings by nature. This is not an assertion

plucked out of thin air but a conclusion arrived at by careful

observation of human development. Human beings start in a

state of utter dependence and must be fed, nurtured,

clothed, educated over an extended period of time. A full

human life requires material necessities and moral, social,

intellectual and spiritual progress that cannot be achieved in

isolation. In a word, social life is necessary for our

perfection. As persons, as subjects of responsibility and love,

our lives are always lives-in-community. Thus, associations of

greater to lesser intimacy are demanded metaphysically, by

the very order of ultimate reality, as it were.

The first form of communion between persons, instituted by

God by design, is the partnership of man and woman. God is

the author of marriage [3:1603], the indissoluble union of a

man and a woman ordered to the good of the spouses and

the procreation and education of children. The human

family, then, is a part, the central element, of the divine

plan from the time of creation. It is the original cell of social

life existing prior to and above all other levels of social

organization and deserving of recognition as such. The

family constitutes nothing less than the foundation

of society.

Beyond the family is the local or civic community. This

encompasses all the associations or groups intermediary

between the family and the state. The political community

overarches all, ideally providing a stability that allows for

harmonious living between citizens of the polis. This series

of natural nested communities can be diagrammed as

Exhibit 1.

EXHIBIT 1: NATURAL NESTED COMMUNITIES

This allows us to see that our own good, our own

development as persons, is linked to the good of our family,

our community and the political society we live in. But these

communities are moral units, which achieve their unity by

the voluntary union of the many persons who comprise the

community. Thus the formation of community is not a

technical problem to be solved (once and for all, like

building a bridge) but a moral struggle, to be faced with as

much equanimity as possible. Human community will only be

established if it is desired, generated, and nourished by the

people who form the community. Said another way,

community can only thrive if the people of the community

value it and are disposed morally to make it work. Human

society, the moral union of all the wills aiming at the same

end, is the result of love.

What is this end? In a teleological perspective, something is

good if it fulfills its purpose. For example, a good watch

keeps time accurately. The good of the human person as a

citizen is the common good of the society in which he lives,

where the common good is understood to be: ?the sum

total of social conditions which allow people, either as

groups or as individuals, to reach their fulfillment more fully

and more easily? [3:1906]. In other words, the common

good is the social order that empowers or facilitates every

individual in it to attain, as closely as possible, his or her

perfection. Such a social order can only be secured by the

moral perfection of the individual persons of that society.

Political Community (State)

Civic Community

Household Community (Family)

Individual Person

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Thus it can be seen that the common good is not in

opposition to any individual?s good, for it is precisely in the

social order that the individual develops. That is, virtue is

not achieved in isolation but only through participation in

the ordered social whole. Far from there being an inherent

incompatibility between the individual and the society, they

can be seen to be complementary ? i.e., they exist for each

other. The individual develops in society or by contributing

to society, and society exists for the development of

individuals. Self-sacrifice for the common good is not the

denial of self but self-fulfillment. We transcend ourselves, or

develop as we ought to, by self-giving love, a process Josef

Pieper referred to as ?selfless self-preservation.?

Governance: Legitimate Public Authority and Subsidiarity

The Catholic perspective explicitly opposes the doctrine of

economic laissez faire [literally, ?leave alone?]. ?Political

authority has the right and duty to regulate the legitimate

exercise of the right of ownership for the common good?

[3:2406]. ?Reasonable regulation of the marketplace and

economic initiatives in keeping with a just hierarchy of

values and view to the common good is to be commended?

[3:2425]. Implicit in this position, however, is a quite severe

curtailment of state intervention in the economic activities

of its citizens. The Social Assistance or Welfare State is also

opposed. Understanding the role government is to play in

economic life requires a discussion of authority in the

Christian worldview.

The telos or end of political bodies is identifiable. ?The

political community, then, exists for the common good: this

is its full justification and meaning and the source of its

specific and basic right to exist? [Guadium et spes:74]. ?It is

the role of the state to defend and promote the common

good of civil society, its citizens and intermediate bodies?

[3:1910]. Thus, political authority is constrained in its actions

to those interventions that contribute to the common good.

What are these? What does the Catechism put forward as

the legitimate role of government?

i)

Setting up the institutional, juridical, political order

necessary in a responsible free enterprise system ?

i.e., guaranteeing people the security needed for

the exercise of freedom in the economic field: This

would include the protection of private property,

the maintenance of a stable currency, and the

provision of efficient public services [3:2431].

ii)

Overseeing and directing the exercise of human

rights in the economic sector: Business enterprises

have a responsibility to society for the effects of

their operations. Individuals have a responsibility to

govern themselves and to observe the just

procurement of the common good by authorities.

Consequently, the primary responsibility for directing

the exercise of human freedom lies with individuals

and the groups and associations which make up

society. When people fail to act responsibly, political

authority must step in. At a minimum, government

must ?restrain the heartless.?

iii)

Harmonizing and guiding development [16:48]): The

state can become involved in business systems, for

example when a sector is just beginning to develop

and would be aided in its development by

government assistance. This must be done

judiciously, however. The ever-present danger is that

state intervention becomes excessive and diminishes

human freedom and initiative. The guiding principle

to be respected is that of subsidiarity, according to

which ?a community of a higher order should not

interfere in the internal life of a community of a

lower order, depriving the latter of its functions, but

rather should support it in case of need and help to

co-ordinate its activity with the activities of the rest

of society, always with a view to the common good?

[3:1883]. In sum, government can assist in economic

development but must avoid taking over functions

properly belonging to business.

iv)

Breaking up monopolies [16:48]: Not all corporate

concentration of economic resources is bad, but

political authorities must act when monopolies

delay or obstruct development.

v)

Ensuring employment: ?Unemployment almost

always wounds its victim?s dignity and threatens the

equilibrium of his life. Besides the harm done to

him personally, it entails many risks for his family?

[3:2436]. For this reason the state has a duty to

rationally coordinate a full employment

policy [14:18].

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?

The right to hold property is

accompanied by responsibilities

in its use.

?

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Human Solidarity: Global and Participative

Solidarity, ?a firm and persevering determination to commit

oneself to the common good ? to the good of all and of

each individual, because we are all really responsible for all?

[15:38], is a virtue that has been emphasized in the Catholic

tradition, albeit under different names, as one of the

fundamental principles of social organization. Today, when

our economic system has made the global nature of our

interdependency so tangibly evident, it is valuable to review

the profound depth at which human fellowship exists in the

Christian worldview. The human race forms a unity because

of its common origin (created by God), its common nature

(each person is an ensouled body), its common dwelling

place (life on earth), its common mission (salvation of souls)

and supernatural end (God himself), and the common means

for attaining this end (Christ?s redemption was for all men).

The ultimate and unshakeable basis for human solidarity,

the reason that ?all men are truly brethren? [3:361], is the

Fatherhood of God made incarnate in the Body of Christ.

Justice: Distributive, Commutative and Social

?Justice is the habit whereby a man renders to each one his

due by a constant and perpetual will.?

?St. Thomas Aquinas

Unpacking Aquinas? classic definition will enable us to see

why a closer scrutiny of justice is called for. First of all, justice

is a moral habit requiring a certain constant rectitude to the

will. That is, it is a virtue, indeed one of the four cardinal

virtues, something whereby a person becomes good as a

person. Secondly, the essence of the virtue is to give to other

people what is their right by virtue of their nature as human

beings. Thus, justice, in inclining us to think of, to be

attentive to, our obligations to others, is a basic social virtue.

Justice allows us to shoulder the responsibilities of social life.

It orders our relationships with others. Without justice, social

stability is impossible. Not the least of what justice governs is

the rightful possession and use of property.

Following Aquinas? masterful treatment of the virtue, the

Catechism distinguishes among three forms of justice:

distributive, commutative and legal [3:2411].

? Distributive justice ?regulates what the community

owes its citizens in proportion to their contributions

and needs? [3:2411]. It pertains especially to those

in authority, for the social whole (whether a

political state or a commercial enterprise) exercises

distributive justice through its officials. In applying

the virtue, such officials must be no respecter of

persons ? i.e., people should not be favored because

of who they are. That said, honors and rewards

ought to be apportioned according to merit. Help

or aid ought to be dispensed according to need.

Duties and burdens ought to be assigned according

to capability.

? Commutative justice ?regulates exchanges between

persons in accordance with a strict respect for their

rights? [3:2411]. The principle act of commutative

justice is restitution.

? At the very least, individuals ought to obey the just

laws of the state and respect the state in its

legitimate procurement of the common good,

hence the name ?legal? justice. But such a moral

minimum does not begin to capture what

individuals working alone or in concert with others

can contribute to the social whole, thus the idea of

?social? justice.

To possess social justice or civic virtue is to have an

intelligent, dutiful concern for the public weal, an

efficacious voluntary interest in the welfare of the

community. It is to constantly will one?s greatest

contribution to the common good. Exhibit 2 captures the

basic forms of justice.

EXHIBIT 2: THE SOCIAL WHOLE

The Individual

Person

The Individual

Person

Legal (or Social) Justice

Distributive Justice

Commutative Justice

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Private Property: Subordinate Natural Right

The right to possess things privately as one?s own is a natural

right ? i.e., it is a right human beings have by virtue of what

they are as human beings, by virtue of ?what makes man

man? [12:11]. Three reasons are given to legitimate private

ownership [3:2402]:

i)

It guarantees the freedom and dignity of persons

ii)

It helps each of us meet our basic needs and the

needs of those in our charge

iii)

It allows for a natural solidarity to develop

between men

In other words, it fits with what we are as human beings.

The right to private property respects the transcendent

dignity of the human person [16:13]. It honors our nature as

i) spiritual beings in possession of the faculties of intellect

and will and thereby capable of initiating thoughtful action

and assuming responsibility, ii) material beings in need of

physical sustenance on a recurring basis, iii) social beings

whose lives are made by loving relationships with others.

God?s original gift of the earth was to the whole of

mankind. Private property rights are therefore not absolute

but are subordinate to this reality, to this prior and more

basic claim. Taking the goods of another to meet immediate,

essential needs when this is the only option (e.g., Jean

Valjean?s stealing of a loaf of bread in Victor Hugo?s classic

Les Miserables) is not theft, because the universal

destination of goods is primordial. The right to life

and subsistence is more fundamental than the claim

of ownership.

It is a great privilege to have been entrusted by God with

material resources. It makes one a steward of Providence.

The awesome responsibility entailed by ownership is to

emulate God?s goodness in making the property fruitful and

communicating its benefits to others. We are obliged to use

what we possess to benefit others as well as ourselves, since

private property is ?based upon and justified precisely by

the principle of the universal destination of goods? [15:42].

The profound unity of the human race demands such

attention to others. In sum, ?private property is under a

social mortgage ? it has an intrinsically social function?

[15:42].

Dignity of Work: Sharing in the Activity of the Creator

Work is clearly a central reality of human existence and has

great meaning in the lives of human beings. Where does

work come from? What gives work its dignity? What is the

end of work? What should work be for human beings? The

Catechism addresses all of these questions summarily

[3:2427,2428]. Work was ordained by God from the

beginning. Man is destined by his Creator to ?fill the earth

and subdue it; and have dominion over the birds of the air

and over every living thing that moves upon the earth?

[Genesis 1:28]. Thus, work is a duty. It is God?s will that we

are to work to the best of our capacities. We are not to be a

burden to others because we are idle busybodies [2 Thess.

3:6-12]. Our responsibility is to work [1 Thess. 4:11], very

hard if necessary [2 Thess. 3:8]. We are equipped for our

God-given mandate by virtue of our humanity. Made in the

?image of God? [Genesis 1:27], a human being is a person, a

?subjective being capable of acting in a planned and

rational way, capable of deciding about himself, with a

tendency to self-realization? [14:6]. Thus, work has a

profound two-fold dignity. First, it is a calling of God, an

extraordinary gift from God. God has given human beings

the task of completing the work of creation, of perfecting

its own harmony for their good and the good of their

neighbors. Secondly, work has dignity because of the dignity

of the human person doing the work ? i.e., it is human

work. Work helps us to attain our innate potential.

?Work is a good thing for man ? a good thing for his

humanity ? because through work man not only

transforms nature, adapting it to his own needs, but he

also achieves fulfillment as a human being and indeed,

in a sense, becomes ?more a human being?? [14:9].

The significance of this is that work can never be looked on

as just an economic issue even though there are obvious

economic consequences. Beyond what is accomplished

objectively, work is by man and for man. The human person

in his or her dignity is the author of work, and as the subject

of work is its beneficiary. Man is the ?true purpose of the

whole of production? [14:7].

?

The justification of enterprise is the

contribution the enterprise makes to

human flourishing, the

correspondence of the economic

activity with God?s plan for man.

?

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The non-negotiable moral vision of Catholic economics is

that there should be ?suitable employment for all who are

capable of it? [14:18]. Everyone ought to be elevated by

work. This stands in stark contrast to the corporate vision of

work being just another commodity to be sold and bought.

Reducing human effort to a category of merchandise

empties work of its dignity.

Stewardship: Caring for God?s Creation

Man has been given dominion over the inanimate world and

over plants and animals [Genesis 1:28-31]. That is, they are

destined for the good of humanity. This dominion is not

absolute, however, having been granted by God the only

absolute in Catholicism. Man?s mastery and possession of

nature is not unlimited. It is not to be an ?arbitrary and

destructive domination? [3:373]. Things are not to be used

in a ?disordered? way [3:329]. The natural world is God?s

masterpiece. To scar or deface the Artist?s work is to

disrespect the Artist. Destroying the creation shows

contempt for God with disastrous consequences to the

environment and to human beings who must make their

home there. At the root of our irresponsible exploitation of

the earth is a refusal to accept the inherent limitations of

our creatureliness.

?Man who discovers his capacity to transform and in a

certain sense create the world through his own work,

forgets that this is always based on God?s prior and

original gift of the things that are. Man thinks that he

can make arbitrary use of the earth, subjecting it

without restraint to his will, as though it did not have

it own requisites and a prior God-given purpose, which

man can indeed develop but must not betray. Instead

of carrying out his role as a cooperator with God in

the work of creation, man sets himself up in the place

of God and thus ends up provoking a rebellion on the

part of nature, which is more tyrannized than

governed by him? [16:37].

Christians are called to be good stewards of God?s material

world, caring for it, maintaining it in its integrity and

perfecting it by opening it up to God through their own

divinization. Even this does not capture the radical nature of

the stewardship call in the Christian worldview. It is not just

about being a trustee or manager of God?s resources by

making good moral choices. The rich young man had done

this [Matthew 19:18-20] and it wasn?t enough. Jesus wants

his followers to do more by risking more. He wants his

disciples to seek intimacy and restored relationships with

each other and the whole creation. In sum, stewardship is

the process of recreating community by establishing

relationships that are life-giving, transforming and healing,

risking all and trusting God in doing it. Life is lived in

thanksgiving without fear because of God?s providence.

Implications of 10 Themes to Business

Ultimate and Basic Purpose of Economic Production

The fundamental question here is what justifies an

institution?s existence? Catholicism?s answer is that ?the

human person ? is and ought to be the principle, the

subject and the end of all social institutions? [3:1892].

Economic enterprises are not excluded. In Catholic

economics the ruling purpose of the economy is not power

or profit, but human well-being in its totality. ?Economic life

? is ordered first of all to the service of persons, of the

whole man, and of the entire human community? [3:2426]

because of the grandeur of the human person. In the

Catholic worldview human beings are a high and holy

mystery, God?s own children. As such they are infinitely more

worthy than any material goods that might be produced or

the organizational entities created to generate that

production. Catholicism?s belief that human beings are

endowed with a spiritual and immortal soul is the safeguard

against totalitarianism, including the totalitarian tendencies

of expansive commercial enterprise [26]. Long after

organizations and nations have died the soul of each human

being will still exist.

The ultimate institutional purpose of the good of persons

must be fulfilled by morally consistent means. Human

actions taken in the service of enterprise must conform to

the moral order. The right to hold property is accompanied

by responsibilities in its use. Profitability is still important. It

is a necessary condition for the viability of the firm, but not

sufficient to legitimate the institution. We need oxygen to

stay alive but no one would contend that breathing is the

ultimate reason for our existence. The justification of

enterprise is the contribution the enterprise makes to

human flourishing, the correspondence of the economic

activity with God?s plan for man.

Out of this understanding, the following generic corporate

mission statement can be formulated: [To do well financially]

by producing and exchanging needed goods and services

humanely. Questions can be proposed to assess the fidelity

of the firm?s operations to the institutional purpose. Is what

we are doing worth doing at all? In what sense are we

contributing to human flourishing? To what degree are our

products essential, useful, reliable, durable, recyclable? Is

there real value being offered? Are genuine human needs

being served?

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This type of interrogation would help the Catholic see that

he ought to exclude himself from involvement with

enterprises that kill the body physically, like tobacco, or kill

the soul morally, like pornography. In the face of a ?culture

of death? [18:12] the mission must be to ?respect, protect,

love and serve life, every human life? [18:5]. No matter what

one?s vocation, whether businessman, teacher, physician or

so on, it must be a channel of public service, it must

contribute to ?the building of an authentic civilization of

truth and love? [18:6].

Right Ordering of the World?s Goods

It is clearly evident that the goods of the world are not

being ordered to God?s providence. Some 800 million

people, immortal beings made in the image of God, lack the

basic necessities of life. This reality subverts human dignity

and is a moral affront since the resources already exist to

ameliorate the desperate conditions people live under. In

Canada alone the net worth of the 50 richest people

exceeds $100 billion [29]. In today?s economic world practical

and artistic skills can grant the person possessing them an

opulence that is hard to even comprehend. Alex Rodriguez

will receive $252 million dollars over 10 years to play

baseball [9]. Talk show personality Rush Limbaugh recently

agreed to a similar pay schedule.

Remedying such a staggering maldistribution of resources

will require a return to the first principle of the whole

ethical and social order, the principle of the common use [or

universal destination] of goods [14:19]. The gifts of creation

are God?s gifts, something Saint Augustine surely had in

mind when he said that he who possesses a surplus possesses

the goods of others. The moral legitimacy of a global

economic system whose concept of justice is unrelated to

both human need and the contribution one?s efforts make

to the well being of others is to be questioned. Perverse

mechanisms, international economic and financial

institutions that impede development, must be dismantled.

Immediate direct aid must be given. Poverty, in all its forms

? material, cultural, spiritual ? must be met with love.

To emphasize that a right ordering of the world?s goods

demands an active love for the poor, the Catechism employs

rhetorical questioning to summarize, the only place in its

2865 items that this technique is utilized.

?How can we not recognize Lazarus, the hungry

beggar in the parable [cf. Luke 17:19-31], in the

multitude of human beings without bread, a roof or a

place to stay? How can we fail to hear Jesus: ?As you

did it not to one of the least of these, you did it not to

me? [Mt 25:45]" [3:2463].

How can those directing commercial enterprises have this

heard in their firms?

i)

Firstly and primarily, business can show its love of

the poor by fulfilling its mission well. By providing

good quality products and services that meet

authentic human needs, the firm adds to the

prosperity of society generating the wealth needed

to alleviate misery and enhance the culture. The

point is that if corporal works of mercy include

feeding the hungry, sheltering the homeless, and

clothing the naked [3:2447], the supermarkets,

homebuilders and apparel manufacturers are

coming to the aid of those in need. This is a fact

that is easily overlooked when thinking about our

commercial system.

ii)

Firms can engage in philanthropy. When the

successful company Thompson-McCully was sold for

$400 million, its owners, Bob and Ellen Thompson,

handed out $128 million to employees [1]. The

Thompson?s goal is to give away $300 million more

in the next 10 years. Already they have set up 1,000

scholarships for inner-city kids and have given $1.5

million to a Michigan hospital.

iii)

Organizations in the commercial sector can enter

into creative partnerships with other sectors of

society seeking to alleviate poverty and unnecessary

human suffering. For example, Habitat for

Humanity?s building fund offers a wise, just and

honorable way for anyone to give.

iv)

The poor can be given help to obtain the capital

they need to start their own ventures. The

Edmonton Community Loan Foundation provides

financing and business support to aspiring

entrepreneurs who are socially or economically

disadvantaged [27]. Since 1995, $600,000 has gone

into small businesses, creating 100 jobs. Capital City

Savings and Credit Union has joined with the

Foundation by providing a $30,000 donation, a

$100,000 line of credit and staff mentoring.

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Catholic Social Thought

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v)

Individuals and groups can use their talents to

benefit others instead of consuming immoderately

and selfishly or accumulating ever more. For

example, before his untimely death, the great

songwriter and singer Harry Chapin performed

more than half of his concerts for charity.

Monetary Compensation

The market mechanisms that a responsible free enterprise

system creates and utilizes have much to commend them.

Resources are better utilized, the exchange of products is

promoted and the desires of contracting parties can be

jointly met [16:40]. For all this, markets are ultimately

inadequate. ?Regulating the economy solely by the

marketplace fails social justice for there are many human

needs which cannot be satisfied by the market? [3:2425].

The anthropological error here is to assume that economic

freedom is all of human freedom and not just one aspect of

it. Homo sapiens is reduced to homo economicus with the

result that only those needs and resources that can be

assigned a price are given significance, or worse, that goods

which by their very nature cannot and must not be sold are

treated as mere commodities. ?Any system in which social

relationships are determined entirely by economic factors is

contrary to the nature of the human person and his acts?

[3:2423].

Remuneration, or the payment of wages, is one aspect of

enterprise that escapes the logic of the market. Under

market idolatry the lowest wages possible globally are

sought out. If labor can be acquired for $0.25 an hour in

China when Mexican workers are being paid $1.00 per hour,

then production will be moved. But to pay someone as little

as you can is the antithesis of liberality, and therefore the

antithesis of the generosity of Jesus, who ?though he was

rich, yet for your sakes he became poor, so that by his

poverty you might become rich? [2 Cor. 8:9]. The basic

dignity of people is over the marketplace.

?Even prior to the logic of a fair exchange of goods

and the forms of justice appropriate to it, there exists

something which is due to the person because he is a

person, by reason of his lofty dignity. Inseparable from

that required ?something? is the possibility to survive

and at the same time, to make an active contribution

to the common good of humanity? [16:34].

A living wage must be paid: ?Everyone should be able to

draw from work the means of providing for his life and that

of his family, and of serving the human community?

[3:2428]. The Market made me do it is insufficient rationale:

?Agreement between parties is not sufficient to justify

morally the amount to be received in wages? [3:2434].

The entirely sensible prescription offered by Block [2] is to

be commended. His idea is that the philosophy that guides

executive compensation schemes should inform the pay

structures at all levels of the organization. One

compensation system having the following features would

be put in place [2:176].

i)

Earnings would be connected to real outcomes.

ii)

The objective would be to pay as much as possible

[instead of as little as possible].

iii)

Special earnings possibilities or tax advantages

would be offered.

iv)

A soft landing would be provided to people in cases

of termination, acquisition, or contraction.

v)

Some equity would be sought across the institution.

It must be noted that Block?s thesis is that it is our

authoritarian tendencies, our desires for positions of

privilege and power, that prevent us from developing such

a policy.

Working Conditions

Economic production is accomplished by human beings using

material means. The question is which takes precedence? Is

capital to serve labor, or is labor to serve capital? The

Catechism affirms the ?primordial value of labor? [3:2428],

once again on the basis of human dignity.

?A system that ?subordinates the basic rights of

individuals and of groups to the collective

organization of production? is contrary to human

dignity. Every practice that reduces persons to nothing

more than a means of profit enslaves man, leads to

idolizing money, and contributes to the spread of

atheism? [3:2424].

It is the case, however, that work environments that should

never be countenanced, work environments that are

harmful to the physical health and moral integrity of the

people working in them, exist in the world today.

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Catholic Social Thought

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i)

Hundreds of millions of tons of hazardous toxic

wastes are shipped from North America to the Third

World every year even though it is known that the

recipient countries lack the money, the technology,

and the environmental safeguards to dispose of the

waste properly [6]. For example, despite the fact

that even very low levels of lead exposure impairs

the brain development of young children, millions

of lead acid batteries are routinely sent to India for

processing by young workers lacking protective

gear. The unconscionable scene is of children

breaking open batteries with their bare hands and

putting the lead on pans for cooking [24].

ii)

Women working in the duty-free Mexican branch

plants of companies such as Zenith, Sanyo, General

Electric, and Sunbeam are subjected to pregnancy

testing exams [5]. These may be as crude as having

a company doctor or nurse press down on the

women?s abdomens with their fists to see if they

can feel a baby.

iii)

Even slavery, which should be met with revulsion

because of its disregard for personal dignity, has

been given a new lease on life [22]. Many of the

consumer products we enjoy ? sugared drinks,

charcoal and clothes ? are produced by bonded and

indentured workers and children around the world.

In Catholicism all life is considered to be the gift of a

personal God and is therefore sacred. Human beings are

seen to be the special and supreme creation of this loving

God. Made in God?s own image, the human reality is a

personal one as well. Each person is viewed as having

infinite value because of the immortal being that he or she

is. Relationships to others are personal in character. The

other person is not an insignificant cog in a machine or an

anonymous element of the collective, but ?someone? who

can be known personally and is deserving of respect. When

people come together to attain objectives that exceed

individual capacities, as they naturally do, they form a

community of persons. The firm exists ?as a community of

persons who in various ways are endeavoring to satisfy their

basic needs and who form a particular group at the service

of the whole of society? [16:35]. These assemblies or

societies (organizations) are at once visible and spiritual

since they are made up of persons united body and soul in a

single nature. The physical dimensions of this reality ought

to be subordinated to the spiritual ones lest persons be

viewed as a mere means. This is to say that social institutions

ought to rest on our concern for others and not just on

contractual exchange.

?Governing them [human communities] well is not limited

to guaranteeing rights and fulfilling duties such as honoring

contracts. Right relations between employers and employees

? presuppose a natural good will in keeping with the

dignity of human persons concerned for justice and

fraternity? [3:2213].

The model for this fraternity is the fellowship that operates

in the Trinity. The ideal in the Christian worldview is to be in

partnership with other persons out of love. In charity one

sees in the other person ?another self? [3:1944] and wills

the good of the other. In charity one pours out one?s life for

another and in doing so realizes one?s own self.

?This is my commandment, that you love one another as I

have loved you. No one has greater love than this, to lay

down one?s life for one?s friends? [John 15:12,13].

?Whoever seeks to gain his life will lose it, but whoever

loses his life will preserve it? [Luke 7:33].

Charity would strive for greater respect, participation

(voice), and ownership for all persons in the firm. For

example, people would be assigned responsibilities and

would be asked to accept challenges so that they might

come to a higher development of their distinctly human

faculties. Workplace participation that builds an authentic

human community and elevates or fulfills the individual

human person is the moral ideal [11].

Today?s reality is that both men and women are in the paid

workforce. That is, many families are now dual-income

households. As a result, the two adults in these households

experience a great deal of stress in meeting both work and

family responsibilities. Corporations can and should assist

parents in this challenge. There is a moral topline in

addition to a financial bottom line. Attending to it means

that firms will not just wash their hands of the matter,

leaving it to the rest of society to cope with the complexity

of modern life, but will actively look for ways to be on the

moral frontier in accommodating parental needs. Many of

these means have already been identified and implemented:

part-time work, flexible working hours, work from home

options, generous parental leaves, and cafeteria style

?

Social institutions ought to rest on

our concern for others and not just

on contractual exchange.

?

Page 27

benefit packages. The company sincerely desiring to do

good can examine more radical options as they appear:

providing lactation facilities for nursing mothers [23], and

encouraging employee volunteering by providing paid leave

[7]. In all these measures the aim is to work flexibly with

each individual and family, to seek personal and working

relationships that make a good life for them and their

families possible, thereby contributing to building up the

basic social structures of our existence.

Conclusion

It is the role of the Magisterium to shed light on the

mysteries of the Catholic faith and in doing so to enlighten

believers. This includes instruction on how to use the

economic resources entrusted to us by God. In the limited

space available, it has only been possible to skim the surface

of the wisdom contained in the documents of the Church

regarding a right ordering of the world?s goods based on

the dignity of the human person. Hopefully this brief survey

of Catholic Social Thought will have implanted in the reader

a desire to acquire greater spiritual insight in these matters

for himself or herself, and will have made a convincing case

for the ultimate pragmatism of the application of these

principles to commercial endeavors.

References

1. ABCNews.com. ?Boss Gives Millions to Employees.? 20/20,

May 26, 1999.

2. Block, P. Stewardship. San Francisco: Berrett-Koehler, 1993.

3. Catechism of the Catholic Church. New York: Image

Doubleday, 1994.

4. The Companion to the Catechism of the Catholic Church.

San Francisco, CA: Ignatius Press, 1994.

5. Eggerton, L. ?Maquiladora Means Abuse.? The Globe

and Mail, October 14, 1997. p. A12.

6. Frontline: ?Global Dumping Ground.? PBS Broadcast,

October 2, 1990.

7. Klieman, C. ?Companies do good by allowing time off for

volunteerism.? National Post, September 20, 1999.

8. Kreeft, P. J. Catholic Christianity. San Francisco, CA:

Ignatius Press, 2001.

9. Maki, A. ?$252 Million converts to 112 Million Franks.?

National Post, December 13, 2000, 51, 2.

10. Mechmann, E. T. God, Society and the Human Person.

New York: Alba House, 2000.

11. Naughton, M. J. ?Participation in the Organization: An

Ethical Analysis from the Papal Social Tradition.?

Journal of Business Ethics 14, 1995, 923-935.

12. Pope Leo XIII. Rerum Novarum (on the Condition of the

Working Classes). St. Paul Editions. [RN] 1891.

13. Pope John XXIII. Mater et Magistra (Christianity and

Social Progress). St. Paul Editions. [MM] 1961.

14. Pope John Paul II. Laborem Exercens (On Human Work).

St. Paul Books & Media. [LE] 1981.

15. Pope John Paul II. Sollicitudo Rei Socialis (On Social

Concern). St. Paul Books & Media. [SRS] 1987.

16. Pope John Paul II. Centesimus Annus (100

th

Year of Rerum

Novarum). St. Paul Books & Media. [CA] 1991.

17. Pope John Paul II. Veritatis Splendor (The Splendor of

Truth). St. Paul Editions. [VS] 1993.

18. Pope John Paul II. Evangelium Vitae (The Gospel of Life).

Mediaspaul. [EV] 1995.

19. Pope John Paul II. Fides et Ratio (Faith and Reason).

Mediaspaul. [FR] 1998.

20. Pope Paul VI. Populorum Progressio (On the Development

of Peoples). St. Paul Books & Media. [PP] 1967.

21. Pope Pius XI. Quadrigesimo Anno (On Social

Reconstruction). St. Paul Editions. [QA] 1931.

22. Reiff, D. ?Modern Slavery and How the Consumer Fuels It.?

National Post,? September 4, 1999, p. 11. [Review of

Disposable People: New Slavery in the Global Economy

by Kevin Bales, University of California Press].

23. Ross, S. ?Time Out in Mom?s Room Pays Off for

Employers.? Financial Post, April 16, 1999, p. C16.

24. Schultz, M. ?Trading Waste.? Harvard International

Review, Summer 1999, 11, 12.

25. Shaw, W. H. and V. Barry. Moral Issues in Business, 8th

Edition. Belmont, CA: Wadsworth, 2001.

26. Shorris, E. Scenes From Corporate Life. Penguin Books,

New York, 1981.

27. Turchansky, Ray. ?Special loan opened doors to pizza

shop,? Edmonton Journal, May 29, 2002, E1.

28. Vatican Council II - The Conciliar and Post Conciliar

Documents. Northport, New York: Costello Publishing

Company, 1975.

29. ?Wealth of a Nation.? National Post, May 25, 2002,

WR4-7.

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The Evolution of Business as a Christian Calling

Gary L. Chamberlain, Seattle University

? With Assistance from Dianna Dickins

the evolution of business as a

christian calling

Abstract

Looking at business as a calling sheds new light on the role

business can play in the life of a Christian. In this article we

first look at the development of the concept of business as a

calling, particularly in recent Roman Catholic social

teachings, and then examine how many of the key concepts

of Catholic social thought can deepen our understanding of

the purpose of business.

Introduction

Worldcom. Tyco. Enron. Arthur Andersen. Qwest. Global

Crossing. The list continues of business companies involved

in questionable if not illegal business activities. Business

Week, in its July 1, 2002 edition, admonishes the business

community that enforcement of existing laws is simply not

enough; currently cases against major and smaller businesses

are pending in 17 attorney general offices across the

country. Regulation must follow. Jane Bryant Quinn,

financial columnist for Newsweek, notes that ?the rot runs

deep.? These authors and many others in the U.S. worry

that business in general is tainted with the brush of these

abuses of power and misuse of wealth, no matter how legal

many of the abuses might be. It would seem that now is an

excellent time to begin a discussion of the ?vocation? of

business, as well as how business is a ?vocation? in terms of

a calling by God.

In this article I will explore the ?calling? or ?vocation? of

business itself as a human enterprise. In spite of the many

difficulties theoretically with Max Weber?s analysis and the

danger of a monocausal approach to the dynamics of

modern capitalism, I begin with Weber?s analysis of ?calling?

in its transition from the medieval Catholic tradition to its

place in John Calvin?s Geneva, as a means to examine the

developing meanings of ?vocation? in Catholic thought.

Weber demonstrates that Calvin developed a worldview

around ?calling,? or ?vocation? which provided the needed

impulse for the dynamism associated with modern

capitalism. Following this inquiry of ?calling? the article

moves to business today, where the psychological and

sociological dynamics of Calvin?s sense of engagement in

worldly, economic activity continues without religious

restraint, motivation and goal, and often in defiance of

legal restraints. As Weber notes, ?Where the fulfillment of

the calling [vocation] cannot directly be related to the

highest spiritual values or need not simply be felt as

economic compulsion, the individual generally abandons the

attempt to justify it at all? [13:182]. The result often leads to

a business ?ethic? of relentless competition, low wages, and

unrestrained acquisition of wealth, troubling to religious

reformers after Calvin and certainly disturbing to observers

and reporters of today?s business scene.

Next I will examine the emergence of a broadened sense of

a ?calling? for business and economic activity in Catholic

Social Teachings. In his major encyclical Solicitudo Rei Socialis

in 1987, Pope John Paul II utilizes a new understanding of

vocation in relation to development: ?? the notion of

development [of each person and of all persons] is not only

?lay? or ?profane,? but it is also seen to be ? the modern

expression of an essential dimension of man?s vocation,

[author?s emphasis] ? the difficult yet noble task of

improving the lot of man in his totality, and of all people?

[8:414]. However, the meaning of the word ?calling? or

?vocation,? here, is quite different from its meaning as used

in medieval texts and even among Roman Catholics until

quite recently.

Through an analysis especially of Pope John Paul?s works, we

will examine the question of whether there are principles

and approaches in Catholic Social Thinking which can

provide substantive guides to business theory and practice. I

believe we will find such principles and approaches in the

themes of common good, subsidiarity, solidarity and

participation by workers in corporate ownership, and these

will enable us to formulate a framework which can guide

business and economic activity in achieving the goals of

contributing to the well-being of local, national and

international communities. I have chosen these four themes

from among the many themes of Catholic Social Teaching

because of their direct relationship to business as a vocation,

and the vocation of business itself. In this sense business is

being ?called? to take up its place in global society; where

Calvin once saw economic engagement as building up the

Holy Community, Catholic Social Teaching moves the

dynamic to building up global, sustainable community.

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The Evolution of Business

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Vocation in Protestant Teaching

In his classic analysis of ?vocation,? Weber addresses the

crucial transition of the term from its Roman Catholic

meaning in the medieval world to the new understanding

employed by Martin Luther, which has come to dominate

Protestant understandings of the meaning of ?vocation.? In

the Catholic understanding, vocation was a response to

God?s calling by removing oneself from the cares and

concerns of this world. Weber notes that in Jewish

traditions, among the Greek and Roman classics, and in the

medieval world of Catholicism, vocation had none of the

contemporary meaning of a fulfillment of one?s duties to

God by active engagement in the contemporary world.

Further, in the medieval world someone who engaged in

business was certainly suspect, was too easily tempted to

greed, and was known more as a reprobate than as a saint:

today?s business state of mind ?would both in ancient times

and in the Middle Ages have been proscribed as the lowest

sort of avarice and as an attitude entirely lacking in self-

respect? [13:56]. The most devout and ethical of Christians

were kept from the trade of economics: ?Business was only

possible for those lax in ethical thinking? [14:220]. According

to Thomas Aquinas, there is ?something shameful about it

[commerce], being without any honorable or necessary

defining goal? [quoted in 11:5]. In Calvin?s Geneva, on the

other hand, a business person was one of the more

respected and responsible members of the community,

precisely because he went about his business with a

conviction that God had called him or her to this work. How

account for such a transition?

Weber begins his analysis with the transitions of the word

?calling? or ?vocation? in Martin Luther?s idea that the

?fulfillment of duty in worldly affairs? was ?the highest

form which the moral activity of the individual could

assume? [13:80]. No longer was worldly activity just a

necessary matter of the flesh, a neutral matter, but

?vocation? was now a way of living acceptable to God

precisely in ?the fulfillment of one?s obligations imposed

upon the individual by his position in the world. That was

his calling? [13:80]. However, in itself the Lutheran

evaluation of work was not sufficient to serve as the spirit

which impelled capitalism to the fore. For Lutheranism did

not require a transformation of the world in a rationalized,

ethical direction, the cornerstone of modern capitalism

[14:198]. That further understanding awaited the workings

of the Protestant sects, following Calvin?s understandings of

economic activity and predestination.

The key to understanding this transition lies in the pietistic

sects (a term used by Weber to denote a withdrawal from

the world) which flowed from Calvinism, and the ?inner-

worldly asceticism? emerging from their understanding of

the relationship with the world and especially of economic

activity. In this view, the Protestant ?takes as his mission, as

sphere of his religious ?vocation,? the bringing of this world

and its sins under the rational norms of revealed divine will,

for the glory of God and as an identifying mark of his own

salvation? [14:257-58]. By conceiving of human relationships

to a transcendent God without the necessity of intervening

hierarchies of saints, priests, and other intermediaries found

in Catholic piety, ascetic Protestantism was able to

restructure the quest for salvation:

Only ascetic Protestantism completely eliminated

magic and the supernatural quest for salvation, of

which the highest form was intellectualist,

contemplative illumination. It alone created the

religious motivations for seeking salvation primarily

through immersion in one?s worldly vocation

[14:269-70].

As a result the ascetic Protestant, denying in his or her

vocational work any impulse toward extravagance which

might detract from work itself, engages in worldly work and

economic activity ?which is faithful to rationalized ethical

requirements and conforms to strict legality? [14:166-67].

Moreover, as opposed to the medieval monk, priest or nun

whose vocation calls for removal from the world, the ascetic

Protestant does not ask questions about the meaning of the

world, since that is God?s responsibility. In this way the world

possesses unique and religious significance and is the place

in which believers now organize their working life as a

spiritually valuable portion of their whole life. The ascetic

Protestant felt that the world provides them with assurances

of religious salvation precisely in an ethic of vocation: ?I am

doing God?s work in my calling? [14:167;182].

Weber notes that this ethic of inner-worldly asceticism

achieved its greatest power in the Puritan interpretation of

predestination. The doctrine of predestination produced in

its believers the strongest motives for acting in service of

God?s desires. ?In the case of the Puritans ?, [this] belief in

predestination often produced ethical rigorism, legalism,

and rationally planned procedures for the patterning of

life.? Consequently, the ?inner-worldly asceticism and the

disciplined quest for salvation in a vocation pleasing to God

were the sources of the virtuosity in acquisitiveness

characteristic of the Puritans? [14:203].

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The Evolution of Business

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Ernst Troeltsch, Weber?s contemporary and a church

historian, remarked that this ethic of acquisition was held in

check by an important set of religious principles:

This peculiar combination of ideas produces a keen

interest in politics, but not for the sake of the State; it

produces active industry within the economic sphere,

but not for the wake of wealth; it produces an eager

social organization, but its aim is not material

happiness; it produces unceasing labour, ever

disciplining the senses, but none of this effort is for

the sake of the object of all this industry. The one

main controlling idea and purpose of this ethic is to

glorify God, to produce the Holy Community, to attain

that salvation which in election is held up as the aim

[12, Vol. II:607].

As Troeltsch notes, such a conception provides a much freer

sense of ?vocation? or ?calling? than a Catholic or even

Lutheran conception, by ?a deliberate increasing of the

intensity of labor.? Yet, the result in our time is that

without the constraints of the ?Protestant? religious

dimension of the calling, ?once this psychological state of

mind has been created, it can then, through a process of

metamorphosis of purpose, be detached from its original

meaning and placed at the disposal of other ideas.? This is

the plight of the acquisitive, consumer ethic which pervades

modern life [12:611].

As Weber remarked in his conclusion to The Protestant Ethic

and the Spirit of Capitalism, ascetic Protestantism created

the force so decisive to the effectiveness of the idea that

faithful labor is highly pleasing to God: ?the psychological

sanction of it through the conception of this labor as a

calling, as the best, often in the last analysis the only means

of attaining certainty of grace? [13:178]. Then, in a phrase

which offers a key insight into the question of business as a

calling, he adds: ?And on the other hand it legalized the

exploitation of this specific willingness to work, in that it

also interpreted the employer's business activity as a

calling.? Weber then states what Troeltsch only indicated,

namely that in our day the religious basis of this asceticism

and valuation of work has ?died away.? The result is the

following:

Since asceticism undertook to remodel the world and

to work out its ideals in the world, material goods

have gained an increasing and finally an inexorable

power over the lives of men as at no previous period

in history. Today the spirit of religious asceticism ?

whether, finally, who knows? ? has escaped from the

cage. But victorious capitalism, since it rests on

mechanical foundations, needs its support no longer

[13:182-83].

In an attempt to revitalize that idea of the religious duty in

one?s calling we now turn to Catholic Social Teaching.

Vocation in Catholic Social Teaching

As long as the idea of ?calling? or ?vocation? was tied in

the Catholic worldview to a removal from worldly activity in

the monastery, nunnery or rectory, the only other meaning

of ?calling? by extension was to married life. The idea of a

?calling? to productive activity in ?worldly? work, and much

less in business, was foreign to this worldview.

Correspondingly, theologian David Hollenbach notes that it

was not until the 1960s that Catholic Social Teachings

themselves shed the hierarchical model of society in which

one?s state in life was generally fixed by natural conditions

of birth, etc. and embraced a more democratic social model

and an ecclesiology in which the Church was engaged in the

world [5:216-17]. In those transitions the idea of a ?calling?

to work gradually emerged not as the means of salvation,

an idea more to be found in ascetic Protestantism, but as

the fulfillment of one?s person through work, a theme

enunciated by John Paul II in his 1981 encyclical On Human

Work. While the full development of these transitions is

beyond the scope of this paper, we can trace the emergence

of this contemporary understanding in Catholic Social

Teachings (CST).

?

In the medieval world of

Catholicism, vocation had none of

the contemporary meaning of a

fulfillment of one?s duties to God by

active engagement in the

contemporary world.

?

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In order to understand the contemporary uses of vocation

and calling in CST, especially in relation to business, it is

instructive to return to the uses of ?vocation? and ?calling?

in Rerum Novarum, Leo XIII?s 1891 encyclical on the

condition of labor. There Leo reiterates the traditional

understanding of vocation as a ?call? to a state of life: ?In

choosing a state of life [calling], it is indisputable that all are

at full liberty either to follow the counsel of Jesus Christ as

to virginity, or to enter into the bonds of marriage? [8:18,

#9]. Even by John XXIII?s writings in 1959, the word

?vocation? was still used to refer to priestly vocations or

more generally a calling of persons to Christian faith, i.e., a

religious response to God?s call (Princeps Pastorum).

It is not until John XXIII?s 1961 encyclical, Mater et Magistra,

that the meaning of vocation is extended to include a more

contemporary understanding of work as vocational: this

requires ?the establishment of economic and vocational

bodies which would be autonomous?

1

[#37 in 9]. And here,

although there is a connection between work and calling, it

can be seen that the word still lacks the power of an ethical

call to transform the world in relation to service of God.

However, in one brief reference John does imbue the word

with a meaning which will emerge later, vocation as work in

an industry or labor affecting the world. Here the reference

is to agriculture: such work as agricultural labor ?should be

thought of as a vocation, a God-given mission? [#149 in 9].

2

This is the closest John comes to a link between ordinary

work in the world and vocation.

As the Second Vatican Council of 1963-65 wrestled with the

difficult question of relating the Church to the larger world,

the bishops refer to calling in the broader sense indicated by

John XXIII, i.e., the understanding that all people, because

created in God?s likeness, ?enjoy the same divine calling and

destiny,? a transcendent call to union with God [Gaudium et

Spes, #29, in 8:182]. Yet, then, in one small remark the

bishops open up the meaning of the word to a more specific

understanding as a calling to specific work in the world:

This Council exhorts Christians, as citizens of two cities,

to strive to discharge their earthly duties

conscientiously and in response to the Gospel spirit.

They are mistaken, who, knowing that we have here

no abiding city but seek one which is to come, think

that they may therefore shirk their earthly

responsibilities. For they are forgetting that by the

faith itself they are more than ever obliged to measure

up to those duties, each according to his proper

vocation (my italics) [GS #43; in 8:192].

In this quote we begin to see a movement toward a Catholic

understanding of vocation as engagement in the world as part

of one?s responsibilities and duties required by faith itself.

While couched in the language of ?two cities,? the idea has

begun to develop, and later John Paul II will then use the term

in two senses: a transcendent calling to God of all people, and

a specific vocation for each person in his or her work.

3

Pope John Paul II on Business and Vocation

In his 1981 encyclical On Human Work, Pope John Paul

outlines an important dimension of work essential to the

understanding of a business as a vocation and the vocation

of business, namely, the subjective nature of work. In the

Pope?s words,

man is a person, a subjective being capable of acting in

a planned and rational way, capable of deciding about

himself and with a tendency to self-realization. As a

person, man is therefore the subject of work . . . [His]

actions must all serve to realize his humanity, to fulfill

the calling to be a person that is his by reason of his

very humanity (author?s italics) [8:358].

Thus all work in this sense involves a calling ? a calling to be

fully a person. This subjective dimension in turn ?conditions

the very ethical nature of work? (author?s italics). The ethical

value of work is linked ?to the fact that the one who carries

it out is a person, a conscious and free subject.? This

changes the ancient and even medieval view that persons

are classed according to their work done, since now the

primary basis of the value of work is the person ?who is its

subject.? This subjective dimension of work has pre-

eminence over the objective nature of work ?however true

it may be that man is destined for work and called to it?

(author?s italics) [8:359].

In particular, for Pope John Paul, the ?ethical meaning of

work? lies in two dimensions; not only do people ?transform

nature,? i.e., produce products, goods, services, whether

material or intellectual, but also and more importantly

because people achieve ?fulfillment as a human being and

indeed in a sense become ?more a human being?? [8:364].

Then, in words which might echo Weber?s analysis, Pope

John Paul notes that this consideration of the ethical nature

of work posits industrious as a virtue, that is, as a habit

whereby one becomes good as a person in work [8]. Thus

through the industriousness in work humans perfect

themselves; work ?constitutes one of the fundamental

dimensions of his earthly existence and of his vocation?

(author?s italics) [8:367].

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This theme finds itself repeated in Pope John Paul?s 1991

encyclical, Centessimus Annus: ?Work thus belongs to the

vocation of every person; indeed, man expresses and fulfills

himself by working.? This subjective, personalist dimension

of work is immediately followed by a reference to the social

nature of work: ?At the same time, work has a ?social?

dimension through its intimate relationship ? to the

common good? [8:443-44], a theme we will take up later.

At this point, then, vocation has taken on a meaning similar

to that found in ascetic Protestantism, i.e., a calling to work

in an industrious manner in the world, and in doing so to

perfect oneself and to work toward the common good as

part of one?s responsibilities to God and to others.

Furthermore, vocation has come to express two different but

related meanings in John Paul?s writings, perhaps most

dramatically reflected in his use of the word ?vocation?

some 20 times in his 1987 encyclical letter, Soliditudo Rei

Socialis. First, John Paul refers to the ?transcendent vocation

of the human being? and the rights which follow from that

vocation. This repeats the earlier formulations found in John

XXIII of a calling to union with the divine. The rights which

follow from this meaning of vocation begin ?with the right

of freedom to profess and practice one?s own religious

belief? [8:427].

Secondly, each person has a ?natural and historical

vocation,? attained not only ?by exploiting the abundance

of goods and services? [8:417], but also in one?s specific

work. Although Pope John Paul does not develop the idea in

this encyclical, the conclusion to that thought involves the

subjective nature of work in which one perfects oneself

through work. Later in the document, Pope John Paul also

notes that a person?s vocation is ?at once both earthly and

transcendent,? and one?s commitment to justice is ?to be

found in each individual?s role, vocation, and circumstances?

(author?s italics) [8:425], a reference to vocation as one?s

individual calling to work toward the common good and

perfect oneself in a particular occupation and job in life.

In other writings directed toward business people, Pope

John Paul?s two-fold understanding of work?s subjective and

social dimensions, along with its transcendent and historical

meanings, leads him to see business not only as an

instrument for production and distribution of goods, but

also as a community of persons. Indeed, according to Pope

John Paul business people must see ?their enterprise as a

social function. They must not conceive them only as

instruments of production and profit, but as a community of

persons? [quoted in 3:11]. As Calvez and Naughton note in

their commentary on the Pope?s remarks, ?profit and

productivity are necessary and critical dimensions; but unless

a community develops within a business to provide a proper

ordering of these economic dimensions, the possibility of the

business becoming a place where people can develop

evaporates? [3:12].

Thus we have a sense in which people are called to

engagement in the world around them both to produce and

take action ?industriously,? but more importantly to develop

themselves in their full potential. In relation to business,

then, when one is called to a particular business, that call

challenges the individual to take steps to ensure that his or

her potential is developed, and also challenges the business

to, first, ensure that employees have opportunities to

develop themselves within the meaning of the enterprise,

and secondly, that the business itself contributes to the

common good of all employees and to the social and

international common good.

In conclusion, in this analysis we have outlined the

development of the meaning of vocation in Catholic Social

Thought to include: 1) a subjective dimension in which

humans perfect themselves through industrious work,

providing an internal ethical motivation for work far

different from the ?acquisitive? habits surrounding work as

Weber analyzes it in today?s work ethic and 2) a social

dimension in which the worker and the business as

community contribute to the common good. Now it is time

to turn to the further questions of whether CST can provide

substantive guidelines for the meaning of business as a

vocation, and the vocation of business through the guiding

principles of the common good, subsidiarity, solidarity

and participation.

?

The ascetic Protestant felt that the

world?provides them with

assurances of religious salvation

precisely in an ethic of vocation:

?I am doing God?s work in

my calling??

?

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The Common Good: Model and Goal

If vocation is considered as a service to self, others and the

community, then the concept of the common good emerges

as critical to the flourishing of individuals and communities.

In the reigning business model, business is usually

interpreted as having the ?sole genuine purpose of making

money.? However, as one author notes, ?Money-making is

certainly an important part of why we are in business, but it

is not the whole story? [1:38]. Rather, there is a deeper drive

that leads people towards a certain work. People strive for

other goods for personal development and for community,

besides money [1:39,40].

In terms of the common good it is important to distinguish

that ?business is not responsible for the common good; it is

responsible to the common good? [1:41]. That is, business

does not determine the content of the common good, but

business has a responsibility to operate in such a way that

the common good is promoted throughout the community.

As defined by Pope John XXIII in Mater et Magistra, the

common good ?embraces the sum total of those conditions

of social living, whereby men are enabled more fully and

more readily to achieve their own perfection? [8:94]. The

common good referred to in this case is ?considered to be a

human perfection or fulfillment achievable by a community,

such that the community?s members all share it, both as a

community, and singly, in their persons? [1:41].

The common good model described here thus serves two

functions, first as an internal model for the firm or business

itself in terms of employees, workers, shareholders and

other stakeholders, and secondly as a model for the business

in relation to the larger society. In relation to the first,

internal dynamic, the common good model preserves the

integrity of the business enterprise. ?Within the common

good model of the firm, managers and employees are

expected to create conditions within the firm that foster a

holistic notion of human development? (1:41). The goals

under which the common good model functions are ?the

ends of human development that perfect the firm as a

community of work, and that benefit its members personally

by their participation? (1:66). The model recognizes the

personal goals of the employees and their own ends rather

than solely focusing on the shareholders and their gain. In

this model the entire community is involved and can

participate in a sense of ownership. As we shall see in the

sections on participation, solidarity and subsidiarity, the

common good model in Catholic Social Teaching calls for

?employees to be partners in enterprises with which they

are associated and wherein they work? [8:98-99].

?The common good model involves a commitment to

definite convictions concerning what constitutes genuine

human development? [1:71]. It is both a communal and

personal model, in that it serves both the community and

individual people. The promotion of the person, within the

work community, calls for recognition of individual diversity

and an appreciation and promotion of each person?s unique

talents and skills. In this model of community the particular

gifts of the individuals can be utilized and brought together

for a more efficient and holistic business, while at the same

time each person?s unique contribution is appreciated.

When looking at the common good as a guide for business

in relation to the larger society, to the vocation of business

itself, John XXIII is clear when he argues that a portion of

the common good is ?to provide employment for as many

workers as possible; to take care lest privileged groups arise

even among the workers; to maintain a balance between

wages and prices?; that the competitive striving of peoples

to increase output be free of bad faith; that harmony in

economic affairs and a friendly and beneficial cooperation

be fostered? [8:97]. This is a difficult but essential task for

business in working out its vocation in the larger world of

multi-national corporations and globalization, given the

dynamics we see in the Enrons of the world.

Subsidiarity: Paradigm and Principle

In his helpful and provocative discussion of business and the

principle of subsidiarity, Dennis McCann asks whether in

addition to sets of moral conclusions and arguments which

businesses are called to develop and follow, there is a

paradigm for business in Catholic Social Teaching. He

believes such a paradigm is found in the principle of

subsidiarity. While McCann?s argument is too long to repeat

adequately here, the gist of his proposal is that the principle

of subsidiarity specifies the limits and the possibilities of

economic institutions. McCann?s analysis rests upon three

premises: 1) business is a form of social relationships, in

contrast to classic contract theory; 2) in recent Catholic Social

Teaching, the principle of subsidiarity has been extended

from political to economic institutions; and 3), most

importantly, the model of human life in terms of the

Christian doctrine of Trinity, in which ?persons? are united in

love, means that Trinity is in the very structure of human

reality, namely, in our human capacity for knowledge and

love [7:177-78].

McCann?s first point reflects traditional understandings of

Catholic Social Teaching that humans are by nature social, and

thus initiate and come together in societies to achieve goals

they could not achieve individually. In contrast to contract

The Evolution of Business

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theory, in which individuals surrender individual rights to the

larger entity of society, the state, CST argues that the social

nature of humans brings them into relationships that are

extensions of themselves. Thus economic institutions are

another form of this natural propensity.

The classical text for defining the principle of subsidiarity is

found in Pius XI?s 1931 encyclical, Quadragesimo Anno:

It is a fundamental principle of social philosophy ?

that one should not withdraw from individuals and

commit to the community what they can accomplish by

their own enterprise and industry. So, too, it is an

injustice ? to transfer to the larger and higher

collectivity functions which can be performed and

provided for by lesser and subordinate bodies [8:60].

While Pius was concerned with the intrusion of the

totalitarian states of fascism and communism into

community organizations and groups, in 1961 John XXIII

used the principle of subsidiarity to call for an ?intervention

of public authorities that encourages, stimulates, regulates,

supplements and complements? [8:92] the increase in the

output of goods and services, all to better serve the common

good. Thus the notion of the importance of ?intermediary?

associations which promote the interests of individuals and

service the common appears essential to CST?s view of a

flourishing civil society.

McCann?s second point is that subsidiarity has been

extended from the political to the economic, and indeed is a

generalizable principle to other social institutions [7:174-75].

Here he relies upon the Unites States Catholic bishops? 1986

pastoral, Economic Justice for All. The bishops at several

junctions call for mediating structures to develop economic

?partnerships? on a local, national and international scale,

new forms of corporate governance, ranging from

?innovative styles of corporate management to employee

stock ownership plans, all of which are intended to foster a

greater sense of accountability through increased

participation throughout the enterprise, consistent with the

pastoral letter?s overall theme of justice as participation?

[7:175], a theme I will take up later.

Finally, McCann?s analysis develops the important theological

theme of the Trinitarian structure of social institutions.

Borrowing Augustine?s contention that ?the distinctively

Trinitarian pattern of divine life is inscribed in the exercise of

human intelligence ? in our distinctively human capacity for

knowledge and love,? McCann asks if we cannot ?discover

similar traces in the organization of human institutions?

[7:177]. He concludes that ?the divine life must somehow

already be encoded in the institutions where we test and

fulfill our vocations. Such ? is the Trinitarian theological

perspective that is tacitly presupposed in the principle of

subsidiarity? [7:178].

The implication for a business model is that the principle of

subsidiarity is first of all a truth about God?s relations with

us, and consequently ?a theological understanding of the

modern business corporation must be about God first of all,

or it is about nothing at all? [7:179]. Subsequently,

subsidiarity is about the ?scale and scope? of people and

institutions in society. Finally, McCann argues that the

principle can provide designs for business strategies likely to

advance other principles he identifies, such as solidarity and

participation, can help identify patterns of marginalization,

and can help ?transform these same institutions? producing

marginalization [7:180].

One final insight from McCann focuses upon the question

raised earlier concerning the transition from a traditional

Roman Catholic suspicion, if not disdain, for business. He

refers again to the pastoral Economic Justice for All, and the

call there for collaboration between bishops and business

people. McCann comments: ?The invitation is based, first, on

the teleological definition of business in terms of its role in

achieving the common good ?, and second, on a

recognition that such an understanding of business should

enable Christians to understand their business practice as an

opportunity to exercise a ?vital Christian vocation?? [7:181].

And he concludes with a significant remark that ?Business

has now become theologically significant for Roman

Catholics, as it has long been for Protestants, particularly in

the Calvinist traditions? (author?s italics) [7:182]! Up to this

The Evolution of Business

as a Christian Calling

?

A business firm is not merely an

instrument at the service of the

well-being of its management; rather,

it is itself a common good of both

management and labor, at the service

of the common good of society.

?

?Pope John Paul II

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point, then, the principles of common good and subsidiarity

have provided strategic guidelines for business in terms of

the internal structure of the business as a community,

namely the flourishing of the persons involved, as well as a

theological basis for economic engagement through work in

building the societal common good.

Solidarity

In his encyclical letters Pope John Paul II develops a new

theme in Catholic Social Teaching, namely, the virtue of

solidarity. Although the word ?solidarity? appeared in the

writings of John XXIII and Paul VI, it acquires new meaning

in John Paul II. In light of contemporary global

interdependence, solidarity is a virtue, ?a firm and

persevering determination to commit oneself to the

common good; that is to say, to the good of all and of each

individual because we are all really responsible for all?

(Sollicitudo Rei Socialis, #38.4). In this way interdependence

is transformed into solidarity, ?based upon the principle that

the goods of creation are meant for all.? Solidarity is the

virtue which challenges the structures of sin created by all-

consuming desire for profit and the thirst for power, a

challenge calling for social justice.

In his challenging analysis of solidarity in relation to modern

business, Robert G. Kennedy examines the principles of the

?economic paradigm? which underlies contemporary views

of economic activity and contrasts those principles with

those of Catholic Social Teachings. In Kennedy?s view the

dominant and powerful ?economic paradigm? rests upon a

set of philosophical convictions. First, persons are solitary

individuals, and human communities are ?instruments for

the satisfaction of the needs and desires of the individuals

who constitute them? [6:51]. Secondly, human happiness lies

in possessing. The implications of this statement are that

possession in the sense of ownership is separate from

responsibility and that the value of work lies in its usefulness

to others and the extent to which it brings possessions to

the workers [6:52].

In contrast, Catholic Social Teachings emphasize the social

nature of persons. Consequently, communities are not

instruments but integral to human development. The

common good of all involves human flourishing, and

happiness then rests on what Pope John Paul II calls ?being?

rather than ?having,? the full flourishing of each person and

every person. Secondly, since all goods, as gifts in God?s

creation, are thus intended for the benefit of the global

community, i.e., human goods have a universal destiny, then

?Private property ? is under a ?social mortgage?? [John Paul

II, quoted in 6:54]. Finally, as seen in the earlier discussion of

the subjective dimension of work, the best work ?is the

work that most completely draws out the potential of the

worker and develops him as a human person? [6:55].

Kennedy?s summary of the different views at play here

reveals the sharp contrast between paradigms:

Under the economic paradigm, rational behavior

[remember Weber!] is essentially utility-maximizing or

wealth-maximizing behavior. One participates in

relationships and in communities in order to acquire

the possessions and experiences that are understood to

constitute satisfaction and happiness. ?

Rationality in the Catholic social tradition takes on a

different character. Since human fulfillment consists in

being and acting, practical rationality requires that a

person seek to develop a certain character (that is, to

become virtuous), which in turn both depends upon and

results in acting well. ? [S]ince human persons are

understood to be essentially social, practical rationality

requires behavior that supports the common good of the

various communities of which they are members [6:56].

In contrast to the economic paradigm in which business is

seen as strictly instrumental and in which ?participation in

the firm?s proper activities by employees is [not] understood

to be intrinsically valuable? [6:58], the principle of solidarity

?calls businesspeople to be mindful of the impacts of their

decisions on others and to make courses of action that

benefit others a priority in their decision making? [6:59].

Kennedy defines the object of solidarity as ?the just society,

characterized first by right relationships among all its

members, and second by fairness in the distribution of

resources, knowledge, opportunities, cultural participation,

and anything else that may be needed for human

flourishing? [6:59].

For Kennedy, the Catholic social tradition has a richness and

flexibility which the economic paradigm, rooted in

inexorable laws of business, lacks:

The ?laws? of economics can be amended to place

them at the service of human flourishing and the

common good. ? What is required is a more

comprehensive vision of the proper function of

business in society, clearer practical guidelines about

how management professionals can give life and

breath to that function, and a firm commitment to

move forward. In short, what is required is informed

solidarity [6:64].

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The Evolution of Business

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Participation

Given the central dimension of these principles of common

good, subsidiarity and solidarity, we now turn to the

principle of participation, a relatively recent concept in

Catholic Social Teaching. It was in his 1971 pastoral letter,

Octagesimo Adveniens, that Pope Paul VI singled out two

aspirations emerging in these times: namely, equality and

participation, two specific forms of human dignity and

freedom (Octagesimo Adveniens, #22). Paul then notes that

these two aspirations seem linked to a democratic form of

society and thus the Christian in particular has a duty to

participate ?in the organization and life of political society.?

In the context of business as a vocation and the vocation of

business, the principle of participation has a centrally

important position, for it asks about the ways in which all

members of the business are engaged in the enterprise, and

the ways in which the enterprise itself participates in the

larger society through its contribution to the common good.

Even as far back as 1891, Leo XIII had posited the necessity

for workers to be involved in the enterprise, at that time

primarily through ?associations? or unions. Then in Pius XI?s

Quadragesimo Anno and more particularly in John XXIII?s

encyclicals, the participation of the workers was enlarged to

encompass a form of worker sharing in the means of

production: ?[I]t is today advisable ? that work agreements

be tempered in certain respects with partnership

arrangements, so that ?workers and officials become

participants in ownership, or management, or share in some

manner in profits?? [8:88].

Further, in his 1961 encyclical, John continues:

We believe that companies should grant to workers

some share in the enterprise. ? It is very desirable that

workers gradually acquire some share in the enterprise

by such methods as seem more appropriate. ?

Furthermore, ? we regard as justifiable the desire of

employees to be partners in enterprises with which

they are associated and wherein they work. ? We do

not doubt that employees should have an active part

in the affairs of the enterprise wherein they work. ?

But it is of utmost importance that productive

enterprises assume the character of a true human

fellowship whose spirit suffuses the dealings, activities,

and standing of all its members. ? This means that the

workers may have a say in, and may make a

contribution toward, the efficient running and

development of the enterprise (#75, 96; #77, 97;

#91,98-99; #92, 99).

Almost 20 years later Pope John Paul II continues this theme

when he calls for ?proposals for joint ownership of the

means of work, sharing by the workers in the management

and/or profits of businesses, shareholding by labor, etc. ? it

is clear that recognition of the proper position of labor and

the worker in the production process demands various

adaptations in the sphere of the right to ownership of the

means of production? [8:372]. Here John Paul combines the

idea of private property?s ?social mortgage? with a call for

workers to share in the very ownership of a business as a

basic right!

Summary and Conclusion

In these pages we have examined the development of the

idea of ?vocation? from its appropriation as a special calling,

to salvation through removal from concerns of the world, to

work in the daily world precisely as a form of ensuring

salvation. Weber has carefully and forcefully traced that

development in the form of ?ascetic Protestantism? to what

today we call the ?work ethic,? an ethic of industriousness

shorn of its religious dynamics. Similarly we traced the

transition in Catholic social thought to a similar

understanding of ?vocation? as active engagement in the

world, with the goal of building up a just society. In that

discussion we also examined the role of work as not only an

external activity but also as a means of the full development

of the person, the ?subjective? dimension of work. In that

sense, work in the Catholic tradition has two dimensions

related to the nature of the person: a ?transcendent?

dimension drawing and pushing each person toward a

?calling? by God to union with God, and a ?historical?

dimension to work in a particular area of business as a

co-creator with God in using the riches of God?s creation

to build a better world in which humans and creation

itself flourish.

In addition we examined the nature of a business as a

community of persons, concerned not only with producing

an object for exchange, but also with the development of

each firm member?s gifts and talents. The business then is

not just an amalgam of individuals, but a true community

fostering the growth of people. This ?subjective? nature of

the enterprise is complemented in Catholic Social Teachings

by a sense of the common good of both the particular

business community and of the society, indeed of the global

society, in which work takes place. As the U.S. bishops state

in Economic Justice for All, ?Commitment to the public good

and not simply the private good of their firms is at the heart

of what it means to call their work a vocation and not

simply a career or a job? [8:605].

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Finally I have explored the possibilities which Catholic Social

Teaching can offer to business as a vocation, and in its

vocation, through substantive principles and approaches in

the discussion of the common good, subsidiarity solidarity,

and participation. In the conception of business as a

community, the ?common good? of the business itself

demands that all involved participate in some way in

ownership and management of the enterprise. Through the

principle of subsidiarity all members of the business are

joined in ways which allow the gifts of each to be fostered

and promoted. Here the Trinitarian pattern of relationships

can serve as a conceptual and motivating factor in shaping

relationships within the business. Solidarity brings the

members of the business together to look beyond a strict

economic end or instrumental purpose of the business, and

it challenges members to envision ways in which their

vocation in the business can promote the vocation of

business to serve the societal common good.

I hope that in the discussion I have provided a useful,

historical analysis of the meaning of vocation itself as it has

emerged in recent Catholic Social Teaching, as well as an

initial strategic paradigm for the evaluation of business as a

calling in which persons flourish, and of the calling of

business to serve the common good. Further work remains,

in particular a reading of the principle of preferential option

for the poor in relation to business practices, and the further

development of specific modalities for carrying out the

principles examined here.

References

1. Alford, O.P, Naughton, H. J. and Naughton, M. J., Eds.

Managing as if Faith Mattered: Christian Social

Principles in the Modern Organization. Notre Dame:

University of Notre Dame Press, 2001.

2. Business Week. July 1, 2002.

3. Calvez, J. and Naughton, M. J. ?Catholic Social Teaching

and the Purpose of Business Organization.?

Cortright, S.A. and Naughton, M. J., Eds. Rethinking

the Purpose of Business: Interdisciplinary Essays

from the Catholic Social Tradition. Notre Dame:

University of Notre Dame Press, 2002, 3-26.

4. Cortright, S. A. and Naughton, M., Eds. Rethinking the

Purpose of Business: Interdisciplinary Essays from

the Catholic Social Tradition. Notre Dame: University

of Notre Dame Press, 2002.

5. Hollenbach, David. ?Modern Catholic Teachings on

Justice.? The Faith That Does Justice, 1979, 207-31.

6. Kennedy, R. G. ?The Virtue of Solidarity and the Purpose

of the Firm.? Cortright and Naughton, Eds.

Rethinking the Purpose of Business, 2002, 48-64.

7. McCann, D. P. ?Business Corporations and the Principle

of Subsidiarity.? Cortright and Naughton, Eds.

Rethinking the Purpose of Business, 2002, 169-89.

8. O?Brien, D. J. and Shannon, T. A., Eds. Catholic Social

Thought: The Documentary Heritage. Maryknoll:

Orbis Books, 1992.

9. The Pope Speaks, 7 (April, 1962), 295-343. Rome: Vatican

Press, 1962. Cited at www.osjspm.com. ?Social

Teaching Documents: Mater et Magistra.?

10. Quinn, J. B. Newsweek. July 8, 2002.

11. Tan, C. ?The Social Ethics of Luther and Calvin.? Seattle

University, private circulation, May 27, 2000.

12. Troeltsch, E. The Social Teachings of the Christian

Churches, Vols I and II. New York: Harper

Torchbacks, 1960.

13. Weber, M. The Protestant Ethic and the Spirit of

Capitalism. New York: Charles Scribner?s Sons, 1958.

14. Weber, M. The Sociology of Religion. Boston: Beacon

Press, 1964.

Endnotes

1

In a different translation, the wording misses the meaning of

?vocational? in John?s understandings: ?This requires, as the

teaching of our predecessor indicated, the orderly

reorganization of society with smaller professional and

economic groups existing in their own right? (Mater et

Magistra, #37) [8, p. 89]. Later, John again refers to

?vocational? as instructional bodies for workers or

?vocational? training (Mater et Magistra, #94) [9].

2

It is important to note that John XXIII?s use of vocation in

relation to agriculture refers to a whole culture of the farm,

its place in society, and the kind of work involved. John?s

own roots were in farming communities (This observation

thanks to David Andrews of the Catholic Rural Life

Conference, personal observation, July 16, 2003).

3

Paul VI does refer to the broader sense of vocation as a

calling to everyone to fulfill his or her own destiny: ?In the

design of God, every man is called upon to develop and

fulfill himself, for every life is a vocation. . . . Endowed with

intelligence and freedom, he is responsible for his

fulfillment as he is for his salvation? Populorum Progressio,

in [8, p. 243].

The Evolution of Business

as a Christian Calling

?

In his encyclical letters Pope John Paul II wrote

that?the principle of solidarity ?calls businesspeople to be

mindful of the impacts of their decisions on others and to

make courses of action that benefit others a priority in

their decision making.?

?

Page 38

Abstract

The business culture and laws of the U.S. stress the

obligation of corporate managers to maximize the profits of

the firm?s shareholders. An excessive focus on profits,

however, can deny managers any meaningful sense of

vocation. It reduces the role of managers, and those who

they manage, to mere cogs in the productive processes of

their firms. Managers informed by the Catholic social

tradition can exercise their responsibilities with a sense of

vocation. Catholic professional schools, including law

schools, should foster the sense of vocation in graduates by

presenting the fundamental principles of Catholic social

teaching early in the curriculum and inviting students to

apply these principles throughout their studies.

Introduction

The notion that conducting the ?business of business,? to

use a popular American expression, involves a ?vocation? in

the same sense as the pursuit of a religious or family life,

would likely strike contemporary Americans as peculiar.

Professionals historically associated with public service, such

as teachers, social workers, physicians and nurses, have been

identified in the public mind with a calling or vocation. By

contrast, managing the productive enterprises that build the

goods and provide the services sought by consumers lacks

the aura of public service that is often associated with a

vocation. As a result, what many individuals spend

considerable time doing throughout their productive lives

seems divorced from transcendent meaning. One is ?called?

to serve the poor, teach the young, and minister to the

needs of the sick, but not to make safe, efficient and

affordable products. Consumers, capital markets,

bureaucrats, organized labor, and the law discipline

businesses. Business managers,

1

as well as the work forces

that build and distribute material goods, satisfy the

demands of consumers and make investors wealthy, but they

seem to have little more to do with society?s well being.

They have professions, careers, or perhaps they just work,

but they are not ?called? to what they do. The sense of

vocation is missing.

The laws regulating business organizations throughout the

U.S. tend to reinforce the idea that business managers

should focus on the economic bottom line. Modern

corporate law allows some charitable giving,

2

and several

states permit business managers to consider the interests of

constituencies other than shareholders,

3

but the general

rule is that officers and directors must enhance the value of

the business for the benefit of shareholders.

4

In economic

terms, corporate law as it relates to managers? duties of care

and loyalty is primarily intended to address the so-called

?agency problem,? i.e., a problem arising from the

separation of ownership and control. Managers and those

who advise them are committed to anticipating, and

perhaps manipulating, consumer preferences in favor of

their wares or services and then meeting the resulting

demand at competitive prices.

5

The good that ensues from

such a crass business environment seems limited to the

promotion of allocative efficiency,

6

which, while surely

desirable, captures only one aspect of the common good.

These observations regarding the nature of business

organization and its management in the U.S. suggest a

business ethos that cannot be readily reconciled with

teachings of the Catholic Church about the social value of

human enterprise. In a way, the existing business order

establishes a form of institutionalized selfishness. The

owners of productive resources have no direct control over

the employment of their property, while managers, who do

control the use of the resources, must maximize the owners?

financial returns. The result, if carried to an extreme, largely

frees both owners and managers from responsibility for the

moral and social implications of their decisions.

From the perspective of the Catholic social tradition, an

excessively consumer- and profit-oriented business economy

will have serious adverse social consequences. While social

welfare, as economists generally use that term, may be

enhanced, over time the common good can only be

diminished by a business culture that fosters morally or

ethically indifferent decision-making. The perverse

consequences will be experienced by the managers directing

the enterprise, as well as by those working under their

direction and, surely in the aggregate, by the broader

37

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Business as a Vocation:

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George E. Garvey, Columbus School of Law, The Catholic University of America

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Business as a Vocation:

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society. It may seem counterintuitive in modern society, but

even the most successful manager who spends her

productive life engaged in activities that have little apparent

relationship to the well being of society will, in the Holy

Father?s view, experience a sense of alienation.

7

The Pope

teaches that contrary to the presumption of neoclassical

economics, the human person has an innate desire to be

self-giving, to contribute to the common good.

8

If the

prevailing business culture equates the value of work,

including the work of managers, solely with the satisfaction

of consumer demand and the returns to investors, there will

be a void in the managers? lives. Although the individual

need to contribute to the common good may be satisfied

outside of the workplace, society is surely poorer when

those who control so many resources are conditioned by the

prevailing business culture to confine their efforts to an

extremely narrow conception of the good.

Managers constrained by a shortsighted, profit-maximizing

business ethos, are likely to employ productive physical and

human resources in ways that diminish the dignity of all

who work in the enterprise. Inevitably, workers become

merely factors of production, things to be used in the profit-

seeking venture. In some respects, a deep-seated aversion to

treating human persons as objects captures the essence of

modern Catholic social teaching. Since at least 1891, when

Pope Leo XIII wrote Rerum Novarum, the Church has been

concerned with the loss of personal dignity in the context of

the work environment. During the social upheaval of the

early industrial era, Leo stated that ?it is shameful and

inhuman to treat men like chattels to make money by, or to

look upon them merely as so much muscle or physical

power.?

9

John Paul II further developed this theme many

decades later: ?[I]t should be recognized that the error of

early capitalism can be repeated wherever man is in a way

treated on the same level as the whole complex of the

material means of production, as an instrument and not in

accordance with the true dignity of his work ? that is to say,

where he is not treated as subject and maker, and for this

very reason as the true purpose of the whole process of

production.?

10

A manager compelled to focus exclusively on

profits will be hard pressed to maintain an environment in

which the firm?s workers can grow as human persons while

contributing to the success of the business.

The nature and role of the human person dominates any

Catholic analysis of socioeconomic issues. When people are

viewed as consuming things, to be manipulated and satiated

for profit, society suffers from the ?phenomenon of

consumerism... a style of life which is presumed to be better

when it is directed toward ?having? rather than ?being,? and

which wants to have more, not in order to be more but in

order to spend life in enjoyment as an end in itself.?

11

Avaricious consumers surely contribute to the phenomenon

of consumerism, but the social dilemma cannot be explained

or dismissed as a ?greedy consumer? problem. This

characterization overstates the individual culpability of

consumers and minimizes the pervasive, corrosive nature of

the desire, in developed societies, to have and consume

more and more things.

In sum, the modern consumer- and profit-oriented economy

fosters a vicious cycle of sorts. The development of

extremely large business concerns in the late 19

th

century

created new forms of ownership and new types of labor.

The new industries needed a large force of more-or-less

fungible workers, people who lacked value to the firm once

their physical strength was sapped. The ?worker problem?

was thus created and has been a primary focus of Catholic

social thought ever since. The social problem, as it relates to

the management of business, also arose in the nascent

industrial era. The new industrialists needed very large

amounts of money to build the plants and machines needed

by industry. How could the financial resources be

accumulated, however, if those who had the needed capital

would have to turn control over to others? Business

convention and the law provided a workable answer in the

form of a fiduciary duty imposed on managers to maximize

the returns to the investors.

Moral Foundation of Commercial Society

Enlightenment thinkers, most notably Adam Smith, had

provided a moral foundation for the emerging commercial

society. Smith?s ?invisible hand of the market? would direct

resources to uses desired by the consuming public. Given

appropriate structures and constraints, the market would

enhance the wealth of all in society. Self-interest would foster

?

The instruction at Catholic

professional schools must

demonstrate that economic success

and the common good are not

irreconcilable.

?

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Business as a Vocation:

Implications for Catholic

Legal Education

the common good. The neoclassical spin on what Adam Smith

began with his magisterial Wealth of Nations

12

lost some of

Smith?s moral sensitivities. The more extreme commitment to

laissez-faire would largely rely on consumers to mediate

moral concerns. That is, consumers would determine what

was ?good? through their buying decisions. The successful

business would identify these products and provide them at

the best prices. The problem, of course, is that this system

posits moral responsibility in agents ? consumers ? who are

not likely to appreciate this responsibility, know how their

purchasing decisions affect the lives of others, or be held

accountable for their faulty moral judgments. As already

noted, the Pope teaches that humans have an innate need to

contribute to the common good. Adam Smith believed that

individuals sought the approbation of their fellows, not just

the maximization of their material wants, which fosters the

virtues of prudence and civility in a market economy.

Neoclassical economic reasoning tends to reduce human

desires to the satisfaction of material desires. In the context of

the firm, this means profits.

This brief abstraction from the complexities of both

economic theory and the practice of business ignores many

complicating factors. Agency issues, for example, are real

and they continue to plague businesses. Recent corporate

scandals raise significant concerns about the extent of

managerial self-dealing. The shareholder profit-maximizing

norm does address this issue of agency costs. Moral decisions

regarding the allocation of resources, moreover, are not left

solely to consumers. In all but the marginal business firm,

managers likely can and do make many decisions that

incorporate values other than the maximization of profits.

Government also prohibits or regulates the production of

unhealthful or immoral products, and ensures that certain

minimal standards are met in the employment relationship.

Finally, this simplistic model ignores the influence that the

modern media gives producers over the appetites of

consumers. The model does, however, provide a workable

basis for analyzing managerial behavior. The generalization

that managers are primarily committed to maximizing

profits is sound as a matter of both fact and policy.

Business as a Calling

Here we are exploring the idea of business as a calling, or

vocation. These terms, however, are slippery. In a sense,

whatever we do with our lives is our calling or vocation. To

say that managing business is a manager?s vocation is a

reasonable use of the term. The statement, however, is

tautological. Managing is a manager?s vocation because that

is what she does. Vocation, however, should suggest a

higher calling. When understood in this way and

applied categorically, it may be difficult to list the managers

of profit-making organizations among those who

have vocations.

This article follows the lead of the U.S. Bishops and

distinguishes between a career and a vocation,

13

although

the distinction is arbitrary. The words are often used

interchangeably. Career, however, does not carry the

connotation of public service that frequently applies to

vocation. A career, therefore, as I am using the term,

identifies work that is instrumental. A vocation, by contrast,

involves human effort that is integral to the person. Stated

more concretely, a career is a way to make money or achieve

status and power, while a vocation is a contribution of

oneself to something of value to society. This does not

suggest that there is something wrong per se with having a

career. We all have to make a living. The difference,

moreover, between the terms is highly subjective and

reflects the attitude of the actor rather than the nature of

the function. Accordingly, a career becomes a vocation when

the actor approaches the position as a free, moral person

wishing to contribute to the common good.

For reasons previously discussed, a purely careerist approach

to the management of business is likely to impose costs on

society. The common good is subordinated to the bottom

line. Maximizing profits becomes the summum bonum for

business proprietors, officers and managers. Moral

sensitivities may come to play in their ?private? lives, but

seldom in their business decisions. Ethical standards,

however, at least those rooted in religious tradition, call for

more. Catholic social teaching provides one particularly rich

source for any businessman or woman wishing to better

understand the moral and social implications of business. It

invites those who direct business ventures to approach their

jobs as a vocation, and that calls for more than generating

profits.

What then does the Church have to say to the business

professional? Theology naturally informs the Catholic

conception of vocation. Pope John Paul II recently asked the

rhetorical question: ?What is the vocation of a Christian??

The answer [the Pope said] is demanding, but clear: ?The

vocation of a Christian is holiness.?

14

The Holy Father, who

has contributed so much to the Church?s teaching about the

value and dignity of human work, has elsewhere identified a

vocation to serve,

15

a vocation to freedom,

16

and a vocation

to love.

17

The Pope, I believe, is referring to a spiritual

imperative that applies to every Christian in every aspect of

his or her life. The business professional, as well as the line

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Business as a Vocation:

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Legal Education

worker, should freely approach every task with a sense of

service and love. Every Catholic must take these papal

missives to heart. How do they apply, however, to people

making their living in the world of business at the end of

the Modern era?

The U.S. Catholic Bishops have addressed the issue directly.

The Pastoral teaching, Economic Justice for All, states:

The economy?s success in fulfilling the demands of

justice will depend on how its vast resources and

wealth are managed. Property owners, managers, and

investors of financial capital must all contribute to

creating a more just society. Securing economic justice

depends heavily on the leadership of men and women

in business. ? Pope John Paul II has pointed out that

the degree of well-being which society today enjoys

would be unthinkable without the dynamic figure of

the business person, whose function consists of

organizing human labor and the means of production

so as to give rise to the goods and services necessary

for the prosperity and progress of the community.

Persons in management face many hard choices each

day, choices on which the well-being of many others

depends. Commitment to the public good and not

simply the private good of their firms is at the heart of

what it means to call their work a vocation and not

simply a career or a job.

18

This extensive quote captures the Church?s appreciation

for the beneficial role that businessmen and women play

in society, but it also recognizes the challenges they face

when exercising their responsibilities. A commitment to

the ?public good? is the essence of the vocation

of management.

Catholic Social Thought and ?Vocation?

Catholic social teaching addresses the mundane and

profane, as well as the profound and spiritual. It is intended

to provide guidance for men and women wishing to live

their faith in the workplace. In Catholic teaching, virtually

any human enterprise that advances the common good

merits the appellation ?vocation? in its most elevated usage,

and that includes the work of business managers and

related professionals. A key to understanding this lies in the

Church?s teachings about the nature and dignity of work.

19

Work, properly understood, is the way that human persons

develop as individuals, becoming ?more human,? and also

contribute to the common good. The challenge for Catholic

educators is to deliver the Church?s message in a way that

has utility for the next generation of business leaders. Overly

broad exhortations to holiness and to establish economic

justice will have little meaning to the business or law

student. Students will properly want to know how a holy or

virtuous life relates to the decisions they will have to make

in the real world of business, law or finance. They must be

prepared to face complex, troublesome issues in a business

environment where only some Christian virtues are

appreciated. This will require the businessperson to

approach his or her job as a vocation, again with the

connotation of higher calling.

At the outset, students must understand that Catholic social

teaching provides no precise formulas. It does not offer a

single acceptable answer for each of the vexing issues

business people must address on a regular basis. Moreover, it

is difficult for many reasons to put the Church?s social

teachings into application. Pope John XXIII taught, ?If it is

indeed difficult to apply teaching of any sort to concrete

situations, it is even more so when one tries to put into

practice the teachings of the Catholic Church regarding

social affairs.?

20

Catholic social doctrine, Pope John

concluded, should be applied by: (1) examining the actual

situation presented to the decision-maker; (2) evaluating the

situation carefully in the light of Catholic teachings; and (3)

deciding what is the right thing to do.

21

The Holy Father

summarized this instruction with the slogan: ?observe,

judge, act.?

22

The U.S. bishops have made it explicitly clear that Catholic

educators must bring the message of the Church?s social

doctrine to bear as they fulfill their teaching mission.

?

The Church makes it clear that

every person ? manager, investor,

worker and consumer ? is

responsible for the moral

consequences of their choices.

?

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Business as a Vocation:

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Legal Education

[T]he Church must incorporate into all levels of her

educational system the teaching of social justice and

the biblical and ethical principles that support it. We

call on our universities, in particular, to make Catholic

social teaching, and the social encyclicals of the popes

a part of their curriculum, especially for those whose

vocation will call them to an active role in U.S.

economic and political decision-making. Faith and

technological progress are not opposed one to

another, but this progress must not be channeled and

directed by greed, self-indulgence, or novelty for its

own sake, but by values that respect human dignity

and foster social solidarity.

23

The bishops? instruction to Catholic universities poses quite a

challenge. How do those involved in the education of

business professionals instill an appreciation for Catholic

teachings while preparing students for the demands of

modern business? Professionals trained at Catholic

universities should know the critical Catholic principles

applicable to all economic decision-making. Moreover, the

instruction at Catholic professional schools must

demonstrate that economic success and the common good

are not irreconcilable. To be sure, a manager or an attorney

seeking to live within the bounds of Catholic teaching, or

any other ethical construct, may have to remove him or

herself from a desired position at times. Managers are not

free to participate in evil or injustice, even if the prevailing

business environment and law would tolerate the action.

The Church, however, values the work of managers and has

never suggested that one cannot manage a business well

and be true to Catholic social doctrine. Over the long-term,

firms that promote the common good ? each in their own

distinctive ways ? should prove to be as successful as those

that are driven solely by the maximization of profits. Given

the author?s expertise, this essay focuses on the training of

lawyers. Attorneys are so intimately involved in the

operation of business enterprises that suggestions applicable

to law schools should have relevance to the education of

business professionals generally. The notion of management

after all encompasses the many disciplines involved in the

organization and direction of business enterprises.

Management, business and law schools likely share

pedagogical styles, such as case and problem analysis.

The business lawyer, like anyone else involved in the

management of a business, should approach his duties with

a sense of vocation.

24

How can legal educators at a Catholic

law school influence the attitudes of students in ways that

foster a sense of vocation? Catholic social teaching provides

the basis for distinguishing between a Catholic professional

education and that which is provided by non-Catholic

institutions. Catholic universities are repositories of this rich

teaching, which can help students to understand how the

work-a-day world they will enter fits into a broader moral

and social matrix. The task, I suggest, should be approached

in a threefold manner:

? First, law students should be exposed to the core of

the Catholic social canon; i.e., they must be

introduced to the principles that will inform their

decisions when representing and counseling

business clients.

? Second, law students should understand how these

Catholic principles relate to their personal lives and

their responsibilities as attorneys.

? Finally, students should be challenged to apply

these principles to complex real or simulated

problems, and to do so in a context that is relevant

to legal analysis.

A critical part of all legal education is the preparation of

students to analyze and resolve complex problems. The

unique contribution of lawyers to the resolution of problems

is, of course, an understanding of the legal consequences of

alternative outcomes. The well-trained, mature lawyer,

however, will appreciate the economic and human

consequences of decisions.

Catholic Social Thought and Business Education

The first goal in this pedagogical paradigm is critical. The

business-oriented student should be taught the core

principles of Catholic social teaching, particularly those that

inform economic decision-making. A complete explication of

these principles is beyond the scope of this paper, but

principles of note for business men and women include the

right to private property and the legitimacy of profits, on

the one hand, and the universal destination of goods (a

limitation to private property rights) and the aversion to

consumerism or economism (limitations on the quest for

profits), on the other. Ideally, law students at Catholic

schools should be introduced to the core principles in their

first year of studies.

25

To elaborate, graduates of Catholic schools should

particularly appreciate what the Church teaches about the

dignity of the human person and the promotion of the

common good. The notion of business as a calling or

vocation is rooted, I believe, in these first principles. Those

who organize and direct human and physical resources have

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Business as a Vocation:

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Legal Education

a special opportunity, for better or for worse, to affect the

dignity of persons and to enhance or detract from the

common weal. Conditions in the workplace first prompted

the development of the Church?s modern social teaching.

The social question was originally the worker question. In

the Leonine era, the humiliating working conditions of the

emerging industrial order violated the dignity of the

working classes. In the mid-20

th

century, the focus shifted to

the indignity caused by unemployment, inadequate training

and widespread poverty in the undeveloped and

underdeveloped nations of the world. Economic

development was considered essential to both economic

justice and peace. Pope John Paul II has developed a more

comprehensive vision of the requisites of human dignity. The

poor and working classes are not the only victims of

indignity in the modern economy. Rather, a pervasive

materialistic and hedonistic culture diminishes the dignity of

persons in many capacities, e.g., workers, consumers and

managers. The ultimate indignity occurs when human

persons become objects, things that work and consume. The

Church associates this social condition with the phenomena

of economism and consumerism.

Those who manage businesses obviously influence the

prevailing business culture. They may treat workers,

suppliers, the natural environment and consumers alike as

objects to be used to generate profits. By contrast, managers

may run their firms in ways that recognize the inherent value

of workers, permitting them to participate in a process

producing desirable products, which in turn contribute to the

common good. The well-managed firm, as measured by

Catholic teaching, would also provide consumers with a good

product or service, honest information and a fair price. The

firm conducting its business within the bounds of Catholic

social teaching would not likely suffer in the market place. A

business with satisfied customers, and workers who share an

interest with managers and equity holders in the success of a

firm, as well as the quality of its products, is likely to be quite

successful. The Church has no aversion to profitability.

Catholic teaching recognizes that profits provide a

reasonable return for the risks of investing and also provide a

basis for measuring the success of a business venture.

26

The introduction to Catholic social thought should also

emphasize the Church?s teachings about private property,

solidarity and subsidiarity. The right to private property is

essential to Catholic teaching, but responsibility attaches to

that right. Property must be employed in ways that foster

the good of society. Solidarity, which the Holy Father

identifies as a ?virtue,? demands much of Catholics. ?[It] is

not a feeling of vague compassion or shallow distress at the

misfortunes of so many people, both near and far. On the

contrary, it is a firm and persevering determination to

commit oneself to the common good; that is to say to the

good of all and of each individual, because we are all really

responsible for all.?

27

Pope John Paul II, applying the

principle of subsidiarity to the state, indicates that reserving

decision making to the lowest appropriate social unit will

?create favorable conditions for the free exercise of

economic activity, which will lead to abundant opportunities

for employment and sources of wealth.?

28

This principle

applies to economic organizations, particularly very large

ones, as well as governments. Economic performance would

likely be enhanced by fostering greater participation among

a firm?s workers and by fixing responsibility where it can

most properly be exercised.

The second pedagogical goal is to demonstrate how Catholic

principles relate specifically to the legal profession the

students aspire to join. The Church?s teaching about the

dignity of the person includes the self. Every worker,

regardless of the nature of the calling, should appreciate the

significance of her own work. Work, at least when it

contributes to the common good, is dignified because it is the

labor of a human person. The fact that a task is mundane and

lacks social significance does not diminish its dignity. And,

naturally, the fact that a person holds a position of some

status does not as such enhance the dignity of that person. As

the Holy Father has taught so well, the dignity of labor

inheres in the subject of the work, a person. Every person

shares a common ?vocation? to help make the resources of

the earth useful to themselves, their families and the human

community generally. Internalizing this conception of the

value of self and of the contributions one makes to society

through labor should foster a sense of vocation.

?

Commitment to the public good and

not simply the private good of their

firms is at the heart of what it means

to call their work a vocation and not

simply a career or a job.

?

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A person, however, can employ his labor and physical or

financial resources in ways that detract from his own dignity.

From the perspective of Catholic social teaching, violating

the dignity of another will never lessen the dignity of the

victim. The person who subjects others to indignity, or

engages in work that diminishes the common good,

however, will diminish himself. He will have failed in his

Christian vocation to become ?more human.? The Church

makes it clear that every person ? manager, investor, worker

and consumer ? is responsible for the moral consequences of

their choices. Graduates of Catholic professional schools

should understand this responsibility and also the

consequences of failing to incorporate the Catholic notion

of vocation into their professional lives.

Finally, Catholic law schools should invite students to apply

this moral teaching throughout their years of legal studies.

As already noted, the Church does not offer precise formulas

or concrete solutions to complex economic and social

questions. She offers ?principles for reflection, criteria for

judgment and directives for action.?

29

The vocation of the

businessperson is to apply these principles in their areas of

expertise and responsibility. Every person is ?called? to

contribute to the common good. For most people, that is

done through the employment of their physical, mental or

material resources. In the course of legal studies, students

should learn to value the critical role that business

organizations and legal regulations play in modern society.

Those who are destined to represent management, become

part of management, or even to oppose management as

lawyers should recognize the power of sound business

organization to exploit and efficiently allocate the world?s

limited resources. The business-oriented lawyer must

understand the nature of the firm, the role played by

various inputs, including capital, labor, technology and

know-how, and the competing claims to the profits of the

enterprise. A successful, i.e., profitable, firm provides jobs

for workers and desired, often essential, goods for

consumers. But the quest for profits can cross lines that are

unacceptable in Catholic social teaching. Students in

appropriate courses can be challenged to begin the

reflective process that can turn the management of business

into a vocation. The cases and problems of legal studies

provide many opportunities for reflective application of the

Church?s social thought.

Conclusion

Management, business and law schools affiliated with

Catholic universities must train business leaders who can

strive for efficiency and profitability without losing their

moral and social balance. Graduates of American law schools

in recent decades have brought a heightened level of

economic sophistication to the practice of law.

30

As an

important part of any management team, it is appropriate

for a business lawyer to bring sound economic sense to the

table when business decisions are made. They should also,

however, appreciate the human dimension of business

decisions. Catholic social teaching provides a solid

foundation for a humanistic approach to the organization

and management of business. It reminds the business

professional that a business firm is a community of persons

working together to promote the common good.

Catholic social teaching surely poses a challenge for business

managers and their legal advisors ? it is rooted in the

Gospel, which is a perpetual challenge to humankind ? but a

business ethic informed by Catholic teaching is not at war

with sound business practices. The Catholic Church?s rich

social doctrine places economic production and development

within a sound ethical framework. The Church, moreover,

should and does expect Catholic educational institutions to

be committed to delivering the Church?s social vision. If the

job is done well, those of us who are called to train

professionals will produce a generation of business leaders

who also see their task as a vocation. They will understand

that their goal is not simply to make a profit, but rather to

do so in ways that promote the common good. Managers

trained in the Catholic social tradition will know that human

persons were not created to serve the firm ? regardless of

the person?s relationship to the firm ? but that the firm

exists to serve people. As stated by the Fathers of the

Second Vatican Council:

In the economic and social realms, too, the dignity and

complete vocation of the human person and the

welfare of society as a whole are to be respected and

promoted. For man is the source, the center, and the

purpose of all economic and social life.

31

Page 45

44

Business as a Vocation:

Implications for Catholic

Legal Education

Endnotes

1

This essay uses the term business manager in a rough,

functional manner. It will generally include all those who

participate in the organization, direction or control of a

business organization, including the highest echelon

executives, so-called middle management and in-house or

outside legal and financial advisors. The focus of this analysis

is on decision-making regarding the employment of human

and physical resources, rather than the creation or

transformation of goods.

2

See Model Bus. Corp. Act (1984) 3.02 (13).

3

See ALI Principles of Corporate Governance: Analysis and

Recommendations (1994) 2.01.

4

See Dodge v. Ford Motor Co., 204 Mich 159, 170 N.W. 668

(1919).

5

I am assuming that profits are maximized by producing the

best goods and services for the lowest prices. It is also likely,

although ethically and legally problematic, that those who

manage business may seek to enhance a monopolistic

position and take monopoly rents. The former furthers the

economic and social good of allocative efficiency. The latter

results in the inefficient allocation of resources.

6

A leading economics text defines allocative efficiency as [a]

situation in which no reorganization or trade could raise the

utility or satisfaction of one individual without lowering the

utility or satisfaction of another individual. Under certain

limited conditions, perfect competition leads to allocative

efficiency. Paul A. Samuelson and William D. Nordhaus,

Microeconomics, 16

th

Ed. (Boston: Irwin, McGraw-Hill, 1998)

436.

7

Pope John Paul II, Centesimus Annus 41.

8

Ibid.

9

Pope Leo XIII, Rerum Novarum 16.

10

Pope John Paul II, Laborem Exercens 7.

11

Centesimus Annus 36.

12

Smith?s classic work is entitled An Enquiry into the Nature

and Causes of the Wealth of Nations (Oxford: Oxford

University Press, 1976 [1776]).

13

See quotation referenced in note 17, infra.

14

Homily of John Paul II, Osijek, Croatia, June 7, 2003.

15

Pope John Paul II, Redemptor Hominis 21.

16

Pope John Paul II, Veritatis Splendor 17.