Of Benedict and business
What the pope’s words imply for corporate social responsibility
IN TOUGH times, many people look to religious authorities for help and guidance; and religious authorities, in turn, rarely miss an opportunity to comment on current events. Pope Benedict XVI released his third encyclical, Caritas in Veritate (Charity in Truth), in July 2009; it was supposed to come out earlier, but the Vatican wanted to be able to respond to the developing economic crisis. Now, business and law academics have had time to mull over Benedict’s words and decide what they imply for corporate governance.
Antonio Argandoña, a professor of economics at IESE, a Spanish business school (and an institution of Opus Dei), uses Benedict’s treatise to help further define corporate social responsibility (CSR) in a working paper. Part of the muddle of CSR, he suggests, is the many different approaches its advocates take: ethical (it’s the right thing for companies and their directors to do); social (the company as conscientious “citizen”); strategic (CSR contributing to value creation); and instrumental (CSR as a way to get desired results). In Mr Argandoña’s view, the papal perception of CSR is firmly ethical, outside of short-term results or social expectations. Moreover, it is best determined and enforced not by outside observers and activist groups but by the employees and directors themselves. Similarly, CSR must be “voluntary,” rather than a response to increasing regulation.
John Breen, a professor at Loyola University School of Law at Chicago, notes this encyclical is part of a long tradition of papal criticism of industrialisation, going back to Pope Leo in 1891. But, writing in the Harvard Journal of Law and Public Policy (PDF), he says Benedict’s critique of business is farther reaching. Even the idea that businesses exist to make money is flawed, in the eyes of the pontiff; a concentration on profit, rather than serving society (with profit as the happy benefit), leads to distorted risk-taking. Moreover, the very form of the corporation leads to an abdication of responsibility. Answering only to investors, managers fail to appreciate the larger moral implications of their answers. Benedict apparently falls squarely behind those who speak of a corporation having to answer to “stakeholders,” rather than just shareholders.
Two other papers concentrate on specific implications of Benedict’s prescriptions. One section of Caritas in Veritate has Benedict considering globalisation and the challenges to traditional political power: “The articulation of political authority at the local, national, and international levels is one of the best ways of giving direction to the process of economic globalisation.” From this Elizabeth Schlitz, at the University of St. Thomas School of Law in Minnesota, somewhat awkwardly speculates (in the Journal of Law and Religion) on how the pontiff might disapprove of federal efforts, in both the United States and the European Union, to harmonise credit regulation across state (or member) borders—and in the process water down regulation. Benedict does sound grumpy about globalisation, which he complains “makes us neighbours but does not make us brothers,” and praises microfinance. But it is not clear that he would prefer layering of further state-based control of credit on top of existing federal regulations, as Ms Schlitz proposes, to stricter enforcement by sterner regulators.
A fourth paper by three economists at the University of Parma, Paolo Andrei, Federica Balluchi and Katia Furlotti, focuses on Benedict’s call for the “logic of gift” to be enshrined in the economy alongside the “logic of exchange”—a knotty idea, unless you simplify it to the inclusion of non-profit organisations. By forming strong relationships with non-profits, the authors argue, for-profit firms can become “active citizens” contributing to the development of the more balanced and humane economy envisioned in Caritas in Veritate. The three authors have an example near home: the ParmaDona project, a three-year-old initiative linking for-profit firms to charitable ventures in need of aid and expertise.
Finally, André Habisch and Cristian Loza Adaui of Ingolstadt Business School, in a paper for the Journal of Management Development, attempt to “integrate charity” into management theory. They call for changes in management education: away from “reductionism” and an exclusive focus on profit-making, towards more charity-minded students. Like the Parma authors, they use Benedict’s encyclical to discuss how for-profit firms can learn from their non-profit peers.
This last piece also explicitly addresses the faith of individual managers: “The Christian entrepreneur... makes decisions remembering that his inner value as a person is not dependent on the result of his endeavours... Rather, he knows that it is the unconditional love of God that holds him in his existence”. Caritas in Veritate makes Benedict’s views clear: the ethical person, in business or not, is a Christian. That makes it harder to generalise his potential teachings to managers who may not be.
Rankings
Stay informed
Full-time MBA ranking breakdowns
Which MBA? special reports
Latest student diaries
Advertisement
Advertisement
Subscribe to The Economist's free e-mail newsletters and alerts.
Subscribe to The Economist's latest article postings on Twitter
See a selection of The Economist's articles, events, topical videos and debates on Facebook.
Advertisement
Readers' comments
The Economist welcomes your views. Please stay on topic and be respectful of other readers. Review our comments policy.
Sort:
I just finished reading Caritas in Veritate and wonder how you can ascribe to Benedict the view that the ethical person, in business, is a Christian. Benedict, throughout the document, makes great efforts to state that the basis for his position is the natural law inscribed in man's heart by the Creator, not only into the hearts of Christians. In fact, the document is addressed to all men of goodwill, including faithful of other religions and agnostics. Further, it is not enough to believe to be ethical. A person is ethical by acting morally. Of course, having a well formed conscience helps one who is inclined to act and thus be ethical. Benedict does state that Genesis teaches very important points about the human person, created in the image of God. He asserts that modes of thoughts and actual conducts that ignore the resulting dignity of man and the obligation to work for the common good have had and will continue to have seriously adverse consequences for individuals and societies. His teaching is applicable and relevant for all men..I grant you that all men may not be equally open minded, willing to listen and to alter the way they live. The church has had this challenge from day one.
Sincerely,
The universe is base on balance and cycles of harmonic motion. Therefore , then, it is not illogical to procreate the notion that there must be a social responsible dimension to business. What the meaning of this? One of the meaning of this is that had many companies in Nazi Germany adhere to that concept maybe the holocaust would have been much less harsh.
The notion of business as just a entity for profit is not sustainable.
Rabbi Dr. Katherine Hans Von Rotes Schild Zitler
As the well said letter to the editor (Feb. 3, Moral dissuasion) in this week's issue states, only people are moral (and not moral). Business models, economic and political arrangements etc. are not. And, if we say a collective is moral (a government, a company), we mean the sum of its individuals' actions. This must be said by Christians over and over. And as much as I respect this Pope, I think he occasionally loses sight of that.
I agree with Jean-Pierre Berliet: Benedict is addressing all men not just Christians. Basing his arguments on the natural law, his arguments are not limited to a denomination or even Christianity. I would further argue that the natural law tradition is the kissing cousin of the Scottish Enlightenment, if not its twin. Both the market oriented economics of Adam smith and the liberating principles of the American Republic proceeded form the Scottish Enlightenment. The natural law tradition provides a non-ideological basis in which democratic debate on moral issues can be conducted.
Royal Ugly Dude and the former Regensberg professor are not that far apart. Catholic social teaching proceed from a radical view of the acting human person made in the image of God. It is this insight that is not only the proper starting point for ethics, but also the ur spring of our western concepts of human rights. Hence Rome's rejection of much of Liberation Theology which stressed structural rather than individual responsibility, a rejection produced by none other than then Joseph Cardinal Ratzinger.
A note of caution for these scholarly researchers: they should be careful in their analyses of the translations. I have found that the sense of the German (presumably controlling) text with the English version is sometimes different.
Oh Joy, its like the middle ages all over again.
A good journalist would start with the truth. Namely that these professors are really engaged in marketing stunts for their respective employers. Instead the Economist decides to become their marketing tool. Bad ethics TE.
"Catholic social teaching proceed from a radical view of the acting human person made in the image of God." This is precisely the starting point of liberation theology, for the principle is not just a principle but a call to action with respect to structures that deny people their human rights.
It is clear that this is aimed at all people working for "Natural Law" otherwise best described as "The Common Good". A starting point is to accept the somewhat esoteric but fundamentally philosophically sound doctrine that "God" could not be seen to exist as definable in our own space and time but is a creative overarching cosmic phenomenon which is real. If that were provable (which it obviously can never be in an accepted sense otherwise we have a cosmic Police State), or next best thing, if one assumed it was very likely to be true based upon the fact of our existence, then it becomes a simple logical step to conclude that making money which does not clearly benefit the common good at a particular point in time is probably bad. Cash grubbing oil companies who are not now diversifying away from hydrocarbons come into this category. Bill "Charity" Gates has seen this trend as has Warren Buffet. People should not underestimate ex-Cardinal Ratz, he is a very deep thinker of great value to humankind.
Why should we listen to the words of a man who covers for pederasts regarding ethics?
Pope Benedict controls HUGE sums of money, very much of which was tithed by dirt-poor widows, orphans, indigenous farmers . . . I could go on. The money has gone to build obscenely opulent cathedrals all over Roman Christendom including, most spectacularly, the Pope's personal digs at the Vatican. This guy did nothing to create any of this wealth, instead he specialized in extracting it from people who would have been better off keeping it for themselves. If this pope -- or any pope -- wants to preach to me about the ethics of giving, rather than the ethics of creating wealth, he is in a VERY good position to set a Christian example. Sell off some of that loot, Old Buddy, and give the proceeds to the poor. I bet you could pull a lot more people out of poverty that way than by trying to get the rest of us to do it for you. We would respect something like that.
I guess it would be too much to ask from the Economist to sum up things, remind us basic concepts, and replace things where they belong
Business is about making money. Regulation is about taxes, environment, keeping the financial institutions on check, etc ... And yes, as an european I like and I want a lot on regulation, feee health care, the works. Not the mess the Republican Party has brought on the US
So here we go again with a big confused mix up of anything and everything
Thank you for nothing
Today's MBA suffers from a 60-year legacy of an amoral educational paradigm (Ghoshal, S. 2005. ‘Bad management theories are destroying good management practices’, Academy of Management Learning and Education, 4(1): 75–91).
This paradigm and related values and practices delivered today’s world of destructive globalisation. Sadly, most leaders lack the vision and vocabulary to reason beyond today’s reality.
The pope and other thought leaders simply call for a new deal – what Bill Gates tried to coined as ‘creative capitalism, and CK Prahalad as ‘bottom of the pyramid business’. Change yes, but to what?
To advance such a new deal, we need to enter the dilemma at the highest possible level, asking: What kind of future do we want? What kind of society can deliver such future? What kind of enterprises would such kind of society require? What kind of business leaders and business models for such kind of enterprises? The answers to these questions constitute ‘humanity’s global sustainability mandate to its leaders’.
For the MBA as a global brand, we need to seek the answers to these questions from business, societal and political leaders from the West, East and South – drawing on the universal values that bind humanity together. In this regard, the following work is helpful: Küng H. 1998: A global ethic for global politics and economics. Oxford: Oxford University Press.
From researching the above emerged a new language, mindset and values to pursue a new role for, and meaning of business leadership. A new Social Contract with Business also emerged to guide business leaders to apply global stewardship as a business case.
The Pope and other thought leaders may be pleasantly surprised to learn of this radical new educational paradigm, termed: ‘the postmodern MBA’, which aims to develop a new breed of global leader who can contribute to humanity’s global sustainability mandate.
This opens a new space for a Christian, Jewish, Muslim, Buddhist, Hindu, or secular entrepreneur to work together, bound by a common ethic of responsibility towards the future – all individually, and jointly responsible to deliver the kind of future humanity wants.
See the blog: http://jopiecoetzee.blogspot.com on the postmodern MBA, which is updated wee
Pope Benedict XVI third encyclical, Caritas in Veritate (Charity in Truth), July 2009
Christian, Jewish, Muslim, Buddhist, Hindu, Animists, etc.
Can a Pope - any Pope - speak to all people? He may try, but it will never work..
Religion speaks to religious people of the same faith. And few religions even try to speak to the rational human...most do to the emotional human...
Thus all analysis is biased with the self reference criteria.
Most credit Adam Smith to be the father of economics...and he was 1st a man of religion, as we know from his other writings. And he evidently did not get it all right in relationship to the equality of income distribution...
But than an other moral code build on Confucius did not get it all balanced either. And here the 3 big monotheistic religions are not part of the underlaying structure...no religion really is relevant here.
Thus I - until a rational word religion is born - think we should listen to the old wisdom: to God what is God's - to Caesar what is Cesar's. Mixing does no one good - it did not in the past nor does it now...and the future is ...future.
"Benedict’s views clear: the ethical person, in business or not, is a Christian."
Really??
I have searched and read the text enough to know this is not a correct conclusion. I fact, he often implies the exact opposite. Since VaticanII it has been doctrine that the church "Catholic Church rejects nothing that is good and true in all religions"..and I won't look for quotes right now but as a Catholic I know quite well that non-Christians are not considered unethical, and that they can be "saved", whatever childish concepts you think that refers to.
And I expect better than this from the Economist, most of all.