Catholicism and capitalism: Allies or enemies?
Imperative to preserve human dignity
While listening to a recent radio report on the economy, I heard the commentator refer to the corporate executive's legal obligation to maximize company profits to the extent permitted by the law. The focus on corporate profits to the virtual exclusion of all other considerations is called shareholder primacy. There was a brief reference made to an argument articulated by Nobel Prize winning economist Milton Friedman in the 1970s.
The idea of shareholder primacy is promoted today in some circles as the foundation of capitalism and a free market economy. However, on the surface, it seemed to be in conflict with Christian Stewardship principles supporting human dignity, so I decided to dig a little deeper.
Milton Friedman's article says, "…That [a corporate executive's] responsibility is to conduct the business in accordance with [his or her shareholder's] desires, which generally will be to make as much money as possible while conforming to [the] basic rules of the society, both those embodied in law and those embodied in ethical custom." (Milton Friedman, "The Social Responsibility of Business is to Increase its Profits," The New York Times Magazine, Sept. 13, 1970.)
While Friedman's actual text states that the executive's responsibility includes ethical economic behavior, the radio commentator omitted that element of Friedman's philosophy. The concept of shareholder primacy drives business decisions in ways that are not always ethical.
As commonly applied today shareholder primacy is in conflict with the principle expressed by the US Council of Catholic Bishops in their pastoral letter on the economy. They say that an important measure of economic success — as well as all human behavior — must be the effect of those actions on human dignity. The idea of respecting human dignity is integral to the CS principle of honoring God in the way we handle his gifts. The bishops remind us that "… our faith calls us to measure this economy not only by what it produces, but also by how it touches human life and whether it protects or undermines the dignity of the human person. Economic decisions have human consequences and moral content; they help or hurt people, strengthen or weaken family life, advance or diminish the quality of justice in our land." ("Economic Justice for All, The Pastoral Letter on Catholic Social Teaching and the U.S. Economy," 1986.)
Their guidance raises the bar for the corporate executive and requires him or her to look beyond mere profitability, and consider what each choice will mean to the people that may be affected by it — specifically does it affirm or degrade their human dignity? This sounds simple, but it has profound implications. It means that the impact on domestic and foreign employees and their families must be part of the calculation of whether or not to outsource manufacturing. It calls into question the peanut processing plant's financial choices affecting the safety of harvested nuts. Perhaps it means a business shouldn't require overtime simply because it will lower unit costs by a fraction of a cent.
To this point, I've discussed this principle of human dignity within the context of business and economics, but it is clear that it can and should guide our choices in virtually every area of our lives. If we would be willing to consider the effect on human dignity of the things we say, the things we do — including the purchase decisions we make and the ways we interact with others — we all would be well served. As a small, ordinary example: consider the choice to cut another driver off who is too slow to get that parking space or the next spot at the gas pump. Some would say "…you snooze, you lose." But, what is the effect of that action on their dignity and our own? Does it lift us up or drag us down? If we were to allow it to guide us, how would the imperative to respect human dignity change us and the world?
(Walt Sears is a lay ecclesial minister in the Diocese of Oakland.)
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