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Knights of Columbus
Ethical Business Decisions: Pope Benedict’s Blueprint for Economic Justice
Knights of Columbus
Monday, November 09, 2009
On Nov. 8, Supreme Knight Carl Anderson gave the following address to a gathering of business leaders and professionals at Fairfield University. His keynote presentation was centered on the recent social encyclical by Pope Benedict XVI, Caritas in Veritate, and its relevance for attendees and their companies. The event was cosponsored by Fairfield University’s Center for Faith and Public Life and the Fairfield County Chapter of Centesimus Annus Pro Pontifice. Preceding the presentation, Supreme Chaplain, Bishop William Lori, celebrated a Mass for the participants in Fairfield University’s Egan Chapel of St. Ignatius Loyola.
Your Excellency, Reverend Fathers, members of Centissimus Annus Pro Pontifice, friends of Fairfield University, fellow Knights, ladies and Gentlemen:
Today, our nation stands hopeful that an economic recovery will soon arrive. For more than a year, we have debated the effectiveness of various technical stimulus measures, and have read headline after headline about the terrible effects the economy has had on our neighbors.
But only at times has the root cause of this crisis gained prominence. Last year, when the Lehman Brothers bankruptcy came to light and again when Bernard Madoff made headlines, there was significant outrage among Americans who saw greed as a primary factor in the crisis.
Certainly, there was no single cause of this crisis – there were unreasonable expectation in the housing market, too much cash in the money supply, banks awash with money that were eager to loan it and made credit available to nearly all who applied, too much government involvement in some places, too little in others.
But it is undeniable that one major contributing factor was greed. The desire to transfer risk – and to profit from its transfer – has been a singular cause of this crisis. Though many argue they didn’t know how bad things would get, people – in a variety of industries, from banking to investment – clearly knew enough not to want to be left holding the bag.
But if the worst of human motivations – greed – was a significant cause of our current economic woes, it will take more than just amoral technical fixes to get our economy healthy again.
...read full story at: http://www.kofc.org/un/eb/en/news/releases/detail/548973.html
It will, in fact, take a fundamental shift in our thinking – a shift towards conscientious action in every area of our lives – including business. We cannot lead lives that are divided, with one moral compass at home and at our places of worship, and another in our workplaces.
Two decades ago, shortly after the fall of European Communism, then Czech President Vaclav Havel addressed his nation on the importance of individual responsibility within an economic system. Speaking of the failure of Communism, he said:
“We live in a morally contaminated environment. We fell morally ill because we became used to saying something different from what we thought. We learned not to believe in anything, to ignore each other, to care only about ourselves. … We have to understand this legacy as a sin we committed against ourselves. … If we realize this, hope will return to our hearts.”
When Havel spoke in 1990, the world had just watched transfixed as the iron curtain fell in Europe. Indeed, one of the two financial and political systems that had defined most of the 20th century almost instantaneously disappeared from the European continent.
The idea of atheistic Communism as a viable economic force had been debunked, leading at least one commentator to proclaim that “the end of history” was at hand.
But as Pope Benedict has pointed out in many contexts, triumphalism is dangerous.
Now, as we celebrate the 20th anniversary of the fall of the Berlin wall, we face a financial and political crisis in the West of enormous proportions, and only by facing what went wrong, can we begin to repair it.
As we face a deep recession caused in no small part by moral failure, we would do well to keep Havel’s words of individual moral responsibility in mind as a necessary part of any real solution.
The importance of each individual’s moral decision making will be critical if we are to succeed.
There were a few, in the days before – and immediately after – the collapse of Soviet Communism, who were prescient enough to have predicted trouble ahead for Western economies, if they ignored morality. Their words are all the more relevant today.
Two men in particular stand out for their foresight: Karol Wojtyla and Joseph Ratzinger – better known as Popes John Paul II and Benedict XVI.
While decrying the “determinism” of Marxism, and its atheistic outlook in a 1985 paper Market, Economy and Ethics, Pope Benedict XVI, then Cardinal Joseph Ratzinger, warned that an economic crisis in the West was possible. His concern was a decline of ethics in economic matters.
In fact, he warned that a decline of ethics, ethics which must be “born and sustained only by strong religious convictions,” could actually “cause the laws of the market to collapse.”
Shortly after the walls began coming down, in 1991, Pope John Paul II – widely recognized for the role he played in the collapse of Communism – also foresaw the threat to a market economy that excluded spiritual values.
In his encyclical Centesimus Annus, he made clear that a system that sought to replace Marxism with consumerism, and thus reduced “man to the sphere of economics and the satisfaction of material needs” – in the end both made the same error as a central tenet of Marxism and was not an adequate solution (19).
Both Benedict and John Paul have made clear that any economic system that pushes God and morality aside rests not on bedrock, but on sand. Even if we create a technical fix to our current crisis, morally deficient behavior will continue, and we will not have done enough to prevent the next crisis, just as the Sarbanes-Oxley Act following the Enron scandal did not prevent the meltdown of 2008.
As Pope Benedict wrote in his 1985 paper:
“Even if the market economy does rest on the ordering of the individual within a determinate network of rules, it cannot make man superfluous or exclude his moral freedom from the world of economics. … These spiritual powers are themselves a factor in the economy: the market rules function only when a moral consensus exists and sustains them.”
And, ladies and gentlemen, we disregard the power of personal moral responsibility in economics at our peril.
Americans want ethical action. They want business leaders with a conscience. But they don’t think they have them, and that is where each of us has a role to play.
Earlier this year, a Knights of Columbus-Marist Survey found that at least 90% of Americans – and 90% of executives themselves – believe that business leaders see career advancement and personal financial gain as primary motivations for business decisions. Only 31% of Americans and 32% of executives believed that “the public good” was a strong motivating factor.
That’s nothing short of embarrassing.
But it’s worse than that, because it need no t be that way – even for a business to be profitable.
For the same poll also showed that three-quarters of Americans and more than nine out of ten executives believe a business can be both ethically run, and successful.
Much pain could have been avoided if the individual members of our economy had heeded our pope’s words in 1985, or his predecessor’s in 1991, and if capitalism with a conscience had been the norm.
But we have been given another chance. Pope Benedict XVI’s encyclical letter Caritas in Veritate – released this July, provides a blueprint for us in seeking to create a better world, and a more just and equitable business environment.
And in case we wonder what people might think about taking advice on the economy from the Pope, you might be interested in knowing that in subsequent polling we found that Americans – and American Catholics especially – value Pope Benedict’s opinion on both economic and spiritual issues. By overwhelming margins they are interested in what he has to say about the short-sightedness of greed and selfishness, and the building of a society where spiritual values play an important role.
The Catholic Church has long addressed the needs of individuals within the economic environment.
Beginning with the encyclical of Pope Leo XIII, Rerum Novarum, in 1891, the Church injected into the economic debate the importance of personal conscience, ethical action, the importance of private property and the principle of subsidiarity, the need to have living wages paid and unions to be formed.
Indeed, I don’t think it’s too much to say that beginning with Pope Leo XIII, the Catholic Church – by providing the voice of conscience – helped save capitalism from excesses that would have made it increasingly untenable during the late 19th and early 20th centuries.
We might even say that by insisting on an ethical foundation for economic action, the Church did much to make possible the sustainability of free markets.
For well over 100 years, and particularly in the past 20, the Church has been very conscious of economic issues and the protection of the individual. Whether it was warning against the moral bankruptcy of Communism, and it reduction of people to means rather than ends, or whether it was warnings about the formation of a market economy without morality, the Church’s voice has been a clear voice for an economic system that takes everyone into consideration.
In 2005, just a few years before the current crisis that we face, the Church released its Compendium of the Social Doctrine of the Church. That document lays out the Church’s position on social issues in a number of areas including ethics, and I would encourage all of you to have the Compendium on hand as an important reference.
And of course, as we have seen, this summer, Pope Benedict gave us his most recent contribution to this tradition.
In it he said something I think each of us needs to take to heart – not only for ourselves, but as a call to those with whom we work. He said:
“Economy and finance, as instruments, can be used badly when those at the helm are motivated by purely selfish ends. Instruments that are good in themselves can thereby be transformed into harmful ones. But it is man's darkened reason that produces these consequences, not the instrument per se. Therefore it is not the instrument that must be called to account, but individuals, their moral conscience and their personal and social responsibility.” (36)
In other words, no system is independent of its individuals, and too many individuals in our system became – in the words of Vaclav Havel – morally ill.
And we should be grateful that we have such an excellent moral and spiritual doctor in Pope Benedict.
As our polling has shown, the American people and business executives alike know that a business can be both ethical and successful. In fact, as Jim Collins pointed out in his book Built to Last, it is the companies that put some value above simply maximizing profit that have been the most successful in the United States.
I am happy to say that there are many such companies, and that one of these is the Knights of Columbus.
We have led by example – not only in our charitable giving – but also in our ability to run a successful business enterprise based on Catholic social teaching.
We consciously strive to treat customers and employees fairly. Our investment rules prevent us from investing in more than a hundred companies that violate Catholic teaching in a number of areas, and yet, in one of the worst financial crises in memory, we have remained profitable. In fact, relative to the rest of the insurance industry, we are stronger now than we were a year ago.
In addition, because of our commitment to running our business in a way consistent with Catholic Social Teaching, the Knights is one of only four US life insurance companies – and the only one in Canada – to have achieved the highest rating for financial strength from A.M. Best and Standard and Poors, and ethical certification from the Insurance Marketplace Standards Association.
But this isn’t just something for “another company” to do. Each of us can and should work to better the moral compass of business. This can be done in many ways, all of them important.
First, we should keep our ethics consistent throughout our life, whether at home or at work.
Second, we should settle for nothing less than ethical behavior from those who work for us, and with us.
Third, where we invest our money and what companies we choose to partner with is an obvious ethical matter in which we can help to influence the moral compass of various businesses for the better.
Fourth, we must embrace the positive and avoid the negative, even when the negative seems to be the quickest way to boost the bottom line. We need to remember that the worst of human nature – greed – has been diagnosed as a large part of the cause of this crisis. Many lost sight of the importance of unity – of solidarity – with their neighbors. And we must look to the best of humanity – to generosity, and solidarity – as the prescription.
A business model based on the understanding of the dignity of each person, and on our responsibility to our neighbor cannot help but be an ethical one. We must work to replace greed and jealousy the motivation of Cain – who killed his neighbor and feigned ignorance – with the Good Samaritan’s motivation – love for our neighbor – in every aspect of our lives.
This is especially true in business relationships. Only in this way – as the Pope makes clear in Caritas in Veritate – will economic development be truly sustainable.
In other words, the Golden Rule – that we should treat others as we wish to be treated – makes good business sense.
In recent months we have seen in the business world a return to the demand for quality especially in regard to financial products as a key to economic recovery. But for the Christian, and indeed for all people of good will, “quality” must always include the quality of a corporation’s moral compass. And all of us, whether we are executives, employees, investors or consumers must insist that this be the case.
This isn’t a job solely or even primarily for government – though government policy can be used to help create a more moral business climate. Each of us has a responsibility to love our neighbor, and in loving our neighbor to create an ethical environment throughout society. The Pope wrote in his first encyclical Deus Caritas Est – God is Love, about this very thing. He said:
Love – caritas – will always prove necessary, even in the most just society. There is no ordering of the State so just that it can eliminate the need for a service of love. Whoever wants to eliminate love is preparing to eliminate man as such. There will always be suffering which cries out for consolation and help. There will always be loneliness. There will always be situations of material need where help in the form of concrete love of neighbour is indispensable.
And then he added:
“The State which would provide everything, absorbing everything into itself, would ultimately become a mere bureaucracy incapable of guaranteeing the very thing which the suffering person – every person – needs: namely, loving personal concern. We do not need a State which regulates and controls everything, but a State which, in accordance with the principle of subsidiarity, generously acknowledges and supports initiatives arising from the different social forces and combines spontaneity with closeness to those in need.” (28b)
Ladies and gentlemen, we cannot do business – or live any portion of our lives – in a vacuum. Each action we take has consequences, and a lack of interest in those consequences or to pretend that such consequences do not exist can make our economic environment toxic.
Individually and collectively, we must strive to build a civilization in which every decision is made with consideration of its moral implications.
All of us here have a role to play. All of us can lead those with whom we work to greater solidarity with our fellow human beings, and to create a greater solidarity of conscience. The public and executives alike believe that business can be both successful and profitable. We have but to act to make this a reality.
Between Pope Benedict XVI’s first encyclical on charity and his most recent one on the economy, he wrote another encyclical Spe Salvi – Saved by Hope. As we chart the course forward, as we seek to overcome the morally ill environment that made our country economically sick, I would like to leave you with the Pope’s words on hope:
“All serious and upright human conduct is hope in action. … If we cannot hope for more than is effectively attainable at any given time, or [if we cannot hope for] more than is promised by political or economic authorities, our lives will soon be without hope.”
Each of us can make a difference individually, but many of us in this room have significant leadership roles in business.
Leading by example, and acting morally in every situation, we can help to reshape the way in which people think about business, and that would give our nation, and indeed our world, great hope – in the truest sense of the word.
source: http://www.kofc.org/un/eb/en/news/releases/detail/548973.html