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© Catherine E Cowley ra 2007
CATHOLIC-SHI’A CONFERENCE 2007
Business Ethics: A Catholic View
Dr Catherine E Cowley ra
Heythrop College, University of London
Draft – Not to be cited or quoted without permission
The subject given to me for my paper, Catholic Business Ethics, is ambiguous.
There is a substantial amount of Catholic reflection on business activity, but whilst there
are a number of ethical issues where one can identify the Catholic position, it is not so
clear-cut when it comes to business.. There are several reasons for this, and I shall
highlight two. The first is that as Catholics we approach the discovery of the meaning of
the world using two complementary means: faith and reason. The exercise of reason
requires using such things as science, which in the business context includes economics
and the social sciences. The Catholic tradition insists that faith and reason, faith and
science, are complementary, not in opposition to each other. For the Christian, science is
the same as it is for other people. There is no such thing as Catholic chemistry or
Catholic mathematics. However, science is seen as having an additional purpose: that is,
to understand God’s work and lead it back to its source in God.
It follows, therefore, that human realities have a certain autonomy1 and if we are
to understand them, in this case, business, we will need to use economics and the other
sciences which study this reality. This does not downgrade faith. “Describing reality in
the light of God is a basic theological discipline.”2 Faith sheds new light, but it does not
prevent the need to understand reality in all its complexity. Faith alone will not tell one,
for example, how to balance the needs of employees with the expectations of
shareholders, or how an executive’s pay package should be structured. Reflection about
1
Second Vatican Council, Gaudium et spes 36 All encyclicals cited are, unless otherwise indicated, from
David J. O’Brien and Thomas A. Shannon, (eds.) Catholic Social Thought: The Documentary Heritage,
New York: Orbis Books, 1999
2
David F. Ford, Christian Wisdom: Desiring God and Learning in Love, Cambridge: Cambridge
University Press, 2007, p.4
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business activity cannot be divorced from its context. Every perspective on business is
addressing explicitly or implicitly the economic, political and cultural contexts of its
activity.3 These require judgements which will be influenced by our understanding of
economics, politics and other social realities. It is for this reason that you will find
Catholics proposing a wide range of ethical judgements, a number of which may be
conflicting.
Some of these judgements may be rejected because the theological
assumptions are considered to be inadequate; others because the economic or political
assumptions are rejected either because of prudential judgements about them or because
of the morality presupposed by the commentator. Either way, it is not possible to come
up with the Catholic business ethics. There will always be a variety of opinions.4
The second reason, is simply the range of aspects which Catholic reflection seeks
to include. It must understand business activity in the world taking God, creation and
redemption as its initial points of reference.5 The context of this activity will include first
its location within an understanding of ‘the good’ and with it the ultimate good of the
human person, and second with a background of the purpose of the economy. Much
secular business ethics tends to ignore these two aspects of the good and the purpose of
the economy or treats them with a fairly uncritical acceptance of the status quo.
Following from those aspects, there emerges a particular understanding of the
business firm and its place within the common good. A Catholic reflection will ask how
business relates to questions about the meaning of human life. It evaluates business
activity in the light of the Catholic understanding of the human person, using key
concepts of human dignity, solidarity and rights and responsibilities, including
participation. It also draws upon a theology of work which broadens the resources
available for ethical reflection still further.6
On top of these fundamentals, there is a vast tradition of reflection on specific
issues such as the just price, the just wage, cheating, interest rates, distributive and
commutative justice, the role of the entrepreneur, the role of regulation and many more.
3
See, for example, Daniel K. Finn, The Moral Ecology of Markets: Assessing Claims about Markets and
Justice, Cambridge: Cambridge University Press, 2006
4
Compare, for example, Michael Novak, The Catholic Ethic and The Spirit of Capitalism, Oxford,
Maxwell Macmillan, 1993 and John C. Médaille, The Vocation of Business: Social Justice in the
Marketplace, London, T & T Clark, 2007
5
John Paul II Laborem Exercens 4, 25; SollicitudoRei Socialis 29-30; Centesimus Annus 31
6
Cf. Laborem Exercens and commentary on it.
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© Catherine E Cowley ra 2007
In a short paper such as this I cannot explore in depth so many strands. Instead, I intend
to present some of the more fundamental aspects of a Catholic approach to reflection on
business activity which would be accepted by a wide range of Catholic ethicists. I shall
do this through focussing on a couple of key questions.
The first of such questions is how the economy is viewed within the Catholic
tradition. The most fundamental aspect is that of its purpose. If we wish to decide
whether something is good, is adequate for a task, we need to know what that task is. If
we want to know if this is a good economy, we have to know what the purpose of the
economy is. A succinct summary of that purpose would go something like this:
“to provide all the goods which the resources of nature and industry can
procure for all members of society. . . . These goods ought to be plentiful
enough to satisfy all those needs which are requirements for people to be
able to realise their full and equal personhood, and raise society=s
members to a reasonable level of comfort.”7
What we have, with this definition, is a clear assertion that the economy has a
purely instrumental function, it is a means to an end. It is not an end in itself; it is not an
absolute, but has been relativized. This can be seen clearly in Gaudium et Spes [one of
the most important documents issued by the Second Vatican Council]
“The ultimate and basic purpose of economic production does not consist
in the increase of goods produced, nor in profit nor in prestige; it is
directed to the service of man, that is of man in his totality, taking into
account his material needs and the requirements of his intellectual, moral,
spiritual and religious life. Economic activity is to be carried out
according to its own methods and laws, within the limits of the moral
order, so that God=s design for mankind may be fulfilled.”8
It may seem strange to suggest that the economy should be meeting the moral,
spiritual and religious dimensions of the human person. But economic activity is an
important place of moral self-realisation.9 It is here that important virtues are developed.
Catholic social teaching suggests that it is precisely through business activity that we
grow in such characteristics as
7
Pius XII in a letter to Charles Flory, dated 7th July 1952. Acta Apostolicae Sedis, Series II Vol. XIX,
Vatican Polyglot Press, 1952 pp. 619-24, p. 621
8
9
Gaudium et spes, 64
See also Laborem Exercens 6
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Adiligence, industriousness, prudence in undertaking reasonable risks,
reliability and fidelity in interpersonal relationships, as well as courage in
carrying out decisions which are difficult and painful but necessary, both
for the overall working of a business and in meeting possible setbacks.”10
This provides the essential background for any reflection on business. It already locates it
within a network of social requirements, and helps to provide a coherent ethical
justification for business activity in general.
Turning now specifically to business, as with the economy when we start to look
at business we must ask what its purpose is. This is the second key question. It is often
suggested that the only purpose of business is to make profits 11. It is true that the social
reality of the business firm as an economic organization means that profits are vital for
production and a primary requirement in a free-market system. They stimulate and
reward innovation, risk bearing and the adjustments of the allocation of resources.
However, to say that because something is a primary value it is therefore the
primary value is a logical mistake. It does not follow that because a primary value of forprofit organisations is to make profits, the only purpose of business is to make profits.
This distinction is important because, as I have pointed out, what is conceived of as the
purpose of something will determine when that something is acting or being used
appropriately. If the only purpose of business is to make a profit, then to maximise that
profit can be the only legitimate criterion by which business can be judged.12
The alternative suggestion that the primary function of business is the provision of
goods and services13 is usually met with the response that if goods and services are not
profitable, they will not be provided. This answer demonstrates confusion between
motives (or subjective reasons) and purposes (which justify). The two have become
conflated. Profits can be made from selling cocaine, but that fact is not considered as
justifying the activity. Profits are a means for achieving the purpose of business and as
10
Centesimus Annus 32
Milton Friedman ‘The Social Responsibility of Business is to Increase Its Profits’ (1970) Reprinted in
George D. Chryssides and John H. Kaler (eds.) An Introduction to Business Ethics, London: International
Thompson Business, 1999
12
Some commentators make the distinction between profit-maximization and maximizing shareholder
wealth, with the latter having priority. See, for example, Arthur J. Keown et al Financial Management:
Principles and Applications,9th ed. London: Pearson Education, 2004. However, both of these approaches
are structurally the same, having as their aim the accumulation of wealth as the sole criterion.
13
Norman E. Bowie and Ronald F. Duska, Business Ethics, 2nd ed. New Jersey: Prentice-Hall, 1990
11
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such should not usurp the end. As an executive remarked, ‘Profit is like health. You
need it and the more the better. But it’s not why you exist.’14 However, neither can we
simply turn to the alternative explanation, that is, the provision of goods and services. As
the quotation I gave from Gaudium et spes made clear, in the perspective of Catholic
social thought, neither a simple increase in goods, nor profit is a sufficient explanation.15
But if neither of those are the purpose of business, then what is it? The question of what
constitutes the good life, the human good, is central to Catholic ethics. So we need to
ask: What are the goods, and the ultimate good, for the sake of which the purposes might
be pursued?
I will deal with this under three headings. The first dimension of the purpose of
business is that it does indeed provide the material goods and services without which
society cannot flourish. This is consistent with both the biblical affirmation of the
goodness of the material world and of our mandate to manage its resources for human
well-being. The second dimension, which is closely linked to the first, is that through the
production of these goods and services, the company increases economic value; that is to
say, it creates wealth for all those participating in the economy. If it does not do so, it
cannot be justified in economic terms.
Even if the nature of its business is
irreproachable, a company which does not generate sufficient income to give satisfactory
remuneration for the work done and the capital used cannot be justified. That is the most
basic, but not the only, aspect of this dimension.
This creation of wealth is not to be thought of only in monetary terms, but also as
the natural goods required for a good human life. Obviously other sectors produce
wealth when it is understood in these wider terms, for example, education, but business,
by its nature, focuses on wealth-creating activity. It is this ability to create wealth which
enables a society to move from poverty to prosperity.16 This prosperity helps to sustain
the good life for each member of society, and is to be applauded. It is, however, always
to be regarded precisely as a means to an end, not an end in itself. The purpose of wealth
is to sustain life; it is a means for achieving the common good of society, not an end in
Quoted in Thomas J. Peters and Robert H. Waterman, In Search of Excellence: Lessons from America’s
Best-Run Companies, London: Harper & Row, 1982, p.103
15
Gaudium et spes 64
16
See, for example, Prosperity with a Purpose – Christians and the Ethics of Affluence, London, Churches
Together in Britain and Ireland, (2005)
14
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itself. When it is treated as an end it becomes an obstacle to the common good and to
following God
Wealth-creation alone is not viewed as a sufficient justification of
business activity.
The third requirement, follows on from the previous two, and it is for business to
contribute to the common good. Wealth creation, to be virtuous, and thus contributing to
the sanctification of those who carry it out, will be embedded in a rich understanding of
the common good. This common good is understood as the all-round realization of the
human person, and the social conditions which enable that realization.17 The contribution
that business can make needs to be carefully articulated, with a clear understanding that it
is not boundless. It is necessary to respect the nature of a for-profit organisation in a
competitive market.
Business organisations cannot be expected to solve all social
problems. Expecting them to do so is to undermine the relativization of the economy
which I mentioned earlier (and is a fault of many Christian and secular social activists).
However, notwithstanding this, Catholic business ethics insists that there will be
companies or practices which, despite creating wealth, cannot be morally justified
because the type of activity in which they are involved causes material or spiritual harm
to the people who form society.
This evaluation may well differ from that of secular
business ethics because the rich Catholic understanding of the human person will often
highlight values and disvalues overlooked by other approaches.
Taken together, these three dimensions incorporate both of the usual secular
understandings of the purpose of business – that is, the provision of goods and services,
and profit-making, demonstrating that in fact they are not alternatives but complementary
– but situates them within a flexible yet demanding framework. In both cases, the usual
explanations are clearly limited by the need to consider the common good and the good
of human persons. By giving due weight to the social context and social relationships
within which business must operate, the relativisation of the economy is transposed into
the sphere of business activity.
The human person lies at the heart of Catholic social thought and provides the
link between reflection on business in general and any particular instance of business
activity, or any individual business firm. I am going to make this link by picking up
17
John XXIII, Mater et Magistra 65, Gaudium et spes, 74
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again the earlier claim that that there should be a conjunction between economic activity
and the moral, spiritual and religious dimensions of the human person. I want to address
this with the background of the universal call to holiness which Lumen Gentium
proclaimed18 and with the claim that business activity, when carried out in an ethical
manner, does serve these dimensions of the human person.
If we are to take seriously the demands that we live our lives in conformity to
God’s will according to the circumstances in which we find ourselves, this suggests a
holiness which lies within the reach of everyone. If sanctity properly consists in such
conformity within one’s state, then it is not a question of everyone’s activities being
structured by a monolithic approach, but rather of applying those standards applicable to
a particular way of life. Such unity of life is integral to the Catholic vision. A strong
emphasis on the active presence of God in the world leads to an insistence that the whole
of life is to be lived in conformity to God’s will. Therefore all aspects of our existence
should be ordered to serve the end of virtuous and pious living; this includes economic
activity. An escape from the economic realities of life is not the ideal for a religious
person. Rather, the religious relationship with God comes in the midst of the living of
daily life, and economic dimensions of that life are as religiously significant as any other.
The connection between faith and life means that Catholic ethics must respond in a
Christian manner to the basic moral question of how we should live. It is this question
which is at the heart of moral reflection. It is not a question about the immediate, nor
about what I should do now or next. Rather it is about a manner of life. Catholic
business ethics, therefore, addresses not only consequentialist considerations about
business activity, but also how each person carrying out that activity can be enabled to
reach moral and spiritual self-realisation.
This is important because the task of ethics is not limited to establishing the
criteria for right actions or to defining the context of obligation. An examination of
norms, of rules, is an important part of Catholic ethics, but it is not the whole. Ethics
must examine questions which deal with the problem of what makes a life meaningful
and explore what it is to be a human agent, a person, a self. The ways in which we
18
Second Vatican Council, Lumen Gentium, Austin Flannery (ed.) Vatican Council II: The Conciliar and
Post Conciliar Documents, Vol. 1, New York: Costello Publishing, 1984
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understand ourselves as persons has a direct link with how we organise ourselves in
social groups.
By placing the business practitioner within the totality of life, both
individual and social, the Catholic understanding of the human person enables moral
reflection to begin from a positive stance. The atmosphere of much business ethics is
negative, with its primary focus on errors, or on what should not be done. Textbooks
tend to be full of case studies of shady behaviour. Not only is this unhelpful from an
educational point of view, it also reinforces stereotypes of the business person as
inevitably immoral. A Catholic approach can be an important corrective. The first task
of moral theology is to determine the good to be done, rather than the evil to be avoided.
Although it may arrive at outlining attitudes and actions which are to be shunned, it
begins by focusing on what the moral agent is and can become. The negatives are then
understood in the light of the positives. Just as a student who wishes to obtain a firstclass degree will avoid a frenetic social life in the run-up to the exams, so individuals, in
choosing to commit themselves to moral and spiritual self-realisation will avoid certain
types of conduct.
Central to the Catholic understanding of the human person is our inherent dignity.
Because humans are made in the image of God (Gen.1:27), called into being by God,
(known in the tradition as the theology of the imago dei,) they are not only precious but
sacred. The theology of imago dei insists that the dignity of the human person be
considered as a whole and should, therefore, have regard to all that is necessary for living
a genuinely human life. This will include food, clothing, housing, education and work. 19
The basic moral test of all institutions, therefore, is whether they enhance or threaten the
dignity of the human person. This includes business institutions and so it is legitimate to
ask of a particular business:

What does it do for people?

What does it do to people?

How do people participate in what it does?20
In its original context these questions were directed to the economy. However, they can
clearly be applied to any particular instance of economic activity, such as the business
19
20
Gaudium et spes 26
US Catholic Bishops’ Conference, Economic Justice for All, 1, in O’Brien and Shannon.
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firm. Again, in its original context, these questions were concerned more with the
consequences of economic activity. In the light of what I have been saying a moment
ago about the need to integrate business activity into the whole of a person’s life, these
questions have a wider focus than they are usually credited with.
They also open the way to an aspect which does not usually feature in secular
business ethics. We live in a world which is marked by sin and in constant need of
redemption.
Secular business ethics, whilst it would not use the term ‘sin’ would
certainly recognise the fact of it, at least at the personal level. However, in the Catholic
understanding, this is not just personal sin; it is also social sin. Actions are part of webs,
or networks; they have connections and ramifications well beyond an isolated deed.
Social structures and institutions help shape the person’s identity and conceptions. These
structures and institutions can hinder human fulfilment, as well as enable it.
The encyclical Sollicitudo Rei Socialis speaks of “structures of sin” as being the
sum total of the negative factors which “give the impression of creating, in persons and
institutions, an obstacle which is difficult to overcome.” Yet these structures are “always
linked to the concrete acts of individuals who introduce these structures, consolidate them
and make them difficult to remove. And thus they grow stronger, spread and become the
source of other sins and so influence people’s behaviour.”21
There are two important features of this analysis. The first is the clear-sighted
recognition that structures of behaviour and social arrangements are deeply influential on
our actions and perceptions. There are strong bonds of complicity in our relationships
with damaging social structures.
The second feature, however, is that whilst these
structures are strong they are not deterministic. They do not have to be the final word.
They are indeed “difficult to overcome ... difficult to remove”, but therefore, by
definition, they can be overcome, they can be removed. The three questions posed by
Catholic social reflection which I cited earlier enable us to highlight those instances
where structures, rather than simply the actions of isolated individuals, work against
human dignity. These structures will include the business sector in general and specific
business firms. How a firm organises itself, for example its corporate culture, its pay
21
Sollicitudio Rei Socialis 36; see also Centesimus Annus 39; Congregation for the Doctrine of the Faith,
Instruction on Christian Freedom and Liberation 42, London: Catholic Media Office 1986
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structure, how it articulates its goals, will have a direct impact on its actions, as will the
ways in which it locates itself within the business sector, and how it sees its relationship
to the wider society. These structural elements need to be examined to assess their
impact on the possibilities for realising the various ‘goods’ which contribute towards
human fulfilment.
Do they facilitate or frustrate human possibilities?
Are these
structures enabling or oppressive? This continual juxtaposition of the systemic and the
individual is characteristic of a Catholic approach.
This juxtaposition is extended with the concept of solidarity.
Catholic social
thought has resisted the move to seeing human relationships through the now dominant
contractual paradigm22. Instead it insists on the covenantal paradigm.23 By this is meant
that humans are essentially social by nature, naturally members of a community rather
than members on the basis of free, calculating reason. Thus the Catholic approach to
ethics (not just business ethics) is one which stresses our responsibility to one another,
the need to give and receive mutual support. Whilst this has a personal element, its main
thrust is social. “Solidarity must be seen above all in its value as a moral virtue that
determines the order of institutions.” because there exists an intimate bond between
solidarity and the common good.”24
The importance of this bond can be seen when we consider stakeholder theory, for
example. This is the approach to business ethics which insists that all those directly
affected and involved with the activities of a business firm should be considered when
decisions are made. These stakeholders include shareholders, employees, customers,
suppliers, the local community and so on. There are different ways of identifying who
should count as a stakeholder, but that is not important for my purposes here. Solidarity
can make a contribution to this theory because it is rarely the case that the interests of all
stakeholders have equal weight when there is a conflict. Its contribution consists, in part,
through the way it alerts us to the need to listen to the voice of the less powerful, the less
influential, to ensure that the most vulnerable are not disadvantaged further.
What Hollenbach describes as the “eclipse of the public”. David Hollenbach, The Common good and
Christian Ethics, Cambridge: Cambridge University Press, 2002, pp3-31
23
For a detailed examination of the contrast between these two ways of viewing human relationships, see
Adela Cortina, Covenant and Contract: Politics, Ethics and Religion, Leuvan: Peeters, 2003
24
Pontifical Council for Justice and Peace, Compendium of the Social Doctrine of the Church, London,
Burns & Oates, 2004, 193, 194
22
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Solidarity, however, cannot operate in a vacuum. As Gaudium et Spes pointed out,
‘The more the world is united, the more men’s commitments go beyond
particular groups and gradually become world-wide. This cannot come
about unless individuals and groups cultivate the moral and social virtues
and spread them abroad. . .’ (emphasis added)25
The question of character and virtue is indispensable in any consideration of Catholic
ethics. Too often, however, discussion of virtue stops at a personal, individual level. As
this quotation makes clear, there are also social virtues as well. In addition to the virtue
of solidarity, some of the more important social virtues for our discussion would include:
beneficence: a disposition to do good to others underpinned by an understanding of
God’s beneficence towards humanity. It is an indispensable part of social and public
virtue.
Then temperance seen as moderation and self-restraint.
We cannot have
everything we want materially and have an environmentally sustainable world.
But
these virtues also have a place in any well run business firm. Coupled with these there is
justice, which must include a strong notion of fairness. Justice needs mercy, however, or
it can be harsh and bitter. Sometimes it is right to forego something we feel entitled to
for the sake of a greater good.
What strengthens the ethical requirement for these social virtues in the Catholic
tradition is the key notion to which I have already referred: the understanding of the
human person as imago dei. Too often that is seen only in a passive sense: that is,
because I am so created, I should be treated in certain ways. However, in the Catholic
tradition there is also an active sense: that is, because I am created in the image of God I
have a duty to act as God acts. I have a duty to display those qualities of God to others
which I perceive as being received by me. In this way, I can move from being a grateful
receiver into being a gracious giver.
Implicit in what I have been suggesting today is a sacramental world view which
acknowledges the significance of human action in general, and, in this specific context,
work in particular, for moral self-realisation. Centesimus Annus argues that the fact that
the human subject self-realises virtue through entrepreneurial work is as important as any
25
Gaiudium et spes, 30
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resulting material prosperity.26 What the text does not do is acknowledge that it could
equally be argued the other way: material prosperity is as important as human selfrealisation, and that in entrepreneurial work within a Christian framework, they are
indissolubly linked. This is because virtues have the concrete application of building up
the household of God. The virtuous person will acquire and generate the things of the
world; they will create because goodness is generative. Then, and this is the essential
step, as Augustine advised they will use them but not rest in them. When virtuous
persons are in the business of creating wealth, they will provide the goods and services
we need for a more human life, enabling society to move from poverty to prosperity.
They will use their wealth in ways which promote the common good. Such a view of
wealth creation is one which stresses that it is at the service of others, not simply about
enriching the individual business person.
Conclusion
I have drawn a positive picture of a Catholic approach to business ethics. Clearly,
this is not the whole picture; there are a number of difficulties.
These include a
vagueness about a lot of reflection on the common good; a tendency to romanticise work
in some of the theological reflections on it; a tension about wealth creation because of its
potential (and often realised) links with materialism and consumerism and an insufficient
factoring-in of the consequences of climate change and environmental degradation.
Nevertheless, I remain convinced that a Catholic perspective on business activity has a
significant contribution to make to the subject, one which can in the best sense humanise
one of our most important activities.
26
Centesimus Annus, 32
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