Abstract
We are increasingly facing in contemporary society significant debates over the nature and purpose of our institutions. In business, its purpose is often pitted between a shareholder maximization or stakeholder balance principle. This purpose discussion, however, too often fails to get to the underlying nature of the business institution itself, which entails how we understand who is in the business (individual vs. person) and its communal character (association vs. community). This essay describes the nature of a business on a continuum between an “association of individuals” and a “community of persons” and the various shadings in between. It is accepted as compelling that the nature of business is a “community of persons” and then lays out the principle of the common good as its purpose. Recognizing the various obstacles of the principle in relationship to business, we explain how the common good views the institutional goods that are particular to a business (good goods, good work, good wealth), and how these goods are ordered to human development (ordering principles, goods held in common, virtues).
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- 1.
See list of Pontifical documents at the beginning of this work with the corresponding abbreviation symbol and bibliographical references.
- 2.
For the past 15 years, I have written several essays attempting to articulate the relationship of the firm to the common good and more recently to the notion of a community of persons. This attempt follows similar expressions within the Catholic social tradition. In 1931, Pius XI began to evaluate the meaning of the corporation explicitly and Pius XII devoted several essays to this question in the 1940s and 1950s, particularly in light of Germany’s codetermination laws. This discussion continued with John XXIII in his encyclical Mater et magister (1961). Recently, John Paul II has used the phrase “community of persons” when speaking about the modern corporation and Benedict XVI has spoken of the logic of gift in relation to economic exchange. I started writing on this topic with Sr. Helen Alford O.P. where we argued that the common good provides a distinctive view of the corporation that is substantively different than the shareholder and stakeholder models (Alford and Naughton 2001, Chap. 2, 2002). I have also written with Jean Yves Calvez S.J., where we distinguish between a “society of shares” and a “community of persons” and how that distinction has worked its way through the Catholic social tradition (Calvez and Naughton 2002). This research continued in another publication (Naughton 2006). More recently in the Père Marquette Lecture I gave in 2011, I develop in greater detail what we mean by a community of persons (Naughton 2012).
- 3.
Put another way the person sublates the individual. This sublation is where a higher system (the person) can integrate elements of a lower system (individual), but a lower system cannot integrate elements of the higher. The person integrates the elements of the individual, but the individual cannot integrate elements of the person. Bernard Lonergan describes this sublation as a process of development: “What sublates goes beyond what is sublated, introduces something new and distinct, yet so far from interfering with the sublated or destroying it, on the contrary needs it, includes it, preserves all its proper features and properties, and carries them forward to a fuller realization within a richer context” (Longeran 1972, 241). If I look at my work as simply a job, for example, to gain money, my world view eliminates the vision to see my work as a profession and its social purpose or even as a vocation as the end of my work. But, if I see my work as part of my profession or vocation, of a social good calling me toward virtue, I can see my work in terms of money, but not only money. I see money as a means ordered toward an end that makes good use of money.
- 4.
This institutional distinction has many variations to it. Ferdinand Tönnies (2007) distinguishes between a society (Gesellschaft) and a community (Gemeinschaft). Philip Selznick (1957) distinguishes between an organization and institution. Louis Putterman (1988) speaks of the firm as either a commodity or association. Yves Simon (1951) distinguishes between partnership and community. In this essay, I have decided to use the distinction between association and community. While no one set of terms seems quite satisfactory, corporations tend to reflect the nature of an association rather than a society, and because we are trying to describe the moral character of a corporation, the word community does this better than institution or association.
- 5.
A distinction that both reveals and conceals these insights above come from the German sociologist, Ferdinand Tönnies, who popularized the distinction of a society or what I call above an association of individuals (Gesellschaft) and a community or what I call a community of persons (Gemeinschaft). He explains that communities form an “essential will” derived from blood relations, spatial relations and spiritual relations. Family, religion as well as small local towns are typically communities; whereas, societies or associations emerged by “will of choice” for common interests or to attain specific ends. Writing at the time of the industrialization and urbanization he saw the large corporation and the large city as societies unable to become communities (Tönnies 2007). What Tönnies’ distinction reveals is that family and religions are at the heart of the realization of what a true community is. What it conceals, however, is that these communities have a social power to humanize and civilize business. For Tönnies, the modern corporation is largely unable to become a community of persons, and consequently is relegated to an “association of individuals” or what he would call a society, an impersonal artificial construct. Its very structure, he argued, prevented it from such a human form. Unlike Tönnies, however, the Catholic social tradition speaks about business as a “community of persons” that can have internal forms of solidarity so long as these forms are connected and informed by family and religion. The moral and spiritual center of community life is family and religion, which is why if business is not connected to this cultural center, it loses its identity by severing itself from the moral and spiritual resources that can make it a community of persons. As pointed out at the beginning of this paper, businesses are not monolithic institutions. They have the freedom to move in the direction of a community of persons, although a freedom that is challenged and constrained depending upon their structure, size, markets and regulatory environment.
- 6.
Of course not all families and religions are at their best. Actually disordered families and religions make for the most inhumane of businesses. They become cesspools of nepotism and cronyism. Religious zealots within business use their power to proselytize employees and suppliers disrespecting the fundamental right of religious liberty. These problems are of a higher order than what can be caused by an association of individuals.
- 7.
The key insight here is that when the Catholic social tradition speaks about business as a “community of persons,” the nature of this community does not come principally from the business itself, or from law or from markets. The notion of community must come from the larger culture and in particular family and religion. The foundation of community life is family and religion, which is why if business is not connected to this cultural center or worse violates it (corrupting goods and services, overworked careerists, etc.), it loses its identity by severing itself from the moral and spiritual resources that can make it a community of persons. It is also the reason why law and markets, while necessary to healthy businesses, are insufficient to fully explain the nature as well as purpose of business. This is not to say that a business is a family or a religion, nor is it to underestimate the important conditions of law and markets, but rather that its civilizing and humanizing character is dependent upon a familial and religious form. People who come from healthy familial structures and religious upbringing are more relational, more other focused and more giving. For example, social capital research shows that people committed to a faith tradition were more likely “to give money to charity, do volunteer work, help the homeless, donate blood, help a neighbor with housework, spend time with someone who was feeling depressed, offer a seat to a stranger or help someone find a job” (Sacks 2012). These relational contacts are formative for the kind of relationships people have in business with employees, customers, suppliers and investors. When relationships no longer have a familial or religious or spiritual form within business, instrumental rationality dominates, reducing relationships to utility and price.
- 8.
Various studies have indicated that family-owned businesses are more socially responsible than other kinds of business (see http://www.heraldextra.com/news/local/education/college/family-businesses-are-more-socially-responsible-study-shows/article_2aad6f26-4c0e-5daf-a5b0-189fe3a34f63.html). Accessed January 10, 2013.
- 9.
These three institutional goods map on to what Alasdair MacIntyre explains as three goods people want out of their work: “Most productive work is and cannot but be tedious, arduous, and fatiguing much of the time. What makes it worthwhile to work and to work well is threefold: that the work that we do has a point and purpose, is productive of genuine goods [good goods]; that the work that we do is and is recognized to be our work, our contribution, in which we are given and take responsibility for doing it and for doing it well [good work]; and that we are rewarded for doing it in a way that enables us to achieve the goods of family and community [good wealth]” (MacIntyre 2011, 323).
- 10.
Business is always prone to profit or shareholder fixation, but it is not the only fixation in business. For example, in a market economy one is constantly tempted to favor the customer over the employee, which is why consumerism is a serious problem in today’s economy. In a world of consumerism, the highest good in the economy is the choice of the consumer, not the nature of the choice. Not only does such consumerism legitimize pornography, drugs, violent video games, tobacco, gambling, excessive alcohol consumption (so long as you have a sober driver), etc. but it also justifies and promotes all sorts of practices which place burdens on workers. For example, reverse auctioning, imposing excessive costs reductions, shifting all risks to suppliers, demanding work 24/7, etc. all of which exhaust employees for the benefit of consumers. Pius XI explained that “[i]t is a scandal when dead matter comes forth from the factory ennobled, while men there are corrupted and degraded.” The grandeur of one’s work should not only lead to improved products and services, but should also develop the worker. When NASA put a man on the moon, for example, the workload of its engineers, scientists and managers was so overwhelming for some that marriages were broken, children were alienated, and their health were compromised. One should not justify such conditions of work that would lead to familial disintegration. What does it matter that you gained the whole world or the moon at least, but lose your family, children, health and soul.
- 11.
The following insight comes from a conversation with Zamagni at a Uniapac event in Paris, France, December 7, 2012.
- 12.
In Martin Buber’s language, between the ‘I’ and the ‘Thou’ is a moral reality that cannot be exhausted in contracts or self-interests. It is the place where the social development of each of us takes place, where we begin to experience the deep profound truth of interdependence, not in a merely physical way or where we see ‘others’ as an instruments of utility, but an interdependence that sees the other as part of a community of work for the common good.
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Naughton, M. (2015). Thinking Institutionally About Business: Seeing Its Nature as a Community of Persons and Its Purpose as the Common Good. In: Melé, D., Schlag, M. (eds) Humanism in Economics and Business. Issues in Business Ethics, vol 43. Springer, Dordrecht. https://doi.org/10.1007/978-94-017-9704-7_11
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