Signs of hope for the world of business

October 12 th 2007

The recent volatility of the world's stock markets threatens a possible recession due to the sub-prime mortgage panic. Such events warn us not to be too optimistic about the general state of the economy nor too trusting of those who manage the financial future, in spite of the benefits that modern economic systems have brought us. The complexity and interdependence of modern business demand that we recognize the many variables and systems in play. Danger can come from almost any quarter and, if things go wrong, fixes are hard to find and apply, for the benefits of open economies also demand a range of tempting freedom for the stewards of other people's money to take calculated risks—some warranted, some not. This is particularly the case since large segments of the economy have escaped the direct control of national or state governments, international regulatory bodies are still under construction, and the moral foundations of a global economy remain quite insecure.

Yet, I shall argue that there is hope for the world of business. The echoes of notorious, recent corporate scandals have died down. This is not to say that new business crises will not appear. Sin has not been abolished by modern progress, even if one hears less and less about Enron, Tyco, WorldCom, Vivendi, et al., and the corporate leaders who betrayed their trusts are dishonoured, broke, in jail, or all three. Even more remote to our memories are the Savings and Loan crises and sweatshop exposés of the 1980s, as well as the "," "junk bond," and the East Asian financial busts of the 1990s. Business has short-term memory, for its failures are temporary and its long-term prospects always invite hope, even if its amnesia invites repeated blunders.

Why is suspicion of business so strong?

One still hears debates about whether or not the policies of the national or, now, international regulatory regencies, such as the International Monetary Fund (IMF) or the World Trade Organization (WTO) caused and exacerbated the problems, or aided the recovery from these earlier crises. And, for some time, the policies of Wal-Mart, Microsoft, Exxon, Haliburton, and the mortgage-bundling institutions have been under debate. There is reason for the ancient marketplace warning: caveat emptor ("buyer beware"), since the temptation to offer little for much by deception remains strong. Nor is the problem only in the seller. Consumer-oriented economies institutionalize a buyers' ethic of "more, now." Many are eager to be willingly seduced into a glutton's excess of wants.

Moreover, the notion that business life—dealing as it must with physical goods, material services, production, competition, market distribution, and consumption—is altogether too materialistic and individualistic for it to be moral remains widespread and pervasive. This, in spite of the facts that the most notorious examples are atypical of most business, and that it is the corporation—owned by many investors and run by a management team—and not the individual, that is the most common agent in today's business world. And the corporations are today subject to ethical reforms, best-practices adherence, whistle-blowing, NGO advocacy, required transparency, competitive forces, legal prosecution, and liability litigation—all of which are efficacious checks and balances toward corporate accountability.

Still, it is puzzling as to why the suspicion of business is so strong. Perhaps, it is nothing more than the kind of suspicion that attends any kind of power, a suspicion not seldom born of a resentment among those who are relatively powerless, legitimated by a worldview that essentially condemns power and celebrates powerlessness. Thus, many religious and academic critics of modern economic life are suspicious not only of wealth but of multinational corporations, military institutions, and mass media, while calling for more science and technology, medical care, and social services by government. The resistance to bigness and power is selective.

What is valid about this suspicion is that the modern nation-state has claimed a legitimized monopoly on the use of coercive force and has sometimes exercised it by way of science and technology, corporate policy, and the media in exploitation, war, colonialism and imperialism. Indeed, the modern nation-state seems to spawn its own scandals and crises by its own lust for power that surpasses what big corporations have exemplified.

Almost every sphere depends on business

In my considered analysis, however, I think the antipathy toward business is not a generic hostility to power. To the contrary, most people acknowledge that government is indispensable, and that it must play a necessary role in regulating behavior at the boundaries of various social institutions in order to set the conditions under which society, including corporations, can flourish independently of direct political control. The church, the family, the school, the hospital, the media, and advocacy organizations need their own social space to develop, and this space in civil society needs to be protected by government big and powerful enough to protect those spaces.

Notable in this regard is that with the exception of the family, all these spheres of society are organized as corporations and depend financially, directly or indirectly, on the modern business corporation, which must have a significant degree of freedom from state control for it to foster the well-being of the whole. The correlations are quite obvious: where business corporations most abound, one finds also the richest development of the multiple spheres of civil society. That, indeed, not only allows each sphere to fulfill its vocation but enables it to speak to and to influence the political order. In short, many critics of "power" fail to recognize the role of corporate power in fostering civil society, the absence of which leads to tyrannical states and faltering economies.

There is another possible reason the hostility to contemporary business is so sharp, especially in religiously and ethically driven advocacy circles. The dominant interpretations of economic life that have ruled academia in the last few centuries have become so conventional and influential that everyone knows, at least by the slogans, the two types of economic theory, and can more or less accurately set forth the difference between the "neoliberal" (or Smithian, "free market," and "libertarian,") views, and the "radical" (or Marxist, "socialist," and "labourite") views. In fact, these terms represent a spectrum of views, each with its own nuances, and both types or families of economics have so moderated themselves in the last decades that one can be called "democratic capitalist," and the other, "social democratic." The former is called "liberal" in (mostly) European vocabulary and "conservative" in the USA; the other way around elsewhere, but both now imply a mixed economy with different degrees of permissible (or morally required) political intervention in economic life, while preserving a place for the priority of civil society.

There remain, of course, differences in the two views. The one implies a greater accent on the relative freedom of the various spheres of the common life, including economically a defense of entrepreneurial initiative supported by policies to foster greater productivity and growth. According to this view, it is better to support economic growth since it fosters the development of respect for human rights, pluralistic social institutions in civil society, inclusive patterns of participation, and concerns for quality educational, ecological and medical care. The "progressive" view focuses on central planning and more governmentally funded programs to foster greater equality in the distribution of wealth, services, and educational opportunity, with relatively less attention to productivity.

These two views, so politically divisive over the last century, and for many still today, actually tend to share the social view that economic interests are the primary factor in shaping the common life. It's all about the money! In this, they both presume a materialist view of why people do what they do, with one's attributing motivations to a desire for personal or corporate gain, which stimulates the further development of society as a whole, and the other to a desire of a class or mass gain, which aids the development of egalitarian solidarity in the society. Both views generally fail to treat the social and ethical principles that are built into modern economic institutions, and thus they end up being cynical about the common life and its stratifications.

Religiously and culturally driven reform in economy and society

I think the greater hope for the world of business comes from another, deeper stream of scholarship, one that is more accurate in its assessment of how social history works and how it has produced the modern structures of business. It is represented less by contemporary political rhetoric than by a growing body of scholarly literature. It can be found, for example, in recent collections of essays edited by Peter L. Berger, et al., Many Globalizations, and its sister volume, Culture Matters, by Lawrence E. Harrison, et al. Both sets of authors sees religious influences as defining cultures and, thus, influential in the society and its economic life. This stream of scholarship is bifocal: it sees the social order as deeply influenced by dominant religious, worldview, and ethical presuppositions as well as by power interests. This mode of analysis is more identified with Max Weber than with Smith or Marx. What differentiates his perspective from theirs is that it recognizes religion as an independent variable that shapes culture, and it recognizes that cultural factors interact with material interests to shape economies. If this is so, there is hope for religiously and culturally driven ethical reform in economy and society!

Weber's arguments, to be sure, have been subject to debate and dispute for a century. Yet, his volumes on the comparative sociology of religion where he treats Judaism, Hinduism, Buddhism, and Confucianism in comparison to Catholic and Protestant economic ethics in the West pose the issue that the heirs of Smith and of Marx largely ignore: What kind of religion shapes what kinds of culture and what is the impact of a culture so generated on social and economic life? They fail to see the kind of thing that Weber identified: that in the dominant structures of social, political, and economic life, religious themes that were worked out over centuries have been ethically plowed into the very fabric of the common life in various ways. Of particular importance for modern business is:

  1. a "this-worldly asceticism" that appears in a work ethic that identifies one's calling with professional excellence and a disciplined approach to production and consumption;

  2. the kind of political life which we call democratic, as it was worked out first in church life and used to legitimate the constitutional polities being advanced around the world;

  3. the ideas of human rights, based in the idea that each person is made in the image of God, and that each is thus endowed with both inalienable rights and duties in society;

  4. the idea of a corporation independent of family or tribe, and of regime or empire, built to operate under covenants with just laws under the supervision of accountable "trustees";

  5. the idea that the world, while created good by God, is not holy in itself, and is subject to radical distortion and thus properly may come under dominion of a stewardly humanity—an idea that made scientific technology and the cybernetic revolutions possible; and

  6. the idea that there is an ultimate end for humanity beyond death, and that the vision of that end is the New Jerusalem, a cosmopolitan and complex urban civilization into which all the peoples of the earth can bring their gifts. This is the key to a theology of history.

These six claims are among the background beliefs that have shaped the formation of the modern business world, even if they are obscured by contemporary scandals and families of social theories that ignore the roots of what we have. We cannot understand the power or the promise of modern business activity if we do not grasp the ways in which these ideas are derived directly from biblical and Christian religious resources, and how they have substantively shaped our history. We cannot understand the distortions of modern business life if we fail to see how these ideas have been ignored or repudiated. We cannot renew the spirit of modern economic life if we do not see how religiously based ethics influence our ethos.

Such faith-based ideas are arguably the ones that became pregnant in many of the patterns of life that sustain and can reform the modernizing, development-oriented, and, even, the globalizing trends that are reshaping our world.

Such ideas are today not at the front of the minds of today's business, political, scientific, technological, legal, or ministerial leaders; but they are so woven into the cultural presumptions of those in the West who are generating the forces of contemporary change, that these forces are enhanced by a preconscious faith in them. If we once grasp this fact, we will have access to the worldviews that shaped what we now have, and we can thus take responsibility for the selective embrace, moral guidance, and social renewal of the world of business.

Topics: Business

Dr. Max Stackhouse is the Rimmer and Ruth de Vries Professor of Reformed Theology and Public Life Emeritus at Princeton Theological Seminary, New Jersey.