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Some Practical Application

March 20, 2021 (1,075 words)

Catholic teaching on social justice is a system of thought that seeks to integrate law, politics, and economics. But there is nothing particularly ‘Catholic’ about it. The implementation does not require you to recite special prayers, observe the feast day of saints, or be proficient in Latin. There are no secret handshakes to learn, or inner sanctum to enter.

Its wisdom is readily accessible to all, and its practice requires only the application of what used to be called common courtesy.

But a little knowledge of recent history is always helpful. ‘Social justice’ has been at the core of papal teaching on economics since 1891, though the phrase didn’t formally enter its lexicon until 1923. Its focus has always been the “state of economic life” that does not allow workers to receive a sufficient wage to meet ordinary domestic needs, support a family, and enjoy “reasonable and frugal comfort.”

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Social justice compels those involved in the political and economic order to restructure society, if necessary, so wage justice can be achieved. That’s a pretty tall order. So far the burden for that restructuring has fallen on the political side of the equation, while those running the show on the economic side have gotten a free pass.

If social justice boils down to our duty to society as a whole, we must find a way of getting business owners and the companies they run to sign on. The notion that ‘profitably’ is a corporation’s only social responsibility must be exposed and discredited, once and for all.

Turning over a new leaf in this regard means fighting against the natural inclination toward self-interest and personal aggrandizement. What makes the proposed transformation so much harder is how these traits have been enshrined as positive virtues in the modern era. But the journey of a thousand miles begins with the first step. So here are a few suggestions culled from papal teaching on social justice designed to help the business community do a better job of balancing the scales.

HOW BUSINESS CAN BETTER BALANCE THE SCALES:

#1) Recognize the dignity of the human person. Every employee – managers to line workers, executives to mailroom people – is a child of God, as they say. Though employees have differing skill levels that will lead them to take on greater or lesser responsibilities within an organization, every employee should be recognized as a stakeholder in the business.

#2) This means when a business succeeds, it’s not enough for the owners and investors to benefit. Employees must also be rewarded proportionately. As things stand now, the serious distribution of profit is limited to owners, high-level executives, and investors.

#3) Not only does the definition of ‘stakeholder’ need to extend beyond owners and investors to include employees, but it must widen the circle even further – to suppliers and customers and the community at large. A successful business should not only be investing in its employees but should also be looking out for its suppliers and the people who buy its products. The net result is a positive impact on the communities in which a successful business operates.

This radical notion was endorsed in August 2019 by an influential think tank of CEO’s from the largest companies in the United States called the Business Roundtable. Its revised “Statement on the Purpose of a Corporation” repudiates the Friedman Doctrine that states: ”There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase profits.”

What has prompted this select group of CEOs to change their tune? As far as I know, the Business Roundtable did not recently affiliate itself with the Vatican. The new and most welcome philosophical re-alignment may just be another case of great minds thinking alike, and how everything that rises must converge.

#4) Once employees are recognized as stakeholders, it follows their every movement need not be directed from on high, filtered through multiple layers of management. It is more efficient when decisions can be made at the lowest level in an organization where competency exists. The trick is identifying and nurturing what can sometimes be the ‘hidden’ competence of lower-tier employees. Once such employees are trusted to make and implement decisions, innovation often thrives.

#5) What’s left after running the business, investing in growth, and giving owners a good return should belong to everyone – not just the stockholders. The difficulty here is determining what constitutes a ‘good return.’ The current paradigm is based on a ‘winner take all’ mentality that assumes only those at the top get to share in the spoils of war, as it were.

#6) Workers should be allowed to voluntarily join a labor union that will represent their interests in a collective bargaining setting. And employers should form trade associations with other businesses in the same industry. But when these two groups operate independently of each other, it only exacerbates the class conflict between owner and worker.

#7) This is where things get interesting. Everyone who earns their livelihood in a given industry – from company president to mailroom messenger – has a stake in seeing that things go well. An “industry council” that represents the entire workforce would bind people together not by their slot on the org chart, but by the fact they all care about the prosperity of their industry.

#8) When every worker has a voice on an industry council, it encourages even the last-hired employee to think about their industry’s “markets, sources of supplies, potential customers, and technology – everything that contributes to the industry’s health and profits.”

#9) As the circle widens even further, all members of a given industry should also be interested in more than merely enriching individual producers and workers. Their concern should extend to the common good, making sure the product or services being produced or provided are helpful to society as a whole.

#10) These proposed industry councils would self-regulate the activities of their own industries, and see to it those activities are directed toward the common good. Such councils would therefore wield more power and exert more influence “in the constitution of society” than existing private organizations, political parties, labor unions, and trade organizations do now. This is turn would mean the state – in the form of the central government – would no longer have to concern itself with “many matters of detail it should not have to bother with.”

(Based on my reading of An Economics of Justice and Charity by Thomas Storck.)

Robert J. Cavanaugh, Jr
March 20, 2021

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