MOVING BEYOND THE CORPORATION:

RECOVERING AN ONTOLOGY OF PARTICIPATION

TO ENVISION NEW FORMS OF BUSINESS

Thesis

Submitted to

The College of Arts and Sciences of the

UNIVERSITY OF DAYTON

In Partial Fulfillment of the Requirements for

The Degree of

Master of Arts in Theological Studies

By

Maura Stephanie Donahue

Dayton, Ohio

December, 2011

MOVING BEYOND THE CORPORATION:

RECOVERING AN ONTOLOGY OF PARTICIPATION

TO ENVISION NEW FORMS OF BUSINESS

Name: Donahue, Maura Stephanie

APPROVED BY:

______Kelly S. Johnson, Ph.D. Faculty Advisor

______Vincent J. Miller, Ph.D. Faculty Reader

______D. Stephen Long, Ph.D. Faculty Reader, Marquette University

______Sandra A. Yocum, Ph.D. Chairperson

ii

ABSTRACT

MOVING BEYOND THE CORPORATION:

RECOVERING AN ONTOLOGY OF PARTICIPATION

TO ENVISION NEW FORMS OF BUSINESS

Name: Donahue, Maura Stephanie University of Dayton

Advisor: Dr. Kelly S. Johnson

This thesis offers a critique of the publicly traded, for-profit corporate form of business organization in light of the Catholic social tradition. It highlights the ways in which this organizational form is inconsistent with the view of the human person, work, and participation in the economy articulated in Pope John Paul II’s encyclical Laborem

Exercens and Pope Benedict XVI’s encyclical Caritas in Veritate. The thesis argues that the corporate form creates moral problems for both shareholders and employees, and it maintains that responses to Benedict XVI’s encyclical that seek positive social change through business must address legal and organizational issues of business structure.

This thesis shows how a participatory ontology and deeper understanding of freedom as kenosis (in contrast to the unchecked freedom of the individual that undergirds the modern corporation) can help point the way toward new forms of business organization that seek to ameliorate the moral problems inherent to the corporate form.

By engaging the work of John Milbank, D. Stephen Long, and others who, following

iii Aquinas, articulate a participatory ontology, the thesis argues that such an ontology is critical to understanding human work and participation in the economy, as it allows the opportunity to question the prevalent understanding of individual freedom and its resulting lack of a unified economic telos.

The last chapter responds to Pope Benedict XVI’s call to find new ways to understand business. Drawing on lessons learned about human work, the role of the person in economy, the critique of the corporation, and by engaging an ontology of participation, the thesis explores existing alternative business structures (including microfinance through Catholic Relief Services, the Economy of Communion business model, and the TOMS’ Shoes company) and suggests ways to mobilize the resources of the church as a means by which Christians might respond to Benedict’s call.

iv

PREFACE

My doctoral research in finance developed an empirical model for corporate CEO compensation, performed a quantitative analysis of the impact of excess compensation on the value of the firm, and analyzed the efficiency of corporate boards of directors in setting compensation levels. My graduate school career in finance focused on learning technical details such as pricing stock options and futures contracts, learning theories of bank failure contagion (such as the “too big to fail” doctrine), studying models for making capital budgeting decisions, and learning the theory and practice of statistical research methods; we did not study the history of the discipline nor why we maximize shareholder wealth or quadratic utility functions. While researching and teaching in this discipline in the 1990s, I never questioned the explicitly stated and reinforced goal of corporate financial management: to maximize shareholders’ wealth.

Ten years ago, I made a career change and began my work as Director of the Lilly

Endowment-funded Program for Christian Leadership, in which I helped to facilitate and create courses and programs for University of Dayton students, faculty, and staff to theologically explore Christian vocation. By collaborating closely with members of the faculty in the humanities, I began to see that it was possible (indeed necessary) to question normative assumptions and claims. I came to understand that the field of economics and the sub-discipline of finance were historically conditioned: economics

v had a history of development of ideas, and corporations have gone through a sort of evolution of their own.

In my work as director of our Lilly program, I knew that I needed more theological education, so in the summer of 2006, I enrolled in my first course toward a master’s degree in theological studies at UD. As I continued through my coursework, my own worldview began to change. I found I was enthralled by church history, apostolic succession, the mystery of the Trinity, Aquinas’ Summa, the challenge of living as disciples in the 21st century, and practical questions related to moral theology. I was energized by thinking about work as a way in which humans participate in God’s ongoing creation. Then, the massive financial crisis that began in 2008 threatened to destroy our global financial system. Every day in the Wall Street Journal and New York Times I read of the repercussions of the crisis on human lives, and I was motivated to look more deeply at possible root causes of the vast and complex problem. This crisis was more significant than “one bad apple” within a single firm. I began to question the hegemony of the for-profit corporation in the U.S. economy and the assumptions and structures that exist within the publicly traded corporate form of organization that result in moral problems for human action. It is here that the questions of my thesis are located.

vi

TABLE OF CONTENTS

ABSTRACT…………………………………………………………………………..….iii

PREFACE………………………………………………………………………………...v

INTRODUCTION………………………………………………………………………...1

I. THE CATHOLIC SOCIAL TRADITION AND THE HUMAN PERSON IN THE ECONOMY……………………………………………………………………………….3

John Paul II’s Laborem Exercens…………………………………………………5 Benedict XVI’s Caritas in Veritate.……………………………………………..18

II. A CRITICAL EXAMINATION OF THE CORPORATION………………...………40

Definition and Explanation of the Publicly Traded Corporation...………………40 Moral Problems Inherent to the Corporate Form.…..……………………………43

III. RECOVERING AN ONTOLOGY OF PARTICIPATION..…………………….…57

The Enlightenment’s Legacy…………………………………………………….58 A Participatory Ontology...………………………………………………………71 Implications of a Participatory Ontology………………………………………...74

IV. INCARNATING THE VISION OF AN ONTOLOGY OF PARTICIPATION...….96

The Role of the Church….……………………………………………………….98 Current Approaches Toward Fostering Social Good Through Business...……..102 Conclusion…………………………….………………………………………..113

BIBLIOGRAPHY………………………………………………………………………115

vii

INTRODUCTION

In 2009, Pope Benedict XVI issued a call for lay people to re-envision ways of engaging in business in such a way that business is characterized by gratuitous love1.

Using the papal encyclicals Laborem Exercens and Caritas in Veritate, I assess theological sources to arrive at an understanding of the church’s position on the vision for and role of human work and participation in the economy. From that understanding, I critique the publicly-traded, for-profit corporate form of business organization to show the ways in which its organizational structure is inconsistent with the view of the human person, human work, and the role of persons in the economy articulated in Catholic social teaching. In contrast to Michael Novak, who has argued that the corporation can be viewed as a “metaphor for the ecclesial community,” I discuss the moral problems for both shareholders and employees that stem directly from the publicly-traded, for-profit corporate form of organization.2 This critique intends to make clear that we must respond at a structural level to imagine new models of business organization.

Taking into consideration these concerns, I turn to research by John Milbank, D.

Stephen Long, and others.3 Together, they offer a theocentric worldview in which

1 Pope Benedict XVI, Caritas in Veritate, Papal Encyclical, July 7, 2009. Henceforth referenced as Caritas in Veritate. 2 Michael Novak, Toward a Theology of the Corporation, American Enterprise Institute for Public Policy Research, Washington, D.C., 1981, 1. 3 Catherine Pickstock states that these authors and others possess a “hermenuetic disposition and…style of metaphysical vision” that has been termed Radical Orthodoxy. See Catherine Pickstock, “Radical Orthodoxy and the Mediations of Time,” in Radical Orthodoxy? – A Catholic Enquiry, ed. Laurent Paul Hemming, (Burlington, VT: Ashgate, 2000), 63-75, at 63.

1 economic activity is not restricted to the secular sphere. Rather, economic activity is one way in which humans participate in the ongoing activity of God’s creation. From this worldview, normative questions follow regarding how humans should participate in the economy, in the exchange of goods and services.

In the last chapter, I respond to Pope Benedict XVI’s call for a “profoundly new way of understanding business enterprise.”4 Benedict argues for room in the economy for “economic activity carried out by subjects who freely choose to act according to principles other than those of pure profit,” and he states that the world must become more open to “forms of economic activity marked by…gratuitousness and communion.”5

Drawing on lessons learned in the first two chapters, and with the ontology of participation developed in the third, I explore alternative structures for business organization and make suggestions for ways to mobilize the resources of the Catholic church as a means by which we might respond to Benedict’s call.

4 Caritas in Veritate, 40. 5 Ibid., 37, 39.

2

CHAPTER I

THE CATHOLIC SOCIAL TRADITION

AND THE HUMAN PERSON IN THE ECONOMY

This chapter describes the church’s vision for the human person in the economy, as set forth in Pope John Paul II’s Laborem Exercens and Pope Benedict XVI’s Caritas in Veritate. The first section highlights the nature of human work and its implications for human participation in the economy, as articulated in Laborem Exercens. The second section focuses on Caritas in Veritate and provides a detailed reading of Benedict’s call to the laity to envision new ways of conducting business. Both encyclicals were written in response to, or at least contemporaneously with, economic crises; however, these were different kinds of economic events and consequently resulted in the authors stressing different aspects of the human person, work, and economy. Taken together, these two encyclicals are valuable complements to each other, each reflecting different emphases appropriate to their historical context and identifying different elements necessary in the quest to seek human flourishing and promote the common good.

Laborem Exercens is concerned primarily with the dignity of the human person in relation to work. Written by Pope John Paul II, it is informed by a personalist anthropology that emphasizes and “asserts the primacy of the distinctive reality and

3 worth of the person.”1 At the same time, the encyclical addresses issues larger than the person that affect the ways persons engage in work, including the structure of the work, the role of indirect employer, and the economic system which pits labor against capital.

In Laborem Exercens, Pope John Paul II carefully critiques communist regimes that oppress humans, yet at the same time invokes language resonant with Marxist concerns regarding the alienation and commodification of human labor that exist within capitalist systems. The encyclical provides a critique of and guidance regarding the structures of work, by beginning with a personalist understanding of the human person, upon which is built the understanding of work, capital, and work environments and structures.

Caritas in Veritate, while never in contradiction with Laborem Exercens, places significant emphasis on the role of personal conscience and responsibility in business decision-making. Benedict XVI stresses the need for love, enlightened by truth, to guide personal actions of work. In contrast to Laborem Exercens, the encyclical seems to have

“sidelined institutions…emphasizing instead their moral reform as the solution to problems.”2

As a result of their different emphases, these two encyclicals provide complementary views of the person, the person’s relation to work, and the role of business in the economy. John Paul II’s historical context prompted him to defend the dignity of the human person against oppression by the state; for John Paul II, it was a case of the “good person” under constant threat by the state, the indirect employer.

1 Patricia A. Lamoureux, “Commentary on Laborem Exercens,” in Modern Catholic Social Teaching: Commentaries and Interpretations, ed. Kenneth R. Himes (Washington, D.C.: Georgetown University Press, 2005), 389-414, at 404. She notes that the philosophy of Immanuel Kant can also be viewed as personalist. 2 Bernard Laurent, “Caritas in Veritate as a Social Encyclical: A Modest Challenge to Economic, Social, and Political Institutions,” Theological Studies 71 (2010): 534.

4 Benedict’s context, ripe with moral failure, greed, and human shortcomings, directs him to emphasize personal responsibility rather than focusing on the economic system. Both documents are vital, as together, they present a careful dialectic: on-going moral discernment by the person is always necessary, but structures in place must serve to support human work, to direct our actions toward goodly ends. If structures hamper, rather than support, the end we seek, then it is imperative to adjust structures to support the good we aim to do. At the same time, if we change only structures, but do not cultivate responsible moral actions, then our work will be disordered, as sinful people can corrupt even the best structures. The encyclicals show that we need both, to be good people and to create good structures for business.

John Paul II’s Laborem Exercens:

Blessed Pope John Paul II (b. 1920 - d. 2005) was a native of Poland, and as a result knew communism not only as a theoretical and ideological construct, but also as a lived reality. The Polish people endured German occupation following the 1939

Blitzkrieg invasion, then were subject to Communist rule after the end of the Second

World War. By the late 1970s and early 1980s, members of the Polish working class were on the verge of a revolution against the communist state. It was in the midst of this tumult that Karol Wojtyla, then the Archbishop of Krakow, was elected the successor to

Pope John Paul I on October 16, 1978.

The new Pope John Paul II was particularly attuned to the struggles of the working class, and launched a tour of Poland in the summer of 1979. In his speeches on tour, he was successful in “challenging the ideology of the regime, the role of the state, the nature of Poland’s alliance with the Soviet Union, and the geopolitical arrangements

5 in Europe resulting from the Second World War.”3 Despite limited television coverage within the Communist states, the summer tour served to unite the oppressed peoples of

Eastern Europe. Pope John Paul II rallied the people, giving them hope and courage to fight the struggles that were yet to come. Carl Bernstein and Marco Politi noted that the opponents in these struggles were clear; it was “the pope and the Slavic nations versus the Soviet empire.”4 During the summer tour, the communist state did not allow the John

Paul II to visit the town of Katowice, in the mining region of Salesia. When the Pontiff arrived for a three-day stay in Czestochowa, some 75 kilometers (46 miles) to the north of Katowice, the Polish church brought the Katowice Catholics to the Pope. It was no small task: “the Bishops responded by making a tremendous effort to bring to the pope hundreds of thousands of Silesian workers and miners, the shock troops of the Polish working class.”5 The people loved their Polish pope.

By the summer of 1980, the economy of Poland was crumbling, the country was heavily indebted, and the state announced price increases of “thirty percent to one hundred percent on beef, pork, and high-grade poultry.”6 Hungry workers began striking in revolt against the Communist government: on July 16, “train operators in Lublin blocked the railways connecting Poland to the Soviet Union.”7 The strikes were contagious and expanded through the working class. By the early September, a strike by

16,000 workers in the shipyards at Gdansk

…spread to about 400 factories and enterprises. . . . By week’s end an estimated 150,000 workers had walked off the job…. [and] In a letter to national church

3 Carl Bernstein and Marco Politi, His Holiness: John Paul II and the History of Our Time (New York: Penguin, 1999), 219. 4 Bernstein and Politi, 233. 5 Ibid., 222. 6 George Weigel, Witness to Hope: The Biography of John Paul II (New York: Harper Perennial, 2005), 400. 7 Ibid., 400.

6 authorities, Poland's own Pope John Paul II expressed his concern over what he called his country's ‘arduous struggle for daily bread and social justice.’8

In another week’s time, a total of “more than 300,000 workers had gone on strike at over 600 industrial enterprises… . Strikes also broke out among copper miners and ironworkers in lower Silesia.”9 Lech Walesa, a 37 year-old electrician, became the leader of the Solidarity movement, which negotiated with the State to become the first independent free trade union within Poland. Walesa traveled to Rome in January 1981 to meet Pope John Paul II. The Pope “called the creation of Solidarity ‘an event of great importance’ and asserted that the right to form free associations is ‘one of the fundamental human rights.’”10 The Pope noted that the actions of Solidarity were movement in a positive direction, “’toward the common good’ of national reform.”11 It was in the context of the workers’ strikes, the formation of Solidarity, and amid the constant threat of invasion by the Union of Soviet Socialist Republics (U.S.S.R.), that the message of Laborem Exercens was penned. While John Paul II had originally intended to publish the encyclical on May 15, 1981, the publication was delayed until September

14, 1981, because of the assassination attempt on the Pope’s life on May 13, 1981.

The significant economic, political, and ensuing social crisis of strikes and unemployment was the setting that informed Laborem Exercens. In response, John

Paul’s encyclical aimed to show that human work itself was “a key, probably the

8 Thomas A. Sancton, “Poland’s Angry Workers” Time, 1 September 1980, accessed online at http://www.time.com/time/magazine/article/0,9171,922118,00.html#ixzz1OiTZ0Dgh. !"Thomas A. Sancton, Roberto Suro, and Barry Kalb, “Poland: A Country on a Tightrope,” Time, 8 September 1980, accessed online at http://www.time.com/time/magazine/article/0,9171,924399,00.html#ixzz1OuTJjzn0. 10 “I Have Been With You: Lech Walesa Meets the Pope,” Time, 26 January 1981, accessed online at http://www.time.com/time/magazine/article/0,9171,954615,00.html#ixzz1OuWQzQtt 11 Weigel, 409.

7 essential key to the whole social question.”12 In the Pope’s mind, progress toward authentic human development requires a different approach to thinking about work that is grounded in a personalist philosophy of the human person. John Paul II’s personalist philosophy understands the human person as a thinking human subject, an actus personae. As Patricia Lamourex notes, John Paul II is “influenced by the Christocentric perspective crystallized in Gaudium et Spes. Essentially, humanity is understood in light of Jesus Christ, who is the perfection of what it means to be human.”13 It is this philosophy that provides a framework for how John Paul II understands human work and the role of persons in the economy.

The Scriptural foundation for John Paul II’s understanding of the work of the person is Genesis 1:26-28. In the creation story, we learn that the human person has inherent dignity because persons are created in the image and likeness of God. The dignity of the human person cannot be eliminated, because dignity resides in the person

(the subject) who was created by God. A “person” is defined as

a subjective being capable of acting in a planned and rational way, capable of deciding about himself and with a tendency to self-realization. As a person, man is therefore the subject of work.14

John Paul II argues that the actions of work themselves “serve to realize [the person’s] humanity, to fulfill the calling to be a person that is his by reason of his very humanity.”15 In this way, work leads to self-actualization. Lamoureux notes the way that

12 Pope John Paul II, Laborem Exercens, Papal Encyclical, 1981, 3. Henceforth referenced as Laborem Exercens. 13 Lamoureux, 392. 14 Laborem Exercens, 6. 15 Ibid.

8 Laborem Exercens articulates the “integral connection between the person’s self- realization and human labor.”16 Through the process of work,

“man manifests himself and confirms himself as the one who ‘dominates’. This dominion …refers to the subjective dimension even more than to the objective one: This dimension conditions the very ethical nature of work. In fact there is no doubt that human work has an ethical value of its own, which clearly and directly remains linked to the fact that the one who carries it out is a person, a conscious and free subject, that is to say, a subject that decides about himself.”17

The meaning of this distinction between subjective and objective must be emphasized, as it implies that the value lies in the subjective dimension of work.

Accordingly, the subject of work (the person) must receive a greater emphasis, because the subject is always more important than the object (outcome) of the work. The greater meaning lies in its subjective nature: “it is always man who is the purpose of the work.”18

Although we exist prior to acting, it is through our actions that we become who we are; the actions disclose and help realize the self. Lamoureux notes that Laborem

Exercens is concerned specifically with “work-acts. Every work-action, no matter how marginal or burdensome, involves self-determining choices and thus either confirms or diminishes self-realization. . . . all human actions have an inescapable inner effect that morally shapes the person.”19 John Paul II’s personalist philosophy views work as good, because through work people come to greater awareness and deeper self-realization, as work expresses human dignity and helps persons to realize their humanity. He writes,

“through work man not only transforms nature, adapting it to his own needs, but he also achieves fulfillment as a human being and indeed in a sense becomes ‘more a human

16 Lamoureux, 394. 17 Laborem Exercens, 6. 18 Ibid. 19 Lamoureux, 405.

9 being’.”20 Even the most demeaning work promotes awareness of self; the human experience of the work is important in effecting that awareness. Accordingly, through raised awareness and consciousness of one’s situation, workers may “recognize when they are treated as objects rather than subjects” and thereby be able to “transform oppressive work situations.”21 Read against the threat of Communist state oppression, it is not difficult to see why human dignity and the inherent worth of the person is a recurring theme in Laborem Exercens.

John Paul II’s personalist anthropology undergirds his viewpoint regarding the use of technology in work. In response to increased use of machines and computers, he asserts that humans should not be thought of as mere supervisors of work done by technology; rather, “the proper subject of work continues to be man.”22 While technology can be man’s “ally,”23 John Paul II cautions that it can become the enemy of man, as it can create distance between the human and both the objective and subjective dimensions or work. For cases in which technology removes “all personal satisfaction and the incentive to creativity and responsibility, when it deprives many workers of their previous employment or when, through exalting the machine, it reduces man to the status of its slave.”24 It is important to remember that, regardless of the influence of technology, work is for the person; the person should not become a slave to the work.

Through work, the person becomes more human.

20 Laborem Exercens, 9. 21 Lamoureux, 405. 22 Laborem Exercens, 5. 23 Ibid. 24 Ibid.

10 In light of the special dignity of work, John Paul II viewed work itself as “positive and creative, educational and meritorious” in character.25 John Paul II reminds us that, of all the creatures made by God, humans are the only ones who are “called to work”; it is this capacity for work that separates humans from the other creatures.26 Human persons reflect “the very action of the creator of the universe” by performing work.27

Work, given as a gift only to humans, is given only to us so that we can become closer to God, to “participate in his salvific plan for man and the world and to deepen their friendship with Christ in their lives by accepting through faith, a living participation in his threefold mission as priest, prophet, and king.”28 As an actus personae, the whole person, body and spirit are engaged in the work. It is anticipated that the self- actualization that arises from work will lead to further questions of a more transcendent nature, such as, Why do we work? Who benefits from my work? What is my obligation to others through work? Who made me?, and so on.

As noted above, John Paul II’s personalist understanding of work emphasizes that the person who performs the work (the subject) is always more important than the outcome of the work. Indeed, the outcome of the work, also known as capital (plant, property, equipment, and funds), is considered to be merely a “collection of things.”29 In

Laborem Exercens, all capital is the “result of work and bears the signs of human labor.”30 As a result, John Paul II insists that, because capital was produced by labor, it

25 Laborem Exercens, 11. 26 Laborem Exercens, preface. 27 Laborem Exercens, 4. 28 Laborem Exercens, 24. 29 Laborem Exercens, 12. 30 Ibid.

11 cannot be separated from labor.31 This fundamental link between labor and capital cannot be severed -- the two are inherently linked -- as capital cannot exist without the labor that created it.

John Paul II observes that, when the nature of capital and labor are misunderstood and viewed as “impersonal forces” set in opposition to each other, then the objective dimension of work takes precedence over the subject. He calls this the error of economism, in that labor is considered valuable only to the extent that it has economic purpose. John Paul II classifies economism as a type of materialism, because it holds the material (rather than the person) as superior, and man is placed in a “position of subordination to material reality.”32 To overcome this error, we must think differently about how we view the relationship between labor and capital. This requires “conviction of the primacy of the person over things and of human labor over capital as a whole collection of means of production.”33 The essential principle is that “capital should be at the service of labor and not labor at the service of capital.”34

In light of the context of the Communist regime, John Paul II is clear about the church’s understanding of private property. Property comes about through the labor of persons and is designed to serve those persons, as well as others. Property, which is a type of capital, is created through work, and it should continue to serve work. The

Pope’s view of property is different from the statist understanding of collectivism and

31 Karl Marx also argued that capital was accumulated labor; however, he placed capital in opposition to labor. John Paul II takes a fundamentally different philosophical perspective on the relationship between labor and capital. 32 Laborem Exercens, 13. 33 Ibid. 34 Laborem Exercens, 23. Daniel Finn expands upon this point, noting that it is important to realize that there people in both camps, people who are laborers and those who are providers of capital. Accordingly, what should be debated is the “claims of workers that conflict with the claims of owners.” Daniel R. Finn, “John Paul II and the Moral Ecology of Markets,” Theological Studies 41 (December 1988): 662-679, at 665.

12 different from that of liberal capitalism. Property rights are not “absolute and untouchable”; rather, they must be understood “within the broader context of the right common to all to use the goods of the whole of creation: The right to private property is subordinated to the right to common use, to the fact that goods are meant for everyone.”35

While all of our possessions (such as cars and clothes) can be thought of as capital goods, it is important to remember that the end of these goods is to serve persons.

Clearly, cars and clothes do serve us, but we must be aware of “the universal destination of goods and the right to common use of them.”36 These goods we possess, even if they are our “private property” are nevertheless subject to a social mortgage, a right to use by others who need them. Man may have “private” property in that we have dominion and use over specific goods, but one person may not exert undue control over the use of that property.37 A current example can be found in battles over control of clean water in developing nations. Land itself, and resources such as water, are to be viewed as gifts from God that are destined to be shared by all.

The universal destination of goods applies not only to those goods that currently exist, but also to those that will be brought into existence through our work.

Manufactured goods are nothing more than gifts of God’s creation that have been transformed through the effort of human work. Wood is just wood, until a human works to make a table and chairs from it. John Paul II’s encyclical prompts us to think more critically about the “goods” that we create through our labor, as well as the mechanisms by which they are shared (or not shared) with others.

35 Laborem Exercens, 14. 36 Ibid. 37 See Thomas Aquinas, Summa Theologiae, II.II. q. 66.

13 Work and the fruits of work are themselves a part of an “historical heritage” of production.38 By working, we use goods and capital that have been produced by those who have gone before us. For example, consider the action of using a computer to do work. The computer itself links us inter-temporally with the work of others, as computer processor, screen, keyboard, mouse, software, even the electricity that powers it, are all derived from the work of others who have preceded us in history.

In that sense, one can think of work as contribution to an ongoing chain: links exist because of by work performed by others in the past, upon which we can continue to build. Correspondingly, the links we forge today through our work will be available to be used by others in the future. Through work, we enter into not only the work of those that came before us, but we also enter into the giving of creation, by bringing about additional resources that are available to all that can be used to continue to transform the world. While these are not natural resources, they are resources nonetheless, gifts of God transformed by human labor. Understanding work in this inter-temporal way helps us see our dependence on God and on those persons who have gone before us. Likewise, it calls us to responsibility for preservation and stewardship of the fruits of the earth (natural resources), as well as responsible design and production of manufactured goods for those who come after us.

In his native Poland, John Paul II could see in action the power of solidarity at work and the importance of collective action. Human labor has an inherent social destiny, it can promote solidarity and strengthen community ties and human relationships. Even if particular work-acts are performed in isolation from others, the fruits of the work are not to be hoarded to oneself, but are to be shared by all.

38 Laborem Exercens, 12.

14 Human work has social value in that it helps contribute to the common good.

John Paul II writes, “Man combines his deepest human identity with membership of a nation, and intends his work also to increase the common good developed together with his compatriots.”39 A person should feel he or she is working for self, family, and nation.

These levels can be viewed as three concentric circles of value of work: at the center, one works out of necessity to support oneself, in the process becoming more human, through self-realization and actualization and creating goods that are an extension of ourselves. Moving outward, work is performed to care for and benefit one’s family;40 and at the outer-most circle, work is performed in solidarity with and for the benefit of one’s community and the common good of all. John Paul II cites Gaudium et Spes, reminding us that all human activity (including work), should “harmonize with the genuine good of the human race, and allow people as individuals and as members of society to pursue their total vocation and fulfill it.79”

______79 Second Vatican Ecumenical Council, Pastoral Constitution on the Church in the Modern World, Gaudium et Spes, 35: AAS 58 (1966), p. 1053. 41

Laborem Exercens addresses structures of work and workers’ rights. John Paul refers to the macro-system of organization of work as the “indirect employer,” and places

39 Ibid.,10. 40 From Leo XIII through John Paul II, the church’s social tradition has argued that wage contracts that do not provide compensation adequate to sustain a family are unacceptable. This is due to both the “personal” and the “necessary” components of one’s labor. Leo XIII in Rerum Novarum argues that if labor were only personal, then an individual would be free to accept whatever compensation is offered, even a pittance. However, because work is necessary to one’s survival, we are obligated to work enough to support ourselves and our dependents. An owner who does not offer a living wage to his employee sins in doing so, as does the worker who accepts the wage; though he is also a victim of injustice. It robs the employed of the duty to produce sustenance for himself and his dependents. 41 Laborem Exercens, 26.

15 responsibility for a just system of labor with the State.42 The way in which work is organized can promote or restrict human flourishing and solidarity. Positive structures allow each person who engages in labor to associate that labor with the goods or capital produced by that labor. From John Paul II’s personalist conception of work, it follows that the individual worker should not be lost amid a huge collective; people should have a sense that they work for themselves, rather than as only a cog in a huge machine. We should seek a system in which “on the basis of his work each person is fully entitled to consider himself a part-owner of the great workbench at which he is working with everyone else.”43 To this end, John Paul II suggests that each person be able to associate his or her own work with ownership of capital produced by that work.44 Work should be done in such a way that the person doing the work is allowed to participate in decision- making, regarding the work.

The responsibility to work also brings with it various rights, including the right of labor to organize and bargain collectively. John Paul II classifies workers’ rights as a subset of the more general rights of the human person, reflecting the historical setting of the workers’ strikes against the communist regime in Poland. Laborem Exercens articulates workers’ rights as an antidote to social problems such as high unemployment, under-employment, and hunger, (all of which were experienced in Poland in the years leading up to the encyclical) as the existence of these problems are evidence that “there is

42 Laborem Exercens, 17. 43 Ibid., 14. 44 While a lengthy digression on Karl Marx is not possible here, it should be noted that the commodification of labor and the “surplus” of its use-value is what yields wealth creation for the capitalist, those who did not do the labor, but to whom its benefits accrue. Robert Heilbroner explains, “One of the conditions of selling labor power as a commodity is that the working person abandons any claim to the produce he or she creates.” Heilbroner, Marxism: For and Against (New York: W.W. Norton & Co., 1980), 106. The result is that, for the capitalist, the key to generating wealth is maximizing the surplus value, the margin between the exchange value of the product created by a worker and the value (cost) of the labor power that was required to create the product (Ibid., 107).

16 something wrong with the organization of work and employment.”45 From this view, the fundamental respect for workers’ rights is a responsibility of what John Paul II calls the

“indirect employer,” that is, the general context of the economy that determines the

“orientation of labor policy.”46 It is important that the indirect employer, the state and governing bodies that set policy, to “constitute the adequate and fundamental criterion for shaping the whole economy…since the rights of the human person are the key element in the whole of the social moral order.”47 Constructively, workers’ rights and collective bargaining are mechanisms by which workers participate and exercise agency in the decisions that affect their work and work environment. Among these rights are “the right to a working environment and to manufacturing processes which are not harmful to the workers’ physical health or to their moral integrity.”48 Also addressed is the importance of workers to organize through unions. John Paul II articulates not a “unions vs. owners” kind of animosity, but rather stresses that work should be unifying, as work contains the

“power to build a community.”49

In his concluding section, John Paul II relates work to the toil of the cross, suggesting that we relate analogically the fruit of our work to the resurrection. He writes,

“The Christian finds in human work a small part of the Cross of Christ and accepts it in the same spirit of redemption in which Christ accepted his Cross for us. In work, thanks to the light that penetrates us from the Resurrection of Christ, we always find a glimmer of new life, of the new good.”50 Clearly, John Paul II does not mean that by accepting the

45 Laborem Exercens, 18. 46 Ibid. 47 Ibid., 17. 48 Ibid., 19. 49 Ibid., 20. 50 Ibid., 27.

17 toil of work that we should accept dehumanizing and degrading work; rather, his anthropology of work claims that through the work, the person will come to a greater realization of his or her own humanity and dignity. This dignity is can help us live in the hope that stems from the resurrection. Placed in the context of Poland in the late 1970s and early 1980s, this hope was of critical importance. John Paul II reminds the people that work is not merely about this world, but it has a transcendent telos. Accordingly, he exhorts each Christian to “know the place that his work has not only in earthly progress but also in the development of the Kingdom of God, to which we are all called through the power of the Holy Spirit and through the word of the Gospel.”51 Our work should promote justice, right relationships, and the common good. This spirituality of work helps to serve as a counter to our human hubris that tends to idolize work and to consider ourselves as our own maker.

John Paul II’s reflections on the personalist nature of work, placed in historical context, explain his emphasis on the dignity of the person and the responsibilities of the indirect employer to set the conditions for labor. Later, in chapter four, these perspectives will be important in considering structures that allow persons to associate their labor with ownership, as well as participate in work-related decisions. In addition, goals for businesses that include an understanding of the social mortgage on goods of the earth (as well as those that are produced) in ways that promote the common good through social transformation and solidarity with others will be important.

Benedict XVI’s Caritas in Veritate:

Pope Benedict XVI’s encyclical Caritas in Veritate was authored to coincide with the 40th anniversary of Paul VI’s encyclical Populorum Progressio, and therefore was

51 Ibid.

18 concerned primarily with authentic human development.52 For Paul VI, true development is about more than economic and technical progress; it rests on the development of the complete human person. As Paul VI wrote, “To be authentic, it

[development] must be well rounded; it must foster the development of each man and of the whole man.”53 In the eyes of both Paul VI and Benedict XVI, economic development is a necessary, but not sufficient, aspect of human flourishing.

Like Laborem Exercens, Benedict’s encyclical was written amid the backdrop of an economic crisis. Whereas Pope John Paul II was responding to workers’ uprisings against the Communist state of Poland, Benedict XVI was dealing with the uncertainty that accompanied the turmoil of the global financial crisis of the early 21st century. The financial meltdown began in the United States in the summer of 2007 when borrowers began defaulting on payments for subprime mortgages and prime home-equity loans.54

In the summer of 2007, this pop in the housing bubble precipitated foreclosures and resulted in cash flow difficulties at various lenders, such as Countrywide Home Loans.55

Non-payment of mortgage obligations by cash-strapped borrowers also reduced the value of mortgage backed securities (MBS) and collateralized debt obligations (CDOs). The crisis was not contained with the United States. By August 2007, French firm BNP

52 The 40th anniversary would have been in 2007; Caritas in Veritate was delayed two years. 53 Pope Paul VI, Populorum Progressio, Papal Encyclical, 1967, 14. 54 This was especially problematic for borrowers who had purchased homes (or had home equity loans) with adjustable rate mortgages. When interest rates were adjusted upwards, the interest payments were no longer affordable. 55 Countrywide Home Loans’ 2007 Q2 SEC filing states, “Countrywide’s results for the second quarter of 2007 reflected strength in our core loan production business, but were adversely impacted by continued weakness in the housing market,” said Angelo R. Mozilo, Chairman and Chief Executive Officer. “During the quarter, softening home prices continued to affect many areas of the country and delinquencies and defaults continued to rise across all mortgage product categories as a result. Due to these adverse conditions, the Company incurred increased credit-related costs in the quarter, primarily related to its investments in prime home equity loans.” SEC filing can be linked to from the timeline available on the Federal Reserve Bank of St. Louis’ web page that is devoted to the Financial Crisis, at http://timeline.stlouisfed.org/index.cfm?p=timeline.

19 Paribas stopped redeeming shares on three of its funds, due to illiquidity in the securitization market.56 In September, the Bank of England announced it would help provide liquidity to Northern Rock, PLC, the UK’s fifth-largest mortgage lender.57 Bank of America announced its purchase of Countrywide Financial (parent of Countrywide

Home Loans) in January of 2008, and by February, Northern Rock, PLC, was under ownership by the Treasury of the UK. The Federal Reserve Bank of New York provided

$29 billion of liquidity for JPMorgan Chase’s acquisition of the illiquid Bear Stearns in

March of 2008.

All the while, the U.S. Federal Open Market Committee (FOMC) was easing monetary policy. In June of 2007, the Federal Funds rate (the interest rate at which banks and other financial institutions can loan to each other overnight in an effort to cover reserve requirements) was set at 5.25%. Beginning in September 2007, the FOMC enacted persistent reductions of 0.25% to 0.50%, with the rate set at 4.25% on December

11, 2007. In January 2008, the Fed voted (over a conference call between regularly scheduled meetings) to cut the rate by a startlingly large 0.75% to 3.5%, and just 9 days later the rate was cut again to 3.0%. By December 16, 2008, the FOMC had established a

“target rate” between 0.00% and 0.25%.

It seemed there was no end to the crisis. Lehman Brothers filed for bankruptcy on

September 15, 2008, precipitating a 500-point drop (approximately 4%) in the Dow Jones

56 The press release from BNP Paribas reads, “The complete evaporation of liquidity in certain market segments of the US securitisation [sic] market has made it impossible to value certain assets fairly regardless of their quality or credit rating. The situation is such that it is no longer possible to value fairly the underlying US ABS assets in the three … funds. We are therefore unable to calculate a reliable net asset value (“NAV”) for the funds.” – July 9, 2007. Available as a link from the timeline on the Federal Reserve Bank of St. Louis’ web page that is devoted to the Financial Crisis, at http://timeline.stlouisfed.org/index.cfm?p=timeline. 57 “Timeline of the Financial Crisis”, St. Louis Federal Reserve Bank, accessed at http://timeline.stlouisfed.org/index.cfm?p=timeline.

20 Industrial Average.58 On October 3, 2008, the TARP (Troubled Asset Relief Program) was passed by Congress and signed by President Bush, and Bank of America received approval to purchase Merrill Lynch on November 26, 2008. The American public swam in an alphabet soup as they learned of the impact of CDOs and CDSs (Credit Default

Swaps) at AIG (American International Group).59 On December 11, 2008, the Securities and Exchange Commission (SEC) arrested Bernard Madoff on charges of running a

Ponzi scheme, through which he had defrauded investors in the amount of $50 billion.60

On March 12, 2009, he “pleaded guilty to 11 felony counts… and was sentenced on June

29, 2009, to the maximum sentence of 150 years behind bars.”61

It was against this backdrop that Pope Benedict XVI authored Caritas in Veritate; it is interesting to note that the encyclical bears the same date as Madoff’s sentencing.62

In Caritas in Veritate, Benedict addresses various causes and ramifications of the economic and financial crises, seeking to bring the Church’s teachings of love and justice to bear on the global crisis. While Caritas in Veritate consistently echoes the themes found in Laborem Exercens, such as including the dignity of work, primacy of the human person, and the importance of rights of workers, Benedict shifts emphasis away from structural concern to emphasize the relational nature of persons in the economy, the

58 Susanne Craig, et al., “AIG, Lehman Shock Hits World Markets,” Wall Street Journal, 16 September 2008, A1-A2. 59 Maurna Desmond, “AIG. CDOs. CDS,” Forbes, 15 November 2008, accessed online at http://www.forbes.com/2008/11/15/aig-credit-default-markets-equity-cx_md_1110markets24.html 60 Tom Lauricella, Amir Afrati, Jenny Strasburg, and David Enrich, “Examiners at SEC sift through years of Records,” Wall Street Journal, 13 December 2008, page A7. The Elie Wiesel Foundation for Humanity lost approximately $15.2 million to Madoff’s scheme. “Madoff’s Vicitms,” Wall Street Journal, 9 March 2009, at http://s.wsj.net/public/resources/documents/st_madoff_victims_20081215.html 61 See the Wall Street Journal’s Bernard Madoff topics page at http://topics.wsj.com/person/m/bernard- madoff/1077. 62 The encyclical, while dated 29 June 2009 (the Feast of Sts. Peter and Paul), was released to the public on July 7, 2009.

21 importance of caritas, assent to truth, and personal responsibility for actions.63 Perhaps he was influenced by details of the Bernard Madoff case when he wrote,

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.64

Pope Benedict XVI stresses themes that resonate with John Paul II’s personalist anthropology articulated in Laborem Exercens, insisting in Caritas in Veritate that we continue to be vigilant about protecting the human rights and dignity of workers as production and consumption becomes more globalized. Accordingly, we should expect large multinational for-profit, publicly held corporations to honor the dignity of workers and to help promote positive social change in countries where labor is outsourced.

Fundamental to attainment of this goal is the focus on the dignity of the person, rather than a utilitarian view of the person as a means to production. Benedict writes, “….[T]he primary capital to be safeguarded is man, the human person in his or her integrity: ‘Man is the source, the focus and the aim of all economic and social life.’61”

______61 Second Vatican Ecumenical Council, Pastoral Constitution on the Church in the Modern World, Gaudium et Spes, 63.”65

63 Bernard Laurent is concerned that Benedict XVI neglects to address the ideological aspects of modern liberalism and capitalism. According to Laurent, Benedict XVI “does not denounce the alienation and slavery that threatens the people of modern developed societies, prisoners of their abusive consumption of materials goods” (538). Laurent suggests that Benedict accepts “excessive consumerism” as “a product of the modern world; it is an exaltation of unbridled individual rights,” rather than challenging the ideology of an economy based on consumption. Laurent, 538. 64 Caritas in Veritate, 36. 65 Ibid., 25. Emphasis original.

22 Just as work is designed for man, not man for work, the economy ought to exist to facilitate human flourishing, rather than the economy flourishing at the expense of humans. We are called to keep the dignity of other persons and our relationships prior to material items.

Benedict follows the lead of John Paul II in affirming the dignity of work. While he does not articulate the distinction between the objective and subjective dimensions of work in the same way that John Paul II did, he nevertheless shares the understanding that work helps persons to express their dignity.66 Benedict provides a summary of factors critical to “decent” work that are in alignment John Paul II’s personalist conception and subjective understanding of work. These factors include:

“work that is freely chosen, effectively associating workers…with the development of their community; work that enables the worker to be respected and free from any form of discrimination; work that makes it possible for families to meet their needs and provide schooling for their children…; work that permits the workers to organize themselves freely and to make their voices heard; work that leaves enough room for rediscovering one’s roots at a personal, familial, and spiritual level; work that guarantees those who have retired a decent standard of living.”67

Due to increasing globalization in both the production of goods and in the provision of capital, Benedict XVI observes in Caritas in Veritate that individual states no longer can exercise the kinds of controls over capital flows and trade that they once did. As states and governments compete in the labor market, Benedict recognizes the negative impact this competition can have on “the rights of workers, for fundamental

66 Caritas in Veritate, 63. 67 Ibid. The notion that decent work should allow for an acceptable standard of living during retirement is for many working poor a moot question. It is probable that workers who cannot earn enough to pay rent, food, and other expenses are unable to save money for retirement, and benefits stemming from social security pay-ins will be meager during retirement years. During the 1980s and 1990s most defined benefit pension plans were converted to defined contribution plans, in which the employee bears the investment risk of assets. As the laity responds to Benedict’s challenge to envision new ways of doing business, an interesting problem will be to address the questions such as retirement age, retirement plans, and the possibility of part-time employment options for aging workers.

23 human rights, and for the solidarity associated with the traditional forms of the social

State.”68 Since 1891, Catholic social teaching has endorsed and supported laborers’ rights to organize and bargain collectively. Benedict XVI is concerned that the increased mobility of labor and competition in labor market, combined with the decline of unions

(or the reduced freedoms of unions to negotiate for workers), leads to “uncertainty over working conditions [and can lead to] new forms of psychological instability.”69 This symptom is definitely a blow to the subjective personalization and actualization that should take place through work, and is, therefore, exceedingly problematic.

Benedict, like John Paul II, understands work as necessary and good, and he considers unemployment to be a plague on society: “Unemployment today provokes new forms of economic marginalization…. [B]eing out of work or dependent on public or private assistance for a prolonged period undermines the freedom and creativity of the person and his family and social relationships, causing great psychological and spiritual suffering.”70 In addition, Benedict notes the obvious relationship between poverty and unemployment, and what John Paul II would have referred to as the indirect employer.

Benedict notes that “the dignity of the individual and the demands of justice require…that we continue to prioritize the goal of access to steady employment for everyone [emphasis original].”71 In this way, Benedict XVI argues that unemployment is not only a threat to democracy (as it undermines social cohesion), but that it leads to an

“erosion of ‘social capital’”, which is that web of social relationships that require people

68 Caritas in Veritate, 25. 69 Ibid. 70 Ibid. 71 Ibid, 32.

24 to trust and depend on each other, as well as respect rules.72 Good work should lead to the building up of community, especially at the familial and local levels. The concentric circles of solidarity must develop from the inner-circle of family, outward to local, civic, national, then global communities.

Benedict also stresses the importance of participation in one’s work, which can be thought of as related to the notion of subsidiarity. The principle of subsidiarity means that large, central authorities should not do for individuals what they can do for themselves; rather, they should act to support, promote and develop initiative at lower levels. 73 For example, local governments (rather than federal) can best manage issues particular to their local communities. When applied to a work context, subsidiarity would imply that decision-making should take place at the lowest possible level in any organization, as this honors the dignity of the persons and implies that they are trustworthy and capable of making decisions. In this way, subsidiarity has implications for how work is managed in an organizational setting: the role of higher-level managers and executives is not one of micro-management (usurping power from them); rather, the role should be one of support. Executives that adhere to this extension of subsidiarity recognize the dignity of the person; as such, their role is to clear the way, remove roadblocks and impediments, and foster the development of the persons doing the work.

In a work environment, the principle of subsidiarity would be honored when the workers who have direct control over the implementation of a particular process are the ones who

72 Ibid. 73 The principle of subsidiarity has both constructive and restrictive implications. Higher levels should both support and encourage lower levels, but higher levels must also not do anything that would “restrict the existential space of the smaller essential cells of society.” Pontifical Council for Justice and Peace, Compendium of the Social Teaching of the Church, English translation, (Washington, D.C.: USCCB Publishing, 2004), 186.

25 are able to make decisions about the process. As an example, workers on an assembly line should have the ability to stop production on the assembly line if they perceive that there is something wrong with the product or process. At the minimum, the workers should be consulted about any changes to how the line is set up or functioning. Benedict

XVI views subsidiarity as an important element of work performed by rational, intelligent persons, and he casts it in the light of one’s work as gift based on the principle of reciprocity. “Subsidiarity respects personal dignity by recognizing in the person a subject who is always capable of giving something to others.”74 In this way, work should

“promote freedom and participation through assumption of responsibility.”75

Subsidiarity should be in balance with solidarity, a sense of responsibility to others. Benedict writes, “solidarity is first and foremost a sense of responsibility …and it cannot therefore be merely delegated to the State.”76 In his remarks about solidarity, we can see Benedict’s 21st century emphasis on individual personal responsibility. He writes, “integral human development is primarily a vocation, and therefore it involves a free assumption of responsibility in solidarity on the part of everyone.”77 Like care for our neighbor and other personal responsibilities, the virtue of solidarity must be consciously cultivated. A personal sense of solidarity may initially come about through acts of collaboration, and over time, acts of solidarity may become habituated. The

Pontifical Council for Justice and Peace states that solidarity is more than just a personal attitude: “Solidarity is also an authentic moral virtue, not a ‘feeling of vague compassion or shallow distress at the misfortunes of so many people, both near and far. On the

74 Caritas in Veritate, 57. 75 Ibid. 76 Ibid., 38. 77 Ibid., 11.

26 contrary, it is a firm and persevering determination to commit oneself to the common good. That is to say to the good of all and of each individual, because we are all really responsible for all’[418].”

______418 John Paul II, Encyclical Letter Sollicitudo Rei Socialis, 38: AAS 80 (1988), 565-66.78

At its root, the disposition of solidarity is grounded in love of neighbor. This love, given to us freely as an infused grace, is to be shared with others. This sharing requires that we be able to subordinate our own selfish desires so as to meet the needs of our neighbors and the greater community.

Against the backdrop of the financial crisis, Benedict was concerned about personal ethical reflection grounded by objective norms, rather than relativism. Caritas in Veritate provided a focus on love in truth. Love of neighbor is the foundation of the

Church’s social teaching, the foundation for solidarity, and is the reason for acting accordingly. Benedict warns, “charity degenerates into sentimentality,” unless love is illumined by the light of truth.79 Benedict is aware of shifting moral norms in contemporary society, and is concerned that love, without reference to truth, itself becomes a victim of relativism and “emotionalism.”80 Truth, the light that provides meaning and knowledge of what is just and good, is necessary to orient and direct love properly, because in the absence of truth, we float in a relativistic world, directed by whims and distortions. As Benedict writes, “without truth, without trust and love for what is true, there is no social conscience and responsibility and social action ends up

78 Pontifical Council for Justice and Peace, Compendium of the Social Doctrine of the Church, English translation (Washington, D.C.: USCCB Publishing, 2004) page 85, paragraph193. 79 Caritas in Veritate, 3. 80 Ibid.

27 serving private interests and the logic of power, resulting in social fragmentation.”81

These concerns of Benedict’s are of a deeply personal nature, and include the need to cultivate a deeper sense of moral responsibility for one’s actions, a sense of responsibility that emerges from love of neighbor. In contrast, John Paul II’s Laborem Exercens takes as given the person as morally good, yet subject to the threat of oppression by the state.

John Paul II did not highlight importance of personal responsibility for one’s actions as extensively as Benedict did; rather, John Paul II emphasized more the value and dignity of the human person. In John Paul II’s context, the threat was one of the communist regime; in Benedict’s context, the threat stems from a relativistic culture.

Benedict explains his understanding of love by reminding us that we are the objects of God’s love, which is freely given to us; it is an unmerited grace. As objects of this love, we can thus respond to the grace and love offered to us, by becoming ourselves subjects of love and by creating “networks of charity.”82 This love can serve to “secure a common good corresponding to the real needs of our neighbors”; it is through these networks that we are to serve our neighbors’ needs.83 Benedict’s argument is based on personal devotion to love in truth; questions of economic systems and the indirect employer will be resolved by the creation of “networks of charity” that arise out of personal commitment to love. In this view, economic systems are constructed from the bottom-up, rather than from the top-down. Benedict appeals to the lay people to work toward development of the common good through love and truth, noting that “authentic development” will not come through “technical progress and relationships of utility”, but

81 Ibid., 5. 82 Caritas in Veritate, 5. 83 Caritas in Veritate, 7.

28 rather depends on the “love that overcomes evil with good.”84 Benedict proposes that caritas, while commonly understood to be the primary principle for close family relationships and friendships, should also be the focus for relationships that exist within the economy, polity, and society.85 His sustained argument is that love is required for the deep and abiding fraternity required for addressing questions of human development.

Benedict asks us to recognize that “the human race is a single family working together in true communion, not simply a group of subjects who happen to live side by side.”86

Benedict highlights the understanding that humans are relational and “defined through interpersonal relations. The more authentically he or she lives these relations, the more his or her own personal identity matures.”87 The way that we perform work with other in communion, in relationship with others, leads us to greater maturity, which includes deeper knowledge of self, knowledge of others, and knowledge of God. This is a useful way to think about the cultivation of solidarity and unity across individuals. If we are to work toward greater solidarity or unity of all persons, according to Benedict we must recognize that “the unity of the human race presupposes a metaphysical interpretation of the ‘humanum’ in which relationality is an essential element [italics original].”88 In this way, Benedict moves beyond the personalist argument of John Paul

II. While Laborem Exercens recognized the role of work in actuating self-realization,

Caritas in Veritate emphasizes the relationality of humans and work as an element of the social milieu.

84 Caritas in Veritate, 9. 85 See Caritas in Veritate, 2. While the church does not attempt to provide details on how economic relationships might be based on caritas, it is helpful to note that love is not articulated as a goal of corporate finance, nor is it included in utility functions. This is not to say that a person might derive utility from love, but that economists are unable to price and model the kind of love to which Benedict refers. 86 Caritas in Veritate, 53. 87 Ibid. 88 Ibid., 55.

29 An original aspect of Caritas in Veritate is Benedict’s introduction of the notion of the role for gift and gratuitousness in the economy. Benedict first defines gift as that which “goes beyond merit: its rule is that of superabundance.”89 Like hope and caritas,

Benedict views truth also as an unmerited gift, the source of which is God.90 While the

Church maintains that all that we have is gift from God, Benedict notes that the

“consumerist and utilitarian” perspectives of our modern society make it difficult for us to see and be aware of the abundance of gifts that we have been given.91

Benedict calls people of good will, especially business people, to develop a new vision and direction for the economy that reflects an ethos of gift. He states that the

“great challenge before us…is to demonstrate…that in commercial relationships the principle of gratuitousness and the logic of gift as an expression of fraternity can and must find their place within normal economic activity [italics original].”92 The challenge to demonstrate gratuitousness in the economy also requires a shared understanding of the common good and how our work within the economy promotes the common good and flourishing of all.93

Charity in truth can build communities of exchange, imperfect though they may be, by reflecting and sharing the love and truth that have been given to us by God. The unity that can be created through caritas directed by truth is known as fraternity (or solidarity), and Benedict maintains that the notion of “gift” must undergird these actions.

Putting this together, Benedict’s encyclical proposes that our economic actions must be

89 Ibid., 34. 90 Ibid., 52. 91 Ibid., 34. 92 Ibid., 36. 93 Ibid.

30 performed out of love, guided by the light of truth, expressed as gift, and directed toward the common good.

Benedict articulates a number of factors (in addition to caritas in truth) that must be considered when thinking about re-ordering business to serve higher ends. These include the necessary role of profit, tempered by a greater emphasis on the long-run nature of business, as well as increased attention individual responsibility on the part of decision-makers in implementing morally responsible actions. Each of these will be discussed before examining the reality that our businesses operate in a fallen world and the resulting need for a transcendent vision.

Benedict carefully endorses the role of profit in business.94 He writes, “Profit is useful if it serves as a means towards an end that provides a sense both of how to produce it and how to make good use of it. Once profit becomes the exclusive goal, if it is produced by improper means and without the common good as its ultimate end, it risks destroying wealth and creating poverty.”95 But profits must be only a means to an end, a vision for outcomes that go beyond mere profits. We must also do some structural work in thinking about forms of business that could promote the achievement of the common good, rather than the maximization of profit. He explains:

What is needed, therefore, is a market that permits the free operation… of enterprises in pursuit of different institutional ends. Alongside profit-oriented private enterprise and the various types of public enterprise, there must be room for commercial entities based on mutualist principles and pursuing social ends to take root and express themselves… . Charity in truth, in this case, requires that shape and structure be given to those types of economic initiative which, without

94 Benedict XVI is careful to view profit as a means to an end, in a way similar to the method used by John Paul II in Centesimus Annus (1991). 95 Caritas in Veritate, 21.

31 rejecting profit, aim at a higher goal than the mere logic of the exchange of equivalents, of profit as an end in itself.96

Benedict understands a proper role of profit, and proposes that we create

“economic activity carried out by subjects who freely choose to act according to principles other than those of pure profit, without sacrificing the production of economic value in the process.”97 These forms of exchange will arise from the cultivation of caritas in veritate. He states, “to defeat underdevelopment, action is required… [for] gradually increasing openness, in a world context, to forms of economic activity marked by…gratuitousness and communion.”98 Benedict notes that in recent years, the lines between for-profit and not-for-profit enterprises have become less clear. He encourages a

“broad new composite reality embracing the private and public spheres,” but he does not offer a prescriptive blueprint for the design of such a business.99 Benedict leaves the creation and realization of new forms of business to the people of good will, who, by their talents, creativity, and sense of moral responsibility to others could create these new forms of business. He prompts the faithful to reconcile the dichotomy between for-profit businesses and not-for-profit enterprises by way of gratuitousness, to find ways to preserve what we know to be good about business management, financial planning and decision-making, within a new context of enterprise that is characterized by gratuitous

96 Ibid., 38. 97 Ibid., 37. 98 Ibid., 39. 99 Economy of Communion businesses are for-profit businesses that also perform a social function. Lorna Gold explains an organization that operates in an Economy of Communion “frames the ‘rational’ logic of profitability on which the market rests with a greater logic that accords value to every member of the working community as a human person who finds fulfillment, above all, in communion with others.” Lorna Gold, New Financial Horizons: The Emergence of an Economy of Communion (New York: Hyde Park Press, 2010), 36. Profits generated in the Focolare project (an economy of communion) were split in three ways: “one-part was to be given to the poor, one kept for reinvestment in the firm, and the third part for creation of educational structures to promote the ‘culture of giving.’” (Gold, 89).

32 love for each other, personal responsibility and creativity, and a deep respect for the dignity of each human person.

Benedict continues the tradition of the church in affirming private economic initiative.100 Hard work, entrepreneurial effort, creativity and innovation are good, but we also know from watching CNBC and reading the Wall Street Journal that corporate managers and “the market” spend a lot of energy focusing on short-term profit figures and earnings announcements. The difficulties arising from an excessive focus on short- term profits have been addressed by U.S. Catholic Bishops.101 In Caritas in Veritate,

Benedict XVI calls for an evaluation of the “human consequences of current tendencies towards a short-term economy” and the goals of economic life.102 Benedict writes forcefully against businesses that make decisions considering only a short-term horizon, stating, “what should be avoided is a speculative use of financial resources that yields to the temptation of seeking only short-term profit, without regard for the long-term sustainability of the enterprise, its benefit to the real economy, and attention to the advancement…of further economic initiatives in countries in need of development.”103

We must guard against a “short-term” focus in business, and find ways to bring the long- run implications and human consequences to bear on our discussions regarding economic goals and strategies for achieving them. Benedict highlights a problem in modern management, noting, “It is rare for business enterprises to be in the hands of a stable director who feels responsible in the long term, not just the short term, for the life and the

100 See Pope John XXIII’s Papal Encyclical, Mater et Magistra, (1961), 51. 101 See the USCCB’s Pastoral Letter, Economic Justice For All, paragraphs 112 and 113. 102 Caritas in Veritate, 32. 103 Ibid., 40.

33 results of his company.”104 A longer-term focus ought to be a primary consideration in the design of new businesses created by the laity in response to Benedict’s call.

Benedict also references a problem specific to the publicly-traded, corporate form of organization, that is, the existence of institutional investors that can place pressure on managers to realize short-term strategies. While institutional investors are ostensibly acting in the shareholders’ best interests, they do have voting control over shares purchased for workers’ retirement funds. Institutional investors can act positively, in the shareholders’ interests, but they can also continuously exert pressure on corporate boards and CEOs to maximize shareholder value, demanding upward-trending earnings every quarter. As a result, Benedict writes, “a new cosmopolitan class of managers has emerged, who are often answerable only to the shareholders generally consisting of anonymous funds which de facto determine their remuneration.”105 Benedict continues,

“one of the greatest risks for businesses is that they are almost exclusively answerable to their investors, thereby limiting their social value.”106

Benedict calls specifically for “a broad new composite reality embracing the private and public spheres, one which does not exclude profit but instead considers it a means for achieving human and social ends.”107 He states that the organizational and legal structure of such a business is “secondary”: “Whether such companies distribute dividends or not, whether their juridical structure corresponds to one or other of the established forms, becomes secondary in relation to their willingness to view profit as a

104 Ibid. 105 Ibid. 106 Ibid. 107 Ibid., 46.

34 means of achieving the goal of a more humane market and society.”108 While his statement that the common good must be the primary concern for our new ways of doing business is true, it must be argued that the legal structure of the business is exceedingly important in determining whether his goal can be met. It is not just a matter to be resolved later, but is of utmost importance in determining whether it will be possible to direct profits for the common good. The form of the business must follow its function.

Benedict simply hopes that “new kinds of enterprise will succeed in finding a suitable juridical and fiscal structure in every country,” but leaves it to the lay people to make this dream a reality.109 The legal and organizational form of the business is critical to it being able to achieve goals related to the common good. Chapter two will show that businesses organized in the U.S. as publicly-traded, for-profit corporations face significant challenges in responding constructively to Benedict’s call.110

Benedict’s encyclical reminds us that forms of business guided by caritas in truth must take into account elements of personal moral responsibility. Voluntary human actions are moral actions; therefore, because economic actions are human actions, all economic decisions also have moral dimensions. Questions of economy cannot be separated from questions of justice. Decisions about labor, resource acquisition, capital markets (including how and where capital is acquired), financial speculation, repatriation of profits, consumption, production schedules, store hours, etc. all have moral implications. We must be careful when considering economic investments, especially

108 Ibid. 109 Ibid. 110 The publicly-traded, for-profit corporate form of organization, as it exists in the United States, inherently possesses significant stumbling blocks that hamper its ability to both promote the common good and maximize shareholder wealth, due to informational asymmetries and agency problems associated with managers’ fiduciary responsibility to shareholders.

35 when the purpose of the investment is to realize cost efficiencies. He acknowledges that more efficient use of capital can bring about improvements in the quality of life and civil society, but cautions business people not to overlook the possible disproportionate distribution of benefits of such investments, and associated negative impacts on humans and their communities. In a passage that echoes the problem of labor being set in opposition to capital in Laborem Exercens, Benedict emphasizes the morality of investment decisions, as he writes,

It is true that the export of investments and skills can benefit the populations of the receiving country. Labor and technical knowledge are a universal good. Yet it is not right to export these things merely for the sake of obtaining advantageous conditions, or worse, for purposes of exploitation, without making a real contribution to local society by helping to bring about a robust productive and social system.111 Benedict emphasizes the need for greater personal responsibility in moral decision-making regarding the use of financial tools. Benedict draws a distinction between the means by which finance is enacted (through contracts and instruments such as loans, swaps, derivative securities, etc.), and the persons who may be abusing the financial instruments to achieve individual gain. He writes, “it is not the instrument that must be called to account, but individuals, their moral conscience and their personal and social responsibility.”112 Benedict specifically mentions the relatively recent innovations of micro-finance and micro-credit, and positions the matter of finance as one of moral discernment and ethical evaluation in light of truth.113 Benedict suggests that finance should be used as a tool, as a means by which persons can do the good. He writes that

111 Caritas in Veritate, 40. While John Paul II argues that through work we become more human, becoming moral creatures, Benedict XVI sees work as an opportunity to exercise moral agency, the workplace is an arena in which we must “be” moral. For Benedict XVI, we must bring personal caritas and truth to our work acts. While the dignity of the human person exists for Benedict XVI, self-realization through work is not a significant theme in his encyclical. 112 Ibid., 36. 113 Ibid., 45.

36 the various financial contracts and instruments ought to be “directed towards improved wealth creation and development.”114 Again, he stresses the need for personal responsibility, “Financiers must rediscover the genuinely ethical foundation of their activity… . Right intention, transparency, and the search for positive results are mutually compatible and must never be detached from one another [emphasis original].”115

To bring together positive financial results and positive moral intention is a task for the future. The world of financial contracts is continuously innovating: arbitrage traders and risk-management professionals are always striving to find ways to increase profits and reduce risk, and financial innovation seeks to exploit loopholes in tax and reporting laws. Now is the time to introduce moral questions and direction into the goals of the development of financial contracts and instruments. In this way, financial technicians can engineer new securities that, instead of merely accruing profits to those who create and trade them, are directed toward serving the common good.

It is important to remember that business is ultimately about people, not profits.

The performance of business, the exchange of work, goods, and resources has a “human significance, prior to its professional one.”116 Our work and economic decisions have implications for our brothers and sisters. Christians are called to go beyond technical calculations of economic utility to authentic love of neighbor. In Caritas in Veritate,

Benedict reminds us that we are called to be concerned with “the meaning of man’s pilgrimage through history in company with his fellow human beings,… [and] with identifying the goal of that journey.”117 As Christians, the goal of that journey is

114 Ibid., 65. 115 Ibid. 116 Ibid., 41. 117 Ibid., 16.

37 beatitude with God. Benedict’s encyclical reminds us that our journey of integral human development is a transcendent vocation.

We cannot delude ourselves into thinking that we can “problem-solve” our way out of this situation. Benedict writes, “integral human development is primarily a vocation…[and] requires a transcendent vision of the person; it needs God: without him, development is either denied or entrusted exclusively to man, who falls into the trap of thinking he can bring about his own salvation.”118 Out of love, we are to respond to the needs of our neighbors who are suffering, to feed the hungry and clothe the poor. We must find the balance between proper use of our human agency in developing structures and technology that can benefit others, and the sin of pride in thinking that we are our own maker and master. In doing so, we must remain open to being guided by “truth- filled love,” given to us as gift from God.119

Neither Laborem Exercens nor Caritas in Veritate articulates an alternative economic system or offers an exact prescription for how to establish businesses; rather, they offer ways to reflect upon the value, dignity, and role of the human person in the economy, and responsibility for human actions. The documents advise on how to discern proper moral actions regarding business in light of charity in truth. We are vulnerable to the greed and sinfulness of our humanity, as well as vulnerable to imperfect structures.

As human creatures, we will not be able to build the perfect system of exchange, but as

Christians who are called to holiness, we can work to create organizations that seek to serve our brothers and sisters and promote the common good.

118 Caritas in Veritate, 11. 119 Caritas in Veritate, 79.

38 If we are to work toward this end, we must consider whether our current structures for business hinder or support work in that direction. The next chapter will show that the legal and organizational form of business is critical to the success of its goals related to promoting the common good. In particular, the next chapter will demonstrate that the publicly-traded, for-profit corporate form of organization is associated with certain moral problems for both shareholders and employees. These moral problems are in direct contrast to the elements of work and economic participation that are highlighted in Laborem Exercens and Caritas in Veritate. The critique provided in chapter two intends to show that new models of business must consider, on an equal footing with the social goals of the business, the structural concerns of business organization. Any response aimed toward achieving positive social good through business must take into account legal and organizational issues of business structure.

39

CHAPTER II

A CRITICAL EXAMINATION OF THE CORPORATION

This chapter explores the modern for-profit publicly traded corporate form of business organization. It explains and clarifies what a corporation is, how it is structured, and the roles that shareholders and managers play. Then, it describes moral problems that exist within the corporate form of organization, in light of the principles articulated in Laborem Exercens and Caritas in Veritate. The chapter attempts to show that the publicly-traded, for-profit corporate form of organization is a severely limited and impaired mechanism by which to promote human flourishing. The separation of ownership and management inherent to a for-profit corporation creates an intrinsically antagonistic structure that cannot reconcile, but only hold in tension, any end that competes with shareholder wealth maximization.

Definition and Explanation of the Publicly Traded Corporation:

A corporation is created by filing articles of incorporation with the secretary of state within a particular state of the union. These articles specify the nature of the firm’s business, the location of the business, the number of and type of ownership shares that may be issued, the par value of the stock, the form of the board of directors, the number of meetings of the board per year, etc. Each state has its own laws that govern a firm’s ability to incorporate within that state. The corporation is considered a “resident” of the

40 state in which it is incorporated; accordingly, it must pay taxes.1 A corporation is a separate entity; it acts as an independent person in that it can sue and be sued, enter into contracts, purchase assets, borrow money and incur liabilities, etc. all in the name of the corporation, not in the name of its managers or owners. The assets and liabilities belong to the corporation, not to the owners of the corporation.

Basic finance and business textbooks articulate the advantages and disadvantages of the corporate form of organization.2 The primary advantages of the corporate form include the ability to raise large sums of capital, the potentially unlimited life of the business, and the limited liability of the owners (shareholders). Limited liability means that each owner is liable to lose only the amount of money that he or she has invested in the corporation’s stock: in the event of a lawsuit or bankruptcy, plaintiffs or creditors cannot seize and appropriate the assets of individual shareholders. The life of the firm is potentially unlimited, because, in contrast to a sole proprietorship or partnership which ceases to exist in the event of the death of the owner or a partner, the corporation can outlast the dismissal and deaths of corporate managers, due to the nature of the separation between ownership and management. The primary disadvantage, from a financial perspective, of the corporate form is double taxation; as stated above, the income earned by the corporation is taxed first at the corporate level, then if earnings are distributed as dividends to shareholders, the dividends constitute taxable income to shareholders at the personal level.

1 Richard A. Brealey and Stewart C. Myers, Principles of Corporate Finance (New York: McGraw-Hill, 1996), 6. The authors are clear to note that, although considered to be a resident, a corporation cannot vote in the political process. 2 See, for example, Stephen R. Ross, Randolph Westerfield, and Jeffrey Jaffe. Corporate Finance, 8th ed. (New York: McGraw-Hill), 2008.

41 Shareholders provide capital to a corporation at the time the shares are issued and purchased. Common stock typically bears with it the right to cast one vote per share of common stock owned, to receive dividends as determined by the corporation, and, in the event of liquidation, to receive cash flows from proceeds of the sale of assets.

Shareholders are also known as “residual claimants” in the event of liquidation, because they receive cash flows only after all other liabilities of the firm have been satisfied; there is no guarantee of receiving funds in the event of liquidation. In some cases, a firm may also issue preferred stock. These shares usually have preference in terms of dividend distribution; holders of preferred stock must receive their dividends before holders of common stock can be paid. Voting rights for preferred shares may also be greater than those attached to regular common stock.

Shareholders vote in elections for members of the board of directors and other matters that come to a general vote, such as mergers.3 Common stock holders also typically possess the “preemptive” right, which allows them to maintain their proportionate ownership by purchasing additional shares of a new offering that will be made to the general public. Sometimes firms issue two classes of common stock (A and

B), especially if the firm determines it desires more equity capital, but the current shareholders (who may be founders or insiders) do not wish to suffer a reduction in voting power. In such case, the B class of shares may have greater voting power (perhaps five or ten votes per share) and are issued to members of the founding family, family trust, or corporate insiders.

3 Since the recent financial crisis, some firms are allowing shareholder voting called “say on pay,” regarding executive compensation levels.

42 As stated above, corporations receive capital from shareholders only at the time the shares are issued. When individuals purchase stock on the secondary market (as opposed to an initial public offering (IPO)),4 corporations do not receive money from the investors; rather, funds are merely passed to the dealer (or through a broker) who sold the shares to the investor.5 The secondary market is merely a market where shares (which as described above represent rights to dividends, if any; residual claims to cash in the event of a liquidation of the firm; and the right to vote for board members) are bought and sold.

Investors who purchase stock on the secondary market seek out firms whose shares they feel are undervalued; they anticipate earning possible dividend income, as well as a capital gain in the future.

Moral Problems Inherent to the Corporate Form:

This section examines certain moral problems that exist for both shareholders and managers of corporations. First, this section will explore the moral dimensions of the role of the shareholder, including: the quest for efficiency that works against the cultivation of human relationships and solidarity, the ability to earn money without work while engaging in only limited risk, the lack of ability to control the activities of the organization (if it were desired), and its counterpart, the ability to exempt oneself from exerting any responsibility for the activities and processes of the firm. Managers and

4 During the financial crisis of 2008-10, the volume of IPOs was drastically reduced. Small investors, even in boom times of many IPOs, frequently are unable to obtain shares of original issue. 5 In 2009, the value of total new shares issued in the United States was $234 billion; of this, $63 billion was issued by nonfinancial firms and $171 billion by financial firms. In contrast, the market value of total equity trades during 2009 was $57,566 billion. The market value of new issues represents less than 0.41% of the total of equity trades. I am indebted to Marjorie Kelly’s book, The Divine Right of Capital: Dethroning the Corporate Aristocracy, (San Francisco: Berrett-Koehler, 2003), at 33, for providing the inspiration to examine this data, as well as providing direction as to the source. Data can be found in the U.S. Census Bureau’s 2011 Statistical Abstract of the United States, Tables 1201 (new issues; from Federal Reserve data) and 1208 (total equity trades; from SEC data). See http://www.census.gov/compendia/statab/ cats/banking_finance_insurance/stocks_and_bonds_equity_ownership.html.

43 workers within corporations may experience alienation and lack of solidarity, conflicts of interests regarding the fiduciary responsibility to shareholders, and a competitive and antagonistic work environment that results from the quest to increase efficiencies, cut costs, and constantly innovate.

One of the advantages of the corporate form of organization is that it can raise significant sums of capital readily through the equity market.6 Economists value the efficiency of the intermediation function of the capital markets, one in which deficit saving units do not have to seek out surplus saving units, and vice versa. Through the capital markets, suppliers and users of capital can transact business at the market rate, yet they do not actually have to interact with each other on an individual level. From an economic standpoint, this is good, as it leads to increased “efficiency.” As William

Megginson writes, without the gains achieved from this Fisherian separation7,

firms would have to tailor their investment decisions to the preferences of individual investors. . . . one of the most significant problems confronting small businesses…is that they usually cannot make this separation...and are thus unable either to raise capital in their own right or to establish an existence separate from their individual owners. Partly for this reason, business…is dominated by a relative handful of large, professionally-managed, limited liability companies that have many widely dispersed shareholders/owners and which can tap a variety of financing sources…8

Closer inspection of this statement reveals that Megginson (and more generally the field of economics) is not simply making a morally-neutral claim; rather, he is asserting “good” to the disaggregated shareholder model, good which stems from the efficiencies of the capital markets. In an efficient capital market, “borrowers do not have

6 There is also an active market for debt securities, but that is beyond the scope of this paper. 7 Megginson is referring to Irving Fisher’s separation theorem, published in 1930. 8 William L. Megginson, Corporate Finance Theory (New York: Addison-Wesley, 1997), 5.

44 to consider the consumption preferences of individual investors.”9 In such a market, we cannot see or get to know the person on the other end of the transaction, yet economists view this market as superior, more efficient, and therefore more desirable than one in which individuals must interact and seek each other out. Indeed, in an efficient market, we are unable to know who benefited from a loan that might have been made by the bank in which we made our deposit.10

But this very point, and Fisher’s separation theorem itself, contains a value judgment. It prizes the efficiency of large, impersonal transactions over smaller ones, as those who offer larger transaction volume can achieve better interest rates and exchange rates. Fisher’s separation theorem dismisses out-of-hand the possibility that a particular provider of capital would want to spend time getting to know a potential user of capital.

It rejects as unreasonable and inefficient the desire to cultivate a community among various lenders and users of capital. Current economists and finance theory would state that these efforts would be inefficient uses of management time. The capital markets exist so as to make loanable funds available more cheaply and quickly than a one-on-one relationship; it would be inefficient and ridiculous to waste one’s time on building such relationships.11 Organizations “go public”, becoming publicly-held corporations, selling ownership shares of stock so as to raise large amounts of capital more quickly and efficiently than could be done through personal contacts.

9 Ibid., 4. 10 This reminds me of George Bailey in the movie “It’s a Wonderful Life”, when he stops a bank-run by explaining to the townspeople that the bank can’t pay them their savings at the moment, because it is invested in their neighbor’s houses: “The money’s not here, your money’s in Joe’s house, that’s right next to yours, and the Kennedy house and Mrs. Makelin’s house, and 100 others!” 11 Only in the context of what is known as “reputational capital” might relationship be important, but in the public equity market, a firm’s reputation will be factored into the price for which its shares are offered. In an efficient market, all publicly-available information is contained in the share price. For individual borrowers, reputation is no longer built on relationship, but on credit score.

45 Consider a person who has purchased common stock of ABC Company in the secondary market (and is not an employee of ABC company). This “owner” of the firm does not do any work for the firm, but has the right to receive dividend income and possible share price appreciation. This investor has no responsibility for honoring the contracts the firm enters into, no responsibility for the products it produces, no responsibility for the way it treats its employees, and no responsibility for how it interacts with the environment. Because of the separation of ownership and control, shareholders are able to excuse themselves from not only the “duty” of work, but also from the responsibility of the consequences of the decisions that corporate managers make about the firm’s activities.12 In the words of finance researchers Eugene Fama and Michael

Jensen, “stockholders are not required to have any other role in the organization.”13

In his preface to the 1967 revised edition of The Modern Corporation and Private

Property,14 Adolf Berle described how the secondary market for the exchange of stock is not defensible by arguments of neo-classical economics. He wrote:

The purchaser of stock does not contribute savings to an enterprise, thus enabling it to increase its plant or operations. He does not take the ‘risk’ of a new or increased economic operation; he merely estimates the chance of the corporation’s shares increasing in value. The contribution his purchase makes to anyone other than himself is the maintenance of liquidity for other shareholders who may wish to convert their holdings into cash. Clearly he cannot and does not intend to contribute managerial or entrepreneurial effort or service…. Why have stockholders? What contribution do they make,…[they] toil not, neither do they spin, to earn that reward. They are beneficiaries by position only. Justification for their inheritance must be sought outside classic economic reasoning.15

12 Shareholders have rights and privileges, but no corresponding duty or obligations to the firm. 13 Eugene F. Fama and Michael C. Jensen, “Organizational Forms and Investment Decisions,” Journal of Financial Economics 14 (March 1985), 101-119, at 102. 14 Originally published in 1932. 15 Adolf Berle, preface to The Modern Corporation and Private Property by Adolf Berle and Gardiner Means, (New York: Harcourt, Brace & World, Inc., 1967), xxiii.

46

The publicly-traded corporate form of organization, with its separation of ownership and management, allows secondary-market investors to earn dividends

(investment income) and possibly earn a capital gain from price appreciation, in exchange for assuming the risk of loss of the initial outlay of cash required to purchase the shares. As noted above, the shareholders are not required to work at the firm, and they are not required to vote their shares. The shareholders, who are also called investor/owners, are able to expropriate wealth from those who labored to produce it, reaping financial benefits from the work of others, when, in reality, none of the funds from their purchase price was used by the firm. The act of buying shares in the secondary market exonerates shareholders from bearing any responsibility for the actions of the firm, the products that they manufacture, the prices they charge, or any other business decisions made by the firm; the worst consequence these shareholders might face is to lose the money invested in the stock. Recalling what John Paul II had to say about labor and capital, a “labor system can be right…and also morally legitimate, if …it overcomes the opposition between labor and capital.”16 Clearly, the publicly-traded corporate form of organization does not seek to overcome that opposition; rather, it is a source of it.

In an efficient capital market, shareholders can be termed “atomistic”; that is, there are many, many shareholders, each of whom owns a small percentage of the shares.

While Fama and Jensen argue that shareholders control and monitor decisions by electing a board of directors to oversee the activities of management, data would suggest that due

16 Laborem Exercens, 13.

47 to atomistic ownership, small shareholders who own significantly less than 1% of a share of stock are not in any position to have their vote count.17

In many cases, small investors hold shares of firms indirectly through their retirement funds, known as institutional investors. When individual workers purchase shares (typically through a 401(k) or 403(b) plan) in an attempt to save for retirement, these mutual funds are comprised of shares of common stock of many publicly-traded corporations. When shares are owned in this way, the institutional investor (such as

TIAA-CREF, Fidelity, BlackRock, etc.) owns the shares, and accordingly, has the right to vote them. Typically, even large institutional investors, such as pension funds, typically do not own more than 10% - 15% of a firm’s stock.

A brief survey of three well-known companies shows that share ownership is exceedingly atomistic. In additional to total shares outstanding, companies are required to disclose in their proxy statements the ownerships of inside directors and executive officers, as well as any group or individual who holds more than 5% of the issued and outstanding common stock.18

Example 1. Coca-Cola Company

According to its Balance Sheet dated December 31, 2009, the Coca-Cola company had 2,300,000,000 shares of common stock outstanding. The group of 28 inside

17 Fama, Eugene F. and Michael C. Jensen. "Separation of Ownership and Control," Journal of Law and Economics 26, no. 2 (1983): 301-325. Effective November 15, 2010, new financial reform introduced by the Dodd-Frank bill has amended the Securities Exchange Act Rule 14a to increase the ability of small shareholders to place a candidate for director on the firm’s annual proxy statement. Unfortunately, the proxy-access rules and procedure governing such placement are strict. For example, the shareholder, or group of shareholders, must own at least 3% of the voting power of a firm’s stock for the past three years, and the window for submitting appropriate paperwork is a 30-day window that spans from “150 days prior to the anniversary of the mailing of the prior year’s proxy statement and no later than 120 days prior to this date.” In any case, firms are not required to place more than one additional candidate on the proxy statement, and the placement of one shareholder nominated and elected director may be insignificant for firms with sizable boards. See http://www.sec.gov/rules/final/2010/33-9136.pdf 18 All the company information is available at the Securities and Exchange Commission website: http://edgar.sec.gov.

48 directors and executive officers held 125,193,121 shares (about 5.4%). Berkshire

Hathaway, Inc., owned 200,000,000 shares (approximately 8.7%), and BlackRock Inc., held nearly 125,000,000 shares (5.4%). Both Berkshire Hathaway and BlackRock can both be considered institutional investors. This means that approximately 80% of the shares were owned in what can be described as “atomistic” ownership -- by people or firms who own less than 5% of the shares. These individuals can exert little to no influence over the firm’s activities.

Example 2. Apple, Inc.

On its 2011 proxy statement, Apple Inc. reported that, as of December 17, 2010, it had 920,965,218 shares outstanding, with all directors and executive officers together owning just 6,166,542 shares (less than 1% as a group). Institutional investors

BlackRock Inc. (50,654,165 shares) and Fidelity, Inc., each owned just over 5%, and firm founder Steve Jobs owned only 5,546,451 shares, which is less than 1%.

Example 3. Exxon-Mobil, Inc.

On its proxy statement, Exxon-Mobil reported that as of February 28, 2010, the firm had 4,713,657,041 shares of common stock outstanding. BlackRock, Inc., held

273,289,117 (just over 5%), and no officer or director owned more than 0.04% of shares.

These examples are included to demonstrate that, although there are some exceptions, share ownership in most large corporations is so thinly distributed that even if an individual were dissatisfied with the actions of the company, that person’s voice is not loud enough to effect any real change. His or her only recourse is to simply sell the shares in the secondary market (or in a repurchase) and walk away. It is only perhaps the largest shareholders – the institutional investors – who can exert pressure on the

49 company’s directors, officers and managers. Individual atomistic shareholders do not have large enough ownership shares to monitor effectively the activities of managers.

With the exception of the market for corporate control, only institutional investors have any chance of monitoring and disciplining management.19

Many participants in the “stock market” who own shares of firms through pension funds, such as CALPERS or TIAA-CREF, do not realize that they have little to no impact on the firm’s activities. This may be perhaps one of the greatest hoaxes ever perpetrated on people. Especially with the advent of “social choice” investment funds, people think that their retirement contributions are going to help fund the activities of socially redeeming firms, such as environmentally conscious firms, or those that are sensitive to

Christian values by not engaging in the purchase or sale of morally problematic goods, such as alcohol, tobacco, or weapons. While any dividend income received by the fund from these firms is ostensibly generated through socially-conscious business models, individuals do not help these businesses to grow and expand because the secondary- market purchases do not benefit the firms.20 Individuals contribute to the success of social-choice firms only through consumption of these firms’ products.

Specific moral problems exist for managers and workers within corporations, as well. Due to the quest to realize economies of scale and increased production efficiencies, workers are in many cases separated both physically and mentally from the product they help create or the service they help provide. An automobile assembly line is

19 The market for corporate control refers to the threat that firms with under-performing managers are subject to takeover. 20 Only if the institutional investor (retirement fund) were to purchase shares in a new issuance would this be the case. It should be emphasized again that the firms’ shares are held by the institutional investor, then pooled into mutual funds. The worker who saves for retirement buys shares of the mutual fund; however, this does not prohibit the worker from also owning corporate shares directly.

50 a ready example of this separation, as is the example of a person who handles baggage from terminal to airplane at the airport. The creation of distance between worker and outcome of the work leads to alienation and the feeling of detachment and insignificance.21 Vincent Miller claims that alienated work experienced on a daily basis by “industrial laborers, post-industrial service workers, and white collar office workers,” who sell labor to others so as to be able to meet “basic needs for survival” through a system of exchange, creates a “shallow conception of human needs.”22 As a result, the repeated actions of working to meet these needs primes these persons “to seek just the sorts of shallow fulfillments that consumerism provides.”23 In this way, their identities are fulfilled not through John Paul II’s “self-realization” that can happen through work, but rather are formed through acts of consumption of goods that, as a result of the division of labor, have been produced by others.

The corporate form of organization also brings with it problems related to managers’ fiduciary responsibility to shareholders. Finance textbooks typically state within the first chapter that the goal of financial decision-making is to maximize the owners’ equity. In a publicly-traded corporation, the owners’ equity is equivalent to the market value of the outstanding stock. A well-respected finance textbook explains,

it follows that the financial manager acts in the shareholders’ best interests by making decisions that increase the value of the stock. The appropriate goal for the

21 Karl Marx wrote, “The alienation of the worker in his product means not only that his labour becomes an object, an external existence, but that it exists outside him, independently, as something alien to him …it means that the life which he has conferred on the object confronts him as something hostile and alien.” (72) “The estrangement is manifested not only in the result but in the act of production,” (73), and as a result, a worker’s labor is “not his own, but someone else’s, that it does not belong to him, that in it he belongs, not to himself, but to another” (74). Not only does labor alienate man from himself and from his product, but it also results in the “estrangement of man from man” (77). This is clearly not the route we wish to take! Karl Marx, “Economic and Philosophic Manuscripts of 1844,” in The Marx-Engels Reader, 2d ed., ed. Robert C. Tucker (New York: W.W. Norton & Co., 1978) 66-125, at 72 -77, passim. 22 Vincent J. Miller, Consuming Religion (New York: Continuum, 2003), 35. 23 Ibid.

51 financial manager can thus be stated quite easily: The goal of financial management is to maximize the current value per share of the existing stock [emphasis original].24

This is the only goal, or end, that the financial manager seeks. Financial managers (indeed, corporate directors and executive officers) have a fiduciary duty to maximize the shareholder value.25 Practically, the choice of this decision rule allows for a solvable mathematical objective function. Regardless of how many independent variables may exist, the financial manager has the fiduciary responsibility to act in such a way as to maximize equity value. There is no ambiguity that would allow for confusion in decision-making. Although there are certain non-quantifiable costs, such as costs of pollution to the environment, health risks to workers, safety of production facilities, etc., attempts are made, nevertheless, to quantify these costs, as a “proxy” for the possible negative impacts. Other than approximations, financial decision-makers do not have any tools at their disposal in their “finance tool kit” to discern the impact of qualitative factors on finance decisions.26 Current models for financial decision-making take as normative the goal of maximizing shareholder wealth. This results in a tendency to value and be concerned with only those transactions that are measurable and quantifiable. As noted above, all economic decisions, whether they are about consumption, production, wages, hiring, or hard-to-quantify environmental impacts, are always a “moral and cultural choice.”27 Unfortunately, our financial models are unable to price moral dimensions.

24 Ross, Westerfield, and Jaffe, 12. 25 Benedict XVI was clear in Caritas in Veritate that profit cannot be the end goal for a business organization. The Catechism of the Catholic Church also states, “A theory that makes profit the exclusive norm and ultimate end of economic activity is morally unacceptable.” United States Catholic Conference, Inc., Catechism of the Catholic Church (New York: Doubleday Press, 1997), 2424. 26 All the more reason why practical wisdom is a virtue that needs to be cultivated by business students and professionals! 27 Pope John Paul II, Centesimus Annus, Papal Encyclical, 1991, 36.

52 In addition, the pitting of workers against owners is acute when corporate leaders, under pressure from “the market” (especially institutional investors holding shares in the firm as retirement assets) to increase profits, try to “establish the lowest possible wages for the work done by the employees.”28 This pressure stems directly from the goal of maximizing value for the shareholders, who, as residual claimants, are last in line for cash flow. Employees represent a drain on the corporation, in terms of wage expense, rather than a corporation’s primary assets.

Competition between firms and among entrepreneurs is a hallmark of the capitalist system; for-profit corporations will not stay in business if they do not stay competitive and generate positive cash flow. Constant innovation to build a better mousetrap is a requirement for the system to function and for the for-profit corporation to continue as a going concern.29 Intense competition requires a drive toward more efficient ways of production and raising capital. We are told that, due to economies of scale in production and in the raising of capital, the corporate form of organization is more efficient than a smaller firm, and is thereby valued as “better”. Typically lost in the discussion of increased efficiencies is the question: “At what cost are we becoming more efficient?” Because finance and efficiencies are based on economic theory that is utilitarian in nature and decision-making is based on anticipated consequences, the hard-

28 Laborem Exercens, 11. 29 In his 1931 Papal Encyclical Quadragesimo Anno, Pope Pius XI had quite a bit to say about competition: “Just as the unity of human society cannot be founded on an opposition of classes, so also the right ordering of economic life cannot be left to a free competition of forces. For from this source, as from a poisoned spring, have originated and spread all the errors of individualist economic teaching. Destroying through forgetfulness or ignorance the social and moral character of economic life, it held that economic life must be considered and treated as altogether free from and independent of public authority, because in the market, i.e., in the free struggle of competitors, it would have a principle of self direction which governs it much more perfectly than would the intervention of any created intellect. But free competition, while justified and certainly useful provided it is kept within certain limits, clearly cannot direct economic life.” (Quadragesimo Anno, 88).

53 to-measure consequences (qualitative ones) typically are overshadowed by those that are easier-to-measure (the quantifiable ones). We can measure how fixed costs per unit decline as production increases, but we can’t measure the benefit of a well-formed community or the cost to society and to families of a reduction in the work force within an organization. Economic analysis is not value-free; it is based on a form of utilitarianism grounded in Enlightenment rationality and empiricism. This kind of analysis determines that quantitative gains, which can be measured, will prevail over qualitative, non-measurable losses. More than two hundred years beyond Adam Smith, economic models value only that which can be measured and quantified. Models of this sort allow us to delude ourselves (and our economy, and our nations) into thinking that we are measuring the right thing, and that increased efficiencies and cost savings are always for the better. We must remember, as Benedict XVI wrote, “the notion of

‘efficiency’ is not value-free.”30

The for-profit corporate form of organization is excellent at producing growth and realizing efficiencies, but it is also excellent at promoting competition and fostering antagonism. The intense competition required for survival in the marketplace, combined with the view that employees are a cost to be minimized, results in the temptation for corporate cultures to be places of cutthroat competition. Workplace culture can become characterized by intense internal competition, in which workers compete for (and are rewarded on the basis of) profit margins and return on investment. Pressure from external firms, as well as from institutional investors and shareholders, creates competition in the pricing market that can range from friendly to hostile. These cultures create moral conflict for employees who are Christians, as they interfere with persons’

30 Caritas in Veritate, 50.

54 abilities to adhere to Jesus’ Great Commandment to “love your neighbor as yourself.”31

How can we both love our neighbor when we are pressured to steal his clients, sabotage his innovative projects, or aim to put her out of business? Competitive cultures that foster cutthroat competition are contradictory to the call to love and cooperate with one another. The emphasis on ever-increasing profits and the practice of measuring worker performance through quantifiable goals (such as production quotas) is not characteristic of charitable or friendly competition either within or external to the firm. Situations in which corporate cultures are corrosively competitive (for example, only one person in a department can be promoted, an advertising account manager must contract for a new account or be fired) are not consistent with charity. The culture of the organization is exceedingly important, and it flows from the goals, mission, and structure of the organization.

In summary, the publicly-held, for-profit corporate form of organization operates in an equity market that prizes efficiency over human relationships, allows purchasers of stock to earn income without work and to evade responsibility for the actions of the company. The corporate form promotes competition among employees, alienates workers, and, in its pursuit of the maximization of shareholder wealth, takes as normative a goal that cannot value qualitative factors and moral aspects of economic decisions.

The publicly-traded, for-profit corporate form of organization is not only an inadequate structure by which to attempt to promote the common good, but it is actually hostile to the goal of anything other than maximization of shareholder wealth. Christians

31 Mark 12:31. The Catechism of the Catholic Church reminds us that “Love of neighbor is inseparable from love for God.” Catechism, 1878.

55 are called to greater responsibility for their actions and for the well-being of their neighbor than this form of organization allows.

The next chapter will explore the ontology of being and the view of the freedom of the human person that provides a framework for the modern, for-profit corporate form of business organization. It will then show how a participatory ontology and deeper understanding of freedom can help point the way toward new forms of business organization that seek to ameliorate the problems articulated in chapter two.

56

CHAPTER III

RECOVERING AN ONTOLOGY OF PARTICIPATION

This chapter analyzes the implications of the Enlightenment legacy of the secular sphere, in which questions of the economy are viewed as distinct and held apart from questions of theology. This bracketing off of transcendent questions from those of economics, in such a manner that questions relevant to economy and transactions in economy are relegated to a secular sphere, was crystallized by the Enlightenment but had its roots in an ontological shift to a univocal understanding of being.1 This chapter seeks to show the implications of this ontological shift for how we, in the current context, tend to think about freedom, the individual and community, and economic exchange. The chapter examines the modern U.S. societal view that holds human freedom in the economy, specifically one’s freedom to choose economic actions predicated on the notion of the autonomous rational individual, as a primary good to be realized.

This chapter distinguishes between two understandings of freedom: a modern economic understanding of freedom, grounded in a univocal conception of being, that defines freedom as a right by which an individual can act out of rational, self-interested utility maximization; and second, a relational, kenotic understanding of freedom grounded in a participatory ontology of being, in which freedom is a process, a journey

(itself a state of being) that happens when we, seeking Jesus, give ourselves to others in

1 See John Milbank’s Theology and Social Theory: Beyond Secular Reason. 2d ed. (Oxford: Blackwell), 2006.

57 relationship. This participatory ontology is critical to understanding and analyzing questions related to human work and participation in the economy and to envisioning new forms of business, as it allows the opportunity to question the modern understanding of the freedom of the individual and its resulting lack of a unified economic telos.

This chapter will proceed in three parts. First, it will outline the way in which

Enlightenment thought has bracketed off economic questions from those of theology by the use of a univocal understanding of being, and it will address the implications of this separation of economy from theology for notions of freedom, individual and community, telos, relationships and work. Second, it will propose an alternative view that reclaims the ontological difference between God and creatures, holding that all materiality is created and sustained by God and thereby participates in God. The third part will draw out implications of this participatory ontology for a kenotic understanding of freedom, persons in community, telos, work, and the exchange of goods and services.

The Enlightenment’s Legacy:

Before arriving at our eventual goal of envisioning alternatives for new ways of organizing business, it is important to consider our current predicament. John Milbank argues that, as a result of the Enlightenment, economic considerations have been bracketed off from discussions of faith.2 Discussions of economics, which concern

2 Milbank is not the only author to note that matters of theology and economics are treated as separate. Stanley Hauerwas and Samuel Wells attribute significant causality to Immanuel Kant for the distinction and the subsequent implications of such a distinction on the understanding of freedom. In their edited volume, the Blackwell Companion to Christian Ethics (Malden, MA: Blackwell, 2006), they state that Kant’s “distinction…between the immanent world of experience…and the unreachable…transcendent world of which religious language speaks has been immensely influential and represents the foundation of conventional distinctions between doctrine and ethics. It undergirds all perspectives that regard talk of God as speculation, while describing talk of ourselves, human beings, as observation” (4). As a result, “the individual and the ethics that established the moral dignity of the individual were assumed to be free of any historical and religious determination” (31). The relevant issue for the present discussion is not the source

58 actions by individual, self-interested utility maximizers, take place within a neutral, secular sphere, immune from normative questions about God, faith, and the telos of economy. Milbank asserts that this outcome of the secular sphere can be traced to John

Duns Scotus (d. 1308), who was among the first to put forth a univocal conception of being.3 This is to say that both God and humans participate similarly in the category of

“being,” which is a significant departure from the pre-modern/medieval view of

Augustine and Aquinas, which held that God is Being and that human creatures participate in God’s being. After Scotus, Enlightenment thinkers such as Descartes,

Locke, Hume, Hobbes, Smith, and Kant continued to conceive of our actions as separate from our participation in God. The “secular” was created, a place in which questions of economy and science are bracketed off from questions of God. As James K. A. Smith explains:

modernity generated the invention of the secular by rejecting the participatory ontology….that understood the immanent as suspended from the transcendent… [and] assumed an ontology based on the univocity of being, which denied the ‘depth’ of being (Scotus) – an ontology that both flattened the world and unhooked it from the transcendent, thus creating a new space untouched by the divine and an autonomous reserve of reality outside the religious. In short, the secular emerged and along with it the notion of an autonomous reason that was supposedly neutral and objective, offering an account of the world uncontaminated by the theological….The result was a picture of the social order as an aggregate of competing atomistic, self-interested subjects (Hobbes, Adam Smith) quasi-united in a supposedly neutral space called the ‘public,’ where relationships were no longer governed by charity but by contract.4

The ontological shift to a univocal conception of being has created a legacy that applies in specific ways to the current economic situation of the United States. Our U.S.

of the “blame” for the bifurcation of economics and theology; rather, it is that Milbank’s description fits the lived reality of the 21st century. 3 John Milbank, Theology and Social Theory. 4 James K. A. Smith, Introducing Radical Orthodoxy: Mapping a Post-Secular Theology (Grand Rapids: MI, Baker Academic, 2004), 88-89.

59 economy rests on the foundation that citizens are free, autonomous, rational individuals who come together to transact in a secular economic sphere. Bellah et al. explain that

“the notion of an unencumbered self is derived…fundamentally from modern philosophy, from Descartes, Locke, and Hume, who affect us more than we imagine.”5 As a result of this conception of the modern individual, Bellah et al. claim that Americans are “limited to a language of radical individual autonomy…they cannot think about themselves or others except as arbitrary centers of volition.”6

Bernard Laurent similarly demonstrates that the Enlightenment redefined what it means to be human.7 Rather than considering the human person as a political and social being, whose individual needs might need to be subordinated to the good of the community from time to time, the Enlightenment focused on the preservation of the rights of the individual to pursue his freedom. As economic actors, individuals exercise this freedom by acting upon desires without undue interference from government or others, unconstrained except by law. Ludwig von Mises defined an individual’s freedom to act within a free market as “that state of affairs in which the individual’s discretion to choose is not constrained by governmental violence beyond the margin within which the praxeological law restricts it anyway.”8 Accordingly, individuals are free to act in ways that maximize utility, constrained only to the extent that they infringe on others’ rights.

Economist Milton Friedman, a representative voice for modern classical economic theory, places paramount importance on freedom as the right to make choices

5 Robert N. Bellah, Richard Madsen, William M. Sullivan, Ann Swidler, and Steven M.Tipton, Habits of the Heart: Individualism and Commitment in American Life, updated edition (Berkeley: University of California Press, 1996), 80. 6 Ibid, 81. 7 Laurent, 519-20. 8 Ludwig von Mises, “The Market,” excerpted from Human Action [1949], in Morality and the Market: Ethics and Virtue in the Conduct of Business, ed. Eugene Heath (New York: McGraw Hill, 2002), 32.

60 about the ways one participates in the economy, including choices about one’s purchases, consumption and one’s choice of work. As Friedman states, freedom is “our ultimate goal in judging social arrangements.”9 Questions of which products to purchase and consume, as well as questions of God, reasons for human existence, and the ultimate telos for one’s life are, in the context of freedom, relegated to the level of personal choice.

Bellah et al. observe, in contrast to Friedman, that this freedom to choose creates a shackle of its own; “the American understanding of the autonomy of the self places the burden of one’s own deepest self-definitions on one’s own individual choice.”10

This understanding of freedom has generated a dynamic that sets individual rights

(including property rights), as not only necessary for one’s freedom, but as a sufficient condition for understanding one’s role in society and ensuring the common good. Adam

Smith’s concept of the “invisible hand” serves to promote the good of society in a rather mysterious way. As an individual acts to maximize

…his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intentions….By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.11

As William Cavanaugh explains, Adam Smith’s “invisible hand of the market guides economic activity so that the pursuit of self-interest by uncoordinated individuals miraculously works out to the benefit of all.”12 In an economy characterized by free market competition, the action of every individual pursuing his or her rational self-

9 Milton Friedman, Capitalism and Freedom (Chicago: Univ. of Chicago Press, 1962), 12. 10 Bellah et al., 65. 11 Adam Smith, An Inquiry into the Nature and Causes of The Wealth of Nations, in The Essential Adam Smith, ed. Robert Heilbroner (New York: W.W. Norton & Co, 1986), 265. 12 William Cavanaugh, Being Consumed: Economics and Christian Desire (Grand Rapids, MI: Eerdmans, 2008), 93.

61 interest leads “to the optimum satisfaction of human wants.”13 Hence, we are told, an individual’s obligation to help achieve the common good is met simply by pursuing one’s own interests, even without a common purpose for economic action.14 As a result, each individual consuming to maximize self-satisfaction creates an economic society “marked by desire with no telos other than consumption itself.”15 Any reference to a transcendent end is neither excluded nor denied by the market, but rather is “preserved in the freedom of each individual to pursue the ends of his or her choice.”16

Human economic actions are those of consumption, production, and distribution.

The free market places few to no constraints on how one might act as a consumer.17 In general, individual consumers do not have to temper or restrict their actions of consumption because they infringe on others’ abilities to consume. While this could happen in the event of a shortage of a particular product, the free market would adjudicate the distribution of the produce; that is, the market will determine which consumer is able to consume the good. This happens through the process of price adjustment: the price of the product in the market will increase until the equilibrium price (at which demand for the product equals the supply of the product) is reached. In this way, the market objectively regulates who does and who doesn’t consume the

13 Adolf Berle and Gardiner Means, The Modern Corporation and Private Property (New York: MacMillian, 1932), 345. It should be noted that we do not live in a completely free market economy. We have a mixed economy, in which certain goods and services are planned, managed, and delivered by the state. Adam Smith himself did not object to the state having a role in this way. What he desired was that the state should stay out of the affairs of private business. 14 Cavanaugh explains that the lack of a common telos for our economic desires results in the “sheer arbitrary power of one will against another. Freedom thus gives way to the aggrandizement of power.” See Cavanaugh, 2. 15 Ibid., 74. 16 Ibid., 6. 17 Of course, alcohol cannot be purchased by those under 21, etc., but for the most part, products and services are available to all who have the funds (or can borrow funds) to purchase them. Ludwig von Mises writes that the consumer is “sovereign,” and that the “only intent of consumers is to secure the best possible satisfaction of their needs.” See von Mises, at 26 and 31.

62 product. While acts of producers and distributors are frequently hampered by regulation by the state, in most cases individuals who control or have access to sufficient capital possess the freedom to start businesses and enter into contracts with suppliers and workers.

This economic understanding of freedom, which focuses on the individual’s right to free economic action, also affects the understanding of private property. After the

Enlightenment, the right to use property came to be understood as an absolute right; it was “stripped from its theological underpinnings by seventeenth-century natural law theorists.”18 Today, U.S. law allows persons to be free to hold material goods, including land, without interference and without obligation to others.19 Lost is the understanding that all of creation belongs to God and people are given stewardship over God’s creation, that the goods of the earth were given to all its inhabitants and are meant to be enjoyed by all. In the tradition of the Catholic church, ownership of private property is subject to the universal destination of goods – the fruits of the earth are destined to meet the needs of all those on earth, not just those who can access the marketplace.20

This modern conception of freedom, characterized by the right to individual action and ownership, has created an endless cycle of frenetic desire and consumption.

Our identities have become caught up in what we purchase, what we own, what we want; the new American dream is founded on consumption. The culture of business, which includes advertising and the creation of demand, cultivates and energizes the identity-by-

18 Ulrich Duchrow and Franz J. Hinkelammert, Property for People, Not for Profit: Alternatives to the Global Tyranny of Capital (New York: Zed Books, 2004), 34. 19 Land typically is subject to local property tax and eminent domain of the state. 20 Church tradition maintains that the ownership of property is subordinated to the needs of others. The Vatican II document, Pastoral Constitution on the Church in the Modern World, instructs us, “In his use of things man should regard the external goods he legitimately owns not merely as exclusive to himself but common to others also, in the sense that they can benefit others as well as himself.” (1965, 69, section 1).

63 consumption formula. As Vincent Miller points out, the individualism in U.S. society has “intensified through the narcissism elicited by advertising. Deprived of communal sources of identity, people were encouraged to invest in commodity-based self- enhancements.”21 The consumption of goods is “motivated by the need to form and communicate an identity in a dynamic and competitive social setting”22; as a result, people consume in an effort to “maintain their status in a competitive society.”23

Consequently, one can shape his or her identity, or at least others’ perceptions of it, by altering one’s consumption. Conspicuous consumption speaks the message of our identity, our consumption states who we are, for us. The disordered understanding of freedom and self-reliance combines with alienated notions of work that predispose us to shallow acts of consumption. In this individualistic, competitive culture characterized by excessive consumption, it is through the free acts of purchasing and consuming that we

“become” ourselves.24

In addition, modernity’s enthronement of individual freedom as the primary good leads to a perduring conflict between individual and community. The social, cultural, and economic environment of the United States stresses the significance of the individual; as

Bellah et al. state, “individualism lies at the very core of American culture.”25 The considerable emphasis on the primacy of the individual leads to a distorted understanding of community. Bellah et al. write that “individualism, the first language in which

21 Vince Miller, Consuming Religion, (New York: Continuum, 2003), 54. 22 Ibid., 115. 23 Ibid., 116. 24 The desire we have for God is corrupted and mis-directed into the desire for all sorts of material things: money, cars, sex, clothing, music, drink, houses, status, etc. It is this mis-direction that feeds the capitalist economy, as this is an economy that needs the engine of consumption (and ingenuity of production) to drive growth. Without the engine of fervent consumption, if products are simply not purchased, a business cannot grow or expand. 25 Bellah et al., 142.

64 Americans tend to think about their lives, values independence and self-reliance above all else,” which results in an inability for Americans to understand that they are

“interdependent on others.”26 Roberto Goizueta cautions that individual-centric cultures hold a view in which the community is seen as external to the individual, and, as a result, a community becomes “nothing more than a collection of individuals who have chosen to enter into a contractual relationship with each other for some common purpose: e.g., to worship, to share living quarters, to create a social order, to study a topic of common interest, to do business, to socialize…. [an individual] is always free to leave that community when it no longer satisfies his or her needs.”27 Michael Novak’s work provides an excellent example of the modern, capitalist interpretation of economic freedom to act (to choose and contract), and its correlative understanding of the individual and community against which Goizueta warns. Novak articulates his view of

“democratic capitalism,” stating:

In order to create wealth, individuals must be free to be other. They are not to be understood as fragments of a collective, members of a kinship group or ethnic enclave, but as individual others; originating sources of insight and choice….when they form communities, they choose them, elect them, contract for them. The natural state of political community for persons is arrived at not by primordial belonging but by constitutional compact….the fulfillment of the individual lies in a beloved community. Yet any community worthy of such love values the singularity and inviolability of each person. Without true individualism, there is no true community [italics original].28

26 Robert N. Bellah, Richard Madsen, William M. Sullivan, Ann Swidler, and Steven M.Tipton, “Introduction to the Updated Edition: A House Divided” in Habits of the Heart: Individualism and Commitment in American Life, updated edition (Berkeley: University of California Press, 1996), viii. 27 Roberto S. Goizueta, Caminemos con Jesus: Toward a Latino Theology of Accompaniment (Maryknoll, NY: Orbis Books, 1995), 60. 28 Michael Novak, The Spirit of Democratic Capitalism (New York: Simon & Schuster, 1982), 355-6. For a fuller account of Novak’s treatment of freedom, see D. Stephen Long’s Divine Economy: Theology and the Market (London: Routledge), 2000.

65 In contrast to Novak, authors such as Goizueta, Miller, and Bellah et al. maintain that our relationships in community serve to form our identity. Communities exist prior to the individual, rather than the individual being prior to (and external to) the community. Goizueta, whose work is concerned specifically with Hispanic and Latino populations, offers that when “human relationships are not constitutive of the self…[but] are voluntarily chosen,” in the manner described above by Novak, these relationships become viewed as possessions.29 In this way, a relationship is just one more item to be demanded, sought after, acquired, consumed, and eventually thrown out. “Like any possession, relationships can be discarded when they no longer meet the needs of the individual.”30 In this framework of consumable relationships, human persons are but one means by which we can obtain personal satisfaction and increased levels of utility.31 This perspective on human relationships, grounded in Enlightenment thought, becomes the touchstone for how individuals act in economic transactions.

Robert Bellah et al. make clear that the individualism prevalent in American upper middle class communities is consistent with Novak’s view of the individual; citizens can seek out and join communities if they desire to do so. Miller suggests that even the prevalence of the single family home contributes to and reinforces the individualism in U.S. culture. “Social isolation and the burdens of maintaining a family in this system make it unlikely that other people’s needs [outside the family] will ever present themselves… . The geography of the single-family home makes it very likely that we will care more about the feeding of our pets than about the millions of children who

29 Goizueta, 60. 30 Ibid. 31 Family relationships may or may not be of a disposable nature. The scourge of abortion and euthanasia in America might provide evidence that family relationships are more disposable than we might think.

66 go to bed hungry around us.”32 Miller notes that the intergenerational home, in which family traditions (including religion) were passed along, is largely a piece of America’s past. Bellah et al. explain that the individualistic conception of the person makes the idea of community difficult for Americans to understand. “The notion that one discovers one’s beliefs in, and through, tradition and community is not very congenial to

Americans. Most of us imagine an autonomous self existing independently, entirely outside of any tradition and community, and then perhaps choosing one.”33

Bellah et al. point out an interesting irony associated with the distancing of the self from one’s community and family of origin that is a hallmark of current American society. “Just where we think we are most free, we are most coerced by the dominant beliefs of our own culture. For it is a powerful cultural fiction that we not only can, but must, make up our deepest beliefs in the isolation of our private selves.”34 It is not possible to stand back, out of our own context and social location, to create our beliefs without influence of those who have come before us. Yet, Bellah et al. suggest that this is exactly what we attempt to do so by our acts of consumption. They write, “separated from family, religion, and calling as sources of authority, duty, and moral example, the self first seeks to work out its own form of action by autonomously pursuing happiness and satisfying its wants.”35

In modern America, questions of identity are answered not only through one’s consumption, but also through one’s work. Bellah et al. assert that a person’s social status, and even one’s “personal identity – is conferred primarily by one’s relationship to

32 Miller, 50. 33 Bellah et al., 65. 34 Ibid. 35 Ibid., 79.

67 the economy, by one’s work and the income derived from one’s work.”36 Again, this result stems from the understanding of the human person that emerged during the

Enlightenment. Bernard Laurent writes, “The modern conception of man as a free being led Locke to define him by his aptitude for work…. Modern man is an owner and a worker animal.”37 In our post-Enlightenment society, acts of work have become distanced from the ends they serve, especially in large organizations where individual workers are removed from interaction with both the final product created and from relationships with the consumers of the product. Work itself fosters competition among individuals, rather than harmony among persons, in a race to sell one’s labor for a wage in a competitive labor market. In such a market, other individuals are seen only as increases in the supply, which results in a lower equilibrium price of labor.

D. Stephen Long contends that, contrary to the above-described Enlightenment legacy of economic freedom, questions of economics cannot be bracketed off to a purely secular sphere. Despite its lack of a communal telos, economics is not value-free, because it assumes that each person does act toward a self-determined end: the maximization of one’s utility. The selection of this goal represents in itself a moral choice, as any economic analysis based on classical economic theory has already determined that all actors in the economy subscribe to the principle of utility maximization.38 When economists leave the determination of “how things ought to be” to exogenously determined personal preferences, rather than to some objective moral

36 Bellah et al., “Introduction,” xix. Note that our work actions facilitate and necessitate consumption. We receive wages for our labor, but, due to the highly specialized nature of modern work, we must purchase other goods that we need but have not produced. 37 Laurent, 520. 38 As D. Stephen Long points out, this view of economics “advocates a particular tradition of moral agency wherein the moral life is a matter of choices.” Divine Economy: Theology and the Market. (London: Routledge, 2000), 224.

68 good then “morality and theology are reduced to value consumption.”39 The assumption that rational economic actors will always make decisions to increase economic utility is a moral judgment in itself, and stems from the modern bracketing off of God from scientific and social-scientific questions. The Enlightenment legacy we have inherited has silenced conversation on the possibility that there might be an economic common good, a common telos to which many economic actors order their economic actions. In our current system, one’s economic actions are adjudicated internally by self-determined personal value preferences; these preferences require neither community nor tradition for validity, only the understanding of one’s utility.40

The intense individualism that governs modern economic theory is inconsistent with the view of the person as social and interdependent. If we do not wish to accept the individualistic economic legacy of the Enlightenment as a deterministic system over which we have no control, if we find problematic the idea that our best economic thought assigns that there can be no common telos for economic action, if we think that

“freedom” means something more than freedom to act without interference by the state, what possible options are available?

While we can attribute the individualism in American society to the ideas that surfaced during the Enlightenment, we cannot summarily reject the entire Enlightenment out of hand and, in a nostalgic move, return to medieval ways of thinking about the person. The modern period has provided us with the field of epistemology and the “turn to the subject,” paradigms that were unknown to Aquinas. We must proceed into the

39 Long, Divine Economy, 223. 40 An interesting challenge for economics is to find a way to make individual preferences endogenous to economic models. In this way, questions of formation of preferences in community with intent to promote the common good might be addressed. See Andrew M. Yuengert’s “The Common Good for Economists,” Faith & Economics (38), 2001: 1-9.

69 post-secular age, but, as James Smith argues, “we cannot retain those vestiges of

Enlightenment modernity that coddle our continued liberal interests in individual rights….”41 If post-modernity is characterized by deconstruction, Smith argues, then why does post-modern critique stop short of a deconstructionist critique of liberal politics? If somewhere the Enlightenment took a wrong turn, and the emphasis on individual rights shifted in ways that we are now finding to be problematic for society, we can do something about it. We do not have to accept this system as our fate. We can return to the roots of theology in the days before Scotus, Locke, Hume, and Kant, recover what has been lost, and re-appropriate these ideas for today’s situation.42 To provide an alternative to the disordered understanding of freedom and its associated understandings of human relationships as merely transactional, the hegemony of the maximization of utility and, correspondingly, shareholder wealth, we must reclaim and begin with a theology of participation that maintains the ontological difference between God and creatures.

The next section will show how a participatory framework, in which all materiality participates in God, offers a fuller understanding of freedom, a corrective to this consumerist model of relationships, and restores a sense of individual in community.

This framework also provides a transcendent telos, rather than a consumerist one, for the human person, a telos that is sharable in traditioned community and can serve as the basis for common economic good.

41 James K.A. Smith, Introducing Radical Orthodoxy: Mapping a Post-Secular Theology (Grand Rapids, MI: Baker Academic, 2004), 61. 42 I make this suggestion at the risk of being labeled “ahistorical”; however, the next chapter will attempt to show that the recovery of such ideas is not a preposterous suggestion. The ideas themselves, while inert, may be acted upon to create prototypes that provide evidence of their feasibility. Examples of such prototypes will be described in chapter four.

70 A Participatory Ontology:

In contrast to Scotus’ univocal conception of being, authors such as John Milbank and James Smith propose a participatory ontology that considers all material creation as participating in the divine life. This section will set forth this participatory understanding of God, by turning to Aquinas and Augustine.

For Aquinas, God has no potentiality; God is pure act.43 The idea that God has no potentiality means that God cannot become more, in any way. God is pure act, pure potency, God is not limited in any way. God is God’s essence. Correspondingly, God cannot be other than God’s essence. God is not composed; there is in God no distinction of matter or form. In this way, God can be thought of (analogically, of course) as the ultimate and simple perfection of Being; God’s essence is “Being”, or “to Be.” As God told Moses, God is “I am Who Am” (Exod. 3:14).

Aquinas shows that we know that God exists from God’s effects. Aquinas demonstrates that God is perfectly simple, in that God is both God’s own essence (the

“what” God is) and God’s own existence (the “that” God is).44 Unlike God, creatures are composed, as they have both essence and existence; we can see this because a creature may or may not exist. The essence (being) of a creature participates in God’s essence

(Being), as God is the source of the existence of creatures. Aquinas explains how creatures participate in the being of God: “Therefore all beings apart from God are not their own being, but are beings by participation. Therefore it must be that all things which are diversified by the diverse participation of being, so as to be more or less perfect, are

43 Aquinas, Summa Theologica, I.3.3. 44 Aquinas states, “God is not only His own essence, as shown in the preceding article [A3], but also His own existence.” Summa Theologica, I.3.4.

71 caused by one First Being, Who possesses being most perfectly.”45 And later, he again explains, “by the very fact that He gives being to the things that fill every place, He

Himself fills every place.”46

Simon Oliver helps to clarify Aquinas’ logic of participation. “Created being exists analogically because being is predicated primarily of God (God is being) and is attributed to creatures by participation….it is important to note that ‘being’ is not an abstract concept common to creator and creature.”47 This is what is meant by a participatory understanding of being, one in which God and humans are ontologically distinct. Humanness is a mode of participation in God’s being. We are like God; according to Scripture we are made “in the divine image” and “likeness”, but God is not like us.48 Demonstrating this, Aquinas writes, “The Godhead is called the being of all things, as their efficient and exemplar cause, but not as being their essence.”49 It is God’s

“role” to act, not to enter into the composition of things; God is the ultimate perfection of being and we participate in that being, God.

Paul J. Griffiths describes St. Augustine’s understanding of creaturely participation in God, explaining that

Things have being only because it is freely given them…and the being they have is therefore entirely derivative and participatory. They are created out of nothing, as Augustine says again and again: creation is the gift of being, and when this gift is received its recipients are, to the extent that they are, only by participation in and derivation from God.50

45 Aquinas, Summa Theologica I. Q44, A1. 46 Ibid., I, Q8, A2. 47 Simon Oliver, “Introducing Radical Orthodoxy: from participation to late modernity,” introduction to The Radical Orthodoxy Reader, ed. John Milbank and Simon Oliver (New York: Routledge, 2009), 21. 48 Genesis 1:26-27. 49 Aquinas, Summa Theologica, I.3.8, reply to objection 1. 50 Paul J. Griffiths, Lying: An Augustinian Theology of Duplicity, (Grand Rapids, MI: Brazos Press, 2004), 47.

72 Griffiths explains that this theology of participation has two primary implications: first, “that there is and can be nothing (no thing) independent of God,” and second, that

“being is itself not a quality independent of God. If it were, it would follow that God and creatures would share an identical property (the property of be-ing or exist-ing), and that any difference between them would be one of degree.”51 Again, we can see how this would be the error of a univocal conception of being.

Accordingly, we believe that all creatures have their being “by participation in

God-as-being.”52 Griffiths explains how all creatures participate in God, “being (esse, essentia, substantia) is not a quality independent of God in which both he and other beings share: God is, rather, being’s measure and origin, and others share in it only by his gift and by way of participation in him.”53

For Aquinas, not only does God gift creatures with being, but God also “preserves them in existence, and applies them to act, and is moreover the end of every action.”54

“God is in all things; not indeed, as a part of their essence, nor as an accident, but as an agent is present to that upon which it works…as long as a thing has being, God must be present to it, according to its mode of being.”55 Scripture concurs: “Apart from me you can do nothing” (John 15:5).56

51 Ibid. 52 Ibid., 48. 53 Ibid., 51. 54 Aquinas, Summa Theologica, I. Q105. A5, reply to objection 3. 55 Ibid., I. Q8.A1. 56 Other Scriptural sources are consistent with a participatory framework. Romans 11:36 states, “For from him and through him and for him are all things.” This affirms God as the Creator of materiality and creatures (“from him”), their participation in God (“through him”), and God as the final cause to which material and creatures will return (“for him”). Similarly, St. Paul said, “In him we live and move and have our being” (Acts 17:28).

73 Augustine and Aquinas arrive at a consistent understanding of God as the source of being for all creatures, and that it is also God who sustains and preserves them. The

Second Vatican Council also affirmed this, stating, “For man would not exist were he not created by God’s love and constantly preserved by it; and he cannot live fully according to truth unless he freely acknowledges that love and devotes himself to His Creator.”57

Implications of a Participatory Ontology:

Fr. Robert Barron sheds contemporary light on the understanding of God as the source of all being. Barron explains that the love of God brings forth both Creation ex nihilo and the Incarnation. This God of love is not a God who is in competition with us, set over and against the world. This God is pure act; God’s gift is pure gift. As described above, God is not “a being,” and the gift of the Incarnation is not a competition of divine being versus human beings. Rather, the Incarnation is based on the principle of what

Barron calls “noncompetitive coinherence.” The Incarnation displays the

“noncompetitive and infinitely generous love of God for the human race and for the world…the coinherence of divinity and humanity.”58 Barron’s post-Enlightenment argument makes use of John Henry Newman’s illative way of knowing: that we rely on many others to know what we know, and that all forms of knowing are “participations in the Logos.”59

Fr. Barron’s understanding of God provides a definition of freedom that is significantly different from that of modern economic theory described in the previous

57 Second Vatican Council, “Pastoral Constitution on the Church in the Modern World (Gaudium et Spes),” in Catholic Social Thought: The Documentary Heritage, ed. David J. O’Brien and Thomas A. Shannon (Maryknoll, NY: Orbis Books, 1992), 19. 58 Robert Barron, The Priority of Christ: Toward a Post-Liberal Catholicism (Grand Rapids, MI: Brazos Press, 2007), 67. 59 Ibid., 182.

74 section. The God of noncompetitive coinherence is a God of love, not a God who, through force, conquers our will, rendering us un-free and unable to act as we “choose”; rather, Barron shows how God “energizes the will from within,” so that the acts we perform are those ordered to the good.60 In this way, Barron states, “[f]reedom is…the ordered pursuit of the good in accord with the deepest desire of the free subject.”61 This alternative understanding of freedom flows from a participatory understanding of being as articulated by Augustine and Aquinas, and it is markedly different from the economic understanding of freedom as the freedom to pursue one’s self-interests. In contrast to freedom defined as the right to act in self-interested rationality unencumbered from interference by the state, freedom that flows from a participatory understanding of God is kenotic, based in service to others. Like our very being, this freedom is a graced gift from God. As Samuel Wells writes, “freedom does not mean dependence on the resources and capacities of the self. . . . Freedom means dependence on the grace of God.

. . . The service of God is perfect freedom. The truth -- that no effort of will or purchase of favor but only God’s grace and forgiveness can enable a person to stand before God -- sets disciples free.”62

This understanding of freedom, grounded in the grace of God, recognizes our ontological poverty before God. We, as created beings, have our life due to the unmerited gift of being that we received from God. Our response to that gift must be one that demonstrates our thankfulness and gratitude. Louis-Marie Chauvet presents an exposition of the operation of the exchange of gift, and how it is different from exchanges

60 Ibid., 228. 61 Ibid., 228-9. 62 Samuel Wells, God’s Companions: Reimagining Christian Ethics (Malden, MA: Blackwell Publishing, 2006), 145-6.

75 in the marketplace. He explains that the gift of God’s grace, a symbolic exchange, is beyond any value that could be assigned to it in the marketplace of exchange.63 Chauvet explains that traditional market exchange means that any gift given implies a return-gift, which could be money or another item of value, whereas in a situation of symbolic exchange, when one subject offers another a gift, the person offered must first receive the gift. Then, any return gift offered back represents an outpouring of gratitude for the gift.

Every gift creates an obligation, and “the return-gift is the mark of the reception” of the first gift.64 The return gift acknowledges, with thanksgiving, the gratuitous nature of the first gift as well as the personhood of the subject who gave it. “If there is not a minimum of gratitude, [the person offered the gift] does not receive the gift offered,” but rather

“seizes a value-object.”65 In such case, no gift would have been given, but the second person has stolen from the first.

There are two implications that stem from Chauvet’s work, in relation to the current discussion. First, as humans, we have received the gift of life as an act of God’s grace. To properly receive this gift, we must act out of gratitude and give a return gift to

God. Certainly, we cannot “hand God a gift” like we would a birthday present to a friend. What can we, as humans, give back to God, who is the complete perfection, and needs nothing from us? Our return gift to God is our return to God. Said another way, the gift we give to God is that we return to God. Through thankfulness and gratitude for

63 Louis-Marie Chauvet, The Sacraments: The Word of God at the Mercy of the Body, trans. Madeleine Beaumont (Collegeville: MN, Liturgical Press), 2001. Chauvet sees the sacraments as a communication between God and persons. Sacraments speak symbolically, helping to create identity both in the person and for the community. 64 Chauvet, 122. 65 Ibid.

76 the gifts God has given to us, we experience conversion back to God and live (not give) our way back to him.

We live our way back to God by giving our lives over to what we discern, both personally and communally, through prayer and reflection, to be a life lived in service to

God’s will for us. To live our way back to the freedom of God implies that there is a transcendent telos for our lives. To return to God is to seek friendship with God. It is something we must practice, so we give ourselves over to the service of others, disciples following in the way of Jesus, so as to reflect the divine love who gave himself for us.

The life we live is our “return gift” that acknowledges the original gift of life from God.

To do anything less is to steal our gift of life from God who gave it freely. We would be like selfish children who grab a gift out of the giver’s hands. The more we can conform our lives to God’s will for us, to seek eventual union with God, the more we become free.

The freedom we seek is that of a journey directed to beatitude with God.66

Second, Chauvet concludes that all human exchanges are of this symbolic type, as they all take place through language. As a result, “no human exchange can be reduced to its utilitarian …purpose,” and that the true value of exchange comes not from the value of what is being exchanged, but rather comes from the “the fact of recognizing another person as a partner and being recognized by this person.”67 The implications for business exchange seem clear. Our exchange of goods and services should be valued, not by the exchange-value of the items being exchanged, but by the way the exchanges themselves

66 The gift of God’s love is not entirely unproblematic. D. Stephen Long poses questions about the gift of Jesus Christ’s sacrifice for our sins, such as “Does not the reception of this gift force us into a burdensome situation of an eternally bended knee, constantly expressing our gratitude for a gift for which we did not ask? What could be more manipulative, hegemonic, and ultimately oppressive than this?” D. Stephen Long and Nancy Ruth Fox, with Tripp York, Calculated Futures: Theology, Ethics, and Economics (Waco, TX: Baylor University Press, 2007), 190. 67 Chauvet, 123.

77 recognize (or fail to recognize) the human persons who are making the exchange.

Kathryn Tanner similarly explains a gift economy as one that “presupposes or brings about close relations of interdependence. . . . The focus is not so much on goods exchanged…as on the relationships between people that are brought about by such exchanges.”68 Our journey of freedom toward beatitude necessitates loving interactions with others in community and the recognition of each other’s dignity, as opposed to viewing others as objects by which we can increase our own utility.

As described in the previous section, the Enlightenment legacy that defines freedom as the freedom to act unencumbered by the State sets the individual in opposition to his/her neighbor and accordingly works against the development of community. A fuller understanding of freedom, grounded in an ontology of participation, places the individual person in a community of relations, rather than the individual opposed to the community. This understanding, in which persons both participate in, and are formed by, their communities, recognizes the person’s situatedness and the role of the community in forming the individual’s identity. Correspondingly, the individual grows in holiness and freedom through service to others in community. This perspective is taken by John Paul II, who maintains that human freedom must be in service to the truth revealed in Jesus and love of neighbor.69 The implication of a participatory ontology is that we embrace a freedom to act out of love for others. As Benedict XVI writes, freedom is “not an intoxication with total autonomy, but a response to the call of being…”70

68 Kathryn Tanner, Economy of Grace (Minneapolis, MN: Augsburg Fortress Press, 2005), 50. 69 Pope John Paul II writes, “Human freedom and God's law are not in opposition; on the contrary, they appeal one to the other. The follower of Christ knows that his vocation is to freedom. ‘You were called to freedom, brethren’ (Gal 5:13), proclaims the Apostle Paul with joy and pride. But he immediately adds: ‘only do not use your freedom as an opportunity for the flesh, but through love be servants of one another’ (ibid.).” John Paul II, Veritatis Splendor, 1993, 17. 70 Caritas in Veritate, 70.

78 The framework for relationships provided by a participatory ontology also offers a response to Michael Novak’s presentation of individual and community. Novak articulated a trepidation that personal identity disappears as though in a collective; however, in a true community grounded in a participatory ontology, the community recognizes the dignity of each person and fosters the development of all its members.

Goizueta notes that the “community does not extinguish but enhances individuality.”71

He relates a community to a family, explaining:

a true family does not suffocate the freedom and uniqueness of the individual members, rather it fosters that very freedom-without which there can be no real family, no real community of others, no genuine “nosotros” [we]….the true test of an authentic relationship or community is one whose participants are…free to disobey, to criticize, and to be different. Just as community is a prerequisite for individual freedom, so too is individual freedom a prerequisite for community. This, however, is not the ahistorical “freedom” of the autonomous, unsituated individual; it is, instead, a personal freedom which already presupposes the very relationality, situatedness, and community which is now freely accepted and appropriated.72

The individual person as a human subject is important, but our understanding of the individual must be grounded in historical, cultural, and social location. Novak’s view of the a-historical, un-situated, utility-maximizing individual is incredibly narrow.

Robert Barron, who embraces the modern notion of the rational self, takes seriously the claims regarding the freedom of the individual. He shows how, by focusing on the non- competitive, yet “coinherent subsistent relations” of the Trinity, the freedom of the

71 Goizueta, 75. As noted above, Goizueta’s work concerns the Latino/Hispanic communities, but the findings of his analysis are applicable to other communities, as well. He notes in the preface to Caminemos con Jesus that his book is written not only for the U.S. Hispanic community, but also “for others in our church, academy, and society who might find in that heritage a goodness, truth, and beauty which are not limited to U.S. Hispanics but transcend any particular culture” (Goizueta, ix). 72 Ibid., 76.

79 modern individual is “preserved not over and against a competitive god but precisely in relation to the God of coinherent love.”73

A fuller understanding of freedom, one that stems from participation in God and is ordered to the good, is the freedom realized by acts of kenosis, rather than acts of acquisition; it is the freedom we have to give ourselves completely over to the other, to our neighbor in community, because caritas is the motivation for our actions. We become most free when we conform our lives to that of Jesus, by dying to the desires of the self and giving ourselves to others. As human subjects with agency and free will, it is true that we can choose our actions. Our faith and the witness of the saints tell us that, as we grow in love and journey along the way to the good, the more we practice the habit of making moral choices directed toward God, the easier it becomes for us to recognize and

“choose” the good.74 Indeed, after some time, the good is no longer a “choice” one makes, as adherence to the good becomes habitual. As we conform our lives and actions to those to which God is calling us, sinful patterns of behavior are no longer valid options, and the freer we become. It is this kind of freedom that we must use as a framework when we seek to envision new ways of doing business and the exchange of goods and services.

In addition to offering a fuller understanding of freedom as kenotic, an ontology of participation is grounded in a transcendent orientation for the human person. The God of love in whom we have our being, the creator and the sustainer, is the first and final

73 Barron, 18. 74 Moral exemplars such as the saints, as well as those with whom we live in community, provide witness to the faith, and they help us to know the good. Stanley Hauerwas reminds us that Christianity is not separable from the “witness” of Christianity. The church itself is a community that forms it members. See Hauerwas, With the Grain of the Universe: The Church’s Witness and Natural Theology (Grand Rapids, MI: Brazos Press, 2001), 36.

80 cause of our existence. We are made by God, for God; it is to God that we are called, and to God that we return. This transcendent orientation for our lives provides persons with a telos: that of beatitude, or friendship with God. Aquinas understood this telos as follows: “man's last end may be said to be either God Who is the Supreme Good simply; or the enjoyment of God, which implies a certain pleasure in the last end.”75 The familiar passage by St. Augustine reads, “for thou hast made us for thyself and restless is our heart until it comes to rest in thee.”76 This transcendent orientation allows us to experience ongoing conversion, a perpetual return to God, as we turn away from our sinful selves and seek the union of beatitude with God.

Attention to a transcendent telos allows us to keep our earthly work from becoming idolatry. Jesuit theologian David Hollenbach points out that “every social good achievable in history is a limited good,” because the “final human good…can be attained only in the kingdom of God through the gift of God’s grace.”77 Knowing the proper place and function of our earthly work allows us to keep proper perspective. We cannot achieve or bring about the ultimate good, the final beatific vision; yet, as

Hollenbach explains, we can contribute to “building up the terrestrial common good as a real though imperfect image of the highest good of the heavenly city.”78

As we do so, we must continue to keep the heavenly city in our sights.79 All of our actions, including those of economic exchange must be ordered to God. Thomas

Aquinas cites Matthew 6:24 “No man can serve two masters,” then proceeds to explain

75 Aquinas, Summa Theologica, I.II.34.3. 76 St. Augustine, Confessions, 1.1. Accessed online at http://www.ccel.org/ccel/augustine/confessions/confessions.html 77 David Hollenbach, S.J., “Christianity in a Community of Freedom,” in The Common Good and Christian Ethics (New York: Cambridge University Press, 2002), 125. 78 Ibid., 129. 79 A community of prayer helps us to maintain eschatological focus, even in the midst of our daily actions that serve to meet daily needs.

81 that “it is therefore necessary for the last end so to fill man's appetite, that nothing is left besides it for man to desire.”80 God, as our true last end, does so consume our lives that there can be no other end that competes with God. We may seek certain natural goods and we may have proximate ends, yet these should be ordered to God, because God is our final destiny.81 Hollenbach, in a passage influenced by H. Richard Niebuhr, explains,

“Christians are called to contribute to transforming their society from lesser approximations of the heavenly city to ones that come nearer to the good that is their ultimate hope.”82

A participatory understanding of being maintains that we participate in God

(vertically) rather than competing alongside God (horizontally). God does not stand as a static object, distant from us; rather, the God in which we participate is one characterized by eternal relation and constant gift of love within the persons of the Trinity. The relation of God in three persons is central to constructing an understanding of human relationships in this world. The different persons of the Trinity are distinct, yet are in a constant dance of love. The differences in the persons are harmonious, rather than oppositional. In contrast to an ontology of violence characterized by competition and antagonism that stems from univocal conception of being, the Trinity is characterized by the kenotic coinherent relations operating in an ontology of peace, giving, and love.

David Hollenbach, following Jacques Maritain’s “personalist communitarianism,” writes that the Trinity “affirms that the One God is not an isolated monad but rather is

80 Aquinas, Summa Theologica, I.II. 1. 5. 81 If the last end of all men is God (see Aquinas, Summa, I.II. QI. A7.), then all our acts, including our economic acts, ought to be ordered to God. 82 Hollenbach, 128.

82 three persons in relationships of absolute self-communication and communion.”83 The loving relations of the Trinity are helpful in thinking about our engagement in and development of relationships with persons in our daily lives, as human society and our communities can be thought of as “located on ‘an analogical scale’ between the perfect society of persons that is the Trinity and simple aggregations of impersonal beings that do not form communities in the proper sense at all.”84 In view of the Trinitarian relations, every human person is not an autonomous individual, disconnected from others, but is intimately involved in a web of relationships. We exist with each other in an on-going dance, taking part in daily interactions that we shape and that shape us. A human person, while maintaining a distinct identity, is grounded in and participates in a complex web of relationships. If we are to envision new ways of doing business, this reality must influence our actions, our relationships, and the goals for what we do in commerce. The

“exchange of love” of the Trinity constitutes the perfection of relationality, which we can seek for both human relationships and for economic exchange of goods.

Participation in work, done in and through relations with others, is analogous to the participation of persons in the Trinity. Consistent with John Paul II’s personalist understanding of work, work cultivates and develops a person’s self-realization, to the extent the person is open to relationship. Just as a family does not usurp each member’s identity, and the Trinity is one God and yet three distinct persons in relation, “we understand that true openness means, not loss of individual identity, but profound interpenetration.”85 We can look to the perfect love demonstrated in the persons of the

Trinity, to learn and foster the charity that brings us to real fraternity and leads us to act

83 Ibid., 129-30. 84 Hollenbach, 131. This analogical conception will serve fruitful in the constructive task of chapter four. 85 Caritas in Veritate, 54.

83 in solidarity with others.86 Through gratuitous love, we can create and build up true solidarity and fraternity with others.

The dynamic dance of the persons of the Trinity is the source of love that we bring to our activity and our relationships. Understanding that God is the creator and the first cause, it is not we who accomplish things, but rather God who creates through us.

God does not need our work; He who creates ex nihilo does not need our help. “God has no need of what he is offered by humanity…and …humanity is nothing aside from God’s donation of life.”87 While this is true, our work can be viewed as part of the gift of our lives that we offer back to God in appreciation for the life and graces with which God provides us. Although God does not need our work, the ability to work is a gift God gives us, and, if properly ordered, work is a way that we can seek to participate in Him.

Work done in loving and cooperative relationship with others provides an opportunity for us to experience communion with others, as a foretaste of the peace of the divine

Trinitarian perfection. Our daily work, like the work of the liturgy, can be viewed as

God’s gift to us and our offering of thankfulness back to God.

Similarly, the relations and kenotic love of the Trinity have direct implications for business and the exchange of goods. From the view that all materiality participates in a non-competitive, coinherent God, it follows that questions related to temporal needs, such as food, clothing, shelter, education, medical care, etc., cannot be relegated to a secular

86 A brief discussion of Frederick Bauerschmidt’s perspective on the Trinity as a regulating “grammar” is helpful. Any discussion of the Trinity must avoid the error of “simply projecting onto the Trinity our preheld ideals of human community,” thinking that the persons of the Trinity might “join” the Trinity as we join social groups. Frederick Christian Bauerschmidt, “The Trinity,” in Gathered for the Journey: Moral Theology in Catholic Perspective, ed. David Matzko McCarthy and M. Therese Lysaught (Grand Rapids, MI: Eerdmans, 2007), 80. Bauerschmidt notes that discussion of the Trinity must affirm that God is one God and that the Trinitarian “persons are constituted by their relatedness – they do not enter into relation, the way human persons do, but they rather are that relation,” (ibid, 79). 87 Simon Oliver, “Introduction to Part IV: Christ and Gift,” in The Radical Orthodoxy Reader, ed. Simon Oliver and John Milbank (New York: Routledge, 2009), 200-1.

84 sphere, as these goods participate in the life of God and should be understood as ordered toward beatitude. This should make life easier for us, rather than more difficult; by aligning our actions with those that are intended for us by the Creator, we experience the freedom of a single telos – the quest for friendship with God – rather than the dizzying array of constant confrontation with individual, personal choices. If all goods participate in God, an economic circulation of goods, as St. Basil understood it, can be helpful in thinking about our use of goods. St. Basil believed that “God has provided enough food, land, and usable materials to satisfy the needs of all; these resources, however, are limited commodities, and must therefore be shared…[this] economic system requires that resources remain in constant circulation, rather than being stored up or accumulated in large amounts for the benefit of a few individuals.”88

The notion of the abundance of God is contradictory to the notion of scarcity that undergirds modern economics, which studies the allocation of scarce resources over unlimited wants. The classical economic framework is part of the Enlightenment legacy that stems from a univocal ontology of being, which places us in competition with each other for scarce goods. D. Stephen Long explains that our modern, capitalistic economy is one in which the “individual consumer confronts objects of desire that are limited by time and space, but the consumer confronts these finite commodities with an infinite desire grounded in an unencumbered freedom.”89 Kathryn Tanner attributes the non- natural state of antagonistic capitalism and property rights as the causation of the conditions of scarcity. She writes that the capitalistic understanding of private property

“is not a natural relation that people have with things but a very particular sort of social

88 C. Paul Schroeder, Introduction to On Social Justice: St. Basil the Great, number 38 in the Popular Patristics Series, (Crestwood, NY: St. Vladimir’s Seminary Press, 2009), 27. 89 D. Stephen Long, Divine Economy: Theology and the Market, (New York: Routledge, 2003), 144.

85 institution. As such it creates the very conditions of scarcity that lie behind the competitive fights of capitalism.”90 The term scarce implies that there is more demand for the good than there is supply of it. If a good is scarce (think platinum or diamonds), the price of the good in the marketplace will increase, thereby reducing demand. While the “use-value” of platinum or diamonds is relatively low, they have a high “exchange- value,” as long as excess demand exists for them. If the demand for the good falls, it is no longer scarce.91

On the other hand, an alternative ontology of participation allows for the recognition of gift and abundance, to realize that all that we have comes gratuitously from God. A participatory ontology offers a view of relationships grounded in peace, and abundant, plentiful goods, characterized by finitude, not scarcity. The term finite means only that there is a limit to how much of a good exists. It does not imply an excess demand for the good or the necessity for rationing. All people in the world might not equally consume a good in finite supply, but finitude does not have desperation of lack associated with it. Hollenbach explains that the finitude of our earthly existence is one characteristic that demonstrates how we, as human persons, are limited and are always lesser than the “divine good.”92

Samuel Wells seems to share St. Basil’s understanding of God’s abundance. He writes, “a point invariably comes when a faith that hinges on a cross and resurrection must challenge other models of formation and transformation. A culture pervaded by the

90 Tanner, 37-38. 91 Cavanaugh argues that the notion of scarcity of goods “implies that goods are not held in common, that the consumption of goods is essentially a private experience,” 91. A family’s tradition of passing along an heirloom necklace to a daughter, or mother’s engagement ring to a daughter-in-law both circumvents the marketplace as well as enhances relationships among family members. The goods are shared in community. 92 Hollenbach, 132.

86 management of limited resources must eventually contradict the limitless goods of

God…an economy that depends on the competition of the market must eventually confront the perpetual communion of the Trinity.”93 He describes the importance of the church, in that God gives us the gifts we need to follow him. Wells describes the thanksgiving of the Eucharist, which is one of “God’s superabundant gifts,” that should so stir the heart of Christians that they “respond to his fulsome pouring-out with their own kenotic imitation. This is the economics of generosity, the politics of love.”94 The unconditional giving of self and material goods to others represents one way that we attempt to love God; it is our response to the gifts God gives us. If our economic actions were characterized by more giving, rather than storing up, perhaps there would be enough material goods to meet the basic needs of all people.95

All participants in a Christian community have the right to work, to be creative.

Human initiative and ingenuity are good things, created by God, but our work should be ordered in such a way that it serves others. William May asserts “the church has carefully understood this participation in the divine creativity as a warrant, not for random liberty, but for creativity directed to the common good.”96 Accordingly, discernment regarding business decisions should include whether the actions taken within the business are ordered toward God and cultivate right relationships.97

93 Wells, 60. 94 Ibid., 212. 95 It would be interesting to explore what sorts of economic “laws” could be developed in thinking of an economy of circulation, rather than of consumption. What conclusions might be drawn if one were to start with the proposition that goods are abundant and finite, rather than scarce; if one assumed that individuals share, rather than compete for goods? 96 William May, Beleagured Rulers: The Public Obligation of the Professional (Louisville, KY: Westminster John Knox Press, 2001), 145. 97 D. Stephen Long writes, “whereas St. Thomas Aquinas discussed economic relations under the virtue of justice (which could be completed only with the infused virtue of charity), [Adam] Smith, a moral

87 Work is both a solitary and a social enterprise. While we each have tasks that we complete on our own, our work has the potential to bring its greatest fruits when performed in, coordinated through, and intended for community. Our work, ordered to friendship with God, is also gift to each other in community. A community that seeks to bring about friendship with God will place emphasis on the web of relationships among the members of the community. This is in sharp contrast to our society’s usual emphasis on self-determination, individualism, and self-reliance. The Christian community respects each member of the community as a child of God, regardless of the work each person does, or the level of his or her contribution to the society. A Christian outlook on work is not utilitarian, but rests in the dignity of the person.

Any new models of business organization that we create should foster each person’s initiative and creativity, self-actualization and realization of vocation. Through a person’s work, he or she can “offer all that they uniquely are.”98 In a Christian community, the gifts of all the members serve to build up the community as a whole; all can contribute to the work. As in the Apostle Paul’s first letter to the Corinthians, all the parts of the body are important and necessary; we cannot say to one member of the community that we have no need of them.99 It takes the wisdom of a community, in faithful prayer and discernment, to know what each one is called to be and to do.

We work not only to provide sustenance for ourselves and for our families, but also to craft beauty and art. Unlike God, we do not create ex nihilo, but from existing material goods and fruits of the earth. Accordingly, the work we do is constructed from

philosopher, taught them under the virtue of prudence, now understood in terms of expediency.” Divine Economy, 188-189. 98 Wells, 193. 99 See 1 Cor. 12

88 goods given to us from God that already participate in God and are sustained by God; as materials, they are ordered to God. The beauty that we create through our work participates in the divine Beauty, who is God. All work can be beautiful, albeit in varying degrees, if it is viewed as participating in the beauty of God, and ordered toward the common good and God. Viewing work as participating in the divine perfection of beauty (or other divine perfections) shapes our understanding of the reason for the work we do. It frees us from a sense of alienation by allowing us to participate in the good, uniting workers with the product of their work, and their minds and souls with the true

“end” of the work.

The proximal ends to which our work is ordered (such as meeting basic needs for sustenance), must be ends that are rightly ordered to the beatific vision, to friendship with

God. To the extent that our work “points” to God, work can be sacramental. Sacraments are a communication with God; they are visible signs of invisible grace. God sustains us in our work, God brings forth our materials, so we know God is in the work; yet, communication is a two-way street: we must also be “in the work”. This requires that we, as human subjects, participate as creative agents in work, rather than as objectified laborers who sell labor to others for a price. We can become more human through our work only if we are able to bring our human selves to the work that we do. Work can be a participation in the divine perfections, can point to God, and deepen our relationships, only to the extent that we can be fully present as human persons in the work. The distance created through the objectification of work, especially in for-profit, publicly-held corporations, in which people are both spatially and psychologically distant from the

89 outcomes of their work, make it difficult for us to be in our work, and fully bring our whole selves to the work.

Being in the work requires first that we recognize that we are rational creatures who have decision-making autonomy over our own actions. We are human subjects with both dignity and agency, and we become more human through our work actions. From this, it follows that any organizations in which we work allow us to fully participate in decisions about our work, and that the work is characterized by subsidiary. Second, because of its communal and social dimension, work should provide for solidarity and community. Work should be a way in which we come together and build fraternal relationships; an organization of workers should not be perceived as a threat. Third, work should not alienate us from ourselves (the act of “selling our work”) nor from the products we help to produce, nor from the capital created by our work. This last point requires that through work, we become owners of the capital produced by our labor. The surplus capital generated by labor ought not to be captured by individuals exterior to the firm (such as shareholders) but should be reaped by those who labored. Being in the work implies a mutuality of relation; the work gains from the business could accrue first to those who did the work, and then to the creditors, then be allocated to firm’s reserves for future growth. The employees of an organization, the workers, should be viewed as the primary resource or asset.

Just as the Trinity has more than one person, any economy of gift must have more than one organization. We cannot start a gift exchange by looking in the mirror. What is needed is a web of relationships, “networks of charity” that begin to operate together, so that gifting can occur. These must be created in tandem, trading and giving in small

90 societies or communities in a spirit of reciprocity. A work community is not an ecclesia, but it is a community nonetheless. A truly collaborative community of work is one in which we experience joy and gratitude for others’ blessings and gifts, rather than envy.

A community of solidarity in work fosters respect for the innate dignity of each human, as each person recognizes that all of its members (as well as those outside of it) are created and sustained by God. Each person deserves respect and “every human person, created in the image of God has the natural right to be recognized as a free and responsible being.”100 The gifts of the Spirit, and the diversity of talents of God’s people, will allow for specialization of work and factors of production. A properly ordered community of work will help members identify and use their gifts to God’s purposes, so that gifts are directed to service that fosters the common good. If more time, energy and prayer were spent in discerning the gifts of each person and how those gifts might best suit the community in its goal of bringing about human flourishing and right relationships, then work would be less likely to result in estrangement from one’s community and alienation of labor.

We must be careful that the community of work does not, itself, become an idol that is an impediment to the true end we seek. A work community cannot replace the church. Samuel Wells explains that if work seeks to “epitomize an ideal community, or demands the soul of its members, or sets itself the task of putting the whole of society straight,” then work has in a certain sense become an “alternative church.”101 Our meals we share over lunch with work colleagues are not the Eucharist. Wells submits that it is the Eucharist that “allows Christians to align their deepest needs with the gifts God

100 Catechism of the Catholic Church, 1738. 101 Wells, 200.

91 abundantly gives, and thus brings freedom.”102 Accordingly, if we are to embark on a journey toward new models for exchange, if we desire “to weave networks of charity,”103 we must include development of our spiritual life relation in with the church. This includes reception of the sacraments and life in the church, as well the reflection on and cultivation of “experiences of trust in God, spiritual fellowship in Christ, reliance upon

God’s providence and mercy, love and forgiveness, self-denial, acceptance of others, justice, and peace.”104

Undoubtedly, the reflections on work presented in this chapter are rather optimistic. We must accept that we are a fallen people, living in a world with sin. This means that work is characterized by toil and struggle; it is arduous and can be unpleasant.

Colleagues can be cranky, and we ourselves can be tempted to not give our work our

“all”. We may not feel up to “being in the work.” There will be days when we fail to be personally virtuous. Decisions made about work must sometime face tragic situations of need and rationing, in which supplies of products (food) or services (medical care) cannot keep pace with desperate and increasing needs. Nevertheless, we are called to bring ourselves to respond to the gifts of God. We are called to make improvements in the way we organize our work, our communities, and our reconciliation with each other, so that we can seek to foster creativity and human flourishing based on the perichoresis of the

Trinity, rather than competition and antagonism.

In summary, the late-modern approach to economics, which is grounded in the view that God and humans both participate in the same ontological category of being, has resulted in the creation of a secular sphere that brackets off from theological inquiry

102 Wells, 200. 103 Caritas in Veritate, 5. 104 Ibid., 79.

92 questions of economics and the sciences. As a result of this “flattening” and undoing of vertical participation in being, late-modern theologians have surrendered questions of society, science, medicine, and economy to expert empiricists who consider faith to be irrelevant to the questions posed in these fields. The claim that John Duns Scotus is at fault for the shift to a univocal conception of being is beyond the subject of debate for the scope of this paper.105 It stands as evident, regardless of the instigator of the shift, that our late-modern U.S. economic system does not view God as relevant to our economic actions. The Enlightenment legacy, with its emphasis on the rights of the individual, suffers from a narrow and understandings of freedom and the role of the individual in community. It also silences the possibility of a common telos for economic action, allowing for only an individual telos of consumption.

This chapter articulated a participatory ontology that provides an alternative definition of human freedom as kenotic, the person in community, and a transcendent telos that gives meaning to human action and is shareable in community. It also explored the Trinity as the divine perfection of relationships that, in an analogical way, that can be helpful in thinking about ordering human relationships and work.

As described in chapter two, the for-profit corporation, which stems from and reinforces the economic understanding of freedom of the individual, cannot be redeemed by engaging in redemptive social philanthropy or other social projects.106 The for-profit corporation exists to maximize value for shareholders, and the products it sells and

105 Stanley Hauerwas suggests other factors were also at play, noting the development of the clock, and the related ringing of the bells, as important to the separation of one’s work day from one’s religious day. See Stanley Hauerwas, With the Grain of the Universe, 35-36, n53. 106 Tanner writes, “disinterested giving for the sake of others often simply legitimates the wealth amassed [by capitalist exchange]. Bill Gates is such a generous man; his enormous accumulation of capital cannot be all that bad. Sporadic, individual acts of a purely charitable nature mean the system does not need fixing.” Tanner, 60.

93 services it provides are nothing more than a means to that end. By its legal construction, the for-profit corporation seeks to maximize shareholder value; it cannot maximize any other objective, as to do so would violate managers’ fiduciary responsibility to the shareholders. As a result, the for-profit corporation is grounded in an ontology of violence, not one of peace. This violence is realized when the value created by laborers is exploited, accruing to external shareholders, many of whom did not provide actual funding to the corporation. This violence is realized in the tyranny of the shareholder over the employee, which results in a competitive, antagonistic system that pits workers against each other, and labor against capital owners. These results are in contradiction to the dignity of the person and our call to love one another in relationship, as described in

Laborem Exercens and Caritas in Veritate.

Instead of attempting to correct the activities of the corporation by increased philanthropy or by encouraging service-in-the-community days for employees, we need to envision completely new ways of engaging in the exchange of goods and services that promote the common good. Personal virtue, while important, is not enough to change the structural problems inherent in the for-profit corporation. We must correct the fundamental problem, which stems from the post-Enlightenment view of God, the human person, and the understanding of individual freedom that grounds the notion of the modern corporation. Our way forward is to reclaim the God of noncompetitive coherence and the perfection of the Trinity as the goal by which we live in relationship with and work with others. Yet, it is not enough that we merely “get the theology right,” it must be demonstrated that it is possible to organize businesses differently to achieve the goods we seek.

94 The next chapter takes up D. Stephen Long’s question, which is whether there is a

“role for economic exchanges situated within the context of the ecclesia rather than merely against it?”107 In examining this question, chapter four draws on the conclusions about human work and personal responsibility from Laborem Exercens and Caritas in

Veritate (which were both discussed in chapter one), and the critique of the for-profit corporate form of organization provided in chapter two, to envision prototype ways of organizing and engaging in business and exchange that seek to promote human flourishing and the common good.

107 Long’s question was asked in relation to Jon Sobrino’s work in liberation theology; however, it is a motivating force for the questions of this paper. See D. Stephen Long, Divine Economy, 267.

95

CHAPTER IV

INCARNATING THE VISION OF AN ONTOLOGY OF PARTICIPATION

Benedict XVI has called upon academics and lay people to devise new mechanisms by which to engage in commerce and trade that blends traditional business with human development goals. A renewed understanding of an ontology of participation – one that views persons as creatures whose being is a participation in the divine perfection of being: God – provides an antidote to the modern conception of humans as atomistic individuals. The ontology of participation provides a counter to thinking that we are our own creator; it recognizes the transcendent telos of our return to

God. Aquinas reminds us that God is in all things, not as a substance or essence, but as an agent for action. Through our actions humans participate in God’s creative activity.

Accordingly, all actions, even our economic ones, should be ordered to God.

An ontology of participation allows persons in community to embrace shared economic goals instead of viewing persons as autonomous economic actors, each with an independent telos of consumption. This kind of shared goal for social transformation and promoting the common good is intelligible within the community of the church; therefore, conceiving of the church as polis can be a fruitful way to envision new business organizations that are consistent with the church’s vision for human work and the role of the person of the economy.

96 As stated earlier, the Papal Encyclical tradition speaks clearly on the purpose and meaning of human work. A properly understood spirituality of work sees God as ongoing sustainer and creator in our lives; humans have inherent dignity because we are made in the image and likeness of God. Through work, we become more human. The tradition maintains that the human subject is always more important than the object of the work. In addition, Catholic social thought articulates the importance of the private ownership of the means of production, with the understanding that such ownership is subject to the universal destination of goods, as well as recognizing the primacy of labor over capital. Indeed, because capital is understood as a function and outgrowth of labor, rather than as opposing adversaries, businesses should be organized so as to allow workers to share in the capital that is created through their work. This participatory philosophy also implies that workers ought to hold decision-making power about their work, including the right to organize and bargain collectively. These elements of work indicate the importance of proper structures for business.

Work is social, and its fruits are communal. Good work helps persons connect with their neighbors. It is possible for the exchange of goods, when rightly configured, to reduce the distance between consumers and producers, reduce worker alienation, and promote the common good. Organizations with healthy cultures uphold human dignity by considering employees to be their greatest asset, not merely as an expense to be minimized. Work in these organizations is characterized by subsidiarity in decision- making and is compensated with fair wages that also provide for retirement savings. The

Catholic tradition views business profits as a means, but never as an end unto itself.

97 Businesses are to be operated with a long-term focus for the benefit of all, not just the wealthy or the powerful.

Benedict calls the faithful to create “networks of charity” through which we pass on the Creator’s love for us by sharing it with others. In doing so, business exchanges reflect an ethos of gift, which helps us to see ourselves as participating in something larger than ourselves. A participatory ontology makes these actions possible in ways that classical economic theory does not, as it recognizes our social nature and our call to act out of love for others.

The Role of the Church:

The participatory ontology found in the church can act as a unifying force that can help faithful business owners envision and articulate the common good. The tradition and community of the church allow for a shared vision that can help to build specific elements of the common good. The people of the church can build new models of economic exchange situated within the ecclesia.1

The encyclicals Laborem Exercens and Caritas in Veritate showed that both good structures and good people are necessary for good work. Good people, formed in virtue and strengthened by the church, can work together to create new structures for businesses that promote the common good. Informed by Catholic social teaching, we seek to create functional businesses that support and foster human flourishing among not only those who work within the business, but also its customers, suppliers, and all those who are affected by the actions of the business. This kind of business could emerge from within a

1 The global church can be a new form of organization. John Milbank writes, “Radical Orthodoxy believes that only the Church has the theoretical and practical power to challenge the global hegemony of capital and to create a viable politico-economic alternative.” John Milbank, “Afterword: The grandeur of reason and the perversity of rationalism: Radical Orthodoxy’s first decade,” in The Radical Orthodoxy Reader, ed. Simon Oliver and John Milbank, (Routledge: New York, 2009), 397.

98 community that takes as its goal the use of profit as a means by which to bring about some aspect of social transformation, one that determines the function of the business to be something other than maximizing the wealth of the equity providers. Such a business could then be structured so as to provide stable employment, characterized by employee participation in decision-making and ownership. Structural considerations that promote solidarity among workers, participation in decision-making, and link labor with capital, allow people to enter more fully into their work and reduce alienation. Guided by the analogy of the Trinity, these structure help foster the creative activity of persons in harmony with each other. Competition among workers is replaced by cooperation, reflecting the divine life in which the activities of the persons of the Trinity are in harmony. Our ultimate telos of participation in God’s perfection informs the “what” the business should produce, the “how” it should be produced, as well as the “how” employees should work in relationship with one another.

With the shared telos of the church providing direction, decisions about the actions of the business can be made in the context of a much larger narrative, that of the eschatological perspective. We will be called to account for our actions during our time on earth; we should seek to construct lives that are about more than merely obtaining money. Our lives are the journey of our return to God: whom we helped, what we did for others, and how we sought to be Christ to one another. Wells states that our decisions should be about “what builds up the Church, which actions foster the kind of character that builds up the body of Christ into the likeness of Christ.”2 Businesses that focus on increasing the “gift and gratuitousness” of transactions can help build up the Body of

Christ, as they require that we come to know each other personally, reducing the distance

2 Wells, 52.

99 between persons and fostering participation. The church provides a network of relationships among people who have a shared transcendent telos, these relationships can act as visible signs of the existence and operation of a participatory ontology. As we come to know each other more deeply, we can see in the other the face of Christ; we can see how our lives are sustained by the action of God.

A traditioning community, such as the church, can provide a normative, Christian ethic that can take the place of the consumerist materialism of the individualistic society in which we find ourselves. The church can help us remember the true end toward which our actions are oriented. As Charles Pinches writes, “if, as Christians say, truth has come to live among us, it cannot be relegated to the edges of life only, but must have shape and form in our midst.”3 In this way, we can live the Christian ethic, as we allow our economic decisions and participation in the marketplace to be guided by and informed by our faith life and the common telos that it demands. “To have our lives oriented by Christ is to become friends who consume in common, rather than individuals who consume in order to remain free from each other.”4 The ecclesia that forms its believers in the virtues necessary for the journey toward beatitude and helps us develop a vision of the common good requires that we work for economic justice for the widows and orphans of our day, to serve first the needs of the marginalized persons among us.

Given that we exist in a profoundly individualized, consumptive society that forms us in certain ways that contradict with the call to a life of Christian discipleship and render an ontology of participation incoherent, it is particularly important that we develop new forms of business that seek to advance the common good. Theories of participation

3 Charles R. Pinches, Theology and Action: After Theory in Christian Ethics (Grand Rapids, MI: Eerdmans, 2002), 187. 4 Long, Fox and York, Calculated Futures, 204.

100 are mere theories if they cannot be practically applied and implemented. Talking about an ontology of participation will accomplish very little; therefore, it is important to engage in experiments in creating businesses that will allow work and consumption to happen in ways that reflect an ontology of participation. These experiments will make possible for witness to be given, so that Christian talk of participation and economy is intelligible. By creating new ways for accomplishing social good through business, the people of the church act as witnesses, voices within society that can give evidence of in- breakings of the Kingdom.

In turn, as people experiment with the creation of new business organizations, the church will be strengthened by the witness of these people. As persons are able to bring themselves more fully to their work, realize the fruits of work in self-actualization, and build communities of love, they become evidence of a response to the call of Christ.5

The examples of their lives and the experiments in new ways of doing business speak a language of love that can be heard over the din of our individualistic, consumerist culture.

The life of the church will be advanced and strengthened by the right actions of those within it. As we come together to be church and to love and serve our neighbors, the experiments in business that we create will also build up the life of the church as we discover new ways of doing business that promote the common good and alleviate social problems.

5 John Paul II reminds us in Laborem Exercens (20) that work has the power to strengthen and build community. Benedict XVI suggests that “consumerist and utilitarian” views prevalent in society make it difficult for persons to see the gifts with which God has blessed us (see Caritas in Veritate, 34). As a result, it is important for persons to be able to create new structures and organizations that give witness to the ontology of participation we seek.

101 Part of the challenge with envisioning new businesses is the abstract notion of the common good. No one business organization can achieve “the common good”; rather, the common good may come about through the work of many people and organizations, each working toward specific goals in different areas of life. It is hard to wrap our minds around the idea of a business whose goal is “the common good”; yet it is easy to think about a business that serves meals to the hungry in a particular location, or one that provides jobs in a particular industry in a specific neighborhood, or one that offers after- school tutoring services to certain students in a particular school. Each of these problems is localized; unfortunately there is no “one-size-fits-all” business answer to every problem. No single model can solve all economic problems for all people. The Christian telos, and the gifts of faith, hope and love may motivate us to love our neighbors, to want the good for them, and to find specific ways to use business products and strategies as a means to strive toward human flourishing. The next section examines three methods by which this good is sought.

Current Approaches Toward Fostering Social Good Through Business:

This section highlights three current initiatives that unite social good with business efforts. The first of these initiatives intentionally applies principles of the

Catholic tradition to business organizations; the second is not rooted in the tradition but presents an interesting and thought-provoking business model; and the third provides an example in which it is somewhat unclear, at a general macro-level, how much the

Catholic tradition affects the day-to-day operations of the business. While each of these initiatives has realized certain successes, each also is has its drawbacks and challenges: none is a flawless example of the application of Catholic social thought to business. Each

102 of them is making a positive difference in the world, but each has shortcomings.

Nevertheless, each of them offers something from which we can learn.

The first, which can be characterized as primarily a charity model, seeks to make investments in the assets of people who use the funds for furthering or expanding their businesses. Jeffry Korgen describes various efforts of this type by Catholic Relief

Services (CRS) in assisting businesses in impoverished areas.6 Among the initiatives highlighted by Korgen is Catholic Relief Services’ (CRS) involvement in organizing and promoting fair trade coffee co-operatives. CRS helps small farmers organize into producer co-ops, which allow the farmers to increase their bargaining power with purchasers and obtain a higher selling price. On the coffee consumption side, parishioners may become CRS affiliates who take orders and act as point persons for the sale of fair trade coffee within U.S. parishes.

This method has been effective at increasing global solidarity among producers and consumers of coffee. As Korgen writes, “the solidarity economy lifts the veil that obscures the inner workings of the global economy by introducing producers, suppliers, service providers, and consumers to one another through packaging, educational materials, advertising, and even face-to-face visits.”7 Clearly, this is a positive result.

Unfortunately, the model does not work perfectly, as there are not enough fair-trade buyers willing to pay the higher prices. Korgen notes, “80 percent of the Fair Trade- certified coffee in the world is sold on conventional terms because of a shortage of Fair

Trade buyers.”8 In traditional economic language, the excess supply of coffee indicates

6 Jeffry Odell Korgen, Solidarity Will Transform the World: Stories of Hope from Catholic Relief Services (Maryknoll, NY: Orbis), 2007. 7 Ibid., 126. 8 Ibid., 142.

103 that the price is too high. Fair-trade coffee retailer Higher Grounds Trading Company

(which carries coffee from the CRS-launched cooperative), sells coffee to consumers at

$12.00/pound, a price that is more than double a U.S. supermarket price for non-fair- trade coffee.9 Significant information and marketing campaigns are necessary to help potential consumers understand the reasons for purchasing fair-trade coffee, instead of a lower-cost brand. These campaigns can occur in U.S. parishes through the work of volunteers, but these efforts have not yet created a satisfactory increase in demand.

In addition to the pricing problems, a more significant problem with this kind of involvement is that the funds provided to help the small businesses organize into co-ops, as well as the loans made to other small businesses through microfinance, all are funded by charity.10 Although Catholic Relief Services provides valuable and helpful services to those in need, it operates on the basis of donations from parishioners, the Catholic church, and government grants. These charitable efforts, while situated within and supported by the church, are not the same as using businesses themselves to achieve the common good. Rather, they use charity (in the form of grants and donations) to fund business investment and education. Without the donations, the model dries up.

In contrast to this model is that of TOMS Shoes. TOMS is a for-profit, privately- held business that operates according to what they call the “One-for-OneTM” business model. The company’s website states, “with every pair of shoes you purchase, TOMS will give a pair to a child in need.”11 TOMS works with the not-for-profit organization

9 See http://www.highergroundstrading.com for pricing. 10 Korgen provides additional examples of CRS involvement, such as its partnership with Mexican Frente Democratico Campesino, which provides microfinance loans to apple farmers in Mexico that allow the farmers to temporarily store their crops in cold storage. Farmers are able to deliver the apples to market during the off-season and obtain a higher selling price. 11 TOMS Shoes, company website. See http://www.toms.com. TOMS holds a trademark for its “One-for- One” concept.

104 “Friends of Toms,” and with other local not-for-profits and NGOs on the ground in poor countries to distribute the shoes.12 TOMS “works to establish shoe-giving partnerships with humanitarian organizations worldwide that have deep experience and a long-term presence in the countries and communities they serve.”13 After establishing the relationship with the “Giving Partner”, the company finds “communities that will benefit most from TOMS shoes due to economic, health and educational needs – and where local businesses will not be negatively affected.”14 As of September 2010, TOMS has given away 1,000,000 pairs of shoes to children.

Unlike Catholic Relief Services, which relies upon donations, TOMS has built the charity of “shoe-giving” into its pricing model and the purpose of the business, thereby making the charity financially sustainable. TOMS’ profits make possible its service work of providing shoes to poor children. Unlike a corporation in which philanthropic efforts can be viewed as a “tax” on the business that reduce return to shareholders, TOMS is upfront and explicit about its goal to be a One-for-OneTM company.15 The structure matters: because TOMS is privately held, it does not have to answer to outside shareholders who might question the business model upon which the firm is based.

TOMS Shoes is doing good work in the world; that is without question. Children are benefitting from this form of charity, as the shoes help to break the cycle of poverty.

12 Friends of TOMS operates under common control by owner/founder of TOMS Shoes, Blake Mycoskie. In the summer of 2011, Tom’s Shoes announced a new initiative, the sale of sunglasses. For each pair of sunglasses sold, the company ensures (by working with country-specific NGOs and not-for-profits) that a local person receives either: 1) prescription glasses; 2) medical treatment, such as removal of a foreign object from the eye; or 3) a common operation, such as a cataract operation. See http://www.toms.com/eyewear/our-movement/ for more information. 13 TOMS Shoes, 2010 Giving Report, available online at http://images.toms.com/media/content/images/giving-report/TOMS-Giving-Report-2010.pdf 14 Ibid. 15 See Milton Friedman, “The Social Responsibility of Business is to Increase Profits”, New York Times Magazine, 12 September 1970, in which he likens corporate philanthropy to a taxation without representation. When managers determine philanthropic gifts, shareholders have no voice in the decision to make the gift, nor are they able to determine which organizations are to receive the gifts.

105 Shoes not only protect children’s feet from soil-borne pests and diseases, but they also allow children to attend school, as many schools require shoes for attendance. But the

TOMS model has its flaws, as well. The firm exerts little control over their production process, relying on third-party monitoring to ensure fair labor standards at the factories in

Argentina, Ethiopia, and China where the shoes are produced.16 While it is better than nothing, many other questions persist. The TOMS model does not increase solidarity and relationship between producer and consumer, and it only marginally does so between the

“donor” (purchaser of shoes) and the recipient (poor child) of the shoes, by providing pictures and videos of children receiving shoes on the website. The model could be viewed as one that threatens human dignity, one in which rich people (shoes cost upwards of $50) merely make token efforts to meet the needs of poor, mostly invisible people, who are so backward that they must depend on rich countries for everything.

Critics could ask why the model wasn’t established as “for every pair you buy, we give away two pairs (or three pairs, or more) to children in need”? How profitable is the company, even after the charitable contributions? Could it be doing more? More critically, why did all the profits need to accrue do Blake Mycoskie and any other private investors? It could be argued that while TOMS Shoes has benefitted poor children, the main purpose of the firm is to the build the equity of owner and founder Blake

Mycoskie.17 Questions also could be asked about the TOMS Shoes organization itself.

16 TOMS Shoes articulates a concern for fair labor practices: “Our factories in Argentina, Ethiopia and China are all third-party audited to ensure they employ no child labor, and pay fair wages.” See http://www.toms.com. 17 More critical voices on Facebook assert that Blake Mycoskie has exploited these poor children, using them as a marketing device. Search for the Facebook group, “TOMS Shoes is a scam!” at http://facebook.com.

106 Does it embrace worker solidarity, subsidiarity, and participation? Do the workers share in the profits? Do its policies support competition or cooperation?

We may never know the answers to these questions; however, the TOMS Shoes model, in which a retail sales of a product help to bring about social benefits for others, is worthy of further exploration, as it demonstrates a way to make charity financially sustainable without relying on donations or grants from outside a business. The structure works, because it explicitly aligns the purpose of the business with the charitable effort.

TOMS moves beyond the charity model of Catholic Relief Services and its dependence on donations and grants, and it also improves upon the goal of maximizing shareholder wealth that drives the activities of a publicly-traded for-profit corporation. TOMS has found a way to use profits as a means for social transformation and to help promote the common good.

The example of TOMS Shoes provides fertile ground and a springboard for thinking about how businesses can work for social transformation. What if TOMS or other businesses could work with local NGOs to help people in poor communities organize to produce what they need? What if they could produce their own shoes? Yet at the same time, TOMS Shoes’ purpose lacks a key element that motivates the Christian in the economy; that is, a transcendent telos that provides a foundation for loving one’s neighbor, as the company professes a strictly humanitarian viewpoint.18

18 The TOMS Shoes model is powerful, but Blake Mycoskie isn’t doing this to be church. It is clear from this example that the inspiration for doing good and working to alleviate social ills through business is not strictly limited to those in the church. As Christians, we are called to see and recognize the good that these efforts achieve; we can see it as further indications of the Spirit at work in the world. It may be that those who engage in such efforts in the absence of a faith commitment may be potential business partners, as they, people of good will, can appreciate the importance of working for social transformation.

107 A third example that blurs the distinction between business and social welfare is the Economy of Communion (EoC) model. Lorna Gold describes Brazil’s Economy of

Communion, which began in 1991 as part of the Focolare movement, as small businesses that are “set up or transformed so that their profits could be redistributed to the poor.”19

By the year 2009, Gold notes that 753 businesses in 45 countries around the world were participating in the EoC; these businesses were “redistributing a portion of their profits to promote welfare in the poorest countries and the spread of a ‘culture of giving.’”20 In general, EoC business profits are allocated as follows: one-third stays within the business for reinvestment to foster growth (although the exact amount is at the discretion of the owner(s)); one-third is distributed through the “community network structures” that provide goods to the poor, and the last third is “used to fund the infrastructure necessary to promote the culture of giving – model towns, publishing houses, formation centers.”21

There are a number of drawbacks to the EoC model. Gold points out that most

EOC businesses are not large corporations; “most businesses are privately owned by individuals, families or groups of less than ten people….None have yet considered public stock offerings.”22 Gold acknowledges the financial limitations of this structure, in that the firms have not yet raised large sums of capital in the equity markets.

When considering EoC in the United States, it is likely that the portion of the profits allocated to provide for the poor would be directed to a tax-exempt, not-for-profit organization. If so, it would be more tax-efficient for a U.S.-based firm to make tax- deductible contributions to the tax-exempt organization (such as the United Way or a

19 Lorna Gold, New Financial Horizons: The Emergence of an Economy of Communion (New York: New City Press, 2010), 36. 20 Ibid. 21 Ibid., 89. 22 Ibid., 155-6.

108 church), rather than to participate as an EoC member in which the support for public projects is paid out of after-tax profits. In this way, the businesses would be able to provide a larger contribution to the social project. One must wonder whether there is anything substantially different from an EoC business, and a for-profit business that makes large annual charitable contributions to tax-exempt organizations in their communities.

One could respond to this question by claiming that EoC businesses are informed by the Focolare movement and its spirituality of unity; however, from Gold’s research, it does not seem that the Focolare spirituality directly affects the work and operations of the businesses. Gold explains that directors of EoC businesses in Brazil saw a clear distinction between the business relationship with Focolare and the personal relationships within the Focolare movement. The business relationship was centered on the distribution of profits. Gold quotes a director as saying, “the life of the business is the life of the business. There is no interference on the part of Focolare in the life of the business.”23 On the other hand, personal relationships within Focolare provided “moral support” which created a “strong incentive” to ensure that the business operated according to the EoC principles.24 What made a difference was that “people who are directing the business are involved in the Focolare movement.”25 Gold notes that about

25% of the EoC business directors in Milan were able to draw a distinction between the work of the business and the work of the Focolare movement. Gold quotes one of these directors as saying, “’With the Focolare, each of us has a personal relationship. There is

23 Ibid., 177. 24 Ibid. 25 Ibid.

109 not a relationship with the business as an entity.’”26 But for the remaining majority of the directors, the situation was less clear; it is noteworthy that they were troubled by the lack of clarity or distinction between the two. They were concerned that “the spiritual role that the Focolare plays in sustaining the vision beneath the businesses was becoming confused with the strategic planning of the business itself,” and the confusion was seen by the directors as a problem.27 This confusion would seem to indicate that the directors would prefer that there be no connection between the Focolare movement and the day-to- day operations of the business. Gold explains that “for most [directors in Milan], decisions on the future of the business were still taken in the boardroom with the advice of the other partners,” demonstrating that the EoC business directors typically engaged a mental separation between the Focolare spirituality and their business purposes.28 It would seem as though EoC businesses are quite similar to TOMS Shoes, as both EoC and

TOMS are closely-held, for-profit companies that engage in highly specific forms of philanthropy.

As discussed above, when for-profit businesses are organized with the sole intent to maximize owners’ equity, goals that promote social good are in conflict with profit maximization, and the social goals are necessarily pushed into the background. Strict adherence to the profit motive interferes with the ability for businesses to achieve social benefit, as the pressure to create value for shareholders (or other outside owners) places downward pressure on the wages of employees. As the TOMS Shoes example shows, the

26 Ibid., 179. One could interpret this result to indicate that approximately 75% of the EoC business directors allow the Focolare movement to influence the business aspects of their organizations. This could be a heartening result; however, the finding that most directors view mixing the Focolare spirituality with business decisions to be problematic outweighs this potentially positive finding. 27 Ibid. 28 Ibid.

110 use of profits to serve a greater end is not equivalent to maximizing profits as an end in themselves. A purpose for the business that goes beyond wealth creation can promote elements of the common good and transform society. Without the clear articulation that the firm will be pursuing goals other than shareholder wealth, corporate philanthropy will be viewed negatively as detracting from shareholders’ returns. If a for-profit business seeks to pursue social good through business, it will be necessary to state clearly, in terms broader than maximization of owners’ wealth, the goals of the business. TOMS Shoes presents an interesting modification to the purpose of for-profit business, as it unmistakably and irrevocably introduces charity (shoe-giving) as a stated goal of the business. While one can critique TOMS shoes, that perhaps it is not doing enough, it has found a way to sustain charitable actions and achieve positive social results. Likewise, the Economy of Communion businesses are making positive differences to the people in their communities.

While the above examples are all different, each of them embraces and articulates a desire to promote the common good, or to achieve social transformation through business activities. The task of the church is to facilitate witness to the ontology of participation, but this is not to say that these kinds of businesses could not be conceived of outside the church. Indeed, TOMS Shoes is just such an example; we cannot govern the action of the Spirit. While we should welcome the work of the Spirit wherever we may find it, as people of God who believe in the incarnation and resurrection of Christ, we are called to give witness and live accordingly. As Christians, we are called to incarnate and give witness to the vision of justice by creating economies that embrace an

111 ontology of participation. We may find we can build partnerships of exchanges with others who also find attractive the concept of business for social transformation.

We can see from the examples provided above that the structure of the business is important; the culture of a business flows from mission, goals and structural organization.

If we desire a culture of collaboration and personal responsibility, the structure must be one upon which such a culture can be built and supported. The structural form of the business must follow its function; this requires that the goals of the business be determined first. We can structure businesses to allow for increased worker participation in decisions about the business, increase the ability of workers to share in the ownership of the business, and reduce supply and distribution chains. We can design ways by which profits can be used to achieve specific social goods. The structure of the organization is important to supporting these goals.

Businesses that seek to promote elements of the common good require both supportive structures as well as personal responsibility on the part of those who work there. The personal relationships sustained in the church can create a network of relationships that helps to strengthen the virtue of caritas in veritate. The church forms us for living in right relationship and ordering our actions, and the possibility of a shared economic telos among people within the church can help shift our thinking from business as contracts between individuals toward relationships of covenant among persons. At the same time, the living witness provided by people who create systems of exchange that represent in-breakings of the heavenly perfection serve to strengthen the church.

112 Conclusion:

Benedict XVI calls for room within the economy for “economic activity carried out by subjects who freely choose to act according to principles other than those of pure profit, without sacrificing the production of economic value in the process.”29 As people of faith, we can experiment to find new ways of constructing business organizations that serve the real needs of people, without idolizing wealth and profit, to use profits as a means by which to promote specific aspects of human flourishing. We must continue to rethink the way we organize business, striving for a model for business that embraces an ontology of participation, in which humans freely cooperate with God’s activity, building human communities that foster dignity and flourishing of neighbor, and viewing their work as a vocation to help promote the common good and the beatific vision.

New forms of business might emerge from within small communities that seek goals such as: increasing access to fulfilling, stable employment; better education; healthier foods; fair-trade products; etc. Businesses such as TOMS Shoes, those that embrace the Economy of Communion model, as well as farm and grocery co-operatives, are examples that help us see that there are possible alternatives to established and prevailing structures.30 We need to continue to innovate and experiment, to find ways to bring these alternative forms into the mainstream. We possess agency for change, we can change structures that dehumanize and act as an impediments to participation and create new alternatives in their place. In addition, there may emerge ideas for new legal forms

29 Caritas in Veritate, 37. 30 William Cavanaugh discusses Community Supported Agriculture (CSA) as a way to decrease distance between and build relationships among consumers and producers. He writes that the CSA creates an “alternative economic space which gives priority to personal relationships, community responsibility, a livable income for farmers, and a direct stewardship of the land from which our food comes.” William Cavanaugh, Theopolitical Imagination: Discovering the Liturgy as a Political Act in an Age of Global Consumerism (New York: Continuum, 2004), 95. The time is right for us to explore new ways of doing business, like CSAs, that are rooted in love of neighbor and concern for relationships.

113 of business that do not currently exist; it may be necessary to take political action to create these forms of business.

We will not be able to create the City of God on earth; we will never be able to achieve the splendor of the heavenly kingdom. We know that we live in a consumerist and individualistic culture that forms us in ways that are contradictory to the Christian life. Nevertheless, we can propagate experiments that challenge a dominant business model and disturb the status quo. It is important that we not grow weary or complacent – if we believe in the resurrection of Christ, we are called to more than mere existence and the consumption of resources. God’s mercy and patience do not excuse us from action, but rather make possible our actions, our witness to solidarity and to the ontology of participation. Economists, theologians, and businesspersons must remain open to the action of the Holy Spirit in our lives, working together, listening to the wise voices around us as we seek beatitude. We are called to trust in God’s providence, employing our gifts and talents creatively in meaningful work that serves the needs and fosters the development of the most marginalized among us. We must continue to experiment with cultivating networks of relationships that provide witness to the vision of the Kingdom of

God and strengthen the church. We can rejoice in the opportunity we have been given to try once again to develop an economic system designed to serve people and help us all move closer to friendship with God.

114

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