It is important for businessmen and top executives to always remind themselves that every business is a community of persons who get together to promote the good of one another as they produce or market goods or services for the public. By putting the human person at the center of every business, the worst abuses of rugged capitalism can be avoided.
The stakeholders of every business, i.e., the consumers, the rank-and-file employees, the managers, the funds providers, the suppliers, the immediate community in which the business operates and the public at large are not just factors of production or economic resources. They are first and foremost persons who want to attain their fullest development as human beings.
No business enterprise can treat human beings as mere factors of production, impersonal buyers of goods or services, mechanical suppliers of funds or raw materials, etc. Those who manage business must always treat the various stakeholders as persons who have legitimate emotional and spiritual needs in addition to the economic ones.
The social doctrine of the Church, a very important source of guidelines for ethical behavior for Christian businesspeople, is replete with statements to this effect. For example, the very first social encyclical, “Rerum Novarum” of Pope Leo XIII, published in 1891, clearly stated that man must never be treated as an instrument but rather as an end in himself. To treat other human beings “as though they were things in the pursuit of gain, or to value them solely for their physical powers—that is truly shameful and inhuman.”
As expressed by Pope Paul VI in “Populorum Progressio” (1967), development cannot be solely economic, but must instead be oriented toward the full development of each individual as a whole—physically, morally, as well as economically.
This is related to the concept of the common good enshrined in the Philippine Constitution of 1987. In the deliberations of the Philippine Commission that drafted the Constitution in 1986, it was made very clear that the common good is not the greatest good for the greatest number (which smacks of utilitarianism), but a social or juridical order which enables every single member of society to attain his or her fullest development economically, politically, socially, culturally, morally and spiritually. In short, his or her integral human development.
This Christian concept that human beings are made in the image of God applies equally to the person of the business executive. To that extent that he is a human being, a person, he is made in the image of God and, therefore, can act out of love for others.
It was, therefore, the height of oversimplification and exaggerated assumption when free enterprise economists attributed to the businessman the exclusive concern with profit maximization, in their theoretical models trying to explain the workings of the law of supply and demand in a free market economy. The businessman can also be motivated by altruism in running his business, even on the assumption that one of his objectives is to make a profit in order to guarantee the sustainability of his operations.
Not all the economic theorizing by liberal economists about profit maximization as the only or principal motive of a businessman can erase the fact that businesspeople can also be conscious of their moral obligation to contribute to the common good. This can be demonstrated by the widespread practice of impact investing and, especially among the younger entrepreneurs, the increasing number of social enterprises. These are for-profit businesses that are put up primarily to meet a need of society such as poverty eradication, the cleaning up of the environment, the improvement of the quality of education at all levels, or the fostering of desirable values, especially among the youth.
Even those enterprises that are put up mainly for profit have a variety of corporate social responsibility programs that address some needs of society. The profit-maximizing creature that was described in many textbooks on microeconomics in the last century is dead, or never really existed.
Dr. Bernardo M. Villegas (bernardo.villegas@uap.asia) is a professor at the University of Asia and the Pacific.
Business Matters is a project of the Makati Business Club.