Many American Catholics are deeply concerned about business, and especially about large corporations. Readers of America have posted comments online: “Today’s businesses, especially large corporate businesses, focus on one thing, and one thing only…the Profit motive,” and “The maw of [corporations’] covetousness knows no end,” and “Capitalism, as it is practiced in the USA, is condemned by Scripture, papal encyclicals, episcopal letters, etc.” These sentiments are not limited to spontaneous comments in some late-night debate. Theologians and chaplains raise similar criticisms in the media and on campus. Social justice conferences often focus on the ways in which businesses, or capitalism in general, must be reformed if we are to raise the living standard of the poor or promote the common good.
Catholic universities find themselves at the center of the controversy. Fifty academics from across the country recently wrote to John Garvey, president of The Catholic University of America, urging him to be wary of a commitment of $1 million by the Charles Koch Foundation to the university’s new School of Business and Economics for research into the role that “principled entrepreneurship can and should play in improving society’s well-being.” The organization Faithful America launched an online petition urging Catholic University to “put academic integrity and social justice ahead of the Koch brothers’ interests.” The petition has almost 33,000 signatures.
The academics and other petitioners seem to discount the depth and diversity of experience and the eminent stature of Catholic University’s executives and trustees, who are responsible for the governance of the university, and the commitment of the university’s existing academic leadership to the church’s teaching on social justice. The concern about undue influence from this particular connection to business may be overblown, but the concern is real and reflects a deep discomfort with business among many university professors.
The Business of Business Schools
Business is increasingly influencing the very size and shape of our institutions. Some Catholic universities now have more undergraduates in their school of business than in the school of arts and sciences. Does the concentration of so many students focused on business careers and the presence of so many full-time business professors and adjunct business professionals influence the mores of the university?
Values are often conveyed through signage. The library at St. Joseph’s University in Philadelphia, my alma mater, bears the name of Francis A. Drexel, acknowledging a major gift written into his will. Drexel made his fortune in investment banking. He was a partner of Junius Morgan, father of J. P. Morgan. Much of Drexel’s investment was in railroads—the dot-coms of the day—in the laissez-faire decades leading to Pope Leo XIII’s encyclical letter “Rerum Novarum” of 1891. The library has now been serving students and faculty for about 50 years. But what influence does signage have on undergraduates who use this library and so many other buildings similarly financed by profits wrought from business and named for the wealthy patron?
Catholic universities rely substantially on income from endowments that are heavily invested in corporate equities—shares of stock. The top five Catholic universities, ranked by the size of their endowments, held assets totaling just over $11 billion in 2012, according to the National Association of College and University Business Officers. The University of Notre Dame leads the pack with $6.3 billion. The top 20 Catholic university endowments total almost $18 billion. University presidents and trustees hope that after-tax corporate profits, delivered as dividends or capital gains, will help them keep a lid on tuition, fund faculty chairs and deliver more scholarship aid. That investment income is no small amount. It is material to the success of the institution. Even with diligent attention to issues of good corporate governance and economic justice, can university investors assure that all is well in every cubicle and factory of the corporations in which they are partial owners? How is the university’s responsibility assessed if employees are harmed or customers are cheated by these corporations? Calls for endowments to divest shares of particular corporations or entire industries are not uncommon.
Maybe Catholic universities should distance themselves from business and drop business education. Why subject Catholic institutions to a system that can easily be perverted against the common good, to the detriment of the most vulnerable? Why not focus on educating students for careers in teaching, medicine, government service and other professions whose social benefits are obvious? Why expose our universities to risk that the undue influence of business will detract from their mission? Let me suggest a few answers.
Serving the Common Good
Catholic universities in the United States confer almost 100,000 baccalaureate degrees each year. The graduates, one hopes, have been schooled in principles of social justice. Some have read the encyclicals and bishops’ letters. A few have experienced the solidarity that comes from living and working among the poor, at least for a short time. All of these graduates, whatever their major course of study, play multiple roles in our complex society. The choices they make as consumers, investors, voters and donors have consequences. All of them, and all of us, are obligated to take part, as Pope Francis stated in “The Joy of the Gospel,” in “decisions, programs, mechanisms and processes specifically geared to a better distribution of income, the creation of sources of employment and an integral promotion of the poor” (No. 204). This is complex work that requires, among other things, some understanding of business—not so much the technical details of accounting, marketing and finance but the role of business and business leaders in society. Pope Francis speaks clearly about this role. “Business is a vocation, and a noble vocation, provided that those engaged in it see themselves challenged by a greater meaning in life; this will enable them truly to serve the common good by striving to increase the goods of this world and to make them more accessible to all” (No. 203). This statement, by this pope, who sees promotion of the poor as central to the mission of the church, should influence our thinking about the role of business in building the society that Francis envisions.
How much more efficiently might we move toward a just society if every graduate of a Catholic university had an understanding of business—not just the business student but the nurse or social worker and the future lawyer, historian, art critic or priest? There are excesses and abuses in business and in our capitalist society, and Pope Francis has named many of them. There is also nobility, as he reminds us. We need to recognize the differences.
Many of those disturbed by business enjoy the option to choose the computer on which they write their complaint (Apple, Dell, Lenovo, etc.) as they sip their Starbucks coffee or Coca-Cola, drive their Prius, Ford or Honda and wait for a text on their choice of cellphone. They applaud the availability of antiretroviral drugs that combat H.I.V. and hope for a remedy for Alzheimer’s disease. The irony is that building a single vehicle assembly plant or computer chip fabrication plant or refinery often requires an investment of more than a billion dollars. Producing a single new medicine may require years of research and millions of dollars in laboratories and manufacturing facilities. What is the source, and motivation, of those billion-dollar investments?
In many cases, those who condemn capitalism or for-profit business also hope that the balances in their retirement plans will grow, that their investments will be rewarded in a way that can happen only by growing after-tax corporate profits. Their objective is the same one that inspires the efforts of corporate-employed 401(k) holders. All of these investors are part of the 47 percent of American households that own shares of corporate stock, either directly or through mutual funds. Many more benefit indirectly from shares owned by their union or municipal retirement funds. This market in publicly traded securities is inextricably tied to the private market of angel and venture investors. Are all these investors worshiping the modern golden calf—money—or are they prudently saving and stewarding resources for a future need? Can our future leaders define the difference? How does this activity promote the common good or affect those at the base of the economic ladder?
Many believe that business and its profits are excusable only to the extent that they can be taxed to fund social programs. But business is the bridge that spans those gaps in wealth and income. That bridge was the route by which a utility plant supervisor left his day job and stumbled through two failed businesses before 12 investors co-founded the Ford Motor Company. Profits in the early years brought wealth to those investors, including Rosetta Couzens, a school teacher who used her savings to buy just one of the original shares in that company. Today, two million Americans work in the automobile industry. That bridge led two bicycle mechanics to spend their summers on a windswept beach and launch the world’s aircraft industry. Business was the route by which a sharecropper’s grandson became chief executive officer of a major financial firm; a fellow with a coffee shop in Seattle built a company that pays fair trade prices to coffee farmers in Africa; and the son of a plumber brought iPods, iPads and iPhones to the world. Business built the enormous wealth of Francis A. Drexel, which funded not just a library but also the lifelong works of his daughter, St. Katharine Drexel, her Sisters of the Blessed Sacrament and others who brought education to people of color and Native Americans in a time when these groups were considered outcasts.
Gaps in income and wealth cause frustration, anger, even outrage. They have produced riots in this country and revolution in others. Widening gaps are evidence of societal failure. Many believe wholeheartedly that the wealth of the 1 percent causes the poverty of the 16 percent. But the wealth of Francis Drexel in the 1800s, or Henry Ford a century ago, or the modern wealth of Bill Gates and Warren Buffett did not cause the poverty of others any more than the graduate degree of one person causes the illiteracy of another. These are not zero sum equations. The wealth of one, if invested in the risky business of new products or processes, provides a job and possibly 100,000 jobs for others. Yet many graduates condemn the very economic system that has helped lift a billion people out of extreme poverty over the past 30 years.
Making Ethical Decisions
Building a more just economy for the world might well begin by understanding the world’s largest economy. “Centesimus Annus,” Pope John Paul II’s encyclical letter (1991) on the 100th anniversary of “Rerum Novarum,” states: “The church has no models to present; models that are real and truly effective can only arise within the framework of different historical situations, through the efforts of all those who responsibly confront concrete problems in all their social, economic, political and cultural aspects, as these interact with each other” (No. 43). Because business is a powerful force in our society, our graduates need to understand it. Do our graduates evaluate corporate profits in relation to the amount of equity invested and the degree of risk involved? Do our students discuss changes in tax policy that could boost money flows in the nonprofit sector, with no loss of revenue to the federal coffers, or the effect that taxes exert on “the creation of sources of employment”? Do they evaluate new and existing social programs against the standard of “an integral promotion of the poor which goes beyond a simple welfare mentality” (“The Joy of the Gospel,” No. 204)? Can our graduates describe with any historical accuracy the largest fortunes of the Gilded Age and what happened to all that money?
All of this is relevant to our graduates because of their roles as consumers, investors, donors and voters. One other fact points to the relevance of business. Most graduates, not only the business or economics majors, will seek employment in the for-profit sector. In less than a decade they will become team leaders, supervisors and managers responsible for the conduct of some part of a business enterprise. The ability to make ethical decisions in any profession depends upon an understanding of the profession’s numerous interactions with society. It is so for attorneys and physicians, and for psychiatric and spiritual counselors. How will our liberal arts graduate turned business person, working in a particular functional area or department, ponder an ethical question and present a principled solution without understanding the larger role of business in society?
Career paths in business are as unpredictable as the wanderings of Odysseus. The foreign language major becomes an insurance company executive; the special education major becomes a financial advisor; the hospitality management graduate goes on to become a mid-level marketing manager. In 20 or 30 years, a few from the class of 2014 may be chief executive officers of large corporations or leaders of major divisions. One or two of them may start a Fortune 500 company that does not exist today, thereby increasing and making accessible the goods of this world and creating new sources of employment for many thousands of people. Even in those lofty promontories, they will confront dilemmas that Cardinal John Henry Newman recognized as “simple of solution in the abstract...at different times differently decided,” in which he observed, “It is no principle of sensible men, of whatever cast of opinion, to do always what is abstractly best. Where no direct duty forbids, we may be obligated to do, as being best under circumstances, what we murmur and rise against, while we do it.”
In social justice work, right moves bring improvements that advance the common good and serve the poor. Wrong moves waste resources and sometimes cause real misery. Catholic universities are uniquely positioned to provide a new generation of graduates, one million of them in the next 10 years, equipped with the authentic teaching of the encyclicals and episcopal letters, a spirit of solidarity and with an understanding of business and its role in society. Reaching out to all, including today’s and tomorrow’s business leaders, in a spirit of creative concern and effective cooperation would be the best protection a university can adopt to avoid, as Pope Francis put it, “drift[ing] into a spiritual worldliness camouflaged by religious practices, unproductive meetings and empty talk” (No. 207). That would be a powerful rejection of the undue influences that threaten the essential mission of our universities, that of educating men and women who are with and for others. That would be the most effective way to enlist the services of one more noble vocation into building the world that Francis wants.