The Virtue of Enterprise: The Pope’s Discovery of a ‘Right to Economic Initiative’ Could Revolutionize Catholic Social Thought

Catholic thought proclaims the primacy of morals over politics and economics. The reason for this is that any social system apportioned to human liberty must recognize the moral activism and responsibility inherent in the use of liberty. In a free society, individual persons exercise far greater liberty of economic action than in any totalitarian, authoritarian, or traditional society. Their moral responsibilities are correspondingly greater. Ubi libertas, ibi iudicium — Wherever there is liberty, accountability follows. Insofar as a free society increases the scope for liberty, so it enlarges the burdens (or, better, the joys) of morality.

Aristotle’s Morality

It is perhaps too Kantian to think that morality means solely obligations, burdens, and responsibilities. The Catholic view sides rather more with the Greeks: true morality is the correct exercise of ever larger capacities for action, and belongs as such in the realm of joy and beauty. For Aristotle, to act well is the very definition of happiness. For Catholics, happiness is deeper than feelings, and may persist even under feelings of pain or dread. Those who act with courage, for example, may not experience pleasant feelings, but only an inner sense of doing the right thing, at the right time, for the right reason, in the right way. In order to be happy, one should not take feelings as one’s guide; on the contrary, one should set one’s compass to acting with virtue, and train one’s feelings to delight in that. First the substance of the act, then the feeling.

By morality we mean the exercise of fundamental human capacities, to the limits (virtually infinite) of their deployment. We mean the full development of human potentialities. We mean the beauty and exhilaration of large and great -souled actions, and of fidelity to small details (“God is in the details”). We mean human consciousness at a high pitch of attentiveness and alertness — and human will at a high level of discrimination and choice. To be human is to reflect and to choose. To be moral is to exercise these capacities frequently, with pleasure, and to the fullest extent attainable. A wise person exercises reflection and choice as frequently as possible every day, deliberately extending them even into such reflexive acts as taking a sip of water, walking, combing hair, or conversing. “Be attentive” is the dynamo of moral action.

Morality is present wherever human beings act in politics and economic life, in the family, and even in solitude. The primacy of morals derives from human liberty. Still, it was not until Adam Smith in 1776 that two new lessons were learned about the scope and consequences of liberty in the economic order. First, human beings can create national wealth in a sustained and systemic way; they thus inherit thereafter responsibility for poverty. If no one can create wealth, then poverty is simply a fact; but if a society knows how to create wealth and doesn’t, then poverty is immoral.

Second, the cause of the wealth of nations is the human mind; that is to say, human creativity. The ancients and medievals had the honor of discovering many important truths about politics (Aristotle’s Politics, St. Thomas’s De Regimine Principum and Dante’s De Monarchia, etc.). The great discovery of the modern period is economics. Human liberty can be extended not only throughout political life but also throughout economic life. Ironically, the second of these truths — that the cause of the wealth of nations is the human mind — is a moral truth. It implants the moral code at the heart of all economic activity. (I say “ironically,” because soon after Adam Smith’s discovery, economists began to treat their new field of inquiry as a science rather than as a branch of moral philosophy, even though Adam Smith had clearly thought of it as a sub-discipline of moral philosophy.) In this spirit, even John Stuart Mill wrote in his Principles of Political Economy, one of the most widely reprinted textbooks of the late nineteenth century, that economics is a moral art, which he compared to other arts necessary to the statesman. In his eyes, economics has to do with the proper arrangement of society, in accord with the system of natural liberty, that leads to the ever-improving wealth of nations and its equitable distribution. Thus economics is both a moral art and a social art. It has to do with the proper and just arrangement of social institutions, oriented toward maximizing personal economic creativity, for the sake of the common economic whole.

Although most economists after Smith detached economics more and more from moral philosophy, in the name of science, the great Heinrich Pesch, S.J., in his multi-volumed works on the social economy, did not. He discerned clearly that the dynamic of every economic system is the energy generated by the moral habits of its citizens.  Economic activities spring from, human liberty, and                from moral agency. A passive population, exercising liberty hardly at all, displays a diminished range of economic activities, compared to a more industrious population.

Contrary to the conventional wisdom, we should recognize that economic reality is inherently social. Through economic activities, citizens fulfill one another’s material needs, and join together to improve their common material good. Exchange is of the essence of economic activity. Indeed, some early Fathers of the Church saw in commerce among the various nations, each with different resources and different advantages, a metaphor for the interdependence of the human race. Looked at religiously, international economic activities, based upon voluntary transactions, represent a humble and earthly image of the unity of humankind in its daily activities. Out of the many comes a certain interdependence. This nation excels in the production of wines, that other one in the production of wool. This nation has great mineral resources, while that other nation has none. In their variety, the nations meet each other’s needs. Through economic life, their interdependence becomes visible to the naked eye, a metaphor for their deeper unity in the system of natural liberty.

This natural liberty, in turn, is the wellspring of enterprise and creativity — the cause of economic prosperity, the engine of development. Since the driving force of economic prosperity is moral agency, the primacy of morals in economic life is vindicated. The name of this moral agency within the economic realm is enterprise.

The Right to Enterprise

The answer to Adam Smith’s question: “What is the cause of the wealth of nations?” may be given in a single word — in Latin, Caput: the human mind, wit, invention. The cause of the wealth of nations is the creativity of the human person. The person is the originating source of invention, enterprise, and economic dynamism. Smith’s example for this was the pin factory: The invention of a machine to produce pins at a rate incredibly faster than individual craftsmen alone had ever before been able to produce them. This invention generated enormous new wealth, and it also made pins available for the first time to the poor.

Friedrich Hayek once pointed out: capitalism did little for duchesses, who already had silk stockings, but a great deal for poor and working class women who soon also had silk stockings. Practically all the little things of daily life that have lightened our days — things that we see here around us and use every day (microphones, electric lights, synthetic materials for chairs and rugs, eyeglasses, earphones, etc.) — are fruits of economic creativity.

Pope John Paul II has greatly advanced Catholic social teaching, therefore, by grounding its economic viewpoint in the story of creation in the Book of Genesis. This he has done in his encyclicals Laborem Exercens and Sollicitudo Rei Socialis.

Moreover, the pope has linked the ancient concept of creativity to the contemporary concept of enterprise and initiative. This is a very important step. He goes so far as to call personal economic enterprise a fundamental human right, which he pairs with the fundamental human right of liberty of conscience. As with liberty of conscience, the Holy Father roots this right in the subjectivity of the human person, made in the image of the Creator, and says that sins against this right destroy that image of God in humans and wreak human devastation.

[I]n today’s world, among other rights, the right of economic initiative is often suppressed. Yet it is a right which is important not only for the individual but also for the common good. Experience shows us that the denial of this right, or its limitation in the name of an alleged “equality” of everyone in society, diminishes, or in practice absolutely destroys the spirit of initiative, that is to say the creative subjectivity of the citizen. As a consequence, there arises, not so much a true equality as a “leveling down.” In the place of creative initiative there appears passivity, dependence and submission to the bureaucratic apparatus which, as the only “ordering” and “decision-making” body —if not also the “owner” — of the entire totality of goods and the means of production, puts everyone in a position of almost absolute dependence, which is similar to the traditional dependence of the worker-proletarian in capitalism. This provokes a sense of frustration or desperation and predisposes people to opt out of national life, impelling many to emigrate and also favoring a form of “psychological” emigration. [Sollicitudo Rei Socialis, 15, emphasis in original]

Clearly, the exercise of personal economic enterprise is close to the moral center of the human person. By declaring such exercise to be a right, Pope John Paul II leaves Catholic social thought with a further question. If personal economic enterprise is a fundamental right, in what precisely does its exercise consist? What is enterprise? If it is a central capacity of personhood — the image of God in us — to exercise it must also be a duty. Not to exercise it appears to be a fault.

But when was the last time we heard in church, or learned from a text of moral theology, that personal economic enterprise is a necessary moral virtue? Or received instruction in how to practice it? Or learned to criticize social systems in the light of how well, or how badly, they nourish and promote personal economic enterprise? Does our catechism teach us even so much as the basic conceptual definition of this virtue?

The explanation for this still undeveloped part of Catholic social teaching is that this virtue is a relatively new one, given special prominence by a new stage of human social development. Every form of society vivifies, among its citizens, a special selection of virtues. The virtues of Athens differed from the virtues of Sparta; even today, those of Madrid differ from those of Rome or Bonn or London or Minneapolis. Every different form of society consists of its own distinctive institutions, manners, arrangements, customs, practices, and habits. Thus, Tocqueville (one of the greatest Catholic Whigs) observed correctly that republican societies require a long education in liberty to prepare their citizens for the new responsibilities inherent in self-government. They call forth new virtues. This is so in the political order; it is also true in the economic order.

Today, traditional habits appropriate to living under tyrants or even under the old aristocratic feudal system have to yield to the habits appropriate to self-government. This is because democracy is not only a form of government; it is a new way of living, and it requires a new way of thinking, feeling, and organizing one’s own inner life. It demands new sets of human virtues. If citizens cannot govern their own inner lives, how can they mutually govern one another in social life? A democratic (republican) revolution is moral or not at all. Republican institutions require republican virtues. Among these are initiative, a sense of personal responsibility, and skill in forming associations to fulfill multiple social purposes. Free citizens must take responsibility for nearly every aspect of their lives. They cannot await the benevolence of others. Under self-government, they are themselves sovereign; they become the ones responsible for everything.

Like a new political order, so also a new economic order demands a new set of moral virtues. Like a feudal political order, the traditional economic order was largely state-run, mercantilist, and relatively uninventive. It required virtues appropriate to a feudal order. But a free economic order requires a new set of virtues parallel to those appropriate to a republican political order. The centerpiece of these new virtues, close to being “the form of all the (economic) virtues,” is personal economic enterprise. This virtue is rooted in God-given capacities for creativity.

The Virtue of Enterprise

Like practical wisdom (phronesis), personal economic enterprise is a virtue of the practical intellect. It is at once an intellectual and a moral virtue. It is an intellectual virtue because the essence of economic enterprise is an act of discernment, an alertness, a noticing. It is a moral virtue, because it falls under the formality of advancing the common good (particularly, but not solely, the material common good) of society. Enterprise is, further, not a solitary act; it is relational. Most of the time, it is an advancement of human interdependence.

Thus, personal economic enterprise is in its essence intellectual, moral, and social. As it is the cause of the wealth of nations, so, in aggregate, it is ordered to the common good. Indeed, to exercise enterprise in an anti-social way is, over time, self-defeating. For to tear down the tissues of mutual trust, mutual confidence, and mutual cooperation — on all of which general prosperity depends — is to arouse defensive reactions on the part of others, and to lead society into a war of all against all. When moral vices eat away its rootage, a social system collapses in ruins upon the enterprises of all.

We have now approached the concept of personal economic enterprise from outside-in, so to speak, by classifying it among the other virtues as intellectual, moral, and social. But what is it in itself? First of all, like practical wisdom, personal economic enterprise is essentially a capacity for insight. In its first moment, it is the habit of discerning new possibilities. This insight may consist in imagining new products and new services not now available. It may also consist in new, better, or more efficient methods of producing or distributing them. The person of economic enterprise, like the person of practical wisdom, is habitually alert to possibilities for action that those without the habit commonly overlook.

In its second moment, the virtue of enterprise consists in realizing one’s creative insights in the world of fact. Just as practical wisdom leads to doing, practical enterprise leads to creating. Whereas practical wisdom is ordered to acting well (recta ratio agendi), economic enterprise is ordered to creating well (recta ratio creandi). In this respect, economic enterprise is a species of art (a commercial art, an industrial art, an entrepreneurial art, one of the arts of human service). It is, then, a humanism on empirical grounds. The Scholastics defined an art as recta ratio factibilium, reason ordered to making things well.

Looked at from an economic point of view, enterprise is the single most important cause of the wealth of nations. It introduces new goods and services to benefit the human race. It creates new markets and new reasons for exchange. It generates new jobs and raises standards of living. Enterprise is the dynamic force in business activity, the principle of change. Enterprise may also work by generating new savings. In this sense, it sometimes conserves wealth that otherwise would have been squandered. For example, consider an American automobile company that expends hundreds of millions of dollars annually in purchasing paint for all the automobiles it produces. An enterprising (and courageous) executive closely studied the company’s traditional methods for purchasing paint. He found that contracts were written nationally with large suppliers, and then the paint was distributed to auto plants all around the United States. Looking still more closely, the new executive saw possibilities for immense savings by decentralizing the contracts, and by allowing each local plant to accept bids from local suppliers.

Despite fierce traditionalist resistance, his plan was carried through. The result was greater satisfaction throughout the system (since the use of local suppliers resulted in lower transport costs and greater local control). The company also reaped a financial savings of nearly 15 percent. On a base of many hundreds of millions of dollars annually, a 15 percent savings was highly significant. These savings accrue to society at large, insofar as these unsquandered funds are turned to more creative uses, either by allowing prices to be cut or productive new investments to be made.

My wife comes from the agricultural state of Iowa. During the first dozen years of our marriage, new inventions and new methods allowed agricultural productivity in the United States to double. By the twenty-fifth year of our marriage, it had doubled again. Whereas in 1900, some 40 percent of the U.S. workforce was engaged in the task of producing food for the nation, today only about two percent is so engaged.

We should think, too, of how much smaller, cleaner, and cheaper new inventions have made industries and industrial products today. The first computer at the Massachusetts Institute of Technology in 1939 filled a room. Today, desk -top computers in millions of homes contain more computational power. Electronic calculators, not long ago the size of typewriters, are now thin enough to carry in a billfold. Radios once box-size now fit in a shirt pocket, and produce much higher fidelity of sound. Through such sustained inventiveness, quality has risen, size has shrunk, and prices have declined. All these benefits spring from personal economic enterprise.

Finally, economic enterprise plays two other important social roles. First, it is a magnificent generator of employment. Second, its main strength is that it is personal and allows millions of families to launch their own businesses. The creativity of such persons may be expressed in economic matters rather than in clay, or oil paint, or music, but they are artists nonetheless. The moneys that they invest to cover start-up costs are placed at risk.

Their art has consequences for their economic well- being. You can be certain that they will need every ounce of enterprising discernment they can learn, in order not to squander their resources unwisely. This is the spur of their invention and their willingness to work.

The problem for socialism, a left-wing American economist has written, is who will stay up all night with a sick cow? When the cow is one’s own, this problem disappears. (St. Bernardine made the same point centuries ago in Italy.) The virtue of enterprise teaches its possessors the risks, the difficulties, and the satisfactions of becoming masters of their own economic destiny.

Note, again, that economic enterprise is inherently communal. As Max Weber said, it grew in cities and cities grew up around it. Since there is no use producing goods and services that no one values, a person of economic enterprise is driven to study the needs and wants of others. To be successful, the enterprising person must be to a remarkable degree other-regarding. Focusing on others is inherent in economic activities. Such focusing falls far short of Christian charity or even altruism; it is not completely selfless. But it is, just the same, not a bad school in the elementary disciplines of consideration for needs and wants other than one’s own. Sound human relations with one’s fellow workers, suppliers, customers, and others is a proven road to economic success. The lack of these is a sure road to hostile resistance, rejection, and social alienation.

Education in Enterprise

If enterprise is an intellectual-moral virtue, we need to know how to learn and how to teach it. Instruction in enterprise consists in becoming awake to one’s own creative capacities, to the many unmet needs of fellow citizens, and to the openness of economic possibilities surrounding us. Yet instruction in the virtue of enterprise consists, too, in becoming alert to social obstacles to enterprise. If all processes of legal incorporation are heavily controlled, regulated, and taxed by state authorities, enterprise may be slaughtered in its infancy. According to Pope John Paul II, states that oppress personal economic enterprise violate not only a fundamental human right, but also the image of the Creator endowed in every human subject. Such societies damage the common good of all and doom their citizens to stagnant, uncreative, and spiritually alienating economies — as the pope says, “leading many citizens even to emigrate from their native lands.”

Catholic social teaching holds that personal economic initiative is a fundamental human right. It holds, further, that to exercise that right is to fulfill the image of God endowed in every man and woman. It follows, then, that teachers of Catholic social thought must awaken peoples to the God-given capacities within them. They must instruct them in how to practice the virtue of enterprise and how to avoid the vices that would destroy or disfigure it. They must show them examples of what to do, and what not to do, in fulfilling the potential that is within them.

Furthermore, teachers of Catholic social thought should lead the way in discerning those practices of governments or existing establishments that presently stifle, suffocate, or otherwise repress the daily practice of personal economic enterprise. They should criticize statist practices and customs that block the flowering of creative talents in economic enterprise; that keep markets open solely to established firms and existing monopolies and blocked to all others; that make legal incorporation a lengthy, expensive, and corrupt procedure; that fail to establish institutions that supply credit to poor, humble, or relatively unknown persons; that fail to recognize how God distributes creative economic talents to all social classes and all human beings, especially among the poor. Teachers of Catholic social thought should also criticize oppressive authorities that excessively tax or over regulate economic activities in such a way that new firms cannot even establish a foothold. Teachers of Catholic social thought should make certain that the ways of enterprise are open especially to the poor.

The enemies of personal economic initiative are many, powerful, and well-established in many traditionalist societies. This is why traditionalist societies are relatively static: By punishing those citizens who show creative economic initiative, they constrict the horizons of the common good and thus punish all other citizens as well. Many other moral and intellectual virtues must flourish in abundance if a free and creative economy is to flourish. Besides participating in personal economic enterprise, economic activists need to practice many other virtues. Consider an economic system within which dishonesty is frequent and corruption rampant; in which egotism inspires contempt for fellow workers and customers; wherein one encounters on all sides mutual hostility and defensiveness. Where is there, in such a society, room for creativity? In such air, free creative enterprise cannot breathe. If any economic system is to flourish, the vices named above must be replaced by their opposing virtues. Human vices poison economic vitality. Moral virtues not only lessen economic costs, but enhance the free and flourishing exercise of practical reason, hope, and creative risk.

It is, of course, beyond human fallibility to expect a regime anywhere on earth to exhibit full moral perfection. Catholic realism would always lead us to expect less than that. In economics, as in politics, if we may paraphrase Aristotle, the wise must be satisfied with a tincture of virtue. There is no use anywhere on earth in building an economy for saints. There are too few of them. The only realistic possibility is to build an economy for sinners — the only moral majority there is.

Nonetheless, it can be said with confidence that the more broadly the circle of virtue spreads in any economic system, the more creative, flourishing, and pleasant to work within that economy is likely to be. Conversely, the more virulent the fever of human vices that rage within it, the more defensive, riddled with distrust, self-defeating, and more or less rapidly declining, any economy is likely to be. It is crucial, therefore, to understand that “human capital” includes moral capital, as well as intellectual; skills of the human heart, as well as skills of hand. In economic life, as everywhere else in human life, the primacy of morals is a fundamental law of human flourishing. Test that proposition if you will. The primacy of morals is an empirical, as well as a philosophical, principle. It is subject to falsification. The consequences of violating it show up in history rather rapidly.

It would be wrong, however, to end these reflections on a downward bent. The fact that human beings are made in the image of the Creator means that every human person, during his or her lifetime, can create more than he or she will consume. This is the ground of all hope for human progress. No one guarantees that we will be creative, rather than destructive. To be so, however, is our vocation, our right, and our responsibility. There are no guarantees. But we do have a chance — all of us, collectively and individually — to act creatively. We have a chance, a kick at the goal. That is all a free woman or man can ask.

Michael Novak

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Michael Novak held for many years the George Frederick Jewett Chair in Religion and Public Policy at the American Enterprise Institute and is now a trustee and visiting professor at Ave Maria University. He is a philosopher, theologian, and author, as well as the 1994 recipient of the Templeton Prize for Progress in Religion. He has been an emissary to the United Nations Human Rights Commission and to the Conference on Security and Cooperation in Europe. He has written over twenty-seven books on the philosophy and theology of culture, especially the essential elements of a free society. He also founded Crisis Magazine with Ralph McInerny in 1982.

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