The Economy of Communion in Africa

africa

Africa is a continent of great spiritual and cultural wealth, but also of great material poverty. The way forward for African economies is not aid and development assistance, but prudent business management that enables African workers to attain higher levels of productivity for their efforts. But what model of business management is appropriate for the communal cultures of Africa?

Soon after the Soviet Union collapsed onto the ash heap of history, John Paul II asked in Centesimus Annus: “Can it perhaps be said that, after the failure of Communism, capitalism is the victorious social system, and that capitalism should be the goal of the countries now making efforts to rebuild their economy and society? Is this the model which ought to be proposed to the countries of the Third World which are searching for the path to true economic and civil progress?” He then answered his question by explaining that it depends upon what we mean by “capitalism:”

If by “capitalism” is meant an economic system which recognizes the fundamental and positive role of business, the market, private property and the resulting responsibility for the means of production, as well as free human creativity in the economic sector, then the answer is certainly in the affirmative, even though it would perhaps be more appropriate to speak of a “business economy,” “market economy” or simply “free economy.”  But if by “capitalism” is meant a system in which freedom in the economic sector is not circumscribed within a strong juridical framework which places it at the service of human freedom in its totality, and which sees it as a particular aspect of that freedom, the core of which is ethical and religious, then the reply is certainly negative.

Some Catholics, emphasizing the first half of this answer, have erroneously interpreted it as a paradigm shift in Catholic social teaching and an endorsement of capitalism. What the passage says, however, is that the species of capitalism taught in most American business schools should not be recommended to Third World countries. The Pontifical Council for Justice and Peace – whose president, Peter Kodwo Appiah Cardinal Turkson, hails from Ghana – recently released “Vocation of the Business Leader: A Reflection.”

According to this document: “Shareholder value has become virtually the sole metric by which business leaders determine their performance and their worth. In the current climate, the call to ‘maximise shareholder wealth’ remains dominant and is the leading theory taught in many business schools.”

The good news about the doctrine of shareholder-wealth maximization is that many people do not accept it at face value. It is often taken to mean something like “increase shareholder wealth significantly, but not by doing anything really nasty.” The concept of maximization, however, is simple and clear: to maximize is to increase as much as possible. If you could attain x units of shareholder wealth by acting virtuously, but x + 1 units by acting viciously, then the imperative of maximization requires acting viciously. To understand with John Paul II that ethical and religious considerations should be taken into account when making business decisions is to reject the doctrine of maximizing shareholder wealth. Yet it is dominant in American business education today. And the existence of courses in business ethics or corporate social responsibility that contradict the rest of the business curriculum is not an antidote.

The Catholic social tradition rejects both socialism and all variants of capitalism that disregard the natural law and the virtues. Pius XI nailed socialism in Quadragesimo Anno: “If Socialism, like all errors, contains some truth (which, moreover, the Supreme Pontiffs have never denied), it is based nevertheless on a theory of human society peculiar to itself and irreconcilable with true Christianity. Religious socialism, Christian socialism, are contradictory terms; no one can be at the same time a good Catholic and a true socialist.” And John Paul II rejected both Marxism and “radical capitalism” in Centesimus Annus:

The Marxist solution has failed, but the realities of marginalization and exploitation remain in the world, especially the Third World, as does the reality of human alienation, especially in the more advanced countries. Against these phenomena the Church strongly raises her voice. Vast multitudes are still living in conditions of great material and moral poverty. The collapse of the Communist system in so many countries certainly removes an obstacle to facing these problems in an appropriate and realistic way, but it is not enough to bring about their solution. Indeed, there is a risk that a radical capitalistic ideology could spread which refuses even to consider these problems, in the a priori belief that any attempt to solve them is doomed to failure, and which blindly entrusts their solution to the free development of market forces.

Many African universities are attempting to emulate Harvard Business School. At the same time, many African leaders believe that partnering with China will be more beneficial than looking to the United States for guidance. In this situation, it is encouraging that one new Africa business school has chosen a model that is neither capitalist nor socialist and neither American nor Chinese: the Focolare Movement’s Economy of Communion. Cameroonian Bishop Immanuel Bushu, with Rev. Frs. George Nkeze Jingwa and Joseph Bomnsa, recently established the University Institute of the Diocese of Buea, which offers degrees in accountancy, banking and finance, management, marketing, insurance and risk management, and human resource management and employment relations. The University Institute of the Diocese of Buea states that it is “an Economy of Communion university.”

The Work of Mary, popularly known as the Focolare Movement, was founded in Italy by Chiara Lubich in 1943. Lubich launched the Economy of Communion during a visit to Brazil in 1991. Italian economists Luigino Bruni and Stefano Zamagni introduce an essay on the Economy of Communion with a passage in Aristotle’s Nicomachean Ethics that confirms the philosopher’s dissent from the doctrine of shareholder-wealth maximization: “Clearly wealth is not the good we are in search of, for it is only good as being useful, a means to something else.” Bruni and Zamagni then provide an account of the founding vision of Economy of Communion:

While driving through the city of São Paulo, Chiara Lubich was struck by the extreme poverty and the many favelas (slums) around the city; a strong impression due mainly to the enormous contrast between the shacks (where a number of people from our Movement also lived) and the many and modern skyscrapers. Faced with this scenario, the idea, or the inspiration, consisted in extending the dynamics of communion from individuals or families to business enterprises, inviting people to start up new businesses and to transform existing ones, all within the fullness of freedom – actually, the full name of the project is ‘The economy of communion in freedom.’  These firms, therefore, are not non-profit organizations, but the business profits are to be pooled and used for three precise goals: first, to finance the development of the business itself; second, to spread the culture of communion by means of press conferences and various infrastructures; and third, to help people in need, by beginning with those who are in contact with the Focolare communities, according to the principle of subsidiarity.

Amelia J. Uelmen, writing in Theological Studies in 2010, reported the growth of the Economy of Communion: “Currently just over 750 Economy of Communion business initiatives are in operation in more than 50 countries worldwide, with about half operating in the service sector. Most are small and medium-sized; some have more than 100 employees. The businesses commit themselves to permeating all their relationships—with employees, customers, suppliers, regulatory agencies, the general public, and the environment around them— with gospel values of love and respect.”

The University Institute of the Diocese of Buea will have to meet the challenge of adapting the Economy of Communion to the cultures of Cameroon. It must also work out the details of how business education according to the Economy of Communion should differ from business education according to the doctrine of shareholder-wealth maximization. But this project of academic entrepreneurship has enormous potential to promote the common good in Cameroon.

By

Dr. David W. Lutz is Associate Professor of Philosophy at Holy Cross College in Notre Dame, Indiana.

  • Tisantir

    Great article. The idea that the business should not be about shareholder maximization merely need to be emphasized and publicized by the Church.

    I would add that entrepreneurship also needs to be viewed a little differently. An entrepreneur is not a person who has found a novel method of making money

    Properly speaking, an entrepreneur is a Patriot, above all. and is possessed by a vision of greater perfection of his country. He seeks to realize his vision, impelled by the love he bears for the country.

    The Catholic teaching is the proper home of such a view. Acts that are commendable seek the common good and not private good. There is no exception. Thus all business enterprise must aim at common good. 

    The Miesen view of price discovery is false. Prices are not merely subjective. There does exist a fair price around which a price is found. Otherwise how can a number be fixed between zero (that the buyer wants the price to be, according to Mieseans)  and infinity (that the seller wants to have, according to Mieseans). 
     

    • Michael Paterson-Seymour

      On the subject of subjective valuation, a man with a ton of strawberries may have no use for them himself; they have value for him, only because he can sell them and use the money to meet some want or supply some satisfaction.  Accordingly, he will take the best price he is offered.  If that price consistently falls below the cost of production, he will go out of business.

      Again, clothes have value only because people want to wear them.  That is why we see clearance sales, when a seller has misjudged the public’s desire for those particular garments.  But, in general, a retailer knows what his customers will pay, or he will not remain a retailer for long.  This determines what he can afford to pay the manufacturer, what the manufacturer can pay for cloth, what the weaver can pay for yarn and what the spinner can pay for wool.  Cloth, yarn and wool only have value, because they are garments in the making.  In the same way, the wine gives value to the grapes and the grapes to the vineyard; the price any individual will pay for the wine depends on his resources on the one hand and his other wants on the other.

      I fail to see how this leaves room for the concept of a “fair” price.  Value is not an intrinsic property, like weight, although we often speak of it as if it were.

      • Tisantir

        Justice is giving each one his due. It assumes we know what one’s due is.

        To ask for more than just price is cheating and failure in charity just as to offer less than the just price.
        Of course, the just price conceived by seller’s need not coincide with that conceived by the buyer. 

        But to conceive in Misean terms  I read once in this very site in an article by William Tucker in 2008.

        “I recall once dickering with one of those insufferable car salesmen. I had my eye on some car and I said I couldn’t afford it. He asked me how much I wanted to pay for this car. I said $0. He looked at me like I was crazy, but I was only telling the truth. I added that I know how much he wants me to pay: a trillion dollars. And he reluctantly agreed. So how does the person who wants to pay $0 and the person who wants to get $1 trillion come to agreement? You find some meeting point in between, the point at which the car is worth more to me than the money I will give for it, and the money I will give for the car is worth more to him than the car. The resulting terms are called the price”

        http://www.crisismagazine.com/2008/what-are-just-prices

        I submit that the author’s attitude is not merely un-Christian but even sub-pagan.
        1) He wants to pay zero for something that has non-zero value. Could anyone maintain that the used car has a zero value?
        2) He imputes a desire for 1T $ sell-price on the salesman though clearly no sane salesman would have conceived such a desire.  Basically he says that the salesman had a false consciousness of having a fair price though really he wanted 1T $.

        • Michael Paterson-Seymour

          I note that you propose no mechanism for calculating a “fair” price.

          “Could anyone maintain that the used car has a zero value?”  Very easily, if it were put up for auction or advertised for sale, without reserve, and there were no bidders.  Value is not an intrinsic property; demand confers value.

          “Full many a flower is born to blush unseen, and waste its perfume on the desert air”   

          These blooms are quite literally valueless.  In Moyses Stevens’s florists in Belgravia, they might command a high price, if they took the public’s fancy, or rather that section of the public, whose resources are ample enough to indulge their taste in rare luxuries.  Again, a dedicated botanist of modest means might be prepared to forego his annual holiday to acquire such a rare specimen.  How would you go about determining a “fair” price?

          Marx notoriously suggested that the value of a thing depended on the labour involved in its production.   But value derives from the future (the prospective use), not from the past.  If the public will not have something, all the labour in Christendom will not give it value.

          • Tisantir

            I failed to make myself explicit.  The “fair price” depends upon the context ; it is not an invariant quantity.  But given a context, the buyer and seller intuit this “fair price”.
            That is, the fair price is a property of a particular transaction, not a property of a particular piece of matter,

            I gave no mechanism for a mechanism can not exist to obtain the “fair price”.
            It comes from intellect which can not be cast into an algorithm.

            • Michael Paterson-Seymour

              That is obvious.  A salvage tug can charge an enormous price for towing a ship that is drifting without power, compared to what a harbour tug would charge to move the ship the same distance.  That is because, in the one case, the owners (or their insurers) risk losing the vessel and in the other at the worst, they only risk losing the freight they hope to earn.  Often they can pay less than they would be wiling to, because competing tug companies underbid each other

              Similarly, a parcel of land may be more valuable to an adjacent owner than to anyone else.  Shrewd property speculators often buy up “ransom strips” for this reason.

          • Tisantir

             Your examples of desert flowers and car with no buyer are subtly mistaken.
            The concept of ‘price’ is sensible in the context of a transaction. When there is no transaction, there is no price.

            • Michael Paterson-Seymour

              A used car may have a negative value – I may have to pay to have it disposed of.

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  • Guest

    Thanks, David – a very interesting read!

  • NH-Catholic

    ‘Maximizing shareholder value’ is the ONLY valid measurement of the success of a business. AND, it is not an immoral goal. A business becomes successful by identifying and satisfying a consumer need. Normal rules of moral behavior apply, the service provided has to be circumscribed by the rule of law, both judicial and natural.

    Corporatism, over regulation by inevitably corrupt politicians and their committees (e.g. EPA fining and extorting money from companies for not including a fictional, non-existing compound in their fuel mix is one egregious, current example) and poverty-pimping parasites like NGOs and Community Organizers corrupt the market process.

    ‘Social Justice’ is an meaningless emotional phrase founded on envy, covetousness and sloth. The ‘Church’ has to be careful about promoting rules and standards they inevitably fail to follow themselves. For example, promoting and mandating ‘rights’ to a ‘living wage’, paid vacations, sick leave, retirement funding, healthcare (including abortion, sex changes, etc.) entitlements, cars, cell phones, etc. – given the bi-monthly requests for ‘special’ donations at Sunday Mass to cover the large gaps in what is required versus what is available for clergy in parishes and dioceses suggests that many of the Church’s institutions and efforts are more than a little delinquent in providing ‘socially just’ levels of compensation and benefits to its many workers and employees.

    Philosophizing about how the market works from a tenured position at Holy Cross College which has the 15th largest endowment among US private universities suggests a view and background much removed from that of attempting to build and run a successful business.

    • John

       I disagree.

    • Tisantir

      The non-Randian libertarians call upon us to pursue our enlightened self-interest. But self-interest, sufficiently enlightened, is just common good by another name. 

      The commandment to Love Thy Neighbor does not exempt business transactions. So in a transaction, one must seek other’s good even as we seek ours. That does not imply that one should roll over, however.

      As for shareholders, I have an opinion that the Church’s commitment to private property does not necessarily include the kind of anonymous property and ownership that is characteristic of modern large corporations.

      The Church regards private property as a means to  greater ends. It is not to be regarded as an absolute as Randians or Miseans do.

       the stock-market divorces ownership and responsibility. And as a point of ownership is responsibility, it turns out that the economy dominated by giant corporations that are effectively owner less is not what should be  meant by Private Property. It is rather Anonymous Property that we as stock owners have.

      Thus how much the virtues of Private Property are retained in the modern capitalist system needs to be examined.

      Suppose a corporation with  ten shareholders. Their liabilities are limited but they would FEEL responsible.They would feel like owners. And the public too knows them and they know each other.

      But if I am just an investor along with millions other anonymous others, where is the sense of ownership?.

      A transient, anonymous stock-ownership is VERY different from what ownership is–a stable, public relation between a Property and its owners.

      I would claim that a stock-ownership, especially when mediated through agents such as mutual and pension funds does not necessarily deserve
      full privileges that Natural Law gives to Private Property.

      Also we need to make it explicit that the the corporation is not responsible to the stock owners only.
      And the final end of a business is not Profit.

      That is, a business must intend at common good. The common good may licitly be pursued by attending to the profits but the profit can not be the sole criterion of the good that the business does.

      If businesses pursue profits above all, the material standards might well increase but at the cost of civility and social cohersiveness of the City and that may not be profitable overall.

      • Michael Paterson-Seymour

        Private Property is not part of the Natural Law.

        As St Thomas says, ““Community of goods is ascribed to the natural law, not that the natural law dictates that all things should be possessed in common and that nothing should be possessed as one’s own: but because the division of possessions is not according to the natural law, but rather arose from human agreement which belongs to positive law, as stated above (57, 2,3).  Hence the ownership of possessions is not contrary to the natural law, but an addition thereto devised by human reason.” [ST IIa IIae Q66, II,obj 1]

        This was a favourite theme, during the French Revolution.  Accordingly, Mirabeau, a moderate,  says ““Property is a social creation.  The laws not only protect and maintain property; they bring it into being; they determine its scope and the extent that it occupies in the rights of the citizens”

        Robespierre, too (not a moderate) says, ““In defining liberty, the first of man’s needs, the most sacred of his natural rights, we have said, quite correctly, that its limit is to be found in the rights of others.  Why have you not applied this principle to property, which is a social institution, as if natural laws were less inviolable than human conventions?”

        Thus, Pope Paul VI was in good company, when, in Populorum Progressio, he says, “24. If certain landed estates impede the general prosperity because they are extensive, unused or poorly used, or because they bring hardship to peoples or are detrimental to the interests of the country, the common good sometimes demands their expropriation.”  This, alone, is sufficient to show that private property is not a natural right, for, otherwise, expropriation would be a breach of Natural Law.

    • Catholicus

      The Church has consistently taught the opposite. Read “Caritas in veritate”, with a section explicitly condemning such a view.

  • NH-Catholic

    Sorry – Holy Cross in Notre Dame, IN does not have the 15th largest endowment. I could not find recent numbers – in 2006, they had some $3.3M in their endowment fund.

  • Alecto

    Another article highlighting the dangers in the RC Church of ignoring catechism in order to pontificate about economic issues.  Why is there a “Justice & Peace” Pontifical Council at all?  Aren’t these the same nits who published “Water, an essential element for life” which attempted to subvert private property rights?  Or, what about that infamous recommendation that we needed global management of financial transactions back in 2011?  They’re suspect!

    I immediately disregard this “Council” and its conclusions or recommendations, being obviously and blatantly comprised of socialists furthering a one-world agenda.  Has anyone asked why this group doesn’t advocate for basic financial and economic investor education in Africa?  It seems to me that would go a long way towards helping Africans benefit from their own resources. 

  • Jaha Arnot

    The statement is usually something like “maximize shareholder value/firm profit, within the parameters of honorable conduct.”  Many of us, in business, drop that last phrase, but it’s important – it means that not ANY action is justified, merely on the argument that it maximizes firm profit.  For example, slave labor, fraud, harming others as a consequence of firm actions (e.g. poisoning ground water), etc.  In other words, management is obliged to maximize profit, but the assumption between the firm and its shareholders should also be virtuous conduct and good citizenship.

    Some people tried to come up with “alternative accounting” to quantify these other goods to create a more holistic behavior of the good accomplished by the firm, as if profit is only one good, but the firm should take credit for other benefits, like United Way contributions or Adopt-A-Highway.  My concern about that is that this is the firm deciding alternative uses for shareholder funds, without the explicit consent of the shareholder – it’s actually theft.  It’s also usually pretty inefficient – they could just give money directly to whatever charity they wish.  Lastly, it’s also usually primarily an instrument to feed the ego of senior management.

    In the end, I think business leaders are confused by the culture of “values.”  They equate social activism with moral habit – “social conscience”  with virtue. Raj Rajaratnam might have been a great philanthropist, but he slid down a slippery moral slope until he was ultimately bribing people for insider information – “consulting fees for market intelligence.”  Since they are moral relativists, and do not have the prerequisite formation for honorable conduct, they think the solution to keep firms in check is some sort of accounting or business model that will give management an incentive to behave well (since the practice of virtue holds little innate attraction to them).

    Unfortunately, I don’t think there is a magic academic or accounting model that will fix this.  We need God in the public square, and to return to character formation and civic virtue as the central concern in the formation of citizens, rather than just technical proficiency.  As one of the earlier comments pointed out, a juridical and moral foundation that informs how people pursue legitimate profits.  If we think we can whitewash cowardice, abortion, divorce, pornography, theft, and fraud with “an alternative business model,” we deserve every Wall Street scandal we can find.

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  • Desiree8184

    Michael Paterson-Seymour, please read Pope Leo XIII’s social encyclicals and Pope Pius IX encyclicals on socialism, all of which are infallible Church teaching and explicitly state the Church’s teaching on private property.

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  • http://twitter.com/joey89924 joey

    Most are small and medium-sized…
    PC817

  • disqus_FiscP2RgVJ

    Ownership of the modern corporation is so dispersed through so many millions of owners and organizations (individual shareholders, mutual funds, pension funds), that no owner really bears any moral responsibility for the actions of the company. In this sense, the progressive era, did as much or more harm than good. By attacking the personal wealth and ownership of the “Robber Barons”, the progressives of a century ago created a more frightening entity. The modern corporation which exists only for its own sake and to maximize shareholder value. Every bit as frightening and amoral as our over sized, over bearing government.

  • Valentin

    We also should not fall into the trap of thinking that poverty automatically mean bad life and sin for example look at Ireland before and after it started being spoon fed by the eu.

  • Valentin

    Wouldn’t it be great if everyone were a generous and faithful Catholic where people would prudently give each other gifts rather than some communist or socialist theft requirement called income tax. For now we have to stick with an acceptable but not as generous system of economics (not communist wealth gathering).

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