No Need for Slogans

Article on Corporate Social Responsibility by Philip Booth in The Tablet

In a recent book Catholic Social Teaching and the Market Economy, published by the Institute of Economic Affairs, nine economists and theologians from around the world came firmly to the conclusion that the market economy was the best way to promote economic development. They also concluded that it was the form of economic organisation most compatible with Catholic social teaching and the nature of the human person. However, the authors pointed out that, if a market economy is to be at its most effective in promoting the common good, it needs to be underpinned not just by the rule of law but also by an ethical framework. The corporate social responsibility (CSR) agenda may, for some, provide that moral framework. I am sceptical.

Those who promote the CSR agenda have chosen an ideal marketing slogan. Who can be against corporate social responsibility? Surely nobody believes that firms should be irresponsible. Thus various parties, including campaigning groups, charities, investors and governments, pursue diverse agendas under the one heading. These programmes range from radical programmes that will undermine the most important role of firms – that of creating wealth - to an ethics-free programme of window dressing simply designed to make the company more attractive to customers: Enron was the leading proponent of CSR in the USA! Cafod, for example, positively endorses government regulation to require firms to produce a comprehensive operating and financial review; this would be a boon to big firms as they gain a marketing device whilst imposing disproportionate fixed costs on smaller competitors.

But there are specific ways in which Catholic social teaching can help us develop our thinking on ethical behaviour by businesses. We should ignore the slogans and think about what constitutes virtuous behaviour in the very difficult circumstances in which companies often find themselves working. As in many areas of Catholic social teaching there are often substantial grey areas that are left for prudential judgement.

In the normal course of events firms can be guided by the profit motive when deciding which business decisions add greatest economic value. However, Catholic teaching indicates that there are circumstances when following this rule of thumb might not be appropriate. For example, the Catechism states clearly that businesses should be responsible for the economic and ecological effects of their operations and not just an increase in profits (para 2432). We are also told of the importance of a strong juridical framework within which businesses should operate. Such a juridical framework should ensure that normal business decisions, guided by the profit motive, generally promote the common good. Indeed, by strong protection of property rights and enforcement of contracts, it should also ensure that businesses are held responsible for the impact of their decisions on the environment.

When such conditions exist, we tend to find that a free economy raises the condition of rich and poor alike and promotes the common good: that is certainly the experience of Western Europe and much of Asia, Australasia and North American. There remain ethical dilemmas for businesses of course – particularly when they operate in a non-Christian and materialistic culture. However, some of the most acute ethical dilemmas for businesses exist in countries where there is no effective rule of law and protection of property rights.

In poorly governed countries businesses should always respect the basic moral law and natural law. Thus it would not be right for a business to take property without compensation or pollute the environment without compensation, even if the law of a particular country allowed it. But there still are grey areas where businesses face dilemmas that they cannot necessarily resolve objectively. Many activities, such as mining, cause harm that might well be tolerated in countries with good governance systems because the benefits are greater than the costs. It is certainly no