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Encyclical Caritas in Veritate: People-Centered Economic Ethics Must Embrace All the Stakeholders, Not Just the Stockholders

Pope Benedict’s XVI’s social encyclical, Caritas in Veritate , took the economic world by surprise. While readers on the right and the left were both waiting for more statements about capitalism and socialism, they found instead a challenge to Catholics and other people of good will of “a profoundly new way of understanding business enterprise” (40). Continuing the papal tradition of what he calls the “social Magisterium,” he certainly did not approve the status quo, but addressed the global dimension of the social question. in the midst of a very serious economic crisis.

The Holy Father spoke of redistribution of wealth (cautioning us to be careful that such redistribution does not hurt the poor), of grave imbalances produced when economic action is conceived merely as an engine for wealth creation He spoke of the importance of “gratuitousness,” of the common good, of “solidarity and reciprocity” within economic activity, not only outside it or “after” it.

He said the market is not, and must not become, the place where the strong subdue the weak and insisted on the involvement of local communities in choices and decisions that affect the use of agricultural land.

The Holy Father traced the roots of this “new” under-standing of business from the Gospel and the Fathers of the Church through modern Catholic social teaching.

It may be very difficult for the Catholic business man or woman who is accustomed to business as usual, where profit is king, to embrace the papal plan, but Benedict XVI insists that our vocation as persons even on a practical level is a transcendent one.

According to the encyclical, we actually have to expect the business person, and the politician who must provide a strong juridical framework for finances and economics, to live according to the Gospel.

“Without the perspective of eternal life,” he said, “human progress in this world … runs the risk of being reduced to the mere accumulation of wealth.”

The Stakeholders, Not Just Stockholders

One of the “new” proposals in Caritas in Veritate would be a major change for firms on Wall Street. Businesses have a responsibility, says the Pope, to all the “stakeholders who contribute to the life of the business,” not simply to shareholders (those who buy stocks). The stakeholders are the “workers, the suppliers, the consumers, the natural environment and the community of reference.”

The practice of basing all decisions on what will please the stockholders has hurt various stakeholders in many types of business and industries. Health care and the pharmaceutical industry have been scandalous examples of this practice in the past decades, as well as practices which destroy the environment while seeking profit.

Here at the Houston Catholic Worker, speaking with the immigrants and refugees who come to our doors, we have been aware for years of the practice of outsourcing, where com-panies have ignored most of the stakeholders where the work is performed, with negative impacts not only on the workers, but on the local communities.

Benedict’s writing on ethics as applied to agriculture and subsidiarity, on traditional as well as innovative farming techniques, would clearly undermine practices of companies like Monsanto who not only market destructive chemicals, but entice people everywhere to use their seeds to produce crops which do not provide seeds for the next planting season, making everyone dependent on buying seeds from Monsanto year after year.

Not Just Any Ethics Whatsoever, but a People-Centered Ethics

This concept of responsibility to all the stakeholders is not the way economics and business classes and “ethics” classes in economics have addressed the question. It does, however, express the ethics outlines in Caritas in Veritate :

“The economy needs ethics in order to function correctly—not any ethics whatsoever, but an ethics which is people-centered” (45).

The Pope indicated that he was aware of much talk about ethics, that various centers for ethics and business, ethics and the economy were being developed, but that the term ethics in some of these ventures had lost its meaning, or could mean almost anything, even “decisions and choices contrary to justice and authentic human welfare.”

In our culture, the concept is strong that people who have done well and helped build our churches have a right to what they have “earned” or to their tremendous income from the stock market. The idea of sharing with the other stakeholders is foreign to the way our business climate is oriented.

Pope Benedict teaches that much depends on the underlying system of morality and that it is here that the Church’s social doctrine can make a specific contribution. The two pillars of this teaching, he says in Caritas in Veritate , are the inviolability of the human person and the transcendent value of natural moral norms. He immediately applies these principles to business practices: “When business ethics prescinds from these two pillars, it inevitable risks losing its distinctive nature and it falls prey to forms of exploitation; more specifically, it risks becoming subservient to existing economic and financial systems rather than correcting the dysfunctional aspects. Among other things, it risks being used to justify th e financing of projects that are in reality unethical.”

Consistent Ethic of Life

The Holy Father ties together economics, social justice toward people and peoples and responsibility towards creation, toward the environment, with concern for life as a whole.

He speaks of responsible procreation as making a positive contribution to make to integral human development, as opposed to state-mandated “family planning” and points out the difficulties countries are having where birth rates are very low.

While Benedict did not mention Natural Family Planning in his encyclical, it is a natural response to the idea of responsible procreation. The secular world is generally unaware of NFP, sometimes equating it with the old rhythm method which did not work. Critics of the Church might take note of the Pope’s commitment to life here in his words of “responsible procreation.” He is not telling everyone to have eighteen children, but to be open to life.

Benedict Asks Us To Change Our Lives So That Others May Live and We Can Save the Environment

There has been a lot of talk since the financial crisis of 2008-2009 about stopping the wild credit-card spending and shopping sprees among our population. One commentator recently said that men over 50 would never need to buy anything again except for fruits and vegetables, pasta and olive oil, underwear and socks.

Quoting John Paul II in Centesimus Annus , Pope Benedict asks us again to change our life-styles: “What is needed is an effective shift in mentality which can lead to the adoption ofnew life-styles ‘in which the quest for truth, beauty, goodness and communion with others for the sake of common growth are the factors which determine consumer choices, savings and investments.'” (No. 50)

He reminds us that there is a link between the wild spending of some while others do not have enough.

The encyclical is available in bookstores and on the Vatican web site for all to read. We recommend it as a rich source of information and meditation.


Houston Catholic Worker, Vol. XXIX, No. 4, September-October, 2009.