Economics for the Common Good and the Vatican

It may seem odd for an athiest to be reading Vatican encyclicals but in 2009 Caritas in Veritate came up on a search for “people-centred”

“The more we strive to secure a common good corresponding to the real needs of our neighbours, the more effectively we love them.”

This was the relevant passage:

“Striving to meet the deepest moral needs of the person also has important and beneficial repercussions at the level of economics. The economy needs ethics in order to function correctly — not any ethics whatsoever, but an ethics which is people-centred.”

“This is not merely a matter of a “third sector”, but of a broad new composite reality embracing the private and public spheres, one which does not exclude profit, but instead considers it a means for achieving human and social ends. Whether such companies distribute dividends or not, whether their juridical structure corresponds to one or other of the established forms, becomes secondary in relation to their willingness to view profit as a means of achieving the goal of a more humane market and society. “

“The strengthening of different types of businesses, especially those capable of viewing profit as a means for achieving the goal of a more humane market and society, must also be pursued in those countries that are excluded or marginalized from the influential circles of the global economy. In these countries it is very important to move ahead with projects based on subsidiarity, suitably planned and managed, aimed at affirming rights yet also providing for the assumption of corresponding responsibilities. In development programmes, the principle of the centrality of the human person, as the subject primarily responsible for development, must be preserved. The principal concern must be to improve the actual living conditions of the people in a given region, thus enabling them to carry out those duties which their poverty does not presently allow them to fulfil. “

With his Evangelii Gaudium, Pope Francis would become a far more prominent critic of trickle down capitalism. One of his statement resonated strongly with our cause — children perishing from malnutrition in state care:

“It is heartbreaking that the world today is more concerned about the health of banks than homeless children dying of starvation and cold”, and called on the Catholic Church to seek out those who need help the most.”This is happening today. If investments in banks fall, it is a tragedy and people say ‘what are we going to do?’ but if people die of hunger, have nothing to eat or suffer from poor health, that’s nothing. This is our crisis today,

“The current financial crisis can make us overlook the fact that it originated in a profound human crisis: the denial of the primacy of the human person! We have created new idols. The worship of the ancient golden calf (cf. Ex 32:1–35) has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose. The worldwide crisis affecting finance and the economy lays bare their imbalances and, above all, their lack of real concern for human beings; man is reduced to one of his needs alone: consumption.”

As you may read on our Home Page

‘P-CED places people at the center of economic development. P-CED takes the bottom line one step further: to people, past numbers. Enterprise profitability and economic success cannot be fairly measured in terms of gains of money capital alone. Profit is redefined in human terms rather than pure quantitative analyses that remove human and social concerns in the name of profit.’

From 1999 P-CED has been doing what Pope Benedict prescribed, using business to improve local livelyhoods. When interviewed in 2004, about his work in Russia, founder Terry Hallman said:

“In 1999 I set out to improve localized economic conditions in the former Soviet Union. As a US citizen, I was able to leverage significant funding from US international aid funds. First effort was in Tomsk oblast in Siberia. After sourcing a large-scale USAID regional initiative to Tomsk, I followed up with a review of Tomsk’s business climate just prior to the initiative getting underway. That set a baseline reference point. After that, my work was finished in Tomsk. So I went with Ukraine as the next location.”

He goes on to describe how the P-CED model uses profit for social benefit and how it began in 1996 with his paper for Clinton’s re-election committee.

I joined him in 2003 and later began to see other references to people-centered economics.

“The anti-values of greed, individualism and exclusion should be replaced by solidarity, common good and inclusion. The objective of our economic and social activity should not be the limitless, endless, mindless accumulation of wealth in a profit-centred economy but rather a people-centred economy that guarantees human needs, human rights, and human security, as well as conserves life on earth. These should be universal values that underpin our ethical and moral responsibility.”

(Miguel D’Escoto Brockmann, the President of the United Nations General Assembly speaking in 2009)

In Ukraine the primary focus of our work became those childen abandoned to the state who were abused and neglected in ‘Death Camps for Children’

With our ‘Marshall Plan for Ukraine. we’d argued that all children could be placed in loving family homes by means of social investment. Not to return a profit to shareholders but to reduce state overheads. Our founder’s activism had unfluenced government decision to increase foster allowances and create 400+ rehab centres for disabled children.

‘An inherent assumption about capitalism is that profit is defined only in terms of monetary gain. This assumption is virtually unquestioned in most of the world. However, it is not a valid assumption. Business enterprise, capitalism, must be measured in terms of monetary profit. That rule is not arguable. A business enterprise must make monetary profit, or it will merely cease to exist. That is an absolute requirement. But it does not follow that this must necessarily be the final bottom line and the sole aim of the enterprise. How this profit is used is another question. It is commonly assumed that profit will enrich enterprise owners and investors, which in turn gives them incentive to participate financially in the enterprise to start with.

That, however, is not the only possible outcome for use of profits. Profits can be directly applied to help resolve a broad range of social problems: poverty relief, improving childcare, seeding scientific research for nationwide economic advancement, improving communications infrastructure and accessibility, for examples — the target objectives of this particular project plan. The same financial discipline required of any conventional for-profit business can be applied to projects with the primary aim of improving socioeconomic conditions. Profitability provides money needed to be self-sustaining for the purpose of achieving social and economic objectives such as benefit of a nation’s poorest, neediest people. In which case, the enterprise is a social enterprise.’

In 2011, a counter conception arrived in the form of Creating Shared Value from Harvard Business School.

Rather than applying profit to resolve social problems, they argued in the absence of any practical application that corporations could profit by solving social problems

I disagreed, and tried to participate in the discussion on Guardian Sustainable Business, sharing only the text of our proposal. I was censored and blocked from further comment:

Fron then on, profit-for-purpose as we described it would begin to morph into profit-with-purpose, doing-well-by-doing-good and other marketing taglines with little evidence of any good being done.

The argument for a New Bottom LIne, or people before profit was reframed into a New Bottom Line for Guardian Sustainable Business where money is no longer a dirty word.

For us it never was a dirty word, as we told the UK government in 2004:

“Traditional capitalism is an insufficient economic model allowing monetary outcomes as the bottom line with little regard to social needs. Bottom line must be taken one step further by at least some companies, past profit, to people. How profits are used is equally as important as creation of profits. Where profits can be brought to bear by willing individuals and companies to social benefit, so much the better. Moreover, this activity must be recognized and supported at government policy level as a badly needed, essential, and entirely legitimate enterprise activity.”

This alternative view is it seems, something of a threat to the elite of sustainable business. Bottom-up and people-centred:

‘This is a long-term permanently sustainable program, the basis for “people-centered” economic development. Core focus is always on people and their needs, with neediest people having first priority — as contrasted with the eternal chase for financial profit and numbers where people, social benefit, and human well-being are often and routinely overlooked or ignored altogether. This is in keeping with the fundamental objectives of Marshall Plan: policy aimed at hunger, poverty, desperation and chaos. This is a bottom-up approach, starting with Ukraine’s poorest and most desperate citizens, rather than a “top-down” approach that might not ever benefit them. They cannot wait, particularly children. Impedance by anyone or any group of people constitutes precisely what the original Marshall Plan was dedicated to opposing. Those who suffer most, and those in greatest need, must be helped first — not secondarily, along the way or by the way. ‘

Blueprint 4 business is one of the more recent intiatiives who have recruited The Archbishop of Westminster. He asks of business should have a responsible purpose.

“My starting point is simple. It is the good of the human person. As a Catholic I have a fundamental belief, along with many others and indeed shared by very many people of no faith, that we must start from the conviction that people really matter. We are none of us simply producers, or consumers, or employees. What we all share first and foremost is a common humanity. Good societies are built on that fundamental respect for the human person.”

People-centered business began 20 years ago with the starting point that the purpose of business was to benefit people.

‘At first glance, it might seem redundant to emphasize people as the central focus of economics. After all, isn’t the purpose of economics, as well as business, people? Aren’t people automatically the central focus of business and economic activities? Yes and no.

People certainly gain and benefit, but the rub is: which people? More than a billion children, women, and men on this planet suffer from hunger. It is a travesty that this is the case, a blight upon us all as a global social group. Perhaps an even greater travesty is that it does not have to be this way; the problems of human suffering on such a massive scale are not unsolvable. If a few businesses were conducted only slightly differently, much of the misery and suffering as we now know it could be eliminated. This is where the concept of a “people-centered” economics system comes in.’

In truth, it was not about charity:

“Clearly, profits can be used very effectively in ways other than traditional investment and profit outcomes. Moreover, this is not charity, it is business — good business. One P-CED firm could be expected to spin off dozens of new firms and businesses, all of which create new jobs and all of which operate under traditional free-enterprise practices. That is, if a spin-off business were to profit a million dollars a year, the owners can bank the money for themselves and their stockholders as is the normal practice. There is nothing wrong with individuals becoming wealthy. It is only when wealth begins to concentrate in the hands of a relative few at the expense of billions of others who are denied even a small share of finite wealth that trouble starts and physical, human suffering begins. It does not have to be this way. Massive greed and consequent massive human misery and suffering do not have to be accepted as a givens, unavoidable, intractable, irresolvable. Just changing the way business is done, if only by a few companies, can change the flow of wealth, ease and eliminate poverty, and leave us all with something better to worry about. Basic human needs such as food and shelter are fundamental human rights; there are more than enough resources available to go around — if we can just figure out how to share. It cannot be “Me first, mine first”; rather, “Me, too” is more the order of the day.”