Economist Milton Friedman wrote that the social responsibility of capitalism is to increase shareholder profit. Period. That’s why many business people are skeptical when they read about corporate social responsibility, faith and work, or helping those in the workplace discover a sense of calling. They imagine return on investment is put at risk when a business expands beyond the traditional emphasis on profits.
In fact, just the opposite happens. But facts have little to do with this skepticism. Rather, two trends have left an impression that moral values ought to be disconnected from workaday practices because they hurt the bottom line. Trend One: We’ve disconnected our moral life from our economic activities. Prior to the Industrial Revolution (c.1790-1820), the home and family were united as the economic engine. In the 1800s, men left the farm to labor in dirty, dangerous factories while women stayed home. During this same period, many Protestant churches began to divide the world between the home (a “spiritual” refuge from the wicked working world) and the workplace (a “secular” setting). Robert Bellah (Habits of the Heart) described this development as “the cult of domesticity” where the church put more emphasis on the home and private life than work and public life.1 Morality and capitalism were disconnected.
The result is many Christians live in a bilingual culture, aptly described by Michael Barone in Hard America, Soft America: Competition vs. Coddling and the Battle for the Nation’s Future. Monday through Friday, people of faith converse in Corporate America’s hard-nosed facts and figures – while on Sunday they speak the language of Soft America (a vocabulary learned from educators and clergy who disdain competition and ferocity). The church has become “a safe place” with moral language appropriate only for a day called Sunday.
Trend Two: We’re disconnected from our historical roots. Historian Daniel Boorstin said cutting off our roots is like trying to plant cut flowers. It’s disastrous. Yet, few business professionals are aware that the blossoming of modern capitalism simply cannot be explained apart from Christianity. That’s the findings of Baylor sociologist Rodney Stark in his new book, The Victory of Reason: How Christianity Led to Freedom, Capitalism, and Western Success. He argues the West grew rich because it invented capitalism and that the important innovations were made by people in the belly of the faith. Religion nurtured economic and scientific ideas but few of us know that today, as David Brooks points out.
The conventional view is that during the Renaissance and Reformation, Europeans shook off the authority of the Catholic Church. When a secular world was created alongside the sacred one, when intellectual freedom replaced obedience to authority, capitalism and scientific advances were the result.2
Rodney Stark says that theory doesn’t fit the facts. In reality, capitalism developed in the Middle Ages through people of Christian faith.
Catholic monasteries emerged as capitalist enterprises, serving not only as manufacturing and trading centers, but also as investment houses. And engineers invented or commercialized a vast array of technologies: the compass, the clock, the round-bottom boat, wagons with brakes and front axles, water wheels, eyeglasses, and so on.3
There’s a third trend, however, that’s encouraging. A lot of folks are acknowledging that a business climate focused solely on the bottom line hasn’t work that well. At least that’s what Patricia Aburdene, one of the foremost trend trackers in the United States, reports. She observes that we have faced “the worst economic crisis since the Depression and begun to experience the consequences of a system that honored profits at all costs. The result of such a philosophy was trillions of dollars in shareholder value being lost.”4
Aburdene contends that a new trend is aimed at fostering a moral transformation in capitalism. In a poll of 25,000 people in 23 countries by the Conference Board, a marketplace research group, two-thirds said they want business to “expand beyond the traditional emphasis on profits and contribute to broader social objectives.” In her new book, Megatrends 2010, Aburdene shares stories of businesses that are attempting to reshape capitalism.
And there’s more encouraging news. Aburdene cites studies showing corporate finances flourish when social responsibility and stakeholder concerns are taken into account. A 2005 study of public firms on Fortune’s list of the “100 Best Companies to Work for” reported a 176% return on investment between 1998 and 2004 (compared to only 39% for the Standard & Poor’s 500). Another study of 25 firms that excel in stakeholder relationships – by Towers Perrin – showed they returned 43% in total shareholder value compared with 19% by S&P 500. Of course, ROI is not the reason any enterprise should pursue life and business the way it ought to be. They should do it because it’s the right thing to do. Still, it’s heartening to know you generally get a better return. Maybe this good news will buck the trend disconnecting Sunday from Monday.
1 For more on this important trend, see Carl Degler, At Odds: Women and the Family in America from the Revolution to the Present ()New York: Oxford University Press, 1980), pp.26-51; Barbara Welter, “The Cult of True Womanhood, 1820-1860,” American Quarterly 18 (1966): 151-74; Richard Sennett, Families Against the City: Middle Class Homes of Industrial Chicago, 1972-1890 (Cambridge, Mass: Harvard University Press, 1970); and Kirk Jeffrey, “The Family as Utopian retreat from the City: The Nineteenth Century Contribution,” Soundings 55 (1955):21-40.
2 David Brooks, “The Holy Capitalists,” The New York Times, December 15, 2005.
4 “Trend Watcher Sees Moral Transformation of Capitalism,” an interview by Jane Lampman with Patricia Aburdene in “Work & Money,” Christian Science Monitor, October 03, 2005.