A painfully slow recovery, such as the one we are in, wears on the nerves of all business owners. It also provides the opportunity for the kind of self-reflection that we have little time for in boom times. Facing our deepest doubts can not only strengthen endurance but eventually help take the enterprise into new areas and heights previously unimagined.
It is natural in stressful times to ask oneself, “Why be in business?” “Are the worry and heartache worth it for the possibility of making money, which can be lost overnight?” “Is this all there is?”
As if financial strain were not enough, capitalism and the free enterprise system have themselves recently come under harsh scrutiny and at times severe attack from political and social critics. For years, television and movies have routinely stereotyped business people and executives as villains and have rarely cast them as heroes.
When the popular media speak well of business people it is usually because they given away a great deal of their wealth or have abandoned business for the non-profit sector. The implication is that making money in itself is a morally dubious way to spend one’s life. If we allow these challenges to go unanswered we risk losing that which is essential for weathering the tough times—the conviction that our enterprises are both valuable and noble.
How does one respond to these questions and attacks? One way is suggested by the Michael Novak, whom I had the pleasure of meeting recently, during a presentation of his book, Business as a Calling: Work and the Examined Life. Notice the title. While it is commonplace to consider a career in medicine, law, teaching, or the church as a “calling,” in which one responds to a higher voice or sense of noble purpose, the term is rarely applied to commerce.
An articulate defender of free market capitalism, former ambassador, professor, columnist, and author of over 25 books, Novak does not use the term lightly. A lay Catholic theologian, he studied for the priesthood before deciding his calling was marriage, family, and a robust intellectual life outside the clergy. Novak’s answers, which are summarized and discussed below, merit consideration by business leaders of all political or religious persuasions.
- From a moral point of view, one of the most important measures of the success of capitalism is how it has elevated the poor. No previous or current system has done so much to raise the standards of living and health for hundreds of millions world-wide. For dramatic evidence of this go to http://news.nationalpost.com/2011/05/28/the-end-of-poverty-what-globalization-did-that-aid-could-not.
- In terms of the effects on individual character, rather than cultivating selfishness, capitalism and business cultivate the virtues of serving others, civility, excellence in quality, reliability, keeping commitments, and building bridges among people. You become wealthy only if you can link your own interest with the common good.
- Capitalism also unleashes creativity by rewarding those who go beyond the expressed need of others to invent solutions no one else had previously dreamed of. Steve Jobs and the popularization of the PC and smart phone exemplify this principle.
- In free economies, employees live in the world of incentives—designed to bring out the best ideas and actions in people. In command and control economies, they live in the world of requirements and tend to produce no more than is minimally required. Hence the equal distribution of poverty.
- Capitalism is a prerequisite to democracy—it started in medieval Italy, before democracy took root. Once merchants and business owners gained wealth they demanded a say in the government. Freedom House and the Heritage Foundation have for several years ranked about 150 nations in terms of economic freedom, http://www.heritage.org/index/ranking. The most economically free nations have not only the highest standards of living, but also the highest respect for civil rights and freedom of conscience. Notwithstanding unequal distribution of wealth, their poor are rich compared to the poor in countries with centrally controlled economies. The least free countries, such as Cuba and North Korea, have in fact the greatest disparities in access to wealth and privilege between the average worker and the most powerful.
- Aristocracy in pre-capitalist societies produced nothing, and its aim was not the creation of plenty for all but power for the few, with never-ending wars of conquest to obtain territory and spoils.
- Free trade diminishes the likelihood of war. Focus is taken from gaining power, as in pre-capitalist societies, to creating plenty. Economic interdependence through trade makes war unthinkable today between countries that have historically often been at war with each other..
- Capitalist democracies go to war only reluctantly, because war consumes wealth; it does not produce it. Where there is robust commerce, there is peace.
- Capitalism tends to reduce class barriers—in the U.K. last year, the daughter of entrepreneurs and granddaughter of a coal miner married a future king. In the U.S., plumbers can make more than professors.
- Capitalism is not merely morally permissible, a kind of lesser of evils, according to Novak. Instead, there is a positive moral imperative to spread free market capitalism for the simple reason that billions of the world’s population exist in desperate poverty, and their only hope for a better life is to have the freedom to create their own enterprises. Wealth transfers and charitable grants of different kinds are life-savers in emergencies but do little for long-term improvement unless they encourage economic independence and self-reliance. Moral conviction is one of the strongest forces in history, and it is critical to boldly and confidently defend the high moral ground from critics of capitalism with their “greed is good” caricatures.
- Business ethics, therefore, is not about trying to make more palatable something that is inherently rotten and corrupt, but rather a way of articulating the responsibilities and duties of a system that is both good in itself and has also been an unprecedented force for enormous good in the world.
How does all this affect you as a business owner? By helping you to momentarily step back from your current objectives, strategic plan, and even the mission of your business. When you are tempted to give up in the face of the sacrifices and doubts that are essential for business success, it is important to remember that you are a part of something of tremendous importance that cannot be taken for granted.
The free market survives and thrives through the creative efforts of individuals who strive every day to improve their businesses and their services to their customers. When you wonder if it is all worth it, remember that you are a symbol, an example, and one of the drivers of a free people freely creating wealth, a society, and a world in which all can pursue their dreams, consistent with the freedom of others.
For those interested, another Novak book on this topic is also recommended, The Spirit of Democratic Capitalism.