Creating Sustainable Wealth and Distributing It JustlyArticle / External content not produced by TOW Project
Entrepreneurs exercise their creativity to organise the talents and energies of labour and to assemble capital and other resources from the earth’s abundance to produce goods and services. When this is done effectively, well-paying jobs are created, profit is realised, the resulting wealth is shared with investors, and everyone involved excels. The Church acknowledges the legitimate role of profit as an indicator that a business is functioning well. When a firm makes a profit, it generally means that the factors of production have been properly employed and corresponding human needs have been duly satisfied.1 A profitable business, by creating wealth and promoting prosperity, helps individuals excel and realise the common good of a society. Yet creating wealth is not restricted to financial profit alone. The very etymology of the word “wealth” reveals the broader notion of “well-being”: the physical, mental, psychological, moral and spiritual well-being of others. The economic value of wealth is inextricably linked to this wider notion of well-being.
Stewarding resources: Scripture teaches that good stewards are creative and productive with the resources placed in their care.2 They do not merely take from creation’s abundance; instead they use their talents and skills to produce more from what has been given to them. One manifestation of this within the business context is financial profit—the surplus of retained earnings over expenses that enables an organisation’s sustainability. The best business leaders use resources effectively and maintain reasonable levels of revenue, margin, market share, productivity and efficiency, in order to ensure the viability of the organisation. If financial wealth is not created, it cannot be distributed and organisations cannot be sustained.
While profitability is an indicator of organisational health, it is neither the only one, nor the most important by which business should be judged.3 Profit is necessary to sustain a business; however, “once profit becomes the exclusive focus, if it is produced by improper means and without the common good as its end, it risks destroying prosperity and creating poverty”.4 Profit is like food. An organism must eat, but that is not the overriding purpose of its existence. Profit is a good servant, but it makes a poor master.
Just as financial resources are important, so too is stewardship of the environment, both physical and cultural. As Pope Benedict XVI wrote, “The environment is God’s gift to everyone, and in our use of it we have a responsibility towards the poor, towards future generations and towards humanity as a whole”.5 Creation is endowed with an order that we discover but do not create. Living creatures and the natural world may reasonably be employed to serve genuine human needs. As collaborators with God in the unfolding of creation, however, we have a duty to respect and not to attack the world around us. We are free to cultivate this world but not to devastate it. Or as the early chapters of Genesis suggest, we are called to exercise a careful dominion over the world, to cultivate it and make it fruitful, but we do not have license to exploit it as we please.
Distribute justly: As creators of wealth and prosperity, businesses and their leaders must find ways to make a just distribution of this wealth to employees (following the principle of the right to a just wage), customers (just prices), owners (just returns), suppliers (just prices), and the community (just tax payments).6
If one accepts that God’s creation is intended for everyone—rich and poor, powerful and weak, now and in the future—then it follows that all resources are conferred on humankind with a “social mortgage”.7 The Catholic social tradition understands this obligation as applying to property as well as capital. While property and capital should as a rule be privately held, the right to private property should be “subordinated to the right to common use, to the fact that goods are meant for everyone”.8 This principle urges business leaders to consider the distributive effect of the way they set prices, allocate wages, share ownership, distribute dividends, manage payables, and so on. Their decisions should aim not at an equal but at a just distribution of wealth, which meets people’s needs, rewards their contributions and risks, and preserves and promotes the organisation’s financial health. Denying people legitimate access to the fruits of the earth, especially the means to sustain life, amounts to a negation of God’s command to humanity to discover, cultivate and use its gifts.