The National Catholic Review
A defense of business education in Catholic schools

Many American Catholics are deeply concerned about business, and especially about large corporations. Readers of America have posted comments online: “Today’s businesses, especially large corporate businesses, focus on one thing, and one thing only…the Profit motive,” and “The maw of [corporations’] covetousness knows no end,” and “Capitalism, as it is practiced in the USA, is condemned by Scripture, papal encyclicals, episcopal letters, etc.” These sentiments are not limited to spontaneous comments in some late-night debate. Theologians and chaplains raise similar criticisms in the media and on campus. Social justice conferences often focus on the ways in which businesses, or capitalism in general, must be reformed if we are to raise the living standard of the poor or promote the common good.

Catholic universities find themselves at the center of the controversy. Fifty academics from across the country recently wrote to John Garvey, president of The Catholic University of America, urging him to be wary of a commitment of $1 million by the Charles Koch Foundation to the university’s new School of Business and Economics for research into the role that “principled entrepreneurship can and should play in improving society’s well-being.” The organization Faithful America launched an online petition urging Catholic University to “put academic integrity and social justice ahead of the Koch brothers’ interests.” The petition has almost 33,000 signatures.

The academics and other petitioners seem to discount the depth and diversity of experience and the eminent stature of Catholic University’s executives and trustees, who are responsible for the governance of the university, and the commitment of the university’s existing academic leadership to the church’s teaching on social justice. The concern about undue influence from this particular connection to business may be overblown, but the concern is real and reflects a deep discomfort with business among many university professors.

The Business of Business Schools

Business is increasingly influencing the very size and shape of our institutions. Some Catholic universities now have more undergraduates in their school of business than in the school of arts and sciences. Does the concentration of so many students focused on business careers and the presence of so many full-time business professors and adjunct business professionals influence the mores of the university?

Values are often conveyed through signage. The library at St. Joseph’s University in Philadelphia, my alma mater, bears the name of Francis A. Drexel, acknowledging a major gift written into his will. Drexel made his fortune in investment banking. He was a partner of Junius Morgan, father of J. P. Morgan. Much of Drexel’s investment was in railroads—the dot-coms of the day—in the laissez-faire decades leading to Pope Leo XIII’s encyclical letter “Rerum Novarum” of 1891. The library has now been serving students and faculty for about 50 years. But what influence does signage have on undergraduates who use this library and so many other buildings similarly financed by profits wrought from business and named for the wealthy patron?

Catholic universities rely substantially on income from endowments that are heavily invested in corporate equities—shares of stock. The top five Catholic universities, ranked by the size of their endowments, held assets totaling just over $11 billion in 2012, according to the National Association of College and University Business Officers. The University of Notre Dame leads the pack with $6.3 billion. The top 20 Catholic university endowments total almost $18 billion. University presidents and trustees hope that after-tax corporate profits, delivered as dividends or capital gains, will help them keep a lid on tuition, fund faculty chairs and deliver more scholarship aid. That investment income is no small amount. It is material to the success of the institution. Even with diligent attention to issues of good corporate governance and economic justice, can university investors assure that all is well in every cubicle and factory of the corporations in which they are partial owners? How is the university’s responsibility assessed if employees are harmed or customers are cheated by these corporations? Calls for endowments to divest shares of particular corporations or entire industries are not uncommon.

Maybe Catholic universities should distance themselves from business and drop business education. Why subject Catholic institutions to a system that can easily be perverted against the common good, to the detriment of the most vulnerable? Why not focus on educating students for careers in teaching, medicine, government service and other professions whose social benefits are obvious? Why expose our universities to risk that the undue influence of business will detract from their mission? Let me suggest a few answers.

Serving the Common Good

Catholic universities in the United States confer almost 100,000 baccalaureate degrees each year. The graduates, one hopes, have been schooled in principles of social justice. Some have read the encyclicals and bishops’ letters. A few have experienced the solidarity that comes from living and working among the poor, at least for a short time. All of these graduates, whatever their major course of study, play multiple roles in our complex society. The choices they make as consumers, investors, voters and donors have consequences. All of them, and all of us, are obligated to take part, as Pope Francis stated in “The Joy of the Gospel,” in “decisions, programs, mechanisms and processes specifically geared to a better distribution of income, the creation of sources of employment and an integral promotion of the poor” (No. 204). This is complex work that requires, among other things, some understanding of business—not so much the technical details of accounting, marketing and finance but the role of business and business leaders in society. Pope Francis speaks clearly about this role. “Business is a vocation, and a noble vocation, provided that those engaged in it see themselves challenged by a greater meaning in life; this will enable them truly to serve the common good by striving to increase the goods of this world and to make them more accessible to all” (No. 203). This statement, by this pope, who sees promotion of the poor as central to the mission of the church, should influence our thinking about the role of business in building the society that Francis envisions.

How much more efficiently might we move toward a just society if every graduate of a Catholic university had an understanding of business—not just the business student but the nurse or social worker and the future lawyer, historian, art critic or priest? There are excesses and abuses in business and in our capitalist society, and Pope Francis has named many of them. There is also nobility, as he reminds us. We need to recognize the differences.

Many of those disturbed by business enjoy the option to choose the computer on which they write their complaint (Apple, Dell, Lenovo, etc.) as they sip their Starbucks coffee or Coca-Cola, drive their Prius, Ford or Honda and wait for a text on their choice of cellphone. They applaud the availability of antiretroviral drugs that combat H.I.V. and hope for a remedy for Alzheimer’s disease. The irony is that building a single vehicle assembly plant or computer chip fabrication plant or refinery often requires an investment of more than a billion dollars. Producing a single new medicine may require years of research and millions of dollars in laboratories and manufacturing facilities. What is the source, and motivation, of those billion-dollar investments?

In many cases, those who condemn capitalism or for-profit business also hope that the balances in their retirement plans will grow, that their investments will be rewarded in a way that can happen only by growing after-tax corporate profits. Their objective is the same one that inspires the efforts of corporate-employed 401(k) holders. All of these investors are part of the 47 percent of American households that own shares of corporate stock, either directly or through mutual funds. Many more benefit indirectly from shares owned by their union or municipal retirement funds. This market in publicly traded securities is inextricably tied to the private market of angel and venture investors. Are all these investors worshiping the modern golden calf—money—or are they prudently saving and stewarding resources for a future need? Can our future leaders define the difference? How does this activity promote the common good or affect those at the base of the economic ladder?

Many believe that business and its profits are excusable only to the extent that they can be taxed to fund social programs. But business is the bridge that spans those gaps in wealth and income. That bridge was the route by which a utility plant supervisor left his day job and stumbled through two failed businesses before 12 investors co-founded the Ford Motor Company. Profits in the early years brought wealth to those investors, including Rosetta Couzens, a school teacher who used her savings to buy just one of the original shares in that company. Today, two million Americans work in the automobile industry. That bridge led two bicycle mechanics to spend their summers on a windswept beach and launch the world’s aircraft industry. Business was the route by which a sharecropper’s grandson became chief executive officer of a major financial firm; a fellow with a coffee shop in Seattle built a company that pays fair trade prices to coffee farmers in Africa; and the son of a plumber brought iPods, iPads and iPhones to the world. Business built the enormous wealth of Francis A. Drexel, which funded not just a library but also the lifelong works of his daughter, St. Katharine Drexel, her Sisters of the Blessed Sacrament and others who brought education to people of color and Native Americans in a time when these groups were considered outcasts.

Gaps in income and wealth cause frustration, anger, even outrage. They have produced riots in this country and revolution in others. Widening gaps are evidence of societal failure. Many believe wholeheartedly that the wealth of the 1 percent causes the poverty of the 16 percent. But the wealth of Francis Drexel in the 1800s, or Henry Ford a century ago, or the modern wealth of Bill Gates and Warren Buffett did not cause the poverty of others any more than the graduate degree of one person causes the illiteracy of another. These are not zero sum equations. The wealth of one, if invested in the risky business of new products or processes, provides a job and possibly 100,000 jobs for others. Yet many graduates condemn the very economic system that has helped lift a billion people out of extreme poverty over the past 30 years.

Making Ethical Decisions

Building a more just economy for the world might well begin by understanding the world’s largest economy. “Centesimus Annus,” Pope John Paul II’s encyclical letter (1991) on the 100th anniversary of “Rerum Novarum,” states: “The church has no models to present; models that are real and truly effective can only arise within the framework of different historical situations, through the efforts of all those who responsibly confront concrete problems in all their social, economic, political and cultural aspects, as these interact with each other” (No. 43). Because business is a powerful force in our society, our graduates need to understand it. Do our graduates evaluate corporate profits in relation to the amount of equity invested and the degree of risk involved? Do our students discuss changes in tax policy that could boost money flows in the nonprofit sector, with no loss of revenue to the federal coffers, or the effect that taxes exert on “the creation of sources of employment”? Do they evaluate new and existing social programs against the standard of “an integral promotion of the poor which goes beyond a simple welfare mentality” (“The Joy of the Gospel,” No. 204)? Can our graduates describe with any historical accuracy the largest fortunes of the Gilded Age and what happened to all that money?

All of this is relevant to our graduates because of their roles as consumers, investors, donors and voters. One other fact points to the relevance of business. Most graduates, not only the business or economics majors, will seek employment in the for-profit sector. In less than a decade they will become team leaders, supervisors and managers responsible for the conduct of some part of a business enterprise. The ability to make ethical decisions in any profession depends upon an understanding of the profession’s numerous interactions with society. It is so for attorneys and physicians, and for psychiatric and spiritual counselors. How will our liberal arts graduate turned business person, working in a particular functional area or department, ponder an ethical question and present a principled solution without understanding the larger role of business in society?

Career paths in business are as unpredictable as the wanderings of Odysseus. The foreign language major becomes an insurance company executive; the special education major becomes a financial advisor; the hospitality management graduate goes on to become a mid-level marketing manager. In 20 or 30 years, a few from the class of 2014 may be chief executive officers of large corporations or leaders of major divisions. One or two of them may start a Fortune 500 company that does not exist today, thereby increasing and making accessible the goods of this world and creating new sources of employment for many thousands of people. Even in those lofty promontories, they will confront dilemmas that Cardinal John Henry Newman recognized as “simple of solution in the abstract...at different times differently decided,” in which he observed, “It is no principle of sensible men, of whatever cast of opinion, to do always what is abstractly best. Where no direct duty forbids, we may be obligated to do, as being best under circumstances, what we murmur and rise against, while we do it.”

In social justice work, right moves bring improvements that advance the common good and serve the poor. Wrong moves waste resources and sometimes cause real misery. Catholic universities are uniquely positioned to provide a new generation of graduates, one million of them in the next 10 years, equipped with the authentic teaching of the encyclicals and episcopal letters, a spirit of solidarity and with an understanding of business and its role in society. Reaching out to all, including today’s and tomorrow’s business leaders, in a spirit of creative concern and effective cooperation would be the best protection a university can adopt to avoid, as Pope Francis put it, “drift[ing] into a spiritual worldliness camouflaged by religious practices, unproductive meetings and empty talk” (No. 207). That would be a powerful rejection of the undue influences that threaten the essential mission of our universities, that of educating men and women who are with and for others. That would be the most effective way to enlist the services of one more noble vocation into building the world that Francis wants.

Joseph J. Dunn is a retired business executive and the author of After One Hundred Years: Corporate Profits, Wealth and American Society.

Comments

Karel Sovak | 4/13/2014 - 9:41am

I always say today's unethical behavior becomes tomorrow's law. Business leaders would be wise to have a social consciousness that extends over what is simply best for business and what is best for all of society. We are all called to be good stewards with all the resources to which we have been entrusted.

Joseph J Dunn | 3/21/2014 - 2:21pm

To acknowledge some of the comments, let me agree with the need for a stable legal system, laws that draw a bright line around unacceptable practices, and effective enforcement. That is one part of building a just society. Businesses that survive and grow do so by building a culture that promotes honesty and proper regard for workers and other stakeholders, in service to customers, and that culture is often enforced and strengthened in ways unseen by the public. Yes, successful businesses earn profits, and sometimes generate enormous wealth.
We can trace what happens to all those profits, and all that wealth--information that would surprise many. Knowledge of all that history--an understanding of business, including the good and the bad-- would let our graduates be more effective in building the society that Pope Francis envisions, in whatever career they pursue. Thanks, and may the discussion and the knowledge continue to spread.

Stanley Kopacz | 3/17/2014 - 4:31pm

I graduated from St. Joseph's, too, just before the asteroid hit and killed the dinosaurs. I don't think most people are talking about eliminating business education. But, I have to say, I know a lot of people who founded successful businesses without having a business degree. They may have taken a business course or two but some people like Gates and Edwin Land (Polaroid) never even got any degree. They were too busy founding a business based on an idea and an opportunity. Business can be a good thing given that it is done within societal limits. It's good to have an elephant in an Indian village to do the heavy lifting, but if it goes crazy and starts flattening huts, you shoot it. I think a lot of us feel that way about big business right now, that it's gone rogue. Business ethics is great, but in any business, the question has to surface, can we afford it? I trust rules and regulations strongly enforced more than the good will of nice businessman. How nice will the corporate culture allow them to be? Isn't external limitation needed to take away the Darwinian advantage for sociopaths?

Michael Barberi | 3/17/2014 - 9:47pm

Stanley,

Business will be always with us as it has progressed since ancient times. It is not a question of affording it, but a question about improving it along moral, social and justice lines without killing the profit motive that is a source of its existence. No one is arguing that businesses that go rogue and should not be brought to justice. The issue is a much larger one. Therefore, what is the solution beyond the criticism?

I have a cousin who was a skilled mechanic, lost his job and pension at Pan Am when it went bankrupt. Remember that airline? He hates big business, and you can understand why. As a result of many bankruptcies and other problems, the Federal government passed ERISA and instituted the Pension Benefit Guarantee Organization. These laws and organizations are not perfect but they represented improvement. Nevertheless, it is one thing to appropriately criticize and another to solve the problem. We don't want to through out the baby with the bath water.

Michael Barberi | 3/16/2014 - 4:06pm

I am a retired senior executive of a Fortune 200 corporation and was a senior partner in a worldwide consulting firm. I applause Mr. Dunn for his most insightful and balanced article.

Some academic and religious scholars, and others put forth arguments that demean capitalism and the profit motive of businesses by pointing to the ethical failures of some companies and senior executives, or even some boards of directors. Somehow they imply but rarely ever substantiate claims that the rich's 1% are the cause of the poorest 16%. Those who chastise U.S. capitalism also rarely every offer any meaningful and practical solutions, or compelling evidence that any other form of of existing world capitalism should be the standard for us or is actually doing a better job in terms of balancing economic profit motives with social justice issues, et al.

I can tell you I have witnessed some bad behavior and decisions by businesses and senior executives over my 30+ year business career. However, I have also witnessed serious and frequent discussions involving business and ethical issues when it came to selecting members of boards of directors or decisions involving the promotion of individuals to senior executive positions of responsibility. I have also frequently witnessed the immediate firing of senior executives for breaches in ethical and business policy.

Our system of business capitalism is a process in development. It is a system that is perfected over time even when it takes a whistle blower to bring injustices and morally illicit decisions that affect the common good to the public's attention. Corporations are human institutions run by people that mostly strive to do good even if their major focus is profit.

Instead of throwing out business education in Catholic universities, we should be adding core courses in business ethics, policy, and moral theology and methodology as requirements for business degrees. This also means courses in Catholic social teachings. However, all the schooling in the world means nothing without a strong faith and reason to apply what we have learned in business school to existential reality. Collectively, we should constantly be striving to improve our business decisions, behaviors, policy and procedures, as well as society's laws and regulations, and the distribution and use of society's capital to limit poverty as much as possible and create more opportunities for people to flourish.

The abuse of the profit motive and capitalism by a few businesses or executives should not deny it to the rest of us who use it responsibly, appropriately and ethically.

Anne Chapman | 3/17/2014 - 12:36pm

Thank you, Michael. As an economist, I sometimes feel despair at the lack of understanding and knowledge betrayed by many when it comes to these topics. Capitalism has been the main engine that has lifted billions of people out of poverty in the world in the last century - even in China, which is walking the tightrope of freeing the economy while maintaining an oppressive political system. For China, adopting some form of capitalism was a matter of survival, and is one reason it is now the third largest economy in the world.

It is not necessary to throw out the baby with the bathwater - as you note. I get incredibly frustrated with those who use statistics completely out of context and with no understanding of economic development. But, misleading with statistics is hardly new!

Instead of throwing out business education in Catholic universities, we should be adding core courses in business ethics, policy, and moral theology and methodology as requirements for business degrees.

ALL business schools should mandate courses in ethics even if not in moral theology, and the scandals of recent years have led to more consideration of this in some business schools.

Stacie Beck | 3/28/2014 - 1:26pm

I, too, thank Michael. Like the majority of my fellow economics professors I have been promoting the free enterprise system for 30 years to foreign graduate students. Our efforts are finally paying off as poverty rates are falling around the world (see recent Economist article). And no, income inequality is not the same as poverty. Think about rising incomes in China and India. Thanks, Michael, for pointing out that people getting richer does not necessarily mean others are getting poorer. And no, crony capitalism of the type that Pope Francis has experienced in South America is not the same as a true free market system.

Matthew Greco | 3/14/2014 - 3:14pm

I can hardly argue with much of what you have to say except to quibble that the Wall Street Journal is rarely in the habit of pointing out ethical shortfalls in business behavior and in fact, has been known to stick with clearly unethical principles and points of view long after they are commonly recognized for what they are. An obvious example jumps to mind on the recent death of Nelson Mandela. If you knew nothing about the man and read the Journal's eulogy, you would hardly know why they were bothering to remember Mandela at all except to point out that while confined to prison for 20 years he entertained the notion of communism. Of course, this example is not of a business, but I think you get the point.

My larger complaint, which goes unaddressed in your well-written, well-researched and carefully thought out essay, is the appearance that the Koch brothers are trying to buy their way into heaven. Upon learning when reading this piece that the Koch brothers are, in fact, Catholic, I was highly offended. (Of course, Adolf Hitler was Catholic, so my surprise is perhaps naive.) How can two people who, in my opinion, publicly spend millions of dollars to spread lies about issues of great import before the common weal, defame individuals involved in these discussions, discredit science and pollute these United States with their business practices while doing so, no matter how great the size and amount of their gift, be honored by a Catholic institution? These men, after all, are two legs shy of being the Magi bringing gifts to the Christ child.

It is certainly admirable that the Koch brothers wish to donate money to Catholic University for a business school that promotes the helpful economic behavior of entrepreneurs. But as Catholics, if not by virtue of their own behavior as inheritors of great and monopolistic wealth, the Kochs embody the dark side of that noble activity and indeed of all of business. To pretend otherwise--say in the public event that should precede the incorporation of their gift, that is, when the honorary shovels hit the ground, great speeches are made, thoughtful benedictions are given and these men in the flesh are honored for their generosity--is most troubling to me.

And, thus, we have brought the scofflaw before the bar. For who better to serve as an example of ethical lapses than these two men, who are perhaps the very personification of such lapses? Now, a benediction that does not try to cover the darkness with a curtain, would be a benediction well worth attending, indeed. Bring it on, I say, and let The Nation hear it.

Joshua DeCuir | 3/14/2014 - 5:50pm

"But as Catholics, if not by virtue of their own behavior as inheritors of great and monopolistic wealth, the Kochs embody the dark side of that noble activity and indeed of all of business."

Could you describe in particular what business activities of the Koch brothers you think "embody the dark side"? If you're going to make such a statement, it would be useful to actually describe the activities. If, as you are assert, they are running a monopoly, then why hasn't the Justice Department brought an antitrust action against them?

With respect to their spending money "to spread lies about issues of great import before the common weal" - are you referring to their spending money to support marriage equality & immigration reform?

ed gleason | 3/19/2014 - 10:52pm

The Koch bros. most likely do not employ many if any minimum wage workers yet hell will freeze over before they would endorse a minimum wage hike that 70% of US supports. Ask yourself why would the Bros.then oppose a hike... that question and answer would give you a true picture of the elite's mind set... Their Fox news talking point is that it would cause workers to lose jobs.. people would be laid off and the minimum wage workers left would be what... pressed or . beaten down to keep production and sales up ? Or would the businesses now with fewer workers forego profits.. Who buys this BS,??? .

Stacie Beck | 3/28/2014 - 1:02pm

Increases in minimum wages reduce job creation and deny job opportunities to workers just entering the job market. It is especially unfair to young minority workers, particulary young men. The economic research is clear on this (check Wascher for summary). They don't get hired and don't get a chance to move up the ladder. Minimum wage increases do benefit existing workers, particularly union members, at the expense of unemployed young workers. Perhaps the Koch brothers are aware of this research. Apparently you are not.

JIM GROGAN | 3/15/2014 - 7:58am

In the fall 2013 USCCB conference, the discussion of the revised rite for marriage had an interesting point. The bishops did not want to give up on " marriage," and did not want to use "nuptial" or another word, which could be construed as abandoning the word "marriage" based on the public debate. The same analogy should be applied to "business." Good, successful, ethical businesses are needed in our country, and on every continent, if the poor are to be served and social justice is to be a lived reality. We are not there yet, and the Wall Street Journal and Harvard Business Review regularly call out business failures, sometimes even "ethical failures."

In his 2009 encyclical Caritas in Veritate, Pope Benedict XVI addressed this not just to bishops, priests, deacons and religious, but to the lay faithful and "all people of good will." This encyclical speaks to business ethics and the impact on the poor and those whose human dignity is fractured by the leaders in our society. Let me offer the suggestion that it should be required reading for Boards of Directors and C-level executives of every global corporation. Far more than any decree by the United States Congress or the British Parliament, business leaders can transform the world. Decisions in mahogany-paneled board rooms can and do effect the lives of the anawim in mahogany rain forests. Businesses can effect change on a global basis far more quickly than political entities. Let's not give up on business education. Universities should prudently screen benefactors, just as individual investors ought to do; I count heavily on the ethical foundation of decisions which will be made in the future by business leaders now studying in our Catholic colleges and universities. They can be our future full of hope, and can help bring the joy of the Gospel to broken parts of our world.

Rev. Mr. Jim Grogan, transitional deacon, seminarian, and former business leader for 35 years

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