Document on Economics - Business - Social Reponsibility

The Social Responsibility of Business

From "Gaudium et Spes"

Pastoral Constitution on the Church in the Modern World Gaudium et Spes
promulgated by his holiness, Pope Paul VI, on December 7, 1965.

CHAPTER III

ECONOMIC AND SOCIAL LIFE

63. In the economic and social realms, too, the dignity and complete vocation
of the human person and the welfare of society as a whole are to be
respected and promoted. For man is the source, the center, and the purpose
of all economic and social life.

Like other areas of social life, the economy of today is marked by man's
increasing domination over nature, by closer and more intense
relationships between citizens, groups, and countries and their mutual
dependence, and by the increased intervention of the state. At the same
time progress in the methods of production and in the exchange of goods
and services has made the economy an instrument capable of better meeting
the intensified needs of the human family.

Reasons for anxiety, however, are not lacking. Many people, especially in
economically advanced areas, seem, as it were, to be ruled by economics,
so that almost their entire personal and social life is pennated with a
certain economic way of thinking. Such is true both of nations that favor
a collective economy and of others. At the very time when the development
of economic life could mitigate social inequalities (provided that it be
guided and coordinated in a reasonable and human way), it is often made to
embitter them; or, in some places, it even results in a decline of the
social status of the underprivileged and in contempt for the poor. While
an immense number of people still lack the absolute necessities of life,
some, even in less advanced areas, live in luxury or squander wealth.
Extravagance and wretchedness exist side by side. While a few enjoy very
great power of choice, the majority are deprived of almost all possibility
of acting on their own initiative and responsibility, and often subsist in
living and working conditions unworthy of the human person.

A similar lack of economic and social balance is to be noticed between
agriculture, industry, and the services, and also between different parts
of one and the same country. The contrast between the economically more
advanced countries and other countries is becoming more serious day by
day, and the very peace of the world can be jeopardized thereby.

Our contemporaries are coming to feel these inequalities with an ever
sharper awareness, since they are thoroughly convinced that the ampler
technical and economic possibilities which the world of today enjoys can
and should correct this unhappy state of affairs. Hence, many reforms in
the socioeconomic realm and a change of mentality and attitude are
required of all. For this reason the Church down through the centuries and
in the light of the Gospel has worked out the principles of justice and
equity demanded by right reason both for individual and social life and
for international life, and she has proclaimed them especially in recent
times. This sacred council intends to strengthen these principles
according to the circumstances of this age and to set forth certain
guidelines, especially with regard to the requirements of economic
development.(1)

SECTION 1
Economic Development

64. Today more than ever before attention is rightly given to the increase of
the production of agricultural and industrial goods and of the rendering
of services, for the purpose of making provision for the growth of
population and of satisfying the increasing desires of the human race.
Therefore, technical progress, an inventive spirit, an eagerness to create
and to expand enterprises, the application of methods of production, and
the strenuous efforts of all who engage in production-in a word, all the
elements making for such development-must be promoted. The fundamental
finality of this production is not the mere increase of products nor
profit or control but rather the service of man, and indeed of the whole
man with regard for the full range of his material needs and the demands
of his intellectual, moral, spiritual, and religious life; this applies to
every man whatsoever and to every group of men, of every race and of every
part of the world. Consequently, economic activity is to be carried on
according to its own methods and laws within the limits of the moral
order," so that God's plan for mankind may be realized.(3)

65. Economic development must remain under man's determination and must not be
left to the judgment of a few men or groups possessing too much economic
power or of the political community alone or of certain more powerful
nations. It is necessary, on the contrary, that at every level the largest
possible number of people and, when it is a question of international
relations, all nations have an active share in directing that development.
There is need as well of the coordination and fitting and harmonious
combination of the spontaneous efforts of individuals and of free groups
with the undertakings of public authorities.

Growth is not to be left solely to a kind of mechanical course of the
economic activity of individuals, nor to the authority of government. For
this reason, doctrines which obstruct the necessary reforms under the
guise of a false liberty, and those which subordinate the basic rights of
individual persons and groups to the collective organization of production
must be shown to be erroneous.(4)

Citizens, on the other hand, should remember that it is their right and
duty, which is also to be recognized by the civil authority, to contribute
to the true progress of their own community according to their ability.
Especially in underdeveloped areas, where all resources must urgently be
employed, those who hold back their unproductive resources or who deprive
their community of the material or spiritual aid that it needs-saving the
personal right of migration-gravely endanger the common good.

66. To satisfy the demands of justice and equity, strenuous efforts must be
made, without disregarding the rights of persons or the natural qualities
of each country, to remove as quickly as possible the immense economic
inequalities, which now exist and in many cases are growing and which are
connected with individual and social discrimination. Likewise, in many
areas, in view of the special difficulties of agriculture relative to the
raising and selling of produce, country people must be helped both to
increase and to market what they produce, and to introduce the necessary
development and renewal and also obtain a fair income. Otherwise, as too
often happens, they will remain in the condition of lower-class citizens.
Let farmers themselves, especially young ones, apply themselves to
perfecting their professional skill, for without it, there can be no
agricultural advance.(5)

Justice and equity likewise require that the mobility, which is necessary
in a developing economy, be regulated in such a way as to keep the life of
individuals and their families from becoming insecure and precarious. When
workers come from another country or district and contribute to the
economic advancement of a nation or region by their labor, all
discrimination as regards wages and working conditions must be carefully
avoided. All the people, moreover, above all the public authorities, must
treat them not as mere tools of production but as persons, and must help
them to bring their families to live with them and to provide themselves
with a decent dwelling; they must also see to it that these workers are
incorporated into the social life of the country or region that receives
them. Employment opportunities, however, should be created in their own
areas as far as possible.

In economic affairs which today are subject to change, as in the new forms
of industrial society in which automation, for example, is advancing, care
must be taken that sufficient and suitable work and the possibility of the
appropriate technical and professional formation are furnished. The
livelihood and the human dignity especially of those who are in very
difficult conditions because of illness or old age must be guaranteed.

SECTION 2
Certain Principles Governing Socio-Economic Life as a Whole

67. Human labor which is expended in the production and exchange of goods or
in the performance of economic services is superior to the other elements
of economic life, for the latter have only the nature of tools.

This labor, whether it is engaged in independently or hired by someone
else, comes immediately from the person, who as it were stamps the things
of nature with his seal and subdues them to his will. By his labor a man
ordinarily supports himself and his family, is joined to his fellow men
and serves them, and can exercise genuine charity and be a partner in the
work of bringing divine creation to perfection. Indeed, we hold that
through labor offered to God man is associated with the redemptive work of
Jesus Christ, Who conferred an eminent dignity on labor when at Nazareth
He worked with His own hands. From this there follows for every man the
duty of working faithfully and also the right to work. It is the duty of
society, moreover, according to the circumstances prevailing in it, and in
keeping with its role, to help the citizens to find sufficient employment.
Finally, remuneration for labor is to be such that man may be furnished
the means to cultivate worthily his own material, social, cultural, and
spiritual life and that of his dependents, in view of the function and
productiveness of each one, the conditions of the factory or workshop, and
the common good.(6)

Since economic activity for the most part implies the associated work of
human beings, any way of organizing and directing it which may be
detrimental to any working men and women would be wrong and inhuman. It
happens too often, however, even in our days, that workers are reduced to
the level of being slaves to their own work. This is by no means justified
by the so-called economic laws. The entire process of productive work,
therefore, must be adapted to the needs of the person and to his way of
life, above all to his domestic life, especially in respect to mothers of
families, always with due regard for sex and age. The opportunity,
moreover, should be granted to workers to unfold their own abilities and
personality through the performance of their work. Applying their time and
strength to their employment with a due sense of responsibility, they
should also all enjoy sufficient rest and leisure to cultivate their
familial, cultural, social and religious life. They should also have the
opportunity freely to develop the energies and potentialities which
perhaps they cannot bring to much fruition in their professional work.

68. In economic enterprises it is persons who are joined together, that is,
free and independent human beings created lo the image of God. Therefore,
with attention to the functions of each-owners or employers, management or
labor-and without doing harm to the necessary unity of management, the
active sharing of all in the administration and profits of these
enterprises in ways to be properly determined is to be promoted.(7) Since
more often, however, decisions concerning economic and social conditions,
on which the future lot of the workers and of their children depends, are
made not within the business itself but by institutions on a higher level,
the workers themselves should have a share also in determining these
conditions-in person or through freely elected delegates.

Among the basic rights of the human person is to be numbered the right of
freely founding unions for working people. These should be able truly to
represent them and to contribute to the organizing of economic life in the
right way. Included is the right of freely taking part in the activity of
these unions without risk of reprisal. Through this orderly participation
joined to progressive economic and social formation, all will grow day by
day in the awareness of their own function and responsibility, and thus
they will be brought to feel that they are comrades in the whole task of
economic development and in the attainment of the universal common good
according to their capacities and aptitudes.

When, however, socio-economic disputes arise, efforts must be made to come
to a peaceful settlement. Although recourse must always be had first to a
sincere dialogue between the parties, a strike, nevertheless, can remain
even in presentday circumstances a necessary, though ultimate, aid for the
defense of the workers' own rights and the fulfillment of their just
desires.
As soon as possible, however, ways should be sought to resume
negotiation and the discussion of reconciliation.

69. God intended the earth with everything contained in it for the use of all
human beings and peoples. Thus, under the leadership of justice and in the
company of charity, created goods should be in abundance for all in like
manner.(8) Whatever the forms of property may be, as adapted to the
legitimate institutions of peoples, according to diverse and changeable
circumstances, attention must always be paid to this universal destination
of earthly goods. In using them, therefore, man should regard the external
things that he legitimately possesses not only as his own but also as
common in the sense that they should be able to benefit not only him but
also others.(9) On the other hand, the right of having a share of earthly
goods sufficient for oneself and one's family belongs to everyone. The
Fathers and Doctors of the Church held this opinion, teaching that men are
obliged to come to the relief of the poor and to do so not merely out of
their superfluous goods.(10) If one is in extreme necessity, he has the
right to procure for himself what he needs out of the riches of others.
(11) Since there are so many people prostrate with hunger in the world,
this sacred council urges all, both individuals and governments, to
remember the aphorism of the Fathers, "Feed the man dying of hunger,
because if you have not fed him, you have killed him,"(12) and really to
share and employ their earthly goods, according to the ability of each,
especially by supporting individuals or peoples with the aid by which they
may be able to help and develop themselves.

In economically less advanced societies the common destination of earthly
goods is partly satisfied by means of the customs and traditions proper to
the community, by which the absolutely necessary things are furnished to
each member. An effort must be made, however, to avoid regarding certain
customs as altogether unchangeable, if they no longer answer the new needs
of this age. On the other hand, imprudent action should not be taken
against respectable customs which, provided they are suitably adapted to
present-day circumstances, do not cease to be very useful. Similarly, in
highly developed nations a body of social institutions dealing with
protection and security can, for its own part, bring to reality the common
destination of earthly goods. Family and social services, especially those
that provide for culture and education, should be further promoted. When
all these things are being organized, vigilance is necessary to present
the citizens from being led into a certain inactivity vis-a-vis society or
from rejecting the burden of taking up office or from refusing to serve.

70. Investments, for their part, must be directed toward procuring employment
and sufficient income for the people both now and in the future. Whoever
makes decisions concerning these investments and the planning of the
economy-whether they be individuals or groups of public authorities-are
bound to keep these objectives in mind and to recognize their serious
obligation of watching, on the one hand, that provision be made for the
necessities required for a decent life both of individuals and of the
whole community and, on the other, of looking out for the future and of
establishing a right balance between the needs of present-day consumption,
both individual and collective, and the demands of investing for the
generation to come. They should also always bear in mind the urgent needs
of underdeveloped countries or regions. In monetary matters they should
beware of hurting the welfare of their own country or of other countries.
Care should also be taken lest the economically weak countries unjustly
suffer any loss from a change in the value of money.

71. Since property and other forms of private ownership of external goods
contribute to the expression of the personality, and since, moreover, they
furnish one an occasion to exercise his function in society and in the
economy, it is very important that the access of both individuals and
communities to some ownership of external goods be fostered

Private property or some ownership of external goods confers on everyone a
sphere wholly necessary for the autonomy of the person and the family, and
it should be regarded as an extension of human freedom. Lastly, since it
adds incentives for carrying on one's function and charge, it constitutes
one of the conditions for civil liberties.(13)

The forms of such ownership or property are varied today and are becoming
increasingly diversified. They all remain, however, a cause of security
not to be underestimated, in spite of social funds, rights, and services
provided by society. This is true not only of material property but also
of immaterial things such as professional capacities.

The right of private ownership, however, is not opposed to the right
inherent in various forms of public property. Goods can be transferred to
the public domain only by the competent authority, according to the
demands and within the limits of the common good, and with fair
compensation. Furthermore, it is the right of public authority to prevent
anyone from abusing his private property to the detriment of the common
good.(14)

By its very nature private property has a social quality which is based on
the law of the common destination of earthly goods.(15) If this social
quality is overlooked, property often becomes an occasion of passionate
desires for wealth and serious disturbances, so that a pretext is given to
the attackers for calling the right itself into question.

In many underdeveloped regions there are large or even extensive rural
estates which are only slightly cultivated or lie completely idle for the
sake of profit, while the majority of the people either are without land
or have only very small fields, and, on the other hand, it is evidently
urgent to increase the productivity of the fields. Not infrequently those
who are hired to work for the landowners or who till a portion of the land
as tenants receive a wage or income unworthy of a human being, lack decent
housing and are exploited by middlemen. Deprived of all security, they
live under such personal servitude that almost every opportunity of acting
on their own initiative and responsibility is denied to them and all
advancement in human culture and all sharing in social and political life
is forbidden to them. According to the different cases, therefore, reforms
are necessary: that income may grow, working conditions should be
improved, security in employment increased, and an incentive to working on
one's own initiative given. Indeed, insufficiently cultivated estates
should be distributed to those who can make these lands fruitful; in this
case, the necessary things and means, especially educational aids and the
right facilities for cooperative organization, must be supplied. Whenever,
nevertheless, the common good requires expropriation, compensation must be
reckoned in equity after all the circumstances have been weighed.

72. Christians who take an active part in present-day socio-economic
development and fight for justice and charity should be convinced that
they can make a great contribution to the prosperity of mankind and to the
peace of the world. In these activities let them, either as individuals or
as members of groups, give a shining example. Having acquired the
absolutely necessary skill and experience, they should observe the right
order in their earthly activities in faithfulness to Christ and His
Gospel. Thus their whole life, both individual and social, will be
permeated with the spirit of the beatitudes, notably with a spirit of
poverty.

Whoever in obedience to Christ seeks first the Kingdom of God, takes
therefrom a stronger and purer love for helping all his brethren and for
perfecting the work of justice under the inspiration of charity.(16)

The Social Responsibility of Business

In more common and popular terms whereby many lay faithful can understand,
what the document really is stating above is that the socio-economic sphere
of life, businesses, in particular, are called to a level of social
responsibility that looks to the interests of all that are related to
the business cycle. This includes most especially, the laborers and the
clients and customers. The focus of a business that incorporates an ethic
of social responsibility in its operations considers much the plight of its
workers and also the quality of life they are leading because of their
employment with the business. Moreover, owners of the business, especially
if it is already the size of a multinational corporation, must consider also
the social dimension of its capital base. This means that all the money and
financial assets of the business are not absolutely owned by the corporation.
They are called to share the profits of their business operations with their
workers and laborers. More on this on The Social Responsiblity of Business.

Dennis-Emmanuel Cabrera
May 1, 2005

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