Making Business Moral

Business is a calling, even a vocation. It is, to be sure, a way of making a living, sometimes a very good living indeed, but it is also a way of serving. In these dimensions it is like law, medicine, and the other learned professions. And the great schools of business are like the great law and medical schools. Like the other great professional schools, however, many business schools are going through something of an identity crisis.

Last year, the Wall Street Journal published an article previewing From Higher Aims to Hired Hands, a book by Rakesh Khurana, a professor at the Harvard Business School. Khurana does not spare even his own school from the charge that, as the Wall Street Journal puts it, “M.B.A. training has deteriorated into a race to steer students into high-paying finance and consulting jobs without caring about graduates’ broader roles in society.” Khurana charges that the “logic of stewardship has disappeared” from business education. “Panoramic, long-term thinking,” the Wall Street Journal sums up Khurana’s argument, “has given way to an almost grotesque obsession with maximizing shareholder value over increasingly brief spans.”

Any healthy society, any decent society, will rest on three pillars. The first of these is respect for individual human beings and their dignity. A society that does not respect the person will generally treat human beings as cogs in a larger social wheel—their dignity and well-being may legitimately be sacrificed for the sake of the collectivity. A healthy liberal ethos supports the dignity of the human person by giving witness to fundamental human rights and civil liberties, and, where a healthy religious life flourishes, faith provides a grounding for the dignity and inviolability of the human person.

The second pillar of any decent society is the institution of the family: the original and best department of health, education, and welfare. No institution surpasses the healthy family in its capacity to transmit to each new generation the understandings and traits of character on which the success of every other institution of society depends. Where families fail to form, or too many break down, the effective transmission of the virtues of honesty, civility, self-restraint, concern for the welfare of others, justice, compassion, and personal responsibility is imperiled. Without these virtues, respect for the dignity of the human person, the first pillar of a decent society, will be undermined and sooner or later lost, for even the most laudable formal institutions cannot uphold respect for human dignity where people do not have the virtues that make that respect a reality and give it vitality in actual social practices.

The third pillar of any decent society is a fair and effective system of law and government. This is necessary because none of us is virtuous all the time, and some people will be deterred from wrongdoing only by the threat of punishment. Contemporary philosophers of law tell that us the law coordinates human behavior for the sake of achieving common goals—the common good—especially in dealing with the complexities of modern life. Even if all of us were virtuous all of the time, we would still need a system of laws (considered as a scheme of authoritatively stipulated coordination norms) to accomplish many of our common ends—safely crossing the streets, for example.

It is all too easy to take these pillars for granted. And thus it is important to remember that each of them has been threatened. Often operating from within the universities, writers and movements hostile to one or another of these pillars, usually preaching or acting in the name of high ideals, have gone on the offensive.

Attacks on business—and on the ideas of the market economy and economic freedom—are well known. Students are sometimes taught contempt for those involved in business: heartless exploiters driven by greed. In my own days as a student, this was often done in the name of Marxism. One notices less of that after the collapse of the Soviet empire, but the attacks themselves have abated little.

Similarly, attacks on the family, and particularly on the institution of marriage on which the family is built, are common in the academy. The line here is that the family, at least as traditionally constituted and understood, is a patriarchal and exploitative institution that oppresses women and imposes on people forms of sexual restraint that are psychologically damaging and inhibiting of the free expression of their personality.

Some will counsel that business has no horse in this race. They will say that it is a moral, cultural, and religious question about which business people as such need not concern themselves. The reality is that the rise of ideologies hostile to marriage and the family has had a measurable social impact, and its costs are counted in ruined relationships, damaged lives, and all that follows from these personal catastrophes. In many Western nations, families are failing to form and marriage is coming to be regarded as a “lifestyle choice”: one among various optional ways of conducting relationships and having and rearing children. Out-of-wedlock birthrates are high, with the negative consequences of this particular phenomenon being borne less by the affluent than by those in the poorest and most vulnerable sectors of society.

In 1965, the sociologist (and later U.S. senator) Daniel Patrick Moynihan shocked Americans by reporting findings that the out-of-wedlock birthrate among African Americans in the United States had reached nearly 25 percent. He warned that the phenomenon of boys and girls being raised without fathers in poorer communities would result in social pathologies that would severely harm those most in need of the supports of solid family life. His predictions were quickly verified. The widespread failure of family formation issued in the disastrous social consequences of delinquency, despair, drug abuse, and crime and incarceration. A snowball effect resulted in the further growth of the out-of-wedlock birthrate, now 69 percent among African Americans. It is worth noting that at the time of Moynihan’s report, the out-of-wedlock birthrate for the population as a whole was almost 6 percent. Today, that rate is at 33 percent.

The consequences for business of these developments are significant. Consider the need of business to have available a responsible and capable workforce. Business cannot manufacture honest, hard-working people to employ. Nor can government create them by law. Businesses depend on there being many such people, but they must rely on the family, assisted by religious communities and other institutions of civil society, to produce them. So business has a stake in the health of the family. It should avoid doing anything to undermine the family, and it should do what it can where it can to strengthen the institution.

As an advocate of dynamic societies, I believe in the market economy and the free-enterprise system. I particularly value the social mobility that economic dynamism makes possible. At the same time, I am not a supporter of the laissez-faire doctrine embraced by strict libertarians. I believe that law and government do have important and, indeed, indispensable roles to play in regulating enterprises for the sake of protecting public health, safety, and morals, preventing exploitation and abuse, and promoting fair competitive circumstances of exchange. But these roles are compatible with the ideal of limited government. For that matter, they are compatible with the principle of subsidiarity, according to which government must respect individual initiative to the extent reasonably possible and avoid violating the autonomy and usurping the authority of families, religious communities, and other institutions of civil society.

Having said that, I would warn that limited government—considered as an ideal as vital to business as to the family—cannot be maintained where marriage collapses and families easily dissolve or fail to form. Where these things happen, the health, education, and welfare functions of the family will have to be undertaken by someone—and that someone will sooner or later be the government. To deal with pressing social problems, bureaucracies will grow, and with them the tax burden. Moreover, the growth of crime and other pathologies will result in the need for more extensive policing and incarceration and, again, increased taxes to pay for these government services. If we want limited government, and a level of taxation that is not unduly burdensome, we need healthy institutions of civil society, beginning with a flourishing marriage culture supporting family formation and preservation.

While it is true that some business firms have exploited workers, many firms have enhanced the dignity of individuals by offering challenging and decently paid jobs, providing opportunities for further education, either on the job or in training programs, and encouraging workers to think creatively about how to improve the quality of products and services and the efficiency of production and delivery. Moreover, business has made upward economic and social mobility possible for countless persons. The free-enterprise system has given many people the freedom to pursue fulfilling and remunerative careers and provided opportunities for them to become entrepreneurs and investors. Whole societies have benefited from economic growth produced by market economies. Businesses and successful business leaders and investors have helped to relieve poverty and have advanced many good causes through their charitable giving. Even when government rather than business supplies the money, it is business that generates the wealth that government distributes.

While some business firms have been involved in corruption and have even stimulated it, business has in many places been in the forefront of demanding reform of corrupt courts and governmental agencies. Business leaders have helped shape laws and policies that are suitable for modern systems of production and exchange, and that will enable us to meet the challenges of the globalized economy.

Notwithstanding the hostility to business in some sectors of academia and the elite intellectual culture, businesses and business leaders have been instrumental in supporting education at every level, especially higher education. This is particularly true in the United States, where the tradition of alumni giving is strong and where colleges and universities depend on it. Even where the overwhelming bulk of financial support is provided by governments, we must remember that governments obtain most of the money they spend through taxation, and taxation at the levels necessary to support modern universities is possible only as a result of the successful efforts of businesses.

So business is a pillar of decent and dynamic societies. It can and must support the other pillars, since it depends on them for its own flourishing. I hope that business leaders, entrepreneurs, and investors will turn their minds to the question of what they can contribute to the cause of upholding marriage and the family in the face of great threats. What business leaders have done in other domains let them now do in defense of this distinctively human and uniquely humanizing institution. Just as the family has a stake in business, which, after all, provides employment and compensation, and which generates economic prosperity and with it social mobility, business has a stake in the family.

This will be clear, I believe, if we adopt the panoramic, long-term view, and follow out—to borrow Rakesh Khurana’s phrase—the logic of stewardship.

Robert P. George is the McCormick Professor of Jurisprudence at Princeton University and Distinguished Visiting Fellow of the Hoover Institution at Stanford.