Convivium Irenicum 2019 Part 5.1

(Previous Parts starting here through here ... and more in between)

I attended the breakout session where Hugh Whelchel, Executive Director of the Institute for Faith, Works, and Economics, presented on "Why Do We Work? The Role of Economic Freedom." First, I was attracted by the opening paragraph of his paper. And second, I wanted to see how someone could "translate" sophisticated concepts into something for the average "person in the pew." The second reason is apropos because the mission of the Davenant Institute, sponsor of the Convivium, is centered around a project of retrieving the insights of the classical Protestant tradition and making those tools accessible to contemporary academics, pastors, and lay persons. The final step--making this trove of wisdom accessible to non-academics--has proved especially challenging.

Whelchel's attention-grabbing first paragraph:

In a New York Times article in September, 1970, Milton Friedman emphatically stated that the purpose of business was to maximize shareholder value. This quote was picked up by business leaders and the media and has been so often repeated it has become an established corporate mantra. Yet we, as Christians, must reject it; we are called to work for a higher purpose. What that purpose is and how we achieve it is the subject of this short white paper.

What support does Whelschel marshall in support of his contention that Christians should reject the wealth-maximization thesis for corporations? In short, humanity's purpose to glorify God through shalom:

Shalom denotes a right relationship with God, with others, and with God’s good creation. It is the way God intended things to be when he created the universe. This was God’s original design for his creation—without scarcity, poverty, or minimalistic conditions. He desires that we enjoy the fruits of his creation and the fruits of our labor because by doing so we bring him glory.

Building on the goal or end of shalom, Whelchel goes on to find in humanity's power to "sub-create" by using the material of creation and working together to be the program for human activity. Of course, sin has clouded the picture but it hasn't changed the ultimate goal of human activity: "Restoration of shalom is God’s design in redemption. Understanding shalom is the key to realizing how God intends to use the work of our hands to participate with him in the restoration of his creation."

The remarkable success of the modern market economy in lifting hundreds of millions of people out of abject poverty is thus connected to the "shalom project." Of course, alleviation of poverty is not equivalent to biblical shalom. Only the eschatological age will see the state of permanent shalom. Thus, the purpose of economic freedom is not found in freedom as such but instead "the purpose of our work, and by extension our businesses, is not just to maximize shareholder value, it is to reweave shalom. We are to bring about flourishing to the communities we serve, seeking to glorify God, serve the common good, and further God’s kingdom in this current age."

Whelchel's assertion, that maximization of shareholder value is not the final goal of a corporation, should sound familiar for those who have followed my blog. I argued the same point here where deploying Aristotle's notion of four-fold causality I wrote:

The material cause of a corporation is that which it does--build cars, produce drugs, clean carpets, or stream internet porn. The efficient cause of corporate activity is capital, which turns the “stuff” of corporate activity, its material cause, into what folks buy. Capital lasts only so long, however, if the corporate activity doesn’t yield a profit. So it’s here, at the level of efficient cause, that profits fit in an Aristotelian account. Then it’s on to the formal cause, the stuff of law school courses in business associations, like Articles, By-laws, resolutions, minutes, and so on. Finally, the final cause.

Before suggesting a corporation’s final cause, however, we should note that it won’t be the same as the corporation’s efficient cause. In other words, profit is not the goal of corporate activity; it is simply one of the “causes” that permits the corporation to achieve its goal. Many probably intuitively recognized this when I listed steaming internet porn among the material causes of a corporation. It strikes most folks that something other than profitability should serve as the corporate goal. But the leading contemporary theoretical accounts of the firm in fact stress profitability--shareholder return--as the corporation’s only goal, at least for publicly traded ones.

An entity without a final cause or goal is like a powerful chainsaw spinning out of control: it can do a lot of damage. ... Only profit directed toward an end that is good is profit worth earning. (Emphasis added.)

Whelchel and I have taken different tacks to reach a similar conclusion. Neither individuals nor corporations exist for themselves. Rather we and our tools (including corporations) are called to glorify God in growing His peaceable Kingdom.

But both of us face a similar objection: Sure, on a Christian account shalom is the goal of human activity but corporations ain't human. So why should an artificial person aim for the same end as a natural one?

This is a fair criticism. After all, we don't hold other tools like, say, a hammer, to have the same final cause as the human who nails with it. Thus, is a corporation more like a "toolish" hammer or a shalom-enhancing human being? Stay tuned for some brief observations in Part 5.2.