The market and social responsibility

It is time for us to consider the ramifications of looking at economic recovery, growth, and development not just from the context of technological progress and the workings of the free market, but also from the perspective of Christian social doctrine. It is time to come out with a deeper analysis of what is taking place in our world from the point of view of true human development.

The market is where persons exchange goods and services of economic value so as to satisfy their needs and desires. The market, according to Economics 101, is subject to the principles of commutative justice, which is what regulates the relation of giving and receiving between parties to a transaction. Pope Francis, in his Apostolic Exhortation, Evangeli Gaudium, however, contends that the most beloved of economic tenets, the “trickle-down approach” is frustrated because of normal market mechanisms whereby the pursuit by individuals of their self-interest work out to the benefit of all, do not apply

It is important, however, to highlight the importance of distributive justice and social justice for the market economy. Social doctrine emphasizes that if the market is governed solely by the principle of equivalence in value of exchanged goods, it cannot produce the social cohesion that it requires to function well. Without internal forms of solidarity and mutual trust, the market cannot completely fulfill its proper economic function. Solidarity is first and foremost a sense of responsibility on the part of everyone with regard to everyone. Corporations view this as corporate social responsibility.

Corporate social responsibility (CSR) is a concept whereby organizations consider the interests of society by taking responsibility for the impact of their activities on customers, employees, shareholders, communities and the environment in all aspects of their operations. Thus, CSR goes beyond the statutory obligation of complying with legislation and sees corporations voluntarily taking steps to improve the quality of life for their stakeholders as well as for the community and society at large.

There is a need for deeper reflection on the meaning of the economy and its goals, indeed, “a profound and far-sighted revision of the current model of development,” to correct its dysfunctions and deviations, citing the unhappy effects of globalization, which while a driving force that gave many countries opportunities to emerge from underdevelopment, nevertheless caused “unprecedented damage and create(d) new divisions within the human family.”b A profoundly new way of business enterprise must be initiated. Today’s international capital markets offer great freedom of action, but there has to be an increased awareness of the need for greater social responsibility on the part of businesses.

Even taking into account the ethical considerations that business considers along the lines of corporate governance,  the corporate world must look at their activities in light of the Church’s social doctrine. As articulated in the principles and guidelines for good governance for both public companies and state-owned enterprises, management must concern itself not only with the interest of the owners, but also must assume responsibility for all the stakeholders that contribute to the life of the company.

Thus  “a model of market economy capable of including within its range all peoples and not just the better off” should be created. Efforts to build a world in which “all will be able to give and receive, without one group making progress at the expense of the other” should be made. Thus, as Pope Benedict XVI said, “the greatest service to development is Christian humanism that enkindles charity and takes its lead from truth.”

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Mercedes B. Suleik is a Fellow at the Institute of Corporate Directors and is a columnist for various newspaper publications. Ms. Suleik previously served as deputy director of the Bangko Sentral ng Pilipinas (BSP), vice president of the Development Bank of the Philippines (DBP), and executive director of the Capital Markets Development Center.

The views and opinions expressed in this column are those of the author/s and do not necessarily reflect the official policy or position of SharePHIL nor purport to reflect the opinions or views of SharePHIL or its members. Learn more at http://sharephil.org