As the world mourns the loss of Pope Francis, I am reminded of my own interaction with the Vatican early in Francis’s papacy. The Pope was eliciting the input from the business community on how one overcomes social and economic exclusion. This dialogue occurred not long after Francis wrote Evangelii Gaudium in which he prays for more politicians capable of “sincere and effective political dialogue” aimed at addressing the social and economic barriers that threaten our societies across all geographies, political and economic philosophies, walk of life. The Pope goes further in advocating a “new political and economic mindset which would help break down the wall of separation between the economy and the common good of society”. But why should there even be a wall separating the economy from the common good of society? Clearly this perception of a two-speed global economy, delivering with largesse for a “mobile minority”, seemingly at the expense of the immobile majority, is the principal reason behind this year’s Edelman Trust Barometer finding that a majority (61%) of global respondents believe “… that government and business make their lives harder and serve narrow interests, and wealthy people benefit unfairly from the system.” And it is this widely held public sense of too many being outside the bakery window looking in, that has undermined political stability and social order.
This “separation between the economy and the common good…” follows a period of hyper-globalization during which to many wealth creation was seen as a desirable end in itself. However, wealth should not be an end in itself, but rather an outcome of the generation of real value. To be sustainably successful, business leaders need to pursue the creation of great life-enhancing products, or new consumer-enabling services, or great ideas….and wealth will follow. John Kay, the founding head of Oxford University’s Said School of Business, calls this “obliquity” and argues that you cannot find happiness by desperately looking for happiness itself (happiness is the result of pursuing those activities/things that genuinely make you happy). So, too, wealth generation is the result of pursuing those things that add value. During my tenure as CEO, I would remind my peers (and Board) that purpose drives performance and that performance/profit is the outcome and not the goal. Find those pursuits that add real value, and wealth will follow.
Much of this might seem contrary to what many believe is the fundamental principle of capitalism, perhaps most famously articulated by Milton Friedman in his influential 1962 book, Capitalism and Freedom, noting that “There is one and only one social responsibility of business: to use its resources to engage in activities designed to increase its profits…” And it is perhaps under this rubric we have constructed this “wall between the economy and the common good…,” which Pope Francis decried. But there should be no such wall—even in the most orthodox capitalist system.
The intellectual father of modern capitalism, Adam Smith, is too well remembered for such phrases as “the invisible hand.” In truth, Smith’s legacy, and assumptions about capitalism, have been grossly oversimplified. Smith was a dogged advocate of the view that free enterprise absolutely required strong moral and ethical foundations and that most market participants needed to be those guided by (in his words) “propriety, prudence and benevolence” for the system to work properly. Smith is, of course, best known for his 1776 book, The Wealth of Nations, which many consider to be the founding document of free-market capitalism. But Smith himself placed greater value on his earlier work, The Theory of Moral Sentiments, in which he explores “the ability to think and act morally in the face of pure natural interest”.
So today it is appropriate for us to recall Pope Francis’s admonition that, “business is a vocation, a noble vocation, provided that those engaged in it see themselves as challenged by a greater meaning in life” enabling them “truly to serve the common good by striving to increase the goods of this world and to make them more accessible to all” . The world will be in a much better place the sooner we were to follow this Papal exhortation not just as a moral imperative, but also as an economic necessity.